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HomeMy WebLinkAboutAgenda - 05-29-1997 - 4 R t 1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. ACTION AGENDA ITEM ABSTRACT Meeting Date: May 29, 1997 SUBJECT: Lease Approval; 501 West Franklin Street Suite 106 DEPARTMENT: PURCHASING AND Public Hearing: No CENTRAL SERVICES Budget Amendment Reqd? No ATTACHMENT(S): INFORMATION CONTACT: PAM JONES, ext. 2650 Lease Telephone Number- Hillsborough 732-8181 Chapel Hill 967-9251 Mebane 227-2031 Durham 688-7331 PURPOSE: To consider approving a lease for property owned by the County at 501 West Franklin Street, Suite 106. BACKGROUND: In July, 1996 the County purchased property at 5011503 West Franklin Street. The 503 side of the building is to be used as the Skills Development Center. The 501 side of the building remained leased to private tenants. James Lilley Properties, desires to renew their lease for Suite #106. Mr. Lilley operates a property management business from the leased space. The term of the proposed lease is for two years at a rate of $655 per month during the first year, with a 3.5% increase during year two. The proposed lease is attached for your information. It should be noted that this lease provides for payment in lieu of taxes, which is consistent with the County's policy that tenants should be charged taxes where tenants are in a for-profit business and that the payments in lieu will include an amount equivalent to County taxes, municipal taxes, school and any other taxes which may legally be assessed against the property. RECOMMENDATION: The Manager recommends that the Board approve a two year lease with Jim Lilley Properties for the period .tune 1, 1997 through May 31, 1999 substantially under the terms and conditions cited in the attached lease; and authorize the Chair to sign on behalf of the Board. 2 STATE OF NORTH CAROLINA COUNTY OF ORANGE LEASE THIS LEASE, made and entered into as of the 1st day of June, 1997, by and between The County of Orange, hereinafter referred to as "County," and James P. Lilley d/b/a Jim Lilley Properties, hereinafter referred to as "Tenant;" WITNESSETH: THAT FOR and in consideration of the mutual covenants and conditions hereinafter set forth, the parties hereto do hereby agree as follows: 1. Premises. County does hereby lease and let unto Tenant and Tenant does hereby accept as Tenant those certain premises designated as Suite #106 of the Bentley Building, 501 Franklin Street, Chapel Hill, Orange County, North Carolina, as more particularly shown on EXHIBIT A appended hereto. Further, tenant shall have the use of three (3) parking spaces adjacent to the Bentley building in common with other tenants of the Building. 2. Acceptance of Premises. The Tenant represents that the lease property, the sidewalks and structures adjoining the same, any subsurface conditions thereof, and the present uses and nonuses thereof have been examined by the Tenant. The Tenant accepts the same in the condition in which they now are without representation or warranty, express or implied, in fact or by law, by the County, the nature, condition or usability thereof, or the uses to which the leased property may be put. Provided, County shall be responsible for insuring that the heating/air-conditioning system is in good operating condition; the exterior walls and roof, the lighting system (excluding such additions as may be required for Tenant's particular business operation) and the parking area and sidewalks are in good repair on the date of commencement of the lease term. County represents and warrants to Tenant that it holds unencumbered fee title to the lease premises. The County shall not be responsible for any latent defect or change of condition in such building, improvements and personality, and the rent hereunder shall in no case be withheld or diminished on account of any defect in such property, any change in the condition thereof, any damage occurring thereto or the existence with respect thereof of any violations of the laws or regulations of any governmental authority, except as hereinafter provided. 3. Term and Rental. (a) This lease shall commence on June 1. 1997 and shall continue for a term of Two 2 years, which ends on May 31, 1999, both dates inclusive, unless sooner terminated as herein provided. 3 (b) The Tenant agrees to pay the County without demand at its office, or at such other place or places as County may from time to time designate in writing, the following rents for the aforementioned Premises for the term of this lease: Lease year 1 (June 1, 1997 through May 31, 1998): $7,860 per annum ($655/month) Lease year 2 (June 1, 1998 through May 31, 1999): $8,135 per annum ($677.93/month) (c) At the commencement of this Lease the Premises is owned by County and as such is exempt from ad valorem taxes as provided in Article V, Section 2 (3) of the North Carolina Constitution and North Carolina General Statutes 105-278.1. During the term, Tenant agrees to make payments to County in lieu of taxes, as additional rent, in amounts equivalent to Tenant's pro-rata share of property taxes that would be lawfully assessed if the Premises were taxable by County and any municipality in which the Premises is located. These payments are hereafter referred to as "the payments in lieu". This agreement to make the payments in lieu is to eliminate the competitive advantage accruing to Tenant, a profit-making enterprise, from the use for profit of County's tax exempt property. county shall bill Tenant annual and no later than December 1 of each year during the lease term for the full amount of the payments in lieu. Tenant will submit payment to County on or before December 31, 1997 in an amount equal to the payments in lieu for the period June 1, 1997 through May 31, 1998 and on or before December 31, 1998 in an amount equal to the payments in lieu for the period June 1, 1998 through May 31, 1999. County and Tenant recognize that the annual payments required in this subsection each span two tax years and will therefore require estimates based on estimated tax rates. Upon receipt of actual tax rates, County will reconcile the amount paid by Tenant and the actual amount due under this subsection and provide Tenant with a copy of this reconciliation. Any difference between what has been paid and what is due shall be paid on May 1 of each lease year by Tenant as additional rent or credited on May 1 by County against rent. Tenant agrees that the valuation of the Premises shall be made by County's Tax Assessor according to the Schedule of Values adopted by County from time to time and that the determination of the true value in money of the Premises shall be made by the County's Tax Assessor. Tenant may, at its expense, in good faith, contest any such taxes, assessments and other similar charges or the valuation on which the same are based, and, in the event of any such contest may pay the taxes, assessments or other charges under protest during the period of such contest and any appeal therefrom. In the event it is determined by Tenant and Landlord or by the tribunal which ordinarily has jurisdiction that such tribunal does not have jurisdiction or is otherwise not permitted to act as a forum in consequence of the fact that Tenant's liability for the tax is contractual rather than imposed by law, then either party may submit a challenge to a tax, assessment or other similar charge or valuation to arbitration by an arbitration panel made up of MAI qualified/certified appraisers. County shall select one appraiser; Tenant shall select one appraiser; the appraiser selected by County and Tenant shall select a third appraiser and the decision of the arbitration panel shall be binding on both parties. To the extent that enforcement of the payment of any such taxes, assessments and other charges in the event of any contest are legally stayed during the period of such contest, such taxes, 4 assessments and other charges may remain unpaid during the period of such contest and any appeal therefrom. (d) The extension of time for the payment of any installment of rent, or the acceptance by the County of any money other than of the kind herein specified, shall not be a waiver of the right of the County to insist on having all other payments of rent made in the manner and at the time herein specified. (e) If any installment of rent is not received by the fifth (5th) day of any month it is due, Tenant shall pay as additional rent a late payment fee of Fifty Dollars ($50.00). This additional rent shall be due immediately without demand therefor and shall be added to and paid as a part of the installment payment of rent with respect to which it is incurred. 4. Holdover . If the Tenant shall remain in possession of the leased property after the expiration of the original or renewal period as set out above, such possession shall be as a month-to-month tenant. During such month-to-month tenancy, rent shall be payable at the same rate as that in effect during the last month of the term immediately preceding, and the provisions of this lease shall be applicable. 5. Insurance. The County shall keep in force insurance to provide for property damage to the building for replacement cost purposes. Provided, however, Tenant shall be responsible for and pay to County any increase in County's insurance premium occasioned by the nature of the Tenant's business. The Tenant shall maintain fire and casualty insurance covering the Tenant's fixtures, equipment and other property located in the demised premises. Tenant shall keep the leased property insured, at its sole cost and expense, against claims for personal injury or property damage under a policy of general public liability insurance, with limits of at least $1,000,000 for bodily injury and $100,000 for property damage. Such policies shall name the County as additional named insured under the policy. The Tenant shall provide the County certificates of such insurance at or prior to the commencement of the term of this lease, and thereafter within ten (10) days prior to the expiration of such policies. Such policies shall provide that the same may not be canceled without at least ten (10) days prior written notice to County. 6. Rental Adjustment. In addition to the base rental, the Tenant shall assume and pay any additional fire insurance premium, hazard insurance premium, or other extended coverage insurance premium required as a result of any particular operation or use of said premises over and above the insurance premium required to be paid by County in the absence of said operation or use. 7. Signs. The County will place and maintain in and about the leased property at appropriately designated places, such neat and appropriate signs advertising the Tenant as such. Any special Tenant sign will be at the sole cost of the tenant but in the same styling, provided, however, that County shall not unreasonably 5 withhold approval of such signs as Tenant may desire. Upon the termination of this lease the Tenant shall remove all signs and repair any damage to the leased property caused by the erection, maintenance or removal of such signs. 8. Repairs. The County shall maintain the roof and exterior walls of the demised property including exterior paint, provided that in the event Tenant desires to alter the exterior color scheme, said alteration must be approved by County and shall be at the Tenant's expense. In addition, County shall maintain the paved parking area and front entry to the building. The Tenant shall not cause or permit any waste, damage or injury to the leased property. The Tenant, at its sole expense, shall keep the leased property as clean and in good condition (reasonable wear and tear excepted), and shall make all repairs, replacements and renewals, whether ordinary or extraordinary, seen or unforeseen, including all structural repairs, necessary to maintain the interior of the leased property. All repairs, replacements and renewals shall be at least equal in quality of materials and workmanship to that originally existing in the leased property. The County shall be responsible for repairs and maintenance of the roof and outside walls and other structural member, including the foundation of the leased premises. The County shall be responsible for maintenance of the heating plant and air-conditioning systems in such condition as existed at the commencement of this lease, which County warrants to be in good working condition as of the date of this lease. The County shall be responsible for the removal of snow (in a timely manner) from the parking lot and the walkways. The County shall in no event be required to make any repair, alteration or improvement to the interior of the leased property. Any equipment replaced by the Tenant shall belong to the Tenant, save equipment replaced in connection with Tenant's obligation to maintain the premises in the same condition as exists at the commencement of this lease, and all proceeds from the disposition thereof may be retained by the Tenant. The Tenant shall indemnify the County against all costs, expenses, liabilities, losses, damages, suits, fines, penalties, claims and demands including responsible counsel fees, because of Tenant's failure to comply with the foregoing. Maintenance of the paved parking area shall be defined as and limited to maintaining and keeping the parking area in good condition with a hardtop surface pavement and proper striping. 9. Improvements. No substantial alteration, addition or improvement to the leased property shall be made by the Tenant without the written consent of the County. Any alteration, addition or improvement made by the Tenant after such consent shall have been given and any fixtures permanently installed as part thereof, shall at the County's option, become the property of the County upon expiration of or other sooner termination of this lease; provided however, that the County shall have the right to require the Tenant to remove such fixtures at the Tenant's cost upon such termination. This clause shall not preclude Tenant from decorating the interior of the leased premises from time to time in Tenant's discretion. 10. Liens for Improvements by Tenant. The Tenant shall not permit any mechanic's lien to be filed against the fee of the property by reason of work, labor, services or materials supplied or claimed to have been supplied, whether prior or subsequent to the commencement of the term hereof, to the Tenant or anyone holding the leased property, through or under the Tenant. If any such mechanic's lien shall at any time be filed against the leased property, the Tenant shall, within 30 days after 6 r notice of the filing thereof, cause such lien to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction, or otherwise. If the Tenant shall fail to cause such lien to be discharged within such 30 day period, then, in addition to any other right or remedy of the County, the County may, but shall not be obligated to, discharge such lien either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event the County shall be entitled, if the County so elects, to compel the prosecution of an action for the foreclosure of such mechanic's lien by the lienor and to pay the amount of the judgment for and in favor of the lienor, with interest, costs and all other allowances. Any amount paid by the County for any such purposes, with interest thereon at the rate of 6% per annum from the date of payment, shall be repaid by the Tenant to the County on demand, and if unpaid may be treated as additional rent as provided for elsewhere in this lease. Nothing in this lease shall be construed in any way as constituting the consent or request of the County, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any property or as giving the Tenant the right, power of authority to contract for or permit the rendering of any service or the furnishing of any material that would give rise to the filing of any mechanic's lien against the fee of the leased property. 11. Tenant's Warranty of Non-Disturbance. Tenant hereby expressly covenants and agrees that the Tenant shall be responsible for controlling the noise level emanating from the Tenant's use of the demised premises in such a way that other occupants of the building of which the demised premises are a part shall not be disturbed. Tenant shall be responsible for and pay for the installation of any special padding for other noise suppression devices which may be required for control of the level of sound emanating from the demised premises. 12. Tenants Obligation to Comply Applicable Laws and Compliance with Requirements of Insurance Policies. The Tenant shall throughout the term of this lease, at its sole expense, promptly comply with all laws and regulations of all federal, state and municipal governments and appropriate departments, commissions, boards and officers thereof, and the orders and regulations of the National Board of Fire Underwriters, or any other body now or hereafter exercising similar function, which may be applicable to the leased property, the fixtures, and equipment therein, and the sidewalks and curbs adjoining the leased property. The Tenant shall comply with the requirements of all policies of public liability, fire and all other types of insurance at any time in force with respect to the building and other improvements on the leased property. 13. Utilities. The Tenant shall pay charges for gas, electricity, light and power used, rendered or supplied upon or in connection with the leased property. The County shall be responsible for the payment of all charges related to the supply of water to the leased property. 14. Condition of Premises. The Tenant shall, during the term of this lease and any renewal or extension hereof, at its sole expense, cause the leased property to by kept clean and in a manner satisfactory to the County. 7 15. Surrender in Same Good Order and Condition. The Tenant shall vacate the leased property in the good order and repair in which such property now is, ordinary wear and excepted, and shall remove all its property therefrom so that the County can repossess the leased property no later than Noon on the day upon which this lease ends, whether upon notice or by holdover or otherwise. The County shall have the same rights to enforce this covenant by ejectment and for damages or otherwise as for the breach of any other condition or covenant of this lease. Tenant may at any time prior to or upon the termination of this lease or any renewal or extension thereof remove from the leased property all materials, equipment, and property of every other sort or nature installed by the Tenant thereon, provided that such property is removed without substantial injury to the leased property. No injury shall be considered substantial if it is promptly corrected by restoration to the condition prior to the installation of such property, if so requested by the County. Any such property not removed shall become the property of the County. 16. Prohibition Against Unlawful or Extrahazardous Use-Enforcement Against Subtenants. The Tenant may use and occupy the leased property for general office uses and for no other purpose without the prior written consent of County. Tenant shall not use or occupy nor permit the leased property or any part thereof to be used or occupied for any unlawful business, use or purpose, nor for any business, use , or purpose deemed extrahazardous, nor for any purpose or in any manner which is in violation of any present or future governmental laws or regulations. The Tenant shall promptly after the discovery of any such unlawful or extrahazardous use take all necessary steps, legal and equitable, to compel the discontinuance of such use and to oust and remove any subtenants, occupants, or other persons guilty of such unlawful or extrahazardous use. The Tenant shall indemnify the County against all costs, expenses, liabilities, losses, damages, injunctions, suits, fines, penalties, claims and demands, including reasonable counsel fees, arising out of any violation of or default in these covenants. 17. County's Right to Cause Expiration upon Listed Defaults A. The occurrence of any of the following shall constitute an event of default: 1. Delinquency in the due and punctual payment of any rent or additional rent payable under this lease when such rent shall become payable, for a period of five days after the due date. 2. Delinquency by the Tenant in the performance of or compliance with any of the conditions contained in this lease other than those referred to in the foregoing subparagraph 1, for a period of 30 days after written notice thereof from the County to the Tenant, except for any default not susceptible of being cured within such 30-day period, in which event the time permitted to the Tenant to cure such default shall be extended for as long as shall be necessary to cure such default, provided the Tenant commences promptly and proceeds diligently to cure such default, and provided further that such period of time shall not be so extended as to jeopardize the interest of the County in this lease or so as to subject the County to any civil or criminal liabilities. 3. Filing by the Tenant in any court pursuant to any statute, either of the United States or any state, or a petition in bankruptcy or insolvency or for 8 reorganization, or for the appointment of a receiver or trustee of all or a portion of the Tenant's property, or an assignment by the Tenant for the benefit of creditors. 4. Filing against the Tenant in any court pursuant to any statute, either of the United States or of any state, of a petition in bankruptcy or insolvency, or for reorganization, or for appointment of a receiver or trustee of all or a portion of the Tenant's property, if within 180 days after the commencement of any such proceeding against the Tenant such petition shall not have been dismissed. B. Upon the expiration or termination of this lease, the Tenant shall peacefully surrender the leased property to the County, and the County, upon or at any time after such expiration or termination may, without further notice, reenter the leased property and repossess it by force, summary proceedings, ejectment, or otherwise, and may dispossess the Tenant and remove the Tenant and all other persons and property from the leased property and the right to receive all rental income therefrom. C. At any time after such expiration, the County may relet the leased property or any part thereof, in the name of the County or otherwise, for such term (which may be greater or less than the period which would otherwise have constituted the balance of the term of this lease) and on such conditions (which may include concessions or free rent) as the County, in its uncontrolled discretion, may determine, and may collect and receive the rent thereof. D. No such expiration of this lease shall relieve the Tenant of its liability or obligations under this lease, and such liability and obligations shall survive any such expiration. In the event of any such expiration, whether or not the leased property or any part any part thereof shall have been relet, the Tenant shall pay to the County the rent and additional rent required to be paid by the Tenant up to the time of such expiration, and thereafter the Tenant, until the end of what would have been the term of this lease in the absence of such expiration, shall be liable to the County for, and shall pay to the County, as and for liquidated and agreed current damages for the Tenant's default: 1. The equivalent of the amount of the rent and additional rent which would be payable under this lease by the Tenant if this lease were still in effect, less 2. The greater of: (a) The fair rental value of the leased property for the remaining term of the lease, after deducting all the County's reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage Commissions, legal expenses, reasonable attorney's fees, alteration costs, and expenses of preparation for such reletting. (b) The net proceeds of any reletting effected pursuant to the provisions of paragraph d. of this article, after deducting all the County's reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorney's fees, alteration costs, and expenses of preparation for such reletting. 9 E. The Tenant shall pay such current damages (herein called "deficiency") to the County monthly on the days on which the rent and additional rent would have been payable under this lease if this lease were still in effect, and the County shall be entitled to recover from the Tenant each monthly deficiency as such deficiency shall arise. At any time after any such expiration, whether or not the County shall have collected any monthly deficiency, the County shall be entitled to recover from the Tenant, and the Tenant shall pay to the County, on demand, as and for liquidated and agreed final damages for the Tenant's default, an amount equal to the difference between the rent and additional rent reserved hereunder for the expired portion of the lease of the leased property for the same period. In the computation of such damages the difference between any installment of rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the leased property for the period for which such installment was payable shall be discontinued to the date of termination at the rate of four percent per annum. F. The terms "enter", "reenter', "entry", or "reentry" as used in this lease are not restricted to their technical meaning. 18. Lien on Tenant's Improvements and Personal Property. The County shall have first lien paramount to all others on every right and interest of the Tenant in and to this lease, and on any building or improvement on or hereafter placed on the leased property, and on any furnishings, equipment, fixtures, or other personal property of any kind belonging to the Tenant, or the equity of the Tenant therein, on the leased property. Such lien is granted for the purpose of covenanted to be paid by the Tenant, and for the purpose of securing the performance of all of the Tenant's obligations under this lease. Such liens shall be in addition to all rights of the County given under statutes of this state, which are now or shall hereinafter be in effect. The provisions of this paragraph shall not be applicable to liens existing at the commencement of this lease. Provided, that County may, at his option, agree to subordinate this lien to liens arising in connection with purchased of equipment or leasehold improvement financing by Tenant, which agreement County covenants not to unreasonably withhold. 19. County's Right to Receiver upon Tenant's Default. In addition to any other security for the performance of this lease, the Tenant hereby assigns to the County all of the rents and profits which might otherwise accrue to the Tenant from the use, enjoyment, and operation of the leased property, such assignment to become effective, however, only after default by the Tenant in the performance of its obligations under this lease. If the County, upon default of the Tenant, elects to file a suit in equity to enforce the lease and protect the County's right hereunder, the County may upon notice to the Tenant, as ancillary to such suit, apply to any court having jurisdiction for the appointment of a receiver of the leased property, the improvements and buildings located thereon, the personal property located therein, and thereupon the court may forthwith appoint a receiver with the usual powers and duties.of receivers in like cases. Such appointment shall be made by such court as a matter of strict right to the County and without consideration of the adequacy of the value of the Tenant's interest in the lease, or of the value of the property, or the commission of waste thereon, or the deterioration thereof. Nothing herein shall prevent the enforcement of the County's lien 10 for rent in any court or by proceeding authorized to the laws of this state, or the institution by the County of a separate proceeding in equity for the appointment of a receiver as an ancillary remedy to protect the rights and interest of the County. Any and all remedies or proceedings are considered cumulative and not exclusive. 20. Waiver of County's Rights Only by Written Instrument. No failure by the County to insist upon the strict performance of any item or condition of this lease or to exercise any right or remedy available on a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach shall constitute a waiver of any breach or of any such term or condition. No term or condition of this lease required to be performed by the Tenant, and no breach thereof, shall be waived, altered or modified, except by a written instrument executed by the County. No waiver of any breach shall affect or alter any term or condition in this lease, and each such term or condition shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. 21. Performance of Tenant's Obligations - Unpaid Insurance Premiums A. If the Tenant shall at any time fail to pay any amount in accordance with the provisions of this lease, or shall fail to take out, keep in force, or shall fail to perform any f its other obligations under this lease, then the County, after 15 days notice to the Tenant (or without notice in case of an emergency) and without waiving or releasing the Tenant from any obligation of the Tenant contained in this lease, may (but shall be under no obligation to) pay any amount payable by the Tenant hereunder, and perform any other act required to be performed by the Tenant hereunder. The County may enter upon the leased property for such purposes and take any action necessary therefor. B. All sums so paid by the County and all costs and expenses incurred by the County in connection with the performance of any such act, together with interest thereon at the rate of 6% per annum from the respective dates of each such payment and such costs and expenses, shall constitute additional rent payable by the Tenant under this lease and shall be paid by the Tenant to the County on demand. C. Notwithstanding anything in this lease to the contrary, the County shall not be limited, in the proof any damages which the County may claim against the Tenant by reason of the Tenant's failure to provide and keep insurance in force, to the amount of the insurance premiums not paid or incurred by the. Tenant. The County shall also be entitled to recover as damages for such breach the uninsured amount of any loss, together with damages, costs, and expenses of any suit offered or incurred by reason of damage to the leased property occurring during any period when the Tenant shall have failed to provide and keep such insurance in force. 22. Performance of Tenant's Obligations-Taxes. If the Tenant shall default in the performance of•any obligation under this lease, the County after 30 days notice to the Tenant specifying such default, or without notice if any emergency exists, may perform such obligation for the account and at the expense (including reasonable counsel fees) of the Tenant. The amount of any payment made or expense incurred by the County for such purpose, with interest 11 thereon at the rate of 6% per annum, shall be deemed additional rent and forthwith shall be repaid by the Tenant to the County, or, at the County's election, may be added to any subsequent installment of rent due and payable under this lease. When no emergency exists, the provisions of this subparagraph shall be inapplicable, if within 30 days after such notice by the County, the Tenant shall have cured such default, or shall have commenced and shall be proceeding diligently to cure such a default. Nothing herein contained shall be deemed to waive any right of the County to sue for and recover by action at law any sums of which the County may have incurred under the provisions of this subparagraph. The provisions of this paragraph shall survive the termination of this lease. 23. Right of Entry. The County or his agent shall with twenty-four (24) hours notice have the right to enter the leased property at reasonable times in order to examine it, to show it to prospective purchasers or lessees, or to make such decorations, repairs, alterations, improvements or additions as the County may deem necessary or desirable. The County shall be allowed to take all material into and upon the leased property that may be required therefor without the same constituting an eviction of the Tenant in whole or in part. The rent reserved shall not abate while decorations, repairs, alterations, improvements, or additions are being made, whether by reason of loss or interruption of the business of the Tenant or otherwise. During the last month prior to the expiration of the term of this lease, the County may place upon the leased property the usual notices "To Let" or "For Sale", which notices the Tenant shall permit to remain thereon without molestation. If during the last month of the term the Tenant shall have removed all or substantially all of the Tenant's property therefrom, the County may, with the Tenant's permission, immediately enter and later, renovate and redecorate the leased property without elimination of abatement of rent and without liability to the Tenant for any compensation, and such acts shall have no effect upon this lease. If the Tenant or its employees shall not be personally present to permit entry at any time when an entry therein shall be immediately necessary, as herein provided, the County may enter the premises by such means as may be appropriate, including forcible entry, without rendering the County or such agents liable therefor (if during such entry the County or his agents shall accord reasonable care to the Tenant's property), and without in any manner affecting the obligations and covenants of this lease. The County's right of reentry shall not be deemed to impose upon the County any obligation, responsibility or liability for the care, supervision or repair of the leased property other than as herein provided. In the event that it becomes necessary for County to replace or repair any major component or any structural or other system in the leased premises, the County shall have full and unrestricted access to the building and the leased property. The County reserves the right temporarily to interrupt, curtail, stop or suspend air-conditioning and heating service, and all other utility or other services, because of accident or emergency ,or for repairs, alterations, additions, or improvements, or because of the County's inability to obtain, or difficulty or delay in obtaining, labor or materials necessary therefor or compliance with governmental restrictions in connection therewith, or because of any other cause beyond the County's reasonable control, provided that, except in cases of emergency, the County will use its best efforts to limit such stoppage to after-business hours, will notify the Tenant in advance, if possible, of any such stoppage, and, if ascertainable, its estimated duration, and will proceed diligently with the work necessary to resume such service as promptly as possible and in a manner and at 12 times as will not materially interfere with or impair the Tenant's use of the leased property. No diminution or abatement of fixed rent or other compensation shall be claimed by the Tenant, nor shall this lease or any of the obligations of the Tenant hereunder be affected or reduced by reason of such interruption, stoppage, or curtailment, nor shall the same give rise to a claim in the Tenant's favor that such failure constitutes total or partial eviction from the leased property, provided that if the leased property shall be unreasonably untenantable for a continuous period of more than four business days by reason of any such stoppage, the fixed rent payable by the Tenant shall abate until the Tenant shall be again able to use the leased property. 24. Destruction by Fire or Other Casualty. In the event the premises or any substantial portion thereof are destroyed by fire or other casualty during the term of this lease, it is understood and agreed that County shall have no obligation to rebuild, and , at the election of County or Tenant the lease may be terminated 25. Condemnation. If the whole of the leased property, or such portion thereof as will make the leased property unsuitable for the purposes herein leased, is condemned for any public use or purpose by any legally constituted authority, then in either of such events this lease shall cease from the time when possession is taken by such public authority and rental shall be accounted for between the County and the Tenant as of the date of the surrender of possession. Such termination shall be without prejudice to the rights of either the County or the Tenant to recover compensation from the condemning authority for any loss or damage caused by such condemnation. Neither the County nor the Tenant shall have any rights in or to any award made to the other by the condemning authority. 26. Assignment of Lease. The Tenant shall not assign, mortgage, or encumber this lease, nor sublet or permit the leased property or any part thereof to be used by others, without the prior written consent of the County in each instance. If this lease is assigned, or if the leased property or any part thereof, is sublet, or occupied by anybody other than the Tenant, the County may, after an event of default, as hereinabove defined, by the Tenant, collect rent fro the assignee, subtenant, or occupant and apply the net amount collected to the rent herein reserved. No such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of this assignee, subtenant, or occupant as tenant, or a release of covenants in this lease. The consent by the County to an assignment or subletting shall not be construed to relieve the Tenant from obtaining the consent in writing of the County to any further assignment or subletting. Provided, further, County shall not unreasonably withhold consent to assignment. 27. Assignment of Interest in Rents. The County shall have the right, without selling its fee interest in the leased property or assigning its interest in this lease, to assign from time to time the whole of the net rent at any time payable hereunder to persons, firms, corporations, trusts or other entities designated by the County in a written notice to the Tenant, and in any such case the Tenant shall pay the net rent, subject to the terms of this lease, to the County's designee at the address mentioned in any such notice for the period covered by such assignment. 13 28. Subordination to Future Mortgages. This lease shall be subject and subordinate at all times to the lien of mortgages which hereafter may be made a lien on the leased property by the County or his assigns. Although no instrument or act on the part of the Tenant shall be necessary to effectuate such subordination, the Tenant will, nevertheless, execute and deliver such further instruments subordinating this lease to the lien of any such mortgages as may be desired by the mortgagee, provided mortgagee shall agree to and shall execute an attornment agreement suitable to Tenant. 29. Exoneration from liability. The County shall not be liable for any personal injury to the Tenant or to its officers, agents and employees, or to any other occupant of any part of the leased property, irrespective of how such injury or damage may be caused, whether from action of the elements or acts of negligence of the occupants of adjacent properties, or any other persons; provided that nothing contained herein shall relieve the County of the consequences of his own negligence. 30. Reimbursement of Expenses. The Tenant shall pay and indemnify the County against all legal costs and charges, including counsel fees lawfully and reasonably incurred, in obtaining possession of the leased premises after default of the Tenant or after the Tenant's default in surrendering possession upon the expiration or earlier termination of the term of the lease or enforcing any covenant of the Tenant herein contained. The Tenant further covenants that in case the County shall be made party to any litigation commenced against the Tenant, due to act or omission on the part of the Tenant alone, then the Tenant shall pay all expenses, costs, and reasonable attorney's fees incurred by or imposed on the County in connection with such litigation, and such expenses, costs, and attorney's fees shall be additional rent due on the last day after services of notice of such payment or payments, together with interest at a rate of 9% per annum from the date of payment, and shall be collected as any other rent specifically reserved herein. Provided that this claim shall not be applicable where the County shall be made a party by reason of any independent liability of the County caused by some act or omission on the part of the County or resulting from any act or omission on the part of both Tenant and County. 31. Smoke Free FacilityNVeapons Prohibited. Tenant acknowledges that County Buildings are smoke-free. Tenant shall ensure that employees, customers or invitees of the Tenant abide by the County's ordinances, which prohibits smoking. 32. Weapons Prohibited. Tenant acknowledges that a County ordinance has been approved by the Board of Commissioners which prohibits weapons in County facilities, except in limited situation. Tenant will ensure that employees, customers or invitees of the Tenant abide by the County's ordinance which prohibits weapons in the facility. 33. Notice by Registered or Certified Mail. Any notice under this lease must be in writing and must be sent by registered or certified mail to the last address of the party to whom the notice is to be given, as designated by such party in writing. The County hereby designates its address as: 14 County of Orange c/o Stephen J. Manton, agent ESM Associates PO Box 4523 Chapel Hill, NC 27515 The Tenant hereby designates his address as: James P. Lilley d/b/a Jim Lilley Properties 106 Bentley Building 501 West Franklin Street Chapel Hill, NC 27514 34. Grammatical Usage. In construing this lease, feminine or neuter pronouns shall be substituted for those masculine in form and vice versa, and plural terms shall be substituted for singular and singular for plural in any place in which the context so requires. 35. Entire Agreement. This lease contains the entire agreement between the parties, and any executory agreement hereafter made shall be ineffective to change, modify, or discharge it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought. IN TESTIMONY WHEREOF, the parties have hereunto set their hands and seals the day and year first above written. COUNTY: ATTEST: BY: William L. Crowther, Chair Beverly A. Blythe, Clerk to the Board TENANT: WITNESS: James P. Lilley 15 STATE OF NORTH CAROLINA ORANGE COUNTY I, , a Notary Public for said County and State, do hereby certify that Beverly A. Blythe personally appeared before me this date and acknowledged that she is the Clerk to the Board of Commissioners of Orange County, and that by authority duly given and as the act of Orange County, the foregoing instrument was signed in its name by William L. Crowther., Chair, sealed with its official seal, and attested by herself as its Clerk. Witness my hand and official seal, this the day of , 1997. Notary Public My Commission expires: STATE OF NORTH CAROLINA COUNTY OF ORANGE I, , a Notary Public, do hereby certify that personally appeared before me this day and acknowledged the due execution of the foregoing Lease Agreement. WITNESS my hand and official seal this the day of ' 19 Notary Public My commission expires: