1
EXHIBIT 10.14
LEASE
between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
and
SKECHERS U.S.A., INC.
2
TABLE OF CONTENTS
Page
----
1. Parties............................................................................................1
2. Premises...........................................................................................1
3. Term...............................................................................................1
3.1 Term.........................................................................................1
3.2 Delay in Possession..........................................................................1
3.3 Early Possession.............................................................................1
4. Base Rent..........................................................................................2
5. Security Deposit...................................................................................2
6. Use................................................................................................2
6.1 Use..........................................................................................2
6.2 Compliance with Law..........................................................................2
6.3 Condition of Premises........................................................................3
7. Maintenance, Repairs and Alterations...............................................................3
7.1 Lessee's Obligations.........................................................................3
7.2 Surrender....................................................................................4
7.3 Lessor's Rights..............................................................................4
7.4 Lessor's Obligations.........................................................................4
7.5 Alterations and Additions....................................................................5
8. Insurance; Indemnity...............................................................................9
9. Damage or Destruction.............................................................................13
9.1 Definitions.................................................................................13
9.2 Partial Damage - Insured Loss...............................................................13
9.3 Partial Damage - Uninsured Loss.............................................................14
9.4 Total Destruction...........................................................................14
9.5 Damage Near End of Term.....................................................................14
9.6 Abatement of Rent; Lessee's Remedies........................................................15
9.7 Termination - Advance Payments..............................................................15
9.8 Waiver......................................................................................16
-i-
3
9.9 Causeway......................................................................................16
10. Real Property Taxes...............................................................................16
10.1 Payment of Taxes............................................................................16
10.2 Definition of "Real Property Tax"...........................................................16
10.3 Joint Assessment............................................................................17
10.4 Additional Provisions Regarding Real Property Taxes.........................................17
10.5 Personal Property Taxes.....................................................................17
11. Utilities.........................................................................................17
12. Assignment and Subletting.........................................................................18
12.1 Lessor's Consent Required...................................................................18
12.2 Procedure...................................................................................18
12.3 Lessees Other Than Individuals..............................................................19
12.4 Lessee Affiliate............................................................................19
12.5 No Release of Lessee........................................................................20
12.6 Assignment to Lessor........................................................................20
12.7 Attorney's Fees.............................................................................21
13. Defaults; Remedies................................................................................21
13.1 Defaults....................................................................................21
13.2 Remedies....................................................................................22
13.3 Default by Lessor...........................................................................24
13.4 Late Charges................................................................................24
13.5 Impounds....................................................................................24
14. Condemnation......................................................................................25
15. Broker's Commissions..............................................................................26
16. Estoppel Certificate..............................................................................26
17. Lessor's Liability................................................................................27
18. Severability......................................................................................27
19. Interest on Past-due Obligations..................................................................27
20. Time of Essence...................................................................................27
-ii-
4
21. Additional Rent...................................................................................27
22. Incorporation of Prior Agreements; Amendments.....................................................27
23. Notices...........................................................................................28
24. Waivers...........................................................................................29
25. No Recording......................................................................................29
26. Holding Over......................................................................................29
27. Cumulative Remedies...............................................................................29
28. Covenants and Conditions..........................................................................29
29. Binding Effect; Choice of Law.....................................................................29
30. Subordination; Attornment; Non-Disturbance........................................................30
30.1 Subordination...............................................................................30
30.2 Attornment..................................................................................30
30.3 Non-Disturbance.............................................................................30
30.4 Self-Executing..............................................................................30
31. Attorney's Fees...................................................................................31
32. Lessor's Access...................................................................................31
33. Auctions..........................................................................................31
34. Signs.............................................................................................31
35. Merger............................................................................................32
36. Consents..........................................................................................32
37. Guarantor.........................................................................................32
38. Quiet Possession..................................................................................32
-iii-
5
39. Options...........................................................................................32
39.1 Definition.................................................................................32
39.2 Options Personal; Multiple Options.........................................................32
39.3 First Option...............................................................................33
39.4 Second Option..............................................................................33
39.5 Fair Market Rent...........................................................................34
39.6 C.P.I. Adjusted Option Rent................................................................36
39.7 Effect of Default on Options...............................................................37
40. Industrial Park Building..........................................................................38
41. Security Measures.................................................................................38
42. Easements.........................................................................................39
43. Performance Under Protest.........................................................................39
44. Authority.........................................................................................39
45. Cashiers Checks...................................................................................39
46. Amendments to Lease...............................................................................39
47. Storage Tanks.....................................................................................40
48. Lessee's Covenants Regarding Hazardous Materials..................................................40
48.1 Lessor's Prior Consent......................................................................40
48.2 Compliance with Hazardous Materials Laws....................................................41
48.3 Hazardous Materials Removal.................................................................41
48.4 Notices.....................................................................................42
48.5 Indemnification of Lessor...................................................................42
49. The Causeway Improvements.........................................................................42
50. Relationship to Other Lease.......................................................................44
51. L.A. Gear.........................................................................................44
52. Existing Sublease.................................................................................45
-iv-
6
Exhibit "A" Premises (Paragraph 2)
-v-
7
LEASE
1. Parties. This Lease, dated, for reference purposes only, November 21,
1997, is made by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation (herein called "Lessor") and SKECHER'S U.S.A., INC. (herein
called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of San Bernardino, State of
California, commonly known as 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
consisting of a 127,799 square foot building (including a portion of the
Causeway (as defined below)) and adjacent land and more particularly delineated
on Exhibit "A" attached hereto and by this reference incorporated herein. Said
real property including the land and all improvements therein, is herein called
the "Premises."
3. Term.
3.1 Term. The term of this Lease shall be for five (5) years commencing
on December 1, 1997 and ending on November 30, 2002, unless sooner terminated
pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, but in such case, Lessee shall not be obligated to
pay rent until possession of the Premises is tendered to Lessee; provided,
however, that if Lessor shall not have delivered possession of the Premises
within sixty (60) days from said commencement date, Lessee may, at Lessee's
option, by notice in writing to Lessor within ten (10) days thereafter, cancel
this Lease, in which event the parties shall be discharged from all obligations
hereunder provided further, however, that if such written notice of Lessee is
not received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease hereunder shall terminate and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay rent
for such period at the initial monthly rates set forth below.
-1-
8
4. Base Rent. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of $36,423.00 ("Base Rent"), in advance, on the first day of each month
of the term hereof. Lessee shall pay Lessor upon the execution hereof $36,423.00
as rent for December 1997. Rent for any period during the term hereof which is
for less than one month shall be a pro rata portion of the monthly installment.
Rent shall be payable in lawful money of the United States to Lessor at the
address stated herein or to such other persons or at such other places as Lessor
may designate in writing, without any offset or deduction.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
$72,846.00 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be material breach of this Lease. If the monthly rent shall, from
time to time, increase during the term of this Lease, Lessee shall thereupon
deposit with Lessor additional security deposit so that the amount of security
deposit held by Lessor shall at all times bear the same proportion to current
Base Rent as the original security deposit bears to the original monthly rent
set forth in Paragraph 4 hereof. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied, subject to the other
terms of this Lease, only for warehousing and distribution in any customary
manner permitted by applicable law and for no other purpose.
6.2 Compliance with Law. Lessee shall, at Lessee's expense, comply
promptly with all applicable statutes, ordinances, rules, regulations, orders,
covenants and restrictions of record, and requirements in effect during the term
or any part of the term hereof, relating in any manner to the Premises and the
occupation and use by Lessee of the Premises. Lessee shall not use nor permit
the use of the Premises in any manner
-2-
9
that will tend to create waste or a nuisance or, if there shall be more than one
tenant in the building containing the Premises, shall tend to disturb such other
tenants.
6.3 Condition of Premises. Lessee hereby accepts the Premises in their
"as is" condition existing as of the Lease commencement date or the date that
Lessee takes possession of the Premises, whichever is earlier, subject to all
applicable zoning, municipal county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and any covenants or
restrictions or easements of record, and accepts this Lease subject thereto and
to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessee's Obligations.
(a) Except to the extent of Lessor's obligations under Paragraph
7.4, below, Lessee shall keep in good order, condition and repair the interior
of the Premises and every structural or nonstructural part thereof (whether or
not such portion of the Premises requiring repair, or the means of repairing the
same are reasonably or readily accessible to Lessee, and whether or not the need
for such repairs occurs as a result of Lessee's use, any prior use, the elements
or the age of such portion of the Premises) including, without limiting the
generality of the foregoing, all plumbing, heating and air conditioning (Lessee
shall procure and maintain, at Lessee's expense, an air conditioning system
maintenance contract) ventilating, electrical, lighting facilities and equipment
within the Premises, fixtures, walls (interior and exterior), ceilings, roofs
(interior), floors, windows, doors, plate glass and skylights located within the
Premises, and all driveways, parking lots, fences and signs located on the
Premises and sidewalks and parkways adjacent to the Premises.
(b) Lessee shall maintain the Premises as provided in Paragraph
7.1(a) and in accordance with the requirements of any covenants or restrictions
as may from time to time be applicable to the Premises. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices and any damage or deterioration shall not be deemed
"ordinary wear and tear" if the same could have been prevented by good
maintenance practice. Lessee's obligations shall include restorations,
replacements or renewals when necessary and when determined not to be due to
ordinary wear and tear, in order to keep the Premises and all improvements
thereon or a part thereof in good order, condition and state of repair.
Notwithstanding anything contained in the Lease to the contrary, Lessee shall
make all repairs whatsoever on the Premises necessitated by the negligence,
misconduct or fault of Lessee, or its agents, licensees or agents.
-3-
10
7.2 Surrender. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, furnishings and equipment (including without
limitation the following components of Lessee's material handling system:
racking, conveyors, mezzanine and related utilities (collectively, "Lessee's
Systems")). Notwithstanding anything to the contrary otherwise stated in this
Lease, upon termination of this Lease, (a) Lessee shall remove from the Premises
Lessee's Systems, and (b) Lessee shall leave the air lines, power panels,
electrical distribution systems, mechanical systems, lighting fixtures, air
conditioning, plumbing, heating (including space heaters) and fencing on the
Premises (other than Lessee's Systems, which shall be removed from the Premises
as provided above) in good condition and operating order, and Lessee shall upon
demand pay to Lessor that portion of the cost to restore such items to good
condition and operating order as may be reasonably allocable to Lessee's
tenancy.
7.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations
under this Paragraph 7, or under any other paragraph of this Lease, Lessor may
at its option (but shall, not be required to) enter upon the Premises after ten
(10) days' prior written notice to Lessee (except in the case of an emergency,
in which case no notice shall be required), perform such obligations on Lessee's
behalf and put the same in good order, condition and repair, and the cost
thereof together with interest thereon at the maximum rate then allowable by law
shall become due and payable as additional rental to Lessor together with
Lessee's next rental installment.
7.4 Lessor's Obligations.
(a) Except for the obligations of Lessor under Paragraph 9
(relating to destruction of the Premises), under Paragraph 14 (relating to
condemnation of the Premises) and Paragraph 7.4(b), it is intended by the
parties hereto that Lessor have no obligation, in any manner whatsoever, to
repair and maintain the Premises nor the building located thereon nor the
equipment therein, whether structural or non structural, all of which
obligations are intended to be that of the Lessee under Paragraph 7.1 hereof.
Lessee expressly waives the benefit of any statute now or hereinafter in effect
which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Premises in good order, condition and repair.
(b) Lessor shall replace the roof (exterior only) as necessary and
maintain and repair the structural components of the perimeter wall of the
Premises, subject to normal wear and tear, provided the need for such
replacement, maintenance
-4-
11
or repair does not arise because of the negligence, misconduct or fault of
Lessee, or its agents, licensees or invitees.
7.5 Alterations and Additions.
(a) Lessee shall not without Lessor's prior written consent make
any alterations, improvements, additions, or Utility Installations in, on or
about the Premises, except for nonstructural alterations not exceeding $10,000
in cumulative costs during any 12-month period (the "Threshold Amount"). In any
event, whether or not in excess of the Threshold Amount, Lessee shall make no
change or alteration to the exterior of the Premises nor the exterior of the
building(s) on the Premises without Lessor's prior written consent. As used in
Paragraph 7.5, the term "Utility Installation" shall mean carpeting, window
coverings, air lines, power panels, electrical distribution systems, lighting
fixtures, space heaters, air conditioning, plumbing and fencing. Lessor may
require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such improvements, to insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work. Lessor's consent shall
not be required for reconfiguration, relocation or modification to the racking
and material handling system, including electrical work related thereto;
provided none of such work is structural and all of such work is in the interior
of the building on the Premises.
(b) Any alterations, improvements, additions, or Utility
Installations made by Lessee during the term of this Lease shall be done in a
good and workmanlike manner and of good and sufficient materials, and Lessee
shall, within thirty (30) days after completion of such alteration,
improvements, addition or Utility Installation, provide Lessor with as-built
plans and specifications for same. Notwithstanding anything contained in this
Lease to the contrary, Paragraphs 7.5(d)(1)(ii) and (iii) shall apply to
non-structural alterations, improvements, additions or Utility Installations
(other than racking, shelving and temporary partitions) not exceeding the
Threshold Amount.
(c) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to make and
which require the consent of the Lessor shall be presented to Lessor in written
form, with proposed detailed plans. If Lessor shall give its consent, the
consent shall be conditioned upon satisfaction of all of the requirements set
forth in Paragraph 7.5(d), below.
(d) For any additions, alterations, improvements, or Utility
Installations requiring Lessor's prior written consent:
-5-
12
(1) Lessee shall:
(i) Request Lessor's approval in writing at least
thirty (30) days prior to proposed construction.
(ii) Employ a California licensed architect contractor
and structural engineer in connection with the proposed construction.
(iii) Be fully responsible for the acts of Lessee's
consultants, employees, contractors, subcontractors, invitees and agents,
and cause them to fully comply with any applicable terms of this Lease and
documents referred to by this Lease and all applicable laws, rules and
regulations.
(iv) Cause to be obtained an applicable building permit
for any and all construction and modifications, and construct the
additions and alterations and perform the construction work in accordance
with all applicable laws, including without limitation the Americans With
Disabilities Act.
(2) Lessee's architect shall:
(i) Be licensed by the State of California.
(ii) Design and specify within the parameters of the
building work letter and approved building specifications or have received
specific written exceptions from the Lessor.
(iii) Secure Lessor's written approval before submitting
plans to the general contractor for bidding or to governmental agencies
for approval.
(iv) Secure Lessor's written approval of any changes or
alternates to the plans recommended by the general contractor or required
by governmental agencies.
(v) Submit a copy of the final application for permit
and issued permit to Lessor.
(vi) Incorporate the building standard details supplied
by Lessor onto the drawings.
(vii) Submit final plans for Lessor's written approval
prior to construction.
-6-
13
(viii) Be available for final inspection with Lessor at
job completion.
(ix) Secure Lessor's written approval of details of any
changes in specifications or finishes during construction.
(x) Provide samples and specifications as required by
Lessor.
(xi) Sign off on the as-built drawings as the
Architect's certification that the improvements have, in fact, been built
as per the Architect's design.
(3) Lessee's general contractor and/or subcontractors shall:
(i) Be licensed by the State of California.
(ii) Have substantial experience providing similar
quality and quantity of improvements. Work history shall be provided to
Lessor prior to being awarded contract.
(iii) Have a bonding capacity equal to or exceeding the
valuation of the job. Lessor may, at its sole option, require the job to
be bonded.
(iv) Maintain in full force and effect, throughout the
duration of its performance under the contract with the Lessee, a Worker's
Compensation insurance policy and a Commercial General Liability insurance
policy issued by an insurer satisfactory to Lessor with liability coverage
of not less than $1,000,000.00 for personal injury and $500,000.00 to
cover property damage. The Commercial General Liability insurance policy
shall include assumption of contractual liability. Certificates of
insurance containing a thirty (30) day cancellation clause shall be
furnished to Lessor prior to commencement of performance under the
construction contract naming Lessor (The Prudential Insurance Company of
America) and its managing agent as additional insureds.
(v) Provide a construction schedule to Lessor prior to
commencement of work and weekly written progress reports.
(vi) Warrant the Contractor's work and that of the
Contractor's subcontractors, for a minimum of one (1) year.
-7-
14
(vii) Provide Lessor with as-built drawings of all
improvements.
(e) All approvals by Lessor, as provided for in this Paragraph
7.5, shall not be unreasonably withheld. All requests to be submitted to Lessor
shall be submitted through Lessor's managing agent. If Lessor shall give its
consent, the consent shall be deemed conditioned upon the compliance by Lessee
in a prompt and expeditious manner of all conditions of all permits obtained
pursuant to Paragraph 7.5(d), above.
(f) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than thirty (30) days' notice prior to the commencement of
any work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall in
good faith, contest the validity of any such lien, claim or demand, then Lessee
shall at its sole expense defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises, upon the condition
that if Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or demand
indemnifying Lessor against liability for the same and holding the Premises free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is in its best interest to do so; provided Lessor agrees that
Lessee shall not be obligated to pay such fees pursuant to this sentence with
respect to any period in which both (a) Lessee has provided the surety bond
required above, and (b) Lessor has not been named in such action.
(g) Unless otherwise agreed in writing, Lessor may require that
any or all alterations, improvements, additions or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor, and that the Premises
be restored to their prior condition. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, Lessor may require that Lessee remove any or all of the same.
(h) Unless Lessor requires their removal, as set forth in
Paragraph 7.5(g), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall become the
property of Lessor and remain upon
-8-
15
and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.5(h), Lessee's machinery and
equipment other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2.
8. Insurance: Indemnity.
(a) Lessee hereby agrees to indemnify, defend and hold harmless
Lessor, its successors, assigns, subsidiaries, directors, officers, agents and
employees from and against any and all damage, loss, liability or expense
including, but not limited to, attorney's fees and legal costs suffered by same
directly or by reason of any claim, suit or judgment brought by or in favor of
any person or persons for damage, loss or expense due to, but not limited to,
bodily injury, including death resulting anytime therefrom and property damage
sustained by such person or persons which arises out of, is occasioned by or in
any way attributable to the use or occupancy of the Premises by the Lessee, the
acts or omission of the Lessee, its agents, employees or any other contractors
brought onto said Premises by the Lessee, or any breach or default in the
performance of any obligation on Lessee's part to be performed under the terms
of this Lease, except to the extent caused by the sole gross negligence or
willful misconduct of Lessor, its employees, and agents. If any action or
proceeding is brought against Lessor by reason of any such claim, Lessee, upon
notice from Lessor, shall defend same at Lessee's expense by counsel
satisfactory to Lessor. Such loss or damage shall include, but not be limited
to, any injury or damage to Lessor's personnel (including death resulting
anytime therefrom) on the Premises. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant if any, of the building or
industrial park in which the Premises are located. Lessee agrees that the
obligations assumed herein shall survive the termination of this Lease.
(b) Lessee hereby agrees to maintain in full force and effect at
all times during the term of this Lease, at Lessee's own expense, for the
protection of Lessee, Lessor and Lessor's property manager, as their interest
may appear, policies of insurance issued by a responsible carrier or carriers to
Lessor which afford the following coverages:
(i) Workers' Compensation with statutory limits.
(ii) Employers' Liability insurance with the following
minimum limits:
Bodily injury by disease per person $1,000,000
Bodily injury by accident policy limit $1,000,000
Bodily injury by disease policy limit $1,000,000
-9-
16
(iii) Property insurance on a special causes of loss
insurance form covering any and all personal property of Lessee including
but not limited to improvements, betterments, furniture, fixtures, Utility
Installations, and equipment in an amount not less than their full
replacement cost, with a deductible not to exceed $10,000. This policy
should contain a waiver of subrogation.
(iv) Commercial General Liability Insurance including
Broad Form Property Damage and Contractual Liability with the following
minimum limits:
General Aggregate $2,000,000
Products/Completed Operations Aggregate $2,000,000
Each Occurrence $1,000,000
Personal & Advertising Injury $1,000,000
Medical Payments $5,000 per
person
(v) Umbrella/Excess Liability on a following form
basis with the following minimum limits:
General Aggregate $10,000,000
Each Occurrence $10,000,000
The limits of said insurance in this Paragraph 8(b)(i) shall not
however, limit the liability of Lessee hereunder.
(c) If Lessor is providing property insurance on the Premises,
then Lessor shall, at all times during the term of this Lease, maintain the
following insurance:
(i) a policy or policies of all-risk property
insurance, issued by and binding upon some solvent insurance company,
insuring for the full replacement cost of the building on the Premises.
Lessor shall not be obligated to insure, and shall not assume any
liability or risk of loss for, any of Lessee's furniture, equipment,
machinery, goods, supplies, utility installations, improvements, or
alterations upon the Premises. This policy shall contain an agreed amount
endorsement and be written with no coinsurance. Lessor may, but shall not
be obligated to, obtain earthquake and flood insurance.
(ii) Rent insurance on an all-risk basis in an amount
equal to all that is called for under Paragraph 4 of this Lease (Base Rent
and any
-10-
17
additional rents payable under this Lease including tax and insurance
costs) for a period of at least twelve (12) months commencing with the
date of loss.
(iii) Boiler and machinery insurance in an amount
satisfactory to Lessor on a comprehensive coverage form.
Lessor may elect to have reasonable deductibles in connection with the insurance
specified in Paragraph 8(c), and Lessee shall be liable for such deductible
amount.
(d) The Lessee shall deliver to Lessor at least thirty (30) days
prior to the time such insurance is first required to be carried by Lessee, and
thereafter at least thirty (30) days prior to expiration of such policy,
certificates of insurance evidencing the above coverage with limits not less
than those specified above. Insurance required hereunder shall be in companies
holding a "General Policyholders Rating" of at least A-VIII as set forth in the
most current issue of "A.M. Best's Insurance Guide". Such Certificates with the
exception of Worker's Compensation shall name Lessor, its subsidiaries,
directors, agents and employees, and its property manager as additional insureds
and shall expressly provide that the interest of same herein shall not be
affected by a breach by Lessee of any insurance 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
to Lessor in the event of material alteration to or cancellation of the coverage
evidenced by such Certificates.
(e) Upon demand Lessee shall provide Lessor, at Lessee's expense,
with such increased amount of existing insurance and such other insurance
coverage in such limits as Lessor may require in its sole judgement to afford
Lessor adequate protection.
(f) If, on account of the failure of Lessee to comply with the
foregoing provisions, Lessor is adjudged a co-insurer by the insurance carrier,
then any loss or damage Lessor shall sustain by reason thereof shall be borne by
Lessee and shall be immediately paid by Lessee upon receipt of xxxx thereof and
evidence of such loss.
(g) Lessor makes no representation that the limits of liability
specified to be carried by Lessee under the term of this Lease are adequate to
protect Lessee against Lessee's undertaking under this Paragraph 8 and in the
event Lessee believes that any such insurance coverage called for under this
Lease is insufficient, Lessee shall provide, at its own expense, such additional
insurance as Lessee deems adequate.
(h) Anything in this Lease to the contrary notwithstanding, Lessor
and Lessee hereby waive and release each other of and from any and all rights of
-11-
18
recovery, claims, action or cause of action, against each other, their agents,
officers and employees, for any loss or damage that may occur to the Premises,
improvements to the building of which the Premises are a part, personal property
(building contents) within the building on the Premises, any furniture,
equipment, machinery, goods or supplies not covered by this Lease which Lessee
may bring or obtain upon the Premises or any additional improvements which
Lessee may construct on the Premises, by reason of fire, the elements or any
other cause which could be insured against under the terms of all risk property
insurance policies, regardless of cause or origin, including negligence of
Lessor or Lessee and their agents, officers and employees. Because this
Paragraph will preclude the assignment of any claim mentioned in it by way of
subrogation (or otherwise) to an insurance company (or any other person) each
party to this Lease agrees immediately to give to each insurance company,
written notice of the terms of the mutual waivers contained in this Paragraph,
and to have the insurance policies properly endorsed if necessary to prevent the
invalidation of the insurance coverages by reason of the mutual waivers
contained in this Paragraph. Lessee also waives and releases Lessor, its agents,
officers and employees of and from any and all rights of recovery, claim, action
or cause of action for any loss or damage insured against under any other
policies of insurance carried by Lessee.
(i) Lessee shall pay to Lessor during the term hereof, additional
rent in the amount of any premiums for the insurance obtained under Paragraphs
8(c)(i), 8(c)(ii), and 8(c)(iii) and any other insurance which Lessor or
Lessor's lender deems necessary for the Premises and the amount of any
deductibles paid by Lessor under such policies. If Lessor elects to self-insure
or includes the Premises under blanket insurance policies covering multiple
properties, then Lessee's reimbursement obligation hereunder shall include the
portion of the reasonable cost of such self-insurance or blanket insurance that
is allocated to the Premises. Lessee shall pay any such premiums to Lessor
within thirty (30) days after receipt by Lessee of a copy of the premiums
statement or other evidence of the amount due. If the insurance policies
maintained hereunder cover other improvements in addition to the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such premiums
attributable to the Premises and showing in reasonable detail the manner in
which such amount was computed. If the term of this Lease shall not expire
concurrently with the expiration of the period covered by such insurance,
Lessee's liability for premiums shall be prorated on an annual basis.
(j) Lessor may also maintain commercial general liability
insurance in addition to, and not in lieu of, the commercial general liability
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein. If Lessor maintains such insurance, Lessee shall pay
to Lessor during the term of this Lease additional rent in the amount of any
premiums for such insurance in the same manner as provided in Paragraph 8(i).
All insurance to be carried by Lessee shall be
-12-
19
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.
(k) Lessor shall not be liable for injury or damage to the person
or goods, wares, merchandise or other property of Lessee, Lessee's employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether said injury
or damage results from conditions arising upon the Premises or upon other
portions of the building of which the Premises are a part, from other sources or
places, and regardless of whether the cause of such damage or injury or the
means of repairing the same is accessible or not. Lessor shall not be liable for
any damages arising from any act or neglect of any other tenant or Lessor or the
failure by Lessor to enforce the provisions of any other lease in the Industrial
Center. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less than
50% of the then replacement cost of the Premises. "Premises Building Partial
Damage" shall herein mean damage or destruction to the building of which the
Premises are a part to the extent that the cost of repair is less than 50% of
the then replacement cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or more
of the then replacement cost of the Premises. "Premises Building Total
Destruction" shall herein mean damage or destruction to the building of which
the Premises are a part to the extent that the cost of repair is 50% or more of
the then replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which
was caused by an event required to be covered by the insurance described in
Paragraph 8.
9.2 Partial Damage - Insured Loss. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there
is damage
-13-
20
which is an Insured Loss and which falls into the classification of Premises
Partial Damage or Premises Building Partial Damage, then Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements unless the same have become a part of the Premises pursuant
to Paragraph 7.5 hereof as soon as reasonably possible and this Lease shall
continue in full force and effect. Notwithstanding the above, if the insurance
proceeds received by Lessor are not sufficient to effect such repair, Lessor
shall give notice to Lessee of the amount required in addition to the proceeds
to effect such repair. Lessee shall contribute the required amount to Lessor
within ten days after Lessee has received notice from Lessor of the shortage in
the insurance. When Lessee shall contribute such amount to Lessor, Lessor shall
make such repairs as soon as reasonably possible and this Lease shall continue
in full force and effect. Lessee shall in no event have any right to
reimbursement for any such amounts so contributed.
9.3 Partial Damage - Uninsured Loss. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there
is damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused by
a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may at Lessor's option either (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect or (ii) give written notice
to Lessee within thirty (30) days after the date of the occurrence of such
damage of Lessor's intention to cancel and terminate this Lease, as of the date
of the occurrence of such damage. In the event Lessor elects to give such notice
of Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within thirty (30) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be canceled and terminated as of the date of the
occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction required
by any authorized public authority), which falls into the classification of
Premises Total Destruction or Premises Building Total Destruction, this Lease
shall automatically terminate as of the date of such total destruction.
9.5 Damage Near End of Term.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an Insured Loss, which falls within the
classification of the Premises Partial Damage, Lessor may at Lessor's option
cancel and terminate this
-14-
21
Lease as of the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within 30 days after the date of occurrence
of such damage.
(b) Notwithstanding Paragraph 9.5(a) in the event that Lessee has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than 20 days after the occurrence of an
Insured Loss falling with the classification of Premises Partial Damage during
the last six months of the term of this Lease. If Lessee duly exercises such
option during said 20 day period, Lessor shall, at Lessor's expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect, provided Lessee first deposits with Lessor any shortfall in
necessary funds. If Lessee fails to exercise such option during said 20 day
period, then Lessor may at Lessor's option terminate and cancel this Lease as of
the expiration of said 20 day period by giving written notice to Lessee of
Lessor's election to do so within 10 days after the expiration of said 20 day
period, notwithstanding any term or provision in the grant of option to the
contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraphs 9.2, 9.3 or 9.5
and Lessor or Lessee repairs or restores the Premises pursuant to the provisions
of Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
-15-
22
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
9.9 Causeway. Notwithstanding anything to the contrary in this Lease,
Lessor shall have no obligation to repair, restore or reconstruct any portion of
the Causeway.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessee shall pay the real property tax, as defined
in Paragraph 10.2, applicable to the Premises during the term of this Lease. All
such payments shall be made at least ten (10) days prior to the delinquency date
of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes paid by Lessee shall cover any
period of time prior to or after the expiration of the term hereof, Lessee's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent installment
together with interest at the maximum rate then allowable by law.
10.2 Definition of "Real Property Tax". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Premises by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (a) in substitution of,
partially or totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of "real property tax," or (b) the nature of
which was hereinbefore included within the definition of "real property tax," or
(c) which is imposed for a service or right not charged prior to June 1, 1978,
or, if previously charged, has been increased since June 1, 1978, or (d) which
is imposed as a result of a transfer, either partial or total, of Lessor's
interest in the Premises or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such transfer,
or (e) which is imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof.
-16-
23
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 Additional Provisions Regarding Real Property Taxes. Lessor shall
have the option to pay the real property taxes, and in such case, Lessee shall,
as additional rent for the Premises, pay for cost of all real property taxes
paid hereunder. If Lessor pays the real property taxes, Lessee shall, within ten
(10) days following demand by Lessor, reimburse Lessor for the cost of the real
property taxes so paid. Lessor shall have the right to contest or appeal any
real property taxes or assessments applicable to the Premises and to seek a
reduction in the assessed valuation of the Premises (collectively, "Tax
Contests"). Any refund of real property taxes resulting from any such Tax
Contest shall be applied first to reimburse Lessor for its costs and expenses in
connection with the Tax Contest (including, without limitation attorneys' fees
and the costs of consultants) (collectively, the "Tax Contest Costs") and then,
out of and to the extent of the balance of such refund, Lessor shall reimburse
to Lessee the portion of such reduction attributable to the Premises and the
term of this Lease, if previously paid by Lessee. Lessor shall equitably
allocate the Tax Contest Costs between those years covered by the Tax Contest
that are outside of the term of this Lease and those years covered by the Tax
Contest that are within the term of this Lease.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within 10 days after receipt of a written statement setting forth the
taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of
all charges jointly metered with other premises.
-17-
24
12. Assignment and Subletting.
12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a noncurable
breach of this Lease, without the need for notice to Lessee under Paragraph
13.1.
12.2 Procedure. If at any time or from time to time during the term of
this Lease, Lessee desires to assign or sublet all or any part of Lessee's
interest in this Lease or in the Premises, Lessee shall give prior written
notice to Lessor setting forth the terms of the proposed assignment or
subletting and the space so proposed to be assigned or sublet. Lessor shall have
the option, exercisable by notice given to Lessee within twenty (20) days after
Lessee's notice is given, either to sublet from Lessee such space at the rental
and other terms set forth in Lessee's notice, or if the proposed subletting is
for the entire Premises for the balance of the term of the Lease, to terminate
this Lease. If Lessor does not exercise such option and Lessor grants its
consent to the proposed assignment or sublease as provided in Paragraph 12.1,
Lessee shall be free to assign or sublet such space to any third party. Such
assignment or sublease shall be subject to, without limitation, all the
conditions in Paragraph 12 and the following conditions:
(a) The assignment or sublease shall be on the terms set forth in
the notice given to Lessor. Any subsequent changes or modifications will require
Lessor's prior written consent
(b) Lessee acknowledges that Lessor's agreement to lease these
Premises to Lessee at the rent and terms stated herein is made in material
reliance upon Lessor's evaluation of this particular Lessee's background,
experience and ability, as well as the nature of the use of the Premises by this
Lessee as set forth in Paragraph 6. In the event that Lessee shall request
Lessor's written consent to assign or sublease the Premises as required in
Paragraphs 12.1 and 12.2 hereof, then each such request for consent shall be
accompanied by the following:
(i) Financial statements of the proposed assignee or
sublessee;
(ii) A statement of the specific uses for which the
Premises will be utilized by the proposed assignee or sublessee; and
-18-
25
(iii) Preliminary plans prepared by an architect or
civil engineer for all alterations to the Premises that are contemplated
to be made by Lessee, the proposed assignee or sublessee.
(c) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises assigned or subleased until an
executed counterpart of such assignment or sublease has been delivered to
Lessor.
(d) No sublessee or assignee shall have a right further to sublet
or assign.
(e) 50% (after deduction of reasonable real estate brokerage
commission paid by Lessee) of any sums or other economic consideration received
by Lessee as a result of such assignment or subletting (except rental or other
payments received which are attributable to amortization of the cost of
leasehold improvements other than building standard tenant improvements made to
the assigned or sublet portion of the Premises by Lessor) whether denominated
rentals under the assignment or sublease or otherwise, which exceed, in the
aggregate, the total sums which Lessee is obligated to pay Lessor under this
Lease (prorated to reflect obligations allocable to that portion of the Premises
subject to such assignment or sublease) shall be payable to Lessor as additional
rental under this Lease without affecting or reducing any other obligation of
Lessee hereunder. In the event of subletting of only a portion of the Premises,
in calculating whether the rent received by Lessee exceeds the rent payable
under this Lease, the rent payable under the Lease shall be prorated according
to the square footage involved in order to reflect the rent applicable to the
space sublet.
12.3 Lessees Other Than Individuals.
(a) If Lessee is a partnership, a transfer of any interest of a
general partner, a withdrawal of any general partner from the partnership, or
the dissolution of the partnership, shall be deemed to be an assignment of this
Lease.
(b) If Lessee is a corporation, unless Lessee is a public
corporation whose stock is regularly traded on a national stock exchange, or is
regularly traded in the over-the-counter market and quoted on NASDAQ, any sale
or other transfer of a percentage of capital stock of Lessee which results in a
change of controlling persons, or the sale or other transfer of substantially
all of the assets of Lessee, shall be deemed to be an assignment of this Lease.
12.4 Lessee Affiliate. Notwithstanding the provisions of Paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or
-19-
26
consolidation with Lessee, or to any person or entity which acquires all the
assets of Lessee as a going concern of the business that is being conducted on
the Premises, provided that (a) the transferee has a net worth, after the
assignment or sublet, which is equal to or greater than the lower of (i) the net
worth of Lessee at the date of this Lease and (ii) the net worth of Lessee
immediately prior to the transfer; (b) the transferee assumes, in full, the
obligations of Lessee under this Lease; and (c) a copy of the document effecting
the sublet and evidencing the transferee's assumption of Lessee's obligations
hereunder is promptly delivered to Lessor. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.5 No Release of Lessee. Regardless of Lessor's consent, any subletting
or assignment shall not (a) be effective without the express written assumption
by such assignee or sublessee of the obligations of Lessee under this Lease, (b)
release Lessee of any of Lessee's obligations hereunder or (c) alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof or
any default by Lessee. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Lessee or any successor of Lessee, in the performance
of any of the terms hereof, Lessor may proceed directly against Lessee without
the necessity of exhausting remedies against said assignee. Lessor may consent
to subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Lessee, without notifying Lessee,
or any successor of Lessee, and without obtaining its or their consent thereto
and such action shall not relieve Lessee of liability under this Lease.
12.6 Assignment to Lessor. Lessee hereby assigns and transfers to Lessor
all of Lessee's interest in all rentals and income arising from any sublease
heretofore or hereafter made by Lessee, and Lessor may collect such rent and
income and apply same toward Lessee's obligations under this Lease; provided
however, that until a default shall occur in the performance of Lessee's
obligations under this Lease, and subject to Paragraph 12.2(e) Lessee may
receive, collect and enjoy the rents accruing under such sublease. Lessor shall
not, by reason of this or any other assignment of such sublease to Lessor nor by
reason of the collection of the rents from a sublessee, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee under such sublease. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a default exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor the rents due and to become due under the
sublease. Lessee agrees that such sublessee shall have the right to rely upon
any such statement and request from Lessor, and that such sublessee shall pay
such rents to Lessor without
-20-
27
any obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.
12.7 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do,
then Lessee shall pay Lessor's reasonable attorneys' fees incurred in connection
therewith, such attorneys' fees not to exceed $350.00 for each such request.
Notwithstanding the foregoing, the parties agree that a payment of $750.00 is a
reasonable fee for Lessor's, review of Lessee's request to assign or sublease.
13. Defaults: Remedies.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes,
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in paragraph (b) above, where such failure shall
continue for a period of 30 days after written notice thereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commenced such cure within said 30-day period
and thereafter diligently prosecutes such cure to completion. To the extent
permitted by law, said thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Lessee under applicable unlawful
detainer statutes.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the
-21-
28
Premises or of Lessee's interest in this Lease, where possession is not restored
to Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within 30
days. Provided, however, in the event that any provision of this Paragraph
13.1(d) is contrary to any applicable law, such provision shall be of no force
or effect
(e) The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligations
hereunder, and any of them, was materially false.
(f) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a guarantor, (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a guarantor's refusal to honor the
guaranty, or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee to Lessee of any
such event, to provide Lessor with written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the guarantors that
existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. In the event of a breach of this Lease
by Lessee, as defined in Paragraph 13.1, with or without further notice or
demand, and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time
-22-
29
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Lessee
proves could be reasonably avoided,; and (iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of the leasing commission paid by Lessor
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provisions (i) and (ii) of the prior sentence shall
be calculated based on an interest rate equal to the highest rate permitted by
applicable law. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's breach of this Lease shall not waive Lessor's right to recover damages
under this Paragraph. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve therein the right to recover all or any part thereof in a
separate suit for such rent and/or damages. If a notice and grace period
required under Paragraphs 13.1(b), (c) or (d) was not previously given, a notice
to pay rent or quit, or to perform or quit, as the case may be, given to Lessee
under any statute authorizing the forfeiture of leases for unlawful detainer
shall also constitute the applicable notice for grace period purposes required
by subparagraphs 13.1(b), (c) or (d). In such case, the applicable grace period
under Paragraphs 13.1(b), (c) or (d) and under the unlawful detainer statute
shall run concurrently after the one such statutory notice, and the failure of
Lessee to cure the default within the greater of the two such grace periods
shall constitute both an unlawful detainer and breach of this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
breach and abandonment and recover the rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the State of California. Unpaid
installments of rent and other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
allowed by law.
-23-
30
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust encumbering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently prosecutes the same to completion. Any damages or judgments arising
out of Lessor's default of its obligations under this Lease shall be satisfied
only out of Lessor's interest and estate in the Premises, and Lessor shall have
no personal liability beyond such interest and estate with respect to such
damages or judgments.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed encumbering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, not prevent Lessor from
exercising any of the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder; whether or not collected, for three (3)
consecutive installments of rent then rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding Paragraph 4
or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to
Lessor, if Lessor shall so request, in addition to any other payments required
under this Lease, a monthly
-24-
31
advance installment, payable at the same time as the monthly rent as estimated
by Lessor, for real property tax and insurance expenses on the Premises which
are payable by Lessee under the terms of this Lease. Such fund shall be
established to insure payment when due, before delinquency, of any or all such
real Property taxes and insurance premiums. If the amounts paid to Lessor by
Lessee under the provisions of this paragraph are insufficient to discharge the
obligations of Lessee to pay such real property taxes and insurance premiums as
the same become due, Lessee shall pay to Lessor, upon Lessor's demand, such
additional sums necessary to pay such obligations. All moneys paid to Lessor
under this paragraph may be intermingled with other moneys of Lessor and shall
not bear interest In the event of a default in the obligations of Lessee to
perform under this Lease, then any balance remaining from funds paid to Lessor
under the provisions of this paragraph may, at the option of Lessor, be applied
to the payment of any monetary default of Lessee in lieu of being applied to the
payment of real property tax and insurance premiums.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the
building on the Premises, or more than 25% of the land area of the Premises
which is not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in the
proportion that the floor area of the building taken bears to the total floor
area of the building situated on the Premises. No reduction of rent shall occur
if the only area taken is that which does not have a building located thereon.
Any award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of net severance damages received
by Lessor in connection with such condemnation, over and above the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such net severance damages required to complete such repair.
-25-
32
15. Broker's Commissions. Lessee and Lessor each represent and warrant to the
other that neither has had any dealings with any person, firm, broker or finder
(other than those persons, if any, whose names are set forth in this Paragraph
15) in connection with the negotiation of this Lease and/or the consummation of
the transaction contemplated hereby, and no other broker or other person, firm
or entity is entitled to any commission or finder's fee in connection with said
transaction and Lessee and Lessor do each hereby indemnify and hold the other
harmless from and against any costs, expenses, attorneys' fees or liability for
compensation, commission or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying party. Named brokers:
Lessor's Broker: None
Lessee's Broker: CB Commercial Real Estate Group
The commission payable to Lessee's Broker with respect to this Lease shall be
pursuant to the terms of the separate commission agreement (the "Separate
Agreement") in effect between Lessor and Lessee's Broker. Nothing in this Lease
shall impose any obligation on Lessor to pay a commission or fee (a) to any
party other than Lessee's Broker or (b) to any party with respect to (i) the
exercise by Lessee of any option or right of first refusal pursuant to this
Lease (except as provided in the Separate Agreement), or (ii) any extension or
renewal of this Lease.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) 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, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a material breach of this Lease or shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
-26-
33
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall include
the past three years' financial statements of Lessee. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only the
owner or owners at the time in question of the fee title or a lessee's interest
in a ground lease of the Premises, and in the event of any transfer of such
title or interest, Lessor herein named (and in case of any subsequent transfers
then the grantor) shall be relieved from and after the date of such transfer of
all liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the time
of such transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns, only
during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as determined by
a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements: Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the real estate broker listed in Paragraph 15
hereof nor any cooperating broker on this transaction nor the Lessor or any
employees or agents of any of said persons has made any oral or written
warranties or representations to
-27-
34
Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease except as otherwise specifically stated in this Lease.
23. Notices. Any notice given pursuant to this Lease shall be in writing shall
be personally delivered, delivered by Federal Express or comparable overnight
courier, providing written evidence of delivery, or delivered by U.S. registered
or certified mail, return receipt requested, postage prepaid and sent to Lessor
and Lessee at the following addresses:
LESSOR:
Prudential Real Estate Investors
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Regional Counsel
With a copy by the same method to:
The Prudential Real Estate Investors
c/x Xxxxxxx & Xxxxxxxxx of California, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx
LESSEE:
SKECHERS USA, Inc.
---------------------------------
000 Xxxxxxxxx Xxxxx Xxxx., #000
---------------------------------
Xxxxxxxxx Xxxxx, XX, 00000
---------------------------------
Xxx: Xxxxx Xxxxxxxx
----------------------------
With a copy by the same method to:
---------------------------------
---------------------------------
---------------------------------
-28-
35
or such other address as either party may from time to time designate as its
notice address by notifying the other party thereof. Notice so sent shall be
deemed given (a) when personally delivered, or (b) on the first business day
following deposit with Federal Express or a comparable overnight courier service
providing written evidence of delivery, or (c) five business days following
deposit in the United States mail, if notice is sent by registered or certified
mail, return receipt requested, Postage prepaid. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. No Recording. Lessee shall not record this Lease.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, except that the monthly rent
shall be 150% of the rent payable in the last month of the Lease term, but all
options and rights of first refusal, if any, granted under the terms of this
Lease shall be deemed terminated and be of no further effect during said month
to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
wherein the Premises are located.
-29-
36
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or security device (collectively, "Security Device"), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof and to
all renewals, modifications, and extensions thereof. Lessee agrees that the
holders of any such Security Devices (in this Lease together referred to as
"Lessor's Lender") shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Any Lender may elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device by
giving written notice thereof to Lessee, whereupon this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof. Lessor warrants that there
are no Security Devices encumbering the Premises on the date of this Lease.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or an other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not; (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership (provided that this clause (i) shall not
relieve the new owner from its ongoing maintenance obligations under this
Lease); (ii) be subject to any offsets or defenses which Lessee might have
against any prior lessor, or (iii) be bound by prepayment of more than one (1)
month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in breach hereof and attorns to the record owner of the
Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
-30-
37
31. Attorney's Fees.
(a) If either party brings an action or proceeding to enforce
the terms hereof or declare rights hereunder, the prevailing party in any such
proceeding, action, or appeal thereon, shall be entitled to his reasonable
attorney's fees and such fees as may be awarded in the same suit or recovered in
a separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term "prevailing party" shall include, without limitation, a
party who obtains legal counsel or brings an action against the other by reason
of the other's breach or default or who defends such action, and substantially
obtains or defeats the relief sought, whether by compromise, settlement,
judgment or of the claim or defense by the other party.
(b) The attorney's fee award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully reimburse
all attorney's fees reasonably incurred in good faith.
(c) Lessor shall be entitled to attorney's fees, costs and
expenses incurred in the preparation and service of notices of default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such default. Lessor and Lessee agree
that $350.00 is a reasonable sum per occurrence for legal services and costs per
preparation and service of a notice of default and that Lessor may include
$350.00 as additional rent due in each such notice of default as an amount that
must be paid to cure said default.
32. Lessor's Access. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises without Lessor's
prior written consent.
-31-
38
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. Consents. Except for Paragraphs 33, 34 and 47 hereof, wherever in this
Lease the consent of one party is required to an act of the other party, such
consent shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease, and all easements, covenants, conditions and restrictions of record. The
individuals executing this Lease on behalf of Lessor represent and warrant to
Lessee that they are fully authorized and legally capable of executing this
Lease on behalf of Lessor and that such execution is binding upon all parties
holding an ownership interest in the Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has the
following meaning: (a) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the option or right of first refusal, to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other property of Lessor or the right of first offer to lease
other property of Lessor, (c) the right or option to purchase the Premises, or
the right of first refusal to purchase the Premises, or the right of first offer
to purchase the Premises or the right or option to purchase other property of
Lessor, or the right of first refusal to purchase other property of Lessor or
the right of first offer to purchase other property of Lessor.
39.2 Options Personal; Multiple Options. Each Option granted to Lessee
in this Lease is personal to Lessee and may not be exercised or be assigned,
voluntarily or involuntarily; by or to any person or entity other than Lessee,
provided, however, the Option may be exercised by or assigned to any Lessee
Affiliate as defined in Paragraph 12.4 of this Lease. The Options herein granted
to Lessee are not assignable separate and apart from this Lease. In the event
that Lessee has any multiple options to extend or renew this Lease a later
option cannot be exercised unless the prior option to extend or renew this Lease
has been so exercised.
-32-
39
39.3 First Option. Lessor hereby grants to Lessee the option to extend
the term of this Lease for a five (5) year period commencing on the date the
prior term expires (the "First Option Period") upon each and all of the
following terms and conditions:
(a) Lessee gives to Lessor, and Lessor actually receives, on a
date which is prior to the date that the First Option Period would commence (if
exercised) by at least six (6) and not more than nine (9) months, a written
notice of exercise of the option to extend this Lease for said additional term,
time being of the essence. If said notification of the exercise of said option
is not so given and received, this option shall automatically expire;
(b) The provisions of Paragraph 39, including the provision
relating to default of Lessee set forth in Paragraph 39.7, of this Lease are
conditions of this option;
(c) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply, except that Lessee shall have
no further option to extend the term of this Lease other than for the option
provided for in Paragraph 39.4;
(d) Any prior Lessee that has not been expressly released from
liability under this Lease, and any guarantor of the Lessee's performance
hereunder, expressly reaffirms in writing the extension of their liability for
the term of the option; and
(e) The monthly Base Rent for each month of the First Option
Period shall be the C.P.I. Adjusted Option Rent (as defined below).
39.4 Second Option. Lessor hereby grants to Lessee the option to extend
the term of this Lease for a five (5) year period commencing on the date the
First Option Period expires (the "Second Option Period") upon each and all of
the following terms and conditions:
(a) Lessee gives to Lessor, and Lessor actually receives, on a
date which is prior to the date that the Second Option Period would commence (if
exercised) by at least six (6) and not more than nine (9) months, a written
notice of exercise of the option to extend this Lease for said additional term,
time being of the essence. If said notification of the exercise of said option
is not so given and received, this option shall automatically expire;
-33-
40
(b) The provisions of Paragraph 39, including the provision
relating to default of Lessee set forth in Paragraph 39.7 of this Lease are
conditions of this option;
(c) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply, except that Lessee shall have
no further option to extend the term of this Lease;
(d) Any prior Lessee that has not been expressly released from
liability under this Lease, and any guarantor of the Lessee's performance
hereunder, expressly reaffirms in writing the extension of their liability for
the term of the option; and
(e) The monthly Base Rent for each month of the option periods
shall be the Fair Market Rent of the Premises as of the commencement of the
Second Option Period, but in no event less than the monthly Base Rent scheduled
to be paid during the month prior to the commencement of the Second Option
Period.
39.5 Fair Market Rent.
(a) The term "Fair Market Rent" as used in this Lease is
defined to mean the rent, including all escalations, at which tenants are
leasing non-sublease, non-encumbered, non-equity space comparable in size and
quality to the Premises for the Option Period as to which Fair Market Rent is
being determined in the Inland Empire West area, giving appropriate
consideration to the annual rental rates per square foot and the standard of
measurement by which the square footage is measured. In determining Fair Market
Rent it shall be assumed that:
(i) The Premises are in excellent condition and
repair and there shall be no deduction for depreciation, obsolescence or
deferred maintenance (but less reasonable wear and tear as long as well
maintained by Lessee).
(ii) The Premises would be leased for the period of
the option being exercised by a tenant with the credit standing of
Lessee, as the same exists at that time.
(iii) The Premises would be leased on the same terms
of this Lease insofar as the obligations for repair, maintenance,
insurance and real estate taxes existed as of the expiration of the
original term of this Lease.
(iv) No deduction shall be given nor consideration
given to allowances for real estate brokerage commissions or free rent.
-34-
41
(v) The Premises will be used for its highest and
best use.
(b) Determination By Lessor. Lessor shall initially determine
the Fair Market Rent in each instance, and shall give Lessee notice (the "Market
Rent Notice") of such determination and the basis on which such determination
was made on or before the 60th day prior to the date on which such determination
is to take effect, or as soon thereafter as is reasonably practicable.
(c) Disputes re Fair Market Rent. In the event that Lessee
notifies Lessor in writing, on or before the 20th business day following any
Market Rent Notice, that Lessee disagrees with the applicable determination,
Lessor and Lessee shall negotiate in good faith to resolve such dispute within
10 business days thereafter. (The 30th business day after any Market Rent Notice
is referred to herein as the "Outside Agreement Date.") If not resolved by the
Outside Agreement Date each party shall submit to the other its determination of
Fair Market Rent and the dispute shall be submitted to arbitration in accordance
with the following paragraph titled "Arbitration Procedures." Until any such
dispute is resolved, any applicable payments due under this Lease shall
correspond to Lessor's determination and, if Lessee's determination becomes the
final determination, Lessor shall refund any overpayments to Lessee, within 5
business days following the final resolution of the dispute.
(d) Arbitration Procedures.
(i) Lessor and Lessee shall each appoint one
arbitrator who shall by profession be a real estate broker who shall
have been active over the 5-year period ending on the date of such
appointment in the leasing of properties similar to the Premises in the
surrounding area of Los Angeles County. The determination of the
arbitrators shall be limited solely to the issue of whether Lessor's or
Lessee's submitted Fair Market Rent for the Premises is the closest to
the actual Fair Market Rent for the Premises as determined by the
arbitrators, taking into account the requirements of this subparagraph
regarding the same. Each such arbitrator shall be appointed within 15
days after the Outside Agreement Date. Lessor and Lessee may not consult
with either such arbitrator prior to resolution.
(ii) The two arbitrators so appointed shall within
15 days of the date of the appointment of the last appointed arbitrator,
meet and attempt to reach a decision as to whether the parties shall use
Lessor's or Lessee's submitted Fair Market Rent, and shall notify Lessor
and Lessee of their decision, if any.
-35-
42
(iii) If the two arbitrators are unable to reach a
decision, the two arbitrators shall, within 30 days of the date of the
appointment of the last appointed arbitrator, agree upon and appoint a
3rd arbitrator who shall be a broker who shall be qualified under the
same criteria set forth hereinabove for qualification of the initial 2
arbitrators.
(iv) The 3 arbitrators shall, within 30 days of the
appointment of the 3rd arbitrator, reach a decision as to whether the
parties shall use Lessor's or Lessee's submitted Fair Market Rent, and
shall notify Lessor and Lessee thereof.
(v) The decision of the majority of the 3
arbitrators shall be binding upon Lessor and Lessee.
(vi) If either Lessor or Lessee fails to appoint an
arbitrator within 15 days after the Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify
Lessor and Lessee thereof and such arbitrator's decision shall be
binding upon Lessor and Lessee.
(vii) If the 2 arbitrators fail to agree upon and to
appoint a 3rd arbitrator, then the appointment of the 3rd arbitrator
shall be dismissed, and the matter to be decided shall be forthwith
submitted to arbitration under the provisions of the American
Arbitration Association, but subject to the instructions set forth in
this Lease.
(viii) The cost of arbitration shall be paid by
Lessor and Lessee equally.
39.6 C.P.I. Adjusted Option Rent. With respect to any Option Period the
"C.P.I. Adjusted Option Rent" shall mean a Base Rent calculated as follows:
(a) As used herein, the term "C.P.I." shall mean the Consumer
Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor
for Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-Riverside,
California (1982-84=100). With respect to the applicable option period the Base
Rent payable as set forth in Paragraph 4 of the Lease shall be multiplied by a
fraction the numerator of which shall be the C.P.I. of the calendar month during
which the option period commences, and the denominator of which shall be the
C.P.I. for the calendar month in which the original Lease term commenced. The
sum so calculated shall constitute the "C.P.I. Adjusted Option Rent" hereunder,
subject to Subparagraph 39.6(d), below.
(b) Pending receipt of the required C.P.I. and determination
of the actual adjustment, Lessee shall pay an estimated adjusted Base Rent equal
to an
-36-
43
estimated C.P.I. Adjusted Option Rent, as reasonably determined by Lessor by
reference to the then available C.P.I. information. Upon notification of the
actual adjustment after publication of the required C.P.I., any overpayment
shall be credited against the next installment of rent due, and any underpayment
shall be immediately due and payable by Lessee. Lessor's failure to request
payment of an estimated or actual rent adjustment shall not constitute a waiver
of the right to any adjustment provided for in the Lease or this Paragraph 39.6.
(c) In the event the compilation and/or publication of the
C.P.I. shall be transferred to any other governmental department or bureau or
agency or shall be discontinued, then the index most nearly the same as the
C.P.I (as selected by Lessor) shall be used to make such calculation.
(d) The adjustment(s) required by this Paragraph 39.6 shall be
subject to the following additional agreements:
(i) The increase under Paragraph 39.6(b), above,
shall be subject to the following minimum and maximum percentage
increase per year involved in the adjustment period, on a cumulative
and compounded basis:
Minimum yearly percentage increase: 2.5%
Maximum yearly percentage increase: 6%
The "adjustment period" is defined as the period commencing
with the month designated in Paragraph 39.6(a), above, as the
reference for determining the "denominator", and ending with
the month preceding the month designated therein as the
reference for determining the "numerator". Should the
adjustment period include a partial year, the minimum and
maximum percentages shall be prorated for that partial year by
multiplying them by a fraction, the numerator of which shall
be the number of full calendar months or major portion
thereof contained in said partial year, and the denominator of
which is twelve (12).
(ii) The new monthly Base Rent shall in no event
be less than the rent scheduled to be paid immediately preceding the
rent adjustment.
39.7 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to Paragraphs 13.1(b)
-37-
44
or 13.1(c) and continuing until the default alleged in said notice of default
is cured, or (ii) during the period of time commencing on the day after a
monetary obligation to Lessor is due from Lessee and unpaid (without any
necessity for notice thereof to Lessee) continuing until the obligation is paid,
or (iii) at any time after an event of default described in Paragraphs 13.1(a),
13.1(d), 13.1(e) or 13.1(f) (without any necessity of Lessor to give notice of
such default to Lessee), or (iv) in the event that Lessor has given to Lessee
three or more notices of default under Paragraph 13.1(b), where a late charge
has become payable under Paragraph 13.4 for each of such defaults, or Paragraph
13.1(c), whether or not the defaults are cured, during the 12 month period prior
to the time that Lessee intends to exercise the subject Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.7.
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of 30 days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in Paragraph 13.1(c) within 30 days after
the date that Lessor gives notice to Lessee of such default and/or Lessee fails
thereafter to diligently prosecute said cure to completion, or (iii) Lessee
commits a default described in Paragraphs 13.1(a), 13.1(d), 13.1(e) or 13.1(f)
(without any necessity of Lessor to give notice of such default to Lessee), or
(iv) Lessor gives to Lessee three or more notices of default under Paragraph
13.l(b), where a late charge becomes payable under Paragraph 13.4 for each such
default, or Paragraph 13.1(c), whether or not the defaults are cured.
40. Industrial Park Building. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make and
revise from time to time for the management, safety, care, and cleanliness of
the building and grounds, the parking of vehicles and the preservation of good
order therein as well as for the convenience of other occupants and tenants of
the building. The violations of any such rules and regulations shall be deemed a
material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
-38-
45
42. Easements. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease by Lessee without the need for
further notice to Lessee.
43. Performance 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
hereof, 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
this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
45. Cashiers Checks.
(a) In the event that any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn on two or more
occasions, then Lessor, at its option may require all future payments to be made
by Lessee under this Lease to be made by cashier's checks.
(b) Any payment made by Lessee pursuant to a written notice to
pay or be deemed in default under this Lease shall be made by cashier's check.
46. Amendments to Lease.
(a) At such times as a rental adjustment is made to this Lease
by virtue of any provision of this Lease, the parties shall execute a written
amendment to this Lease to reflect said change.
-39-
46
(b) Lessee agrees to make any non-monetary modifications to
this Lease that may be required by an institutional mortgagee of Lessor.
47. Storage Tanks.
(a) Notwithstanding anything to the contrary in Paragraph 7.5
hereof, Lessee shall not install storage tanks of any size or shape in the
Premises, above or below ground, without the consent of the Lessor which can be
withheld in Lessor's sole discretion. If Lessor elects to grant its consent,
Lessor shall have the right to condition its consent upon Lessee agreeing to
give to Lessor such assurances that Lessor, in its sole discretion, deems
necessary to protect itself against potential problems concerning the
installation, use, removal and contamination of the Premises as a result of the
installation and/or use of such tank, including but not limited to the
installation of a concrete encasement for said tank. Lessee shall comply at its
expense with all applicable permit and/or registration requirements and repair
any damage caused by the installation, maintenance or removal of such tank. Upon
termination of the Lease, Lessee shall, at its sole cost and expense, remove any
tank from the Premises, remove and replace any contaminated soil or materials
(and compact or treat the same as then required by law) and repair any damage or
change to the Premises caused by said installation and/or removal. Nothing
contained herein shall be construed to diminish or reduce Lessee's obligations
under Paragraph 48.
(b) Lessor shall have the right to employ experts and/or
consultants, at Lessee's expense, to advise Lessor with respect to the
installation, operation, monitoring, maintenance and removal and restoration of
any such tank.
48. Lessee's Covenants Regarding Hazardous Materials.
48.1 Lessor's Prior Consent. Notwithstanding anything contained in this
Lease to the contrary, Lessee has not caused or permitted, and shall not cause
or permit any "Hazardous Materials" (as defined in Paragraph 48.2, below) to be
brought upon, kept, stored, discharged, released or used in, under or about the
Premises by Lessee, its agents, employees, contractors, subcontractors,
licensees or invitees, unless (a) such Hazardous Materials are reasonably
necessary to Lessee's business and will be handled, used, kept, stored and
disposed of in a manner which complies with all "Hazardous Materials Laws" (as
defined in Paragraph 48.2, below); (b) Lessee will comply with such other rules
or requirements as Lessor may from time to time impose, including without
limitation that (i) such materials are in small quantities, properly labeled and
contained, (ii) such materials are handled and disposed of in accordance with
the highest accepted industry standards for safety, storage, use and disposal,
(iii) such materials are for use in the ordinary course of business (i.e., as
with office or cleaning supplies), (c) notice of and a copy of the current
material safety data sheet is
-40-
47
provided to Lessor for each such Hazardous Material, and (d) Lessor shall have
granted its prior written consent to the use of such Hazardous Materials.
48.2 Compliance with Hazardous Materials Laws. As used herein, the term
"Hazardous Materials" means any (a) oil, petroleum, petroleum products,
flammable substances, explosives, radioactive materials, hazardous wastes or
substances, toxic wastes or substances or any other wastes, materials or
pollutants which (i) pose a hazard to the Premises or to persons on or about the
Premises or (ii) cause the Premises to be in violation of any Hazardous
Materials Laws (as hereinafter defined); (b) asbestos in any form, urea
formaldehyde foam insulation, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls, or radon gas;
(c) chemical, material or substance defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," or "toxic substances" or words
of similar import under any applicable local, state or federal law or under the
regulations adopted or publications promulgated pursuant thereto, including, but
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the
Resources Conservation Recovery Act, 42 U.S.C. Section 6901, et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251, et seq.; Sections 25115, 25117, 25122.7, 25140, 25249.8 25281, 25316 and
25501 of the California Health and Safety Code; and Article 9 or Article II of
Title 22 of the California Code of Regulations, Division 4, Chapter 20; (d)
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or may or could pose a hazard to the
health and safety of the occupants of the Premises or the owners and/or
occupants of property adjacent to or surrounding the Premises, or any other
Person coming upon the Premises or adjacent property; and (e) other chemical,
materials or substance which may or could pose a hazard to the environment. As
used herein the term "Hazardous Materials Laws" means any federal, state or
local laws, ordinances, regulations or policies relating to the environment,
health and safety, and Hazardous Materials (including, without limitation, the
use, handling, transportation, production, disposal, discharge or storage
thereof) or to industrial hygiene or the environmental conditions on, under or
about the Premises, including, without limitation, soil, groundwater and indoor
and ambient air conditions. Lessee shall at all times and in all respects comply
with all Hazardous Materials Laws.
48.3 Hazardous Materials Removal. Upon expiration or earlier
termination of this Lease, Lessee shall, at Lessee's sole cost and expense,
cause all Hazardous Materials brought on the Premises with Lessor's consent to
be removed from the Premises in compliance with all applicable Hazardous
Materials Laws. If Lessee or its employees, agents, or contractors violates the
provisions of the foregoing two paragraphs, or if Lessee's acts, negligence, or
business operations contaminate or
-41-
48
expand the scope of contamination of, the Premises from such Hazardous
Materials, then Lessee shall promptly; at Lessee's expense, take all
investigatory and/or remedial action (collectively, the "Remediation") that is
necessary in order to clean up, remove and dispose of such Hazardous Materials
causing the violation on the Premises or the underlying groundwater or the
properties adjacent to the Premises to the extent such contamination was caused
by Lessee, in compliance with all applicable Hazardous Materials Laws. Lessee
shall further repair any damage to the Premises caused by the Hazardous
Materials contamination. Lessee shall provide prior written notice to Lessor of
such Remediation, and Lessee shall commence such Remediation no later than
thirty (30) days after such notice to Lessor and diligently and continuously
complete such Remediation. Such written notice shall also include Lessee's
method, time and procedure for such Remediation and Lessor shall have the right
to require reasonable changes in such method, time or procedure of the
Remediation. Lessee shall not take any Remediation in response to the presence
of any Hazardous Materials in or about the Premises or enter into any settlement
agreement, consent decree or other compromise in respect to any claims relating
to any Hazardous Materials in any way connected with the Premises, without first
notifying Lessor of Lessee's intention to do so and affording Lessor ample
opportunity to appear, intervene or otherwise appropriately assert and protect
Lessor's interests with respect thereto.
48.4 Notices. Lessee shall immediately notify Lessor in writing of: (a)
any enforcement, cleanup, removal or other governmental or regulatory action
threatened, instituted, or completed pursuant to any Hazardous Materials Laws
with respect to the Premises; (b) any claim, demand, or complaint made or
threatened by any person against Lessee or the Premises relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any
Hazardous Materials; and (c) any reports made to any governmental authority
arising out of any Hazardous Materials on or removed from the Premises. Lessor
shall have the right (but not the obligation) to join and participate, as a
party, in any legal proceedings or actions affecting the Premises initiated in
connection with any Hazardous Materials Laws.
48.5 Indemnification of Lessor. Lessee shall indemnify, protect, defend
and forever hold Lessor harmless from any and all damages, losses, expenses,
liabilities, obligations and costs arising out of any failure of Lessee to
observe the foregoing covenants in Paragraphs 47 and 48. The provisions of
Paragraphs 47 and 48 shall survive the expiration or earlier termination of the
lease.
49. The Causeway Improvements.
A prior tenant constructed a causeway (the "Causeway") between the
Premises and the building leased by lessee from Lessor under the Other Lease (as
defined in Paragraph 50). Lessee shall be solely responsible for obtaining and
maintaining all permits, approvals, variances, consents and other authorizations
required by applicable
-42-
49
law in connection with the Causeway. Lessor shall not be obligated to enter into
any covenants or other agreements affecting Lessor's interest in the Premises in
connection with the Causeway, including without limitation any covenant
requiring the Premises and the Other Lease Premises (as defined below) to be
held as one parcel. Lessor shall have no obligation to provide a bond or other
security for the maintenance or removal of the Causeway. In the event a bond or
other security is provided by Lessee in connection with the Causeway, Lessor
shall be an additional beneficiary of that bond or other security.
Upon or after the expiration or earlier termination of either or both
of this Lease and the Other Lease (as defined below), Lessor may require Lessee
to demolish and remove the Causeway and to restore the Premises to its condition
prior to the construction of the Causeway at Lessee's sole cost and expense.
Lessee agrees to obtain a demolition permit and commence that demolition,
removal and restoration no later than 30 days after Lessor's request and to
complete that demolition removal and restoration no later than 30 days after
receipt of the demolition permit. In the event that Lessee fails to (a) obtain a
demolition permit and commence that demolition within 30 days after Lessor's
request, or (b) complete that demolition, removal and restoration within such
30-day period after receipt of that demolition permit, Lessor shall have the
option to perform such work itself at Lessee's cost. In addition, Lessee's
failure to demolish and remove the Causeway and restore the Premises shall be a
material default by Lessee under this Lease and, if so elected by the Lessor
under the Other Lease, a material default under the Other Lease. Lessee hereby
indemnifies Lessor and agrees to defend, protect and hold Lessor harmless from
and against any claims, demands, liens, causes of action, loss and liability
arising out of, or in any way related to, the planning, construction, operation,
maintenance, repair, demolition and removal of the Causeway, and restoration of
the Premises. This indemnification shall survive the expiration or earlier
termination of the Lease, and any assignment of the Lease.
The insurance policies required by this Lease and the Other Lease shall
be modified or endorsed to cover, to the extent customary, all risks arising out
of the operation, maintenance, repair, demolition and removal of the Causeway.
Lessee shall pay on demand all additional costs of insurance required by Lessor
to the extent the same are customarily carried by prudent Lessors in connection
with the maintenance and use of improvements such as the Causeway.
Neither this Lease nor any existence or use of the Causeway shall give
rise to easements, licenses, servitudes or other rights for the benefit of the
Premises over the Other Lease Premises or for the benefit of the Other Lease
Premises over the Premises. Any rights or privileges to use the Causeway for
ingress and egress from and to the Premises and the Other Premises shall not
burden or run with the land, and shall
-43-
50
terminate automatically upon the expiration or earlier termination of either
this Lease or the Other Lease.
Without limiting any other restriction in this Lease on assignment or
subletting, Lessor may condition its consent to any assignment or subletting of
the Premises that would result in less than 10,000 square feet in each of the
Premises and the Other Premises being occupied by at least one common occupant
upon Lessee's demolition and removal of the Causeway and restoration of the
Premises to the condition that existed prior to the construction of the
Causeway.
50. Relationship to Other Lease. Concurrently herewith, Lessor and Lessee are
entering into another Lease (the "Other Lease") of even date herewith of the
property commonly known as 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the "Other
Lease Premises"). Neither this Lease nor the Other Lease shall be effective
unless and until both are fully executed and delivered. Lessor and Lessee
acknowledge that the Other Lease and this Lease are not cross-defaulted or
otherwise dependent, except as expressly provided in Article 49 with respect to
the Causeway.
51. L.A. Gear. The Premises is currently leased to LA. Gear, Inc. ("Gear") and
the effectiveness of this Lease is subject to Lessor obtaining from Gear an
agreement (the "Termination Agreement") satisfactory to Lessor in its sole
discretion with respect to the termination of Gear's tenancy in the Premises. In
addition, in the event the Termination Agreement ceases to be effective and
rights of Gear with respect to the
-44-
51
Premises are Reinstated, then this Lease shall terminate effective as of the
date the Termination Agreement ceases to be effective.
52. Existing Sublease. As a condition precedent to the effectiveness of this
Lease, Lessee shall have caused the termination of all existing subleases in
the Premises, without any cost, expense or liability to Lessor and provided
Lessor with reasonable evidence of that termination.
"LESSOR":
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, a New Jersey corporation?
By XXXXXXX & XXXXXXXXX OF
CALIFORNIA, INC.,
its Managing Agent
By /s/ XXXX X. XXXXXXXX
---------------------------------
XXXX X. XXXXXXXX -- PORTFOLIO MGR
---------------------------------
[Printed Name and Title]
By /s/ XXXXXXX XXXXXXX
--------------------------------
XXXXXXX XXXXXXX -- DIRECTOR
--------------------------------
[Printed Name and Title]
"LESSEE":
SKECHERS U.S.A., INC.
By /s/ XXXXX XXXXXXXX
--------------------------------
Xxxxx Xxxxxxxx, C.F.O.
--------------------------------
[Printed Name and Title]
-45-
52
EXHIBIT A
[Floorplan depicting leased premises located at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx. The floorplan includes dotted lines to depict two existing
rail easements running along the north and east sides of the building.]
53
0000 X. XXXXXXX XXX.
LEASE
Premises are Reinstated, then this Lease shall terminate effective as of the
date the Termination Agreement ceases to be effective.
52. Existing Sublease. As a condition precedent to the effectiveness of this
Lease, Lessee shall have caused the termination of all existing subleases in the
Premises, without any cost, expense or liability to Lessor and provided Lessor
with reasonable evidence of that termination.
"LESSOR"
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, a New Jersey corporation?
By XXXXXXX & WAKEFIELD OF
CALIFORNIA, INC.,
its Managing Agent
By /s/ XXXX X. XXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxx-Portfolio Mgr.
By /s/ XXXXXXX XXXXXXX
------------------------------
Xxxxxxx Xxxxxxx-Director
"LESSEE":
SKECHERS U.S.A., INC.
BY: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx, C.F.O.
