Exhibit 10.12
COMMERCIAL LEASE
THIS COMMERCIAL LEASE ("Lease"), dated November 15, 1999, is made
between INTER CO-OP USA NO. III [ILLEGIBLE] NETWORKS, INC. ("Tenant"). In
consideration of the mutual convenants in this Lease, Landlord and Tenant
agree as follows:
1. BASIC PROVISIONS AND DEFINITIONS. The following terms, whenever used in
this Lease, with the first letter of each word capitalized, will have
the meanings set forth in this Section, unless the context otherwise
requires:
1.1. PREMISES. The leased portion of the property as shown on the
floor plan attached as Exhibit A. The Premises as located
on the real property legally described on Exhibit B.
1.2 BUILDING NAME AND ADDRESS.
CAMPUS BUSINESS CENTER
00000 0XX XXXXXX XXXXX
XXXXXXX XXX, XX 00000
1.3 TENANT'S SQUARE FOOTAGE & PROPORTIONATE SHARE. Tenant's Square
Footage is approximately 2,721.
Tenant's Proportionate Share of the entire net leasable space in
the property is agreed to be 4.05%.
1.4 DATE OF EXECUTION. The date above written, which is the date of
full execution hereof.
1.5 COMMENCEMENT DATE (SECTION 4). January 1, 2000.
1.6 TERM (SECTION 3). The period beginning on the Commencement Date
and ending on December 31, 2002 (which date shall be the last day
of a month)("Lease Term End Date").
1.7 MINIMUM RENT FOR INITIAL (SECTION 7).
Months 1-6: $1,576.80 per month plus NNN (as described in Paragraph 9)
Months 7 - 12: $1,624.10 per month plus NNN.
Months 13 - 18: $1,672.83 per month plus NNN.
Months 19 - 24: $1,723.01 per month plus NNN.
Months 25 - 30: $1,774.70 per month plus NNN.
Months 31 - 36: $1,827.94 per month plus NNN.
1.8 RENT PAYMENT. Monthly, in advance on the first calendar day of
each month.
1.9 DEPOSITS (SECTION 8). Rent Deposit $1,576.80. Security Deposit
$1,827.94
1.10 LANDLORD'S NOTICE AND PAYMENT ADDRESS (SECTION 24.15).
NOTICE: PAYMENT:
c/o Xxxxxx Xxxx Real Estate Services c/o Xxxxxx Xxxx Real Estate Services.
00000 XX 00xx Xxxxxx 00000 XX 00xx Xxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000-0000 Xxxxxxxx, XX 00000-0000
Telephone (000) 000-0000 Telephone (000) 000-0000
TENANT'S BILLING AND NOTICE ADDRESS (SECTION 24.15)
000 X. 000xx Xx. #000
Xxxxxxx Xxx, XX 00000
1.12 GUARANTOR'S ADDRESS (SECTION 24.18).
-1-
1.13 TENANT'S TRADE NAME (IF ANY), Freei Net.
1.14 STATE OF ORGANIZATION OF TENANT (IF OTHER THAN INDIVIDUAL). WA
1.15 PERMITTED USERS UNDER LEASE (SECTION 5). General Office Use and
use as a call center.
1.16 RIDERS & EXHIBITS TO THE LEASE (SECTION 24.20). Riders #: 28 & 29.
Exhibit Letters: A & B
1.17 BROKER FEE (IF ANY, OWNED BY LANDLORD) (SECTION 25). By separate
letter
2. PREMISES. Landlord hereby leases the Premises to Tenant and Tenant hereby
leases the Premises from Landlord, upon the term and condition set forth
in this Lease. The Premises are a part of the building which is situated
at the Building Address as set out in Section 1.
3. TERM. Tenant leases from Landlord the Premises for a lease term described
in Section 1.6 (the "Lease Term"). The Lease Term will begin on the
Commencement date and end at midnight on the Lease Term End Date unless
sooner terminated or extended as provided elsewhere in this Lease.
4. POSSESSION.
4.1 POSSESSION. Except as provided elsewhere in this Lease, Tenant
will be entitled to possession of the Premises on the
Commencement Date.
4.2 DELAY OF POSSESSION. If Landlord, for any reason, cannot deliver
possession of the Premises to Tenant upon the Commencement Date,
this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting from ??? but
then shall be a rent abatement covering the period between the
Commencement Date and the time the Landlord ??? to tenant and all
of the terms and conditions of this Lease shall remain in full
force and effect. If Landlord does not deliver possession of the
Premises to Tenant within 120 days after the Commencement Date
(the "Delivery period"), Tenant may, at its option cancel this
Lease by written notice delivered to Landlord within the ten day
period immediately succeeding the final day of the Delivery
Period. If Tenant does not deliver such written notice to
Landlord, within that ten-day period, Tenant's right to cancel
this Lease will terminate and be of no further force or effect,
and the terms and conditions of this Lease will remain in full
force and effect, except that Tenant's rent abatement shall
continue until the time Landlord delivery possession of the
Premises to Tenant.
4.3 EARLY POSSESSION. Landlord and Tenant may agree to Tenant's
occupancy of the Premises prior to the Commencement Date as per
PARAGRAPH #29. If Tenant occupies the Premises prior to the
Commencement Date, the occupancy will be subject to all
provisions of this Lease, the occupancy shall not advance the
termination date and Tenant shall pay rent throughout the period
of early occupancy as set forth in Sections 7, 8 and 9 of this
Lease.
4.4 SURRENDER OF PREMISES. At the expiration or sooner termination of
this Lease, Tenant shall return the Premises to Landlord in the
same condition in which received, broom clean, reasonable wear
and tear excepted. Tenant shall remove all personal property
trade fixtures, appliances and equipment ("Fixtures"). Where such
removal will require structural changes or damage to the
Premises, Landlord will have the option to have same removed at
Tenant's expense and under Landlord's supervision. Tenant shall
also remove any and all alterations which Landlord designates to
be removed pursuant to Section 10.4 below, and shall restore the
Premises to the condition they were in prior to the installation
or construction of said alterations. If Tenant has failed to
fully pay all amounts due under this lease, Landlord may, at
Landlord's option, designate any or all Fixtures paid for by
Tenant and installed on the Premises. Landlord's payment in full
or in part of any such unpaid amounts, and Tenant shall provide
Landlord with a Xxxx of Sale correctly evidence the transfer of
ownership. If Tenant fails to remove any fixture, at Landlord's
option, Tenant shall agree to designate and permit Landlord to
remove the same at Tenant's expense. Tenant shall return all keys
to the Landlord within 12 hours following termination of this
Lease or pay for the cost of new keys, if the Landlord so
requires. Tenant's obligation to perform this covenant shall
survive the expiration of termination of this Lease. Landlord may
place and maintain "For Lease" signs in conspicuous places on the
Premises for 180 days prior to the expiration or early
termination of this Lease, and reserves the right to enter any
part of the Premises during the same 180-day period to show the
Premises to prospective tenants.
5. USE.
5.1 USE. Tenant covenants that at all times during the Lease term and
such other time as Tenant occupies the Premises, Tenant shall use
the Premises for the Permitted Uses and for no other purposes
without the prior written consent of Landlord, as set forth in
Section 1.13.
5.2 USES PROHIBITED. Tenant shall not do or permit anything to be
done in nor about the Premises or bring or keep anything therein
which will in any way increase or affect the existing rate of any
fire or other insurance policy upon the Premises or the Building,
or cause a cancellation of any such insurance policy covering
said Premises, nor which will in any way obstruct or interfere
with the right of other
-2-
tenants or occupants of the Building or injure or annoy them, nor
shall the Tenant use or allow the Premises to be used for any
improper, immoral, unlawful, objectionable or offensive purpose, nor
shall Tenant cause, maintain or suffer or permit any ??? on or about
the Premises. Tenant shall not commit or allow to be committed any
waste in or upon the Premises and shall refrain from using or
permitting the use of the Premises or any portion thereof as living
quarters, sleeping quarters or for lodging purposes. Tenant shall
not do or permit anything to be done in or about the Premises, nor
bring or keep anything thereon that is or will constitute or create
a hazardous waste or substance or violate any environmental law.
Tenant will indemnify and hold the Landlord harmless from any and
all damages related to the Tenant's introduction to, or creation of,
hazardous waste on the Premises. Tenant shall advise Landlord in
writing immediately of any environmental concern related to
Tenant's use and occupancy of the Premises brought to Tenant's
attention by any private party or governmental agency or official.
Landlord shall have the right to remedy any environmental problem
and to conduct any environmental tests reasonably necessary to
discover a hazardous waste or other environmental problem and Tenant
shall be liable for all costs and expenses related to such tests or
remedial action if a hazardous waste or environmental problem
created by Tenant is found to exist.
5.3 BUILDING CODES AND ZONING. Tenant has investigated all
applicable building and zoning codes, regulations and ordinances
to determine whether Tenant's intended use of the Premises is
permitted. Based upon this investigation, Tenant accepts the
Premises "as is" subject to all applicable statutes, ordinances,
rules and regulations governing Tenant's use of the Premises. Any
and all expenses required to comply with all applicable statutes,
ordinances, rules, regulations and requirements in effect during
the Lease Term or part thereof regulating Tenant's use of the
Premises will be borne exclusively by Tenant. Tenant agrees to
comply with all such statutes, ordinances, rules and regulations
throughout the Lease Term.
5.4 CONDITION OF PREMISES. Tenant has inspected the plumbing,
lighting, air conditioning, heating, doors, windows, interior
walls, flooring and all other elements of the Premises prior to
execution of this Lease. Based upon that inspection, Tenant
accepts the Premises "as is" in the absence of any material
change in its condition prior to the Commencement Date or the
date the Tenant takes possession of the Premises, whichever is
earlier. Tenant acknowledges that neither Landlord nor Landlord's
agent has made any representation or warranty as to the present
or future suitability of the Premises for the conduct of Tenant's
business.
6. COMMON AREAS.
6.1 AREAS. Landlord shall make available such areas and facilities
for the common use of all tenants of the Building including but
not limited to parking areas, driveways, truckways, delivery
passages, truck-loading area, access and egress roads, wall ???
and landscaped and planted areas) as Landlord shall reasonably
deem appropriate ("Common Areas"). The roof and exterior walls of
the Building and the utility systems up to the exterior walls of
the Premises are Common Areas. Landlord or its agents shall
operate, manage, equip, light, repair, replace and maintain the
Common Areas for the intended purposes in such manner as Landlord
shall reasonably, in its sole discretion, determine. Landlord
may, from time to time, change the size, location, nature and use
of any Common Area, and make installations therein and move and
remove the same, provided that Tenant's access to the Premises is
not materially altered. All expenses in connection with the
Common Areas are Operating Expenses for the purposes of Section 9
below.
6.2 RIGHTS. Tenant and its employees, agents and invitees shall have
the non-exclusive right (in common with other Tenants of the
Building and Landlord) to use the Common Areas, subject to any
Rules, as defined in Section 18. Landlord's Rules may include the
documentation of specific areas in which cars owned by Tenant,
its employees, agents and invitees must be parked. Landlord may
at any time temporarily close any Common Areas due to
construction, maintenance, repair or changes to any part of the
Building or the real property upon which the Building is located,
with prior notice to Tenant.
6.3 PARKING. Tenant shall be entitled to use, on a non-reserved
basis, parking available to the Building. Tenant shall not at any
time interfere with the rights of Landlord or of other tenants of
the Building or other adjacent buildings or invitees of the same
to use any of the parking areas. Twenty-four hour parking on the
real property upon which the Premises are located shall not be
permitted by Tenant, its employees, agents or invitees.
7. MINIMUM RENT.
7.1 AMOUNT. During the Lease Term, Tenant agrees to pay to Landlord
at Landlord's Payment Address or such other place as designated,
the Minimum Rent, in the manner described in Section 7.2.
7.2 RENT PAYMENT. The Minimum Rent for the Lease Term shall be paid
in advance of the first day of each calendar month of the Lease
Term or any period prior or subsequent thereto while Tenant is in
possession of the Premises. The Minimum Rent for any partial
month shall be prorated based upon a 30-day month. The Minimum
Rent is exclusive of any sales, franchise, business and
occupation or other tax based on rents. Should any such taxes
apply during the term of this Lease, the Minimum Rent shall be
increased by such amount. In the event percentage or other
additional rent is payable by the Tenant under this Lease, it
shall be paid in the manner and at the time set forth in the
Riders attached hereto and by reference made a part of this
Lease. All Minimum Rent, Additional Rent (as hereinafter defined)
and other amounts payable under this Lease shall be paid without
deduction or offset.
-3-
8. FIRST MONTH'S RENT AND SECURITY DEPOSIT.
8.1 DEPOSITS. As set out in Section 1.9, Tenant has paid Landlord the
Rent Deposit, which shall be credited to the payment of the first
month's rent. Tenant has also deposited the Security Deposit for
the performance of all of the terms, covenants and conditions of
this Lease and as additional consideration for entering into this
Lease. Landlord shall not be required to keep the Security Deposit
separate from its general accounts and Tenant shall not be entitled
to interest on such deposit. Tenant may not apply the Security
Deposit to the last month's rent.
8.2 APPLICATIONS ON DEFAULT. If Tenant is in default under this Lease,
Landlord may use the Security Deposit, or any portion thereof to
cure the default or to compensate Landlord for damages (including
attorneys' fees) sustained by Landlord resulting from Tenant's
default, including, but not limited to, the payment of rent and the
cost of cleaning and/or repairing the Premises. Any payment to
Landlord from the Security Deposit, whether during the Lease Term
or upon termination of this Lease, shall not be considered a
payment of liquidated damages. Tenant shall, within ten days after
written demand, deposit cash with Landlord in an amount sufficient
to restore the Security Deposit to the full amount provided in
this Lease, and Tenant's failure to do so shall be a material
breach of this Lease. If Tenant is not in default at the expiration
of the Lease Term and after Tenant has vacated the Premises,
Landlord shall return the Security Deposit (less any amounts
deducted by Landlord that Tenant has not restored pursuant to this
Section 8.2 and less any amounts used by Landlord to restore the
Premises to the condition required in Section 4.4) within 45 days
of the latter of such expiration of this Lease or vacation of the
Premise. No trust relationship is created between Landlord and
Tenant with respect to the Security Deposit.
9. OPERATING EXPENSES.
9.1 NET LEASE. The purpose of this Section 9 is to insure that, in
addition to Minimum Rent, Tenant pays its Proportionate Share of
all expenses relating to the use, maintenance, ownership, repair
and insurance of the Premises, except costs specifically assumed by
Landlord according to other terms of this Lease.
9.2 DIRECT EXPENSE. The expenses listed in this Section 9.2 ("Direct
Expenses") are to be paid directly by Tenant:
9.2.1 UTILITIES AND BUILDING SERVICES. Tenant agrees to pay
before delinquency and at its sole cost and expense, all
charges for utilities and building services supplied to the
Premises including, without limitation, water, electricity,
gas, sewer, waste disposal, security, heating, ventilating,
and air conditioning, throughout the full Lease Term.
Landlord shall not be liable for the failure of any of these
services for any reason whatsoever. If charges for any or
all of such utility services are charged for the Building as
a whole, Tenant agrees to pay, upon demand, Tenant's
Proportionate Share of such charges. If charges for any or
all of such utility or building services are charged for a
larger space containing the Premises, Tenant agrees to pay
upon demand a share of any such charges based on the
proportion that the square footage of the Premises bears to
such larger space or a share determined by Landlord based
upon Landlord's estimate of Tenant's consumption relative to
other Tenant's sharing such utilities or building services.
9.2.2 INSURANCE PROCURED BY TENANT. Throughout the Lease Term and
any other period(s) of occupancy of the Premises by Tenant,
Tenant shall, at Tenant's expense, obtain and maintain the
following insurance policies, naming as additional insureds,
the Landlord, Xxxxxx Xxxx Management Group, Inc. and
Landlord's lender, as instructed by Landlord:
(a) LIABILITY INSURANCE. A commercial general liability
insurance policy providing coverage for bodily injury
liability, property damage liability and personal
injury liability with minimum limits of not less than
$1,000,000 Combined Single Limit per accident and
$2,000,000 General Aggregate. Such insurance policies
shall include Blanket Contractual Liability and Owners
and Contractors Protective endorsements. Landlord may
increase or decrease the required limit as it deems
necessary based upon periodic insurance reviews. The
insurance required by this Section shall be on an
occurrence basis, and underwritten by an acceptable
insurer licensed to do business in the State of
Washington. If Tenant is unable to obtain this
insurance on an occurrence basis, it may be on a
claims-made basis provided that, in addition, Tenant,
at Tenant's expense, obtains an owner's protective
policy issued in the name of Landlord only, which is on
an occurrence basis for the limits required by this
Section 9.2.2(a). The insurance shall be written as a
primary policy not contributing with and not in excess
of coverage which Landlord may carry.
(b) PERSONAL PROPERTY INSURANCE. A special form policy of
property insurance (or the equivalent) covering all
Tenant's personal property, including but not limited
to Tenant's furniture, fixtures, leasehold
improvements, equipment and inventory, in the amount of
its full replacement costs. Such property insurance
coverage shall at a minimum insure against loss
resulting from fire, lightning and extended or broad
form perils. Landlord shall be named as Loss Payee as
its interest may appear in tenant improvements and
betterments.
-4-
(c) BUSINESS INTERRUPTION AND PLATE GLASS INSURANCE.
Business interruption insurance in an amount sufficient
to protect Tenant against any additional costs and lost
income associated with a move to temporary space due to
a business interruption. In addition, plate glass
insurance in an amount sufficient to replace windows in
the Premises in the event of breakage.
Tenant shall obtain the insurance required by this
Section 9.2.2 from companies reasonably acceptable to
Landlord licensed to do business in the State of Washington.
Before occupying the Premise, Tenant shall deliver to
Landlord or Landlord's agent, copy of the insurance policies
required by this Section 9.2.2, or certificates evidencing
the existence and amount of such insurance. If required by
Landlord, or Landlord's agent, Tenant shall deliver the
original policy to Landlord's lender. Not later than ten
days before expiration of these policies, the Tenant shall
deliver to Landlord evidence that insurance required by this
Section 9.2.2 has been continued. The policies shall not be
cancelable or subject to reduction of coverage until after
30 days prior written notice to Landlord, or its Agent, and
Landlord's lender, if any. If Tenant fails to maintain the
required insurance Landlord may, but it is not required to,
procure the same at Tenant's expense.
9.2.3 PERSONAL PROPERTY TAXES. Tenant shall pay, before
delinquency, any and all taxes levied or assessed and payable
during the Lease Term upon all Tenant's equipment, furniture,
fixtures and any other personal property located on the
Premises. If any of the same are assessed or taxed with the
building or real property upon which the Building is located,
Tenant shall pay Landlord the amount of such taxes within ten
days after receipt of a written statement setting forth the
amount of such taxes that Landlord has determined to be
attributable to Tenant's personal property.
9.2.4 LICENSES AND TAXES. Tenant shall be liable for, and shall
pay throughout the Lease Term, all license and excise fees
and occupation taxes covering the business conducted on the
premises. If any governmental authority or unit under any
present or future law effective at any time during the Lease
Term shall in any manner levy a tax on rents payable under
this Lease or rent accruing from use of the premises or a
tax in any form against Landlord because of, or measured by,
income derived from the leasing or rental of said property,
such tax shall be paid by Tenant, either directly or through
Landlord, and upon Tenant's default therein, Landlord shall
have the same remedies as upon failure to pay Minimum
Monthly Rent. It is understood and agreed, however, that
Tenant shall not be liable to pay any net income tax imposed
on Landlord unless, and then only to the extent that, the
net income tax is a substitute for real estate taxes.
9.3 ADDITIONAL RENT. Tenant shall pay as additional rent ("Additional
Rent") in the manner set forth in Section 9.4, Tenant's Proportionate
Share of the following expenses
9.3.1 INSURANCE PROCURED BY LANDLORD. Throughout the Lease term,
Tenant's Proportionate Share of the following insurance
policies, obtained and maintained by Landlord, insuring the
Landlord and Landlord's lender or any other insurance that
Landlord may deem necessary, including but not limited to
earthquake and flood insurance.
(a) LIABILITY INSURANCE. A commercial general liability
insurance policy providing coverage for bodily injury
liability, property damage liability and personal
injury liability with in such amounts and with such
endorsements as Landlord may reasonably determine
from time to time.
(b) FIRE AND CASUALTY INSURANCE. A fire and casualty
insurance policy with extended coverage endorsements
for the full replacement value of the Premises as the
Landlord may reasonably determine from time to time.
(c) BOILER AND RENTAL LOSS INSURANCE. Boiler interruption
and rental loss insurance in an amount sufficient to
protect Landlord from any loss of rental income
resulting from boiler failure or any other reason.
9.3.2 REAL PROPERTY TAXES AND ASSESSMENTS. Tenant's Proportionate
Share of all real property taxes and general and special
assessments levied and assessed against the Building
improvements on the land of which the Premises are a part.
Each year Landlord shall notify Tenant of Landlord's
calculation of Tenant's Proportionate Share of the real
property taxes and assessments. Tenant shall pay Tenant's
Proportionate Share of said taxes or assessments in the
manner set forth in Section 9.4. Upon written request,
Landlord will furnish Tenant with a copy of the Tax
assessment xxxx. Landlord may require from Tenant, upon
reasonable written notice from Landlord, a payment of the
Tenant's Proportionate Share of such real property taxes
and/or assessments to Landlord on a periodic basis. If this
Lease commences or terminates other than on January 1 and
December 31 respectively, taxes and assessments payable
shall be prorated in the first and last calendar years of
the Lease Term.
9.3.3 COMMON AREA EXPENSES. To the extent not covered by other
provisions of this Lease, Tenant shall pay Tenant's
Proportionate Share of the following costs associated with
Common Areas of the Building in the manner set forth in
Section 9.4:
-5-
(a) All real estate taxes, including assessments, all
insurance costs, all sprinkler, fire, life safety
system utility costs and all other costs to maintain,
repair and replace common areas (including common area
signage), parking lots, sidewalks, driveways and other
areas used in common by the tenants of the Building
(including, but not limited to HVAC, signs and
parking), as well as personal property used in common
by the tenants of the Building.
(b) All costs to supervise and administer the Common Areas,
parking lots, driveways and other areas used in common
by the tenant or occupants of the Building. The costs
shall include such fees as may be paid to a third
party, including management fees in connection with the
same and shall include, in addition, a fee to Landlord
to supervise and administer the same in an amount equal
to 15 percent of the total costs of Subsection (a) and
(b).
(c) Any parking charges, utility subcharges, or any other
costs levied, assessed or imposed by or at the
direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated
by any governmental authority in connection with the
use or occupancy of the Premises or the parking
facilities serving the Premises.
9.3.4 PAYMENT IN LIEU OF ACTUAL COSTS. In lieu of the actual
cost of replacing the roof of the building, replacing or
repaving parking areas and drive aisles, and repainting all
or substantially all of the Building, Tenant shall pay
Landlord each month during the Lease Term an amount equal to
2 percent of the applicable Minimum Rent.
9.4 PAYMENT OF ADDITIONAL RENT. Tenant shall pay Additional Rent
described in Section 9.3 or elsewhere, in the manner set
forth herein:
9.4.1 ADDITIONAL MONTHLY RENT. On the Commencement Date or as soon
as possible thereafter, Landlord shall submit to Tenant a
statement of the estimated total Additional Rent owed by
Tenant under Section 9.3 for the period from the
Commencement Date to the end of the calendar year. Tenant
shall pay such estimated Additional Rent in monthly payments
equal to the amount of the Additonal Rent divided by the
number of full months remaining in the period from the
Commencement date to the end of the calendar year (the
"Additional Monthly Rent"). The Additional Monthly Rent
shall be paid concurrently with the monthly payment of the
Minimum rent and shall be adjusted as provided in Section
9.4.2 herein.
9.4.2 ADJUSTMENTS STATEMENT. By March 1 of each year of the Lease
Term, Landlord shall endeavor to provide Tenant with a
statement showing the actual Additional Rent for the prior
calendar year (the "Adjustments Statement"). If the total of
the Additional Monthly Rent payments which the Tenant has made
for the prior calendar year is less than Tenant's
Proportionate Share of the actual Additional Rent for such
period, Tenant shall pay within ten days after receipt
of the Adjustments Statement, an amount equal to (i) the
deficiency for the previous calendar year, plus (ii) the
definiency due to Additional Monthly Rent payments made in
the current calendar year prior to such Additional Monthly
Rent being adjusted as set forth in Section 9.4.3. Failure
of Landlord to submit Adjustment Statements shall not be
deemed a waiver of Tenant's obligation to pay sums as
required by this Section 9.4.
9.4.3 ADJUSTMENT OF ADDITIONAL MONTHLY RENT. The amount of
Additional Monthly Rent owing in the current calendar year
shall be adjusted concurrently with Landlord's provision of
the Adjustments Statement to Tenant. Taking into account the
actual amount of the Additional Rent for the previous
calendar year, Landlord shall submit to Tenant as part of
the Adjustments Statement (i) an estimate of the total
Additional Rent for the current calendar year and (ii) the
adjusted Additional Monthly Rent amount based on such
estimate.
9.4.4 DEFICIENCY/OVERPAYMENT. Even though the term has expired
and Tenant has vacated the Premises, when the final
determination is made of Tenant's Proportionate Share of the
Additional Rent for the year in which the Lease terminates,
Tenant shall immediately pay any deficiency between the
total of the Additional Monthly Rent payment made and the
actual Additional Rent due. Any overpayment made shall be
immediately rebated by Landlord to Tenant, provided there
are no outstanding rents or charges due. This provision
shall survive termination of this Lease.
9.4.5 TENANT AUDIT. Tenant may have performed an audit of the
amount or the calculation of the Additional Rent, provided
that (a) the Tenant shall have no right to have such an
audit performed for any Additional Rent unless tenant
provides notice of Tenant's intention to do so within 60
days of the date that Tenant receives the Adjustments
Statement related to such Additional Rent, (b) any such audit
shall be at Tenant's sole cost and expense, (c) the audit
shall be performed by a recognized independent accounting
firm that is not being compensated on a contingency fee
basis, and (d) the audit shall not unreasonably interfere
with the business of Landlord or its agent.
10. MAINTENANCE, REPAIRS AND ALTERATIONS.
10.1 LANDLORD'S OBLIGATIONS. Landlord shall maintain and repair the
foundations, exterior walls (excluding Paint) and the roof
structure (excluding the roof membrane) of the Building. Except as
otherwise required by Section 13 regarding subrogation, if any of
this maintenance and/or repair in whole or in part because of the
negligence or willful misconduct of Tenant, its agents or
-6-
invitees, Tenant shall pay to Landlord the reasonable
cost of the repairs. Except as provided by Section 14
regarding reconstruction, there shall be no abatement
of rent, and no liability of Landlord, due to any injury
or interference with Tenant's business arising from
Landlord's performance of any maintenance or repair which
it is required or permitted to perform. Tenant waives any
right which it may have under any current or future law or
ordinance to make repairs at Landlord's expense.
10.2 TENANT'S OBLIGATIONS. Tenant shall, at Tenant's sole cost
and expense, keep in good condition and repair all portions
of the Premises not required to be maintained by Landlord
under Section 10.1, including, without limitation, the
maintenance, repair and replacement of any storefront, all
interior walls or partitions and interior portions of
exterior walls, doors, exterior and interior glass and
window casements, roof covering (but not roof structure)
and all utility systems within the Premises including
heating, ventilation and air conditioning systems ("HVAC").
Tenant shall, upon expiration or sooner termination of
this Lease, surrender the Premises to Landlord in good and
clean condition, ordinary wear accepted. Any damage to
adjacent premises caused by Tenant's use of the Premises
shall be repaired at the sole cost and expense of Tenant.
If Tenant fails to perform the maintenance, repair or
replacement required by this Section 10.2 or to surrender
the Premises in the condition required by this Section,
Landlord shall have the right, but not the obligation to
perform the necessary work at Tenant's expense, and Tenant
agrees to reimburse all costs incurred by Landlord.
Landlord shall have the right to contract for such services
as HVAC maintenance and xxxx Tenant for cost for such
service.
10.3 GOVERNMENT REPAIRS. In the event any governmental agency
requires major repairs or modifications to be made to the
Premises, which repairs are the obligation of Landlord and
cannot, in Landlord's judgment, be justified by the Minimum
Rent, the Landlord shall have the right to cancel and
terminate this Lease by giving Tenant 90 days written
notice. Major repairs for purposes of this Section shall
be repairs or modifications with a cost exceeding six
months' Minimum Rent under this Lease. However, Tenant may
elect in writing within 15 days of Tenant's receipt of the
90 days notice of cancellation from Landlord to make these
repairs at its sole cost and expense in which event this
Lease shall remain in full force and effect.
10.4 ALTERATIONS AND ADDITIONS. Tenant shall not make or permit
any alteration, addition or improvement to the Premises
without the prior written consent of Landlord. Tenant
shall pay any and all costs incurred by Landlord in
reviewing and evaluating any request for the consent
required by this section. Any alteration, addition or
improvement consented to by Landlord shall be made in a
good workmanlike manner at Tenant's sole cost and expense
and shall comply with all applicable laws, codes,
ordinances, rules and regulations. All alterations,
additions or improvements (including but not limited to
wall and window covering, paneling and built-in cabinet
work, but excluding movable furniture and trade fixtures)
shall at once become a part of the Premises belonging to
the Landlord and shall be surrendered with the Premises at
the expiration of this Lease, unless Landlord demands their
removal as set forth below. Upon expiration or sooner
termination of the Lease Term, Tenant shall, at Tenant's
sole cost and expense, with all diligence, remove any
alterations, additions or improvements made by Tenant and
designated by Landlord to be removed; provided Landlord
gives Tenant not less than 30 days advance written notice
prior to termination of this Lease. Tenant shall, at its
sole cost and expense, repair any damage to the Premises
caused by such removal. If Tenant fails to remove any such
alterations, additions or improvements, Landlord may do the
same at Tenant's expense.
11. LIENS.
11.1 LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished or
obligations incurred by Tenant, and agrees to hold
Landlord harmless from the same. Landlord may require, at
Landlord's sole option, that Tenant provide, at Tenant's
sole cost and expense, a materialman's labor and
performance bond acceptable to Landlord in an amount equal
to one and one-half times the estimated cost of any
improvements, additions or alterations to the Premises
which the Tenant desires to make, to insure Landlord
against any liability for mechanics' and materialmen's
liens, and to insure completion of the work.
11.2 ENCUMBRANCES. The Tenant shall not cause or suffer to be
placed, filed or recorded against the title to the
Premises, the Building, or any part thereof, or against
Tenant's leasehold interest in the Premises any mortgage,
deed of trust, security agreement, financing statement or
other encumbrances. Further, in no event shall Tenant lien
or mortgage any leasehold improvements alterations,
additions or improvements thereto, except trade fixtures,
appliances and equipment which are owned by Tenant and
which are not, and which do not become a part of the
Premises. The form of any such mortgage, deed of trust or
other security agreement or financing statement which
includes a legal description of the Premises or the
Building shall be subject to Landlord's prior written
approval, which approval shall be subject to such conditions
as the Landlord may deem appropriate.
12. HOLD HARMLESS. Tenant agrees to indemnify and hold Landlord and its
agents harmless from any and all claims arising from the use of the
Premises by Tenant, its agents and invitees, from the conduct of
Tenant's business, or from any activity, work or things done or
permitted to be done by Tenant, its agents and invitees on the
premises or elsewhere. Tenant further agrees to indemnify and hold
Landlord and its agents harmless from any and all claims arising
from, in connection with, or related to any default by Tenant in the
performance of its obligations under this Lease, or any act, omission
or neglect of Tenant, its agents or invites. Tenant further agrees to
indemnify and hold Landlord and its agents harmless from all costs
(including but not limited to attorney's fees) incurred by Landlord
in connection with its defense against any claim made against the
Landlord as to which Tenant is required to indemnify Landlord pursuant
to this Section. Tenant shall give prompt notice to Landlord of any
casualty or accident in the Premises.
-7-
Upon notice by Landlord, Tenant, at Tenant's expense, shall defend
Landlord, through counsel reasonably satisfactory to Landlord in any
action or proceeding brought against Landlord by reason of any such
claim. Tenant further assumes all risk of, and waives and releases
all claims against Landlord for any damages to person or property
sustained by Tenant, or any person claiming through Tenant, which
damage results from any accident or occurrence in or on the Premises
from any cause whatsoever.
13. SUBROGATION. Neither Landlord nor Tenant shall be liable to the
other or to any insurance company (by way of subrogation or otherwise)
insuring the other party for any loss or damage to any building,
structure or other tangible property, or any resulting loss of income,
or losses under worker's compensation laws and benefits, even though
such loss or damage might have been occasioned by the negligence of
such party, agents or employees if any such loss or damage is covered
by insurance benefiting the party suffering such loss or damage or
was required to be covered by insurance pursuant to this Lease.
14. RECONSTRUCTION.
14.1 EFFECT OF INSURED LOSS. Except as provided below, if the
Premises are damaged by fire or other cause covered by
Landlord's property insurance, Landlord agrees to repair
the same, and this Lease shall remain in full force and
effect.
14.2 LANDLORD'S OPTIONS. Landlord shall have the option either
to repair or rebuild the Premises or to terminate this Lease
if the Premises any portion of the Building is damaged if:
(a) The damage results from any cause not covered by
Landlord's insurance;
(b) Insurance proceeds are insufficient to fully pay
for repair and restoration;
(c) The cost to repair exceeds 25 percent of the then
complete replacement cost of the Premises and the
Building;
(d) The repair or restoration, in Landlord's opinion,
cannot be completed within six months of the
damage; or
(e) The damage occurs during the last 12 months of the
Lease Term.
Landlord shall exercise its option to terminate this Lease
by giving to Tenant, at any time within 60 days after the
damage, written notice of its election to terminate this
Lease as of the date specified in the notice. The
termination date shall not be less than 30 nor more than 60
days after the date of notice. If Landlord fails to give
notice within the 60 days, it shall be deemed to have
elected to repair or restore the damage. If Landlord
terminates this Lease as provided by this Section 14.2, this
Lease shall automatically terminate on the date specified
in Landlord's notice. Neither party shall have further
liability to the other, except for obligations which were
accrued and unpaid as of the date of termination specified
in Landlord's notice, and except that Landlord shall return
any unused balance of the Security Deposit to Tenant.
14.3 RENT ABATEMENT. This Lease shall remain in full force and
effect if Landlord elects to repair the damage, or until the
termination date specified in the notice of termination, as
applicable, except that the Minimum Rent and any Additional
Rent shall be proportionately abated from the date of
damage until the repairs are completed, or until the
specified termination date, as applicable. Such
proportionate abatement shall be based upon the extent to
which the damage materially interferes with the business
carried on by Tenant in the Premises.
14.4 TENANT'S REPAIR OBLIGATIONS. Landlord shall not be
required to repair or replace any leasehold improvements,
fixtures or other personal property of Tenant, all of which
shall be repaired or replaced promptly by Tenant.
15. EMINENT DOMAIN.
15.1 TOTAL OR PARTIAL TAKING. If any portion of the Premises is
taken or appropriated by any public or quasi-public
authority under the power of eminent domain, or is
purchased by the condemnor in lieu of condemnation
proceedings, either party shall have the right to terminate
this Lease upon 30 days written notice given to the other
party within 60 days after the date that possession is
surrendered to the condemnor. If neither party elects to
terminate, the Minimum Rent and any Additional Rent
thereafter to be paid shall be equitably reduced. If any
part of the Building other than the Premises is so taken or
appropriated, or is purchased by the condemned in lieu
thereof, Landlord shall have the right at its option to
terminate this Lease upon 30 days written notice to Tenant
given within 60 days after the date that possession is
surrendered to the condemnor.
15.2 DAMAGES. Landlord reserves all rights to the entire damage
award or payment for any taking by eminent domain and Tenant
shall make no claim whatsoever against Landlord for damages
for termination of its leasehold interest in the Premises
or for interference with its business. Tenant hereby grants
and assigns to Landlord any right Tenant may now have or
hereafter acquire to damages related to any taking by
eminent domain and agrees to execute and deliver such
further instruments of assignment thereof as Landlord may
from time
-8-
to time request. Tenant shall, however, have the right to
claim from the condemning authority all compensation that
may be recoverable by Tenant on account of any loss incurred
by Tenant in removing Tenant's merchandise, furniture,
trade fixtures and equipment or for damage to Tenant's
business provided, however, that Tenant may claim such
damages only if they are awarded separately in the eminent
domain proceeding and not as part of Landlord damages.
16. ASSIGNMENT AND SUBLETTING.
16.1 RESTRICTION. Tenant shall not, without the prior written
consent of Landlord:
(a) Voluntarily, involuntarily or by operation of law,
assign, transfer, mortgage, pledge, hypothecate or
otherwise encumber this Lease, or any interest in
it, or any right or privilege appurtenant to it;
(b) Sublet all or any part of the Premises; or
(c) Allow any other person, except the agents and
invitees of Tenant, to occupy or use any portion of
the Premises.
Landlord's consent may be withheld in Landlord's
discretion. In determining whether to consent to any
assignment, transfer, encumbrance or subletting, Landlord
may consider any commercially reasonable basis for approving
or disapproving any such request including, without
limitation, the following: (i) the experience or business
reputation of the proposed transferee, (ii) whether the use
clientele, personnel or foot traffic that will be generated
by the proposed transferee is consistent, in Landlord's
opinion, with the business of other tenants of the Building
at the time of the proposed transfer, and (iii)
notwithstanding that Tenant and others would remain liable
upon transfer, whether the proposed transferee has a net
worth and financial strength and credit record satisfactory
to Landlord. Any assignment, transfer, encumbrance,
subletting or use without Landlord's consent shall be void
and shall, at the option of Landlord, constitute a material
default under this Lease. An assignment or sublease
consented to by Landlord shall not be binding upon Landlord
unless the assignee or subtenant delivers to Landlord:
(a) An original executed assignment or sublease;
(b) Any collateral agreements; and
(c) An instrument containing said assignee's or
sublessee's assumption of all of the obligations of
the Tenant under this Lease, in form and substance
satisfactory to Landlord.
The assignee's or sublessee's failure to execute such a
covenant shall not waive, release or discharge the assignee
or subleasee from its liability for the performance of the
Tenant's obligations under this Lease. Regardless of
Landlord's consent, no subletting or assignment shall
release Tenant or Guarantor of their obligations or alter
the primary liability of Tenant to pay rent and to perform
all the obligations of the Tenant under this Lease.
16.2 COSTS. Tenant shall reimburse Landlord and Landlord's
agent for all attorney's fees and other costs incurred by
Landlord in connection with the review of and preparation
of documents incident to any request by Tenant for
Landlord's consent. Each request for Landlord's consent
shall be accompanied by a deposit in the amount of $200 to
be applied to such costs.
16.3 INCLUDED TRANSFERS. If Tenant is a corporation,
partnership, limited liability company or other entity, and
transfer of this Lease by merger, consolidation,
reorganization or dissolution shall constitute a transfer
for the purposes of this Section. If Tenant is such an
entity, any change in the ownership of, or power to vote,
a percentage of Tenant's now-outstanding stock or ownership
interest which results in a change of controlling persons,
or any transfer of all or substantially all the assets of
Tenant shall constitute a transfer for the purposes of this
Section. If Tenant is a partnership, any partial or total
withdrawal of any of the present general partners, and any
transfer by a general partner of all or part of his
partnership interest shall constitute a transfer for the
purposes of this Section.
16.4 JUDICIALLY IMPOSED ASSIGNMENT. If the non-assignment
provisions of this Section are deemed to be unenforceable
in any bankruptcy proceeding, Landlord and Tenant agree
that a showing of adequate assurance of future performance
by a prospective assignee of this Lease must include,
without limitation, clear and convincing evidence that:
(a) Landlord will receive the full benefit of each and
every term of its bargain in this Lease, except for
the non-assignment and related termination clauses;
(b) The Premises will continue to be used solely for
the use permitted by this Lease;
(c) A judicially imposed assignment will not cause an
acceleration or increase in the interest rate on, or
fees in connection with, any indebtedness of
Landlord secured by Landlord's interest in the
building or this Lease; and
-9-
(d) The prospective assignee has the means, expertise
and experience to operate the business to be conducted upon
the Premises in a first-class manner.
16.5 ASSIGNMENT BY LANDLORD. If Landlord shall assign its interest
under this Lease or transfer its interest in the Premises,
Landlord shall be relieved of any obligation accruing hereunder
after such assignment or transfer, and such transferee shall
thereafter be deemed to be the Landlord under this Lease.
Landlord may transfer Tenant's Security Deposit to such
transferee and Tenant shall look solely to the transferee for the
return of such deposit.
17. DEFAULT.
17.1 EVENTS OF DEFAULT. The following events are referred to,
collectively, as "Events of Default" or, individually, as an
"Event of Default":
(a) Tenant defaults in the due and punctual payment of rent or
Additional Rent, and such default continues for three days
after written notice from Landlord; however, Tenant will
not be entitled to more than one written notice for
monetary defaults during any 12 month period, and if after
such written notice any rent or Additional Rent is not paid
when due, an Event of Default will be considered to have
occurred without further notice;
(b) Tenant vacates or abandons the Premises or fails to operate
its business on the Premises;
(c) This Lease or the Premises or any part of the Premises are
taken upon execution or by other process of law directed
against Tenant, or are taken upon or subject to any
attachment by any creditor of Tenant or claimant against
Tenant, and said attachment is not discharged or disposed
of within 15 days after its levy;
(d) Tenant files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of
the United States or under any insolvency act of any state,
or admits the material allegations of any such petition by
answer or otherwise, or is dissolved or makes an assignment
for the benefit of creditors;
(e) Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Tenant are
instituted against Tenant, or a receiver or trustee is
appointed for all or substantially all of the property of
Tenant, and such proceeding is not dismissed or such
receivership or trusteeship vacated within 60 days after
such institution or appointment, or
(f) Tenant makes, causes to be made or suffers to exist on the
Premises noise of any type (including music) that, in the
opinion of Landlord, could reasonably be expected to
interfere with the rights of quiet enjoyment of other
tenants in the Building or in the complex of which the
Premises are a part, and such default continues or occurs
for ten days after written notice from Landlord, however,
Tenant will not be entitled to more than one written notice
of such defaults during any 12 month period, and if after
such written notice a default under this provision exists
or occurs, an Event of Default will be considered to have
occurred without further notice;
(g) Tenant breaches any of the other agreements, terms,
covenants, or conditions that this Lease requires Tenant to
perform, and such breach continues for a period of 30 days
after written notice from Landlord to Tenant or, if such
breach cannot be cured reasonably within such 30-day
period, if Tenant fails to diligently commence to cure such
breach within 30 days after written notice from Landlord
and to complete such cure within a reasonable time
thereafter (but not to exceed 90 days).
17.2 LANDLORD'S REMEDIES. If any one or more Events of Default set
forth in Section 17.1 occur, then Landlord has the right, at its
election:
(a) To give Tenant written notice of Landlord's intention to
terminate this Lease on the earliest date permitted by law
or on any later date specified in such notice, in which
case Tenant's right to possession of the Premises will
cease and this Lease will be terminated, except as to
Tenant's liability, as if the expiration of the term fixed
in such notice were the end of the term;
(b) Without further demand or notice, to reenter and take
possession of the Premises or any part of the Premises,
repossess the same, expel Tenant and those claiming through
or under Tenant, and remove the effects of both or either,
using such force for such purposes as may be necessary,
without being liable for prosecution, without being deemed
guilty of any manner of trespass, and without prejudice to
any remedies for arrears of monthly rent or other amounts
payable under this Lease or as a result of any preceding
breach of covenants or conditions; or
(c) Without further demand or notice to cure any Event of
Default and to charge Tenant for the cost of effecting such
cure, including without limitation reasonable attorneys'
fees and interest on the amount so advanced at the rate of
15 percent per annum, provided that Landlord will have no
obligation to cure any such Event of Default of Tenant.
-10-
Should Landlord elect to reenter as provided in Section 17.2(b),
or should Landlord take possession pursuant to legal proceedings
or pursuant to any notice provided by law, Landlord may, from
time to time, without terminating this Lease, relet the Premises
or any part of the Premises in Landlord's or Tenant's name, but
for the account of Tenant, for such term or terms (which may be
greater or less than the period that would otherwise have
constituted the balance of the term) and on such conditions and
upon such other terms (which may include concessions of free
rent and alteration and repair of the Premises) as Landlord, in
its reasonable discretion, may determine, and Landlord may
collect and receive the rent. Landlord will in no way be
responsible or liable for any failure to relet the Premises, or
any part of the Premises, or for any failure to collect any rent
due upon such reletting. No such reentry or taking possession of
the Premises by Landlord will be construed as an election on
Landlord's part to terminate this Lease unless a written notice
of such intention is given to Tenant. No written notice from
Landlord under this Section 17.2 or under a forcible or unlawful
entry and detainer statute or similar law will constitute an
election by Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right following
any such reentry or reletting to exercise its right to terminate
this Lease by giving Tenant such written notice, in which event
this Lease will terminate as specified in such notice.
17.3 CERTAIN DAMAGES. In the event that Landlord does not elect to
terminate this Lease as permitted in Section 17.2(a), but on the
contrary elects to take possession as provided in Section
17.2(b), Tenant will pay to Landlord monthly rent and other sums
as provided in this Lease that would be payable under this Lease
if such repossession had not occurred, less the net proceeds, if
any, of any reletting of the Premises after deducting all of
Landlord's reasonable expenses in connection with such reletting,
including without limitation all repossession costs, brokerage
commissions, attorneys' fees, expenses of employees, alteration
and repair costs, and expenses of preparation for such
reletting. If, in connection with any reletting, the new Lease
term extends beyond the existing term, or the Premises covered
by such new lease include other Premises not part of the
Premises, a fair apportionment of the rent received from such
reletting and the expenses incurred in connection with such
reletting as provided in this Section will be made in
determining the net proceeds from such reletting, and any rent
concessions will be equally apportioned over the term of the new
lease. Tenant will pay such rent and other sums to Landlord
monthly on the day on which the monthly rent would have been
payable under this Lease if possession had not been retaken,
and Landlord will be entitled to receive such rent and other
sums from Tenant on each such day.
17.4 CONTINUING LIABILITY AFTER TERMINATION. If this Lease is
terminated on account of the occurrence of an Event of Default,
Tenant will remain liable to Landlord for damages in an amount
equal to monthly rent and other amounts that would have been
owing by Tenant for the balance of the term, had this Lease not
been terminated, less the net proceeds, if any, of any
reletting of the Premises by Landlord subsequent to such
termination, after deducting all of Landlord's expenses in
connection with such reletting, including without limitation the
expenses enumerated in Section 17.3. Landlord will be entitled
to collect such damages from Tenant monthly on the day on which
monthly rent and other amounts would have been payable under
this Lease if this Lease had not been terminated, and
Landlord will be entitled to receive such monthly rent and other
amounts from Tenant on each such day. Alternatively, at the
option of Landlord, in the event this Lease is so terminated,
Landlord will be entitled to recover against Tenant as damages
for loss of the bargain and not as a penalty:
(a) The worth at the time of award of the unpaid rent that had
been earned at the time of termination;
(b) The worth at the time of award of the amount by which the
unpaid rent that would have been earned after termination
until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided.
(c) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term of this Lease (had
the same not been so terminated by Landlord) after the time
of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; and
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which would be
likely to result therefrom.
The "worth at the time of award" of the amounts referred to in
(a) and (b) above is computed by adding interest at the interest
rate of 15D percent per annum from the Termination Date until the
time of the award. The "worth at the time of award" of the
amount referred to in (c) above is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San
Francisco, at the time of award plus 1 percent.
17.5 CUMULATIVE REMEDIES. Any suit or suits for the recovery of the
amounts and damages set forth in Sections 17.3 and 17.4 may be
brought by Landlord, from time to time, at Landlord's election,
and nothing in this Lease will be deemed to require Landlord
to await the date upon which this Lease or the term would have
expired had there occurred no Event of Default. Each right and
remedy provided for in this Lease is cumulative and is in
addition to every other right or remedy provided for in this
Lease or now or after the Lease date existing at law or in
equity or by statute or otherwise, and the exercise or beginning
of the exercise by Landlord of any one or more of the rights or
remedies provided for in this Lease or at law, in equity or by
statute or otherwise will not preclude the simultaneous or later
exercise by Landlord of any or all other rights or remedies
provided for in this Lease or at law, in equity or by statute or
otherwise. All costs incurred by Landlord in collecting any
amounts and damages owing by Tenant pursuant to the provisions
of this Lease or to
-11-
enforce any provision of this Lease, including reasonable
attorneys' fees from the date any such matter is turned over to
an attorney, whether or not one or more actions are commenced by
Landlord, will also be recoverable by Landlord from Tenant.
17.6 WAIVER OF REDEMPTION. Tenant waives any right of redemption
arising as a result of Landlord's exercise of its remedies under
this Article 17.
17.7 LATE CHARGES. Tenant acknowledges that late payment by Tenant to
Landlord of rent and other sums due under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. These
costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Landlord by the
terms of any mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sums due from
Tenant shall not be received by Landlord or Landlord's agent
within five days after the amount shall be due or if payment is
made with a check that is returned for lack of sufficient funds,
then without any requirement of notice to Tenant, Tenant shall
pay to Landlord a late charge equal to the greater of 10 percent
of the delinquent amount or $75, plus 1 percent per month
interest on the delinquencies from the date due until payment.
The parties agree that this late charge plus interest represents
a fair and reasonable estimate of the cost Landlord will incur by
reason of late payment by Tenant. Acceptance of the late charge by
Landlord shall in no event constitute a waiver of Tenant's
default with respect to the overdue amount, nor prevent Landlord
from exercising any of the other rights or remedies granted to
Landlord under this Lease, or at law or equity.
17.8 DEFAULT BY LANDLORD. Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord within
a reasonable time, but in any event 30 days after written notice
by certified mail by Tenant to Landlord and to the holder of any
first mortgage or deed of trust covering the Premises whose name
and address shall have theretofore been furnished to Tenant in
writing. Said notice shall specify wherein Landlord has failed to
perform such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than 30 days are required
for performance, then Landlord shall not be in default if
Landlord commences performance within such 30-day period and
thereafter diligently prosecutes the same to completion. Tenant
further agrees not to invoke any of its remedies under this Lease
until said 30 days have elapsed. In no event shall Tenant have
the right to terminate this Lease as result of Landlord's default
and Tenant's remedies shall be limited to damages and/or an
inunction; and in no case may the Tenant withhold rent or claim a
set-off or deduction from rent.
18. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
all recorded covenants, conditions and restrictions affecting the
Premises, all rules and regulations that Landlord may from time to time
make to facilitate the reasonable operation of the Building of which
the Premises are a part or the complex in which it is located or to
comply with the requirements of any governmental entity or insurance
company, including, without limitation, those rules and regulations
attached to this Lease (collectively called "Rules"). Landlord
reserves the right to modify the Rules from time to time. The Rules and
any modifications shall be binding upon Tenant upon delivery of a copy
of the Rules to Tenant. Landlord shall not be responsible to Tenant for
the failure of any other tenants or occupants to comply with the Rules.
19. HOLDING OVER.
19.1 HOLDING OVER. If Tenant remains in possession of the Premises or
any part thereof, after the expiration of the Lease Term with the
express written consent of Landlord (which consent may be
granted, withheld or conditioned at the sole discretion of
Landlord), such occupancy shall be a tenancy from month to month
at a minimum rent in an amount equal to 150 percent of the last
monthly Minimum Rent, plus all additional rent and other charges
payable hereunder, and upon all the terms hereof applicable to a
month-to-month tenancy.
19.2 ABANDONMENT. Tenant agrees not to vacate or abandon the Premises
at any time during the Lease Term. Should Tenant vacate or
abandon said Premises or be dispossessed by process of law or
otherwise, such abandonment, vacation or dispossession shall be
deemed a breach of this Lease and, in addition to any other
rights which Landlord may have, Landlord may remove any personal
property belonging to Tenant which remains on the Premises and
store the same, the cost of such removal and storage to be
Tenant's liability.
19.3 VOLUNTARY SURRENDER. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work
a merger, but shall, at the option of Landlord, terminate all or
any existing subleases or subtenancies, or operate as an
assignment to it of any or all such subleases or subtenancies.
20. ENTRY BY LANDLORD. Landlord reserves the right to enter the Premises
to inspect the same, to show the Premises to prospective purchasers or
tenants, to perform any alterations, improvements, repairs or
maintenance, to provide any services that Landlord may deem necessary or
desirable and to do any other act permitted under this Lease. Tenant
hereby waives all claims for damages occasioned by such entry. Landlord
may retain a key with which to unlock all of the doors in the premises
(excluding Tenant's vaults, safes and files). No entry by Landlord
shall be construed or deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or an eviction of Tenant from all or
any portion of the Premises.
-12-
21. ESTOPPEL CERTIFICATE. Upon not less than five days' prior written notice
from Landlord, Tenant shall execute, acknowledge and deliver to Landlord a
written estoppel certificate stating certain facts including, but not
limited to:
(a) That this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that
this Lease as so modified is in full force and effect);
(b) The date to which the Minimum Rent and other charges are paid; and
(c) That there are not, to Tenant's knowledge, any uncured defaults on
the part of the Landlord (or specifying such defaults if any are
claimed.)
The statement shall be in any form that Landlord provides to Tenant. Any
such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Building or the real property
upon which it is located.
22. SIGNS. Tenant shall not place any signs or symbols in the windows or on
the doors of the Premises or upon any part of the Building without the
prior written consent of Landlord. Any signs or symbols shall be in
conformity with other signs on the Premises and the Building, the Rules,
and all applicable laws, ordinances and regulations. Tenant shall
maintain any such sign or symbol in good condition and repair at its sole
cost and expense. Tenant shall remove such sign or symbol at its sole cost
and expense upon termination of the Lease Term, and shall repair all damage
caused by the removal. If Tenant fails to remove any sign or symbol and/or
repair any damage caused by its removal, Landlord may have the same removed
and/or repaired at Tenant's expense.
23. AUTHORITY; LIABILITY.
23.1 AUTHORITY. If Tenant is a corporation, partnership, limited
liability company or other form of entity, each individual executing
this Lease on behalf of said entity represents and warrants that he
or she is duly authorized to execute and deliver this Lease on
behalf of said entity, in accordance with a duly adopted resolution
of the board of directors of said entity authorizing and consenting
to this Lease; specifically authorizing the designated officers
signing this Lease to execute, acknowledge and deliver the same
without the consent of any other officer or officers; resolving that
such action and execution is in accordance with the bylaws of said
corporation; and, resolving that this Lease is binding upon said
entity in accordance with its terms.
23.2 LIABILITY. If the Landlord herein is a limited or general
partnership, it is understood and agreed that any claims by Tenant
against Landlord shall be limited to the assets of the limited or
general partnership, and furthermore, Tenant expressly waives any
and all rights to proceed against the individual partners, or the
officers, directors or shareholders of any corporate partner, except
to the extent of their interest in said limited general partnership.
24. GENERAL PROVISIONS.
24.1 EXHIBITS AND ADDENDUMS. Any exhibits and addendums attached to this
Lease are a part hereof and are fully incorporated in this Lease by
this reference.
24.2 NON-WAIVER OF DEFAULT. Landlord's waiver of any term, covenant or
condition of this Lease shall not be deemed to be a waiver of any
other term, covenant or condition or any subsequent default under
the same or any other term, covenant or condition. Landlord's
acceptance of any sum shall not be deemed to be a waiver of any
preceding default by Tenant, other than the failure of Tenant to pay
the particular sum so accepted, regardless of Landlord's knowledge
of such preceding default at the time it accepts the sum.
24.3 JOINT OBLIGATIONS. If there is more than one Tenant, the obligations
of the Tenants under this Lease shall be joint and several.
24.4 SECTION TITLES. The Section titles of this Lease are not a part of
this Lease and shall have no effect upon its construction or
interpretations.
24.5 TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor, including, but not
limited to, Tenant's execution of estoppel certificates and
subordinates and Tenant reimbursements to Landlord.
24.6 SUCCESSORS AND ASSIGNS. The covenants and conditions of this Lease
apply to and bind the heirs, successors, executors, administrators
and assigns of all parties of this Lease.
24.7 RECORDATION. A short form memorandum may be recorded at the request
of either party, and at the requesting party's expense.
-13-
24.8 QUIET POSSESSION. Subject to all the provisions of this Lease and
provided Tenant pays all sums due under this Lease and observes and
performs all of the other covenants, conditions and provisions to be
observed and performed by Tenant, Tenant shall have quiet possession
of the Premises for the entire Lease Term, against any adverse claim
of Landlord or any party claiming under Landlord.
24.9 PRIOR AGREEMENTS. This Lease contains the full agreement of the
parties with respect to any matter covered or mentioned in this
Lease. No prior agreements or understandings pertaining to any such
matter shall be effective for any purpose. This Lease may be amended
or supplemented only by an agreement in writing signed by the parties
or their respective successors in interest. 27.14. Tenant agrees to
make any modifications of the terms and provisions of this Lease
required or requested by any lending institution providing financing
for the Building, or project, as the case may be, provided that no
such modifications will materially adversely affect Tenant's rights
and obligations under this Lease.
24.10 INABILITY TO PERFORM. Except as provided in Sections 13 and 14, this
Lease and Tenant's obligations hereunder, including Tenant's
obligation to make payments, shall not be affected or impaired
because Landlord is unable to fulfill any of its obligations, or is
delayed in doing so, if such inability or delay is caused by reason
of weather, strike, labor troubles, acts of God, or any other cause
beyond the reasonable control of the Landlord.
24.11 SEVERABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal, shall in no way affect, impair, or
invalidate any other provision, and all other provisions shall
remain in full force and effect.
24.12 CUMULATIVE REMEDIES. No remedy or election under this Lease shall be
deemed to be exclusive but shall, whenever possible, be cumulative
with all other remedies at law or in equity.
24.13 CHOICE OF LAW. This Lease shall be governed by the laws of State of
Washington.
24.14 ATTORNEYS' FEES. In the event any action or proceeding is brought
by either party against the other arising out of or in connection
with this Lease, the prevailing party shall be entitled to recover
its costs, including, but not limited to, reasonable attorneys' and
accountants' fees, incurred in such action or proceedings, including
any such costs and fees incurred on appeal, in any arbitration
proceeding and in any bankruptcy proceeding.
24.15 NOTICES. All notices or demands which are required or permitted to
be given by either party to the other under this Lease shall be in
writing. Except as otherwise provided in any addendum, all notices
and demands to the Tenant shall be either personally delivered or
sent by the U.S. Mail, registered or certified, postage prepaid,
addressed to the Tenant at the Premises, or at the address set forth
below, or to such other place as Tenant may from time to time
designate in a notice to the Landlord. Except as provided in any
addendum, all notices and demands to the Landlord shall be either
personally delivered or sent by U.S. Mail, registered or certified,
postage prepaid, addressed to the Landlord at the address set forth
below, or to such other person or place as the Landlord may from
time to time designate in a notice to the Tenant. Any notices sent
by US Mail as provided above shall be deemed to have been received
three days after deposit into the mail as set out in Section 1.11
and 1.12.
24.16 SUBORDINATION. At Landlord's option, this Lease shall be subject to
and subordinate to the lien of any existing or future mortgages or
deeds of trust in any amount or amounts whatsoever, now or hereafter
placed in or against the Building or the real property upon which it
is located, and to any extensions, renewals or replacements thereof,
without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination.
Within five days of Landlord's request, Tenant will execute and
deliver such further instruments as Landlord deems necessary to
evidence such subordination of this Lease. As long as Tenant is not
in default under this Lease, said subordination shall not disturb
Tenant's right to possession of the Premises.
24.17 ATTORNMENT. In the event of foreclosure, or the exercise of the
power of sale under any mortgage or deed of trust made by Landlord
covering the Premises, or in the event of any sale in lieu thereof,
Tenant shall attorn to the purchaser upon any such foreclosure or
sale and recognize such purchaser as Landlord under this Lease;
provided said purchaser expressly agrees in writing that, so long as
Tenant is not in default under the Lease, Tenant's possession and
occupancy of the Premises shall not be disturbed and said purchaser
will thereafter perform all of the obligations of Landlord under
this Lease.
24.18 GUARANTOR. In the event that there is a Guarantor of this Lease,
Guarantor hereby agrees to jointly and severally perform all payment
and other obligations of Tenant under this Lease. Guarantor waives
all suretyship defenses that would otherwise be available to
Guarantor.
24.19 COMPLIANCE WITH ENVIRONMENTAL LAWS. The parties acknowledge that
there are certain federal, state and local laws, regulations and
guidelines now in effect and that additional laws, regulations and
guidelines may hereafter be enacted relating to or affecting the
Premises and the larger parcel of land upon which the demised
Premises may be a part, concerning the impact on the environment of
construction, land use, the maintenance and operation of structures,
and the conduct of business. Tenant shall not cause, or permit to
be caused, any act or practice by negligence, or omission, or
otherwise, that would adversely affect the environment or do
anything or
-14-
permit anything to be done that would violate any of said laws,
regulations or guidelines. Any violation of this covenant shall
be an Event of Default under this Lease. Tenant shall indemnify
and hold Landlord harmless from any and all cost, expense, claims,
losses, damages, fines and penalties, including reasonable
attorneys' fees, that may in any manner arise out of or be imposed
because of the failure of Tenant to comply with this covenant.
The foregoing shall cover all requirements whether or not
foreseeable at the present time and regardless of the expense
attendant thereto.
24.20 RIDERS AND EXHIBITS. The Riders and Exhibits referred to in Section
1.16 are attached to this Lease and made a part of it.
24.21 LIMITATION ON RECOURSE. Tenant specifically agrees to look solely
to Landlord's interest in the Premises for the recovery of any
judgments from Landlord. It is agreed that Landlord (and its
shareholders, venturers, members and partners, and their
shareholders, venturers, members and partners and all of their
officers, directors, and employees) will not be personally liable for
any such judgment. The provisions contained in the preceding
sentences are not intended to and will not limit any right that
Tenant might otherwise have to obtain injunctive relief against
Landlord.
24.22 TAX CREDITS. Landlord is entitled to claim all tax credits and
depreciation attributable to leasehold improvements in the Premises.
Promptly after Landlord's demand, Landlord and Tenant will prepare a
detailed list of the leasehold improvements and fixtures and the
respective costs for which Landlord or Tenant has paid. Landlord
will be entitled to all credits and depreciation for those items for
which Landlord has paid by means of any Tenant finish allowance or
otherwise. Tenant will be entitled to any tax credits and
depreciation for all items for which Tenant has paid with funds not
provided by Landlord.
24.23 RELOCATION OF THE PREMISES.
24.24 LANDLORD'S FEES. Whenever Tenant requests Landlord to take any
action or give any consent required or permitted under this Lease,
Tenant will reimburse Landlord for all of Landlord's reasonable
costs incurred in reviewing the proposed action or consent, including
without limitation reasonable attorneys', engineers' or architects'
fees, within ten days after Landlord's delivery to Tenant of a
statement of such costs. Tenant will be obligated to make such
reimbursement without regard to whether Landlord consents to any
such proposed action.
24.25 DISCLOSURE OF AGENCY REPRESENTATION. At the signing of this Lease
Agreement, Xxxxxx Xxxx Management Group, Inc. represented the
Landlord. Each party signing this document confirms that prior oral
and/or written disclosure of agency was provided to them in this
transaction.
24.26 RULES OF CONSTRUCTION. The parties agree that (a) in the event of
any inconsistency between the provisions of Section 1 and the other
provisions of this Lease, the other provisions of this Lease shall
govern; (b) in the event of any inconsistency between the provisions
of the body of this Lease and the Riders attached hereto, the
provisions set forth in the Riders shall govern; (c) in the event of
any ambiguity regarding which party is responsible for costs or
expenses, Tenant shall be responsible; and (d) ambiguities shall not
be construed against the party that drafted this Lease.
24.27 WAIVER OF JURY TRIAL. LANDLORD, TENANT AND GUARANTOR BY THIS
SECTION 24.22 WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES TO THIS LEASE AGAINST
THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT,
TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY OTHER CLAIMS
(EXCEPT CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE), AND ANY
EMERGENCY STATUTORY OR ANY OTHER STATUTORY REMEDY.
25. BROKERS. Tenant warrants that it has had no dealing with any real estate
broker or agent in connection with the negotiation of this Lease except for
Xxxxxx Xxxx Management Group, Inc., and it knows of no other real estate
broker or agent who is entitled to a commission in connection with this
Lease. Landlord agrees to pay Xxxxxx Xxxx Management Group, Inc. upon the
execution of this Lease by both Landlord and Tenant, the Broker Fee for
negotiating this Lease.
26. LEGAL DOCUMENT. Tenant understands that this is a legally binding
contract. Tenant has carefully read each of its provisions, and prior to
execution of the Lease, represents and warrants that Tenant has been
advised to discuss the legal effect of the Lease with Tenant's legal
counsel.
-15-
27. DISCLOSURE OF AGENCY REPRESENTATION. At the signing of this Lease
Agreement, Xxxxxx Xxxx Real Estate Services represents the Landlord and
Xxxxxx Xxxxxxx Xxxxxx/Oncor International represents the Tenant. Each
party signing this document confirms that prior oral and/or written
disclosure of agency was provided to them in this transaction.
-16-
IN WITNESS WHEREOF, the parties have executed this instrument as of the day and
year first above written:
LANDLORD: Inter Co-Op USA No. 111
By _______________________________
Title ____________________________
TENANT: Freei Networks, Inc
By /s/ Xxxxxx XxXxxxxxxx
-------------------------------
Title President/CEO
----------------------------
-17-
(CORPORATE NOTARY TO BE ADDED HERE)
STATE OF WASHINGTON )
)ss.
COUNTY OF King )
--------
On this 15TH day of November, 1999, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn
personally appeared Xxxxxx XxXxxxxxxx, to me known to be the person who
signed as CEO/President of the Freei Networks, Inc that executed the within
and foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said partnership for the uses and purposes therein
mentioned, and on oath stated that He was authorized to execute said
instrument on behalf of the partnership.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the
day and year first above written.
/s/ Xxxxx X. Xxxxx
---------------------------------------
(Signature of Notary)
Xxxxx Xxxxx
---------------------------------------
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the State of
Washington, residing at Xxxxxx
------
My appointment expires: 11-29-99
-18-
EXHIBIT A
MAP OF PREMISES AND/OR LEGAL DESCRIPTION
[ DIAGRAM ]
PARCEL "CAMPUS BUSINESS CENTER"
Xxxx 00 xxx 00 xx Xxxx Xxxxxx Xxxxxxxx Xxxx, as per Plat recorded in Volume
97 of Plats, page 78 through 82. Records of King County:
Together with that portion of Lots 20 and 21 of said Plat described as
follows:
Beginning at the Northeast corner of said Lot 20: Thence Southerly, along the
East line thereof, South 09DEG.28'57" East 374.09 Feet to the Northeast
corner of said Lot 21:
Thence Southwesterly, along the East line thereof,
South 13DEG.46'37" West 101.29 Feet, Thence leaving said East line North
09DEG.28'37" West 466.74 Feet to a point on the South margin of South
336th Street (the radial line through said point bears North 10DEG.39'11"
West);
Thence Easterly, along said margin on a curve to the right
having a radius of 1,958.00 Feet, through a central angle 01DEG.10'14" an arc
distance of 40.00 feet to the point of beginning
Situate in the County of King, State of Washington
-19-
EXHIBIT B
[DIAGRAM]
TO BE MADE A PART OF THE COMMERCIAL LEASE DOCUMENT UNDER DATE OF November 15,
1999 BY AND BETWEEN INTER CO-OP USA NO.III as ("Landlord") AND FREEI NET as
("Tenant").
RIDER #28 - EARLY CANCELLATION
Provided Tenant has not been in default at any time during this Lease, Tenant
shall have the right to cancel this lease every six (6) months by providing
Landlord 60 days advance written notice of its intent to cancel. This Lease
shall continue in full force and effect in the absence of such written notice.
RIDER #29 - EARLY OCCUPANCY
Tenant may have occupancy of the Premises upon mutual execution of this
Lease. Tenant shall be responsible for payment ??? triple net charges during
the month of December 1999.
RIDER #30 - SATELLITE DISH
Tenant has the right to install a small satellite dish and antenna on the
roof at tenant's sole cost and expense. Tenant will be responsible for all
maintenance and repair and will consult with Landlord's agent if any roof
penetrations are necessary prior to such installation. At the end of the lease
term, tenant will remove the dish and leave it in the same condition as at
the time of occupancy.
RIDER #31 - HANDICAP PARKING STALL
At tenant's expense, a handicap stall will be added behind the existing roll-up
door (which will be turned into a false wall).
RIDER #32 - TENANT IMPROVEMENTS
Tenant accepts the Premises in "As Is" condition with the exception of some
paint cans left over from the previous tenant, which will be removed as soon
as practical. Additional tenant improvements as shown in Exhibit "A" are
approved by Landlord and will be done at tenant's sole cost and expense.
RIDER #33 - HVAC
The existing HVAC on the premises has been serviced regularly and should be
in good working order at the time of Tenant's possession of the Premises.
Tenant will notify Landlord within the initial 15 days of possession of the
Premises if the HVAC is in need of repair, in which case the Landlord will
repair it at its cost.
-2-
