EXHIBIT 10.6
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes only,
May ____, 2002, is made by and between PRINCIPAL LIFE INSURANCE COMPANY, an Iowa
Corporation ("LESSOR") and CONVERSE INC., a Delaware corporation ("LESSEE"),
(collectively the "PARTIES," or Individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as the Northeast corner of Etiwanda and Jurupa in the City of the City of
Fontana (the "City"), located in the County of San Bernardino, State of
California, and generally described as (describe briefly the nature of the
property and, if applicable, the "PROJECT", if the property is located within a
Project) approximately 250,430 square foot freestanding concrete and steel
tilt-up industrial building located on approximately 13.4 acres of land
("PREMISES"). (See also Paragraph 2.)
Subject to Lessors obligations described in this Section 1.2 and in Section 2.2,
below, Lessee is leasing the Premises in an AS-IS condition. Lessee has had the
full opportunity to inspect and approve the condition of the Premises. Lessee
acknowledges that there are no other improvements of any type which are not
present in the Premises as they exist as of April 2, 2002 which are to be
provided by Lessor, except for the completion of the (i) base building in
accordance with the plans, specifications and working drawings approved for it
by the City, and (ii) Tenant Improvements, as set forth below.
Subject to the limitations set forth herein, including, without limitation,
those with respect to the Lessor's maximum contribution to the cost of certain
items thereof, Lessor shall construct or cause to be constructed for Lessee
certain improvements ("Tenant Improvements"). Except in the event that the cost
of any items subject to maximum cost contributions, ("MCC's") are exceeded, in
which event the Lessee shall bear such cost, Lessor shall pay the costs of the
Tenant Improvements. The Tenant Improvements shall consist of the following:
1. Installation of a complete ESFR system prior to the Commencement Date, in
accordance with plans and specifications prepared by Lessor's consultants, to
include fully automatic wet pipe fire system, 75 psi, with all pumps, hydrants,
alarms, emergency fire exits and other equipment required to provide a complete
ESFR system in accordance with all applicable laws, rules and regulations.
2. Provided 1,200 AMP, 277/480 VAC, 3 phase, 4 wired electrical service to the
Building, expandable, at Lessee's expense, to 2,000 amps in the future.
3. 350 watt pulse start HID lamps, providing 30 foot candle lighting in the
warehouse area, and 40 foot candle lighting in the staging area. All lighting
fixtures shall be equipped with 15 foot extension whips, and shall be the same
as those in the 4450 Xxxxxx Street Building (the "Original Building").
4. 6" diameter steel, concrete filled bollards at (i) all truck door locations,
(ii) 2 each at interior power panel, and sprinkler riser locations, (iii) 2 at
interior and exterior of drive in door locations, and (iv) exterior pad mounted
equipment, transformers, gas rises, and fire hydrants.
5. Construct 3,000 square feet of single story office space with standard
commercial finishes and utility supply and outlet and fixture placement, with
legally sufficient restrooms to accommodate fifty (50) employees. The maximum
allowance for the office space, including all restrooms and ceiling, wall, and
floor finishes shall be One Hundred Thirty Five Thousand Dollars ($135,000.00).
6. Provide protective guard rails for the entire length of the office walls
adjacent to the warehouse areas.
7. Warehouse ceiling to be insulated with white foil type insulation with scrim
reinforcing, on the underside of the roof sheathing, stapled to the joists, and
ventilated to prevent condensation.
8. Powered and thermostat controlled roof ventilation to accommodate at least
one air change per hour. Minimum of two percent (2%) of mechanically ventilated
skylights to meet local fire codes for high-pile Class IV commodities with
narrow aisle storage capabilities.
9. All interior walls and columns painted off-white. All columns painted yellow
for the first ten (10) feet from the floor.
10. Lessor to provide a $2,500.00 allowance for signage, to be used in
accordance with paragraph 34, below.
11. Asphalt paved parking for 104 cars.
12. Concrete paved, fenced and secured (on going security to be provided by
Lessee) truck yards sufficient for parking approximately Seventy Two (72) truck
trailers. Southern California Edison ("SCE") License Area, as defined below,
shall be improved to same truck yard standards to the extent permissible under
the governing document for such area. Said governing document is that certain
License Agreement for SCE's Property No. PSETV643J22, dated January 9, 2002,
between SCE as Licensor, and Lessor as Licensee, a copy of which is attached
hereto as Exhibit A (the "License Agreement"). The SCE License Area shall be the
area described in the License Agreement as the "Site".
13. One (1) 9' x 10' dock door equipped for electrical service to accommodate a
trash compactor (by Lessee).
14. Twenty (20) of the fifty eight (58) dock high doors in the Building to be
equipped with 35,000 pound mechanical load levers, seals, and dock lights. The
Building also will have one (1) grade level door.
15. Twenty five (25) forklift battery charging stations, located adjacent to the
electrical room, with required eyewash, ventilation and other equipment required
for the stations to satisfy all applicable governmental laws, rules, and
regulations.
Lessor and Lessee shall cooperate to finalize the plans, specifications and
working drawings for the Tenant Improvements, which shall be consistent with the
terms hereof. Upon mutual approval of the plans, specifications, and working
drawings, the parties shall execute a copy of same, indicating their agreement
to them. Lessee acknowledges that full cooperation and prompt responses and
approvals are necessary in order for Lessor to be able to cause the completion
of the Tenant Improvements in time for Lessee's preferred occupancy date.
Accordingly, Lessee agrees that it shall have approved the plans, specifications
and working drawings for the Tenant Improvement no later than May 8, 2002, and
the failure to do so shall constitute a Lessee Delay for purposes of this Lease.
The Tenant Improvements shall be constructed by a contractor or specialty
contractors selected by Lessor (each, a "Contractor"), pursuant to arm's length
contract(s) entered into with Lessor.
At the request of Lessee, Lessor and Lessee shall communicate on a weekly basis
concerning the ongoing progress of the Tenant Improvements, including the
estimated completion date.
As used herein, the Tenant Improvements shall be deemed to be substantially
complete at such time as Lessor has completed the Tenant Improvements to the
point where it is useable by Lessee, with all the Tenant Improvements in place,
but subject to "punch list" items, i.e., items to completed, added, or modified
but which do not unreasonably interfere with Lessee's use and enjoyment of the
premises (See also Paragraph 3.)
As used herein, "Lessee Delay" shall mean any delay in the commencement or
completion of the Tenant Improvements caused by Lessee, including, without
limitation, Lessee's delay in approving any working drawings or plans and
specifications with respect to which Lessee's approval, change orders resulting
in delays, or interference by Lessee, or Its contractors, consultants, or
fixture installers with the orderly progress of the construction of the Tenant
Improvements.
Lessor shall have no obligation to contribute or advance any funds; or undertake
any work or improvements except as provided expressly herein, and Lessee shall
bear all other costs for all work, improvements, furniture, fixtures, and
equipment. (see also Paragraph 2.)
1.3 TERM: Six years and one month ("ORIGINAL TERM") commencing
September 1, 2002 ("COMMENCEMENT DATE") and ending September 30, 2008
("EXPIRATION DATE"). (See also Paragraph 3.)
1.4 EARLY POSSESSION: Subject to the limitations set forth below, the
LESSEE SHALL BE ALLOWED TO ENTER THE PREMISES FOR THE PURPOSES OF INSTALLING ITS
FIXTURES AND EQUIPMENT, provided that Lessee has then provided Lessor with
copies of Certificates of Insurance, complying in all respects with the terms of
this Lease, for all insurance required to be carried hereunder (the "Lessee
Insurance Evidence"). Lessor shall make the Building available for Lessee's
Early Possession upon the later to occur of (i) the providing to Lessor of
Lessee's Insurance Evidence, the completion of mutual Lease execution, and the
delivery to Lessor of all funds required to be delivered on or before Lease
Commencement, including, without limitation, the Security Deposit as described
in Paragraph 1.7, below, and the Base Rent to be paid upon execution, as
described in Paragraph 1.6, below, and (ii) the completion of the building shell
to the point where it is weather proof and lockable, which the parties
acknowledge shall be no sooner than June 10, 2002. Lessee acknowledges that the
ESFR system for the Building will not be completed upon the delivery to Lessee
of the Building for such Early Possession, and that the earliest anticipated
completion date for the ESFR is July 1, 2002. Lessee acknowledges that Lessor
will be completing the shell Building and related improvements and constructing
Lessee's Tenant Improvements during the period of Early Possession, and that
accordingly the ability of Lessee to freely install its fixtures and equipment
or otherwise use the Premises during this period will be limited by Lessor's
activities in the Premises. Lessee agrees that in all events Lessor shall have
priority over Lessee in construction or similar activities, that Lessee will
follow all reasonable rules and regulations concerning its activities in and
about the Premises during this period promulgated by Lessor, Its Contractor, or
Property Manager: Due to the ongoing construction and other activities, Lessee
hereby forever releases and discharges Lessor, its contractors, agents,
employees, and managers from and against any and all claims of loss, damage or
injury to persons or property, including, without limitation, its product
inventory, which loss, damage or injury occurs, or is alleged to have occurred,
during the period of Early Possession, except to the extent caused by Lessor's
gross negligence or intentional malfeasance. Lessee acknowledges that Lessor
does not guarantee or warrant the safety of the Premises, or its security during
such period, as construction and other activities will be ongoing.
("EARLY POSSESSION DATE"). (See also Paragraphs 3.2 and 3.3.)
1.5 BASE RENT: $70,120.40 per month ("BASE RENT"), payable on the first
day of each month commencing September 1, 2002, but subject to the adjustments
and abatements described below. (See also Paragraph 4.)
[ ] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.
The Rent for months 4 through 36 shall be $70,120.40 and Base Rent for months 37
through 73 shall be $75,129.00. Subject to the terms and conditions of this
Lease, including without limitation paragraphs 1.4 and 13.3, Base Rent, real
property taxes, insurance and other building or project expenses shall be abated
for the first three (3) months of the Term. Such Rent and expense abatements
shall be considered inducements within the meaning of paragraph 13.3 of this
Lease.
As Additional Rent, Lessee shall also pay a Management Fee equal to One and
One-half Percent (1-1/2%) of the Base Rent, payable monthly in advance with each
payment of Base Rent. Lessee shall also pay to Lessor with each monthly
installment of Base Rent all amounts due pursuant to the License Agreement.
Lessor shall advise Lessee of any changes in such amounts reasonably in advance
of their due date.
1.6 BASE RENT PAID UPON EXECUTION: $140,280.80 as Base Rent for the
period December __,2002 and January 2003.
1.7 SECURITY DEPOSIT: $105,180.00 ("SECURITY DEPOSIT"). (See also
Paragraph 5.)
1.8 AGREED USE: WAREHOUSING AND DISTRIBUTION OF FOOTWEAR, APPAREL, AND
RELATED ACCESSORIES. (See also Paragraph 6.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise
stated herein: (See also Paragraph 8.)
1.10 REAL ESTATE BROKERS: (See also Paragraph 15.)
(a) REPRESENTATION: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction: (Check applicable boxes):
[x] Xxxxxxx & Xxxxxxxxx represents Lessor exclusively ("LESSOR'S BROKER");
[x] CB Xxxxxxx Xxxxx represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ] none represents both Lessor and Lessee ("DUAL AGENCY").
(b) PAYMENT TO BROKERS: Lessor shall pay to the Broker the fee
agreed to in their separate written agreement for the brokerage services
rendered by the Broker), as and when set forth therein.
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by none ("Guarantor"). (See also Paragraph 37.)
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less. During the term of this Lease, Lessee shall
have the exclusive right to use 106 parking spaces which are on the property
where the Building is located.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date, and, so long as the required
service contracts described in Paragraph 7.1(b) below are obtained by Lessee
within thirty (30) days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, landscape irrigation system and
parking lot, if any, and all other such elements in the Premises, other than
those constructed by Lessee, shall be in good operating condition on the
Commencement Date and that the structural elements of the roof, bearing walls
and foundation of any buildings on the Premises (the "BUILDING") shall be free
of material defects. If a non-compliance with said warranty exists as of the
Commencement Date, Lessor shall, as Lessor's sole obligation with respect to
such matter, except as other otherwise provided in this Lease, promptly after
receipt of written notice from Lessee setting froth with specificity the nature
and extent of such non-compliance, rectify same at Lessor's expense. If, after
the Commencement Date, Lessee does not give Lessor written notice of any
non-compliance with this warranty within: (i) one year as to the surface of the
roof, (ii) six (6) months as to the HVAC systems, (iii) thirty (30) days as to
the remaining systems and other elements of the Building, correction of such
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. Lessee shall notify Lessor of any claimed defect in the terms which are
Lessor's responsibility under paragraph 7.2, below, as soon as practicable after
Lessee discovers same, failing which Lessee shall be responsible for any damage
caused by its failure to provide such notice to Lessor and thereby provide
Lessor an opportunity to repair same.
2.3 COMPLIANCE. Lessor warrants that the improvements on the Premises
and the Tenant Improvements to be constructed by Lessor upon completion, comply
with all applicable laws, covenants or restrictions of record, building codes,
regulations and ordinances ("APPLICABLE
REQUIREMENTS") in effect on the Start Date. Said warranty does not apply to the
use to which Lessee will put the Premises or to any Alterations or Utility
installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.
NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed (as opposed to being in existence at the
Start Date, which is addressed in Paragraph 6.2(e) below) so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building ("CAPITAL
EXPENDITURE"), Lessor and Lessee shall allocate the cost of such work as
follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by :Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), the Lessor and Lessee shall allocate the
obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the last
two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon ninety (90) days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance o the Rend due and
payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non-voluntary, unexpected,
and Applicable Requirements. If the Capital Expenditures are instead triggered
by Lessee as a result of an actual or proposed change in use, change in quality
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.
2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use; (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefor as the same relate to its occupancy of the
Premises; and (c) neither Lessor, Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease. In addition, Lessor acknowledges that: (a)
Broker has made no representations, promises or warranties concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises; and (b) it is
Lessor's sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are specified in Paragraph 1.3.
3.2 EARLY POSSESSION. Except as otherwise set forth herein, if Lessee
totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the prior of such early
possession. Except as otherwise set forth herein, all other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. IF, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefore,
nor shall such failure affect the validity of their Lease.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee unless Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Ate, the Start Date shall occur
but Lessor may elect to withhold possession until such conditions are satisfied.
4. RENT.
4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("RENT").
4.2 PAYMENT. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall
within ten (10) days after written request therefor deposit monies with Lessor
sufficient to restore said Security Deposit to the full amount required by this
Lease. If the Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional monies with Lessor so that
the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to
the initial Base Rent. Should the Agreed Use be amended to accommodate a
material change in the business of Lessee or to accommodate a sublessee or
assignee, Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessor's reasonable judgment, to account for any increased
wear and tear that the Premises may suffer as a result thereof. If a change in
control or Lessee occurs during this Lease and following such change the
financial condition of Lessee is, in Lessor's reasonable judgment, significantly
reduced, Lessee shall deposit such additional monies with Lessor as shall be
sufficient to cause the Security Deposit to be at a commercially reasonable
level based on said change in financial condition. Lessor shall not be required
to keep the Security Deposit separate from its general accounts. Within fourteen
(14) days after the expiration or termination of this Lease, if Lessor elects to
apply the Security Deposit only to unpaid Rent, and otherwise within thirty (30)
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below,
Lessor shall return that portion of the Security Deposit not used or applied by
Lessor. No part of the Security Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under
this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturb
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
6.2 HAZARDOUS MATERIALS.
6.2.1 DEFINITIONS.
(a) "Hazardous Material" means any substance, whether solid,
liquid or gaseous in nature:
(i) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation ordinance,
order, action, policy or common law, or
(ii) which is or becomes defined as a "hazardous waste,"
"hazardous substance," pollutant or contaminant under any federal, state or
local statute, regulation, rule or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et sect.) and or the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 8401 et seq.) the Toxic Substances Control Act, as amended (15 U.S.C.
Section 2601 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as these law have been amended or supplemented; or
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous or is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the State of
California or any political subdivision thereof, or
(iv) the presence of which on the Property causes or
threatens to cause a nuisance upon the Property or to adjacent properties or
poses or threatens to pose a hazard to the health or safety of persons on or
about the Property; or
(v) the presence of which on adjacent properties could
constitute a trespass by Lessee; or
(vi) without limitation which contains gasoline, diesel
fuel or other petroleum hydrocarbons; or
(vii) without limitation which contains polychlorinated
biphenyls, (PCBs), asbestos or urea formaldehyde foam insulation; or
(viii) without limitation with contains radon gas.
(b) "Environmental Requirements" means all applicable present
and future:
(i) statutes, regulations, rules, ordinances, codes,
licenses, permits, orders, approvals, plans, authorizations, concessions,
franchises, and similar items (including, but not limited to those pertaining to
reporting, licensing, permitting, investigations and remediation), of all
Governmental Agencies; and
(ii) all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of human
health or the environment, including, without limitation, all requirements
pertaining to emissions, discharges, releases, or threatened cases of Hazardous
Materials or chemical substances into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous Materials or chemical
substances.
(c) "Environmental Damages" means all claims, judgments,
damages, losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs, and expenses (including the expense of investigation
and defense of any claim, whether or not such claim is ultimately defeated, or
the amount of any good faith settlement or judgment arising from any such claim)
of whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable to unforeseeable (including without limitation reasonable attorneys'
fees and disbursements and consultants' fees) any of which are incurred at any
time as a result of the existence of Hazardous Material upon, about, or beneath
the Property or migrating or threatening to migrate to or from the Property, or
the existence of a violation of Environmental Requirements pertaining to the
Property and the activities thereon, regardless of whether the existence of such
Hazardous Material or the violation of Environmental Requirements arose prior to
the present ownership or operation of the Property. Environmental Damages
include, without limitation:
(i) damages for personal injury or injury to property or
natural resources occurring upon or off of the Property, including, without
limitation, lost profits, consequential damages, the cost of demolition and
rebuilding of any improvements on real property, interest, penalties and damages
arising from claims brought by or on behalf of employees of Lessee (with respect
to which Lessee waives any right to raise as a defense against Lessor any
immunity to which it may be entitled under any industrial or worker's
compensation laws);
(ii) fees, costs or expenses incurred for the service of
attorneys, consultants, contractors, experts, laboratories and all other costs
incurred in connection with the investigation or remediation of such Hazardous
Materials or violation of any feasibility studies or reports or the performance
of any cleanup, remediation, removal, response, abatement, containment, closure,
restoration or monitoring work required by any Governmental Agency or reasonably
necessary to make full economic use of the Property or any other property in a
manner consistent with its current use or otherwise expended in connection with
such conditions, and including without limitation any attorneys' fees, costs and
expenses incurred in enforcing the provisions of this Lease or collecting any
sums due hereunder;
(iii) Liability to any third person or Governmental
Agency to indemnify such person or Governmental Agency for costs expensed in
connection with the items referenced in subparagraph (ii) above; and
(iv) diminution in the fair market value of the
Property, including, without limitation, any reduction in fair market rental
value or life expectancy of the Property or the improvements located thereon or
the restriction on the use of or adverse impact on the marketing of the Property
or any portion thereof.
(d) "Governmental Agency" shall mean all governmental
agencies, departments, commissions, boards, bureaus or instrumentalities of the
United States, states, counties, cities and political subdivisions thereof.
(e) The "Lessee Group" means Lessee, Tenant's successors,
assigns, guarantors, officers, directors, agents, employees, invitees,
permittees, or other parties under the supervision or control of Lessee or
entering the Property during the term of this Lease with the permission or
knowledge of Lessee other than Lessor or its agents or employees.
6.2.2 PROHIBITIONS.
(a) Other than commercially reasonable quantities of general
office supplies AND SUCH OTHER CHEMICALS AS IT REASONABLY DEEMS NECESSARY FOR
THE CONDUCT OF ITS BUSINESS in THE PREMISES, and provided Lessee's use of same
complies with all APPLICABLE REQUIREMENTS AND Environmental requirements and is
incidental to Lessee's operation of its business, Lessee shall not cause, permit
or suffer any Hazardous Material to be brought upon, treated, kept, stored,
disposed of, discharged, released, produced, manufactured, generated, refined or
sued upon, about or beneath the Property by the Lessee Group, without the prior
written consent of Lessor. From time to time during the term of this Lease,
Lessee may request Lessor's approval of Lessee's use of other Hazardous
Materials, which approval may be withheld in Lessor's sole discretion. Lessee
shall, prior to the Commencement Date, provide to Lessor all "community right to
know" plans or disclosures and/or emergency response plans which Lessee is
required to supply to local governmental agencies pursuant to any Environmental
Requirements.
(b) Lessee shall not cause or permit the commission by the
Lessee Group, of a violation of any Environmental Requirements upon, about or
beneath the Property.
(c) Lessee shall neither create, cause to be created, allow
nor permit the Lessee Group to create any lien, security interest or other
charge or encumbrance of any kind with respect to the Property, including
without limitation, any lien imposed pursuant to Section 107(f) of the Superfund
Amendments and Reauthorization Act of 1986 (42 U.S.C. Section 9607(1) or any
similar statute.
(d) Lessee shall not install, operate or maintain any above or
below grade tank, sump, pit, pond, lagoon or other storage or treatment vessel
or device on the Property, without Lessor's prior written consent, which consent
may be withheld in Lessor's sole discretion.
6.2.3 INDEMNITY.
(a) Lessee, its successors, assigns and guarantors, agree to
indemnify, defend, reimburse and hold harmless:
(i) Lessor; and
(ii) any other person who acquires title to all or a
portion of the Premises in any manner (including purchase at a foreclosure sale)
or who becomes entitled to exercise the rights and remedies of Lessor under this
Lease; and
(iii) the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees, affiliates,
lessees, mortgagees, trustees, heirs, devisees, successors, assigns and invitees
of such persons.
from and against any and all Environmental Damages which exist as a result of
the activities and negligence of the Lessee Group during the Lessee's occupancy
of the Property or which exist as a result of the breach of any warranty or
covenant or the inaccuracy of any representation of Lessee contained in this
Lease, or by Lessee's remediation of the Property or failure to meet its
remediation obligations contained in this Lease.
(b) The obligations contained in this Section 6.2.3 shall
include, but not be limited to, the burden and expense of defending all claims,
suite and administrative proceedings, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of any
description, and paying and discharging, when and as the same become due, any
and all judgments, penalties, consequential damages or other sums due against
such indemnified persons. Lessor, at it sole expense, may employ additional
counsel of its choice to associate with Lessee's counsel.
(c) Lessor shall have the right, but not the obligation, to
join and participate in, and control, if it so elects, any legal proceedings or
actions initiated in connection with Lessee's activities. Lessor may also
negotiate, defend, approve and appeal any action taken or issued by any
applicable governmental authority with regard to contamination of the Property
by a Hazardous Material.
(d) The obligations of Lessee under this paragraph shall not
be affected by any investigation by or on behalf of Lessor, or by any
information which Lessor may have or obtain with respect thereto.
6.2.4 OBLIGATION TO REMEDIATE.
In addition to the obligation of Lessee to indemnify Lessor pursuant to
this Lease, Lessee shall, upon approval and demand of Lessor, at its sole cost
and expense and using contractors approved by Lessor, promptly take all actions
to remediate the Property which is required by any Governmental Agency, or which
are reasonably necessary to mitigate Environmental Damager, or to allow full
economic use of the Property, which remediation is necessitated from the
presence upon, about or beneath the Property, at any time during or upon
termination of this Lease, of a Hazardous Material or a violation of
Environmental Requirements, existing as a result of the activities or negligence
of the Lessee Group. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the Property, the preparation of
any feasibility studies, reports or remedial plans, and the performance of any
cleanup, remediation, containment, operation, maintenance, monitoring or
restoration work, whether on or off the Property, which shall be performed in a
manner approved by Lessor. Lessee shall take all actions necessary to restore
the Property to the condition existing prior to the introduction of Hazardous
Material upon, about or beneath the Property, notwithstanding any lesser
standard of remediation allowable under applicable law or governmental policies.
6.2.5 RIGHT TO INSPECT.
Lessor shall have the right in its sole and absolute discretion,
but not the duty, to enter and conduct an inspection of the Property, including
invasive tests, at any reasonable time to determine whether Lessee is complying
with the terms of the Lease, including but not limited to the compliance of the
Property and the activities thereon with Environmental Requirements and the
existence of Environmental Damages as a result of the condition of the Property
or surrounding properties and activities thereon. Lessor shall have the right,
but not the duty, to retain any independent professional consultant (the
"CONSULTANT") to enter the Property to conduct such an inspection or to review
any report prepared by or for Lessee concerning such compliance. The cost of the
Consultant shall be paid by Landlord unless such investigation discloses a
violation of any Environmental Requirement by the Lessee Group or the existence
of a Lessor Hazardous Material on the Property or any other property caused by
the activities or negligence of the Lessee Group (other than Hazardous Materials
used in compliance with all Environmental Requirements and previously approved
by Lessor), in which case Lessee shall pay the cost of the Consultant. Lessee
hereby grants to Lessor, and the agents, employees, consultants and contractors
of Lessor the right to enter the Property and to perform such tests on the
Property as are reasonably necessary to conduct such reviews and investigations.
Lessor shall use its best efforts to minimize interference with the business of
Lessee.
6.2.6 NOTIFICATION.
If Lessee shall become aware of or receive notice or other
communication concerning any actual, alleged, suspected or threatened violation
of Environmental Requirements, or liability of Lessee for Environmental Damages
in connection with the Property or past or present activities of any person
thereon, including, but not limited to, notice or other communication concerning
any
actual or threatened Investigation, inquiry, lawsuit, claim, citation,
directive, summons, proceeding, complaint, notice, order, writ, or injunction,
relating to same, then Lessee shall deliver to Lessor within ten (10) days of
the receipt of such notice or communication by Lessee, a written description of
said violation, liability, or actual or threatened event or condition, together
with copies of any documents evidencing same. Receipt of ouch notice shall not
be deemed to create any obligation on the part of Lessor to defend or otherwise
respond to any such notification.
If requested by Lessor, Lessee shall disclose to Lessor the names and
amounts of all Hazardous Materials, other than general office supplies referred
to in Section 6.2 of this Lease, which were used, generated , treated, handled,
stored or disposed of on the property or which Lessee intends to use, generate,
treat, handle, store or dispose of on the Property. The foregoing in no way
shall limit the necessity for Lessee obtaining Lessor's consent pursuant to
Section 6.2 of this Lease.
6.2.7 SURRENDER OF PREMISES.
In the ninety (90) days prior to the expiration or termination of the
Lease Term, and for up to ninety (90) days after Lessee fully surrenders
possession of the Property, Lessor may have an environmental assessment of the
Property performed in accordance with Section 6.2 of this Lease. Lessee shall
perform, at its sole cost and expense, any cleanup or remedial work recommended
by the Consultant which Is necessary to remove, mitigate or remediate any
Hazardous Materials and/or contaminations of the Property caused by the
activities or negligence of the Lessee Group.
6.2.8 ASSIGNMENT AND SUBLETTING.
In the event the Lease provides that Lessee may assign the Lease or
sublet the Property subject to Lessor's consent and/or certain other conditions,
and if the proposed assignee's or sublessee's activities in or about the
Property involve the use, handling, storage or disposal of any Hazardous
Materials other than those used by Lessee and in quantities and processes
similar to Lessee's uses in compliance with the Lease, (i) it shall be
reasonable for Lessor to withhold its consent to such assignment or sublease in
light of the risk of contamination posed by such activities and/or (ii) Lessor
may impose an additional condition to such assignment or sublease which requires
Lessee to reasonably establish that such assignee's or sublessee's activities
pose no materially greater risk of contamination to the Property than do
Lessee's permitted activities in view of the (a) quantities, toxicity and other
properties of the Hazardous Materials to be used by such assignee or sublessee,
(b) the precautions against a release of Hazardous Materials such assignee or
sublessee agrees to implement, (c) such assignee's or sublessee's financial
condition as it relates to its ability to fund a major cleanup and (d) such
assignee's or sublessee's policy and historical record respecting its
willingness to respond to the clean up of a release of Hazardous Materials.
Lessor shall also have its approval rights as set forth in Section 12.
6.2.9 SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.
Lessee's breach of any of its covenants or obligations under this Lease
shall constitute a material default under the Lease. The obligations of Lessee
under this Paragraph 6.2 shall survive the expiration or earlier termination of
the Lease without any limitation, and shall constitute obligations that are
independent and severable from Lessee's covenants and obligations to pay rent
under the Lease.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
otherwise provided in this Lease, Including, without limitation, in Paragraph
2.3, above, Lessee shall, at Lessee's sole expense, fully, diligently and in a
timely manner, materially comply with all Applicable Requirements, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor's engineers and/or consultants which relate in any
manner to the Premises, without regard to whether said requirements are now in
effect or become effective after the Start Date. Lessee shall, within ten (10)
days after receipt of Lessor's written request, provide Lessor with copies of
all permits and other documents, and other information evidencing Lessee's
compliance with any Applicable Requirements specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving the failure of Lessee or the
Premises to comply with any Applicable Requirements.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, and
on reasonable notice (24 hours being reasonable in all events) for the purpose
of inspecting the condition of the Premises and for verifying compliance by
Lessee with this Lease. The cost of any such inspections shall be paid by
Lessor, unless a violation of Applicable Requirements, or a contamination is
found to exist or be imminent, or the inspection is requested or ordered by a
governmental authority and was occasioned by Lessee's operations in the
Premises, or a good faith belief that Lessee is not in compliance with all
Applicable Requirements. In such case, Lessee shall upon request reimburse
Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.
7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), ceilings, roof membrane and surface, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
sign, sidewalks and parkways located in, or on, the Premises. Lessee, in keeping
the Premises in good order, condition and repair, shall exercise and perform
good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. Lessee shall, during the
term of this Lease, keep the exterior appearance of the Building in a
first-class condition, consistent with the present condition of the Building,
and the exterior appearance of other similar facilities of comparable age and
size in the vicinity, including, when necessary, the removal of graffiti or
similar defacement of the exterior of the Building.
(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.
(c) REPLACEMENT. Subject to Lessee's Indemnification of Lessor
as set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor, and
the cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator f which is
one, and the denominator of which is the number of months of the useful life of
such replacement as such useful life is specified pursuant to Federal income tax
regulations or guidelines for depreciation thereof (including interest on the
unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right to prepay its obligation
at any time.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are Intended to be that of the Lessee. It is
the Intention of the Panties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease. Notwithstanding
anything to the contrary herein, Lessor, at its sole cost and expense, shall be
responsible for the repair of any and all structural defects, floor slab and
foundation defects, and latent structural defects in the Building during the
original term of the Lease. Lessor shall also be responsible for, and keep in
good order, maintenance and repair, including restoration, replacement and
renewal, the structural elements of the roof.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility Installations or Trade Fixtures, whether by addition or deletion.
LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are no yet owned by
Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the Interior
of the Premises (excluding the. roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during any twelve month period during the Term of this
Lease as extended does not exceed $50,000 in the aggregate.
(b) CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations she be performed in
a workmanlike manner with good and sufficient materials. Lessee shall promptly
upon completion furnish Lessor with as-built plans and specifications. For work
which costs an amount equal to the greater of one month's Base Rent, or $10,000,
Lessor may condition its consent upon Lessee providing a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation and/or upon Lessee's posting an additional
Security Deposit with Lessor.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been furor shed to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered here before
the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety
bond in an amount equal to one and one-half times the amount of such contested
lien, claim or demand, Indemnifying Lessor against liability for the same. If
Lessor elects to participate in any such action, Lessee shall pay Lessor's
attorneys' fees and costs.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per Paragraph 7A(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.
(b) REMOVAL. By delivery to Lessee of written notice from
Lessor not earlier than ninety (90) and not later than thirty (30) days prior to
the end of the term of this Lease, Lessor may require that any or all Lessee
Owned Alterations or Utility Installations the approval of which by Lessor was
conditioned upon their removal at the time the approval was granted, be removed
by the expiration or termination of this Lease. Lessor may require the removal
at any time of all or any part of any Lessee Owned Alterations or Utility
Installations made without the required consent.
(c) Surrender/Restoration. Lessee shall surrender the Premises
by the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear and
casualty damage for which Lessee has no responsibility under the terms of this
Lease excepted. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Lessee shall repair any damage occasioned by the installation, maintenance or
removal of Trade Fixtures, Lessee Owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage
tank installed by or for Lessee, and the removal, replacement, or remediation of
any soil, material or groundwater contaminated by Lessee. Trade Fixtures shall
remain the property of Lessee and shall be removed by Lessee. The failure by
Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 26 below. Notwithstanding anything else herein to the
contrary, "ordinary wear and tear" shall not include any condition which results
in, or the fact of, failure of any building system (including, without
limitation, the HVAC, plumbing, electrical, load levelers, and similar items) to
operate effectively for the purpose for which it was intended. Lessee fully
understands that its surrender obligations shall be performed on or prior to he
Expiration Date or earlier termination of the Lease. In the event that the
Premises are left in a condition at such time which does not comply with the
terms and conditions hereof, Lessor shall be entitled to treat Lessee as a
holdover tenant, on
a day to day basis, with Base Rent and all Rent and Expenses charged in
accordance with paragraph 26 hereof. During such holdover period Lessor shall
have the right, but not the obligation, to enter into the Premises, without
notice to Lessee, and without terminating Lessee's holdover status, for the
purpose of assessing the condition of the Premises, and undertaking the clean up
and restoration of same as required to bring the Premises into compliance with
the terms of this paragraph 7. Lessee shall pay and be responsible for (either
from the Security Deposit, or otherwise as Lessor elects) the cost of such clean
up and restoration, which Lessor shall perform, or cause to be performed,
pursuant to an arms length agreement with the appropriate consultants and
contractors and laborers. In the event that Lessee's Security Deposit is
inadequate to pay for such costs, Lessee shall pay same to Lessor within five
(5) days of the date of the invoice for same provided to Lessee. Lessor shall
also have the right, but not the obligation, to remove any personal property,
inventory, machinery, or other items left on the Premises by Lessee following
the Expiration Date or earlier termination of the Lease, and to store same, as
Lessee's expense, or dispose of same, in accordance with Lessor's rights under
law, and Lessor may charge the cost of same against any remaining Security
Deposit, or invoice same to Lessee, who shall pay such costs within five (5)
days of the date of such invoice.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within ten (10) days following receipt of an
Invoice.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily Injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF PREMISES
ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an 'Insured contract' for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar Insurance carried by Lessor, whose insurance shall be considered excess
insurance only. All policies required to be maintained by Lessee shall name
Lessor, its property manager, and any lender of Lessor's, as additional
insureds. in addition, Lessee shall obtain and keep in force during the term of
the Lease, an "excess" or "umbrella" policy, in the amount of $5,000,000.00,
which shall in all other respects conform to the requirements set forth herein
for insurance to be carried by the Lessee, including, without limitation, those
requirements concerning the named and additional insureds, the characteristics
of the Insurer, and the providing of proof of coverage to Lessor.
(b) CARRIED BY LESSOR. Lessor may, but shall not be obligated
to, maintain liability insurance as described in Paragraph 8.2(a), in addition
to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional Insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to ninety percent (90%) of
the full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by any Lenders, but in no event more than the
commercially reasonable and available insurable value thereof. If Lessor is the
Insuring Party, however, Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee's personal property shall be Insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct
physical loss or damage - including the perils of flood and/or earthquake if
Lessor so desires , including coverage for debris removal and the enforcement of
any Applicable Requirements requiring the upgrading, demolition, reconstruction
or replacement of any portion of the Premises as the result of a covered loss.
Said policy or policies shall also contain an agreed valuation provision in lieu
of any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such Insurance coverage has a deductible clause, the deductible amount shall not
exceed $1,000 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss..
(b) RENTAL VALUE. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor and
any Lender, insuring the loss of the full Rent for one (1) year. Said Insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12 month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain
Insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such Insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.
(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain
loss of income and extra expense Insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the Insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to Its property arising out of or Incident to the perils required
to be insured against herein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles;
applicable hereto. The Parties agree to have their respective property damage
Insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long as the Insurance is not
invalidated thereby.
8.7 INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or Indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises upon other portions of the Building of which the Premises are a part,
or from other sources or places. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant of Lessor. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee's business or for any loss of Income or profit
therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the Improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence
or discovery of a condition Involving the presence of, or contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect;
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effects such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
same, or adequate assurance thereof within ten (10) days following receipt of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to: (i) make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain full force and effect, or have this Lease
terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
to not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee falls to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished. If during such last six month period Lessee has already
irrevocably exercised its Option to Extend, then the provisions of paragraphs
9.1 through 9.4 shall prevail without regard to the time at which the damage has
occurred.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) REMEDIES. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within ninety (90) days after such obligation shall
accrue, or, having commenced, does not thereafter diligently pursue same to
completion (subject to Lessee Delay and paragraph 50 of this Lease) Lessee may,
at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice,
of Lessee's election to terminate this Lease to on a date not less than sixty
(60) days following the giving of such notice. If Lessee gives such notice, and
such repair or restoration is not commenced within thirty (30) days thereafter,
this Lease shall terminate as of the date specified in said notice. If the
repair or restoration is commenced within said thirty (30) lays, this Lease
shall continue in full force and effect. "COMMENCE" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 TERMINATION -ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor, and of Additional Rent or other sums owed by Lessee to Lessor. Lessor
shall, in addition, return to Lessee so much of Lessee's Security Deposit as has
not been, or is not then required to be, used by Lessor.
9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income, excise, franchise or corporate, transfer
attributable to Lessor, or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the
Premises, Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "REAL PROPERTY TAXES" shall also include any tax, fee, levy assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises.
10.2
(a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax xxxx applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand. However, Lessor, in its sole and
absolute discretion, may elect to pay such taxes directly, and then invoice
Lessee for same. Lessee's shall reimburse Lessor for such amounts within ten
(10) business days of the date of same. Unless and until Lessor advises Lessee,
in writing, to the contrary, Lessor shall initially pay all such taxes directly.
(b) ADVANCE PAYMENT. In the event Lessee incurs a late charge
on any Rent payment, Lessor may, at Lessor's option, estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due, at least
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment
monthly in advance, the monthly payment shall be an amount equal to the amount
of the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax xxxx is known the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand,
such additional sums as are necessary to pay such obligations. All monies paid
to Lessor under this Paragraph may be intermingled with other monies of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any balance of funds paid
to Lessor under the provisions of this Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.
10.5 RIGHT TO CONTEST. Lessee shall have the right to contest any Real
Property Tax with the applicable taxing authority or authorities in accordance
with all applicable tax contest procedures provided by law so long as (a) Lessee
continues to; ay all Rent (including all Real Property Taxes then assessed) as
required under this Lease, and (b) such Real Property Tax is being diligently
contested in good faith. In the event that Lessee elects to contest any
assessment of Real Property Taxes, Lessee shall first notify Lessor of any such
intended contest and shall consult and coordinate with, and permit participation
by Lessor and Lessor's legal counsel in connection with such contest, including
any tax contests being concurrently contemplated, undertaken or advocated by
Lessor. Any such contest by Lessee shall be conducted solely at Lessee's cost
and expense. Lessor agrees to cooperate fully with Lessee in such contest,
including executing any documents of authorization necessary in connection
therewith.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent.
(b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose, except in the normal course of
business if Lessee is a publicly traded company, and except in the course of a
bona-fide public offering of stock, which complies in all respects with all
Applicable Requirements.
(c) Except as provided in subparagraph (f), below, the
involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition,
financing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than twenty-five percent (25%) of such Net Worth as it was represented
at the time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "NET WORTH OF LESSEE" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.
(d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
(f) Notwithstanding anything in this Paragraph 12.1 to the
contrary, Lessee may assign this Lease, or sublet the Premises or any portion
thereof, without Lessor's consent (a "Permitted Transfer") to any parent,
subsidiary, or affiliate corporation or other business entity which controls, is
controlled by or is under common control with Lessee, or to any person or entity
which acquires all the assets of Lessees business as a going concern,
(collectively, a "Permitted Transferee") provided that: (i) at least thirty (30)
days prior to such assignment or sublease, or as soon thereafter as practicable,
Lessee delivers to Lessor the financial statements and other financial and
background information of the assignee or sublessee as is required for other
transfers; (ii) if the transfer is an assignment, the assignee assumes, in full,
the obligations of Lessee under this Lease (or if a sublease, the sublessee
assumes, in full, the obligations of Lessee with respect to such portion as
sublessee has subleased); (iii) the financial net worth of the assignees or
sublessees as of the time of the proposed transfer is sufficient for such
assignee or sublessee to fulfill its obligations pursuant to such assignment or
sublease (and in considering same, Lessor shall have the right to consider the
long term prospects for sustaining such ability to perform for the period of any
extended term, if applicable); (iv) Lessee remains fully liable under this
Lease; and (v) unless Lessor consents to same, the use of the Premises set forth
herein remains unchanged.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor
may proceed directly against Lessee, any Guarantors or anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor's
remedies against any other person or entity responsible therefore to Lessor, or
any security held by Lessor.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any. Lessee
shall reimburse Lessor, as Additional Rent, for its actual, reasonable costs and
expenses, including reasonable attorneys' fees, incurred in considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to b observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.
(g) Lessor may refuse to consent on any commercially
reasonable grounds, including, without limitation: the potential inability of
the proposed assignee to fulfill the Lease terms and the financial
irresponsibility or instability of the proposed assignee or sublessee, the lack
of suitability of the Premises for the intended use by the proposed assignee or
sublessee, the potential for unlawful or undesirable use of the Premises by the
proposed assignee or sublessee, or the character or business reputation of the
proposed assignee or sublessee. In any dispute which arises under this
paragraph, Lessee shall pay to Lessor all of Lessor's costs and expense
reasonably incurred by Lessor in making the investigation and factual findings
provided for in this paragraph.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim; from Lessee to the
contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any,
specified in such notice. The sublessee shall have a right of reimbursement and
offset from and against Lessee for any such Defaults cured by the sublessee.
12.4 TRANSFER PREMIUMS. Fifty percent (50%) of any sums or other
economic consideration received by Lessee as a result of any assignment or
subletting entered into pursuant to this Paragraph 12, however denominated under
the assignment or sublease, which exceed, in the aggregate (a) the total sums
which Lessee is obligated to pay Lessor under this Lease (prorated to reflect
obligations allocable to any portion of the Premises subleased), plus (b)(i)
reasonable real estate brokerage commissions or fees payable by Lessee in
connection with such assignment or subletting, (ii) the reasonable fees of
attorneys, architects and engineers, and (iii) reasonable costs of tenant
improvements required to be constructed by Lessee for any such assignee or
subtenant, shall be paid by Lessee to Lessor as additional rent under this Lease
without affecting or reducing any other obligations of Lessee hereunder. Lessee
understands, acknowledges and agrees that Lessor's right to recapture any
consideration paid in connection with an approved assignment or subletting is a
material inducement for Lessor's agreement to lease the Premises to Lessee upon
the terms and conditions, set forth herein.
12.5 LESSOR'S OPTION AS TO SUBJECT SPACE. Notwithstanding the foregoing
provisions contained in this Paragraph 12 to the contrary, Lessor shall have the
option, by giving written notice to Lessee within twenty (20) days after
Lessor's receipt of written notice by Lessee (accompanied by all of the items
set forth in this Paragraph 12 concerning the nature of the transfer and the
transferee) of any proposed assignment or sublease (except to a Permitted
Transferee) for a term of three (3) years or more by Lessee (a "Transfer
Notice"), to recapture the space which is the subject of such proposed transfer
(the "Subject Space"), provided the subject space constitutes not less than
100,000 square feet; or, if prior transfers have occurred, would result in
having 100,000 square feet in the aggregate assigned or sublet. Such recapture
notice shall cancel and terminate this Lease with respect to the Subject Space
as of the date stated in the Transfer Notice. In the event of a recapture by
Lessor, if this Lease shall be canceled with respect to less than the entire
Premises, the rent reserved herein shall be prorated on the basis of the number
of rentable square feet retained by Lessee in proportion to the number of
rentable square feet contained in the Premises, and this Lease as so amended
shall continue thereafter in full force and effect, and upon request of either
party, the parties shall execute confirmation of same. If Lessor declines, or
fails to elect in a timely manner to recapture the Subject Space under this
Paragraph 12.5, then, provided Lessor has consented to the proposed transfer
pursuant to Paragraph 12.2, Lessee shall be entitled to proceed to transfer the
Subject Space to the proposed transferee, subject to the other provisions of
this Paragraph 12 (including Paragraph 12.4 above).
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "BREACH" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of fifteen (15) days following written notice to
Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's Interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1(e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor; (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a Guarantor's refusal to honor the
guaranty; or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written alternative assurance or
security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any of its affirmative duties
or obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions if this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.
13.3 INDUCEMENT RECAPTURE. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "INDUCEMENT
PROVISIONS," shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease,
including without limitation, the timely payment (i.e., prior to the time Lessee
is in default, as set forth in Paragraph 13.1(b)) of all rent due hereunder.
Upon Breach of this Lease by Lessee (which shall be deemed to include any late
payment of rent or other sums due hereunder, or the presentation in payment of
any obligation hereunder of any check which is not honored on the first attempt
to realize on it), any such Inducement Provision shall automatically be deemed
deleted from this Lease and of no further force or effect, and any rent, other
charge, bonus, inducement or consideration theretofore abated, given or paid by
Lessor under such an Inducement Provision shall be immediately due and payable
by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by
Lessee. The acceptance by Lessor of Rent or the cure of the Breach which
Initiated the operation of this paragraph shall not be deemed a waiver by Lessor
of the provisions of this paragraph unless specifically so stated in writing by
Lessor at the time of such acceptance. Notwithstanding anything else herein to
the contrary, Lessee shall not be subject to the loss of an Inducement due to a
default in the payment of Rent if Lessee has not been late with respect to the
payment of Rent more than three times in the first thirty months of the Term,
and all such late payments have been made within the cure periods allowed by
this Lease.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
Include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 INTEREST. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The Interest ("INTEREST") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.
13.6 BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, (except in
the event of an emergency, in which event the reasonableness of the time of
Lessor's response shall be determined in relationship to the nature and extent
of the emergency) a reasonable time shall in no event be less than thirty (30)
days after receipt by Lessor, and any Lender whose name and address shall have
been furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than thirty (30)
days are reasonably required for its performance, then Lessor shall not be in
breach if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.
(b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event
that neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.
13.7 MORTGAGEE PROTECTION. Lessee to send by certified or registered
mail to any Lender whose address has been furnished to Lessee, a copy of any
notice of default served by Lessee on Lessor. If Lessor fails to cure such
default within the time provided for in this Lease, such Lender shall have an
additional thirty (30) days to cure such default; provided, however, that if
such default cannot reasonably be cured within that thirty (30) day period, then
such Lender shall have such additional time to cure the default as is reasonably
necessary under the circumstances (including, without limitation, the time to
obtain possession of the Premises by foreclosure or similar proceedings).
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (collectively "CONDEMNATION"), this Lease shall terminate as to the part
taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than ten percent (10%) of any building portion
of the Premises, or more than twenty-five percent (25%) of the land area portion
of the Premises not occupied by any building, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced in
proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation for
Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. All Alterations and Utility Installations made to
the Premises by Lessee, for purposes of Condemnation only, shall be considered
the property of the Lessee and Lessee shall be entitled to any and all
compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation; Lessor shall repair any damage to the
Premises caused by such Condemnation.
15. BROKERS' FEE.
15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, and/or attorneys' fees reasonably incurred with respect thereto.
16. ESTOPPEL CERTIFICATES.
(a) Each Party (as "RESPONDING PARTY") shall within fifteen
(15) days after written notice from the other Party (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current "ESTOPPEL CERTIFICATE" form published
by the American Industrial Real Estate Association, or such form as is
reasonably required by any lender of Lessor, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver
the Estoppel Certificate within such fifteen (15) day period, the requesting
Party may execute an Estoppel Certificate stating that: (i) the Lease is in full
force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party's
performance, and (iii) if Lessor is the Requesting Party not more than one
month's Rent has been paid in advance. Prospective purchasers and encumbrancers
may rely upon the Requesting Party's Estoppel Certificate, and the Responding
Party shall be estopped from denying the truth of the facts contained in said
Certificate.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver any
potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser, including, but not
limited to, Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender r purchaser in
confidence and shall be used only for the purposes herein set forth.
17. DEFINITION OF LESSOR. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent
holders of the Lessor's interest in this Lease shall remain liable and
responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6 above.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION OF LIABILITY. See paragraph 51, below.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered la delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of monies or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee. Unless
Lessor and Lessee have reached an agreement in writing to the contrary, if
Lessee fails to surrender the Premises upon the expiration or earlier
termination of the Lease despite Lessor's demand to do so, in addition to the
rent and other obligations of Lessee as provided in this Lease, Lessee shall
indemnify and hold Lessor harmless against any and all losses, costs, damages
and liability (including actual attorneys' fees and costs, and court costs),
direct or indirect, which Lessor may suffer as a result of Lessee's failure to
surrender the Premises.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof. Lessee waives
the protection of any statute or rule of law which gives or purports to give
Lessee any right to terminate this Lease or surrender possession of the Premises
upon the transfer of Lessor's interest by foreclosure, deed in lieu of
foreclosure, or otherwise.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "NON-DISTURBANCE AGREEMENT:) from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms thereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorney's fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"PREVAILING PARTY" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorney's fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorney's fees reasonably incurred. In addition, Lessor shall be
entitled to attorney's fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times and upon reasonable notice (it
being agreed that 24 hours is reasonable for the purposes of this paragraph 32)
for the purpose of showing the same to prospective purchasers, lenders, or
lessees, and making such alterations, repairs improvements or additions to the
Premises as Lessor may deem necessary. All such activities shall be without
abatement of rent or liability to Lessee. Lessor may at any time place on the
Premises any ordinary "FOR SALE" signs and Lessor may during the last six (6)
months of the term hereof place on the Premises any ordinary "FOR LEASE" signs.
Lessee may at any time place on or about the Premises any ordinary "FOR
SUBLEASE" sign.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted , any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. SIGNS. Lessee shall have the right, at its sole expense, to install
building signage, and directional ground and fence signage which is consistent
in type, amount and quality with that of surrounding buildings of similar type
and quality, and in accordance with all requirements of the City of Fontana. All
signs must comply with all Applicable Requirements.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease
the consent of Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including, but not limited to, architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including, but not limited to, consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within ten (10) business days following such
request.
37. GUARANTOR.
37.1 EXECUTION. The Guarantors, if any, shall each execute a guaranty
in the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
37.2 DEFAULT. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
39. OPTIONS.
39.1 DEFINITION. "OPTION" shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee or Permitted Transferee and
only while the original Lessee or Permitted Transferee is in full possession of
the Premises and, if requested by Lessor, with Lessee or a Permitted Assignee,
as applicable, certifying that Lessee has no intention of thereafter assigning
or subletting.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option: (i)
during the period commencing with the giving of any notice of Default and
continuing until said Default is cured, (ii) during the period of time any Rent
is unpaid (without regard to whether notice thereof is given Lessee, (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given three (3) or more notices of separate Default, whether or
not the defaults are cured, during the twelve (12) month period immediately
preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor gives to Lessee three (3) or more notices of separate Default during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.
39.5 OPTIONS TO EXTEND. Lessee may extend the Term for one (1)
additional period of five (5) years (the "Extended Term") upon all the terms and
conditions of this Lease, subject to the following terms, conditions and
exceptions. Lessee must exercise the Option, if at all, by giving written notice
of its intention to do so no earlier than nine (9) and no later than six (6)
months prior to the end of the Original Term:
(a) Lessee's option shall automatically terminate upon any
transfer, assignment, sublease, conveyance, hypothecation or encumbrance of the
Lease (except to a Permitted Transferee) for which Lessor's consent is required,
or if the use of he Premises specified in Paragraphs 1.8 and 6 is changed
without the consent of Lessor.
(b) Base Rent for the first Extended Term shall be equal to
the Fair Market Rental Rate (the "FMRR") of the Premises as of the commencement
of such Extended Term. As used herein, FMRR shall mean the rent that a willing
lessee would pay to a willing lessor, with neither party under any financial
duress, in an arm's length transaction, for property similar to the Premises, as
the Premises are then improved (and taking into account that there shall be no
free rent period and no payment of broker's commissions), in the market area in
which the Premises are located. Not more than nine (9), nor less than six (6)
months before the end of the Original Term, Lessee shall provide Lessor with its
written notice that it wishes to exercise its option as provided for herein.
Within thirty (30) days of Lessor's receipt of such notice, Lessor shall provide
Lessee, in writing, its good faith opinion of the FMRR of the Premises as of the
end of such term ("Lessor's FMRR Notice"). If Lessee objects to Lessor's
determination of the FMRR of the Premises for the Extended Term, Lessee shall
notify Lessor in writing, within fifteen (15) days after receipt of Lessors
notice of the FMRR, that Lessee disagrees with Lessor's determination. The
parties shall then attempt to agree upon the FMRR. In the event that Lessor and
Lessee are unable to agree upon the FMRR of the Premises within thirty (30) days
of Lessor's receipt of Lessee's notice that it disagrees with the Lessor's FMRR
Notice, then the FMRR shall be determined by appraisal in the manner provided
below. Until the appraisal procedures are finalized; Lessee shall continue to
pay Lessor the amount of Base Rent due immediately preceding the expiration of
the Lease Term. After the determination of the appraisers is final, Lessee shall
promptly make payment to Lessor for any underpayment of Base Rent owing for
prior months.
The FMRR of the Premises shall be determined as follows: The Premises shall be
appraised by an MAI appraiser chosen by Lessor ("First Appraisal") and the
appraisal report forwarded to Lessee. If the First Appraisal is deemed
unacceptable by Lessee, then Lessee shall so advise Lessor in writing within ten
(10) working days after receipt of the First Appraisal and Lessee shall have the
right to engage an MAI appraiser to appraise the Premises ("Second Appraisal")
and the appraisal report forwarded to Lessor. In the event Lessor shall deem the
Second Appraisal unacceptable, then Lessor shall advise Lessee within ten (10)
working days after receipt of the Second Appraisal, and the first appraiser and
second appraiser shall together choose a third MAI appraiser who shall appraise
the Premises ("Third Appraisal") and forward the appraisal report to Lessor and
Lessee. The cost of the second appraisal shall be borne by Lessee, and the cost
of the third Appraiser, if any, shall be shared equally by the parties. All
Appraisers shall have no less than five (5 ) years experience (up to and
including the date of instituting the appraisal process, of appraising property
like the Premises, in the market area where the Premises are located, If the
Third Appraiser is greater than the highest or lower than the lowest of the
First and Second Appraisals, then the FMRR for the Premises shall be the average
of the First and Second Appraisals. If the Third Appraisal is not greater than
the highest nor lower than the lowest of the First and Second Appraisals, then
the FMRR for the Premises shall be the sum of the three appraisals, divided by
three (3). The appraisal process shall commence no later than forty-five (45)
days prior to the effect date of the Extended Term and shall be concluded within
thirty (30) days after the start of the appraisal process.
Notwithstanding anything else herein to the contrary, in no event shall the Base
Rent for any Extended Term be less than that in effect at the end of the prior
Term.
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not materially interfere with the use of the Premises by Lessee.
Lessee agrees to sign any documents is reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay.
44. AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within thirty (30) days after request, deliver to the other Party
satisfactory evidence of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder (i.e., there shall be no
material increase in Lessee's obligations, and no material decrease in Lessee's
rights), Lessee agrees to make such reasonable non-monetary modifications to
this Lease as may be reasonably required by a Lender in connection with the
obtaining of normal financing or refinancing of the Premises.
48. MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease [ ] is [X] not attached to this Lease.
50. UNAVOIDABLE DELAYS. If the performance of Lessor of any act required
herein, including, without limitation, the design, planning, permitting,
construction and completion of the Tenant Improvements, is prevented or delayed
by reason of strikes, lockouts, labor disputes, governmental delays, acts of
God, fire, floods, epidemics, freight embargoes, unavailability of materials aid
supplies, development moratoriums imposed by any governmental authority, or
other causes beyond
the reasonable control of Lessor, lessor shall be excused from performing that
act for the period equal to the period of the prevention or delay.
51. LIMITATION ON LIABILITY. In consideration of the benefits accruing
hereunder, Lessee on behalf of itself and all successor and assigns Lessee
covenants and agrees that, notwithstanding anything in this Lease to the
contrary and notwithstanding any Applicable law to contrary:
(a) the liability of Lessor under this Lease (including any
liability for any actual or alleged failure, breach or default by Lessor under
this Lease and/or negligence by Lessor hereunder) and any recourse against
Lessor shall be limited solely to Lessor's in rest in the Premises, and the
undistributed rents, profits, other income derived from the Premises, and
available insurance proceeds (and not any other assets of Lessor); and
(b) the obligations of Lessor under this Lease do not
constitute personal obligations of the members, partners or subpartners of
Lessor, or any of the managers, directors, officers or shareholders of lessor or
Lessor's members, partners or subpartners; , and Lessee shall not seek recourse
against any such members, partners or subpartners or any of the managers,
directors, officers or shareholders of Lessor or Lessor's members, partners or
subpartners or any of their personal assets for satisfaction of any liability
with respect to this Lease.
52. SCE LICENSE AREA. In order to enhance Lessee's proposed use and
enjoyment of the Premises, Lessor has agreed to allow Lessee to license from
Lessor the SCE License Area for the parking and storage of truck trailers in
connection with the operatic of Lessee's business at the Premises, and for no
other purposes. Lessee shall be permitted to use the SCE License area for such
purposes in the manner, at the times, and for the costs set forth in the License
Agreement. Without limiting the foregoing, Lessee shall reimburse Lessor, as an
operating expense, for all costs, fees, and expenses, including by way of
example only, the License Fee described in Article 2 of the License Agreement.
The basic License Fee shall be paid to Lessor in equal monthly installments,
each such installment being one-twelfth of the amount stated in the License
Agreement as the License Fee for the relevant period, and the monthly payments
shall be due as additional rent as and when the Base Rent is due. Any other such
costs, fees and expenses shall be due as and when invoiced by Lessor. Without
limiting the foregoing, by its execution hereof, Lessee acknowledges that it is
fully familiar with, and agrees to be bound by, all of the terms and conditions
of the License Agreement, but Lessee shall have no direct rights thereunder.
That is, Lessee shall have no right to exercise any option or other right under
the License Agreement in its own name, and Lessee shall refrain from any and all
direct contact with SCE with respect to its use of the SCE License Area, unless
either (i) such contact is necessary to avoid damage to persons or property from
an emergency situation, or (ii) Lessor has consented, in writing, to such
contact, in advance of Lessee's undertaking same. Lessee agrees to indemnify,
defend, and hold harmless Lessor for any loss, claim, injury, damage or
liability Lessor may suffer arising out of or related to Lessor's use of the SCE
License Area, its violation of any of the terms of the License Agreement, and
the beach of this Paragraph 52. In addition, Lessee acknowledges the disclosure
of all matters described in the License Agreement, including information about
Electric and Magnetic Fields, Induced Voltage, and environmental matters, as if
such disclosures had been made directly by Lessor to Lessee. Lessee also
acknowledges that the License Agreement is subject to termination by SCE upon
twelve (12) months written notice without cause, as well as being terminable for
cause. Accordingly, Lessee agrees that no such termination shall operate to
terminate, or give any right to Lessee to terminate, this Lease, it being agreed
that the use of the SCE License Area is an enhancement of its rights under the
Lease, and not a condition to its obligations hereunder. Except where the
contrary is set forth in this paragraph, the SCE License Area shall be deemed
part of the Premises, and all rights related to said Area are coextensive with
Lessee's rights to the Premises. While the License Agreement and the Lease are
meant to work in concert, in the event of a conflict between the terms of this
paragraph and the balance of the Lease, with respect to the rights, duties and
obligations of Lessee concerning the SCE License Area, this paragraph shall
prevail over the balance of the Lease.
53. TEMPORARY SPACE. As an accommodation to Lessee, and an inducement to
Lessee to enter into this Lease. Lessor shall arrange for the ability of Lessee
to use approximately One Hundred Thousand (100,000) square feet of warehouse
storage space located in the Ontario area (the "Temporary Space"). The Temporary
Space shall be located by Lessor, and Lessor, provided Lessee is not, in default
hereunder, shall bear all costs related to obtaining the Space for Lessee's use,
provided, however, Lessor shall not be obligated to incur any out of pocket
expenses for design or planning of the space, or for tenant improvements,
security, or any other similar terms, it being
agreed that as between Lessor and Lessee, Lessee will take the Temporary space
on an "AS-IS" basis. At Lessor's request, Lessee agrees to execute such
documents or instruments as may be reasonably necessary to confirm Lessee's
agreement to be bound by all of the terms and conditions of the use of the
Temporary space imposed by the owner or master tenant thereof, other than the
payment of rent or other occupancy costs except for property and liability
insurance, (so long as Lessee is not in default under this Lease, or under the
terms and conditions governing the occupancy of the Temporary space.) Lessee
shall however, as a condition to its right to enter into possession of the
Temporary Space, deliver to Lessor at Lessee's sole cost and expense, for the
benefit of Lessor and the landlord of the Temporary Space, certificates of
insurance identical to those required under this Lease, except that all property
and liability insurance shall name Lessor and Iron Mountain Records Management,
Inc. (or such other entity as Lessor subsequently identifies to Lessee as the
owner/landlord of the Temporary Space) as additional loss payees and additional
insured, as applicable. Lessor shall use due diligence and commercially
reasonable efforts to have the Temporary Space available to Lessee as soon as
possible after the execution hereof, and its rights to and use of the Temporary
Space shall terminate at such time as the Premises is available to Lessee for
its legal use of same for storage of the materials stored at the Temporary Space
(the "Ending Date"). Lessee acknowledges that its failure to vacate the
Temporary Space on or before the Ending Date shall constitute a breach of this
Lease, and from and after the date of such Lease, Lessee shall pay Lessor 150%
of the costs thereafter incurred by Lessee with respect to the Temporary Space,
to compensate Lessor for its ongoing expenses and the administrative and other
costs incurred by Lessor in obtaining, maintaining, and otherwise dealing with
the Temporary Space. All of Lessors obligations with respect to the Temporary
Space arc contingent upon the complete execution and unconditional delivery of
this Lease by Lessee, and the payment to Lessor of all funds due upon such
execution and delivery, and Lessee's performance under the terms hereof.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
[SIGNATURES ON NEXT PAGE]
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN,
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
THIS LEASE MUST BE EXECUTED BY TWO CORPORATE OFFICERS OF LESSEE
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Des Moines, Iowa Executed at: North Andover, Massachusetts
------------------ ----------------------------
on: on:
---------------------------- ---------------------------------------
By LESSOR: BY LESSEE:
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------------------- ----------------------------------
Name Printed: Xxxxxx Xxxxxxxx Name Printed: Xxxxxxx Xxxxx
-------------------------- -----------------------
Title: Assistant Director Title: Executive Co-Chairman
-------------------------------- ------------------------------
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------------- ----------------------------------
Name Printed: Xxxx X. Xxxxx Name Printed: Xxxxx X. Xxxxxx
-------------------------- -----------------------
Title: Director Title: Vice-President Legal
-------------------------------- ------------------------------
Address: Address: 0 Xxxx Xxxxxx, Xxxxx
---------------------------- --------------------------
Xxxxxxx, XX 00000
---------------------------- --------------------------
Telephone: (___) Telephone: (000) 000-0000
---------------------- -----------
Facsimile: (___) Facsimile: (000) 000-0000
---------------------- -----------
Federal ID No. Federal ID No.
-------------------------- -----------------------
LESSOR'S ADDRESS FOR NOTICES:
c/o Xxxx Koeselman
Principal Capital Management, LLC
000 Xxxxx Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
NOTE: These forms are often modified to meet the changing requirements of law
and industry needs. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 000 Xx. Xxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. (000) 000-0000. Fax No. (213)
000-0000
