1
EXHIBIT 10.1
LEASE
between
XXXX VENTURE ONE, LLC,
a Delaware limited liability company
and
VANS, INC., a Delaware corporation
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TABLE OF CONTENTS
Page
1. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Premises, Parking and Common Areas . . . . . . . . . . . . . . 1
2.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Vehicle Parking . . . . . . . . . . . . . . . . . . . . . 1
2.3 Common Areas--Definition . . . . . . . . . . . . . . . . 1
2.4 Common Areas--Lessee's Rights . . . . . . . . . . . . . . 2
2.5 Common Areas--Rules and Regulations . . . . . . . . . . . 2
2.6 Common Areas--Changes . . . . . . . . . . . . . . . . . . 2
3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Delay in Possession . . . . . . . . . . . . . . . . . . . 3
3.3 Early Possession . . . . . . . . . . . . . . . . . . . . 4
3.4 Early Occupancy . . . . . . . . . . . . . . . . . . . . . 4
4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Operating Expenses . . . . . . . . . . . . . . . . . . . 4
4.3 Rent Escalations--Initial Term . . . . . . . . . . . . . 7
5. Security Deposit . . . . . . . . . . . . . . . . . . . . . . . 9
6. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Compliance with Law . . . . . . . . . . . . . . . . . . . 10
6.3 Conditions of Premises . . . . . . . . . . . . . . . . . 10
7. Maintenance, Repairs, Alterations and Common Area Services . . 11
7.1 Lessor's Obligations . . . . . . . . . . . . . . . . . . 11
7.2 Lessee's Obligations . . . . . . . . . . . . . . . . . . 12
7.3 Alterations and Additions . . . . . . . . . . . . . . . . 13
7.4 Utility Additions . . . . . . . . . . . . . . . . . . . . 17
7.5 Condition of Premises Upon Termination; Additional
Use Provisions . . . . . . . . . . . . . . . . . . . . . . 18
8. Insurance; Indemnity . . . . . . . . . . . . . . . . . . . . . 18
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9. Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . 23
9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2 Premises Partial Damage; Premises Building Partial Damage . . 23
9.3 Premises Total Destruction; Industrial Center Buildings Total
Destruction . . . . . . . . . . . . . . . . . . . . . 24
9.4 Damage Near End of Term . . . . . . . . . . . . . . . . . . . 24
9.5 Abatement of Rent; Lessee's Remedies . . . . . . . . . . . . 25
9.6 Termination -- Advance Payments . . . . . . . . . . . . . . . 25
9.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10. Real Property Taxes . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Additional Improvements . . . . . . . . . . . . . . . . . . 26
10.3 Definition of "Real Property Tax" . . . . . . . . . . . . . 26
10.4 Joint Assessment . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Personal Property Taxes . . . . . . . . . . . . . . . . . . 27
11. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
12. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . 27
12.1 Lessor's Consent Required . . . . . . . . . . . . . . . . . 27
12.2 Lessee Affiliate . . . . . . . . . . . . . . . . . . . . . . 29
12.3 Lessees Other Than Individuals . . . . . . . . . . . . . . . 29
12.4 Terms and Conditions of Assignment . . . . . . . . . . . . . 29
12.5 Terms and Conditions Applicable to Subletting . . . . . . . 30
12.6 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . 32
13. Default Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.3 Default by Lessor . . . . . . . . . . . . . . . . . . . . . 35
13.4 Late Charges . . . . . . . . . . . . . . . . . . . . . . . . 36
14. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
15. Broker's Commissions . . . . . . . . . . . . . . . . . . . . . . . 37
16. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . 38
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17. Lessor's Liability . . . . . . . . . . . . . . . . . . . . . . . . 38
18. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
19. Interest on Past-due Obligations . . . . . . . . . . . . . . . . . 39
20. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 39
21. Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . 39
22. Incorporation of Prior Agreements; Amendments . . . . . . . . . . 39
23. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
24. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
25. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
26. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
27. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . 42
28. Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . 42
29. Binding Effect; Choice of Law . . . . . . . . . . . . . . . . . . 42
30. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 42
31. Attorneys Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 43
32. Lessor's Access . . . . . . . . . . . . . . . . . . . . . . . . . 44
33. Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
34. Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
35. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
36. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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37. Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
38. Quiet Possession . . . . . . . . . . . . . . . . . . . . . . . . . 45
39. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
39.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . 45
39.2 [Confidential treatment is being sought for this portion
of the Lease, which has been filed separately] . . . . . . .
39.3 Multiple Options . . . . . . . . . . . . . . . . . . . . . . 45
39.4 Effect of Default on Options . . . . . . . . . . . . . . . . 45
39.5 First Option . . . . . . . . . . . . . . . . . . . . . . . . 46
39.6 Second Option . . . . . . . . . . . . . . . . . . . . . . . 47
39.7 Fair Market Rent . . . . . . . . . . . . . . . . . . . . . . 48
39.8 Rent Escalations - Option Terms. . . . . . . . . . . . . . . 50
40. Security Measures . . . . . . . . . . . . . . . . . . . . . . . . 52
41. Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
42. Performance Under Protest . . . . . . . . . . . . . . . . . . . . 52
43. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
44. Cashiers Checks . . . . . . . . . . . . . . . . . . . . . . . . . 53
45. Amendments to Lease . . . . . . . . . . . . . . . . . . . . . . . 53
46. Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . 53
47. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . 54
47.1 Lessee's Covenants Regarding Hazardous Materials . . . . . . 54
47.2 Indemnification of Lessor . . . . . . . . . . . . . . . . . 56
48. Lessor's Default . . . . . . . . . . . . . . . . . . . . . . . . . 56
49. Easements and Restrictions of Record . . . . . . . . . . . . . . . 57
50. Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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51. [Confidential treatment is being sought for this portion of the Lease,
which has been filed separately] . . . . . . . . . . . . . . . . . 57
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LEASE
1. Parties. This Lease, dated, for reference purposes only,
September 12, 1996, is made by and between XXXX VENTURE ONE, LLC, a Delaware
limited liability company (herein called "Lessor"), and VANS, INC., a Delaware
corporation (herein called "Lessee").
2. Premises, Parking and Common Areas.
2.1 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 Los
Angeles, State of California, commonly known as 15700 "A" Xxxxxxxxx Avenue,
Santa Fe Springs and described as a building containing 180,000 square feet
(consisting of approximately 165,000 square feet on the ground floor and an
additional 15,000 square feet on the mezzanine level) located on the property
shown on Exhibit "A" hereto, said 180,000 square feet herein referred to as the
"Premises," including rights to the Common Areas as hereinafter specified.
Notwithstanding the foregoing, upon completion of the improvements as provided
in the Construction Agreement (the "Construction Agreement") attached hereto as
Exhibit "C", the Premises will be remeasured and the rent will be recalculated
based on the actual square footage of the Premises, as determined pursuant to
the Construction Agreement. The Premises are all of a building, herein
referred to as the "Building." The Premises, the Building, the Common Areas,
the land upon which the same are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the "Industrial
Center."
2.2 Vehicle Parking. Lessee shall be entitled to exclusive
parking on those portions of the Common Areas shown as Lessee's parking on
Exhibit B.
2.3 Common Areas--Definition. The term "Common Areas" is
defined as all areas and facilities outside the Premises and within the
exterior boundary line of the Industrial Center that are provided and
designated by the Lessor from time to time for the general non- exclusive use
of Lessor, Lessee and of other lessees of the Industrial Center and their
respective employees, suppliers, shippers, customers and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways and landscaped areas.
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2.4 Common Areas--Lessee's Rights. Lessor hereby grants to
Lessee, for the benefit of Lessee and its employees, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas. Any such storage shall be permitted only by the prior
written consent of Lessor or Lessor's designated agent, which consent may be
revoked at any time. In the event that any unauthorized storage shall occur
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the
cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.5 Common Areas--Rules and Regulations. Lessor or such
other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable rules and regulations with
respect thereto; provided that Lessor shall not be permitted to enforce any
such rules or regulations in a discriminatory manner. The rules and
regulations that shall initially apply for such purposes are attached hereto as
Exhibit "D." Lessee agrees to use reasonable efforts to cause its employees,
suppliers, shippers, customers, and invitees to abide and conform to such
rules. Lessor shall not be responsible to Lessee for the non-compliance with
said rules and regulations by other lessees of the Industrial Center. Lessee
shall have the right to approve any rules and regulations established by Lessor
in addition to those set forth on Exhibit "D;" provided that Lessee agrees not
to unreasonably withhold its approval of any such new rule or regulation and in
any event will approve any new rule or regulation that does not have an impact
on the operation of Lessee's business in the Premises. Lessee's failure to
disapprove of a new rule or regulation within 30 days after its delivery to
Lessee shall be deemed Lessee's approval of that new rule or regulation.
2.6 Common Areas--Changes. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas,
including, without limitation, changes in the location, size, shape
and number of driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress, direction of traffic,
landscaped areas and walkways;
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(b) To close temporarily any of the Common Areas
for maintenance purposes so long as reasonable access to the Premises
remains available;
(c) To add additional improvements to the Common
Areas;
(d) To use the Common Areas while engaged in
making additional improvements, repairs or alterations to the
Industrial Center, or any portion thereof;
(e) To do and perform such other acts and make
such other changes in, to or with respect to the Common Areas and
Industrial Center as Lessor may, in the exercise of sound business
judgment, deem to be appropriate.
2.6.1 Lessor shall at all times provide the parking
facilities required by applicable law and in no event shall the number of
parking spaces or the location of such spaces that Lessee is entitled to under
Paragraph 2.2 be reduced or changed.
2.6.2 [Confidential treatment is being sought for
this portion of the Lease, which has been filed separately]
3. Term.
3.1 Term. The term of this Lease shall be for ten (10) years
commencing on June 1, 1997 and ending on May 31, 2007 unless sooner terminated
pursuant to any provision hereof subject to the provisions of the Construction
Agreement.
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 with the Initial Improvements Substantially Complete (as
such terms are defined in the Construction Agreement), Lessor shall not be
subject to any liability therefor, except as expressly provided in Section 12
of the Construction Agreement, nor shall such failure affect the validity of
this Lease or the obligations of Lessee hereunder, but in such case the
commencement of the term shall be subject to delay as provided in the
Construction Agreement.
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3.3 Early Possession. If Lessee occupies the Premises prior
to said commencement date for purposes of conducting its business (which as to
the warehouse area shall mean shipping of inventory and as to office area shall
mean conducting business other than incidental use of phones and furniture),
such occupancy shall be subject to all provisions of this Lease, such occupancy
shall not advance the termination date, and Lessee shall pay rent for such
period at the initial monthly rates set forth below.
3.4 Early Occupancy. Commencing on the Office Area Early
Commencement Date, as defined in the Construction Agreement, Lessee shall
occupy that portion of the Premises consisting of approximately 30,000 square
feet of office space (the "Office Area"); provided, however, such occupancy
shall be subject to all provisions of this Lease, such occupancy shall not
advance the termination date, and Lessee shall pay rent for such space at the
monthly rate of $11,100 plus an appropriate pro rata share of the Operating
Expenses based on square footage of the Premises actually occupied by Lessee.
Neither early occupancy nor early possession by Lessee or its agents,
contractors or invitees shall interfere with or otherwise delay any work to be
performed by Lessor or its contractors under this Lease or Exhibit "C."
4. Rent.
4.1 Base Rent. Subject to Section 3.2 and 3.4 of this Lease,
Lessee shall pay to Lessor, as Base Rent for the Premises, without any offset
or deduction, except as may be otherwise expressly provided in this Lease, on
the first day of each month of the term hereof, monthly payments in advance of
$66,600. The Base Rent is subject to adjustment as provided herein. Rent for
any period during the term hereof which is for less than one month shall be a
pro rata portion of the Base Rent. 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.
4.2 Operating Expenses. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of all Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions:
(a) "Lessee's Share" is defined, for purposes of
this Lease, as 34.24% percent with respect to Operating Expenses
applicable to the Industrial Center; provided that to the extent any
Operating Expenses are applicable only to the Building in which the
Premises are located, "Lessee's Share" shall be defined as 100%.
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(b) "Operating Expenses" is defined, for purposes
of this Lease, as all costs incurred by Lessor, if any, for:
(i) The operation, repair and maintenance,
in neat, clean, good order and condition, of the following:
(aa) The Common Areas, including
parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, walkways, parkways (i.e.,
planted areas adjacent to streets and sidewalks),
driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area, lighting facilities
and fences and gates.
(bb) Trash disposal services;
(cc) Tenant directories;
(dd) Fire detection systems including
sprinkler system maintenance and repair.
(ee) Security services;
(ff) Any other service to be provided
by Lessor that is elsewhere in this Lease stated to
be an "Operating Expense."
(ii) Any deductible portion of an insured
loss concerning any of the items or matters described in this
Paragraph 4.2;
(iii) The cost of the premiums for the
liability and property insurance policies to be maintained by
Lessor under Paragraph 8 hereof;
(iv) The amount of the real property tax
to be paid by Lessor under Paragraph 10.1 hereof;
(v) The cost of water, gas and
electricity to service the Common Areas;
(vi) The cost of Lessor's performing the
maintenance obligations described in Paragraph 7.1, including
replacements; and
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(vii) The cost of a Commercial General
Liability policy of insurance, insuring Lessor, but not
Lessee, against liability arising out of the ownership, use,
occupancy or maintenance of the Industrial Center, in amounts
determined by Lessor consistent with the practices of
institutional owners of comparable properties, if Lessor
determines to obtain such insurance.
[Confidential treatment is being sought for this portion of
the Lease, which has been filed separately]
(c) The inclusion of the improvements, facilities
and services set forth in Paragraph 4.2(b)(i) of the definition of
Operating Expenses shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide
those services unless the Industrial Center already has the same,
Lessor already provides the services, or Lessor has agreed elsewhere
in this Lease to provide the same or some of them.
(d) The percentages set forth in Paragraph 4.2(a)
have been determined by dividing the approximate square footage of the
Premises by the total approximate square footage of rentable space
contained in the Building or the Industrial Center, as applicable. It
is understood and agreed that the percentage figures set forth in
4.2(a) are approximations which Lessor and Lessee agree are reasonable
and shall not be subject to revision except in connection with an
actual change in the size of the Premises or a change in the space
available for lease in the Building or the Industrial Center.
(e) [Confidential treatment is being sought for
this portion of the Lease, which has been filed separately]
(f) Lessee's Share of Operating Expenses shall be
payable by Lessee within thirty (30) days after a reasonably detailed
statement of actual expenses is presented to Lessee by Lessor. At
Lessor's option, however, an amount may be estimated by Lessor from
time to time of Lessee's Share of annual Operating Expenses and the
same shall be payable monthly or quarterly, as Lessor shall designate,
during each twelve-month period of the Lease term, on the same day as
the Base Rent is due hereunder. In the event that Lessee pays
Lessor's estimate of Lessee's Share of Operating Expenses as
aforesaid, Lessor shall deliver to Lessee within ninety (90) days
after the expiration of each calendar year, or as soon thereafter as
practicable, but in all events within one hundred eighty (180) days
after the end of such calendar year, a reasonably
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detailed statement showing Lessee's Share of the actual Operating
Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(f) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be entitled to
credit the amount of such overpayment against Lessee's Share of
Operating Expenses and Base Rent next falling due. If Lessee's
payments under this paragraph during said preceding year were less
than Lessee's Share as indicated on said statement, Lessee shall pay
to Lessor the amount of the deficiency within thirty (30) days after
delivery by Lessor to Lessee of said statement.
(g) Lessor and Lessee shall promptly adjust
between them by appropriate cash payment any balance determined to
exist with respect to Lessee's Share of Operating Expenses after the
end of the calendar year in which this Lease terminates, prorating for
any partial year involved.
(h) In the event of any dispute as to the amount
of Operating Expenses as set forth in Lessor's statement of Operating
Expenses delivered to Lessee, Lessee shall have the right, after
reasonable notice and at reasonable times within one year after the
final statement for such Operating Expenses is delivered to Lessee, to
inspect and photocopy (at Lessee's expense) Lessor's accounting
records with respect to Lessee's Share of Operating Expenses. If,
after such inspection and photocopying, Lessee still disputes the
amount of Operating Expenses as set forth in Lessor's statement,
Lessee shall be entitled to retain an independent certified public
accountant reasonably approved by Lessor to audit Lessor's records to
determine the proper amount of such Operating Expenses and the proper
amount payable by Lessee pursuant to this Lease. Lessee agrees to pay
the cost of such audit, provided that Lessor shall pay such cost if
the audit reveals that Lessor's determination of Operating Expenses as
set forth in Lessor's statement overstated Operating Expenses by 5% or
more. Lessor shall be required to maintain records of all Operating
Expenses for one year after the final statement for such Operating
Expenses. If such audit reveals an overstatement or understatement of
Operating Expenses, the amount of the differential shall be promptly
reimbursed to Lessee by Lessor or paid by Lessee to Lessor, as the
case may be.
4.3 Rent Escalations--Initial Term.
(a) On the first day of each of the 31st month,
the 61st month and the 91st month of the term of this Lease, the
monthly Base Rent payable under Paragraph 4.1 of this Lease shall be
adjusted by the increase, if any, from
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the Commencement Date, in 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), "All Items", herein referred to as "C.P.I.".
(b) The monthly Base Rent payable in accordance
with Paragraph (a) above shall be calculated as follows: the Base Rent
scheduled to be paid during the month prior to the month in which the
adjustment is to occur, shall be multiplied by a fraction the
numerator of which shall be the C.P.I. of the second calendar month
prior to the month during which the adjustment is to take effect, and
the denominator of which shall be the C.P.I. for the calendar month
prior to the month in which the Commencement Date occurs or the last
rent adjustment occurred, as applicable. The sum so calculated shall
constitute the new monthly Base Rent hereunder, subject to
Subparagraph (e), below.
(c) Pending receipt of the required C.P.I. and
determination of the actual adjustment, Lessee shall pay an estimated
adjusted rental, 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, within thirty (30) days after such notice. 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
this Lease or this Paragraph 4.3.
(d) 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. shall be used to
make such calculation. In the event that Lessor and Lessee cannot
agree on such alternative index, then the matter shall be submitted
for decision to JAMS/Endispute in accordance with the then rules of
said association and the decision of the Arbitrators shall be binding
upon the parties. The cost of said Arbitrators shall be paid equally
by Lessor and Lessee.
(e) The adjustment(s) required by this Rent
Escalation Paragraph shall be subject to the following additional
agreements:
(i) The increase under Subparagraph (b),
above, shall be subject to the following annual, non
cumulative minimum and
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maximum percentage increases per year involved in the
adjustment period:
Minimum yearly percentage increase: 3%
Maximum yearly percentage increase: 7%
The "adjustment period" is defined as the period commencing
with the month designated in SubParagraph (b) 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 in effect immediately preceding
the rent adjustment.
5. Security Deposit. Lessee shall deposit with Lessor upon
execution hereof $73,260.00 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 fifteen (15) days after written demand therefor deposit cash with Lessor
in an amount sufficient to restore said deposit to the full amount then
required of Lessee. If the monthly rent shall, from time to time, increase
during the term of this Lease, Lessee shall, at the time of such increase,
deposit with Lessor additional money as a security deposit so that the total
amount of the security deposit held by Lessor shall at all times bear the same
proportion to the then current Base Rent as the initial security deposit bears
to the initial Base Rent set forth in Paragraph 4. Lessor shall not be
required to keep said security 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
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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 only for
warehousing, distribution, general office functions and other lawful uses, and
shall be subject to all requirements of this Lease.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises,
in the state existing on the Commencement Date (or, with respect to
the Office Area, on the Office Area Early Commencement Date), but
without regard to alterations by Lessee which are not constructed by
the contractor pursuant to the Construction Agreement, or to the
specific use for which Lessee will occupy the Premises, does not
violate any covenants or restrictions of record, or any applicable
building code, statute, rule, regulation or ordinance in effect on the
Commencement Date (or Office Area Early Commencement Date, as
applicable). [Confidential treatment is being sought for this portion
of the Lease, which has been filed separately]
(b) Except as provided in Paragraph 6.2(a) Lessee
shall, at Lessee's expense, promptly comply with all applicable
statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements of any fire insurance
underwriters or rating bureaus, now in effect or which may hereafter
come into effect, whether or not they reflect a change in policy from
that now existing, 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 and of the Common Areas. Lessee shall not use
nor permit the use of the Premises or the Common Areas in any manner
that will tend to create waste or a nuisance or shall tend to disturb
other occupants of the Industrial Center.
6.3 Conditions of Premises.
(a) Lessor shall deliver the Premises to Lessee
clean and free of debris on the applicable commencement dates improved
in accordance with the Construction Agreement and Lessor warrants to
Lessee that the improvements in the Premises other than those portions
constructed by Lessee (other than pursuant to the Construction
Agreement) shall be in good operating
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condition on the applicable commencement dates. In the event that it
is determined that this warranty has been violated, then it shall be
the obligation of Lessor, after receipt of written notice from Lessee
setting forth with specificity the nature of the violation, to
promptly, at Lessor's sole cost, rectify such violation. Lessee's
failure to give such written notice to Lessor within twelve (12)
months after the Office Area Early Commencement Date shall cause the
conclusive presumption that Lessor has complied with all of Lessor's
obligations hereunder.
(b) Except as otherwise provided in this Lease,
Lessee hereby accepts the Premises in their condition existing as of
the applicable commencement dates 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, easements or restrictions 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.
(c) [Confidential treatment is being sought for
this portion of the Lease, which has been filed separately]
7. Maintenance, Repairs, Alterations and Common Area Services.
7.1 Lessor's Obligations. Subject to the provisions of
Paragraph 4.2 (Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) 7.5,
(Condition of Premises Upon Termination) and 9 (Damage or Destruction), and
except for damage to the Premises, Building, or Common Areas (collectively and
individually, "Lessee Caused Damage") caused by any negligent or intentional
act or omission of Lessee, Lessee's, contractors, licensees, employees or
agents (in which event Lessee shall repair the damage at Lessee's expense or
pay Lessor as provided in Paragraph 7.1.1), Lessor, at Lessor's expense, shall
keep in good condition and repair the Lessor Structural Elements and, subject
to reimbursement pursuant to Paragraph 4.2, the parking lots, walkways,
driveways, landscaping, fences, signs, utility installations and other aspects
of the Common Areas and all parts thereof and shall paint the exterior walls
when necessary as reasonably determined by Lessor to keep them in a sightly
condition. Lessor shall not, however, be obligated to paint the interior
surface of exterior walls, nor shall Lessor be required to maintain, repair or
replace windows, doors or plate glass of the Premises, or to maintain or repair
anything required to be maintained by
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18
Lessee under Paragraph 7.2. Lessor shall have no obligation to make repairs
under this Paragraph 7.1 until a reasonable time after receipt of written
notice from Lessee of the need for such repairs. Lessee expressly waives the
benefits of any statute now or hereafter 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. Lessor shall not be liable for damages or loss of any kind or nature
by reason of Lessor's failure to furnish any Common Area Services when such
failure is caused by accident, breakage, repairs, strikes, lockout, or other
labor disturbances or disputes of any character or by any other cause beyond
the reasonable control of Lessor.
7.1.1 [Confidential treatment is being sought for this
portion of the Lease, which has been filed separately]
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 6
(Use), 7.1 (Lessor's Obligations), and 9 (Damage or Destruction),
Lessee, at Lessee's expense, shall keep in good order, condition and
repair the Premises and every part thereof (whether or not the damaged
portion of the Premises or the means of repairing the same are
reasonably or readily accessible to Lessee) including, without
limiting the generality of the foregoing, the non-structural elements
of foundations, exterior walls, interior bearing walls, and roof of
the Premises, any plumbing, heating, ventilating and air conditioning
systems (Lessee shall procure and maintain, at Lessee's expense, a
ventilating and air conditioning system maintenance contract with a
qualified licensed contractor), electrical and lighting facilities and
equipment within the Premises, or that serves only the Premises
wherever situated, fixtures, walls and interior surfaces of exterior
walls, ceilings, windows, doors, plate glass, and skylights located
within the Premises.
(b) If Lessee fails to perform Lessee's
obligations under this Paragraph 7.2 or under any other paragraph of
this Lease, Lessor may enter upon the Premises after ten (10) days'
prior written notice to Lessee (except in the case of emergency, in
which case only such notice, if any, as shall be reasonable under the
circumstances shall be required) perform such obligations on Lessee's
behalf and put the Premises in good order, condition and repair, and
the cost thereof together with interest thereon at the rate of ten
percent (10%) per annum shall be due and payable as additional rent to
Lessor together with Lessee's next Base Rent installment. Without
limiting the foregoing, in the
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event Lessee fails to appropriately maintain the heating, ventilating
and air conditioning system, Lessor reserves the right to procure and
maintain the ventilating and air conditioning system maintenance
contract and if Lessor so elects, Lessee shall reimburse Lessor upon
demand for the cost thereof.
(c) 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 received, ordinary wear and tear excepted, clean
and free of debris. Any damage or deterioration of the Premises shall
not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices. Lessee shall repair any
damage to the Premises occasioned by the installation or removal of
Lessee's trade fixtures, alterations, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this
Lease, Lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing and fencing on the Premises in good operating
condition.
7.3 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, or the Industrial
Center, except for nonstructural alterations to the Premises
[Confidential treatment is being sought for this portion of the Lease,
which has been filed separately]. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior
approval of Lessor, Lessor may, at any time during the term of the
Lease, require that Lessee remove any or all of the same.
(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, in the event that the nature of the
applicable work is such that plans and specifications are prepared,
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 7.3(d)(i)(bb) and (cc) shall apply to non-structural
alterations, improvements, additions or Utility Installations not
exceeding either of the Threshold Amounts in cost.
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(c) Any alterations, improvements, additions or
Utility Installations in or about the Premises or the Industrial
Center that Lessee shall desire to make and which requires 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 deemed conditioned upon Lessee acquiring a permit to
do so from appropriate governmental agencies, if required, the
furnishing of a copy thereof to Lessor prior to the commencement of
the work and the compliance by Lessee of all conditions of said permit
in a prompt and expeditious manner.
(d) For any additions, alterations, improvements,
or Utility Installations requiring Lessor's prior written consent:
(i) Lessee shall:
(aa) Request Lessor's approval in
writing at least thirty (30) days prior to proposed
construction.
(bb) Employ a California licensed
architect, contractor and structural engineer in
connection with the proposed construction, if the
work is structural or, in the case of non-structural
work, if the employment of such person is appropriate
in connection with the work being performed and the
cost of such work exceeds $20,000.00.
(cc) 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.
(dd) If employment of that type of
professional is required under clause (bb), enter
into written agreements with an architect and general
contractor. Copies of executed agreements will be
forwarded to Lessor within five (5) days of
execution.
(ee) Cause to be obtained an
applicable building permit for any and all
construction and modifications, and construct the
additions and alterations and perform the
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construction work in accordance with all applicable
laws, including without limitation the Americans With
Disabilities Act.
(ii) Lessee's Architect (with respect to
all alterations, improvements, additions or Utility
Installations for which a professional architect's services
(1) would typically be used by a prudent tenant doing
comparable work or (2) are otherwise used by Lessee) shall:
(aa) Be licensed by the State of
California.
(bb) Design and specify within the
parameters of the building work letter (if any) and
approved building specifications (if any) or have
received specific written exceptions from Lessor.
(cc) Secure Lessor's written approval
before submitting plans to the general contractor for
bidding or to governmental agencies for approval.
(dd) Secure Lessor's written approval
of any changes or alternates to the plans recommended
by the general contractor or required by governmental
agencies.
(ee) Submit a copy of the final
application for permit and issued permit to Lessor.
(ff) Incorporate the building standard
details (if any) supplied by Lessor onto the drawings.
(gg) Submit final plans for Lessor's
written approval prior to construction.
(hh) Be available for final inspection
with Lessor at job completion.
(ii) Secure Lessor's written
approval of details of any changes in specifications
or finishes during construction.
(jj) Provide samples and specifications
as required by Lessor.
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(kk) 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.
(iii) Lessee's General Contractor and/or
Subcontractors Shall:
(aa) Be licensed by the State of
California.
(bb) Have substantial experience
providing similar quality and quantity of
improvements. Work history shall be provided to
Lessor prior to being awarded contract.
(cc) Have a bonding capacity equal to
or exceeding the valuation of the job.
(dd) 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 a
licensed insurer 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 (Xxxx Venture One, LLC) and
its managing agent (currently Xxxxxxx & Wakefield of
California, Inc.) as additional insureds.
(ee) Provide a construction schedule
to Lessor prior to commencement of work.
(ff) Use reasonable efforts to require
the General Contractor to warrant the General
Contractor's work and that of the General
Contractor's subcontractors, for a minimum of one (1)
year.
(gg) Provide Lessor with as-built
drawings of all improvements.
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(iv) All approvals by Lessor, as herein
provided for, shall not be unreasonably withheld and shall be
given within ten (10) business days after submission of a
request therefor or shall be deemed approved. All requests to
be submitted to Lessor shall be submitted through Lessor's
managing agent.
(e) 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 mechanic's or materialmen's lien against the Premises,
or the Industrial Center, or any interest therein. Lessee shall give
Lessor not less than ten (10) business days' notice prior to the
commencement of any work in the Premises exceeding $10,000.00 in
cumulative costs, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises or the Building 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 or the
Industrial Center, 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 and the
Industrial Center 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 to
Lessor's best interest to do so.
(f) All alterations, improvements, additions and
Utility Installations, other than trade fixtures and personal property
of Lessee, which may be made on or brought onto the Premises, shall be
the property of Lessor and shall remain upon and be surrendered with
the Premises at the expiration or earlier termination of the Lease
term, unless Lessor requires their removal pursuant to Paragraph
7.3(a). Notwithstanding the provisions of this Paragraph 7.3(f),
Lessee's machinery and equipment shall remain the property of Lessee
and may be removed by Lessee subject to the provisions of Paragraph
7.2.
7.4 Utility Additions. Lessor reserves the right to install
new or additional utility facilities throughout the Common Areas for the
benefit of Lessor or Lessee, or any other lessee of the Industrial Center,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, security systems,
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communication systems, and fire protection and detection systems, so long as
such installations do not unreasonably interfere with Lessee's use of the
Premises.
7.5 Condition of Premises Upon Termination; Additional
Use Provisions.
7.5.1 Lessee shall maintain the Premises as provided
in Paragraph 7.2 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 to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair, subject to Lessor's obligations under Paragraph 7.1. [Confidential
treatment is being sought for this portion of the Lease, which has been filed
separately]
7.5.2 Notwithstanding anything to the contrary in
Paragraph 7.2 of this Lease, upon termination of this Lease, Lessee shall leave
all plumbing, heating (including space heaters), air conditioning, electrical
and mechanical systems, on the Premises and in good condition and operating
order, ordinary wear and tear excepted, and Lessee shall upon demand pay to
Lessor that portion of the cost to restore such items to good condition and
operating order.
7.5.3 Notwithstanding anything to the contrary
contained in this Lease, the Premises shall not be used for the warehousing or
distribution of hazardous or explosive products, substances or materials.
8. Insurance; Indemnity.
8.1 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 judgement 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
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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
gross negligence or wilful misconduct of Lessor, its employees, and agents.
[Confidential treatment is being sought for this portion of the Lease, which
has been filed separately] 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 reasonably satisfactory to Lessor
(it being agreed that Lessor's good faith belief that a conflict of interest
exists or may reasonably exist in the event that Lessor and Lessee are
represented by the same counsel shall constitute reasonable grounds for
Lessor's insistence on separate counsel). 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 Center. Lessee agrees that the obligations assumed
herein shall survive the termination of this Lease.
8.2 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:
(a) Workers' Compensation with statutory limits.
(b) 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
(c) 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 on the Premises in an
amount not less than their full replacement cost, with a deductible
not to exceed $10,000. Lessee shall use commercially reasonable
efforts to obtain a waiver of subrogation.
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(d) 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
(e) 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 8.2 shall not, however,
limit the liability of Lessee hereunder.
8.3 Lessor shall, at all times during the term of this Lease,
maintain the following insurance:
(a) 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.
(b) 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 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.
(c) Boiler and machinery insurance in an amount
satisfactory to Lessor on a comprehensive coverage form.
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8.4 The Lessee shall deliver to Lessor prior to taking
possession of the Premises, 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 "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, Lessee shall use commercially reasonable efforts to cause all
Certificates to 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.
8.5 Lessor may secure and maintain, at Lessee's expense,
increased amounts of insurance and other insurance coverage in such limits, as
Lessor may require in its reasonable judgment to afford Lessor adequate
protection consistent with the practices of institutional owners of comparable
properties.
8.6 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.
8.7 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 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
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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.
8.8 Payment of Premium Increase.
(a) After the term of this Lease has commenced, Lessee
shall not be responsible for paying Lessee's Share of any increase in the
property insurance premium for the Industrial Center specified by Lessor's
insurance carrier as being caused by the use, acts or omissions of any other
lessee of the Industrial Center, or by the nature of such other lessee's
occupancy which create an extraordinary or unusual risk.
(b) Lessee, however, shall pay the entirety of any
increase in the property insurance premium for the Industrial Center over what
it was immediately prior to the commencement of the term of this Lease if the
increase is specified by Lessor's insurance carrier as being caused by the
specific nature of Lessee's occupancy or any act or omission of Lessee, rather
than the general occupancy of the Premises.
8.9 Exemption of Lessor from Liability. Lessee hereby agrees
that Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other
person in or about the Premises or the Industrial Center, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, 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, sprinklers, wires, appliances, plumbing,
air conditioning, or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon
other portions of the Industrial Center, or from other sources or places and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Lessee, Lessor shall not be liable for
any damages arising from any act or neglect of any other lessee, occupant or
user of the Industrial Center, nor from the failure of Lessor to enforce the
provisions of any other lease of the Industrial Center. Notwithstanding
anything in this Paragraph 8.9 to the contrary, but subject to Paragraph 8.7,
nothing in this Lease shall limit Lessor's liability for injuries to natural
persons or damage to property to the extent caused by the active negligence or
willful misconduct of Lessor, its employees or agents.
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9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean if the
Premises are damaged or destroyed to the extent that the cost of
repair is less than fifty percent of the then replacement cost of the
Premises.
(b) "Premises Total Destruction" shall mean if
the Premises are damaged or destroyed to the extent that the cost of
repair is fifty percent or more of the then replacement cost of the
Premises.
(c) "Industrial Center Buildings" shall mean all
of the buildings on the Industrial Center site.
(d) "Industrial Center Buildings Total
Destruction" shall mean if the Industrial Center Buildings are damaged
or destroyed to the extent that the cost of repair is fifty percent or
more of the then replacement cost of the Industrial Center Buildings.
(e) "Insured Loss" shall mean damage or
destruction which was caused by an event required to be covered by the
insurance described in Paragraph 8. The fact that an Insured Loss has
a deductible amount shall not make the loss an uninsured loss.
(f) "Replacement Cost" shall mean the amount of
money necessary to be spent in order to repair or rebuild the damaged
area to the condition that existed immediately prior to the damage
occurring excluding all improvements made by lessees.
9.2 Premises Partial Damage; Premises Building Partial
Damage.
(a) Insured Loss: Subject to the provisions of
Paragraphs 9.4 and 9.5, if at any time during the term of this Lease
there is damage which is an Insured Loss and which falls into the
classification of Premises Partial Damage, then Lessor shall, at
Lessor's expense, repair any damage to the Base Building (as defined
in the Construction Agreement), other than tenant improvements,
fixtures and Utility Installations constructed by Lessee, and Lessee
shall, at Lessee's expense, repair all other damage to the Premises
and to Lessee's
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fixtures, equipment, tenant improvements or Utility Installations, as
soon as reasonably possible and this Lease shall continue in full
force and effect.
(b) Uninsured Loss: [Confidential treatment is
being sought for this portion of the Lease, which has been filed
separately]
9.3 Premises Total Destruction; Industrial Center
Buildings Total Destruction.
(a) [Confidential treatment is being sought for
this portion of the Lease, which has been filed separately]
9.4 Damage Near End of Term.
(a) Subject to Paragraph 9.4(b), if at any time
during the last six months of the term of this Lease there is
substantial damage, whether or not an Insured Loss, which falls within
the classification of Premises Partial Damage, Lessor or Lessee may at
its option cancel and terminate this Lease as of the date of
occurrence of such damage by giving written notice to the other party
of its election to do so within 30 days after the date of occurrence
of such damage.
(b) Notwithstanding Paragraph 9.4(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 twenty (20) business days after the occurrence of an
Insured Loss falling within 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 twenty (20) business day
period, Lessor shall, at Lessor's expense, repair any damage to the
Base Building, other than tenant improvements, fixtures and Utility
Installations constructed by Lessee, as soon as reasonably possible at
Lessor's expense, in which event Lessee shall, at Lessee's expense,
repair all other damage to the Premises and to Lessee's fixtures,
equipment, tenant improvements or Utility Installations as soon as
reasonably possible, and in such event this Lease shall continue in
full force and effect. If Lessee fails to exercise such option during
said twenty (20) business day period, then Lessor may at Lessor's
option terminate and cancel this Lease as of the expiration of said
twenty (20) business day period by giving written notice to Lessee of
Lessor's election to do so within ten (10) business days after
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the expiration of said twenty (20) business day period,
notwithstanding any term or provision in the grant of option to the
contrary.
9.5 Abatement of Rent; Lessee's Remedies.
(a) Subject to the provisions of Paragraph 51, in
the event Lessor and/or Lessee repairs or restores the Premises
pursuant to the provisions of this Paragraph 9, the rent, Operating
Expenses and all other amounts payable to Lessor 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; provided that if the damage, repair or
restoration relates to Lessee Caused Damage, that abatement shall be
given only to the extent Lessor receives proceeds from rent abatement
insurance. Except for abatement of rent as provided above, 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 Base Building under the provisions of this Paragraph 9 and
shall not commence such repair or restoration within one hundred (100)
days after such obligation 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. In the event that Lessor shall be
obligated to repair or restore the Base Building pursuant to Paragraph
9 of this Lease and shall not commence such repair or restoration
within one hundred (100) days after such obligation shall accrue, the
right of Lessee to terminate this Lease pursuant to this Paragraph
9.5(b) shall be the sole right and remedy of Lessee against Lessor,
and Lessor shall have no other liability to Lessee, for damages,
specific performance or otherwise, in connection with any such
failure.
[Confidential treatment is being sought for this
portion of the Lease, which has been filed separately]
9.6 Termination -- Advance Payments. Upon termination of
this Lease pursuant to this 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.
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9.7 Waiver. Lessor and Lessee waive the provisions of any
statute 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.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the real property
tax, as defined in Paragraph 10.3, applicable to the Industrial Center subject
to reimbursement by Lessee of Lessee's Share of such taxes in accordance with
the provisions of Paragraph 4.2, except as otherwise provided in Paragraph
10.2.
10.2 Additional Improvements. Lessee shall not be
responsible for paying Lessee's Share of any increase in real property tax
specified in the tax assessor's records and work sheets as being caused by
additional improvements placed upon the Industrial Center by other lessees or
by Lessor for the exclusive enjoyment of such other lessees. Lessee shall,
however, pay to Lessor at the time that Operating Expenses are payable under
Paragraph 4.2(c) the entirety of any increase in real property tax if assessed
solely by reason of additional improvements placed upon the Premises by Lessee
or at Lessee's request.
10.3 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 Industrial Center
or any portion thereof by any authority having the direct or indirect power to
tax, including any city, county, 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 Industrial
Center or in any portion thereof, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Industrial
Center. The term "real property tax" shall also include any tax, fee, levy,
assessment or charge (i) in substitution of, partially or totally, any tax,
fee, levy, assessment or charge hereinabove included within the definition of
"real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax" or (iii) 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 (iv) which is imposed as a result of a
transfer, either partial or total, of Lessor's interest in the Industrial
Center or which is added to a tax or charge hereinbefore included within the
definition of real property tax by reason of such transfer, or (v) which is
imposed by reason of this transaction, any modifications or changes hereto, or
any transfers hereof.
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10.4 Joint Assessment. If the Industrial Center is not
separately assessed, Lessee's Share of the real property tax 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.
10.5 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 to
Lessor the Shares attributable to Lessee within ten (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. Unless separate metering is not available
from the applicable utility, all such utilities shall be separately metered
with respect to the Building, and the installation of such separate meters
shall be Lessor's obligation as part of the Base Building work. If any such
services cannot be separately metered to the Premises at any time, Lessee shall
pay, at Lessor's option, either Lessee's Share or a reasonable proportion to be
determined by Lessor of all charges jointly metered with other premises in the
Industrial Center.
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 the Lease or in
the Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold, condition or delay. Without limiting Paragraph 12.2
hereof, a sale or transfer of all or substantially all of the assets of Lessee
shall be a transfer within this Paragraph 12. Lessor shall
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respond to Lessee's request for consent hereunder within ten (10) business days
and any such 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. 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. Such assignment or sublease shall be subject to, without
limitation, all the conditions in this 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, which
consent shall not be unreasonably withheld, conditioned or delayed.
(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 this Paragraph 12.1,
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
(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.
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(d) No sublessee or assignee shall have a right further
to sublet or assign except in accordance with all consent and other
requirements of this Paragraph 12.
(e) [Confidential treatment is being sought for this
portion of the Lease, which has been filed separately]
12.2 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 or other business entity
which controls, is controlled by or is under common control with Lessee, or to
any corporation or other business entity resulting from the merger or
consolidation with Lessee, or to any person or entity which acquires all or
substantially all of the assets of Lessee as a going concern of the business
that is being conducted on the Premises, all of which are referred to as
"Lessee Affiliate," provided that before such assignment shall be effective
said assignee shall assume, in full, the obligations of Lessee under this
Lease. 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.
12.3 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
capital stock or assets of Lessee, shall be deemed to be an assignment
of this Lease.
12.4 Terms and Conditions of Assignment. Regardless of
Lessor's consent, no assignment shall release Lessee of Lessee's obligations
hereunder or alter the primary liability of Lessee to pay the Base Rent and
Lessee's Share of Operating Expenses, and to perform all other obligations to
be performed by Lessee hereunder.
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Lessor may accept rent from any person other than Lessee pending approval or
disapproval of such assignment. Neither a delay in the approval or disapproval
of such assignment nor the acceptance of rent shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the breach of any of
the terms or conditions of this Paragraph 12 of this Lease. Consent to one
assignment shall not be deemed consent to any subsequent assignment. 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 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.
12.5 Terms and Conditions Applicable to Subletting.
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
included in subleases:
(a) 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, Lessee may, subject to Paragraph 12.1(e) 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 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.
(b) No sublease entered into by Lessee shall be
effective unless and until it has been approved in writing by Lessor.
In entering into any
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sublease, Lessee shall use only such form of sublease as is reasonably
satisfactory to Lessor, and once approved by Lessor, such sublease
shall not be changed or modified without Lessor's prior written
consent. Any sublessee shall, by reason of entering into a sublease
under this Lease, be deemed, for the benefit of Lessor, to have
assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such
obligations as are contrary to or inconsistent with provisions
contained in a sublease to which Lessor has expressly consented in
writing.
(c) If Lessee's obligations under this Lease have
been guaranteed by third parties, then a sublease, and Lessor's
consent thereto, shall not be effective unless said guarantors give
their written consent to such sublease and the terms thereof.
(d) The consent by Lessor to any subletting shall
not release Lessee from its obligations or alter the primary liability
of Lessee to pay the rent and perform and comply with all of the
obligations of Lessee to be performed under this Lease.
(e) The consent by Lessor to any subletting shall
not constitute a consent to any subsequent subletting by Lessee or to
any assignment or subletting by the sublessee. However, Lessor may
consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining
their consent and such action shall not relieve such persons from
liability.
(f) In the event of any default under this Lease,
Lessor may proceed directly against Lessee, any guarantors or any one
else responsible for the performance of this Lease, including the
sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefor to Lessor, or any security
held by Lessor or Lessee.
(g) In the event Lessee shall default in the
performance of its obligations under this Lease, Lessor, at its option
and without any obligation to do so, may require any sublessee to
attorn to Lessor, in which event Lessor shall undertake the
obligations of Lessee under such sublease from the time of the
exercise of said option to the termination of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security
deposit paid
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by such sublessee to Lessee or for any other prior defaults of Lessee
under such sublease.
(h) Each and every consent required of Lessee
under a sublease shall also require the consent of Lessor.
(i) No sublessee shall further assign or sublet
all or any part of the Premises without Lessor's prior written
consent.
(j) Lessor's written consent to any subletting of
the Premises by Lessee shall not constitute an acknowledgement that no
default then exists under this Lease of the obligations to be
performed by Lessee nor shall such consent be deemed a waiver of any
then existing default, except as may be otherwise stated by Lessor at
the time.
(k) With respect to any subletting to which
Lessor has consented, Lessor agrees to deliver a copy of any notice of
default by Lessee to the sublessee. Such sublessee shall have the
right to cure a default of Lessee within ten (10) days after service
of said notice of default upon such sublessee, and the sublessee shall
have a right of reimbursement and offset from and against Lessee for
any such defaults cured by the sublessee.
12.6 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 attorney's and/or
consultants' fees incurred in connection therewith, such attorney's fees not to
exceed $500.00 for each such request.
13. Default Remedies.
13.1 Default. The occurrence of any one or more of the
following events shall constitute a material default of this Lease by Lessee:
(a) (i) The vacating of the Premises by Lessee in
the event that it results in an impairment or limitation on the
insurance coverage for the Premises or any breach or default of any
loan then encumbering the Premises; or (ii) the abandonment of the
Premises by Lessee in the event Lessee is deemed to have abandoned the
Premises pursuant to California Civil Code Section 1951.3.
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(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 ten
(10) 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) Except as otherwise provided in this Lease,
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 thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the
nature of Lessee's noncompliance is such that more than thirty (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
thirty (30) day period and thereafter diligently prosecutes such cure
to completion. To the extent permitted by law, such 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 general 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 one hundred twenty (120)
days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where possession is
not restored to Lessee within ninety (90) 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 ninety (90)
days. 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, was materially false and
that such financial statement was known by Lessee or the other parties
who delivered it to be materially false at the time it was delivered.
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13.2 Remedies. If Lessee fails to perform any affirmative
duty or obligation of Lessee under this Lease, within ten (10) business 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 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 of 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 ten percent (10%). 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
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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
subparagraphs 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 subparagraphs 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.
(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 covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein
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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 thirty (30) day period and thereafter
diligently prosecutes the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late
payment by Lessee to Lessor of Base Rent, Lessee's Share of Operating Expenses
or 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 covering the Property. Accordingly, if any
installment of Base Rent, Operating Expenses or any other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) business
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 5% 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, nor 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 any of the aforesaid monetary
obligations of Lessee, then Base Rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding Paragraph
4.1 or any other provision of this Lease to the contrary.
[Confidential treatment is being sought for this portion of
the Lease, which has been filed separately]
14. Condemnation. If the Premises or any portion thereof or the
Industrial Center 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 twenty percent of the floor area of the Premises, or more
than twenty-five percent of that portion of the Common Area designated as
parking for the Industrial Center is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within thirty (30) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within thirty (30) 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,
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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 Premises taken bears to the total floor area of the
Premises. No reduction of rent shall occur if the only area taken is that
which does not have the Premises 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 severance damages received by Lessor in connection with
such condemnation, 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
severance damages required to complete such repair.
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 at the end of 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: Xxxxxxx & Xxxxxxxxx of California, Inc. and
CB Commercial Real Estate Group, Inc.
Lessee's Broker: CB Commercial Real Estate Group, Inc.
The commission payable to Lessor's Broker with respect to this Lease shall be
pursuant to the terms of the separate commission agreement in effect between
Lessor and Lessor's Broker. Lessor's Broker shall pay a portion of its
commission to Lessee's Broker, if so provided in any agreement between Lessor's
Broker and Lessee's Broker. Nothing in this Lease shall impose any obligation
on Lessor or Lessee to pay a commission or fee to any party other than Lessor's
Broker.
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16. Estoppel Certificate.
(a) Each party (as "responding party") shall at
any time upon not less than ten (10) days' prior written notice from
the other party, ("requesting party") execute, acknowledge and deliver
to the requesting party 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 the responding party's
knowledge, any uncured defaults on the part of the requesting party,
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 or of the business of the requesting
party.
(b) At the requesting party's option, the failure
to deliver such statement within such time shall be a material default
of this Lease by the party who is to respond, without any further
notice to such party, or it shall be conclusive upon such party that
(i) this Lease is in full force and effect, without modification
except as may be represented by the requesting party, (ii) there are
no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has
been paid in advance.
(c) If Lessor desires to finance, refinance, or
sell the Property, 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 (3) 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. Notwithstanding
the foregoing, so long as Lessee is a publicly traded company, Lessee
shall be required to deliver only those financial statements of Lessee
that are publicly available.
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' interest in a ground lease of the Industrial Center, in the event of
any transfer of such title or interest. So long as the applicable grantee
assumes all of the obligations of Lessor hereunder arising from and after the
effective date of the applicable transfer, 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
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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
Interest Rate (as defined below). 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. As used herein, the term "Interest
Rate" means the lesser of (a) a floating annual interest rate equal to three
and one-half percent (3.5%) over the prime rate (for corporate loans at large
United States money center commercial banks) published in the Wall Street
Journal on the first business day of each month, or (b) the maximum rate
permitted by applicable law. In the event that the Wall Street Journal fails
to publish such a prime rate, the "prime rate" shall be the prime rate or
reference rate quoted by a national bank having offices in California selected
by Lessor in its sole discretion.
20. Time of Essence. Time is of the essence with respect to the
obligations to be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor
under the terms of this Lease, including but not limited to Lessee's Share of
Operating Expenses and insurance and tax expenses payable 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 or contemporaneous 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 employee or agents
of any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of the
Premises or
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the Property 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 required or permitted to be given
hereunder shall be in writing and may be given by personal delivery or by
certified mail and if given personally or by mail, shall be deemed sufficiently
given if addressed to Lessee or to Lessor at the address noted below the
signature of the respective parties, as the case may be. Either party may by
notice to the other specify a different address for notice purposes except that
upon Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice purposes. 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.
Any notice given pursuant to this Lease 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:
Xxxx Venture One, LLC
c/o Wohl Property Group
0000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx
Attn: Skip Xxxx
With a copy by the same method to:
Xxxxxxx & Wakefield of California, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx Xxxxxxxx
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LESSEE:
Prior to the Office Area Early Commencement Date:
Vans, Inc.
0000 Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
After the Office Area Early Commencement Date:
Vans, Inc.
15700 "A" Xxxxxxxxx Avenue
Santa Fe Springs, California ________
Attn: Xxxxx X. Xxxxxxxx, Esq.
With a copy by the same method to:
Proskauer, Rose, Xxxxx & Xxxxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx Xxxx, Esq.
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.
24. Waivers. No waiver by Lessor or Lessee of any provision
hereof shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Lessee or Lessor, as the case may be, of the same or any
other provision. Lessor's or Lessee's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's or
Lessee's, as the case may be, consent to or approval of any subsequent act by
Lessor or 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.
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25. Recording. Lessee shall have the right to record a memorandum
of this Lease, in form reasonably acceptable to Lessor, at Lessee's sole cost
and expense.
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 of 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, 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 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 where the Industrial Center is located and any litigation
concerning this Lease between the parties hereto shall be initiated in the
county in which the Industrial Center is located.
30. Subordination.
(a) This Lease, and any Option granted hereby, at
Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter
placed upon the Industrial Center and to any and all advances made on
the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. Notwithstanding
such subordination, Lessee's right to quiet possession of the Premises
shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the
provisions of this Lease (subject in each case to any applicable cure
periods), unless this Lease is otherwise terminated pursuant to its
terms. If any mortgagee, trustee or ground lessor shall elect to have
this Lease and any Options granted hereby prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior
to such
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mortgage, deed of trust, or ground lease, whether this Lease or such
Options are dated prior or subsequent to the date of said mortgage,
deed of trust or ground lease or the date of recording thereof.
(b) So long as such documents are consistent with
the nondisturbance requirements of Paragraph 30(a), above, Lessee
agrees to execute any documents reasonably required to effectuate an
attornment, a subordination or to make this Lease or any Option
granted herein prior to the lien of any mortgage, deed of trust or
ground lease, as the case may be, Lessee's failure to execute such
documents within ten (10) days after written demand shall constitute a
material default by Lessee hereunder without further notice to Lessee
or, at Lessor's option, Lessor shall execute such documents on behalf
of Lessee as Lessee's attorney-in-fact. Lessee does hereby make,
constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact
and in Lessee's name, place and stead, to execute such documents in
accordance with this Paragraph 30(b); provided, however, that this
appointment of Lessor as Lessee's attorney-in-fact shall not be
effective so long as Vans, or a Lessee Affiliate (as defined in
Paragraph 12.2) of Vans is the Lessee under this Lease.
31. Attorneys Fees.
31.1 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 its
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 abandonment of the claim or defense by the
other party.
31.2 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.
31.3 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
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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. Upon reasonable prior notice to Lessee,
Lessor and Lessor's agents shall have the right to enter the Premises at
reasonable times for the purpose of inspecting same, showing the same to
prospective purchasers, lenders, or (during the last nine (9) months of the
term of this Lease) lessees, and, with the prior consent of Lessee, making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises or the Building 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. During any period that Vans, or a Lessee Affiliate (as defined in
Paragraph 12.2) of Vans is the Lessee under this Lease and in occupancy of the
Premises, Lessor agrees that it shall make reasonable efforts to avoid locating
any "For Sale" sign on the Premises in immediate proximity to any signs
identifying the Lessee so as to minimize any misimpressions that Vans, Inc. and
not the Building is for sale. All activities of Lessor pursuant to this
paragraph shall be without abatement of rent, nor shall Lessor have any
liability to Lessee for the same.
33. Auctions. Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon the Premises
or the Common Areas 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 or
the Industrial Center without Lessor's prior written consent. Under no
circumstances shall Lessee place a sign on any roof of the Industrial Center.
Lessor hereby approves of the signs described on Exhibit "E" attached hereto,
which shall be installed, maintained and removed at Lessee's sole cost and
expense.
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, 46 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, conditioned or
delayed.
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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
Property.
39. Options.
39.1 Definition. As used in this paragraph, the word
"Option" has the following meaning: (1) 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; (2) 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 space within the Industrial Center
or other property of Lessor or the right of first offer to lease other space
within the Industrial Center or other property of Lessor; (3) the right or
option to purchase the Premises or the Industrial Center, or the right of first
refusal to purchase the Premises or the Industrial Center, or the right of
first offer to purchase the Premises or the Industrial Center, 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 purchaser
other property of Lessor.
39.2 [Confidential treatment is being sought for this portion
of the Lease, which has been filed separately]
39.3 Multiple Options. 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.
39.4 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)
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or 13.1(c) and continuing until the default alleged in said notice of default
is cured, or (ii) at any time after an event of default described in Paragraphs
13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice of
such default to Lessee).
(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 39.4(a).
(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 notice from Lessor that 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) or 13.1(e) (without any necessity of Lessor to give
notice of such default to Lessee).
39.5 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 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 twelve (12) 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 39.4, 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;
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(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) Subject to adjustment as provided in Paragraph 39.8,
the monthly Base Rent for each month of the First Option Period shall
be ninety-five percent (95%) of the Fair Market Rent (as defined
below) of the Premises as of the commencement of the First 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 First Option
Period.
39.6 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 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 twelve (12) 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 39.4 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;
(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 thee term of the option; and
(e) Subject to adjustment as provided in Paragraph 39.8,
the monthly Base Rent for each month of the option periods shall be
ninety-five percent (95%) of 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
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scheduled to be paid during the month prior to the commencement of the
Second Option Period.
39.7 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 Mid Cities Area, giving appropriate consideration to
the annual rental rates per square foot and the standard of measurement by
which the square footage is measured and any free rent or tenant improvement
allowances given in connection with those leases. In determining Fair Market
Rent it shall be assumed that:
(i) The Premises are in good condition and repair
(less reasonable wear and tear).
(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.
(v) The Premises will be used for its highest and
best use.
(vi) The rent escalations in Paragraph 39.8 will
be applicable.
(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 90th 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
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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.
(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
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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 made by the President of the Los Angeles Chapter
of the American Arbitration Association.
(viii) The cost of arbitration shall be paid by
Lessor and Lessee equally.
(e) Adjustment for Tenant Improvement Allowance. If in
determining Fair Market Rent the parties or the arbitrators, as applicable,
determine that the economic terms of leases of comparable space include a
tenant improvement allowance, Lessor may, at Lessor's sole option, elect to do
the following:
(i) Grant some or all of the value of the tenant
improvement allowance as an allowance for the refurbishment of the
improvements on the Premises; and
(ii) Reduce the Base Rent component of the Fair
Market Rent to be an effective rental rate that takes into
consideration the total dollar value of that portion of the tenant
improvement allowance that Lessor has elected not to grant to Lessee
(in which case that portion of the tenant improvement allowance
evidenced in the effective rental rate shall not be granted to
Lessee).
39.8 Rent Escalations - Option Terms.
(a) On the first day of the 31st month of the term of
each of the Option Periods, the monthly Base Rent payable under Paragraph 4 of
the Lease as modified by Paragraph 39.5(e) and Paragraph 39.6(e), as applicable,
shall be adjusted by the increase, if any, from the date the applicable Option
Period commenced, in the C.P.I.
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(b) The monthly Base Rent payable in accordance with
Paragraph 39.8(a) above shall be calculated as follows: the base rent
scheduled to be paid during the month prior to the month in which the
adjustment is to occur, shall be multiplied by a fraction the
numerator of which shall be the C.P.I. of the calendar month prior to
the month during which the adjustment is to take effect, and the
denominator of which shall be the C.P.I. for the calendar month prior
to the month in which the applicable Option Period commences. The sum
so calculated shall constitute the new monthly Base Rent hereunder,
subject to Paragraph 39.8(e), below.
(c) Pending receipt of the required C.P.I. and
determination of the actual adjustment, Lessee shall pay an estimated
adjusted rental, 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 within thirty (30) days after such notice. 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 39.8.
(d) 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. shall be used to make such calculation.
In the event that Lessor and Lessee cannot agree on such alternative
index, then the matter shall be submitted for decision to
JAMS/Endispute in accordance with the then rules of said association
and the decision of the Arbitrators shall be binding upon the parties.
The cost of said Arbitrators shall be paid equally by Lessor and
Lessee.
(e) The adjustment(s) required by this Rent Escalation
Paragraph shall be subject to the following additional agreements:
(i) The increase under Paragraph
39.8(b), above, shall be subject to the following annual,
non-cumulative minimum and maximum percentage increases per
year involved in the adjustment period:
Minimum yearly percentage increase: 3%
Maximum yearly percentage increase: 7%
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The "adjustment period" is defined as the period commencing
with the month designated in Paragraph 39.8(b), 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.
40. Security Measures. Lessee hereby acknowledges that Lessor
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Industrial Center. Lessee
assumes all responsibility for the protection of Lessee, its agents and
invitees and the property of Lessee and of Lessee's agents and invitees from
acts of third parties. Nothing herein contained shall prevent Lessor, with
Lessee's consent, from providing security protection for the Industrial Center
or any part thereof, in which event the cost thereof shall be included within
the definition of Operating Expenses, as set forth in Paragraph 4.2(b).
41. 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 interfere with the use of the Premises by Lessee. Lessee
shall sign any of the aforementioned reasonable documents upon request of
Lessor and failure to do so shall constitute a material default of this Lease
by Lessee without the need for further notice to Lessee.
42. 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.
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43. Authority. If Lessor or 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 Lessor or Lessee
is a corporation, trust or partnership, Lessor and Lessee shall each, if so
requested by the other party in writing, within thirty (30) days after receipt
of such request, deliver to the other party evidence of such authority
reasonably satisfactory to such other party.
44. Cashiers Checks.
44.1 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 during any twelve (12) month period, 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.
45. Amendments to Lease.
45.1 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.
45.2 Lessee agrees to make any non-monetary modifications to
this Lease that may be required by an institutional mortgagee of Lessor and
that do not result in a material adverse change in Lessee's obligations, use or
occupancy under this Lease.
46. Storage Tanks.
46.1 Notwithstanding anything to the contrary in Paragraph
7.3 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 installed by or
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under the direction of Lessee 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 47.
46.2 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.
47. Hazardous Materials.
47.1 Lessee's Covenants Regarding Hazardous Materials.
(a) 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 subparagraph (b) 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 (1) 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 subparagraph (b)
below); (2) 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), (3) notice of and a copy of the current material safety
data sheet is provided to Lessor for each such Hazardous Material, and
(4) Lessor shall have granted its prior written consent to the use of
such Hazardous Materials.
(b) Compliance with Hazardous Materials Laws. As
used herein, the term "Hazardous Materials" means any (1) 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); (2) asbestos in any form, urea
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formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated
biphenyls, or radon gas; (3) 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 11 of Title 22 of the California Code
of Regulations, Division 4, Chapter 20; (4) 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 (5)
other chemical, materials or substance which may or could pose a
hazard to the environment. As used here 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.
(c) 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 by Lessee or Lessee's agents, employees or invitees, 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 expand the scope of contamination of, the Leased
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
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necessary in order to clean up, remove and dispose of such Hazardous
Materials causing the violation on the Leased Premises or the
underlying groundwater or the properties adjacent to the Leased
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 Leased 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.
(d) Notices. Lessee shall immediately notify
Lessor in writing of: (i) 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;
(ii) 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 (iii) 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.
47.2 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.
48. Lessor's Default.
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
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the Industrial Center, and Lessor shall have no personal liability beyond such
interest and estate with respect to such damages or judgments.
49. Easements and Restrictions of Record
49.1 Lessee accepts the Premises and Industrial Center
subject to the easements and covenants or restrictions of record.
49.2 Lessor and Lessee agree to cooperate and use their best
efforts to participate in traffic management programs generally applicable to
businesses located in the area which includes the Industrial Center and,
initially, shall encourage and support van and car pooling by Lessee's
employees to the fullest extent permitted by the requirements of Lessee's
business. Neither this Paragraph nor any other provision in this Lease,
however, is intended to or shall create any rights or benefits in any other
person, firm, company, governmental entity or the public.
50. Offer. Preparation of this Lease by Lessor or Lessor's agent
and submission of same to Lessee shall not be deemed an offer to lease. This
Lease shall become binding upon Lessor and Lessee only when fully executed by
Lessor and Lessee.
51. [Confidential treatment is being sought for this portion of
the Lease, which has been filed separately]
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE
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INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
LESSOR LESSEE
XXXX VENTURE ONE, LLC, VANS, INC., a Delaware corporation
Delaware limited liability company
By: Xxxx Property Group, Inc., a By __________________________
California corporation,
its manager
By __________________________
By:__________________________
Xxxx X. Xxxx Executed on__________________
President
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