EXHIBIT 10.4
LEASE AGREEMENT
Dated as of December 23, 1996
between
XXXXX X. XXXXXXX, an individual
as Lessor,
and
D.J. Acquisition Corp., an Illinois corporation
as Lessee
TABLE OF CONTENTS
ARTICLE I
Section 1.1. Lease of Premises; Title and Condition.................. 1
Section 1.2. Use..................................................... 1
Section 1.3. Term.................................................... 2
Section 1.4. Intentionally omitted................................... 2
Section 1.5. Rent.................................................... 2
ARTICLE II
Section 2.1. Maintenance and Repair.................................. 2
Section 2.2. Alterations, Replacements and Additions................. 3
ARTICLE III
Section 3.1. Severable Property...................................... 3
Section 3.2. Removal................................................. 4
ARTICLE IV
Section 4.1. Lessee's Assignment; Subletting; Mortgaging............. 4
Section 4.2. Permitted Transfers..................................... 5
Section 4.3. Transfer or Pledge by Lessor............................ 5
ARTICLE V
Section 5.1. Net Lease............................................... 7
Section 5.2. Taxes and Assessments; Compliance With Law.............. 7
Section 5.3. Liens................................................... 9
Section 5.4. Indemnification.........................................10
Section 5.5. Permitted Contests......................................10
Section 5.6. Environmental Compliance................................11
Section 5.7. Maintain Licenses.......................................13
ARTICLE VI
Section 6.1. Intentionally Omitted...................................14
Section 6.2. Condemnation and Casualty...............................14
Section 6.3. Insurance...............................................15
Section 6.4. Waiver of Subrogation...................................17
ARTICLE VII
Section 7.1. Conditional Limitations; Default Provisions.............18
Section 7.2. Bankruptcy or Insolvency................................21
Section 7.3. Additional Rights of Lessor.............................23
ARTICLE VIII
Section 8.1. Notices and Other Instruments.............................. 24
Section 8.2. Estoppel Certificates; Financial Information............... 25
ARTICLE IX
Section 9.1. Intentionally Omitted...................................... 27
ARTICLE X
Section 10.1. No Merger.................................................. 27
Section 10.2. Surrender.................................................. 27
Section 10.3. Separability; Binding Effect; Governing Law................ 27
Section 10.4. Table of Contents and Headings; Internal References........ 27
Section 10.5. Counterparts............................................... 28
Section 10.6. Lessor's Liability......................................... 28
Section 10.7. Amendments and Modifications............................... 28
Section 10.8. Additional Rent............................................ 28
Section 10.9. Schedules.................................................. 28
Section 10.10. Confidentiality............................................ 28
Section 10.11. Memorandum of Lease........................................ 29
Section 10.12. Inconsistent Actions....................................... 29
ARTICLE XI
Section 11.1. Option to Purchase......................................... 30
Section 11.2. Procedure Upon Purchase.................................... 31
Section 11.3. Right of First Offer....................................... 32
Section 11.4. Quiet Enjoyment............................................ 32
Section 11.5. Brokers.................................................... 32
Section 11.6. Force Majeure.............................................. 33
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LEASE AGREEMENT
LEASE AGREEMENT, dated as of December 23, 1996 (this "Lease"), is made
between XXXXX X. XXXXXXX, an individual (herein, together with his successors
and assigns, called "Lessor"), and D.J. Acquisition Corp., an Illinois
corporation (herein, together with its successors and permitted assigns, called
"Lessee").
ARTICLE I
Section 1.1. Lease of Premises: Title and Condition. In
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consideration of the rents and covenants herein stipulated to be paid and
performed by Lessee and upon the terms and conditions herein specified, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the real property
and fixtures located at 0000 X. Xxxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxx 00000
(the "Premises") more specifically consisting of:
(a) the land described in Schedule A attached hereto, together with
all rights, easements and interests appurtenant thereto, including but not
limited to any streets or other public ways adjacent to said land (collectively
the "Land");
(b) all buildings, improvements structures, facilities,
installations, amenities and fixtures now or hereafter located on the Land, and
all plumbing, gas, electrical, ventilating, lighting and other utility systems,
canopies, signs, air conditioning systems and all other building systems and
fixtures attached to or comprising a part of the building (all collectively
being referred to herein as the "Improvements"); and
(c) the personal property, if any, listed in Schedule B attached
hereto (the "Personal Property").
The Premises are leased to Lessee in their present condition without
representation or warranty by Lessor except as provided in the Asset Purchase
Agreement dated as of December 24, 1996 among Dae Xxxxx, Inc., Lessor, and
Favorite Brands International, Inc. (the "Purchase Agreement"), and subject to
all applicable Legal Requirements (as defined in Subsection 5.2(b)) now or
hereafter in effect and to the exceptions to title listed in Schedule C (the
"Permitted Exceptions"). Lessee has examined the Premises and title to the
Premises and has found all of the same satisfactory for Lessee's purposes.
Lessee acknowledges and agrees that Lessor leases the Premises "AS IS" without
warranty or representation either express or implied as to the fitness for any
particular purpose or merchantability or design or quality of the Premises
except as provided in the Purchase Agreement.
Section 1.2. Use. Lessee may use the Premises for office, warehouse
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and candy manufacturing purposes, provided that such use shall not constitute a
public or private nuisance or waste to the Premises or any part thereof.
Section 1.3. Term. This Lease shall be for a term of ten (10) years,
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beginning on January 27, 1997 ("Commencement Date"), and ending at midnight on
January 26, 2007 (the "Term").
Section 1.4. Intentionally omitted.
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Section 1.5. Rent.
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During the Term Lessee shall pay the amounts set forth in Schedule D
to Lessor by check as basic rent for the Premises ("Basic Rent") at the
location, or to the party designated by Lessor, or pursuant to such other
instructions or to such other person or entity as Lessor from time to time may
designate. Lessor shall give Lessee not less than fifteen (15) days' notice of
any change in the instructions to which such payments are to be made. Such
annual rentals shall be payable in equal monthly installments in advance on the
first day of the Term, and on the first day of each calendar month any portion
of which is within the Term. Any rental payment made in respect of a period
which is less than one (1) month shall be prorated by multiplying the then-
applicable monthly rental by a fraction the numerator of which is the number of
days in such month with respect to which Basic Rent is being paid and the
denominator of which is the total number of days in such month. Lessee shall
perform all its obligations under this Lease at its sole cost and expense, and
shall pay all Basic Rent, additional rent and any other sum due hereunder
(collectively, "Rent") when due and payable, without notice or demand.
ARTICLE II
Section 2.1. Maintenance and Repair.
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(a) Lessee acknowledges that it has received the Premises in good
order and repair. Lessee, at its own expense, will maintain all parts of the
Premises in good safe repair and condition, ordinary wear and tear excepted, and
will take all action and will make all structural and nonstructural, foreseen
and unforeseen and ordinary and extraordinary changes and repairs which may be
required to keep all parts of the Premises in good safe repair and condition,
ordinary wear and tear excepted, (including, but not limited to, all painting,
glass, utilities, conduits, fixtures and equipment, foundation, roof, exterior
walls, heating and air conditioning systems, wiring, plumbing, sprinkler systems
and other utilities, and all paving, sidewalks, roads, parking areas, curbs and
gutters, awnings and fences, but excluding the curing of any violation of
Environmental Laws if such violation was not caused by Tenant, its agents,
employees, contractors or invitees). Excepted as otherwise provided in this
Lease or the Purchase Agreement, Lessor shall not be required to maintain,
repair or rebuild all or part of the Premises under any circumstances. Excepted
as otherwise provided in this Lease or the Purchase Agreement, Lessee waives the
right to require Lessor to maintain, repair or rebuild all or any part of the
Premises, or make repairs at the expense of Lessor pursuant to any Legal
Requirement (defined below), agreement, covenant, condition or restrictions at
any time.
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(b) If all or any part of the Improvements as they exist on the date
that possession of the Premises is delivered to Lessee shall encroach upon any
property, street or right-of-way adjoining or adjacent to the Premises, or shall
violate the agreements or conditions affecting the Premises or any part thereof,
or shall hinder, obstruct or impair any easement or right-of-way to which the
Premises is subject, then, promptly after written request of Lessee (unless such
encroachment, violation, hindrance, obstruction or impairment is a Permitted
Exception) or of any person or entity so affected, Lessor shall, at its expense,
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting therefrom or (ii) if Lessee consents thereto
(which approval shall not be unreasonably withheld), make such changes,
including alterations to, or removal of, the Improvements and take such other
actions as shall be necessary to remove or eliminate such encroachments,
violations, hindrances, obstructions or impairments.
Section 2.2. Alterations, Replacements and Additions. Lessee may, at
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its expense, make additions to and alterations of the Improvements, and
construct additional Improvements, provided that (a) the fair market value of
the Premises shall not be lessened thereby, (b) such work shall be expeditiously
completed, lien free, in a good, safe and workmanlike manner and in compliance
with all applicable Legal Requirements and the requirements of all insurance
policies required to be maintained by Lessee hereunder, (c) no Major Alterations
(defined below) shall be made to the Improvements unless Lessee shall have first
furnished Lessor with such surety bonds or other security acceptable to Lessor
as shall be necessary in Lessor's opinion to assure rebuilding of such
Improvements, and (d) no Major Alterations (defined below) shall be made unless
Lessor's prior written consent shall have been obtained, which consent shall not
be unreasonably withheld or delayed. Lessee shall give Lessor no less than sixty
(60) days prior written notice of any Major Alterations (defined below). Such
notice shall include a description of the proposed work and estimated cost
thereof. Lessee shall provide such further information with respect to such work
as Lessor shall reasonably request. "Major Alterations" shall mean any addition,
alteration or replacement, or any combination thereof, which (i) Lessee
estimates in good faith will cost in excess of $50,000 and will alter any of the
building mechanical systems, the load bearing structure of any of the
Improvements or the roof or (ii) will alter the footprint of the Improvements.
All additions and alterations of the Premises, without payment of any
consideration by Lessor, shall be and remain part of the Premises and the
property of Lessor and shall be subject to this Lease.
ARTICLE III
Section 3.1. Severable Property. Lessee may, at its expense,
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install, assemble or place on the Premises, and remove and substitute any items
of machinery, equipment, furniture, furnishings and other personal property used
or useful in Lessee's business which is not a fixture under the law of the State
of Illinois (the "Severable Property"), and title to same shall remain in
Lessee, but in connection therewith Lessee may not remove any material item of
the building systems or fixtures except in compliance with Section 2.2 and
unless replaced with items of equal or greater utility and value. Lessee's trade
fixtures shall be deemed part of the Severable Property.
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Section 3.2. Removal. Lessee shall remove the Severable Property at
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the expiration or prior termination of this Lease. Any of Lessee's Severable
Property not removed by Lessee prior to the expiration of the Lease or thirty
(30) days after an earlier termination shall be considered abandoned by Lessee
and may be appropriated, sold, destroyed or otherwise disposed of by Lessor
without any obligation to account therefor to Lessee. Lessee will repair at its
expense all damage to the Premises caused by the removal of Lessee's Severable
Property, whether effected by Lessee or Lessor.
ARTICLE IV
Section 4.1. Lessee's Assignment: Subletting; Mortgaging. Lessee
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shall not assign this Lease or sublet all or any part of the Premises for all or
any part of the Term without the consent of Landlord, which consent shall not be
unreasonably withheld. Landlord shall have no obligation to consent to any
assignment or sublease if a Default or Event of Default shall have occurred and
is continuing. Any guarantor of Lessee's obligations under this Lease (each, a
"Guarantor") shall have confirmed in writing that its obligations, liabilities
and duties under its guaranty of this Lease remain in full force and effect
notwithstanding such assignment or sublease. Each such assignment or sublease
shall expressly be made subject to the provisions of this Lease. No such
assignment or sublease shall modify or limit any right or power of Lessor
hereunder or affect or reduce any obligation of Lessee hereunder and all such
obligations shall be those of Lessee and shall continue in full effect as
obligations of a principal and not of a guarantor or surety, as though no
subletting or assignment had been made such liability of the original Lessee
named herein to continue notwithstanding any subsequent modifications or
amendments of this Lease; provided, however, that (other than with respect to
any modifications required by law or on account of bankruptcy or insolvency) if
any modification or amendment is made without the consent of Lessee named herein
(which consent shall not be unreasonably withheld or delayed), such modification
or amendment shall be ineffective as against Lessee named herein to the extent,
and only to the extent, that the same shall increase the rent or other charges
payable by Lessee or materially increase the other obligations of Lessee, it
being expressly agreed that (even if any such modification or amendment shall
materially increase the likelihood of a default by Lessee under this Lease) the
original Lessee named herein shall remain liable to the full extent of this
Lease as if such modification had not been made. Except as provided in Section
4.2, this Lease shall not be mortgaged by Lessee, nor shall Lessee, without the
prior written approval of Lessor, mortgage or pledge its interest in any
sublease of the Premises or the rentals payable thereunder. Any such mortgage or
pledge, any sublease made otherwise than as expressly permitted by this Section
4.1 shall, and (except as otherwise provided in Section 7.2) any assignment of
Lessee's interest hereunder made otherwise than as expressly permitted by this
Section 4.1 shall, at the option of Lessor, be null and void. Lessee shall,
within twenty (20) days after the execution of any assignment or sublease,
deliver a conformed copy thereof to Lessor and any Mortgagee (as defined in
Subsection 6.3(b)). Lessee shall, at the written request of Lessor or any
Mortgagee, deliver copies of any or all subleases and amendments to such
requesting party. Lessee shall not, without the prior written
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consent of Lessor (which Lessor may withhold in its absolute discretion), enter
into any sublease for a term, or granting the sublessee an option to extend the
term, beyond the then existing Term.
Section 4.2. Permitted Transfers. Notwithstanding any provision in
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this Lease to the contrary, Lessee may assign this Lease or sublet all or any
portion of the Premises without Lessor's consent to any: (1) entity resulting
from a consolidation, merger or reorganization by or with Lessee; (2) parent of,
subsidiary of or entity under common control with of Lessee; (3) purchaser of
all or substantially all of the assets constituting Lessee's business as a going
concern; or (4) purchaser of all or substantially all of the outstanding voting
capital stock of Lessee; provided, in all events each Guarantor shall have
confirmed in writing that its obligations, liabilities and duties under its
guaranty of this Lease remain in full force and effect notwithstanding such
assignment or sublease. Notwithstanding the foregoing, Lessee shall also have
the right to mortgage, create a security interest in or collaterally assign this
Lease to secure indebtedness and other obligations in favor of its lenders (or
those of Guarantor) without Lessor's consent, provided that such mortgage,
security interest or collateral assignment shall remain subordinate to the fee
or other estate of Lessor in and to the Premises and provided in all events that
each Guarantor shall have confirmed in writing that its obligations, liabilities
and duties under its guaranty of this Lease remain in full force and effect
notwithstanding such transactions or an actual assignment of Lessee's rights
under this Lease to any such party or their designee (or assignee at a
foreclosure) pursuant to such mortgage, security interest or collateral
assignment. Lessor agrees to execute, acknowledge and deliver such waivers and
consents with respect to the removal of the Severable Property as may be
reasonably requested by Lessee's or Guarantor's lenders so long as such waivers
or consents are in a form reasonably acceptable to Lessor and do not limit or
decrease Lessor's rights under this Lease or increase its obligations or give
such lender rights which Lessee does not have under this Lease (expect Lessor
will allow such a lender a reasonable extension of the periods provided in this
Lease for the curing of Lessee defaults if such lender notifies Lessor of its
intention to try to effect a cure).
Section 4.3. Transfer or Pledge by Lessor. Lessor shall be free to
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transfer its fee interest in the Premises or any part thereof or interest
therein, subject, however, to the terms of this Lease. Any such transfer shall
relieve the transferor of all liability and obligation hereunder (to the extent
of the interest transferred) accruing after the date of the transfer. Lessor
shall be free to pledge or mortgage its interest in the Premises and this Lease
after the commencement of the Term on the condition that either (a) this Lease
shall be superior to such pledge or mortgage, or (b) if this Lease is to be
subordinate to the mortgage of any lender of Lessor that Lessee receives a
nondisturbance agreement reasonably acceptable to Lessee from the holder of such
pledge or mortgage. Lessee agrees to attorn, at the request of any such lender,
to such lender or other transferee upon a transfer title by reason of
foreclosure or deed in lieu of foreclosure. No such transfer shall be effective
as to Lessee until Lessee receives written notice thereof and a copy of the deed
or other instrument evidencing such transfer. In connection with any proposed
transfer, pledge or mortgage of Lessor's fee interest in the Premises or any
portion of the equity interests of Lessor, Lessee shall, within ten (10) days
after Lessor's written request therefor, provide Lessor
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with confirmation in writing that Lessee shall recognize such transferee,
pledgee or mortgagee as such in the event of the consummation of the transaction
described in such notice.
Without limiting the generality of the foregoing, at the written
direction of Lessor, Lessee shall, within ten (10) days thereafter, agree in
writing for the benefit of a Mortgagee that (i) the Mortgagee is a collateral
assignee of Lessor's interest under this Lease, (ii) that until otherwise
notified in writing by such Mortgagee or said Mortgage has been released of
record (and lessee has been provided with a copy of such release), all payments
of Rent are to be made as set forth in said direction (and no subsequent
direction by Lessor shall be honored by Lessee until said Mortgage has been
released of record unless the Mortgagee consents to such subsequent direction in
writing) and (iii) no modifications or amendments shall be made to this Lease
and no waivers of Lessee's obligations under this Lease shall be given or
effective until said Mortgage has been released of record (and Lessee has been
provided with a copy of such release) unless the Mortgagee consents thereto in
writing. Any Mortgagee which becomes an assignee of Lessor's interest in this
Lease, whether by foreclosure of a Mortgage or pursuant to a deed in lieu
thereof, or any successor to such assignee, shall not be obligated to perform
any duty, covenant or condition required to be performed by Lessor under any of
the terms hereof (except for obligations that arise on and after such time as
the Mortgagee shall obtain title to the Premises following foreclosure or deed
in lieu of foreclosure), but on the contrary, Lessee and Lessor, by their
respective executions hereof each acknowledge and agree that notwithstanding any
such assignment each and all of such duties, covenants or conditions required to
be performed by Lessor shall survive any such assignment and shall be and remain
the sole liability of Lessor. Subject to the prior sentence, any transferee of
Lessor's interest which acquires such interest from a Mortgagee, and any
purchaser of such interest at a foreclosure of a Mortgage (or transferee of a
deed in lieu of such a foreclosure), shall not be obligated to any duty,
covenant or condition required to be performed by Lessor under any of the terms
hereof, which obligation arises prior to said transferee's or purchaser's
acquisition of Lessor's interest under this Lease, and shall not otherwise be
liable for the defaults of any prior Lessor hereunder.
Lessor shall cause the Mortgagee existing as of the date hereof to
provide Lessee with a subordination, non-disturbance and attornment agreement in
such Mortgagee's standard form; provided, however, if Lessee undertakes to
negotiate changes to such form (none of which changes shall be the
responsibility of Lessor to cause the Mortgagee to consent to, but Lessor will
cooperate with Lessee in good faith in connection therewith), Lessee shall
reimburse Lessor for any costs or expenses incurred by Lessor in connection
therewith, including Mortgagee's legal fees and expenses charged to Lessor.
ARTICLE V
Section 5.1. Net lease.
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This Lease is a net lease and, any present or future law to the
contrary notwithstanding, shall not terminate except as otherwise expressly
provided herein, nor shall
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Lessee be entitled to any abatement or reduction, set-off, counterclaim, defense
or deduction with respect to any Basic Rent, additional rent or other sums
payable hereunder, except as expressly provided in this Lease. Lessor shall not
be responsible for any action or for payment of any expense relating to the
Premises or its use, unless such action or expense arose or accrued or otherwise
related to the period prior to the Commencement Date of this Lease or unless
otherwise provided in this Lease or in the Purchase Agreement. The parties
intend that the obligations of Lessee hereunder shall be separate and
independent covenants and agreements from the covenants and agreements of Lessor
hereunder and shall continue unaffected unless such obligations shall have been
modified or terminated pursuant to an express provision of this Lease.
Section 5.2. Taxes and Assessments; Compliance With Law.
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(a) Lessee shall pay, prior to delinquency: (i) all taxes,
assessments, levies, fees, water and sewer rents and charges, and all other
governmental charges, general and special, ordinary and extraordinary, foreseen
and unforeseen, which are, during the Term hereof, imposed or levied upon or
assessed against or which arise with respect to (A) the Premises, (B) any Basic
Rent, additional rent or other sums payable hereunder, (C) the operation,
possession or use of the Premises, (ii) all charges of utilities, communications
and similar services serving the Premises; and (iii) all In-Lieu Taxes (as
defined below). It is understood and agreed that books and records with respect
to the items described in this Section 5.2(a)(i) through (iii) shall be kept,
and Lessee's obligations with respect to the same shall arise, on an accrual
basis. Lessee shall not be required to pay any of the items described in Section
5.2(a)(i) through (iii) above which arose or accrued during or otherwise relate
to any time prior to the Commencement Date of this Lease. Lessee shall not be
required to pay any franchise, estate, inheritance, transfer, net income,
capital gains or similar tax of Lessor unless such tax is imposed, levied or
assessed in substitution for any other tax, assessment, charge or levy which
Lessee is required to pay pursuant to this Subsection 5.2(a) ("In-Lieu Taxes").
Lessee will furnish to Lessor, promptly after demand therefor, proof of payment
of all items referred to above which are payable by Lessee. If any special
assessment may legally be paid in installments, Lessee may pay such assessment
in installments; in such event, Lessee shall be liable only for installments
(including interest) which become due and payable with respect to any tax period
occurring in whole or in part during the Term; provided, however, that all
amounts referred to in this Subsection 5.2(a) for the fiscal or tax year in
which the Term shall expire shall be apportioned so that Lessee shall pay those
portions thereof which correspond with the portion of such year as are within
the Term hereby demised. Lessee's obligations under this Section 5.2 shall
survive the expiration or earlier termination of this Lease. Notwithstanding
anything contained herein to the contrary, Lessor shall have the right, prior to
the end of the Term, to send Lessee an estimated xxxx for all taxes and other
charges which Lessee is obligated to pay pursuant to this Section 5.2(a) with
respect to the Term, the final amount of which shall not be determined until
after the end of the Term. Lessee shall pay such estimated xxxx within thirty
(30) days after receipt of such xxxx from Lessor. When the actual amount of such
taxes and other charges is actually determined after the end of the Term, Lessor
shall send Lessee a statement showing the actual amount due and either: (1)
billing Lessee for any additional amount owing from Lessee, which
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additional amount shall be paid by Lessee to Lessor within thirty (30) days
after Lessee's receipt of Lessor's statement, or (2) enclosing any overpayment
by Lessee.
(b) Lessee shall comply with and cause the Premises to comply with
and shall assume all obligations and liabilities with respect to (i) all laws,
ordinances and regulations, and other governmental rules, orders and
determinations presently in effect or hereafter enacted, made or issued, whether
or not presently contemplated (collectively, "Legal Requirements") applicable to
the Premises or the ownership, operation, use or possession thereof and (ii) all
contracts, insurance policies (including, without limitation, to the extent
necessary to prevent cancellation thereof and to insure full payment of any
claims made under such policies), agreements, covenants, conditions and
restrictions now or hereafter applicable to the Premises or the ownership,
operation, use or possession thereof including, but not limited to, all such
Legal Requirements, contracts, agreements, covenants, conditions and
restrictions which require structural, unforeseen or extraordinary changes;
provided, however, that with respect to any of the obligations of Lessee in
clause (ii) above which are not now in existence, Lessee shall not be required
to so comply unless Lessee is either a party thereto or has given its written
consent thereto, or unless the same is occasioned by Legal Requirements or
Lessee's default (including any failure or omission by Lessee) under this Lease.
Notwithstanding the foregoing provisions of this Subsection 5.2(b) to the
contrary, if Lessee, in order to comply with General Legal Requirements (as
defined below) applicable to the Premises, is required to construct a capital
improvement to the Premises which costs in excess of $25,000, and the useful
life of such capital improvement extends beyond the end of the Term, then Lessor
shall reimburse Lessee for a portion of such excess costs above $25,000 incurred
by Lessee, which portion shall equal the product of (i) the amount of such
excess costs, multiplied by (ii) a fraction, the numerator of which is the
remainder obtained by subtracting the remainder of the Term (expressed in
months) at the time the capital improvement is completed, from the expected
useful life of the capital improvement (expressed in months), and the
denominator of which is the expected useful life of the capital improvement
(expressed in months). Lessor shall make such reimbursement to Lessee upon the
later of (i) ninety (90) days after Lessee notifies Lessor of the need for such
capital improvement and Lessee's plans therefor, together with Lessee's then
cost estimate with respect thereto, and (ii) thirty (30) days after Lessor has
received copies of all paid bills, lien waivers and as-built plans (or if none
are prepared for Lessee, marked record sets) with respect to such capital
improvement. "General Legal Requirements" shall mean Legal Requirements which
are applicable to all buildings in the relevant jurisdiction which are similar
to the Premises, and which Legal Requirements do not pertain or arise because of
Lessee's particular use of the Premises (whether for candy manufacturing or as
otherwise permitted under this Lease).
(c) So long as an Event of Default is continuing uncured, if Lessor
or a Mortgagee so requires, then, upon written request of Lessor, Lessee shall
(i) within ten (10) days following such written request, pay to Lessor an amount
equal to (A) the product of one-twelfth(1/12th) of the amount (as reasonably
estimated by Lessor based on the taxes paid for and during the previous year) of
the annual taxes and assessments described in Subsection 5.2(a) hereof
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assessed for the then-current calendar year times the number of calendar months
or portions thereof which have elapsed since the due date of the most recent
xxxx or bills for such taxes, plus (B) the product of one-twelfth (1/12th) of
the annual premiums for insurance required under Section 6.3 hereof times the
number of calendar months or portions thereof which have elapsed since the due
date of the most recent annual insurance xxxx, and (ii) in addition to and
concurrently with the payment of Basic Rent as required in Subsection 1.5(a)
hereof, thereafter pay one-twelfth (1/12th) of the amount (as reasonably
estimated by Lessor based on the taxes paid for and during the previous year) of
the annual taxes and assessments described in Subsection 5.2(a) hereof assessed
for the then current calendar year and the annual premiums for insurance
required in Section 6.3 hereof next becoming due and payable with respect to the
Premises. Lessee shall also pay to Lessor on demand therefor the amount by which
the actual taxes and assessments and insurance premiums exceed the payment by
Lessee required in this Subsection. If the amount held by Lessor with respect to
any tax or insurance payment exceeds the amount due, Lessor shall appropriately
adjust future deposits under this Subsection 5.2(c). Lessor shall not be
considered a fiduciary with respect to any amounts paid to or received by it
pursuant to the terms of this Subsection and shall not be liable for the payment
of interest on all or part of such funds. Amounts paid to Lessor under this
Subsection may be commingled with Lessor's other funds and need not be
segregated.
Section 5.3 Liens. Lessee will promptly (and in all events before the
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same will constitute a default by Lessor under a Mortgage) remove and discharge
any charge, lien, security interest or encumbrance upon the Premises or upon any
Basic Rent, additional rent or other sums payable hereunder which arises for any
reason, including, without limitation, all liens which arise out of the
possession, use, occupancy, construction, repair or rebuilding of the Premises
or by reason of labor or materials furnished or claimed to have been furnished
to Lessee or for the Premises, but not including (i) the Permitted Exceptions,
(ii) this Lease and any assignment hereof or any sublease permitted hereunder,
and (iii) any mortgage, charge, lien, security interest or encumbrance created
or caused by Lessor or its agents, employees or representatives without the
consent of Lessee or caused or created by Lessee as permitted pursuant to
Section 4.2. Nothing contained in this Lease shall be construed as constituting
the consent or request of Lessor, express or implied, to or for the performance
by any contractor, laborer, materialman or vendor, of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Premises or any part thereof. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding an interest in the
Premises or any part thereof through or under Lessee, and that no mechanic's,
materialman's or other liens for any such labor, services or materials shall
attach to or affect the interest of Lessor in and to the Premises.
Section 5.4 Indemnification. Lessee shall defend (with counsel
---------------
reasonably acceptable to Lessor) all actions against Lessor, and any Mortgagee
and their respective owners, agents and employees (collectively, "Indemnified
Parties"), with respect to, and shall pay, protect, indemnify and save harmless
Parties from and against, any and all liabilities,
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losses, damages, costs, expenses (including, without limitation, reasonable
attorney's fees and expenses), causes of action, suits, claims, demands or
judgments of any nature (individually and collectively, "Claims") arising from
or out of (i) this Lease and each of the other documents and instruments
described herein or relating hereto to which Lessee is a party, (ii) the
sublease, possession, use, operation, condition, maintenance, repair or
reconstruction of the Premises, (iii) injury to or death of any person, or
damage to or loss of property, on or about the Premises or any adjoining
sidewalks, streets or ways, or connected with the use, condition or occupancy of
any thereof, (iv) any violation of this Lease by Lessee or by anyone by, through
or under Lessee, (v) any use, act or omission of Lessee or its agents,
employees, contractors, assignees, licensees, sublessees or invites, and (vi)
any contest referred to in Section 5.5 of this Lease. The indemnities and
obligations of Lessee to defend contained in this Section 5.4 and elsewhere in
this Lease (including without limitation, Section 5.5 and 5.6) shall survive the
expiration or early termination of this Lease. Notwithstanding the foregoing,
this Section 5.4 shall not apply to any Claims which arose or accrued during or
otherwise relate to any time prior to the Commencement Date of this Lease or
which result from the affirmative negligent acts of any Indemnified Parties or
their respective employees, contractors or agents.
An Indemnified Party shall give Lessee notice of the existence of any
Claim with respect to which Lessee is responsible to indemnify and defend the
Indemnified Party under this Lease (whether or not pursuant to this Section
5.4), promptly after such Claim is made upon the Indemnified Party; provided (i)
notice of any Claim by any Indemnified Party shall serve as notice to Lessee
with respect to such Claim from all Indemnified Parties, and (ii) failure to
provide such notice shall not diminish in any way Lessee's obligations to
indemnify or defend the Indemnified Parties, except as to the obligations to
Indemnify the Indemnified Parties cited in such Claim, and then only to the
extent Lessee is actually prejudiced thereby. In any event, all settlements of
Claims must be subject to the reasonable approval of each affected Indemnified
Party.
Section 5.5. Permitted Contests. Lessee, at its expense, may contest,
------------------
by appropriate legal proceedings conducted in good faith and with due diligence,
any Legal Requirement with which Lessee is required to comply pursuant to
Subsection 5.2(b), or the amount or validity or application, in whole or in
part, of any tax, assessment or charge which Lessee is obligated to pay or any
lien, encumbrance or charge not permitted by Sections 2.1, 2.2, 5.3, and 6.2,
provided that (a) the commencement of such proceedings shall suspend the
enforcement or collection thereof against or from Lessor and against or from the
Premises, (b) neither the Premises nor any rent therefrom nor any part thereof
or interest therein would be in any danger of being sold, forfeited, attached or
lost, (c) Lessee shall have furnished such security, if any, as may be required
in the proceedings and as may be reasonably required by Lessor, and (d) if such
contest be finally resolved against Lessee, Lessee shall promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon.
Lessor, at Lessess's expense, shall execute and deliver to Lessee such
authorizations and other documents as reasonably may be required in any such
contest (and Lessee shall pay Lessor's reasonable legal fees and expenses
incurred in reviewing any such authorizations and documents). Lessee shall
indemnify and save
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Lessor harmless against any cost or expense of any kind that may be imposed upon
Lessor in connection with any such contest and any loss resulting therefrom.
Lessee shall not be in default hereunder in respect to the compliance with any
Legal Requirement with which Lessee is obligated to comply pursuant to
Subsection 5.2(b) or in respect of the payment of any tax, assessment or charge
which Lessee is obligated to pay or any lien, encumbrance or charge not
permitted by Section 2.1, 2.2, 5.3 and 6.2 which Lessee is in good faith
contesting pursuant to the terms of this Section 5.5.
Section 5.6. Environmental Compliance.
------------------------
(a) For purposes of this Lease,
(i) the term "Environmental Laws" shall mean any
current or future statute, law, regulation, ordinance, order,
consent decree, judgement, permit, license or other requirement
or publication of any international, foreign, federal, state,
regional, county, local or other governmental body which is
applicable to or may affect the Premises and pertains to
protection of the environment, health or safety of persons,
natural resource use, conservation, wildlife, waste management,
hazardous materials or pollution (including regulation of
releases to air, Land, water and groundwater), and includes,
without limitation, the Resource Conservation and Recovery Act,
as amended by the Hazardous and Solid Waste Amendments of 1984,
the Comprehensive Environmental Response, Compensation and
Liability Act the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Federal Water Pollution Control Act, the
Clean Air Act and any similar or implementing state law, and all
current or future amendments, rules and regulations promulgated
thereunder; and
(ii) the term "Regulated Substance" shall mean and
include any, each and all substances or materials now or
hereafter regulated pursuant to any Environmental Laws, including
but not limited to any such substance or material now or
hereafter defined as or deemed to be a "regulated substance,"
"pesticide," "hazardous substance" or hazardous waste," or
included in any similar or like classification or categorization,
thereunder.
(b) Lessee shall:
(i) not cause or permit any Regulated Substance to be
placed, held, located, released, transported or disposed of on,
under, at or from the Premises; provided, however, that the
foregoing provisions shall not prohibit the transportation to and
from, and use, storage, maintenance and handling within, the
Premises of Regulated Substances customarily used in the business
or activity expressly permitted to be undertaken in the Premises
under Section 1.2, provided:
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(a) such Regulated Substances shall be used and maintained only in such
quantities as are reasonably necessary for such permitted use of the
Premises, strictly in accordance with applicable Environmental Laws and the
manufacturers' instructions therefor, (b) such substances shall not be
disposed of, released or discharged on the Premises, and shall be
transported to and from the Premises in compliance with all applicable
Environmental Laws, (c) if any applicable Environmental Law or Lessee's
trash removal contractor requires that any such Regulated Substances be
disposed of separately from ordinary trash, Lessee shall make arrangements
at Lessee's expense for such disposal directly with a qualified and
licensed disposal company at a lawful disposal site and shall ensure that
disposal occurs frequently enough to prevent unnecessary storage of such
Regulated Substances in or on the Premises, and (d) any such remaining
Regulated Substances shall be completely, properly and lawfully removed
from the Premises upon expiration or earlier termination of this Lease.
(ii) contain or remove from the Premises, or perform any other
necessary or desirable remedial action regarding, any Regulated Substance
in any way affecting the Premises if, as and when such containment, removal
or other remedial action is required under any Legal Requirement and, shall
perform any containment, removal or remediation of any kind involving any
Regulated Substance in any way affecting the Premises in compliance with
all Legal Requirements, (all of the foregoing to be at Lessee's sole cost
and expense) and, if requested by Lessor in writing upon reasonable cause
for the need therefor, shall arrange for or permit environmental
inspections and tests to be conducted at the Premises (at Lessee's expense,
unless the request therefor is not the result of Lessee's specific
activities and is only being requested in connection with the potential
sale or refinancing of the Premises by Lessor, in which case the same shall
be at Lessor's expense) by qualified companies specializing in
environmental matters and reasonably satisfactory to Lessor and Lessee in
order to ascertain compliance with all Legal Requirements and the
requirements of this Lease; provided that Lessee's containment or removal
obligations under this Subsection 5.6(b)(ii) shall only apply to Regulated
Substances brought unto or permitted on the Premises by Lessee or its
employees, agents, contractors or invitees. Lessor shall contain or remove
from the Premises, or perform any other necessary remedial action regarding
any Regulated Substances existing on the Premises prior to the Commencement
Date if, as and when such containment, removal or other remedial action is
required under any Legal Requirements.
(iii) provide Lessor with written notice (and a copy as may be
applicable) of any of the following within five (5) days thereof: (A)
Lessee's obtaining knowledge or notice of any kind of the presence, or any
actual or threatened release, of any Regulated Substance in any way
affecting the Premises in
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violation of Environmental Laws or; (B) Lessee's receipt or submission, or
Lessee's obtaining knowledge or notice of any kind, of any report,
citation, notice or other communication from or to any federal, state or
local governmental or quasi-governmental authority regarding any violation
of Environmental Laws in any way affecting the Premises;
(iv) in addition to the requirements of Section 5.4 hereof,
defend all actions against the Indemnified Parties and pay, protect,
indemnify and save harmless the Indemnified Parties from and against any
and all liabilities, losses, damages, costs, expenses, (including, without
limitation, reasonable attorneys' fees and expenses), causes of action,
suits, claims, demands or judgments of any nature relating to Lessee's
violation of any Environmental Laws or Lessee's breach of this Lease as it
pertains to Environmental Laws or Regulated Substances. The indemnity
contained in this Section 5.6 shall survive the expiration or earlier
termination of this Lease and shall relate to events occurring during the
Term; and
(v) comply, and cause the Premises and Lessee's use thereof and
Lessee's property thereon to comply, in all materials respects and at all
times during the Term with all Environmental Laws including without
limitation any provision of Environmental Laws which may require that
notification be made to, or reports filed with, any governmental agency (it
being understood that any failure to promptly comply in all material
respects with any order or directive of any governmental agency having
jurisdiction over the Premises shall constitute a material noncompliance
unless Lessee is contesting in good faith the validity or applicability of
such order or directive pursuant to Section 5.5) and Lessee shall
diligently pursue a cure of all immaterial noncompliance with Environmental
Laws of which Lessee has actual knowledge or of which Lessee has received
notice.
(c) Notwithstanding anything contained herein to the contrary, Lessee
shall not have any obligation or be required to incur any liability with respect
to any acts or omissions relating to Environmental Laws and Regulated Substances
by parties other than Lessee, Lessee's contractors, agents, customers and
invitees, and their respective employees, agents and contractors.
Section 5.7. Maintain Licenses. Lessee shall maintain or cause to
-----------------
be maintained all licenses, permits, charters and registrations material to the
operation of the Premises.
ARTICLE VI
Section 6.1. Intentionally Omitted.
---------------------
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Section 6.2. Condemnation and Casualty.
-------------------------
(a) General Provisions. Lessee hereby irrevocably assigns to Lessor
------------------
any award, compensation or insurance payment to which Lessee may become entitled
by reason of Lessee's interest in the Premises (i) if the use, occupancy or
title of the Premises or any part thereof, is taken, requisitioned or sold in,
by or on account of any actual or threatened eminent domain ("Condemnation") or
(ii) if the Premises or any part thereof are damaged or destroyed by fire, flood
or other casualty ("Casualty"). All awards, compensations and insurance payments
on account of any Condemnation or Casualty are herein collectively called
"Compensation." Lessor may appear in any such proceeding or action to negotiate,
prosecute and adjust any claim for any Compensation, and Lessor shall collect
any such Compensation. Notwithstanding anything to the contrary contained in
this Section 6.2, if permissible under applicable law, any separate compensation
available to Lessee for its moving and relocation expenses, anticipated loss of
business profits, loss of goodwill or equipment and other Severable Property
paid for by Lessee and which are not part of the Premises, shall be paid
directly to and shall be retained by Lessee if and to the extent such separate
compensation shall not reduce the Compensation otherwise payable to Lessor
pursuant hereto; and such separate compensation available to Lessee shall not be
included within the meaning of "Compensation" as used herein. All Compensation
shall be applied pursuant to this Section 6.2, and all such Compensation (less
the reasonable expense of collecting such Compensation) is herein called the
"Net Proceeds."
(b) Substantial Condemnation or Casualty. If a Condemnation or
------------------------------------
Casualty shall, in Lessee's good faith judgment, affect all or a substantial
portion of the Premises and shall render the Premises unsuitable for restoration
for continued use and occupancy in Lessee's business, and in the case of a
Casualty, the Premises cannot be restored within two hundred seventy (270) days
after the date of the casualty, then Lessee may, not later than thirty (30) days
after the date of such Casualty or Condemnation, deliver to Lessor (i) notice (a
"Termination Notice") of its intention to terminate this Lease which termination
shall be effective as of the date of the Casualty or on the date on which
possession must be surrendered pursuant to a Condemnation (the "Termination
Date"), (ii) a certificate of an authorized officer of Lessee describing the
event giving rise to such termination and stating that Lessee has determined
that such Condemnation or Casualty has rendered the Premises unsuitable for
restoration for continued use and occupancy in Lessee's business, and (iii) in
the case of a Casualty, the certificate of an architect licensed in the state of
Illinois stating that the architect has determined, in its good faith judgment,
that the Premises cannot be restored for continued use and occupancy in Lessee's
business within two hundred seventy (270) days after the date of the Casualty,
whereupon this Lease shall terminate on the Termination Date, except with
respect to obligations and liabilities of Lessee hereunder, actual or
contingent, which have arisen on or prior to the Termination Date, upon payment
by Lessee of all Rent and other sums due and payable hereunder to and including
the Termination Date.
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(c) Less Than Substantial Condemnation or Casualty/Substantial
----------------------------------------------------------
Condemnation or Casualty Not Causing Termination. If, as a result of a
------------------------------------------------
Condemnation or Casualty, Lessee does not give or does not have the right to
give notice of its intention to terminate this Lease as provided in Subsection
6.2(b), then this Lease shall continue in full force and effect and Lessor
shall, at its expense, rebuild, replace or repair the Premises so as to restore
the Premises (in the case of Condemnation, as nearly as practicable) to the
condition and character thereof immediately prior to such Casualty or
Condemnation. Lessor shall promptly and diligently pursue such restoration and
shall in any event commence restoration within sixty (60) days after the date of
the Casualty or Condemnation and complete the restoration within two hundred
seventy (270) days of the date of the Casualty or Condemnation; provided,
however, that Lessor shall not be obligated to expend any sums in excess of the
Net Proceeds in connection with the repair or restoration of the Premises. If
Lessor determines in good faith that it will receive insufficient Net Proceeds
to pay for the required restoration work Lessor is to perform, and Lessor is not
willing to fund such deficit from other sources, then Lessor shall promptly send
Lessee a notice of such determination, and unless the parties thereafter agree
to the contrary within thirty (30) days of Lessee's receipt of such notice,
either Lessor or Lessee may terminate this Lease by giving notice thereof to the
other party. If Lessor's restoration of the Premises is not substantially
completed within said 270-day period, then Lessee may terminate this Lease by
giving Lessor written notice thereof prior to the substantial completion of such
restoration work. In no event shall Lessor be responsible for the repair,
replacement or restoration of any Severable Property, all of which shall be
Lessee's responsibility. Lessor shall be entitled to all Net Proceeds. In the
event of any temporary Condemnation, this Lease shall remain in full effect and
Lessee shall be entitled to receive the Net Proceeds allocable to such temporary
Condemnation, except that any portion of the Net Proceeds allocable to the
period after the expiration or termination of the Term shall be paid to Lessor.
(d) Unless the Casualty was caused by the acts of Lessee or its
employees, contractors, invitees or agents, Basic Rent and additional rent
pertaining to taxes shall xxxxx until Lessor's restoration work has been
substantially completed. In the event of a Condemnation not resulting in a
termination of the Lease, Basic Rent shall be adjusted equitably based on the
portion of the Premises so taken.
Section 6.3. Insurance.
---------
(a) Lessee will maintain insurance on the Premises of the following
character:
(i) Insurance against all risks of direct physical loss,
including loss by fire, lightning and other risks which at the time are
included under "extended coverage" endorsements, in amounts sufficient to
prevent Lessor and lessee from becoming a coinsurer of any loss but in any
event in amounts not less than 100% of the actual replacement value of the
Improvements, exclusive of foundations and excavations;
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(ii) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Premises and adjoining streets and sidewalks, in the minimum amounts of
$5,000,000 for bodily injury or death to any one person, $7,000,000 for any
one accident and $500,000 or property damage to others, or in such greater
amounts as are then customary for property similar in use to the Premises;
(iii) Workers' compensation insurance (including employers'
liability insurance, if requested by Lessor) to the extent required by the
law of the State of Illinois;
(iv) Explosion insurance in respect of any boilers and similar
apparatus located on the Premises in the minimum amount of $1,000,000 or in
such greater amounts as are then customary;
(v) During any period of construction on the Premises by
Tenant, builder's risk insurance on a completed value, non-reporting basis
for the total cost of such alterations or improvements, and workers'
compensation insurance as required by applicable law; and
(vi) Such other insurance in such amounts and against such
risks, as in the opinion of Lessor is commonly obtained in the case of
property similar in use to the Premises and located in the State of
Illinois, including, but not limited to, flood insurance (if the Premises
is in a flood plain) and earthquake insurance.
Such insurance shall be written by companies of nationally recognized
financial standing legally qualified to issue such insurance accorded a rating
by A.M. Best Company, Inc. of A:X or higher (or in the case of foreign carriers,
an equivalent rating by an equivalent rating agency) at the time of issuance of
any such policy, and in the case of property damage policies, shall name Lessee
and Lessor as insured parties and include each Mortgagee as additional insureds
as their interests may appear, and in the case of public liability policies,
shall name Lessor and each Mortgagee as additional named insureds. If the
Premises or any part thereof shall be damaged or destroyed by Casualty, and if
the estimated cost of rebuilding, replacing or repairing the same shall exceed
$25,000, Lessee promptly shall notify Lessor thereof. All policies carried by
Lessee may contain Lessee's standard deductibles (provided, without limiting
Lessee's obligations under this Lease, Lessee shall be responsible for payment
of expenses, claims and losses which would have been paid by such policies, but
for the deductibles, up to the amount of such deductibles) and may be in one or
more blanket, umbrella or excess liability policies covering other locations and
activities of Lessee, provided that the Premises are specified therein.
(b) Every such casualty policy shall bear a mortgagee endorsement in
favor of the mortgagee or beneficiary (whether one or more, the "Mortgagee")
under each mortgage, deed
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of trust or similar security instrument creating a lien on the interest of
Lessor in the Premises (whether one or more, the "Mortgage"), and any loss under
any such policy shall be payable to the Mortgagee which has a first lien on such
interest (if there is more than one first Mortgagee, then to the trustee for
such Mortgagees) to be held and applied pursuant to Section 6.2. Every policy
referred to in Subsection 6.3(a) shall provide that it will not be cancelled or
amended except after thirty (30) days' written notice to Lessor and each
Mortgagee and that it shall not be invalidated by any act or negligence of
Lessor, Lessee or any person or entity having an interest in the Premises, nor
by occupancy or use of the Premises for purposes more hazardous than permitted
by such policy, nor by any foreclosure or other proceedings relating to the
Premises, nor by change in title to or ownership of the Premises, nor by any
breach or violation by Lessee of any warranties, declarations or conditions
contained in such policies. Every such policy shall also provide for the waiver
by the insurer or insurers thereunder of any right of subrogation against
Lessee, Lessor and any Mortgagee, and to any set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessee, Lessor or any Mortgagee.
(c) Lessee shall deliver to Lessor and any Mortgagee originals of the
applicable insurance policies or original or duplicate certificates of
insurance, reasonably satisfactory to Lessor and any Mortgagee, evidencing the
existence of all insurance which is required to be maintained by Lessee
hereunder and payment of all premiums therefor, such delivery to be made (i)
upon the execution and delivery hereof and (ii) at least thirty (30) days prior
to the expiration of any such insurance. Lessee shall not obtain or carry
separate insurance concurrent in form or contributing in the event of loss with
that required by this Section 6.3 unless Lessor is named insured therein, and
unless there is a mortgagee endorsement in favor of Mortgagee with loss payable
as provided herein. Lessee shall immediately notify Lessor whenever any such
separate insurance is obtained and shall deliver to Lessor and Mortgagee the
policies or certificates evidencing the same.
(d) The requirements of this Section 6.3 shall not be construed to
negate or modify Lessee's obligations under Section 5.4, 6.2 or Subsection
5.6(b)(iv), except to the extent of Lessor's recovery under any insurance
policies required to be maintained hereunder which insurance proceeds are
directly attributable to such obligations.
Section 6.4. Waiver of Subrogation.
---------------------
Lessor and Lessee desire that to the extent any event is covered by
insurance maintained by either party, any loss, cost, damage or expense related
thereto, including, without limitation, expense of defense, be borne by the
insurer or insurers without regard to the fault of the parties. Accordingly,
and notwithstanding any other provision of this Lease to the contrary, Lessor
and Lessee each hereby waive all rights of action against the other for loss or
damage to the Premises or to property of Lessor and Lessee located on the
Premises, which loss or damage is covered or required to be covered by insurance
pursuant to this Lease, provided, however, that this waiver shall be effective
only when the waiver shall not operate to diminish or invalidate the coverage
provided under such insurance policies.
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ARTICLE VII
Section 7.1 Conditional Limitations; Default Provisions.
-------------------------------------------
(a) Any of the following occurrences or acts shall constitute an
Event of Default under this Lease:
(i) If Lessee shall fail to pay any Basic Rent, additional
rent or other sum, as and when required to be paid by Lessee hereunder and
such failure shall continue for five (5) days following notice from Lessor
of such failure;
(ii) If Lessee shall make or permit any assignment or transfer
of this Lease in breach of this Lease or sublet the Premises or any portion
thereof in breach of this Lease;
(iii) If Lessee shall fail to observe or perform any other
provision hereof not specified in clauses (i) or (ii) and such failure
shall continue for thirty (30) days after written notice to Lessee of such
failure (provided, that in the case of any such failure which cannot be
cured by the payment of money and cannot with diligence be cured within
thirty (30) day period, if Lessee shall commence promptly to cure the same
and thereafter prosecute the curing thereof with diligence, the time within
which such failure may be cured shall be extended for such period not to
exceed ninety (90) additional days as is necessary to complete the curing
thereof with diligence);
(iv) If any representation or warranty of Lessee set forth
herein or in any document, notice, certificate, demand or request executed
by Lessee and delivered to Lessor, or if any representation or warranty of
any Guarantor set forth in a guaranty or in any document, notice,
certificate, demand or request delivered to Lessor, shall prove to be
incorrect in any material adverse respect as of the time when the same
shall have been made in a way adverse to Lessor;
(v) If Lessee or any Guarantor shall file a petition in
bankruptcy or for reorganization or for an arrangement pursuant to any
federal or state law, or shall be adjudicated a bankrupt or become
insolvent or shall make an assignment for the benefit of creditors or shall
admit in writing its inability to pay its debts generally as they become
due, or if a petition proposing the adjudication of Lessee or any Guarantor
as a bankrupt or its reorganization pursuant to any federal or state
bankruptcy law or any similar federal or state law shall be filed in any
court and Lessee or such Guarantor, as applicable, shall consent to or
acquiesce in the filing thereof or such petition shall not be discharged or
denied within ninety (90) days after the filing thereof;
(vi) If a receiver, trustee or liquidator of Lessee or any
Guarantor, or of all or substantially all of the assets of Lessee or any
Guarantor, or of the Premises or Lessee's estate therein shall be appointed
in any proceeding
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brought by Lessee or any Guarantor, or if any such receiver, trustee or
liquidator shall be appointed in any proceeding brought against Lessee or
any Guarantor and shall not be discharged within ninety (90) days after
such appointment, or if Lessee or any Guarantor shall consent to or
acquiesce in such appointment;
(vii) If the Premises shall be abondoned and Lessee fails to pay
the Rent or otherwise maintain and protect the Premises required by this
Lease;
(viii) If any guaranty of this lease (a "Guaranty") shall cease
to be in full force and effect for any reason whatsoever other than a
termination of such Guaranty as expressly provided for in such Guaranty,
but otherwise including, without limitation, a final determination by a
governmental body or court that the Guaranty is invalid, void or
unenforceable or the Guarantor thereunder shall contest or deny in writing
the validity or enforceability of any of its obligations under its
Guaranty; or
(ix) If a default occurs under any Guaranty which default
continues beyond applicable grace periods, if any, for the cure of such
default.
(b) If an Event of Default shall have occurred and be continuing,
Lessor shall have the right to proceed by appropriate court action or actions,
either at law or in equity, to enforce performance by Lessee of the applicable
covenants and terms of this Lease or to recover damages for the breach thereof
or both.
(c) If an Event of Default shall have occurred and be continuing,
Lessor shall have the right to give Lessee notice of Lessor's termination of the
Term. Upon the giving of such notice, the Term and the estate hereby granted
shall expire and terminate on such date as fully and completely and with the
same effect as if such date were the date herein fixed for the expiration of the
Term, and all rights of Lessee hereunder shall expire and terminate, but Lessee
shall remain liable as hereinafter provided.
(d) If an Event of Default shall have occurred and be continuing,
Lessor shall have the immediate right, whether or not the Term shall have been
terminated pursuant to Subsection 7.1(c), to re-enter and repossess the Premises
and the right to remove all persons and property therefrom by summary
proceedings, ejectment, any other legal action or in any lawful manner Lessor
determines to be necessary or desirable. Lessor shall incur no liability by
reason of any such re-entry, repossession or removal. No such re-entry,
repossession or removal shall be construed as an election by Lessor to terminate
the Term unless a notice of such termination is given to Lessee pursuant to
Subsection 7.1(c).
(e) At any time or from time to time after a re-entry, repossession
or removal pursuant to Subsection 7.1(d), whether or not the Term shall have
been terminated pursuant to Subsection 7.1(c), Lessor may relet the Premises for
the account of Lessee, in the name of Lessee or Lessor or otherwise, without
notice to Lessee, for such term or terms and on such conditions and for such
uses as Lessor, in its reasonable discretion, may determine. Lessor may collect
any rents payable by reason of such reletting. Lessor shall not be liable for
any failure to relet the
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Premises or for any failure to collect any rent due upon any such reletting.
Lessor shall use reasonable efforts to relet the Premises in an effort to
mitigate its damages.
(f) No expiration or termination of the Term pursuant to Subsection
7.1(c), by operation of law or otherwise, and no re-entry, repossession or
removal pursuant to Subsection 7.1(d) or otherwise, and no reletting of the
Premises pursuant to Subsection 7.2(e) or otherwise, shall relieve Lessee of its
liabilities and obligations hereunder, all of which shall survive such
expiration, termination, re-entry, repossession, removal or reletting.
(g) In the event of any expiration or termination of the Term or re-
entry or repossession of the Premises or removal of persons or property
therefrom by reason of the occurrence of an Event of Default, Lessee shall pay
to Lessor all Basic Rent, additional rent and other sums required under this
Lease to be paid by Lessee, in each case to and including the date of such
expiration, termination, re-entry, repossession or removal; and, thereafter,
Lessee shall, until the end of what would have been the Term in the absence of
such expiration, termination, re-entry, repossession or removal and whether or
not the Premises shall have been relet, be liable to Lessor for, and shall pay
to Lessor, as liquidated and agreed current damages: (i) all Basic Rent, all
additional rent and other sums which would be payable under this Lease by Lessee
in the absence of any such expiration, termination, re-entry, repossession or
removal, together with all expenses of Lessor in connection with such reletting
(including, without limitation, all repossession costs, brokerage commissions,
reasonable attorneys' fees and expenses (including, without limitation, fees and
expenses of appellate proceedings), employee's expenses, alteration costs and
expenses of preparation for such reletting) less (ii) the net proceeds, if any,
of any reletting effected for the account of Lessee pursuant to Subsection
7.1(e). Lessee shall pay such liquidated and agreed current damages on the dates
on which Rent would be payable under this Lease in the absence of such
expiration, termination, re-entry, repossession or removal, and Lessor shall be
entitled to recover the same from Lessee on each such date.
(h) At any time after any such expiration or termination of the Term
or re-entry or repossession of the Premises or removal of persons or property
therefrom by reason of the occurrence of an Event of Default, Lessor shall be
entitled to recover from Lessee, and Lessee shall pay to Lessor on demand, as
and for liquidated and agreed final damages for Lessee's default and in lieu of
all liquidated and agreed current damages beyond the date of such demand (it
being agreed that it would be impracticable or extremely difficult to fix the
actual damages), an amount equal to the excess, if any, of (i) the aggregate of
all unpaid Basic Rent, additional rent and other sums which would be payable
under this Lease, in each case from the date of such demand (or, if it be
earlier, the date to which Lessee shall have satisfied in full its obligations
under subsection 7.1(g) to pay liquidated and agreed current damages) for what
is or would have been in the absence of such expiration or termination, the then
unexpired Term, discounted at the rate of 6% per annum over (ii) the then fair
rental value of the Premises for the same period, discounted at the rate of 6%
per annum. Nothing in subsection 7.1(g) or this 7.1(h) shall permit Lessor to
double count any unpaid rent and collect such unpaid rent under both subsection
7.1(g) and this 7.1(h). If any applicable law shall limit the amount of
liquidated final damages to less than the foregoing amount, Lessor shall be
entitled to the maximum amount allowable under such law.
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Section 7.2. Bankruptcy or Insolvency.
------------------------
(a) If Lessee shall become a debtor in a case filed under Chapter 7
or Chapter 11 of the Bankruptcy Code and Lessee or Lessee's trustee shall fail
to elect to assume this Lease within sixty (60) days after the filing of such
petition to such additional time as provided by the court within such sixty (60)
day period, this Lease shall be deemed to have been rejected. Immediately
thereupon Lessor shall be entitled to possession of the Premises without further
obligation to Lessee or Lessee's trustee and this Lease upon the election of
Lessor shall terminate, but Lessor's right to be compensated for damages
(including, without limitation, liquidated damages pursuant to any provision
hereof) or the exercise of any other remedies in any such proceeding shall
survive, whether or not this Lease shall be terminated.
(b) (i) If Lessee, Lessee's trustee or the debtor-in-possession has
failed to perform all of Lessee's obligations under this Lease within the time
period (excluding grace periods) required for such performance, no election by
Lessee's trustee or the debtor-in-possession to assume this Lease, whether under
Chapter 7 or Chapter 11, shall be permitted or effective unless each of the
following conditions had been satisfied:
(A) Lessee's trustee or the debtor-in-possession has cured all
defaults under this Lease, or has provided Lessor with Assurance (as
defined below) that it will cure all defaults susceptible of being
cured by the payment of money within ten (10) days from the date of
such assumption and that it will cure all other defaults under this
Lease which are susceptible of being cured by the performance of any
promptly after the date of such assumption.
(B) Lessee's trustee or the debtor-in-possession has compensated
Lessor, or has provided Lessor with Assurance that within ten (10)
days from the date of such assumption it will compensate Lessor, for
any actual pecuniary loss incurred by Lessor arising from the default
of Lessee, Lessee's trustee or the debtor-in-possession as indicated
in any statements of actual pecuniary loss sent by Lessor to Lessee's
trustee or the debtor-in-possession.
(C) Lessee's trustee or the debtor-in-possession has provided
Lessor with Assurance of the future performance of each of the
obligations of Lessee, Lessee's trustee or the debtor-in-possession
under this Lease, and, if Lessee's trustee or the debt-in-possession
shall also (i) deposit with Lessor, as security for the timely payment
of rent hereunder, an amount equal to three (3) installments of Basis
Rent (at the rate than payable) which shall be applied to installments
of Basis Rent in the inverse order in which such installments shall
become due provided all the terms and provisions of this Lease shall
have been complied with, and (ii) pay in advance to Lessor
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on the date each installment of Basis Rent is payable a pro
rata share of Lessee's annual obligations for additional
rent and other sums pursuant to this Lease, such that Lessor
shall hold funds sufficient to satisfy all such obligations
as they become due. The obligations imposed upon Lessee's
trustee or the debtor-in-possession by this section shall
continue with respect to Lessee or any assignee of this
Lease after the completion of bankruptcy proceedings.
(D) Each of Lessee's obligations hereunder shall be
considered an integral part of this Lease and the assumption
of this Lease shall include the entirety of Lessee's
obligations hereunder.
(ii) For purposes of this Section 7.2, Lessor and
Lessee acknowledge that "Assurance" shall mean no less than:
Lessee's trustee or debtor-in-possession has and will continue
to have sufficient unencumbered assets after the payment of all
secured obligations and administrative expenses to assure Lessor
that sufficient funds will be available to fulfill the
obligations of Lessee under this Lease.
(c) If Lessee's trustee or the debtor-in-possession has assumed this
Lease pursuant to the terms and provisions of Subsection 7.2(a) or 7.2(b) for
the purpose of assigning (or elects to assign) this Lease, this Lease may be so
assigned only if the proposed assignee ("Assignee") has provided adequate
assurance of future performance of all of the terms, covenants and conditions of
this Lease to be performed by Lessee. Lessor shall be entitled to receive all
cash proceeds of such assignment. As used herein, "adequate assurance of future
performance" shall mean no less than each of the following conditions has been
satisfied:
(i) The Assignee has furnished Lessor with either (i)
(x) a copy of a credit rating of Assignee which Lessor reasonably
determines to be sufficient to assure the future performance by
Assignee of Lessee's obligations under this Lease and (y) a
current financial statement of Assignee indicating a net worth
and working capital in amounts which Lessor reasonably determines
to be sufficient to assure the future performance by Assignee of
Lessee's obligations under this Lease or (ii) a guarantee or
guarantees, in form and substance satisfactory to Lessor, from
one or more persons with a credit rating and net worth equal to
or exceeding the credit rating and net worth of Lessee as of the
date hereof.
(ii) The proposed assignment will not release or impair
any guaranty of the obligations of Lessee (including the
Assignee) under this Lease.
(d) When, pursuant to the Bankruptcy Code, Lessee's trustee or the
debtor-in-possession shall be obligated to pay reasonable use and occupancy
charges for the use of the
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Premises, such charges shall not be less than the Basis Rent, additional rent
and other sums payable by Lessee under this Lease.
(e) No acceptance by Lessor of rent or any other payments from any
such trustee, receiver, assignee, person or other entity shall be deemed to
constitute such consent by Lessor nor shall it be deemed a waiver of Lessor's
right to terminate this Lease for any transfer of Lessee's interest under this
Lease without such consent.
Section 7.3 Additional Rights of Lessor.
---------------------------
(a) No right or remedy hereunder shall be exclusive of any other
right or remedy, but shall be cumulative and in addition to any other right or
remedy hereunder or now or hereafter existing. Failure to insist upon the strict
performance of any provision hereof or to exercise any option, right, power or
remedy contained herein shall not constitute a waiver or relinquishment thereof
for the future. Receipt by Lessor of any Basic Rent, additional rent or other
sums payable hereunder with knowledge of the breach of any provision hereof
shall not constitute waiver of such breach, and no waiver by Lessor of any
provision hereof shall be deemed to have been made unless made in writing.
Lessor shall be entitled to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the provisions hereof, or to a
decree compelling performance of any of the provisions hereof, or to any other
remedy allowed to Lessor by law or equity.
(b) Lessee hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have to redeem the Premises or to have a continuance
of this Lease after termination of Lessee's right of occupancy by order or
judgement of any court or by any legal process or writ, or under the terms of
this Lease, or after the termination of the Term as herein provided, and (ii)
Lessee specifically waives any rights of redemption or reinstatement available
by law, or any successor law.
(c) If Lessee shall be in default in the observance or performance of
any term or covenant on Lessee's part to be observed or performed under any of
the provisions of this Lease, then, without thereby waiving such default,
Lessor may, but shall be under no obligation to, take all action, including,
without limitation, entry upon the Premises, to perform the obligation of Lessee
hereunder immediately and without notice in the case of any emergency and upon
five (5) business days' notice to Lessee in other cases; provided, however,
other than in the case of an emergency, Lessor will not take any such action
until Lessee's default continues beyond the applicable cure period, if any, set
forth in Section 7.1(a). All reasonable expenses incurred by Lessor in
connection therewith, including, without limitation, attorneys' fees and
expenses (including, without limitation, those incurred in connection with any
appellate proceedings) shall constitute additional rent under this Lease and
shall be paid by Lessee to Lessor upon demand.
(d) If Lessee shall be in default in the performance of any of its
obligations hereunder, and provided Lessor prevails in any action against
Lessee, Lessee shall pay to Lessor,
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on demand, all expenses incurred by Lessor as a result thereof, including,
without limitation, reasonable attorneys' fees and expenses (including, without
limitation, those incurred in connection with any appellate proceedings).
If Lessor shall be made a party to any litigation commenced against Lessee and
Lessee shall fail to provide Lessor with counsel approved by Lessor and pay the
expenses thereof, Lessee shall pay all costs and reasonable attorneys' fees and
expenses in connection with such litigation (including, without limitation, fees
and expenses incurred in connection with any appellate proceedings).
(e) If Lessee shall fail to pay when due any Basic Rent, additional
rent or other sums required to be paid by Lessee hereunder, Lessor shall be
entitled to collect from Lessee as additional rent and Lessee shall pay to
Lessor, in additiom to such Basic Rent, additional rent or other sum, interest
on the past due payment from and including the date it was due until the date it
is paid at the Late Rate. The Late Rate shall be the lesser of (i) that per
annum rate of interest which exceeds by two (2) percentage points the base rate
most recently announced by Citibank, N.A., New York, New York as its Base Rate
or (ii) the maximum rate permitted by applicable law. If Citibank discontinues
the announcement of a Base Rate or substantially alters the meaning thereof,
Lessor may substitute a comparable "prime rate" of a major national bank by
written notice to lessee. The Late Rate shall change as and when said Base Rate
or prime rate changes. In addition, if Lessee shall fail to pay any Basic Rent,
additional rent or other sum, as and when required to be paid by Lessee
hereunder, and Lessor shall have given Lessee notice of such failure pursuant to
Subsection 7.1(a)(i), Lessor shall be entitled to collect from Lessee, and
Lessee shall pay to Lessor, as additional rent, an amount equal to 1% of the
amount shown in such notice as unpaid; provided, Lessor shall not impose said 1%
late charge unless Lessee has been late in the payment of rent more than twice
in any twelve (12) month period.
ARTICLE VIII
Section 8.1 Notices and Other Instruments. All notices, offers,
-----------------------------
consents and other instruments given pursuant to this Lease shall be in writing
and shall validly given when hand-delivered or sent by a courier or express
service guarantying overnight delivery or by telecopy, with original being
promptly sent as otherwise provided above, addressed as follows:
If to Lessor: Xx. Xxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
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With a copy to: Xxxxxx X. Black
Goldberg, Kohn, Bell, Black,
Xxxxxxxxxx & Xxxxxx, Ltd.
00 Xxxx XXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to Lessee: Favorite Brands International, Inc.
00 Xxx-Xxxxx Xxxxxxxxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx
Vice President and General Counsel
Favorite Brands International, Inc.
00 Xxx-Xxxxx Xxxxxxxxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Lessor and Lessee each may from time to time specify, by giving fifteen (15)
days' notice to each other party (i) any other address in the United States as
its address for purposes of this Lease, and (ii) any other person or entity in
the United States that is to receive copies of notices, offers, consents and
other instruments hereunder.
Section 8.2. Estoppel Certificate; Financial Information.
-------------------------------------------
(a) Lessee will upon ten (10) days' written notice at the request of
Lessor, execute, acknowledge and deliver to Lessor a certificate of Lessee
stating that this Lease is unmodified and in full force and effect (or, if there
have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications); and stating the dates to which
Basis Rent, additional rent and other sums payable hereunder have been paid;
either stating that to the knowledge of Lessee no default exists hereunder or
specifying each such default of which Lessee has knowledge and whether or not
Lessee is still occupying and operating the Premises, and making factually
correct statements as to such additional matters as Lessor may reasonably
request. Any such certificate may be relied upon by any actual or prospective
Mortgagee or purchaser of the Premises or of an equity interest in Lessor and
the certificate shall so state. Further, if requested by Lessor, Lessee state in
the certificate that Lessee shall acknowledge a proposed purchaser of Lessors'
interest in the Premises as Lessor under this Lease
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upon the consummation of such proposed sale. Lessee shall also deliver to
Lessor, promptly upon request therefor, such affidavits, certificates and
instruments as may be reasonably requested in order for Lessor to be able to
obtain for prospective Mortgagees or purchasers of Lessor's interest hereunder
or of an interest in Lessor, customary title insurance policies and endorsements
provided that Lessee shall not be obligated to provided any indemnities in
connection therewith. Lessor will, upon ten (10) days' written notice at the
request of Lessee, execute, acknowledge and deliver to Lessee a certificate of
Lessor stating that this Lease is unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications) and the dates to which Basic
Rent, additional rent and other sums payable hereunder have been paid, and
either stating that to the knowledge of Lessor no default exists hereunder or
specifying each such default of which Lessor has knowledge, and making factually
correct statements as to such additional matters as Lessee may reasonably
request. Any such certificate may be relied upon by Lessee or any actual or
prospective assignee or sublessee, or permitted leasehold mortgagee of the
Premises.
(b) If from time to time Lessor notifies Lessee that Lessor intends
to finance or refinance the Premises or to sell the Premises or an interest
therein (or that it is contemplated that a material equity interest in an entity
which is the Lessor will be issued or transferred), then within twenty (20) days
after Lessee's receipt of such notice, Lessee shall deliver to Lessor a copy of
Lessee's most recent annual audited financial statements, and if then available
and later dated, Lessee's most recent quarterly unaudited financial statements;
provided, however, Lessor shall not provide such financials to any proposed
lender or purchaser (or recipient of an equity interest in Lessor) as described
above unless said individual or entity has entered into a confidentiality
agreement with respect thereto in a form reasonably acceptable to Lessee;
provided, further, that such form of agreement shall be acceptable to Lessee if
it is substantially similar to the provisions of Section 10.10 below. In
addition, upon reasonable advance notice, Lessee shall make available an
appropriate financial officer of Lessee to discuss such financial information
with Lessor, any prospective purchaser of Lessor's interest hereunder or of an
interest in Lessor, any Mortgagee or prospective Mortgagee. Such financial
statements may consist of consolidated financial statements which include
Lessee, in which event Lessee shall also provide Lessor, upon request, with
consolidating financial statements.
(c) Lessor, any Mortgagee and their respective agents and designees
may enter upon and examine the Premises at reasonable times and on reasonable
notice and show the Premises to prospective Mortgagees and/or purchasers.
Except in the case of emergency, Lessee may designate an employee to accompany
Lessor, its agents and designees on such examinations. Other than in the event
of an emergency, Lessor shall give Lessee reasonable prior notice of such
entries by Lessor. In the exercise of its rights hereunder, Lessor shall use
reasonable efforts to refrain from interfering with Lessee's business operations
and to minimize any inconvenience, disturbance, loss of business, nuisance or
other damage arising out of such entries, whether such entries are permitted
pursuant to this Section 8.2(c) of the Lease or provided for elsewhere herein.
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Lessor shall promptly reimburse Lessee for any physical property damage suffered
on account of such entries, unless such entries show (or result from) a default
by Lessee under this Lease.
ARTICLE IX
Section 9.1. Intentionally Omitted.
---------------------
ARTICLE X
Section 10.1. No Merger. There shall be no merger of this Lease or
---------
of the leasehold estate hereby created with the fee estate in the Premises by
reason of the fact that the same person acquires or holds, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest
herein or in such leasehold estate as well as the fee estate in the Premises or
any interest in such fee estate.
Section 10.2. Surrender. Upon the expiration or earlier termination
---------
of this Lease, Lessee shall surrender the Premises to Lessor in a condition
comparable to that existing on the date hereof, normal wear and tear, Casualty
and Condemnation loss excepted. The provisions of this Section and Article III
shall survive the expiration or earlier termination of this Lease.
Section 10.3. Separability; Binding Effect; Governing Law. Each
-------------------------------------------
provision hereof shall be separate and independent and the breach of any
provision by Lessor shall not discharge or relieve Lessee from any of its
obligations hereunder. Each provision hereof shall be valid and shall be
enforceable to the extent not prohibited by law. If any provision hereof or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby. All provisions contained in
this Lease shall be binding upon, inure to the benefit of, and be enforceable
by, the permitted successors and assigns of the parties to the same extent as if
each such successor and assign were named as a party hereto. This Lease shall be
governed by and interpreted in accordance with the laws of the state of
Illinois.
Section 10.4. Table of Contents and Headings; Internal References.
---------------------------------------------------
The table of contents and the headings of the various paragraphs and schedules
of this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
Unless stated to the contrary, any references to any section, subsection,
schedule and the like contained herein are to the respective section,
subsection, schedule and the like of this Lease.
Section 10.5. Counterparts. This Lease may be executed in two or
------------
more counterparts and shall be deemed to have become effective when and only
when one or more of such counterparts shall have been executed by or on behalf
of each of the parties hereto (although it shall not be necessary that any
single counterpart be executed by or on behalf of each of the
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parties hereto, and all such counterparts shall be deemed to constitute but one
and the same instrument), and shall have been delivered by each of the parties
to the other.
Section 10.6. Lessor's Liability. Notwithstanding anything to the
------------------
contrary provided in this Lease, it is specifically understood and agreed, such
agreement being a primary consideration for the execution of this Lease by
Lessor, that there shall be absolutely no personal liability on the part of
Lessor or any partner, shareholder or member of Lessor, its successors or
assigns with respect to any of the terms, covenants and conditions of this
Lease, and any liability on the part of Lessor shall be limited solely to its
interest in the Premises, such exculpation of liability to be absolute and
without exception whatsoever.
Section 10.7. Amendments and Modifications. Except as expressly
----------------------------
provided herein, this Lease may not be modified or terminated except by a
writing signed by Lessor and Lessee.
Section 10.8. Additional Rent. All amounts other than Basic Rent
---------------
which Lessee is required to pay or discharge pursuant to this Lease, including
the interest and provided for by Subsection 7.3(g) hereof, shall constitute
additional rent.
Section 10.9. Schedules. The Schedules attached hereto are hereby
---------
incorporated herein by this reference.
Section 10.10. Confidentiality. With respect to the financial
---------------
statements and information delivered to Lessor pursuant to this Lease, and any
other information obtained by Lessor as a result of any examination or
discussion contemplated under this Lease, Lessor agrees that, to the extent that
such information therein contained has not theretofore otherwise been disclosed
in such a manner as to render such information available to the public and that
such information has been clearly marked or labeled as being confidential
information, Lessor will employ reasonable procedures reasonably designed to
maintain the confidential nature of the information therein contained, provided,
that anything herein contained to the contrary notwithstanding, Lessor may
disclose or disseminate such information to: (a) its partners, members or
shareholders and Lessor's and their employees, agents, brokers, consultants,
attorneys and accountants who would ordinarily have access to such information
in the normal course of the performance of their duties; provided, Lessor
informs such recipient that such information is to be kept confidential under
the terms of this Lease; (b) such third parties as Lessor may, in Lessor's
reasonable discretion, deem reasonably necessary or desirable in connection with
or in response to (i) compliance with any law, ordinance or governmental order,
regulation, rule, policy, subpoena, investigation, regulatory, authority request
or requests, or (ii) any order, decree, judgment,subpoena, notice of discovery
or similar ruling or pleading issued, filed, served or purported on its face to
be issued, filed or served (x) by or under authority of any court, tribunal,
arbitration board of any governmental or industry agency, commission, authority,
board or similar entity or (y) in connection with any proceeding, case or matter
pending (or on its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority,
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board or similar entity, provided that Lessor shall endeavor to notify Lessee in
writing prior to making any such disclosure; (c) any prospective purchaser,
assignee or transferee of Lessor's interest in this Lease or the Premises or any
equity interest in Lessor, securities broker or dealer or investment banker in
connection with the sale or proposed sale of Lessor's interest in this Lease or
the Premises or any equity interest in Lessor, provided that Lessor obtains
written confidentiality agreements consistent with the provisions of this
Section from such persons; (d) any Mortgagee or any lender to Lessor or to any
of Lessor's partners, members or shareholders who shall have requested to
inspect such information in its capacity as a Mortgagee or as a lender, to
Lessor or such partners or shareholders or to any such prospective Mortgagee or
lender; provided, Lessor informs such recipient that such information is to be
kept confidential under the terms of this Lease; and (e) any person or entity in
order to enforce Lessor's or any Mortgagee's rights under this Lease; and,
provided further, that Lessor shall not be liable to Lessee or any other person
or entity for damages for any failure by Lessor to comply with the provisions of
this Section 10.16, except in any case involving Lessor's negligence, willful
misconduct or fraudulent misconduct.
Section 10.11. Memorandum of Lease. Lessor will execute and delivery
-------------------
to Lessee a memorandum of this Lease in recordable form (and in a form
reasonably acceptable to Lessor and its counsel), and Lessee may record said
memorandum (the "Memorandum") at its expense. Upon the expiration or earlier
termination of this Lease, Lessee shall promptly execute and deliver to Lessor a
memorandum of the termination of this Lease (the "Termination Memorandum") in
recordable form, which Lessor may prepare and record at Lessee's expense. In the
event Lessee fails to promptly execute and deliver to Lessor the Termination
Memorandum (including any notarization required in connection therewith) after
Lessee's receipt of a request therefor (provided, however, Lessor's request
shall not be effective and Lessee need not respond thereto until this Lease has
been terminated due to the lapse of time or otherwise, or if earlier, until
Lessee's right to possession of the Premises has been terminated), Lessor may,
and is hereby irrevocably granted a power of attorney by Lessee to, execute and
deliver the Termination Memorandum, which power of attorney is coupled with an
interest on the part of Lessor; further, such irrevocable grant of power of
attorney by Lessee for said purpose is assignable by Lessor to any Mortgagee or
any person or entity who may acquire Lessor's interest in the Premises or in
this Lease, and to their respective successors and assigns. The obligations of
Lessee under this Section 10.17 and the power of attorney granted by Lessee
herein shall survive the expiration or earlier termination of this Lease.
Section 10.12. Inconsistent Actions. Lessee and Lessor each intend
--------------------
that Lessor is, and shall be treated as, the owner of the Premises for all
purposes, and that Lessee's interest in the Premises is solely that of a lessee
pursuant to this Lease. Lessee shall not take any action and shall cause
Lessee's affiliates to take no action (including without limitation, the filing
of any tax return) which would be inconsistent with the aforesaid.
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ARTICLE XI
Section 11.1. Option to Purchase. So long as no Default or Event of
------------------
Default shall have occurred and be continuing as of the date of Lessee's notice
hereunder, Lessee may give Lessor a written notice (the "Purchase Notice")
which shall include an irrevocable offer by Lessee to purchase the Premises on a
date (the "Purchase Date") that is not less than six (6) months and not more
than nine (9) months after the date Lessor receives the Purchase Notice, for a
purchase price (the "Purchase Price") equal to the Fair Market Value (as
hereinafter defined).
(a) "Fair Market Value" shall mean the amount a willing buyer would
be willing to pay a willing seller for the Premises in a sale by a seller
without a broker to a buyer without a broker, each being under no compulsion to
buy or sell, assuming the Premises to be (A) in the condition in which it is
required to be kept under this Lease, and (B) untenanted. Fair Market Value, if
Lessor and Lessee are not able to agree on the same within thirty (30) days
after Lessor's receipt of the Purchase Notice (the "Negotiation Period"), shall
be determined pursuant to the procedure set forth in subsection (b) of this
Section 11.1.
(b) Not more than twenty (20) days after the end of the Negotiation
Period wherein Lessor and Lessee failed to agree as to the Fair Market Value of
the Property, the parties shall attempt to agree upon an appraiser. If the
parties agree upon an appraiser, the appraiser so selected shall determine the
Fair Market Value of the Premises within thirty (30) days after selection. If
the parties fail to so agree upon the selection of one such appraiser within
twenty (20) days after the end of the Negotiation Period, Lessee and Lessor
shall each designate, within five (5) business days from the end of such twenty
(20) day period, one appraiser to determine such Fair Market Value. In the event
either party fails to so select its own appraiser, the appraiser selected by the
other party shall determine Fair Market Value. If two appraisers are so
selected, then they shall independently determine the Fair Market Value of the
Premises and complete and forward to Lessor and Lessee their separate appraisal
reports within thirty (30) days after the expiration of such five (5) business
day period. Any appraisal report not so forwarded within such time period shall
be excluded. If only one such report is timely forwarded, then the appraisal set
forth therein shall be the Fair Market Value. If both reports are timely
forwarded and the lower appraisal is not less then ninety percent (90%) of the
higher appraisal, then the arithmetic mean of the two appraisals shall be the
Fair Market Value. If the lower appraisal is less than ninety percent (90%) of
the higher appraisal, then the two appraisers shall meet and select a third
appraiser within ten (10) days after the expiration of such thirty (30) day
period. In the event the two appraisers fail to so select a third appraiser,
either party may obtain court appointment of such third appraiser. The third
appraiser shall independently determine the Fair Market Value of the Premises
and promptly complete and forward its report to Lessor and Lessee. The
arithmetic mean of the two appraisals closest in amount shall be the Fair Market
Value. All appraisers shall be members in good standing of the Appraisal
Institute or any organization succeeding thereto and shall have had not less
than ten (10) years experience with commercial real estate of the type of the
Premises in the location where the Premises are located.
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After determination of the Purchase Price as set forth above, Lessee
shall purchase the Premises from Lessor on the Purchase Date and the provisions
of Section 11.2 shall apply thereto.
Section 11.2. Procedure Upon Purchase. If Lessee shall purchase the
-----------------------
Premises pursuant to this Article XI of this Lease, Lessor shall convey or cause
to be conveyed title thereto by good and sufficient special warranty deed and
any other necessary instruments of conveyance, with covenants only against
Lessor's acts, and subject only to this Lease, the lien of any taxes, exceptions
and encroachments set forth in the title insurance commitment delivered to
Lessee upon execution of this Lease, which are listed in Schedule C attached
hereto and made a part hereof (excluding the mortgages referred to therein),
exceptions and encroachments created or consented to or existing by reason of
any action or inaction by Lessee, and all Legal Requirements. Lessor shall
provide an extended coverage endorsement over the standard printed exceptions.
Upon the Purchase Date, Lessee shall pay to Lessor in immediately
available funds, subject to this Section, (i) the Purchase Price plus, (ii) all
Basic Rent, additional rent and other sums then due and payable hereunder to and
including Purchase Date, plus (iii) any prepayment fees or premiums which Lessor
is required to pay to discharge the current Mortgage, if it is then encumbering
the Property. In connection with such payment, Lessor shall cause to be
discharged any then existing mortgages, lien or deeds of trust arising by,
through or under Lessor.
There shall be no prorations or adjustments at the closing of a
purchase pursuant to this Article 11, except that Basic Rent and all additional
rent shall be prorated to the date of closing.
All charges incident to such purchase, including, without limitation,
escrow fees, recording fees, title insurance premiums and all applicable
transfer taxes (not including any income, capital gain or franchise taxes of
Lessor) which may be imposed by reason of such purchase and the delivery of
said deed and other instruments shall be paid one-half by each of Lessee and
Lessor. Upon the completion of the purchase of the Premises pursuant to this
Article XI, but not prior thereto (whether or not any delay or failure in the
completion of such purchase shall be the fault of Lessor), this Lease shall
terminate, except with respect to obligations and liabilities of Lessee
hereunder, actual or contingent, which have arisen on or prior to such
completion of purchase. In addition to the deed, Lessor shall deliver an ALTA
Statement, Non-Foreign Certificate, Plat Act Affidavit, if required, a
Disclosure Document under the Illinois Responsible Property Transfer Act, if
required, a Release from the Illinois Department of Revenue, if required, and
transfer tax declarations in required form. The transaction shall be closed
through a deed and money escrow in the customary form of escrow instructions
then in use by the title insurer with changes as are required in order to
conform to the terms of this Section 11.2.
Section 11.3. Right of First Offer. If, during the Term, Lessor
--------------------
intends to sell the Premises, Lessor shall give Lessee written notice thereof
which shall include a proposed purchase price for the Premises (the "Sale
Notice"). So long as no Default or Event of Default has occurred
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and is continuing, Lessee shall have the right to purchase Lessor's entire
interest in the Premises (but not less than such entire interest) upon the same
terms and conditions as those set forth in the Sale Notice and this Section
11.3, which right shall be exercised, if at all, only by giving Lessor written
notice thereof (the "Lessee's Purchase Notice") within ten (10) days after
Lessee's receipt of the Sale Notice. Upon giving the Lessee Purchase Notice to
Lessor, Lessee shall be obligated to purchase Lessor's interest in the premises
at the price and on the terms and conditions set forth in the Sale Notice to the
extent not inconsistent with this Section 11.3, such purchase to be consummated
as soon as is reasonable but in any event within ninety (90) days after the
Lessee Purchase Notice is received by Lessor. The provisions of Section 11.2
shall be applicable to such a purchase as if the purchase was occurring pursuant
to Section 11.1, except that (i) the purchase price shall be as set forth in the
Sale Notice and (ii) the expenses of sale shall be shared equally, other than
attorneys' fees as respect to which each party shall pay its own counsel. The
foregoing provisions of this Section 11.3 shall not apply to the sale by Lessor
to any Affiliate (as defined in Schedule E to the Lease) of Lessor or any
Affiliate of any partner, shareholder, member or beneficiary of Lessor, but any
such Affiliate shall remain subject to the provisions of this Section 11.3. The
foregoing provisions also shall not apply to any transfer by Lessor of his
interest in the Premises for estate-planning purposes (including, without
limitation, transfers to Lessor's immediate family members, his estate or any
trust) or as a result of the death of Lessor provided that any transferee shall
remain subject to the provisions of this Section 11.3. If Lessee fails to
strictly comply with the provisions of this Section 11.3, including the time
period for the giving of the Lessee's Purchase Notice, Lessor shall not be
obligated to sell its interest in the Premises to Lessee and Lessor, so long as
it shall have strictly complied with the provisions hereof, shall be free to
transfer its Interest in the Premises to any transferee so long as the purchase
price of Lessor's interest in the Premises is not less than ninety percent (90%)
of the purchase price set forth in the Sale Notice.
Section 11.4. Quiet Enjoyment. So long as Lessee has faithfully performed
---------------
all of its obligations under this Lease, Lessor covenants that Lessee shall
peaceably and quietly have, hold and enjoy the Premises during the Term, subject
to the terms hereof.
Section 11.5 Brokers. Lessee and Lessor each represents and warrants
-------
to the other that it has not had any dealings with any real estate broker,
finder or other person with respect to this Lease in any manner. Each party
agrees to indemnify, defend and hold the other harmless from and against all
claims for broker's commissions or finder's fees by any person claiming to
have been retained by it in connection with this transaction or claiming by,
through or under it to be the procuring cause of this transaction in breach of
the foregoing representation and warranty.
Section 11.6 Force Majeure. Anything in this Lease to the contrary
--------------
notwithstanding, neither party shall be deemed in default with respect to the
performance of any obligation on its part to be performed under this Lease if
such default shall be directly due to any strike, lockout, civil commotion,
war-like operation, invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulation or controls, inability to obtain any material
or
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service, or through acts of God or other cause or causes whether similar or
dissimilar to those enumerated beyond the control of said party, and the period
for said party to perform such obligation shall be extended by a period equal to
the period of delay caused by such reason.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the date first above written.
LESSOR:
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
XXXXX X. XXXXXXX, an individual
LESSEE:
D.J. ACQUISITION CORP., an Illinois corporation
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------------------
Its CEO
--------------------------------------------
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SCHEDULE A
LEGAL DESCRIPTION
THAT PART OF THE WEST 1/2 OF SOUTHWEST 1/4 OF SECTION 28, TOWNSHIP 41 NORTH,
RANGE 12, EAST OF THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: COMMENCING AT
THE NORTHEAST CORNER OF SAID WEST 1/2; THENCE SOUTH 1196.048 FEET ALONG THE EAST
LINE OF SAID WEST 1/2; THENCE WEST ALONG A LINE PARALLEL WITH THE NORTH LINE OF
SAID WEST 1/2 723.98 FEET TO THE POINT OF BEGINNING OF FOLLOWING TRACT OF LAND;
THENCE CONTINUING WEST ALONG SAID PARALLEL LINE 450.0 FEET; THENCE NORTH
PERPENDICULARLY TO SAID PARALLEL LINE TO A POINT ON A LINE 756.066 FEET SOUTH OF
(AS MEASURED ALONG THE EAST LINE OF SAID WEST 1/2) AND PARALLEL WITH THE NORTH
LINE OF SAID WEST 1/2; THENCE EAST ALONG THE LAST DESCRIBED PARALLEL LINE 450.0
FEET; THENCE SOUTH TO THE HEREIN DESCRIBED POINT OF BEGINNING, ALL IN XXXX
COUNTY, ILLINOIS. The Real Property or its address is commonly known as 0000
Xxxx Xxxxxxxxx, Xxx Xxxxxxx, XX 00000. The Real Property tax identification
number is 09-28-300-021-0000.
SCHECULE B
PERSONAL PROPERTY
None.
SCHEDULE C
PERMITTED EXCEPTIONS
1. Drainage ditches, feeders and laterals, and other drainage
easements, if any.
2. Rights of the public, the municipality, and the State of Illinois
in and to that part of the land taken and used for roads and highways, if any.
3. General Real Estate Taxes on the land for the year 1996 and
subsequent years.
4. Mortgage dated February 26, 1993 and recorded March 4, 1993 as
Document Number 93164994, made by Xxxxx Xxxxxxx, a married person, to Park
National Bank & Trust of Chicago, to secure an indebtedness of $2,000,000.00,
subject to the terms of the Subordination, Non-Disturbance and Attornment
Agreement among Lessor, Lessee and Park National Bank.
5. Assignment of Rents dated February 26, 1993 and recorded March 4,
1993 as Document Number 93164995, made by Xxxxx Xxxxxxx, a married person, to
National Bank & Trust of Chicago, subject to the terms of the Subordination,
Non-Disturbance and Attornment Agreement among Lessor, Lessee and Park National
Bank.
6. Mortgage dated August 2, 1995 and recorded August 18, 1995 as
Document Number 95548349, made by Xxxxx Xxxxxxx, a married man, to Park National
Bank & Trust Company, to secure an indebtedness of $500,000.00, subject to
the terms of the Subordination, Non-Disturbance and Attornment Agreement among
Lessor, Lessee and Park National Bank.
7. Assignment of Rents dated August 2, 1995 and recorded August 18,
1995 as Document Number 95548350, made by Xxxxx Xxxxxxx, a married man, to Park
National Bank & Trust Company, subject to the terms of the Subordination, Non-
Disturbance and Attornment Agreement among Lessor, Lessee and Park National
Bank.
8. Grant of easement recorded November 10, 1927 as Document Number
9837696 in favor of the Wisconsin Central Railway Company to occupy a strip,
piece, belt or parcel of land sufficient in width for the construction,
maintenance and operation of a spur track which location is disclosed by
"Exhibit X."
Note: No "Exhibit X" was attached to the above described instrument.
9. Grant of easement recorded January 27, 1964 as Document Number
19031126 in favor of Commonwealth Edison Company and Middle States Telephone
Company of Illinois for electrical and telephone purpose in, upon, under and
along the property described in the instrument.
10. Reservation of utility easement over, under and upon the North 15
feet, the East 6 feet and the West 6 feet of the premises in question, as
disclosed by Deed recorded March 26, 1965 as Document Number 19417709.
11. Reservation of easement for switch track and public utilities
over, under and upon the South 20 feet of the premises in question, as disclosed
by Deed recorded March 26, 1965 as Document Number 19417709.
12. Restriction as contained in Deed recorded March 26, 1965 as
Document Number 19417709; regarding face brick, stone or modern building
material on all exterior walls facing a street, and in no case shall concrete,
brick or unfinished sheet metal be used on any exterior wall.
13. Building setback lines on the premises, 50 feet on the North, 25
feet on the West, 25 feet on the East and 25 feet on the South, and no parking
on the North 50 feet, as contained in Deed recorded March 26, 1965 as Document
Number 19417709.
-2-
SCHEDULE D
BASIC RENT
$38,854 per month commencing on the Commencement Date, subject to
adjustment as follows: If the CPI (as defined below) on any Adjustment Date (as
defined below) shall be greater than the CPI for the Commencement Date, monthly
Basic Rent commencing on such Adjustment Date shall be adjusted by increasing
the monthly Basic Rent originally due hereunder as of the Commencement Date by
adding an amount (the "CPI Escalation Amount") equal to the product obtained by
multiplying: (a) the monthly Basic Rent originally due hereunder as of the
Commencement Date by (b) the percentage increase in the CPI from the
Commencement Date through the Adjustment Date. In no event will the monthly
Basic Rent decrease on any Adjustment Date from the amount of monthly Basic rent
due immediately prior to such date. "Adjustment Date" shall mean each January 1
during the Term.
"CPI" shall mean the Consumer Price Index for All Urban Consumers, All
Items (Base year 1982-1984 = 100) published by the United States Department of
Labor, Bureau of Labor Statistics (or if a separate index is published by the
Bureau of Labor Statistics for a metropolitan area within 100 miles of the
Property, then such metropolitan index). If the Bureau of Labor Statistics
substantially revises the manner in which the CPI is determined, an adjustment
shall be made in the revised index which would produce results equivalent, as
nearly as possible to those which would be obtained hereunder if the CPI were
not so revised. If the 1982-1984 average shall no longer be used as an index of
100, such change shall constitute a substantial revision. If the CPI becomes
unavailable to the public because publication is discontinued, or otherwise,
Landlord shall substitute therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer dollar published by a
governmental agency, major bank, other financial institution, university or
recognized financial publisher. If the CPI is available on a monthly (or
alternating monthly) basis, the CPI for the months in which (or immediately
preceding, as the case may be) the Commencement Date and Adjustment Date
respectively occur shall be used.
