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BUILD TO SUIT LEASE AGREEMENT
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BY AND BETWEEN
XXXXXXX EQUITIES INC.
("LANDLORD")
AND
VALLEY RECORD DISTRIBUTORS, INC.
("TENANT")
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CONFIDENTIAL
BUILD TO SUIT LEASE AGREEMENT
THIS BUILD TO SUIT LEASE AGREEMENT ("Lease") is dated as of October 1st,
1997 for reference purposes only and is made and entered into by and between
XXXXXXX EQUITIES INC. ("Landlord") and VALLEY RECORD DISTRIBUTORS, INC., a
California corporation ("Tenant").
1. RECITALS. This Lease is entered into on the basis of the following
facts, intentions and understandings of the parties:
1.1. Landlord is a real estate developer with experience and
expertise in the development of land and the construction of
industrial and commercial buildings of the type hereafter
described as the "Premises."
1.2. Tenant is in the business of distributing compact disks, videos
and other media products.
1.3. Tenant desires to lease, with an option to purchase, a
warehouse and distribution facility with associated office
space to be constructed in the Jefferson Riverport
International Industrial Park at Louisville, Kentucky (the
"Park"). The facility will be comprised of approximately
331,088 usable square feet of space, situated on approximately
16.8131 acres of land, and provide parking for approximately
300 automobiles.
1.4. Tenant has heretofore entered into an Option Agreement and
Contract for Sale dated August 12, 1997 ("Land Sale and Option
Agreement") with the Riverport Authority ("Authority") pursuant
to which Tenant agreed to purchase approximately 16.8131 acres
of land and was granted an option to purchase an additional
parcel of approximately 4.4578 acres (the "Land") within the
Park.
1.5. Tenant has heretofore prepared and distributed a Request for
Proposal ("RFP") soliciting offers from qualified developers to
purchase a portion of the Land, to construct hereon to Tenant's
specifications a building of the nature described in Section
1.3 above, to lease the building to Tenant with an option to
purchase the same, and to provide a means for future expansion
should such expansion be required by Tenant. This Lease
supersedes all provisions of the RFP.
1.6. From among the developers responding to the RFP, Tenant has
selected Landlord's proposal as set forth in Exhibit A.
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1.7. Landlord and Tenant now desire, and intend hereby, to set forth
the terms by which Landlord will construct a building on a
portion of the Land to Tenant's specifications, lease the Land
and building to Tenant with an option to purchase the same, and
provide for Tenant's possible future expansion into an
additional building to be constructed by Landlord.
2. PREMISES.
2.1. ASSIGNMENT OF CONTRACT. Not later than ten (10) days after the
date on which both Landlord and Tenant have executed this
Lease, Tenant shall assign to Landlord, by an instrument in
writing mutually agreeable to Landlord and Tenant, all of
Tenant's rights and obligations in the Land Sale and Option
Agreement and Landlord shall accept such assignment and assume
and agree to hold Tenant free and harmless from all obligations
and liabilities arising under or pursuant to such Agreement.
Concurrent with such assignment and acceptance, Landlord shall
reimburse Tenant for all deposits made and other sums expended
by Tenant in connection with the Land Sale and Option Agreement
as detailed in an itemized accounting thereof to be prepared by
Tenant and delivered to Landlord at the time of such
assignment.
2.2. PURCHASE OF INITIAL PARCEL. No later than ten (10) days after
assignment of the Land Sale and Option Agreement, Landlord
shall, at Landlord's sole cost and expense, either (a)
purchase, pursuant to the terms and conditions of said
agreement, fee title to approximately 16.8 acres of the Land
("Initial Parcel") or (b) execute an agreement with the
landowner for immediate commencement of preliminary clearing
and site grading. At the closing of Landlord's purchase of the
Initial Parcel, Landlord shall cause to be recorded in the
official records of the county where the Land is situated a
Memorandum of Lease in the form of Exhibit B hereto and a
Memorandum of Option in the form of Exhibit C hereto which
Memoranda shall for purposes of title priority constitute
encumbrances on the Initial Parcel which are senior to all
other liens or encumbrances except those which are specifically
approved in writing by Tenant. Not later than ten (10) days
after the closing of Landlord's purchase of the Initial Parcel,
Landlord shall provide Tenant, at Landlord's expense, with a
copy of the recorded deed by which Landlord has taken title to
the Initial Parcel, certified copies of the recorded Memoranda
and evidences of title, to Tenant's reasonable satisfaction,
showing fee title vested in Landlord and the encumbrances of
the Memoranda with priority of title as above stated. In
connection with its purchase of the Initial Parcel, Landlord
shall conduct such tests and inspections of the Land and of all
relevant matters pertaining to the development of the Land as
contemplated by this Lease as would a prudent developer of
similar properties and as are necessary to satisfy the terms
and conditions of this Lease. Landlord shall provide Tenant,
within five (5) working days after Landlord's initial receipt
thereof, with copies of all reports
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and test results it obtains regarding the Land, including, but
not limited to, soils reports, environmental assessment
reports, and test results of soil or water samples taken from
the Land. Landlord acknowledges and agrees that the foregoing
items are provided to Tenant for Tenant's information only,
that Tenant shall have no duty to act or inquire with respect
to any matter disclosed or recommended by any such reports, and
that Tenant's receipt of any such report shall not relieve
Landlord of any duty to Tenant at law or under this or any
other agreement between Landlord and Tenant or be the basis of
any defense by Landlord against any claim by Tenant arising out
of any alleged failure or breach by Landlord.
2.3. CONTINUING OPTION. Until the earlier of (a) three (3) years
after the commencement Date or (b) Landlord's receipt of a
written notice from Tenant that Tenant irrevocably waives its
rights hereunder to acquire the Additional Premises, Landlord
shall keep in full force and effect, and do all things required
of Landlord to maintain as operative, the Land Sale and Option
Agreement as it pertains to the remaining 4.5 acres of Land
("Second Parcel") on which the Additional Premises will be
constructed if Tenant shall exercise its option to expand as
provided in this Lease. Tenant shall reimburse Landlord for
any money expended to keep the option in effect.
2.4. CONSTRUCTION OF PREMISES. From and after the closing of
Landlord's purchase of the Initial Parcel, Landlord shall, at
Landlord sole cost and expense, commence and diligently pursue
to completion development and construction of the Premises as
provided in Exhibit D and other provisions of this Lease.
3. LEASE TERM.
3.1. INITIAL TERM. The term of this Lease ("Term") shall be ten
(10) years commencing on the Commencement Date.
3.2. COMMENCEMENT DATE. The Commencement Date shall be the earlier
of (a) the first day of the first calendar month following the
calendar month in which construction of the Tenant Improvements
has been substantially completed or (b) seventy-five (75) days
after delivery of a water-tight building as described in
Exhibit D. Within thirty (30) days after the Commencement
Date, Landlord and Tenant shall execute, acknowledge, and
record a Commencement Date Memorandum in the form of Exhibit E
hereto, setting forth therein the actual Commencement Date of
this Lease.
3.3. DELAY. If the Commencement Date has not occurred by August 15,
1998, Tenant may, at anytime thereafter, upon written notice to
Landlord, ("Termination Notice") terminate this Lease whereupon
neither party shall have any rights or obligations hereunder
except for those which by the express terms of this Lease
survive such termination. If Tenant does not deliver a
Termination Notice, this Lease shall remain in full force and
effect.
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CONFIDENTIAL
3.4. OPTIONS TO EXTEND. Tenant may extend the Term of this Lease
upon the following terms and conditions:
3.4.1. Provided that Tenant is not then in default of any
material term of this Lease, Tenant may, at any
time prior to the last day of the one hundred
fourteenth (114th) month of the Lease Term, by
written notice to Landlord, extend the Term of this
Lease for an additional period of five (5) years
commencing at the end of the Term provided in
Section 3.1 above ("First Extension Term").
3.4.2. Provided that Tenant has exercised its option for
the First Extension Term and is not then in default
of any material term of this Lease, Tenant may, at
any time after commencement of the First Extension
Term and prior to the last day of the fifty-fourth
(54th) month of the First Extension Term, by
written notice to Landlord, extend the Term of this
Lease for an additional period of five (5) years
commencing at the end of the First Extension Term
provided in Section 3.4.1 above ("Second Extension
Term").
3.4.3. Provided that Tenant has exercised its options for
the First Extension Term and the Second Extension
Term and is not then in default of any material
term of this Lease, Tenant may, at any time after
commencement of the Second Extension Term and prior
to the last day of the fifty-fourth (54th) month of
the Second Extension Term, by written notice to
Landlord, extend the Term of this Lease for an
additional period of five (5) years commencing at
the end of the Second Extension Term provided in
Section 3.4.2 above ("Third Extension Term").
3.4.4. In the event that Tenant exercises any of its
options to extend the Term of this Lease, as
hereinabove provided, the word "Term" as used in
this Lease shall, as applicable, include the First
Extended Term, Second Extended Term, and Third
Extended Term.
4. RENT.
MONTHLY RENT. Tenant shall pay to Landlord, at Landlord's address for
notices set forth in Section 24 hereof, in lawful money of the United States,
for each calendar month of the Term, Monthly Rent in advance, on the first day
of each calendar month, without abatement, deduction, claim, offset, prior
notice or demand, except as otherwise provided for herein. Any payment of rent
received more than twenty (20) days past its due date shall be assessed a late
payment penalty of three (3) percent. Monthly rent for the Initial Term shall
be as follows:
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LEASE MONTH MONTHLY RENT AMOUNT
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1-60 $71,735.73
61-120 $78,357.50
Monthly Rent during the Extended Terms, if any, shall be as provided below.
4.1.1. MONTHLY RENT - FIRST EXTENDED TERM. Monthly Rent payable during
each month of the First Extended Term, if applicable, shall be no
greater than 115% of the Monthly Rent in effect during the last
year of the initial lease term.
4.1.2. MONTHLY RENT - SECOND EXTENDED TERM. Monthly Rent payable during
each month of the Second Extended Term, if applicable, shall be
no greater than 115% of the Monthly Rent in effect during the
last year of the First Extended Term.
4.1.3. MONTHLY RENT - THIRD EXTENDED TERM. Monthly Rent payable during
each month of the Third Extended Term, if applicable, shall be no
greater than 115% of the Monthly Rent in effect during the last
year of the Second Extended Term.
5. CHANGE ORDERS. Any change orders must be agreed to in writing by both
Landlord and Tenant in order to be effective. Any change to the land or
construction costs in connection with any such change orders shall be multiplied
by a factor of 0.12 to calculate the change in annual rent. All costs
associated with change orders will be identified to Tenant on an open book
basis.
6. SECURITY DEPOSIT. On the Commencement Date, Tenant shall deposit with
Landlord an amount equal to half the Monthly Rent payable for the first month of
the Term as a Security Deposit for the full and faithful performance of every
provision of this Lease to be performed by Tenant. If Tenant defaults with
respect to any provisions of this Lease, Landlord may apply all or any part of
the Security Deposit to the payment of any Rent or other sum in default, the
repair of any damage to the Premises, the payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss or damage which Landlord may suffer
by reason of Tenant's default to the full extent permitted by law. Landlord's
obligations with respect to the Security Deposit are those of a trustee and not
a debtor and Tenant shall be entitled to interest on the Security Deposit. If
Tenant is not otherwise in default, the Security Deposit and all interest earned
thereon shall be returned to Tenant within twenty-one (21) days of termination
of the Lease.
7. CONSTRUCTION AND DELIVERY OF IMPROVEMENTS. Upon the occurrence of any
Delay Event, the targeted date for the substantial completion of the
construction of the Improvements will be extended by a number of days equal to
the number of days of the actual delay caused by the occurrence of such Delay
Event. For the purposes of this Lease, the Improvements will be deemed
"substantially completed" on the earlier of: (a) the date on
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which Tenant occupies the Building for the conduct of all aspects of its
business operation; or (b) the date on which a temporary or permanent
certificate of occupancy for the improvements is issued by the appropriate
governmental authority, which certificate of occupancy will permit Tenant to
operate its business in the normal course. Landlord shall construct the
improvements and deliver possession of the Premises no later than May 1, 1998,
subject only to delays caused by events which are beyond its control ("Delay
Events"). Such Delay Events are agreed to be limited to the following: (a)
Tenant's failure to respond to the drawings, plans, and specifications submitted
for its review and approval within a five day period; (b) Tenant's change
orders, but only to the minimum extent absolutely necessary; (c) any
governmental authority's refusal to issue the requisite approvals for the
Improvements, which refusal is directly and solely attributable to Tenant's
failure to complete any improvements or installations to the interior of the
premises, which are to be undertaken as Tenant's sole responsibility and
expense; (d) acts of God, such as major natural disasters; (e) failure by the
Authority to complete the various infrastructure improvements by the times
indicated in the Land Sale and Option Agreement; provided however, that if
Landlord uses a delay in infrastructure improvements as a Delay Event, Landlord
will pass any and all liquidated damages received from the Authority through to
Tenant; and (f) seriously adverse weather conditions, but only to the minimum
extent that such seriously adverse weather-related Delay Events actually affect
the schedule. Any Delay Event resulting from seriously adverse weather under
sub-paragraph (f) above is limited to a total of 30 days. All Delay Events
shall be considered concurrent (not cumulative or consecutive), unless in the
totality of circumstances, any individual Delay Event shall be considered to
have an individually adverse affect on the critical path schedule.
7.1. LIQUIDATED DAMAGES. Landlord will use its best efforts to proceed
with the construction of the Improvements, so as to facilitate the
achievement of Tenant's operational objectives as set forth in Exhibit
D. If, for any reason other than the occurrence of a Delay Event,
Landlord fails to meet the required level of construction for each
operational objective set forth in Exhibit D, then Landlord shall pay
to Tenant as liquidated damages and not as a penalty the sum of
$5,000.00 for each and every day Landlord fails to meet the required
level of construction or the operational objective is delayed by
Landlord's failure. These liquidated damages are intended to
reimburse Tenant for its lost opportunity costs resulting from such
delay.
7.2. EXPANSION OPTION. Landlord will construct the Improvements to
facilitate the future construction of an additional 88,000 square feet
of warehouse space (the "Expansion"), and will keep the adjacent land
between the building and the western property line and Second Parcel
free of any easements or construction to facilitate the construction
of such expansion. Tenant shall have the option for the first three
(3) years of the lease to require the Landlord to develop and
construct the Expansion, which shall be built on substantially the
same specifications and materials as the initial Improvements and
which shall be integrated into the initial Improvements in an
essentially seamless manner. The lease rate for the
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Expansion shall be calculated by multiplying Landlord's total project
cost, including hard, soft and land costs (which shall be identified
to Tenant on an open book basis) by a constant which is equal to
the greater of 11% or 300 basis points over the corresponding
like-term treasury rate for the remaining term of this Agreement.
7.3. REPRESENTATIONS AND WARRANTIES. Landlord represents and warrants to
Tenant that the Premises are constructed entirely with new materials
and in strict compliance with the Final Plans. Landlord further
represents and warrants to Tenant that on the Commencement Date the
Premises complies with all applicable covenants or restrictions of
record, and with all applicable building codes, regulations,
ordinances, laws and statutes in effect on the Commencement Date,
including, without limitation, the Americans with Disabilities Act
("Legal Requirements"). In the event of non-compliance with said
warranty, Landlord shall promptly and in all events within thirty (30)
days after receipt of written notice from Tenant at any time during
the Term setting forth with specificity the nature and extent of such
non-compliance with this warranty, rectify same in a good and
workmanlike manner and in compliance with all Legal Requirements at
Landlord's sole cost and expense.
8. USE OF THE PREMISES; HAZARDOUS MATERIALS.
8.1. TENANT'S USE. Tenant may use the Premises for any lawful purpose.
8.2. COMPLIANCE. Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Premises which will in any way
conflict with any law, statute, zoning restriction, private covenant
or restriction of record ordinance or governmental law, rule,
regulation or requirement of duly constituted public authorities now
in force or which may hereafter be in force, or the requirements of
the Board of Fire Underwriters or other similar body now or hereafter
constituted relating to or affecting the condition, use or occupancy
of the Premises. Tenant shall not commit any public or private
nuisance or any other act or thing which might or would unreasonably
disturb the quiet enjoyment of any occupant of nearby property.
Tenant shall place no loads upon the floors, walls or ceilings in
excess of the maximum designed load determined by Landlord or which
endanger the structure; nor place any harmful liquids in the drainage
systems; nor dump or store waste materials or refuse or allow such to
remain outside the building proper, except in the enclosed trash areas
provided. Tenant shall not store or permit to be stored or otherwise
placed any other material of any nature whatsoever outside the
building, except in storage areas approved by Landlord.
8.3. HAZARDOUS MATERIALS.
8.3.1. TENANT'S COMPLIANCE. From and after the Commencement Date,
Tenant shall comply with all statutes, laws, ordinances, rules
and regulations now or hereinafter promulgated by any federal,
state, local or other governmental agency with respect to the
use, generation, storage or
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CONFIDENTIAL
disposal of Hazardous Materials (as hereinafter defined) on or
about the Premises. Tenant (including Tenants employees, agents
and contractors) shall not cause any Hazardous Materials, other
than in compliance (which shall be at Tenant's sole cost and
expense) with all applicable local, state and federal laws,
codes, statutes, ordinances, regulations and permits now or
hereafter in effect and using all necessary and appropriate
precautions, to be used, generated, stored or disposed of on,
under or about, or transported to or from the Premises
("Hazardous Materials Activities"). Landlord shall not be liable
to Tenant for any Hazardous Materials Activities by Tenant,
Tenant's employees, agents, contractors, licensees or invitees.
Tenant shall indemnify, defend with counsel acceptable to
Landlord and hold Landlord harmless from any claims, costs and
liabilities arising out of Hazardous Materials Activities by
Tenant, Tenant's employees, agents, contractors, licensees or
invitees on, under or about the Premises, whether during the Term
or after the expiration thereof, and Landlord shall provide to
Tenant reasonable access to the Premises following expiration of
the Term to perform remedial work arising with respect to
Tenant's use of Hazardous Materials. For purposes of this Lease,
the term "Hazardous Materials" shall include, but not be limited
to, any flammable, corrosive or ignitable materials, any
explosives, petroleum or petroleum by-products, any radioactive
materials, wastes or substances, or any toxic substances and
other substances defined as "hazardous substances," "hazardous
wastes," "extremely hazardous wastes," "hazardous materials" or
"toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601, ET SEQ.; the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, ET SEQ.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ.; and/or in
regulations, compliance and guideline documents promulgated
pursuant to said laws and any similar federal, state or local
law.
8.3.2. LANDLORD'S REPRESENTATION AND INDEMNITY - HAZARDOUS MATERIALS.
Landlord hereby represents for the benefit of Tenant that as of
the Commencement Date there are no Hazardous Materials located on
or beneath the Premises. Landlord shall indemnify, defend with
counsel reasonably acceptable to Tenant, and hold Tenant harmless
from any claims, liabilities or costs (including reasonable
attorneys' fees) arising out of any governmental, administrative,
regulatory or private action or proceeding involving (1) any
Hazardous Materials which are located on or under the Premises as
of the Commencement Date and (2) any Hazardous Materials which
are located on or under the Premises at any time during the Term
and that were caused by the use, generation, disposal or storage
of Hazardous Materials by Landlord (including its employees,
agents and contractors) during the Term. The obligations of
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Landlord hereunder shall inure to the benefit of any assignee or
sublessee of Tenant. This obligation shall survive expiration or
termination of this Lease.
8.3.3. PREMISES RENDERED UNTENANTABLE. If (1) all or any material
portion of the Premises are rendered untenantable as a result of
Hazardous Materials on, under or about the Premises, (2) the
presence of the Hazardous Materials is not the result of
Tenant's, its agents', employees', contractors', or invitees'
Hazardous Materials Activities, and (3) all or a material portion
of the Premises remain untenantable for more than five (5)
consecutive business days, Tenant shall have the right to xxxxx
Rent for the portion or portions of the Premises so affected, and
if the Premises or applicable portion thereof remain untenantable
for more than thirty (30) consecutive days, Tenant shall have the
right to terminate the Lease as to the affected portion, upon
thirty (30) days' prior written notice to Landlord.
9. QUIET ENJOYMENT. Landlord covenants that Tenant, upon performing the
terms, conditions and covenants of this Lease, shall have quiet and
peaceful possession of the Premises as against any person claiming the same
by, through or under Landlord.
10. ALTERATIONS.
10.1. PERMITTED ALTERATIONS. After the Commencement Date, Tenant shall
not make or permit any Major Alterations in, on or about the
Premises, except with the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Tenant shall not, without the
prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed, make any:
10.1.1. Alterations to the structure or systems of the building;
10.1.2. Alterations to or penetrations of the roof of the building; or
10.1.3. Alterations that affect the exterior aesthetics of the building.
The term "Alterations" as used herein means additions or improvements to
the Premises which are not in a nature of ordinary maintenance or repair and do
not constitute trade fixtures. The term "Major Alteration" means an Alteration
the cost of which is in excess of $25,000.00.
All Alterations shall be installed at Tenant's sole expense, in compliance
with all applicable laws, by a licensed contractor, shall be done in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date and shall not diminish the value of the Premises.
All Alterations made by Tenant shall be the property of Tenant. Landlord may,
at its option, and provided that Landlord so notifies Tenant in writing at the
time Landlord consents to such item, require that Tenant, at Tenant's expense,
upon
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the expiration or earlier termination of the Term, remove any Major Alteration
installed by Tenant. Notwithstanding any other provision of this Lease, Tenant
shall be solely responsible for the maintenance and repair of any and all
Alterations made by it to the Premises after the Commencement Date.
10.2. NOTICE. Tenant shall give Landlord written notice at least ten
(10) days' prior to the commencement of such work of Tenant's
intention to perform work on the Premises which might result in
any claim of lien to enable Landlord to post and record a Notice
of Nonresponsibility or other notice deemed proper before the
commencement of any such work.
11. SURRENDER OF THE PREMISES. Except as otherwise provided in this Lease,
upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord in its condition existing as of the date
the Premises or any portion thereof were delivered to Tenant, normal wear
and tear and fire or other casualty excepted. Tenant shall remove from the
Premises all of Tenant's Major Alterations required to be removed pursuant
to Section 9, and all of Tenant's personal property and repair any damage
and perform any restoration work caused by such removal.
12. REAL PROPERTY TAXES.
12.1. PAYMENT BY TENANT. Tenant shall pay, as Additional Rent, all
real property taxes and personal property taxes levied against
the Premises and Tenant's personal property during the Term as
they shall respectively become due and payable. Landlord agrees
to forward to Tenant all notices and tax bills pertaining to real
property taxes on the Premises upon receipt or at least sixty
(60) days before the due dates. Tenant shall provide Landlord
with satisfactory evidence that such taxes and assessments have
been timely paid in full. Landlord's failure to timely deliver
any notice or tax xxxx as prescribed in this Section shall not
relieve Tenant of its obligation to pay all real property taxes
called for herein but such failure shall relieve Tenant of any
obligation to pay any late payment charges or interest
attributable to that installment of real property taxes. Tenant
may contest the amount or validity of any real property taxes by
appropriate proceeding; provided that Tenant shall promptly pay
such taxes unless such proceeding shall operate to prevent or
stay the collection of the tax so contested. Landlord shall
join in any such proceeding if any law shall so require,
providing that Tenant shall indemnify Landlord against any
liability, cost or expense in connection therewith, including
attorneys' fees and costs.
12.2. SEPARATE ALLOCATION. If any real property tax is levied against
real property, including the Premises, in which Landlord has an
interest and such tax is not separately allocated to Tenant's
operations or to the Premises, then Landlord shall equitably
apportion the real property taxes so assessed among all such real
property, including the Premises, according to the measure used
by the taxing authorities to levy the tax and shall disclose the
basis of such determination to
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Tenant, provide Tenant with copies of all notices and tax bills
relating to such tax, and permit Tenant a reasonable right to
review Landlord's books and records relating to the basis of such
allocation.
12.3. PRORATION. Tenant's liability to pay real property taxes shall
be prorated on the basis of a 365-day year to account for any
fractional portion of a fiscal tax year included at the
commencement or expiration of the Term. With respect to any
assessments which may be levied against or upon the Premises, or
which under the laws then in force may be evidenced by
improvement or other bonds or may be paid in annual installments,
only the amount of such annual installment (with appropriate
proration for any partial year) and interest due thereon, if any,
shall be included within the computation of the annual real
property taxes levied against the Premises.
12.4. PAYMENT ON EXPIRATION OF TERM. If this Lease terminates on a
date earlier than the end of a fiscal tax year, Landlord shall
deliver to Tenant a statement setting forth the amount of real
property taxes to be paid by Tenant, together with reasonable
supporting evidence for the amount set forth therein, adjusted to
the date of termination which shall be paid within fifteen (15)
days of such receipt.
12.5. PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency
all taxes assessed or levied against Tenant's personal property
in, on or about the Premises or elsewhere. When possible, Tenant
shall cause its personal property to be assessed and billed
separately from the real or personal property of Landlord.
13. UTILITIES AND SERVICES. Tenant shall be responsible for and shall pay
promptly all charges for water, gas, electricity, telephone, refuse pick
up, janitorial service and all other utilities, materials, and services
furnished directly to or used by Tenant in, on or about the Premises during
the Term, together with any taxes thereon. Except as otherwise provided
herein, Landlord shall not be liable in damages or otherwise for any
failure or interruption of any utility service or other service furnished
to the Premises, except that resulting from the willful misconduct or
negligence of Landlord. Notwithstanding the foregoing, if the interruption
of utilities from any cause renders the Premises or any part thereof
untenantable, Tenant shall be entitled to rent abatement for the portion of
the Premises that is rendered untenantable.
14. REPAIR AND MAINTENANCE.
14.1. BUILDING.
14.1.1. LANDLORD'S OBLIGATIONS. Landlord shall at all times
promptly and at its own expense repair any defects in
materials or workmanship for the Improvements to be
constructed by Landlord, as set forth in Exhibit A to this
Agreement. Landlord shall also promptly and its own expense
keep in good order, condition and repair the structural
parts of the building, foundation, exterior and interior
load-bearing walls, and roof of the
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Premises, except for any damage thereto caused by the
negligence or willful acts or omissions of Tenant.
14.1.2. TENANT'S OBLIGATIONS. Tenant shall at all times and at
its own expense clean, keep and maintain in good, safe
and sanitary order, condition and repair the building and
Premises and every part thereof which is not within
Landlord's obligation pursuant to Section 13.1.1 above.
Tenant shall have the benefit of all warranties and
insurance available to Landlord regarding the portions
and components of the Premises to which Tenant's repair
obligation applies, including the outside areas described
below.
14.2. OUTSIDE AREAS. Tenant shall at all times and at its own expense
clean, keep and maintain in good, safe and sanitary order,
condition and repair the outside areas and every part thereof.
Tenant's repair and maintenance obligations shall include,
without limitation, the landscaping (including such replacement
thereof as may be necessary to maintain the landscaping in its
condition as of the Commencement Date), sprinkler system,
walkways, signs and site lighting, pest control and sweeping.
14.3. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at its
own cost and expense, promptly and properly observe and comply
with, including the making by Tenant of any Alteration to the
Premises, all present and future orders, regulations, directions,
rules, laws, ordinances, and requirements of all governmental
authorities (including, without limitation, state, municipal,
county and federal governments and their departments, bureaus,
boards and officials) arising from Tenant's use or occupancy of
the building or the Premises or privileges appurtenant to or in
connection with Tenant's enjoyment of the building or Premises.
Notwithstanding the foregoing, to the extent any modification to
the building or a building system or the common area is required
because of an obligation to comply with existing or new laws,
except to the extent same is required because of the actual
physical use of the Premises by Tenant or its assigns or
subtenants for the particular purpose requiring said modification
and compliance, nothing set forth in this Lease shall require
Tenant to make any modifications or additions to the building or
building systems or the common area, as the case may be. In such
event, Landlord shall promptly make the modification to effect
such compliance in a good and workmanlike manner and in
compliance with all legal requirements at Landlord's sole cost
and expense.
14.4. OPTION TO PURCHASE. Landlord hereby grants to Tenant the
exclusive right, privilege and option to purchase the Premises in
accordance with the following terms and conditions:
At delivery $ 9,307,000
End of Year 5 $ 9,897,800
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End of Year 10 $10,748,000
15. LIENS. Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished or obligations incurred by or on
behalf of Tenant and hereby agrees to indemnify and hold Landlord harmless
from all liability and cost, including attorneys' fees and costs, in
connection with or arising out of any such lien or claim of lien. Tenant
shall cause any such lien imposed to be released of record by payment or
posting of a proper bond reasonably acceptable to Landlord within thirty
(30) days after the earlier of Tenant's actual knowledge of the imposition
of the lien or written request by Landlord, but in any event, before the
foreclosure of the lien. If Tenant fails to so remove said lien within the
prescribed period, then Landlord may do so at Tenant's expense and Tenant's
reimbursement to Landlord for such amounts shall be deemed Additional Rent.
Such reimbursement shall include all sums disbursed, incurred or deposited
by Landlord, including Landlord's costs, expenses and reasonable attorneys'
fees with interest thereon.
16. LANDLORD'S RIGHT TO ENTER THE PREMISES. Tenant shall permit Landlord and
its agents to enter the Premises at all reasonable times with reasonable
prior notice, to inspect the same, to post Notices of Nonresponsibility, to
make necessary Alterations or repairs, and to discharge Landlord's
obligations hereunder. The above rights are subject to reasonable security
regulations of Tenant, and to the requirement that Landlord shall at all
times act in a manner to cause the least possible interference with
Tenant's business.
17. SIGNS. Tenant shall have the right to place, construct and maintain in the
interior and exterior of the Premises one or more signs advertising its
business at the Premises, with Landlord's written consent, which consent
shall not be unreasonably withheld or delayed. The size, design, color and
other physical aspects of Tenant's signs shall be subject to any
appropriate municipal or other governmental approvals. The cost of any
sign, its installation, maintenance and removal expense shall be Tenant's
sole expense. If Tenant fails to maintain its sign, or, if Tenant fails to
remove its sign upon termination of this Lease, Landlord may do so at
Tenant's expense and Tenant's reimbursement to Landlord for such amounts
shall be deemed Additional Rent. Such reimbursement shall include all sums
disbursed, incurred or deposited by Landlord, including Landlord's costs,
expenses and reasonable attorneys' fees with interest thereon.
18. INSURANCE.
18.1. INDEMNIFICATION.
18.1.1. TENANT'S OBLIGATION TO INDEMNIFY. Tenant shall
indemnify and hold Landlord harmless from and against
any and all claims, demands, liabilities and expenses,
including attorneys' fees, arising from the negligence
or wrongful act of Tenant or its agents, employees,
invitees or contractors or from any breach by Tenant of
this Lease, provided that Tenant's obligations under
this Subsection shall not apply to the extent such
claims, demands, liabilities or expenses (a) arise out
of or relate to
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the negligence or wrongful act of Landlord, its agents,
employees, invitees or contractors or the breach of
this Lease by Landlord; or (b) relate to losses
covered by casualty insurance. In the event any action
or proceeding shall be brought against Landlord by
reason of any such indemnified claim, Tenant shall
defend the action or proceeding at Tenant's expense by
counsel reasonably satisfactory to Landlord. Landlord
may participate in any such action or proceeding
through counsel employed at its own expense.
18.1.2. LANDLORD'S OBLIGATION TO INDEMNIFY. Landlord shall
indemnify and hold Tenant harmless from and against any
and all claims, demands, liabilities and expenses,
including attorneys' fees, arising from the negligence
or wrongful act of Landlord, its agents, employees,
invitees, or contractors or from any breach of this
Lease by Landlord, provided that Landlord's obligations
under this Subsection shall not apply to the extent
such claims, demands, liabilities or expenses (a) arise
out of or relate to the negligence or wrongful act of
Tenant, its agents, employees, invitees or contractors
or the breach of this Lease by Tenant; or (b) relate
to losses covered by casualty insurance. In the event
any action or proceeding shall be brought against
Tenant by reason of any such indemnified claim,
Landlord shall defend the action or proceeding at
Landlord's expense by counsel reasonably satisfactory
to Tenant. Tenant may participate in any such action
or proceeding through counsel employed at its own
expense.
18.1.3. SURVIVAL. The provisions of this Subparagraph shall
survive the expiration or termination of this Lease
with respect to any claims or liability occurring prior
to such expiration or termination.
18.2. TENANT'S INSURANCE. Tenant agrees to maintain in full force and
effect at all times during the Term, at its own expense, for the
protection of Tenant and Landlord, as their interests may appear,
policies of insurance issued by a responsible carrier or carriers
reasonably acceptable to Landlord which afford the following
coverages:
18.2.1. Worker's compensation - statutory limits.
18.2.2. Employer's liability - not less than One Million
Dollars ($1,000,000).
18.2.3. Comprehensive general liability insurance including
blanket contractual liability broad form property
damage, personal injury, completed operations, products
liability, fire damage, and legal, in an amount not
less than One Million Dollars ($1,000,000) combined
single limit for both bodily injury and property damage
naming Landlord as additional insureds.
18.2.4. "All Risk" property insurance (including, without
limitation, business interruption, vandalism, malicious
mischief, inflation endorsement,
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sprinkler leakage endorsement, and boiler and machinery
coverage) on the Premises, including, without
limitation, the building, tenant improvements, Tenant's
personal property located on or in the Premises, and
any Alterations constructed or installed on the
Premises. Such insurance shall be in the full amount
of the replacement cost, as the same may from time to
time increase as a result of inflation or otherwise,
and shall be in a form providing coverage comparable to
the coverage provided in the standard ISO All-Risk
form. The insurance shall name Landlord as named
insured and include a lender's loss payable endorsement
in favor of Landlord's lender (Form 438 BFU
Endorsement). As long as this Lease is in effect, the
proceeds of the policy on Tenant's personal property
shall be used for the repair and replacement of such
items. Landlord shall have no interest in the
insurance proceeds on Tenant's personal property r
inventory. Any dispute between the parties regarding
the value of such portion of tenant improvements shall
be resolved by arbitration.
18.2.5. Machinery insurance including the HVAC equipment.
18.3. DEDUCTIBLES. Tenant shall be liable for any deductible amounts
under any insurance policies required to be maintained pursuant
to this Lease.
18.4. CERTIFICATES. Tenant shall deliver to Landlord, at least ten
(10) days prior to the time such insurance is first required to
be carried by Tenant, and thereafter at least thirty (30) days
prior to expiration of each such policy, certificates of
insurance evidencing the above coverage, together with
satisfactory evidence of payment of the premium thereon, with
limits not less than those specified above. The certificates
shall expressly provide that the interest of Landlord therein
shall not be affected by any breach of Tenant of any policy
provision for which such certificates evidence coverage.
Further, all certificates shall expressly provide that no less
than thirty (30) days' prior written notice shall be given
Landlord in the event of cancellation or material alteration of
the coverages evidenced by such certificates.
18.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive all
rights of recovery against the other on account of loss and
damage occasioned to such waiving party for its property or the
property of others under its control to the extent that such loss
or damage is insured against under any insurance policies which
may be in force at the time of such loss or damage. Tenant and
Landlord shall, upon obtaining policies of insurance required
hereunder, give notice to the insurance carrier that the
foregoing mutual waiver of subrogation is contained in this Lease
and Tenant and Landlord shall cause each insurance policy
obtained by such party to provide that the insurance company
waives all right of recovery by way of subrogation against either
Landlord or Tenant in connection with any damage covered by such
policy.
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19. DAMAGE OR DESTRUCTION.
19.1. INSURED DAMAGE. If the Premises are partially or completely
damaged or destroyed, and if such peril is covered by insurance
carried under the terms of this Lease, then Landlord shall
promptly and diligently repair and restore the Premises to the
same condition they were in immediately before such partial or
complete damage or destruction, subject to such modifications as
may be required by applicable law, code or ordinance. Tenant
shall replace or restore any of its personal property which is
damaged or destroyed and shall be entitled to receive proceeds of
insurance equal to the replacement cost. Rent shall xxxxx for
the period and to the extent that the Premises are rendered
untenantable by reason of the damage or destruction.
19.2. UNINSURED DAMAGE. If the Premises are partially or completely
damaged or destroyed, and if such peril is not covered by any
insurance required to be maintained under this Lease, then the
obligation to reconstruct the Premises hereunder shall be
governed by this subparagraph.
19.2.1. If the uninsured damage or destruction is proximately
caused by the willful act or negligence of Tenant or
Tenant's employees, agents, visitors, invitees, or
contractors, then Tenant shall pay to Landlord, within
thirty (30) days of written notice, the amount
determined by Landlord as necessary to reconstruct the
Premises to the same condition as they were in
immediately prior to such damage or destruction. Upon
receipt of the amount set forth above, Landlord shall
commence and diligently pursue to completion
reconstruction of the Premises to the same condition
they were in immediately prior to such damage or
destruction, subject to such modifications as may be
required by applicable law, code or ordinance. If the
cost of actual reconstruction is less than the amount
estimated by Landlord in its notice(s) to Tenant,
Landlord shall promptly refund such excess funds to
Tenant, with interest. If the uninsured damage or
destruction is proximately caused by the willful acts
or negligence of Landlord, Landlord's employees,
agents, visitors, invitees, or contractors, then
Landlord shall promptly commence and diligently pursue
to completion, at Landlord's sole expense,
reconstruction of the Premises to the same condition
they were in immediately before such damage or
destruction, subject to such modifications as may be
required by applicable law, code, or ordinance. Rent
shall xxxxx for the period and to the extent that the
Premises are rendered untenantable by reason of such
damage or destruction.
19.2.2. If the uninsured damage or destruction is proximately
caused by causes other than the willful act or
negligence of Landlord or Tenant; or Landlord's or
Tenant's employees, agents, visitors, invitees, or
contractors, then Tenant shall have the option,
exercisable in writing
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within ninety (90) days of such damage or destruction,
to pay the cost of any reconstruction. If Tenant
elects not to pay the cost of reconstruction, Landlord
shall have until ninety (90) days from the date of such
damage or destruction to elect to pay the cost of such
reconstruction. During the election periods set forth
above, this Lease shall continue in full force and
effect; provided, however, that rent shall xxxxx to the
extent that the Premises are rendered untenantable. If
neither party elects to pay the costs of the
reconstruction, this Lease shall terminate.
19.2.2.1. If Tenant elects to pay the cost of any
reconstruction, Tenant shall deposit with
Landlord, within ninety (90) days of the date
of such damage or destruction, the estimated
cost of such reconstruction. Thereafter,
Landlord shall commence, and diligently
pursue to completion reconstruction of the
Premises to the same condition they were in
immediately prior to such damage or
destruction, subject to such modifications as
may be required by any applicable law, code,
or ordinance.
19.2.2.2. If Landlord elects to pay the cost of any
reconstruction, Landlord shall immediately
commence and diligently pursue to completion
reconstruction of the Premises to the same
condition they were in immediately prior to
such damage or destruction, subject to such
modifications as may be required by any
applicable law, code, or ordinance.
19.2.2.3. Rent shall xxxxx during any reconstruction to
the extent that the Premises are rendered
untenantable.
19.3. RIGHT TO TERMINATE. Notwithstanding any other provision in this
Lease to the contrary, either Landlord or Tenant shall have the
right to terminate this Lease in the event any of the following
events occurs:
19.3.1. The Premises cannot be safely repaired because of the
presence of hazardous factors, including, but not
limited to, earthquake faults, radiation, chemical
waste and other similar dangers;
19.3.2. The replacement or repair thereof cannot be completed
within one hundred thirty-five (135) days of the damage
or or destruction;
19.3.3. The Premises cannot be replaced or restored except in a
substantially different structural and functional form
than existed before the damage or destruction; or
19.3.4. The existing laws, code or ordinances do not permit the
use of the Premises in all respects as required for the
conduct of Tenant's business.
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19.3.5. The damage or destruction occurs within the last twelve
(12) months of the Term.
If either party elects to terminate this Lease, the electing party shall
give the other party written notice of its election to terminate within sixty
(60) days after such damage or destruction, and this Lease shall terminate
fifteen (15) days after the date of such notice. All insurance proceeds,
excluding proceeds for trade fixtures, equipment inventory and other personal
property of Tenant, and excluding proceeds for moving expenses or other costs
incurred by Tenant and specifically itemized and reimbursed to Tenant under such
insurance, shall be disbursed and paid to Landlord.
19.4. TENANT'S PARAMOUNT PURCHASE OPTION RIGHT. Notwithstanding any
terms set forth in this section to the contrary, Tenant's
purchase option right described in Section 14 shall remain in
full force and effect and, should Tenant elect to exercise said
right following any such destruction or damage and before the
reconstruction of the Premises, Tenant shall keep all insurance
proceeds resulting from the destruction and damage.
20. CONDEMNATION.
20.1. TOTAL TAKING - TERMINATION. If title to all of the Premises or
so much thereof is taken for any public or quasi-public use under
any statute or by right of eminent domain so that reconstruction
of the Premises will not result in the Premises being reasonably
suitable for Tenant's continued occupancy for the uses and
purposes permitted by this Lease, this Lease shall terminate as
of the date that possession of the Premises or part thereof be
taken.
20.2. PARTIAL TAKING. If any part of the Premises is taken and the
remaining part is reasonably suitable for Tenant's continued
occupancy for the purposes and uses permitted by this Lease, this
Lease shall, as to the part so taken, terminate as of the date
that possession of such part of the Premises is taken and the
Rent and other sums payable hereunder shall be reduced in the
same proportion that the area of the portion of the Premises so
taken bears to the original area of the Premises. Landlord
shall, at its own cost and expense, make all necessary repairs or
alterations to the Premises so as to make the portion of the
Premises not taken a complete and functional architectural unit.
Rent and other sums payable hereunder shall be temporarily abated
during such restoration proportionately in the degree to which
Tenant's use of the Premises is impaired. Each party hereby
waives any applicable provisions of law allowing either party to
terminate this Lease in the event of a partial taking of the
Premises.
20.3. ALLOCATION OF AWARD.
20.3.1. LANDLORD'S RIGHT TO AWARD. Except as otherwise
provided herein in connection with a taking:
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20.3.1.1. Landlord shall be entitled to receive all compensation
and anything of value awarded, paid, or received in
settlement or otherwise ("Award"); and
20.3.1.2. Tenant irrevocably assigns and transfers to Landlord
all rights to and interests in the Award and fully
releases and relinquishes any claim to, right to make a
claim on, or interest in the Award.
20.3.1.3. TENANT'S RIGHT TO COMPENSATION. Despite subsection
20.3.1, Tenant shall have the right to make a separate
claim in the condemnation proceeding for:
20.3.1.3.1. The taking of the unamortized or
undepreciated value of any leasehold
improvements owned by Tenant that Tenant
has the right to remove at the end of
the Term and that Tenant elects not to
remove;
20.3.1.3.2. Reasonable removal and relocation costs
for any leasehold improvements that
Tenant has the right to remove and
elects to remove (if condemnor approves
of the removal);
20.3.1.3.3. Loss of goodwill;
20.3.1.3.4. Relocation costs for Tenant's business;
20.3.1.3.5. Any other amount in addition to the
foregoing that does not reduce the
amount of the Award payable to Landlord.
Tenant shall have the right to negotiate directly with condemnor for the
recovery of the portion of the Award that Tenant is entitled to under this
Subsection 20.3.2.
20.4. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to any abatement of
Rent. For the purpose of this subsection, a temporary taking
shall be deemed to have occurred only in the event there is a
taking for any period less than the remaining Term of this Lease.
Any award made by reason of such temporary taking shall belong
entirely to Tenant and Landlord shall not be entitled to share
therein. Each party agrees to execute and deliver to the other
all instruments that may be required to effectuate the provisions
of this subparagraph.
21. ASSIGNMENT AND SUBLETTING.
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21.1. SUBLETTING. Tenant shall not sublet more than thirty-three and a
third percent (33 1/3%) of the Premises without Landlord's prior
written consent, which consent shall not be unreasonably withheld
or delayed. Tenant shall not be relieved of any of its duties or
obligations under this Lease by reason of any subletting and
shall be entitled to receive all rent or other consideration paid
by any subtenant.
21.2. ASSIGNMENT. Tenant shall not assign this Lease without the prior
written consent of Landlord, which consent will not be
unreasonably withheld or delayed. Notwithstanding the foregoing,
Tenant may assign this Lease and all of its rights hereunder and
to the Premises without the prior written consent of Landlord to
any parent, subsidiary, affiliate or successor in interest of
Tenant so long as Tenant remains financially responsible.
22. DEFAULT.
22.1. TENANT'S DEFAULT. At the option of Landlord, a default under
this Lease by Tenant shall exist if any of the following events
shall occur:
22.1.1. If Tenant shall have failed to pay Rent or any other sum
required to be paid hereunder within twenty (20) days after
receipt of written notice from Landlord that payment is past
due; provided, however, that Tenant may cure said default at
any time prior to a termination of this Lease by Landlord by
paying all Rent and other expenses or charges then due
together with interest through the date of payment; or
22.1.2. If Tenant shall have failed to perform any term, covenant or
condition of this Lease except those requiring the payment
of money, and Tenant shall have failed to cure such breach
within thirty (30) days after written notice from Landlord
where such breach could reasonably be cured within such
thirty (30) day period; provided, however, that where such
failure could not reasonably be cured within the thirty (30)
day period, that Tenant shall not be in default if it has
commenced such performance within the thirty (30) day period
and diligently thereafter prosecutes the same to completion;
or
22.1.3. If Tenant shall have assigned its assets for the benefit of
its creditors pursuant to any proceeding under the United
States Bankruptcy Code; or
22.1.4. If the sequestration or attachment of or execution on any
material part of Tenant's personal property essential to the
conduct of Tenant's business shall have occurred, and Tenant
shall have failed to obtain a return or release of such
personal property within sixty (60) days thereafter, or
prior to sale pursuant to such sequestration, attachment or
levy, whichever is earlier; or
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22.1.5. If a court shall have made or entered any decree or order
other than under the bankruptcy laws of the United States
adjudging Tenant to be insolvent; or approving as properly
filed a petition seeking reorganization of Tenant; or
directing the winding up or liquidation of Tenant and such
decree or order shall have continued for a period of sixty
(60) days; or
22.2. LANDLORD'S DEFAULT. Landlord shall not be deemed to be in
default in the performance of any obligation required to be
performed by it hereunder unless and until it has failed to
perform such obligation within ten (10) days after receipt of
written notice by Tenant to Landlord specifying the nature of
such default; provided, however, that if the nature of Landlord's
obligation is such that more than ten (10) days are required for
its performance, then Landlord shall be deemed to be in default
if it fails to commence such performance within such ten (10) day
period and thereafter diligently prosecutes the same to
completion.
23. SUBORDINATION.
23.1. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any mortgage or deed
of trust covering the Premises which does not in the reasonable
judgment of Tenant impair Tenant's rights and benefits under its
option to purchase the Premises set forth in Section 14 hereof
provided Landlord first obtains from the lender a written
agreement that provides that in the event of a foreclosure or of
any other action or proceeding for the enforcement thereof, or of
any sale thereunder, this Lease will not be barred, terminated,
cut off or foreclosed, nor will the rights and possession of
Tenant thereunder be disturbed if Tenant shall not then be in
default in the payment of rent, and Tenant shall attorn to the
purchaser at such foreclosure, sale or other action or
proceeding.
24. NOTICES. Unless otherwise specifically permitted by this Lease, all
notices or other communications required or permitted under this lease
shall be in writing, and shall be personally delivered or sent by facsimile
transmission with hard copy to follow by mail, by overnight receipted
courier (such as Federal Express), or by registered or certified mail,
postage prepaid, return receipt requested, and shall be deemed received:
(i) if personally delivered, upon the date of delivery to the address of
the person to receive such notice, (ii) if sent by overnight courier, one
(1) business day after delivery to such courier, (iii) if mailed in
accordance with the provisions of this Section, four (4) business days
after the date placed in the United States mail, (iv) if mailed other than
in accordance with the provisions of this Section or mailed from outside
the United States, upon the date of delivery to the address of the person
to receive such notice, or (v) if transmitted by facsimile, upon telephonic
or automatic confirmation of receipt. Notices shall be given at the
following addresses:
IF TO LANDLORD: Xxxxxxx Equities, Inc.
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000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
with copy to: Xxxxxxx Xxxxx
IF TO TENANT: Valley Record Distributors, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx Xxxxxxxxxx 00000
with copy to: Chief Financial Officer in Woodland, California
and
Director of Operations in Louisville, Kentucky
25. ATTORNEYS' FEES. If either party brings any action or legal proceeding for
damages for an alleged breach of any provision of this Lease, to recover
Rent or other sums due, to terminate the tenancy of the Premises, or to
enforce, protect or establish any term, condition or covenant of this Lease
or right of either party, the prevailing party shall be entitled to recover
as a part of such action or proceedings, or in a separate action brought
for that purpose, reasonable attorneys' fees and costs.
26. ESTOPPEL CERTIFICATES. Within seven (7) days following written request by
either Landlord or Tenant, the requested party shall execute and deliver to
the requesting party any documents, including estoppel certificates, in the
form prepared by the requesting party (a) certifying that this Lease is
unmodified and in full force and effect or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in
full force and effect and the date to which the Rent and other charges are
paid in advance, if any, (b) acknowledging that there are not, to the
requested party's knowledge, any uncured defaults on the part of the
requesting party, or, if there are uncured defaults on the part of the
requesting party, stating the nature of such uncured defaults, (c)
evidencing the status of the Lease; and (d) acknowledging any other fact as
may reasonably be required either by a lender making a loan to Landlord to
be secured by deed of trust or mortgage covering the Premises, a lender
making a loan to Tenant to be secured by a collateral assignment of this
Lease, or a sublessee or assignee of Tenant, or as may be reasonably
requested by Tenant in connection with any disclosures required pursuant to
state or federal securities laws.
If either party fails to so deliver a requested estoppel certificate
within the prescribed time, such failure shall constitute an irrevocable
appointment of the other party as its attorney-in-fact to act in its name,
place and stead to execute such estoppel certificate, such appointment
being coupled with an interest.
27. BROKERS. Landlord and Tenant each represents to the other that it has had
no dealings with any real estate broker or agent in connection with the
negotiation of this Lease and that they know of no real estate broker or
agent who is entitled to a commission or finder's fee in connection with
this Lease. Each party shall indemnify, protect, defend,
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and hold harmless the other party against all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including
reasonable attorneys' fees) for any leasing commission, finder's fee, or
equivalent compensation alleged to be owing on account of the indemnifying
party's dealings with any real estate broker; provided, however, that both
parties acknowledge that a broker is involved in the Land Sale and Option
Agreement. The terms of this subsection shall survive the expiration or
earlier termination of this Lease.
28. ARBITRATION OF DISPUTES
28.1. WHEN ARBITRATION IS REQUIRED. Any dispute between Landlord and
Tenant (other than disputes solely concerning the payment of
rent) shall be settled by arbitration in accordance with the
Commercial Arbitration Rules then obtaining of the American
Arbitration Association, and judgment upon the award rendered in
such arbitration may be entered in any court having jurisdiction
thereof.
28.2. RULES AND PROCEDURES. The following provisions shall apply to
any arbitration conducted hereunder:
28.2.1. Before either party initiates an arbitration hereunder,
such party shall request in writing a meeting with a
designated representative of the other party, to occur
within ten (10) business days after the giving of such
notice, at the place of business of the initiating
party or such other place as the parties may agree, for
the purpose of attempting to resolve the dispute
without arbitration. If the other party refuses to
meet or if the dispute cannot be settled at the
meeting, the initiating party may, after the expiration
of the aforesaid ten (10) day period, commence an
arbitration hereunder.
28.2.2. The arbitrator or arbitrators may not change any of the
terms of this Lease or deprive any party to this Lease
of any right or remedy expressly or impliedly reserved
in this Lease.
28.2.3. There shall be no right of discovery except by
stipulation of the parties or pursuant to the
discretion of the arbitrator upon petition by either of
the parties.
28.2.4. The costs of the proceeding shall be borne equally
between the parties; provided, however, that such
costs, including attorneys' fees, shall be subject to
award, in whole or in part, by the arbitrator, in the
arbitrator's discretion, to the prevailing party.
Unless the arbitrator so awards attorneys' fees, each
party shall be responsible for its own attorneys' fees.
28.2.5. To the extent possible, the arbitration hearings shall
be conducted on consecutive days, excluding Saturdays,
Sundays, and holidays, until the completion of the
case.
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28.2.6. Any party shall have the right to join any third
parties in such proceedings in order to resolve any
other similar disputes, the facts of which are related
to the matters submitted for arbitration hereunder.
29. GENERAL.
29.1. CAPTIONS. The captions and headings used in this Lease are for
the purpose of convenience only and shall not be construed to
limit or extend the meaning of any part of this Lease.
29.2. EXECUTED COPY. Any fully executed copy of this Lease shall be
deemed an original for all purposes.
29.3. TIME. Time is of the essence for the performance of each term,
condition and covenant of this Lease.
29.4. SEVERABILITY. In case any one or more of the provisions
contained herein, except for the payment of Rent, shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall
not affect any other provision of this Lease, but this Lease
shall be construed as if such invalid, illegal or unenforceable
provision had not been contained herein.
29.4. CHOICE OF LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of Kentucky.
29.6. GENDER; SINGULAR, PLURAL. When the context of this Lease
requires, the neuter gender includes the masculine, the feminine,
a partnership or corporation or joint venture, and the singular
includes the plural.
29.7. BINDING EFFECT. The covenants and agreements contained in this
Lease shall be binding on the parties hereto and on their
respective successors and assigns to the extent this Lease is
assignable.
29.8. ENTIRE AGREEMENT. This Lease is the entire agreement between the
parties and there are no agreements or representations between
the parties except as expressed herein. Except as otherwise
provided herein, no subsequent change or addition to this Lease
shall be binding unless in writing and signed by the parties
hereto.
29.9. AUTHORITY. Each individual executing this Lease on behalf of an
entity represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said entity in
accordance with its corporate bylaws, statement of partnership or
certificate of limited partnership, as the case may be, and that
this Lease is binding upon said entity in accordance with its
terms.
29.10. EXHIBITS. All exhibits, amendments, riders and addenda attached
hereto are hereby incorporated herein and made a part hereof.
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29.11. REASONABLENESS. Except as specifically proved elsewhere in
this Lease, whenever the consent or approval of either party
hereto is required, such consent or approval shall not be
unreasonably withheld or delayed, and whenever this Lease
grants to either party hereto the right to take action,
exercise discretion, make a judgment or other determination,
or request or require documents or other items or
information, such party shall act reasonably and in good
faith. Any costs, expenses, fees or charges incurred by one
party hereto and to be paid by the other party shall be
limited in type and amount to those reasonably incurred.
29.12. PAYMENT UNDER PROTEST. If at any time a dispute shall arise
as to any amount or sum of money to be paid by one party to
the other under the provisions of the Lease, the party
against whom the obligation to pay the money is asserted
shall have the right to make payment "under protest" and
such payment shall not be regarded as a voluntary payment,
and there shall survive the right on the part of said party
to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of
said party to pay such sum or any part thereof, said party
shall be entitled to recover such sum or so much thereof as
it was not legally required to pay under the provisions of
the Lease with interest thereon at the Interest Rate from
the date of payment through the date of recovery.
THIS LEASE is effective as of the date the last signatory necessary to
execute the Lease shall have executed this Lease.
LANDLORD: TENANT:
By: /s/ Xxxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxxx Name: XXXXXX X. XXXX
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Title: VP Title: PRESIDENT
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Dated: 9/25/97 Dated: Sept. 22. 1997
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