LEASE AGREEMENT
THIS AGREEMENT, made this 1st day of January, 2002, by and between D&P Management Associates, Inc., a Pennsylvania corporation, with a principal place of business located at 179 Mikron Road, Bethlehem, Pennsylvania 18020 (hereinafter called ÒLessorÓ), and the Bethlehem Area School District, with a business address located at 1516 Sycamore Street, Bethlehem, Pennsylvania 18017 hereinafter called ÒLesseeÓ).
WHEREIN IT IS MUTUALLY AGREED AS FOLLOWS:
Section 1. Leased Premises:
Lessor hereby leases to Lessee the certain first rental area labeled ÒB1Ó on Exhibit A attached hereto, and made part hereof, of the property known as 3713 Linden Street in the Township of Bethlehem, County of Northampton, and Commonwealth of Pennsylvania, consisting of approximately Ten Thousand (10,000) Square Feet (the ÒLeased PremisesÓ). Lessee specifically acknowledges that it has inspected the Leased Premises and all fixtures contained therein and accepts the same, without reservation, in an Òas inÒ condition.
Section 2. Term:
The term shall be for ten (10) years beginning on the 1st day of January 2002 and ending on the 31st day of December 2011. The foregoing notwithstanding, Lessor or Lessee may unconditionally terminate the Lease Agreement at any time subsequent to the expiration of the fifth (5th) Lease Year (as indicated in Section 4 of this Agreement) upon six (6) months, prior written notice provided to the Lessee or Lessor, as the case may be, by means of certified mail.
Section 2-1. Option to Renew Term:
INTENTIONALLY OMITTED
Section 3. Possession:
Unless Lessee is already in possession of the Leased Premises, it is understood and agreed that Lessee will take possession on January 1, 2002.
Section 3-1. Use of Premises:
The Leased Premises may be used for governmental or typical public school district purposes, including, but not limited to, storage or warehouse purposes, and/or educational purposes, (i.e., classrooms, etc.), and it shall be Lessee's obligation to obtain all governmental and quasi-governmental approvals for any change in Lessee's current use and Lessor shall be obligated to cooperate fully with Lessee with regard to Lessee's acquisition of said approvals. Upon the execution of this Lease Agreement, Lessee will commence immediately to obtain such permits and permissions. Lessor acknowledges that it has represented to the Lessee that the Leased Premises may be used for governmental purposes.
During the Term of this Lease Agreement, Lessee agrees to pay minimum rents in strict accordance with the following payment schedule:
Lease Month / Year thru Month / Year Annual Monthly
Year Installment
1 January 1, 2002 thru December 31, 2002 28,500.00 $2,375.00
2 January 1, 2003 thru December 31, 2003 29,925.00 2,493.75
3 January 1, 2004 thru December 31, 2004 31,421.25 2,618.44
4 January 1, 2005 thru December 31, 2005 32,992.31 2,749.36
5 January 1, 2006 thru December 31, 2006 34,641.93 2,886.83
6 January 1, 2007 thru December 31, 2007 36,374.02 3,031.17
7 January 1, 2008 thru December 31, 2008 38,192.73 3,182.73
8 January 1, 2009 thru December 31, 2009 40,102.36 3,341.86
9 January 1, 2010 thru December 31, 2010 42,107.48 3,508.96
10 January 1, 2011 thru December 31, 2011 44,212.85 3,684.40
Lessee shall also pay as additional rent the sums described in Sections 5 and Section 8 of this Agreement, if applicable.
This requirement has been waived by the Lessor, however, Lessee hereby agrees to accept responsibility for payment to Lessor for any and all damages caused to the Leased Premises, by the Lessee, which would be considered beyond normal wear and usage.
Lessor shall be responsible for all real estate taxes levied against the Leased Premises during the Term. The foregoing notwithstanding, in the event change in real estate taxes are levied against the property during the Term, Lessor shall have the right, upon notice to Lessee, to increase the rental rate by an amount equal to eighteen (18%) of the value of the tax increase (the Leased Premises of 10,000 square feet equates to 18% of the total 55,000 building square footage). The Lessor shall have the responsibility to decrease the rental rate by an amount equal to eighteen (18%) of the value of the tax decrease. Lessee shall have the option to pay any such rental increase resulting from an increase in real estate taxes in a lump sum payment to Lessor, thereby causing Lessee rental rate to remain as scheduled in Section 4 above. The Lessor shall have the option to pay any such decrease resulting from a decrease in real estate taxes in a lump sum payment to Lessee, thereby causing Lessee rental rate to remain as scheduled in Section 4.
Section 6. Subletting:
Lessor agrees that Lessee may assign or sublet the Leased Premises provided, however, that any such assignment or subletting shall not alter the responsibility of Lessee to continue to remain liable for rental payments and all other obligations of Lessee under this Lease
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Agreement. Subtenant must be approved in writing by Lessor, which approval will not be arbitrarily or unreasonably withheld.
Property is leased Òas-is.Ó
Lessee may make additions, alterations, and/or improvements to the Leased Premises provided any such additions, alterations, and/or improvements do not structurally alter or damage, or detract from the character of the building. Lessee shall notify Lessor in writing with appropriate plans and specifications of any additions, alterations, and improvements that Lessee wishes to make prior to installation thereof. Additions, alterations, and improvements that do structurally alter or damage or detract from the character of the building will require Lessor's approval. Lessee shall be responsible for obtaining any and all approvals or permits required by Law, for any additions, alterations, and/or improvements to the Leased Premises. Lessor shall cooperate with Lessee in securing building or other permits or authorizations required from time to time for any work permitted hereunder or installations by Lessee. Lessor shall notify Lessee in writing, within ten (10) days after receipt of appropriate plans and specifications of any additions, alterations, and/or improvements, that the Lessee shall be obligated to remove same upon termination of this Lease. In the event removal is required by Lessor, Lessee shall repair any damage caused by such removal.
During the term of this Lease Agreement, Lessor shall be responsible for payment of gas, water, and sewer. The Lessee shall be responsible for electric bills, and any and all other utilities that may be required by it to the Leased Premises. It is mutually understood and agreed that the Lease Premises is to be used for storage or warehousing purposes by the Lessee, and, therefore, the Lessor provided heat will be maintained at a minimum of 55 degrees Fahrenheit. The foregoing notwithstanding, Lessee acknowledges that Lessee's rental rate is based upon a maximum annual cost for natural gas for the Leased Premises in the amount of Four Thousand ($4,000.00) Dollars, calculated based upon the Leased Premises of 10,000 square feet being forty-five percent (45%) of the total 22,000 square feet serviced under Lessor's gas meter. At the end of each Lease Year, Lessor shall calculate the total cost of natural gas consumed and in the event the cost of Lessee's proportionate usage exceeds Four Thousand ($4,000.00) Dollars, Lessor shall invoice (with attached gas bills and Lessor's calculations) Lessee for said cost overrun.
Lessee will, at its cost and expense throughout the term of this Lease Agreement, maintain in good condition the interior of the Leased Premises, and will keep the same in good order and condition and will make necessary repairs thereto. All preventative maintenance shall be the responsibility of the Lessee. Lessor shall be responsible for the replacement of any items that have become obsolete or do not work because of the age or due to the condition of the equipment or the building as it was upon commencement of this Lease. Lessee shall be responsible for the replacement of any items, which are part of Lessee's additions, alterations, and/or improvements that become obsolete or do not work for any reason whatsoever, however, Lessee's responsibility for maintenance and repair of Lessee's items shall terminate upon the termination of this Lease Agreement. Roof must be leak free. Any repairs that have to be made in the order of a replacement shall be the responsibility of the Lessor and same shall be made promptly upon notification in writing by the Lessee. Lessor shall maintain in good condition and keep in good repair the exterior and structural components of the building, including the roof and foundation, and the walkways, sidewalks, and parking areas, and shall keep the walkways, sidewalks, and parking areas clear of all obstructions. Lessor shall be responsible for snow removal from all designated walkways and sidewalks.
Lessee, at its expense, shall comply with all laws, orders, and regulations of federal, state and local authorities and, as set forth above, obtain necessary permits to conduct the business contemplated by this Lease Agreement. During the term of the Lease and for any further time the Lessee shall hold the Leased Premises, Lessee shall obtain and maintain at its expense the following types and amounts of insurance.
(1) Fire Insurance - Lessee shall keep its interest in and to all equipment and property in the Leased Premises insured against loss or damage by fire and other hazards. Lessor shall, similarly, keep its interest in the Leased Premises insured. Lessee shall name the Lessor as an additional insured on its policies of insurance or otherwise provide a waiver of subrogation in the customary form.
(2) Personal Injury and Property Damage Insurance - Lessee shall maintain a policy of insurance with a limit of not less than Two Million ($2,000,000.00) Dollars covering liability for bodily injury, property damage, and machinery insurance during the Term of this Lease.
(3) Other Insurance - Lessee shall provide and keep in force other insurances in amounts that may from time to time be required by Lessor against other insurable hazards as are commonly insured against for the type of business activity that Lessee will conduct.
(4) All insurance shall be written with responsible companies licensed to do business in the Commonwealth of Pennsylvania. A Certificate of Insurance evidencing such insurance, provided by the company issuing the policy, shall be provided to the Lessor, or when appropriate, to the holder of any mortgage. A Certificate of Insurance evidencing Lessor's Property/Liability insurance shall be provided to Lessee by the company issuing Lessor's policy.
(a) By Lessor - Lessor shall indemnify and save harmless from and against any and all expenses, liabilities, and claims of every kind, including reasonable counsel fees, arising from: (i) any failure of the Lessor to perform any of the terms or conditions of this Lease which are the Lessor's obligations to perform; (ii) from any act of omission of Lessor or Lessor's agents, contractors, employees, guests, licensees or invitees, and (iii) from the failure of the Lessor to comply with any law of any governmental authority with which it is the legal obligation of the Lessor to comply.
(b) By Lessee - Lessee shall indemnify and save harmless from and against any and all expenses, liabilities, claims of every kind, including reasonable counsel fees, arising from: (i) any failure of the Lessee to perform any of the terms or conditions of this Lease which are the Lessee's obligations to perform; (ii) from any act or omission of Lessee or Lessee's agents, contractors, employees, guests, licensees, or invitees; (iii) from the failure of Lessee to comply with any law of any governmental authority with which it is the legal obligation of the Lessee to comply; (iv) any mechanic's lien or security interest filed against the Leased Premises by reason of any labor or materials contracted for by Lessee, and (v) any injury or damage happening in the Leased Premises.
ÒNotwithstanding the foregoing, if such expense, liability, or claim is caused by the joint or concurring negligence or fault of Lessor and Lessee, the same shall be borne by them to the extent of their respective fault or negligence.Ó
In the event that any casualty damage is only partial, and such that the Leased Premises can be restored to their previous condition within sixty (60) business or working days, the Lessor shall restore the same within such time. The Lessor reserves the right to enter upon the Leased Premises whenever necessary to repair damage caused by fire or other casualty to the building which the Leased Premises is a part, even though the effect of such entry be to render the Leased Premises or a part thereof untenantable. In such event, the rent shall be apportioned and suspended during the time Lessor is in possession, taking into account the proportion of the Leased Premises rendered untenantable and the duration of the Lessor's possession. If, at any time during the term of this Lease Agreement there occurs casualty damage which totally destroys the Premises, then this Lease Agreement shall be terminated at the option of either party hereto and all rent paid by Lessee in advance of said total casualty loss shall be repaid to Lessee. Notice of such termination shall be in writing by the party electing to terminate and must be given within thirty (30) days after such destruction occurs.
Section 13. Signs:
Lessor hereby gives Lessee the right to erect and maintain signs in or about the Leased Premises provided that they are lawfully constructed and maintained. All such signs which are installed or placed upon the Leased Premises by the Lessee shall remain the property of the Lessee, provided such removal is at Lessee's own cost and expense and that the Leased Premises are left in good condition and repair as a result of said removal.
Section 14. Condemnation:
In the event that all or a substantial part of the Leased Premises shall be acquired or condemned by eminent domain, for any public use or purpose, so as to materially affect its use by Lessee, in the judgment of the Lessee, then this Lease Agreement shall cease and be terminated, and Lessor shall have no claim against Lessee for the value of any unexpired term of said Agreement, and any rental paid by Lessee in advance of the date of condemnation shall be repaid by Lessor to Lessee. Lessor shall be entitled to receive and retain the amounts awarded for subject Leased Premises except that Lessee shall be entitled to receive and retain which may be specifically awarded to it in any such condemnation proceedings because of the taking of its trade fixtures and its leasehold improvements which have not become a part of the realty or other allowances for relocation and attendant costs. Lessee shall have no claim against Lessor for the value of any unexpired term of its Lease Agreement.
Section 15. Mechanic's Lien:
Lessee shall promptly pay all contractors and materialmen so as to minimize the possibility of lien attaching to the Lease Premise, and should any such lien be made or filed, Lessee shall bond against or discharge the same within thirty (30) days after written request by Lessor. Nothing herein contained shall be construed as a consent on the part of the Lessor to subject the fee or the estate of the Lessor to liability under the Mechanic's Lien Law of Pennsylvania, it being expressly understood that the Lessor's estate shall not be subject to such liability.
Section 16. Surrender of Premises:
At the expiration of this Lease Agreement, Lessee shall surrender the Leased Premises to Lessor in good order and condition, ordinary wear and tear accepted, and shall surrender all keys for the Leased Premises to Lessor and shall inform Lessor of all combinations of locks, if any, on the Leased Premises. Lessee's obligation to observe or perform this covenant shall survive the expiration or other termination of this Lease Agreement.
Section 17. Defaults of Lessee:
Any one or more of the following shall constitute a default by the Lessee hereunder:
If the Lessee, during the term of this Lease Agreement or any renewal thereof:
(i) Does not pay in full when due and payable any and all rent,
minimum and additional, herein agreed to be paid by Lessee; or
(ii) Violates or fails to perform or otherwise breaches in a material
fashion any covenant or provision hereof; or
(iii) Abandons the Leased Premises; or
(iv) If the leasehold estate or any property of the Lessee on the Premises
shall be exposed for sale on judgment or execution process by any
Sheriff, Marshall, or Constable; or
(v) Becomes bankrupt or insolvent, or files any debt or proceedings, or takes or has taken against Lessee in any court pursuant to any statue,
either of the United States or any State, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee's property, or if it makes an assignment; provided, however, that if an involuntary proceeding shall be swayed or dismissed within sixty (60) days of filing, the same shall not constitute a default by Lessee under this Section.
Should Lessee ever be in default, Lessee shall in that case, have fifteen (15) days after written notice by Lessor of such default to cure the default, if said default is for non-payments of monies; and a commercially reasonable length of time to cure if the said default is pursuant to any other provision of this Lease.
Section 18. Remedies of Lessor:
In the event of default by the Lessee as provided in Section 17 hereof, and in any or either of such events of default at the sole option of the Lessor, Lessor may:
(i) Acceleration of Rent:
The whole balance of minimum and additional rent, or any part thereof, and all reasonable costs shall be taken to be due and payable and in arrears as if by the terms and provisions of this Lease Agreement said balance of minimum and additional rent, or any part thereof, were on that date payable in advance; and
(ii) Termination:
This Lease and the term hereby created, or any renewal term hereof, shall, at the sole option of Lessor, terminate and become absolutely void without any right on the part of the Lessee to save the forfeiture by payment of any sum due or by performance of any provision of this Lease Agreement; provided that the remedies in paragraphs (i) and (ii) of this Section shall be mutually exclusive remedies:
(iii) Entry and Possession:
After notice of default has been given to Lessee by Lessor, and after the expiration of the period within which Lessee may cure any default as provided herein; Lessor may enter the Leased Premises for such purposes as may be permitted by law and may, after ten (10) days written notice to Lessee, remove the property and personnel of Lessee, and store the property in a public warehouse at the expense of the Lessee. Lessor shall give oral and written notice to the Lessee of the location of said public warehouse within twenty-four (24) hours of said removal. Lessor understands and agrees that the property stored on said Leased Premises is necessary for the public health, safety, and welfare, and hereby waives any said right or rights. Entry and possession pursuant to this subsection shall constitute termination of the Lease and upon termination, Lessor may recover from the Lessee all damages resulting from the breach including the cost of recovering the Leased Premises; provided that the remedies in paragraphs (i) and (iii) of this Section shall be mutually exclusive remedies.
(iv) Lease:
Lessor may lease the Leased Premises, or any part or parts thereof, to such person or persons as may be in Lessor's reasonable business judgment be deemed best suited, and Lessee shall be liable for any loss of minimum or additional rent, for the balance of then current term; and
(v) Remedies Cumulative:
All of the remedies hereinbefore given to Lessor and all rights and remedies given to them by law and equity shall be at Lessor's option cumulative and concurrent, except as provided in paragraphs (ii) and (iii) of this Section. No termination of this Lease Agreement or taking or recovering of the Leased Premises shall deprive Lessor of any of their remedies or actions against Lessee for rent due at the time. Notwithstanding the above, Lessor agrees to given written notice to Lessee to cure any default within fifteen (15) days of any breach. If said default is for nonpayment of monies, and a commercially reasonable length of time to cure if the said default is pursuant to any other provision of the Lease.
Section 19. Notices:
Any notice required or permitted to be delivered hereunder shall be deemed received when sent by Federal Express, United Parcel Service, or United States Mail, postage prepaid, certified mail, return receipt requested, addressed to Lessor or Lessee, as the case may be, at the address set forth in the introduction to this Agreement, or such other address which the parties may hereafter designate in writing.
Section 20. Holding Over:
Should the Lessee holdover in possession with the consent of the Lessor after expiration of the original term of this Lease Agreement, or any extended term, such holding over shall not be deemed to extend the term or renew the Lease, but the tenancy thereafter shall be from month to month only, at a rental rate equal to one hundred twenty-five percent (125%) of the rental rate in effect during the last month of the Term, subject to being terminated by either party upon thirty (30) days written notice prior to the expiration of the then current month.
Section 21. Successors:
Except as herein otherwise provided, all right and liabilities herein given to or imposed upon the respective parties hereto shall extend to and be binding upon the several heirs, legal representatives, successors, and assigns of the said parties.
Section 22. Waiver:
The wavier or Lessor or Lessee of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of future breaches, if any, or such term, covenant, or condition herein contained. The subsequent acceptance of rent hereinunder by Lessor shall not be deemed to have been waived by Lessor or Lessee unless such waiver be in writing by Lessor or Lessee.
Section 23. Recording:
By Letter of Agreement dated December 6, 1990, D&P Management Associates, Inc., is the authorized agent for Wind-Drift Real Estate Associates (as well as other real estate holding companies or entities), the owner of the Leased Premises, which authorization permits D&P Management Associates, Inc., to administer the managerial and financial affairs or operations of Wind-Drift Real Estate Associates, and Wind-Drift Real Estate Associates is hereby bound by the terms and conditions of this Lease Agreement.
Section 25. Entire Agreement:
This Agreement and the Exhibit(s) attached hereto and forming a part hereof set forth all the covenants, promises, agreements, conditions, and understanding between the parties hereto. Except as herein otherwise provided, no subsequent alteration, amendment, change, or addition to this Lease Agreement shall be binding upon Lessor or Lessee unless reduced to writing and duly executed.
IN WITNESS WHEREOF, Lessor and Lessee have hereunto set hands and seals this day first above written,
WITNESS:
_________________________________ _______________________________________
Stanley J. Majewski, Jr. Margaret J. Williams
Board Secretary, Bethlehem Area School District Board President, Board of School Directors
D&P Management Associates
By:
_________________________________ _______________________________________
David A. Ronca, Partner