LEASE AGREEMENT
(Multi-Tenant Facility)
ARTICLE ONE: BASIC TERMS.
This Article One contains the Basic Terms of this Lease between the Landlord and Tenant named below. Other
Articles, Sections and Paragraphs of the Lease referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.
Section 1.01. Date of Lease:
Section 1.02. Landlord (include legal entity): Xxxxxxxx-Xxxxx Company, a Mississippi corporation,
Address of Landlord: 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000
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Section 1.03. Tenant: Creative Computers, Inc., a California corporation
Address of Tenant: 0000 Xxxx 000xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, Attention Simon Abuyones
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Section 1.04. Property: The Property is part of Landlord's multi-tenant real property development known
as Shelby I, 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000 and described or depicted in Exhibit "A" (the
"Project"). The Project includes the land, the buildings and all other improvements located on the land, and the
common areas described in Paragraph 4.05(a). The Property is (include street address, approximate square footage
and description): approximately 155,000 square feet at Shelby I, 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx, as
shown on Exhibit B.
Section 1.05. Lease Term: 36 months beginning on May 1, 2002, or such other date as is specified in this
Lease, and ending on April 30, 2005.
Section 1.06. Permitted Uses (See Article Five): Office, warehouse and distribution of computers,
electronic components or related equipment and other uses related to Tenant's business.
Section 1.07. Tenant's Guarantor (if none, so state): None
Section 1.08. Broker(s) (See Article fourteen) (if none, so state):
Landlord's Broker: Whitetail Real Estate Management, Inc.
Tenant's Broker: None
Section 1.09. Commission payable to Landlord's Broker (See Article Fourteen): Four percent (4.0%) to
Whitetail Real Estate Management, Inc.
Section 1.10. Initial Security Deposit (See Section 3.03): None
Section 1.11. Vehicle Parking Spaces Allocated to Tenant: (See Section 4.05) 238
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: THIRTY-FOUR THOUSAND SIX HUNDRED SIXTEEN AND 66/100 DOLLARS ($34,616.66) per month
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02); (ii) Utilities (See Section 4.03);
(iii) Insurance Premiums (See Section 4.04); (iv) Tenant's Pro-Rata Share of Common Area Expenses: Forty-Eight
percent (48%) (See Section 4.05); (v) Impounds for Insurance Premiums and Property Taxes ( if required pursuant to
Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).
Section 1.13. Landlord's Share of Profit on Assignment or Sublease: (See Section 9.05) Fifty percent (50%)
of the profit (the "Landlord's Share").
Section 1.14. Riders: The following Riders are attached to and made a part of this Lease: (If none, so
state) Addendum to Lease Agreement
ARTICLE TWO. LEASE TERM.
Section 2.01. Lease of Property for Lease Term. Landlord leases the Property from Landlord to Tenant and
Tenant leases the Property from Landlord for the Lease Term. The Lease Term is for the period stated in Section
1.05 above and shall begin and end on the dates specified in Section 1.05 above, unless terminated or extended
pursuant to the terms hereof. The "Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term. Section 2.02 Delay in Commencement.N/A
Section 2.03 Early Occupancy. N/A
Section 2.04 Holding Over. Tenant shall vacate the Property upon the expiration or earlier termination of
this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all reasonable damages which
Landlord incurs from Tenant's delay in vacating the Property. If Tenant does not vacate the Property upon the
expiration or earlier termination of the Lease and Landlord thereafter accepts rent from Tenant, Tenant's occupancy
of the Property shall be a "month to month" tenancy, subject to all of the terms of this Lease applicable to a
month-to-month tenancy, except that the Base Rent then in effect shall be increased by fifty percent (50%).
ARTICLE THREE: BASE RENT.
Section 3.01. Time and Manner of Payment. Upon execution of this Lease, Tenant shall pay Landlord the Base
Rent in the amount stated in Paragraph 1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay Landlord the Base Rent, in advance,
without offset, deduction or prior demand. The Base Rent shall be payable at Landlord's address or at such other
place as Landlord may designate in writing.
Section 3.02 Cost of Living Increases. N/A
Section 3.03. Security Deposit; Increases.
(a) Upon the execution of this Lease, Tenant shall deposit with Landlord a cash Security Deposit in the
amount set forth in Section 1.10 above, if any. Landlord may apply all or part of the Security Deposit to any
unpaid rent or other charges due from Tenant or to cure any other defaults of Tenant. If Landlord uses any part of
the Security Deposit, Tenant shall restore the Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a material default under this Lease. No interest
shall be paid on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from
its other accounts and no trust relationship is created with respect to the Security Deposit.
(b) Each time the Base Rent is increased, Tenant shall deposit additional funds with Landlord sufficient to
increase the Security Deposit to an amount which bears the same relationship to the adjusted Base Rent as the
initial Security Deposit bore to the initial Base Rent.
Section 3.03. Termination; Advance Payments. Upon termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation) or any other termination not resulting from Tenant's default, and after
Tenant has vacated the Property in the manner required by this Lease, Landlord shall refund or credit to Tenant (or
Tenant's successor) the unused portion of the Security Deposit, any advance rent or other advance payments made by
Tenant to Landlord, and any amounts paid for real property taxes and other reserves which apply to any time periods
after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT.
Section 4.01. Additional Rent. All charges payable by Tenant, pursuant to this Article Four other than Base
Rent are called "Additional Rent." Unless this Lease provides otherwise, Tenant shall pay all Additional Rent then
due with the next monthly installment of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Tenant shall pay all real property taxes on the Property (including any fees,
taxes or assessments against, or as a result of, any tenant improvements installed on the Property by or for the
benefit of Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08 below, such payment shall
be made to the applicable taxing authority at least ten (10) days prior to the delinquency date of the taxes.
Within such ten (10)-day period, Tenant shall furnish Landlord with satisfactory evidence that the real property
taxes have been paid. Landlord shall reimburse Tenant for any real property taxes paid by Tenant covering any
period of time prior to or after the Lease Term (except taxes paid under Tenant's prior Lease of the Project). If
Tenant fails to pay the real property taxes when due, Landlord may pay the taxes and Tenant shall reimburse Landlord
for the amount of such tax payment as Additional Rent.
(b) Definition of "Real Property Tax." "Real Property Tax" means: (i) any fee, license fee, license tax,
business license fee, commercial rental tax, levy charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax or charge for fire protection, streets, sidewalks, road maintenance, refuse or
other services provided to the Property by any governmental agency; (iii) any tax imposed upon this transaction or
based upon a re-assessment of the Property due to a change of ownership, as defined by applicable law, or other
transfer of all or part of Landlord's interest in the Property; and (iv) any charge or fee replacing any tax
previously included within the definition of real property tax. "Real property tax" does not, however, include
Landlord's federal or state income, franchise, inheritance, estate taxes or any tax on the Landlord's right to
receive, or the receipt of, rent or income from the Property or against Landlord's business of leasing the Property.
(c) Joint Assessment. If the Property is not separately assessed from the remainder of the Project, or any
portion thereof, Landlord shall reasonably determine Tenant's share of the real property tax payable by Tenant under
Paragraph 4.02(a) from the assessor's worksheets or other reasonably available information. Tenant shall pay such
share to Landlord within fifteen (15) days after receipt of Landlord's written statement.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant. Tenant shall try to have personal property taxed separately from the
Property.
(ii) If any of Tenant's personal property is taxed with the Property, but only to the extent Tenant
does not pay such taxes to the applicable taxing authority pursuant to 4.02(a) above, Tenant shall pay Landlord the
taxes for the personal property within fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes with copies of tax bills setting forth amount of taxes attributable to Tenant's
personal property.
Section 4.03. Utilities. Tenant shall pay, directly to the appropriate supplier, the cost of all natural
gas, heat, light, power, sewer service, telephone, water, refuse disposal and other utilities and services supplied
to the Property. However, if any services or utilities are jointly metered with other property, Landlord shall make
a reasonable determination of Tenant's proportionate share of the cost of such utilities and services and Tenant
shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement.
Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant shall maintain a policy of commercial general
liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Tenant
against liability for bodily injury, property damage (including loss of use of property) and personal injury arising
out of the operation, use or occupancy of the Property. Tenant shall name Landlord as an additional insured under
such policy. The initial amount of such insurance shall be ONE MILLION DOLLARS ($1,000,000.00) per occurrence and
shall be subject to periodic increase based upon inflation, increased liability awards, recommendation of Landlord's
professional insurance advisers and other relevant factors. The liability insurance obtained by Tenant under this
Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii) contain cross-liability endorsements; and (iii)
insure Tenant's performance under Section 5.05, if the matters giving rise to the indemnity under Section 5.05
result from the negligence of Tenant. The amount and coverage of such insurance shall not limit Tenant's liability
nor relieve Tenant of any other obligations under this Lease. Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by Landlord, in its reasonable discretion insuring
Landlord against liability arising out of ownership, operation, use or occupancy of the Property. The policy
obtained by Landlord shall not be contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease Term, Landlord shall maintain policies of
insurance covering loss of or damage to the Property in the full amount of its replacement value. Such policy shall
contain an inflation Guard Endorsement and shall provide protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk),
sprinkler leakage and any other perils which Landlord deems reasonably necessary. Landlord shall have the right to
obtain flood and earthquake insurance if required by any lender holding a security interest in the Property.
Landlord shall not obtain insurance for Tenant's fixtures or equipment or building improvements installed by Tenant
on the Property. During the Lease Term, Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one (1) year's Base Rent, plus estimated real property taxes and
insurance premiums. Tenant shall be liable for the payment of any deductible amount under Landlord's or Tenant's
insurance policies maintained pursuant to this Section 4.04, in an amount not to exceed TWENTY THOUSAND DOLLARS
($20,000.00). Tenant shall not do or permit anything to be done which invalidates any such insurance policies.
(c) Payment of Premiums. Subject to Section 4.08, Tenant shall pay all premiums for the insurance
policies described in Paragraphs 4.04(a) and (b) (whether obtained by Landlord or Tenant) within fifteen (15) days
after Tenant's receipt of a copy of the premium statement or other evidence of the amount due, except Landlord shall
pay all premiums for non-primary comprehensive public liability insurance which Landlord elects to obtain as
provided in Paragraph 4.04(a). If insurance policies maintained by Landlord cover improvements on real property
other than the Property, Landlord shall deliver to Tenant a statement of the premium applicable to the Property
showing in reasonable detail how Tenant's share of the premium was computed. If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be liable for Tenant's prorated share of the
insurance premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy of any policy of
insurance which Tenant is required to maintain under this Section 4.04. At least thirty (30) days prior to the
expiration of any such policy, Tenant shall deliver to Landlord a renewal of such policy. As an alternative to
providing a policy of insurance, Tenant shall have the right to provide Landlord a certificate of insurance,
executed by an authorized officer of the insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 is in full force and effect and containing such other information which Landlord
reasonably requires.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is required to maintain under this Lease shall include a provision
which requires the insurance carrier to give Landlord not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver a policy, certificate or renewal to Landlord required under this
Lease within the prescribed time period or if any such policy is cancelled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in which case Tenant shall reimburse Landlord for the cost
of such insurance within fifteen (15) days after receipt of a statement that indicates the cost of such insurance.
(iii) Any insurance required to be provided by Tenant under this Section 4.04 may be provided by
blanket or umbrella coverage covering Tenant's operations at the Property as well as at other locations; provided
that all coverage amounts required under this Section 4.04 shall remain available at all times for coverage of
claims related to the Property or Tenant's operation thereon. Tenant shall maintain all insurance required under
this Lease with companies holding a "General Policy Rating" of A-12 or better, as set forth in the most current
issue of "Best Key Rating Guide". Landlord and Tenant acknowledge the insurance markets are rapidly changing and
that insurance in the form and amounts described in this Section 4.04 may not be available in the future. Tenant
acknowledges that the insurance described in this Section 4.04 is for the primary benefit of Landlord. If at any
time during the Lease Term, Tenant is unable to maintain the insurance required under the Lease, Tenant shall
nevertheless maintain insurance coverage which is customary and commercially reasonable in the insurance industry
for Tenant's type of business, as that coverage may change from time to time. Landlord makes no representation as
to the adequacy of such insurance to protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain any
such additional property or liability insurance which Tenant deems necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance policies maintained, Landlord and Tenant each
hereby waive any and all rights of recovery against the other, or against the officers, employees, agents or
representatives of the other, for loss of or damage to its property or the property of others under its control, if
such loss or damage is covered by any insurance policy in force (whether or not described in this Lease) at the time
of such loss or damage. Upon obtaining the required policies of insurance, Landlord and Tenant shall give notice to
the insurance carriers of this mutual waiver of subrogation.
Section 4.05. Common Areas: Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas" shall mean all areas within the Project which are
available for the common use of tenants of the Project and which are not leased or held for the exclusive use of
Tenant or other tenants, including, but not limited to, parking areas, driveways, sidewalks, loading areas, access
roads, corridors, landscaping and planted areas. Landlord, from time to time but subject to compliance with all
applicable zoning and land use regulations, ordinances or requirements, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leasable areas, construct additional parking facilities
(including parking structures) in the Common Areas, and increase or decrease Common Area land and/or facilities
Tenant acknowledges that such activities may result in an increase or decrease in Common Area Land or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant. Such activities are permitted if
they do not materially affect Tenant's use of the Property. Common Areas shall also include the Property's share of
the Project's share of landscape maintenance and street sweeping expenses for Southpoint Industrial Park. The
Project's share of landscape maintenance and street sweeping expenses for Southpoint Industrial Park is currently
approximately 6.09%.
(b) Use of Common Areas. Tenant shall have the nonexclusive right (in common with other tenants and all
others to whom Landlord has granted or may grant such rights) to use the Common Areas for the purposes intended,
subject to such reasonable rules and regulations as Landlord may establish from time to time. Tenant shall abide by
such rules and regulations and shall use its best effort to cause others who use the Common Areas with Tenant's
express or implied permission to abide by Landlord's rules and regulations. At any time, Landlord may close any
Common Areas to perform any acts in the Common Areas as, in Landlord's judgment, are desirable to improve the
Project. Tenant shall not interfere with the rights of Landlord, other tenants or any other person entitled to use
the Common Areas.
(c) Specific Provision re: Vehicle Parking. Tenant shall be entitled to use the number of vehicle parking
spaces in the Project allocated to Tenant in Section 1.11 of the Lease without paying any additional rent. Tenant's
parking shall not be reserved, shall be located adjacent to the Property and shall be limited to vehicles no larger
than standard size automobiles or pickup utility vehicles. Tenant shall not cause large trucks or other large
vehicles to be parked within the Project or on the adjacent public streets. Temporary parking of large delivery
vehicles in the Project may be permitted by the rules and regulations established by Landlord. Vehicles shall be
parked only in striped parking spaces and not in driveways, loading areas or other locations not specifically
designated for parking. Handicapped spaces shall only be used by those legally permitted to use them. If Tenant
knowingly permits use by its employees or invitees of parking spaces in excess of the number set forth in Section
1.11 of this Lease, and such excess parking persists for more than ten (10) days after written notice thereof from
Landlord, such conduct shall be a material breach of this Lease. In such event, in addition to Landlord's other
remedies under the Lease, Tenant shall pay a daily charge determined by Landlord for each such additional vehicle if
Landlord can reasonably demonstrate that vehicles being parked in the parking area of the Project on a recurring
basis and belong to Tenant or to one of Tenant's employees or invitees.
(d) Maintenance of Common Areas. Landlord shall maintain the Common Areas in good order, condition and
repair (including snow removal) and shall operate the Project, in Landlord's sole discretion, as a first-class
industrial/commercial real property development. Tenant shall pay Tenant's pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common Areas. Common Area costs include,
but are not limited to, costs and expenses for the following: gardening and landscaping; snow removal; utilities,
water and sewage charges; maintenance of signs (other than tenants' signs); premiums for liability, property damage,
fire and other types of casualty insurance on the Common Areas and all Common Area improvements; all property taxes
and assessments levied on or attributable to the Common Areas and all Common Area improvements; all personal
property taxes levied on or attributable to personal property used in connection with the Common Areas; rental or
lease payments paid by Landlord for rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing, repaving, maintaining, painting,
lighting, cleaning, refuse removal, security and similar items; reasonable reserves for roof replacement and
exterior painting and other appropriate reserves; and a reasonable allowance to Landlord for Landlord's supervision
of the Common Areas which shall be fixed for the term of this lease at six cents ($.06) per square foot per year
payable in the same manner as other items composing Additional Rent. Landlord may cause any or all of such services
to be provided by third parties and the cost of such services shall be included in Common Area Costs; provided
however, that if any such services are provided by affiliates or subsidiaries of Landlord, the cost of such services
to be included in Common Area maintenance costs shall be limited to the cost for obtaining such services if rendered
by unaffiliated third parties on a competitive basis (based upon a standard of similar buildings in the general area
of the Property.) Common Area costs shall not include depreciation of real property which forms part of the Common
Areas, marketing or leasing commission costs, attorneys' fees or other expenses incurred in connection with
negotiations or disputes with present or prospective tenants (except Tenant) of the Project. (e) Tenant's Share
and Payment. Tenant shall pay Tenant's annual pro rata share of all Common Area costs (prorated for any fractional
month) as set forth in this Section 4.05(e) . Tenant's pro rata share has been calculated by dividing the square
foot area of the Property, as set forth in Section 1.04 of the Lease, by the aggregate square foot area of the
Project which is leased or held for lease by tenants. Tenant's pro rata share is set out in Paragraph 1.12(b).
Landlord represents and warrants to Tenant that Tenant's Prorata Share as set forth in Section 1.12(b) above is true
and correct and has been calculated in accordance with IRAM standards in effect as of the date of this Lease.
Landlord shall estimate in advance and charge to Tenant as Common Area costs, all real property taxes for which
Tenant is liable under Section 4.02 of the Lease, all insurance premiums for which Tenant is liable under Section
4.04 of the Lease, all maintenance and repair costs for which Tenant is liable under Section 6.04 of the Lease, and
all other Common Area costs payable by Tenant hereunder. Such statements of estimated Common Area costs shall be
delivered monthly, and Tenant shall pay such installments of estimated Common Area costs on a monthly basis.
Landlord may adjust such estimates of estimated Common Area costs based upon Landlord's experience and reasonable
anticipation of costs not more often than twice per year. Such adjustments shall be effective as of the next rent
payment date after notice to Tenant. Within sixty (60) days after the end of each calendar year of the Lease Term,
Landlord shall deliver to Tenant a statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share. Upon receipt of such statement, there shall be an adjustment between
Landlord and Tenant, with payment to or credit given by Landlord (as the case may be) so that Landlord shall receive
the entire amount of Tenant's share of such costs and expenses for such period. Any further payment due to Landlord
shall be due and payable with tenant's next monthly payment of Base Rent. In the event that Tenant is entitled to a
credit, such credit may be offset against Tenant's next monthly rental payment.
Section 4.06. Late Charges. Tenant's failure to pay rent promptly may cause Landlord to incur unanticipated
costs. The exact amount of such costs are impractical or extremely difficult to ascertain. Such costs may include,
but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by any
ground lease, mortgage or trust deed encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay to Landlord a late charge equal to three
percent (3.0%) of the overdue amount. The parties agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount owed by Tenant to Landlord which is not paid
within ten (10) days after its due date shall bear interest at the rate of fifteen percent (15%) per annum from the
due date of such amount. However, interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any default by Tenant under this Lease. If
the interest rate specified in this Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
Section 4.08. Impounds for Insurance Premiums and Real Property Taxes. If requested by any ground lessor
or lender to whom Landlord has granted a security interest in the Property, or if Tenant is more than ten (10) days
late in the payment of rent more than once in any consecutive twelve (12) month period, Tenant shall pay Landlord a
sum equal to one-twelfth (1/12) of the annual real property taxes and insurance premiums payable directly by Tenant
under this Lease, together with each payment of Base Rent. Landlord shall hold such payments in a non-interest
bearing impound account and shall apply such amounts to payment of such property taxes or insurance premiums prior
to the due date thereof. If unknown, Landlord shall reasonably estimate the amount of real property taxes and
insurance premiums when due. Tenant shall pay any deficiency of funds in the impound account to any obligation then
due under this Lease.
ARTICLE FIVE: USE OF PROPERTY.
Section 5.01. Permitted Uses. Tenant may use the Property only for the Permitted Uses set forth in
Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or permit the Property to be used in any way which
constitutes a violation of any law, ordinance, or governmental regulation or order, which annoys or interferes with
the rights of other tenants of the Project, or which constitutes a nuisance or waste. Tenant shall obtain and pay
for all permits, including a Certificate of Occupancy, required for Tenant's occupancy of the Property and shall
promptly take all actions necessary to comply with all applicable statutes, ordinances, rules, regulations, orders
and requirements regulating the use by Tenant of the Property, including the Occupational Safety and Health Act.
Landlord represents and warrants to Tenant that the Property, as of the date on which Tenant first commenced
occupancy of the Property under the prior lease, complied with all applicable statutes, ordinances, rules,
regulations, orders and requirements applicable thereto. Tenant accepts the property in its current condition and
acknowledges that Landlord shall have no liability for ensuring compliance with the Americans with Disabilities Act
("ADA") for the interior of the Property or any of Tenant's improvements. Landlord shall maintain all exterior and
common elements in compliance with ADA.
Section 5.03. Hazardous Materials. As used in this Lease, the term "Hazardous Material" means any
flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related
materials, included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state or local laws or regulations,
including, without limitation petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar compounds, and including any
different products and materials which are subsequently found to have adverse effects on the environment or the
health and safety of persons. Tenant shall not cause or permit any Hazardous Material to be generated, produced,
brought upon, used, stored, treated or disposed of in or about the Property by Tenant, its agents, employees,
contractors, sublessees other than in the ordinary course of Tenant's business and in strict compliance with all
applicable Hazardous Materials rules, regulations and laws without the prior written consent of Landlord. Landlord
shall be entitled to take into account such other factors or facts as Landlord may reasonably determine to be
relevant in determining whether to grant or withhold consent to Tenant's proposed activity with respect to Hazardous
Material. In no event, however, shall Landlord be required to consent to the installation or use of any storage
tanks on the Property.
Section 5.04. Signs and Auctions. Tenant shall not place any signs on the Property without Landlord's
prior written consent. Tenant shall obtain all necessary permits and governmental approval for operation of any
retail sales or auctions on the Property.
Section 5.05. Indemnity. Tenant shall indemnify Landlord against and hold Landlord harmless from any and
all costs, claims or liability arising from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business
or anything else done or permitted by Tenant to be done in or about the Property, including any contamination of the
Property or any other property resulting from the presence or use of Hazardous Material caused or permitted by
Tenant; (c) any breach or default in the performance of Tenant's obligations under this Lease; or (d) any
misrepresentation or breach of warranty by Tenant under this Lease; (e) other negligent acts or omissions of Tenant.
Tenant shall defend Landlord against any such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any reasonable legal fees or
costs incurred by Landlord in connection with any such claim. As a material part of the consideration to Landlord,
Tenant assumes all risk of damage to property or injury to persons in or about the Property arising from any cause,
other than Landlord's gross negligence or intentional misconduct and Tenant hereby waives all claims in respect
thereof against Landlord, except for any claim arising out of Landlord's gross negligence or willful misconduct. As
used in this Section, the term "Tenant" shall include Tenant's employees, agents, contractors and invitees, if
applicable.
Section 5.06. Landlord's Access. Landlord or its agents may enter the Property at all reasonable times to
show the Property to potential buyers, investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable environmental laws and all laws governing
the presence and use of Hazardous Material; or for any other purpose Landlord deems necessary. Landlord shall give
Tenant not less than 24 hours prior notice of such entry, except in the case of an emergency. Landlord may place
customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent and complies with all other terms of this Lease,
Tenant may occupy and enjoy the Property for the full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the Property in its condition as of the execution of the
Lease, subject to all recorded matters, laws, ordinances, and governmental regulations and orders. Except as
provided herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation as
to the condition of the Property or the suitability of the Property for Tenant's intended use. Tenant represents
and warrants that Tenant has made its own inspection of and inquiry regarding the condition of the Property and is
not relying on any representations of Landlord or any Broker with respect thereto. If Landlord or Landlord's Broker
has provided a Property Information Sheet or other Disclosure Statement regarding the Property, a copy is attached
as an exhibit to the Lease.
Section 6.02. Exemption of Landlord from Liability. Landlord shall not be liable for any damage or injury
to the person, business (or any loss of income therefrom), goods, wares, merchandise or other property of Tenant,
Tenant's employees, invitees, customers or any other person in or about the Property, whether such damage or injury
is caused by or results from: (a) fire, steam, electricity, water, gas or rain; (b) the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures or any other cause; (c) conditions arising in or about the Property or upon other portions of the Project,
or from other sources or places; or (d) any act or omission of any other tenant of the Project. Landlord shall not
be liable for any such damage or injury even though the cause of or the means of repairing such damage or injury are
not accessible to Tenant. The provisions of this Section 6.02 shall not, however, exempt Landlord from liability
for Landlord's gross negligence or willful misconduct.
Section 6.03. Landlord's Obligations.
(a) Except as provided in Article Seven (Damage or Destruction) and Article Eight (Condemnation), Landlord
shall keep the following in good order, condition and repair: the foundations, exterior walls and roof of the
Property (including painting the exterior surface of the exterior walls of the Property not more than once every
five (5) years, if necessary, and all components of electrical, mechanical, plumbing, heating and air conditioning
systems and facilities located in the Property which are concealed or used in common by tenants of the Project.
However, Landlord shall not be obligated to maintain or repair windows, doors, plate glass or the interior surfaces
of exterior walls. Landlord shall make repairs under this Section 6.03 within a reasonable time after receipt of
written notice from Tenant of the need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs under Paragraph 6.03(a) above as
Common Area costs as provided for in Section 4.05 of the Lease. Tenant waives the benefit of any statute in effect
now or in the future which might give Tenant the right to make repairs at Landlord's expense or to terminate this
Lease due to Landlord's failure to keep the Property in good order, condition and repair.
Section 6.04. Tenant's Obligations.
(a) Except as provided in Section 6.03(a) above, Article Seven (Damage Destruction) and Article Eight
(Condemnation), Tenant shall keep all portions of the Property (including , nonstructural, interior, exterior, and
landscaped areas, portions, systems and equipment) in good order, condition and repair (including interior
repainting and refinishing, as needed). If any portion of the Property or any system or equipment in the Property
which Tenant is obligated to repair cannot be fully repaired or restored, Tenant shall promptly replace such
portion of the Property or system or equipment or equipment in the Property, and provided however if the benefit
or useful life of such replacement extends beyond the Lease Term (as such term may be extended by exercise of any
options), the useful life of such replacement shall be prorated over the remaining portion of the Lease Term (as
extended), and Tenant shall be liable only for that portion of the cost which is applicable to the Lease Term (as
extended). Tenant shall maintain a preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating and air conditioning contractor. If
any part of the Property is damaged by any act or omission of Tenant, Tenant shall pay Landlord the cost of
repairing or replacing such damaged property, whether or not Landlord would otherwise be obligated to pay the cost
of maintaining or repairing such property. It is the intention of Landlord and Tenant that at all times Tenant
shall maintain the portions of the Property which Tenant is obligated to maintain in an attractive, first-class and
fully operative condition.
(b) Tenant shall fulfill all of Tenant's obligations under this Section 6.04, at Tenant's sole
expense. If Tenant fails to maintain, repair or replace the Property as required by this Section 6.04, Landlord
may, upon ten (10) days' prior notice to Tenant (except that no notice shall be required in the case of an
emergency), enter the Property and perform such maintenance or repair (including replacement, as needed) on behalf
of Tenant. In such case, Tenant shall reimburse Landlord for all costs reasonably incurred in performing such
maintenance or repair immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or improvements to the Property without
Landlord's prior written consent, except for non-structural alterations which do not exceed Ten Thousand Dollars
($10,000.00) in cost cumulatively over the Lease Term and which are not visible from the outside of any building of
which the Property is part. Landlord may require Tenant to provide demolition and/or lien and completion bonds in
form and amount satisfactory to Landlord. Tenant shall promptly remove any alterations, additions, or improvements
constructed in violation of this Paragraph 6.05(a) upon Landlord's written request. All alterations, additions, and
improvements shall be done in a good and workmanlike manner, in conformity with all applicable laws and regulations,
and by a contractor approved by Landlord. Upon completion of any such work, Tenant shall provide Landlord with "as
built" plans, copies of all construction contracts, and proof of payment for all labor and materials.
(b) Tenant shall pay when due all claims for labor and material furnished to the Property. Tenant
shall give Landlord at least twenty (20) days' prior written notice of the commencement of any work on the Property,
regardless of whether Landlord's consent to such work is required. Landlord may elect to record and post notices of
non-responsibility on the Property.
Section 6.06. Condition upon Termination. Upon the termination of the Lease, Tenant shall surrender the
Property to Landlord, broom clean and in the same condition as received except for ordinary wear and tear which
Tenant was not otherwise obligated to remedy under any provision of this Lease. However, Tenant shall not be
obligated to repair any damage which Landlord is required to repair under Article Seven (Damage or Destruction). In
addition, Landlord may require Tenant to remove any alterations, additions or improvements (whether or not made with
Landlord's consent) prior to the expiration of the Lease and to restore the Property to its prior condition, all at
Tenant's expense. All alterations, additions and improvements which Landlord has not required Tenant to remove
shall become Landlord's property and shall be surrendered to Landlord upon the expiration or earlier termination of
the Lease, except that Tenant may remove any of Tenant's furniture, fixtures, machinery or equipment which can be
removed without material damage to the Property. Tenant shall repair, at Tenant's expense, any damage to the
Property caused by the removal of any such machinery or equipment. In no event, however, shall Tenant remove any of
the following materials or equipment (which shall be deemed Landlord's property) without Landlord's prior written
consent; any power wiring or power panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other
window coverings; carpets or other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; fencing or security gates; or other similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon the occurrence of any material damage to
the Property. If the Property is only partially damaged (i.e., less than fifty percent (50%) of the Property is
untenantable as a result of such damage or less than fifty percent (50%) of Tenant's operations are materially
impaired) and if the proceeds received by Landlord from the insurance policies described in Paragraph 4.04(b) are
sufficient to pay for the necessary repairs, this Lease shall remain in effect and Landlord shall repair the damage
as soon as reasonably possible. Landlord may elect (but is not required) to repair any damage to Tenant's fixtures,
equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not sufficient to pay the entire cost of repair,
or if the cause of the damage is not covered by the insurance policies which Landlord maintains under Paragraph
4.04(b), Landlord may elect either to (i) repair the damage as soon as reasonably possible, in which case this Lease
shall remain in full force and effect, or (ii) terminate this Lease as of the date the damage occurred. Landlord
shall notify Tenant within thirty (30) days after receipt of notice of the occurrence of the damage whether Landlord
elects to repair the damage or terminate the Lease. If Landlord elects to terminate the Lease, Tenant may elect
to continue this Lease in full force and effect, in which case Tenant shall repair any damage to the Property and
any building in which the Property is located. Tenant shall pay the cost of such repairs, except that upon
satisfactory completion of such repairs, Landlord shall deliver to Tenant any insurance proceeds received by
Landlord for the damage repaired by Tenant. Tenant shall give Landlord written notice of such election within ten
(10) days after receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six (6) months of the Lease Term and such
damage will require more than thirty (30) days to repair, either Landlord or Tenant may elect to terminate this
Lease as of the date the damage occurred, regardless of the sufficiency of any insurance proceeds. The party
electing to terminate this Lease shall give written notification to the other party of such election within thirty
(30) days after Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. Substantial or Total Destruction. If the Property is substantially or totally destroyed by
any cause whatsoever (i.e., the damage to the Property is greater than partial damage as described in Section 7.01),
and regardless of whether Landlord receives any insurance proceeds, this Lease shall terminate as of the date the
destruction occurred. Notwithstanding the preceding sentence, if the Property can be rebuilt within six (6) months
after the date of destruction, Landlord may elect to rebuild the Property at Landlord's own expense, in which case
this Lease shall remain in full force and effect. Landlord shall notify Tenant of such election within thirty (30)
days after Tenant's notice of the occurrence of total or substantial destruction. If Landlord so elects, Landlord
shall rebuild the Property at Landlord's sole expense, except that if the destruction was caused by an act or
omission of Tenant, Tenant shall pay Landlord the difference between the actual cost of rebuilding and any insurance
proceeds received by Landlord.
Section 7.03. Temporary Reduction of Rent. If the Property is partially, substantially or totally
destroyed or damaged and Landlord or Tenant repairs or restores the Property pursuant to the provisions of this
Article Seven, any rent payable during the period of such damage, repair and/or restoration shall be reduced
according to the degree, if any, to which Tenant's use of the Property is impaired. However, the reduction shall
not exceed the sum of one year's payment of Base Rent, insurance premiums and real property taxes. Except for such
possible reduction in Base Rent, insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any damage, destruction, repair, or
restoration of or to the Property.
Section 7.04. Waiver. Tenant waives the protection of any statute, code or judicial decision which grants
a tenant the right to terminate a lease in the event of the substantial or total destruction of the leased
property. Tenant agrees that the provisions of Section 7.02 above shall govern the rights and obligations of
Landlord and Tenant in the event of any substantial or total destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent domain or sold under the threat
of that power (all of which are called "Condemnation"), this Lease shall terminate as to the part taken or sold on
the date the condemning authority takes title or possession, whichever occurs first. If more than twenty percent
(20%) of the floor area of the Property ,or such other portion of the parking or loading areas or accessways that
directly service Tenant's operations so as to materially impair Tenant's use of the Premises for its intended use,
is taken, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes title or
possession, by delivering written notice to the other within ten (10) days after receipt of written notice of such
taking (or in the absence of such notice, within ten (10) days after the condemning authority takes title or
possession). If neither Landlord nor Tenant terminates this Lease, this Lease shall remain in effect as to the
portion of the Property not taken, except that the Base Rent and Additional Rent shall be reduced in proportion to
the reduction in the floor area of the Property or impairment of Tenant's use thereof. Any Condemnation award or
payment shall be distributed in the following order: (a) first, to any ground lessor, mortgagee or beneficiary
under a deed of trust encumbering the Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to Tenant's trade fixtures or removable
personal property; and (c) third, to Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease is not terminated, Landlord shall
repair any damage to the Property caused by the Condemnation, except that Landlord shall not be obligated to repair
any damage for which Tenant has been reimbursed by the condemning authority. If the severance damages received by
Landlord are not sufficient to pay for such repair, Landlord shall have the right to either terminate this Lease or
make such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. Landlord's Consent Required. No portion of the Property or of Tenant's interest in this
Lease may be acquired by any other person or entity, whether by sale, assignment, mortgage, sublease, transfer,
operation of law, or act of Tenant, without Landlord's prior written consent, except as provided in Section 9.02
below. Landlord has the right to grant or withhold its consent as provided in Section 9.05 below. Any attempted
transfer without consent shall be void and shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent (20%) of the partnership interests shall require
Landlord's consent. Subject to Section 9.02 below, Tenant is a corporation, any change in the ownership of a
controlling interest of the voting stock of the corporation shall require Landlord's consent.
Section 9.02. Tenant Affiliate. Tenant may assign this Lease or sublease the Property, without Landlord's
consent, to any corporation which controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger of or consolidation with Tenant ("Tenant's Affiliate"). In such case, any
Tenant's Affiliate shall assume writing all of Tenant's obligations under this Lease.
Section 9.03. No Release of Tenant. No transfer permitted by this Article Nine, whether with or without
Landlord's consent, shall release Tenant or change Tenant's primary liability to pay the rent and to perform all
other obligations of Tenant under this Lease. Landlord's acceptance of rent from any other person is not a waiver
of any provision of this Article Nine. Consent to one transfer is not a consent to any subsequent transfer. If
Tenant's transferee defaults under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments or modifications of this Lease by
Tenant's transferee, without notifying Tenant or obtaining its consent. Such action shall not relieve Tenant's
liability under this Lease provided however, that if any amendment or modification of the Lease entered into without
Tenant's consent increases the obligations or liabilities of Tenant hereunder, such amendment or modification shall
not be enforceable against Tenant.
Section 9.04. Offer to Terminate. If Tenant desires to assign the Lease or sublease the Property, Tenant
shall have the right to offer, in writing, to terminate the Lease as of a date specified in the offer. If Landlord
elects in writing to accept the offer to terminate within twenty (20) days after notice of the offer, the Lease
shall terminate as of the date specified and all the terms and provisions of the Lease governing termination shall
apply. If Landlord does not so elect, the Lease shall continue in effect until otherwise terminated and the
provisions of Section 9.05 with respect to any proposed transfer shall continue to apply.
Section 9.05. Landlord's Consent.
(a) Tenant's request for consent to any transfer described in Section 9.01 shall set forth in writing the
details of the proposed transfer, including the name, business and financial condition of the prospective
transferee, financial details of the proposed transfer (e.g., the term of and the rent and security deposit payable
under any proposed assignment or sublease. Upon Landlord's request, Tenant shall provide any other information
Landlord deems reasonably relevant. Landlord shall have the right to withhold consent, if reasonable, or to grant
consent, based on the following factors: (i) the business of the proposed assignee or subtenant and the proposed
use of the Property: (ii) the net worth and financial reputation of the proposed assignee or subtenant: (iii)
Tenant's compliance with all of its obligations under the Lease: and (iv) such other factors as Landlord may
reasonably deem relevant. If landlord objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may nonetheless sublease (but not assign), all or a portion of
the Property to the proposed transferee, but only on the other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease the Landlord's Share (stated in
Section 1.13) of the Profit (defined below) on such transaction as and when received by Tenant, unless Landlord
gives written notice to Tenant and the assignee or subtenant that Landlord's Share shall be paid by the assignee or
subtenant to Landlord directly. The "Profit" means (A) all amounts paid to Tenant for such assignment or sublease,
including "key" money, monthly rent in excess of the monthly rent payable under the Lease, and all fees and other
consideration paid for the assignment or sublease, including fees under any collateral agreements, less (B) costs
and expenses directly incurred by Tenant in connection with the execution and performance of such assignment or
sublease, including real estate broker's commissions and legal fees , costs of renovation or construction of tenant
improvements required under such assignment or sublease. Tenant is entitled to recover such cost and expenses before
Tenant is obligated to pay the Landlord's Share to Landlord. The Profit in the case of a sublease of less than all
the Property is the rent allocable to the subleased space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all amounts to be paid from any
assignment or sublease of the Property within thirty (30) days after the transaction documentation is signed, and
Landlord may inspect Tenant's books and records to verify the accuracy of such statement. On written request, Tenant
shall promptly furnish to Landlord copies of all the transaction documentation, all of which shall be certified by
Tenant to be complete, true and correct. Landlord's receipt of Landlord's Share shall not be consent to any further
assignment or subletting. The breach of Tenant's obligation under this Paragraph 9.05(b) shall be a material default
of the Lease.
Section 9.06. No Merger. No merger shall result from Tenant's sublease of the Property under this Article
Nine, Tenant's surrender of this Lease or the termination of this Lease in any other manner. In any such event,
Landlord may terminate any or all subtenancies or succeed to the interest of Tenant as sublandlord under any or all
subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's performance of each of Tenant's obligations under this
Lease is a condition as well as a covenant. Tenant's right to continue in possession of the Property is conditioned
upon such performance. Time is of the essence in the performance of all covenants and conditions.
Section 10.02. Defaults. Tenant shall be in material default under this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the Property results in the cancellation of
any insurance described in Section 4.04;
(b) If Tenant fails to pay rent or any other charge within ten (10) days after such payment is due;
(c) If Tenant fails to perform any of Tenant's non-monetary obligations under this Lease for a period of
thirty (30) days after written notice from Landlord; provided that if more than thirty (30) days are required to
complete such performance, Tenant shall not be in default if Tenant commences such performance within the thirty
(30)-day period and thereafter diligently pursues its completion. However, Landlord shall not be required to give
such notice if Tenant's failure to perform constitutes a non-curable breach of this Lease. The notice required by
this Paragraph is intended to satisfy any and all notice requirements imposed by law on Landlord and is not in
addition to any such requirement.
(d)(i) If Tenant makes a general assignment or general arrangement for the benefit of creditors; (ii) if a
petition for adjudication of bankruptcy or for reorganization or rearrangement is filed by or against Tenant and is
not dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed to take possession of
substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease and possession is
not restored to Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease is subjected to attachment, execution or other judicial seizure which
is not discharged within thirty (30) days. If a court of competent jurisdiction determines that any of the acts
described in this subparagraph (d) is not a default under this Lease, and a trustee is appointed to take possession
(or if Tenant remains a debtor in possession) and such trustee of Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent (or any other consideration) paid
in connection with such assignment or sublease over the rent payable by Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates, or purports to revoke or otherwise
terminate, any guaranty of all or any portion of Tenant's obligations under the Lease. Unless otherwise expressly
provided, no guaranty of the Lease is revocable.
Section 10.03. Remedies. On the occurrence of any material default by Tenant, Landlord may, at any time
thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy
which Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any lawful means, in which case this Lease
shall terminate and Tenant shall immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default,
including (i) the worth at the time of the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time of the award of the amount by which
the unpaid Base Rent, Additional Rent and other charges which Landlord would have earned after termination until the
time of the award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably
avoided;(iii) the worth at the time of the award of the amount by which the unpaid Base Rent, and other charges
which Tenant would have paid for the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves Landlord could have reasonably avoided; and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under
the Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited
to, any costs or expenses Landlord incurs in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including necessary renovation or alteration of the
Property, Landlord's reasonable attorneys' fee incurred in connection therewith, and any real estate commission paid
or payable. As used in subparts (i) and (ii) above, the "worth at the time of the award" is computed by allowing
interest on unpaid amounts at the rate of fifteen percent (15%) per annum, or such lesser amount as may then be the
maximum lawful rate. As used in subpart (iii) above, the "worth at the time of the award" is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one
percent (1%). If Tenant has abandoned the Property, Landlord shall have the option of (i) retaking possession of the
Property and recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii) proceeding under
Paragraph 10.03(b);
(b) Maintain Tenant's right to possession, in which case this Lease shall continue in effect whether or not
Tenant has abandoned the Property. In such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes due;
(c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of
the state in which the Property is located.
Section 10.04. Repayment of "Free" Rent. If this Lease provides for a postponement of any monthly rental
payments, a period of "free" rent or other rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall be credited with having paid all of the Abated Rent on the expiration of the Lease Term only if
Tenant has fully, faithfully, and punctually performed all of Tenant's obligations hereunder, including the payment
of all rent (other than the Abated Rent) and all other monetary obligations and the surrender of the Property in the
physical condition required by this Lease. Tenant acknowledges that its right to receive credit for the Abated Rent
is absolutely conditioned upon Tenant's full, faithful and punctual performance of its obligations under this
Lease. If Tenant defaults and does not cure within any applicable grace period, the Abated Rent shall immediately
become due and payable in full and this Lease shall be enforced as if there were no such rent abatement or other
rent concession. In such case, Abated Rent shall be calculated based on the full initial rent payable under this
Lease.
Section 10.05. Automatic Termination. Notwithstanding any other term or provision hereof to the contrary,
the Lease shall terminate on the occurrence of any act which affirms the Landlord's intention to terminate the Lease
as provided in Section 10.03 hereof, including the filing of an unlawful detainer action against Tenant. On such
termination, Landlord's damages for default shall include all costs and fees, including reasonable attorneys' fees
that Landlord incurs in connection with the filing, commencement, pursuing and/or defending of any action in any
bankruptcy court or other court with respect to the Lease; the obtaining of relief from any stay in bankruptcy
restraining any action to evict Tenant; or the pursuing of any action with respect to Landlord's right to possession
of the Property. All such damages suffered (apart from Base Rent and other rent payable hereunder) shall constitute
pecuniary damages which must be reimbursed to Landlord prior to assumption of the Lease by Tenant or any successor
to Tenant in any bankruptcy or other proceeding.
Section 10.06. Cumulative Remedies. Landlord's exercise of any right or remedy shall not prevent it from
exercising any other right or remedy.
ARTICLE ELEVEN. PROTECTION OF LENDERS.
Section 11.01. Subordination. Subject to the Landlord's delivery to Tenant of a commercially reasonable
non-disturbance agreement from the holder of any ground lease, deed of trust, mortgage or other lien encumbering the
Property, Landlord shall have the right to subordinate this Lease to any such ground lease, deed of trust or
mortgage, any advances made on the security thereof and any renewals, modifications, consolidations, replacements
or extensions thereof, whenever made or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute such further documents and
assurances as such lender may require, provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed material), and Tenant shall not be
deprived of its rights under this Lease. Tenant's right to quiet possession of the Property during the Lease Term
shall not be disturbed if Tenant pays the rent and performs all of Tenant's obligations under this Lease and is not
otherwise in default. If any ground lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to Tenant, this Lease shall be deemed
prior to such ground lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of
said ground lease, deed of trust or mortgage or the date of recording thereof.
Section 11.02. Attornment. If Landlord's interest in the Property is acquired by any ground lessor,
beneficiary under a deed of trust, mortgagee, or purchaser at a foreclosure sale, Tenant shall attorn to the
transferee or successor to Landlord's interest in the Property and recognize such transferee or successor as
Landlord under this Lease. Tenant waives the protection of any statute or rule of law which gives or purports to
give Tenant any right to terminate this Lease or surrender possession of the Property upon the transfer of
Landlord's interest.
Section 11.03. Signing of Documents. Tenant shall sign and deliver any instrument or documents necessary or
appropriate to evidence any such attornment or subordination or agreement to do so. If Tenant fails to do so within
ten (10) days after written request, Tenant hereby makes, constitutes and irrevocably appoints Landlord, or any
transferee or successor of Landlord, the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge and deliver to Landlord a written
statement certifying: (i) that none of the terms or provisions of this Lease have been changed (or if they have
been changed, stating how they have been changed); (ii) that this Lease has not been cancelled or terminated; (iii)
the last date of payment of the Base Rent and other charges and the time period covered by such payment; (iv) that
to Tenant's knowledge, Landlord is not in default under this Lease (or, if Landlord is claimed to be in default,
stating why); and (v) such other representations or information with respect to Tenant or the Lease as Landlord may
reasonably request or which any prospective purchaser or encumbrancer of the Property may reasonably require.
Tenant shall deliver such statement to Landlord within ten (10) business days after Landlord's request. Landlord
may give any such statement by Tenant to any prospective purchaser or encumbrancer of the Property. Such purchaser
or encumbrancer may rely conclusively upon such statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such ten (10) day period, any prospective
purchaser or encumbrancer may conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented by Landlord; (ii) that this Lease has
not been cancelled or terminated except as otherwise represented by Landlord; (iii) that not more than one month's
Base Rent or other charges have been paid in advance; and (iv) that Landlord is not in default under the Lease. In
such event, Tenant shall be estopped from denying the truth of such facts.
Section 11.05. Tenant's Financial Condition. Within ten (10) days after written request from Landlord,
Tenant shall deliver to Landlord such financial statements as Landlord reasonably requires to verify the net worth
of Tenant or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall deliver to any lender
designated by Landlord any financial statements required by such lender to facilitate the financing or refinancing
of the Property. Tenant represents and warrants to Landlord that each such financial statement is a true and
accurate statement as of the date of such statement. All financial statements shall be confidential and shall be
used only for the purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in breach or default under this Lease,
such party (the "Defaulting Party") shall reimburse the other party (the "Nondefaulting Party") upon demand for any
reasonable costs or expenses that the Nondefaulting Party incurs in connection with any breach or default of the
Defaulting Party under this Lease, whether or not suit is commenced or judgment entered. Such costs shall include
reasonable legal fees and costs incurred for the negotiation of a settlement, enforcement of rights or otherwise.
Furthermore, if any action for breach of or to enforce the provisions of this Lease is commenced, the court in such
action shall award to the party in whose favor a judgment is entered, a reasonable sum as attorneys' fees and
costs. The losing party in such action shall pay such attorneys' fees and costs. Tenant shall also indemnify
Landlord against and hold Landlord harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or action (a) instituted by Tenant against any third party, or by
any third party against Tenant, or by or against any person holding any interest under or using the Property by
license of or agreement with Tenant; (b) for foreclosure of any lien for labor or material furnished to or for
Tenant or such other person; (c) otherwise arising out of or resulting from any act or transaction of Tenant or such
other person; or (d) necessary to protect Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. Tenant shall defend Landlord against any such
claim or action at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election,
Tenant shall reimburse landlord for any legal fees or costs Landlord incurs in any such claim or action.
Section 12.02. Landlord's Consent. Tenant shall pay Landlord's reasonable attorneys' fees incurred in
connection with Tenant's request for Landlord's consent under Article Nine (Assignment and Subletting), or in
connection with any other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant promises, and it is a condition to the continuance of this Lease,
that there will be no discrimination against, or segregation of, any person or group of persons on the basis of
race, color, sex, creed, national origin or ancestry in the leasing, subleasing, transferring, occupancy, tenure or
use of the Property or any portion thereof.
Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the current owner or owners of the fee title to
the Property or the leasehold estate under a ground lease of the Property at the time in question. Each Landlord is
obligated to perform the obligations of Landlord under this Lease only during the time such Landlord owns such
interest or title. Any Landlord who transfers its title or interest is relieved of all liability with respect to
the obligations of Landlord under this Lease to be performed on or after the date of transfer. However, each
Landlord shall deliver to its transferee all funds that Tenant previously paid if such funds have not yet been
applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to perform any of its obligations under
this Lease to Landlord and to any ground lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing. Landlord shall not be in default under
this Lease unless Landlord (or such ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such non-performance reasonably requires more
than thirty (30) days to cure, Landlord shall not be in default if such cure is commenced within such thirty (30)
day period and thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the liability of Landlord for the
performance of its duties and obligations under this Lease is limited to Landlord's interest in the Property, and
neither the Landlord nor its partners, shareholders, officers or other principals shall have any personal liability
under this Lease.
Section 13.03. Severability. A determination by a court of competent jurisdiction that any provision of
this Lease or any part thereof is illegal or unenforceable shall not cancel or invalidate the remainder of such
provision or this Lease, which shall remain in full force and effect.
Section 13.04. Interpretation. The captions of the Articles or Sections of this Lease are to assist the
parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the
context of this Lease, the singular shall include the plural and the plural shall include the singular. The
masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts
or omissions of Tenant, the term "Tenant" shall include Tenant's agents, employees, contractors, invitees,
successors or others using the Property with Tenant's expressed or implied permission.
Section 13.05. Incorporation of Prior Agreements; Modifications. This Lease is the only agreement between
the parties pertaining to the lease of the Property and no other agreements are effective. All amendments to this
Lease shall be in writing and signed by all parties. Any other attempted amendment shall be void.
Section 13.06. Notices. All notices required or permitted under this Lease shall be in writing and shall be
personally delivered, sent by a nationally recognized overnight courier, or sent by certified mail, return receipt
requested, postage prepaid. Notices to Tenant shall be delivered to the address specified in Section 1.03 above.
Notices to Landlord shall be delivered to the address specified in Section 1.02 above. All notices shall be
effective upon delivery. Either party may change its notice address upon written notice to the other party. Any
such notice shall be deemed received on the earlier of the date of actual receipt thereof or, in the case of notices
sent by overnight courier, one business day after the date deposited with such service, or in the case of certified
mail, two business days after the date deposited in the U.S. Mail. The time period for responding to any such
notice shall begin on the date the notice is deemed received, but refusal to accept delivery or inability to
accomplish delivery because the party can no longer be found at the then current notice address shall be deemed
receipt. If either party notifies the other party of an appropriate telefacsimile number and/or e-mail address to
be used for notice purposes, the party receiving such information shall use reasonable efforts to provide a courtesy
copy of any future notices to the party providing such information by fax and/or electronic mail; provided that
receipt of notice solely by fax or electronic mail shall not be deemed to be receipt of notice hereunder.
Section 13.07. Waivers. All waivers must be in writing and signed by the waiving party. Landlord's failure
to enforce any provision of this Lease or its acceptance of rent shall not be a waiver and shall not prevent
Landlord from enforcing that provision or any other provision of this Lease in the future. No statement on a
payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may,
with or without notice to Tenant, negotiate such check without being bound to the conditions of such statement.
Section 13.08. No Recordation. Tenant shall not record this Lease without prior written consent from
Landlord. However, either Landlord or Tenant may require that a "Short Form" memorandum of this Lease executed by
both parties be recorded. The party requiring such recording shall pay all transfer taxes and recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease binds any party who legally acquires any rights or
interest in this Lease from Landlord or Tenant. However, Landlord shall have no obligation to Tenant's successor
unless the rights or interests of Tenant's successor are acquired in accordance with the terms of this Lease. The
laws of the state in which the Property is located shall govern this Lease.
Section 13.10. Corporate Authority; Partnership Authority. If Tenant is a corporation, each person signing
this Lease on behalf of Tenant represents and warrants that he has full authority to do so and that this Lease binds
the corporation. Within thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a certified
copy of a resolution of Tenant's Board of Directors authorizing the execution of this Lease or other evidence of
such authority reasonably acceptable to Landlord. If Tenant is a partnership, each person or entity signing this
Lease for Tenant represents and warrants that he or it is a general partner of the partnership, that he or it has
full authority to sign for the partnership and that this Lease binds the partnership and all general partners of the
partnership. Tenant shall give written notice to Landlord of any general partner's withdrawal or addition. Within
thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement
of partnership or certificate of limited partnership.
Section 13.11. Joint and Several Liability. All parties signing this Lease as Tenant shall be jointly and
severally liable for all obligations of Tenant.
Section 13.12. Force Majeure. If Landlord cannot perform any of its obligations due to events beyond
Landlord's control, the time provided for performing such obligations shall be extended by a period of time equal to
the duration of such events. Events beyond Landlord's control include, but are not limited to, acts of God, war,
civil commotion, labor disputes, strikes, fire, flood or other casualty, shortages of labor or material, government
regulation or restriction and weather conditions.
Section 13.13. Execution of Lease. This Lease may be executed in counterparts and, when all counterpart
documents are executed, the counterparts shall constitute a single binding instrument. Landlord's delivery of this
Lease to Tenant shall not be deemed to be an offer to lease and shall not be binding upon either party until
executed and delivered by both parties.
Section 13.14. Survival. All representations and warranties of Landlord and Tenant shall survive the
termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by and delivered to both Landlord and Tenant,
Landlord shall pay a real estate commission to Landlord's Broker named in Section 1.08 above, if any, as provided in
the written agreement between Landlord and Landlord's Broker. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to Tenant's Broker if so provided in any
agreement between Landlord's Broker and Tenant's Broker. Nothing contained in this Lease shall impose any
obligation on Landlord to pay a commission or fee to any party other than Landlord's Broker.
Section 14.02. Agency Disclosure; No Other Brokers. Landlord and Tenant each warrant that they have dealt
with no other real estate broker(s) in connection with this transaction except: Whitetail Real Estate Management,
Inc., who represents Landlord.
ARTICLE FIFTEEN: COMPLIANCE
The parties hereto agree to comply with all applicable federal, state and local laws, regulations, codes,
ordinances and administrative orders having jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign
Investment in Real Property Tax Act, the Comprehensive Environmental Response Compensation and Liability Act, and
The Americans With Disabilities Act.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER ATTACHED HERETO OR IN THE BLANK SPACE BELOW. IF NO
ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW A LINE THROUGH THE SPACE BELOW.
Landlord and Tenant have signed this Lease at the place and on the dates specified adjacent to their
signatures below and have initialed all Riders which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on _____________, 200___ XXXXXXXX-XXXXX COMPANY, a Mississippi
corporation
at _________________________________
By: __________________
Its:
"TENANT"
Signed on __________________, 200__ CREATIVE COMPUTERS, INC., a California
corporation
at ________________________________
By:
Its:
ADDENDUM TO
LEASE AGREEMENT
1. FIRST RIGHT OF REFUSAL TO LEASE ADJOINING SPACE. Provided Tenant is not then in default of any of the
terms or covenants of this Lease, which default has not been cured during any applicable grace period, if any,
Tenant shall have a continuing Right of First Refusal, on the adjoining space or the remainder of any vacant space
(the "Expansion Space") in the Project . Tenant shall have three (3) business days after receipt to accept or
reject any offers to lease the adjoining space or any vacant space of the Building received by Landlord from
Landlord to Tenant of a copy of such written offers to lease the Expansion Space from bona fide arms length third
party prospects. If Tenant does not timely deliver to Landlord Tenant's written notice to exercise during the three
(3) day period, then Tenant's First Right of Refusal shall be of no further force or effect as it relates to said
offer, and Landlord may enter into negotiations with any person or entity and/or negotiate with, and consummate an
agreement to lease the adjoining space to, any person or entity provided that the material terms of any lease
resulting from such negotiations shall be similar to the terms in the offer presented to Tenant. The rent due
under such lease shall be deemed similar if it is at least 95% of the rental presented in the offer made to Tenant.
However, if Landlord enters into a lease transaction for the Expansion Space with a third party, then Tenant's First
Right of Refusal shall once again be in full force and effect upon the expiration or termination of said lease for
the Expansion Space. Any further written offers received by Landlord from a third party during the Term of this
Lease shall be subjected to the same terms and conditions contained herein. The parties acknowledge that in the
event Tenant leases the Expansion space, the rental rates for the Property and the Expansion Space may be different.
2. RENEWAL OPTIONS.
X. XXXXX OF OPTION. Provided no Event of Default has occurred which remains uncured as of the date
Tenant would otherwise have the right to elect to exercise any of the renewal options set forth herein, and Tenant
is occupying the Premises at the time of such election, Tenant may renew this Lease for 2 additional periods of 3
years on the same terms and conditions as provided in this Lease (except as set forth below), by delivering written
notice of the exercise thereof to Landlord not later than one hundred twenty days (120) days before the expiration
of the Term (the "Renewal Notice Deadline"). On or before ninety (90) days prior to the commencement date of the
extended Term, Landlord and Tenant shall execute an amendment to this Lease extending the Term on the same terms and
conditions as provided in this Lease, except as follows:
(1) The Base Rent payable during the extended Term shall be at the then prevailing market
rental rate, at the commencement of such extended Term, for space of equivalent quality, size, utility and location
in the southeast Shelby County area, taking into account all relevant factors including, but not limited to, any
tenant improvement allowance which is then being offered by landlords in such market area, the length of the
extended Term, and the credit standing of Tenant "Market Rate"), determined in accordance with paragraph (B) below.
(2) Tenant shall have no further renewal options unless expressly granted by Landlord in
writing; and
(3) Landlord shall lease to Tenant for such extended term the Premises in their then-current
condition.
31
B. DETERMINATION OF MARKET RENT. Upon notification from Tenant of the exercise of its renewal option,
Landlord shall within ten (10) days thereafter notify Tenant in writing of the proposed Market Rate applicable to
the renewal term; Tenant shall within then (10) business days following receipt of such notice from Landlord, notify
Landlord in writing of the acceptance or rejection of the proposed Market Rate. If Tenant fails to respond to
Landlord's designation of Market Rate within said ten (10) business-day period, Tenant shall be deemed to have
accepted Landlord's designation of Market Rate for all purposes. In the event of rejection by Tenant, the Market
Rate for the renewal term shall be determined as follows:
(1) If Tenant exercised its first option to extend the Term, the Base Rent per square foot per
annum for the Property for the first three year extension term (the "First Extension Term") shall be $2.68
multiplied by a fraction, the numerator of which shall be the CPI (as hereinafter defined) most recently published
prior to the commencement of the First Extension Term and the denominator of which shall be the CPI on the Lease
Commencement Date. Notwithstanding the foregoing, the annual Base Rent for the First Extension Term shall increase
by no more than fifteen percent (15%) over the an amount of $2.68 multiplied by the total number of square feet in
the Property. In making such calculations, no effect shall be given to existing rent concessions or abatements, if
any. For purposes of this section, "CPI" shall mean the Consumer Price Index for this market, not national average,
published by the Bureau of Labor Statistics of the United States Department of Labor, U.S. City Average, All Items
and Major Group Figures for Urban Wage Earners and Clerical Workers (1982-84=100).
(2) If Tenant exercised its second option to extend the Term, the Base Rent per square foot
per annum for the Property for the second three year extension term (the "Second Extension Term") shall be increased
at the beginning of said term by multiplying the annual Base Rent during the immediately preceding lease year by a
fraction, the numerator of which shall be the CPI (as hereinafter defined) most recently published prior to the
commencement of the Second Extension Term and the denominator of which shall be the CPI on the first day of the
First Extension Term. Notwithstanding the foregoing, the annual Base Rent for the Second Extension Term shall
increase by no more than fifteen percent (15%) over the annual Base Rent during the immediately preceding lease
year. In making such calculations, no effect shall be given to existing rent concessions or abatements, if any. For
purposes of this section, "CPI" shall mean the Consumer Price Index published by the Bureau of Labor Statistics of
the United States Department of Labor, U.S. City Average, All Items and Major Group Figures for Urban Wage Earners
and Clerical Workers (1982-84=100).
(3) Except for the Base Rent, which shall be determined as set forth above, leasing of the
Property by Tenant for the applicable extended term shall be subject to all of the same terms and conditions set
forth in this Lease, including Tenant's obligation to pay Additional Rent as provided in this Lease; provided,
however, that any improvement allowances, rent abatements or other concessions applicable to the Property during the
initial Term shall not be applicable during any such extended term.
Exhibit A
[Property Description]
