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EXHIBIT 10.10
STANDARD SUBLEASE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. PARTIES. This Sublease, dated, for reference purposes only, June 8,
1995, is made by and between ▇▇▇▇▇, CONE & ▇▇▇▇▇▇▇ COMMUNICATIONS, INC. now
known as TRUE NORTH COMMUNICATION, a delaware corporation (herein called
"Sublessor") and SPECTRAL HOLDINGS CORPORATION, a California Corporation, dba
SPECTRATEK (herein called "Sublessee").
2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee
hereby subleases from Sublessor for the term, at the rental, and upon all of
the conditions set forth herein, that certain real property situated in the
County of Los Angeles, State of California, commonly known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and described as AN INDUSTRIAL BUILDING CONTAINING
APPROXIMATELY 70,440 SQUARE FEET
Said real property, including the land and all improvements thereon, is
hereinafter called the "Premises".
3. TERM.
3.1 TERM. The term of this Sublease shall be for 31 months and 21
days commencing on June 20, 1995 * see addendum 12e and ending on February 11,
1998 unless sooner terminated pursuant to any provision hereof.
3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement
date, if for any reason Sublessor cannot deliver possession of the Premises to
Sublessee on said date, Sublessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease or the
obligations of Sublessee hereunder or extend the term hereof, but in such case
Sublessee shall not be obligated to pay rent until possession of the Premises
is tendered to Sublessee, provided, however, that if Sublessor shall not have
delivered possession of the Premises within sixty (60) days from said
commencement date. Sublessee may, at Sublessee's option, by notice in writing
to Sublessor within ten (10) days thereafter, cancel this Sublease in which
event the parties shall be discharged from all obligations thereunder. If
Sublessee occupies the Premises prior to said commencement date such occupancy
shall be subject to all provisions hereof such occupancy shall not advance the
termination date and Sublessee shall pay rent for such period at the initial
monthly rates set forth below.
4. RENT. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $40,000.00, in advance, on the 11th day of each month of
the term hereof. Sublessee shall pay Sublessor upon the execution hereof
$67,096.77, as rent for June 20, 1995 through August 10, 1995. Rent for any
period during the term hereof which is for less than one month shall be a
prorata portion of the monthly installment. Rent shall be payable in lawful
money of the United States to Sublessor at the address stated herein or to such
other persons or at such other places as Sublessor may designate in writing.
5. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon
execution hereof $100,000.00 as security for Sublessee's faithful performance
of Sublessee's obligations hereunder. If Sublessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit, Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to
do so shall be a material breach of this Sublease. Sublessor shall not be
required to keep said deposit separate from its general accounts. If Sublessee
performs all of Sublessee's obligations hereunder, said deposit, or so much
thereof as has not theretofore been applied by Sublessor, shall be returned,
without payment of interest or other increment for its use to Sublessee (or at
Sublessor's option, to the last assignee, if any, of Sublessee's interest
hereunder) at the expiration of the term hereof, and after Sublessee has
vacated the Premises. No trust relationship is created herein between
Sublessor and Sublessee with respect to said Security Deposit.
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6. USE.
6.1 USE. The Premises shall be used and occupied only for
corporate office, warehouse, manufacturing and distribution of holograms and
other related uses. and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Sublessor warrants to Sublessee that the Premises, in
its existing state but without regard to the use for which Sublessee will use
the Premises, does not violate any applicable building code regulation or
ordinance at the time that this Sublease is executed in the event that it is
determined that this warranty has been violated, then it shall be the
obligation of the Sublessor after written notice from Sublessee, to promptly,
at Sublessor's sole cost and expense, rectify any such violation. In the event
that Sublessee does not give to Sublessor written notice of the violation of
this warranty within 1 year from the commencement of the term of this Sublease,
it shall be conclusively deemed that such violation did not exist and the
correction of the same shall be the obligation of the Sublessee.
(b) Except as provided in paragraph 6.2(a), Sublessee
shall, at Sublessee's expense, comply promptly with all applicable statutes,
ordinances, rules, regulations, orders, restrictions of record, and
requirements in effect during the term or any part of the term hereof
regulating the use by Sublessee of the Premises. Sublessee shall not use or
permit the use of the Premises in any manner that will tend to create waste or
a nuisance or if there shall be more than one tenant of the building containing
the Premises, which shall tend to disturb such other tenants.
6.3 CONDITION OF PREMISES. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their as is condition existing as of
the date of the execution hereof, subject to all applicable zoning, municipal,
county and state laws, ordinances, and regulations governing and regulating the
use of the Premises, and accepts this Sublease subject thereto and to all
matters disclosed thereby and by any exhibits attached hereto. Sublessee
acknowledges that neither Sublessor nor Sublessor's agents have made any
representation or warranty as to the suitability of the Premises for the
conduct of Sublessee's business.
7. MASTER LEASE.
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, dated October 6, 1992 wherein Bardon of Hollywood,
Inc., a California Corporation, dba Bardon, Inc. is the lessor, hereinafter
referred to as the "Master Lessor"
7.2 This Sublease is and shall be at all times subject and
subordinate to the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor
and Sublessee to each other under this Sublease shall be the terms and
conditions of the Master Lease except for those provisions of the Master Lease
which are directly contradicted by this Sublease in which event the terms of
this Sublease document shall control over the Master Lease. Therefore, for the
purposes of this Sublease, wherever in the Master Lease the word "Lessor" is
used it shall be deemed to mean the Sublessor herein and wherever in the Master
Lease the word "Lessee" is used it shall be deemed to mean the Sublessee
herein.
7.4 During the term of this Sublease and for all periods
subsequent for obligations which have arisen prior to the termination of this
Sublease, Sublessee does hereby expressly assume and agree to perform and
comply with, for the benefit of Sublessor and Master Lessor, each and every
obligation of Sublessor under the Master Lease except for the following
paragraphs which are excluded therefrom: see paragraph 12
7.5 The obligations that Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations".
The obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
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7.6 Sublessee shall hold Sublessor free and harmless of and from
all liability, judgments, costs, damages, claims or demands, including
reasonable attorneys fees, arising out of Sublessee's failure to comply with or
perform Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the
entire term of this Sublease, subject, however, to any earlier termination of
the Master Lease without the fault of the Sublessor, and to comply with or
perform Sublessor's Remaining Obligations and to hold Sublessee free and
harmless of and from all liability, judgments, costs, damages, claims or
demands arising out of Sublessor's failure to comply with or perform
Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in
full force and effect and that no default exists on the part of any party to
the Master Lease.
8. ASSIGNMENT OF SUBLEASE AND DEFAULT.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease and all rentals and income arising
therefrom, subject however to terms of Paragraph 8.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a
default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the rents accruing
under this Sublease. However, if Sublessor shall default in the performance of
its obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all rent owing and to be owed under this
Sublease. Master Lessor shall not, by reason of this assignment of the
Sublease nor by reason of the collection of the rents from the Sublessee, be
deemed liable to Sublessee for any failure of the Sublessor to perform and
comply with Sublessor's Remaining Obligations.
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee,
upon receipt of any written notice from the Master Lessor stating that a
default exists in the performance of Sublessor's obligations under the Master
Lease, to pay the Master Lessor the rents due and to become due under the
Sublease. Sublessor agrees that Sublessee shall have the right to rely upon
any such statement and request from Master Lessor, and that notice from or
claim from Sublessor to the contrary and Sublessor shall have no right or claim
against Sublessee for any such rents so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease
without the consent of Master Lessor.
9. CONSENT OF MASTER LESSOR.
9.1 In the event that the Master Lease requires that Sublessor
obtain the consent of Master Lessor to any subletting by Sublessor then this
Sublease shall not be effective unless within 10 days of the date hereof.
Master Lessor signs this Sublease thereby giving its consents to this
Subletting.
9.2 In the event that the obligations of the Sublessor under the
Master Lease have been guaranteed by third parties then this Sublease, nor the
Master Lessor's consent, shall not be effective unless, within 10 days of the
date hereof, said guarantors sign this Sublease thereby giving guarantors
consent to this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its
obligations or alter the primary liability of Sublessor to pay the rent and
perform and comply with all of the obligations of Sublessor to be performed
under the Master Lease.
(b) The acceptance of rent by Master Lessor from
Sublessee or any one else liable under the Master Lease shall not be deemed a
waiver by Master Lessor of any provisions of the Master Lease.
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(c) The consent to this Sublease shall not constitute a
consent to any subsequent subletting or assignment.
(d) In the event of any default of Sublessor under the
Master Lease, Master Lessor may proceed directly against Sublessor, any
guarantors or any one else liable under the Master Lease or this Sublease
without first exhausting Master Lessor's remedies against any other person or
entity liable thereon to Master Lessor.
(e) Master Lessor may consent to subsequent sublettings
and assignments of the Mater Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor nor any one else liable under
the Master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.
(f) In the event that Sublessor shall default in its
obligations under the Master Lease, then Master Lessor, at its option and
without being obligated to do so, may require Sublessee to attorn to Master
Lessor in which event Master Lessor shall undertake the obligations of
Sublessor under this Sublease from the time of the exercise of said option to
termination of this Sublease but Master Lessor shall not be liable for any
prepaid rents nor any security deposit paid by Sublessee, nor shall Master
Lessor be liable for any other defaults of the Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of
Sublessor at the end of this document shall constitute their consent to the
terms of this Sublease.
9.5 Master Lessor acknowledges that, to the best of Master
Lessor's knowledge, no default presently exists under the Master Lease of
obligations to be performed by Sublessor and that the Master Lease is in full
force and effect.
9.6 In the event that Sublessor defaults under its obligations to
be performed under the Master Lease by Sublessor, Master Lessor agrees to
deliver to Sublessee a copy of any such notice of default. Sublessee shall
have the right to cure any default of Sublessor described in any notice of
default within ten days after service of such notice of default on Sublessee.
If such default is cured by Sublessee then Sublessee shall have the right of
reimbursement and offset from and against Sublessor
10. BROKERS FEE.
10.1 Upon execution hereof by all parties, Sublessor shall pay to
ZAMEL & ASSOCIATES, pursuant to 5/9/95 agreement. DELETED
10.2 DELETED.
10.3 DELETED.
10.4 DELETED.
10.5 DELETED.
11. ATTORNEY'S FEES. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial and appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
Court. The provision of this paragraph shall inure to the benefit of the
Broker named herein who seeks to enforce a right hereunder.
12. ADDITIONAL PROVISIONS. [If there are no additional provisions draw a
line from this point to the next printed word after the space left here. If
there are additional provisions place the same here.]
see addendum attached
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If this Sublease has been filled in it has been prepared for
submission to your attorney for his approval. No representation or
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 Sublease or the transaction relating thereto.
Executed at San Francisco, CA ▇▇▇▇▇, Cone & ▇▇▇▇▇▇▇ Communications, Inc.
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now known as True North Communications, Inc.
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on June 20, 1995
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By /s/ Signature unreadable
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address ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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By VP Finance; FCB/WEST
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San Francisco
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"Sublessor" (Corporate seal)
Executed at Los Angeles, CA Spectral Holdings Corporation
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on June 13, 1995 dba Spectratek
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By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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address ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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By President
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▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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"Sublessee" (Corporate seal)
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Executed at
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on By
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address By
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"Master Lessor" (Corporate seal)
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Executed at
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on By
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address By
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"Guarantors" (Corporate seal)
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AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
(Do not use this form for Multi-Tenant Property)
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("Lease") dated for reference purposes
only, October 6, 1992 is made by and between Bardon of Hollywood, Inc., a
California corporation, dba Bardon, Inc. ("Lessor") and ▇▇▇▇▇/▇▇▇▇▇▇ U.S.A., a
Delaware corporation ("Lessee"), (collectively the "Parties," or individually
a "Party").
1.2 PREMISES: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known by the street address of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ located in the
County of ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and generally described as
(describe briefly the nature of the property) an industrial building containing
approximately 70,440 square feet and more particularly described on Exhibit "A"
attached hereto and incorporated herein by reference ("Premises"), (See
Paragraph 2 for further provisions.)
1.3 TERM: five (5) years and four (4) months ("Original Term")
commencing October 12, 1992 ("Commencement Date") and ending February 11, 1998
("Expiration Date"), (See Paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: Not Applicable (See Paragraphs 3.2 and 3.3 for
further provisions.)
1.5 BASE RENT: $35,220 per month ("Base Rent"), payable on the
first (1st) day of each month commencing October 12, 1992 and shall be
increased on the first day of the 33rd month of the Term hereof in accordance
with the provisions of Section 4.2 below. See Addendum (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 EXECUTIONS: $35,220 as Base Rent for the
fourth (4th) month of the Original Term.
1.7 SECURITY DEPOSIT: $70,440 ("Security Deposit"). (See Paragraph 5 for
further provisions.)
1.8 PERMITTED USE: Printing, storage and distribution of direct
and mass-mailing materials and related office and other uses (See Paragraph 6
for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party" unless
otherwise stated herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes): The
Klabin Company (Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇) represents
[x] Lessor exclusively ("Lessor's Broker"): [ ] both Lessor and Lessee, and
▇▇▇▇▇▇▇ & Wakefield of California, Inc. (Attention: ▇▇▇ ▇▇▇▇▇) 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 ▇▇▇▇▇, Cone and ▇▇▇▇▇▇▇ Communications, a Delaware
corporation ("Guarantor"). (See Paragraph 37 for further provisions.)
1.12 ADDENDA. Attached here is an Addendum or Addenda consisting
of Paragraphs 1 through 11 and Exhibits "A" and the Guaranty attached hereto
all of which constitute a part of this Lease.
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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 set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable
See Addendum
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean
and free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, fire sprinkler system, lighting, air conditioning, hearing,
and loading doors, if any, in the Premises, 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 Date, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the 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 this warranty within one
hundred eighty (180) 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 Premises comply with 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 Premises or to any
Alterations or Utility installations (as defined in Paragraph 7.3(a)) made or
to be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance rectify the same at Lessor's expense if Lessee does not
give Lessor written notice of a non-compliance with this warranty within
eighteen (18) months following the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. See Addendum
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that
it has ben advised by the Brokers to satisfy itself with respect to the
condition of the Premises (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
Premises for Lessee's intended use, (b) that Lessee has made such investigation
as it deems necessary with reference to such matters and except as otherwise
expressly provided herein 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, has made any oral or
written representations or warranties with respect to the said matters other
than as set forth in this Lease.
2.5 DELETED.
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 applied for the period or such early possession. All other terms of this
Lease, however, (including but not limited to the obligations to pay Real
Property Taxes and insurance premiums and to maintain the Premises) shall be in
effect during such period. Any such early possession shall not affect no
advance the Expiration Date of the Original Term.
Initials /s/
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/s/
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3.3 DELAY IN POSSESSION. If for any reasons 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 Premises 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 at
any time prior to the date Lessor delivers possession of the Premises to Lessee
in the condition required hereunder, 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 omissions of Lessee.
4. RENT.
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
except as expressly provided herein 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 time to time designate in writing to Lessee.
4.2 See Addendum
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 fails
to pay Base Rent or other rent or charges due hereunder, or otherwise faithful
performance of Lessee's obligations under this Lease. If Lessee fails 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 due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reasons thereof if Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. 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 Premiss, return to Lessee (or, at Lessor' option, to the
last assignee, if 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 held 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 See
Addendum
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
hereto, and for no other purpose. Lessee shall not use or permit the use of
the Premises in a manner that creates waste or a nuisance, or that disturbs
owners and/or occupants of, or cause damage to, neighboring premises or
properties.
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
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intensity of existence, use, manufacture, disposal, transportation, spill,
release or effect, 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 Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
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 Premises 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 (i) the installation or use of any above or below ground
storage tank, (ii) 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 is required to be
filed with, any governmental authority. Reportable use shall also include
Leasee's being responsible for the presence in, or about the Premises 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, Leasee 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 Premises, so long as such use is
not a Reportable Use and does not expose the Premises 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 (other than an increase in the Security Deposit) as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises 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 Premises (such as
concrete encasements)
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
case to believe, that Hazardous Substance, or a condition, giving or resulting
from same, has come to be located in, on, under or about the Premises, 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, or about
the Premises, including but not limited to all such documents as may be
involved in any Reportable Uses involving the Premises.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all lost 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
Substances or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include,
but not be limited to the effects of any contamination or injury to person,
property or the environmental 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
(d) See Addendum
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 to any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release
by Lessee or any of its agents,
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employees, contractors, sublessees, assignees or invitees 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 fifteen (15) 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 upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as
defined in Paragraph 8.3(a)) shall have the right to enter the Premises at any
time in the case of an emergency, and otherwise at reasonable times and upon
reasonable prior notice 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 to advise Lessor with respect to
Lessee's activities, including but not limited to the installation, operation,
use, monitoring, maintenance, or removal of a Hazardous Substance or storage
tank on or from the Premises. The costs and expenses of any such inspections
shall be paid by the party request 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 unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing 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. Lessor and Lessor's Lender(s) shall endeavor
to perform any such entry in a manner which minimizes the interference with or
disruption of Lessee's operations.
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), 2.3 and Section 3 of the Addendum (Lessor's warranty
as to compliance with covenants, etc), 7.2 and Section 7 of the Addendum
(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 Premises 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 occur
*required by Applicable Law Initials /s/
------------------
as a result of Lessee's use, any prior use, the elements or the age of the such
portion of the Premises including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, 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), 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 Premises. 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,
or pertaining to or involving any Hazardous Substance and/or storage tank
brought onto the Premises by or for Lessee or under its control. Lessee, in
keeping the Premises 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 contacts, 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, if any,
located on the Premises (i) heating,
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air conditioning and ventilation equipment, (ii) boiler, fired or unfired
pressure vessels, (iii) fire sprinkler and/or sidepipe and hose or other
automatic fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) rock clearing and drain
maintenance and (vi) asphalt and parking lot maintenance.
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and
agreements of Lessor contained in Paragraph 2.2 (relating to condition of the
Premises), 2.2 and Section 3 of the Addendum (relating to compliance with
covenants, restrictions and building code), 9 (relating to destruction of the
Premises) and Section 7 of the Addendum and 14 (relating to condemnation of the
Premises), it is intended by the Parties hereto that Lessor have no obligation,
in any manner whatsoever, to repair and maintain the Premises, the improvements
located thereon, or the equipment therein, all of which obligations are
intended to be that of the Lessee under Paragraph 7.1 hereof* it is the
intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties 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 allows Lessee the right to make repairs at the expense of
Lessor or to terminate this Lease by reason of any needed repairs.
*See Addendum
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 Premises. The term "Trade Fixtures" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the
Premises. The term "Alterations" shall mean any modification of the
improvements of the Premises 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 Premises without Lessor's prior written consent which consent shall not be
unreasonably withheld, conditioned or delayed. Lessee may, however without
Lessor's consent make non-structural Utility Installations to the interior of
the Premises (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 deemed conditioned upon: (i) Lessee's
acquiring all applicable permits required by governmental authorities, (ii) the
furnishing of 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. Lessee shall promptly upon completion
thereof furnish Lessor with as-built plans and specifications therefor.
(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 lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior to
the commencement of any work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility in or on the Premises 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 Premises against the same and shall pay and
satisfy any such adverse judgment that may be tendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety 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 Premises free from the effect of such
lien or claim. In
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addition Lessor may require Lessee to pay Lessor's attorney's fees and costs in
participating in such action if 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 Premises by
Lessee shall be the property 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 Lessee 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 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
Premises by the end of the last day of the Lease term or any earlier
termination date, with all of the improvements, parts and surfaces thereof
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear and damage by casualty excepted. "Ordinary wear
and tear" 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 Premises, as surrendered that 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 at levels in violation of applicable laws all as may
then be required by Applicable Law. 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 Premises per this Lease.
7.5 See Addendum.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or
Lessee is the Insuring Party, Lessee shall pay all insurance required under
this Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor in excess of $2,000,000 per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Lease term shall
be prorated to correspond to the Lease term. Payment shall be made by Lessee
to Lessor within thirty (30) days following receipt of an invoice for any
amount due.
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
$2,000,000 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
Page 7
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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 Lessee. Lessee shall not be named as an
additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall
obtain and keep in force during the term of this Lease a policy or policies in
the name of Lessor, with loan payable to Lessor and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Premises. 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. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood 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 the 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 and earthquake coverage. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for
such deductible amount in the event of an insured Loss, as defined in Paragraph
9.1(c). See Addendum.
(b) RENTAL VALUE. The Insuring Party 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 the
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 Premises, 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, if
any, otherwise payable by Lessee for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a
larger building, or if the Premises are part of a group of buildings owned by
Lessor which are adjacent to the Premises, the Lessee shall pay for any
increase in the premiums for the property insurance of such building or
buildings if said increase is caused by Lessee's acts, omissions, use or
occupancy of the Premises.
(d) TENANT'S IMPROVEMENTS. If the 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. If Lessee is the Insuring Party, the
policy carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned
Alterations and Utility installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its costs 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. Lessee shall be the
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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 Premises
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 lien on the Premises, as set 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.
If Lessee is the Insuring Party, Lessee shall cause to be delivered to Lessor
certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancellable 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. If the Insuring Party shall fail to procure
and maintain the insurance required to be carried by the Insuring Party under
this Paragraph 8, the other Party may, but shall not be required to procure and
maintain the same, but at Lessee's expense.
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 (text unreadable) in accordance with Paragraph 8.3(a)
above). 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 or its employees', agents' or
contractors' negligence, willful misconduct and/or breach of express warranties
or any provision of this Lease, Lessee shall indemnify, protect, defend and
hold harmless the Premises, Lessor and its agents, Lessor's master or ground
lessor, partners and Lenders, from and against any and all claims, loss of
rents and/or damages, 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 Premises 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. See Addendum.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Subject to Section 9 of
the Addendum Lessor shall not be liable for injury or damage to the person or
goods, wares, merchandise or other property of Lessee, Lessee's employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the said
injury or damage results from conditions arising upon the Premises or upon
other portions of the building of which the Premises 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.
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9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations and Utility installations, 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 or damage the**
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, 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 or damage the repair of***
(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 repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or 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, to the extent Lessor makes a Hazardous Substance as defined
in Paragraph 6.2(a), in, on, or under the Premises.
9.2 PARTIAL DAMAGE-INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations unless Lessor, as the insuring party, has elected to
carry insurance on the same and provided such loan is not also covered by
Lessee's insurance as soon as reasonably possible and this Lease shall continue
in full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less to the extent Lessor makes insurance proceeds
available to Lessee for that purpose. Notwithstanding the foregoing, if 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 (except as to the deductible which is Lessee's
responsibility) 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, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
same or adequate assurance thereof, within ten (10) days following receipt of
written notice of such shortage and request therefor, if Lessor receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If Lessor does
not receive such funds or assurance within said period, Lessor may nevertheless
elect by written notice to Lessee within ten (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
effect. If in such case Lessor does not so elect, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right
to reimbursement from Lessor for any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3 rather than paragraph 9.2, notwithstanding
that there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs if made by either party.
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*and earthquake coverage.
**repair of which can be completed in less than 180 days from the date of
casualty.
***which cannot be completed in less than 180 days from the date of casualty
(unless the same does not materially interfere with (text unreadable).
9.3 PARTIAL DAMAGE -- UNINSURED LOSS. If a Premises 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:
(i) repair such damage as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) 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 thirty (30) 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, if a Premises Total Destruction occurs (including any destruction
required by any authorized public authority), this Lease shall terminate as of
the date of such Premises 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. See Addendum
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2
(Partial Damage--Insured) or Paragraph 9.3 (Partial Damage - Uninsured Loss),
whether or not Lessor or Lessee repairs or restores the Premises, the Base
Rent, Real Property Taxes, insurance premiums, and other charges, if any,
payable by Lessee hereunder for the period during which such damage, its repair
or the restoration continues (not to exceed the period for which rental value
insurance is required under Paragraph 8.3(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
Premises 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
Lessee'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 Premises 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. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required
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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, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twelve (12) times the
then monthly Base Rent or $100,000, whichever is greater, give written notice
to Lessee within one hundred eighty (180) days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition 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
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.
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
Premises with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent
herewith.
10. REAL PROPERTY TAXES.
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property
Taxes, as defined in Paragraph 10.2, applicable to the Premises during the
terms of this Lease. Subject to Paragraph 10.1(b), all such payments shall be
made at least ten (10) days prior to the delinquency date of the applicable
installment. Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes to be paid by Lessee shall
cover any period of time prior to or after the expiration or earlier
termination of the term hereof, Lessee's share of such taxes shall be equitably
prorated to cover only the period of time within the tax fiscal year this Lease
is in effect, and Lessor shall reimburse Leasee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by
this Lease to be paid by Lessee, Lessor shall have the right to pay the same,
and Lessee shall reimburse Lessor therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due
and before delinquency of any or all Real Property Taxes, Lessor reserves the
right, at Lessor's option, if Lessee has been delinquent in the payment of Real
Property Taxed at any time during the Lease Term, to estimate the current Real
Property Taxes applicable to the Premises, and to require such current year's
Real Property Taxes to be paid in advance to Lessor by Lessee, either: (i) in
a lump sum amount equal to the installment due, at least twenty (20) days prior
to the applicable delinquency date, or (ii) monthly in advance with the payment
of the Base Rent. If Lessor elects to require payment monthly in advance, the
monthly payment shall be that equal monthly amount which, over the number of
months remaining before the month in which the applicable tax installment would
become delinquent (and without interest thereon), would provide a fund large
enough to fully discharge before delinquency the estimated installment of taxes
to be paid. When the actual amount of the applicable tax ▇▇▇▇ is known, the
amount of such equal monthly advance payment shall be adjusted as required to
provide the fund needed to pay the applicable taxes before delinquency. If the
amounts paid to Lessor by Lessee under the provisions of this Paragraph are
insufficient to discharge the obligations of Lessee to pay such Real Property
Taxes as the same become due, Lessee shall pay to Lessor, upon Lessor's demand,
such additional sums as are necessary to pay such obligations. All moneys paid
to Lessor under this Paragraph may be intermingled with other moneys of Lessor
and shall not bear interest. In
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the event of a Breach by Lessee in the performance of the obligations of Lessee
under this Lease, then any balance of funds paid to Lessor under the provisions
of this Paragraph may, subject to proration as provided in Paragraph 10.1(a),
at the option of Lessor, be treated as an additional Security Deposit under
Paragraph 5.
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 Premises 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 changes in applicable law taking effect,
during the term of this Lease. See Addendum
10.3 JOINT ASSESSMENT. If the Premises are not separately
assessed, Lessee's liability shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be 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.
Initials /s/
------------------
/s/
------------------
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. When possible,
Lessee shall cause its Trade Fixtures, furnishings, equipment and all personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay such taxes to the taxing authority prior to
delinquency (of if already paid, to Lessor directly within ten (10) days after
receipt of a written statement setting forth the taxes applicable to Lessee's
property.)
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 premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIREMENT.
(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
fifty (50) percent 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 net 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 exists prior to said
transaction or transactions constituting such reduction, shall be considered an
assignment of this Lease by Lessee to which Lessor may reasonably withhold its
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consent. "NET 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 after notice per Paragraph 13.1(c).
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, in
accordance with the terms of such assignment or subletting (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 held by Lessor or Lessee.
(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, (which use and/or modifications shall be reasonably considered by Lessor).
Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested by Lessor with such other
or additional information and/or documentation as may be reasonably requested
by Lessor, and shall pay lessor's reasonable*
(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 herein to
be observed or performed by Lessee during the term of said assignment or
sublease, other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented in writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and
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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 sublessee, 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 except to the
extent received by Lessor or for any other prior Defaults or Breaches of such
sublessor under such sublease.
(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.
See Addendum
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, and shall entitle Lessor to pursue
the remedies set forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises coupled with a failure to pay
rent when due.
(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 surety bond required under this Lease, or
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 ten
(10) days following written notice thereof by or on behalf of Lessor to Lessee.
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(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 rescission 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
ten (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, then 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: (i)
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 Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within sixty (60) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within sixty (60) days; provided, however,
in the event that any provision of this subparagraph (e) is contrary to any
applicable law, such provision shall be of no force or effect, and not affect
the validity of the remaining provisions.
(f) The discovery 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 guarantor's 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.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease (after expiration of any applicable cure
period), 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 duty or obligation on Lessee's behalf, including but not
limited to the obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. The costs and expenses of any
such performance by Lessor shall be due and payable by Lessee to Lessor upon
invoice therefor. If any check given to Lessor by Lessee shall not be honored
by the bank upon which it is drawn, Lessor, at its option, may require all
future payments to be made 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
Premises 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
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the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
term after the time of award exceeds the amount of such rental loss that the
Lessee proves could be reasonably avoided; and (iv) any other amount necessary
to compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of 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. Efforts by Lessor
to mitigate damages caused by Lessee's Default or Breach of this Lease shall
not waive Lessor's right to recover damages under this Paragraph. If
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. If 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 effect (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 Premises, or the appointment
of a receiver to protect the Lessor's interest under the Lease, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
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.
13.3 See Addendum.
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 form
Lessee shall not be received by Lessor or Lessor's designee within five (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 three percent (3%)
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.
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
13.6, a reasonable time shall be thirty (30) days after receipt by Lessor, and
by the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have been furnished Lessee
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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, the Lessor shall not
be in breach of this Lease if performance is commenced within such thirty (30)
day period and thereafter diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (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 a portion of the Premises, or
the land area not occupied by any building, is taken by condemnation, which
materially impairs Lessee's ability to conduct its operations from the Premises
Lessee may, at Lessee's option, to be exercised in writing within thirty (30)
days after Lessor shall have given Lessee written notice of such taking (or in
the absence of such notice, within thirty (30) days after the condemning
authority shall
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have taken possession) terminate this Lease as to the date the condemning
authority takes such possession. If Lessee does not terminate this lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in accordance with the impairment in Lessee's ability to conduct its
operations from the Premises. 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 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 net severance damages received, over and above the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation, except to the extent that Lessee
has been reimbursed therefor by the condemning authority. Lessee shall be
responsible for the payment of any amount in excess of such net 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.
15.3 Deleted.
15.4 Deleted.
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 form and against liability for compensation of charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the Indemnifying Party, including any
costs, expenses, 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.
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16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within twenty (20)
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 Premises,
any part thereof, or the building of which the Premises 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.
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 Premises, or,
if this is a sublease, of the lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held 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 hereinafter
defined. See Addendum.
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 Premises.
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 courtesy copy of all notices required or
permitted to be given to either Party hereunder shall be concurrently
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transmitted to such party or parties at such addresses as such Party may from
time to time hereafter designate by written notice to the other Party.
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. If sent
by regular mail the notice shall be deemed given forty- eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
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. If 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
mail. If notice is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVERS. No waiver by either Party of the Default or Breach of any
term, covenant or condition hereof by the other, shall be deemed a waiver of
any other term, covenant or condition hereof, or of any subsequent Default or
Breach by the other 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 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. Deleted.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises 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.
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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. Subject to the nondisturbance provisions of
Paragraph 30.3 This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed 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 reasons
thereof. If any Lender shall elect to have this Lease and/or any Option
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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 Premises by reasons of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or (iii)
be bound by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered
into by Lessor after the execution of this Lease, Lessee's subordination of
this Lease shall be subject to receiving assurance (a "NON-DISTURBANCE
AGREEMENT") in a commercially reasonable form from the Lender that Lessee's
possession and this Lease, including any options to extend the term hereof,
will not be disturbed so long as Lessee is not in Breach hereof and attorns to
the record owner of the Premises.
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. If 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 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. They 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 at 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 during the last nine (9) months of
the Term lessees, and making such alterations, repairs, improvements or
additions to the Premises 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, and shall be
conducted in a manner to minimize interference with Lessee's operations.
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 exercise 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.
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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 lesser 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
withheld 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 therefor.
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 held 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 shall 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 then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
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 herein
any particular condition to Lessor's consent shall not preclude the imposition
by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is
being given.
37. GUARANTOR.
37.1 If 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 the same 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 fails 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 effect.
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 Lessee's 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 or to extend or renew any lease that Lessee has on
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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 Premises, or the right of
first refusal to purchase the Premises, or the right of first offer to purchase
the Premises, 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. Deleted.
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.
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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 time Lessee is in Breach of this Lease.
(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reasons 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 effect, notwithstanding
Lessee's due and timely exercise of the Option, if, after such exercise and
during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of thirty (30) days after notice from Lessor
that such obligation is past due or if Lessee commits a Breach of this Lease.
39.5 See Addendum.
40. MULTIPLE BUILDINGS. If the Premises 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 for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not 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.
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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 and the requesting Party shall, within thirty
(30) days after request by the other Party, deliver to the requesting Party
evidence satisfactory to requesting Party of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions or the Addendum attached hereto
and incorporated herein by this reference 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 Premises 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.
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The Parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at Executed at
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on on
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by LESSOR: by LESSEE:
Bardon of Hollywood, Inc., a California ▇▇▇▇▇/▇▇▇▇▇▇, U.S.A., a Delaware
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corporation, dba Bardon, Inc. corporation
--------------------------------------------------- ---------------------------------------------------
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------------
By /s/ Name Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------------ -------------------------------------
Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: President
------------------------------------- --------------------------------------------
Title: Pres.
--------------------------------------------
By
------------------------------------------------
By Name Printed:
------------------------------------------------ -------------------------------------
Name Printed: Title:
------------------------------------- --------------------------------------------
Title: Address:
-------------------------------------------- ------------------------------------------
Address:
------------------------------------------ ---------------------------------------------------
Tel. No. ( ) Fax No. ( )
--------------------------------------------------- ---- -------------- ---- -----
Tel. No. ( ) Fax No. ( )
---- -------------- ---- -----
NET
NOTICE: These forms are often modified to meet changing requirements of law
and industry needs. Always write or call to make sure you are
utilizing the most current form: American Industrial Real Estate
Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇. Fax No. (▇▇▇) ▇▇▇-▇▇▇▇.
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ADDENDUM
This Addendum is attached to and forms a part of that certain Lease
dated October 6, 1992 by and between Bardon of Hollywood, Inc., a California
corporation, dba Bardon, Inc., as Lessor, and ▇▇▇▇▇/▇▇▇▇▇▇ U.S.A., a Delaware
corporation, as Lessee. The provisions of this Addendum supersede any contrary
provisions in the Lease.
1. SECTION 1.5 - BASE RENT.
Subject to the provisions set forth below, provided that Lessee is not
then in Default under the terms and provisions of this Lease, Lessee shall not
be obligated to pay Base Rent for the first (1st), second (2nd), third (3rd)
and twenty-first (21st) months of the Original Term of this Lease (the "Abated
Rent"). The foregoing shall not, however, relieve Lessee from paying all other
fees and charges payable by Lessee hereunder during such months.
2. SECTION 2.1 - LETTING.
The Base Rent set forth above is computed at the rate of fifty cents
($.50) per month per square foot of Building Area, based on 70,440 square feet
of Building Area. For purposes of this Lease, "Building Area" shall mean the
gross floor area of the Premises measured from the outside of the exterior
walls of the Premises. At Lessee's election, Lessee's licensed architect may
verify the Building Area of the Premises within thirty (30) days after the
Commencement Date, and any dispute shall be resolved by binding arbitration in
Los Angeles in accordance with the rules and regulations of the American
Arbitration Association. Lessor and Lessee shall thereafter promptly confirm
in writing the Building Area of the Premises and shall set out the initial Base
Rent payable hereunder. If Lessee fails to cause such verification to be
performed within said 30-day period, the square footage set forth above shall
be deemed conclusive for all purposes hereunder. Except as provided below, if
the Premises has more (or less) than 70,440 square feet of Building Area, then
the Base Rent set forth in Paragraph 1.6 above, shall be proportionately
increased (or decreased) to the amount obtained by multiplying fifty cents
($.50) times the agreed upon number of square feet of Building Area contained
in the Premises. If any previous Base Rent payments exceed the amount of Base
Rent determined in accordance with this Paragraph, Lessee shall be given a
credit against the next Base Rent installment due under this Lease. If any
previous Base Rent payments were less than the amount of Base Rent determined
in accordance with this Paragraph, Lessee shall, within ten (10) days of such
determination of Building Area, pay the difference to Lessor.
3. SECTION 2.3 - COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING
CODE.
Notwithstanding anything to the contrary set forth in the printed
portion of paragraph 2.3 above, Lessor's warranty shall only be effective for a
period of six (6) months following the Commencement Date with respect to
Hazardous Substances and shall not apply at any time to the removal of asbestos
or other Hazardous Substances from the Premises the removal of which would not
have been required by applicable law but for Lessee's Alterations and/or
Utility Installations.
In addition to the obligations of Lessor set forth in the printed
portion of paragraph 2.3 above, Lessor hereby agrees, at its sole cost and
expense, to comply with any requirements of the Americans With Disabilities Act
of 1990 (42 U.S.C. Section 12101, et seq.) which are required by any
governmental agency to be performed with respect to the Premises provided the
same do not arise from or in connection with any of the Alterations or Utility
Installations constructed by or at the request of Lessee with respect to which
Lessee shall be liable, at its sole cost and expense, for such compliance.
4. SECTION 4.2 - COST OF LIVING INCREASE (NEW).
The Base Rent shall be increased on the first day of the 33rd month of
the Original Term hereof (the "Rental Adjustment Date") in accordance with the
increase in the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for All Urban Consumers (Los Angeles/Anaheim/Riverside
Statistical Area on the basis of 1982-1984 = 100) (the "Index"), as follows:
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The Base Rent (the "Comparison Base Rent") in effect immediately prior
to the Rental Adjustment Date (without regard to any setoffs, free rent or
other deductions) shall be increased by the percentage that the Index has
increased from the date (the "Comparison Date") on which payment of the
Comparison Base Rent began through the month in which the Rental Adjustment
Date occurs; provided, however, the increase in Base Rent payable by Lessee
pursuant to this section shall not be greater than 13.3333% of the Base Rent in
effect immediately prior to the Rental Adjustment Date. The Base Rent shall
not, however, be reduced by reason of such computation. Lessor shall notify
Lessee of such increase by a written statement which shall include the Index
for the Comparison Date, the Index for the Rental Adjustment Date, the
percentage increase between the two indices and the new Base Rent. Lessee
shall pay the new Base Rent from the Rental Adjustment Date until the
expiration of the Original Term. Lessor's notice may be given after the Rental
Adjustment Date and Lessee shall pay Lessor the accrued rental adjustment for
the months elapsed between the effective date of the increase and Lessor's
notice of such increase within thirty (30) days after Lessor's notice. If the
format or components of the Index are materially changed after the Commencement
Date, Lessor shall reasonably select a substitute index which is published by
the Bureau of Labor Statistics or similar agency and which is most nearly
equivalent to the Index in effect on the Commencement Date.
5. SECTION 5 - SECURITY DEPOSIT.
Provided that Lessee is not in Default under the terms of this Lease
(as defined in Paragraph 13.1) on the last day of the 35th month of the
Original Term hereof, Lessor shall apply $35,220 of the Security Deposit
against the Base Rent then owing for the 36th month of the Term of this Lease.
The foregoing shall not, however, relieve Lessee from paying any additional
Base Rent or other charges applicable to the 36th month of the Term.
Thereafter, Lessee shall only be obligated to maintain a Security Deposit equal
to $35,220.
6. SECTION 6.2(d) - LESSOR'S INDEMNIFICATION.
Lessor shall indemnify, protect, defend and hold Lessee, its agents,
employees and lenders, if any, and the Premises harmless from and against any
and all damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, permits and attorneys and consultants fees arising out of or
involving any Hazardous Substance or storage tank brought onto the Premises by
or for Lessor or under Lessor's control or which occurred or existed prior to
the Commencement Date of this Lease. Lessor's obligations under this paragraph
shall include, but not be limited to, the effects of any contamination or
injury to persons, property or the environment created or suffered by Lessor
and the costs of investigation (including consultants and attorneys 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. Additionally, to Lessor's actual knowledge without
any inquiry, the Premises is presently free of any asbestos or other Hazardous
Substances and/or storage tanks.
7. SECTION 7.2 - LESSOR'S OBLIGATIONS.
Notwithstanding anything to the contrary contained in this Lease,
Lessor shall, at its sole cost and expense, maintain the foundations,
subfloors, roof (including the repair and/or replacement, as necessary),
exterior walls and other structural portions of the Premises in good condition
and repair provided that Lessor shall not be responsible for the routine
cleaning of the roof or maintenance of the drainage systems or any damage
caused to the foregoing which results from the acts or omissions of Lessee, its
agents or employees. Furthermore, Lessee acknowledges and agrees that to the
extent any of Lessee's improvements (including the installation and maintenance
of an HVAC system on the roof of the Premises) causes any damage to the roof or
other structural portions of the Premises, Lessee shall remain liable for such
damage including, without limitation, the repair and/or replacement of the
roof.
8. SECTION 7.5 - LESSEE'S IMPROVEMENTS.
Subject to the provisions of paragraphs 2.2 and 2.3 above, Lessee
hereby acknowledges and agrees that it is accepting the Premises in their "As
Is" condition and that Lessor shall not be obligated to construct or pay for
any tenant improvements thereon except that Lessor shall provide to Lessee a
tenant improvement allowance (the "Improvement Allowance") of up to Twenty
Thousand Dollars ($20,000) to paint and carpet the existing office space in the
Premises. The Improvement Allowance shall be promptly reimbursed to Lessee
upon Lessor's receipt of paid invoices from Lessee with respect to such
painting and carpeting. Any portion of the Improvement Allowance
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which is not used to paint and carpet the Premises within six (6) months of the
Commencement Date shall be retained by the Lessor. Lessee acknowledges that
all other improvements to the premises shall be made at Lessee's sole cost and
expense and shall be subject to Lessor's prior written approval and the
provisions of paragraphs 7.3 and 7.4 above. Furthermore, Lessee acknowledges
and agrees that the execution and commencement of this Lease shall not be
subject to, delayed or conditioned upon Lessee obtaining any governmental
approvals or permits or other consents to construct any improvements in the
Premises. Lessor expressly acknowledges that Lessee intends to construct
additional improvements in the Premises promptly following the Commencement
Date at a cost of approximately Two Hundred Thousand Dollars ($200,000).
Lessor agrees that it shall, within seven (7) days of its receipt of any
proposed plans and specifications for such alterations, provide to Lessee
either Lessor's written approval of such plans and specifications or written
notice of Lessor's disapproval thereof, which disapproval notice shall state
the reasons for such disapproval and the specific changes to the submitted
plans and specifications which must be made in order for Lessor to approve the
same, if any. Lessor's response with respect to any revised plans and
specifications shall thereafter be limited to five (5) days following its
receipt of the revised documents. The failure of Lessor to respond in writing
within the required time period shall conclusively be deemed to constitute
Lessor's approval of the plans and specifications as submitted by Lessee.
9. SECTION 8.3 - PROPERTY INSURANCE.
Notwithstanding anything to the contrary contained in the printed
portion of Paragraph 8.3 of the Lease, Lessee shall not be obligated to pay for
the premium attributable to the portion of the property insurance relating to
earthquake coverage except Lessee shall pay for such earthquake coverage (i)
during the first year of the Lease (not to exceed $16,200), or (ii) if required
by any Lender; provided, however, Lessor shall use its diligent efforts to
persuade any such Lender that earthquake insurance should not be required
coverage.
10. SECTION 8.7 - LESSOR'S INDEMNITY.
Except for Lessee's or its employees', agents', contractors',
sublessees' or assignees' negligence and/or breach of express warranties or any
provisions of this Lease, Lessor shall indemnify, defend and hold Lessee and
its directors, officers, employees and agents harmless from and against any and
all claims, damages, costs, liens, judgments, penalties, expenses (including,
without limitation attorneys and consultants costs and fees) and/or liabilities
(but excluding consequential damages) arising out of directly or indirectly any
breach by Lessor of this Lease or any provision hereof or as a result of the
negligence or willful misconduct of Lessor, its employees, agents, contractors
or invitees. The following shall include but not be limited to the defense or
pursuit of any claims or any action or proceeding involved therein and whether
or not (in the case of claims made against Lessee) litigated and/or reduced to
judgment and whether well founded or not. In case any action or proceeding be
brought against Lessee by reason of any of the foregoing matters, Lessor, upon
notice from Lessee, shall defend the same at Lessor's expense and Lessee shall
cooperate with Lessor in such defense. Lessee need not have first paid any
such claim in order to be so indemnified.
11. SECTION 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 month's Base
Rent, whether or not an Insured Loss, Lessor or Lessee may, at their respective
option, terminate this Lease by giving notice to the other of such party's
election to do so within thirty (30) days after the date of the occurrence of
such damage. In such event, this Lease shall terminate as of the date of such
notice; provided, however, if Lessee at the time has an exercisable option to
extend this Lease, then Lessee may preserve this Lease by exercising such
option within twenty (20) days following the occurrence of damage or before the
expiration of the time provided in such option for its exercise, whichever is
earlier (the "Exercise Period"). If Lessee duly exercises such option during
said Exercise Period, Lessor shall, if and to the extent required under this
Paragraph 9, repair such damage as soon as reasonably possible and this Lease
shall, subject to the provisions of this Paragraph 9, continue in full force
and effect. If Lessee fails to exercise such option during said Exercise
Period, then Lessor or Lessee may, at their respective option, terminate this
Lease by giving written notice to the other of its 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. In such event, this Lease
shall terminate as of the date of such notice.
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12. SECTION 10.2 - DEFINITION OF "REAL PROPERTY TAXES."
Notwithstanding anything to the contrary contained herein, Lessee
shall not, during the Original Term of this Lease or any extension thereof, be
liable for increases in Real Property Taxes that result from a sale, financing
or refinancing or other transfer by Lessor of the Premises or any portion
thereof or interest therein.
13. SECTION 12.4 - ASSIGNMENT AND SUBLETTING TO AFFILIATES.
Notwithstanding anything to the contrary contained in Paragraph 12 of
the Lease, Lessee shall have the right, without Lessor's consent, to assign
this Lease or sublet all of the Premises to any parent or subsidiary of Lessee
or to any person, firm or corporation which is controlled by, under the control
of, or under common control with Lessee, or, subject to the terms of Paragraph
12.1(c) of the Lease any entity into which Lessee may be merged or consolidated
or which purchases all or substantially all of the assets of Lessee; provided,
however, in all such instances, Lessee shall provide Lessor with written notice
of such transfer, the transferee shall expressly assume in writing all of
Lessee's obligations under the Lease and Lessee shall not be released from any
liability under the Lease.
14. SECTION 17 - LESSOR'S LIABILITY.
Lessee understands and agrees that this Lease is a sublease of the
Premises and that Lessor is the tenant under that certain Master Lease dated
_________________ (the "Master Lease") between Jandy Investment Company, a
California general partnership ("Master Landlord"), as landlord, and Lessor, as
tenant. As a condition to Lessee's obligations hereunder and to the
effectiveness of this Lease, Lessor shall deliver to Lessee concurrently with
Lessor's execution hereof, a non-disturbance agreement from the Master Landlord
in the form attached hereto which provides that as long as Lessee is not in
default under the terms and provisions of the Lease, Lessee's right to
possession of the Premises under the Lease or any extensions or renewals
thereof shall not be diminished or interfered with by Master Landlord and
Master Landlord shall, upon termination of the Master Lease, recognize Lessee
as its tenant under the Lease as if Master Landlord and Lessee were original
signatories thereto.
15. SECTION 39.5 - OPTION TO EXTEND.
(a) GRANT OF OPTION.
Lessor hereby grants to Lessee one (1) option (the "Option") to
extend the Original Term for an additional term of five (5) years (the
"Extension"), on the same terms and conditions as set forth in the Lease, but
at a Base Rent as set forth below. The Option shall be exercised only by
written notice delivered to Lessor at least one hundred twenty (120) days
before the expiration of the Original Term. If Lessee fails to deliver to
Lessor written notice of the exercise of the Option within the prescribed time
period, the Option shall lapse, and there shall be no further right to extend
the Original Term.
(b) FAIR RENTAL VALUE ADJUSTMENT.
The Base Rent shall be increased on the first day of the first
month of the Extension (the "Rental Adjustment Date") to ninety- five percent
(95%) of the "fair rental value" of the Premises, determined in the following
manner:
(i) Not later than one hundred (100) days prior to the
Rental Adjustment Date, Lessor and Lessee shall meet in an effort to negotiate,
in good faith, the fair rental value of the Premises as of such Rental
Adjustment Date. If Lessor and Lessee have not agreed upon the fair rental
value of the Premises at least ninety (90) days prior to the Rental Adjustment
Date, the fair rental value shall be determined by appraisal, by one or more
brokers (herein called "Brokers"), as provided in Subparagraph (ii), below.
Such Broker(s) shall have at least five (5) years' experience in the sales and
leasing of commercial/industrial real property in the area in which the
Premises is located and shall be members of professional organizations such as
the of American Industrial Real Estate Association, or equivalent.
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(ii) If Lessor and Lessee are not able to agree upon the
fair rental value of the Premises within the prescribed time period, then
Lessor and Lessee shall attempt to agree in good faith upon a single Broker not
later than seventy-five (75) days prior to the Rental Adjustment Date. If
Lessor and Lessee are unable to agree upon a single Broker within such time
period, then Lessor and Lessee shall each appoint one Broker not later than
sixty five (65) days prior to the Rental Adjustment Date. Within ten (10) days
thereafter, the two (2) appointed Brokers shall appoint a third (3rd) Broker.
If either Lessor or Lessee fails to appoint its Broker within the prescribed
time period, the single Broker appointed shall determine the fair rental value
of the Premises. If both parties fail to appoint Brokers within the prescribed
time period, the single Broker appointed shall determine the fair rental value
of the Premises. If both parties fail to appoint Brokers within the prescribed
time periods, then the first Broker thereafter selected by a party shall
determine the fair rental value of the Premises. Each party shall bear the
cost of its own Broker and the parties shall share equally the cost of the
single or third Broker, if applicable.
(iii) For the purposes of such appraisal, the term "fair
market value" shall mean the price that a ready and willing tenant would pay,
as of the Rental Adjustment Date, as monthly rent to a ready and willing
landlord of property comparable to the Premises if such property were exposed
for lease on the open market for a reasonable period of time and taking into
account all of the purposes for which such property may be used but excluding
any value given to the "Lessee Owned Alterations and/or Utility Installations."
If a single Broker is chosen, then such Broker shall determine the fair rental
value of the Premises. Otherwise, the fair rental value of the Premises shall
be the arithmetic average of the two (2) of the three (3) appraisals which are
closest in amount, and the third appraisal shall be disregarded. In no event,
however, shall the Base Rent be reduced by reason of such computation below the
Base Rent payable by Lessee during the last month of the Original Term. Lessor
and Lessee shall instruct the Broker(s) to complete the determination of the
fair rental value not later than thirty (30) days prior to the Rental
Adjustment Date. If the fair rental value is not determined prior to the
Rental Adjustment Date, then Lessee shall continue to pay to Lessor the Base
Rent applicable to the Premises immediately prior to the Extension, until the
fair rental value is determined. When the fair rental value of the Premises is
determined, Lessor shall deliver notice thereof to Lessee, and Lessee shall pay
to Lessor, within ten (10) days after receipt of such notice, the difference
between the Base Rent actually paid by Lessee to Lessor and the new Base Rent
determined hereunder.
(c) COST OF LIVING ADJUSTMENT.
The Base Rent shall be further increased on the first day of the
31st month of the Extension (the "Extension Adjustment Date") by reference to
the Index (or substitute index) defined in Paragraph 4.2 of the Lease as
follows: The Base Rent in effect immediately prior to the Extension Adjustment
Date (the "Comparison Base Rent") shall be increased by the percentage that the
Index has increased from the month in which the payment of the Comparison Base
Rent commenced through the month in which the Extension Adjustment Date occurs;
provided, however, the increase in Base Rent payable by Lessee pursuant to this
section shall not be greater than 12.5% of the Base Rent in effect immediately
prior to the Extension Adjustment Date. In no event shall the Base Rent be
reduced by reason of such computation.
16. SELF-HELP.
If Lessee provides written notice to Lessor of an item of repair which
is the obligation of Lessor which requires the action of Lessor, and Lessor
fails to provide such action within a reasonable period of time, given the
circumstances, after receipt of such written notice, but in no event earlier
than thirty (30) days after receipt of such written notice (except in the event
of emergency repairs required for the roof, in which event Lessor shall provide
such services or take such action within a reasonable period of time), then
Lessee may proceed to take the required action upon the delivery of an
additional written notice to Lessor specifying that Lessee is taking such
required action, and if such action was required under the terms of this Lease
to be taken by Lessor, then Lessee shall be entitled to a prompt reimbursement
by Lessor for Lessee's reasonable cost and expense in taking such action.
Further, if Lessor does not deliver a written objection to Lessee within thirty
(30) days after receipt of an invoice from Lessee for its costs in taking such
action which Lessee claims should have been taken by Lessor, and if such
invoice from Lessee sets forth a reasonably detailed breakdown of its costs and
expenses in connection with taking such action on behalf of Lessor, then Lessee
shall be entitled to deduct from rental payable by Lessee under the Lease the
amount set forth in such invoice. If, however, Lessor delivers to Lessee
within thirty (30) days after
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receipt of Lessee's notice a written objection to the payment of such invoice,
then Lessee shall not be entitled to such deduction from rental but as Lessee's
sole remedy, Lessee may proceed to claim a default by Lessor and the matter
shall proceed through the judicial process in the court of appropriate
jurisdiction or, at either party's election, the matter shall proceed to
resolution by the selection of an arbitrator to resolve the dispute, which
arbitrator shall be selected and qualified pursuant to the rules of the
American Arbitration Association in Los Angeles, California, and whose costs
shall be paid for by the losing party unless it is not clear that there is a
"losing" party, in which case the cost of arbitration shall be shared equally.
The purpose of the use of an arbitrator to resolve such a dispute is to avoid
the delays incident to the court calendar system of the jurisdiction within
which the Premises are located. Therefore, the parties agree that if the issue
in dispute between Lessor and Lessee under this section may be expected to be
resolved under the then current calendar of the court of appropriate
jurisdiction within a period not exceeding six months from the date the issue
is joined by Lessor's objection to Lessee's invoice, then the arbitration
process described hereinabove shall be utilized and the matter shall proceed
through the judicial process of the court of appropriate jurisdiction.
17. SAFE TO REMAIN ON PREMISES.
Lessee acknowledges and agrees that the safe located on the mezzanine
level of the Premises is and shall remain the sole and exclusive property of
Lessor. However, as an accommodation to Lessor, Lessee hereby agrees to permit
Lessor to store the safe at the Premises during the term of the Lease, at no
additional cost or expense, provided that Lessor removes all contents therefrom
on or before October 31, 1992. Thereafter, Lessor shall have no further right
of access to the safe until the Lease expires. Lessee shall not be liable for
any damage or destruction to the safe unless caused by Lessee's gross
negligence or willful misconduct.
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SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
1. PARTIES.
This Subordination, Non-Disturbance and Attornment Agreement (the
"Agreement"), dated as of October 6, 1992, is entered into by and between Jandy
Investment Company, a California general partnership ("Master Lessor"), Bardon
of Hollywood, Inc., a California corporation, dba Bardon, Inc. ("Landlord"),
and ▇▇▇▇▇/▇▇▇▇▇▇ U.S.A., a Delaware corporation ("Tenant").
2. RECITALS.
2.1 Master Lessor and Landlord entered into that certain Lease dated
as of _____________________________, 199__, hereinafter referred to as the
"Master Lease" covering that certain real property (the "Property") commonly
known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as more particularly
described in the Master Lease.
2.2 On or about October 6, 1992, Landlord, as sublessor, and Tenant,
as sublessee, entered into a Sublease (the "Sublease") for the entire Property.
2.3 The parties hereto intend to establish certain rights of quiet
and peaceful possession and use of the Property and other rights for the
benefit of the parties and further to define the terms, covenants and
conditions pertaining to such rights.
3. AGREEMENT.
NOW, THEREFORE, in consideration of the foregoing and other mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
3.1 SUBORDINATION. The Sublease is now and shall at all times
continue to be subject and subordinate in each and every respect to the Master
Lease.
3.2 NON-DISTURBANCE. Master Lessor agrees that so long as the
Sublease has not been lawfully terminated on account of a default by Sublessee
thereunder in accordance with the provisions of the Sublease, Master Lessor
shall honor all of the provisions of the Sublease and shall not disturb or
otherwise interfere with Sublessee's possession and quiet enjoyment of the
Property in accordance with the terms of the Sublease, nor shall any of the
rights and privileges of Sublessee under the Sublease be in any manner
diminished or affected by Master Lessor, all notwithstanding any default by
Landlord under the Master Lease or any termination of the Master Lease.
3.3 SUBLESSEE'S ATTORNMENT. In the event the Master Lease is
terminated and Master Lessor thereafter succeeds to the interest of Landlord
under the Sublease, Sublessee shall attorn to and be bound to Master Lessor
under all the terms and conditions of the Sublease for the balance of the term
thereof with the same force and effect as if Master Lessor were the landlord
thereunder, such attornment to be effective and self-operative without the
execution of any further instrument on the part of any of the parties hereto,
immediately upon Master Lessor succeeding to the interests of Landlord under
the Sublease. The rights and obligations of Sublessee and Master Lessor,
respectively, upon such attornment shall, to the extent of the then remaining
balance of the term of the Sublease, including any renewals or extension
thereof provided for in the Sublease, be the same as now set forth in the
Sublease and by this reference, the Sublease is incorporated herein as part of
this Agreement.
4. MISCELLANEOUS.
4.1 ATTORNEYS FEES. In the event of any action at law or in suit or
in equity is brought to enforce any of the provisions of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys fees in
connection therewith.
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4.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
4.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but when taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
"MASTER LESSOR"
JANDY INVESTMENT COMPANY, a
California general partnership
By: /s/
---------------------------------
Its: Partner
--------------------------------
"LANDLORD"
BARDON OF HOLLYWOOD, INC., a
California corporation
By: /s/
---------------------------------
Its: Pres.
--------------------------------
"TENANT"
▇▇▇▇▇/▇▇▇▇▇▇ U.S.A., a Delaware
corporation
By: /s/
---------------------------------
Its: President
--------------------------------
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