AGREEMENT TO TERMINATE LEASE
This Agreement to Terminate Lease (the "Agreement") is made as of April 30,
2001, by and between Little Orchard Realty Holding Co., Inc. ("Lessor"), a
California corporation, and RockShox, Inc., a Delaware corporation ("Lessee"),
with reference to the following facts.
RECITALS
WHEREAS, Lessee and Lessor's predecessors S. Xxxxxxx Xxxxxxxxx and Xxxxx X.
Xxxxxxxxx, husband and wife, have entered into that certain Standard
Industrial/Commercial Multi-Tenant Lease -- Modified Net, dated March 7, 1997,
as amended by that certain First Amendment to Standard Industrial/Commercial
Multi-Tenant Lease -- Modified Net, dated as of November 4, 1997 (collectively,
the "Lease"), whereby Lessor leases to Lessee and Lessee leases from Lessor
approximately One Hundred Fifty-eight Thousand Two Hundred (158,200) rentable
square feet in those certain premises located at 0000 Xxxxxx Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxxxxxxxxx (the "Premises");
WHEREAS, pursuant to the Lease, the Lease Term for the Premises would end
on April 30, 2004 (the "Original Expiration Date");
WHEREAS, Lessor and Lessee now wish to provide for the termination of the
Lease as to Phase I (hereafter defined) on the Phase I Termination Date
(hereafter defined), and possible termination of the Lease as to Phase II
(hereafter defined) on the Phase II Termination Date (hereafter defined), both
the Phase I Termination Date and the Phase II Termination Date being dates prior
to the Original Expiration Date, on the terms and conditions set forth below;
and
WHEREAS, Lessor and Lessee now also wish to provide for the possible
re-leasing of a portion of Phase II (hereafter defined as "Phase IIA"), and a
possible corresponding termination of the Lease as to Phase IIA prior to the
Phase II Termination Date, all as more particularly set forth herein.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Recitals. Lessor and Lessee hereby agree that the recitals set
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forth hereinabove are true and correct and incorporated into this Agreement.
2. Lease Termination.
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A. Definitions. The Premises shall be deemed to consist of "Phase
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I" (the back portion of the Premises), comprising approximately 57,651 rentable
square feet; and "Phase II" (the front portion of the Premises), comprising
approximately 100,549 rentable square feet; each as more particularly shown on
Exhibit A attached hereto. In addition, Phase II shall be deemed to consist of
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"Phase IIA" (the middle portion of the Premises), comprising approximately
46,549 rentable square feet; and "Phase IIB" (the front portion of Phase II),
comprising approximately 54,000 rentable square feet; each as more particularly
shown on Exhibit A attached hereto. Phase I, Phase II, Phase IIA and Phase IIB
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are hereinafter referred to individually as a "Phase", and collectively as the
"Phases".
B. Phase I Termination. Lessor and Lessee hereby agree to
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terminate the Lease with respect to Phase I as of May 31, 2001 (the "Phase I
Termination Date"). On or before the Phase I Termination Date, Lessee shall
vacate and surrender possession of Phase I to Lessor in accordance with the
provisions of the Lease and this Agreement.
C. Phase II Termination. Lessor and Lessee hereby agree that
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Lessee may terminate the Lease with respect to Phase II, at Lessee's election,
on a date to be not earlier than October 31, 2002, and not later than December
31, 2002. Lessee shall exercise this election, if at all, by written notice
delivered to and received by Lessor at least eight (8) months prior to the
selected termination date (such termination date being hereinafter referred to
as the "Phase II Termination Date"). On or before the Phase II Termination
Date, Lessee shall vacate and surrender possession of Phase II to Lessor in
accordance with the provisions of the Lease and this Agreement.
D. Phase IIA Re-Leasing; Phase IIA Subletting. Lessor agrees
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that, so long as Lessee is in compliance with all of its obligations under this
Agreement and the Lease, Lessor shall use all commercially reasonable efforts to
assist Lessee to find a new lessee for Phase IIA. If a new lessee suitable in
all respects to Lessor, in the sole and absolute discretion of Lessor, shall be
located for Phase IIA, and a new lease for Phase IIA shall be entered into
between Lessor and such new lessee on terms suitable in all respects to Lessor,
in the sole and absolute discretion of Lessor, then this Lease shall terminate
with respect to Phase IIA as of the earlier of the date of the rent commencement
of such new lease or occupancy of Phase IIA by such new lessee (the "Phase IIA
Termination Date"). In addition, between the Phase I Termination Date and the
Phase II Termination Date, in addition to attempting to locate a new lessee
suitable for Phase IIA for purposes of enabling Lessee to terminate the Lease
with respect to Phase IIA as contemplated by this Paragraph 2.D., Lessee will
concurrently be attempting to locate a suitable subtenant for Phase IIA so as to
relieve Lessee from all or a portion of the financial and other burdens
associated with its continued occupation of Phase IIA. In connection therewith,
Lessor hereby acknowledges and agrees that: (i) Lessee's rights to sublet all
or a portion of the Premises, including, without limitation, Phase IIA, shall be
as described in the Lease, and nothing set forth in this Agreement is intended
to or shall modify or amend such rights, except for Lessee's obligations to
fulfill the Termination Conditions set forth in Paragraph 3 below, and except
that no such sublease shall extend beyond the Phase IIA Termination Date (as it
may be established), and no proposed subtenant shall use any, Hazardous
Substances with the exception of normal quantities of customary and usual office
and janitorial supplies, which shall be used, stored and disposed of solely in
accordance with all applicable laws, without the prior written consent of
Lessor, which may be govern or withheld in the sole and absolute discretion of
Lessor, or shall require alterations or improvements that would, in Lessor's
reasonable judgment, damage or reduce the value of the Building, or shall fail
to have financial resources sufficient to meet the anticipated obligations of
their subtenancy, and (ii) Lessor agrees to cooperate in good faith with Lessee
in its attempts to locate a suitable subtenant for Phase IIA to the extent a
suitable replacement lessee cannot be found (all subject to Lessor's right to
review and approve such subtenant in accordance with the provisions of the
Lease), all with the intent that Lessee might be relieved of the financial and
other burdens associated with its continued occupation of Phase IIA prior to the
Phase II Termination Date. In addition, if Lessee shall, with Lessor's prior
written consent, enter into a sublease for Phase IIA, then Lessor shall not
enter into a new lease with a new lessee for Phase IIA for a term that would
overlap with such subtenancy.
E. No Further Options. Any and all options to extend the term of
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the Lease and/or to expand the Premises granted to Lessee under the Lease are
hereby deleted in their entirety and shall be of no further force or effect.
F. Security Deposit. Lessor and Lessee hereby acknowledge and
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agree that Lessor now holds the sum of Eighty-seven Thousand One Hundred
Ninety-six Dollars ($87,196.00) as a security deposit under the Lease. In
connection therewith, Lessor hereby agrees that, subject to Lessor's rights to
use the same as more particularly described in the Lease, upon vacation and
surrender of all of the Premises in accordance with the provisions of this
Agreement and the Lease, Lessor shall return the Security Deposit to Lessee.
G. Effect of Termination. Upon termination of this Lease with
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respect to any Phase of the Premises in accordance with the provisions of this
Agreement and completion of the Termination Conditions (defined in Paragraph 3
below) of this Agreement with respect to each Phase of the Premises, Lessor and
Lessee shall have no further rights, obligations or claims with respect to each
other arising from this Agreement or the Lease with respect to the particular
Phase of the Premises in question, except for those obligations of Lessee under
the Lease which are expressly required to survive and continue after the
termination or expiration of the Lease. Lessee and Lessor hereby acknowledge
and agree that certain obligations of Lessee survive the termination or
expiration of the Lease, pursuant to the terms and provisions of the Lease, and
the parties further agree that it is the intention of Lessee and Lessor that
this Agreement not affect such ongoing obligations of Lessee.
3. Termination Conditions. The following conditions shall be
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conditions to the termination of each Phase of the Lease (collectively, the
"Termination Conditions"):
A. Performance by Lessee. Performance by Lessee through the
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termination of the Lease with respect to any Phase of the Premises of all
obligations required to be performed by Lessee under the Lease or this Agreement
with respect to such Phase, as and when such obligations are required to be
performed under the Lease or this Agreement, including in any case, without
limitation, the payment of Base Rent, Lessee's Share of Common Area Operating
Expenses and any other sums required to be paid by Lessee to Lessor. From and
after the termination of the Lease with respect to any Phase of the Premises,
and the performance by Lessee of the Termination Conditions with respect to such
Phase, Lessee's payment of Base Rent and Lessee's Share of Common Area Operating
Expenses (which shall be adjusted to reflect the reduction in the Premises
following the termination of the Lease with respect to any Phase) and
performance of other Lease obligations shall be required only with respect to
the remaining Phase or Phases.
B. Surrender of the Premises. Lessee's vacating Phase I and
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Lessee's surrender of Phase I to Lessor in accordance with the provisions of
Paragraph 5 below and the Lease by the Phase I Termination Date, Lessee's
vacating Phase II and Lessee's surrender of Phase II to Lessor in accordance
with the provisions of Paragraph 5 below and the Lease by the Phase II
Termination Date (if applicable), and Lessee's vacating Phase IIA and Lessee's
surrender of Phase IIA to Lessor in accordance with the provisions of Paragraph
5 below and the Lease by the Phase IIA Termination Date (if applicable).
C. No Lessee Default or Breach. There shall not occur any Lessee
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Default or Breach, as defined in Paragraph 13.1 of the Lease, beyond any
applicable cure periods set forth therein, from the date hereof through the
Phase I Termination Date with respect to termination of the Lease for purposes
of Phase I, or through the Phase II Termination Date, Phase IIA Termination Date
or the Original Expiration Date, as applicable, with respect to termination of
the Lease for purposes of Phase II.
D. Lessee's Cooperation. Lessee agrees to cooperate with Lessor
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to complete the demising of Phase I and electrical power separation, if so
desired by Lessor; provided, however, that such demising of Phase I and
electrical power separation shall be performed at Lessor's sole cost and
expense, and provided further that such cooperation shall not result in Phase II
being without utilities or electrical power during normal working hours during
such demising work for a period in excess of two (2) business days. The
foregoing notwithstanding, Lessor hereby agrees to provide Lessee with three (3)
business days' prior written notice of the temporary cessation of electrical
power for Lessor's accomplishment of such electrical power separation, and
Lessor hereby agrees to use good faith efforts to conduct such work during the
weekend or during non-business hours so as to cause the least amount of
inconvenience possible to Lessee's operations in the Premises. Lessor shall
have the right to reallocate power within the Premises; provided, however, that
in no event shall Phase IIB be left with less than 2,000 amps of power for
Lessee's continued operations in Phase IIB through the Phase I Termination Date.
Lessee further agrees to cooperate with Lessor's efforts to obtain for Lessee a
new lessee for Phase IIA, including without limitation allowing Lessor to enter
the Premises to show the Premises, and to do demolition of some walls and
construct a demising wall at Lessor's expense should Lessor choose to do so; and
Lessor's obligation to pay the portion of the Termination Fee described in
Paragraph 4(iii) below is expressly conditioned on such cooperation.
The Termination Conditions are conditions for the sole benefit of
Lessor and may, at the sole discretion of Lessor, be waived by Lessor. If any
or all of the Termination Conditions are not satisfied as required with respect
to each Phase of the Premises, then Lessor, at its option, may (i) terminate
this Agreement and reinstate the Lease with respect to the entire Premises prior
to the Phase I Termination Date and surrender of Phase I, or with respect to
Phase II following the Phase I Termination Date (in which event the Lease shall
remain in full force and effect with respect to the applicable Phase or Phases
of the Premises); (ii) consider the Lease terminated as to Phase I as of the
Phase I Termination Date, and as to Phase II as of the Phase II Termination Date
selected by Lessor within the date range set forth in Paragraph 2.C. above,
subject to Lessor's payment of the applicable portion of the Termination Fee
described below (less any and all damages, costs, expenses or liabilities
incurred by Lessor due to any failure by Lessee to satisfy any Termination
Condition as and when required hereunder); or (iii) treat such failure of a
Termination Condition as a Lessee Default or Breach under Paragraph 13.1 of the
Lease with respect to the entire Premises prior to the Phase I Termination Date,
or with respect to Phase II following the Phase I Termination Date, and exercise
any or all of Lessor's rights and/or remedies under the Lease, including
termination of the Lease with respect to any remaining Phase or Phases.
4. Termination Fee. As consideration for Lessee's agreement to
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terminate the Lease and for Lessee's vacating and surrendering the Premises in a
timely manner and as required hereunder and fulfilling all of the Termination
Conditions, Lessor will pay to Lessee a sum (the "Termination Fee") calculated
as set forth herein, payable as follows: (i) the sum of One Hundred Thousand
Dollars ($100,000.00) within ten (10) days after the full execution and delivery
of this Agreement; (ii) the additional sum of One Hundred Thousand Dollars
($100,000.00) on or before the later of (a) May 31, 2001, or (b) ten (10) days
after the vacation and surrender of Phase I in accordance with this Agreement;
and (iii) in the event that no new lessee shall be found for Phase IIA on the
terms set forth above who shall begin paying rent for Phase IIA on or before
January 1, 2002, then Lessor shall pay to Lessee within ten (10) days after the
end of each of January, February and March of the calendar year 2002, the sum of
Twenty-five Thousand Dollars ($25,000) for each of those months for which no
such new lessee shall have been found or shall be paying rent; provided that if
Lessee subleases Phase IIA at any time prior to January 1, 2002, then Lessee
shall not be entitled to the portion of the Termination Fee set forth in this
Paragraph 4(iii); provided further, however, that if Lessee shall file for
bankruptcy protection or if there shall occur any other Lessee Default or Breach
beyond any applicable cure period set forth in the Lease, then Lessor may
terminate this Agreement and reinstate the Lease as to the entire Premises prior
to the Phase I Termination Date and surrender of Phase I, and as to the entire
Phase II following the Phase I Termination Date (in which event the Lease shall
remain in full force and effect with respect to the applicable Phase or Phases
of the Premises, and Lessor shall have no further obligation to make any
remaining unpaid payments of the Termination Fee) or Lessor may consider the
Lease terminated as to Phase I as of the Phase I Termination Date, and as to
Phase II as of the Phase II Termination Date selected by Lessor within the date
range set forth in Paragraph 2.C. above, subject to Lessor's payment of the
applicable portion of the Termination Fee (less any and all damages, costs,
expenses or liabilities incurred by Lessor due to any failure by Lessee to
satisfy any Termination Condition as and when required hereunder).
5. Surrender; Abandoned Property.
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A. At the expiration of the Lease term as set forth herein with
respect to each Phase of the Premises, or upon the earlier termination of this
Lease as to any Phase of the Premises, Lessee shall surrender the applicable
Phase of the Premises to Lessor (a) in good condition and repair (damage by acts
of God, casualty, and normal wear and tear excepted), but with all interior
walls cleaned, any carpets cleaned, all floors cleaned and waxed, all
non-working light bulbs and ballasts replaced and all roll-up doors and plumbing
fixtures in good condition and working order, and (b) in the manner required by
the provisions of Paragraph 7.4 of the Lease. Normal wear and tear shall not
include any damage or deterioration that would have been prevented by proper
maintenance by Lessee, or Lessee otherwise performing all of its obligations
under this Lease. For purposes of such Paragraph 7.4, the term "Lessee-Owned
Alterations and Utility Installations" shall include, without limitation, all
equipment, trade fixtures, computer wiring and cabling, furnishings,
inventories, goods and personal property of Lessee. Any Lessee-Owned
Alterations and Utility Installations not so removed by Lessee upon the
expiration of the Lease with respect to each Phase thereof, as required herein
and in the Lease, shall be deemed abandoned and may be stored, removed, and
disposed of by Lessor at Lessee's expense, and Lessee waives all claims against
Lessor for any damages resulting from Lessor's retention and disposition of such
property; provided, however, Lessee shall remain liable to Lessor for all costs
incurred in storing and disposing of such abandoned property of Lessee. If the
applicable Phase of the Premises are not surrendered at the applicable
expiration date or any earlier termination of this Lease, and in accordance with
the provisions of this Paragraph 5 and of Paragraph 7.4 of the Lease, Lessee
shall continue to be responsible for the payment of Base Rent, Lessee's Share of
Common Area Operating Expenses and any other sums required to be paid by Lessee
to Lessor in accordance with the provisions of the Lease until the Premises or
the applicable portion thereof are so surrendered in accordance with the
provisions of this Paragraph 5 and of Paragraph 7.4 of the Lease. Lessee shall
indemnify, protect, defend and hold the Lessor harmless from and against any and
all damages, expenses, costs, losses or liabilities to the extent arising from
any delay by Lessee in so surrendering the Premises or any portion thereof
including, without limitation, any damages, expenses, costs, losses or
liabilities arising from any claim against Lessor made by any succeeding lessee
or prospective lessee to the extent founded on or resulting from such delay and
losses and damages suffered by Lessor due to lost opportunities to lease any
Phase of the Premises to any such succeeding lessee or prospective lessee,
together with, in each case, actual attorneys' fees and costs.
B. In addition to any rights Lessor may have under the Lease or
this Agreement, Lessor, at its sole option, may deem any Lessee-Owned
Alterations and Utility Installations, or any furniture, fixtures, shelving,
cabinets, tables, equipment, lighting, and other fixtures or personal property
in, on or attached to the Premises and remaining in or on any portion of Phase I
after the Phase I Termination Date, remaining in or on any portion of Phase II
after the Phase II Termination Date, if applicable, or remaining in or on any
portion of Phase IIA after the Phase IIA Termination Date, if applicable (the
"Abandoned Property"), whether or not belonging to Lessee, to be abandoned, and
Lessor may dispose of the Abandoned Property as it in its sole discretion deems
appropriate. Lessee shall not be entitled to any proceeds received by Lessor as
a result of the disposition of the Abandoned Property. Lessee waives, to the
greatest extent permitted by law, all of its rights under California Civil Code
Sections 1980, et seq., as the same may be amended from time to time, and any
related and successor statutes thereto.
6. Representations and Warranties. Lessee and Lessor hereby
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represent and warrant to the other, as applicable, the following, each of which
shall survive the termination of the Lease, the vacation and surrender of the
Premises, the surrender of the Lease and Lessee's leasehold estate, and the
termination of this Agreement:
A. Lessee has not made any assignment, sublease, transfer,
conveyance or other disposition of the Lease, Lessee's leasehold estate, the
Premises, any other rights, title, interest under or arising by virtue of the
Lease, or of any claim, demand, obligation, liability, action or cause of action
arising from or pursuant to the Lease or arising from any rights of possession
arising under or by virtue of the Lease, Lessee's leasehold estate, or the
Premises.
B. The person or entity executing this Agreement on behalf of
Lessee and Lessor has the full right and authority to execute this Agreement on
behalf of said party and to bind said party without the consent or approval of
any other person or entity.
C. Lessee and Lessor each have the full power, capacity, authority
and legal right to execute and deliver this Agreement.
D. This Agreement is legal, valid and binding upon Lessee and
Lessor, and this Agreement is enforceable in accordance with its terms.
E. Lessee has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by its creditors, (iii) suffered the
appointment of a receiver to take possession of all, or substantially, all of
its assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets, (v) admitted in writing to its inability to
pay its debts as they become due, or (vi) made an offer of settlement, extension
or composition to its creditors generally.
7. Capitalized Terms. All capitalized terms used herein and not
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otherwise defined herein shall have the same meaning ascribed to such terms as
set forth in the Lease.
8. General Provisions.
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A. Time is of the essence in the performance of the parties'
respective obligations set forth in this Agreement, including without limitation
the Termination Conditions set forth in Paragraph 3.
B. Notices may be given pursuant to the provisions of Paragraph 23
"Notices" of the Lease, and shall be deemed given pursuant to the provisions of
Paragraph 23 "Notices" subparagraph 23.2 "Date of Notice" of the Lease. Notices
for purposes of this Agreement and for purposes of the Lease from and after the
date of this Agreement shall be sent to the following address: If to Lessee,
notices shall be sent to: RockShox, Inc., 0000 Xxxxxx Xxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Facsimile Number (000) 000-0000. If to Lessor, notices shall be sent
to: Legacy Partners Commercial, Inc., 000 Xxxxxxx Xxxxxx Xxxxx, 0xx Xxxxx,
Xxxxxx Xxxx, Xxxxxxxxxx 00000; Attention: Portfolio Vice President, Facsimile
Number (000) 000-0000. If at any time either party should change its address,
such party shall deliver written notice thereof to the other party together with
the designation of the new address.
C. This Agreement, together with the Lease, constitutes the entire
understanding of the parties and all prior agreements, representations, and
understandings between the parties, whether oral or written, are deemed null,
all of the foregoing having been merged into this Agreement. The parties
acknowledge that each party and/or its counsel have reviewed and revised this
Agreement and that no rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall be employed in the
interpretation of this Agreement or any amendments or exhibits to this Agreement
or any document executed and delivered by either party in connection with this
Agreement. The terms and provisions of this Agreement shall supersede any
contrary provision of the Lease; and except as expressly set forth herein, the
Lease remains in full force and effect according to its terms.
D. Lessee may not assign its rights, obligations and interest in
this Agreement to any other person or entity, without Lessor's written consent
thereto. Any attempted assignment shall be null and void. This Agreement shall
inure to the benefit of and be binding upon the parties to this Agreement and
their respective successors and assigns.
E. If for any reason, any provision of this Agreement shall be
held to be unenforceable, it shall not affect the validity or enforceability of
any other provision of this Agreement.
F. This Agreement shall be governed by and construed under the
laws of the State of California.
G. Any and all addenda attached hereto and either signed or
initialed by the parties shall be deemed a part hereof. Any and all future
modifications of this Agreement will be effective only if they are in writing
and signed by the parties hereto. The terms and conditions of any and all
addenda attached hereto and any and all future modifications of this Agreement
shall supersede and replace any inconsistent provisions in this Agreement.
H. This Agreement may be executed in counterparts. All executed
counterparts shall constitute one agreement, and each counterpart shall be
deemed an original.
I. In the event any dispute between the parties results in
litigation or other proceeding, the prevailing party shall be reimbursed by the
non-prevailing party for all reasonable costs and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs incurred by the
prevailing party in connection with such litigation or other proceeding and any
appeal thereof. Such costs, expenses and fees shall be included in and made a
part of the judgment recovered by the prevailing party, if any.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first written above in this Agreement.
LESSEE:
RockShox, Inc.,
a Delaware corporation
By: _____________________________________
Its: _____________________________________
Date: _____________________________________
LESSOR:
Little Orchard Realty Holding Co., Inc.,
a California corporation
By: _____________________________________
Its: _____________________________________
Date: _____________________________________
