Exhibit 10.7
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AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-GROSS
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
February 21, 1997 1997 is made by and between Xxxxxx X. Xxxxxxx ("Lessor") and
American Fire Retardant Corporation ("Lessee") (collectively the "Parties," or
individually a "Party").
1.2 Promises: That certain real property, Including all Improvements
therein or to be provided by Lessor under the forms of this Lease, and commonly
known by the street address of 0000 Xxxx Xxx. located In the County of San Diego
State of CA and generally described as (describe briefly the nature of 119
property) Approximately 7,554 square feet of office and industrial 'space with
fenced parking (Premises"). See Paragraph 2 for further provisions.)
1.3 Term: Five years and 0 months ("Original Term") commencing June 1, 1997
("Commencement Date") and ending - May 31, 2002 ("Expiration Date"). (See
Paragraph 3 for further provisions.)
1.4 Early Possession: ---------------------------------- ("Early Possession
Date"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent: $ 4,155.00 per month ("Base Rent"), payable on the 1st day
of each month commencing July 1, 1997 (See Paragraph 4 for further provisions.)
X If this box is checked, there are provisions In this Lease for the Base Rent
to be adjusted.
1.6 Base Rent Paid Upon Execution: $ 4,155 as Base Rent for the period June
1, 1997 through June 30, 1997
1.7 Security Deposit: $4,155.00 ("Security Deposit"). (See Paragraph 5 for
further provisions.)
1.8 Permitted Use: Office and Warehouse for flame proofing company (See
Paragraph 6 for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party." $ 1997 invoice is the
"(Base Premium." (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationship exist in this transaction and are
consented to by the Parties (check applicable boxes): Xxxxx & Associates
represents X Lessor exclusively ("Lessor's Broker"); -- both Lessor and Lessee,
and East County Properties represents X Lessee exclusively ("Lessee's Broker");
-- both Lessee and Lessor. (See paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by Xxxxxx Xxxxx ("Guarantor"). (See Paragraph 37 for further
provisions)
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs ---- through -- through -- and Exhibits -- all of which constitute a
part of this Lease.
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 square footage sot forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
Page 1
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Data and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Promises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Data, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity of its nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with it's warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the Improvements on the Promises comply will) all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances In effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Promises or to any
Alterations or Utility Installations (as defined In Paragraph 7.3(a)) made or to
be made by Lessee. If the Promises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after recall)[ 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 Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 Acceptance of Promises. Lessee hereby acknowledges: (a) that It has
been advised by the Brokers to satisfy itself with respect to :1,0 condition of
the Promises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined In Paragraph 6.3) and the present and future suitability of the Promises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents,
ties made any oral or written representations or warranties with respect to the
said matters other than as set forth In this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor In this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Promises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease, however,
shall be in effect during such period. Any such early possession shall not
affect nor advance the Expiration Date of the Original Term.
3.3 Delay In Possession. If for any reason Lessor cannot deliver possession
of the Premises to Lessee as agreed herein by the Early Possession Date, if one
is specified in Paragraph 1.4, or, if no Early Possession Date is specified, by
the Commencement Date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but In such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Promises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option. by notice In writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder; provided, however, that if such written notice
by Lessee is not received by Lessor within said ten (10) day period, Lessee's
right to cancel this Lease shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the term actually
commences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, If any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to what Lessee would otherwise have enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or emissions of Lessee.
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0.Xxxx.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which It Is due under the terms of this Lease. Base Rent and all
other rent and charges 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 the calendar month Involved. Payment of Base Rent and other charges
shall be made to Lessor at Its address stated herein or to such other persons or
at such other addresses as Lessor may from lime to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth In Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee falls
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined In Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount duo
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorney's~ fees) which Lessor may stiffer or incur by
reason thereof. It Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall; upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the same ratio between the
Security Deposit and the Base Rent as those amounts are specified In the Basic
Provisions. Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, It
any. of Lessee's Interest herein), that portion of the Security Deposit not used
or applied by Lessor. Unless otherwise expressly agreed In writing by Lessor, no
part of the Security Deposit shall be considered to be field In trust, to bear
interest or other Increment for its use. or to be prepayment for any moneys to
be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Promises only for the purposes set
forth In Paragraph 1 .8, or any other use which Is comparable thereto, and for
no other purpose. Lessee shall not use or permit the use of the Promises In a
manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to. neighboring promises or properties. Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written
request by Lessee, Lessees assignees or subtenants, and by prospective assignees
and subtenants of the Lessee, Its assignees and subtenants, for a modification
of said permitted purpose for which the promises may be used or occupied, so
long as the same will not Impair the structural integrity of the improvements on
the Promises, the mechanical or electrical systems therein, Is not significantly
more burdensome to the Premises and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. It Lessor elects to withhold such
consent, Lessor shall within five (5) business days give a written notification
of same, which notice shall include an explanation of Lessor's reasonable
objections. to the change In use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used
In this Lease shall mean any product, substance, chemical, material or waste
whose presence, nature, quantity and/or Intensity of existence, use,
manufacture, disposal, transportation, spill, release or affect, either by
itself or In combination with other materials expected to be on the Premises, is
either: (I) potentially injurious to the public health, safety or welfare, the
environment or the Promises, (it) regulated or monitored by any governmental
authority, or (It) a basis lot liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substance shall Include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by products or fractions thereof. Lessee
shall not engage In any activity In, on or about the Promises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in Paragraph
6.3). "Reportable Use" shall mean (1) the Installation of use of any above or
below ground storage tank, (it) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
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is required to be filed with, any governmental authority. Reportable Use shall
also include Lessees being responsible for the presence In, on or about the
Promises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but In compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee In the
normal course of Lessee's business permitted on the Promises, so long as such
use Is not a Reportable Use and does not expose the Promises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to the use or presence of any Hazardous Substance,
activity or storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, In its reasonable discretion, deems necessary to protect
Itself, the public, the Promises and the environment against damage,
contamination or Injury and/or liability therefrom or therefor, Including, but
not limited to, the Installation (and removal on or before Lease expiration or
earlier termination) of reasonably necessary protective modifications to the
Promises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
same, has coma to be located In, on, under or about the Promises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice
of such fact to Lessor. Lessee shall also Immediately give Lessor a copy of any
statement, report, notice, registration, application. permit, business plan,
license, claim, action or proceeding given to. or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination In, on, of about the Promises,
Including but not limited to all such documents as may be involved in any
Reportable Uses Involving the Promises.
(c) Indemnification. Lessee shall Indemnify, protect, defend and hold
Lessor, Its agents, employees, lenders and ground lessor, If any. and the
Promises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Promises by or for Lessee or under
Lessee's control. Lessees obligations under this Paragraph 6 shall Include, but
not be limited to, the effects of any contamination or Injury to xxxxxx,
property or the environment created or suffered by Lessee, and the cost of
Investigation (Including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein Involved, and shall survive the expiration or earlier termination of
this Lease, No termination, cancellation or release agreement entered Into by
Lessor and Lessee shall release Lessee from Its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor In writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided In this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "Applicable Law:' which term Is used In this
Lease to Include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire Insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Promises (including but not limited to matters pertaining to (1)
Industrial hygiene, III) environmental conditions on, in, under or about the
Premises, Including soil and groundwater conditions, and (111) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change In policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and Information, Including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall Immediately upon receipt, notify Lessor in writing (with copies of any
documents Involved) of any threatened of actual claim. notice, citation.
warning, complaint or report pertaining to or involving failure by Lessee or the
Promises to comply with any Applicable Law.
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6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Promises at any time, In the
case of an emergency, and otherwise at reasonable times, for the purpose of
Inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined In Paragraph 6.3), and to
employ experts and/or consultants In connection therewith and/or to advise
Lessor with respect to Lessee's activities, Including but not limited to the
Installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Promises. The costs and
expenses of any such Inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent. or unless the Inspection Is requested or ordered by a
governmental authority as the result of any such existing of imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
Inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to
condition), 23 (Lessor's warranty as to compliance with covenants, etc.), 7.2
(Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Promises and every part thereof In good order, condition and
repair, (whether or not such portion of the Premises requiring repair, 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 Promises), Including,
without limiting the generality of the foregoing, all equipment or facilities
serving the Promises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired pressure vessels,
fire sprinkler and/or standpipe and hose or other automatic fire extinguishing
system, Including fire alarm and/or smoke detection systems and equipment, fire
hydrants, fixtures, walls (interior and exterior), ceilings, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located In, on, about, or
adjacent to the Promises, but excluding foundations, the exterior roof and the
structural aspects of the Promises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of, the Premises, the elements surrounding same, or neighboring
properties, that was caused or materially contributed to by Lessee, of
pertaining to or involving any Hazardous Substance and/or storage tank brought
onto the Promises by or for Lessee or under Its control. Lessee, In keeping the
Promises in good order, condition and repair, shall exercise and perform good
maintenance practices. 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.
(b) Lessee shall, at Lessee's sole cost and expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for, and with
contractors specializing and experienced In, the Inspection. maintenance and
service of the following equipment and improvements, It any, located on the
Promises: (i) heating, air conditioning and ventilation equipment, (ii) boiler,
fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and Irrigation systems, (v) roof covering and
drain maintenance and (vi) asphalt and parking lot maintenance.
7.2 Lessor's Obligations. Upon receipt of written notice of the need for
such repairs and subject to Paragraph 13.5, Lessor shall, at Lessors expense,
keep the foundations, exterior roof and structural aspects of the Promises in
good order, condition and repair, Lessor shall not, however, be obligated to
paint the exterior surface of the exterior walls or to maintain the windows,
doors or plate glass or the Interior surface of exterior walls. Lessor shall
not, In any event, have any obligation to make any repairs until Lessor receives
written notice of the need for such repairs. It Is the Intention of the Parties
that the terms of this Lease govern the respective obligations of the Parties as
to maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter In effect to the extent It is
inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of, any needed repairs.
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7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is used
in this Lease to refer to all carpeting, window coverings, air lines, power
panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing. and fencing in, on or about the Promises. The
term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Promises. The term "Alterations"
shall mean any modification of the Improvements on the Promises from that which
are provided by Lessor under the terms of this Lease, 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 not yet owned by Lessor as defined
In Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations In, on, under or about the Promises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
Interior of the Promises (excluding the roof). 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 the term of this
Lease as extended does not exceed $25,000.
(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 proposed detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be doomed conditioned upon: (1) Lessee's acquiring all applicable permits
required by governmental authorities, (it) the furnishing if copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done In a good and workmanlike manner,
with good and sufficient materials, and in compliance with all Applicable Law.
Losses shall promptly upon completion thereof furnish Lessor with as-built plans
and specifications therefor. Lessor may (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation that
costs $10,000 or more upon Lessee's providing Lessor with 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 under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lion against the Promises or any interest therein. Lessee shall
give Lessor not less than ton (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 in or on the Promises as provided by law. If
Lessee shall, In good faith, contest the validity of any such lien. claim or
demand, then Lessee shall, at Its sole expense defend and protect Itself, Lessor
and the Promises against the same and shall pay and satisfy no such adverse
judgment that may be tendered thereon before the enforcement thereof against the
Lessor or the Promises. 11 Lessor shall require, Lessee shall furnish to Lessor
a surely bond satisfactory to Lessor 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, as required by law for the holding of the
Promises free from the affect of such lion or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs In participating In
such action it Lessor shall decide it is to its best Interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or become
the owner thereof as hereinafter provided In this Paragraph 7.4, all Alterations
and Utility Additions made to the Promises by Lessee shall be the properly of
and owned by Lessee, but considered a part of the Premises. Lessor may, at any
time and at Its option, elect In writing to Lessee to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise Instructed per subparagraph 7.4(b) hereof, all Lessor Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed In writing, Lessor may require that
any or all Lessee Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor May require the
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removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Promises by the end
of the last day of the Lease term or any earlier termination with all of the
improvements, parts and surfaces thereof clean and tree of debris and in good
operating order, condition and state of repair, ordinary wear and fear excepted.
"Ordinary wear and fear" shall not Include any damage or deterioration that
would have been prevented by good maintenance practice or by Lessee performing
all of Its obligations under this Lease. Except as otherwise agreed or specified
in writing by Lessor, the Promises, as surrendered, shall include the Utility
Installations. The obligation of Lessee shall Include the repair of any damage
occasioned by the Installation, maintenance or removal of Lessee's Trade
Fixtures, furnishings, equipment, and Alterations and/or Utility Installations,
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 ground water
contaminated by Lessee, all as may then be required by Applicable Law and/or
good service practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Promises per this Lease.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) Lessee shall pay to Lessor any Insurance cost Increase ("Insurance Cost
Increase") occurring during the term of tills Lease. "Insurance Cost Increase"
Is defined as any Increase In the actual cost of the Insurance required under
Paragraphs 8.2(b), 8.3(a) and 8.3(b). ("Required Insurance"), over and above the
Base Premium, as hereinafter defined, calculated on an annual basis. "Insurance
Cost Increase" shall Include, but not be limited to, Increases resulting from
the nature of Lessee's occupancy, any act or omission of Lessee, requirements of
the holder of a mortgage or deed of trust covering the Promises, Increased
valuation of the Promises, and/or a premium rate Increase. It the parties Insert
a dollar amount In Paragraph 1.9, such amount shall be considered the "Base
Premium:' In lieu thereof, If the Premises have been previously occupied, the
"Base Premium" shall be the annual premium applicable to the most recent
occupancy. It the Premises have never been occupied, the "Base Premium" shall be
the lowest annual premium reasonably obtainable for the Required Insurance as of
the commencement of the Original Term, assuming the most nominal use possible of
the Premises. In no event, however, shall Lessee be responsible for any portion
of the premium cost attributable to liability Insurance coverage In excess of
$1,000,000 procured under Paragraph 8.2(b) (Liability Insurance Carried By
Lessor).
(b) Lessee shall pay any such Insurance Cost Increase to Lessor within
thirty (30) days after receipt by Lessee of a copy of the premium statement or
other reasonable evidence of the amount due. If the Insurance policies
maintained hereunder cover other property besides the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such Insurance Cost Increase
attributable only to the Promises showing In reasonable detail the manner In
which such amount was computed. Premiums for policy periods commencing prior to,
or extending beyond, the term of this Lease shall be prorated to coincide with
the corresponding Commencement or Expiration of the Lease term.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep In force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee and Lessor (as an additional Insured) against claims for bodily Injury,
personal injury and property damage based upon, involving 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 $1,000,000 per occurrence with
an Additional Insured-Managers or Lessors of Premises" Endorsement and contain
the "Amendment of the Pollution Exclusion" 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 required by this Lease or as carried by Lessee shall not,
however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All Insurance to be 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.
(b) Carried By Lessor. In the event Lessor Is the Insuring Party, Lessor
shall also maintain liability Insurance described In Paragraph 8.2(a), above, in
addition to, and not in lieu of, the Insurance required to be maintained by
Losses. Losses shall not be named as an additional Insured therein.
Page 7
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and keep In
force during the term of this Lease a policy or policies In the name of Lessor,
with loss payable to Lessor and to the holders of any mortgages, deeds of trust
or ground losses on the Premises ("Lender(s)"), Insuring loss or damage to the
Promises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time. or the amount
required by Lenders, but In no event more than the commercially reasonable and
available Insurable value thereof If, by reason of the unique nature or age of
the Improvements Involved, such latter amount is less than full replacement
cost. Lessee Owned Alterations and Utility Installations shall be Insured by
Lessee under Paragraph 8.4. It the coverage Is available and commercially
appropriate, such policy or policies shall Insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), Including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of (he Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss, but not including plate glass Insurance.
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 whore the Premises are located.
(b) Rental Value. Lessor shall, In addition, obtain and keep In force
during the term of this Lease a policy or policies In the name of Lessor, with
loss payable to Lessor and Lender(s), Insuring the loss of the full rental and
other charges payable by Lessee to Lessor under this Lease for one (1) year
(including all real estate taxes, Insurance costs, and any scheduled rental
increases). 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 Promises, to provide for one full year's loss of rental
revenues 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 rental Income,
property taxes, Insurance premium costs and other expenses, It any, otherwise
payable by Lessee, for the next twelve (12) month period.
(c) Adjacent Promises. It the Promises are part of a larger building, or if
the Promises are part of a group at 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 Promises.
(d) Tenant's Improvements. Since Lessor Is the Insuring Party, the Lessor
shall not be required to Insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option.
by endorsement to a policy already carried, maintain Insurance coverage on all
of Lessee's personal property, Lessee Owned Alterations and Utility
Installations In, on, or about the Premises similar In coverage to that carried
by the Insuring Party under Paragraph 8.3. 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 or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such Insurance Is in force.
8.5 Insurance Policies. Insurance required hereunder shall be In companies
duly licensed to transact business In the state where the Promises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender having a lion
on the Premises, as sat forth in the most current Issue of "Best's Insurance
Guide." Lessee shall not do or permit to be done anything which shall invalidate
the Insurance policies referred to In this Paragraph 8. Lessee shall cause to be
delivered to Lessor certified copies of. or certificates evidencing the
existence and amounts of, the Insurance, and with the additional insureds,
required under Paragraph 8.2(a) and 8.4. 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.
Page 8
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or Incident to the perils required to be Insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of Insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties. Lessee shall Indemnity, protect, defend and hold harmless the
Promises. 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,
costs, liens, judgments. penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, Involving. or In dealing with, the
occupancy of the Promises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee In the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall Include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding Involved therein, and whether or not (In the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall 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 so 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 Promises, 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, air conditioning or lighting fixtures. or from any other
cause, whether the said Injury or damage results from conditions arising upon
the Promises or upon other portions of the building of which the Promises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
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) "Promises Partial Damage" shall moan damage or destruction to the
Improvements on the Promises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction Is less than 50%
of the then Replacement Cost of the Premises Immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to the
Promises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction Is 50% or more of the then
Replacement Cost of the Premises Immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to Improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations. 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 repairer 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 building codes, ordinances of
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or discovery
of a condition Involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), In, on, or under the Premises.
Page 9
9.2 Partial Damage-insured Loss. It 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, It the required Insurance
was not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds as
and when required to complete said repairs. In the event, however, the shortage
in proceeds was due to the fact that, by reason of the unique nature of the
Improvements, lull 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, of adequate
assurance thereof, within ton (10) days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ton (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. It Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ton (10) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage In
proceeds. in which case this Lease shall remain In full force and affect. If in
such case Lessor does not so elect. then this Lease shall terminate sixty (60)
days following the occurrence of [he damage or destruction. Unless otherwise
agreed, Losses shall In no event have any right to reimbursement from Lessor for
any funds contributed by Lessee to repair any such damage or destruction.
Promises Partial Damage due to flood or earthquake shall be subject to Paragraph
9.3 rather than Paragraph 9.2, notwithstanding that there may be some Insurance
coverage, but the not proceeds of any such Insurance shall be made available for
the repairs it made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Promises Partial Damage that is
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 and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (1) 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 (it) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's Intention to terminate this Lease, Lessee
shall have the right within tan (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said 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 and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified In Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, It a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Promises Total Destruction, whether or not the damage
or destruction Is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term 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, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, If Lessee at that time has an exercisable option to
extend this Lease or to purchase the Promises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (1) exercising such option and (it)
providing Lessor with any shortage In insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessor duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage In Insurance proceeds, Lessor shall, at Lessor's
Page 10
expense repair such damage as soon as reasonably possible and this Lease shall
continue In full force and affect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision In the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described In Paragraph 9.2 (Partial Damage-
Insured), whether or not Lessor or Lessee repairs or restores the Promises, the
Base Rent, Real Property Taxes, Insurance premiums, and other charges, If. any,
payable by Lessee hereunder for the period dining which such damage, Its repair
or the restoration continues (not to exceed the period for which rental value
Insurance Is required under Paragraph 13.0(b)), shall be abated In proportion to
the degree to which Lessee's use of the Premises Is Impaired. Except for
abatement of Base Rent. Real Property Taxes, Insurance premiums, and other
charges, if any, as aforesaid, all other obligations of Lessee hereunder shall
be performed by Lessee, and Lessee shall have no claim against Lessor for any
damage suffered by reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Promises under
the provisions of this Paragraph 9 and shall not commence, in a substantial and
meaningful way, the repair or restoration of the Premises within ninety (90)
days after such obligation shall accrue, 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 Lessor's election to terminate
this Lease on a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such repair
or restoration Is not commenced within thirty (30) days after receipt of such
notice, this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Promises within
thirty (30) days after receipt of such notice, this Lease shall continue in full
force and effect. "Commence". as used In this Paragraph 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 Hazardous Substance Conditions. It a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, it required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and affect, or (ii) if the estimated cost to investigate,
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent of $100,000, whichever is greater, give written notice to Lender within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition of Lessor's desire to terminal, this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
Investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of
Lessee or satisfactory assurance thereof within thirty (30) days following
Lessee's said commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such Investigation and remediation
as soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified In Lessor's notice of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee's obligations under this Lease to the same extent as provided In
Paragraph 9.6(a) for a period of not to exceed twelve (12) months.
9.8 Termination-Advance Payments. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made 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 under the terms of this
Lease.
Page 11
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Promises 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 (a) Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Promises;
(b) deleted in its entirety.
(c) Additional Improvements. Notwithstanding Paragraph 10.1 (a) hereof,
Lessee shall pay to Lessor upon demand therefor the entirety of any Increase In
Real Property Taxes assessed by reason of Alterations or Utility Installations
placed upon the Promises by Lessee or at Lessee's request.
10.2 Definition of "Real Property Taxes: As used herein, the term "Real
Property Taxes" shall Include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) Imposed upon the Premises by any authority
having the direct or Indirect power to tax, Including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Promises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. 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, or changes in applicable law taking
affect. during the term of this Lease, including but not limited to a change In
the ownership of the Promises or in the Improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
10.3 Joint Assessment. It the Promises 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 determined by Lessor from the respective valuations
assigned In the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, In good faith,
shall be conclusive.
10.4 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 contained In the Premises or elsewhere. When possible, Lessee shall
cause Its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. It any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Losses within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided In Paragraph 10.1(b).
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 with other promises.
12.Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or otherwise transfer or encumber (collectively, "assignment") or
sublet all or any part of Lessee's Interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change In the control of Lessee shall constitute an assignment
requiring Lessor's 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.
(c) The involvement of Lessee or Its assets In any transaction, or series
of transactions (by way of merger, sale, acquisition, financing, refinancing.
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 Not Worth of Lessee, as hereinafter defined, by an
amount equal to or greater than twenty-five percent (25%) of such Net Worth of
Lessee as it was represented to Lessor at the time of the execution by Lessor of
this Lease or at the time of the most recent assignment to which Lessor has
Page 12
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, at whichever time said Not Worth of Lessee was or
is greater, shall be considered an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent. "Not Worth of Lessee" for purposes
of this Lease shall be the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles consistently applied.
(d) An assignment or Subletting of Lessee's Interest In this Lease without
Lessor's specific prior written consent shall, at Lessor's option, be a Default
curable alter 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
unconsented to assignment or subletting as a noncurable Breach, Lessor shall
have the right to either: (1) terminate this Lease, or (11) upon thirty (30)
days written notice ("Lessor's Notice"), Increase the monthly Base Rent to fair
market rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the now fair market
rental value, If disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next Installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, In the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Promises hold
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in affect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be Increased In the same ratio as the now
market rental bears to the Base Rent In affect Immediately prior to the market
value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall
be limited to compensatory damages and Injunctive relief.
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 Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay In the approval or disapproval of such assignment nor the
acceptance of any rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for the Default or Breach by Lessee of
any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or any
one else responsible for the performance of the Lessee's obligations under this
Lease, Including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor. or any
security hold by Lessor or Lessee.
Page 13
(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 Promises, it any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering Into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation heroin to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to of Inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented In writing.
(g) The occurrence of a transaction described In Paragraph 12. 1 (c) shall
give Lessor the right (but not the obligation) to require that the Security
Deposit be increased to an amount equal to six (6) times the then monthly Base
Rent, and Lessor may make the actual receipt by Lessor of the amount required to
establish such Security Deposit a condition to Lessor's consent to such
transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what Is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
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 Promises 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 rentals and Income arising from any sublease of all or a portion of the
Promises heretofore or hereafter made by Lessee, and Lessor may collect such
rent and income and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach (as defined in Paragraph 13.1) shall
occur in the performance of Lessee's obligations under this Lease, Lessee may,
except as otherwise provided In this Lease, receive. collect and enjoy the rents
accruing under such sublease. Lessor shall not. by reason of this or any other
assignment of such sublease to Lessor, nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby Irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists In the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under. the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
Inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublesses, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease. Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, In which event Lessor
shall undertake the obligations of 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 other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.
(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.
Page 14
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor In connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may Include the cost of such services and costs In said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms.
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice Is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth In Paragraphs
13.2 and/or 13.3:
(a) The vacating of the Promises without the Intention to reoccupy same, or
the abandonment of the Promises.
(b) Except as expressly otherwise provided in this Lease. the failure by
Lessee to make any payment of base rent or any other monetary payment required
to be made by Lessee hereunder, whether to Lessor or to a third party, as and
when due, the failure by Lessee to provide Lessor with reasonable evidence of
insurance or surely bond required under this Lease, or the failure of Lessee to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) days following
written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided In this Lease, the failure by
Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with applicable law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1 (b). (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1 (b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of 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 ton (10) days
following written notice by or on behalf of Lessor 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,
that are to be observed, complied with or performed by Lessee, other than those
described In subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, than
it shall not be deemed to be a Breach of this Lease by Lessee 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: (1) The making by lessee
of any general arrangement or assignment for the benefit of creditors; (ii)
Lessee's becoming a "debtor" as defined in 11 U.S.C. ss.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
Promises 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 (a) 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 by Lessor that any financial statement given to Lessor by
Lessee or any Guarantor of Lessee's obligations hereunder 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 guarantors refusal to honor the guaranty, or (v) a
guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with 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.
Page 15
13.2 Remedies. If Lessee fails to perform any affirmative duly or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duly or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
Insurance policies, or governmental licenses, permits or approvals. the costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon Invoice therefore. if any chock given to Lessor by Losses
shall not be honored by the bank upon which It is drawn, Lessor, at Its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined In Paragraph 13.1, with or without further notice or demand. and without
limiting Lessor In the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, In which case this Lease and the term hereof shall terminate and Lessee
shall Immediately surrender possession of the Promises to Lessor. In such ,event
Lessor shall be entitled to recover from Lessee: (i) the worth at the time of
the award of the unpaid rent which had been earned at the time of termination;
(ii the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Promises, expenses of retailing, including necessary renovation and alteration
of the Promises, reasonable attorneys' fees, and that portion of the leasing
commission paid by Lessor 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
prior sentence shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). Efforts by Lessor to mitigate damages caused by Losses's Default
or Breach of this Lease shall not waive Lessor's right to recover damages under
this Paragraph. It termination of this Lease Is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover In such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve therein the right to recover all or any part thereof in a separate suit
for such rent and/or damages. It a notice and grace period required under
subparagraphs 13.1 (b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
subparagraphs 13.1 (b), (c) or (d). In such case, the applicable grace period
under subparagraphs 13.1 (b), (c) or (d) and under the unlawful detainer statute
shall run concurrently after the one such statutory notice, and the failure of
Lessee to cure the Default within the greater of the two such grace periods
shall constitute both an unlawful detainer and 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 in affect (in
California under California Civil Code Section 1951.4) after Lessee's breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Promises, or the appointment of a receiver to
protect the Lessor's Interest under the Lease, shall not constitute a
termination of the Lessee's tight to possession. located.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the state wherein the Promises are located
(d) The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any
Indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee's occupancy of the Premises.
Page 16
13.3 Inducement Recapture In Event Of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, 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 to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee as defined In Paragraph 13.1, 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,
and recoverable by Lessor as additional rent due under this Lease,
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.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to Incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs Include, but are not limited to, processing
and accounting charges, and late charges which may be Imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly. If any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within live (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will Incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall In no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge Is payable hereunder, whether or not
collected, for three (3) consecutive Installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary. Base Rent shall, at Lessor's option, become due and payable quarterly
In advance.
13.5 Breach by Lessor. 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 13.5, a reasonable
time shall in no event be less than thirty (30) days alter receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Promises 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 after such notice are reasonably
required for its performance, then Lessor shall not be In breach of this Lease
it performance Is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
14. Condemnation. If the Promises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area 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 Promises remaining, except that the Base Rent shall be reduced In the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the building located on the Premises. No reduction of
Base Rent shall occur If the only portion of the Promises taken Is land on which
there Is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor. whether such award
shall be made as compensation for diminution In value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its not severance damages received, over and above the legal and other
expenses Incurred by Lessor In the condemnation matter, repair any damage to the
Page 17
Premises caused by such condemnation, except to the extent that Lessee has been
reimbursed therefore by the condemning authority Lessee shall be responsible for
the payment of any amount In excess of such not severance damages required to
complete such repair.
15. Broker's Fee.
15.1 The Brokers named In Paragraph 1. 10 are the procuring causes of this
Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to said
Brokers jointly, or In such separate shares as they may mutually designate In
writing, a fee as set forth in a separate written agreement between Lessor and
said Brokers (or In the event there Is no separate written agreement between
Lessor and said Brokers. the sum of ($ as agreed) for brokerage services
tendered by said Brokers to Lessor In this transaction.
15.3 Unless Lessor and Brokers have otherwise agreed In writing, Lessor
further agrees that: (a) if Lessee exercises any Option (as defined In Paragraph
39.1) or any Option subsequently granted which is substantially similar to an
Option granted to Lessee In this Lease, or (b) It Lessee acquires any rights to
the Promises or other promises described In this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Losses been exercised, or (c) It Lessee remains in possession of the Promises,
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Promises and/or any adjacent property In which Lessor has an Interest, or
(e) If Base Rent Is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Brokers a fee In accordance with the schedule of said Brokers In effect at
the time of the execution of this Lease,
15.4 Any buyer or transferee of Lessor's interest In this Lease, whether
such transfer Is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Each Broker shall be a
third party beneficiary of the provisions of this Paragraph 15 to the extent of
its interest In any commission arising from this Lease and may enforce that
right directly against Lessor and Its successors.
15.5 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 named In Paragraph 1.10) In connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and that no
broker or other person. firm or entity other than said named Brokers Is entitled
to any commission or finder's fee In connection with said transaction. 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,
expanses, attorneys' fees reasonably Incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, Including any dual agencies, Indicated In Paragraph 1.10.
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) 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 "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional Information,
confirmation. and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Promises, any
part thereof, or the building of which the Promises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors 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 or purchaser In confidence and shall be used only for the purposes herein
set forth.
Page 18
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Promises, or, it 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 Promises or In this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit hold by Lessor at the time of such transfer or assignment.
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.
18. Severability. The Invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall In no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date on which It was due, shall bear Interest from the
thirty-first (31st) day after It was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for In Paragraph 13.4.
20. 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.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
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.
Lessor and Lessee each represents and warrants to the Brokers that It has made,
and Is relying solely upon, its own Investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Promises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be In writing
and may be delivered in person (by hand or by messenger or courier service) 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 notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at Such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 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. It 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 guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. It any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy Is also delivered via delivery or mall. If notice Is received on
a Sunday or legal holiday, It shall be deemed received on tile 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. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
Page 19
by Lessor on account of moneys 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 or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Promises or any part thereof beyond the expiration or earlier termination of
this Lease.
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. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
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, dead of trust, of other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof, Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
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 Promises 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, (if) 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 assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the farm hereof, will not be disturbed so long as Lessee Is not In Breach hereof
and attorns to the record owner of (he Premises.
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 such
subordination or non-subordination. Attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. It any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker 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
Page 20
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 fee award shall not be computed In accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. 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 of any time, In the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, Improvements or additions to the Promises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or Involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exorcise any standard
of reasonableness In determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except that Lessee
may, with Lessor's prior written consent. Install (but not on the roof) such
signs as are reasonably required to advertise Lessee's own business. The
Installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to Install, and
all revenues from the Installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably Interfere with the conduct of
Lessee's business.
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, Lessor shall, In the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lessor Interest, shall constitute Lessor's election to have such
event constitute the termination of such Interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party Is required to an act by
or for the other Party, such consent shall not be unreasonably withhold or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
Incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, Including but not
limited to consents to an assignment. a subletting or the presence or use of a
Hazardous Substance. practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an Invoice and supporting documentation therefore. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit hold under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit ,hall be refunded to Lessee without
Interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no Default
or Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any than existing Default or Breach, except as may be otherwise
specifically stated In writing by Lessor at the lime of such consent,
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify 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.
Page 21
37. Guarantor.
37.1 It there are to be any Guarantors of this Lease per Paragraph 1.11,
the form of the guaranty to be executed by each such Guarantor shall be in the
form most recently published by the American Industrial Real Estate Association,
and each said Guarantor shall have tile some obligations as Lessee under this
Lease. Including but not limited to the obligation to provide the Tenancy
Statement and information called for by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease If any
such Guarantor falls or refuses, upon reasonable request by Lessor to give: (a)
evidence of the due execution of the guaranty called for by this Lease,
Including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, and Including
In the case of a corporate Guarantor, a certified copy of a resolution of Its
board of directors authorizing the making of such guaranty, together with a
certificate of Incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in affect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants. conditions and
provisions on Lessees part to be observed and performed under this lease, Lessee
shall have quiet possession of the Premises for the entire term hereof subject
to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease of to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Promises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Promises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor. or the right of first offer to purchase 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 named In Paragraph 1. 1 hereof,
and cannot be voluntarily or involuntarily assigned or exercised by any person
or entity other than said original Lessee while the original, Lessee is in full
and actual possession of the Premises and without the Intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease In any manner,
by reservation or otherwise.
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 to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision In the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee Is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) In the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13. 1, 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 an Option
because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or affect. notwithstanding Lessee's due and timely
exercise of the Option. 11, after such exercise and during the term of this
Lease, (i) Lessee falls to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of Default under Paragraph 13.1 during any
twelve (12) month period. whether or not the Defaults occurred, or (iii) If
Lessee commits a Breach of this Lease.
Page 22
40. Multiple Buildings. If the Promises are part of a group of buildings
controlled by Lessor, Lessee agrees that It will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety. care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, 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 (of 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 unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents 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 under the provisions of this
Lease,
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor 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 Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed 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. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Promises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity Is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
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.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS
OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR
THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
Page 23
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at Executed at
on on
by LESSOR: by LESSEE:
American Fire Retardant Corporation
/S/ Xxxxxx X. Xxxxxxx /S/ Xxxxxx X. Xxxxx 3/20/97
------------------------------- ---------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx Name Printed: Xxxxxx Xxxxx
Title: Owner Title: Executive V.P.
By By
Name Printed: Name Printed:
Title: Title:
Address: 00000 Xxxxxxx Xx. Address: 0000 Xxxxxx Xx.
Xx Xxxxx, XX 00000 Xxxxxx, XX 00000
Tel. No. (__) 000-0000 Xxx.Xx.(__) 000-0000
Page 24
Additional Paragraphs
To Lease between Xxxxxx X. Xxxxxxx as Lessor and Xxxxxx Xxxxx DBA American Fire
Retardant as Lessee for lease dated February 21, 1997.
49. Zoning & Permits: This lease is contingent upon: (a) receiving zoning
approval from the County of San Diego for Lessee's proposed use (b) receiving a
business license from the County of San Diego (c) getting Fire Xxxxxxxx approval
for Lessee's proposed use.
Lessee shall have until 5 P.M. on February 28, 1997 to investigate, apply for
and receive all of these permits and licenses. After 5 P.M. on February 28,
1997, unless written notice of cancellation is received by Lessor or Lessor's
Broker, Lessee waives the ability to cancel this Lease as 'a result of
contingencies 49 (a), (b), and (c).
Lessee is strongly urged to get Fire Xxxxxxxx'x approval for tile adequacy of
existing fire sprinkler capacity for Lessee's proposed use. Since Fire Xxxxxxxx
inspections typically take place a couple weeks after Lessee's occupancy, Lessee
accepts full responsibility for investigating Fire Xxxxxxxx requirements prior
to occupancy and Lessee accepts full responsibility for any expenses associated
with permits, licenses or improvements to the property that the Fire Xxxxxxxx
may require as a result of' Lessee's proposed use.
50. Broker Indemnification: Lessor and Lessee shall hold Brokers harmless for
any expense or liability associated with the investigation, satisfaction and/or
mitigation of (a) zoning requirements, (b) business license requirements, (c)
underground tank/clarifier requirements (d) Fire Xxxxxxxx requirements (e)
American with Disabilities Act requirements (f) Hazardous Waste Contamination.
Lessor & Lessee shall hold Brokers harmless for any expense or liability
associated with (a) Lessee's non-performance of any provision in the lease, (b)
ally flooding of the premises, (c) any earthquake damage, (d) any
electromagnetic radiation damage that could be caused by surrounding power
lines, and (e) any other damage that may result from a natural disaster, nuclear
accident, act of war, act of God or act of' Congress.
51. Hazardous Materials Disclosure: Various construction materials may contain
items that have been or may in the future be determined to be hazardous (toxic)
or undesirable and may need to be specifically handled, treated or removed. For
example, some transformers and other electrical components contain PCB's and
asbestos has been used in components such as fire-proofing, heating and cooling
systems, air duct insulation, spray-on and tile acoustical materials, linoleum,
floor tiles, roofing, dry-wall and plaster.
Due to prior or current uses of the property or other properties in the area,
the property may have hazardous or undesirable metals, minerals, chemicals,
hydrocarbons, or biological or radioactive items (including electrical and
magnetic fields) in soils, water, building components, above and below ground
containers and other accessible and non-accessible areas. Such items may leak or
otherwise be released.
Xxxxx & Associates and its agents have no expertise in the detection or
correction of hazardous or undesirable items. Expert inspections are necessary
and recommended. Current or future laws may require clean up by past, present
and future operators and/or owners. It is the responsibility of the
Seller/Lessor and the Buyer/Lessee to retain qualified experts to detect and
correct such matters and to consult with the legal counsel of their choice to
determine what provisions, if any, they may wish to include in transaction
documents regarding the property.
52. Environmental Notification and Indemnification:
(a) Lessor's Duty to Notify Lessee: If Lessor knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
the same, has been located in, on, under or about the premises, prior to
Lessee's occupancy, Lessor shall immediately give notice of such fact to Lessee.
Lessor at Lessee's written request, shall immediately give Lessee a copy of any
statements, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding, given to or received from, any
governmental authority or
Lessor: Lessee:
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
-------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Additional Paragraphs Continued:
private party, or person entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any Hazardous Substance
or contamination in, on, or about the Premises, including but not limited to all
such documents as may be involved in any reportable uses involving the premises.
At this time, Lessee makes such written request.
(b) Lessor's Indemnification: Lessor shall indemnify, protect, defend and hold
Brokers and Lessee, its agents and employees, harmless from and against any and
all damages, liabilities, judgements, costs, claims, liens, expenses, penalties,
permits, attorney's and consultant fees arising out of or involving any
Hazardous substance or storage tank on the Premises prior to Lessee's occupancy.
Lessor's obligations under this paragraph shall include, but not be limited to,
the effects of any contamination therein or injury to person, property or the
environment created by Lessor or any other previous occupants and the cost of
investigation (including consultant an attorney fees and testing), removal,
remediation, restoration and/or abatement thereof, shall be at the sole expense
of the Lessor.
Lessee agrees not to install any underground tanks during the term of the lease.
(c) Lessee's Responsibilities: It shall be the Lessee's sole responsibility to
properly dispose of all wastes generated or used in the course of Lessee's
occupancy. Such disposal shall be made in accordance with all applicable laws,
codes and standards provided for such disposal. Lessee shall be solely
responsible for any clean up of such wastes generated by Lessee's use of the
premises. Lessee is specifically prohibited from dumping any such waste into any
drain, toilet facility or outside yard area on the leased premises, and if used
for such disposal, Lessee shall be fully responsible for any subsequent clean
up.
53. Broker Disclosure: Americans with Disabilities Act:
The United States Congress has enacted thee Americans with Disabilities Act of
1990. ("ADA") Among other things, this act is intended to make many business
establishments equally accessible to persons with a variety of disabilities.
State and Local Laws may also mandate changes. As such, modifications to
existing buildings may be required. The real estate brokers in this transaction
are not qualified to advise you as to what, if any, changes may be required now
or in the future. Lessors and lessees should consult their attorney's and
qualified design professionals of their choice for information regarding the
consequences of ADA.
Lessee shall at all times keep the premises in compliance with ADA, and its
supporting regulations, and all similar federal, state and local laws,
regulations and ordinances. If Lessor's consent would be required for
alterations to bring thee Premises into compliance, Lessor agrees to not
unreasonably withhold such consent.
Also, within seven (7) days of receipt, Lessee and Lessor shall advise the other
party in writing, and provide the other party with copies of any notices
alleging violation of ADA; any claims made or threatened in writing regarding
noncompliance with ADA; or any governmental or regulatory actions or
investigations taken in response to noncompliance with ADA.
54. Tenant Improvements: Landlord at Landlord's expense shall:
A. Deliver yard and premises in clean condition;
B. Deliver all mechanical, electrical and plumbing in good working order;
C. Repaint office walls & clean or replace office carpeting
55. Option to Purchase: See attached Exhibit "B."
56. Cost of Living Increase: See attached Exhibit "C".
57. Resume Marketing For Sale: Should tenant fail to exercise option to
purchase, prior to June 1, 2001, then Xxxxx & Associates is authorized to renew
marketing the property for sale and the tenant shall cooperate in all showings
of the property.
Lessor: Lessee:
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
-------------------------- ---------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
GUARANTY OF LEASE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
WHEREAS, Xxxxxx X. Xxxxxxx hereinafter referred to as "Lessor" and Xxxxxx
Xxxxx hereinafter referred to as "Lessee" are about to execute a document
entitled "Lease" dated 2/ 21/97 concerning the premises commonly known as 0000
Xxxx Xxx., Xx Xxxxx, XX 00000 wherein Lessor will lease the premises to Lessee
and whereas, Xxxxxx Xxxxx hereinafter referred to as "Guarantors' have a
financial interest in Lessee. and WHEREAS. Lessor would not execute the Lease it
Guarantors did not execute and deliver to Lessor this Guarantee of Lease. NOW
THEREFORE. for and in consideration of the execution of the foregoing Lease by
Lessor and as a material inducement to Lessor to execute said Lease. Guarantors
hereby jointly. severally, unconditionally and irrevocably guarantee the prompt
payment by Lessee of all rentals and all other sums payable by Lessee under said
Lease and the faithful and prompt performance by Lessee of each and every one of
the terms, conditions and covenants of said Lease to be kept and performed by
Lessee.
It is specifically agreed and understood that the terms of the foregoing
Lease may be altered, affected, modified or changed by agreement between Lessor
and Lessee. or by a course of conduct, and said Lease may be assigned by Lessor
or any assignee of Lessor without consent Or notice to Guarantors and that this
Guaranty shall thereupon and thereafter guarantee the performance of said Lease
as so changed modified. altered or assigned
This Guaranty shall not be released. modified or affected by failure or
delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease. whether pursuant to the terms thereof or at law or in
equity.
No notice of default need be given to Guarantors. it being specifically
agreed and understood that the guarantee of the undersigned is a continuing
guarantee under which Lessor may proceed forthwith and immediately against
Lessee or against Guarantors following any breach or default by Lessee of for
the enforcement of any rights which Lessor may have as against Lessee pursuant
to or under the terms of the within Lease or at law or in equity
Lessor Shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee of
Guarantors,
Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or plead
any statute of limitations as to or relating to this Guaranty and the Lease, (d)
any right to require the Lessor to proceed against Lessee or any other Guarantor
or any other person or entity liable to Lessor. (e) any right to require Lessor
to apply 10 any default any security deposit or other security it may hold under
the Lease. (1) any right to require Lessor to proceed under any other remedy
Lessor may have before proceeding against Guarantors. (g) any right of
subrogation.
Guarantors do hereby subrogate all existing or future indebtedness of
Lessee to Guarantors to the obligations owed to Lessor under the Lease and this
Guaranty
Any married woman who signs this Guaranty expressly agrees that recourse
may be had against her separate properly for all of her obligations hereunder.
The obligations of Lessee under the Lease to execute and deliver estoppel
statements and financial statements. as therein provided. Shall be deemed to
also require the Guarantors hereunder to do and provide the same relative to
Guarantors.
Page 1
The term "Lessor" whenever hereinabove used refers to and means the Lessor
in the foregoing Lease specifically named and also any assignee of said Lessor.
whether by outright assignment or by assignment for security, and also any
successor to the interest of said Lessor or of any assignee in Such Lease or any
part thereof. whether by assignment or otherwise. So long as the Lessor's
interest In or to the leased premises or the rents, issues and profits
therefrom, or in, to or under said Lease. are subject to any mortgage or deed of
trust or assignment for security, no acquisition by Guarantors of the Lessor's
interest in the leased premises of under said Lease shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue
in full force and effect for the benefit of the mortgagee. beneficiary. trustee
or assignee under such mortgage. deed of trust or assignment, of any purchase at
sale by judicial foreclosure or under private power of sale. and of the
successors and assigns of any such mortgagee. beneficiary. trustee. assignee or
purchaser.
The term "Lessee" whenever hereinabove used refers to and means the Lessee
in the foregoing Lease specifically named and also any assignee or sublessee of
said Lease and also any successor to the interests of said Lessee. assignee or
sublessee of Such Lease or any part thereof whether by assignment. Sublease or
otherwise.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation of Guarantors hereunder. the unsuccessful
party in such action shall pay to the prevailing party therein a reasonable
attorney's fee which shall be fixed by the court.
If this Form has been filled in it has been prepared for submission to your
attorney for his approval. No representation of recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Form or the transaction relating thereto.
Executed at: /s/ Xxxxxx X. Xxxxx
-----------------------------
"GUARANTORS"
Page 2
Exhibit "B"
Option to Purchase
A. Lessor (does hereby grant to Lessee an option to purchase the Premises and
Lessor's interest under this lease, upon the terms and conditions herein set
forth.
B. Lessee has the option to purchase 0000 Xxxx Xxx., an approximately 7,554
square foot building with APN: 000-000-00 for $528,780 in the first year of the
lease. Beginning June 1, 1998 and each year thereafter, (the same cost of living
increase that affects the rent shall also increase the selling price.
The option to purchase is terminated if not exercised by January 1, 2002.
C. In order to exercise the option to purchase, Lessee must give written notice
of the exercise of such option to Lessor, and at the same time, open up escrow
by depositing a check into Grossmont Escrow Company for One Hundred Dollars
($100.) Such deposit will apply towards the purchase price.
D. The provision of Paragraph 39, including the provision relating to the
default of the Lessee set forth in paragraph 39.4 of this lease are conditions
of the Option.
E. Within 10 days of the date that the option to purchase is exercised, Lessor
and Lessee shall give instructions to consummate the sale to Grossmont Escrow
Company who shall act as escrow holder, on the normal and usual forms then used
by such escrow holder as follows:
i. Escrow fees shall be split equally;
ii. Interest, fees and rents if any shall be prorated to the close of
escrow;
iii. Lessor shall pay for tile costs of a standard CLTA title policy
to be issued by Chicago Title;
iv. All real estate transfer taxes shall be paid by Lessor;
v. Lessee's security deposit tinder the Lease shall be credited
against the sales price;
vi. Payment of Broker's Commission as explained below;
F. Brokers' Sale Commission: If sellers or successors should sell this property
to Xxxxxx X. Xxxxx DBA American Fire Retardant Corporation &/or Nominee at any
time during the lease or any extension, a Six (6%) commission based on the gross
sales price shall be payable to Xxxxx & Associates (3%) and Xxx Xxxxxx'x Broker
(3%.) Any "unearned commission" that has been paid for the lease of the premises
shall be a credit against the sales commission owed. The "unearned commission"
shall be computed in accordance with the original listing agreement schedule
based on the total value of lease payments owed on the original lease the Lessee
is no longer obligated to pay as a result of close of escrow on the property.
Initials /s/ AMR /s/ DZ
Exhibit "C"
Cost of Living Adjustments
The monthly rent for the 2nd year of the lease and cumulatively for every year
thereafter and through any option period shall be automatically adjusted based
upon any increase that may occur in the Consumer Price Index (All Items) as
published by the United States Department of Labor, Bureau of Labor Statistics
for the Los Angeles, Long Beach, Anaheim, California Area. "Area."
The ratio of the change in the Area Base Index (1967 = 100,) between the month
immediately proceeding the commencement of the lease (Denominator), and the
month immediately preceding the 2nd and each subsequent anniversary of the lease
commencement (Numerator), shall be multiplied by the base rent to determine the
new rental rate, provided, however, that the monthly rent shall never decrease
from the higher of the initial base rent or any subsequent increase.
If the above Consumer Price Index ceases to be published, then both parties
shall agree to substitute another Index with which they both can agree. If no
such index can be approved by both parties, then the Parties agree to submit the
matter to arbitration. Each party shall appoint one arbitrator and the so
appointed shall appoint a third arbitrator and the decision of the majority of
said arbitrators shall be binding upon Lessor and Lessee. The cost of such
arbitration if any, shall be paid equally by Lessor and Lessee.
The maximum increase in the Cost of Living shall be capped at Five (5 %) per
adjustment. The minimum annual rent increase shall be Three (3%) percent. This
increase shall also apply to Tenant's option to purchase price.
Initials /s/ DZ /s/ Xxxxxx X. Xxxxx
--------------------------------- ---------------------------------------
Lessor Lessee
