EXHIBIT 10.3
STANDARD INDUSTRIAL/ COMMERCIAL MULTI-TENANT LEASE - NET
AIR COMMERCIAL REAL ESTATE ASSOCIATION
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes only
SEPTEMBER 12, 2005, is made by and between PARK/EL SEGUNDO PARTNERS, LLC (A
CALIFORNIA LIMITED LIABILITY COMPANY) ("Lessor") and IRONCLAD PERFORMANCE WEAR
CORPORATION (A CALIFORNIA CORPORATION) ("Lessee", (collectively the "Parties",
or individually a "Party").
1.2(a) PREMISES: That certain portion of the Project (as defined
below), including all improvements therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address at 0000 XXXX XXXXX,
XXXXX 000 , located in the city of EL SEGUNDO County of LOS ANGELES , State of
CALIFORNIA , with zip code 90245 , as outlined on Exhibit A attached hereto
("Premises") and generally described as (describe briefly the nature of the
Premises): OFFICES AND WAREHOUSE CONSISTING OF APPROXIMATELY 10,204 SQUARE FEET.
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the any utility raceways of
the building containing the Premises ("Building") and to the common Areas (as
detailed in Paragraph 2.7 below), but shall not have any rights to the roof or
exterior walls of the Building or to any other buildings in the Project. The
Premises, the Building, the Common Areas, the land upon which they are located,
along with all other buildings and improvements thereon, are herein collectively
referred to as the "Project". (See also Paragraph 2)
1.2(b) PARKING: TWENTY-ONE (21) unreserved vehicle parking spaces. (See
also Paragraph 2.6)
1.3 TERM: FIVE (5) years and _____ months ("Original Term") commencing
X (SEE ADDENDUM ("Commencement Date") and ending X (SEE ADDENDUM) ("Expiration
Date"). (See also Paragraph 3)
1.4 EARLY POSSESSION: _________________________________ ("Early
Possession Date") (See also Paragraph 3.2 and 3.3)
1.5 BASE RENT 10,204.00 per month ("Base Rent"0, payable on the FIRST
day of each month commencing (SEE ADDENDUM) . (See also Paragraph 4)
If this box is check, there are provisions in this Lease for the Base Rent to be
adjusted.
1.6 LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: percent (25.5%)
("Lessee's Share"). Lessee's Share has been calculated by dividing the
approximate square footage of the Premises by the approximate square footage of
the Project. In the event that the size of the Premises and/or the Project are
modified during the term of this Lease, Lessor shall recalculate Lessee's Share
to reflect such modification.
1.7 BASE RENT AND OTHER MONIES PAID UPON EXECUTION:
(a) Base Rent: $ 10,204.00 for the period FIRST MONTH
(b) Common Area Operating Expenses: $ 2,550.00 for the
period FIRST MONTH
(c) Security Deposit: $ 10,204.00 ("Security Deposit").
(See also Paragraph 6)
(d) Other: $__________ for_____________________.
(e) Total Due Upon Execution of this Lease: $ 22,958.00
1.8 AGREED USE: ADMINISTRATIVE OFFICES AND WAREHOUSE FOR DISTRIBUTION
OF TASK SPECIFIC WORK GLOVES. (See also Paragraph 6)
1.9 INSURING PARTY. Lessor is the "Insuring Party". (See also Paragraph
6)
1.10 REAL ESTATE BROKERS: (See also Paragraph 15)
(a) Representation: The following real estate brokers (the
"Brokers") and brokerage relationships exist In this transaction (check
applicable boxes):
|X| XXXXX & XXXXX COMPANY - XXXX XXXXX represents Lessor exclusively ("Lessor's
Broker");
|X| XXXXX & XXXXX COMPANY - XXXXXX XXX represents Lessee exclusively ("Lessee's
Broker"); or
|_| __________________________________ represents both Lessor and Lessee ("Dual
Agency").
(b) Payment to Brokers: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed
to in a separate written agreements (or if there is no such agreement, the sum
of or % of the total Base Rent for the brokerage services rendered by the
Brokers).
1.11 GUARANTOR. The obligations of the Lessee under this Lease are
to be guaranteed by XXXXXX X. ---------- XXXXXX ("Guarantor"). (See also
Paragraph 37)
1.12 ATTACHMENTS. Attached hereto are the following, all of which
constitute a part of this Lease:
|X| an Addendum consisting of Paragraphs 50 through 54 ;
|X| a site plan depicting the Premises;
|_| a site plan depicting the Project;
|X| a current set of the Rules and Regulations for the Project;
|_| a current set of the Rules and Regulations adopted by the owners'
association;
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 the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of size set forth in this lease or that may have been used
in calculating rent, is an approximation which the Parties agree is reasonable
and any payments based thereof are not subject to revision whether or not the
actual size is more or less. NOTE: Lessee is advised to verify the actual size
prior to executing this lease.
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2.2 CONDITION. Lessor shall deliver that position of the premises
contained within the Building ("Unit") to Lessee broom clean and free of debris
on the commencement Date or the Early Possession Date, which first occurs (Start
Date"), and so long as the required service contracts described in Paragraph 7.1
(b) below are obtained by Lessee and in effect within thirty days following the
Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems ("HVAC"), loading
doors, sump pumps, if any and all other such elements in the Unit, other than
those constructed by Lessee, shall be in good operating condition on said date,
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects, and that the Unit does not contain
hazardous levels of any mold or fungus deemed as toxic under applicable state of
federal law. If a non-compliance with such warranty exists as of the Start Date,
or if one of such systems or elements should malfunction or fall within the
appropriate warranty period, Lessor shall, as Lessor's sole obligation with
respect to such matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from the Lessee selling forth with specificity
the nature and extent of such non-compliance, malfunction, or failure, rectify
same at Lessor's expense. The warranty periods shall be as follows: (I) 6 months
as to the HVAC systems and (II) 30 days as to the remaining systems and other
elements of the Unit. If Lessee does not give Lessor the required notice within
the appropriate warranty period, corruption of any such non-compliance,
malfunction, or failure shall be the obligation of Lessee at Lessee's sole cost
and expense ( except for the repairs to the fire sprinkler systems, roof,
foundations, and/or bearing walls - see Paragraph 7).
2.3 COMPLIANCE. Lessor warrants that to the best of its knowledge the
improvements on the Premises and the common areas comply with the building codes
that were in effect at the time that each such improvement, or portion thereof,
was constructed, and also with all applicable covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date ("Applicable
Requirements"). Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee's use (see paragraph
49) or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a) made or to be made by Lessee. NOTE: Lessee is responsible for determining
whether or not the Applicable Requirements and especially the zoning are
appropriate for Lessee's intended use and acknowledges that past uses of the
premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with the warranty within 6 months
following the Start Date, correction of that non-compliance shall be the
obligation of the Lessee at Lessee's sole cost and expense. If the applicable
Requirements are thereafter changed so as to require during the term of this
lease the construction of an addition or an alteration of the Unit, Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of
such work as follows:
(a) Subject to paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided however that if such Capital
expenditure is required during the last 2 years if this Lease and the cost
thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing within 10 days after receipt of
Lessee's termination notice that Lessee has elected to pay the difference
between actual cost thereof and the amount equal to 6 months' Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises, which requires such Capital Expenditure, and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier that the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the
specified and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d): provided, however,
that if such Capital Expenditure is required during the last 2 years of this
lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing
within 10 days after receipt of Lessor's termination notice that Lessee will pay
for such Capital Expenditure. If Lessor does not elect to terminate and fails to
tender its share of any such Capital Expenditure, Lessee may advance such funds
and deduct same, with interest, form Rent until Lessor's share of such costs
have been fully paid. If Lessee is unable to finance Lessor's share, or if
balance of the Rent due and payable for the remainder of this Lease is not
sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the
right to terminate this Lease upon 30 days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non -voluntary unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in the event,
Lessee shall either, (I) immediately cause such changed use or intensity of use
and/or take such other steps as may be necessary to eliminate the requirement
for such Capital Expenditure, or, (ii) complete such Capital Expenditure as it's
own expense. Lessee shall not have any right to terminate this Lease.
2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) It has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security environmental aspects, and compliance with Applicable
Requirements and the Americans with Disabilities Act), and their suitability for
Lessee's intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility
thereafter as the same relates to it's occupancy of the Premises, and (c)
neither Lessor, Lessor's agents, nor brokers, have made any oral or written
representations or warranties with respect to said matters other than as set
forth in the Lease. In addition, Lessor acknowledges that (I) Brokers have made
no representations, promises, or warranties concerning Lessee's ability to honor
the Lease or suitability to occupy the Premises, and (II) it is the Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.
2.5 LEASE AS PRIOR OWNER/ OCCUPANT. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
parking spaces specified in Paragraph 1.2(b) on those portions of the Common
Areas designated from time to time by Lessor for parking. Lessee shall not use
more parking space s than said number. Said parking spaces shall be used for
parking by vehicles no larger than full size passenger automobiles or pick-up
trucks herein called "Permitted Size Vehicles." Lessor may regulate the loading
and unloading of vehicles by adopting Rules and Regulations as provided in
Paragraph 2.9. No vehicles other than Permitted size Vehicles may be parked in
the Common Area without the prior written permission of Lessor. In addition:
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(a) Lessee shall not permit or allow any vehicles that belong
to or are controlled by Lessee or Lessee's employees. Suppliers, shippers,
customers, or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities
(b) Lessee shall not service or store any vehicles in the
Common Areas
(c) If Lessee permits or allows any of the prohibited
activities described in this paragraph 2.6 then Lessor shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and change the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
2.7 COMMON AREAS - DEFINITION. The term "common Areas" is defined as
all areas and facilities outside the premises and within the exterior boundary
line of the Project and Interior utility raceways and installations within the
Unit that are provided and designated by the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors, and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, walkways, driveways, and landscaped areas.
2.8 COMMON AREAS - LESSEE'S RIGHTS. Lessor grants to Lessee, for the
benefit of Lessee and its employees, suppliers, shippers, contractors,
customers, and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as hey
exist from time to time, subject to any rights, powers and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Project. Under no circumstances shall
the right herein granted to use the Common Areas be deemed to include the right
to store any property, temporarily or permanently in the Common Areas. Any such
storage shall be permitted only by prior written consent of Lessor or Lessor's
designated agent, which consent may be revoked at any time, In the event that
any unauthorized storage shall occur then Lessee shall have the right, without
notice, in addition to such I=other rights and remedies that it may have, to
remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9 COMMON AREAS - RULES AND REGULATIONS. Lesser or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas ad shall have the right, form time to time, to establish,
modify, amend, and enforce reasonable rules and regulations ("Rules and
Regulations") 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 the Building and
the Project and their invitees. Lessee agrees to abide by and conform to all
such Rules and Regulations, and shall use its best efforts to cause its
employees, suppliers, shippers, customers, contractors, and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said Rules and Regulations by other tenants of the Project.
2.10 COMMON AREAS - CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to the Common Area, including without
limitation, changes in the location, size, shape, and number
of driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ______,_______, direction of
traffic, landscaped areas, walkways, and utility raceways;
(b) To close temporarily any Common Areas for maintenance purposes
so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the Project
to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common areas while engaged in making additional
improvements, repairs, or alterations to the Project, or any
portion thereof: and
(f) To do and perform such other acts and make such other changes
in, to, or with respect to the Common areas and Project as
Lessor may, in the exercise of sound business judgment, deem
to be appropriate.
3. TERM
3.1 TERM THE Commencement Date, Expiration Date, and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All others terms of the Lease
(including but not limited to the obligation to pay Lessee's share of Common
Area Operating Expenses, 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 the Expiration Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts , Lesser is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefore,
nor shall such failure affect the validity of this lease or change the
Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform
its other obligations until Lessor delivers possession of the Premises and any
period of rent abatement that Lessee would otherwise have enjoyed shall run from
date of the delivery of possession and continue for a period equal to what
Lessee would otherwise have enjoyed, but minus any days of delay caused by the
acts or omissions of Lessee, if possession is not delivered within 60 days after
the Commencement Date, Lessee may as its option, by notice in writing within 10
days after the end of such 60 day period, cancel the Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease,
as ___________, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery or possession and continue for a
period equal to what the Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession of the premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee in writing.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of Insurance (Paragraph 8.5) Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under the
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of Insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.
4. RENT
4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor under
the terms if this Lease (except for the Security deposit) are deemed to be Rent
("Rent")
4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor during
the term hereof, In addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6) of all Common area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
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(a) "COMMON AREA OPERATING EXPENSES" are defined, for purpose of
this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Project, including but not
limited to the following:
(I) The operation, repair, and maintenance, in neat,
clean, good order and condition, and if necessary the
replacement, of the following:
(aa) The common Areas and Common Area
Improvements, including parking areas,
loading and unloading areas, trash areas,
roadways, parkways, walkways, driveways,
landscaped areas. Bumpers, irrigation
systems, Common Area lighting facilities,
fences and gates, elevators, roots, and roof
drainage systems.
(bb) Exterior signs and tenant directions (cc)
Any fire sprinkler systems
(II) The cost of water, gas, electricity, and telephone to
service the Common Areas and any utilities not
separately metered.
(III) Trash disposal, pest control, services, property
management, security services, owner's association
dues and fees, the cost to repaint the exterior of
any structures and the cost of any reasonably
necessary environmental inspections.
(IV) Reserves set aside for maintenance, repair and/or
replacement of common Area improvements and
equipment.
(V) Real Property Taxes (as defined in Paragraph 10).
(VI) The costs of the premiums for the insurance
maintained by Lessor pursuant to Paragraph 8.
(VII) Any deductible portion of an insured loss concerning
the Building or the Common Areas.
(VIII) Auditors, accountants', and attorney's fees and costs
related to the operation, maintenance, repair and
replacement of the Project, only as they relate to
the Premises.
(IX) The cost of any capital improvement to the Building
or the Project not covered under the provisions of
Paragraph 2.3 provided; however, that Lessor shall
allocate the cost of any such capital improvement
over a 12 year period and Lessee shall not be
required to pay more than Lessee's Share of 1/144th
of the cost of such capital improvement in any given
month.
(X) Any other services to be provided by Lessor that are
stated elsewhere in the Lease to be a Common Area
Operating Expense.
(b) Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Unit, the Building,
or to any other building in the Project, or to the operation,
repair, and maintenance thereof, shall be allocated entirely
to such Unit, Building, or other building, However, any Common
Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other
building or to the operation, repair, and maintenance thereof,
shall be equitably allocated by Lessor to all buildings in the
Project.
(c) The inclusion of the improvements, facilities, and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose
an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or
Lessor has agreed elsewhere in the Lease to provide the same
or some of them.
(d) Lessee's share of Common Area Operating Expenses is payable
monthly on the same day as the Base Rent is due hereunder. The
amount of such payments shall be based on Lessor's estimate of
the annual Common Area Operating Expenses. Within 60 days
after written request (but not more than once each year)
Lessor shall deliver to Lessee a reasonably detailed statement
showing Lessee's Share of the actual Common Area Operating
Expenses incurred during the preceding year. If Lessee's
payments during such year were less than Lessee's Share.
Lessee shall pay to Lessor the amount of the deficiency within
30 days after delivery by Lessor to Lessee of the statement
(e) Common Area Operating Expenses shall not include any expenses
paid by any tenant directly to third parties, or as to which
Lessor is otherwise reimbursed by any third party, other
tenant, or insurance proceeds.
4.3 PAYMENT. Lessee shall causes payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. All monetary amounts shall be rounded to the nearest whole dollar. In the
event that any invoice prepared by Lessor is inaccurate, such inaccuracy shall
not constitute a waiver and Lessee shall be obligated to pay the amount set
forth in this Lease. Rent for any period during the term hereof which is for
less than one full calendar month shall be prorated based upon the actual number
of days or said months. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or place as Lessor may from time to time
designate in writing. Acceptance of a payment which is less than the amount then
due shall not be a waiver of Lessor's rights to the balance of such Rent,
regardless of Lessor's endorsement of any check so stating. In the event that
any check, draft, or other Charge and Lessor, at its option, may require all
future Rent be paid by cashiers check. Payments will be applied first to accrued
late charges and attorney's fees, second to accrued interest, then to Base Rent
and Common Area Operating Expenses, and any remaining amount to any other
outstanding changes or costs.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee's faithful performance of its
obligations under this lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lessee, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefore deposit ___________ with Lessor sufficient to restore sold Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term or if this lease, Lessee shall, upon written request from
Lessor, Deposit additional _________ with Lessor so that the total amount of the
Security Deposit shall at all times bear the same proportion to the increased
Base Rent as the initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of
Lessee or to accommodate a or , Lessor shall have the right to increase the
Security Deposit to the extent necessary, In Lessor's reasonable Judgment, to
account for any increased wear and tear that the premises may suffer as a result
thereof, If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, In Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional with
Lessor as shall be sufficient to cause the Security Deposit separate from its
general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and
otherwise within 30 days after the premises have been vacated pursuant to
paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not used or applied by Lessor. No part of the Security deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any to
be paid by Lessee under this Lease.
6. USE.
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6.1 USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use that is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties, Other than
guide, signal and Seeing Eye dogs. Lessee shall not keep or allow in the
Premises any pets, animals, birds, fish, or reptiles. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use so long as the same will not impair the
structural integrity of the Building or the mechanical or electrical systems
therein, and/or is not significantly more burdensome to the Project. If Lessor
elects to withhold consent, Lessor shall within 7 days after such request give
written notification or same, which notice shall include an explanation of
Lessor's objections to the change in the Agreed Use.
6.2 HAZARDOUS SUBSTANCES
(a) REPORTABLE USES REQUIRE CONSENT. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, or waste
whose presence, Use, manufacture, disposal, transportation, or release, ether 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 potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or tractions
thereat. Lessee shall not engage in any activity in or on the Premises, which
constitutes a Reportable Use of Requirements. "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 ____ with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the forgoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance
with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefore. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation and removal on or
before Lease expiration or termination of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance 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, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
ahs concerning the presence of such Hazardous Substance.
(c) LESSEE REMEDIATION. Lessee shall not cause or permit any
Hazardous Substance to be applies or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer systems) and shall
promptly, at Lessee's expense, comply with all Applicable Requirements and take
all investigatory and/or remedial actions reasonably recommended, whether or not
formally ordered or required, for the cleanup or any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.
(d) LESSEE INDEMNIFICATION. Lessee shall indemnity, defend and
hold Lessor, its agents, employees, lenders and ground Lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and attorneys' however, that Lessee
shall have no liability under this Lease with respect to underground migration
or any Hazardous Substance under the Premises from areas outside of the Project
not caused or contributed to by Lessee). Lessee's obligations shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or 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, unless specifically so agreed by Lessor in writing at the time of
such agreement.
(e) LESSOR INDEMNIFICATION. Lessor and its successors and
assigns shall indemnify, defend, reimburse and hold Lessee, its employees and
lenders, harmless from and against any and all environmental damages, including
the cost of remediation, which are suffered as a direct result of Hazardous
Substances on the Premises prior to Lessee taking possession or which are caused
by the gross negligence or willful misconduct of Lessor, its agents or
employees. Lessor's obligations, as and when required by the Applicable
requirements, shall include, but not be limited to, the cost of Investigation,
removal, remediation, restorations and/or abatement, and shall survive the
expiration or termination of this Lease.
(f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entitles having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Lessee taking possession,
unless such remediation measure is required as a result of Lessee's use
(including "Alterations", as denned in paragraph 7.3(a) below) of the Premises,
in which event Lessee shall be responsible for such payment. Lessee shall
cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor's agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) LESSOR TERMINATION OPTION. If a hazardous Substance
Condition (see Paragraph 9.1(e) occurs during the term of this Lease, unless
Lessee is legally responsible therefore (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 6.2(d) and 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 remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall
proceed to make such remediation as soon as reasonably possible after the
required funds are available. If Lessee does not give such notice and provide
the required funds or assurance thereof within the time provided, this Lease
shall terminate as of the date specified in Lessor's notice of termination.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sols expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to such requirements, without regard to whether said
Requirements are now in effect or become affective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor's written request, provide Lessor
with copies of all permits and other documents, and other information evidencing
Lessee's compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies or any
documents involved) or any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements. Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water damage to the
Premises and any suspected seepage, pooling, dampness or other condition
conductive to the production at mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.
Page 5 of 27
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's "Lander" (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice for the purpose of inspecting the condition or the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements or a Hazardous Substance condition (see Paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of written request therefore.
7.0 MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located) and Alterations in good order, condition and repair (whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion or the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior walls,
interior surfaces or exterior walls, callings, floors, windows, doors, plate
glass, and skylights but excluding any items which are good maintenance
practices, specifically including the procurement and maintenance of the service
required by Paragraph 7.1(b) below. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.
(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in improvements, in any,
if and when installed on the Premises: (I) HVAC equipment, (ii) boiler and
pressure vessels, (iii) clarifiers, and (iv) any other equipment, if reasonably
required by Lessor. However, Lessor reserves the right, upon notice to Lessee,
to procure and maintain any or all of such service contracts and Lessee shall
reimburse Lessor, upon demand, for the cost thereof.
(c) FAILURE TO PERFORM. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
(d) REPLACEMENT. Subject to Lessee's indemnification of Lessor
as set forth in Paragraph 8.7 below, and without removing Lessee of Liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if an item described in Paragraph 71(b) cannot be repaired other than
at a cost which is in excess of 50% of the cost of replacing such item, then
such item shall be replaced by Lessor, and the cost thereof shall be prorated
between the Parties and Lessee shall only be obligated to pay, each month during
the remainder of the term of this Lease, an the date on which Base Rent is due,
an amount equal to the product of multiplying the cost of such replacement by a
traction, the numerator of which is one, and the denominator of which is 144
(i.e. 1/144th of the cost per month). Lessee shall pay interest on the
unamortized balance but may prepay its obligation at any time.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee's Obligations), 9 (Damage or Destruction), and 4 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas, and all parts thereof, as well as providing
the services for which there is a Common area Operating Expense pursuant to
paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces or exterior walls nor shall Lessor be obligated to maintain, repair, or
replace windows, doors, or plate glass on the Premises. Lessee expressly waives
the benefit of any statute now and hereafter in effects to the extent it is
inconsistent with the terms of the Lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS. The term "Utility Installations" refers to
all floor and window coverings, air and/or vacuum lines, power panels,
electrical distribution, security and fire protection systems, communication
cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in the
Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment
that can be removed without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
"Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).
(b) CONSENT. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the Interior of The
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or fire safety systems, and the cumulative cost
thereof during he Lease as extended does not exceed a sum equal to a 3 month's
Base Rent in the aggregate or a sum equal to one month's Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of the Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's (I)
acquiring all applicable governmental permits, (II) furnishing Lessor with
copies of both the permits and plans and specifications prior to commencement of
the work, and (III) compliance with all conditions or said permits and other
Applicable Requirements in a prompt and expeditious manner. Any Alterations or
Utility Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with
as-built planes and specifications.
(c) LIENS; BONDS. Lessee shall pay, when due, al 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
mechanic's or material man's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 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 or non-responsibility. If Lessee shall contest the validity of any
such lien, claim, or demand, then Lessee shall, at its sole expense, defend and
[protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon, before the
enforcement thereof, If Lessor shall require, Lessee shall furnish a surety bond
in an amount equal to 150% of the amount of such contested lien, claim, or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor's attorney's fees and
costs.
Page 6 of 27
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's rights to require removal
or elect ownership as hereinafter provided. All Alterations and Utility
Installations made by Lessee shall be the property of the Lessee, but considered
a part of the Premises. Lessor may at anytime, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee owned Alterations and Utility Installations shall, at the expiration of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.
(b) REMOVAL. By delivery to Lessee or written notice from
Lessor not earlier than 90 days and not later than 90 days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee owned Alterations or Utility Installations made without the required
consent.
(c) SURRENDER; RESTORATION. Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of the
improvements, parts, and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Notwithstanding the
foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance, or removal of Trade Fixtures,
Lessee owned Alterations and/or Utility Installations, furnishings, and
equipment as well as the removal of any storage tank installed by or for Lessee,
(except Hazardous Substances which were deposited via underground migration from
areas outside of the project) even if such removal would require Lessee to
perform or pay fro work that exceeds statutory requirements. Trade Fixtures
shall remain the property of Lessee and shall be removed by Lessee, any personal
property of Lessee not removed on or before the Expiration Date or any earlier
termination date shall be deemed to have been abandoned by Lessee and may be
disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.
8. INSURANCE INDEMNITY
8.1 PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), and
8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods
commencing prior to, or extending beyond the term of this Lease shall be
prorated to coincide with the corresponding Start Date of Expiration Date.
8.2 LIABILITY INSURANCE
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury, and
property damage based upon or arising out of the ownership, use, occupancy, or
maintenance of the Premises and all areas appurtenant thereto. Such Insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as a the Insurance Service Organization's
"Additional Insured-Managers or Lessor's of Premises" Endorsement and coverage
shall also be extended to include 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 the Lease as an "Insured contract" for the performance
of Lessee's indemnity obligations under this Lease. The limits of said Insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its liability
policy(ies) which provides that the Insurance shall be primary to and not
contributory with any similar insurance carries by Lessor, whose insurance shall
be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall maintain liability
insurance as described in Paragraph 6.2(a), in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE
(a) BUILDING AND IMPROVEMENTS. Lessor shall maintain and keep
in force a policy or policies of insurance in the name of Lessor with loss
payable to Lessor, any ground-Lessor, and to any lender insuring loss or damage
to the Premises. The amount of such insurance shall be equal to the full
insurable replacement cost of the Premises as the same shall exist from time to
time, or the amount required by any lender, but in no event more than the
commercially reasonable and available insurable value thereof. Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4. 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
and/or earthquake, unless required by a Lender), including coverage for debris
removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction, or replacement 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.
(b) RENTAL VALUE. Lessor shall also obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 160 days ("RENTAL VALUE INSURANCE"). Said
Insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee for the next 12 month period
(c) ADJACENT PREMISES. Lessee shall pay for any increase in
the premiums for the property insurance of the Building and for the Common Areas
or other buildings in the Project if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(d) LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 LESSEE'S PROPERTY; BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee's Owned Alterations and Utility Installations. Such Insurance shall be
full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds fro many such Insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee's Owned Alterations
and Utility Installations. Lessee shall provide Lessor with written evidence
that such Insurance is in force.
Page 7 of 27
(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent Lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least A-, VI as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a lender. Lessee
shall not do or permit to be done anything which invalidated the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessee
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 10 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "Insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be earned by it, the other
may, but shall no be required to, procure and maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the parts required to be insured
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated.
8.7 INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnity, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground Lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from dire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or damage results
from conditions arising upon the Premises or upon other portions of the
building, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
8.9 FAILURE TO PROVIDE INSURANCE. Lessee acknowledges that any failure
on its part to obtain or maintain the insurance required herein will expose
Lessor to risks and potentially cause Lessor to incur costs not contemplated by
this Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificated evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee's failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee's Default or Breach
with respect to the failure to maintain such insurance,, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in 3 months or less from
the date of the damage or destruction, and the cost thereof does not exceed a
sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total. Notwithstanding the foregoing, Premises Partial
Damage shall not include damage to windows, doors and/or other similar items
which Lessee has the responsibility to repair or replace pursuant to the
provisions of Paragraph 7.1.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in 3 months or less from the date of the damage or destruction and/or
the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as
to whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective or any
deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence
of discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or, under the
Premises which requires repair, remediation, or restoration.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonable possible and this Lease shall continue in
full force and effect.; provided, however, that Lessee shall, at Lessor's
Page 8 of 27
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing. If the required insurance was not in
force or the insurance proceeds are not efficient to effect such repair, the
insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvement, 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 10 days following receipt of written notice of such shortage and request
therefor. If Lessor received said funds or adequate assurance thereof within
said 10 day period, the party responsible for making the repairs shall complete
them as soon as reasonably possible and this Lease shall remain in full force
and Effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within 10 days thereafter to: (I) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or (II) have this Lease terminate 30 days thereafter. Lessee shall not
be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premise Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3, notwithstanding that there may be some
insurance coverage, but the net proceeds of any such Insurance shall be made
available for the repairs if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS, If a Premise 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),
Lessor may either: (I) repair such damage as soon as reasonably possible at
Lessor's expense. In which event this Lessee shall continue in full force and
effect, or (II) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination xxxx be effective 60 days following the date of such notice. In
the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor, Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate 60 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last 6 months 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 may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option, and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (I) the date which is 10 days
after Lessee's receipt of Lessor's written notice purporting to terminate this
Lease, or (II) the day prior to the date upon which such options expires. If
Lessee duly exercises such option during such period end provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such
funds or assurance during such period, then this Lease shall terminate on the
date specified in the termination notice and Lessee's option shall be
extinguished.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
Impaired, but not to exceed the proceeds received from the Rental Value
Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) REMEDIES. If the Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within 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 within 30 days thereafter, this
Lease shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall continue in full
force and effect. "Commence" shall mean either the unconditional authorization
or the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.
9.7 TERMINATION; ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to, used by Lessor.
9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of the Lease
shall govern the effect of and damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION. As used herein, the term "REAL PROPERTY TAXES" shall
include and form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor's right
to other income therefrom, and/or Lessor's business or leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are to
be applied by the city, county or other local taxing authority of a jurisdiction
within which the Project is located. The term "Real Property Taxes" shall also
include and tax, fee, levy assessment or charge, or any increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Project, (ii) a change in
the improvements thereon, and/or (iii) levied as assessed on machinery or
equipment provided by Lessor to Lessee pursuant to this Lease. In calculating
Real Property Taxes for any calendar year, the Real Property Taxes for any real
estate tax year shall be included in the calculation of Real Property Taxes for
such calendar year based upon the number of days which such calendar year and
tax year have in common.
10.2 PAYMENT OF TAXES. Except as otherwise provided in Paragraph 10.3,
Lessor shall pay the Real Property Taxes applicable to the Project, and said
payments shall be included in the calculation of Common Area Operating Expenses
in accordance with the provisions of Paragraph 4.2.
Page 9 of 27
10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other Lessees or by Lessor for the exclusive enjoyment of such other Lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises by
Lessee or at Lessee's request or by any reason or any alterations or
improvements to the Premises made by Lessor subsequent to the execution of this
Lease by the Parties.
10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building 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 worksheets or such other information as
may be reasonable available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.5 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee's said property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. UTILITIES AND SERVICES. Lessee shall pay for all water, gas, heat,
light, power, telephones, trash disposal and other utilities and services
supplied to the Premises, together will any taxes thereon. Notwithstanding the
provisions of Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity
or other commonly metered utilities, or that Lessee is generating such a large
volume of trash as to require an increase in the size of the trash receptacle
and/or an increase in the number of times per month that it is emptied, then
Lessor may increase Lessor's Base Rent by an amount equal to such increased
costs. There shall be no abatement of Rent and Lessor shall not be liable in any
respect whatsoever for the inadequacy, stoppage, interruption or discontinuance
of any utility or service due to riot, strike, labor dispute, breakdown,
accident, repair or other cause beyond Lessor's reasonable control or in
cooperation with governmental request or directions.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber {collectively, "assign or assignment") or
sublet all or any part of Lessor's interest in this Lease or in the Premises
without Lessor's prior written consent.
(b) Unless Lessee is a corporation and its stock is publicly
traded on a national stock exchange, a change in the control of Lessee shall
constitute an assignment requiring consent. The transfer, on a cumulative basis,
of 25% or more of the voting control of Lessee shall constitute a change in
control for the purpose.
(c) The involvement of Lessee or the assets in any
transaction, or series of transactions (by way of merger, sale acquisition,
financing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than 25% of such Net Worth as it was represented at the time of the
execution of this Lease or in the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of the Lease to which Lessor may withhold as consent.
"Net Worth of Lessee" shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.
(d) An assignment of subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach, without the necessity of any notice and grace period. If
Lessor elects to treat such Unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate the Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in effect.
Further, in the event of such Breach and rental adjustment, (i) the purchase
price of any option to purchase the Premises held by Lessee shall be subject to
similar adjustment is 110% of the price previously in effect, and (ii) all fixed
and no-fixed rental adjustments scheduled during the remainder of the Lease term
and be increased to 110% of the scheduled adjusted rent.
(e) Lessee's remedy for any Breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damage and/or injunctive relief.
(f) Lessor may reasonably withhold consent to a proposed
assignment or subletting if Lessee is in Default at the time consent is
requested.
(g) Notwithstanding the foregoing, allowing a de minimis
portion of the Premises, as, 20 square feet or less, to be used by a third party
vendor in connection with the installation of a vending machine or payphone
shall not constitute a subletting.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, no assignment or
subletting shall: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or the performance or any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's
obligation 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 Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise the remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute consent of any subsequent assignment or subletting.
(d) In the event of any default or Breach by Lessee, Lessor
may proceed directly against Lessee, any Guarantors or anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or subLessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefore to Lessor, or any security held by
Lessor.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or subLessee, including but not limited
to the intended use and/or request modification or the Premises, if any,
together with a fee of $500 as consideration for Lessor's considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested. (See
also Paragraph 36).
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment, entering into such sublease, or entering
into possession of the Premises or any portion thereof, be deemed 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 agreement or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
Page 10 of 27
(g) Lessor's consent to any assignment or subletting shall not
transfer to the assignee or sublessee by Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2)
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 herby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease, provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. In the event that this amount
collected by Lessor exceeds Lessee's then outstanding obligations any such
excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing
or any assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublease for any failure of Lessee to perform and comply
with any of Lessee's nor by reason of the collection of Rent, be deemed liable
to the sublessee for any failure of Lessee to perform and comply with any of the
Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to
Lessor without any obligation or right to inquire as to whether such Breach
exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease, provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No subleases 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
or 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.
13. DEFAULT; BREACH; REMEDIES.
13.1 Default; Breach. A "Default" is deemed as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is deemed as the occurrence of one or
more of the following Defaults, and the failure of Lessee's to cure such Default
within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurance to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of 3
business days following written notice to Lessee.
(c) The commission of waste, act or acts constituting public
or private nuisance, and/or an illegal activity on the Premises by Lessee, where
such actions continue for a period of 3 business days following written notice
to Lessee.
(d) The failure by Lessee to provide (i) reasonable written
evidence or compliance with Applicable Requirements, (ii) the service contracts,
(iii) the reclusion of an unauthorized assignment or subletting, (iv) an
Estoppell Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Xxxxxxxxx 00,
(xxxx) material data safety sheets (MSDS), or (ix) any other documentation or
information which Lessor any reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.
(e) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof,
other than those described in subparagraphs 13.1(a), (b), (c) or (d), above
where such Default continues for a period of 30 days after written notice;
provided, however that if the nature of Lessee's Default is such that more than
30 days are reasonably required for its cure, than it shall not be deemed to be
a Breach is Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "debtor" as defined in 11 U.S.C. ss. 101 oR any successor
statute thereto (unless, in the case or a petition filed against Lessee, the
same is dismissed within 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 30 days; or (iv) the attachment execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not discharged
within 30 days; provided, however, in the event that any provision of the
subparagraph is contrary to any applicable law, such provision shall be or no
force or effect and not effect the validity of the remaining provision.
(g) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.
(h) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, with 60 days following written notice
or any such event, to provide written alternative assurances 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 executive of this Lease.
13.2 REMEDIES. If Lessee fails to perform any of the affirmative duties
or obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% or the costs and
expenses incurred by Lessor in such performance upon receipt of an invoice
therefore. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach.
Page 11 of 27
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case the Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitle to recover from Lessee: (i) the unpaid Rent which had been earned at the
time of termination; (ii) the worth of the time or award of the amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the 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 the
obligation 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 alternation of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with the Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of the Lease shall not waive Lessor's right to recover
damages under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer. Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quite given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interest, shall not
constitute a termination of the Lessee's right possession.
(c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions 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 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by Lessee, the
exact amount of which will be extremely difficult to ascertain. Such costs
includes, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 6 days after such amount shall be due,
then, without any requirement for notice to Lessee. Lessee shall immediately pay
to Lessor a one-time late charge equal to 5% of each such overdue amount or
$100, whichever is greater. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the cost Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount., nor prevent the exercise of any of the other rights and
remedies granted hereunder. IN the event that a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base
Rent, then notwithstanding any provision of the Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.
13.4. INTEREST. Any monetary payment due Lessor hereunder, other then
late charges, not received by Lessor, when due as to schedule payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be computed at the rate of 10%
per annum but shall not exceed the maximum rata allowed by law. Interest is
payable in addition to the potential late charge provided for in Paragraph 13.3.
13.5. BEACH BY LESSOR.
(a) Notice of Breach. Lessor shall not be deemed in breach of
the Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, or 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 30 days are reasonably required for its
performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued in completion.
(b) Performance by Lessee on Behalf of Lessor. In the event
that neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one
moth's Base Rent or the Security deposit, reserving Lessee's right to
reimbursement from Lessor for any such expense in excess of such offset. Lessee
shall document the cost of said cure and supply said documentation to Lessor.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (collectively "Condemnation"), this Lease shall terminate as to the part
taken as of the date this condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Unit, or more
than 20% of Lessee's Reserved Parking Spaces, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within 10 days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises cause by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessor's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefore. IN the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. BROKERAGE FEES.
15.1 ADDITIONAL COMMISSION. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) If Lessee exercises any Option, (b) if Lessee
acquires from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (c) if Lessee remains in possession of
the Premises, with the consent of Lessor, after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of this
Lease.
Page 12 of 27
15.2 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts
due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue interest. In addition, if Lessor fails to pay any amounts
is Lessee's Broker when due, Lessee's Broker may send written notice to Lessor
and Lessee of such failure and if Lessor fails to pay such amounts within 10
days after said notice, Lessee shall pay said monies to the Broker and offset
such amounts against Rent. In addition, Lessee's broker shall be deemed to be a
third party beneficiary or any commission agreement entered into by and/or
between Lessor and Lessor's Broker for the limited purpose of collecting any
brokerage so owed.
15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Broker is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the Indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. ESTOPPEL CERTIFICATES.
(a) Each Party (as "Responding Party") shall within 10 days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
AIR Commercial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver
the Estoppel Certificate within such 10 day period, the Requesting Party may
execute an Estoppel Certificate stating that (i) the Lease is in full force and
affect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor be the Requesting Party, not more than one month's rent has
been paid in advance. Prospective purchases and encumbrances may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained to said Certificate.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by the Lessor such financial statements
as may be reasonably required by such lender or purchaser, including but not
limited to Lessee's financial statements for the pas 3 years. All such financial
statements shall be reviewed by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or if
this is a sublease, of the Lessor's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or the Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligation and/or covenants in the Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court or competent jurisdiction, shall in no way effect the
validity of any other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION OF LIABILITY. The obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor, or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, nor the application of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. 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 use, 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. The liability (including court costs and attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee resolved by such
Broker pursuant to the Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties as such
addresses as Lessor may from time to time hereafter designate in writing.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery whom on
the receipt card, or if no delivery date is show, the postmark therein. If sent
by regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery, shall be deemed given 24 hours AFTER DELIVERY of the same to the
Postal Service or courier. Notices transmitted by facsimile transmission or
similar means shall be deemed delivered upon telephone confirmation or receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.
Page 13 of 27
24. WAIVERS. No waiver by Lessor or Lessee of the Default or Breach of any
term, covenant or condition hereof by Lessee or Lessor shall be deemed a waiver
of any other term, covenant or condition hereof, or at any subsequent Default or
Breach by Lessee or Lessor of the same or any other term, covenant or condition
hereof. Lessor's or _____________ consent to, or approval of any act shall not
be deemed to render unnecessary the obtaining of Lessors or Lessee's consent to,
or approval of any subsequent or similar act by Lessee or Lessor or be construed
as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver
or any Default or breach by Lessee. Any payment 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 payments.
25. DISCLOSURES REGARDING THE NATURE OF A REAL ESTATE AGENCY RELATIONSHIP.
(a) When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset understand
what type of agency relationship or representation it has with the agent or
agents in the transaction. Lessor and Lessee acknowledge being advised by the
Brokers in this transaction as follows:
(I) Lessor's Agent. A Lessor's agent under a listing agreement
with the Lessor acts as the agent for the Lessor only. A Lessor's agent or
subagent has the following affirmative obligation: TO THE LESSOR: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the
Lessor. TO THE LESSEE AND THE LESSOR: (a) Diligent exercise of reasonable skills
and care in performance of the agent's duties. (b) A duty of honest and fair
dealing and good faith. (c) A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not know
to, or within the diligent attention and observation of, the Parties. An agent
is not obligated to reveal to either Party any confidential information obtained
from the other Party which does not involve the affirmative duties set forth
above.
(II) Lessee's Agent. An agent can agree to act as agent for
the Lessee only. In these situations, the agent is not the Lessor's agent, even
if by agreement the agent may receive compensation for services rendered, wither
in full or in part from the Lessor. An agent acting only for a Less has the
following affirmative obligations. TO THE LESSEE: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. TO THE LESSEE
AND THE LESSOR: (a) Diligent exercise of reasonable skills and care in
performance of the agent's duties. (b) A duty of honest and fair dealing and
good faith. (c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to or
within the diligent attention and observation of the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party, which does not involve the affirmative duties set forth above.
(III) AGENT REPRESENTING BOTH LESSOR AND LESSEE. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee, in a dual
agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: (a) a fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve a Lessor or
Lessee from the responsibility to protect their own rent interests. Lessor and
Lessee should carefully read all agreements to assure that they adequately
express their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.
(b) Brokers have no responsibility with respect to any Default or
Breach hereof by either Party. The Parties agree that no lawsuit or other legal
proceeding involving any breach of duty, error or omission relating to this
Lease may be brought against Broker more than one year after the Start Date and
that the liability (including court costs and attorneys' fees), of any Broker
with respect to any such lawsuit and/or legal proceeding shall not exceed the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker's liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.
(c) Buyer and Seller agree to identify to Brokers as "Confidential" any
communication or information given Brokers that is considered by such Party to
be confidential.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION: ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed or trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
30.2 ATTORNMENT. In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination or a Security Device to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such now owner, and (ii) Lessor shall
thereafter be relieved of any further obligations hereunder and such now owner
shall assume all of Lessor's obligations, except that such now owner shall not:
(a) be liable for any act or omission of any prior Lessor or with respect to
events occurring prior to acquisition of ownership; (b) be subject to any
offsets or defenses which Lessee might have against any prior Lessor; (c) be
bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior Lessor.
Page 14 of 27
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "NON-DISTURBANCE AGREEMENT") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. ATTORNEY'S FEES. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as HEREAFTER defined) in any
such proceeding, action, or appeal, thereon, shall be entitled to reasonable
attorneys' 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 of Broker of its claim or defense. The attorneys' fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' 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 ($200 is a reasonable minimum per
occurrence for such services and consultation).
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 after reasonable prior notice for
the purpose of showing the same to prospective purchasers, lenders, or tenants,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary or desirable and the erecting, using and
maintaining of utilities, services, pipes, and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee's
use of the Premises. All such activities shall be without abatement of rent or
liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, not permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determination
whether to permit an auction.
34. SIGNS. Lessor may place on the Premises ordinary "For Sale" signs at
any time and ordinary "For Lease" signs during the last 6 months or the term
hereof, except for ordinary "For Sublease" signs which may be placed only on the
Premises. Lessee shall not place any sign upon the Project without Lessor's
prior written consent. All signs must comply with all Applicable Requirements.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest shall constitute Lessor's election to have such event constitute the
termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of 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, engineer's and
other consultants' fees) incurred in the consideration of, or response to a
request by Lessee for any Lessor consent including but not limited to consents
to an assignment, a subletting, or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment, or subletting shall
constitute an acknowledgement that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver or any then existing Default
or Breach except as may be otherwise specifically stated in writing by Lesser at
the time of consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.
37. GUARANTOR.
37.1 EXECUTION. The Guarantors, if any, shall each execute a guaranty I
in the form most recently published by the AIR Commercial Real Estate
Association.
37.2 DEFAULT. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate the Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements. (c)
an Estoppel Certificate or (d) written confirmation that the guaranty is still
in effect.
38. QUIET POSSESSION. Subject to payment by Lessee of the rent and
performance of all of the covenants, conditions, and provisions on Lessee's part
to be observed and performed under this Lessee, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
39. OPTIONS. If Lessee is granted an option, as defined below, then the
following provisions shall apply.
39.1 DEFINITION. "Option" shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that Lessee has on other
property or Lessor: (b) the right to first refusal or first offer to lease with
the Premises or other premises, or other property of Lessor: (c) the right to
purchase or the right of first refusal to purchase the Premises or other
property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Any option grated to Lessee
in this Lease is personal to the original Lessee and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full Possession of the Premises and if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
Page 15 of 27
(a) Lessee shall have no right to exercise an Option: (i)
during the period commencing with the giving of any notice of Default and
continuing until said Default is cured. (II) duringthe period of time any Rent
is unpaid (without regard to whether notice thereof is given Lessee), (III)
during the time Lessee is in Breach of this Lease, or (IV) in the event that
Lessee has been given 3 or more notices of separate Default, whether or not the
Defaults are cured, during the 12 month period immediately preceding the
exercise of the Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of not further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of this extended term or
completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days
after such Rent become due (without any necessity of Lessor to give notice
thereof), or (ii) if Lessee commits a breach of this Lease.
40. SECURITY MEASURES. Lessee hereby acknowledges that the Rent 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 invited and their property from the acts of third parties.
41. RESERVATIONS. Lessor reserves the right: (i) to grant, without the
consent or jointer of Lessee, such easement, rights and dedications that Lessor
deems necessary, (ii) to cause the recordation of parcel maps and restrictions,
and (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not
unreasonable interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonable requested by Lessor to effectuate such rights.
42. 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 pr so much thereof as it was not legally required to pay. A Party who
does not initiate suit for the recovery of sums paid "under protest" within 6
months shall be deemed to have waived its rights to protest such payment.
43. AUTHORITY; MULTIPLE PARTIES; EXECUTION.
(a) If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within 30 days after request, deliver to the other Party satisfactory
evidence of such authority.
(b) If this Lease is executed by more than one person or
entity as "Lessee", each such person or entity shall be jointly and severally
liable hereunder. It is agreed that any one of the named Lessees shall be
empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind al of the named Lessees, and Lessor may rely on the same as if
all o the named Lessees had executed such documented.
(c) This Lease may be executed by the Parties in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
44. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
45. OFFER. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
46. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
47. WAVIER OF JURY TRIAL. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING
OUT OF THIS AGREEMENT.
48. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease |_| is |X| is not attached to this Lease.
49. AMERICANS WITH DISABILITIES ACT. Since compliance with the Americans
with Disabilities Act (ADA) is dependant upon Lessee's specific use of the
Premises, Lessor makes no warranty or representation as to whether or not the
Premises comply with ADA or any similar legislation. In the event that Lessee's
use of the Premises requires modifications or additions to the Premises in order
to be in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee's expense.
Page 16 of 27
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.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL
REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSATION TO WHICH IT RELATES.
THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED
TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND
OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT
AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS
OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Executed at:
----------------------------- --------------------------------
On: On:
-------------------------------------- -----------------------------------------
By LESSOR: By LESSEE:
PARK/ EL SEGUNDO PARTNERS, LLC IRONCLAD PERFORMANCE WEAR CORPORATION
----------------------------------------- --------------------------------------------
(A CALIFORNIA LIMITED LIABILITY COMPANY) (A CALIFORNIA CORPORATION)
----------------------------------------- --------------------------------------------
By: /s/ L. Field By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------- -----------------------------------------
Name Printed: HEARTLAND INVESTMENTS, INC. Name Printed: XXXXXX X. XXXXXX
--------------------------- ------------------------------
Title: MANAGER Title: PRESIDENT AND CEO
---------------------------------- -------------------------------------
By: By:
-------------------------------------- -----------------------------------------
Name Printed: XXXXXXXX N FIELD. Name Printed:
--------------------------- ------------------------------
Title: PRESIDENT Title:
---------------------------------- -------------------------------------
Address: 000 X. XXXXXX XXXXX, XXXXX 000 Address: 0000 XXXX XXXXX, XXXXX 000
-------------------------------- --------------------------
XXXXXXX XXXXX, XX 00000 XX XXXXXXX, XX 00000
----------------------------------------- --------------------------------------------
Telephone: (000) 000-0000 Telephone: ( )
----- ------------------------ ----- ---------------------------
Facsimile: (000) 000-0000 Facsimile: ( )
----- ------------------------ ----- ---------------------------
Federal ID No. Federal ID No.
-------------------------- -----------------------------
BROKER: BROKER:
Attn: Attn:
----------------------------------- --------------------------------------
Title: Title:
---------------------------------- -------------------------------------
Address: Address:
-------------------------------- -----------------------------------
----------------------------------------- --------------------------------------------
Telephone: ( ) Telephone: ( )
----- ------------------------ ----- ---------------------------
Facsimile: ( ) Facsimile: ( )
----- ------------------------ ----- ---------------------------
Email: Email:
---------------------------------- -------------------------------------
Federal ID No. Federal ID No.
-------------------------- -----------------------------
These forms are often modified to meet changing requirements of law and needs of
the industry. Always write or call to make sure you are utilizing the most
current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxx, XX 00000. (000) 000-0000.
Page 17 of 27
RENT ADJUSTMENT(S)
STANDARD LEASE ADDENDUM
DATED SEPTEMBER 12, 2005
BY AND BETWEEN (LESSOR) PARK/EL SEGUNDO PARTNERS, LLC
(A CALIFORNIA LIMITED LIABILITY COMPANY)
(LESSEE) IRONCLAD PERFORMANCE WEAR CORPORATION
(A CALIFORNIA CORPORATION)
ADDRESS OF PREMISES: 0000 XXXX XXXXX, XXXXX 000
XX XXXXXXX, XX 00000
Paragraph 50
--------
A. RENT ADJUSTMENTS:
The monthly rent for each month of the adjustment period(s) specified
below shall be increased using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
|_| I. COST OF LIVING ADJUSTMENT(S) (COLA)
a. On (Fill in COLA Dates): _________________________________________
________________________________________________________________________________
the base rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one): |_| CPI W (Urban Wage Earners
and Clerical Workers) or |_| CPI U (All Urban Consumers) for (Fill in Urban
Areas):
________________________________________________________________________________
_____________________, All items (1982-1984 = 100), herein referred to as "CPI".
b. The monthly rent payable in accordance with paragraph A.1.a. of this
Addendum shall be calculated as follows: the Base Rent set forth in paragraph
1.5 of the attached Lease, shall be multiplied by a fraction the numerator or
which shall be the CPI of the calendar month 2 months prior to the month(s)
specified in paragraph A.1.a. above during which the adjustment is to take
effect, and the denominator of which shall be the CPI of the calendar month
which is 2 months prior to (select one): the first month fo the term of this
Lease as set forth in paragraph 1.3 ("Base Month") or (Fill in Other "Base
Month"). The sum so calculated shall constitute the new monthly rent hereunder,
but in no event, shall any such new monthly rent be less than the rent payable
for the month immediately preceding the rent adjustment.
c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, than the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.
|_| II. MARKET RENTAL VALUE ADJUSTMENT(S) (MRV)
a. On (Fill in MRV Adjustment Date(s): the Base Rent shall be
adjusted to the "Market Rental Value" of the property as follows:
1) Four months prior to each Market Rental Value Adjustment Date
described above, the Parties shall attempt to agree upon what the new MRV will
be on the adjustment date. If agreement cannot be reached within thirty days,
then:
(a) Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30 days.
Any associated costs will be split equally between the Parties, or:
(b) Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:
(i) With 15 days thereafter, Lessor and Lessee shall
each select and appraiser or broker ("Consultant" - check one) of their choice
to act as an arbitrator. The two arbitrators so appointed shall immediately
select a third mutually acceptable Consultant to act as a third arbitrator.
(ii) The 3 arbitrators shall within 30 days of this
appointment of the third arbitrator reach a decision as to what the actual MRV
for the Premises is, and whether Lessor's or Lessee's submitted MRV is the
closest thereto. The decision of a majority of the arbitrators shall be binding
on the Parties. The submitted MRV which is determined to be the closest to the
actual MRV shall thereafter be used by the Parties.
Page 18 of 27
(iii) If either of the Parties fails to appoint an
arbitrator within the specified 15 days, the arbitrator timely appointed by one
of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.
(iv) The entire cost of such arbitration shall be
paid by the party whose submitted MRV is not selected, ie, the one that is NOT
the closest to the actual MRV.
2) Notwithstanding the foregoing, the new MRV shall not be
less than the rent payable for the month immediately preceding the rent
adjustment.
b. Upon the establishment of each New Market Rental Value:
1) the new MRV will become the new "Base Rent" for the purpose
of calculating any further Adjustments, and
2) the first month of each Market Rental Value term shall
become the new "Base Month" for the purpose of calculating any further
Adjustments.
|X| III. FIXED RENTAL ADJUSTMENT(S) (FRA)
The Base Rent shall be increased to the following amounts on the dates set forth
below:
On (Fill in FRA Adjustment Date(s): The New Base Rent shall be:
MONTHS
----------------------------------- --------------------------
13-24 $10,510.00
----------------------------------- --------------------------
25-36 $10,825.00
----------------------------------- --------------------------
37-48 $11,150.00
----------------------------------- --------------------------
49-60 $11,485.00
----------------------------------- --------------------------
B. NOTICE:
Unless specified otherwise herein, notice of any such adjustments,
other than Fixed Rental Adjustments, shall be made as specified in paragraph 23
of the Lease.
C. BROKER'S FEE:
The Brokers shall be paid a Brokerage Fee for each adjustment specified
above in accordance with paragraph 15 of the Lease.
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 000 X. Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxx, Xxxxx. 00000
Page 19 of 27
OPTION(S) TO EXTEND
STANDARD LEASE ADDENDUM
DATED SEPTEMBER 12, 2005
----------------------------------------------------------------------
BY AND BETWEEN (LESSOR) PARK/EL SEGUNDO PARTNERS, LLC
--------------------------------------------------
(A CALIFORNIA LIMITED LIABILITY COMPANY)
-------------------------------------------------
BY AND BETWEEN (LESSEE) IRONCLAD PERFORMANCE WEAR CORPORATION
--------------------------------------------------
ADDRESS OF PREMISES: 0000 XXXX XXXXX, XXXXX 000
-----------------------------------------
XX XXXXXXX, XX 00000
Paragraph 51
----
A. OPTION(S) TO EXTEND:
Lessor hereby grants to Lessee the option to extend the term of this Lease for
ONE (1) additional SIXTY (60) month period(s) commencing when the prior term
expires upon each and all of the following terms and conditions:
(i) In order to exercise an option to extend, Lessee must give written
notice of such election to Lessor and Lessor must receive the same at least SIX
(6) but not more than NINE (9) months prior to the date that the option period
would commence, time being of the essence. If proper notification of the
exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only be exercised
consecutively.
(ii) The provisions of paragraph 39, including those relating to
Lessee's Default set forth in paragraph 39.4 of this Lease, are conditions of
this Option.
(iii) Except for the provisions of this Lease granting an option or
options to extend the term, all of the terms and conditions of this Lease except
where specifically modified by this option shall apply.
(iv) This Option is personal to the original Lessee, and cannot be
assigned or exercised by anyone other than said original Lessee and only while
the original Lessee is in full possession of the Premises and without the
intention of thereafter assigning or subletting.
(v) The monthly rent for each month of the option period shall be
calculated as follows, using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
|_| I. COST OF LIVING ADJUSTMENT(S) (COLA)
a. On (Fill in COLA Dates): ___________________________________________________
_________________________________________________________ the Base Rent shall be
adjusted by the change, if any, from the Base Month specified below, in the
Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of
Labor for (select one): |_| CPI W (Urban Wage Earners and Clerical Workers) or
|_| CPI U (All Urban Consumers), for (Fill in Urban Area): All items (1982-1984
+100) herein referred to as "CPI".
b. The monthly rent payable in accordance with paragraph A.1.a. of this Addendum
shall be calculated as follows: the Base Rent set forth in paragraph 1.5 of the
attached Lease, shall be multiplied by a fraction the numerator or which shall
be the CPI of the calendar month 2 months prior to the month(s) specified in
paragraph A.1.a. above during which the adjustment is to take effect, and the
denominator of which shall be the CPI of the calendar month which is 2 months
prior to (select one): the first month fo the term of this Lease as set forth in
paragraph 1.3 ("Base Month") or (Fill in Other "Base Month") . The sum so
calculated shall constitute the new monthly rent hereunder, but in no event,
shall any such new monthly rent be less than the rent payable for the month
immediately preceding the rent adjustment.
c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, than the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.
|_| II. MARKET RENTAL VALUE ADJUSTMENT(S) (MRV)
a. On (Fill in MRV Adjustment Date(s):_________________________________
_______________________________________________ the Base Rent shall be adjusted
to the "Market Rental Value" of the property as follows:
Page 20 of 27
1) Four months prior to each Market Rental Value Adjustment Date
described above, the Parties shall attempt to agree upon what the new MRV will
be on the adjustment date. If agreement cannot be reached within thirty days,
then:
(a) Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30 days.
Any associated costs will be split equally between the Parties, or:
(b) Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:
(i) With 15 days thereafter, Lessor and Lessee shall
each select and appraiser or
broker ("Consultant" - check one) of their choice to act as an arbitrator. The
two arbitrators so appointed shall immediately select a third mutually
acceptable Consultant to act as a third arbitrator.
(ii) The 3 arbitrators shall within 30 days of this
appointment of the third
arbitrator reach a decision as to what the actual MRV for the Premises is, and
whether Lessor's or Lessee's submitted MRV is the closest thereto. The decision
of a majority of the arbitrators shall be binding on the Parties. The submitted
MRV which is determined to be the closest to the actual MRV shall thereafter be
used by the Parties.
(iii) If either of the Parties fails to appoint an
arbitrator within the specified 15
days, the arbitrator timely appointed by one of them shall reach a decision on
his or her own, and said decision shall be binding on the Parties.
(iv) The entire cost of such arbitration shall be
paid by the party whose submitted
MRV is not selected, ie, the one that is NOT the closest to the actual MRV.
2) Notwithstanding the foregoing, the new MRV shall not be
less than the rent payable for the month immediately preceding the rent
adjustment.
b. Upon the establishment of each New Market Rental Value:
1) the new MRV will become the new "Base Rent" for the purpose
of calculating any further Adjustments, and
2) the first month of each Market Rental Value term shall
become the new "Base Month" for the purpose of calculating any further
Adjustments.
|X| III. FIXED RENTAL ADJUSTMENT(S) (FRA)
The Base Rent shall be increased to the following amounts on the dates set forth
below:
On (Fill in FRA Adjustment Date(s): The New Base Rent shall be:
MONTHS
----------------------------------- --------------------------
61-72 $11,830.00
----------------------------------- --------------------------
73-84 $12,185.00
----------------------------------- --------------------------
85-96 $12,550.00
----------------------------------- --------------------------
97-108 $12,927.00
----------------------------------- --------------------------
109-120 $13,315.00
----------------------------------- --------------------------
B. NOTICE:
Unless specified otherwise herein, notice of any such adjustments,
other than Fixed Rental Adjustments, shall be made as specified in paragraph 23
of the Lease.
C. BROKER'S FEE:
The Brokers shall be paid a Brokerage Fee for each adjustment specified
above in accordance with paragraph 15 of the Lease.
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 000 X. Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxx, Xxxxx. 00000
Page 21 of 27
ADDENDUM TO LEASE DATED SEPTEMBER 12,2005 BY AND BETWEEN PARK/EL SEGUNDO
PARTNERS, LLC (A CALIFORNIA LIMITED LIABILITY COMPANY), AS LESSOR, AND IRONCLAD
PERFORMANCE WEAR COPORATION, (A CALIFORNIA CORPORATION) AS LESSEE, FOR THE
PREMISES LOCATED AT 0000 XXXX XXXXX, XXXXX 000, XX XXXXXXX, XXXXXXXXXX.
--------------------------------------------------------------------------------
52. LEASE DATES
The Lease Commencement Date shall be the date that Lessee's tenant
improvement work is substantially completed and suitable for occupancy
and Lessor delivers the Premises to Lessee. The Lease Expiration Date
shall be the last day of the sixtieth (60th) month of the lease term.
53. TENANT IMPROVEMENTS
Lessor shall improve Lessee's Premises as shown on the tenant
improvement plan (Exhibit A) prepared by Lessor's architect. The cost
of Lessee's tenant improvements in excess of Lessor's shell cost is
$47,293 (Exhibit B). Lessor shall give Lessee a tenant improvement
allowance of $25,000 resulting in a balance due of $22,293, which shall
be repaid by Lessee to Lessor in thirty-six (36) equal monthly payments
of $619.00 beginning the first month of the lease term.
54. SIGNAGE
Lessee, at its cost, may install exterior building signage of
non-illuminated "Channel Letter" style at a location(s) agreed upon by
Lessor and subject to Lessor's written approval of a plan submitted by
Lessee's sign contractor. Lessee shall obtain the required City sign
permit(s).
AGREED AND ACCEPTED
LESSOR: LESSEE
PAR/EL SEGUNDO PARTNERS, LLC. IRONCLAD PERFORMANCE WEAR CORPORATION
(a California limited liability company) (a California corporation)
By: HEARTLAND INVESTMENTS. INC By:
Managing Member ---------------------------
Xxxxxx X Xxxxxx, President
and CEO
By: Date:
------------------------------- ---------------------------
Date:
-----------------------------
Page 22 of 27
AIR COMMERCIAL REAL ESTATE ASSOCIATION
GUARANTY OF LEASE
WHEREAS, PARK/EL SEGUNDO PARTNERS, LLC (A CALIFORNIA LIMITED LIABILITY
COMPANY), hereinafter "Lessor", and IRONCLAD PERFORMANCE WEAR CORPORATION (A
CALIFORNIA CORPORATION), hereinafter "Lessee", are about to execute a document
entitled "Lease" dated SEPTEMBER 12, 2005 concerning the premises commonly known
as 0000 XXXX XXXXX, XXXXX 000, XX XXXXXXX, XXXXXXXXXX wherein Lessor will lease
the premises to Lessee, and
WHEREAS, XXXXXX X. XXXXXX hereinafter "Guarantors" have a financial
interest in Lessee, and
WHEREAS, Lessor would not execute the Lease if Guarantors did not
execute and deliver to Lessor this Guarantee of Lease.
NOW THEREFORE, in consideration of the execution of the foregoing Lease
by Lessor and as a material inducement to Lessor to execute said Lease,
Guarantors hereby jointly, severally, unconditionally and irrevocably guarantee
the prompt payment by Lessee of all rents and all other sums payable by Lessee
under said Lease and the faithful and prompt performance by Lessee of each and
every one of the terms, conditions and covenants of said Lease to be kept and
performed by Lessee.
It is specifically agreed that the terms of the foregoing Lease may be
modified by agreement between Lessor and Lessee, or by a course of conduct, and
said Lease may be assigned by Lessor or any assignee of Lessor without consent
or notice to Guarantors and that this Guaranty shall guarantee the performance
of said Lease as so modified.
This Guaranty shall not be released, modified or affected by the
failure or delay on the part of Lessor to enforce any of the rights or remedies
of the Lessor under said Lease, whether pursuant to the terms thereof or at law
or in equity.
No notice of default need be given to Guarantors, if being specifically
agreed that the guarantee of the undersigned is a continuing guarantee under
which Lessor may proceed immediately against Lessee and/or against Guarantors
following any breach or default by Lessee or for the enforcement of any rights
which Lessor may have as against Lessee under the terms of the Lease or at law
or in equity.
Lessor shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee or
Guarantors.
Guarantors hereby waive (a) notice or acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or plead
any statute of limitations relating to this Guaranty or the Lease, (d) any right
to require the Lessor to proceed against the Lessee or any other Guarantor or
any other person or entity liable to Lessor, (e) any right to require Lessor to
apply to any default any security deposit or other security it may hold under
the Lease, (f) any right to require Lessor to proceed under any other remedy
Lessor may have before proceeding against Guarantors. (g) any right of
subrogation.
Guarantors do hereby subrogate all existing or future indebtedness of
Lessee to Guarantors to the obligations owed to Lessor under the Lease and this
Guaranty.
If a Guarantor is married, such Guarantor expressly agrees that
recourse may be had against his or her separate property for all of the
obligations hereunder.
The obligations of Lessee under the Lease to execute and deliver
estoppel statements and financial statements, as therein provided, shall be
deemed to also require the Guarantors hereunder to do and provide the same.
The term "Lessor" refers to and means the Lessor named in the Lease and
also Lessor's successors and assigns. So long as Lessor's interest in the Lease,
the leased premises or the rents, issues and profits therefrom, are subject to
any mortgage or deed of trust or assignment for security, no acquisition by
Guarantors of the Lessor's interest shall affect the continuing obligation of
Guarantors under this Guaranty which shall nevertheless continue in full force
and effect for the benefit of the mortgagee, beneficiary, trustee or assignee
under such mortgage, deed of trust or assignment and their successors and
assigns.
The term "Lessee" refers to and means the Lessee named in the Lease and
also Lessee's successors and assigns.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation hereunder, the unsuccessful party in such
action shall pay to the prevailing party therein a reasonable attorney's fee
which shall be fixed by the court.
If this Form has been filled in, it has been prepared for submission to
your attorney for his approval. No representation or recommendation is
made by the AIR Commercial Real Estate Association, the real estate
broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Form or the transaction relating
thereto.
XXXXXX X. XXXXXX
Executed at: /s/ Xxxxxx Xxxxxx
----------------------- --------------------------------------
On:
-------------------------------- --------------------------------------
Address:
--------------------------- --------------------------------------
------------------------------------ --------------------------------------
"GUARANTORS"
Page 23 of 27
EXHIBIT B
ESTIMATE
------------------ ----------------
DATE ESTIMATE
------------------ ----------------
8/3/2005 217
------------------ ----------------
------------------------------------
NAME / ADDRESS
------------------------------------
PARK PLAZA PARTNERSHIP
000 X. XXXXXX XXXXX 000
XXXXXXX XXXXX, XX 00000
IRON CLAD CO.
TENANT IMPROVEMENTS
------------------------------------
------------------- ----------------------------------------- ------------------ ------------------ ------------------
ITEM DESCRIPTION QTY COST TOTAL
------------------- ----------------------------------------- ------------------ ------------------ ------------------
PARTITION ___ PARTITION WALLS @ 10' HIGH PER PLAN 220 54.90 12,078.00
STRUCT. STEEL XXXXX POSTS IN OFFICE WALLS (BUDGET#) 11 256.20 2,818.20
FIR OUT FIR OUT EXISTING CONCRETE WALLS & 45 34.16 1,537.20
INSTALL 5/8" WALL BOARD
3'0" X 6'8" DR 3'8" X 6'8" BUILDING STANDARD DOOR AND 10 457.50 4,575.00
FRAME
DUPLEX OUTLET 120V DUPLEX OUTLETS PER PLAN 32 85.40 2,732.80
PHONE/DATA SWITCH SINGLE XXXX RING WITH 3/4" CONDUIT STUB 18 54.90 988.20
120V BRANCH C A/B SWITCH PER PLAN 14 91.50 1,281.00
SUPERVISION 120V BRANCH CIRCUIT WITH IN 70 FEET OF 17 256.20 4,355.40
DEBRIS HAUL PANEL 60 79.30 4,758.00
FIRESPRINKLER SUPERVISION AND COORDINATION 2 622.20 1,244.40
CARPENTRY HAUL OFF DEBRIS 1 5,124.00 5,124.00
INSTALL FIRESPRINKLERS 5 1,160.22 5,801.10
INSTALL SKY LIGHTS
-------------------------------------------------------------------------------- -------------------------------------
TOTAL $47,293.30
-------------------------------------------------------------------------------- -------------------------------------
Page 24 of 27
RULES AND REGULATIONS
1. Lessor shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation, or property of the
Building and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or interfere
with other Lessees or persons having business within the Building.
4. Lessee shall not keep animals or birds within the Building and shall not
bring bicycles, motorcycles or other vehicles into areas not designated as
authorized for same.
5. Lessee shall not make, suffer, or permit letter except in appropriate
receptacle for that purpose.
6. Lessee shall be responsible for the inappropriate use of any toilet rooms,
plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.
7. Lessee shall not deface the walls, partitions or other surfaces of the
Premises or Building.
8. Lessee shall not suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of
the Building.
9. Lessee shall not employ any service or contractor for services or work to
be performed in the Building, except as approved by Lessor.
10. Lessee shall return all keys at the termination of its tenancy and shall be
responsible for the cost of replacing any keys that are lost.
11. No Lessee, employee or invitee shall go upon the roof of the Building.
12. Lessee shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Lessor or by applicable
government agencies as non-smoking areas.
13. The Premises shall not be used for lodging or manufacturing, cooking of
food preparation except for food preparation and cooking for the benefit of
Lessee's employees.
14. Lessee shall comply with all safety, tire protection and evacuation
regulations established by Lessor or any applicable government agencies.
15. Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lesse, and any such waiver shall not constitute
a waiver of any other rule or regulation or any subsequent application
thereof to such Lessee.
16. Lessee assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.
17. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Building and its occupants. Lessee agrees to
abide by these and such rules and regulations.
PARKING RULES AND REGULATIONS
1. Parking areas shall be used only for parking by vehicles no longer than
full size, passenger automobiles and for no other purpose. No storage of
any items including but not limited to trucks, trailers, shipping/storage
containers, boxes and pallets shall be permitted in either the parking
areas or the Common Areas.
2. Lessee shall not permit or allow and vehicle that belong or are controlled
by Lessee or Lessee's employees, suppliers, shippers, customers, or
invitees to be loader, unloaded, or parked in areas other than those
designated by Lessor for such activities.
3. Parking stickers or identification devices shall be the property of Lessor
and be returned to Lessor by the holder thereof upon termination of the
holder's parking privileges. Lessee will pay such replacement charge as
reasonable established by Lessor for the loss of such device.
4. Lessor reserves the right to relocate all or part of parking spaces within
the parking area of the Building and to reasonably allocate them between
compact and standard size spaces, as long as the same complies with
applicable laws, ordinances and regulations.
5. Users of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.
6. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible
for any damage to vehicles, injury to persons or loss of property, all of
which risks are assumed by the party using the parking area.
7. The maintenance, washing, waxing, or cleaning of vehicles in the parking
areas or Common Areas is prohibited.
8. Lessee shall be responsible for seeing that all of its employees, agents,
and invites comply with the applicable parking rules, regulations, laws and
agreements.
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9. Lessor reserves the right to modify these rules and/or adopt such other
reasonable rules and regulations it may deem necessary for the proper
operation of the parking area.
10. Such parking use as is herein provided is intended merely as a license only
and no bailment is intended or shall be created hereby.
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AMENDMENT NO. 1 TO LEASE DATED SEPTEMBER 12, 2005 BY AND BETWEEN PARK/EL SEGUNDO
PARTNERS, LLC (A CALIFORNIA LIMITED LIABILITY COMPANY), AS LESSOR, AND IRONCLAD
PERFORMANCE WEAR CORPORATION (A CALIFORNIA CORPORATION) AS LESSEE, FOR THE
PREMISES LOCATED AT 0000 XXXX XXXXX, XXXXX 000, XX XXXXXXX, XXXXXXXXXX.
--------------------------------------------------------------------------------
SECURITY DEPOSIT
On or before October 17, 2005, Lessee shall pay Lessor $10,204.00 as
additional security deposit. With regard to Lease Paragraph 1.7 Lessee's
security deposit shall total $20,408.00.
In the event Lessee is not in default nor have been in default of the
Lease during the lease term, Lessor shall apply from Lessee's security
deposit $10,204.00 to Lessee's rent payable for the thirteenth (13th)
month of the lease term. In that event, Lessee's security deposit shall
total $10,204.00.
AGREED AND ACCEPTED
LESSOR: LESSEE:
PARK/EL SEGUNDO PARTNERS, LLC. IRONCLAD PERFORMANCE WEAR CORPORATION
(a California limited liability company) (a California corporation)
By: Heartland Investments, Inc. By: /s/ Xxxxxx Xxxxxx
Managing Member -------------------------------
Xxxxxx X. Xxxxxx, President and CEO
By: /s/ L. Field Date: 9-30-05
------------------------------- -----------------------------
Xxxxxxxx X. Field, President
Date: 9-30-05
-----------------------------
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