LEASE AGREEMENT
THIS LEASE AGREEMENT (the "LEASE") is entered into by and between
CABOT INDUSTRIAL PROPERTIES, L.P., a Delaware limited partnership
("LANDLORD"), and I-PAC MANUFACTURING, INC., a California corporation
("TENANT"), on May __, 1999.
RECITALS
WHEREAS, Landlord and Tenant have entered into that certain purchase
agreement dated as of April 20, 1999 (the "PURCHASE AGREEMENT") pursuant to
which Tenant has agreed to sell and Landlord has agreed to purchase (subject
to the terms and conditions more particularly set forth therein) (the "SALE")
the real estate and improvements, located at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, which real estate and improvements are more particularly
described on SCHEDULE A attached hereto (the "LEASED PROPERTY");
WHEREAS, after the Sale, Tenant desires to engage in the business of
electronic manufacturing services (the "BUSINESS") on the Leased Property;
WHEREAS, Landlord and Tenant desire that, upon completion of the Sale,
the Leased Property shall be the subject of this Lease and be used by Tenant
in its operation of the Business;
NOW, THEREFORE, in consideration of the foregoing premises and of
their respective agreements and undertakings herein, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
I. LEASE AGREEMENT, LEASED PROPERTY AND TERM
1.01 LEASE AGREEMENT. Landlord does hereby lease unto Tenant, and
Tenant does hereby lease from Landlord the Leased Property, which shall
consist of the following, to the extent the same were conveyed by Tenant to
Landlord pursuant to the Purchase Agreement:
(a) The land located at the address listed in SCHEDULE A,
with all rights, titles, covenants, licenses, privileges and benefits thereto
belonging, and any easements, rights-of-way, rights of ingress or egress or
other interests appurtenant thereto, subject to all liens, encumbrances,
restrictions and agreements related thereto (the "LAND");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be constructed on the
Land, including, without limitation, sidewalks, landscaping, parking lots and
structures, roads, drainage and all above ground and underground utility
structures and conduits (on-site or off-site), equipment systems and other so
called "infrastructure" improvements (the "IMPROVEMENTS");
(c) All equipment, machinery, fixtures, and other items of
real and/or personal property, including all components thereof, located in,
on or used in connection with, and permanently affixed to or incorporated
into the Improvements, including, without limitation, any furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment and similar systems, together with all
replacements, modifications, alterations and additions thereto (collectively
the "FIXTURES"); and
(d) All easements, rights and appurtenances relating to the
Land and the Improvements.
The Leased Property shall, however, exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the Business being conducted on the Leased
Property which items may readily be removed without material damage to the
Land and Improvements whether or not such items might legally be considered
to be fixtures (all of which are owned by Tenant and shall hereinafter be
defined as the "EXCLUDED PERSONAL PROPERTY") and all real and personal
property leased to Nextel of California, Inc., a Delaware corporation.
1.02 COMMENCEMENT DATE. The commencement date of this Lease (the
"COMMENCEMENT DATE") shall be the Closing Date as defined in the Purchase
Agreement. Tenant understands that Landlord will not own the Leased Property
until the Closing Date.
1.03 [Intentionally Omitted.]
1.04 TERM. The initial term of this Lease (the "TERM") shall be for
a fixed term of fifteen (15) years commencing on the Commencement Date.
Tenant shall have the right to extend this Lease on the same terms and
conditions set forth herein (except as to Base Annual Rent and the right to
renew) at Tenant's option for an additional five (5) year renewal term (the
"FIRST EXTENSION TERM") from the expiration of the Term, provided that no
Event of Default (as defined in SECTION 9.01 hereof) shall exist and be
continuing. In addition, if Tenant exercises the option for the First
Extension Term, Tenant shall have the right to extend this Lease on the same
terms and conditions set forth herein (except as to Base Annual Rent and the
right to renew) Tenant's option, for a second five (5) year renewal term (the
"SECOND EXTENSION TERM;" each an "EXTENSION TERM," and collectively with the
First Extension Term, the "EXTENSION TERMS") from the expiration of the First
Extension Term, provided that no Event of Default (as defined in SECTION 9.01
hereof) shall exist and be continuing. Tenant shall exercise the First
Extension Term by written notice to Landlord no earlier than fifteen (15)
months and no later than twelve (12) months prior to the end of the Term.
Tenant shall exercise the Second Extension Term by written notice to Landlord
no earlier than fifteen (15) months and no later than twelve (12) months
prior to the end of the First Extension Term. Notwithstanding anything
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else to the contrary in this Agreement, the Base Annual Rent (as hereinafter
defined) during the First Extension Term shall be the Fair Market Rent (as
hereinafter defined) for the Leased Property. The Base Annual Rent during
the Second Extension Term shall be the Fair Market Rent for the Leased
Property. Fair Market Rent shall be determined as soon as possible after
receipt by Landlord of Tenant's notice of option exercise, on the basis of
appraisals of independent appraisers selected in accordance with the
provisions of SECTION 16.01. Fair Market Rent during the Extension Terms
shall be subject to Base Annual Rent Adjustments as set forth in SECTION 2.03.
1.05 HOLDING OVER. Should Tenant, without the express consent of
Landlord, continue to hold and occupy the Leased Property after the
expiration or earlier termination of the Term or any Extension Term, as the
case may be, such holding over beyond the Term and the acceptance or
collection of rent (as hereinafter defined) by Landlord shall operate and be
construed as creating a tenancy from month-to-month and not for any other
term whatsoever. During any such holdover period Tenant shall pay to
Landlord for each month (or portion thereof) Tenant remains in the Leased
Property, in lieu of the Base Annual Rent for the Leased Property, an amount
equal to the sum of one-twelfth (1/12) of (i) one hundred fifty percent
(150%) of such Base Annual Rent, and (ii) as applicable, one hundred percent
(100%) of the Additional Rent (as hereinafter defined) for the Leased
Property, each as in effect on the expiration date. Said month-to-month
tenancy may be terminated by Landlord by giving Tenant thirty (30) days
written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
1.06 SURRENDER. Except as a result of (a) Tenant Improvements and
Capital Additions (as hereinafter defined); (b) normal and reasonable wear
and tear (subject to the obligation of Tenant to maintain the Leased Property
in good order and repair during the Term); and (c) casualty, taking or other
damage and destruction not required to be repaired by Tenant, Tenant shall
surrender and deliver up the Leased Property at the expiration or termination
of the Term or the Extension Term, as the case may be, broom clean, in good
order and repair, free of the Excluded Personal Property and any additional
items of Tenant's personal property (together with the Excluded Personal
Property, the "TENANT'S PERSONAL PROPERTY"), all of which Tenant shall remove
prior to such surrender and delivery, and in as good order and condition as
of the Commencement Date.
1.07 DELIVERIES AT COMMENCEMENT. On the Date of Possession, Tenant
shall deliver to Landlord:
(a) A binding insurance certificate stating that Landlord is
an additional named insured under the Tenant's insurance policy;
(b) A consent or resolutions of the Tenant authorizing
Tenant to enter into this Lease.
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II. RENT
2.01 BASE ANNUAL RENT. Tenant shall pay Landlord annual base rent
(the "BASE ANNUAL RENT") during the Term or the Extension Term, paid to
Landlord in twelve (12) equal monthly installments, which Base Annual Rent
for the initial Lease Year shall be as set forth on SCHEDULE 2.01 attached
hereto. For purposes of this Lease, the term "LEASE YEAR" shall mean the
period of June 1 through May 31.
2.02 ADDITIONAL RENT. In addition to the Base Annual Rent, Tenant
shall pay all other amounts, liabilities, obligations and Impositions (as
defined in SECTION 3.02 hereto), and, except as otherwise specifically
excluded herein, all cost and expenses related to the ownership and operation
of the Leased Property, including association fees, and any fine, penalty,
interest, charge and cost which may be added for nonpayment or late payment
of such items (collectively, the "ADDITIONAL RENT"; the Base Annual Rent and
Additional Rent are sometimes hereinafter referred to as "RENT"). Tenant's
obligation to pay Additional Rent shall begin on the Commencement Date.
2.03 BASE ANNUAL RENT ADJUSTMENT.
(a) The Base Annual Rent shall be adjusted upward during the
Term beginning June 1, 2000, and each Lease Year thereafter, and each year
during the Extension Terms (the "BASE ANNUAL RENT ADJUSTMENT") as follows:
(i) The base for computing the adjustment is the CPI
which is in effect on the first day of the Lease Year immediately prior to
the applicable Lease Year (the "BEGINNING INDEX"). The CPI which is in
effect on the last day of the Lease Year immediately prior to the applicable
Lease Year (the "ADJUSTMENT INDEX") is to be used in determining the amount
of the adjustment. If the Adjustment Index has increased over the Beginning
Index, the Base Annual Rent for the following year (until the next Base
Annual Rent Adjustment) shall be set by multiplying the Base Annual Rent by a
fraction, the numerator of which is the Adjustment Index and the denominator
of which is the Beginning Index.
(ii) In no case shall the Base Annual Rent be less
than the Base Annual rent in effect immediately prior to the adjustment date
then occurring.
(iii) In no case shall the CPI increase be greater than
six percent (6%) or less than three percent (3%) for any Base Annual Rent
Adjustment.
(iv) On adjustment of the Base Annual Rent as provided
in this Lease, the parties shall immediately execute an amendment to this
Lease stating the new Base Annual Rent; however, failure to execute an
amendment shall in no way affect the adjustment of the Base Annual Rent.
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(b) As used herein, "CPI" shall mean the Consumer Price
Index published by the United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index for All Urban Consumers (base years
1982-1984=100), for San Diego MSA. If at any time during the Term or the
Extension Term, as the case may be, the CPI shall be discontinued, Landlord
shall select a substitute index, being an existing official index published
by the Bureau of Labor Statistics or its successor or another, similar
governmental agency, which index is most nearly equivalent to the CPI.
2.04 PLACE OF PAYMENT OF RENT; DIRECT PAYMENT OF ADDITIONAL RENT.
Tenant shall pay the Base Annual Rent without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement
Date and thereafter on the first day of each month during the Term and any
Extension Terms. Unless Landlord shall direct otherwise, Tenant shall make
all payments of Base Annual Rent to Landlord at the address set forth in
SECTION 17.01. Tenant shall pay the Impositions to Lease as set forth in
SECTION 3.04. At the direction of the Landlord, Tenant shall make payments of
Additional Rent directly to the person or persons to whom such amount is
owing at or before the time and times when such payments are due, and Tenant
shall give to Landlord such evidence of such direct payments as Landlord
shall reasonably request. Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease or by statute
or otherwise in the case of nonpayment of the Rent for the Leased Property.
2.05 NET LEASE. This Lease shall be deemed and construed to be
"triple net lease" (i.e. that Tenant shall pay all costs and expenses related
to the ownership and operation of the Leased Property, thereby leaving all
Rent as a net return to Landlord). Tenant shall pay all Rent, Impositions,
and other charges and expenses in connection with the Leased Property
throughout the Term and any Extension Term, without abatement, deduction or
set-off.
2.06 NO TERMINATION, ABATEMENT, ETC. Except as otherwise
specifically provided herein, Tenant shall remain bound by this Lease in
accordance with its terms. Except as otherwise specifically provided herein,
Tenant shall not, without the prior written consent of Landlord, modify,
surrender or terminate this Lease nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent or set-off against the Rent for any
reason whatsoever. Except as specifically provided herein, the obligations
of Landlord and Tenant shall not be affected by reason of (a) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any part thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by
paramount title; (b) any claim which Tenant has or might have against
Landlord or by reason of any default or breach of any warranty by Landlord
under this Lease or any other agreement between Landlord and Tenant, or to
which Landlord and Tenant are parties; (c) Tenant's bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding
up or other proceeding's effect on Landlord or any assignee or transferee of
Landlord; (d) any damage to, or destruction of, the
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Leased Property or any portion thereof for whatever cause, or any taking of
the Leased Property or any portion thereof; or (e) any other cause, whether
similar or dissimilar to any of the foregoing, other than a discharge of
Tenant from any such obligations as a matter of law. Except as otherwise
specifically provided herein, and to the maximum extent permitted by law,
Tenant hereby specifically waives all rights, including but not limited to,
any rights under any statute relating to rights of tenants in the
jurisdiction where the Leased Property is located, which may now be conferred
upon it by law, relating to: (aa) the modification, surrender or termination
of this Lease, or the quitting or surrender of the Leased Property or any
portion thereof; (bb) any abatement, reduction, suspension or deferment of
the Rent or other sums payable by Tenant hereunder; (cc) any rights of
redemption; and (dd) any right to demand or notice of termination or
eviction. The obligations of Landlord and Tenant hereunder shall be separate
and the Rent and all other sums shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions of this Lease or by termination of this Lease other than
by reason of an Event of Default.
2.07 LATE CHARGE. Tenant's payment of Rent that is made more than
five (5) business days after the due date shall be subject to a late charge
of six percent (6%) of the amount of such overdue payment.
2.08 INTEREST. Any Rent or other amount due to Landlord, if not
paid when due, shall bear interest from the date due until paid at the rate
of fifteen percent (15%) per annum or, if a higher rate is legally
permissible, at the highest rate legally permitted, PROVIDED THAT interest
shall not be payable on late charges incurred by Tenant nor on any amounts
upon which late charges are paid by Tenant to the extent such interest would
cause the total interest to be in excess of that legally permitted. Payment
of interest shall not excuse or cure any default hereunder by Tenant.
2.09 SECURITY DEPOSIT . Tenant shall deposit with Landlord on the
date of this Lease security (the "SECURITY DEPOSIT") for the performance of
all of its obligations under this Lease, in the form of (a) a letter of
credit in the face amount of Two Hundred Seventy-Five Thousand Dollars
($275,000) (the "LETTER OF CREDIT") or cash or a cashiers check in the amount
of Two Hundred Seventy-Five Thousand Dollars ($275,000) (the "CASH
REPLACEMENT"); and (b) cash or a cashiers check in the amount of Twenty-Five
Thousand One Hundred Thirty-Seven Dollars ($25,137). In the event that
Tenant initially deposits with Landlord the Cash Replacement rather than the
Letter of Credit, Tenant, at its sole election, so long as no Event of
Default has occurred and is continuing or there is no other default which,
with the giving of notice or the passage of time would become an Event of
Default, may provide Landlord with a letter of credit in the face amount of
Two Hundred Seventy-Five Thousand Dollars ($275,000) in lieu of the Cash
Replacement (also a "LETTER OF CREDIT"). Upon receipt of such Letter of
Credit, and so long as no Event of Default has occurred and is continuing or
there is no other default which, with the giving of notice or the passage of
time would become an Event of Default, Landlord shall return the Cash
Replacement to Tenant and such Letter of Credit shall constitute a "Security
Deposit" under this Lease. In the event that
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Tenant initially deposits with Landlord the Letter of Credit rather than the
Cash Replacement, Tenant, at its sole election, so long as no Event of
Default has occurred and is continuing or there is no other default which,
with the giving of notice or the passage of time would become an Event of
Default, may provide Landlord with cash or a cashiers check in the face
amount of the Letter of Credit in lieu of the Letter of Credit (the "L/C CASH
REPLACEMENT") at any time prior to a draw by Landlord under the Letter of
Credit. Upon receipt of the L/C Cash Replacement, and so long as no Event of
Default has occurred and is continuing or other default which, with the
giving of notice or the passage of time would become an Event of Default,
Landlord shall return the Letter of Credit to Tenant and such L/C Cash
Replacement shall constitute a portion of the "Security Deposit" under this
Lease. If Tenant elects to deposit the Letter of Credit at any time
hereunder, such Letter of Credit shall (i) be in form set forth in SCHEDULE
2.09 attached hereto or otherwise in form and substance satisfactory to
Landlord, (ii) name Landlord as beneficiary, and (iii) be drawable on a
Permitted Issuer (as hereinafter defined). As used herein, "PERMITTED
ISSUER" means a financial institution which (a) is a national association or
bank chartered by the United States or in one of the states of the United
States, in either case, the accounts of which are FDIC insured, or a foreign
bank incorporated in any jurisdiction governed by the Organization for
Economic Cooperation and Development, (b) has a minimum capital and surplus
of $500 million, and (c) maintain at all times until the L/C Termination Date
a branch office in California at which Landlord may draw on the Letter of
Credit (and if at any time such Permitted Issuer fails to meet these
conditions, Tenant shall within ten (10) days thereafter deliver to Landlord
a substitute Letter of Credit meeting the requirements of this Section 2.09
issued by a Permitted Issuer).
If Tenant does not provide Landlord with a substitute Letter of Credit
complying with all of the requirements hereof or the L/C Cash Replacement at
least ten (10) days before the stated expiration date (except the L/C
Termination Date (as hereinafter defined)) of the current Letter of Credit,
Landlord shall have the right to draw upon the current Letter of Credit and
hold the funds drawn as the Security Deposit, subject to the provisions of
this Section 2.09.
Landlord may, at its option, apply all or part of the Security
Deposit, including, without limitation, any draw upon the Letter of Credit,
to any unpaid Rent or other charges due from Tenant, cure any other defaults
of Tenant, or compensate Landlord for any loss or damage which Landlord may
suffer due to Tenant's default. In the event that an Event of Default shall
have occurred and be continuing, Landlord shall be entitled to draw upon the
Letter of Credit (or use the proceeds of the Letter of Credit if they are
then held by Landlord as a result of Tenant's failure to renew the Letter of
Credit before the stated expiration date as provided herein) and apply such
amount towards curing the Event of Default. As a requirement for such draw
on the Letter of Credit Landlord shall only be obligated to deliver the
Letter of Credit to the Permitted Issuer.
Except as expressly provided in this Section 2.09, the Letter of
Credit, Cash Replacement or L/C Cash Replacement, as applicable, shall remain
outstanding in accordance
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with the terms of this Section 2.09 through the date which is thirty (30)
days after the last day of the fourth Lease Year provided that no Event of
Default or other default which, with the giving of notice or the passage of
time would become an Event of Default, has occurred and is continuing (the
"L/C TERMINATION DATE"). On the L/C Termination Date, provided that no Event
of Default other default which, with the giving of notice or the passage of
time would become an Event of Default, has occurred and is continuing,
Landlord shall return to Tenant the Letter of Credit, Cash Replacement or L/C
Cash Replacement, as applicable. The remainder of the Security Deposit shall
remain outstanding throughout the Term.
Tenant hereby waives any restriction on the use or application of the
Security Deposit by Landlord set forth in California Civil Code Section
1950.7. All claims of Tenant to the Security Deposit shall be prior to the
claim of any creditor of Landlord, except a trustee in bankruptcy. To the
extent any portion of the Security Deposit is used, Tenant shall within five
(5) days after demand from Landlord reinstate the Security Deposit to its
full amount (whether by delivery of a new Letter of Credit (in the amount so
used) meeting the requirements of this Section 2.09, by amending the Letter
of Credit then held by Landlord to increase the face amount by the amount so
used or by the deposit of L/C Cash Replacement in the amount so used).
Nothing contained in this Section 2.09 shall waive or impair any of
Landlord's rights or remedies in the event of an Event of Default by Tenant
or modify any party's obligation of good faith and fair dealing under
applicable law. The Security Deposit shall not serve as an advance payment
of Rent or a measure of Landlord's damages for any Event of Default under
this Lease.
If Landlord transfers its interest in the Leased Property or this
Lease, Landlord may transfer the Security Deposit to its transferee. Upon
such transfer, Landlord shall have no further obligation to return the
Security Deposit to Tenant, and Tenant's right to the return of the Security
Deposit shall apply solely against Landlord's transferee.
No interest shall be paid on the Security Deposit, no trust
relationship is created herein between Landlord and Tenant with respect to
the Security Deposit, and the Security Deposit may be commingled with other
funds of Landlord. If Tenant shall perform all of its obligations under this
Lease (or Landlord shall use any portion of the Security Deposit to cure any
Event of Default by Tenant) and return the Leased Property (including,
without limitation, all personal property required to remain in the Leased
Property) to Landlord at the end of the Term in accordance with the terms of
this Lease, Landlord shall return any unused Security Deposit within two (2)
weeks after Termination Date so long as no Event of Default shall have
occurred and be continuing.
III. IMPOSITIONS AND UTILITIES
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3.01 PAYMENT OF IMPOSITIONS. Landlord and Tenant intend that
Landlord shall bear none of the costs of the ownership and operation of the
Leased Property except for payment of the federal, state or local income
taxes, and that Tenant shall pay all costs in every respect of the ownership
and operation of the Leased Property except for Landlord's payment of
federal, state or local income taxes. By way of example, and in no means by
way of limitation, Tenant shall pay as follows: subject to the adjustments
set forth herein, Tenant shall pay, in the manner set forth in SECTION 3.04,
as Additional Rent, to the Landlord an amount equal to the amount necessary
to pay all Impositions that may be levied or become a lien on the Leased
Property or any part thereof at any time (whether prior to or during the
Term), without regard to prior ownership of the Leased Property, before the
same becomes delinquent. Tenant's obligation to pay such Impositions shall
be deemed absolutely fixed upon the date such Impositions become a lien upon
the Leased Property or any part thereof or delinquent. Tenant, at its
expense, shall prepare and file all tax returns and reports in respect of any
Imposition as may be required by governmental authorities; PROVIDED, HOWEVER,
that Tenant shall provide to Landlord copies of all mailings of such tax
returns or reports in respect of any real or personal property owned by
Landlord. Tenant shall be entitled to any refund due in respect of such
Impositions from any Taxing authority if no Event of Default shall have
occurred and be continuing. Any refunds in respect of such Impositions
retained by Landlord due to an Event of Default shall be applied as provided
in SECTION 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any
required tax returns and reports. In the event governmental authorities
classify any property covered by this Lease as personal property, Landlord
and Tenant shall file all personal property tax returns with respect to their
respective owned personal property. Landlord, to the extent it possesses the
same, and Tenant to the extent it possesses the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
such returns or reports for any property so classified as personal property.
Tenant may, upon notice to Landlord, at Tenant's option and at Tenant's sole
cost and expense, protest, appeal, or institute such other proceedings as
Tenant may deem appropriate to effect a reduction of real estate or personal
property assessments. Landlord, at Tenant's expense, shall fully cooperate
with Tenant in such protest, appeal, or other action. Tenant shall provide
Landlord copies of all materials filed or presented in connection with any
such proceeding. Impositions imposed with respect to the tax-fiscal period
during which the Term commences and terminates shall be adjusted and prorated
between Landlord and Tenant. Tenant shall also pay to Landlord a sum equal
to the amount which Landlord may be caused to pay of any privilege tax, sales
tax, gross receipts tax, rent tax, occupancy tax or like tax (excluding any
tax based on net income), hereafter levied, assessed, or imposed by any
governmental authority, upon or measured by Rent or other consideration
required to be paid by Tenant under this Lease.
3.02 DEFINITION OF IMPOSITIONS.
The term "IMPOSITIONS" means, collectively: (i) taxes
(including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real
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estate or separately assessed as unsecured personal property), sales and use,
business or occupation, single business, gross receipts, transaction,
privilege, rent or similar taxes, but not including income or franchise or
excise taxes payable with respect to Landlord's receipt of Rent); (ii)
assessments, whether in the nature of a special assessment or otherwise
(including, without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed prior to the Commencement
Date and whether or not to be completed within the Term or any Extension
Term, as the case may be), including, without limitation, assessments under
the CC&Rs (as hereinafter defined); (iii) ground rents, water, sewer or other
rents and charges, excises, tax levies, and fees (including, without
limitation, license, permit inspection, authorization and similar fees); (iv)
to the extent they may become a lien on the Leased Property, all taxes
imposed on Tenant's operations of the Leased Property (including, without
limitation, employee withholding taxes, income taxes and intangible taxes);
and (v) all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every
character in respect of the Leased Property or any part thereof (including
without limitation, any increase in real property taxes resulting from the
transfer of ownership of the Leased Property), the Business conducted by
Tenant thereon, and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during
or in respect of the Term or any Extension Term, as the case may be, may be
assessed or imposed on, in respect of or a lien upon (aa) Landlord or
Landlord's interest in the Leased Property or any part thereof; (bb) the
Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein; or (cc) any occupancy, operation, use or
possession of, or activity conducted on, or in connection with the Leased
Property or the leasing of the Leased Property or any part thereof. If any
tax, assessment, tax levy or charge which Tenant is obligated to pay pursuant
to this SECTION 3.02 and which is in effect at any time during the Term
hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge is levied, assessed or imposed expressly in lieu thereof, Tenant shall
then pay such tax, levy or charge.
3.03 UTILITIES. Tenant shall contract for, in its own name, and
will pay, as Additional Rent all taxes, assessments, charges/deposits, and
bills for utilities, including without limitation charges for water, gas,
oil, sanitary and storm sewer, electricity, telephone service, trash
collection, and all other utilities which may be charged against the occupant
of the Improvements during the Term.
3.04 ESCROW OF IMPOSITIONS. Unless waived by written notice from
Landlord to Tenant, or as otherwise instructed by Landlord, Tenant shall
thereafter deposit with Landlord on the first day of each month during the
Term and any Extension Term, as the case may be, a sum equal to one-twelfth
(1/12) of the Impositions assessed against the Leased Property which sums
shall be used by Landlord toward payment of such Impositions. If, at the end
of any applicable tax year, any such funds held by Landlord are insufficient
to make full payment of taxes or other Impositions for which such funds are
held, Tenant, on demand, shall pay to Landlord any additional funds necessary
to pay and discharge in full the obligations of Tenant pursuant to the
provisions of this Section. If, however, at the end of any applicable tax
year, such funds held by
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Landlord are in excess of the total payment required to satisfy taxes or
other Impositions for which such funds are held, and so long as no Event of
Default has occurred and is continuing, Landlord shall apply such excess
amounts to a tax and Imposition escrow fund for the next tax year. If any
such excess exists following the expiration or earlier termination of this
Lease, and so long as no Event of Default has occurred, subject to SECTION
9.08 below, Landlord shall promptly refund such excess amounts to Tenant.
The receipt by Landlord of the payment of such Impositions by and from Tenant
shall only be as an accommodation to Tenant and the taxing authorities, and
shall not be construed as rent or income to Landlord, Landlord servicing if
at all, only as a conduit for delivery purposes.
3.05 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities at the Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from the
Leased Property, cause an abatement of Rent as to the Leased Property or
operate to release Tenant from any of Tenant's obligations under this Lease,
unless to the extent such damages or injury are caused by the willful
misconduct of Landlord.
3.06 LIENS. Subject to SECTION 17.18 relating to contests, Tenant
shall not directly or indirectly create or allow to remain, and will promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon the Leased Property or any attachment, levy, claim or
encumbrance in respect of any Rent provided under this Lease, not including,
however: (a) this Lease; (b) such encumbrances as are subsequently consented
to in writing by Landlord in advance, but excluding liens in respect of
Impositions required to be paid under SECTION 3.01; (c) liens for
Impositions, so long as (i) the same are not yet payable or are payable
without the addition of any fine or penalty or imposition of any Lien upon
the Leased Property, or (ii) such liens are being contested as permitted
under SECTION 17.18; and other encumbrances, easements, rights of way or
liens, (A) provided the same do not adversely affect the intended use of the
Leased Property (including the Improvements) and do not create a material
adverse effect on the value of the Leased Property, (B) do not create a lien
upon the Leased Property, or (C) which result solely from the action or
inaction of Landlord.
3.07 IMPOSITIONS STATEMENTS. Except with respect to Impositions
subject to escrow as set forth in SECTION 3.04, and, to the extent it has not
already done so, Tenant shall immediately after the Commencement Date notify
the appropriate taxing authorities, utility providers, and other entities
that would send invoices for Impositions that all tax statements, assessments
and bills for Impositions shall be delivered directly to Tenant for payment,
Tenant shall deliver to Landlord copies of all statements of taxes, special
assessments or other Impositions within ten (10) days of Tenant's receipt
thereof.
IV. INSURANCE
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4.01 INSURANCE. Tenant shall, at Tenant's expense, keep the
Excluded Personal Property, Improvements, Fixtures and other components of
the Leased Property insured against the following risks:
(a) loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious
mischief, sprinkler leakage and all other physical loss
perils commonly covered by "All Risk" insurance in an
amount not less than one hundred percent (100%) of the then
full replacement cost thereof (as hereinafter defined).
Such policy shall include an agreed amount endorsement if
available at a reasonable cost. Such policy shall also
include endorsements for contingent liability for operation
of building laws, demolition costs and increased cost of
construction;
(b) loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed
on the Leased Property, in commercially reasonable amounts
acceptable to Landlord;
(c) business interruption insurance, providing in the event of
damage or destruction of the Leased Property an amount
sufficient to sustain Tenant for a period of not less than
one (1) year for: (i) the net profit that would have been
realized had Tenant's business continued; and (ii) such
fixed charges and expenses as must necessarily continue
during a total or partial suspension of business to the
extent to which they would have been incurred had no
business interruption occurred, including, but not limited
to, interest on indebtedness of Tenant, salaries of
executives, foremen, and other employees under contract,
charges under noncancelable contracts, charges for
advertising, legal or other professional services, taxes
and rents that may still continue, trade association dues,
insurance premiums, and depreciation.
(d) workers' compensation insurance as required by statute in
respect of any work or other operations on or about the
Leased Property;
(e) comprehensive general liability insurance for bodily
injury, property damage (including loss of use of property)
and personal injury at the Leased Property in amounts equal
to Five Million Dollars ($5,000,000) for each occurrence;
the liability insurance obtained by Tenant under this
SECTION 4.01 shall (i) be primary and (ii) insure Tenant's
obligations to Landlord under SECTION 5.01. The amount and
coverage of such insurance shall not limit Tenant's
liability nor relieve Tenant of any other obligation under
this Lease. Landlord may also obtain commercial general
liability
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insurance in an amount and with coverage determined by
Landlord insuring Landlord against liability with
respect to the Leased Property. The policy obtained by
Landlord shall not provide primary insurance, shall not
be contributory and shall be excess over any insurance
maintained by Tenant;
(f) commercial comprehensive catastrophic liability insurance
with limits of liability of not less than Five Million
Dollars ($5,000,000);
(g) during the period when any addition, alteration,
construction, installation or demolition is being made or
performed to any part of the Leased Property, contingent
liability, public liability, completed value, builder's
risk (non-reporting form), workers' compensation and other
insurance as is deemed prudent by Landlord;
(h) automobile liability insurance, including but not limited
to, passenger liability, on all owned, non-owned, and hired
vehicles used in connection with the Leased Property, with
a combined single limit per occurrence of not less than One
Million Dollars ($1,000,000) for injuries or death of one
or more persons or loss or damage to property.
4.02 INSURANCE LIMITS. Deductible provisions for the insurance
required under SECTION 4.01(A) shall not exceed Five Thousand Dollars
($5,000) per occurrence and Twenty Thousand Dollars ($20,000) aggregate per
occurrence; under clause (e), Five Thousand Dollars ($5,000) per occurrence;
under clause (f), Five Thousand Dollars ($5,000) per occurrence.
4.03 INSURANCE REQUIREMENTS.
(a) Tenant shall be the "named insured" and Landlord, Cabot
Industrial Trust and any mortgagee of Landlord shall be an
"additional named insureds" on each policy.
(b) Any insurance which Tenant shall be required to maintain
under this Lease shall include a provision which requires
the insurance carrier to give Landlord not less than thirty
(30) days' written notice prior to any cancellation or
modification of such coverage.
(c) Prior to the earlier of Tenant's entry into the Leased
Property or the Commencement Date, Tenant shall deliver to
Landlord an insurance company certificate that Tenant
maintains the insurance required by
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Section 4.01 and not less than thirty (30) days prior to
the expiration or termination of any such insurance,
Tenant shall deliver to Landlord renewal certificates
therefor. Tenant shall provide Landlord with copies of
the policies promptly upon request from time to time.
If Tenant shall fail to deliver any certificate or
renewal certificate to Landlord required under this
Lease within the prescribed time period or if any such
policy shall be canceled or modified during the Term
without Landlord's consent, Landlord may obtain such
insurance, in which case Tenant shall reimburse
Landlord, as Additional Rent, for 110% of the cost of
such insurance within ten (10) days after receipt of a
statement of the cost of such insurance.
(d) Tenant shall maintain all insurance required under this
Lease with companies having a "General Policy Rating" of
A-;X or better, as set forth in the most current issue
of the Best Key Rating Guide. Landlord and Tenant, on
behalf of themselves and their insurers, each hereby
waive any and all rights of recovery against the other,
or against the officers, partners, employees, agents, or
representatives of the other, for loss of or damage to
its property or the property of others under its
control, if such loss or damage shall be covered by any
insurance policy in force (whether or not described in
this Lease) at the time of such loss or damage. All
property insurance carried by either party shall contain
a waiver of subrogation against the other party to the
extent such right shall have been waived by the insured
party prior to the occurrence of loss or injury.
(e) Landlord shall have the right to review the insurance
coverages required hereunder with Tenant from time to time,
to obtain the input of third party professional insurance
advisers (at Landlord's expense) with respect to such
insurance coverages, to consult with Tenant in Tenant's
annual review and renewal of such insurance coverages and
to require periodic increases in coverage amounts based
upon inflation, increased liability awards, recommendations
of Landlord's professional insurance advisors and other
relevant factors. All insurance coverages hereunder shall
be in such form, substance and amounts as are customary or
standard in Tenant's industry, but at a minimum shall
comply with the requirements set forth herein.
4.04 LANDLORD'S PROPERTY AND RENTAL INCOME INSURANCE. During the
Term, Landlord shall maintain in effect all risk insurance covering loss of
or damage to the Leased Property in the amount of its replacement value with
such endorsements and deductibles as Landlord shall determine from time to
time. Landlord shall have the right to obtain flood, earthquake, and such
other insurance as Landlord shall determine from time to time or shall be
required by any lender
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holding a security interest in the Property. Landlord shall not obtain
insurance for Tenant's fixtures or equipment or building improvements
installed by Tenant. During the Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one year's Base Rent, plus estimated real property taxes, operating expenses,
and insurance premiums. Tenant shall be liable for the payment of any
deductible amount under Landlord's insurance maintained pursuant to this
Section 4 Seven, in an amount not to exceed Twenty-Five Thousand Dollars
($25,000). Tenant shall not do or permit anything to be done which shall
invalidate any such insurance. Any increase in the cost of Landlord's
insurance due to Tenant's use or activities at the Leased Property shall be
paid by Tenant to Landlord as Additional Rent hereunder.
4.05 PAYMENT OF INSURANCE PREMIUMS. Landlord shall pay the premiums
of the insurance policies maintained by Landlord under Section 4.04 and 4.01
(if applicable), and, Tenant shall reimburse Landlord for such premiums.
Tenant shall pay directly the premiums of the insurance policies maintained
by Tenant under Sections 4.01.
4.06 REPLACEMENT COST. The term "FULL REPLACEMENT COST" means the
actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions. Tenant
shall, not later than thirty (30) days after the anniversary of each policy
of insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of
construction. If Tenant makes any Permitted Alterations (as hereinafter
defined) to the Leased Property, Landlord may have such full replacement cost
redetermined at any time after such Permitted Alterations are made,
regardless of when the full replacement cost was last determined.
4.07 BLANKET POLICY. Tenant may carry the insurance required by
this Article under a blanket policy of insurance, provided that the coverage
afforded Tenant will not be reduced or diminished or otherwise be different
from that which would exist under a separate policy meeting all of the
requirements of this Lease and Landlord approves the form of the policy.
4.08 NO SEPARATE INSURANCE. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
named insureds or loss payees, the loss is payable under said insurance in
the same manner as losses are payable under this Lease, and such additional
insurance is not prohibited by the existing policies of insurance required
pursuant to this Article. Tenant shall immediately notify Landlord of the
taking out of such separate insurance or the increasing of any of the amounts
of the existing insurance by securing an additional policy or additional
policies. The term "mortgages" as used in this Lease includes, but is not
limited to, deeds of trust and the term "mortgagee" includes, but is not
limited to, beneficiaries under a deed of trust.
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4.09 WAIVER OF SUBROGATION. Landlord and Tenant hereby each waives
any and every claim which arises or may arise in its favor and against the
other party during the Term or any Extension Term or renewal thereof, for any
and all loss of, or damage to, any of its property located within or upon or
constituting a part of, the Leased Property, which loss or damage is covered
by valid and collectible insurance policies, to the extent that such loss or
damage is recoverable in full under such policies. This mutual waiver shall
be in addition to, and not in limitation or derogation of, any other waiver
or release contained in this Lease with respect to any loss or damage to
property of the parties hereto. Inasmuch as this waiver will preclude the
assignment of any aforesaid claim by way of subrogation (or otherwise) to an
insurance company (or any other person), Landlord and Tenant agree
immediately to give each insurance company which has issued to it policies of
insurance, written notice of the terms of this mutual waiver, and to have
such insurance policies properly endorsed, if necessary, to prevent the
invalidation of the insurance coverage by reason of this waiver, so long as
such endorsement is available at a reasonable cost.
4.10 MORTGAGES. The following provisions shall apply if Landlord
now or hereafter places a mortgage on the Leased Property or any part
thereof: (a) Tenant shall obtain a standard form of mortgage clause insuring
the interest of the mortgagee; (b) Tenant shall deliver evidence of insurance
to such mortgagee; (c) loss adjustment shall require the consent of the
mortgagee but such consent shall not be unreasonably withheld and may not
include any requirement that the funds be paid to mortgagee in lieu of
reconstruction as long as no Event of Default has occurred and is continuing
and the Lease is in full force and effect; and (d) Tenant shall obtain such
other coverages and provide such other information and documents as may be
reasonably required by the mortgagee.
4.11 OTHER INSURANCE REQUIREMENTS. Notwithstanding anything in this
Lease to the contrary and not by way of limitation, in addition to the types
and amounts of insurance required to be carried by Tenant herein, Tenant
covenants to insure and continue in effect such types and amounts of
insurance as Tenant shall be required to carry pursuant to any contract,
agreement, instrument, statute, law, rule or regulation relating to the use
of the Leased Property and the operations of the Business or other activities
thereon.
V. INDEMNITY; SUBSTANCES OF CONCERN
5.01 TENANT'S INDEMNIFICATION. Subject to SECTION 4.07, Tenant
hereby agrees to indemnify, defend and hold harmless Landlord, its officers,
directors, shareholders, agents, employees, successors and assigns, from and
against any and all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
SECTION 9.06) (the "CLAIMS") incurred in connection with or arising from: (a)
the use, condition, operation or occupancy of the Leased Property; (b) any
activity, work, or thing done, or permitted or suffered by Tenant in, on
16
or about the Leased Property; (c) any acts, omissions, or negligence of Tenant
or any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; (d) any breach,
violation, or nonperformance by Tenant or any person claiming under Tenant or
the employees, agents, contractors, invitees, or visitors of Tenant or of any
such person, of any term, representation, warranty, covenant, or provision of
this Lease or any law, ordinance, or governmental requirement of any kind;
(e) any injury or damage to the person, property or Business of Tenant its
employees, agents, contractors, invitees, visitors, or any other person
entering upon the Leased Property; (f) any accident, injury to or death of
persons or loss or damage to any of property occurring on or about the Leased
Property; (g) any Environmental Law or any pollution or other threat to human
health or the environment at, arising out of or relating to the Leased
Property as set forth in SECTION 5.05, and (h) any brokers' or agents' fees
and commissions. If any action or proceeding is brought against Landlord,
its officers, directors, shareholders, employees or agents by reason of any
Claim, Tenant, upon notice from Landlord, will defend the same at Tenant's
expense with counsel reasonably satisfactory to Landlord. In the event
Landlord reasonably determines that its interests and the interests of Tenant
in any such action or proceeding are not substantially the same and that
Tenant's counsel cannot adequately represent the interests of Landlord
therein, Landlord shall have the right to hire separate counsel in any such
action or proceeding and the reasonable costs thereof shall be paid for by
Tenant. Tenant's indemnification obligations with respect to a Claim shall
survive the expiration or earlier termination of this Lease.
5.02 SUBSTANCES OF CONCERN.
(a) For purposes of this Section 5:
(i) "SUBSTANCES OF CONCERN" means, without limitation,
chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local government
authority including, without limitation, (1)
petroleum or any fraction thereof, (2) asbestos, (3)
any substance or material defined as a "hazardous
substance" pursuant to Section 101 of the
Comprehensive Environmental Response Compensation
and Liability Act (42 U.S.C. Section 9601), or (4)
any substance or material defined as a "hazardous
chemical" pursuant to the federal Hazard
Communication Standard (29 C.F.R. Section
1910.1200).
(ii) "ENVIRONMENTAL LAWS" means all federal, state,
local, and foreign laws and regulations relating to
pollution or protection of human health or the
environment (including, without limitation, ambient
air, surface water, ground water, wetlands, land
surface, subsurface strata, and indoor and outdoor
workplace), including, without
17
limitation, (1) laws and regulations relating to
emissions, discharges, releases, or threatened
releases of Substances of Concern, and (2) common
law principles of tort liability.
(b) Tenant shall not, either with or without negligence,
injure, overload, deface, damage or otherwise harm the Leased Property or any
part thereof; commit any nuisance, permit the emission of any Substances of
Concern; allow the release or other escape of any biologically or chemically
active substances or materials or other Substances of Concern so as to
impregnate, impair or in any manner affect, even temporarily, any element or
part of the Leased Property or neighboring property; or allow the storage or
use of such substances or materials in any manner not sanctioned by law and
by reasonable standards prevailing in the industry of the Business for the
storage and use of such substances or materials; nor shall Tenant permit the
occurrence of objectionable noise or odors, or make, allow or suffer any
waste whatsoever to the Leased Property. Landlord may inspect the Leased
Property from time to time, and Tenant will cooperate with such inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using,
storing and disposing of certain Substances of Concern normally used in
connection with the operation of the Business. Tenant shall ascertain and
comply fully with all applicable Environmental Laws and environmental
standards and requirements set by federal, state or local laws, rules,
regulations or governmental directives related to the Leased Property or
Tenant's use or occupancy of the Leased Property ("ENVIRONMENTAL STANDARDS"),
including but not limited to any laws or standards (a) regulating the use,
storage, generation or disposal of Substances of Concern; (b) regulating the
monitoring or use of any underground or aboveground storage tanks at the
Leased Property; or (c) establishing any permitting, notification or
reporting requirements. As promptly as practicable after the Commencement
Date (but in no event later than 120 days thereafter), Tenant shall establish
and implement a proof of compliance with all applicable Environmental Laws
and Environmental Standards ("ENVIRONMENTAL COMPLIANCE PROGRAM"). Tenant
shall update such Environmental Compliance Program every three (3) years
during the Term and any Extension Term. Tenant shall submit its Environmental
Compliance Program and each update thereto to Landlord; PROVIDED, HOWEVER,
such submittal shall not relieve Tenant of its obligations pursuant to this
Section 5. Tenant's Environmental Compliance Program shall include a program
for monitoring Tenant's compliance with Environmental Laws and Environmental
Standards and a plan for correcting immediately any incident of
noncompliance. Tenant shall comply with its Environmental Compliance Program.
(d) In the event of any noncompliance with any Environmental
Laws or Environmental Standards or any spill, release or discharge of
Substances of Concern in a reportable quantity under federal, state or local
law, Tenant shall:
(i) give Landlord immediate notice of the incident by
telephone or facsimile, providing as much detail as
possible;
18
(ii) as soon as possible, but no later than seventy-two
(72) hours, after discovery of an incident of
noncompliance, submit a written report to Landlord,
identifying the source or case of the noncompliance
or spill, release or discharge (including the names
and quantities of any Substances of Concern
involved) and the method or action required to
correct the problem; and.
(iii) cooperate with Landlord or its designated agents or
contractors with respect to the investigation and
correction of such problem.
Tenant shall also be solely responsible for providing any notice to
any federal, state or local governmental authority required by applicable
laws and regulations as a result of such incident.
5.03 AUDITS. Landlord shall have the right to conduct, at its
expense, periodic audits of Tenant's compliance with the Environmental
Compliance Program and management of Substances of Concern at the Leased
Property and/or periodic tests of air, soil, surface water or groundwater at
or near the Leased Property. Landlord shall not be obligated to provide
Tenant with the results of any audit or tests unless such results are the
basis for a claim by Landlord that Tenant has breached its obligations under
this Lease or a demand by Landlord that Tenant modify its Environmental
Compliance Program or operations or remediate or remove a spill, release or
discharge of Substances of Concern in accordance with SECTION 5.06 below.
Tenant agrees promptly to modify its Environmental Compliance Program or the
conduct of its operations in accordance with Landlord's reasonable
recommendations directed at improvement of Tenant's handling, use and
disposal of Substances of Concern in, on or from the Leased Property. If, as
a result of an environmental audit performed by Landlord with respect to the
Leased Property, Landlord reasonably determines in its judgment that
alterations or improvements of equipment or buildings located on the Leased
Property are necessary, Tenant shall perform such alterations or improvements
as are reasonable under the circumstances and pay all costs and expenses
related thereto. If Tenant shall fail to pay any such costs or expenses,
Tenant shall deposit with Landlord the full amount necessary to pay such
costs within ten (10) days of Landlord's demand. Nothing contained herein
shall be construed to obligate or require Landlord to perform any audits,
tests, inquiry or investigation. Should Landlord elect or be required to
disclose to Tenant the results of any audit or tests, Landlord shall not be
liable in any way for the truth or accuracy of such information.
5.04 LANDLORD'S OPTION RE: COMPLIANCE. If Tenant, after notice from
Landlord, fails to comply with or perform any of its obligations pursuant to
this ARTICLE 5, including, but not limited to, obligations to clean up
spills, releases or discharges, Landlord may, but shall not be obligated to,
perform such obligations and Tenant shall pay Landlord within ten (10) days
of demand Landlord's costs therefor, including any overhead and
administrative costs.
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5.05 ENVIRONMENTAL INDEMNIFICATION. Tenant shall indemnify, defend
and hold harmless Landlord, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all demands, claims, causes
of action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, and
expenses (including, without limitation, attorneys' fees, court costs, and
the costs set forth in SECTION 9.06) imposed upon or asserted against Tenant,
Landlord or the Leased Property on account of any Environmental Law
(irrespective of whether there has occurred any violation of any
Environmental Law) relating to the Leased Property, including (a) response
costs and costs of removal and remedial action incurred by the any
governmental unit to any other person or entity, or damages from injury to or
destruction or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to any
Environmental Law; (b) costs and expenses of abatement, investigation,
removal, remediation, correction or cleanup, fines, damages, response costs
or penalties which arise from the provisions of any Environmental Law; (c)
liability for personal injury or property damage arising under any statutory
or common-law tort theory, including, without limitation, damages assessed
for the maintenance of a public or private nuisance or for carrying on of a
dangerous activity; (d) liability by reason of a breach of an environmental
representation or warranty by Tenant; and (e) failure of Tenant to complete
in a timely manner alterations or improvements of equipment or buildings
located on the Leased Property deemed necessary or advisable by Landlord
pursuant to SECTION 5.03 in a manner acceptable to Landlord.
5.06 TENANT'S CLEANUP OBLIGATION. If any spill, release or
discharge of Substances of Concern occurs on, at or from the Leased Property
during the Term or any Extension Term, Tenant shall promptly take all
actions, at its sole expense, as are necessary to remove or remediate such
spill, release or discharge and to return the Leased Property to the
condition existing prior to the introduction of any such Substances of
Concern to the Leased Property, provided that Landlord's written approval of
such action shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material
adverse effect on the Leased Property.
5.07 SURVIVAL OF TENANT'S OBLIGATIONS. Tenant's obligations under
this Section 5 shall survive the expiration or earlier termination of this
Lease. During any period of time after the termination of this Lease that
Tenant is completing the removal from the Leased Property of any Substances
of Concern for which Tenant is responsible, Tenant shall continue to pay the
full amount of rent due under this Lease if the Leased Property is not
rentable for uses contemplated under this Lease, which Rent shall be prorated
daily for the final month of such period of time.
VI. USE AND ACCEPTANCE OF THE LEASED PROPERTY
6.01 USE OF LEASED PROPERTY. For so long as this Lease is in
effect, Tenant shall use and occupy the Leased Property exclusively for the
purpose of conducting the Business, and for no other purpose without the
prior written consent of Landlord. Tenant shall obtain and maintain
20
all approvals, licenses, and consents needed to use and operate the Leased
Property for such purposes. Tenant shall promptly deliver to Landlord
complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to
Tenant by any governmental agency.
6.02 ACCEPTANCE OF LEASED PROPERTY. Except as otherwise
specifically provided in this Lease, Tenant acknowledges (i) Tenant has been
in occupancy of the Leased Property prior to the Commencement Date; (ii)
Tenant has found the Leased Property fit for Tenant's use; (iii) delivery of
the Leased Property to Tenant is in an "as-is" condition; (iv) Landlord is
not obligated to make any improvements or repairs to the Leased Property; and
(v) the roof, walls, foundation, heating, ventilating, air conditioning,
telephone, sewer, electrical, mechanical utility, plumbing, and other
portions of the Leased Property are in good working order. Tenant waives any
claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION OR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, AS TO QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 CONDITIONS OF USE. Tenant agrees that during the Term and any
Extension Term it shall use and keep the Leased Property in a careful, safe
and proper manner; not commit or suffer waste thereon; not use or occupy the
Leased Property for any unlawful purposes; not use or occupy the Leased
Property or permit the same to be used or occupied, for any purpose or
business deemed extra hazardous on account of fire or otherwise; keep the
Leased Property in such repair and condition as may be required by the local
board of health, or other city, state or federal authorities, free of all
cost to Landlord; not permit any acts to be done which will cause the
cancellation, invalidation, or suspension of any insurance policy; and permit
Landlord and its agents to enter upon the Leased Property at all reasonable
times to examine the condition thereof. In addition, at any time and from
time to time upon not less than fifteen (15) days prior written notice,
Tenant shall permit Landlord's mortgagee or lender and their authorized
representatives, to inspect the Leased Property during normal business hours,
provided that such inspections shall not unreasonably interfere with the
Business.
6.04 FINANCIAL STATEMENTS AND OTHER INFORMATION. Tenant shall
provide Landlord and any mortgagee or lender regularly (or more often as may
be reasonably requested by Landlord in writing), the following financial
information: (a) within forty-five (45) days after each fiscal quarter during
the Term or any Extension Term (except the fourth quarter), Tenant-prepared
financial statements prepared in accordance with generally accepted
accounting principles consistently applied; and (b) as to the Leased Property
and itself, Tenant shall use its best efforts to provide Landlord within
ninety (90) days after the end of each fiscal year of Tenant during the Term
or any Extension Term and in no event later than one hundred and twenty (120)
days after
21
the end of each fiscal year of Tenant during the Term or any Extension Term,
financial statements, audited, reviewed or compiled by a certified public
accountant (the "ANNUAL FINANCIAL STATEMENTS"). Tenant shall also deliver to
Landlord such additional financial information as Landlord may reasonably
request, provided the same is of a type normally maintained by Tenant or can
be obtained without undue cost or burden on Tenant's personnel and does not
constitute information which Tenant reasonably determines to be proprietary
or confidential.
VII. REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 MAINTENANCE. Tenant shall maintain the Leased Property in good
order, repair and appearance, and repair the Leased Property, including
without limitation, all interior and exterior, structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer and gas
connections, pipes, and mains. Tenant shall pay as Additional Rent the full
cost of such maintenance, repairs, and replacements. Tenant shall maintain
all drives, sidewalks, parking areas and lawns on or about the Leased
Property in a clean and orderly condition, free of accumulations of dirt and
rubbish. Tenant shall permit Landlord to inspect the Leased Property at all
reasonable times, and shall implement all reasonable suggestions of Landlord
as to the maintenance and repair of the Leased Property.
7.02 COMPLIANCE WITH LAWS. Tenant shall comply with all conditions,
covenants and restrictions affecting the Project, insurance requirements,
laws, ordinances, orders, rules, regulations and other governmental
requirements relating to the use, condition or occupancy of the Leased
Property, whether now or hereafter enacted and in force, including, without
limitation: (a) licensure requirements for operation of the Business; (b)
requirements of any board of casualty insurance underwriters or insurance
service office for any other similar body having jurisdiction over the Leased
Property; (c) all zoning and building codes; (d) Environmental Laws; (e)
those certain covenants, conditions and restrictions recorded on September
12, 1986 as File/Page No. 86-401456 of the Official Records of San Diego
County, California (the "Official Records") (as amended from time to time,
the "CC&Rs"); and (f) that certain agreement dated December 21, 1990, by and
between Carlsbad Airport Centre, a California limited partnership and Xxxx X.
XxXxxxxxx, Trustee of the XxXxxxxxx Family Trust and The City of Carlsbad,
recorded on January 16, 1991 as File/Page no. 1991-0021341 in the Official
Records. At Landlord's request, from time to time, Tenant shall deliver to
Landlord copies of certificates or permits evidencing compliance with such
laws, including without limitation, copies of any applicable licenses,
certificates of occupancy and building permits. Tenant shall promptly
provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or the Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require
of Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify
and hold harmless Landlord, its officers, directors, shareholders, agents and
employees from and against any and all demands,
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claims, causes of action, fines, penalties, damages (including punitive and
consequential damages), losses, liabilities (including strict liability),
judgments, costs and expenses (including, without limitation, attorneys'
fees, court costs, and the costs set forth in SECTION 9.06) resulting from
any failure by Tenant to comply with any laws, ordinances, rules, regulations
and other governmental requirements.
7.03 CHANGES TO THE LEASED PROPERTY. Subject to Landlord's approval
as set forth in SECTION 8.01, Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to the
Leased Property, including structural alterations, which may be required by
any governmental authorities, including those required to continue to satisfy
any licensure requirements related to the operation of the Business, whether
such changes are required by Tenant's continued use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of
this Lease, or any other cause whatsoever. Tenant shall provide thirty (30)
days prior written notice to Landlord of any changes to the Leased Property
pursuant to this SECTION 7.03 which involve changes to the structural
integrity thereof or materially affect the operational capabilities thereof.
All such additions, changes, improvements or alterations shall be deemed to
be a Tenant Improvement and shall comply with all laws relating to such
alterations and with the provisions of SECTION 8.01.
7.04 MECHANIC'S LIENS. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby
agrees to defend, indemnify, and hold Landlord harmless from and against any
mechanics' liens or other liens against the Leased Property by reason of
work, labor services or materials supplied or claimed to have been supplied
on or to the Leased Property. Tenant shall immediately remove, bond-off, or
otherwise obtain the release of any mechanic's lien filed against the Leased
Property. Tenant shall pay all expenses in connection therewith, including
without limitation, damages, interest, court costs and reasonable attorneys'
fees.
7.05 REPLACEMENT OF FIXTURES. Tenant shall not remove Fixtures from
the Leased Property except to replace such Fixtures with other items used for
similar or analogous purposes, which replacement items are of equal or
greater quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant, and items replacing the same shall be
and remain the property of Landlord. Tenant shall execute, upon written
request from Landlord, any and all documents necessary to evidence Landlord's
ownership of the Fixtures and replacements therefor. Tenant may not finance
replacements by security agreement or equipment lease unless: (a) Landlord
has consented to the terms and conditions of the equipment lease or security
agreement; (b) the equipment lessor or lender has entered into a
non-disturbance agreement with Landlord upon terms and conditions acceptable
to Landlord, including without limitation (i) Landlord shall have the right
(but not the obligation) to assume such security agreement or equipment lease
upon the occurrence of an Event of Default by Tenant hereunder; (ii) the
equipment lessor or lender shall promptly notify Landlord of any default by
Tenant under
23
the equipment lease or security agreement and give Landlord a reasonable
opportunity to cure such default; and (iii) Landlord shall have the right to
assign its rights under the equipment lease, security agreement, or
non-disturbance agreement; (c) the equipment lessor or lender shall
subordinate its security interest to the security interest of any of
Landlord's lessors, mortgagees or lenders, whether now created or hereafter
existing; and (d) Tenant shall, within ten (10) days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred
in reviewing and approving the equipment lease, security agreement, and
non-disturbance agreement, including without limitation, reasonable
attorneys' fees and costs.
7.06 ENCROACHMENT RESTRICTIONS. If any of the Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to
the Leased Property, or shall violate the agreements or conditions contained
in any restrictive covenant or other agreement affecting the Leased Property,
other than one which is created or consented to by Landlord without Tenant's
consent, or shall impair the rights of others under an easement or
right-of-way to which the Leased Property is subject, other than one which is
created or consented to by Landlord without Tenant's consent, then promptly
upon the request of Landlord or at the request of any person affected by any
such encroachment, violation or impairment, Tenant shall, at its expense,
subject to its right to contest the existence of any encroachment, violation
or impairment and in such case, in the event of an adverse final
determination, either (a) obtain valid and effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation or impairment whether the same shall affect Landlord or Tenant, or
(b) subject to Landlord's approval as set forth in SECTION 8.01, make such
changes in the Improvements and take such other actions as shall be necessary
to remove such encroachment and to end such violation or impairment,
including, if necessary, the alteration of improvements. Any such alteration
shall be made in conformity with the requirements of ARTICLE VIII.
VIII. ALTERATIONS AND SIGNS: TENANT'S PROPERTY: CAPITAL ADDITIONS TO THE
LEASED PROPERTY
8.01 TENANT'S RIGHT TO CONSTRUCT. During the Term of this Lease or
any Extension Term, so long as no Event of Default shall have occurred and be
continuing, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to the Leased Property as
deemed necessary or useful to operate the Leased Property for the Business
(individually, a "TENANT IMPROVEMENT," or collectively, the "TENANT
IMPROVEMENTS"). "CAPITAL ADDITIONS" shall mean the construction of one or
more new buildings or one or more additional structures annexed to any
portion of any of the Improvements, including the construction of a new
floor, or the repair, replacement, restoration, remodeling or rebuilding of
the Improvements or any portion thereof which are not normal, ordinary or
recurring to maintain the Leased Property. Except as otherwise agreed to by
Landlord herein or otherwise in writing, any such Tenant Improvement or
Capital Addition shall be made at Tenant's sole expense and shall become the
property of Landlord upon termination of this Lease.
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Unless made on an emergency basis to prevent injury to person or property,
Tenant must obtain Landlord's prior written approval, such approval not to be
unreasonably withheld or delayed, for any Capital Addition, and for any
Tenant Improvement which is not a Capital Addition and which (a) has a cost
of more than Twenty-Five Thousand Dollars ($25,000) or a cost which, when
aggregated with the costs of all such Tenant Improvements on the Leased
Property in a given Lease Year, would cause the total costs of all such
Tenant Improvements on the Leased Property to exceed One Hundred Thousand
Dollars ($100,000); or (b) would, in Landlord's reasonable judgment, impair
the value of the Leased Property. Additionally, in connection with any
Tenant Improvement, including any Capital Addition, Tenant shall provide
Landlord with copies of any plans and specification therefor, Tenant's budget
relating thereto, any required governmental permits or approvals, any
construction contracts or agreements relating thereto, and any other
information relating to such Tenant Improvement as Landlord shall reasonably
request. Notwithstanding anything to the contrary contained in this Lease,
Landlord may require Tenant to remove any Tenant Improvements or Capital
Additions (whether or not made with Landlord's consent) prior to the
expiration of the Lease and to restore the Leased Property to its prior
condition, all at Tenant's expense. With respect to any Tenant Improvements
or Capital Additions that require Landlord's approval, at the time of such
approval, Landlord shall specify if Tenant shall not be required to remove
the same, and such items shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or equipment
which can be removed without damage to the Leased Property. Tenant shall
repair, at Tenant's expense, any damage to the Leased Property caused by the
removal of any such machinery or equipment. In no event, however, shall
Tenant remove any of the following materials or equipment (which shall be
deemed Landlord's property), without Landlord's prior written consent.
8.02 TENANT'S RIGHTS. Subject to SECTION 8.01 herein and SECTION
7.03 and SECTION 7.06 concerning required alterations, at Tenant's cost and
expense, Tenant shall have the right to:
(a) seek any governmental approvals, including building
permits, licenses and conditional use permits that Tenant
requires to construct any Tenant Improvement;
(b) erect upon the Leased Property such Tenant Improvements as
Tenant deems desirable;
(c) make additions, alterations, changes and improvements in
any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the development
of the Leased Property in accordance with the Business;
PROVIDED, HOWEVER, Tenant shall not make any Tenant
25
Improvement which would, in Landlord's reasonable judgment,
impair the value of the Leased Property without Landlord's
prior written consent and provided, further that Tenant
shall not be permitted to create a mortgage, lien or any
other encumbrance on the Leased Property without Landlord's
prior written consent.
8.03 COOPERATION OF LANDLORD. Landlord shall cooperate with Tenant
and take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within fifteen (15) business days following
the later of (a) the date Landlord receives Tenant's written request, or (b)
the date of delivery of any such application or document to Landlord;
provided, the taking of such action by Landlord shall be without cost to
Landlord (or if there is a cost to Landlord, such cost shall be reimbursed by
Tenant), shall not cause Landlord to be in violation of any law, ordinance or
regulation, and shall not be deemed a waiver by Landlord of any of its rights
or of any of Tenant's obligations, including but not limited to
indemnification.
8.04 COMMENCEMENT OF CONSTRUCTION. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently oversee any such
construction to completion in accordance with applicable
insurance requirements and the laws, rules and regulations
of all governmental bodies or agencies having jurisdiction
over the Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon the Leased Property such
notices as may be necessary to protect Landlord's interest
from mechanic's liens, materialmen's liens or liens of a
similar nature;
(d) Tenant shall not suffer or permit any mechanic's liens or
any other claims or demands arising from the work of
construction of any Tenant Improvement to be enforced
against the Leased Property or any part thereof, and Tenant
agrees to indemnify, defend and hold Landlord, its
officers, directors, shareholders, agents and employees and
the Leased Property free and harmless from all demands,
claims, causes of action, fines, penalties, damages
(including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs
and expenses
26
(including, without limitation, attorneys' fees, court
costs, and the costs set forth in SECTION 9.06) incurred
in connection with or arising therefrom;
(e) all work shall be performed in a satisfactory and
workmanlike manner consistent with standards in the
industry; and
(f) subject to SECTION 8.08 in the case of Capital Additions,
Tenant shall not secure any construction or other financing
for the Tenant Improvements which is secured by the Leased
Property without Landlord's prior written consent, and any
such financing (i) shall not exceed the cost of the Tenant
Improvements, (ii) shall be subordinate to any mortgage or
encumbrance now existing or hereinafter created with
respect to the Leased Property, and (iii) shall be limited
solely to Tenant's interest in the Leased Property.
8.05 RIGHTS OF TENANT IMPROVEMENTS. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements existing on the Leased
Property or constructed upon the Leased Property pursuant to SECTION 8.01,
any and all subsequent additions thereto and alterations and replacements
thereof shall be the sole and absolute property of Tenant during the Term and
any Extension Term. Upon the expiration or early termination of this Lease,
all such Tenant Improvements located on the Leased Property shall become the
property of Landlord, subject to Landlord's right to require their removal by
Tenant pursuant to the provisions of Section 8.01. Without limiting the
generality of the foregoing, prior to the expiration or earlier termination
of this Lease, Tenant shall be entitled to all federal and state income tax
benefits associated with all Tenant Improvements located on the Leased
Property.
8.06 PERSONAL PROPERTY. Tenant shall install, place and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required or as Tenant
may, from time to time, deem necessary or useful to operate the Leased
Property in the operation of the Business.
8.07 REQUIREMENTS FOR THE TENANT'S PERSONAL PROPERTY. Tenant shall
comply with all of the following requirements in connection with Tenant's
Personal Property:
(a) Tenant's Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental
laws, ordinances, rules and regulations and all insurance
requirements, and be installed free and clear of any
mechanic's liens;
(b) Tenant shall, at Tenant's sole cost and expense, maintain,
repair and replace Tenant's Personal Property.
27
(c) Tenant shall pay all Impositions and other taxes applicable
to Tenant's Personal Property;
(d) unless an Event of Default has occurred and is continuing,
Tenant may remove Tenant's Personal Property from the
Leased Property from time to time provided that Tenant
promptly repairs any damage to the Leased Property
resulting from the removal of Tenant's Personal Property;
(e) Tenant shall remove all of Tenant's Personal Property upon
the termination or expiration of the Lease and shall
promptly repair any damage to the Leased Property resulting
from the removal thereof to the reasonable satisfaction of
Landlord; PROVIDED, HOWEVER, if Tenant fails to remove
Tenant's Personal Property from the Leased Property within
thirty (30) days after the termination or expiration of
this Lease, then Tenant shall be deemed to have abandoned
such items of Tenant's Personal Property, all of which
shall become the property of Landlord, and Landlord may
remove, store and dispose of such property, and Tenant
shall have no claim or right against Landlord for such
property or the value thereof regardless of the disposition
thereof by Landlord. Tenant shall pay Landlord, upon
demand, all expenses incurred by Landlord in removing,
storing and disposing of such items of Tenant's Personal
Property and repairing any damage caused by such removal.
(f) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Personal Property;
(g) Tenant's obligations hereunder shall survive the
termination or expiration of this Lease.
IX. DEFAULTS AND REMEDIES
9.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall be an event of default ("EVENT OF DEFAULT") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or any
other monetary obligation payable by Tenant hereunder,
within three (3) business days after the due date thereof
and after written notice thereof and an opportunity to cure
within a three (3) business day period after such notice is
given to Tenant by Landlord;
(b) Tenant shall abandon or vacate the Leased Property;
28
(c) Any insurance required to be carried by Tenant hereunder
shall have lapsed; Tenant shall fail to observe the
covenant in respect to insurance under ARTICLE IV provided
Landlord shall have provided notice of such failure to
Tenant, and Tenant shall have failed to cure such failure
within three (3) business days of such notice;
(d) Tenant fails to observe and perform any covenant, condition
or agreement hereunder to be performed by Tenant (except
the covenants in respect of insurance, or the payment of
Rent or under Section 2.09) and such failure continues for
a period of twenty (20) days after written notice thereof
is given to Tenant by Landlord;
(e) if Tenant or Photomatrix, Inc. ("GUARANTOR"): (i) admits in
writing its inability to pay its debts generally as they
become due; (ii) files a petition in bankruptcy or a
petition to take advantage of any insolvency act; (iii)
makes an assignment for the benefit of its creditors; (iv)
is unable to pay its debts as they mature; (v) consents to
the appointment of a receiver of itself or of the whole or
any substantial part of its property; or (vi) files a
petition or answer seeking reorganization or arrangement
under the federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state
thereof;
(f) if Tenant or Guarantor, on insolvency proceedings or on a
petition in bankruptcy filed against it, is adjudicated as
bankrupt or a court of competent jurisdiction enters an
order or decree appointing, without the consent of Tenant
or Guarantor, as the case may be, a receiver of Tenant or
Guarantor, as the case may be, of the whole or
substantially all of its property, or approving a petition
filed against it seeking, reorganization or arrangement of
Tenant, or Guarantor, as the case may be, under the federal
bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof, and such
judgment, order or decree is not vacated, dismissed or set
aside within sixty (60) days from the date of the entry
thereof;
(g) if the estate or interest of Tenant in the Leased Property
or any part thereof is levied upon or attached in any
proceeding and the same is not vacated or discharged within
fifteen (15) days after commencement thereof (unless Tenant
is contesting such lien or attachment in accordance with
this Lease) or if such estate or interest of Tenant is
assigned, conveyed or involuntarily transferred in
violation of this Lease;
29
(h) any representation, warranty or covenant made by Tenant on
behalf of itself or an Affiliate in this Lease or in any
certificate, demand or request made pursuant hereto proves
to be incorrect, in any material respect, as of the date of
issuance or making thereof;
(i) a final, non-appealable judgment or judgments for the
payment of money not fully covered (excluding deductibles)
by insurance is rendered against Tenant and the same
remains undischarged, unvacated, unbonded, unappealed or
unstayed for a period of thirty (30) consecutive days;
(j) except after the effective date of a permitted assignment
meeting the requirements of ARTICLE XIII if Tenant is
liquidated or dissolved, or begins proceedings toward
liquidation or dissolution, or in any manner permits the
sale or divestiture of substantially all of its assets; or
(k) Tenant shall fail to observe and perform any covenant,
condition or agreement to be performed under Section 2.09.
9.02 REMEDIES. Upon the occurrence of an Event of Default, Landlord
may, with or without further notice or demand, and without limiting Landlord
in the exercise of any right or remedy which Landlord may have by reason of
such Event of Default:
(a) Terminate Tenant's right to possession of the Leased
Property by any lawful means, in which case this Lease
shall terminate and Tenant shall immediately surrender
possession to Landlord. In such event Landlord may
repossess the Leased Property and may, at tenant's sole
cost, remove any of tenant's signs and any of its other
property without relinquishing its right to receive Rent or
any other right against Tenant. Without limiting the
generality of the foregoing, upon the termination of this
Lease or the termination of Tenant's right of possession,
it shall be lawful for Landlord, without formal demand or
notice of any kind, to re-enter the Leased Property by
summary dispossession proceedings or any other action or
proceeding authorized by law and to remove Tenant and all
persons and property therefrom. Except as otherwise
provided in Section 9.02(b), if Tenant abandons the Leased
Property prior to the end of the term hereof, or if
Tenant's right to possession is terminated by Landlord
because of an Event of Default, this Lease shall terminate.
Upon such termination, Landlord shall be entitled to
recover from Tenant the following, as provided in Section
1951.2 of the California Civil Code:
(i) the unpaid Rent which had been earned at the time of
termination;
30
(ii) the worth at the time of award of the amount by
which the unpaid Rent which would have been earned
after termination until the time of award exceeds
the amount of such rental loss that Tenant proves
could have been reasonably avoided;
(iii) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term
after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably
avoided; and
(iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease
or which in the ordinary course of things would be
likely to result therefrom, including but not
limited to the cost of recovering possession of the
Leased Property, expenses of reletting, including
necessary renovation and alteration of the Leased
Property, reasonable attorneys' fees, and that
portion of any leasing commission paid by Landlord
in connection with this Lease applicable to the
unexpired Term of this Lease.
The worth at the time of award of the amount referred to in
provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus
four percent (4%).
Efforts by Landlord to mitigate damages caused by Tenant's default
of this Lease shall not waive Landlord's right to recover damages
as provided herein. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Landlord
shall have the right to recover in such proceeding any unpaid Rent
and damages as are recoverable therein, or Landlord may reserve
the right to recover all or any part thereof in a separate suit.
If a notice and grace period required under SECTION 9.01 was not
previously given, a notice to pay rent or quit, or to perform or
quit given to Tenant under the unlawful detainee statute shall
also constitute the notice required by SECTION 9.01. In such case,
the applicable grace period required by SECTION 9.01 and the
unlawful detainee statute shall run concurrently, and the failure
of Tenant to cure the Event of Default within the greater of the
two such grace periods shall constitute both an unlawful detainer
and an Event of Default entitling Landlord to the remedies
provided for in this Lease and/or by said statute.
(b) Even if Tenant has abandoned the Leased Property, this Lease shall
continue in effect for so long as Landlord does not terminate
tenant's right to possession, and
31
Landlord may enforce all its rights and remedies under this
Lease, including, without limitation, the right to recover Rent
as it becomes due. This remedy is intended to be the remedy
described in California Civil Code Section 1951.4, and the
following provision from such Civil Code Section is hereby
repeated: "The Lessor has the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect
after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject
only to reasonable limitations)." Any such payments due
Landlord shall be made upon demand therefor from time to time
and Tenant agrees that Landlord may file suit to recover any
sums falling due from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time
thereafter elect in writing to terminate this Lease for such
previous breach.
(c) If Landlord terminates Tenant's right to possession without
terminating the Lease, and Landlord takes possession of the Leased
Property itself, Landlord may relet any part of the Leased
Property for such Rent, for such time, and upon such terms as
Landlord, in its sole discretion, shall determine. Any proceeds
from reletting the Leased Property shall first be applied to the
expenses of reletting, including, without limitation,
redecoration, repair, alteration, and advertising, brokerage,
legal, and other reasonably necessary expenses. If the reletting
proceeds after such payment of expenses are insufficient to pay
the full amount of Rent under this Lease, Tenant shall pay such
deficiency to landlord monthly upon demand as it becomes due. Any
excess proceeds shall be retained by Landlord.
(d) Make a draw upon the Letter of Credit.
(e) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Leased Property is
located. The expiration or termination of this Lease and/or the
termination of Tenant's right to possession shall not relieve
Tenant from liability under any indemnity provisions of this Lease
as to matters occurring or accruing during the Term or any
Extension Term or by reason of Tenant's occupancy of the Leased
Property.
9.03 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of the Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against
Landlord, against any obligations of Tenant under this Lease and against any
claims by Landlord against Tenant, whether or not Landlord has exercised any
other remedies hereunder. Landlord shall set-off and apply such sums first
to delinquent real estate taxes, unless such taxes are being protested in
good faith and no lien has attached to the Leased Property with respect
thereto; second, to currently due and owing real estate taxes; and next, to
other Tenant's obligations in
32
the order which Landlord may determine. The rights of Landlord under this
Section are in addition to any other rights and remedies Landlord may have
against Tenant.
9.04 PERFORMANCE OF TENANT'S COVENANTS. Landlord may, without
waiving or releasing any obligation of Tenant, and without waiving or
releasing any obligation or default, perform any obligation of Tenant which
Tenant has failed to perform within five (5) business days after Landlord has
sent a written notice to Tenant informing it of its specific failure
(provided no such notice shall be required if Landlord has previously
notified Tenant of such failure under the provisions of SECTION 9.01). In the
event Landlord deems, in its discretion, that Tenant's failure to perform
such obligation has given rise to an emergency situation, Landlord may
perform such obligation without waiving or releasing any obligation of
Tenant, and without waiving or releasing any obligation or default; PROVIDED,
HOWEVER, that Landlord shall notify Tenant of such performance as soon as it
is reasonably practicable to do so. Tenant shall reimburse Landlord on
demand, as Additional Rent, for any expenditures thus incurred by Landlord
and shall pay interest thereon at the rate of ten percent (10%) per annum.
9.05 [INTENTIONALLY OMITTED]
9.06 LITIGATION; ATTORNEYS' FEES. Within ten (10)days after Tenant
has knowledge of any litigation or other proceeding (a) against Tenant or
Guarantor in an amount in excess of One Hundred Thousand Dollars ($100,000),
(b) related to or arising out of this Agreement or the Leased Property in an
amount in excess of Fifty Thousand Dollars ($50,000) or (c) that (i) may be
instituted against Tenant, (ii) may be instituted against the Leased Property
to secure or recover possession thereof, or (iii) may affect the title to or
the interest of Landlord or Tenant in the Leased Property, Tenant shall give
written notice thereof to Landlord. In the event that Landlord determines
that Tenant has failed to give adequate cooperation or information with
respect to any such litigation, investigation, receivership, administrative,
bankruptcy insolvency or other similar proceeding, Landlord may, after notice
to Tenant, undertake such investigation or proceeding and Tenant shall pay
all reasonable costs and expenses (the "COSTS") related thereto that are
incurred by Landlord, whether or not Landlord has received notice from Tenant
of such investigation or proceeding, and whether or not an Event of Default
has actually occurred or has been declared and thereafter cured, which Costs
shall include, without limitation: (aa) the fees, expenses and costs of any
litigation, investigation, receivership, administrative, bankruptcy
insolvency or other similar proceeding; (bb) reasonable attorneys',
paralegal, consulting and witness fees and disbursements; and (cc) the
expenses, including, without limitation, lodging, meals, and transportation,
of Landlord and its employees, agents, attorneys, and witnesses in
investigating or preparing for litigation, administrative, bankruptcy
insolvency or other similar proceedings and attendance at hearings,
depositions and trials in connection therewith. Within ten (10) days of
Landlord's presentation of an invoice of Costs incurred by Landlord pursuant
to the preceding sentence or otherwise incurred by Landlord in enforcing or
preserving Landlord's rights under this Lease, whether or not an Event of
Default has actually occurred or has been
33
declared and thereafter cured, Tenant shall pay all such Costs. All such
Costs as incurred shall be deemed to be Additional Rent under this Lease.
9.07 REMEDIES CUMULATIVE. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at
law or in equity. The use of or failure to use, any one remedy shall not be
taken to exclude or waive the right to use any other remedy.
9.08 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord
all its right, title and interest in and to all monies escrowed with Landlord
under this Lease and all deposits with utility companies, taxing authorities,
and insurance companies; PROVIDED, HOWEVER, that Landlord shall not exercise
its rights hereunder with respect to the Leased Property until an Event of
Default has occurred. Any payments received by Landlord under any provisions
of this Lease during the existence or continuance of an Event of Default
shall be applied to Tenant's obligations; first to delinquent real estate
taxes, unless such taxes are being protested in good faith and no lien has
attached to the Leased Property with respect thereto; second, to currently
due and owing real estate taxes; and next, to other Tenant's obligations in
the order which Landlord may determine.
9.09 POWER OF ATTORNEY. Tenant hereby irrevocably and
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact to act
after an Event of Default, for Tenant in Tenant's name, place and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with
Tenant's operation of the Leased Property, and to do any and all other acts
incidental to any of the foregoing. Tenant irrevocably and unconditionally
grants to Landlord as its attorney-in-fact full power and authority to do and
perform, after an Event of Default, every act necessary and proper to be done
in the exercise of any of the foregoing powers as fully as Tenant might or
could do if personally present or acting, with full power of substitution,
hereby ratifying and confirming all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled with an
interest and is irrevocable prior to the full performance of Tenant's
obligations hereunder.
X. DAMAGE OR DESTRUCTION
10.01 DAMAGE TO LEASED PROPERTY.
10.01(a) Tenant shall notify Landlord in writing
immediately upon the occurrence of any damage to the Leased Property. If the
Leased Property shall be only partially damaged (i.e., the restoration shall
be estimated by Landlord to require less than six (6) months from the date of
such damage) and if the proceeds received by Landlord from the insurance
policies described in Section 4.03 shall be sufficient to pay for the
necessary repairs, this Lease
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shall remain in effect and Landlord shall repair the damage as soon as
reasonably possible. Landlord may elect (but shall not be required) to
repair any damage to Tenant's fixtures, equipment, or improvements at
Tenant's expense.
10.01(b) If the insurance proceeds received by Landlord
shall not be sufficient to pay the entire cost of repair, or if the damage
shall not be covered by the insurance policies which Landlord shall maintain
under Section 4.03, Landlord may elect either to (i) repair the damage as
soon as reasonably possible, in which case this Lease shall remain in full
force and effect, or (ii) terminate this Lease as of the date the damage
occurred. Landlord shall notify Tenant within thirty (30) days after receipt
of notice of the occurrence of the damage whether Landlord elects to repair
the damage or terminate this Lease. If Landlord shall elect to repair the
damage, Tenant shall pay Landlord the portion of the "deductible amount"
under Landlord's insurance allocable to the damage to the Leased Property
and, if the damage shall have been due to an act or omission of Tenant, or
Tenant's employees, agents, contractors or invitees, the difference between
the actual cost of repair and any insurance proceeds received by Landlord.
10.01(c) If the damage to the Leased Property shall occur
during the last six (6) months of the Lease Term and such damage shall be
estimated by Landlord to require more than thirty (30) days to repair, either
Landlord or Tenant may elect to terminate this Lease as of the date the
damage shall have occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within ten (10) days after
Tenant's notice to Landlord of the occurrence of the damage.
10.02 TEMPORARY REDUCTION OF RENT. If the Property shall be
destroyed or damaged and Landlord shall repair or restore the Property
pursuant to the provisions of this Article X, any Rent payable during the
period of such damage, repair and/or restoration shall be reduced according
to the degree, if any, to which Tenant's use of the Leased Property shall be
impaired. Such reduction shall not exceed the sum of one year's payment of
Base Rent, insurance premiums and real property taxes. Except for such
possible reduction in Base Rent, insurance premiums and real property taxes,
Tenant shall not be entitled to any compensation, reduction or reimbursement
from Landlord as a result of any damage, destruction, repair, or restoration
of the Leased Property.
10.03 WAIVER. Tenant waives the protection of any statute, code or
judicial decision which shall grant a tenant the right to terminate a lease
in the event of the damage or destruction of the leased property and the
provisions of this Article X shall govern the rights and obligations of
Landlord and Tenant in the event of any damage or destruction of or to the
Property.
XI. CONDEMNATION
11.01 CONDEMNATION. If more than twenty percent (20%) of the floor
area of the Leased Property or more than twenty-five percent (25%) of the
parking on the Leased Property shall be
35
taken by eminent domain either Landlord or Tenant may terminate this Lease as
of the date the condemning authority takes title or possession, by delivering
notice to the other within ten (10) days after receipt of written notice of
such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall take title or possession). If neither Landlord
nor Tenant shall terminate this Lease, this Lease shall remain in effect as
to the portion of the Leased Property not taken, except that the Base Rent
shall be reduced in proportion to the reduction in the floor area of the
Leased Property. If this Lease shall be terminated, any condemnation award
or payment shall be distributed to the Landlord. Tenant shall have no claim
against Landlord for the value of the unexpired lease term or otherwise.
XII. ADDITIONAL REPRESENTATION,
WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as
follows:
12.01 ORGANIZATION AND QUALIFICATION.
(a) Tenant is duly organized, validly existing and in good
standing under the laws of its state of incorporation or
organization, with all power and authority, corporate or
otherwise, necessary to: (i) enter into and perform this
Lease and (ii) own and lease its assets and properties, and
conduct the Business, as it is now being conducted or
proposed to be conducted. Tenant is duly qualified as a
foreign corporation or other entity, as the case may be, to
conduct the Business and own and lease its assets and
properties, and is in good standing, in each jurisdiction
where the character of its assets and properties owned or
held under lease or the nature of its Business makes such
qualification necessary or advisable, and is duly qualified
and licensed under all laws, regulations, ordinances or
orders of public or governmental authorities, or otherwise
to carry on the Business and own or lease its assets and
properties in the places and in the manner in which they
are owned, leased or conducted or proposed to be owned,
leased or conducted, except where the failure to be so
organized, qualified and in good standing or to have such
authority, qualification or licensing could not result in a
Material Adverse Change. Complete and correct copies of
Tenant's articles of incorporation, as in effect on the
date hereof, and Tenant's bylaws, also as in effect on the
date hereof, have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or
from the Leased Property, whether now or at any time in the
future, is duly organized, validly existing and in good
standing under the laws of its organization, with all power
and authority, corporate or otherwise, necessary to own
36
and lease its assets and properties, and conduct its
business, as it is now being conducted or proposed to be
conducted. Each Affiliate is duly qualified as a foreign
corporation or other entity, as the case may be, to do
business and own and lease its assets and properties,
and is in good standing, in each jurisdiction where the
character of its assets and properties owned or held
under lease or the nature of its activities or business
makes such qualification necessary or advisable, and is
duly qualified and licensed under all laws, regulations,
ordinances or orders or public or governmental
authorities or otherwise to carry on its business and
own or lease its assets and properties in the places and
in the manner in which they are owned, leased or is
conducted or proposed to be owned, leased or conducted,
except where the failure to be so organized, qualified
and in good standing or to have such authority,
qualification or licensing could not result in a
Material Adverse Change.
"Material Adverse Change" since a particular specified
date, or a date which may be specified from the
circumstances existing immediately prior to the happening
of a specified event or occurrence, or, if no date or event
is specified, with reference to the most recent Annual
Financial Statements delivered pursuant to this Lease,
means a material adverse change in the Business, assets,
properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties,
franchises, financial condition, income or prospects of any
Affiliate, whether or not such event or occurrence is an
Event of Default.
"Affiliate" means with respect to any Person, (i) any
Person that holds direct or indirect beneficial ownership
(as deemed in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of voting securities or other voting
interests representing at least five percent (5%) of the
outstanding voting power of a Person or equity securities
or other equity interests representing at least five
percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with such
Person. Guarantor shall be deemed an Affiliate of Tenant.
A "Person" shall mean and include natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies
and political subdivisions thereof.
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12.02 CHANGES IN CONDITION. Since the date of the latest Annual
Financial Statements, no Material Adverse Change has occurred between such
date and the date hereof, and neither Tenant nor any Affiliate has entered
into any material transaction outside the ordinary course of its or their
operations or business, including the Business, except as set forth in
Schedule 12.02 and the matters contemplated by this Lease.
12.03 LITIGATION. No litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after
giving effect to any applicable insurance, has resulted, or could result in
any Material Adverse Change or which seeks to enjoin the execution and
consummation of this Lease or the performance of Tenant's obligations
hereunder. No judgment, decree or order of any court, board or other
governmental or administrative agency or any arbitrator has been issued
against or binds Tenant or any Affiliate, which has resulted, or could
result, in any Material Adverse Change.
12.04 AUTHORIZATION AND ENFORCEABILITY. Tenant has taken all
corporate or other action required to execute, deliver and perform this
Lease. This Lease constitutes the legal, valid and binding obligation of
Tenant and is enforceable against Tenant in accordance with its terms.
12.05 NO LEGAL OBSTACLE TO LEASE. Neither the execution and delivery
of this Lease nor the performance of any obligation hereunder has constituted
or resulted in or will constitute or result in (a) any breach, violation of,
conflict with, default under or termination of any agreement, contract,
mortgage, instrument, deed or lease to which Tenant or any Affiliate is a
party or by which it or they are bound; (b) the violation of or conflict with
any law, statute, ordinance, judgment, decree, order, rule or regulation
applicable to Tenant, any Affiliate, any Improvements or the Leased Property;
or (c) any violation of or conflict with Tenant's or any Affiliate's articles
or bylaws or other organizational documents, as the case may be.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person
is required to be obtained or made by Tenant in connection with the
execution, delivery and performance of this Lease.
12.06 DISCLOSURE. This Lease does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to
make any statement contained herein not misleading in light of the
circumstances under which it was made. To Tenant's knowledge, there is no
event, fact or occurrence that has resulted, or in the future (so far as
Tenant can reasonably foresee) could result, in any Material Adverse Change,
except to the extent that present or future general and sector-specific
economic conditions may result in a Material Adverse Change.
XIII. ASSIGNMENT AND SUBLETTING; ATTORNMENT
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13.01 PROHIBITION AGAINST SUBLETTING AND ASSIGNMENT. Subject to
SECTION 13.03, Tenant shall not, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, assign, sublease,
mortgage, pledge, hypothecate, encumber or otherwise transfer (except to an
Affiliate) this Lease or any interest herein, or all or any part of the
Leased Property, or suffer or permit this Lease or the leasehold estate
created hereby or any other rights arising hereunder to be assigned,
subleased, transferred, mortgaged, pledged, hypothecated or encumbered, in
whole or in part, whether voluntarily, involuntarily or by operation of law.
For purposes of this SECTION 13.01, an assignment of this Lease shall be
deemed to include any Change of Control of Tenant, as if such Change of
Control were an assignment of the Lease. No assignment shall in any way
impair the continuing primary liability of the Tenant.
13.02 CHANGES OF CONTROL. A Change of Control requiring the consent
of Landlord shall mean (a) the issuance and/or sale by Tenant or the sale by
any shareholder or equity holder of Tenant of a controlling interest (which
shall mean, as applied to any Person, the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise) in Tenant to a Person other than an Affiliate of
Tenant, other than in either case a distribution to the public pursuant to an
effective registration statement under the Securities Act of 1933, as
amended; (b) the sale, conveyance or other transfer of all or substantially
all of the assets of Tenant (whether by operation of law or otherwise); or
(c) any transaction pursuant to which Tenant is merged with or consolidated
into another entity (other than an entity owned and controlled by an
Affiliate), and Tenant is not the surviving entity.
13.03 ASSIGNMENT. No consent to any assignment or sublease in a
particular instance shall be deemed to be a general waiver of the prohibition
set forth in ARTICLE XIII. Any assignment shall be solely of Tenant's entire
interest in this Lease with respect to the Leased Property and shall not
relieve Tenant of its obligations hereunder. Any assignment or other
transfer of all or any portion of Tenant's interest in this Lease in
contravention of ARTICLE XIII shall be voidable at Landlord's option. If
Tenant shall assign or sublease, the following shall apply: Tenant shall pay
to Landlord as Additional Rent fifty percent (50%) of the Proceeds (defined
below) on such transaction (such amount being Landlord's share) as and when
received by Tenant, unless Landlord shall give notice to Tenant and the
assignee or subtenant that Landlord's Share shall be paid by the assignee or
subtenant to Landlord directly. Proceeds shall mean (a) all Rent and all
fees and other consideration paid for or in respect of the assignment or
sublease, including fees under any collateral agreements less (b) the Rent
and other sums payable under this Lease (in the case of a sublease of less
than all of the Premises, allocable to the subleased premises) and all
reasonable costs and expenses directly incurred by Tenant in connection with
the execution and performance of such assignment or sublease for reasonable
real estate broker's commissions and reasonable costs of renovation or
construction of tenant improvements required under such assignment or
sublease. Tenant shall be entitled to recover such reasonable costs and
expenses before Tenant shall be obligated to pay Landlord's Share to
Landlord. Tenant shall provide Landlord a written statement certifying all
amounts to be paid
39
from any assignment or sublease of the Premises within thirty (30) days after
the transaction shall be signed and from time to time thereafter on
Landlord's request, and Landlord may inspect Tenant's books and records to
verify the accuracy of such statement. On written request, Tenant shall
promptly furnish to Landlord copies of all the transaction documentation, all
of which shall be certified by Tenant to be complete, true and correct.
Tenant shall promptly reimburse Landlord for all legal costs and expenses
incurred by Landlord in connection with a request for a sublease or
assignment of this Lease.
13.04 ATTORNMENT. Tenant shall insert in each sublease permitted
hereunder provisions to the effect that: (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the
rights of Landlord hereunder; (b) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder will, at
Landlords' option, attorn to Landlord and waive any right the sublessee may
have to terminate the sublease or to surrender possession thereunder, as a
result of the termination hereof; and (c) in the event the sublessee receives
a written notice from Landlord or Landlord's assignees, if any, stating that
Tenant is in default under this Lease, the sublessee shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the
party giving such notice, or as such party may direct. All rentals received
from the sublessee by Landlord or Landlord's assignees in respect of a Leased
Property, if any, as the case may be, shall be credited against the amounts
owing by Tenant hereunder with respect to the Leased Property.
XIV. ARBITRATION
14.01 CONTROVERSIES. Except with respect to the payment of Rent
hereunder or to the existence of any default or Event of Default hereunder,
each of which shall be subject to the provisions of SECTION 9.02, in the
event a controversy arises between the parties as to any of the requirements
of this Lease or the performance hereunder, which the parties are unable to
resolve, the parties agree to waive the remedy of litigation (except for
extraordinary relief in an emergency situation) and agree that such
controversy or controversies shall be determined by arbitration as hereafter
provided in this ARTICLE XIV.
14.02 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing,
specifying in detail the controversy and matter(s) to be submitted to
arbitration before the American Arbitration Association. The selection of
arbitrators shall be conducted pursuant to the rules for resolution of
commercial disputes promulgated by the American Arbitration Association. The
party or parties giving notice shall request a listing of available
arbitrators from the American Arbitration Association, and each party shall
respond in the selection process within fifteen (15) days after each receipt
of such listings until a panel of three (3) arbitrators has been designated.
If either party fails to respond within fifteen (15) days, it is agreed that
the American Arbitration Association may make such selections as are
necessary to complete the panel of three (3) arbitrators.
40
14.03 ARBITRATION PROCEDURE. Within five (5) business days after the
selection of the arbitration panel, the arbitrators shall give written notice
to each party as to the time and the place of each meeting, which shall be
held in San Diego, California, at which the parties may appear and be heard,
which shall be no later than fifteen (15) days after certification of the
arbitration panel. The parties specifically waive discovery, and further
waive the applicability of rules of evidence or rules of procedure in the
proceedings. The applicable rules shall be those in effect at the time for
the resolution of commercial disputes promulgated by the American Arbitration
Association. The arbitrators shall take such testimony and make such
examination and investigations as the arbitrators reasonably deem necessary.
The decision of the arbitrators shall be in writing signed by a majority of
the panel which decision shall be final and binding upon the parties to the
controversy; PROVIDED, HOWEVER, in rendering their decisions and making
awards, the arbitrators shall not add to, subtract from or otherwise modify
the provisions of this Lease.
14.04 EXPENSES. The expenses of the arbitration shall be assessed by
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally
between Landlord and Tenant. Each party in interest shall be responsible for
and pay the fees, costs and expenses of its own counsel, unless the
arbitration award provides for an assessment of reasonable attorneys' fees
and costs.
14.05 ENFORCEMENT OF THE ARBITRATION AWARD. There shall be no appeal
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the appropriate
jurisdiction for enforcement as provided by applicable law.
XV. QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT, CERTIFICATES
15.01 QUIET ENVIRONMENT. So long as Tenant performs all of its
obligations under this Lease, subject to the provisions of this ARTICLE 15,
Tenant's possession of the Leased Property will not be disturbed by or
through Landlord.
15.02 LANDLORD MORTGAGES: SUBORDINATION. Subject to SECTION 15.03,
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any liens, encumbrances,
security interests or title retention agreements on the Leased Property, or
any portion thereof or any interest therein, whether to secure any borrowing
or other means of financing or refinancing. Tenant shall execute,
acknowledge and deliver to Landlord, at any time and from time to time upon
demand by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this Section, without cost to Landlord, a
Subordination and Non-Disturbance Agreement incorporating any reasonable
requests of Landlord, mortgagee or beneficiary, and otherwise substantially
in the form attached hereto as SCHEDULE 15.02, which provides that (a)
Tenant's rights hereunder are subordinate to any ground
41
lease or underlying lease, first mortgage, first deed of trust, or other
first lien against the Leased Property, together with any renewal,
consolidation, extension, modification, or replacement thereof, which now or
at any subsequent time affects the Leased Property or any interest of
Landlord in the Leased Property, except to the extent that any such
instrument expressly provides that this Lease is superior; and (b) in the
event such party succeeds to Landlord's interest under the Lease and provided
that no Event of Default by Tenant exists, such party will not disturb
Tenant's possession, use or occupancy of the Leased Property. If Tenant
fails or refuses to execute, acknowledge and deliver such Subordination and
Non-Disturbance Agreement within ten (10) days after such written demand,
then Landlord or such successor in interest may execute, acknowledge and
deliver such Subordination and Non-Disturbance Agreement on behalf of Tenant
as Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably
appoints Landlord, its successors and assigns, as Tenant's attorney-in-fact
to execute, acknowledge, and deliver on behalf of Tenant the Subordination
and Non-Disturbance Agreement. This power of attorney is coupled with an
interest and is irrevocable.
15.03 ATTORNMENT. If any holder of any mortgage, indenture, deed of
trust or other similar instrument described in SECTION 15.02 succeeds to
Landlord's interest in the Leased Property, Tenant will pay to such holder
all Rent subsequently payable hereunder. Tenant shall, upon request of
anyone succeeding to the interest of Landlord, automatically become the
tenant of, and attorn to, such successor in interest without changing this
Lease. The successor in interest will not be bound by: (a) any payment of
Rent for more than one (1) month in advance; (b) any amendment or
modification hereof made without its written consent after the date such
successor became a mortgagee or beneficiary as to the Leased Property; (c)
any claim against Landlord arising prior to the date on which the successor
succeeded to Landlord's interest; or (d) any claim or offset of Rent against
Landlord.
15.04 ESTOPPEL CERTIFICATES. At the request of Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate in favor of Landlord or any
mortgagee or purchaser of the Leased Property certifying the following: (a)
that this Lease is unmodified and in full force and effect, or if there have
been modifications that the same is in full force and effect as modified and
stating the modifications; (b) the date to which Rent and other charges have
been paid; (c) that neither Tenant nor Landlord is in default nor is there
any fact or condition which, with notice or lapse of time, or both would
constitute a default, if that be the case, or specifying any existing
default; (d) that Tenant has accepted and occupies the Leased Property; (e)
that Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord, if that be the case, or specifying such that exist; (f)
that Landlord has no outstanding construction or repair obligations; and (g)
such other information as may reasonably be requested by Landlord or any
mortgagee or purchaser. Any purchaser or mortgagee may rely on this estoppel
certificate. If Tenant fails to deliver the estoppel certificates to
Landlord within ten (10) days after such request by Landlord, then Tenant
shall be deemed to have certified that: (aa) this Lease is in full force and
effect and has not been modified, or that this Lease has been modified as set
forth in the certificate delivered to Tenant; (bb) Tenant has
42
not prepaid any Rent or other charges except for the current month; (cc)
Tenant has accepted and occupies the Leased Property; (dd) neither Tenant nor
Landlord is in default nor is there any fact or condition which, with notice
or lapse of time, or both, would constitute a default; (ee) Landlord has no
outstanding construction or repair obligation; and (ff) Tenant has no
defenses, set-offs, deductions, credits or counterclaims against Landlord.
Tenant hereby irrevocably appoints Landlord as Tenant's attorney-in-fact to
execute, acknowledge and deliver on Tenant's behalf any estoppel certificate
which Tenant does not object to within ten (10) days after Landlord sends the
certificate to Tenant. This power of attorney is coupled with an interest
and is irrevocable.
XVI. APPRAISAL METHOD
16.01 APPRAISAL METHOD. When an appraisal is required under this
Lease, the Fair Market Rent of the Leased Property shall be determined by (1)
an independent appraiser, who is a member of the Appraisal Institute, and
will be selected by Landlord (the "LANDLORD MAI APPRAISER"), and (2) a second
appraiser, who is a member of the Appraisal Institute, and will be selected
by Tenant (the "TENANT MAI APPRAISER") (each an "APPRAISER" and,
collectively, the "APPRAISERS"). Landlord and Tenant shall, as promptly as
possible, but in no event later than thirty (30) days following the date
Tenant exercises its option to extend, select its respective Appraiser. The
costs of the Appraisers' appraisals shall be shared equally by the parties.
As promptly as possible but in no event later than fifteen (15) days after
selection of the Appraisers, each Appraiser shall deliver his or her written
report of the Appraisers' determination of the Fair Market Rent of the Leased
Property, which determination shall be based upon the appropriate use of the
Leased Property and taking into consideration the location of the Leased
Property and rentals for other properties comparable thereto. The Fair
Market Rent of the Leased Property shall be equal to the average of the two
(2) Fair Market Rent determinations of the Appraisers. In the event Landlord
and Tenant do not concur with the Appraisers' determination of Fair Market
Rent, within five (5) days after such determination, the two Appraisers shall
appoint a third MAI appraiser (the "THIRD MAI APPRAISER"). The Third MAI
Appraiser shall determine the Fair Market Rent, which Fair Market Rent shall
fall between the two appraisals by the Landlord MAI Appraiser and the Tenant
MAI Appraiser. Notwithstanding the foregoing, in no event shall the Fair
Market Rent be less than the Base Annual Report for the Lease Year
immediately preceding the year for which the Fair Market Rent is being
determined.
XVII. MISCELLANEOUS
17.01 NOTICES.
Any notice or other communication to be given under this Agreement by
either party to the other will be in writing and delivered personally or
mailed by certified mail, postage prepaid and return receipt requested, or
delivered by an express overnight delivery service, charges prepaid, or
transmitted by facsimile, as follows:
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If to Tenant: I-PAC Manufacturing, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Chief Executive Officer
Fax No. (000) 000-0000
With copy to: Xxxxx X. Xxxx, Esq.
Sullivan, Hill, Xxxxx, Rez & Xxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
If to Landlord: Cabot Industrial Properties, L.P.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx
Facsimile Number: (000) 000-0000
With copy to: Xxxxx Xxxxxx Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile Number: (000) 000-0000
Any address or name specified above may be changed by a notice given
by the addressee to the other party in accordance with this numbered
paragraph. Any notice will be deemed given and effective (i) if given by
personal delivery, as of the date of delivery in person; or (ii) if given by
mail, upon receipt as set forth on the return receipt; or (iii) if given by
overnight courier, one (1) business day after timely deposit with the
courier; or (iv) if given by facsimile, upon receipt of the appropriate
confirmation of transmission by facsimile. The inability to deliver because
of a changed address of which no notice was given or the rejection or other
refusal to accept any notice will be deemed to be the receipt of the notice
as of the date of such inability to deliver or the rejection or refusal to
accept.
17.02 ADVERTISEMENT OF THE LEASED PROPERTY. In the event the parties
hereto have not executed a renewal lease or agreed to the Extension Term
within twelve (12) months prior to the expiration of the Term or an Extension
Term, as the case may be, then Landlord or its agent shall have the right to
enter the Leased Property at all reasonable times for the purpose of
exhibiting the Leased Property to others and to place upon the Leased
Property for and during the period commencing twelve (12) months prior to the
expiration of the Term or an Extension Term, as the case may be, "for sale"
or "for rent" notices or signs.
44
17.03 LANDLORD'S ACCESS. Landlord, or its designated agents or
contractors, shall have the right to enter upon the Leased Property, upon
reasonable prior notice to Tenant, for purposes of inspecting the same and
assuring Tenant's compliance with this Lease.
17.04 ENTIRE AGREEMENT. This Lease and the exhibits and schedules
attached hereto and incorporated by reference, contains the entire agreement
between Landlord and Tenant with respect to the Leased Property. No
representations or warranties have been made by the parties as Landlord or
Tenant except as set forth in this Lease.
17.05 SEVERABILITY. If any term or provision of this Lease is held
by a court of competent jurisdiction to be invalid or unenforceable, such
holding shall not affect the remainder of this Lease, and the same shall
remain in full force and effect, unless such holding substantially deprives
Tenant of the use of the Leased Property or Landlord of the Rents therefor,
in which case this Lease shall forthwith terminate as if by expiration of the
Term or an Extension Term, as the case may be.
17.06 CONSENTS AND APPROVALS. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit
or describe the scope of this Lease or the intent of any provision hereof.
17.07 GOVERNING LAW. This Lease shall be construed under the laws of
the State of California (without application of choice of law provisions).
45
17.08 MEMORANDUM OF LEASE OR CERTAIN RIGHTS UNDER THE LEASE.
Landlord and Tenant agree that a record of this Lease or of certain rights
under this Lease may be recorded by either party in a memorandum of lease
approved by Landlord and Tenant with respect to the Leased Property. The
party recording such memorandum must bear all costs of such recording.
17.09 WAIVER. No waiver by Landlord of any condition or covenant
herein contained, or of any breach of any such condition or covenant, shall
be held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach
thereof or of any condition or covenant, nor shall the acceptance of Rent by
Landlord at any time when Tenant is in default in the performance or
observance of any condition or covenant herein be construed as a waiver of
such default, or of Landlord's right to terminate this Lease or exercise any
other remedy granted herein on account of such default.
17.10 ASSIGNMENT; BINDING EFFECT. Except as otherwise set forth
herein, this Lease shall not be assignable by Tenant, without the prior
written consent of Landlord. This Lease will be binding upon and inure to
the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
17.11 CONSENTS AND APPROVALS. In each instance in this Lease where
Landlord is required or permitted to give a consent or approval, Landlord
shall not unreasonably withhold consent.
17.12 MODIFICATION. This Lease may be modified only by a writing
signed by both Landlord and Tenant.
17.13 INCORPORATION BY REFERENCE. All schedules and exhibits
referred to in this Lease are incorporated herein by reference.
17.14 NO MERGER. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a
merger, and will, at Landlord's option, terminate any subleases or operate as
an assignment to Landlord of any subleases. Landlord's option under this
paragraph will be exercised by notice to Tenant and all known subtenants of
the Leased Property.
17.15 FORCE MAJEURE. Landlord, its officers, directors,
shareholders, agents and employees, will not be liable for any loss, injury,
death or damage (including consequential damages) to persons, property or the
Business occasioned by theft, act of God, public enemy, injunction, riot,
strike, insurrection, war, court order, requisition, order of governmental
body or authority, fire, explosion, falling objects, steam, water, leak or
flow of water or rain from the Leased Property or into the Leased Property or
from the roof, street, subsurface or from any other
46
place, or by dampness or from the breakage, leakage, obstruction or other
defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures of the Leased Property, or from
construction, repair or alteration of the Leased Property or from any acts or
omissions of any other occupant or visitor of the Leased Property, or from
the release, emission, discharge, presence or disposal of any hazardous
substance or material on or from the Leased Property, or from any other cause
beyond Landlord's control.
17.16 LACHES. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such
right or power or be construed to be a waiver thereof.
17.17 WAIVER OF JURY TRIAL. To the extent that there is any claim by
one party against the other that is not to be settled by arbitration as
provided in ARTICLE XIV hereof, Landlord and Tenant waive trial by jury in
any action, proceeding or counterclaim brought by either of them against the
other on all matters arising out of this Lease or the use and occupancy of
the Leased Property (except claims for personal injury or property damage).
If Landlord commences any summary proceeding for nonpayment of Rent, Tenant
will not interpose, and waives the right to interpose, any counterclaim in
any such proceeding.
17.18 PERMITTED CONTESTS. Tenant, on its own or on Landlord's
behalf, but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment levy,
encumbrance, charge or claim provided that (a) in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property; (b) neither
the Leased Property nor any Rent therefrom nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited, attached
or lost; (c) in the case of a legal requirement, Landlord would not be in any
immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings; (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of
Twenty Five Thousand Dollars ($25,000), Tenant shall deliver to Landlord and
its counsel an opinion of Tenant's counsel to the effect set forth in clauses
(a), (b) and (c), to the extent applicable; (e) in the case of a legal
requirement and/or an Imposition, lien, encumbrance or charge, Tenant shall
give such reasonable security as may be demanded by Landlord to insure
ultimate payment of the same and to prevent any sale or forfeiture of the
Leased Property or the Rent in respect thereof by reason of such nonpayment
or noncompliance; PROVIDED, HOWEVER, the provisions of this Section shall not
be construed to permit Tenant to contest the payment of Rent (except as to
contests concerning the method of computation or the basis of levy of any
Imposition or the basis for the assertion of any other claim) or any other
sums payable by Tenant to Landlord hereunder; (f) in the case of an insurance
requirement, the coverage required by ARTICLE IV shall be maintained; and (g)
if such contest be finally resolved against Landlord or Tenant, Tenant shall,
as Additional Rent due
47
hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable legal
requirement or insurance requirement. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may
be reasonably required in any such contest, and, if reasonably requested by
Tenant or if Landlord so desires, Landlord shall join as a party therein.
Tenant hereby agrees to indemnify and hold harmless Landlord, its officers,
directors, shareholders, employees, affiliates and agents from and against
any and all demands, claims, causes of action, fines, penalties, damages
(including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
SECTION 9.06) that may be incurred in connection with or arise from any such
contest.
17.19 CONSTRUCTION OF LEASE. This Lease has been reviewed by
Landlord and Tenant and their respective professional advisers. Landlord and
Tenant believe that this Lease is the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in
favor of either Landlord or Tenant or against either Landlord or Tenant
merely because of any party's efforts in preparing such documents.
17.20 COUNTERPARTS. This Lease may be executed in duplicate
counterparts, each of which shall be deemed an original hereof or thereof.
17.21 RELATIONSHIP OF LANDLORD AND TENANT. The relationship of
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
17.22 GUARANTY. This Lease shall be guaranteed by Guarantor, Inc.
pursuant to a guaranty in the form attached hereto as SCHEDULE 17.23.
17.23 NON-DISCRIMINATION. Tenant agrees that it will not permit any
discrimination against, or segregation of, any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Leased
Property or any portion thereof.
17.24 LANDLORD'S LIABILITY; CERTAIN DUTIES.
17.24(a) LIMITATION OF LANDLORD'S LIABILITY. No owner of
the Leased Property shall be liable under this Lease except for breaches of
Landlord's obligations occurring while owner of the Leased Property and upon
any transfer of any Landlord's interest in the Leased Property, such
transferring party shall be automatically relieved of all obligations
thereafter accruing under this Lease. The obligations of Landlord shall be
binding upon the assets of Landlord which comprise the Leased Property but
not upon other assets of Landlord. No individual partner, trustee,
stockholder, officer, member, director, employee, advisor or
48
beneficiary of Landlord, or any partner, trustee, stockholder, officer,
member, director, employee, advisor or beneficiary of any of the foregoing,
shall be personally liable under this Lease and Tenant shall look solely to
Landlord's interest in the Leased Property in pursuit of its remedies upon an
event of default hereunder, and the general assets of Landlord, its partners,
trustees, stockholders, members, officers, employees, advisors or
beneficiaries, and the partners, trustees, stockholders, members, officers,
employees, advisors or beneficiaries of any of the foregoing, shall not be
subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of Tenant.
17.24(b) NOTICE. Tenant shall give written notice of any
failure by Landlord to perform any of its obligations under this Lease to
Landlord and to any ground lessor, mortgagee or beneficiary under any deed of
trust encumbering the Leased Property whose name and address shall have been
furnished to Tenant. Landlord shall not be in default under this Lease
unless Landlord (or such ground lessor, mortgagee or beneficiary) shall fail
to cure such non-performance within thirty (30) days after receipt of
Tenant's notice. However, if such non-performance shall reasonably require
more than thirty (30) days to cure, Landlord shall not be in default if such
cure shall be commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
17.25 NO OTHER BROKERS. Tenant represents and warrants to Landlord
that BRE Brokerage Company is the only agent, broker, finder or other party
with whom Tenant has dealt who may be entitled to any commission or fee with
respect to this Lease or the Leased Property. Tenant agrees to indemnify and
hold Landlord harmless from any claim, demand, cost or liability, including,
without limitation, attorneys' fees and expenses, asserted by any party other
than BRE Brokerage Company based upon dealings of that party with Tenant.
49
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers
as of the date first set forth above.
"LANDLORD" "TENANT":
CABOT INDUSTRIAL PROPERTIES, L.P., a I-PAC MANUFACTURING, INC.,
Delaware limited partnership a California corporation
By: Cabot Industrial Trust, a By:
Maryland real estate --------------------------------
investment trust Name:
its general partner -----------------------------
Title:
-----------------------------
By:
-----------------------------
Name:
--------------------------
Title:
-------------------------
S-1
SCHEDULE A
LEGAL DESCRIPTION OF THE LAND
PARCEL A:
XXX 00 XX XXXXXXXX XXXXX XX. 00-00 XXXX XX. 0, XX THE CITY OF CARLSBAD,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF
NO. 11288, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY.
EXCEPTING THEREFROM 50% OF ALL OIL, MINERAL, GAS, AND OTHER HYDROCARBON
SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL PROPERTY, WITHOUT
RIGHT OF SURFACE ENTRY, AS RESERVED IN DEED BY CARLSBAD PROPERTIES, A
PARTNERSHIP RECORDED JULY 5, 1978 AS FILE/PAGE NO. 78-279136 OF OFFICIAL
RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.
PARCEL B:
EASEMENTS AS MORE FULLY SET FORTH IN DECLARATION OF COVENANTS, CONDITIONS
AND RESTRICTIONS RECORDED SEPTEMBER 12, 1986 AS FILE/PAGE NO. 86-401456
OF THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, STATE OF CALIFORNIA.
PARCEL C:
EASEMENT OVER PORTIONS OF MAPS 11287, 11288 AND 11289 FOR COMMON AREA
PURPOSES AS GRANTED IN DOCUMENT RECORDED OCTOBER 31, 1986 AS FILE/PAGE
NO. 86-497819 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.
Address of the Leased Property:
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
SCHEDULE 2.01
BASE ANNUAL RENT
MONTHLY
PERIOD INSTALLMENT BASE ANNUAL RENT
------ ----------- ----------------
Commencement Date
to May 31, 2000 $25,137 $301,644
SCHEDULE 2.07
LETTER OF CREDIT
(See attached)
FORM OF LETTER OF CREDIT
[LETTERHEAD OF LETTER OF CREDIT BANK]
[DATE]
Cabot Industrial Properties, L.P. ("BENEFICIARY")
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
Re: Irrevocable Transferrable Letter of Credit
No.
-------------------------------------------
Beneficiary:
By order of our client, I-Pac Manufacturing, Inc., a California
corporation (the "APPLICANT"), we hereby establish this Irrevocable
Transferrable Letter of Credit No. _______________ in your favor for an
amount up to but not exceeding the aggregate sum of Two Hundred Seventy-Five
Thousand and No/100 Dollars ($275,000) (as reduced from time to time in
accordance with the terms hereof, the "LETTER OF CREDIT AMOUNT"), effective
immediately, and expiring on the close of business at our office at the
address set forth above one year from the date hereof unless renewed as
hereinafter provided.
Funds under this Letter of Credit are available to you on or prior to
the expiry date against presentation by you of your request in the form of
Annex 1 hereto (a "DRAWING REQUEST"), completed and signed by one of your
officers. Presentation of your Drawing Requests may be made by you to us at
the address set forth above or may be made by facsimile transmission, to the
following facsimile number . You may present to us one
or more Drawing Requests from time to time prior to the expiry date in an
aggregate amount not to exceed the Letter of Credit Amount then in effect (it
being understood that the honoring by us of each Drawing Request shall reduce
the Letter of Credit Amount then in effect).
This Letter of Credit will be automatically renewed for a one-year
period upon the expiration date set forth above and upon each anniversary of
such date, unless at least sixty (60) days prior to such expiration date, or
prior to any anniversary of such date, we notify both you and the Applicant
in writing by certified mail that we elect not to so renew the Letter of
Credit.
This Letter of Credit sets forth in full the terms of our undertaking
and such undertaking shall not in any way be modified, amended or amplified
by reference to any document or instrument referred to herein or in which
this Letter of Credit is referred to or to which this Letter of Credit
relates, and no such reference shall be deemed to incorporate herein by
reference any document or instrument.
All bank charges and commissions incurred in this transaction are for
the Applicant's account.
This Letter of Credit is transferrable by you and your successors and
assigns any number of times in its entirety and not in part, but only by
delivery to us of a Notice of Assignment in the form of Annex 2 hereto.
We hereby agree with the drawers, endorsers, and bona fide holders of
drafts drawn under and in compliance with the terms of this Letter of Credit
that such drafts will be duly honored upon presentation to the drawee from
our own funds and not the funds of the Applicant and shall be available to
such drawers, endorsers, and bona fide holders, as the case may be, on or
before noon, time, on the Business Day (defined
below) next following the date on which such drafts are received by us.
"Business Day" shall mean any day which is not a Saturday, Sunday or day on
which we are required or authorized by law to be closed in .
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Commercial Documentary Credits
(1993 Revision), I.C.C. Publication No. 500 (the "UCP 500") and as to matters
not governed by the UCP 500, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of .
Very truly yours,
[NAME OF LETTER OF CREDIT BANK]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ANNEX 1
DRAWING REQUEST
, 199
[NAME AND ADDRESS OF LETTER
OF CREDIT BANK]
Re: Irrevocable Transferrable Letter of Credit No. (the
"LETTER OF CREDIT")
The undersigned (the "BENEFICIARY"), hereby certifies to [Name of Letter
of Credit Bank] (the "ISSUER") that:
(a) The Beneficiary is making a request for payment in lawful
currency of the United States of America under Irrevocable Transferrable
Letter of Credit No. (the "Letter of Credit") in the amount of
$ .
(b) The Letter of Credit Amount (as defined in the Letter of
Credit) as of the date hereof and prior to payment of the amount demanded in
this Drawing Request is $ . The amount requested by this Drawing
Request does not exceed the Letter of Credit Amount.
Please wire transfer the proceeds of the drawing to the following
account of the Beneficiary at the financial institution indicated below:
Unless otherwise defined, all capitalized terms used herein have the
meanings provided in, or by reference in, the Letter of Credit.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Drawing Request as of the day of , 199 .
CABOT INDUSTRIAL PROPERTIES, L.P.,
a Delaware limited partnership
By: Cabot Industrial Trust,
a Maryland real estate investment trust
its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ANNEX 2
NOTICE OF ASSIGNMENT
, 199
[NAME AND ADDRESS OF
LETTER OF CREDIT BANK]
Re: Irrevocable Transferable Letter of Credit No.
The undersigned (the "BENEFICIARY"), hereby notifies [Name of Letter
of Credit Bank] (the "ISSUER") that it has irrevocably assigned the
above-referenced Letter of Credit to (the "ASSIGNEE") with an
address at effective as of the date the Issuer receives this
Notice of Assignment. The Assignee acknowledges and agrees that the Letter
of Credit Amount may have been reduced pursuant to the terms thereof, and
that the Assignee is bound by any such reduction.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Notice of Assignment as of this day of , 199 .
CABOT INDUSTRIAL PROPERTIES, L.P.,
a Delaware limited partnership
By: Cabot Industrial Trust,
a Maryland real estate investment trust
its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Agreed:
[Assignee]
--------------------------------
SCHEDULE 12.02
Material Adverse Change: None.
SCHEDULE 15.02
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
[ ]
-------------
--------------------------------------------------------------------------------
(SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY)
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
NOTICE: THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT
TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENT.
THIS AGREEMENT is entered into as of [ , ], by and
among CABOT INDUSTRIAL PROPERTIES, L.P., a Delaware limited partnership
("LANDLORD"), I-PAC MANUFACTURING, INC., a California corporation ("TENANT"),
and ("LENDER").
RECITALS
A. Tenant is the lessee and Landlord is the lessor under
that certain lease dated , 1999 (the "LEASE").
B. Concurrently herewith, Lender is making a loan to
Landlord in a principal amount up to Dollars ($ ) (the
"LOAN"). The Loan is secured by, among other things, that certain deed of
trust from Landlord (the "DEED OF TRUST"), covering the property wherein the
premises (the "PREMISES") covered by the Lease are located, which property is
described more fully in EXHIBIT "A" attached hereto (the "PROPERTY"). The
Deed of Trust and all other documents to be executed by Landlord in
connection with the requested loan being herein collectively called the "LOAN
DOCUMENTS".
C. Tenant has requested that Landlord and Lender execute
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
induce Lender to make the Loan, Tenant, Landlord and Lender hereby agree and
covenant as follows:
1. SUBORDINATION. Notwithstanding anything to the contrary
contained in the Lease, Tenant and Lender hereby agree that the Lease
(including specifically, without limitation, (a) any option or options to
purchase or rights of first refusal affecting the Property, or any portion
thereof, contained therein, (b) any extension, renewal or modification of the
Lease, (c) the leasehold estate in the Premises created by the Lease and (d)
all of Tenant's rights under the Lease) is and shall at all times be
completely and unconditionally subject and subordinate in all respects (i) to
the Deed of Trust and other Loan Documents, the lien thereof and to all
renewals, modifications, extensions, substitutions, rearrangements and
replacements thereof, and all advances made or to be made thereunder by
Lender in Lender's good faith discretion to protect the Property or to
enforce its rights under the Deed of Trust and other Loan Documents, and (ii)
to any and all renewals, modifications, replacements, extensions,
substitutions and rearrangements of any and all obligations and indebtedness
secured by the Deed of Trust or the other Loan Documents.
2. NON-DISTURBANCE AND ATTORNMENT. Provided that Tenant is
not in default under any of the terms, covenants or conditions of the Lease
and Tenant makes monthly payments to Lender equal to at least the amount of
monthly payments previously required to be made under the Note plus all
operating expenses (and the Lease shall be deemed modified at such time to
the extent lesser payments are required thereunder), and Tenant is then in
possession of the Premises, Tenant's rights under the Lease and possession of
the Premises thereunder shall not be affected or disturbed by Lender in the
exercise of any of its rights and remedies under the Note or the Loan
Documents (as that term is defined in the Deed of Trust). Upon foreclosure
of the Loan Documents, or any of them, Tenant shall continue in occupancy of
the Premises upon the terms and conditions of the Lease, shall attorn to
Lender to the same extent and with the same force as if Lender were the
Landlord under the Lease, and shall be bound by and perform all of the
obligations imposed upon Tenant by the Lease. Tenant's attornment hereunder
shall be effective and self-operative without the execution of any other
instruments on the part of any party hereto, immediately upon Lender's
acquisition of title to the Property. Tenant shall, within ten (10) days
after request by Lender, execute any instrument or take any action specified
by Lender further to confirm attornment hereunder in accordance with the
provisions of this Agreement.
3. RIGHTS OF LENDER. If Lender exercises its rights or
remedies under the Loan Documents, or any of them, then Lender shall be
entitled, but not obligated, to exercise any and all claims, rights, powers,
privileges and remedies of Landlord under the Lease and shall be further
entitled to the benefits of and to receive and enforce performance of all of
the covenants, terms and conditions to be performed by Tenant under the
Lease. Lender shall not, by execution of this Agreement, be or become subject
to any liability or obligation to Tenant under the Lease or otherwise, unless
and until Lender has obtained title to the Premises by foreclosure or
otherwise, and then only to the extent of liabilities or obligations accruing
subsequent to the date Lender acquires (and prior to the date it disposes of)
title to the Premises; PROVIDED, HOWEVER, that Lender shall not be:
(a) liable for any act or omission of any prior lessor
(including Landlord) or subsequent lessor; or
(b) subject to any counterclaims, offsets or defenses which
Tenant might have against any prior lessor (including Landlord);
(c) bound by any rent or additional rent which Tenant might
have paid in advance to any prior lessor (including Landlord) for any period
beyond the month in which Lender succeeds to the interest of Landlord under
the Lease;
(d) responsible for any security deposit, cleaning deposit
or other prepaid charge which Tenant may have paid in advance to any prior
lessor (including Landlord) which has not been delivered to Lender (Lender
acknowledging that Lender will be responsible for any security deposit that
is delivered or obtained by Lender);
(e) bound by any previous amendment or modification of the
Lease or by any waiver or forbearance by any prior landlord (including
Landlord) unless the same was approved in writing by Lender;
(f) responsible for the performance of (or contribution
toward) any work to be done by the landlord under the Lease to render the
Premises ready or available for occupancy by the Tenant, or required to
remove any person occupying the Premises or any part thereof; or
(g) personally liable under or in connection with the Lease
(Tenant's recourse being limited to Lender's interest in the Property).
4. CERTAIN ACKNOWLEDGMENTS AND AGREEMENTS BY TENANT.
(a) LOAN DISBURSEMENTS. Lender, in making any disbursements
of the loan evidenced by the Note to Landlord, shall be under no obligation
or duty to oversee or direct the
application of the proceeds of such disbursements, and such disbursements may
be used by Landlord for purposes other than improvement of the Property.
(b) NOTICE AND CURE. If Landlord commits any act or
omission which constitutes a default under the Lease, or which would give
Tenant the right, either immediately or after a lapse of time, to terminate
the Lease, or to claim a partial or total eviction, Tenant shall not exercise
any such right, or remedy with respect thereto: (i) until it has given notice
of such act or omission to Lender; and (ii) until Lender is entitled under
the Loan Documents to remedy Landlord's default and Lender has thereafter
been afforded a reasonable time, at Lender's option, to cure Landlord's
default. As used herein, a "reasonable time" shall include, without
limitation, any time which may be necessary to enable Lender to invoke and
perfect its remedies under the Loan Documents, or any of them, such as
appointment of a receiver for the Property or foreclosure thereof, plus not
less than sixty (60) days. Nothing contained herein shall obligate Lender to
effect a cure of any act or omission of Landlord.
(c) NOTICES. Tenant shall send to Lender a copy of any
notice or statement given by Tenant to Landlord under the Lease at the same
time such notice or statement is sent to Landlord.
(d) OPTION RIGHTS. Tenant warrants and represents that it
has no right or option of any nature whatsoever, whether pursuant to the
Lease or otherwise, to purchase the Premises or the Property, or any portion
thereof, or any interest therein, but to the extent that Tenant has had or
hereafter acquires any such right or option, Tenant hereby acknowledges that
such right or option is made subject and subordinate to the Loan Documents
pursuant to this Agreement and is hereby waived and released against Lender.
(e) NEW LEASE. Upon Lender's written request at or after
any foreclosure under the Loan Documents, or any of them, Tenant shall
execute a new lease of the Premises upon the same terms and conditions as the
Lease between Landlord and Tenant, which new lease shall cover any unexpired
term of the Lease existing prior to such foreclosure (but there shall be no
requirement for an additional deposit).
(f) RENTAL PAYMENTS AND PERFORMANCE UNDER LEASE. Tenant
shall not pay any installment of rent, or any other amount or charge due
under the Lease, more than 30 days prior to the due date thereof, and Lender
shall be entitled to recover from Tenant any such payments or charges made by
Tenant in violation hereof. Tenant shall observe and perform, throughout the
term of the Lease, all of the terms, covenants, conditions and obligations to
be performed by Tenant thereunder.
(g) MODIFICATION AND CANCELLATION OF LEASE. Tenant shall
not enter into any agreement, cancellation, surrender, amendment or
modification of the Lease without Lender's prior written consent.
(h) TENANT ESTOPPEL STATEMENT. Tenant, for the benefit of
Lender, hereby confirms, acknowledges, warrants, represents and certifies as
follows: (i) the Lease is in full force and effect and a valid and binding
obligation of Landlord and Tenant (subject only to Landlord's acquisition of
the Property) enforceable in accordance with its terms; (ii) neither Landlord
not Tenant is in default under any of the terms, covenants or conditions of
the Lease, and there are no setoffs, counterclaims or credits against rentals
or other amounts payable under the Lease, and no event or circumstance has
occurred or pertains which, but for the giving of required notice or the
lapse of an applicable grace period, would result in any of the foregoing;
(iii) Tenant has no notice of any prior assignment, hypothecation or pledge
of the Lease or any of the amounts payable thereunder; and (iv) the Lease is
a complete statement of the agreement of the parties thereto with respect to
the leasing of the Premises, and no modifications, amendments, supplements,
assignments or subleases (whether written or oral) have been made to the
Lease.
5. CERTAIN ACKNOWLEDGMENTS AND AGREEMENTS BY LANDLORD.
(a) RIGHT OF LENDER TO RECEIVE RENTAL PAYMENTS. In the
event of any Event of Default under the Loan Documents, Lender has the right
to give notice to Tenant to pay all rent and all other sums due or payable
under the Lease directly to Lender. Landlord hereby expressly authorizes and
directs Tenant (and Tenant agrees) to make such payments to Lender upon
receipt of such notice (regardless of any conflicting claims made by Landlord
as to whether a default exists or otherwise) and Landlord hereby releases and
discharges Tenant of and from any liability to Landlord on account of any
such payments made by Tenant hereunder.
(b) AGREEMENT DOES NOT ALTER LOAN DOCUMENTS. Landlord
acknowledges that the Note and the Loan Documents remain in full force and
effect, enforceable in accordance with their terms, and that this Agreement
does not constitute a waiver by Lender of any of its rights thereunder, or in
any way release Landlord from its obligations to comply with any of the
terms, provisions, conditions, covenants, agreements or obligations under the
Note or the Loan Documents.
6. NO MERGER. Landlord, Tenant and Lender agree that unless Lender
shall otherwise expressly consent in writing, fee title to the Property and
the leasehold estate created by the Lease shall not merge but shall remain
separate and distinct, notwithstanding the union of said estates either in
the Landlord or the Tenant or any third party by purchase, assignment or
otherwise.
7. MODIFICATIONS; LEASE NOT AMENDED; ALTERATIONS TO LOAN. This
Agreement may not be modified orally or in any other manner other than by an
agreement in writing signed by the parties hereto or their respective
successors in interest. This Agreement shall not be deemed to alter or
modify any of the terms, covenants, conditions or obligations of the Lease,
except to the extent specifically set forth herein. No renewal, extension,
modification, consolidation or replacement of the Loan Documents, or any of
them, or any other provision of the loan
evidenced by the Note, or any waiver of any term thereof, shall in any manner
affect the obligations of Tenant under the Lease or this Agreement, and
Tenant hereby unconditionally relinquishes, waives and releases any and all
claims or defenses based thereon.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their respective
heirs, successors and assigns; and PROVIDED, HOWEVER, that the obligations
and liabilities of Lender, and each of its successors and assigns, shall be
binding upon Lender and each such successor only during such period as Lender
or such successor retains an interest in the Loan Documents; provided,
further, that the interest of Tenant under this Agreement may not be assigned
or transferred without the prior written consent of Lender (which consent
shall not be unreasonably withheld). As used herein, the term "Tenant" shall
include the original Tenant designated herein and its heirs, successors and
assigns; the term "Landlord" shall include the original Landlord designated
herein and its heirs, successors and assigns; the term "Lender" shall include
the original Lender designated herein and its heirs, successors and assigns,
including anyone who shall have succeeded to Landlord's interest in the
Premises by, through or under foreclosure of the Loan Documents, or any of
them; and the term "foreclosure" shall be deemed to include judicial
foreclosure, foreclosure by any power of sale granted under the Loan
Documents, or the acquisition of Landlord's estate in the Property by
voluntary deed or assignment in lieu of foreclosure.
9. SEVERABILITY. If any term of this Agreement, or the application
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application of such
term to persons or circumstances other than those to which it is invalid and
unenforceable, shall, at Lender's option, not be affected thereby, and in
such event this Agreement shall be construed to the extent necessary as if
such invalid or unenforceable provision had never been contained herein.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
California (without regard to conflicts of law).
11. ATTORNEYS' FEES. If any action or proceeding is brought by any
party against any other party under this Agreement, the prevailing party
shall be entitled to recover for the fees of its attorneys in such action or
proceeding such amount as the court may adjudge reasonable.
12. NOTICES. Whenever a party shall desire to give or serve any
notice, demand, request or other communications with respect to this
Agreement ("Notice"), each such Notice shall be in writing and shall be
personally served or sent by a commercial overnight delivery service or by
certified mail, return receipt requested, and shall be deemed to have been
received on the date actually received if personally served or on the next
business day after deposit with an overnight delivery service or on the date
of receipt or refusal as shown on the return receipt if sent by certified
mail. The addresses of the parties to which Notices shall be sent (until
notice of
a change is served as provided in this paragraph) are as set forth below the
signature of such party on the signature page of this Agreement. Notice of a
change of address shall be given by 15 days' advance written notice in the
manner set forth in this paragraph.
13. TERMINOLOGY. Whenever used in this Agreement (including any
Exhibit hereto), the word "including", "includes", or "include" shall be read
as though the phrase "without limitation," immediately followed the same.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Address: "Tenant"
0000 Xxxxxxx Xxxxxx I-PAC MANUFACTURING, INC.,
Xxxxxxxx, Xxxxxxxxxx 00000 a California corporation
Attn: Xxxxxxx X. Xxxxx
Chief Executive Officer By:
Facsimile No.: (760) (930-0115) --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
"Landlord"
Xxx Xxxxxx Xxxxx, Xxxxx 000 XXXXX XXXXXXXXXX PROPERTIES, L.P.,
Xxxxxx, Xxxxxxxxxxxxx 00000-0000 a Delaware limited partnership
Attn: Xx. Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
By: Cabot Industrial Trust,
a Maryland real estate
investment trust
its general partner
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address: "Lender"
--------------------------------
--------------------------------
--------------------------------
State of California )
County of )
On before me, a notary public in and for said state,
personally appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he or she executed the same in the capacity(ies) indicated at the
signature point.
WITNESS my hand and official seal.
Signature
--------------------------------
Capacity of Signatory
--------------------
State of California )
County of )
On before me, a notary public in and for said state,
personally appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he or she executed the same in the capacity(ies) indicated at the
signature point.
WITNESS my hand and official seal.
Signature
--------------------------------
Capacity of Signatory
--------------------
State of California )
County of )
On before me, a notary public in and for said state,
personally appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he or she executed the same in the capacity(ies) indicated at the
signature point.
WITNESS my hand and official seal.
Signature
--------------------------------
Capacity of Signatory
---------------------
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
PARCEL A:
XXX 00 XX XXXXXXXX XXXXX XX. 00-00 XXXX XX. 0, XX THE CITY OF CARLSBAD,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF
NO. 11288, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY.
EXCEPTING THEREFROM 50% OF ALL OIL, MINERAL, GAS, AND OTHER HYDROCARBON
SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL PROPERTY, WITHOUT
RIGHT OF SURFACE ENTRY, AS RESERVED IN DEED BY CARLSBAD PROPERTIES, A
PARTNERSHIP RECORDED JULY 5, 1978 AS FILE/PAGE NO. 78-279136 OF OFFICIAL
RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.
PARCEL B:
EASEMENTS AS MORE FULLY SET FORTH IN DECLARATION OF COVENANTS, CONDITIONS
AND RESTRICTIONS RECORDED SEPTEMBER 12, 1986 AS FILE/PAGE NO. 86-401456
OF THE OFFICIAL RECORDS OF SAN DIEGO COUNTY, STATE OF CALIFORNIA.
PARCEL C:
EASEMENT OVER PORTIONS OF MAPS 11287, 11288 AND 11289 FOR COMMON AREA
PURPOSES AS GRANTED IN DOCUMENT RECORDED OCTOBER 31, 1986 AS FILE/PAGE
NO. 86-497819 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.
SCHEDULE 17.22
GUARANTY OF LEASE
GUARANTY OF LEASE
THIS GUARANTY OF LEASE ("GUARANTY") is made on , 1999, by
PHOTOMATRIX, INC., a California corporation ("GUARANTOR"), in favor of CABOT
INDUSTRIAL PROPERTIES, L.P., a Delaware limited partnership, ("LANDLORD", in
connection with that certain lease agreement dated of even date herewith (the
"LEASE") pursuant to which Landlord leases to I-PAC MANUFACTURING, INC., a
California corporation ("TENANT"), the premises located at 0000 Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000 (the "PREMISES"). As a material
inducement to and in consideration of Landlord's entering into the Lease,
Landlord having indicated that it would not enter into the Lease without the
execution of this Guaranty, Guarantor does hereby agree with Landlord as
follows:
14. Guarantor does hereby unconditionally guarantee, without deduction by
reason of set off, defense or counterclaim, as a primary obligor and not as a
surety, and promises to perform and be liable for any and all obligations and
liabilities of Tenant under the terms of the Lease, including without
implied limitation the Tenant's obligation to pay such rents, charges, costs
and impositions as are set forth in the Lease. Guarantor further agrees to
defend with counsel acceptable to Landlord, and to indemnify and save
Landlord harmless from and against any and all loss, cost, damage or
liability arising out of any breach by Tenant of any of the terms, conditions
and covenants of the Lease, or out of any breach of warranty or
misrepresentation made by Tenant under the Lease or heretofore or hereafter
made to Landlord, including reasonable attorneys' fees and any other costs
incurred by Landlord in connection therewith.
15. DIRECT ENFORCEMENT. The undertakings contained in this Guaranty shall
be the personal liability of Guarantor. Guarantor acknowledges that after
any event of default by Tenant in the performance of any term, condition or
covenant of the Lease, the liability of Guarantor under this Guaranty shall
be primary and that, in the enforcement of its rights, Landlord shall be
entitled to look to Guarantor for the performance of the obligations of
Tenant which Guarantor has guaranteed, without first commencing any action or
proceedings against Tenant, and likewise, enforcement of Landlord's rights
against Tenant shall not impair the right of Landlord to enforce this
Guaranty, and any such action by Landlord shall not operate as a release of
the liability of Guarantor under this Guaranty. The guaranteed obligations
include both payment and performance. The obligations of the Guarantor shall
be absolute and unconditional and shall remain in full force and effect until
all amounts due pursuant to the Lease have been paid in full and all of
Tenant's obligations thereunder have been performed in full.
16. If Tenant shall at any time default in the performance or observance
of any of the terms, covenants or conditions in the Lease on Tenant's part to
be kept performed or observed,
1
Guarantor will keep, perform and observe same, as the case may be, in the
place and stead of Tenant.
17. The obligations of Guarantor hereunder shall not be released by
Landlord's receipt, application or release of any security given for the
performance and observance of any covenant or condition in the Lease on
Tenant's part to be performed or observed, regardless of whether Guarantor
consents thereto or receives notice thereof.
18. The liability of Guarantor hereunder shall in no way be affected by
(a) the release or discharge of Tenant in any creditor's receivership,
bankruptcy or other proceeding; (b) the impairment, limitation or
modification of the liability of Tenant or the estate of Tenant in
bankruptcy, or of any remedy for the enforcement of Tenant's liability under
the Lease resulting from the operation of any present or future provision of
the Bankruptcy Act or other statute or from the decision in any court; (c)
the rejection of the Lease in any such proceedings; (d) the assignment or
transfer of the Lease by Tenant; (e) any disability or other defense of
Tenant; (f) the cessation from any cause other than as provided under the
Lease whatsoever of the liability of Tenant; (g) the exercise by Landlord of
any of its rights or remedies reserved under the Lease or by law; or (h) any
termination of the Lease, other than as provided under the Lease.
19. Guarantor agrees that none of its obligations and no right against
Guarantor hereunder shall in any way be discharged, impaired, or otherwise
affected by any extension of time for, or by any partial of complete waiver
of the performance of any of Tenant's obligations under the Lease, or by any
other alteration, amendment, assignment, expansion, extension or modification
in or to the Lease, or by any release or waiver of any term, covenant or
condition of the Lease, or by any delay in the enforcement of any rights
against Tenant, Guarantor or any other person or entity under the Lease.
Without limitation, Guarantor agrees that the Lease may be altered, amended,
assigned, expanded, extended or modified from time to time on such terms and
provisions as may be satisfactory to Landlord without notice to or further
assent by Guarantor, and Guarantor hereby waives notice of acceptance of this
Guaranty, notice of any obligations guaranteed hereby or of any action taken
or omitted in reliance hereon, and notice of any defaults of Tenant under the
Lease and waives presentment, demand for payment or performance, protest,
notice of dishonor, nonpayment or nonperformance of any such obligations,
suit or taking of other action by Landlord against, and any other notice to,
any party liable thereon and waives suretyship defenses generally, other than
full and timely payment and performance of all obligations hereby guaranteed,
and Guarantor agrees to cause Tenant to preserve the enforceability of all
instruments hereby guaranteed, as modified with Landlord's consent, and to
cause Tenant to refrain from any act or omission which might be the basis for
a claim that Guarantor has any defense to Guarantor's obligations hereunder,
exclusive only of the defense that Tenant has fully and timely paid and
performed all obligations hereby guaranteed. No invalidity, irregularity or
unenforceability of all or any part of such obligations or of any security
therefor and no insolvency, bankruptcy, liquidation proceeding or dissolution
affecting Tenant or Guarantor shall affect, impair or be a defense to this
Guaranty. The liability of the Guarantor
2
hereunder is primary and unconditional and shall not be subject to any
offset, defense (other than the defense of full and timely payment and
performance) or counterclaim of Guarantor. This is a continuing guaranty.
20. Guarantor represents that this Guaranty, and the Lease hereby
guaranteed, as originally delivered and as modified, amended or supplemented,
have been duly authorized and are the legal, valid and binding obligations of
Guarantor and Tenant, enforceable in accordance with their respective terms,
and Guarantor further agrees that no invalidity of any such Guaranty shall
affect or impair Guarantor's liability under this Guaranty.
21. This instrument is intended to be fully effective in accordance with
its terms notwithstanding any exculpatory provisions inconsistent herewith
contained in the Lease.
22. Without in any manner limiting the generality of the foregoing,
Guarantor hereby waives the benefits of the provisions of Section 2809, 2819,
2845 and 2850 of the California Civil Code and any similar or analogous
statutes of California or any other jurisdiction.
23. Guarantor further agrees that it may be joined in any action against
Tenant in connection with the obligations of Tenant under the Lease and
recovery may be had against Guarantor in any such action. Landlord may
enforce the obligations of Guarantor hereunder without first taking any
action whatsoever against Tenant or its successors and assigns, or pursue any
other remedy or apply any security it may hold.
24. Until all of Tenant's obligations under the Lease are fully performed,
Guarantor: (a) shall have no right of subrogation against Tenant by reason of
any payments or actions of performance by Guarantor under this Guaranty; and
(b) subordinates any liability or indebtedness of Tenant now or hereafter
held by Guarantor to the obligations of Tenant under, arising out of or
related to the Lease or Tenant's use of the Premises. Furthermore, from and
after the occurrence of any default by Tenant in the performance of any term,
condition, covenant or obligation under the Lease, Guarantor agrees that it
will not accept or receive any dividend, payment or reimbursement from
Tenant, including any payment on account of any indebtedness from Tenant to
Guarantor, and that if Guarantor does then receive any such dividend, payment
or reimbursement the same shall be held in trust for Landlord and forthwith
will be turned over to Landlord in the form received.
25. The liability of Guarantor and all rights, powers and remedies of
Landlord hereunder and under any other agreement now or at any time hereafter
in force between Landlord and Guarantor relating to the Lease shall be
cumulative and not alternative and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to Landlord by law.
3
26. This Guaranty applies to, inures to the benefit of and binds all
parties hereto, and their successors and assigns. This Guaranty may be
assigned by Landlord voluntarily or by operation of law.
27. Guarantor shall provide quarterly financial statements, within
forty-five (45) days following each quarter, to Landlord. The financial
statements shall be prepared in accordance with generally accepted accounting
principles and shall be true and correct in all material respects.
28. If Landlord desires to sell, finance or refinance the Premises, or any
part thereof, Guarantor hereby agrees to deliver to any lender or buyer
designated by Landlord such financial statements of Guarantor as may be
reasonably required by such lender or buyer. Such statements shall include
the past three (3) years' financial statements of Guarantor. All such
financial statements shall be received by Landlord in confidence and shall be
used only for the foregoing purposes.
29. If claim is ever made upon Landlord for repayment of any amount or
amounts received by Landlord in payment of the obligations under the Lease
and Landlord repays all or any part of said amount, then, notwithstanding any
revocation or termination of this Guaranty or the termination of the Lease,
Guarantor shall be and remain liable to Landlord for the amount so repaid.
30. This Guaranty shall constitute the entire agreement between Guarantor
and the Landlord with respect to the subject matter hereof. No provision of
this Guaranty or right of Landlord hereunder may be waived nor may any
guarantor be released from any obligation hereunder except by a writing duly
executed by an authorized officer of Landlord.
31. When the context and construction so requires, all words used in the
singular herein shall be deemed to have been used in the plural. The word
"person" as used herein shall include an individual, company, firm,
association, partnership, corporation, trust or other legal entity of any
kind whatsoever.
32. Should any one or more provisions of this Guaranty be determined to be
illegal or unenforceable, all other provisions shall nevertheless be
effective.
33. The waiver or failure to enforce any provision of this Guaranty shall
not operate as a waiver of any other breach of such provision or any other
provisions hereof.
34. If either party hereto participates in an action against the other
party arising out of or in connection with this Guaranty, the prevailing
party shall be entitled to have and recover from the other party reasonable
attorneys' fees, collection costs and other costs incurred in and in
preparation for the action.
4
35. Guarantor agrees that this Guaranty shall be governed by and construed
in accordance with the laws of the State of California.
36. If Guarantor is a corporation, each individual executing this Guaranty
on behalf of said corporation represents and warrants that he or she is duly
authorized to execute and deliver this Guaranty on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors and said corporation or in accordance with the bylaws of said
corporation, and that this Guaranty is binding upon said corporation in
accordance with its terms. If Guarantor is a corporation, Landlord, at its
option, may require Guarantor to concurrently, with the execution of this
Guaranty, deliver to Landlord a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of
this Guaranty.
37. The term "Landlord" whenever used herein refers to and means the
Landlord in the foregoing Lease specifically named and also any assignee of
said Landlord, whether by outright assignment or by assignment for security,
and also any successor to the interest of said Landlord or of any assignee of
such Lease or any part thereof whether by assignment or otherwise. The term
"Tenant" whenever used herein refers to and means the Tenant in the foregoing
Lease specifically named and also any assignee of said Tenant, assignee or
sublessee of such Lease or any part thereof, whether by assignment, sublease
or otherwise.
38. Any notice or other communication to be given under this Agreement by
either party to the other will be in writing and delivered personally or
mailed by certified mail, postage prepaid and return receipt requested, or
delivered by an express overnight delivery service, charges prepaid, or
transmitted by facsimile, as follows:
If to Landlord: Cabot Industrial Properties, L.P.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx
Fax No. (000) 000-0000
With copy to: Xxxxx Xxxxxx Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax No. (000) 000-0000
If to Guarantor: Photomatrix, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
5
With a copy to: Xxxxx X. Xxxx, Esq.
Sullivan, Hill, Xxxxx, Rez & Xxxxx
000 X X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
Any address or name specified above may be changed by a notice given
by the addressee to the other party in accordance with this numbered
paragraph. Any notice will be deemed given and effective (i) if given by
personal delivery, as of the date of delivery in person; or (ii) if given by
mail, upon receipt as set forth on the return receipt; or (iii) if given by
overnight courier, one (1) business day after timely deposit with the
courier; or (iv) if given by facsimile, upon receipt of the appropriate
confirmation of transmission by facsimile. The inability to deliver because
of a changed address of which no notice was given of the rejection or other
refusal to accept any notice will be deemed to be the receipt of the notice
as of the date of such inability to deliver or the rejection or refusal to
accept.
39. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY(IES) AGAINST ANY
OTHER PARTY(IES) ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS GUARANTY OR THE RELATIONSHIP OF THE PARTIES CREATED HEREUNDER.
6
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
date first above written.
"Guarantor"
PHOTOMATRIX, INC.,
A California corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
7
