Lease And Construction

EXHIBIT 10.12


LEASE AND CONSTRUCTION EXHIBIT
THE ESQUIRE OFFICE BUILDING


I. BASIC LEASE PROVISIONS


A. BUILDING:


The Esquire Office Building
6710 Clayton Road
St. Louis, Missouri 63117


B. LANDLORD and ADDRESS:


Bachelor Foods, Inc., a Kentucky corporation
1956 NW 167th Avenue
Pembroke Pines, FL 33028


C. TENANT: Panera, Inc., a Delaware corporation


D. DATE OF LEASE: September 7, 2000.


E. PREMISES: A portion of an office building consisting of the entire
first and second floors and a portion of the basement floor including
storage space, all as shown on Exhibit E, located at 6710 Clayton
Road, St. Louis, Missouri. The Premises does not include the space
presently occupied by Outback Steakhouse or Landlord's office and
storage adjacent to the Outback Steakhouse on the ground floor.


F. ANNUAL BASE RENT: First year (based upon 365 days): $560,000 per year.
Years 2 - the end of the fourth year: $616,000 per year. The fifth
year through the end of the term: $621,000 per year.


G. LEASE TERM: Ten (10) years commencing on the Commencement Date.


H. COMMENCEMENT DATE: The earlier of i) November 1, 2000; or ii)
substantial completion of Tenant's improvements and Tenant's occupancy
of the Premises.


I. EXPIRATION DATE: Ten (10) full years after the Commencement Date.


J. EXHIBITS:


1. EXHIBIT A: Construction Exhibit.


2. EXHIBIT B: Construction Allowance.


3. EXHIBIT D: Parking Agreement Exhibit


4. EXHIBIT E: Floor Plans of the Premises


II. LEASE OF PREMISES:


For and in consideration of the rental and of the covenants and agreements hereinafter set forth to be kept and performed by Tenant, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises which are contained in THE ESQUIRE OFFICE BUILDING (hereinafter referred to as "the Building") located at


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6710 Clayton Road, St. Louis, Missouri, for the term and upon the conditions provided in this Lease, all as shown on Exhibit C.


Upon delivery of the Premises to Tenant (the Premises Delivery Date), Tenant shall immediately commence the construction of Tenant's Work as described in Exhibit A and shall diligently pursue such construction to completion. "Premises Delivery Date" is the date on which Landlord delivers possession of the Premises to Tenant and the Premises are available to Tenant to commence Tenant's Work.


Tenant shall take the Premises in AS IS condition without any representation or warranty. No agreement of Landlord to alter, remodel, decorate, clean or improve the Premises or the Building and no representation regarding the condition of the Premises or the Building have been made by or on behalf of Landlord to Tenant, except as stated in this Lease. All provisions of this Lease, except for the payment of Rent and all other charges, shall be applicable commencing with the delivery of the Premises to Tenant.


Notwithstanding anything in the Lease to the contrary, Landlord, Outback Steakhouse, or any subsequent tenant of the Outback Steakhouse space ("third party") shall have access to portions of the unfinished basement space for maintenance, repair and installation of its utilities and drainage systems. Where access must be gained through Tenant's space, such third party shall give reasonable prior notice to Tenant.


III. RELOCATION (INTENTIONALLY DELETED)


IV. TERM


The term of this Lease shall commence on the Commencement Date and shall expire on the Expiration Date or at the expiration of the number of years provided in Section 1.G. after the Commencement Date if no Expiration Date is provided.


Tenant agrees that in the event of the inability of Landlord for any reason to deliver possession of the Premises to Tenant as intended by the parties, Landlord shall not be liable for any damages caused by the delay, nor shall the delay affect the validity of this Lease or the obligations of Tenant hereunder.


V. RENT:


Commencing on the earlier of November 1, 2000 or such date that Tenant has relocated its offices into the Premises the Tenant agrees to pay as rental for the use and occupancy of the Premises, at the times and in the manner hereinafter provided the following sums of money.


A. ANNUAL BASE RENT: The Annual Base Rent shall be payable in twelve (12) equal monthly installments during each year, in advance, on the first day of each calendar month without demand and without setoff or deduction. Should the rental period commence on a day of the month other than the first day of such month, then the rental for the first fractional month shall be pro-rated based upon a thirty (30) day month.


B. RENT TAX: In addition to Annual Base Rent and other charges to be paid by Tenant hereunder, Tenant shall reimburse to Landlord, within thirty (30) days of receipt of a demand therefore, any and all taxes, charges, and/or surcharges payable by Landlord (other than a tax on net income) whether or not now customary or within the contemplation of the parties hereto; (a) upon, allocable to, or measured by the area of the Premises or on the rent payable hereunder, including without limitation any gross


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income tax or excise tax levied by the State, any political subdivision thereof, City or Federal Government with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.


Tenant also agrees to pay, before delinquency, any and all taxes levied or assessed and which become payable during the term hereof upon or measured by the value of Tenant's equipment, furniture, fixtures and personal property located in the Premises. For the purpose of determining said amount, figures supplied by the Assessor as to the amount so assessed shall be conclusive. Tenant shall comply with the provisions of any law, ordinance or rule of the taxing authorities which require Tenant to file a report of Tenant's property located in the Premises.


C. INTENTIONALLY DELETED


D. REAL ESTATE TAXES AND OPERATING EXPENSES ADJUSTMENT


1. DEFINITIONS:


For the purposes of this Section V.D., the following words and phrases shall have the following meanings:


a. Intentionally deleted.


b. Intentionally deleted.


c. "Operating Expenses" shall mean all costs, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the management, operation, maintenance, cleaning, trash removal, insuring, heating, cooling, replacement and repair of the Building and the land, and of the personal property, fixtures, machinery, equipment, systems and apparatus located in or used in connection with the Building or the land, including, but not limited to, the following:


(i) Wages, salaries and related expenses and benefits of all on-site and off-site employees engaged directly in the operation, management, maintenance, engineering and security of the Building.


(ii) Supplies, materials and rental of equipment used in the operation, management and maintenance of the Building.


(iii) Maintenance and repair of all heating, air conditioning and ventilation equipment.


(iv) All maintenance, janitorial and service agreements for the Building and the equipment therein, including, without limitation, trash removal, and elevator maintenance.


(v) Reasonable management fees and expenses.


(vi) Legal expenses and consultant's fees; provided, however, that legal expenses shall not include the cost of negotiating leases, collecting rents, evicting


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tenants nor shall it include costs incurred in legal proceedings with or against any tenant or to enforce the provisions of any lease.


(vii) All insurance premiums and costs, including reasonable insurance deductibles and including but not limited to, the premiums and cost of fire, casualty and liability coverage and rental abatement and earthquake insurance (if Landlord elects to provide such coverage) applicable to the Building, Landlord's personal property used in connection therewith, and Landlord's employees.


(viii) Repairs, replacements and general maintenance (excluding repairs and replacements paid by proceeds of insurance).


(ix) All maintenance costs relating to public and service areas of the Building, including (but without limitation) sidewalks, landscaping, service areas, mechanical rooms and Building exteriors.


(x) Amortization (together with reasonable financing charges) of capital improvement made to the Building subsequent to the initial construction of the building which will improve the operating efficiency of the Building or which may be required to comply with laws, ordinances, rules or regulations promulgated, adopted or enforced after completion of the initial construction of the Building and improvements of the Premises pursuant to Exhibit A.


(xi) Costs paid for parking area maintenance, repairs or restoration or costs for these items paid pursuant to any reciprocal easement or similar agreement.


(xii) All maintenance and repair costs pursuant to Article XII.


MAINTENANCE.


Operating Expenses shall not include the following: costs of improvements to the Premises and the premises of other tenants of the Building; charges for depreciation of the original cost of the Building; interest and principal payments on mortgages; ground rental payments; and salaries and other compensation of executive officers of the Manager senior to the individual building manager. Operating Expenses also exclude the following:


(a) The cost (or the depreciation of the cost) of the original construction of the Building or any additions or expansions to the Common Areas or the Building (permitted capital expenses shall be capitalized and depreciated pursuant to generally accepted accounting principles with an imputed interest rate of 2% over the prime rate); (b) the cost of correcting any defects in the original construction of the Building; (c) any reserves for future expenditures not yet incurred; (d) ground lease rental; (e) costs incurred by Landlord for repair or restoration to the extent that Landlord is reimbursed by insurance or condemnation proceeds or that the same is covered by warranty; (f) costs, including permit, license and inspection costs incurred with respect to the installation of improvements made for tenants or other occupants or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants; (g) attorneys' fees, leasing commissions and other costs and expenses incurred in connection with negotiations or disputes with present or prospective tenants or other occupants of the Building; (h) expenses in connection with services or benefits which are not offered to Tenant; (i) costs incurred by Landlord due to the negligence or misconduct of Landlord or its agents, contractors, licensees and employees or the violation by Landlord or any tenants or other occupants of the terms and conditions of another lease of space or other agreements including this Lease; (j) overhead and profit increment paid to landlord or to subsidiaries or affiliates of Landlord


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for services to the extent the same exceeds the costs of such services rendered by other first-class unaffiliated third parties on a competitive basis; (k) interest, principal points and fees on debts or amortization on any mortgage or mortgages or any other debt instrument encumbering all or any portion of the Building or the real property upon which the Building is located; (1) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; (m) items and services for which Tenant or any other tenant reimburses Landlord or which Landlord provides exclusively to one or more tenants (other than Tenant) but not all tenants without reimbursement; (n) advertising and promotional expenditures in connection with leasing the Building, and costs of the installation of signs identifying the owner and/or manager of the Building; (o) electric power costs for which any tenant or occupant directly contracts with the local public service company; (p) any costs relating to hazardous materials, asbestos and the like not resulting from actions of Tenant and which are not incidental to the operation of a typical suburban office building; (q) charitable contributions; (r) off-site traffic lights; (t) any charge for Landlord's income taxes, excess profit taxes, or franchise taxes; (v) the cost of any electric current or other utility furnished to any leaseable area of the Building; and (w) there shall be no duplication in charges to Tenant by reason of the provision in this Lease setting forth Tenant's obligation to reimburse Landlord for common area expenses and any other provision herein.


d. Intentionally deleted


e. "Taxes" shall mean all federal, state and local governmental taxes, assessments and charges (including transit, transit district, or business district taxes, charges, surcharges, or assessments) of every kind or nature, whether general, special, ordinary or extraordinary, which Landlord shall pay or become obligated to pay because of or in connection with the ownership, leasing, management, control or operation of the Building and the Land. For purposes hereof, Taxes for any year shall be Taxes which are due for payment or paid in that year, and shall include any interest on assessments payable in installments. Taxes shall not include any capital stock, inheritance, general income, gift or estate taxes, except that if a change occurs in the method of taxation resulting in whole or in part in the substitution of any such taxes, or any other assessment, for any Taxes as above defined, such substituted taxes or assessments shall be included in the Taxes.


f. Intentionally deleted


g. Intentionally Deleted.


h. Intentionally Deleted.


i. Intentionally deleted


2. ADJUSTMENTS TO ANNUAL BASE RENT


Commencing November 1, 2001 and each year thereafter(including any and all option periods), Annual Base Rent shall be increased (but not decreased)by an amount equal to Tenant's pro rata share of the difference between the sum of the Operating and Tax Expenses for the year in question and the sum of the Operating and Tax Expenses for the "Base Year." The "Base Year" shall be the fiscal year November 1, 2000 through October 31, 2001. Base Year Taxes shall be based upon the tax assessment for the calendar year 2000. For services and other Operating Expense items which are provide to Tenant exclusively (including, but not limited to, janitorial service and HVAC maintenance repair), Tenant's pro rata share shall be 100%. For


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services and Operating Expense items which are provided for the benefit of other tenants in the Building, Tenant's pro rata share shall be fairly and equitably determined which determination may be based upon square footage of space occupied by tenants in the Building; provided, however, it will be 75% so long as Outback Steakhouse is occupying the remainder of the Building other than a small space next to the Outback space occupied by the Landlord.


3. PROJECTIONS


For purposes of calculating Taxes and Operating Expenses for any year, Landlord may make reasonable estimates, forecasts or projections (collectively, the "Projections") of Taxes and Operating Expenses for such year. Landlord shall deliver to Tenant a written statement (i) setting forth the Projections of Operating Expenses and Taxes for the year in question and (ii) providing a calculation of the increase in installments of Annual Base Rent to become effective for said year; provided, however, that the failure of Landlord to provide any such statement shall not relieve Tenant from its obligation to continue to pay Adjusted Annual Base Rent at the rate then in effect under this Lease, and if and when Tenant receives such statement from Landlord, Tenant shall pay any increases in Annual Base Rent reflected thereby effective retroactively to the beginning of the year.


4. READJUSTMENTS


Within 120 days following the end of each year, or at such earlier time as Landlord shall be able to determine the actual amounts of Operating Expenses and Taxes for the year last ended, Landlord shall notify Tenant in writing of such actual amounts and copies of appropriate back up such as the paid tax bill and a reasonably detailed breakdown of operating expenses. If such actual amounts exceed the Projections for such year, then Tenant shall, within 30 days after the date of such written notice from Landlord, pay to Landlord an amount equal to the excess of the Adjusted Annual Base Rent payable for the year last ended based upon actual Operating Expenses and Taxes for such year over the total Adjusted Annual Base Rent paid by Tenant during such year. The obligation to make such payments shall survive the expiration or earlier termination of the Term. If the total Adjusted Annual Base Rent paid by Tenant during such year exceeds the amount payable for such year based upon actual Operating Expenses and Taxes for such year, then Landlord shall credit such excess to installments of Adjusted Annual Base Rent or payable after the date of Landlord's notice until such excess has been exhausted, or if this Lease shall expire prior to full application of such excess, Landlord shall pay to Tenant the balance thereof not previously applied against Rent. No interest or penalties shall accrue on any amounts which Landlord is obligated to credit or pay to Tenant by reason of this Section.


5. BOOKS AND RECORDS


Landlord shall maintain books and records showing Operating Expenses and Taxes in accordance with sound accounting and management practices, which records shall be available to Tenant for inspection at the offices of Landlord upon reasonable prior notice.


E. Tenant shall pay all sums of money required to be paid pursuant to the terms of this Article V and all other sums of money or charges required to be paid by Tenant under this Lease without set off or deduction. The term "Rent" in this Lease shall be defined to include the Base Annual Rent and all other charges payable by Tenant to Landlord under this Lease. If such amounts or charges are not paid at the time


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provided in this Lease, they shall nevertheless be collectible with the next installment of Base Annual Rent and Landlord shall have all of the rights available to it at law and equity for the collection of rent to collect such overdue amounts. Landlord's obligations under this Lease are deemed to be independent covenants and not condition precedent to Tenant's obligations under this Lease, including Tenant's obligation to pay Annual Base Rent and all other charges.


VI. SECURITY DEPOSIT: INTENTIONALLY DELETED


VII. UTILITIES AND SERVICES


During the term of this Lease, the following utilities shall be furnished to or for the benefit of the Premises.


A. ELECTRIC AND GAS: Tenant shall, at its own cost and expense, contract directly with the public utility for the electrical and gas service and shall pay for all electricity and gas consumed in the Premises.


B. HEATING AND AIR CONDITIONING: Landlord shall maintain and repair the heating and air conditioning equipment in the Premises as may be required in Landlord's reasonable judgement. The costs in connection therewith shall be an Operating Expense pursuant to Section V.D. The costs of utilities consumed in the operation of the HVAC system will be paid by Tenant directly to the public utility. Whenever heat generating machines, lighting, equipment, etc. are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises or provide additional conditioned air to the Premises, and the cost (including the cost of installation, operation and maintenance) shall be paid by Tenant to Landlord upon demand.


C. WATER AND TOILET SERVICE: Landlord shall provide drinking water and toilet facilities in such locations in the Building as Landlord shall determine for use by Tenant, its employees and customers. Tenant shall contract directly with the water and sewer utility companies and pay all water and sewer bills. If the water and/or sewer account cannot be transferred into Tenant's name, Landlord will pay the water and/or sewer charges for the Premises and Tenant will reimburse Landlord for these charges.


D. JANITORIAL: Landlord shall provide janitorial services to the Premises substantially similar to those provided in other office buildings charging comparable aggregate rent in St. Louis. Tenant shall provide its own interior and exterior window washing.


E. ELEVATOR SERVICE: Landlord shall provide passenger elevator service in such manner as Landlord shall reasonably determine. Tenant shall comply with all reasonable rules and regulations for elevator service.


F. PHONE SERVICE: Telephone service and its costs shall be the responsibility of Tenant.


G. SECURITY: Tenant shall be responsible for providing at its expense any and all security services and devices which it requires or desires.


H. PARKING: Landlord acknowledges that the Tenant's right to the use of adequate parking for Tenant's use under the Richmond Heights Zoning Code is a


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material inducement to Tenant to enter into this Lease and Landlord grants to Tenant the non-exclusive right to the use of 136 parking spaces during the term of its Lease or any extension thereof. Tenant's parking shall be limited to the non-exclusive use of the 136 parking spaces identified on Exhibit C-3 to the Interim Parking and Easement Agreement (the "IPEA") recorded in Book 9066 at page 1126 of the St. Louis county Records (a copy of which Exhibit is attached hereto as Exhibit D). Landlord represents that, other than Outback Steakhouse or another tenant utilizing the portion of the Building presently used by Outback Steakhouse, no other Disproportionate User (as defined in the IPEA) shall be permitted in the Building. In addition, Landlord shall not lease any space in the Building to a movie theater, bowling alley, pool hall, skating rink, adult entertainment facility, health club, fitness center, video or other game room. In the event Landlord breaches the representations or covenants herein contained or if the parking described above is not available to Tenant, Tenant may terminate this Lease; provided, however, in the event Landlord is able to secure substitute parking in the immediate vicinity of the Premises or in a location reasonably acceptable to Tenant of not less than the spaces required by the Richmond Heights Missouri Zoning Code within fourteen (14) days of notice from Tenant, Tenant shall not have the termination right contained herein.


I. NON-LIABILITY: Landlord shall not be liable for, and Tenant shall not be entitled to, any damages or abatement or reduction of rent by reason of Landlord's failure to furnish any utilities or services when such failure is caused by accidents, breakage, repairs, strikes, lockouts or other labor disturbances or labor disputes of any character, or by any other cause similar or dissimilar, beyond the reasonable control of Landlord, nor shall such interruption be construed as a constructive or other eviction of Tenant. Landlord shall not be liable under any circumstances for lost profits or other consequential damages. through or in connection with or incidental to failure to furnish any utilities and/or services, or due to other acts or omissions of Landlord, its employees, agents or contractors. Tenant's sole remedy shall be an abatement of rent and other rental charges and for direct damages.


Tenant has the right to obtain business interruption insurance or such other policies as may be necessary to protect Tenant against such risks. All policies shall contain a waiver of subrogation endorsement whereby the insurance companies agree to waive their claims against Landlord, its affiliates, subsidiaries, employees, officers and directors.


J. ADDITIONAL SERVICE: Landlord shall in no event be obligated to furnish any services or utilities, other than those specified above. If Landlord elects to furnish services or utilities requested by Tenant in addition to those specified above, Tenant shall pay Landlord's then prevailing rates for such services and utilities, within 10 days after receipt of Landlord's invoices thereof. If Tenant shall fail to make any such payment, Landlord may, without notice to Tenant and in addition to Landlord's other remedies under this Lease, discontinue any or all of the additional services. No discontinuance of any service pursuant to this section shall result in any liability of Landlord to Tenant or be deemed to be an eviction or a disturbance of Tenant's use of the Premises.


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IX. POSSESSION, USE, AND ENJOYMENT


A. POSITIVE OBLIGATIONS:


1. The Premises shall be used and occupied by Tenant for general office purposes only and for no other purpose without the prior written consent of Landlord. The Premises shall not be used for intense purposes which require high numbers of personnel for available space such as a call center.


The Outback Steakhouse lease requires Tenant to agree to the following use restrictions:


Tenant agrees not to use, or permit the use, of the Premises or any portion thereof, for a full service restaurant, or any facility owning an on-premises wine, beer or liquor license.


Tenant agrees not to use, or permit the use, of the Premises or any portion thereof, for the operation of a movie theater, bowling alley, pool hall, skating rink, adult entertainment facility, health club, fitness center, video or other game room, video store or theater.


2. Tenant shall at its sole cost and expense promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not relating to or required by the condition, use or occupancy of the Premises, or otherwise not related to or otherwise required by Tenant's improvements or acts.


B. NEGATIVE OBLIGATIONS:


1. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which will in any way increase the existing rate or affect any fire or other insurance upon the Building or any of its contents (unless Landlord approves such acts or use and Tenant agrees to pay any increased premium as a result of such acts or use), or cause a cancellation of any insurance policy covering said Building or any part thereof or any of its contents, nor shall Tenant sell or permit to be kept, used or sold in or about said Premises any articles which may be prohibited by a standard f ...