LEASE
THIS LEASE made and entered into this first day of June, 1984,
between XXXXXX X. XXXXX, an individual, hereinafter called "Lessor", and PAYCO
AMERICAN CORPORATION, a Delaware corporation, hereinafter called "Lessee";
WITNESSETH:
WHEREAS, Lessor proposes to construct improvements to be used solely
by Lessee as more particularly described on Exhibit A, (plans and
specifications), attached hereto and incorporated herein by reference, and which
improvements shall be located on a parcel of land described on Exhibit B,
attached hereto, located in the City of Westlake Village, Los Angeles County,
State of California.
The improvements shall consist of an office building, which shall be
completed as expeditiously as possible by Lessor in accordance with the plans
and specifications approved by the parties and the tenant finishing allowance,
which is marked Exhibit A and attached hereto.
NOW, THEREFORE, in consideration of the premises and of the mutual
benefits to be derived therefrom, it is agreed as follows:
1. Lessor hereby leases, demises and rents unto the Lessee, and Lessee
hereby leases, takes and hires of and from the Lessor, the demised premises,
including all easements, rights of way and other rights appurtenant thereto.
2. Lessor shall, at his sole expense, complete construction and
improvement of the demised premises as specified by the provisions hereof
contained in Exhibit A. Construction of the demised premises shall commence as
soon as possible and the work shall be completed
in accordance with the plans, specifications and requirements hereof and be
ready for occupancy on or before January 1, 1985, (completion date). The
issuance of an occupancy permit by the City of Westlake Village shall satisfy
the requirements that the premises are ready for occupancy by Lessee.
Lessor warrants that the construction of the building and other
improvements shall be performed in a good and workmanlike manner and that the
materials, equipment and other building facilities and parking lot furnished in
connection therewith shall be free of defects.
Lessee may enter the demised premises during the construction period
for the purpose of inspecting the premises as to progress and completion in
accordance with plans and specifications, installing signs, fixtures, and
equipment, provided such activity shall be done only in such manner so as not to
interfere with the construction.
3. This lease shall be for a term of twenty (20) years, commencing on
the later of either the first day of January, 1985, or the first day of the
month following the month during which the demised premises become ready for
occupancy as required by Paragraph 2 hereof, and ending twenty (20) years after
the date of commencement, unless sooner terminated as hereinafter set forth.
The Lessee shall have the option to terminate this lease under the
following terms and conditions: After the first 84 months of the lease term have
expired, the Lessee shall have the following calendar month in which to make an
election to terminate the lease at the end of 96 months. This election must be
in writing and
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delivered to Lessor. Lessee shall also be required to pay a cancellation penalty
equal to one (1) full year's rent, based on the rental due and owing under the
terms of the lease for the 85th through the 96th months of occupancy, or the sum
of $280,000, whichever is greater. The effective date or termination shall be at
the end of the 96th month subsequent to commencement of the lease. To make the
election effective, the penalty must be paid to the Lessor on or before the last
day of the 96th month. The payment of this penalty shall not relieve Lessee of
its obligation under the terms of the lease to pay rent during the 84th through
96th months. Time is of the essence with respect to the exercise of the election
to terminate the lease and pay the penalty. The election and penalty must be
personally delivered to or sent postage prepaid, to the Lessor at the address
that the rent is then being paid.
4. The Lessee shall pay a base annual rental of Two Hundred Eighty
Thousand and 00/100 Dollars ($280,000.00), payable in equal monthly installments
of Twenty-three Thousand Three Hundred Thirty-three and 33/100 Dollars
($23,333.33), on the first day of each and every month, in advance.
In the event that the interest rate required to be paid by Lessor on
its underlying first mortgage indebtedness at any time during the term of this
lease exceeds the rate of Thirteen (13%) percent per annum, the annual base
rental shall increase by the sum of Three Thousand Seven Hundred and 00/100
Dollars ($3,900.00), payable monthly, for each twenty-five (25) basis points of
increase in the interest rate over Thirteen (13%) percent. Such rental increase
shall become effective the month following the effective
-3-
date of the mortgage rate adjustment. In the event that the annual base rental
is increased at any time during the term of this lease, should there
subsequently be a decrease in the mortgage interest rate, the annual base rental
shall correspondingly be decreased. Written evidence of adjustments in the
Lessor's mortgage rate shall be furnished to Lessee within ten (10) days of
receipt from Lessor's mortgagee.
At the end of the third year of this lease, the base annual rental
shall be adjusted to reflect the changes in the cost of living. However, no
adjustment shall reduce the rental below that charged during the first
three-year period. The basis for computing such adjustment shall be the Consumer
Price Index - United States, all items and major group figures for urban wage
earners and clerical workers or items (based on 1967 equals 100), published
monthly by the "Monthly Labor Review" by the Bureau of Labor Statistics of the
United States Department of Labor ("index"). The computation shall be made by
multiplying the initial base annual rental by a fraction, the numerator of which
shall be the index figure for the month prior to the month in which the
adjustment commences and the denominator of which shall be the index figure for
the month in which this lease commences. In the event that the Bureau of Labor
Statistics shall cease to publish the index, then a similar index by any other
branch or department of the United States shall be used. The result of this
computation shall then be divided by twelve (12), and commencing the forty-ninth
(49th) month of the Lease, the adjusted base rental shall be paid. Annually
thereafter, at twelve (12) month
-4-
intervals, the base annual rental shall be adjusted in accordance with the
adjustment in the Consumer Price Index or other comparable index. However, in no
event shall any annual increase in base rentals, exclusive of any adjustment
occasioned by an increase in interest rates as specified above, exceed five (5%)
percent of the rental charged in the prior twelve (12) month period.
5. It is agreed that the leased premises shall be used by the Lessee
as a general office building and that Lessee shall, with Lessor's prior written
consent, and, if required, the consent of Lessor's mortgagee, have the right to
sublease out portions of the building to qualified, responsible tenants
requiring office space. In the event of such sublease, Lessee's obligation to
pay rent under the terms and conditions of this lease shall not be relieved and
Lessee shall remain liable under its full obligation, pursuant to the terms of
this lease. Written consent to such subleasing shall not be unreasonably
withheld.
6. The Lessor shall have no obligation, after Lessee has taken
possession of the demised premises, to make any alterations, improvements or
repairs of any kind on or about the demised premises or the building or
buildings thereon, or of which they are a part, or the equipment, fixtures,
plumbing, appliances, or machinery in, upon or serving same, or the streets,
alleys, areas, area-ways or passages adjoining or appurtenant thereto. Without
limitation, Lessee covenants and agrees at its own expense throughout the term:
(A) to maintain and keep every part of demised premises, including
fixtures and appurtenances situated thereon in good and substantial order and
repair; and
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(B) to comply with all laws and orders of municipal, state and other
governmental authorities pertaining to the demised premises or the use of the
demised premises.
7. Lessee shall pay and discharge as and when the same become due and
prior to delinquency, all taxes, assessments, levies and other charges, general
and special, which are or may be during the term hereof, levied, assessed,
imposed or charged against the demised premises and any personal property owned
by the Lessor but used by the Lessee in connection with its use of the demised
premises and situated thereon, provided, however, that the Lessee during the
first calendar year of the original term of this lease and the last calendar
year of the original term or the final extension thereof shall be obligated to
pay only a pro rata portion of said real estate taxes due and payable for such
year based upon the part of the year the Lessee occupies the demised premises,
and shall only be obligated to pay those installments of special assessments
(using the longest amortization term available) coming due during the term of
this Lease.
The Lessee may in good faith contest any tax assessed which it is
obligated to pay under the terms of this lease if it shall give the Lessor a
bond for such amount and guaranteed by such surety as may be satisfactory to the
Lessor. The Lessor shall give the Lessee copies of all notices of levy or change
or proposed change in tax rate or assessment within thirty (30) days after
receipt by Lessor. The Lessor at its option, may require Lessee to pay over to
Lessor an amount equal to one-twelfth (1/12th) of the estimated annual real
estate taxes which may be due and payable during any lease year. Lessor shall
adjust the amount of such payments upon the municipality
-6-
rendering the real estate tax xxxx, and in the event that Lessee has paid an
insufficient amount to cover the total amount due, then Lessee shall, upon
demand, pay the additional sum. In the event that Lessee has paid an amount in
excess of the amount necessary to cover the general real estate tax liability,
then Lessee shall receive a credit against the following year's estimated taxes
for such overpayment.
8. Lessee covenants and agrees at its own expense throughout the term
to provide and maintain policies of insurance upon the premises in amounts and
with companies acceptable to Lessor, having a Best Insurance Guide rate of 5A+
or better, licensed to transact business in the State of California and, in
connection with casualty insurance, with mortgagee clauses in favor of and with
losses payable to Lessor and its mortgagee, as follows:
(A) Fire and extended coverage insurance upon all improvements upon
the premises in the amount of the full insurable value thereof, with full
replacement cost endorsement;
(B) General comprehensive public liability insurance in such amounts
as Lessor may from time to time determine as appropriate, but in no event less
than $2,000,000/2,000,000/500,000;
(C) Rent loss or business interruption insurance in such amounts as
may be required by Lessor.
(D) Such other insurance and coverage as Lessor may require or as may
be customarily carried by persons owning and operating properties of the same
type and usage as the leasehold premises.
9. Upon the termination of this agreement, the Lessee may remove any
trade fixtures and equipment owned by it or placed upon
-7-
the premises by it, other than fixtures installed to replace those presently in
the premises, provided, however, that the Lessee leaves the premises in the same
condition or repair and tenantability as they were at the time of the making of
this agreement prior to the addition of such trade fixtures.
10. The Lessee shall pay for all utilities, including gas electricity,
sewer and water, as well as any other services used therein during the term of
this lease.
11. Lessee agrees to save the Lessor harmless and indemnified from all
loss, damage, liability or expense incurred or claimed by reason of Lessee's
neglect or use of the premises, or by reason of any injury or property damage to
any person or property on the premises described herein, except such as is
caused by the negligence of the Lessor, and Lessee further agrees to pay all
legal expenses, including a reasonable attorney's fee, incurred by the Lessor by
reason of the commencement of legal proceedings to enforce any of the provisions
of this lease, and resulting in a decree or award in favor of the Lessor.
The Lessor shall not be liable, and the Lessee hereby waives all
claims against the Lessor, for any injury, loss or damage, by theft or
otherwise, or damage either to person or property, sustained by the Lessee or
other persons, whether due to the building or any part or appurtenances thereof
becoming out of repair, or arising from bursting of pipes or resulting from
steam, electricity, gas, odors, water, rain or snow which may leak or come from
any part of the building or adjoining premises, or due to the happening of any
accident in or about the building, or to pipes or appurtenances,
-8-
or plumbing works therein, or from any other cause whatsoever, unless caused by
the negligence of the Lessor.
12. In case the demised premises are damaged by fire or other
casualty, the Lessor covenants and agrees, subject to the right of cancellation
hereinafter set forth, promptly to repair or restore the same and obtain
certificates approving all such repairs from all public authorities having
jurisdiction, subject to reasonable delays in collection of insurance funds or
due to restrictions on or inability to obtain labor or materials, or due to
other causes or conditions beyond the control of the Lessor. Prompt repair or
restoration shall be deemed to allow a reasonable time for the parties to make a
survey and determination of the extent of the damage and the probable cost of
necessary repairs and restoration and to prepare suitable plans and
specifications for and to repair or restore the demised premises in accordance
with such determination.
In the event the damage to the demised premises is of such nature and
extent as to require expenditures for repairing and restoration in excess of
25%, but less than 50% of the replacement value of the improvements upon the
demised premises as last determined for fire insurance purposes, Lessor shall
have one hundred twenty (120) days from the date the damage occurs or if 50% of
such replacement value, then Lessor shall have two hundred ten (210) days from
the date the damage occurs to repair and restore the demised premises to a
condition substantially equal to or better in every respect than their condition
prior to such damage. Lessor shall submit to Lessee full information obtained by
it as to the cost of repairing and restoring the demised premises. If all
repairs and restoration are
-9-
not substantially completed within the time limits herein stated, then Lessee
may at its option terminate this lease on written notice given thirty (30) days
after expiration of the applicable time limit. Expenditures for repairing and
restoration shall include the costs of decorating and refurbishing, but shall
exclude damage to personal property owned by Lessee.
If the demised premises are untenantable for Lessee's purposes in
whole or in part due to damage by fire or other casualty, or the repair of such
damage, Lessee's obligation to pay rent and taxes shall be abated
proportionately from the date of such damage until the demised premises are
repaired or restored, and any unearned rent paid by Lessee shall be refunded or
credited upon rent subsequently payable by Lessee if this lease continues in
effect.
13. In the event that the building or the demised premises shall be
taken or condemned by any competent authority for any public use or purpose, or
in the event that prior to such taking or condemnation, Lessor deems it
expedient to sell the premises to such public authority, the term of this lease
shall end upon the first to occur of sale of the premises or the date when the
possession of the portion so taken shall be required for such use or purpose,
and the Lessee shall have no claim against the Lessor and shall not be entitled
to any portion of the amount which may be awarded as damages or paid as a result
of such condemnation proceedings. In the event of termination of this lease as
herein provided, the rental shall be apportioned to the date of such
termination.
14. The Lessee shall not assign this lease without the consent in
writing of Lessor, and, if required, Lessor's mortgagee,
-10-
which consent shall not be unreasonably withheld. Such consent shall not be
unreasonably withheld. It is understood and agreed, however, that if the Lessee
shall be declared bankrupt, shall have a receiver appointed of its property,
which receiver shall not be discharged in thirty (30) days, or shall Lessee make
an assignment for the benefit of creditors, or its rights hereunder shall be
taken under execution, it shall be construed as an assignment of this lease
within the meaning hereof and lessor shall have the right to terminate this
lease upon the happening of the foregoing event. In the event, however, that
Lessee is the subject or involved in a merger or consolidation, this lease will
not be construed as being assigned in the event that the resulting corporation
of such merger or consolidation has total assets and a net worth after such
consolidation or merger equal to or greater than that of the Lessee immediately
prior to such consolidation or merger. Notwithstanding the foregoing, such act
shall require the consent of Lessor and Lessor's mortgagee, which consent shall
not be unreasonably withheld.
15. The Lessee covenants and agrees to pay and discharge all
reasonable costs, attorneys' fees and expenses and shall be paid and incurred by
the said Lessor in enforcing the covenants and agreements of this lease on
account of Lessee's default hereunder.
16. The Lessor may at all reasonable times enter said premises to
inspect same, but agrees to maintain confidentiality; and not to use or divulge
any proprietary information of Lessee disclosed during such inspection.
17. In case the Lessee shall vacate or abandon said premises, or shall
default in any of its covenants herein, and said
-11-
default shall not be cured within ten (10) days after notice thereof in writing
from the Lessor, the Lessor is hereby authorized to reenter said premises to
eject the Lessee, and take full possession of said premises, to terminate this
lease at its option and to release and let said premises on such terms as to
Lessor shall seem best, to remove from said premises all personal property of
the Lessee, and to store the same to the account and at the expense and risk of
the Lessee, and to sell said property or any part thereof, and out of the
proceeds to pay all expenses of so removing, storing and selling the same, and
all sums which shall then be in arrears or past due for rent; and that no such
act or acts of the Lessor shall be construed as cancellation of this lease or
waiver of the right of the Lessor to collect rent hereunder for the remainder of
said term, except said exercise of its option to terminate the same; and that in
case the Lessor shall determine that any action or proceeding at law or
otherwise is necessary to enforce the terms and conditions hereof, the Lessee
agrees that a reasonable attorney's fee and the necessary costs and
disbursements thereof may be allowed and taxed against it.
18. That no sign, advertisement or notice will be placed or painted on
any part of the outside or inside of said building or leased premises, except in
such manner, style and places as approved in writing by the Lessor and the City
of Westlake Village, California, which approval shall not be unreasonably
withheld, and the Lessor reserves the right to remove all others at the expense
of Lessee.
19. At all times during the term of this lease, the Lessee shall and
may peaceably and quietly hold and enjoy the demised premises free from
molestation, invasion or disturbance.
-12-
20. That the Lessor shall have the right to enter the leased premises
during twelve (12) months prior to the termination of this lease, to show the
same to prospective tenants, and to place on doors and windows the usual notice
that the premises are for rent, upon giving reasonable prior notice to Lessee.
21. This Lease shall be subject and subordinate at all times to the
lien of any mortgages or ground rents now or hereafter placed on the demised
premises without the necessity of any further instrument or act on the part of
Lessee to effect such subordination, provided that the holder of any such
mortgage shall on behalf of itself, its successors and assigns, agree that
Lessee shall have the quiet enjoyment of the demised premises for the term of
this lease in accordance with every provision hereof, so long as Lessee shall
fully and faithfully perform all of the terms, covenants and conditions of this
lease on its part to be performed, irrespective of Lessor's default. Lessee
covenants and agrees to execute and deliver upon demand such further instrument
or instruments evidencing such subordination of this lease upon the foregoing
terms as shall be desired by any mortgagee or proposed mortgagee or by any
person entitled thereto.
22. Except as other provisions may herein specifically be made, in the
event that either Lessee or Lessor as the obligated party, after ten (10) days'
written notice from the other party, fails or refuses to make any of the
payments when due as required of such obligor by this lease (other than the
payment of the rent reserved hereunder), or to do or cause to be done promptly
any and all of the acts and things in this lease provided to be done by such
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obligor, then the other party shall have the right, (but shall be under no
obligation to the obligor to do so), to advance any and all sums of money or do
or cause to be done any and all acts and things necessary or proper to be done
or performed by the obligor and in such event, the obligor covenants and
agrees forthwith upon demand to repay to such other party any and all sums so
advanced or expended to do or cause to be done any and all such acts and things.
In the event that the obligor fails within ten (10) days after written
demand by the other party to repay (or, if applicable, to allow a deduction from
rental) any sum advanced by the other party pursuant to the foregoing
provisions, there shall be added to the sum to be repaid interest thereon from
the date of demand to the date of repayment at the rate of ten (10%) percent per
annum.
The Lessee may, (but shall not be obligated to), from time to time,
make such payments on account of mortgages or deeds or trust or other
encumbrances on or liens against the Lessor's estate as may be necessary in the
Lessee's judgment for the protection of the Lessee's estate. The Lessee in
making any such payments shall be subrogated as against the Lessor to the rights
of the parties to whom such payments are made, and if the Lessor shall after
notice fail to repay any amount so paid, the Lessee shall also have the right to
deduct the amount so paid, with legal interest thereon, from the rental
thereafter accruing, until fully reimbursed.
23. All notices, consents, demands and requests which may be or are
required to be given by either party to the other, shall be in writing, and
shall be sent by United States registered or certified mail, with return receipt
requested, addressed as follows:
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TO LESSOR: Xxxxxx X. Xxxxx
Inland Development Corp.
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
TO LESSEE: Payco American Corporation
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
The date shown on the return receipt as of the date of which said registered or
certified mail is received by the addressee shall be conclusively deemed to be
the date on which a notice, consent, demand or request is given or made. The
above address or a party may be changed at any time, or from time to time by
notice given by said party to the other party in the manner hereinabove
provided.
24. Simultaneously with or subsequent to the execution hereof, the
parties hereto shall, at the option of either party, execute a short form lease
for recording purposes, and, in such event, the terms thereof shall constitute a
part of this lease as fully as though recited at length herein.
25. This lease and all the covenants, terms, provisions and conditions
herein contained shall inure to the benefit, and be binding upon the Lessor and
Lessee, their respective successors and assigns.
26. Lessor agrees that should it at any time offer the property for
sale and receive an acceptable offer to purchase the premises, it will notify
Lessee in writing, attaching an exact copy of the offer. Lessee shall then have
thirty (30) days from receipt of such offer to make a similar offer as to price,
terms and conditions with respect to the purchase of the premises. If Lessee
does not make such an offer within thirty (30) days, or prior thereto indicates
its intention not to make such an offer, then Lessor shall be free
-15-
to sell the premises to such third party bona fide purchaser on the same terms
and conditions as submitted by the original offer. If there are any changes or
modifications to the original offer, Lessee must be informed of such changes and
be given ten (10) days to make a similar offer based on such changes or
modifications. This right of first refusal shall exist only during the period in
which this lease is in effect.
IN WITNESS WHEREOF, the Lessor and Lessee have caused this lease
agreement to be executed by the persons duly authorized on the day and year
first above written.
/s/ Xxxxxx X. Xxxxx (SEAL)
-----------------------------
Xxxxxx X. Xxxxx, Lessor
PAYCO AMERICAN CORPORATION, Lessee
by /s/ Xxxxxx Punches
---------------------------------
President
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AMENDMENT
TO
LEASE
The Lease between Payco American Corporation ("Payco") dated June 1,
1984, as Lessee, and Xxxxxx X. Xxxxx ("Welsh") as Lessor and as assigned by
Welsh to Westlake Investment Company ("Westlake") is hereby amended as follows:
1. Paragraph number four (4) is amended to provide that the base
annual rental effective April 1, 1993, shall be Two Hundred Sixty-five Thousand
Sixty-eight and 00/100 ($265,068.00) Dollars payable in equal monthly
installments of Twenty-two Thousand Eighty-nine and 00/100 ($22,089.00) Dollars
each on the first day of each and every month commencing on April 1, 1993.
2. Paragraph number four (4) of the lease is further amended to
provide that should the underlying first mortgage covering the leasehold
premises as in effect on April 1, 1993, be subjected to an interest rate
increase at any time during the term of the lease whereby the mortgage interest
rate is in excess of twelve and five-eighths (12-5/8ths%) percent per annum, the
monthly rental payment shall be increased to cover the cost of such increase in
excess of twelve and five-eighths (12-5/8ths%) percent per annum.
3. Paragraph number four (4) shall further be amended to provide that
the base annual rental effective April 1, 1994, shall be subject to an
adjustment to reflect the change in the cost of living. However, no adjustment
shall reduce the rental below that charged for the annual period commencing
April 1, 1993. The base for computing such adjustment shall be the Consumer
Price Index - All Urban Consumers - United States (based on 1982-84 =100),
published by the United States Department of Labor, Bureau of Labor Statistics.
The computation shall be made by multiplying the initial base annual rental as
set forth in this amendment by a fraction, the numerator of which shall be the
index figure for the last reporting period prior to the month in which the
adjustment commences and the denominator of which shall be the index figure for
the last reporting period for the month in which this lease amendment commences
(April 1, 1993). In the event that the Bureau of Labor Statistics shall cease to
publish the index, then a similar index by any other branch or department of the
United States shall be used. The result of this computation shall be divided by
twelve and commencing April 1, 1994, the adjusted base rental shall be paid.
Annually thereafter, at twelve month intervals, the base annual rental shall be
adjusted in accordance with the adjustment in the Consumer Price Index or other
comparable index. However, in no event shall any annual increase in base
rentals, exclusive of any adjustment occasioned by an increase in interest rates
as specified above, exceed five (5%) percent of the rental charged in the prior
twelve month period.
4. All of the rest of the terms and conditions of the lease dated June
1, 1984, above referred to are hereby ratified, approved and confirmed.
Executed this 30 day of December, 1992.
WESTLAKE INVESTMENT COMPANY, Lessor
/s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx, managing Partner
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx, Managing Partner
PAYCO AMERICAN CORPORATION, Lessee
Xxxxxx Punches
------------------------------------
President
