LEASE AGREEMENT
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the Landlord and
Tenant named below. Other Articles, Sections and Paragraphs of the Lease
referred to in this Article One explain and define the Basic Terms and are to be
read In conjunction with the Basic Terms.
Section 1.01. Date of Lease: July 1, 1999
Section 1.02. Landlord (include legal entity): Xxxxxx Xxxxxxxx
Address of Landlord: 000 X. Xxxx Xxxx.
Section 1.03. Tenant (include legal entity):
Address of Tenant:
Section 1.04. Property: The Property is part of a multi-tenant real
property development known as Turnberry Xxxxxx Xxxx Xxxx #00 0000 000 X.Xxxx Xx,
00000 and described or depicted In Exhibit "A" (the "Project"). The Project
includes the land, the buildings and all other improvements located on the land,
and the common areas described in Paragraph 4.05(a). The Property is (include
street address, approximate square footage and description)
Section 1.05. Lease Term: 0 years months beginning on or such other date as
is specified in this Lease, and ending on Month to Month with 60 day notice to
vacate.
Section 1.06. Permitted Uses: (See Article Five) Any permitted use in
current zone of Orem.
Section 1.07. Tenant's Guarantor: (if none, so state)
Section 1.08. Brokers: (See Article Fourteen) (if none, so state)
Landlord's Broker: None Tenant's Broker: None
Section 1.09. Commission Payable to Landlord's Broker: (See Article
Fourteen) $ None
Section 1.10. Initial Security Deposit: (See Section 3.03) Last month
rent/deposit 1900.00
Section 1.11. Vehicle Parking Spaces Allocated to Tenant: (See Section
4.05) 7 unassigned
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: Nineteen Hundred Dollars ($1900.00 ) per month, for the
first months, as provided in Section 3.01, and shall be increased on the first
day of the month(s) after the Commencement Date, either (i) as provided in
Section 3.02, or (ii). (If (ii) is completed, then (i) and Section 3.02 are
inapplicable.)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the "Base
Real Property Taxes" (See Section 4.02); (ii) Utilities (See Section 4.03);
(iii) Increased Insurance Premiums above "Base Premiums" (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses included(See
Section 4.05); (v) impounds for Tenant's Share of Insurance Premiums and
Property Taxes (See Section 4.08); (vi) Maintenance, Repairs and Alterations
(See Article Six).
Section 1.13. Costs and Charges Payable by Landlord: (a) Base Real Property
Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section 4.04(c)); (c)
Maintenance and Repair (See Article Six).
Section 1.14. Landlord's Share of Profit on Assignment or Sublease: (See
Section 9.05) included percent ( %) of the Profit (the "Landlord's Share").
Section l.15. Riders: The following Riders are attached to and made a part
of this Lease: (if none, so state) None.
Initials _____
ARTICLE TWO: LEASE TERM
Section 2.01. Lease of Property For Lease Term. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.
Section 2.02. Delay in Commencement. Landlord shall not be liable to Tenant
if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord's non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
sixty (60) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the sixty
(60) day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the other.
If Tenant does not give such notice, Tenant's right to cancel the Lease shall
expire and the Lease Term shall commence upon the delivery of possession of the
Property to Tenant. If delivery of possession of the Property to Tenant is
delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to
this Lease setting forth the actual Commencement Date and expiration date of the
Lease. Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.
Section 2.03. Early Occupancy. If Tenant occupies the Property prior to the
Commencement Date, Tenant's occupancy of the Property shall be subject to all of
the provisions of this Lease. Early occupancy of the Property shall not advance
the expiration date of this Lease. Tenant shall pay Base Rent and all other
charges specified in this Lease for the early occupancy period.
Section 2.04. Holding Over. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnify Landlord against all damages which Landlord incurs from
Tenant's delay in vacating the Property. If Tenant does not vacate the Property
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant's occupancy of the Property shall be a
"month-to-month" tenancy, subject to all of the terms of this Lease applicable
to a month-to-month tenancy, except that the Base Rent then is effect shall be
increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. Time and Manner of Payment. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.
Section 3.02. Cost of Living Increases. The Base Rent shall be increased on
each date (the "Rental Adjustment Date") stated in Paragraph 1.12(a) above in
accordance with the increase in the United States Department of Labor, Bureau of
Labor Statistics, Consumer Price Index for All Urban Consumers (all items for
the geographical Statistical Area in which the Property is located on the basis
of 1982-1984 = 100) (the "index") as follows:
(a) The Base Rent (the "Comparison Base Rent") in effect immediately
before each Rental Adjustment Date shall be increased by the percentage
that the index has increased from the date (the "Comparison Date") on which
payment of the Comparison Base Rent began through the month in which the
applicable Rental Adjustment Date occurs. The Base Rent shall not be
reduced by reason of such computation. Landlord shall notify Tenant of each
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increase by a written statement which shall include the index for the
applicable Comparison Date, the index for the applicable Rental Adjustment
Date, the percentage increase between those two indices, and the new Base
Rent. Any increase in the Base Rent provided for in this Section 3.02 shall
be subject to any minimum or maximum increase, if provided for in Paragraph
1.12(a).
(b) Tenant shall pay the new Base Rent from the applicable Rental
Adjustment Date until the next Rental Adjustment Date. Landlord's notice
may be given after the applicable Rental Adjustment Date of the increase,
and Tenant shall pay Landlord the accrued rental adjustment for the months
elapsed between the effective date of the increase and Landlord's notice of
such increase within ten (10) days after Landlord's notice. If the format
or components of the index are materially changed after the Commencement
Date, Landlord shall substitute an index which is published by the Bureau
of Labor Statistics or similiar agency and which is most nearly equivalent
to the index in effect on the Commencement Date. The substitute index shall
be used to calculate the increase in the Base Rent unless Tenant objects to
such index in writing within fifteen (15) days after receipt of Landlord's
notice. If Tenant objects, Landlord and Tenant shall submit the selection
of the substitute index for binding arbitration in accordance with the
rules and regulations of the American Arbitration Association at its office
closest to the Property. The costs of arbitration shall be borne equally by
Landlord and Tenant.
Section 3.02 Security Deposit; Increases.
(a) Upon the execution of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10
above. Landlord may apply all or part of the Security Deposit to any unpaid
rent or other charges due from Tenant or to cure any other defaults of
Tenant. If Landlord uses any part of the Security Deposit, Tenant shall
restore the Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a material
default under this Lease. No interest shall be paid on the Security
Deposit. Landlord shall not be required to keep the Security Deposit
separate from its other accounts and no trust relationship is created with
respect to the Security Deposit.
(b) Each Time the Base Rent is increased, Tenant shall deposit
additional funds with Landlord sufficient to increase the Security Deposit
to an amount which bears the same relationship to the adjusted Base Rent as
the initial Security Deposit bore to the initial Base Rent.
Section 3.04. Termination; Advance Payments. Upon termination this Lease
under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any
other termination not resulting from Tenant's default, and after Tenant has
vacated the Property in the manner required by this Lease, Landlord shall refund
or credit to Tenant (or Tenant's successor) the unused portion of the Security
Deposit, any advance rent or other advance payments made by Tenant to Landlord,
and any amounts paid for real property taxes and other reserves which apply to
any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Landlord shall pay the "Base Real Property
Taxes" on the Property during the Lease Term. Base Real Property Taxes are
real property taxes applicable to the Property as shown on the tax xxxx for
the most recent tax fiscal year ending prior to the Commencement Date.
However, if the structures on the Property are not completed by the tax
lien date of such tax fiscal year, the Base Real Property Taxes are the
taxes shown on the first tax xxxx showing the full assessed value of the
Property after completion of the structures. Tenant shall pay Landlord the
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amount, if any, by which the real property taxes during the Lease Term
exceed the Base Real Property Taxes. Subject to Paragraph 4.02(c), Tenant
shall make such payments within fifteen (15) days after receipt of
Landlord's statement showing the amount and computation of such increase.
Landlord shall reimburse Tenant for any real property taxes paid by Tenant
covering any period of time prior to or after the Lease Term.
(b) Definition of "Real Property Tax. "Real property tax" means: (i)
any fee, license fee, license tax, business license fee, commercial rental
tax, levy, charge, assessment, penalty or tax imposed by any taxing
authority against the Property; (ii) any tax on the Landlord's right to
receive, or the receipt of, rent or income from the Property or against
Landlord's business of leasing the Property; (iii) any tax or charge for
fire protection, streets, sidewalks, road maintenance, refuse or other
services provided to the Property by any governmental agency; (iv) any tax
imposed upon this transaction or based upon a reassessment of the Property
due to a change of ownership, as defined by applicable law, or other
transfer of all or part of Landlord's interest in the Property; and (v) any
charge or fee replacing any tax previously included within the definition
of real property tax. "Real property tax" does not, however, include
Landlord's federal or state income, franchise, inheritance or estate taxes.
(c) Joint Assessment. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to
Landlord within fifteen (15) days after receipt of Landlord's written
statement.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging
to Tenant. Tenant shall try to have personal property taxed
separately from the Property.
(ii) It any of Tenant's personal property is taxed with the Property.
Tenant shall pay Landlord the taxes for the personal property
within fifteen (15) days after Tenant receives a written
statement from Landlord for such personal property taxes.
Section 4.03. Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant shall maintain
a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant
against liability for bodily injury, property damage (including loss of use
of property) and personal injury arising out of the operation, use or
occupancy of the Property. Tenant shall name Landlord as an additional
insured under such policy. The initial amount of such insurance shall be
One Million Dollars ($1,000,000) per occurrence and shall be subject to
periodic increase based upon inflation, increased liability awards,
recommendation of Landlord's professional insurance advisers and other
relevant factors. The liability insurance obtained by Tenant under this
Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant's
performance under Section 5.05, if the matters giving rise to the indemnity
under Section 5.05 result from the negligence of Tenant. 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
comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The policy obtained
by Landlord shall not be contributory and shall not provide primary
insurance.
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(b) Property and Rental Income Insurance. During the Lease Term,
Association shall maintain policies of insurance covering loss of or damage
to the Property in the full amount of its replacement value. Such policy
shall contain an inflation Guard Endorsement and shall provide protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, special extended perils (all
risk), sprinkler leakage and any other perils which Landlord deems
reasonably necessary. Landlord shall have the right to obtain flood and
earthquake insurance if required by any lender holding a security interest
in the Property. Landlord shall not obtain insurance for Tenant's fixtures
or equipment or building improvements installed by Tenant on the Property.
During the Lease 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 and insurance
premiums. Tenant shall be liable for the payment of any deductible amount
under Landlord's or Tenant's insurance policies maintained pursuant to this
Section 4.04, in an amount not to exceed Ten Thousand Dollars ($10,000).
Tenant shall not do or permit anything to be done which invalidates any
such, insurance policies.
(c) Payment of Premiums.
(i) Landlord shall pay the "Base Premiums" for the insurance policies
maintained by Landlord under Paragraph 4.04(b). If the Property
has been previously fully occupied, the "Base Premiums" are the
insurance premiums paid during or applicable to the last twelve
(12) months of such prior occupancy. If the Property has not been
previously fully occupied or has been occupied for less than
twelve (12) months, the Base Premiums are the lowest annual
premiums reasonably obtainable for the required insurance for the
Property as of the Commencement Date.
(ii) Tenant shall pay Landlord the amount. If any, by which the
insurance premiums for all policies maintained by Landlord under
Paragraph 4.04(b) have increased over the Base Premiums, whether
such increases result from the nature of Tenant's occupancy, any
act or omission of Tenant, the requirement of any lender referred
to in Article Eleven (Protection of Lenders), the increased value
of the Property or general rate increases. However, if Landlord
substantially increases the amount of insurance carried or the
percentage of insured value after the period during which the
Base Premiums were calculated, Tenant shall only pay Landlord the
amount of increased premiums which would have been charged by the
insurance carrier if the amount of insurance or percentage of
insured value had not been substantially increased by Landlord.
This adjustment in the amount due from Tenant shall be made only
once during the Lease Term. Thereafter, Tenant shall be obligated
to pay the full amount of any additional increases in the
insurance premiums, including increases resulting from any
further increases in the amount of insurance or percentage of
insured value. Subject to Section 4.05, Tenant shall pay Landlord
the increases over the Base Premiums within fifteen (15) days
after receipt by Tenant of a copy of the premium statement or
other evidence of the amount due. If the insurance policies
maintained by Landlord cover improvements or real property other
than the Property, Landlord shall also deliver to Tenant a
statement of the amount of the premiums applicable to the
Property showing, in reasonable detail, how such amount was
computed. If the Lease Term expires before the expiration of the
insurance period, Tenant's liability shall be pro rated on an
annual basis.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is 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.
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(ii) If Tenant fails to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time
period or if any such policy is cancelled or modified during the
Lease Term without Landlord's consent, Landlord may obtain such
insurance, in which case Tenant shall reimburse Landlord for the
cost of such insurance within fifteen (15) days after receipt of
a statement that indicates the cost of such insurance.
(iii)Tenant shall maintain all insurance required under this Lease
with companies holding a "General Policy Rating" of A-12 or
better, as set forth in the most current issue of "Best Key
Rating Guide". Landlord and Tenant acknowledge the insurance
markets are rapidly changing and that insurance in the form and
amounts described in this Section 4.04 may not be available in
the future. Tenant acknowledges that the insurance described in
this Section 4.04 is for the primary benefit of Landlord. It at
any time during the Lease Term, Tenant is unable to maintain the
insurance required under the Lease. Tenant shall nevertheless
maintain insurance coverage which is customary and commercially
reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to time. Landlord
makes no representation as to the adequacy of such insurance to
protect Landlord's or Tenant's interests. Therefore, Tenant shall
obtain any such additional property or liability insurance which
Tenant deems necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all
rights of recovery against the other, or against the officers,
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 is covered by any insurance
policy in force (whether or not described in this Lease) at the
time of such loss or damage. Upon obtaining the required policies
of insurance, Landlord and Tenant shall give notice to the
insurance carriers of this mutual waiver of subrogation.
Section 4.05. Common Areas; Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants
of the Project and which are not leased or held for the exclusive use of
Tenant or other tenants, including, but not limited to, parking areas,
driveways, sidewalks, loading areas, access roads, corridors, landscaping
and planted areas. Landlord, from time to time, may change the size,
location, nature and use of any of the Common Areas, convert Common Areas
into leaseable areas, construct additional parking facilities (including
parking structures) in the Common Areas, and increase or decrease Common
Area land and/or facilities. Tenant acknowledges that such activities may
result in inconvenience to Tenant. Such activities and changes are
permitted if they do not materially affect Tenant's use of the Property.
(b) Use of Common Areas. Tenant shall have the nonexclusive right In
common with other tenants and all others to whom Landlord has granted or
may grant such rights) to use the Common Areas for the purposes intended,
subject to such reasonable rules and regulations as Landlord may establish
from time to time. Tenant shall abide by such rules and regulations and
shall use its best effort to cause others who use the Common Areas with
Tenant's express or implied permission to abide by Landlord's rules and
regulations. At any time, Landlord may close any Common Areas to perform
any acts in the Common Areas as, in Landlord's judgment, are desirable to
improve the Project, Tenant shall not Interfere with the rights of
Landlord. other tenants or any other person entitled to use the Common
Areas.
(c) Specific Provision re: Vehicle Parking. Tenant shall be entitled
to use the number of vehicle parking spaces in the Project allocated to
Tenant in Section 1.11 of the Lease without paying any additional rent.
Tenant's parking shall not be reserved and shall be limited to vehicles no
larger than standard size automobiles or pickup utility vehicles. Tenant
shall not cause large trucks or other large vehicles to be parked within
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the Project or on the adjacent public streets. Temporary parking of large
delivery vehicles in the Project may be permitted by the rules and
regulations established by Landlord. Vehicles shall be parked only in
striped parking spaces and not in driveways, loading areas or other
locations not specifically designated for parking. Handicapped spaces shall
only be used by those legally permitted to use them. If Tenant parks more
vehicles in the parking area than the number set forth in section 1. 11 of
this Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord's other remedies under the Lease, Tenant shall pay a
daily charge determined by Landlord for each such additional vehicle.
(d) Maintenance of Common Areas. Landlord shall maintain the Common
Areas in good order, condition and repair and shall operate the Project, in
Landlord's sole discretion, as a first-class industrial/commercial real
property development. Tenant shall pay Tenant's pro rate share (as
determined below) of all costs incurred by Landlord for the operation and
maintenance of the Common Areas. Common Area costs include, but are not
limited to, costs and expenses for the following: gardening and
landscaping; utilities, water and sewage charges; maintenance of signs
(other than tenants signs); premiums for liability, property damage, fire
and other types at casualty insurance on the Common Areas and worker's
compensation insurance; all property taxes and assessments levied on or
attributable to the Common Areas and all Common Area improvements; all
personal property taxes levied on or attributable to personal property used
in connection with the Common Areas; straightline depreciation an personal
property owned by Landlord which is consumed in the operation or
maintenance of the Common Areas; rental or lease payment paid by Landlord
for rented or leased personal of the Common Areas; fees for required
licenses and permits; repairing. resurfacing, repaving, maintaining,
painting, lighting, cleaning, refuse removal, security and similar items;
reserves for roof replacement and exterior painting and other appropriate
reserves; and a reasonable allowance to Landlord for Landlord's supervision
of the Common Areas (not to exceed five percent (5%) of the gross rents of
the Project for the calendar year). Landlord may cause any or all of such
services to be provided by third parties and the cost at such services
shall be included in Common Area costs. Common Area costs shall not include
depreciation of real property which forms part of the Common Areas.
(e) Tenant's Share and Payment. Tenant shall pay Tenant's annual pro
rata share of all Common Area costs (prorated for any fractional month)
upon written notice from Landlord that such costs are due and payable, and
in any event prior to delinquency. Tenant's pro rate share shall be
calculated by dividing the square foot area of the Property, as set forth
in Section 1.04 of the Lease, by the aggregate square foot area of the
Project which is leased or held for lease by tenants, as of the date on
which the computation is made. Tenant's initial pro rate share is set out
in Paragraph 1.13(b). Any changes in the Common Area costs and/or the
aggregate area of the Project leased or hold for lease during the Lease
Term shall be effective on the first day of the month after such change
occurs. Landlord may, at Landlord's election, estimate in advance and
charge to Tenant as Common Area costs, all real property taxes for which
Tenant is liable under Section 4.02 of the Lease, all insurance premiums
for which Tenant is liable under Section 4.04 of the Lease, all maintenance
and repair costs for which Tenant is liable under Section 6.04 of the
Lease, and all other Common Area costs payable by Tenant hereunder. At
Landlord's election, such statements of estimated Common Area costs shall
be delivered monthly, quarterly or at any other periodic intervals to be
designated by Landlord. Landlord may adjust such estimates at any time
based upon Landlord's experience and reasonable anticipation of costs. Such
adjustments shall be effective as of the next rent payment date after
notice to Tenant. Within sixty (60) days after the end of each calendar
year of the Lease Term. Landlord shall deliver to Tenant a statement
prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred
by Landlord during the preceding calendar year and Tenant's pro rate share.
Upon receipt of such statement, there shall be an adjustment between
Landlord and Tenant, with payment to or credit given by Landlord (as the
case may be) so that Landlord shall receive the entire amount of Tenant's
share of such costs and expenses for such period.
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Section 4.06. Late Charges. Tenant's failure to pay rent promptly may cause
Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, if Landlord does not receive any rent payment within ten
(10) days after it becomes due, Tenant shall pay Landlord a late charge equal to
ten percent (10%) of the overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount owed by Tenant to
Landlord which is not paid when due shall bear interest at the rate of fifteen
percent (15%) per annum from the due date of such amount. However, interest
shall not be payable on late charges to be paid by Tenant under this Lease. The
payment of interest an such amounts shall not excuse or cure any default by
Tenant under this Lease. If the interest rate specified in this Lease is higher
than the rate permitted by law, the interest rate is hereby decreased to the
maximum legal interest rate permitted by law.
Section 4.08. Impounds for Insurance Premiums and Real Property Taxes. If
requested by any ground lessor or lender to whom Landlord has granted a security
interest in the Property, or if Tenant is more than ten (10) days late in the
payment of rent more than once in any consecutive twelve (12) month period,
Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the annual real
property taxes and insurance premiums payable by Tenant under this Lease,
together with each payment of Base Rent. Landlord shall hold such payments in a
non-interest bearing impound account. If unknown, Landlord shall reasonably
estimate the amount of real property taxes and insurance premiums when due.
Tenant shall pay any deficiency of funds in the impound account to Landlord upon
written request, if Tenant defaults under this Lease, Landlord may apply any
funds in the impound account to any obligation then due under this Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. Permitted Uses. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
tenants of the Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of Occupancy, required
for Tenant's occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.
Section 5.03. Hazardous Materials. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state or
local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or
about the Property by Tenant, its agents, employees, contractors, sublessess or
invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or use
of any storage tanks on the Property.
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Section 5.04. Signs and Auctions. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.
Section 5.05. Indemnity. Tenant shall indemnity Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property, (b) the conduct of Tenant's business or anything
also done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under this Lease;
(d) any misrepresentation or breach of warranty by Tenant under this Lease; or
(e) other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal less or costs incurred by Landlord in connection with any
such claim. As a material part of the consideration to Landlord, Tenant assumes
all risk of damage to properly or injury to persons in or about the Property
arising from any cause, and Tenant hereby waives all claims in respect thereof
against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term "Tenant"
shall include Tenant's employees, agents, contractors and invitees, if
applicable.
Section 5.06. Landlord's Access. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall give
Tenant prior notice of such entry, except in the case of an emergency. Landlord
may place customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX- CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of the
Properly and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord's Broker has provided a Property
information Sheet or other Disclosure Statement regarding the Property, a copy
is attached as an exhibit to the Lease.
Section 6.02. Exemption of Landlord from Liability. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Property or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's gross negligence or willful misconduct.
Section 6.03. Landlord's Obligations. Subject to the provisions of Article
Seven (Damage or Destruction) and Article Eight (Condemnation), and except for
damage caused by any act or ommission of Tenant, or Tenant's employees, agents,
contractors or invitess, Landlord shall keep the foundation, roof and structural
portions of exterior walls of the improvements on the Property in good order,
9
condition and repair. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the surfaces of walls. Landlord shall not
be obligated to make any repairs under this Section 6.03 until a reasonable time
after receipt of a written notice from Tenant of the need for such repairs.
Tenant waives the benefit of any present or future law which might give Tenant
the right to repair the Property at Landlord's expense or to terminate the Lease
because of the condition of the Property.
Section 6.04. Tenant's Obligations.
(a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all
portions of the Property (including structural, nonstructural, interior,
systems and equipment) in good order, condition and repair (including
interior repainting and refinishing, as needed). If any portion of the
Property or any system or equipment in the Property which Tenant is
obligated to repair cannot be fully repaired or restored. Tenant shall
promptly replace such portion of the Properly or system or equipment in the
Property, regardless of whether the benefit of such replacement extends
beyond the Lease Term; but if the benefit or useful life of such
replacement extends beyond the Lease Term (as such term may be extended by
exercise of any options), the useful life of such replacement shall be
prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which is
applicable to the Lease Term (as extended). Tenant shall maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed
heating and air conditioning contractor. Landlord shall have the right,
upon written notice to Tenant, to undertake the responsibility for
preventive maintenance of the heating and air conditioning system at
Tenant's expense. In addition, Tenant shall, at Tenant's expense, repair
any damage to the roof, foundation or structural portions of walls caused
by Tenant's acts or omissions. It is the intention of Landlord and Tenant
that, at all times during the Lease Term, Tenant shall maintain the
Property in an attractive, first-class and fully operative condition.
(b) Tenant shall fulfill all of Tenant's obligations under this
Section 6.04 at Tenant's sole expense. If Tenant fails to maintain, repair
or replace the Property as required by this Section 6.04, Landlord may,
upon ten (10) days' prior notice to Tenant (except that no notice shall be
required in the case of an emergency), enter the Property and perform such
maintenance or repair (including replacement, as needed) on behalf of
Tenant. In such case, Tenant shall reimburse Landlord for all costs
incurred in performing such maintenance or repair immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or improvements
to the Property without Landlord's prior written consent, except for
non-structural alterations which do not exceed Ten Thousand Dollars
($10,000) in cost cumulatively over the Lease Term and which are not
visible from the outside of any building of which the Property is part.
Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord. Tenant shall
promptly remove any alterations, additions, or improvements constructed in
violation of this Paragraph 6.05(a) upon Landlord's written request. All
alterations, additions, and improvements shall be done in a good and
workmanlike manner, in conformity with all applicable laws and regulations,
and by a contractor approved by Landlord. Upon completion of any such work,
Tenant shall provide Landlord with "as built" plans, copies of all
construction contracts, and proof of payment for all labor and materials.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Property. Tenant shall give Landlord at least twenty (20)
days' prior written notice of the commencement of any work on the Property,
regardless of whether Landlord's consent to such work is required. Landlord
may elect to record and post notices of non-responsibility on the Property.
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Section 8.08. Condition upon Termination. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord's consent) prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant's expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove 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
material damage to the Property. Tenant shall repair, at Tenant's expense, any
damage to the 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: any power wiring or power panels; lighting or lighting
fixtures; wall coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; fencing or security gates; or other similar building
operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is
untenantable as a result of such damage or less than fifty percent (50%) of
Tenant's operations are materially impaired) and if the proceeds received
by Landlord from the insurance policies described in Paragraph 4.04(b) are
sufficient to pay for the necessary repairs, this Lease shall remain in
effect and Landlord shall repair the damage as soon as reasonably possible.
Landlord may elect (but is not required) to repair any damage to Tenant's
fixtures, equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not sufficient
to pay the entire cost of repair, or if the cause of the damage is not
covered by the insurance policies which Landlord maintains under Paragraph
4.04(b), 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 the Lease. If Landlord elects to repair
the damage, Tenant shall pay Landlord the "deductible amount" (if any)
under Landlord's insurance policies and, if the damage was 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. If Landlord elects to terminate the Lease, Tenant may
elect to continue this Lease in full force and effect, in which case Tenant
shall repair any damage to the Property and any building in which the
Property is located. Tenant shall pay the cost of such repairs. except that
upon satisfactory completion of such repairs, Landlord shall deliver to
Tenant any insurance proceeds received by Landlord for the damage repaired
by Tenant. Tenant shall give Landl6rd written notice of such election
within ten (10) days after receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six (6)
months of the Lease Term and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate this Lease
as of the date the damage 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 thirty (30)
days after Tenant's notice to Landlord of the occurrence of the damage.
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Section 7.02. Substantial or Total Destruction. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding the preceding
sentence, if the Property can be rebuilt within six (6) months after the date of
destruction, Landlord may elect to rebuild the Property at Landlord's own
expense, in which case this Lease shall remain in full force and effect.
Landlord shall notify Tenant of such election within thirty (30) days after
Tenant's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.
Section 7.03. Temporary Reduction of Rent. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, 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 Property is impaired. However, the 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 or to the Property.
Section 7.04. Waiver. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken either
Landlord or Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the other
within ten (10) days after receipt of written notice of such taking (or in the
absence of such nofice, within ten (10) days after the condemning authority
takes title or possession). It neither Landlord nor Tenant terminates this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order (a) first, to any
ground lessor, mortgages or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to. either terminate this Lease or make
such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. Landlord's Consent Required. No portion of the Property or of
Tenant's interest in this Lease may be acquired by any other person or entity,
whether by sale, assignment, mortgage, sublease, transfer, operation of law, or
act of Tenant, without Landlord's prior written consent, except as provided in
Section 9.02 below. Landlord has the right to grant or withhold its consent as
provided in Section 9.05 below. Any attempted transfer without consent shall be
void and shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent (20%) of the
partnership interests shall require Landlord's consent. If Tenant is a
corporation, any change in the ownership of a controlling interest of the voting
stock of the corporation shall require Landlord's consent.
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Section 9.02. Tenant Affiliate. Tenant may assign this Lease or sublease the
Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all of
Tenant's obligations under this Lease.
Section 9.03. No Release of Tenant. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant's liability under
this Lease.
Section 9.04. Offer to Terminate. If Tenant desires to assign the Lease or
sublease the Property. Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and all the terms
and provisions of the Lease governing termination shall apply. It Landlord does
not so elect, the Lease shall continue in effect until otherwise terminated and
the provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.
Section 9.05. Landlord's Consent.
(a) Tenant's request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer,
including the name, business and financial condition of the prospective
transferee financial details of the proposed transfer (e.g., the. term of
and the rent and security deposit payable under any proposed assignment or
sublease), and any other information Landlord deems relevant. Landlord
shall have the right to withhold consent. It reasonable, or to grant
consent, based on the following factors: (i) the business of the proposed
assignee or subtenant and the proposed use of the Property; (ii) the net
worth and financial reputation of the proposed assignee or subtenant; (iii)
Tenant's compliance with all of its obligations under the Lease; and (iv)
such other factors as Landlord may reasonably deem relevant. If Landlord
objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may nonetheless
sublease (but not assign), all or a portion of the Property to the proposed
transferee, but only on the other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease
the Landlord's Share (stated in Section 1.14) of the Profit
(defined below) on such transaction as and when received by
Tenant, unless Landlord gives written notice to Tenant and the
assignee or subtenant that Landlord's Share shall be paid by the
assignee or subtenant that Landlord's Share shall be paid by the
assignee or subtenant to Landlord directly. The "Profit" means
(A) all amounts paid to Tenant for such assignment or sublease,
including "key" money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other consideration
paid for the assignment or sublease, including fees under any
collateral agreements, less (B) costs and expenses directly
incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate
broker's commissions and costs of renovation or construction of
13
tenant improvements required under such assignment or sublease.
Tenant is entitled to recover such costs and expenses before
Tenant is obligated to pay the Landlord's Share to Landlord. The
Profit in the case of a sublease of less than all the Property is
the rent allocable to the subleased space as a percentage on a
square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the
Property within thirty (30) days after the transaction
documentation is signed, 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. Landlord's receipt of
Landlord's Share shall not be a consent to any further assignment
or subletting. The breach of Tenant's obligation under this
Paragraph 9.05(b) shall be a material default of the Lease.
Section 9.06. No Merger. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner in any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.
Section 10.02. Defaults. Tenant shall be in material default under this
Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section
4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(c) If Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Landlord; provided that if more than thirty (30) days are
required to complete such performance, Tenant shall not be in default if
Tenant commences such performance within the thirty (30) day period and
thereafter diligently pursues its completion. However, Landlord shall not
be required to give such notice if Tenant's failure to perform constitutes
a noncurable breach of this Lease. The notice required by this Paragraph is
intended to satisfy any and all notice requirements imposed by law on
Landlord and is not in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement
for the benefit of creditors; (ii) a petition for adjudication of
bankruptcy or for reorganization or rearrangement is filed by or against
Tenant and is not dismissed within thirty (30) days; (iii) if a trustee or
receiver is appointed to take possession of substantially all of Tenant's
assets located at the Property or of Tenant's interest in this Lease and
possession is not restored to Tenant within thirty (30) days; or (iv) if
substantially all of Tenant's assets located at the Property or of Tenant's
interest in this Lease is subjected to attachment, execution or other
judicial seizure which is not discharged within thirty (30) days. If a
court of competent jurisdiction determines that any of the acts described
in this subparagraph (d) is not a default under this Lease, and a trustee
is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest
hereunder, then Landlord shall receive, as Additional Rent, the excess, if
any, of the rent (or any other consideration) paid in connection with such
assignment or sublease over the rent payable by Tenant under this Lease.
14
(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any
portion of Tenant's obligations under the Lease. Unless otherwise expressly
provided, no guaranty of the Lease is revocable.
Section 10.03. Remedies. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such
event, Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default, including (i) the worth
at the time of the award of the unpaid Base Rent, Additional Rent and other
charges which Landlord had earned at the time of the termination; (ii) the
worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which Landlord would have earned after
termination until the time of the award exceeds the amount of such rental
loss that Tenant proves Landlord could have reasonably avoided; (iii) the
worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which Tenant would have paid for the
balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have 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 the Lease or which in the ordinary course of things would be likely
to result therefrom, including, but not limited to, any costs or expenses
Landlord incurs in maintaining or preserving the Property after such
default, the cost of recovering possession of the Property, expenses of
retailing, including necessary renovation or alteration of the Property,
Landlord's reasonable attorneys' fees incurred in connection therewith, and
any real estate commission paid or payable. As used in subparts (i) and
(ii) above, the "worth at the time of the award" is computed by allowing
interest on unpaid amounts at the rate of fifteen percent (15%) per annum,
or such lesser amount as may then be the maximum lawful rate. As used in
subpart (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award, plus one percent (1%). If Tenant
has abandoned the Property, Landlord shall have the option of (i) retaking
possession of the Property and recovering from Tenant the amount specified
in this Paragraph 10.03(a), or (ii) proceeding under Paragraph 10.03(b);
abandoned the Property. In such event, Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Lease, including
the right to recover the rent as it becomes due;
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Property is
located.
Section 10.04. Repayment of "Free" Rent. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated Rent".
Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition required
by this Lease. Tenant acknowledges that its right to receive credit for the
Abated Rent is absolutely conditioned upon Tenant's full, faithful and punctual
performance of its obligations under this Lease. If Tenant defaults and does not
cure within any applicable grace period, the Abated Rent shall immediately
become due and payable in full and this Lease shall be enforced as if there were
no such rent abatement or other rent concession. In such case Abated Rent shall
be calculated based an the full initial rent payable under this Lease.
15
Section 10.05. Automatic Termination. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate an the occurrence of
any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord's damages for default shall
include all costs and fees, including reasonable attorneys' fees that Landlord
incurs in connection with the filing, commencement, pursuing and/or defending of
any action in any bankruptcy court or other court with respect to the Lease; the
obtaining of relief from any stay in bankruptcy restraining any action to evict
Tenant; or the pursuing of any action with respect to Landlord's right to
possession of the Property. All such damages suffered (apart from Base Rent and
other rent payable hereunder) shall constitute pecuniary damages which must be
reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Tenant in any bankruptcy or other proceeding.
Section l0.06. Cumulative Remedies. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section ll.01. Subordination. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute
such further documents and assurances as such lender may require, provided that
Tenant's obligations under this Lease shall not be increased in any material way
(the performance of ministerial acts shall not be deemed material), and Tenant
shall not be deprived of its rights under this Lease. Tenant's right to quiet
possession of the Property during the Lease Term shall not be disturbed if
Tenant pays the rent and performs all of Tenant's obligations under this Lease
and is not otherwise in default. If any ground lessor, beneficiary or mortgages
elects to have this Lease prior to the lien of its ground lease, deed of trust
or mortgage and gives written notice thereof to Tenant, this Lease shall be
deemed prior to such ground lease, deed of trust or mortgage whether this Lease
is dated prior or subsequent to the date of said ground lease, deed of trust or
mortgage or the date of recording thereof.
Section 11.02. Attornment. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. Signing of Documents. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute,
acknowledged and deliver to Landlord a written statement certifying: (i)
that none of the terms or provisions of this Lease have been changed (or if
they have been changed, stating how they have been changed); (ii) that this
Lease has not been cancelled or terminated; (iii) the last date of payment
of the Base Rent and other charges and the time period covered by such
payment; (iv) that Landlord is not in default under this Lease (or, if
Landlord is claimed to be in default, stating why); and (v) such other
representations or information with respect to Tenant or the Lease as
Landlord may reasonably request or which any prospective purchaser or
encumbrancer of the Property may require. Tenant shall deliver such
statement to Landlord within ten (10) days after Landlord's request.
Landlord may give any such statement by Tenant to any prospective purchaser
or encumbrancer of the Property. Such purchaser or encumbrancer may rely
conclusively upon such statement as true and correct.
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(b) If Tenant does not deliver such statement to Landlord within such
ten (10) day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following facts:
(i) that the terms and provisions of this Lease have not been changed
except as otherwise represented by Landlord; (ii) that this Lease has not
been cancelled or terminated except as otherwise represented by Landlord;
(iii) that not more than one month's Base Rent or other charges have been
paid in advance; and (iv) that Landlord is not in default under the Lease,
in such event, Tenant shall be stopped from denying the truth of such
facts.
Section 11.05. Tenant's Financial Condition. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verity the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall reimburse
the other party (the "Nondefaulting Party") upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the Provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor judgment is entered, a reasonable sum as attorneys' fees and costs.
The losing party in such action shall Pay such attorneys' fees and costs. Tenant
shall also indemnity Landlord against and hold Landlord harmless from all costs,
expenses, demands and liability Landlord may incur if Landlord becomes or is
made a party to any claim or action (a) instituted by Tenant against any third
party, or by any third party against Tenant, or by or against any person holding
any interest under or using the Property by license of or agreement with Tenant;
(b) for foreclosure of any lien for labor or material furnished to or for Tenant
or such other person; (c) otherwise arising out of or resulting from any act or
transaction of Tenant or such other Person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of The United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant's expense with
counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant
shall reimburse Landlord for any legal fees or costs Landlord incurs in any such
claim or action.
Section 12.02. Landlord's Consent. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant Promises, and it is a condition
to the continuance of this Lease, that there will be no 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 Property or any portion thereof.
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Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the
leasehold estate under a ground lease of the Property or Project at the
time in question. Each Landlord is obligated to perform the obligations of
Landlord under this Lease only during the time such Landlord owns such
interest or title. Any Landlord who transfers its title or interest is
relieved of all liability with respect to the obligations of Landlord under
this Lease to be performed on or after the date of transfer. However, each
Landlord shall deliver to its transferee all funds that Tenant previously
paid if such funds have not yet been applied under the terms of this Lease.
(b) 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 Property whose name and address have been furnished to Tenant in
writing. Landlord shall not be in default under this Lease unless Landlord
(or such ground lessor. mortgagee or beneficiary) fails to cure such
non-performance within thirty (30) days after receipt of Tenant's notice.
However, if such non-performance reasonably requires more than thirty (30)
days to cure, Landlord shall not be in default if such cure is commenced
within such thirty (30) day period and thereafter diligently pursued to
completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations
under this Lease is limited to Landlord's interest in the Property and the
Project, and neither the Landlord nor its partners, shareholders, officers
or other principals shall have any personal liability under this Lease.
Section 13.03. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.04. Interpretation. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors of others using the Property with Tenant's expressed or
implied permission.
Section 13.05 Incorporation of Prior Agreements; Modifications. This Lease
is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any Other attempted amendment
shall be void.
Section 13.06 Notices. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid. Notices to Tenant shall be delivered
to the address specified in Section 1.03 above, except that upon Tenant's taking
possession of the Property, the Property shall be Tenant's address for notice
purposes. Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery. Either party
may change its notice address upon written notice to the other party.
Section 13.07 Waivers. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other Provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement
Section 13.08. No Recordation. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form", memorandum of this lease executed by both parties
be recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
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Section l3.10. Corporate Authority; Partnership Authority. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. Joint and Several Liability. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
Section 13.12 Force Majeurs. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.13. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. Survival. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by and delivered to
both Landlord and Tenant. Landlord shall pay a real estate commission to
Landlord's Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord's Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord's Broker in
this transaction. Landlord shall pay Landlord's Broker a commission if Tenant
exercises any option to extend the Lease Term or to buy the Property, or any
similar option or right which Landlord may grant to Tenant, or if Landlord's
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord's Broker's commission schedule in effect as of the
execution of this Lease. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to Tenant's
Broker it so provided in any agreement between Landlord's Broker and Tenant's
Broker. Nothing contained in this Lease shall impose any obligation on Landlord
to pay a commission or fee to any party other than Landlord's Broker.
Section 14.02. Protection of Brokers. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord's Broker.
Section 14.03. Broker's Disclosure of Agency. Landlord's Broker hereby
discloses to Landlord and Tenant and Landlord and Tenant hereby consent to
Landlord's Broker acting in this transaction as the agent of (check one):
__ Landlord exclusively; or
__ both Landlord and Tenant.
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Section 14.04. No Other Brokers. Tenant represents and warrants to Landlord
that the brokers named in Section 1.08 above are the only agents, brokers,
finders or other parties with whom Tenant has dealt who are or may be entitled
to any commission or fee with respect to this Lease or the Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO
OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED. PLEASE
DRAW A LINE THROUGH THE SPACE BELOW.
Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on June 22, 1999 /s/ Xxxxxx Xxxxxxxx
at_________________________
By:
Its:
By:
Its:
"TENANT"
Signed on June 22, 1999 Online Investors Advantage
at /s/ Xxxxxx Xxxxxx
By:
Its:
By:
Its:
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION OF
THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS
INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA
CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS, INC. ITS LEGAL
COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR AGENTS, AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEOUENCES OF THIS LEASE OR OF
THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE THEM
ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.
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