UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 18, 2004
ONE LIBERTY PROPERTIES, INC.
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(Exact name of Registrant as specified in charter)
Maryland 001-09279 13-3147497
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(State or other (Commission file No.) (IRS Employer
jurisdiction of I.D. No.)
incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 516-466-3100
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets
On October 18, 2004 OLP St. Cloud LLC, a limited liability company wholly owned
by the registrant, acquired from New Flyer of America, Inc. ("Seller"), a
manufacturing facility containing approximately 338,000 square feet of space
(including approximately 45,800 square feet of office space) and the land
(approximately 77.11 acres) on which it sits located in Saint Cloud, Minnesota,
for a purchase price of approximately $17M. There is no material relationship,
other than in respect of the reported transaction, between the registrant or any
of its affiliates and the Seller or any of its affiliates.
The Contract of Sale (reported on Form 8-K filed by the registrant on September
30, 2004) and the lease entered into by Seller and registrant's wholly owned
limited liability company, provide that the transaction is a "sale and lease
back" transaction and on the closing date a Lease, in substantially the form
attached to the contract as an exhibit, was entered into between the parties.
The Lease provides that Seller, as tenant, leases the property from OLP St.
Cloud LLC, as landlord, for a term expiring October 31, 2024 at an initial
annual rental of $1,530,000, with annual periodic increases. The lease provides
for three ten year options. The lease is intended to be a triple net lease and
is guaranteed by NFIL Holdings Corporation, the tenant's parent.
All terms and conditions of the transaction, including the Contract of Sale, the
consideration paid and all terms and conditions of the Lease, were negotiated at
arms length.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Registrant maintains a $62,500,000 revolving credit facility with Valley
National Bank, Merchant's Bank Division, Bank Leumi USA, Israel Discount Bank of
New York and Manufacturers Traders and Trust Company. Borrowings under the
facility bear interest at the lower of LIBOR plus 2.5% and the bank's prime
rate. The registrant borrowed $7,000,000 under the facility to consummate the
acquisition described in Item 2.01 above and that is the balance outstanding
under the facility. The Credit Agreement requires that net proceeds received
from the sale or refinancing of properties are required to be used to repay
amounts outstanding under the facility, if proceeds from the facility were used
to purchase or refinance the properties.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statement of Businesses Acquired. Not Applicable.
(b) Proforma Financial Information. Not Applicable.
(c) Exhibits.
1. Contract of Sale dated as of September 27, 2004 between New Flyer
America, Inc., as Seller, and OLP St. Cloud LLC (Filed with this Form 8-K).
2. Lease Agreement dated as of October 18, 2004 between OLP St. Cloud
LLC, as Landlord, and New Flyer America, Inc., as tenant (Filed with this
Form 8-K).
3. Guaranty dated as of October 18, 2004 of NFIL Holdings Corporation
(Filed with this Form 8-K).
4. Amended and Restated Loan Agreement dated as of June 4, 2004
between registrant and certain of its subsidiaries and Valley National Bank,
Merchants Bank Division, Bank Leumi, USA, Israel Discount Bank and Manufacturers
Traders and Trust Company. Filed as exhibit to Form 8-K on June 8, 2004 and
incorporated herein by reference.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ONE LIBERTY PROPERTIES, INC.
Date: October 19, 2004 By: /s/ Simeon Brinberg
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Simeon Brinberg
Senior Vice President
CONTRACT OF SALE
NEW FLYER OF AMERICA, INC.
- Seller -
OLP ST. CLOUD LLC
- Purchaser -
as of September 27, 2004
62 Glenn Carlson Drive
St. Cloud, Minnesota
TABLE OF CONTENTS
Page:
1. Purchase Price .............................................1
2. Escrow .....................................................1
3. Successors/Assigns .........................................2
4. Seller's Representations....................................2
5. Inspections ................................................2
6. Environment ................................................4
7. Brokers ....................................................5
8. Title ......................................................5
9. Closing Costs ..............................................5
10. FIRPTA .....................................................6
11. Authority of Purchaser .....................................6
12. Authority of Seller ........................................6
13. Included Property ..........................................6
14. Closing Documents ..........................................6
15. Preclosing Obligations of Seller ...........................7
16. Closing ....................................................7
17. Casualty ...................................................9
18. Condemnation ...............................................10
19. Apportionments .............................................10
20. Master Lease ...............................................11
21. Common Development Restrictions/Zoning......................12
22. Miscellaneous...............................................13
23. Financing...................................................15
24. SEC Compliance..............................................15
25. Section 1031 Tax Deferred Exchange .........................16
CONTRACT OF SALE
This CONTRACT OF SALE (this "Contract of Sale") is made and entered
into as of the 27 day of September, 2004 by and between NEW FLYER OF AMERICA,
INC., a North Dakota corporation having an address at 609 Marin Avenue,
Crookston, Minnesota 56716-2909 ("Seller"), and OLP ST. CLOUD LLC, a Minnesota
limited liability company having an office at 60 Cutter Mill Road, Suite 303,
Great Neck, New York 11021 ("Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller is the current owner of an approximately 338,000 square
foot, manufacturing facility, and the land on which it sits, known as and by
6200 Glenn Carlson Drive, St. Cloud, Minnesota and more particularly described
on Exhibit A attached hereto (hereinafter referred to as the "Premises"); and
WHEREAS, Seller wishes to sell and leaseback, and Purchaser wishes to
acquire the Premises in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the sufficiency of which being hereby acknowledged, the parties
hereto do hereby agree as follows:
1. Purchase Price. Seller agrees to sell and Purchaser agrees to buy the
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Premises for the sum of $17,000,000.00 payable as follows (the "Purchase
Price"):
$250,000.00 upon the execution and delivery of this Contract
of Sale as the Downpayment herein referenced, by check(s) made
payable to the order of First American Title Insurance
Company, which sum shall be held in escrow pursuant to the
terms hereof; and
$16,750,000.00 (less the interest on the Downpayment), at the
Closing, by wire transfer to an account designated by Seller
or by unendorsed certified or bank check made payable to the
order of Seller.
2. Escrow. Concurrently with the execution of this Contract of Sale, Purchaser
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has delivered to First American Title Insurance Company, as escrow agent
("Escrow Agent"), a check(s) (subject to collection, if check fails collection,
Seller may terminate by notice) in the amount of $250,000.00 as the downpayment
(the "Downpayment"). Escrow Agent shall deposit the Downpayment into an
interest-bearing account(s) maintained at a federally insured financial
institution(s). Escrow Agent shall deliver the Downpayment by bank or certified
check to the direct order of Seller in accordance with this Contract of Sale, or
a joint instruction signed by Seller and Purchaser, or separate instructions of
like tenor signed by Seller and Purchaser, or a final judgment of a court of
competent jurisdiction. Escrow Agent at any time may deposit the Downpayment
with a court of competent jurisdiction, and upon notice to Seller and Purchaser
of such deposit, Escrow Agent shall have no further responsibility or liability
hereunder. If Escrow Agent shall receive a written request by one party for the
release of the escrow, Escrow Agent will give a copy thereof to the other party.
If Escrow Agent shall not receive an objection from the other party within five
(5) business days after it gives such copy to the other party, then Escrow Agent
shall so release the Downpayment. If Escrow Agent receives an objection, then
Escrow Agent shall continue to hold the Downpayment in accordance with the terms
hereof. Escrow Agent may act upon any instruction or other writing believed by
Escrow Agent in good faith to be genuine and to be signed or presented by the
proper persons. Any interest or income on the Downpayment shall be paid to
Purchaser or credited to Purchaser at Closing except in the event of the default
of Purchaser entitling Seller to the Downpayment in which event Seller shall be
entitled to the interest. At Closing, the Downpayment shall be paid by Escrow
Agent to Seller.
Seller and Purchaser acknowledge that Escrow Agent is merely a
stakeholder, and that Escrow Agent shall not be liable for any act or omission
unless taken or suffered in bad faith, in willful disregard of this Contract of
Sale or involving gross negligence. Escrow Agent shall not be liable for the
failure of a qualifying institution(s) in which the Downpayment has been
deposited. Seller and Purchaser, jointly and severally, agree to indemnify and
hold Escrow Agent harmless from and against any reasonable costs, claims or
expenses incurred by Escrow Agent in connection with the performance of the
Escrow Agent's duties hereunder, unless such costs, claims or expenses were
occasioned by Escrow Agent's bad faith or its willful disregard of this Contract
of Sale.
Escrow Agent shall not be bound by any agreement between Seller and
Purchaser, whether or not Escrow Agent has knowledge thereof, and Escrow Agent's
only duties and responsibilities shall be to hold, and to dispose of, the
Downpayment and interest earned thereon in accordance with this Contract of
Sale.
All instructions or notices given to or by Escrow Agent shall be in
writing and delivered in accordance with the requirements of this Contract of
Sale. For purposes of this paragraph, such instructions and notices shall be
deemed delivered on the date of delivery, if by hand, or on the date of mailing
if mailed, except that no instruction or notice to Escrow Agent shall be deemed
effectively delivered to Escrow Agent until actual receipt thereof by Escrow
Agent.
3. Successors and Assigns.
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A. This Contract of Sale shall not be binding until executed and delivered by
Seller, Purchaser and Escrow Agent. Once fully executed and delivered, this
Contract of Sale shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
B. Purchaser will not, without the prior written consent of Seller, sell, assign
or transfer its interest in this Contract of Sale. Notwithstanding the
foregoing, Purchaser shall be permitted without the necessity of obtaining the
approval of Seller to assign this Contract to a corporation, partnership or
other entity which is owned or controlled by (or under common control with)
Purchaser. Seller shall not assign its obligations hereunder nor sell the
Premises during the term of this Contract of Sale.
4. Seller's Representations.
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Seller's Knowledge Persons. Seller represents and warrants
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that Glenn Asham and/or John Marinucci are the individuals affiliated with
Seller that are most knowledgeable about the Premises and that the
responsibilities of Seller's non-executive staff, include informing them of
matters regarding the Premises and that therefore, such persons, have
information with regard to the subject matter of the representations and
warranties made by Seller in this Agreement.
A. Seller warrants, represents and agrees that the Premises is, or by Closing
shall be, in good and fully operable condition and in compliance with all
applicable laws (including specifically, without limitation, the American
Disabilities Act);
B. Seller hereby warrants and represents that (i) there is no litigation or
arbitration pending (including a bankruptcy or similar proceeding) or, to the
best of its knowledge, threatened by or against Seller or the Premises and in
any manner relating to the Premises (collectively, "Litigation") and (ii) Seller
has not received any notice from any governmental agency or office or any nearby
property owner or tenant of the Premises' violation or potential violation of
applicable law (a "Violation"). Seller agrees to immediately notify Purchaser of
any notice that it may receive on or after the date hereof of a Violation or
Litigation;
C. Seller hereby warrants and represents that Seller has not received a notice
or request which is still outstanding (i.e., which Seller has not complied with)
from any insurance company or Board of Fire Underwriters (or other organization
exercising functions similar thereto) requesting the performance of any work or
alteration in respect of the Premises. If prior to the Closing Date Seller
receives a Notice (a "Notice") from any insurance company or Board of Fire
Underwriters (or other organization exercising functions similar thereto)
requesting the performance of any work or alteration in respect of the Premises
prior to the Closing Date, Seller agrees to promptly send same to Purchaser. If
any Violation, Litigation or Notice is not cured by Seller prior to Closing then
Purchaser's sole remedy and right shall be to either close on this Contract of
Sale without abatement in the purchase price or terminate this Contract of Sale
and receive back its Downpayment, plus accrued interest thereon, and be
reimbursed its net survey costs, and net environmental testing costs, in which
event the parties shall have no further obligation to the other;
D. Seller hereby warrants and represents that Seller has no employees at the
Premises or elsewhere that would become employees of Purchaser upon its
acquisition of the Premises;
E. Seller acknowledges that pursuant to a lease to be executed by Seller, as
tenant (with respect thereto, Seller shall hereinafter be referred to as
"Tenant"), and Purchaser, as Landlord, at the Closing (the "Lease"), a copy of
the form of which Lease is attached hereto as Exhibit B, Seller, as Tenant,
shall be solely responsible for the operation, maintenance and repair of the
Premises;
F. Seller hereby warrants and represents that there are no service contracts,
maintenance agreements, landscaping contracts, security service contracts or any
other agreements relating to the Premises, (except those running with the land)
to which Seller is a party or bound which will be assigned to Purchaser;
G. Seller warrants and represents that the Premises possesses all permits,
licenses, approvals and certificates as shall be necessary for general office
and/or industrial and/or warehouse purposes;
H. Seller warrants and represents that to its knowledge the Premises constitutes
its own tax parcel. Seller further warrants and represents that all installments
of real property, personalty, transfer or other taxes in respect of the Premises
which are due and payable on or prior to the date hereof (the non-payment of
which could cause a lien to be placed upon the Premises) have been paid and
Seller agrees same will be paid through the Closing Date;
I. Seller warrants and represents that it is solvent as of the date hereof and
that this transaction shall not render Seller insolvent. Seller warrants and
represents that there is no monetary or other material default existing under
any of its indebtedness or under any of its or its subsidiaries' leases. Seller
and Purchaser each agree that for all purposes they will treat this transaction
as a bona fide third party transaction and is being made for fair value and that
this transaction is a bona fide sale-leaseback transaction and not a joint
venture, partnership or mortgage/lending relationship. Seller shall deliver to
Purchaser at Closing an opinion (the "Opinion") in form and substance reasonably
satisfactory to Purchaser of independent legal counsel reasonably acceptable to
Purchaser confirming that the Seller is duly authorized to enter into the
Contract of Sale and Lease, and that the Seller is in good standing in the State
of North Dakota and authorized to transact business in the State of Minnesota;
J. Intentionally Omitted.
K. The warranties and representations set forth in this Paragraph 4 shall
survive the Closing and shall continue in effect for six (6) months following
the Closing. Seller shall recertify the warranties and representations contained
in this Paragraph 4 and Paragraph 6A as of the Closing Date in an instrument to
be delivered at the Closing (the "Seller's Certificate");
L. The Seller is the record title owner of the Premises and knows of no
encumbrances or defects in title except for Permitted Exceptions;
M. There are no tax exemptions or abatements in effect affecting the Premises;
N. Seller represents that it has not received notice of any mechanic's liens,
sidewalk assessments, and emergency repair liens or to repair sidewalks. If any
mechanic's liens, emergency repair liens, sidewalk assessments or notices to
repair sidewalks are discovered or levied prior to the date of delivery of the
deed, Seller agrees to pay same on demand;
O. Seller represents that except as may be provided in Permitted Exceptions or
pursuant to the Lease no person, firm, corporation or other entity has any right
or option to acquire the Property, any portion thereof or any interest therein;
P. The execution, delivery and performance of this Agreement, in accordance with
its terms, do not violate any material contract, agreement, commitment, order,
and judgment to which Seller is a party or by which it is bound;
Q. Seller has the right, power and authority to make and perform its obligations
under this Agreement, and this Agreement is a valid and binding obligation of
Seller, subject to bankruptcy, reorganization and other similar laws affecting
the enforcement of creditors' rights generally and equitable considerations;
R. Seller has not received, and has no knowledge of, any presently outstanding
notification from any city, county, state or federal authority having
jurisdiction over the Premises, or of any utility providing service to the Real
Estate requiring any work to be done to, or affecting the use, operation and/or
occupancy of the Real Estate or any portion thereof;
S. Seller has no pending applications for changes of zoning, variances, or any
other land use matter pending before any governmental body affecting any portion
of the Premises;
T. Seller has not received any notices of nonpayment of any federal, state and
local taxes payable in connection with the Premises; and
U. Seller has no knowledge of any pending or threatened condemnation proceedings
against the Premises, or any part thereof nor of any Violations affecting the
Premises.
Guarantor's Representations.
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A. Guarantor hereby warrants and represents that it is solvent as of the date
hereof and that this transaction shall not render Guarantor insolvent;
B. Guarantor hereby warrants and represents that (i) there is no litigation or
arbitration pending (including a bankruptcy or similar proceeding); or (ii) to
the best of its knowledge, threatened by or against Guarantor;
C. Guarantor hereby warrants and represents that there will be no material
adverse change in its financial condition between the date hereof and the
Closing Date. Guarantor warrants and represents that there is no monetary or
other material default existing under any of its indebtedness or under any of
its or its subsidiaries contractual obligations.
5. Inspections.
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A. At Purchaser's cost and expense, Purchaser and its advisors shall be
permitted to inspect the Premises (the "Inspection") for (i) its design features
and physical condition, (ii) its location, (iii) its proximity to major
thoroughfares, its access, its visibility, the demographics of the surrounding
areas, (iv) its compliance with applicable laws (including, without limitation,
the Americans with Disabilities Act), (v) soil conditions, (vi) utility issues;
(vii) structural, construction or building issues; (viii) the Plans and
Specifications (as hereinafter defined) and (ix) such other matters as are
deemed relevant by Purchaser (the "Inspection"), and also to perform a phase I
environmental audit of the Premises (the "Phase I") and if recommended by
Purchaser's environmental consultant a phase II environmental audit of the
Premises (the "Phase II"). Purchaser agrees to indemnify, defend and hold
harmless Seller from any damage to person or property that may be caused by the
Inspection, the Phase I or the Phase II.
B. Purchaser shall have through the expiration of the Due Diligence Period
(hereafter defined) to notify Seller that Purchaser is satisfied with the
results of the Inspection, the Phase I or the Phase II. In the event Purchaser
shall fail to timely notify Seller of its satisfaction or in the event Purchaser
shall notify Seller that it is dissatisfied with the Premises, or any other item
in Purchaser's sole discretion, then in such case this Contract of Sale shall
terminate and the Downpayment with interest thereon shall be returned to
Purchaser and except for the indemnity in P. 5 above and (confidentiality and
brokerage clauses herein) the parties shall have no other liability to each
other.
C. Seller agrees to cooperate with Purchaser in connection with the inspections
referenced above and to provide access to the Premises in connection therewith.
Seller also agrees to cooperate with Purchaser in having any of Seller's
existing inspection reports (i.e. its current environmental report) redated and
certified in favor of Purchaser and its lender, and agrees to provide Purchaser
with true and correct copies of any such existing inspection reports. Seller
further agrees to provide to Purchaser within five (5) days of the execution
hereof the following:
1. A copy of the most recent financial statements for Seller;
2. A copy of the final certificate of occupancy for the Premises together with
all other necessary or appropriate approvals or certifications;
3. A copy of any covenants, easements restrictions, declarations, reservations
or agreements affecting the Premises (the "Restrictions");
4. A copy of the most recent as-built ALTA survey for the Premises;
5. Intentionally Omitted;
6. A copy of the roof, HVAC, general contractor's and any other warranties in
respect of the Premises (collectively, the "Warranties");
7. A copy of the plans and specifications for the construction of the Premises
and the improvements thereon including any change orders (collectively, the
"Plans and Specifications");
8. A true and complete copy of all phase I environmental audits and any updates
or other environmental information in its possession relating to the Premises
(including a phase II environmental audit, if applicable); Seller also agrees to
provide to Purchaser a true and complete copy of any additional environmental
information Seller may receive following its execution of this Contract of Sale,
and
9. To the extent in Seller's possession, a true and complete copy of a
structural inspection report, geotechnical report and/or appraisal of the
Premises.
All of the foregoing items 1-9 are hereafter referred to as the "Due Diligence
Items".
The Due Diligence Period shall expire on the date that is thirty (30) days
following Purchaser's receipt of a fully executed counterpart of this Contract
of Sale.
D. Seller further agrees to cooperate in having all structural inspections,
architect certifications, engineer's reports and other similar items certified
in favor of Purchaser and its lender and Seller shall promptly give a copy of
such items to Purchaser upon Seller's receipt thereof.
6. Intentionally Omitted.
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7. Brokers. Purchaser and Seller each warrants and represents to the other that
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it has not dealt with any broker in respect of the Premises. Purchaser
represents and warrants to Seller that no broker has brought the Premises to the
attention of the Purchaser or was otherwise involved in the Purchaser's interest
in the Premises. Each party shall indemnify, defend and hold harmless the other
for any claims which would constitute a breach of its foregoing representations
and warranties. The provisions of this paragraph shall survive the delivery of
the deed or the termination of this Contract of Sale.
8. Title.
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A. (i) Purchaser agrees to promptly order a commitment for title insurance from
Escrow Agent. Purchaser shall cause a copy of said commitment and any
continuations and/or supplements thereto to be promptly delivered to Seller.
Purchaser agrees to take title if same is good and marketable and if insurable
by Escrow Agent and subject only to Permitted Exceptions (defined below) and
such other restrictions or encumbrances as Purchaser shall consent to in
writing. If Seller shall be notified by Purchaser that it has an objection
(which is not a Permitted Exception) to Seller's title (which notice shall be
deemed to have been given upon delivery of the title report and/or any
continuations and/or supplements thereto), then Seller shall use its reasonable
efforts to attempt to cure such defect(s). Seller shall be entitled, at its
option, to extensions of the Closing Date for up to thirty (30) days in the
aggregate to attempt to cure such defect(s). For purposes of this Paragraph,
violations of applicable building or zoning law against the Premises shall
constitute title defects. In all events, Seller shall pay or satisfy any defects
or other items that can be satisfied by the payment of money (such as, by way of
example, mortgages, mechanic's liens and deeds of trust), and with respect to
any other title defect which are not Permitted Exceptions, Seller shall be
obligated to cure same to the extent the cost to cure does not exceed $75,000.00
("Non-Lien Title Defect").
(ii) Should the cost to cure such Non-Lien Title Defect exceed $75,000.00
and should Seller not cure such defect(s) despite Seller's reasonable efforts
therefore, then Purchaser shall have the option (exercisable by notice to Seller
given within ten (10) days of Seller's notification thereof to Purchaser), to
close on its purchase of the Premises in accordance with the terms hereof with
a $75,000.00 credit against the Purchase Price. If Purchaser shall not have
timely exercised its option set forth in the preceding sentence, then this
Contract of Sale shall terminate, the Downpayment (plus accrued interest) shall
be returned to Purchaser, Purchaser shall be reimbursed its net title and
environmental testing expenses, and the parties shall have no other liability to
each other, other than those matters specifically set forth herein to survive
the Closing Date or the earlier termination of the Contract.
B. Seller agrees to deliver (and Purchaser agrees to accept) a special warranty
deed (or its local equivalent) in form satisfactory for recording and otherwise
satisfactory to Purchaser.
C. In the event that applicable law requires that certain governmental agencies
or authorities be notified in advance of the date of Closing or of the proposed
sale of the Premises by Seller to Purchaser, then Seller shall comply with such
notification and otherwise shall comply with all legal requirements in respect
of the sale. To the extent available under applicable law, Seller shall obtain
and deliver to Purchaser a clearance or similar certificate from the
governmental entity(ies) having jurisdiction and evidencing the payment in full
of all required taxes, assessments and/or contributions. Seller agrees to pay
any such taxes, assessments and/or contributions or fees in connection
therewith. Purchaser agrees (at no cost to Purchaser) to cooperate with Seller
in connection with this Paragraph 8C. Seller agrees to act in good faith and
with reasonable diligence to apply for, obtain and deliver to Escrow Agent all
required clearance or other certificates as soon as is reasonably possible. If
any such required clearance or other certificate is not available at Closing,
then Purchaser shall have the option of terminating this Contract of Sale, in
which event the Downpayment with interest thereon shall be returned to Purchaser
and the parties shall have no further obligation to each other.
9. Closing Costs. Purchaser shall pay for all of its costs of closing including
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its own attorney fees. Seller shall pay for all of its costs of closing
including its own attorney fees and Seller shall pay for any and all transfer
taxes and/or recording fees due upon the sale and pay for the premiums due on
Purchaser's title insurance policy (except that Purchaser shall be responsible
for any additional premiums for lender's coverage, if any) and for an updated
as-built ALTA survey certified in favor of Purchaser, Escrow Agent and
Purchaser's lender.
10. FIRPTA. Seller warrants and represents that it is not a "foreign person" as
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defined in Section 1445 of the Internal Revenue Code, as amended, and Seller
shall supply at Closing an appropriate non-foreign person affidavit pursuant to
said Section 1445.
11. Authorization of Purchaser. Purchaser warrants and represents that it was
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duly organized and is in good standing in its jurisdiction of organization.
Purchaser warrants and represents that it has the authority to enter into this
Contract of Sale and agrees to supply to Seller such information as Seller may
require (such as its articles of organization and operating agreement) to
establish to Seller's reasonable satisfaction the accuracy of the warranties and
representations contained in this paragraph. Purchaser represents that its
signatory was fully authorized to execute and deliver this Contract of Sale as
well as the Lease and memo of Lease to be executed simultaneously with the
Closing Date on its behalf.
12. Authorization of Seller. Seller warrants and represents that it was duly
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organized and is in good standing in its jurisdiction of organization and that
it is in good standing in the State in which the Premises is located. Seller
warrants and represents that it has the authority to enter into this Contract of
Sale and agrees to supply to Purchaser its certificate of incorporation, by-laws
and resolutions adopted by its board of directors to establish to Purchaser's
reasonable satisfaction the accuracy of the warranties and representations
contained in this paragraph. Seller represents that its signatory was fully
authorized to execute and deliver this Contract of Sale on its behalf as well as
the Lease and memo of Lease to be executed simultaneously with the Closing Date.
13. Included Property. This sale includes all the right, title and interest of
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Seller in and to all easements, rights of way, privileges, appurtenances,
certificates, licenses, permits and rights to the same belonging to and inuring
to the benefit of the Premises, insurance proceeds, if any, held by Seller on
the Closing Date, condemnation proceeds, if any, held by Seller on the Closing
Date, supplies, fixtures attached to or appurtenant to the Premises or used in
connection with the operation of the Premises and owned by Seller. Except in
connection with Seller's leasehold mortgage referred to in the Lease, no rents
or leases will, on the Closing Date, be assigned or pledged by Seller except to
Purchaser in connection with the Closing.
14. Closing Documents.
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A. As a condition to the Closing, Seller agrees to execute and deliver to
Purchaser on the Closing Date all documents, in form reasonably satisfactory to
Purchaser, necessary to effectuate the provisions hereof including, without
limitation:
1. The special warranty deed.
2. The Lease and short form Memo of Lease, dated as of the Closing Date, in the
same form as attached hereto as Exhibit B, executed by each of the Purchaser and
the Seller, and any consents or other documentation requested by Purchaser
and/or Escrow Agent as evidence of Seller's authority to execute the same, and
to consummate this transaction generally.
3. A copy of the final certificate of occupancy for the Premises together with
all other necessary or appropriate approvals or certifications.
4. A copy of the Warranties, together with an assignment thereof which, if
required by the terms of any Warranty, shall be consented to by the warrantor.
5. Intentionally Omitted.
6. A title affidavit that all improvements have been fully paid for and to such
other matters as Escrow Agent shall require.
7. The Opinion.
8. The Due Diligence Materials.
9. A "nonforeign" certificate signed by Seller pursuant to Treas. Reg.
#1.4452T(b)(2) or other evidence that Seller is not a "foreign person" within
the meaning of Internal Revenue Code Section 1445;
10. The Seller's Certificate.
11. The Estoppel Certificate, as hereinafter defined.
12. The certificate, or other evidence reasonably satisfactory to Purchaser that
Purchaser has been named on the Tenant's insurance policy required under the
Lease.
13. Guaranty of Lease by NFIL Holdings Corporation ("Guarantor") in the form as
attached hereto as Exhibit D.
14. Such other documents that shall reasonably be required to consummate the
transactions herein contemplated.
B. Purchaser agrees to pay the following and to execute and deliver to Seller on
the Closing Date all documents, in form reasonably satisfactory to Seller,
necessary to effectuate the provisions hereof including, without limitation:
1. The balance of the cash portion of the purchase price referred to
hereinabove.
2. The Lease and short form Memo of Lease, dated as of the Closing Date, in the
same form as attached hereto as Exhibit B, executed by each of the Purchaser and
the Seller, and any consents or other documentation requested by Purchaser
and/or Escrow Agent as evidence of Seller's authority to execute the same, and
to consummate this transaction generally.
3. Any authorization, confirmation or approval document reasonably requested by
Escrow Agent (regardless whether in fact same is required hereunder) for its
payment of the Downpayment to Seller.
4. Such other documents that shall reasonably be required to consummate the
transactions herein contemplated.
15. Pre-Closing Obligations of Seller. Between the date hereof and the Closing
----------------------------------
Date, Seller shall:
A. Furnish Purchaser with such information with respect to the operation and
maintenance of the Premises as Purchaser shall reasonably request.
B. Not withdraw, settle or compromise any reduction proceeding affecting real
estate taxes assessed against the Premises without the prior consent of
Purchaser which consent shall not be unreasonably withheld or delayed. Any
future refunds and related fees shall be prorated between Purchaser and Seller
as of the Closing Date; this obligation shall survive the Closing Date.
C. Permit Purchaser and its representatives access to the Premises, and to
Seller's records in respect of the Premises, upon reasonable prior notice and at
reasonable times provided however Purchaser may not conduct any intrusive
testing on the Premises unless consented to by Seller in writing.
D. Cause the Premises to be maintained in good and first-class condition.
E. Not allow or consent to any modification of any Restrictions or the
imposition of any new Restrictions and not initiate or consent to any zoning
change, except in the ordinary course of business.
F. Seller agrees that it shall not make any material alterations of the Premises
that are not consistent with past practices without the express prior written
consent of the Purchaser.
16. Closing.
--------
A. Subject to extensions as herein expressly permitted, the parties agree that
the closing (the "Closing") shall occur at the offices of Moritt Hock Hamroff &
Horowitz LLP, 400 Garden City Plaza, Garden City, New York 11530, on or about
the date that is ten (10) days following the expiration of the Due Diligence
Period. If Purchaser shall have failed or been unable to timely close despite
the satisfaction of all of the conditions to Closing contained herein, then upon
at least ten (10) business days' notice from Seller to Purchaser and Escrow
Agent this Contract of Sale shall terminate, neither party shall have any
further obligations to the other except those matters specifically set forth
herein to survive the Closing Date or earlier termination of the Contract and
Seller shall be entitled to the entire Downpayment and any interest earned
thereon. Notwithstanding anything contained in this Contract of Sale to the
contrary it is understood and agreed that in the event of any default on the
part of the Purchaser, Seller agrees to look solely to the Downpayment in
accordance with the terms hereof as its liquidated damages and waives any claim
for specific performance or any other claim either against the Purchaser or
against any person disclosed or undisclosed. Seller and Purchaser acknowledge
that the amount of damages Seller occasioned by a default of the Purchaser would
be difficult or impossible to accurately predict and Seller and Purchaser, after
consultation with counsel of their own choosing, agree that the liquidated
damages provided for in this paragraph are reasonable sums to be used as
liquidated damages. In no event shall Purchaser be liable for actual,
consequential or special damages. Notwithstanding anything to the contrary set
forth in this Contract of Sale, in the event Seller shall default hereunder
Purchaser's sole right, claim and remedy shall be to either (i) receive back its
Downpayment with interest thereon (and, if Seller's default shall have been
willful, then Seller shall also reimburse Purchaser for Purchaser's actual out
of pocket expenses incurred in connection with the Premises or this Contract of
Sale) or (ii) seek specific performance of this Contract of Sale (and if
Purchaser shall be successful Seller shall be responsible to reimburse Purchaser
for Purchaser's legal fees and other costs associated with the application for
specific performance)
B. It is a condition to Purchaser's obligations to close hereunder and pay the
Purchase Price under this Contract of Sale that between the end of the Due
Diligence Period and the Closing Date (i) there shall be no material, adverse
change which causes an express closing condition herein not to be met in the
physical or environmental condition of the Premises, (ii) there shall be no
change in any of the Seller's representations and warranties made herein, (iii)
there shall be no material adverse change in the financial condition of the
Tenant (and any parent entity) (a "material adverse change" for purposes hereof
shall mean either the filing by or against such party of a petition in
bankruptcy, an admission in writing by any such party of its general inability
to pay its debt when due or the default by any such party under its operating
line of credit or other corporate level indebtedness or an announcement of the
need to restate previously reported earnings or the actual restatement thereof
or an announcement of an SEC or other governmental investigation of such party
or the lowering of the credit rating on any such party by a nationally
recognized credit rating agency (unless such party was on "credit watch" or
similar by the applicable credit rating agency as of the date hereof)), (iv)
there shall be no Violation imposed or threatened in writing, (v) there shall be
no Litigation or condemnation commenced or threatened, (vi) Seller shall
continue to operate at the Premises and Seller hereby represents and warrants
that shall Seller has every current intention of operating at the Premises
throughout the term of the Lease (which representation and warranty shall
survive the Closing) and (vii) there shall be no change in the full accuracy and
completeness of the warranties and representations of Seller contained in this
Contract of Sale which causes an express closing condition herein not to be met.
At Closing, Seller shall certify to Purchaser as part of the Seller's
Certificate that to its actual knowledge none of the items listed in (i) - (vii)
above shall have occurred; provided that if Seller shall obtain knowledge of any
matter which would cause a violation of (i) - (vii) above prior to the Closing,
Seller agrees to promptly notify Purchaser of such matter. If Seller does not
indicate in its notice to Purchaser that it will be satisfying and/or complying
with such matters (or, having indicated that it will so satisfy and/or comply,
is then not able to, or if the matter in question is a violation of (iii) or
(vi) above) then Purchaser shall have ten (10) days from receipt of Seller's
notice (or ten (10) days from receipt of notice that Seller having elected to
attempt to satisfy and/or comply but was unable to do so) in which to terminate
this Contract of Sale and receive back its Downpayment and the interest thereon,
following which neither party shall have any further obligation to the other
hereunder. Seller shall be entitled to an extension of the Closing for thirty
(30) days in order to attempt to satisfy and/or comply with any such matters
(other than items (iii) or (vi)). If Purchaser shall not so terminate this
Contract of Sale then Purchaser shall close without abatement or offset in the
purchase price.
C. Notwithstanding anything to the contrary set forth herein, (i) provisions of
this Contract of Sale permitting Seller for any reason to extend the Closing
Date shall not be cumulative so that if there shall be two or more items
allowing Seller to extend the Closing Date hereunder, Seller shall only be
entitled to extend for the longest period allowed by any one of the rights to
extend, and (ii) despite any specific provision of this Contract of Sale
allowing for a specific time for Seller to extend the Closing Date, Seller shall
not be permitted to extend the Closing Date beyond the expiration date of any
mortgage application or commitment on behalf of Purchaser provided that such
outside date is at least 30 days following the Closing Date specified herein
(regardless of whether or not this Contract of Sale is conditioned on Purchaser
obtaining financing).
17. Casualty. Subject to the terms of this Paragraph, the risk of loss or damage
---------
or destruction to the Premises by fire or other casualty is assumed by Seller
until the Closing. In the event of fire or other casualty, Seller shall
immediately notify Purchaser thereof and if cost to repair same exceeds
$125,000.00 then Purchaser shall have the option, exercisable within fifteen
(15) days of Seller's notice, of either (i) declaring this Contract of Sale
terminated in which event Escrow Agent shall refund to Purchaser, with the
interest earned thereon, the Downpayment whereupon this Contract of Sale and all
rights of Purchaser hereunder and to the Premises shall terminate and neither
Seller nor Purchaser shall have any further claim against the other, or (ii)
closing title in accordance with this Contract of Sale and paying in full the
Purchase Price, without any abatement thereof or claim against Seller for such
loss or damage (except solely that Seller shall credit the purchase price by the
amount of its insurance deductible), and accepting an assignment, without
recourse, of Seller's rights, if any, to any payments to be made under any
applicable hazard insurance policies together with any payments under such
policies made to Seller prior to the Closing and not expended to repair or
replace such loss, damage or destruction, provided however that if and to the
extent so provided in the Lease, the proceeds thereof and the amount of the
deductible so credited against the purchase price shall be made available to
Seller for restoration of the Premises together with payment by Seller to
Purchaser of the amount of the applicable deductible. If Purchaser shall have
failed to timely make an election pursuant to the foregoing sentence Purchaser
shall be deemed to have elected to terminate this Contract of Sale in accordance
with (i) above. This paragraph shall govern to the extent inconsistent with any
applicable law.
18. Condemnation. As of the date hereof, Seller represents and warrants that it
-------------
has no knowledge of any pending or contemplated condemnation proceedings
affecting the Premises or any part thereof. If prior to the Closing, all of the
Premises shall be taken by condemnation, eminent domain or deed in lieu thereof
or such a taking shall be threatened in writing by the applicable governmental
authority having jurisdiction over the Premises, this Contract of Sale shall be
automatically canceled, the Downpayment together with any interest thereon shall
be returned to Purchaser and thereupon neither party shall have any further
liability or obligation to the other. Seller agrees not to deliver a deed in
lieu or its equivalent without the prior written consent of Purchaser. If prior
to the Closing date, (a) a portion, but less than all, of the Premises shall be
taken by condemnation, eminent domain or deed in lieu thereof, or (b) there is
any taking of the land lying in the bed of any street, road, highway or avenue
open or proposed, in front of or adjoining all or any part of the Premises, (c)
there is any change of grade of any street, road, highway or avenue, or (d) a
taking described in (a), (b) or (c) above shall be threatened in writing by the
applicable governmental authority having jurisdiction over the Premises, then in
any of such events Purchaser may cancel this Contract of Sale by sending written
notice thereof to Seller within thirty (30) days of Purchaser's receipt of
notice of such condemnation, eminent domain, change of grade or other taking, in
which event Escrow Agent shall return to Purchaser the Downpayment with interest
thereon and thereupon neither party shall have any further liability or
obligations to the other. If this Contract of Sale is not canceled Purchaser
shall accept title to the Premises subject to the condemnation, eminent domain,
taking or change of grade, in which event on the Closing Date the net proceeds
of the award or payment (after payment of all actual collection costs) shall be
assigned by Seller to Purchaser and net monies theretofore received by Seller in
connection with such condemnation, eminent domain, taking or change of grade
shall be paid over to Purchaser, provided however that if and to the extent so
provided in the Lease, the proceeds thereof shall be made available to Seller
for restoration of the Premises or allowed as a credit against the purchase
price hereunder.
19. Apportionments. Taxes, special assessments, utilities and other charges
---------------
shall not be apportioned. Rent and additional rent shall under the Lease
commence as of the Closing Date. Taxes, special assessments, utilities and other
charges shall be paid in full through the Closing Date by Seller and thereafter
by Tenant pursuant to the Master Lease.
20. Lease. The parties acknowledge that this is a sale leaseback transaction.
------
Accordingly, it is a condition to Purchaser's obligations hereunder that (i) on
the Closing Date there shall be in full force and effect the Lease, in the form
attached hereto as Exhibit B, and (ii) on the Closing Date there shall be
delivered to Purchaser an estoppel certificate (and if Purchaser's lender shall
so require, a subordination, non-disturbance and attornment agreement in the
lender's standard form (the "SNDA")) of Seller and Guarantor (the "Estoppel
Certificate") in respect of the Lease (effective as of the Closing Date) in the
form attached hereto as Exhibit C and dated the Closing Date, and (iii) on the
Closing Date no event shall have occurred which would by itself or with the
passage of time and/or the giving of notice constitute a default of Seller under
the Lease and Seller shall certify same at closing as part of the Estoppel
Certificate, and (iv) on the Closing Date there shall be in full force and
effect the Guaranty, in the form attached hereto as Exhibit D.
21. Potential Post-Closing Sale of a Portion of Premises by Purchaser. Seller
------------------------------------------------------------------
has informed Purchaser that Anderson Trucking Service, Inc. has asked Seller to
sell to it approximately 20 acres of the Premises, which acreage Seller does not
use. If Purchaser consummates such sale (with it being understood that Purchaser
shall be under no obligation to do so), such parcel shall be removed from the
Premises as covered by the Lease and the base rental payments and security
deposit under the Lease shall be reduced (effective from and after the first day
of the month following Purchaser's receipt of proceeds from such sale) on a pro
rata basis. Although the foregoing base rent and security deposit reductions
shall be self-operative and shall occur automatically if such sale is
consummated, if either Seller or Purchaser shall so request, the parties shall
memorialize the foregoing in a lease amendment document to be signed by the
parties. This section shall survive the Closing.
22. Miscellaneous.
--------------
A. All notices, demands and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been properly
given if delivered by hand or sent by United States registered or certified
mail, return receipt requested, or sent by Federal Express or other overnight
delivery service, to Seller at its address set forth above with a copy to Roger
Noble, Esq., White & Case, LLP, 1155 Avenue of the Americas, New York, New York
10036, or at such other addresses as it may designate by notice hereunder and to
Purchaser at its address set forth above (for the attention of Jeffrey Fishman)
with a copy to Mark H. Lundy at Purchaser's address set forth above or at such
other addresses as it may designate by notice hereunder. The address for Escrow
Agent is 633 Third Avenue, New York, New York 10017. Notice shall also be sent
to Harvest Partners, 280 Park Avenue, 33rd Floor, New York, New York 10017, (for
the attention of Colin Farmer). The respective attorneys for Seller and
Purchaser shall be authorized to give and receive any notices required or
permitted to be sent hereunder and shall be permitted to agree on adjournments
of the Closing Date.
B. This Contract of Sale shall be governed by and construed in accordance with
the laws of the State of New York.
C. This Contract of Sale contains the entire agreement between the parties
hereto in respect of the matters hereto and supersedes any prior (oral or
written) agreements. This Contract of Sale has been negotiated and shall not be
construed against its drafter. This Contract of Sale may not be modified nor any
of its terms waived except by a writing executed by the party to be charged by
such modification or waiver. If any provision hereof shall be deemed
unenforceable, the remaining terms of this Contract of Sale shall be unaffected
thereby and shall remain in effect. The headings used herein are for reference
purposes only and shall not affect the interpretation of this Contract of Sale.
D. If either party shall employ an attorney to enforce or defend the rights of
such party under this Contract of Sale, the prevailing party shall be entitled
to recover its reasonable attorneys' fees and expenses. This provision shall
survive the Closing or earlier termination of this Contract of Sale.
E. Excepting solely for matters arising out of Purchaser's inspections of the
Property and Purchaser's obligations to indemnify and hold Seller harmless
pursuant to Paragraph 7 above, Seller shall indemnify, defend and hold Purchaser
harmless with respect to liability from injury to persons or property at the
Premises which occur prior to the Closing. This Paragraph 22E shall survive
Closing and the transfer of the Premises to Purchaser.
F. Seller warrants and represents that its financial statements attached hereto
as Exhibit E are true, complete and accurate in all material respects as of the
date hereof. Seller agrees to deliver to Purchaser a copy of all financial
statements and all filings with the Securities and Exchange Commission (other
than Form 4's) which Seller may make between the date hereof and the Closing
Date. In the event of a material adverse change in the financial condition of
Seller between the date hereof and the Closing Date, Purchaser shall have the
option (exercisable within fifteen (15) days of Purchaser's receipt of knowledge
of such adverse change) to terminate this Contract of Sale in which event Escrow
Agent shall refund to Purchaser, with the interest earned thereon, the
Downpayment whereupon this Contract of Sale and all rights of Purchaser
hereunder and to the Premises shall terminate and neither Seller nor Purchaser
shall have any further claim against the other.
23. Financing. This Contract of Sale is not contingent on Purchaser obtaining
----------
financing. However, in the event that Purchaser determines to obtain financing,
then Seller, at no out-of-pocket cost or expense to Seller agrees to provide
such documentation or information to Purchaser in respect of the Premises as the
prospective lender shall reasonably request.
Purchaser, at no out-of-pocket cost or expense to Purchaser,
agrees to provide (and if Purchaser obtains mortgage financing, to also cause
its lender to provide) such documentation (including without limitation a
subordination, non-disturbance and attornment agreement in customary, reasonable
form) to Seller and Seller's leasehold mortgagee, as they shall reasonably
request.
24. SEC Reporting Compliance. Seller acknowledges that Purchaser has informed
-------------------------
Seller that Purchaser is an affiliate of a publicly traded real estate
investment trust. Accordingly, to the extent an SEC Section 314 audit shall be
required by applicable law in respect of Purchaser's acquisition of the
Premises, Purchaser's obligations hereunder shall be conditioned on a
satisfactory SEC Section 314 audit of the Premises by Ernst & Young LLP
(Purchaser's independent auditors or any successor) by the expiration of the Due
Diligence Period. Seller agrees to cooperate with such auditors and to provide
such information and certifications as are customarily required by Ernst & Young
LLP to complete an SEC Section 314 audit. If Purchaser fails to terminate per
paragraph 5b hereof, this Section 24 shall, at the expiration of the Due
Diligence Period, be deemed deleted and of no force and effect.
25. Section 1031 Tax Deferred Exchange. At either party's option, the
-----------------------------------
non-requesting party agrees to cooperate with the requesting party to qualify
this transaction as a like-kind exchange of property described in Section 1031
of the Internal Revenue Code of 1986, as amended. The non-requesting party
further agrees to consent to the assignment of this Contract of Sale to a
"Qualified Intermediary" and/or take such other action reasonably necessary to
qualify this transaction as a like-kind exchange provided that (i) such exchange
shall be at the cost and expense of the requesting party, (ii) the
non-requesting party shall incur no liability as a result of such exchange and
(iii) no such assignment of this Contract of Sale shall relieve the requesting
party of its obligations under this Contract of Sale and the requesting party
shall remain liable for the performance of its obligations hereunder including,
without limitation, the representations, warranties, and covenants given by the
requesting party to the non-requesting party in this Contract of Sale.
26. Confidentiality. (a) Each of Purchaser and Seller hereby agrees, for the
----------------
benefit of the other, that between the date hereof and the Closing Date, it will
not release or cause to be released any press notices, publicity (oral or
written) or advertising promotion or otherwise announce or disclose or cause to
be announced or disclosed, in any manner whatsoever, the terms, conditions or
substance of the transactions contemplated herein without first obtaining the
express consent of the other party hereto. The foregoing shall not prohibit
either of the parties hereto (a) from discussing the substance of the
transaction contemplated in this Agreement or any of the terms thereof with its
attorneys, accountants, professional consultants or potential lenders or
potential financial partners or investors or their respective counsel or other
representatives, or (b) from complying with applicable laws or by regulatory or
judicial process or pursuant to any regulation promulgated by either the
Securities and Exchange Commission, the New York Stock Exchange or any other
public securities exchange.
(b) Anything to the contrary contained herein notwithstanding,
the obligations of Purchaser under that certain confidentiality letter agreement
dated June 18, 2004, shall survive the execution and delivery of this Agreement
but shall not survive the Closing.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Contract of Sale as of the date first hereinabove written.
NEW FLYER OF AMERICA, INC., as Seller
By:s/ Glenn Asham
-------------------------
Name: Glenn Asham
----------------------
Title:Vice President - Finance
------------------------
OLP ST. CLOUD LLC, as Purchaser
By:s/ Jeffrey Fishman
---------------------------
Name:Jeffrey Fishman
-------------------------
Title:President
------------------------
NFIL HOLDINGS CORPORATION, as Guarantor
By:s/ John Marinucci
-----------------
Name:John Marinucci
---------------
Title:President and CEO
-----------------
First American Title Insurance Company,
solely in its capacity as Escrow Agent
By:s/ William H. Brast
-------------------
Name:s/ William H. Brast
-------------------
Title: Vice President/Counsel
----------------------
EXHIBIT A
Legal Description
Lot One (1), Block One (1), St. Cloud I-94 Business Park 2, according
to the plat thereof on file in the office of the County Recorder, Stearns
County, Minnesota
EXHIBIT B
Form of Lease
EXHIBIT C
Estoppel Certificate
EXHIBIT D
Guaranty of Lease
LEASE AGREEMENT
By and between
OLP ST. CLOUD LLC, as Landlord
And
NEW FLYER OF AMERICA, INC., as Tenant
As of October 18, 2004
TABLE OF CONTENTS:
ARTICLE 1 TERMS AND DEFINITIONS.............................................5
ARTICLE 2 DEMISED PREMISES..................................................8
2.1 The Building and the Land............................................8
2.2 Condition of the Premises............................................8
ARTICLE 3 LEASE TERM........................................................9
3.1 Term.................................................................9
3.2 Options to Extend Lease Term.........................................9
ARTICLE 4 RENTAL AND OTHER PAYMENTS.........................................11
4.1 Minimum Annual Rent..................................................11
4.2 Net Lease............................................................11
4.3 Additional Rent......................................................12
ARTICLE 5 SECURITY DEPOSIT..................................................13
ARTICLE 6 USE...............................................................16
6.1 .....................................................................16
ARTICLE 7 SERVICES AND UTILITIES............................................16
7.1 Obtaining Utilities..................................................16
7.2 Interruption of Services and Utilities...............................16
ARTICLE 8 INDEMNITY AND INSURANCE...........................................17
8.1 Indemnification......................................................17
8.2 Fire, Casualty and Other Insurance...................................17
8.3 Tenant Insurance.....................................................18
8.4 Liability Insurance..................................................18
8.5 Additional Insurance.................................................19
8.6 Form of Policies.....................................................19
8.7 Subrogation..........................................................20
8.8 Delivery of Policies, etc............................................20
8.9 Separate Insurance...................................................20
ARTICLE 9 TENANT IMPROVEMENTS/ALTERATIONS...................................21
9.1 Improvements.........................................................21
9.2 .....................................................................22
9.3 Construction Insurance...............................................22
ARTICLE 10 SIGNS............................................................22
10.1 ....................................................................22
10.2 ....................................................................23
ARTICLE 11 ASSIGNMENT AND SUBLETTING........................................23
11.1 Restrictions........................................................23
11.2 Procedure for Transfer..............................................23
11.3 Effect of a Transfer................................................24
11.4 Required Documents..................................................24
11.5 Assignment of Subleases, etc........................................24
ARTICLE 12 REPAIRS AND MAINTENANCE..........................................24
12.1 ....................................................................25
12.2 ....................................................................25
12.3 ....................................................................25
ARTICLE 13 DAMAGE OR DESTRUCTION............................................25
13.1 Tenant to Reconstruct...............................................25
13.2 Waiver of Statutory Provisions......................................26
13.3 Insurance Proceeds..................................................26
13.4 Landlord's Fees.....................................................28
ARTICLE 14 DEFAULTS; REMEDIES...............................................28
14.1 Events of Default...................................................28
14.2 Remedies Upon Event of Default......................................29
14.3 Form of Payment After Default.......................................31
14.4 Waiver of Default...................................................31
14.5 Efforts to Relet....................................................31
ARTICLE 15 DEFAULT BY LANDLORD..............................................31
ARTICLE 16 EMINENT DOMAIN...................................................32
16.1 Permanent Taking....................................................32
16.2 Tenant to Reconstruct...............................................33
16.3 Temporary Taking....................................................33
16.4 Landlord's Fees.....................................................33
ARTICLE 17 SUBORDINATION....................................................33
ARTICLE 18 ESTOPPEL CERTIFICATES AND OTHER FINANCIAL INFORMATION............34
18.1 Estoppel Certificates...............................................34
18.2 Financial Statements................................................35
ARTICLE 19 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT.............35
19.1 Landlord's Cure.....................................................35
19.2 Tenant's Reimbursement..............................................35
ARTICLE 20 SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES...35
20.1 Surrender of Premises...............................................35
20.2 Removal of Tenant Property by Tenant................................36
20.3 Removal of Tenant's Property by Landlord............................36
20.4 Landlord's Property.................................................36
20.5 Landlord's Actions on Demised Premises..............................36
ARTICLE 21 MISCELLANEOUS PROVISIONS.........................................37
21.1 Severability........................................................37
21.2 Entire Agreement....................................................37
21.3 Compliance With Law, Insurance Requirements, etc....................37
21.4 Late Charges........................................................38
21.5 Sale of Demised Premises by Landlord................................38
21.6 Holdover by Tenant..................................................39
21.7 Quiet Enjoyment.....................................................39
21.8 Entry by Landlord...................................................39
21.9 Cumulative Rights...................................................40
21.10 Time...............................................................40
21.11 Relationship of Parties............................................40
21.12 Exculpation........................................................40
21.13 Memorandum of Lease................................................40
21.14 Notices............................................................41
21.15 Successors.........................................................41
21.16 Captions...........................................................41
21.17 Joint and Several..................................................41
21.18 Authority..........................................................41
21.19 Attorney's Fees....................................................41
21.20 Waiver of Jury Trial...............................................41
21.21 Governing Law......................................................42
21.22 Brokers............................................................42
21.23 Mechanics' Liens...................................................42
21.24 Intentionally omitted
21.25 Bankruptcy Protections.............................................42
21.26 Environment........................................................43
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease") is made and entered into as of this
18 day of October, 2004 by and between OLP ST. CLOUD LLC, a limited liability
company having an address at Suite 303, 60 Cutter Mill Road, Great Neck, New
York 11021 ("Landlord") and NEW FLYER OF AMERICA, INC., a North Dakota
corporation having an address at 609 Marin Avenue, Crookston, Minnesota
56716-2909 ("Tenant").
W I T N E S S E T H :
WHEREAS, pursuant to a sale leaseback transaction, Landlord has this
date acquired that certain parcel(s) of land (the "Land") containing
approximately 77.11 acres, such Land being improved by a no less than 338,000
square foot (above grade) manufacturing facility, together with all other
buildings and other improvements now or hereafter located thereon, all commonly
known as and located at 6200 Glenn Carlson Drive, St. Cloud, Minnesota and more
particularly described on Exhibit A attached hereto and made a part hereof (such
Land and the Building (hereafter defined), together with all easements and
appurtenances relating thereto, being collectively referred to herein as the
"Demised Premises"); and
WHEREAS, as a condition to Landlord's acquisition of the
Demised Premises and of Tenant's disposition of the Demised Premises, Landlord
now desires to lease the Demised Premises to Tenant and Tenant now desires to
lease the Demised Premises from Landlord all upon the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the mutual premises herein
set forth, the sufficiency of which being hereby acknowledged, the parties
hereto do hereby agree as follows:
ARTICLE 1
TERMS AND DEFINITIONS
For purposes of this Lease, the following terms shall have the
following meanings:
"Broker": None.
"Building": All buildings and other improvements now
or hereafter located on the Land, which
Landlord shall own, together with all
appurtenances thereto.
"FIN 46R": FASB Interpretation No. 46,
Consolidation of Variable Interest Entities
(Revised), an interpretation of ARB No. 51,
Consolidated Financial Statements, issued by
the Financial Accounting Standards Board on
January 17, 2003 (as amended December 15,
2003), together with any related
interpretative guidance published or to be
published by the Financial Accounting
Standards Board.
"Lease Commencement
Date": Shall be the date hereof.
"Lease Term": A period of time commencing on the Lease
Commencement Date and ending on October 31,
2024, as same may be extended as provided
herein (See Article 3).
"Minimum Annual
Rent": Minimum Annual Rent per annum for the
Demised Premises for the initial Lease
Term shall commence on the date hereof and
shall be as follows (See also Article 4):
Lease Year Minimum Annual Rent Monthly Rent
---------- ------------------- ------------
1 $ 1,530,000.00 $ 127,500.00
2 $ 1,560,600.00 $ 130,050.00
3 $ 1,591,812.00 $ 132,651.00
4 $ 1,623,648.24 $ 135,304.02
5 $ 1,656,121.20 $ 138,010.10
6 $ 1,689,243.63 $ 140,770.30
7 $ 1,723,028.50 $ 143,585.71
8 $ 1,757,489.07 $ 146,457.42
9 $ 1,792,638.85 $ 149,386.57
10 $ 1,828,491.63 $ 152,374.30
11 $ 1,865,061.46 $ 155,421.79
12 $ 1,902,362.69 $ 158,530.22
13 $ 1,940,409.95 $ 161,700.83
14 $ 1,979,218.15 $ 164,934.85
15 $ 2,018,802.51 $ 168,233.54
16 $ 2,059,178.56 $ 171,598.21
17 $ 2,100,362.13 $ 175,030.18
18 $ 2,142,369.37 $ 178,530.78
19 $ 2,185,216.76 $ 182,101.40
20 $ 2,228,921.10 $ 185,743.43
"Rent Commencement
Date": Shall be the date hereof.
"Security Deposit": Initially $255,000, subject to increase as set
forth herein (See also Article 5).
Address for Notices
(Section 21.15):
To Landlord: OLP ST. CLOUD LLC
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
Attention: Jeffrey Fishman
With a copy to: OLP ST. CLOUD LLC
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
Attention: Richard M. Figueroa
And a copy to: David H. Cohen, Esq.
Morritt Hock Hamroff & Horowitz
400 Garden City Plaza
Garden City, NY 11530
To Tenant: New Flyer of America, Inc.
609 Marin Avenue
Crookston, Minnesota 56716-2909
Attention: Glenn Asham,
Vice President of Finance
With a copy to: NFIL Holdings Corporation
609 Marin Avenue
Crookston, Minnesota 56716-2909
Attention: Glenn Asham,
Vice President of Finance
And a copy to: Harvest Partners
280 Park Avenue, 33rd Floor
New York, New York 10017
Attention: Colin Farmer,
Vice President
And a copy to: White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Roger Noble, Esq.
ARTICLE 2
DEMISED PREMISES
2.1 The Demised Premises. Upon and subject to the terms,
--------------------
covenants and conditions hereinafter set forth, Landlord hereby leases and
demises to Tenant and Tenant hereby hires from Landlord the Demised Premises.
2.2 Condition of the Premises. Tenant expressly understands and agrees
-------------------------
and acknowledges that Landlord would not have entered this Lease or acquired the
Demised Premises without the express provisions of this Paragraph 2.2. It is
understood that the Demised Premises and all improvements and fixtures
(including, without limitation, the Building) shall be delivered "AS IS" in
their present condition and with all faults, whether latent or patent,
foreseeable or unforseeable. Landlord shall not be liable for any latent or
patent defects in the Demised Premises. Tenant acknowledges that neither
Landlord nor any of its representatives, employees, officers, directors,
shareholders, trustees, members, partners, counsel or agents has made any
representations or warranties as to the physical condition, state of repair,
tenancy, income, expenses or operation of the Demised Premises. Tenant
acknowledges that it has not relied on any representations, warranties or
"broker set-ups" in its decision to lease the Demised Premises in accordance
with the terms hereof and also acknowledges that Tenant is intimately familiar
with the Demised Premises due to its previous ownership and occupancy of same.
In particular, Landlord is unwilling to make and does not make any
representations or warranties in respect of (i) the physical condition of
the Demised Premises (including, without limitation, in respect of the
presence, non-presence or condition of hazardous, toxic or other
environmentally sensitive materials or substances), (ii) the compliance or
non-compliance of the Demised Premises with applicable laws (including,
without limitation, those relating to the protection of the environment or
the safety of employees or workers), (iii) the revenues, income or expenses
of the Demised Premises, (iv) the adequacy or inadequacy of the utilities,
if any, provided to the Demised Premises, (v) the zoning of the Demised
Premises or (vi) any other matter concerning the Demised Premises. Tenant
acknowledges the foregoing and warrants and represents that it (or its
principal officers if Tenant shall be an entity) has had sufficient time
and opportunity to inspect the Demised Premises and other matters deemed
important to Tenant, that it (or its principal officers if Tenant shall be
an entity) is experienced in owning real property similar to the Demised
Premises, that it is represented by advisors and counsel of its choosing
and that Tenant is intimately familiar with the Demised Premises due to its
previous ownership and occupancy of same.
ARTICLE 3
---------
LEASE TERM
----------
3.1 Term. The terms and provisions of this Lease shall be effective as
-----
of the Lease Commencement Date. The Lease Term shall commence on the Lease
Commencement Date and shall terminate on the last day of the Lease Term, unless
this Lease is properly and timely extended as provided below or shall sooner
terminate as hereinafter provided. For purposes of this Lease, a "Lease Year"
shall mean any consecutive twelve (12) month period during the Lease Term;
provided, however, that the first Lease Year shall commence on the Lease
Commencement Date and shall end on October 31, 2005; and further provided that
the last Lease Year of the Lease Term shall end on the last day of the Lease
Term.
3.2 Options to Extend Lease Term.
----------------------------
3.2.1 Provided that the Lease then remains in full force and
effect, and further provided that at the time of the exercise of any option
granted pursuant to this Section 3.2, or the commencement of any extension term,
Tenant shall not then be in default of any of the terms, covenants and
conditions of this Lease beyond any applicable notice and/or cure period (and,
in the event that Tenant has elected to deliver the Letter of Credit (hereafter
defined) in lieu of a cash Security Deposit as permitted by Section 5.3 below,
then further provided that Tenant shall have delivered a replacement Letter of
Credit meeting all of the requirements of Section 5.3), then Tenant may extend
the Lease Term for three (3) additional successive ten (10) year periods. Tenant
may exercise each such option to extend the Lease Term only by delivering to
Landlord written notice of such exercise not less than twelve (12) months prior
to the expiration of the original Lease Term or the applicable option period, as
the case may be. Once exercised, such election shall be irrevocable.
3.2.2 Should Tenant exercise any option to extend the Lease
Term granted hereunder in accordance with Section 3.2.1, the Tenant's use and
occupation of the Demised Premises shall, during each extended Lease Term, be
upon the same terms, covenants and conditions contained herein, except that
Tenant shall be required to pay Minimum Annual Rent in the amounts set forth in
Section 3.2.4 below.
3.2.3 In the event that Tenant fails to timely exercise any
option to extend the Lease Term as described herein in accordance with Section
3.2.1, then Tenant shall be deemed to have irrevocably waived and forfeited any
and all rights to extend the Lease Term, and the provisions of this Section 3.2
shall, at such time, be automatically deemed null and void, of no further force
and effect, and shall be deemed deleted from this Lease.
3.2.4 If Tenant exercises its option(s) to extend the Lease
Term as aforesaid in accordance with Section 3.2.1, then in addition to all
other obligations and covenants of Tenant contained in this Lease, Tenant shall
pay Minimum Annual Rent during each applicable extended term in the following
amounts:
(i) for the first Lease Year in any such extended term, in an amount
equal to the then Minimum Annual Rent (as previously adjusted) payable for the
immediately preceding Lease Year plus two percent (2%) and (ii) for each
subsequent Lease Year in such extended term in an amount equal to the then
Minimum Annual Rent (as previously adjusted) payable for the immediately
preceding Lease Year plus the applicable Inflation Adjustment (as described
below) but in no event less than the Minimum Annual Rent (as previously
adjusted) payable for the immediately preceding Lease Year.
"Inflation Adjustment" means, with respect to any amount of Minimum Annual Rent
----------------------
to be so adjusted, an amount equal to the product of (a) the then Minimum Annual
Rent for the immediately preceding Lease Year and (b) a fraction, (i) the
numerator of which is the amount, if any, by which (A) the Consumer Price Index
for the calendar month in which the last day of the last full calendar month of
the immediately preceding Lease Year falls exceeds (B) the Consumer Price Index
for the calendar month in which the last day of the last full calendar month
immediately preceding the commencement of the preceding Lease Year falls, and
(ii) the denominator of which is the Consumer Price Index for the calendar month
in which the last day of the last full calendar month immediately preceding the
commencement of the preceding Lease Year falls.
"Consumer Price Index" shall mean the Consumer Price Index for All Urban
----------------------
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, New York - Midwest urban area, all Items (1982-1984=100),
or any successor index thereto, appropriately adjusted. If the Consumer Price
Index ceases to be published, and there is no successor thereto, such other
index as selected by Landlord and reasonably acceptable to Tenant, as
appropriately adjusted, shall be substituted for the Consumer Price Index.
Any and all Additional Rent that becomes due and payable during any
extension of the Lease Term shall continue to be paid in addition to the Minimum
Annual Rent as calculated herein during any extended Lease Term, as well as any
other sums that become due and payable in accordance with the terms hereof.
ARTICLE 4
---------
RENTAL AND OTHER PAYMENTS
-------------------------
4.1 Minimum Annual Rent. Tenant agrees to pay the Minimum Annual Rent
--------------------
to Landlord at Landlord's address set forth herein, or such other place as
Landlord may from time to time designate and at the times and in the manner
herein provided. Commencing on the Rent Commencement Date, Minimum Annual Rent
shall be payable by Tenant to Landlord in advance in twelve (12) equal monthly
installments on the first day of each calendar month, without demand, notice,
abatement or offset whatsoever, provided that if a rental payment date
(including the Rent Commencement Date) falls on a day of the month other than
the first day of such month, or if any rental payment is for a period which is
shorter than one month, then the Minimum Annual Rent for such fractional month
shall accrue on a daily basis for the period from the date such payment is due
to the end of such calendar month (or to the end of the Lease Term, if
applicable) at a rate per day which is equal to 1/360 of the Minimum Annual Rent
then in effect and provided further that Minimum Annual Rent for the period from
the Rent Commencement Date through the end of the month in which the Rent
Commencement Date occurs as well as Minimum Annual Rent for the first full
calendar month of the initial Lease Term shall be paid by Tenant on the Rent
Commencement Date. If the last Lease Year contains more than twelve (12)
calendar months, then the Minimum Annual Rent for the extra time period shall be
prorated based upon the Minimum Annual Rent for the first twelve (12) calendar
months of the last Lease Year. All other payments required to be made under the
terms of this Lease that require proration on a time basis shall be prorated on
the same basis. Minimum Annual Rent shall be paid in the amounts set forth in
Article 1 above for each Lease Year during the initial Lease Term or such
amounts as are set forth in Section 3.2.4 above for any option term.
4.2 Net Lease. The parties acknowledge and agree that this Lease is and
----------
is intended to be a triple net lease and the parties hereto intend that Landlord
shall receive all Minimum Annual Rent and all Additional Rent and all other sums
payable hereunder free and clear of any and all liability or responsibility of
Landlord for real property taxes, liens, charges or expenses, offsets or similar
impositions or charges upon the Demised Premises of any nature whatsoever.
Tenant shall pay all items of expenses and damage that are attributable to
Tenant and/or its use and/or possession of the Demised Premises and which,
except for the execution of this Lease, would have been chargeable against the
Demised Premised and payable by the Landlord. Tenant agrees to promptly
reimburse Landlord for all out-of-pocket attorneys' fees and disbursements
reasonably incurred by Landlord in connection with reviewing, approving and
consenting to any sublease or other Transfer documents after the date hereof.
Tenant understands and agrees that Landlord is to have no obligation whatsoever
under this Lease or otherwise in respect of the repair, operation, maintenance
and/or replacement of the Demised Premises or for the quality or compliance with
applicable law of its construction (or in either case, the lack thereof), all
such obligations being the sole responsibility of the Tenant, at Tenant's sole
cost and expense.
4.3 Additional Rent. A. Tenant shall pay or cause to be paid to
----------------
Landlord, commencing on the date hereof and thereafter on the first day of each
month during the Lease Term (as same may be extended), such amounts as Landlord
from time to time estimates as necessary to create and maintain a reserve fund
to be held by Landlord (or its lenders or ground lessors), without interest,
from which to pay all impositions of any kind whatsoever due against the Demised
Premises one month prior to the date same become due without interest or penalty
(including without limitation all real estate taxes, sales taxes, rent taxes,
assessments, liens and charges on or against the Demised Premises or any part
thereof or relating in any way to the operations at the Demised Premises), all
water/sewer charges and all premiums for insurance required to be maintained by
Tenant under this Lease (collectively, "Impositions"). In the event of any
default under the terms of this Lease, any part or all of such reserve fund may
be applied in such fashion as Landlord may determine and Landlord shall be
entitled to refuse to disburse such deposits following any such default. If one
month prior to the due date of any such Impositions the amount then on deposit
therefor shall be insufficient for the payment of such obligation in full,
Tenant, within five (5) days after written notice from Landlord, shall deposit
the amount of the deficiency with Landlord. Until expended or applied as above
provided, any amounts in the reserve fund pursuant to this Section 4.3 (and all
amounts held by or for Landlord relating to insurance or condemnation proceeds)
shall constitute additional security for the payment and satisfaction of all of
Tenant's obligations hereunder. The reserve fund (including all amounts held by
or for Landlord relating to insurance or condemnation proceeds) shall not
constitute a trust fund and may be commingled with other monies held by
Landlord. No earnings or interest on the reserve fund (or on any amounts held by
or for Landlord relating to insurance or condemnation proceeds) shall be payable
to Tenant. Notwithstanding the forgoing, if and for so long as Tenant has
delivered to Landlord evidence reasonably satisfactory to Landlord that all
premiums for all insurance required to be maintained by Tenant pursuant to the
terms of this Lease are paid current and all required policies are in full force
and effect, then Landlord shall waive the requirement for reserves for insurance
premiums as set forth in this Paragraph 4.3; with it being understood and agreed
that in the event that Tenant shall fail to deliver such evidence to Landlord
then, in addition to any and all other rights and remedies that may be available
to Landlord at law, equity or under this Lease as a result of same, Tenant shall
thereafter, promptly upon notice from Landlord, be required to make payments to
the reserve fund for insurance premiums in the amounts and according to the
procedures for same as set forth above until such time as such evidence is
delivered to Landlord.
B. Any and all sums due under this Lease from Tenant to Landlord (other
than the Minimum Annual Rent) shall be deemed "Additional Rent" hereunder. A
failure to pay Additional Rent shall have the same effect and shall be treated
identically to a failure to pay Minimum Annual Rent, as all such sums are hereby
considered "rent".
C. Except as otherwise specifically noted in A above, Tenant
will pay or cause to be paid when due and payable all real estate taxes, sales
taxes, rent taxes, assessments (including, but not limited to, all assessments
for public improvements or benefits and any payable in installments shall
nonetheless be paid at once), liens, water and sewer rates, common area
maintenance charges, charges or expenses due under any Restrictions (hereafter
defined), vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Demised Premises if and to the extent applicable,
charges for public or private utilities, license permit fees, inspection fees
and other governmental levies or payments, of every kind and nature whatsoever,
general and special, ordinary and extraordinary, unforeseen as well as foreseen,
which at any time may be assessed, levied, confirmed, imposed or which may
become a lien upon the Demised Premises or any portion thereof, or which are
payable with respect thereto, or upon the occupancy, operation, use, possession
or activities thereof, whether any or all of the same be levied directly or
indirectly, and all taxes, assessments or charges which may be levied on this
Lease or the rents payable in connection herewith (specifically excluding,
however, Landlord's income taxes). Tenant will deliver to Landlord, upon
request, copies of official receipts or other satisfactory proof evidencing such
payments.
ARTICLE 5
---------
SECURITY DEPOSIT
----------------
5.1. Initial Security Deposit; Increases. Simultaneously with
------------------------------------
Tenant's execution of this Lease, Tenant has deposited with Landlord the initial
sum of $255,000 (which sum is equal to two months Minimum Annual Rent at the
current rate and which sum shall be supplemented by Tenant from time to time
within five days after demand from Landlord as necessary to ensure that all
times during the Lease Term (as same may be extended), Landlord shall be holding
an amount equal to two months Minimum Annual Rent at the then-current rate),
which shall be held by Landlord as security (the "Security Deposit") for
Tenant's performance of all of its obligations under this Lease. If Tenant
defaults in the performance of its obligations under any of the terms,
provisions and conditions of this Lease beyond applicable notice and/or cure
periods, including, but not limited to, the payment of any installment of
Minimum Annual Rent and/or Additional Rent, Landlord may at its option use,
apply or retain the whole or any part of the Security Deposit to the extent
required for the payment of any such installment and/or any other sum as to
which Tenant is in default or for any sum which Landlord may expend, have
expended or may be required to expend by reason of Tenant's default in respect
of any of the terms, covenants, and conditions of this Lease, including but not
limited to, any damages or deficiency in the re-letting of the Demised Premises,
whether such damages or deficiency accrued before or after summary proceedings
or other re-entry by Landlord, whereupon Tenant shall promptly deposit such sums
with Landlord sufficient to restore the Security Deposit to the amount required
hereunder (i.e., two months Minimum Annual Rent at the then-current rate). If
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this Lease, then the Security Deposit (with accrued
interest, if any) shall be returned to Tenant within 30 days after the
expiration of the Lease Term and surrender and delivery of possession of the
Demised Premises to Landlord in the condition required by this Lease. In the
event of a sale of the Demised Premises, Landlord shall have the right to
transfer the security to the transferee, and Landlord shall thereupon be
released by Tenant from all liability for the return of such Security Deposit,
and Tenant agrees to look solely to the new Landlord for the return of said
Security Deposit. The provisions hereof shall apply to each and every transfer
or assignment made of the Security Deposit to a new Landlord/transferee. Tenant
shall not assign or encumber or attempt to assign or encumber the Security
Deposit, and neither Landlord nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Landlord shall hold the cash Security Deposit in an interest-bearing account
with any interest being added to the Security Deposit (and with Tenant being
responsible for payment of any and all income taxes thereon); however, Landlord
shall not be responsible for ensuring any minimum rate of interest on such cash
Security Deposit nor shall Landlord be responsible or liable for the failure of
any institution in which such cash Security Deposit has been deposited.
5.2. Guaranty; Restrictions on Transfers by Guarantor. Simultaneously
-------------------------------------------------
with the execution and delivery of this Lease and as an inducement to Landlord
to enter into this Lease, NFIL Holdings Corporation (the "Guarantor") has
executed and delivered to Landlord a Guaranty (the "Guaranty") of all of the
Tenant's obligations under this Lease. Tenant acknowledges and confirms that the
Guaranty contains certain restrictions on assignments of the Guaranty by
Guarantor and certain restrictions on certain other prohibited transfers of
equity interests in Guarantor, all as more particularly set forth in paragraph 8
of the Guaranty. Tenant confirms, acknowledges and agrees that a breach of the
terms and provisions of paragraph 8 of the Guaranty shall constitute an Event of
Default under this Lease entitling Landlord to exercise any and all remedies
available to Landlord whether under this Lease or at law and/or equity.
5.3. Letter of Credit. At Tenant's option, simultaneously with Tenant's
-----------------
execution and delivery of this Lease, Tenant may elect (in lieu of a cash
deposit) to post the Security Deposit required by this Article 5 by delivering
to Landlord an irrevocable, standby letter of credit issued in favor of
Landlord, such letter of credit to be an "evergreen" letter of credit having an
initial expiration date not earlier than one year following the date of this
Lease and with provision for automatic one-year renewals thereafter, such letter
of credit to at all times be in an amount at least equal to the amount of the
Security Deposit then required pursuant to the terms of this Article 5 (the
"Letter of Credit"). The Letter of Credit shall also require the issuing bank to
deliver to Landlord written notice of any non-renewal no less than sixty days
prior to the then extant expiration date thereof, in which event Tenant shall
immediately on demand from Landlord deliver either a replacement Letter of
Credit satisfying all of the conditions of this Section 5.3 or deliver to
Landlord cash security, in each case in the amount then required by this Article
5, with it being further understood and agreed that any failure by Tenant to
make such delivery to Landlord shall entitle Landlord to immediately draw upon
the full amount of such Letter of Credit. The Letter of Credit shall be payable
on Landlord's sight draft and must be issued by and drawable on a New York
branch of a commercial bank reasonably acceptable to Landlord and must otherwise
be in form and substance reasonably acceptable to Landlord (including, without
limitation, that same be transferable by Landlord). In the event that Landlord
draws on the Letter of Credit pursuant to this Article 5, then Tenant shall
promptly deliver to Landlord a replacement Letter of Credit (meeting all of the
requirements of this Article 5) or a cash deposit, in either case for the
amount(s) so drawn such that at all times Landlord shall be holding a Security
Deposit in the amount required by this Article 5. In the event that the amount
of the Security Deposit required under this Lease increases pursuant to the
terms of Section 5.1 above and Tenant shall fail to increase the Letter of
Credit as required (or deliver to Landlord a supplemental Letter of Credit
meeting all of the requirements of this Section 5.3 such that the total security
being held by Landlord is equal to the amount of security required by this
Article 5) or else deliver to Landlord the required increased amount by means of
a cash deposit, in each case within the time frame required by this Article 5,
then such failure shall constitute an Event of Default under this Lease and, in
addition to all of Landlord's other rights and remedies available upon an Event
of Default, if the security has been posted in the form of a Letter of Credit as
permitted hereby then Landlord shall have the right to immediately draw the full
amount of the Letter of Credit (it being understood that same shall not operate
to cure such Event of Default).
ARTICLE 6
---------
USE
---
6.1 Subject to Tenant's compliance with Legal Requirements and the
Restrictions (both as hereafter defined), Tenant shall use the Demised Premises
for any and all lawful uses; provided, however, that under no circumstances
shall the Demised Premises or any portion thereof be used for any use that in
Landlord's reasonable judgment would be likely to cause damage to the Demised
Premises or any portion thereof or any equipment, facilities or other systems
therein. Further, neither the Demised Premises nor any portion thereof shall be
used as a massage parlor or establishment for the sale of pornographic
materials. Tenant shall also not use the Demised Premises, nor any portion
thereof, for any unlawful business, use or purpose nor any business, use or
purpose deemed by Landlord (in Landlord's reasonable discretion) to be
disreputable or extra-hazardous. Tenant shall also not use or occupy the Demised
Premises, nor any portion thereof, in violation of any certificate of occupancy,
if any, issued for the Demised Premises. Tenant shall not use or occupy the
Demised Premises nor do or permit anything to be done thereon in any manner that
will cause structural injury to the Demised Premises, or which would constitute
a public or private nuisance, and Tenant agrees not to cause or allow a nuisance
to third parties in respect of the operations at the Demised Premises.
ARTICLE 7
---------
SERVICES AND UTILITIES
----------------------
7.1 Obtaining Utilities. Tenant agrees, at its sole cost and expense,
--------------------
to arrange for the hooking up of, and the connection to, all utilities to the
Demised Premises to the extent that Tenant desires such utility service,
including meters, and Tenant shall directly pay for the use of all such
utilities obtained by Tenant. In the event that any utilities are billed
directly to Landlord, whether sub-metered or otherwise, then and in that event
Tenant shall pay to Landlord immediately upon demand all of such expenses.
Tenant acknowledges that Landlord shall have no responsibility or liability to
Tenant whatsoever for the provision or supply of utilities to the Demised
Premises, or for the cost of any such utilities, all of same being the sole
responsibility of Tenant.
7.2 Interruption of Services and Utilities. Landlord shall not be
---------------------------------------
liable for, and Tenant shall not be entitled to any reduction of the Minimum
Annual Rent or of the Additional Rent on account of Tenant's failure to receive
any utility service on account of accident, breakage, when such failure is
caused by acts of God, war, repairs, strikes, lockouts or other labor
disturbances or disputes, unavailability of materials or labor, or by any other
cause whatsoever, or by rationing or restrictions on the use of said services
and utilities due to energy shortages, war or any other reason, or the making of
repairs, alterations or improvements to the Demised Premises or Building.
Furthermore, Landlord shall not be liable under any circumstances for a loss of,
or injury to, property or for injury to, or interference with, Tenant's
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish or receive
any of the foregoing services or utilities, and Tenant shall not be relieved of
its obligation to pay the full Minimum Annual Rent or any Additional Rent by
reason thereof.
ARTICLE 8
---------
INDEMNITY AND INSURANCE
-----------------------
8.1 Indemnification. Landlord shall not be liable for and Tenant hereby
----------------
relinquishes any claims against Landlord (and the lessor or lessors under all
ground or underlying leases and the holder of any mortgage or deed of trust
encumbering Landlord's interest in the Demised Premises and all of their
shareholders, members, partners, officers, directors, trustees, employees,
agents or representatives (collectively, "Landlord's Affiliates")) for damage to
any property, improvements, fixtures, equipment and/or personal property, and
for any illness or death of any person in, upon, or about the Demised Premises
arising at any time and from any cause whatsoever other than damages proximately
caused by reason of the breach of this Lease by Landlord or the willful
misconduct or gross negligence of Landlord or Landlord's Affiliates. Tenant
shall indemnify, defend, and protect Landlord and Landlord's Affiliates, and
hold Landlord and Landlord's Affiliates harmless from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys' fees) (hereinafter collectively referred to as "Claims")
incurred in connection with or arising from any cause in, on or about the
Demised Premises, including, without limiting the generality of the foregoing
(but specifically excluding Claims arising as the proximate result of the breach
of this Lease by Landlord or the willful misconduct or gross negligence of
Landlord or Landlord's Affiliates): (i) any default by Tenant in the observance
or performance of any of the terms, covenants or conditions of this Lease on
Tenant's part to be observed or performed, (ii) the use or occupancy of the
Demised Premises by any party, (iii) the condition of the Demised Premises or
any occurrence or happening in the Demised Premises from any cause whatsoever
and (iv) any acts, omissions or negligence of any party in, on or about the
Demised Premises, either prior to or during the Lease Term or any extensions
thereof, including, without limitation, any acts, omissions or negligence in the
making or performance of any alterations. Tenant further agrees to indemnify and
save harmless Landlord and Landlord's Affiliates, from and against any and all
Claims incurred in connection with or arising from any claims by any persons by
reason of injury to persons or damage to property occasioned by any use,
occupancy, condition, occurrence, happening, act, omission or negligence
referred to in the preceding sentence or otherwise at, on or about the Demised
Premises (provided such Claims do not arise as a result of the breach of this
Lease by Landlord or the willful misconduct or gross negligence of Landlord or
Landlord's Affiliates). The provisions of this Section 8.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability occurring prior to such expiration or termination. Landlord shall have
the right to undertake, control and conduct, through counsel of its own choosing
and at the sole cost and expense of Tenant, the conduct and settlement of any
Claim giving rise to indemnification hereunder, and the Tenant shall cooperate
with the Landlord in connection therewith.
8.2 Fire, Casualty and Other Insurance. Tenant shall maintain, at its
-----------------------------------
sole cost and expense, (a) insurance with respect to all of the Demised Premises
(including the Building, all other improvements now or hereafter located on any
portion of the Demised Premises and Tenant's personal property and equipment)
against loss or damage by perils customarily included under standard "all-risk"
policies (at a minimum, such policy shall cover the perils insured under the ISO
special causes of loss form CP1030), in amounts sufficient to prevent Tenant or
Landlord from becoming a co-insurer of any partial loss under the applicable
policies and with an actual replacement value endorsement. Tenant shall also
maintain, at its sole cost and expense, separate (or as part of the property
insurance referred to above) (a) explosion insurance in respect of any steam and
pressure boilers and similar apparatus located in the Demised Premises in such
amounts as are usually carried by persons operating similar properties in the
same general locality, but in any event in an amount not less than $10,000,000,
(b) flood and/or earthquake hazard insurance (if required by Landlord in its
good faith determination), (c) worker's compensation and employers liability
insurance to the full extent required by applicable law for all employees of
Tenant engaged in any work on or about the Demised Premises, (d) business
interruption and extra expense insurance in an amount equal to the loss of gross
earnings and rental value and the extra expense that could result from the
cessation of the business conducted by Tenant at the Demised Premises for a
period of at least 12 months due to loss or damage resulting from any of the
risks referred to in the clauses (a) through (d), which business interruption
insurance may be subject to a deductible (or an exclusion) not exceeding the
first five days following each loss, (e) to the extent not already provided for
the direct benefit of Landlord pursuant to (d) above, rental interruption
insurance in an amount equal to the Minimum Annual Rent and the Additional Rent
for a period of at least 12 months due to loss or damage resulting from any of
the risks referred to in the clauses (a) through (d), which rental interruption
insurance may be subject to a deductible (or an exclusion) not exceeding the
first five days following each loss and (f) all-risk builders' risk insurance
with respect to the Demised Premises during any period in which there is any
construction occurring at the Demised Premises, against loss or damage by fire
and such other risks, including vandalism, malicious mischief and sprinkler
leakage, as are included in so-called "extended coverage" clauses at the time
available with respect to similar property, in an amount not less than the value
of the alterations and/or additions made to the Demised Premises when the work
is not insured under Tenant's property insurance. During the Lease Term Tenant
shall also carry and maintain, at Tenant's sole cost and expense, Umbrella
Liability Insurance with a limit no less than $15,000,000, providing excess
coverage over all limits and coverages noted elsewhere herein, written on an
"occurrence" basis.
8.3 Insurance on Tenant's Fixtures and Leasehold Improvements. Tenant
----------------------------------------------------------
shall obtain and maintain throughout the Lease Term, at its sole cost and
expense, a policy or policies of standard fire, extended coverage and special
extended coverage insurance ("All Risks"), including a vandalism and malicious
mischief endorsement, sprinkler leakage coverage and earthquake sprinkler
leakage in an amount equal to the full replacement value new without deduction
for depreciation of all fixtures, furniture and leasehold improvements installed
in the Building and all alterations and additions thereto, and replacement cost
insurance on all plate or tempered glass in or enclosing the Demised Premises.
8.4 Liability Insurance. Tenant shall obtain and maintain throughout
--------------------
the Lease Term, at Tenant's sole cost and expense, comprehensive general
liability insurance, including public liability and property damage insurance in
the amount of no less than Ten Million Dollars ($10,000,000) per occurrence for
personal injuries or deaths of persons occurring in or about the Demised
Premises including a Broad Form Comprehensive General Liability endorsement
covering the performance of Tenant of the indemnity agreements set forth in
Section 8.1 hereof, and no less than Ten Million Dollars ($10,000,000) general
aggregate limit per location.
8.5 Additional Insurance. Tenant shall carry and maintain during the
---------------------
Lease Term, at its sole cost and expense, such other types of insurance coverage
and in such amounts covering the Demised Premises and Tenant's operations
therein, as may be reasonably requested by Landlord or Landlord's lender on the
Demised Premises so long as such other insurance is customarily required to be
carried on similar properties by Institutional Lenders. Tenant shall also be
required to carry and maintain during the Lease Term, at its sole cost and
expense, environmental liability insurance with limits no less than $10,000,000
each incident, covering on-site cleanup of pre-existing conditions, on-site
cleanup of new conditions, third party claims for on-site bodily injury and/or
property damage, third party claims for off-site cleanup resulting from
pre-existing and/or new conditions and third party claims for off-site bodily
injury and/or property damage (such coverage to also specifically include
business interruption, actual loss or rental value). No exclusions shall pertain
to underground or above ground storage tanks known to the Tenant and not
reported to the insurer, and said policy shall be endorsed to name Landlord as
"Additional Insured".
8.6 Form of Policies. The minimum limits of policies of insurance
-----------------
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall: (i) (with respect to the casualty
and liability insurance required to be maintained by Tenant hereunder), name
Landlord and Landlord's lender(s) and ground lessor(s) as additional insureds as
their respective interests may appear, including without limitation one or more
loss payee endorsements on the property insurance in favor of the holders of any
mortgages or deeds of trust encumbering the interest of Landlord in the Demised
Premises or the ground or underlying lessors of the Land, or any portion
thereof, (ii) specifically cover the liability assumed by Tenant under this
Lease, including, but not limited to, Tenant's obligations under Section 8.1 of
this Lease, (iii) be issued by an insurance company having a rating of not less
than 10 in the most current edition of A.M. Best's Property-Casualty Key Rating
Guide or which is otherwise acceptable to Landlord and licensed to do business
in the State in which the Demises Premises is located, (iv) be primary insurance
as to all claims thereunder and that any insurance carried by Landlord is excess
and non-contributing with any insurance requirement of Tenant, (v) provide that
said insurance shall not be cancelled or coverage materially modified unless
thirty (30) days' prior written notice shall have been given by such insurer to
Landlord and any lender or ground lessor of Landlord's of which such insurer
shall have been given notice and address and shall also require such insurer to
deliver notice to Landlord of any non-payment of the applicable insurance
premium, (vi) contain in the liability insurance policy a cross liability
endorsement or severability of interest clause acceptable to Landlord and (vii)
shall not have a deductible in excess of (A) $100,000 with respect to
comprehensive general liability insurance (provided, however, that if and so
long as the Guarantor's Net Worth (as such term is defined in the Guaranty)
shall be equal to or greater than the Minimum Net Worth (as such term is defined
in the Guaranty), then a deductible of $150,000 shall be permitted with respect
to such liability insurance), (B) $250,000 with respect to "all-risk" property
insurance (provided, however, that if and so long as the Guarantor's Net Worth
shall be equal to or greater than the Minimum Net Worth, then a deductible of
$500,000 shall be permitted with respect to such property insurance) and (C)
$25,000 (or such lower amount as may be expressly provided in this Lease with
respect to a particular coverage) with respect to the other insurance coverages
required to be maintained by Tenant under this Lease (or such higher
commercially reasonable deductible amounts as may be acceptable to Landlord
provided such higher deductible is consistent with then-prevailing commercial
practice). Tenant shall, at Tenant's sole cost and expense, comply with all
insurance company requirements pertaining to the Demised Premises. Tenant, at
Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body. Landlord shall be entitled from
time to time to increase any or all of the minimum insurance coverages provided
for in this Lease to such higher amounts as Landlord shall deem, in its
reasonable determination consistent with then-prevailing commercial practice, to
be appropriate. Tenant shall have the right to provide insurance coverage for
which it is obligated pursuant to Article 8 in a blanket policy, provided such
blanket policy expressly affords coverage in the Demised Premises and to
Landlord (and Landlord's lender, if any) as required herein and that such
coverage shall be property specific and shall not be limited in amount by claims
at other properties under such blanket insurance policy.
8.7 Subrogation. Tenant agrees to waive any right it may have against
------------
Landlord by way of subrogation and shall obtain a waiver from its respective
insurance company(ies) of any rights of subrogation that such company(ies) may
have against Landlord. In the event that Landlord shall, in its sole discretion,
elect to obtain insurance coverage(s) in respect of the Demised Premises (it
being acknowledged and understood that Landlord is not obligated to obtain any
such insurance), then in that event Landlord shall waive any right it may have
against Tenant by way of subrogation and shall obtain a waiver from its
insurance company(ies) of any rights of subrogation that such company(ies) may
have against Tenant.
8.8 Delivery of Policies, etc. Tenant will deliver, or cause to be
--------------------------
delivered, to Landlord, on or before the Lease Commencement Date and no later
than 30 days prior to the expiration of any policy, a binder or certificate of
the insurer evidencing the replacement thereof and not later than 15 days prior
to the expiration of such policy, (a) at the written request of Landlord, the
original or true copies of all policies evidencing all insurance required to be
maintained under this Article 8 and (b) at the written request of Landlord,
evidence as to the payment of all premiums due thereon (with respect to public
liability insurance policies, all installments for the current year due thereon
to such date), provided that Landlord shall not be deemed by reason of its
custody of such policies to have knowledge of the contents thereof. No more
often than two (2) times per calendar year, Tenant will also deliver to
Landlord, promptly upon written request, a certificate of Tenant certifying that
the particulars of all such insurance policies comply with the requirements of
this Section, that all premiums due thereon have been paid and that the same are
in full force and effect. In the event Tenant shall fail to effect or maintain
any insurance required to be effected or maintained pursuant to the provisions
of this Article 8, Landlord shall have the right, but not the obligation, to
obtain any such insurance and any reasonable amount expended by Landlord shall
be deemed Additional Rent under this Lease and shall immediately be due and
payable by Tenant within five (5) days after delivery to Tenant of a bill
therefor, and same shall be without prejudice to Landlord's rights and remedies
in respect of such default.
8.9 Separate Insurance. Tenant will not take out separate insurance
-------------------
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Article 8.
ARTICLE 9
---------
TENANT IMPROVEMENTS/ALTERATIONS
-------------------------------
9.1 Improvements. A. Landlord agrees that Tenant may (at Tenant's own
-------------
cost and expense and after giving Landlord at least ten (10) days' prior notice
in writing of its intention to do so, including with such notice a copy of any
and all plans, specifications and working drawings therefor) make such
improvements, alterations, additions, and changes in and to the interior of the
Demised Premises (except those of a structural nature and except for
construction of additional buildings and improvements at the Demised Premises,
which shall require Landlord's prior written consent as herein required) as it
may find necessary or convenient for its purposes, provided that the value,
residual value, utility or remaining useful life of the Demised Premises is not
thereby diminished. If Tenant's actions are otherwise in compliance with this
Article 9, all improvements, fixtures and/or equipment which Tenant may install
or place in or about the Demised Premises, and all improvements, alterations,
repairs or changes to the Demised Premises, and all signs installed in, on or
about the Demised Premises, from time to time, shall be at the sole cost of
Tenant and shall be and become the property of Landlord (without lien or lease
thereon). Landlord shall be without any obligation in connection therewith.
Tenant hereby indemnifies and holds Landlord and Landlord's Affiliates harmless
from any liability, cost, obligation, expense or claim of lien in any manner
relating to the installation, placement, removal or financing of any such
improvements, additional building(s), alterations, repairs, changes,
improvements, fixtures, personal property, trade fixtures and/or equipment in,
on or about the Demised Premises. Any other improvements, alterations,
additions, redecorations and changes to the Demised Premises not expressly
permitted by this Article 9.1 shall be made by Tenant only with the prior
written consent of Landlord, and if consented to by Landlord shall be made by
Tenant subject to all of the terms and provisions of this Lease including the
terms and provisions of this Article 9. To the extent reasonably requested by
Tenant, Landlord shall cooperate with Tenant in securing any required permits or
approvals in connection with any proposed alteration permitted by this Article
9, provided and on the condition that such cooperation be at no cost or expense
to Landlord.
B. Tenant has no authority or power to cause or permit any
lien or encumbrance of any kind whatsoever (including a lease or license),
whether created by act of Tenant, operation of law or otherwise, to attach to or
be placed upon the Land, the Building or the Demised Premises or any portion
thereof, and any and all liens and encumbrances created by Tenant shall attach
to Tenant's interest only. Landlord shall have the right at all times to post
and keep posted on the Demises Premises a "notice of non-responsibility" or
similar notice if an to the extent Landlord deems same necessary for protection
from such liens. Tenant covenants and agrees not to suffer or permit any lien of
creditors, mechanics or materialmen or others to be placed against the Land, the
Building or the Demised Premises with respect to work, product or services
claimed to have been performed for or materials claimed to have been furnished
to Tenant or the Demised Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be promptly
released and removed of record (or bonded, if Tenant in good faith is disputing
the validity or amount of the lien and provided Landlord is not subjected to
potential liability of any kind during the prosecution of Tenant's contest) as
soon as reasonably practicable. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not so released and removed
(or bonded), Landlord, at its sole option, may immediately take all action
necessary to release and remove (or bond) such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
attorneys' fees and costs, incurred by Landlord in connection with such lien
shall be deemed Additional Rent under this Lease and shall immediately be due
and payable by Tenant and same shall be without prejudice to Landlord's rights
and remedies in respect of such default.
9.2 Tenant shall construct any such improvements, alterations
or repairs in a first class and in a good and workmanlike manner using proper
materials and workmanship as may then be customary for facilities similar to the
Demised Premises in the metropolitan area including the Demised Premises, and in
conformance with any and all applicable laws, rules and regulations of any
federal, state, county or municipal code or ordinance and pursuant to a valid
building permit, issued by the applicable governmental jurisdiction. In the
event Tenant orders any construction, alteration, decorating or repair work
directly from Landlord, the charges for such work shall be deemed Additional
Rent under this Lease, payable upon billing therefor, either periodically during
construction or upon the substantial completion of such work, at Landlord's
option. All work with respect to any alterations, additions or changes must be
done in a good and workmanlike manner and diligently prosecuted to completion to
the end that the Demised Premises shall at all times be a complete unit except
during the period of work. Upon completion of any improvements, alterations,
additions or changes, Tenant agrees to cause a notice of completion or its
equivalent to be properly recorded and Tenant shall deliver to Landlord a copy
of the "as built" drawings of the improvements. Any such alterations, additions
or changes shall be performed and done strictly in accordance with the laws and
ordinances relating thereto.
9.3 Construction Insurance. In the event that Tenant shall make any
-----------------------
permitted improvements, alterations, additions or changes to the Demised
Premises, in compliance with the terms and provisions of this Article 9, Tenant
agrees to carry "Builder's All Risk" insurance in an appropriate amount covering
the construction of such improvements, alterations, additions or changes, it
being understood and agreed that all of such improvements, alterations,
additions or changes shall be insured by Tenant pursuant to Article 8 of this
Lease. In addition, Landlord may, in its discretion, require Tenant to obtain a
lien and completion bond or some alternate form of security satisfactory to
Landlord in an amount to ensure the lien-free completion of such improvements,
alterations, additions or changes.
ARTICLE 10
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SIGNS
-----
10.1 Subject to (i) Tenant's receipt of any and all necessary approvals
of governmental authorities having jurisdiction over the Demised Premises, and
(ii) the terms covenants and conditions of any covenants, conditions and
restrictions and/or reciprocal easement agreements which encumber the Demised
Premises or any portion thereof, Tenant may install identification signage on
the interior or exterior portions of the Demised Premises. Landlord hereby
acknowledges the existence of the existing signage at the Demised Premises as of
the date hereof (it being understood and acknowledged that Landlord expresses no
opinion relating to the compliance of such existing signage with applicable laws
and regulations of applicable governmental authorities, such compliance being
the sole responsibility of Tenant). Except for customary "to rent", "for lease"
and similar signage, which Landlord may display on or about the exterior of the
Demised Premises during the six month period prior to the expiration of this
Lease, Landlord shall not erect or maintain any signage on either the exterior
or the interior of the Demised Premises.
10.2 Tenant shall be solely responsible for maintaining (and,
if and to the extent Tenant desires to replace same, then Tenant shall be solely
responsible for replacing) any and all interior and/or exterior signage on the
Demised Premises, at Tenant's sole cost and expense.
ARTICLE 11
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ASSIGNMENT AND SUBLETTING
-------------------------
11.1 Restrictions. Tenant shall not transfer, assign, sublet, mortgage
-------------
(except for the leasehold mortgage encumbering Tenant's interest in this Lease
as of the date hereof and any amendments, refinancings or replacements thereof),
license, grant a concession or otherwise hypothecate or encumber this Lease, or
Tenant's interest in and to the Demised Premises (collectively, a "Transfer"),
without first obtaining the Landlord's written consent thereto, such consent not
to be unreasonably withheld by Landlord. Any such attempted or purported
Transfer without Landlord's prior written consent shall be void and of no force
or effect and shall constitute a default under this Lease. For purposes of this
Lease, Transfer shall be deemed to include a change in control of Tenant or the
transfer in the aggregate of more than 40% of the equity interests in Tenant.
Notwithstanding the foregoing, the transfer of equity interests in Tenant (or in
an entity that is an indirect owner of interests in Tenant) (i) to an entity
that, pursuant to Section 8 of the Guaranty, is permitted to acquire equity
interests in Guarantor or (ii) to an entity that controls Tenant, is controlled
by Tenant or is under common control with Tenant) shall be excluded from the
definition of "Transfer" for purposes of this Section 11.1. For purposes of this
Section 11.1, "control" shall mean the power or authority to direct management
policies.
11.2 Procedure for Transfer. Should Tenant desire to make a Transfer
-----------------------
hereunder, Tenant shall, in each instance, give written notice of its intention
to do so to Landlord at least thirty (30) days prior to the effective date of
any such proposed Transfer, specifying in such notice the details of the
proposed Transfer transaction and the proposed date thereof, and specifically
identifying the proposed transferee. Such notice shall be accompanied, in the
case of a subletting, license or assignment, by a copy of the proposed sublease,
license, assignment or similar agreement and any other documents or financial
information Landlord may require in order to make a determination as to the
proposed Transfer. Landlord shall, within fifteen (15) days after its receipt of
such notice of a proposed Transfer from Tenant, give written notice to Tenant of
Landlord's election pursuant to Section 11.1 of this Lease to either (i)
withhold consent to the Transfer or (ii) consent to such Transfer, but if
Landlord shall fail to timely send its determination, then Landlord shall be
deemed to have rejected the proposed Transfer.
11.3 Effect of a Transfer. The transferee shall agree to comply with
---------------------
and be bound by and shall assume all of the terms, covenants, conditions,
provisions and agreements of this Lease to the extent of the space transferred,
assigned or sublet; and Tenant shall deliver to Landlord promptly after
execution an executed copy of each such Transfer document and an agreement of
compliance by the transferee. No Transfer of this Lease or agreement entered
into with respect thereto, whether with or without Landlord's consent, shall
relieve Tenant from its primary liability under this Lease, which shall continue
in full force and effect notwithstanding any such Transfer.
11.4 Required Documents. Each Transfer to which Landlord has consented
-------------------
shall be evidenced by a written instrument in form reasonably satisfactory to
Landlord, executed by Tenant and the transferee, under which the Transferee
shall agree in writing for the benefit of Landlord to assume, to perform and to
abide by all of the terms, covenants and conditions of this Lease to be done,
kept and performed by Tenant, including the payment of all amounts due or to
become due under this Lease directly to Landlord and the obligation to use the
Demised Premises only for the purposes specified in this Lease. Tenant agrees to
reimburse Landlord for Landlord's reasonable out-of-pocket attorneys fees
incurred in conjunction with the processing of and documentation for each such
requested Transfer, whether or not the Transfer is consummated.
11.5 Assignment of Subleases, etc. In the event of a sublet, license or
-----------------------------
grant of a concession to all or any portion of the Demised Premises, such
sublet, license or grant shall be deemed pledged to Landlord and Tenant hereby
assigns to Landlord all its right, title and interest as landlord under any such
sublease, license or concession agreement now existing or hereafter entered
into, and all rents and other sums payable to Tenant under each such agreement,
together with the right to collect and receive the same; provided that, if and
so long as no default beyond applicable notice and/or cure period shall have
occurred under this Lease, Tenant shall be permitted to exercise its rights and
perform its obligations as landlord under such agreements and to collect and
receive such rents and other sums for its own uses and purposes. Upon the
occurrence of a default beyond applicable notice and/or cure period, such
permission shall automatically terminate. Such assignment shall be fully
operative without any further action on the part of either party hereto, and
Landlord shall be entitled, at its option, upon the occurrence of a default
beyond applicable notice and/or cure period hereunder, to all rents, income and
other benefits from the Demised Premises whether or not Landlord takes
possession of the Demised Premises. All actions or collections by Landlord
pursuant to this Section 11.5 shall be without prejudice to its other rights and
remedies on account of any default beyond applicable notice and/or cure period
of Tenant.
ARTICLE 12
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REPAIRS AND MAINTENANCE
-----------------------
Tenant agrees that Landlord shall have no obligation
whatsoever in respect of the repair, operation, maintenance, compliance and/or
replacement of the Demised Premises and it is Tenant's obligation, at Tenant's
sole cost and expense, to repair, operate, maintain and/or replace all and every
part of the Demised Premises. In particular, without implied limitation:
12.1 Tenant shall, at its sole cost and expense, continuously
cause the repair, maintenance, operation and/or replacement of the Demised
Premises to keep same in good and first-class order and repair and in such a
fashion that the value and utility of the Demised Premises will not be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be at least equal in quality and class to the original Improvements.
Tenant's obligation to repair shall include the obligation to rebuild in the
event of destruction however caused. Neither the Minimum Annual Rent or any
Additional Rent shall be reduced and Landlord shall not be liable under any
circumstances for a loss of or injury to property, loss of profits, or for
injury to or interference with Tenant's business arising from or in connection
with the condition of the Demised Premises (including without limitation due to
latent defects) or by virtue of Tenant's failure to make any repairs,
maintenance, alterations or improvements in or to any portion of the Demised
Premises or in or to fixtures, appurtenances and equipment therein. Tenant
hereby irrevocably waives and releases its right to make repairs at Landlord's
expense under any applicable law, statute, or ordinance now or hereafter in
effect.
12.2 Tenant shall keep the Demised Premises in good and
sanitary condition and repair at Tenant's sole cost and expense including,
without limitation, snow removal, painting and repainting, cleaning and rubbish
removal. Should any law, standard or regulation now or hereafter be imposed on
Landlord or Tenant by a state, federal or local governmental body charged with
the establishment, regulation and enforcement of occupational, health or safety
standards for employers, employees, landlords or tenants, then Tenant agrees, at
its sole cost and expense, to comply promptly with such laws, standards or
regulations.
12.3 Tenant acknowledges and agrees that Landlord has never
occupied or operated at the Demised Premises and that Landlord acquired the
Demised Premises directly from Tenant and Tenant hereby agrees to undertake all
of the maintenance, repair, compliance and replacement responsibilities at the
Demised Premises regardless of how or when such responsibilities arise or arose.
ARTICLE 13
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DAMAGE OR DESTRUCTION
---------------------
13.1 Tenant to Reconstruct. Tenant shall promptly notify Landlord if
----------------------
all or any portion of the Demised Premises shall be damaged by casualty
resulting from fire or any other cause. If, at any time during the Lease Term,
any portion of the Demised Premises is damaged by fire or other cause, Tenant
shall, at its sole cost and expense (and regardless or whether or not insured in
whole or part), forthwith repair and/or replace the Demised Premises in
compliance with Article 9 above and in any event shall complete same within one
hundred twenty (120) days after the later to occur of (i) Landlord's written
approval of the plans, specifications and working drawings therefor and (ii) the
receipt of all applicable building permits (and Tenant covenants to use
diligence to obtain such building permits as promptly as reasonably possible).
Except as expressly set forth in Section 13.3 below, in no event shall this
Lease terminate, and this Lease shall remain in full force and effect without
any reduction in the Minimum Annual Rent and Additional Rent. In no event shall
Landlord be required to repair any injury or damage to or to make any repairs or
replacements of any alterations or any other improvements installed at the
Demised Premises by or for Tenant, and Tenant shall, at Tenant's sole cost and
expense, repair and restore all Tenant's improvements and all other alterations
and improvements in the same condition existing immediately prior to such event.
In connection with such repairs and replacements Tenant shall submit to
Landlord, for Landlord's review and prior written approval, all plans,
specifications and working drawings relating thereto. Tenant shall not be
entitled to any compensation or damages from Landlord for damage to any of
Tenant's improvements, alterations, fixtures, or Tenant's other property, for
loss of use of the Demised Premises or any part thereof, or for any damage to or
interference with Tenant's business, loss of profits, or for any disturbance to
Tenant caused by any casualty or the restoration of the Demised Premises
following such casualty or other cause. All such restoration shall be performed
by Tenant in accordance with all of the requirements of this Lease including,
without limitation, Article 9 hereof.
13.2 Waiver of Statutory Provisions. The provisions of this Lease,
-------------------------------
including this Article 13, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Demised Premises, and any applicable statute or regulation with respect
to any rights or obligations concerning damage or destruction in the absence of
an express agreement between the parties, and any other statute or regulation,
now or hereafter in effect, shall have no application to this Lease or any
damage or destruction to all or any part of the Demised Premises.
13.3 Insurance Proceeds. A. All insurance proceeds shall be and are the
-------------------
property of Landlord and shall be paid to Landlord (or its lender(s) or ground
lessor(s) if so required). If Tenant shall come into possession of any insurance
proceeds same shall be deemed to be held in trust for Landlord and shall
immediately be transferred to Landlord. Except as expressly set forth in Section
13.3 D below, it shall be at Landlord's (and any lender's and ground lessor's)
sole discretion to make insurance proceeds, if any, and net of any collection or
adjustment costs available to Tenant for the restoration. If Landlord (and its
lender(s) and ground lessor(s)) shall determine to make the net insurance
proceeds available to Tenant for restoration, then same shall be disbursed to
Tenant or at Landlord's option directly to third party contractors in
reimbursement of the costs of such restoration in accordance with Landlord's
"construction loan" procedures requiring, among other things, that disbursements
of insurance proceeds are made only upon satisfaction of the following
conditions: (i) prior to commencement of restoration, the architects, contracts,
contractors, plans and specifications for the restoration work shall have been
approved in advance in writing by Landlord, (ii) the restoration work on the
Demised Premises for which such disbursement request is made shall have been
completed in accordance with the plans and specifications previously approved by
Landlord (and, with respect to the final disbursement request made upon
completion in full of the restoration of the Demised Premises, all applicable
governmental approvals such as, but not limited to, a final certificate of
occupancy shall have been received), and Landlord shall have received an
architect's certification satisfactory to Landlord certifying as to same, (iii)
Landlord shall have received a certificate from Tenant, signed by an authorized
officer of Tenant, describing the completed work for which payment is requested,
stating the cost incurred in connection therewith and stating that Tenant has
not previously received payment for such work and, with respect to the final
disbursement request made upon completion in full of the restoration of the
Demised Premises, further stating that all restoration work has been completed
in accordance with this Lease and in compliance with all applicable law, (iv)
the receipt by Landlord, at Tenant's sole cost and expense, of such lien waivers
and title "bring down" endorsements as Landlord shall require as well as such
documentation (such as receipted invoices and bills) and other evidence
reasonably required by Landlord to confirm the amounts requested in the
disbursement request and to verify that the amounts disbursed from time to time
are represented by work that is completed in place and free and clear of
mechanics' lien claims, (v) with respect to the final disbursement request upon
completion in full of the restoration of the Demised Premises, Tenant shall have
resumed full operations at the Demised Premises and (vi) no default exists under
the Lease and no mechanics' or materialmen's liens shall have been filed and
remain undischarged. A ten percent (10%) retainage will be made from each
disbursement of proceeds, which will be disbursed upon the final completion of
the restoration of the Demised Premises, a final inspection by Landlord and
receipt of all applicable permits and a permanent certificate of occupancy.
Disbursements, if made, shall be made only to the extent of the actual and
reasonable third party expenses of Tenant incurred in connection with such
restoration as reasonably established to Landlord's satisfaction; provided that
(x) no disbursements shall be made in respect of the restoration of Tenant's
personalty, (y) any excess net insurance proceeds shall be retained by Landlord
without rent abatement or credit and (z) Tenant shall be responsible for any
excess cost of restoration over the amount of net insurance proceeds, regardless
of the amount of such excess cost.
B. In the event that the destruction or damage is not
covered in whole or in part by insurance, Tenant shall nonetheless be
responsible, at its sole cost and expense, to repair and/or replace the Demised
Premises as required by this Article 13. Prior to the commencement of the
restoration and at any time during the prosecution of same, if the estimated
cost of restoration as reasonably determined by Landlord or Landlord's mortgagee
exceeds the amount of proceeds available for restoration, then the excess
required (including the amount of any insurance deductible) shall be paid by
Tenant to Landlord to be added to the proceeds prior to any further
disbursement.
C. In the event that Landlord or Landlord's lender shall
determine not to make the net insurance proceeds available to Tenant (other than
as a result of the failure by Tenant to comply with any of the provisions of
Section 13.3A above, including without limitation any conditions to disbursement
set forth in such Section, in which event the provisions of this Section 13.3C
shall be inapplicable), then in such event and in such event only, this Lease
shall terminate effective as of the later to occur of the cessation of
operations of Tenant at the Demised Premises or the date of the applicable
casualty. If the Lease shall be so terminated, Landlord shall retain all
insurance proceeds and Tenant shall pay to Landlord all Minimum Annual Rent and
all Additional Rent through the date of termination.
D. Notwithstanding the provisions of Section 13.3 A above, if
Landlord reasonably determines that all of the conditions described in (i)
through (vi) below in this Section 13.3 D have been satisfied, then Landlord
shall first apply the insurance proceeds to Landlord's costs incurred in the
collection thereof, and then, subject to the terms and conditions set forth in
this Article 13, the balance of such proceeds shall be disbursed in connection
with such restoration in accordance with the procedures set forth in Section
13.3 A above. Such insurance proceeds shall be so disbursed only if, and so long
as, Landlord reasonably determines as follows: (i) the restoration can be (and
is being) effected with due diligence and is on schedule to be completed within
the time frames provided in this Article 13, in a good and workmanlike manner
and in compliance with all legal requirements and insurance requirements and in
compliance with all terms and conditions of this Article 13; (ii) the Demised
Premises are capable of being restored (and the then-applicable zoning and other
legal requirements permit the restoration of the Demised Premises) to
substantially the value, condition and quality existing immediately prior to
such damage or destruction and such restoration can be completed at least (X)
two years prior to the scheduled expiration date of this Lease if the amount of
insurance proceeds available as a result of the applicable destruction or damage
is $10,000,000 or less and (Y) five years prior to the scheduled expiration date
of this Lease if the amount of the insurance proceeds available as a result of
the applicable destruction or damage exceeds $10,000,000 (with it being
understood and agreed that Tenant may satisfy this requirement by its
irrevocable written notice of its exercise of any then-remaining option to
extend the Lease Term, which written notice must be delivered to Landlord within
ten days after the occurrence of the applicable destruction or damage
notwithstanding the time periods for exercise of such options to extend the
Lease Term set forth in Section 3.2.1 above); (iii) no Event of Default shall
have occurred and remain uncured; (iv) sufficient insurance proceeds (as same
may have been supplemented by Tenant as provided in 13.3 B above) are available
to enable Tenant to complete the restoration; (v) Tenant shall have the ability
to pay and shall pay all Minimum Annual Rent, Additional Rent and other charges
due under this Lease during the period of restoration and (vi) the Guarantor
shall then have a Net Worth (as such term is defined in the Guaranty) equal to
or greater than the Minimum Net Worth (as such term is defined in the Guaranty).
Under no circumstances shall Landlord be obligated to take any action to restore
any portion of the Demised Premises. Landlord and its officers, employees and
agents may inspect the Demised Premises from time to time as restoration
progresses to determine Tenant's compliance with this Article 13.
13.4 Landlord's Fees. Tenant shall promptly reimburse Landlord (and
----------------
Landlord shall be entitled to reimburse itself directly out of the net insurance
proceeds) for any costs incurred by Landlord in connection with reviewing plans,
specifications and working drawings in connection with a casualty or other
damage and/or the restoration necessitated thereby.
ARTICLE 14
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DEFAULTS; REMEDIES
------------------
14.1 Events of Default. The occurrence of any of the following
------------------
shall constitute an "Event of Default" by Tenant:
14.1.1 Any failure by Tenant to pay when due any installment of Minimum
Annual Rent, Additional Rent, and/or any other charge required to be paid
under this Lease, or any part thereof, and such default continues for five
(5) days after written notice from Landlord of such Event of Default (with
it being understood and agreed that Landlord shall have no obligation to
deliver such written notice more than two (2) times in any calendar year,
and in the event Landlord shall have delivered such written notice twice in
any calendar year, then for the balance of such calendar year, Tenant's
failure to pay all or any portion of any installment of Minimum Annual
Rent, Additional Rent, and/or any other charge required to be paid under
this Lease within five (5) days after same is due shall constitute an Event
of Default without further notice from Landlord); or
14.1.2 Excluding the provisions of Article 8, Section 11.1 and
Article 13 hereof, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed
by Tenant where such failure continues for twenty (20) days after written
notice thereof from Landlord to Tenant; provided that if the nature of such
default is such that the same cannot reasonably be cured within a
twenty-day period, Tenant shall not be deemed to be in default if it shall
promptly commence such cure within such period and thereafter rectify and
cure said default with due diligence within sixty (60) days after such
written notice; or
14.1.3 Any failure by Tenant to timely and properly perform (a) its
material obligations under Article 8 (with it being understood and agreed
that any failure by Tenant to maintain in full force and effect any of the
insurance policies and coverages substantially in accordance with the terms
of such Article 8 shall constitute a failure by Tenant to perform a
material obligation thereunder), (b) its obligations under Article 13
within the specific time frames and taking into account the specific notice
and/or cure periods, if any, contained in such Article 13 (and in the
absence of a specific time frame and/or notice and cure period in Article
13, then the provisions of Section 14.1.2 shall control) and/or (c) its
obligations under Section 11.1, in each case in accordance with their
respective terms; or
14.1.4 To the extent permitted by law, a general assignment by Tenant
or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency
or bankruptcy law, unless in the case of an involuntary proceeding filed
against Tenant or any guarantor the same is dismissed within ninety (90)
days, or the appointment of a trustee or receiver to take possession of all
or substantially all of the assets of Tenant or any guarantor, unless
possession is restored to Tenant or such guarantor within ninety (90) days,
or any execution or other judicially authorized seizure of all or
substantially all of Tenant's assets located upon the Demised Premises or
of Tenant's interest in this Lease.
14.2 Remedies Upon Event of Default.
-------------------------------
Upon the occurrence of any Event of Default by Tenant,
Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies (each and all of which shall be cumulative and
nonexclusive, it being agreed that the mention in this Lease of any
specific remedy shall in no way limit Landlord's right to pursue any one or
more remedies available at law or in equity) without any notice or demand
whatsoever:
14.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Demised Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Demised Premises and expel or remove Tenant and any other person who may be
occupying the Demised Premises or any part thereof, without being liable
for prosecution or any claim or damages therefor, and Landlord may recover
from Tenant the following:
(i) Landlord shall be entitled to receive from
Tenant, and Tenant covenants and agrees to pay to Landlord,
the difference between (A) the total amount of Minimum Annual Rent that remains
to be paid for the balance of the Lease Term then in effect immediately prior to
the termination of this Lease and (B) the actual rent, if any, (net of
collection, brokerage, concession and renovation costs therefor) actually
collected by Landlord pursuant to any new lease, if any, that Landlord may have
obtained at the time of the termination of this Lease and for the entire
remaining balance of the Lease Term then in effect. If the foregoing calculation
results in a negative number no payment shall be due from Tenant hereunder, and
in no event shall Tenant be entitled to any sums from Landlord. Landlord shall
be under no obligation or liability to attempt to mitigate its damages and to
the extent that Landlord shall attempt to relet all or any portion of the
Demised Premises Landlord shall not be liable for its inability to effect such a
reletting or even if a reletting shall occur for its failure to collect all or
any portion of the rents provided for in such reletting.
(ii) All sums due from Tenant to Landlord as
calculated in this Section 14.2.1 shall be paid by the wire transfer of
immediately available funds within five (5) business days after the
good faith determination by Landlord of the amount due pursuant to (i) above.
14.2.2 If Landlord does not elect to terminate this Lease on
account of any default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies under this Lease,
including, but not limited to, (i) the right to recover all rent as it becomes
due, (ii) the right to re-enter the Demised Premises, and (iii) the right to
re-let the Demised Premises or any portion thereof from time to time without
terminating this Lease. Any such reletting may be on such terms and conditions
including, but not limited to, the term thereof and the rent to be paid
thereunder, as Landlord may determine in its sole discretion. Any rents received
by Landlord during such reletting shall be applied first, to any and all costs
incurred by Landlord in connection with such reletting including, but not
limited to, brokerage commissions, construction costs and professional fees,
second, to all sums due or which become due from Tenant to Landlord hereunder,
and any remaining sums shall be held by Landlord to be applied in the future
against any rent and all other charges which be come due hereunder. If the rent
and other sums received by Landlord as a result of such reletting during any
month are less than the amounts Landlord was to receive from Tenant hereunder
during that month, Tenant shall immediately pay any such deficiency to Landlord
by the wire transfer of immediately available funds. Such deficiency shall be
calculated and paid on a monthly basis. During any reletting term, Tenant shall
be deemed to have voluntarily surrendered possession of the Premises to Landlord
so that Landlord will be permitted to give any new tenant from time to time full
and unencumbered use, occupancy and possession of the Demised Premises, all
without any rights of possession or interference from Tenant.
14.2.3 Whether or not Landlord elects to terminate this Lease
on account of any Event of Default by Tenant, Landlord shall have the right,
upon the occurrence of an Event of Default, to terminate any and all subleases,
licenses, concessions or other consensual arrangements for possession entered
into by Tenant and affecting the Demised Premises or may, in Landlord's sole
discretion, succeed to Tenant's interest in any or all (at Landlord's
discretion) such subleases, licenses, concessions or arrangements.
14.3 Form of Payment After Default. Following the occurrence of an
------------------------------
Event of Default by Tenant, Landlord shall have the right to require that any or
all subsequent amounts to be paid by Tenant to Landlord hereunder, whether in
the cure of the default in question or otherwise, be paid in the form of cash,
money order, cashier's or certified check drawn on an institution acceptable to
Landlord, or by other means approved by Landlord, notwithstanding any prior
practice of accepting payments in any different form.
14.4 Waiver of Default.No waiver by Landlord of any violation or breach
-----------------
of any of the terms, provisions and covenants herein contained shall be deemed
or construed to constitute a waiver of any other or later violation or breach of
the same or any other of the terms, provisions, and covenants herein contained.
Forbearance by Landlord in enforcement of one or more of the remedies herein
provided upon an Event of Default shall not be deemed or construed to constitute
a waiver of same. The acceptance of any rent hereunder by Landlord following the
occurrence of any default, whether or not known to Landlord, shall not be deemed
a waiver of any such default. Landlord shall be free to accept checks from or on
behalf of Tenant without prejudice to Landlord's rights and remedies and no
special endorsement or notation on any check shall in any manner be binding on
Landlord and Landlord shall be free to accept such checks without prejudice to
Landlord's rights and remedies.
14.5 Efforts to Relet. For the purposes of this Article 14, Tenant's
-----------------
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Demised Premises, by its acts of maintenance or
preservation with respect to the Demised Premises, or by appointment of a
receiver to protect Landlord's interests hereunder. The foregoing enumeration is
not exhaustive, but merely illustrative of acts which may be performed by
Landlord without terminating Tenant's right to possession.
ARTICLE 15
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DEFAULT BY LANDLORD
-------------------
15.1. Landlord Defaults. Tenant agrees that Landlord shall not be in
------------------
default hereunder unless Landlord fails to perform the obligations, if any,
required of Landlord within thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Demised Premises and to any ground lessor, whose name and address shall have
theretofore been furnished to Tenant, in writing specifying wherein Landlord has
failed to perform such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such 30-day period and thereafter diligently prosecutes the
same to completion within one hundred twenty (120) days thereafter. In no event
shall Tenant have the right to terminate this Lease as a result of Landlord's
default, and Tenant's sole remedy shall be to effect the cure of such default
itself and then bring separate action for reimbursement of its actual third
party costs from Landlord with it being expressly understood (i) Tenant shall in
no event be entitled to a rent abatement, credit or offset and (ii) Landlord
shall in no circumstance whatsoever be liable to Tenant for consequential
damages. Nothing herein contained shall be interpreted to mean that Tenant is
excused from paying rent due hereunder as a result of any default by Landlord.
15.2 Waiver of Default. No waiver by Tenant of any violation or breach
------------------
by Landlord of any of the terms, provisions and covenants herein contained to be
performed by Landlord shall be deemed or construed to constitute a waiver of any
other or later violation or breach of the same or any other of the terms,
provisions, and covenants herein contained. Forbearance by Tenant in enforcement
of one or more of the remedies herein provided upon a default by Landlord beyond
applicable notice and/or cure period shall not be deemed or construed to
constitute a waiver of same.
ARTICLE 16
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EMINENT DOMAIN
--------------
16.1 Permanent Taking. A. If all or substantially all (i.e., so much of
-----------------
the Demised Premises such that Tenant thereafter is no longer reasonably able to
conduct its business operations at the Demised Premises) of the Demised Premises
is taken under power of eminent domain or sold, transferred or conveyed in lieu
thereof, either Landlord or Tenant shall have the right to terminate this Lease
as of the earliest of the date of vesting of title or the date possession is
taken by the condemning authority; such right shall be exercised by the giving
of written notice to the other party on or before said date. In either of such
events, Landlord shall receive the entire award which may be made in such taking
or condemnation, and Tenant hereby assigns to Landlord any and all rights of
Tenant now or hereafter arising in or to the same whether or not attributable to
the value of the unexpired portion of this Lease; provided, however, that
nothing contained herein shall be deemed to give Landlord any interest in or to
require Tenant to assign to Landlord any award made to Tenant solely for
Tenant's moving expenses, or the taking of the unamortized or the undepreciated
value of Tenant's personal property, or that portion of the unamortized or
undepreciated portion of Tenant's improvements, which were not purchased with
any funds from a tenant improvement allowance supplied by Landlord.
B. In the event of any other taking or a sale, transfer, or
conveyance in lieu thereof (each a "Taking"), or if this Lease is not terminated
by Landlord or Tenant as provided above, then this Lease shall continue in full
force and effect in respect of the remaining portion of the Demised Premises,
then Tenant shall promptly restore the balance of the Demised Premises remaining
after such Taking as set forth in Section 16.2 below, and there shall be no
reduction in Minimum Annual Rent, Additional Rent and/or any other charge
payable hereunder. If the Lease is not terminated, then any net condemnation
proceeds (subject to the consent of its lender(s) and ground lessor(s)), shall
be made available to Tenant and shall be disbursed to Tenant in reimbursement of
the final costs of any reasonable restoration needed due to such Taking but (i)
only upon the completion in full of the restoration of the Demised Premises and
the receipt of all applicable governmental approvals such as, but not limited
to, a final certificate of occupancy, (ii) only upon receipt of an architect's
certification satisfactory to Landlord that the restoration has been completed
in accordance with the plans and specifications therefor previously approved by
Landlord, (iii) only upon the production of such lien waivers and title
endorsements as Landlord shall require, (iv) only after such time as Tenant has
resumed full operations at the Demised Premises, (v) only if there shall be no
default under the Lease and (vi) only to the extent of the actual and reasonable
third party expenses of Tenant incurred with such restoration as reasonably
established to Landlord; provided that (x) no disbursements shall be made in
respect of the restoration of Tenant's personalty, and (y) Tenant shall be
responsible for any excess cost of restoration over the amount of net
condemnation proceeds, if any, regardless of the amount of such excess cost.
16.2 Tenant to Reconstruct. Tenant shall, at its sole cost and
----------------------
expense (and regardless or whether or not covered by condemnation proceeds in
whole or part), forthwith repair and/or replace the Demised Premises to as close
to its original condition as is possible following a Taking and shall complete
same within a reasonable period of time taking into account the degree of the
Taking and the amount of the restoration required, but in all events within two
hundred seventy (270) days of such Taking. In no event shall Landlord be
required to repair any injury or damage or to make any repairs or replacements.
In connection with such repairs and replacements Tenant shall submit to
Landlord, for Landlord's review and prior written approval, all plans,
specifications and working drawings relating thereto. Tenant shall not be
entitled to any compensation or damages from Landlord for damage to any of
Tenant's improvements, alterations, fixtures, or Tenant's other property, for
loss of use of the Demised Premises or any part thereof, or for any damage to or
interference with Tenant's business, loss of profits, or for any disturbance to
Tenant caused by any Taking or the restoration of the Demised Premises following
such Taking. All such restoration shall be performed by Tenant in accordance
with all of the requirements of this Lease. In the event that the Taking is not
covered in whole or in part by net condemnation proceeds, Tenant shall
nonetheless be responsible, at its sole cost and expense, to repair and/or
replace the Demised Premises as required by this Section 16.2. To the fullest
extent permitted by applicable law, Tenant hereby waives any and all rights it
might have (other than as provided in Section 16.1 above) pursuant to applicable
law which permits a termination of this Lease due to any Taking.
16.3 Temporary Taking. In the event of temporary taking of all or any
-----------------
portion of the Demised Premises for a period of 360 days or less, then this
Lease shall not terminate and the Minimum Annual Rent and the Additional Rent
shall in no wise be affected thereby. Tenant shall be entitled to receive the
entire award made in connection with any such temporary taking.
16.4 Landlord's Fees. Tenant shall promptly reimburse Landlord (and
----------------
Landlord shall be entitled to reimburse itself directly out of the net
condemnation proceeds) for any costs incurred by Landlord in connection with a
Taking or a restoration necessitated thereby.
ARTICLE 17
----------
SUBORDINATION
-------------
This Lease shall be subject and subordinate at all times to:
(i) any and all ground leases or underlying leases now existing or hereafter
executed affecting the Building or all or any portion of the Demised Premises
and (ii) the lien of any mortgage or deed of trust now existing or hereafter
executed in any amount for which the Demised Premises (or any portion thereof),
ground leases, underlying leases, or Landlord's interest or estate in any of
said items is specified as security, with it being understood and agreed that he
foregoing subordination shall be conditioned upon such ground lessor, underlying
lessor, mortgagee, trustee, beneficiary, grantee or lender (hereafter referred
to as "mortgagee") named in such instrument providing Tenant with a written
subordination, non-disturbance and attornment agreement in recordable form, on
such mortgagee's standard form for same, which shall provide in substance that
so long as no Event of Default by Tenant occurs under this Lease beyond
applicable notice and/or cure period, then (a) Tenant shall not be named or
joined in any action or proceeding to terminate such ground or underlying lease
or to foreclose on such mortgage or deed of trust (as applicable) or any
proceeding to otherwise enforce the rights of such mortgagee, in each case
except as required by applicable law and (b) no such termination, foreclosure or
other proceeding shall result in the cancellation or termination of this Lease
(whether or not Tenant is named in such action). Notwithstanding the foregoing,
Landlord shall have the right, at Landlord's option, to subordinate or cause to
be subordinated any such ground leases or any such liens to underlying leases or
to this Lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination and at the option of such successor, attorn to and become Tenant
of the successor in interest to Landlord, at the option of such successor in
interest. Subject to the requirement that Tenant receive a subordination,
non-disturbance and attornment agreement as aforesaid, the Tenant covenants and
agrees to execute and deliver, within ten (10) days of request by Landlord and
in the form requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground leases
or underlying leases or to the lien of any such mortgage or deed of trust. If
Tenant fails to timely execute such additional documents, Tenant hereby appoints
Landlord as Tenant's attorney-in-fact for the sole purpose of executing such
additional documents on behalf of Tenant. If requested by any present or future
lender or ground lessor, Tenant agrees to amend this Lease provided such
amendment does not materially increase the obligations or materially decrease
the rights of Tenant under this Lease.
ARTICLE 18
----------
ESTOPPEL CERTIFICATES; FINANCIAL INFORMATION
--------------------------------------------
18.1 Estoppel Certificates. At any time during the Lease Term, within
----------------------
ten (10) days following a request in writing by either party hereto, the other
party shall execute and deliver to the requesting party (and/or such other
party(ies) as directed by such requesting party) an estoppel certificate in the
form reasonably required by the requesting party, indicating therein any
exceptions thereto that may exist at that time, which certificate shall also
contain any other information reasonably requested by the requesting party.
Failure of such party to timely execute and deliver such estoppel certificate
shall constitute an acceptance of the Demised Premises (if Tenant has failed to
execute and deliver such estoppel certificate) and an acknowledgment by such
party that the statements included in the required form of estoppel are true and
correct, without exception.
18.2 Financial Statements. Within forty-five (45) days after
---------------------
the end of each fiscal quarter, Tenant shall provide to Landlord quarterly
income statement, balance sheet and statement of cash flow for the consolidated
group comprised of Tenant and Guarantor. Within ninety-one (91) days after the
end of each calendar year, Tenant shall provide to Landlord an annual income
statement, balance sheet and statement of cash flow for the consolidated group
comprised of Tenant and Guarantor. All financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
with quarterly statements being certified by the chief financial officer of
Tenant and annual statements being audited by independent auditors reasonably
acceptable to Landlord.
ARTICLE 19
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LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
----------------------------------------------------
19.1 Landlord's Cure. All covenants and agreements of Tenant to be kept
----------------
or performed under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Minimum Annual Rent or Additional Rent.
If Tenant shall default in the performance of its obligations under this Lease
and if such default is not cured within the applicable grace period provided in
Article 14 hereof, Landlord may, but shall not be obligated to, make any such
payment or perform any such act on Tenant's part without waiving its rights or
remedies based upon such or any other default of Tenant and without releasing
Tenant from any obligations hereunder.
19.2 Tenant's Reimbursement. Tenant shall pay to Landlord, within five
-----------------------
(5) days after delivery by Landlord to Tenant of statements therefor: (i) sums
equal to expenditures made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 19.1 or elsewhere in this Lease; and (ii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Minimum Annual Rent or Additional Rent or in enforcing
or attempting to enforce any rights of Landlord under this Lease or pursuant to
law , including, without limitation, all legal fees and other amounts so
expended. Tenant's obligations under this Section 19.2 shall survive the
expiration or sooner termination of the Lease Term.
ARTICLE 20
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SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES
--------------------------------------------------------------
20.1 Surrender of Premises. No act or thing done by Landlord or any
----------------------
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Demised Premises
prior to the expiration of the Lease Term unless such intent is specifically
acknowledged in a writing signed by Landlord. The delivery of keys to the
Demised Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Demised Premises or effect a termination of this
Lease, whether or not the keys are thereafter retained by Landlord, and
notwithstanding such delivery Tenant shall be entitled to the return of such
keys at any reasonable time upon request until this Lease shall have been
properly terminated. The voluntary or other surrender of this Lease by Tenant,
whether accepted by Landlord or not, or a mutual termination hereof, shall not
work a merger, and at the option of Landlord shall operate as an assignment to
Landlord of any and/or all subleases or subtenancies affecting the Demised
Premises.
20.2 Removal of Tenant Property by Tenant. Upon the early termination
-------------------------------------
of this Lease due to an Event of Default by Tenant hereunder, Tenant shall,
subject to the provisions of this Article 20, quit and surrender possession of
the Demised Premises to Landlord in at least as good order and condition as
exists on the date hereof. Upon such expiration or termination, Tenant shall,
without expense to Landlord, remove or cause to be removed from the Demised
Premises all debris and rubbish, and such items of furniture, equipment,
free-standing cabinet work, trade fixtures, and other articles of personal
property owned by Tenant or installed or placed by Tenant in the Demised
Premises and such similar articles of any other persons claiming under Tenant as
Landlord may, in its sole discretion, require to be removed, and Tenant shall
repair at its own expense all damage to the Demised Premises and Building
resulting from such removal and shall indemnify and hold Landlord and Landlord's
Affiliates harmless from any and all liability, cost, obligation, expense or
claim of lien in any manner relating to such removal. The obligations of Tenant
set forth herein shall survive the expiration or sooner termination of this
Lease.
20.3 Removal of Tenant's Property by Landlord. Any personal property of
-----------------------------------------
Tenant not removed by Tenant upon the expiration of the Lease Term, or within
five (5) days after a termination by reason of an Event of Default by Tenant,
shall be deemed abandoned by Tenant and may be disposed of by Landlord in
accordance with applicable law or in accordance with any judicial decisions
which may supplement or supplant those provisions from time to time.
20.4 Landlord's Property. All fixtures, alterations, additions,
--------------------
repairs, improvements and/or appurtenances built into the Demised Premises prior
to or during the term hereof (but expressly excluding unaffixed personal
property such as machinery, drills and other tools, snow removal equipment,
landscaping equipment and all other equipment, all of which, Landlord and Tenant
hereby agree, are and shall remain the property of Tenant), whether by Landlord
at its expense or at the expense of Tenant, or by Tenant at its expense, or by
previous occupants of the Demised Premises, shall be and remain part of the
Demised Premises and shall not be removed by Tenant at the end of the Lease
Term, unless otherwise expressly provided for in this Lease or unless such
removal is required by Landlord pursuant to the provisions of Section 20.2 or
Article 9 of this Lease. If Tenant shall fail to complete such removal and
repair such damage, Landlord may do so and may charge the cost thereof to Tenant
and Tenant's obligation to repay the cost of same shall survive the expiration
or sooner termination of this Lease. Such fixtures, alterations, additions,
repairs, improvements and/or appurtenances shall include, without limitation,
floor coverings, paneling, molding, doors, plumbing systems, electrical systems,
lighting systems and communication systems.
20.5 Landlord's Actions on Demised Premises. Tenant hereby waives all
---------------------------------------
claims against Landlord with respect to Landlord's removal as provided in this
Article 20 and agrees that same shall not constitute forcible entry.
ARTICLE 21
----------
MISCELLANEOUS PROVISIONS
------------------------
21.1 Severability. It is agreed that if any provision of this Lease
-------------
shall be determined to be void by a court of competent jurisdiction, then such
determination shall not affect any other provision of this Lease or portion
thereof and all such other provisions shall remain in full force and effect.
21.2 Entire Agreement. It is understood and acknowledged that there are
-----------------
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease
contains all of the terms, covenants, conditions, warranties and agreements of
the parties relating in any manner to the rental, use and occupancy of the
Demised Premises, shall be considered to be the only agreement between the
parties hereto and their representatives and agents, and none of the terms,
covenants, conditions or provisions of this Lease can be modified, deleted or
added to except in writing signed by the parties hereto. All negotiations and
oral agreements acceptable to both parties have been merged into and are
included herein. There are no other representations or warranties between the
parties, and all reliance with respect to representations is based totally upon
the representations and agreements contained in this Lease. Notwithstanding the
foregoing, nothing contained in this Lease shall be deemed to limit, restrict or
otherwise affect the provisions of the contract of sale of even date herewith
between Landlord and Tenant and/or the closing and/or any other related closing
documents thereunder entered into by and between Landlord and Tenant which by
their terms were to survive the closing of the purchase of the Demised Premises
by Landlord from Tenant. This Lease has been negotiated and shall not be
construed against the party who caused the first draft to be undertaken. This
Lease may not be modified or amended nor any of its terms waived except by a
writing executed by Landlord and Tenant and if required pursuant to applicable
documents, any lender or ground lessor of Landlord.
21.3 Compliance With Law, Insurance Requirements, etc.
-------------------------------------------------
Tenant, at its sole cost and expense, will comply, or cause compliance
with:
(a) all provisions of any insurance policy covering or
applicable to the Demised Premises or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the applicable board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Demised Premises or
any part thereof or any use or condition of the Demised Premises or any part
thereof;
(b) all laws, statutes, codes, acts, ordinances, orders,
permits, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including, without limitation,
those relating to the protection of the environment and the Americans with
Disabilities Act) of all governments, departments, commissions, boards, courts,
authorities, agencies, officials and officers, which now or at any time
hereafter may be applicable to the Demised Premises or any part thereof, or any
use or condition of the Demised Premises or any part thereof (collectively,
"Legal Requirements"); and
(c) all restrictions, easements, reciprocal easement
agreements, covenants and similar matters now or hereafter of record and
affecting all or any portion of the Demised Premises (collectively,
"Restrictions").
The Tenant's obligation, at its sole cost and expense, to comply with the
provisions of (a)-(c) above is absolute whether or not compliance therewith
shall require structural changes or replacements in or interference with the use
and enjoyment of the Demised Premises or any part thereof and whether or not
such compliance could be foreseen or is unforeseen, ordinary or extraordinary.
Tenant's obligations shall include any defects or other items that may need
correction as of the date hereof and/or which may have resulted from defective
construction or design of the Demised Premises.
21.4 Late Charges. Tenant hereby acknowledges that late payment by
-------------
Tenant to Landlord of Minimum Annual Rent, Additional Rent and/or other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which are extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges
which may be imposed upon Landlord by the terms of any mortgage or deed of trust
covering the Demised Premises. Accordingly, if any installment of Minimum Annual
Rent, Additional Rent or any other sum due from Tenant shall not be received by
Landlord or Landlord's designee within five (5) days of the date due, then (and
without prejudice to Landlord's rights and remedies in respect of such default)
Tenant shall pay to Landlord a late charge equal to two percent (2%) of such
amount overdue plus any attorneys' fees incurred by Landlord by reason of
Tenant's failure to pay rent and/or other charges when due hereunder. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs that Landlord will incur by reason of the late payment by
Tenant. Acceptance of such late charge by Landlord shall in no event constitute
a waiver of Tenant's default with respect to such overdue amount, nor prevent
Landlord from exercising any of the other rights and remedies granted hereunder.
The late charge shall be deemed Additional Rent and the right to require it
shall be in addition to all of Landlord's other rights and remedies hereunder or
at law and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner. In addition to the five percent (5%) late
charge described above, any rents or other amounts owing hereunder which are not
paid within five (5) days after the date they are due shall thereafter bear
interest until paid at a rate per annum equal to the lesser of the prime rate as
announced from time to time in the Wall Street Journal (the "Prime Rate") plus
three percent (3%) per annum or the highest rate permitted by applicable law. If
such Prime Rate is no longer published, Landlord shall have the right to
substitute a replacement index that in Landlord's good faith determination is
reasonably similar to the Prime Rate.
21.5 Sale of Demised Premises by Landlord. Each conveyance by Landlord
-------------------------------------
or Landlord's successor of its interest in the Demised Premises prior to
expiration or termination hereof shall be subject to this Lease and shall
relieve the grantor of any further obligations or liability as Landlord, except
with respect to such obligations or liability arising prior to the date of such
conveyance. Tenant hereby agrees to attorn to Landlord's successor(s) in
interest, whether such interest is acquired by sale, transfer, foreclosure, deed
in lieu of foreclosure or otherwise.
21.6 Holdover by Tenant. If Tenant holds over after the Lease Term,
-------------------
with or without the consent of Landlord, the Minimum Annual Rent during the
period of such holdover shall be 200% of the Minimum Annual Rent due immediately
prior thereto and all Additional Rent shall continue to be due and payable as
set forth in this Lease. At Landlord's option, Landlord may deem such holdover
to be a month-to-month tenancy at such increased rental subject to every other
term, covenant and agreement contained herein. Nothing contained in this Section
21.6 shall be construed as consent by Landlord to any holding over by Tenant,
and Landlord expressly reserves the right to require Tenant to surrender
possession of the Demised Premises to Landlord as provided in this Lease upon
the expiration or other termination of this Lease. If Tenant fails to surrender
the Demised Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
indemnify and hold Landlord harmless from loss or liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender or any
losses occasioned by the loss of any prospective succeeding tenant.
21.7 Quiet Enjoyment. Upon Tenant paying the Minimum Annual Rent, all
----------------
Additional Rent and all other charges payable hereunder and performing all of
Tenant's covenants, agreements and obligations under this Lease, Tenant may
peacefully and quietly enjoy the Demised Premises during the Lease Term as
against all persons or entities lawfully claiming by or through anyone other
than Tenant, subject, however, to the provisions of this Lease and any present
or future Restrictions and Legal Requirements.
21.8 Entry by Landlord. Landlord reserves the right at all reasonable
------------------
times and upon reasonable notice to the Tenant to enter the Demised Premises or
any portion thereof to: (i) inspect them; (ii) show the Demised Premises to
prospective or existing purchasers, mortgagees or tenants, or to the ground or
underlying lessors; (iii) post notices of nonresponsibility; or (iv) repair the
Demised Premises or the Building or any portion of any of same. Notwithstanding
anything to the contrary contained in this Section 21.8, Landlord may (but shall
not be obligated to) enter the Demised Premises or any portion thereof at any
time to (i) take possession due to any breach/termination of this Lease subject
to and in the manner provided herein; (ii) perform any covenants of Tenant which
Tenant fails to perform (subject to applicable notice and/or cure periods
contained in this Lease) and (iii) correct (in whole or part) or otherwise deal
with any emergency situation as permitted by this Lease. Landlord may make any
such entries without the abatement of rent and may take such reasonable steps as
required to accomplish the stated purposes. Tenant hereby waives any claims for
damages or for any injuries or inconvenience to or interference with Tenant's
business, lost profits, any loss of occupancy or quiet enjoyment of the Demised
Premises, and any other loss occasioned thereby. In an emergency, Landlord shall
have the right to use any means that Landlord may deem proper to gain access in
and to the Demises Premises, including, but not limited to, taking such action
which might be considered to be an unlawful entry into the Building under other
circumstances, as well as, the breaking down of doors or other barriers
prohibiting or impeding access to the Building. Any entry into the Demised
Premises by Landlord in the manner hereinbefore described shall not be deemed to
be a forcible or unlawful entry into, or a detainer of, the Demised Premises, or
an actual or constructive eviction of Tenant from any portion of the Demised
Premises.
21.9 Cumulative Rights. A. The various rights, options, elections,
------------------
powers and remedies of Landlord contained in this Lease shall be construed as
cumulative and no one of them shall be exclusive of any of the others, or of any
other legal or equitable remedy which Landlord might otherwise have as against
Tenant in the event of breach or default in the terms hereof, and the exercise
of one right or remedy by Landlord shall not impair its right to any other right
or remedy until all obligations imposed upon Tenant have been fully performed.
B. Except as may be otherwise provided in this Lease (including,
without limitation, in Section 15.1 above), (X) the various rights, options,
elections, powers and remedies of Tenant contained in this Lease shall be
construed as cumulative and no one of them shall be exclusive of any of the
others, or of any other legal or equitable remedy which Tenant might otherwise
have as against Landlord in the event of breach or default in the terms hereof
and (Y) the exercise of one right or remedy by Tenant shall not impair its
right to any other right or remedy until all obligations imposed upon Landlord
have been fully performed.
21.10 Time. Time is of the essence with respect to the performance
-----
of each of the covenants and agreements contained in this Lease.
21.11 Relationship of Parties. Nothing contained in this Lease shall be
------------------------
deemed or construed by the parties hereto or by any third person to create the
relationship of principal and agent or of partnership or of joint venture or of
any association between Landlord and Tenant, and neither the method of
computation of rent nor any other provision contained in this Lease nor any acts
of the parties hereto shall be deemed to create any relationship between
Landlord and Tenant other than the relationship of landlord and tenant.
21.12. Exculpation. The obligations of Landlord under this Lease do not
------------
constitute personal obligations of Landlord, and Tenant shall look solely to
Landlord's interest in the Demised Premises and to no other assets of Landlord
for satisfaction of to this Lease and shall not seek any liability with respect
nor against any of its personal recourse against Landlord herein assets for such
satisfaction. In no event shall any officer, director, shareholder, member,
manager, trustee, agent or representative of Landlord or any of its lenders be
liable hereunder. In addition, Landlord shall not be liable for the failure,
seizure or similar circumstance of any financial institution in which Landlord
shall have deposited sums on account of this Lease or Tenant (if applicable)
(for example, without implied limitation, tax escrow deposits and insurance or
condemnation proceeds) regardless whether or not such financial institution
shall be affiliated with Landlord and whether or not the sums on deposit shall
have exceeded the maximum amount covered by any applicable federal or other
insurance.
21.13 Memorandum of Lease. Simultaneously with the execution and
--------------------
delivery of this Lease, Landlord and Tenant have executed, acknowledged and
delivered a short form "memorandum of lease" suitable for recording, and Tenant
may, if it so elects, cause same to be recorded at Tenant's cost and expense.
21.14 Notices. All notices, demands, statements or communications
--------
(collectively, "Notices") given or required to be given by either party to the
other hereunder shall be in writing, shall be sent by United States certified
mail, postage prepaid, return receipt requested, or delivered personally or by
established overnight delivery service, (i) to Tenant at the address(es) set
forth in Article 1 of this Lease, or to such other address(es) as Tenant may
from time to time designate in a Notice to Landlord; or (ii) to Landlord at the
address(es) set forth in Article 1 of this Lease, or to such other address(es)
as Landlord may from time to time designate in a Notice to Tenant. Any Notice
will be deemed given upon the date personal delivery is made (or refused). If
Tenant is notified of the identity and address of Landlord's mortgagee or ground
or underlying lessor, Tenant shall give to such mortgagee or ground or
underlying lessor a copy of any notice sent to Landlord hereunder. If Landlord
is notified of the identity and address of Tenant's leasehold mortgagee under a
leasehold mortgage permitted pursuant to the terms of this Lease, then Landlord
shall give to such permitted leasehold mortgagee a copy of any notice sent to
Tenant hereunder alleging a default under the terms of this Lease (and such
permitted leasehold mortgagee shall have the same cure period afforded to Tenant
pursuant to the terms of this Lease within which to cure the applicable
default(s)).
21.15 Successors. The Lease and all of the covenants and conditions
-----------
herein contained shall be binding upon and shall inure to the benefit of the
heirs, executors, administrators, assigns and other successors in interest of
each of the parties; provided that the foregoing shall not be deemed to permit
any assignment or sublease of this Lease not expressly permitted by the terms
hereof.
21.16 Captions. The titles or captions in this Lease are for reference
---------
purposes only and have no effect upon the construction or interpretation of any
part hereof. The use herein of the singular includes the plural and vice versa,
and the use herein of the neuter gender includes the masculine and the feminine
and vice versa, whenever and wherever the context so requires.
21.17 Joint and Several. If there is more than one Tenant, the
------------------
obligations imposed upon Tenant under this lease shall be joint and several.
21.18 Authority. Tenant hereby represents and warrants that Tenant is a
----------
duly formed and existing entity qualified to do business in its jurisdiction of
organization and the State(s) in which the Demised Premises are located and that
Tenant has full right and authority to execute and deliver this Lease and that
each person signing on behalf of Tenant is authorized to do so.
21.19 Attorney's Fees. If either party commences litigation against the
----------------
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, then the
non-prevailing party shall be liable for and shall immediately reimburse the
prevailing party for all reasonable attorneys' fees as may have been incurred.
21.20 Waiver of Jury Trial. To the fullest extent permitted by law, the
---------------------
parties hereby waive any right to a trial by jury in any litigation where Tenant
and Landlord are parties.
21.21 Governing Law. This Lease shall be construed and enforced
---------------
in accordance with the internal laws of the State where the Demised Premises
are located.
21.22 Brokers. Landlord and Tenant hereby warrant to each other that
--------
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease and that they know of no real estate broker
or agent who would be entitled to a commission in connection with this Lease.
Each party agrees to indemnify and defend the other party against and hold the
other party harmless from any and all claims, demands, losses, liabilities,
lawsuits, judgments, and costs and expenses (including without limitation
reasonable attorneys' fees) with respect to any leasing commission or equivalent
compensation alleged to be owing an account of the indemnifying party's dealings
with any real estate broker or agent.
21.23 Mechanics' Liens. Tenant shall keep the Demised Premises free
-----------------
from any mechanics', materialmen's or other liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant or any
person or entity claiming by, through or under Tenant. If any such liens are
filed and are not released of record by payment or posting of a proper bond
within thirty (30) days after such filing, Landlord may, without waiving its
rights and remedies based on such breach by Tenant and without releasing Tenant
from any obligations hereunder, cause such liens to be released by any means it
shall deem proper, including payment of the claim giving rise to such lien in
which event all amounts paid by Landlord shall immediately be due to Landlord by
Tenant (and this repayment obligation shall survive the expiration or
termination of this Lease).
21.24 Intentionally omitted.
----------------------
21.25 Bankruptcy Protections. A. Tenant warrants and represents that it
-----------------------
is solvent as of the date hereof and that this Lease and the sale/leaseback of
which it is a part shall not render Tenant insolvent. Tenant warrants and
represents that there is no monetary or other material default existing under
any of its corporate level indebtedness or under any of its or its subsidiaries'
leases. Tenant warrants and represents that this transaction is a bona fide
transaction and is being made for fair value. Landlord and Tenant acknowledge
and agree that this transaction is a bona fide sale-leaseback transaction and
does not constitute a joint venture, partnership or mortgage/lending
relationship.
B. As a material inducement for Landlord to enter into this Lease (and
the sale/leaseback of which it is a part and without which Landlord would not
have entered into this transaction with Tenant) Tenant hereby (i) to the fullest
extent permitted by applicable law, waives any right to reject all or any part
of this Lease or Tenant's obligations hereunder, (ii) to the fullest extent
permitted by applicable law and in the event (i) above is not enforceable,
waives any provision or ability to extend the minimum period within which Tenant
shall have to assume or reject this Lease, and (iii) agrees that in the event of
an assignment by Tenant out of or pursuant to the bankruptcy or similar
proceeding of Tenant, the proposed assignee shall not be deemed creditworthy and
Landlord shall be entitled to reject the proposed assignee unless (x) such
proposed assignee has a net worth (certified by independent auditors and
determined in accordance with generally accepted accounting principles) equal to
or exceeding $1 Billion or (y) such proposed assignee shall post a security
deposit (or irrevocable letter of credit acceptable to Landlord) with Landlord
equal to two year's worth of Minimum Annual Rent then in effect.
21.26 Environment. (a) Tenant covenants, represents and warrants (i)
------------
that, except in full compliance with all applicable Legal Requirements and
Restrictions, the Demised Premises does not contain and will not contain (A)
asbestos in any form; (B) urea formaldehyde foam insulation; (C) transformers or
other equipment which contain dielectric fluid containing polychlorinated
biphenyls (PCB's); (D) fuel oil, gasoline, other petroleum products or
by-products, (E) lead-based paint or (F) any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous, controlled or toxic
substances, or any pollutant or contaminant, or related materials defined in or
controlled pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801 et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 9601, et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state or local environmental
law, ordinance, rule, or regulation; or which, even if not so regulated, may or
could pose a hazard to the health or safety of the occupants of the Demised
Premises or surrounding properties or the owners of the Demised Premises or
surrounding properties (the substances described in (A), (B), (C), (D), (E) and
(F) above are referred to collectively herein as "Hazardous Materials"), (ii)
that, except in full compliance with all applicable Legal Requirements and
Restrictions, neither the Demised Premises nor any portion thereof nor any
buildings and/or other improvements and additions previously, now or hereafter
located thereon, are now being used, have ever been used and during the Term of
this Lease will ever be used for any activities involving, directly or
indirectly, the use, generation, treatment, transportation, storage or disposal
of any Hazardous Materials whether by Tenant, any prior owner of the Demised
Premises or any tenant or prior tenant of the Demised Premises; (iii) that to
Tenant's knowledge there has never been any Hazardous Materials Release (as
defined below in this section) on, from or affecting the Demised Premises and
(iv) that none of the Demised Premises, any previous owner of the Demised
Premises, nor Tenant is subject to any existing, pending or, to Tenant's
knowledge, threatened notice, summons, citation, directive, investigation,
litigation, proceeding, inquiry, lien, encumbrance or restriction, settlement,
remedial response, cleanup or closure arrangement or any other remedial
obligations by or with any governmental authority (collectively "Regulatory
Actions") under, or are in violation of, any applicable laws, rules, regulations
or orders pertaining to health, the environment or Hazardous Materials. Tenant
does not know of any violation of the foregoing representations, warranties and
covenants.
(b) Tenant represents, warrants and covenants that during the
Term of this Lease with respect to the Demised Premises and any buildings and
other improvements and additions thereon, Tenant (i) shall comply with and
ensure compliance by all subtenants, invitees, patrons and other persons with
all applicable laws, rules and regulations or orders pertaining to health, the
environment or Hazardous Materials, (ii) shall not store, utilize, generate,
treat, transport or dispose (or permit or acquiesce in the storage, utilization,
generation, transportation, treatment or disposal of) any Hazardous Materials on
or from the Demised Premises except in full compliance with all applicable Legal
Requirements and Restrictions; and (iii) shall cause any subtenant, licensee,
concessionaire or other person or entity using and/or occupying any part of the
Demised Premises to comply with the representations, warranties and covenants
contained in this Section.
(c) In the event of any storage, presence, utilization,
generation, transportation, treatment or disposal of Hazardous Materials on the
Demised Premises or in the event of any Hazardous Materials Release whatsoever
or howsoever occurring (except in full compliance with all applicable Legal
Requirements and Restrictions), Tenant shall, as soon as is possible, at the
direction of Landlord or any federal, state, or local authority or other
governmental authority, remove any such Hazardous Materials and rectify any such
Hazardous Materials Release to the extent necessary to comply with the laws,
rules, regulations or orders of such authority, all at the sole cost and expense
of Tenant, including without limitation, the undertaking and completion of all
investigations, studies, sampling and testing and all remedial, removal and
other actions necessary to clean up and remove all Hazardous Materials, on, from
or affecting the Demised Premises. If Tenant shall fail to proceed with such
removal or otherwise comply with such laws, rules, regulations or orders within
the cure period permitted under the applicable regulation or order, the same
shall constitute a default hereunder without right of further notice or grace
period, and Landlord shall have the right, at its sole option but with no
obligation, to do whatever is necessary to cause compliance with the applicable
law, rule, regulation or order, acting either in its own name or in the name of
Tenant pursuant to this Section, and the cost thereof shall be and become
immediately due and payable without notice by Tenant to Landlord. In addition to
and without limiting Landlord's rights pursuant to this Lease, Tenant shall give
to Landlord and its agents and employees access to the Demised Premises and all
buildings and other improvements and additions thereon for such purposes and
hereby specifically grants to Landlord a license to remove the Hazardous
Materials and otherwise comply with applicable laws, rules, regulations or
orders, acting either in its own name or in the name of Tenant pursuant to this
Section.
(d) Tenant shall defend, indemnify and save Landlord and
Landlord's Affiliates harmless from, against, for and in respect of, any and all
damages, losses, settlement payments, obligations, liabilities, claims, actions
or causes of actions, encumbrances, fines, penalties, and costs and expenses
suffered, sustained, incurred or required to be paid by any such indemnified
party (including, without limitation, fees and disbursements of attorneys,
engineers, laboratories, contractors and consultants) caused by any
"Environmental Liabilities" (as defined below) in connection with the Demised
Premises or any buildings previously, now or hereafter located thereon. For
purposes of this indemnification clause, "Environmental Liabilities" shall mean
all costs and liabilities of Landlord and/or Landlord's Affiliates resulting
from the past, present or future presence, removal, utilization, generation,
storage, transportation, disposal or treatment of any Hazardous Materials or any
release, spill, leak, pumping, pouring, emitting, emptying, discharge,
injection, escaping, leaching, dumping or disposing into the environment (air,
land or water) of any Hazardous Materials (each a "Hazardous Materials
Release"), including without limitation, (i) cleanups, remedial and response
actions, remedial investigations and feasibility studies, permits and licenses
required by, or undertaken in order to comply with the requirements of, any
federal, state or local law, regulation, or agency or court, any damages for
injury to person, property or natural resources, claims of governmental agencies
or third parties for cleanup costs and costs of removal, discharge, and
satisfaction of all liens, encumbrances and restrictions on the Demised Premises
relating to the foregoing and (ii) injury to person or property in any manner
related to a Hazardous Materials Release on, near or from the Demised Premises.
Hazardous Materials Release shall also include by means of any contamination,
leaking, corrosion or rupture of or from underground or above ground storage
tanks, pipes or pipelines on or from the Demised Premises. Landlord shall have
the right to undertake, control and conduct, through counsel of its own choosing
and at the sole cost and expense of Tenant, the conduct and settlement of any
claim giving rise to indemnification hereunder, and the Tenant shall cooperate
with the Landlord in connection therewith. Notwithstanding any provisions of
this Section 21.26 to the contrary, Tenant shall not be obligated to indemnify
and hold harmless Landlord and/or Landlord's Affiliates against any claims and
liabilities if and to the extent arising as a result of (X) acts or events not
caused by Tenant (and/or any of Tenant's shareholders, members, partners,
officers, directors, trustees, employees, agents or representatives, subtenants,
licensees or concessionaires) and occuring after the expiration or termination
of this Lease and/or (Y) acts or events that occur on property adjacent to the
Demised Premises and cause migration contamination to the Demised Premises
provided same are not in any way caused by or related to acts of Tenant and/or
any of Tenant's shareholders, members, partners, officers, directors, trustees,
employees, agents or representatives, subtenants, licensees or concessionaires.
(e) Tenant shall, if and to the extent Tenant becomes aware
thereof, promptly notify Landlord in writing of the occurrence of any Hazardous
Materials Release or any pending or threatened Regulatory Actions, or any claims
made by any governmental authority or third party, relating to any Hazardous
Materials or Hazardous Materials Release on or from, the Demised Premises, or
any buildings or other improvements or additions previously, now or hereafter
located thereon and shall promptly furnish Landlord with copies of any
correspondence or legal pleadings or documents in connection therewith. Landlord
shall have the right, but shall not be obligated, to notify any governmental
authority of any state of facts which may come to its attention with respect to
any Hazardous Materials or Hazardous Materials Release on or from the Demised
Premises.
(f) The liability of Tenant to Landlord pursuant to, by reason
of or arising from the representations, warranties, covenants and indemnities
provided for this Section 21.26 is unlimited and shall survive the expiration of
the term of this Lease.
(g) Tenant covenants, represents and warrants that Tenant is
in full compliance with all registration and other requirements of 42 USC ss.
6991, "Regulation of Underground Storage Tanks" and all federal, state and local
laws and regulations implementing the provisions of such act.
(h) The provisions of this Section 21.26 are in addition to
and not intended to limit (i) any representations, warranties, covenants,
agreements and indemnities, if any, concerning the environment by Tenant in
favor of Landlord in the contract of sale between the parties relating to
Landlord's acquisition of the Demised Premises from Tenant or in any other
documents related thereto, in each case if and to the extent same survive
pursuant to the terms thereof and (ii) the provisions of applicable law (with
Landlord and Tenant acknowledging and agreeing that Tenant shall at all times
during the Term of the Lease be deemed to be the "operator" of the Demised
Premises and to bear the primary responsibility under all such applicable law).
Tenant acknowledges and agrees that Landlord has never occupied or operated at
the Demised Premises and that Landlord acquired the Demised Premises directly
from Tenant and therefore it is appropriate for Tenant to undertake the specific
environmental responsibilities as set forth in this Section 21.26.
21.27 Variable Interest Entity. Landlord hereby represents, warrants
-------------------------
and covenants that:
(a) Landlord is not, and shall not be at any time during the
term of this Lease (as the same may be extended), a "variable interest entity"
pursuant to FIN 46R, or if Landlord is at any time a "variable interest entity",
Tenant shall not be the "primary beneficiary" of Landlord or any portion of
Landlord pursuant to FIN 46R.
(b) Landlord will provide Tenant, from time to time as
reasonably requested by Tenant, sufficient and appropriate information with
respect to the capitalization and structure of Landlord to enable Tenant to
support its assertion that Tenant is not required to consolidate all or any
portion of the assets, liabilities, revenues and expenses of Landlord into its
financial statements pursuant to FIN 46R; and
(c) Landlord will use reasonable efforts to maintain
"operating lease" treatment for this Lease in accordance with SFAS Number 13 and
the related standards issued by the Financial Accounting Standards Board,
including, without limitation, by amending or modifying any provisions of this
Lease as may be reasonably necessary so as to give effect to such operating
lease provisions for purposes of the Tenant's financial reporting; provided and
on the condition that any such amendment or modification in no way affects the
economic provisions of this Lease and/or the length of the term hereunder, and
provided and on the condition that any such amendment or modification in no way
increases the duties or obligations of Landlord under this Lease and/or
decreases the rights and benefits afforded to Landlord under this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed and
delivered this Lease as of the day and year first above written.
Landlord:
OLP ST. CLOUD LLC
By: s/ Jeffrey Fishman
-------------------
Name: Jeffrey Fishman
-----------------
Title: President
----------------
Tenant:
NEW FLYER OF AMERICA, INC.
By: s/ Colin Farmer
----------------
Name: Colin Farmer
---------------
Title:
EXHIBIT A
Legal Description of the Demised Premises
Lot One (1), Block One (1), St. Cloud I-94 Business Park 2, according
to the plat thereof on file in the office of the County Recorder, Stearns
County, Minnesota.
GUARANTY
Pursuant to the Lease (hereafter defined) and that certain Purchase and
Sale Agreement dated as of September 27, 2004 between Tenant (hereafter defined)
and Landlord (hereafter defined) this Guaranty is made and delivered as of the
18 day of October, 2004, by NFIL HOLDINGS CORP., a Delaware corporation having
an address at 609 Marin Avenue. Crookston, Minnesota 56716-2909 ("Guarantor") in
favor of OLP ST. CLOUD LLC a limited liability company having an address at
Suite 303, 60 Cutter Mill Road, Great Neck, New York 11021 ("Landlord").
The Guarantor hereby agrees as follows:
1 Guaranty. In order to induce Landlord to enter into that certain Lease
---------
Agreement (the "Lease") being executed simultaneously herewith between Landlord
and New Flyer of America, Inc., a North Dakota corporation having an address at
609 Marin Avenue, Crookston, Minnesota 56716-2909 (together with its successors
and/or assigns, the "Tenant"), affecting certain land and improvements thereon
commonly known as and located lit 6200 Glenn Carlson Drive, St Cloud, Minnesota
as more fully described in the Lease (the "Demised Premises"), and in
recognition and acknowledgment of the fact that Landlord would not have entered
into the Lease without this Guaranty, the undersigned Guarantor does hereby
unconditionally, irrevocably and absolutely guarantee to Landlord the full and
faithful payment, performance and observance of all the covenants, terms,
conditions and obligations provided to be performed and observed by Tenant under
the Lease, including but not limited to, the payment of all rents, additional
rents and all other charges due from the Tenant to Landlord under the terms and
conditions of the Lease. Guarantor shall, upon demand, pay, perform, and observe
each and every term, covenant and condition of the Lease in the same place and
stead as Tenant. Guarantor represents and warrants that there are no conditions
to the effectiveness of this Guaranty, and nothing impairs the effectiveness of
the liability of Guarantor to Landlord hereunder or prevents this Guaranty from
taking immediate effect.
2 Modification of Lease; Amendment. Landlord shall have the full right, in
---------------------------------
Landlord's sole discretion and without any notice to or consent from the
Guarantor, from time to time at any time and without affecting, impairing or
discharging, in whole or in part, the liability of the Guarantor hereunder (such
liability continuing in full force and effect) (a) to make any change,
amendment, modification, supplement or extension whatsoever of any of the terms
and conditions of the Lease, including, without limitation, any increase or
reduction in the amount of rent or other obligations due thereunder, (b) to
modify or otherwise alter any of the other obligations guaranteed by Guarantor
pursuant hereto, (c) to extend, in whole or in part, by renewal or otherwise and
on one or any number of occasions, the time for the payment of any sum or for
the performance of any other term or condition under the Lease and/or (d) to
settle, compromise, release, substitute, surrender, modify or impair and to
enforce and exercise, or to waive, fail or refuse to enforce or exercise, any
claims, rights or remedies, of any kind or nature, which Landlord may at any
time have against Tenant, or any other endorser or guarantor of Tenant's
obligations under the Lease, or with respect to any security of any kind held by
Landlord at any time, whether under this Guaranty, the Lease or otherwise.
3 Guaranty Absolute. This Guaranty is and shall be construed to be an absolute,
------------------
present, continuing and unconditional guaranty of the payment of all sums due,
and the performance and satisfaction of all obligations of Tenant under the
Lease as from time to time amended or modified, and not of collection, and is in
no way conditioned or contingent upon any attempt to collect payment from or
enforce performance by the Tenant and is in no way affected by any releases,
waivers or delays in enforcement of any of the liabilities and obligations of
the Tenant under the Lease. Landlord shall have the right to proceed against the
Guarantor immediately upon any default under the Lease and shall not be required
to take any action or proceeding of any kind against Tenant or any other party
liable for Tenant's liabilities or any security which Landlord may hold, either
under this Guaranty, the Lease or otherwise, before proceeding against the
Guarantor hereunder. Guarantor further agrees that in any action or proceeding
brought by Landlord against Tenant, Guarantor need not be joined as a party
thereto. The liability of the Guarantor hereunder shall continue in full force
and effect until all the sums due under the Lease are fully paid and all
obligations of the Tenant under the Lease are satisfied and discharged; and
shall not be reduced, affected, impaired, or discharged, in whole or in part, by
reason of (a) the death of any individual Guarantor, or the dissolution,
liquidation, bankruptcy or insolvency, or the merger, consolidation or other
change in form of Tenant, (b) the invalidation of any of the provisions of the
Lease, (c) the modification, rejection, assignment or termination of the Lease
due to the bankruptcy or insolvency of Tenant, and the liability of the
Guarantor shall be for the sums and other obligations due under the Lease as it
existed immediately prior to any such modification, rejection, assignment or
termination, (d) the assignment of the interest of the Tenant under the Lease or
the sublet of all or any portion of the Demised Premises demised by the Lease
whether or not permitted by the Lease and whether or not known of or consented
to by Landlord or Guarantor; or (e) any other circumstance which might otherwise
constitute an equitable or legal discharge or defense of the Guarantor.
4 No Waiver of Landlord's Rights. No waiver of any of Landlord's rights
-------------------------------
hereunder and no modification of this Guaranty shall be deemed to be made for
any reason whatsoever, including, but not limited to, any act or failure or
delay in acting of Landlord unless the same shall be in writing and duly signed
by Landlord, and each such waiver, if any, shall apply only with respect to the
specific instance involved and shall in no way impair or affect the rights of
Landlord or the obligations of Guarantor in any other respect or at any other
time. Landlord's failure or delay in exercising any rights under the Lease or
this Guaranty or in sending any notices, demands or requests, or in requiring
strict performance or observance of any term or covenant of the Lease, shall not
be a waiver of any of Landlord's rights created by this Guaranty.
5 No Oral Modification. This Guaranty cannot be modified, altered, changed or
---------------------
terminated orally but only by a writing executed by both Landlord and Guarantor.
This Guaranty reflects the entire understanding of the parties in respect of the
subject matter hereof and supersedes any and all prior oral or written
understandings.
6 Jurisdiction; Governing Law; Attorney's Fees. This Guaranty shall be deemed
---------------------------------------------
made in the State of Minnesota and shall be governed, construed and interpreted,
as to validity, enforcement and in all other respects, in accordance with the
laws of the State of Minnesota. The Guarantor hereby submits to the jurisdiction
of any federal or state courts located in the State of Minnesota and the County
in which the Demised Premises are located, for any action or claim brought by
the Landlord pursuant to this Guaranty. This clause shall not be construed as
requiring the Landlord to bring any action in the State of Minnesota, but the
Landlord shall have the option of bringing such action either in the State of
Minnesota or in any other jurisdiction which is proper. Guarantor hereby
designates the Secretary of State of the State of Minnesota as the Guarantor's
separate general agent for receipt of notice and service of process in any such
action or proceeding (and Landlord may make service of process on such general
agent). The Guarantor hereby waives any defense or right to stay or dismiss on
the basis of forum non conveniences or lack of jurisdiction regarding any action
or proceeding brought before any of said courts. Each of Guarantor and Landlord
hereby waives the right to trial by jury in any action or proceeding that may
hereafter be instituted by Landlord against Guarantor in respect of this
Guaranty. Guarantor shall pay to Landlord all fees and expenses (including, but
not limited to, attorneys' fees) that Landlord incurs in enforcing this
Guaranty.
7 Assignment by Landlord. This Guaranty shall inure to the benefit of Landlord
-----------------------
and its successors and assigns, and shall be binding upon the distributees,
executors, administrators, successors and assigns of Guarantor. The Landlord
shall have the right to assign and transfer this Guaranty in whole or in part to
any assignee or successor owner of the Demised Premises. The Landlord's
successors and assigns shall have all of the rights, elections, remedies,
privileges, discretion and powers granted hereunder to Landlord, and shall have
the right to rely on this Guaranty, in the same manner and with the same force
and effect as if they were specifically named as the Landlord herein.
8 Assignment by Guarantor; Prohibited Transfers. Neither this Guaranty nor the
----------------------------------------------
obligations of the Guarantor hereunder may be assigned or otherwise transferred
by Guarantor, and any such purported assignment or other transfer shall be void
and of no force or effect and shall also constitute an "Event of Default' (as
defined in the Lease) under the Lease. For purposes of the prohibition contained
in this Paragraph 8, a "transfer" shall be deemed to include a change in control
of Guarantor or the transfer of any of the equity interests in Guarantor;
however, notwithstanding the foregoing prohibition, the transfer of equity
interests in Guarantor shall be permitted and shall not be deemed to be a
"transfer" for purposes of this Paragraph 8 provided and on the condition that,
immediately after the effectiveness of such transfer the Guarantor shall have a
"Net Worth" (as defined below) of no less than the "Minimum Net Worth" (as
defined below). As used herein, (A) "Net Worth" shall mean Guarantor's net worth
as audited and certified by a nationally recognized accounting firm selected by
Guarantor and reasonably acceptable to Landlord, determined in accordance with
generally accepted accounting principles consistently applied and (B) "Minimum
Net Worth" shall mean initially $109,000,000, increasing on December 31, 2004 to
$110,000,000, increasing on December 31, 2009 to $132,000,000 and increasing on
December 31, 2014 and every five calendar years thereafter during the Term (as
defined in the Lease and as same may be extended) to an amount equal to one
hundred ten (110%) percent of the then-effective Minimum Net Worth (so, by way
of example, the Minimum Net Worth shall be increased on December 31, 2014 to
$145,200,000, which increased sum shall remain the Minimum Net Worth through
December 31, 2019 at which time it shall automatically increase to $159,720,000,
and so on).
9 Miscellaneous.
-------------
(a) Guarantor hereby expressly waives promptness, diligence. notice of
acceptance hereof or of action in reliance hereon, notice of presentment. demand
for payment, protest or dishonor of all of any part of the Lease, notice of the
failure of Tenant or any other person, firm or corporation to perform and any
other notice to which Guarantor might otherwise be entitled.
(b) If any provision of this Guaranty shall be unenforceable in whole or part
for any reason whatsoever, then such provision (to the extent it is
unenforceable) shall be ineffective and the balance of this Guaranty shall be
deemed valid and enforceable and construed as if the offending provision had
been deleted herefrom.
(c) All notices, demands, statements or other communications (collectively,
"Notices") given or required to be given by either party to the other hereunder
shall be in writing, shall be sent by United States certified mail, postage
prepaid, return receipt requested, or delivered personally or by established
overnight delivery service, (i) to Guarantor at its address set forth above with
a copy to Tenant's counsel, White & Case, 1155 Avenue of the Americas, New York,
New York 10036, Attention: Roger Noble, Esq. or to such other address(es) as
Tenant may from time to time designate in a Notice to Landlord or (ii) to
Landlord at its address set forth above with a copy to Richard M. Figueroa, 60
Cutter Mill Road, Suite 303, Great Neck, New York 11021 or to such other
address(es) as Landlord may from time to time designate in a Notice to Tenant.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty as of the day and year first above written.
NFIL HOLDINGS CORP., a Delaware corporation
By:s/ Glenn Ashem
--------------
Name: Glenn Ashem
Title: Vice President - Finance
PROVENCE OF MANITOBA)
ss.:
COUNTRY OF CANADA )
On the 13th day of October in the year 2004 before me, the
undersigned, a Notary Public in and for said State, personally appeared Glenn
Ashem, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by
his signature on the instrument, the individual or the person upon behalf of
which the individual acted, executed the instrument.
s/ N. Budowiski
---------------
NOTARY PUBLIC
A NOTARY PUBLIC
IN AND FOR THEPROVINCE OF MANITOBA
MY COMMISSION EXPIRES MAY 1, 2006