EXHIBIT 10.20
LEASE
THIS LEASE is dated as of the 1st day of July, 1997, by and between
XXXXXX DEVELOPMENT, L.L.C., an Arizona limited liability company ("Lessor"), and
TRI-CITY MECHANICAL, INC., an Arizona corporation ("Lessee").
W I T N E S S E T H:
ARTICLE 1
DEFINITIONS
The following terms used in this Lease shall have the meanings
described below:
BUILDINGS. All the buildings, and fixtures and equipment therein or
thereon situated upon the Demised Premises, during the Lease Term, and any and
all renewals, replacements, additions to and substitutions for any such
Buildings and fixtures and equipment.
DEFAULT RATE. Fifteen percent (15%) per annum.
DEMISED PREMISES. The real property, exclusive of the Buildings more
particularly described on EXHIBIT "A", together with the easements, rights,
privileges and appurtenances thereto.
EVENT OF DEFAULT. The occurrence of any event described in ARTICLE
17.
EXTENDED LEASE TERM. One (1) additional period of sixty (60) months,
commencing upon the expiration of the Initial Lease Term, when exercised by
Lessee in accordance with SS.2.02.
FEE MORTGAGE. A mortgage on the fee interest in the Demised
Premises, which shall be deemed to include a deed of trust and the note or other
credit instrument secured thereby.
FEE MORTGAGEE. A mortgagee under a Fee Mortgage, or the trustee and
beneficiary under a deed of trust.
FORCE MAJEURE. Any delay in Lessee's or Lessor's non-monetary
obligations caused by acts of God or the public enemy, or by casualty or by
strike, or by governmental restrictions upon the availability or use of labor or
materials necessary to perform such obligations, or by reason of any other fact,
matter or condition beyond the control of Lessee or Lessor, respectively.
FORECLOSURE. The exercise of remedies under a Fee Mortgage and the
enforcement of the rights of a beneficiary under a deed of trust and the
exercise of the power of sale thereunder and the tender and acceptance of a
warranty deed in lieu of foreclosure or forfeiture.
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IMPOSITIONS. All real estate taxes, personal property taxes, rental
taxes (whether denominated as rental, privilege, sales, transportation, excise
or otherwise), assessments (arising from an improvement district or otherwise),
sewer rents, water meter and water charges, levies, license and permit fees,
charges for public utilities and all other charges of whatsoever kind and nature
and whether any of the foregoing be general or special, ordinary or
extraordinary, or foreseen or unforeseen, which at any time during the Lease
Term may be imposed upon the rent and other payments due hereunder, the Demised
Premises, the Building and/or the Improvements.
IMPROVEMENTS. All improvements and structures other than Buildings
at any time during the Lease Term erected or situated upon the Demised Premises,
and any and all renewals, replacements, additions to and substitutions for any
such Improvements.
INITIAL LEASE TERM. The term commencing on the Rent Commencement
Date and ending upon the expiration of one hundred twenty (120) months
thereafter.
LEASE. This agreement.
LEASE DATE. The date first set forth above, which shall be deemed to
be the date of execution of this Lease by both parties.
LEASE TERM. Where no distinction is made, the Initial Lease Term
and/or the Extended Lease Term(s).
MINIMUM RENT.
(a) Forty-Four Thousand One Hundred Seventy-Five and No/100
Dollars ($44,175.00) representing the first month's Minimum Rent shall be
payable upon the execution hereof.
(b) Minimum Rent shall increase on each second anniversary of
the Rent Commencement Date by an amount equal to six percent (6%) of the Minimum
Rent due for the preceding month.
(c) Minimum Rent during the Extended Lease Term shall be
payable in accordance with EXHIBIT "B" attached hereto.
(d) Minimum Rent shall be payable on the first day of each
month (except as provided in subparagraph (a) above). If the Rent Commencement
Date is on other than the first day of the month, the monthly rent for the first
month and last month shall be prorated on a daily basis.
NEW IMPOSITIONS. Impositions arising as a result of the events more
particularly described in SS.5.07.
PAD. The aggregate of the Demised Premises and the Improvements and
Buildings thereon.
RENT COMMENCEMENT DATE. The date upon which the Lessor receives a
Certificate of Occupancy for the Building and Improvements.
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ARTICLE 2
DEMISED PREMISES--TERM OF LEASE--OPTION
ss.2.011. (a) Lessor, in consideration of the rents, covenants and
agreements hereinafter reserved, on the part of Lessee to be performed, leases
to Lessee, and Lessee leases from Lessor, the Pad, including all Buildings and
Improvements therein or thereon as of the Rent Commencement Date, for the Lease
Term, unless this Lease shall sooner terminate as hereinafter provided.
(b) Lessor hereby represents and warrants to Lessee that
it is the owner of fee simple title to the Demised Premises subject to all
matters of record.
ss.2.012. (a) Lessee shall have one (1) option to extend the Initial
Lease Term for an additional period of sixty (60) months, such Extended Lease
Term to begin upon the expiration of the Initial Lease Term. The same terms and
conditions as herein set forth shall apply to the Extended Lease Term (except
the option to renew), and the Minimum Rent shall be as set forth in ARTICLE 1.
If Lessee shall elect to exercise the aforesaid options, it shall do so by
giving written notice to Lessor not less than twelve (12) months prior to the
expiration of the Initial Lease Term.
(b) Notwithstanding the foregoing, Lessee may exercise
the option only if, at the time of notice of exercise of such option and as of
the date of the commencement of the Extended Lease Term, an Event of Default
does not then exist.
ARTICLE 3
RENT
ss.3.011. Lessee covenants and agrees to pay to Lessor during the
entire Lease Term, Minimum Rent (commencing on the Rent Commencement Date) at
the times, in the amounts and as provided in ARTICLE 1 and all other charges and
amounts at the time provided for herein together with all sales, rental, excise
or privilege taxes payable on such amounts. The Minimum Rent and other charges
shall be paid to Lessor by Lessee without notice or demand and without
abatement, deduction or set-off.
ss.3.012. Commencing on the Rent Commencement Date, Lessee covenants
and agrees to pay all Impositions to Lessor, or as otherwise provided herein.
ss.3.013. It is the purpose and intent of Lessor and Lessee that the
Minimum Rent shall be absolutely net to Lessor, so that this Lease shall yield,
net to Lessor, the Minimum Rent specified herein and that all costs, operating
expenses, Impositions, excise, rental, sales and privilege taxes, premiums,
fees, interest, charges, expenses, reimbursements and obligations of every kind
and nature whatsoever relating to the Pad, excepting only certain taxes of
Lessor as provided in SS.4.02 and any Fee Mortgage which may arise or become due
during or out of the term of this Lease, shall be paid or discharged by the
Lessee, and that Lessor shall be indemnified and saved harmless by Lessee from
and against such costs, operating expenses, Impositions, premiums, fees,
interest, charges, expenses, reimbursements and obligations, and Lessee
expressly covenants to pay all of the foregoing.
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ARTICLE 4
PAYMENT OF TAXES, ASSESSMENTS AND CARRYING CHARGES
ss.4.011. Lessee shall pay or cause to be paid (except as provided
in SS.4.02), before any fine, penalty, interest or cost may be added thereto,
all Impositions, provided, however, that:
(a) if, by law, any Imposition may at the option of the
Lessee be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same, including any accrued interest on the unpaid
balance of such Imposition, in installments and, in such event,
shall pay only such installments as may become due during the term
of this Lease as the same respectively become due and before any
fine, penalty, further interest or cost may be added thereto; and
(b) any Imposition, except Impositions which have been
converted into installment payments by Lessee, as referred to in
SS.4.01(A), relating to a fiscal period of the taxing authority, a
part of which period is included within the Lease Term and a part of
which is included in a period of time after the expiration of the
Lease Term, shall, whether or not such Imposition shall be assessed
or become a lien upon the Demised Premises or the Building or the
Improvements, or shall become payable, during the Lease Term, be
adjusted between Lessor and Lessee as of the expiration of the Lease
Term, so that Lessee shall pay that portion of such Imposition which
that part of such fiscal period included in the period of time
before the expiration of the Lease Term bears to such fiscal period,
and Lessor shall pay the remainder thereof.
ss.4.012. Nothing herein contained shall require Lessee to pay
municipal, state or federal income, gift, estate, inheritance or excess profits
taxes assessed against Lessor.
ss.4.013. Lessee shall have the right to contest the amount or
validity, in whole or in part, of any Imposition by appropriate proceedings
diligently conducted in good faith, in which event, notwithstanding the
provisions of SS.4.01, Lessee may postpone or defer payment of such Imposition
if neither the Demised Premises, the Building nor the Improvements would by
reason of such postponement or deferment be in danger of being forfeited or
lost. Upon the termination of any such proceedings, Lessee shall pay the amount
of such Imposition or part thereof, if any, as finally determined in such
proceedings, the payment of which may have been deferred during the prosecution
of such proceedings.
ss.4.014. Lessor shall join in any proceedings referred to in
SS.4.03 if the provisions of any law, rule or regulation shall require that such
proceedings be brought by or in the name of Lessor, in which event Lessor shall
join in such proceedings or permit the same to be brought in its name, provided
that Lessor shall not ultimately be subjected to any liability for the payment
of any fees, including reasonable counsel fees, costs and expenses. Lessor may
retain independent counsel in connection with any such proceedings and Lessee
shall pay the actual, reasonable and necessary expenses therefor. Lessee shall
indemnify Lessor from and against all claims arising from Lessee's contest of
any Impositions.
ss.4.015. Lessor and Lessee agree to each furnish the other with
whatever information, documents or records that may be required and otherwise
cooperate so as to permit the Demised Premises
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to be assigned a separate Maricopa County Tax Roll number. Lessee agrees that
should the Demised Premises be separately assessed, Lessee shall pay such
separately assessed Imposition(s) according to this Article.
ss.4.016. In the event the Demised Premises are not separately
assessed, but are part of a larger parcel for assessment purposes (hereinafter
referred to as the "larger parcel") then Impositions for which Lessee is
responsible hereunder shall be a fractional portion of the Impositions on the
larger parcel the numerator of which shall be the total area of the Demised
Premises and the denominator of which shall be the total area of the larger
parcel as to the "land" portion of such assessment. If, however, there are
Buildings and Improvements on the Demised Premises, then the same calculation
shall be made by comparing the area of the Buildings on the Demised Premises to
the area of the buildings on the larger parcel and adding such amount to the
"land" amount to determine Lessee's total share. With respect to any Impositions
which under the laws then in force may be evidenced by improvement or other
bonds, or may be paid in annual installments, only the amount of such annual
installment (with appropriate proration for any partial year) and statutory
interest shall be included with the computation of the Impositions levied
against the Demised Premises.
ss.4.017. If at any time during the Lease Term, any authority having
the power to tax shall alter the methods and/or standards of taxation and
assessment, against the legal or equitable interests of Lessor or Lessor's
lender in the Demised Premises or the remainder of the Pad in whole or in part,
so as to impose a tax or taxes in lieu of or in addition to the tax or taxes in
existence as of the date of this Lease, such taxes or assessments shall be paid
by Lessee. Any special, unforeseen or extraordinary New Impositions, however
described, shall be considered as "taxes" for the purposes of this Lease,
excluding, however, from such taxes all general income taxes, gift taxes,
inheritance taxes and estate taxes.
ss.4.018. Upon Lessor's notice to Lessee given at least fifteen (15)
days prior to the first day of any month, Lessor may require Lessee to deposit
with Lessor, in monthly installments, an amount equal to one-twelfth (1/12) of
the sum of the estimated Impositions for the calendar year in which the notice
was given ("Impounds"). Such estimate shall be based upon the prior calendar
year's Impositions. The Impounds shall be payable at the same time and manner as
Minimum Rent is due and payable under this Lease. If the Impounds for the
Impositions for a calendar year are insufficient to fully discharge the
Impositions for that calendar year, Lessor may notify Lessee at any time after
the end of such calendar year, and Lessee shall within ten (10) days thereafter
deposit with Lessor an amount equal to such deficiency. If the amount Lessee has
paid in Impounds for the prior calendar year is greater than the amount of
actual Impositions for such calendar year, then such excess shall, at the option
of Lessee, be refunded to Lessee by February 15th of the subsequent calendar
year or applied to the current year's Impound payments. If Lessee shall commit
an Event of Default, then all Impound amounts then held by Lessor may be applied
to any amounts due under this Lease whether for Minimum Rent, Impositions, late
charges, interest or other charges, in any order Lessor may determine. Lessee
shall not be entitled to interest on Impounds. If Impositions are not being paid
by Lessor, Lessee has the right to pay Impositions directly. In the event Lessor
shall fail to pay, for any reason, any taxes, assessments or Impositions as they
become due, Lessee shall be given prompt notice thereof and, at the option of
Lessee, Lessee may require that all Impositions be deposited in escrow, with an
escrow company of Lessee's choosing. In that event, all costs associated with
the escrow shall be paid equally by Lessor and Lessee.
ARTICLE 5
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SURRENDER
ss.5.011. Lessee covenants and agrees to not hold over without the
express written consent of Lessor and shall on the last day of the Lease Term or
upon any earlier termination of this Lease, or upon any entry or re-entry by
Lessor upon the Demised Premises after an Event of Default, surrender and
deliver up the Pad to the Lessor and, subject to the provisions of SS.14.03(B),
in good order, condition and repair, reasonable wear and tear excepted.
ss.5.012. Any property of Lessee which shall remain on the Demised
Premises, or in the Buildings, after the termination or expiration of this Lease
and the removal of Lessee from the Demised Premises and the Buildings may, at
the option of Lessor, be deemed to have been abandoned by Lessee and either may
be retained by Lessor as its property or be disposed of in such manner as Lessor
may see fit.
ARTICLE 6
INSURANCE
ss.6.011. Lessor shall, during the course of construction of the
Building and the Improvements, keep the Pad and all fixtures and equipment
installed therein by Lessor insured against loss or damage by fire and against
loss or damage by such other risks now or hereafter embraced by "Special Form
Property Insurance," so-called, and against such other risks or hazards and in
such amounts as a Fee Mortgagee shall require. Thereafter, such insurance shall
be maintained by Lessee during the Lease Term for a sum not less than one
hundred percent (100%) of the full replacement value of the Buildings and
Improvements erected upon the Demised Premises and not less than one hundred
percent (100%) of the full replacement cost of the furniture, fixtures and
equipment. Such insurance shall also insure the interest of Lessor and any Fee
Mortgagee. A Standard Mortgagee Endorsement shall be provided for the benefit of
such Fee Mortgagee. Flood hazard insurance shall also be maintained by Lessee if
required by any Fee Mortgagee.
ss.6.012. In addition to the insurance required above, Lessee, at
its sole cost and expense (except as provided below), shall purchase and
maintain during the entire Lease Term:
(a) A "Commercial General Liability Insurance" policy,
so called, insuring against claims for bodily injury, death or
property damage, occurring in, on or about the Demised Premises, the
Building and Improvements and on, in or about the adjoining streets,
avenues, property and passageways, naming the Lessor and the Lessee
as the insureds, such insurance to afford minimum protection, during
the term of this Lease, of not less than the amounts required by any
Fee Mortgagee and in any event in an initial amount of not less than
Two Million Dollars ($2,000,000.00). Such amount shall be increased
upon the reasonable demand of Lessor. Reasonableness for the
purposes of this subparagraph shall be determined by comparing the
construction of the Building and Improvements and the use then being
made of the Pad with other similarly constructed and operating
facilities in the Phoenix metropolitan area.
(b) Such other insurance insuring against such risks, in
such amounts with such protective provisions as may be reasonably
required from time to time by any Fee
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Mortgagee. Reasonableness for the purposes of this subparagraph
shall be determined by comparing the construction of the Building
and Improvements and the use then being made of the Pad with other
similarly constructed and operating facilities in the Phoenix
metropolitan area.
(c) "Business Income (and Extra Expense) Commercial
Property Insurance - Rental Value only," so called, against loss of
rent due to fire and the risks now or hereafter embraced by "Special
Form Property Insurance," so-called, naming the Lessor as a loss
payee.
ss.6.013. All insurance provided for in this ARTICLE 6 shall be
effected under valid and enforceable policies issued by insurers of recognized
responsibility which are licensed to do business in the State of Arizona and
which have been approved by Lessor and any Fee Mortgagee as to the
qualifications of insurers and the amounts of insurance to be written by each.
Prior to the Rent Commencement Date, and thereafter not less than twenty (20)
days prior to the expiration dates of the expiring policies theretofore
furnished pursuant to this ARTICLE 6, originals of the policies or evidence
thereof on form XXXXX 27, in the case of bodily injury and property damage
liability insurance, bearing notations evidencing the payment of premiums or
accompanied by other evidence of such payment, shall be delivered by Lessee to
the person or entity entitled to approve any insurance company as provided above
in this section.
ss.6.014. Subject to ARTICLE 14 and to the provisions of any Fee
Mortgage, the proceeds of any insurance required to be maintained by the
provisions of this Article shall be payable to Lessor, or if paid to Lessee,
Lessee shall immediately and simultaneously pay them to Lessor, and shall be
used to restore the Demised Premises, Buildings and Improvements to their
original approximate value, and to replace furniture, fixtures and equipment but
for any use allowed by this Lease.
ss.6.015. Each insurance policy shall, to the extent obtainable,
have attached thereto (a) an endorsement that such policy shall not be cancelled
or materially changed without at least thirty (30) days' prior written notice to
the Lessor and any Fee Mortgagee; and (b) an endorsement to the effect that no
act or omission of the Lessee shall invalidate the interest of such person or
entity entitled to such notice.
ss.6.016. Each policy of insurance shall name, as an additional
insured, the Lessor and, in addition, such other persons, firms or corporations
as may be required under the terms of any Fee Mortgage. Copies of such policies
shall be delivered to Lessor.
ss.6.017. If, notwithstanding the provisions of SS.6.05, any
insurance which Lessee is required to obtain and maintain is cancelled, Lessee
shall, before such cancellation is effective (or, if such cancellation is
effective upon receipt of notice, within five (5) business days of the date such
notice is received), replace such insurance with other insurance providing
essentially the same or better coverages and essentially the same or greater
indemnity amounts. Lessee shall promptly deliver to Lessor evidence of such
replacement insurance.
ss.6.018. If Lessee fails to obtain the replacement insurance as
required by SS.6.07, then Lessor may (but shall not be required to) procure such
replacement insurance on Lessee's behalf and charge Lessee the premiums together
with a ten percent (10%) handling charge, payable upon demand.
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ss.6.019. Lessor and Lessee each hereby waive any and all rights of
recovery against the other or against the officers, employees, agents and
representatives of the other on account of loss or damage occasioned to such
waiving party or its property or the property of others under its control to the
extent that such loss or damage is insured against under any Special Form
Property Insurance policy which either may have in force at the time of such
loss or damage. Lessee and Lessor shall, at the time of procuring the policies
of insurance required under this Lease, give notice to the insurance carrier or
carriers that the foregoing mutual waiver of right of recovery is contained in
this Lease and each party shall cause each insurance policy obtained by it to
provide that the insurance company waives any right of recovery, by way of
subrogation, against either party in connection with any damage covered by any
policy of insurance.
ARTICLE 7
LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS
ss.7.011. If Lessee shall at any time fail to pay any sum,
Imposition, cost or expense other than the Minimum Rent as provided in ARTICLE 3
which it is obligated to pay under the terms of this Lease, then Lessor, after
fifteen (15) days' written notice to Lessee (or without notice or upon a shorter
notice period in case of an emergency), and without waiving or releasing either
party from any obligation under this Lease and without being considered an
election of remedies, may, but shall be under no obligation to pay any such sum,
Imposition, cost or expense; provided, however, that no such payment shall be
made if Lessee has in fact paid the same before the expiration of the time
period and has given notice to Lessor.
ss.7.012. If Lessee shall at any time fail to perform or observe any
covenant or condition contained in this Lease, the performance of which involves
something more than merely the payment of money, then Lessor, after thirty (30)
days' written notice to Lessee (or without notice or upon a shorter notice
period in case of an emergency), and without waiving or releasing Lessee from
any obligation and without being considered an election of remedies, may perform
the same for the account of Lessee and charge Lessee the actual cost of any such
performance; provided, however, that if Lessee has in fact performed its
obligation before the expiration of the notice period, or in the case of
performance which by its nature cannot be completed within the notice period,
has begun diligent performance of the same and is continuing such performance in
a diligent fashion, and has given Lessor notice of such performance, then in
such event, Lessor shall not commence such performance on its own part.
ss.7.013. All sums so paid or expended by Lessor and all costs and
expenses, including reasonable attorneys' fees, incurred by Lessor in connection
with the performance of any such act, together with interest thereon at the
Default Rate from the respective dates of Lessor's making of each such payment
or incurring of each such cost and expense, including reasonable attorneys'
fees, shall be paid by Lessee to Lessor on demand.
ARTICLE 8
REPAIRS AND MAINTENANCE OF THE DEMISED PREMISES
ss.8.011. Throughout the entire Lease Term, Lessee, at its sole cost
and expense, shall take good care of the Demised Premises, the Building and
Improvements, and all plumbing, electrical and
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HVAC systems located thereon or therein and all furniture, fixtures and
equipment located therein and shall keep the same in first class order and
condition, and make all necessary repairs and replacements thereto, interior and
exterior, structural and nonstructural, ordinary and extraordinary or radical,
foreseen and unfore seen with due diligence and in good faith. When used in this
ARTICLE 8, the term "repairs" shall include all necessary replacements, renewals
and alterations. All repairs made by Lessee shall be at least equal in quality
and class to the original work. Lessee shall do, or cause others to do, all
necessary repairs of supporting walls and walls of the Building and comply with
all laws and ordinances with respect thereto and do every other act or thing for
the safety and preservation thereof which may be necessary by reason of any
excavation, subsurface construction, remodeling or other building operation upon
any adjoining property or street, avenue, alley, or passageway. After the
initial construction of the Building and Improvements, any subsequent
modifications, improvements or alterations to the Pad, the cost of which exceeds
Five Thousand Dollars ($5,000.00), shall require Lessor's prior written consent
to the plans therefor. Upon the expiration or earlier termination of this Lease,
all electrical, plumbing and HVAC systems located on, in or under the Pad and
all fixtures and equipment (except Lessee's personal property and equipment not
attached to the Building) shall be surrendered to Lessor in good operating and
clean condition, normal wear and tear excepted.
ss.8.012. The necessity for and adequacy of repairs to the Demised
Premises, the Buildings and Improvements and the furnishings and equipment
therein pursuant to SS.8.01 shall be measured by the standard which is
appropriate for buildings of similar construction and class, provided that
Lessee shall in any event make all repairs necessary to avoid any structural
damage or injury to the Buildings.
ss.8.013. Subject to the provisions of SS.8.05, Lessee shall put,
keep and maintain all portions of the Demised Premises, the Buildings and
Improvements and the sidewalks, curbs, landscaping, entrances, passageways and
all areas adjoining the same in a first class condition, clean and orderly, free
of dirt, vermin, rubbish and unlawful obstructions.
ss.8.014. Lessor shall not be required to furnish any services or
facilities, equipment or fixtures, or to make any repairs or alterations in or
to the Pad and Lessee hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the
Pad. Lessee will inspect the Demised Premises on the Rent Commencement Date and
will accept the Demised Premises in its "as is" condition, subject to any
punchlist items and the provisions of SS.8.05.
ss.8.015. (a) Lessee shall not use the Demised Premises as a storage
facility for any "Hazardous Substances," but Lessee may use and sell in a lawful
manner on the Demised Premises those Hazardous Substances which are normal and
customary in the conduct of Lessee's business. Lessee shall not install or use
any underground storage tank or other underground receptacle on the Demised
Premises, whether or not for Hazardous Substances.
(b) Lessee hereby agrees to indemnify Lessor and hold
Lessor harmless for, from and against any and all losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs of any settlement or judgment and claims of any and every kind
whatsoever (including, without limitation, any losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs of any settlement or judgment or claims asserted or arising under
any Environmental Law [as defined in ss.8.05(c)(ii)]) paid, incurred or suffered
by, or asserted against, Lessor by any person or entity or governmental agency
for, with respect to, or as a direct or indirect result of, the presence on or
under or the escape, seepage, leakage, spillage, discharge, emission,
discharging
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or release from or otherwise occurring on the Demised Premises of any Hazardous
Substances during Lessee's possession of the Pad, except as caused by Lessor.
(c) (i) For purposes of this Lease, "Hazardous
Substances" shall mean and include any contaminant, pollutant or hazardous or
toxic substances, materials or wastes or other environmentally regulated
materials including, but not limited to, those substances, materials and wastes
listed in the United States Department of Transportation Table (49 CFR 172.101)
or by the Environmental Protection Agency as hazardous substances, materials and
wastes or which are or become regulated under any applicable local, state or
federal law, code or ordinance, and all rules and regulations promulgated
thereunder, including, without limitation, any material, waste or substance
which is (i) petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv)
designated as a "Hazardous Substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321), or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. Section 13171, (v) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) or (vi)
defined as a "Hazardous Substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq. (42 U.S.C. Section 9601).
(ii) For purposes of this Lease, "Environmental
Laws" shall mean and include all state, federal and local laws, codes and
ordinances, and all rules and regulations promulgated thereunder, governing or
in any way relating to the generation, handling, manufacturing, treatment,
storage, use, transportation, spillage, leakage, dumping, discharge or disposal
(whether legal or illegal, accidental or intentional) of any Hazardous
Substances.
(d) If Lessee receives any notice of (i) the happening
of any material event involving the spill, release, leak, seepage, discharge or
cleanup of any Hazardous Substance into or upon (A) the air, (B) soils or any
improvements located thereon, (C) soil vapors, (D) surface water or groundwater,
or (E) the sewer, septic system or waste treatment, storage or disposal system
servicing the Demised Premises (any of which is hereafter referred to as a
"Hazardous Discharge"), or (ii) any complaint, order, citation, claim, directive
or notice with regard to (F) air emissions, (G) spills, releases or discharges
to soils or any improvements located thereon, soil vapors, surface water,
groundwater or the sewer, septic system or waste treatment, storage or disposal
systems servicing the Demised Premises, (H) noise emissions, (I) solid or liquid
waste disposal, (J) the use, generation, storage, transportation or disposal of
Hazardous Substances, or (K) other environmental, health or safety matters
affecting Lessee, the Demised Premises, any improvements located thereon, or the
business therein conducted (any of which is hereafter referred to as an
"Environmental Complaint"), then Lessee shall immediately notify Lessor orally
and in writing of said notice.
(e) Lessor shall have the right but not the obligation,
and without limitation of Lessor's rights under this Lease, to enter onto the
Demised Premises or to take such other actions as it deems necessary or
advisable to clean up, remove, resolve or minimize the impact of, or otherwise
deal with, any such Hazardous Substance or Environmental Complaint following
receipt of any notice from any person or entity asserting the existence of any
Hazardous Substance or an Environmental Complaint pertaining to any part of the
Premises which could result in an order, suit or other action against Lessee or
which, in the reasonable opinion of Lessor, could jeopardize its interest in the
Premises.
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(f) Lessor hereby represents and warrants to Lessee that
it has received no notice of any violation of Environmental Laws, the existence
of any Hazardous Substances on the Demised Premises, any Environmental
Complaints, any Hazardous Discharges, or any other environmental conditions
relating to the Demised Premises other than as set forth in the Phase I
__________ prepared by __________ and dated ______________, 19__, a copy of
which was received by Lessee on or about July __, 1997.
ARTICLE 9
COMPLIANCE WITH LAWS, ORDINANCES AND REGULATIONS
ss.9.011. Throughout the entire Lease Term, Lessee, at its sole cost
and expense, shall promptly comply with all present and future laws, ordinances,
orders, rules, regulations and requirements of all federal, state and municipal
governments, any national or local Insurance Rating Bureau, or any other body
exercising functions similar to those of any of the foregoing, which may be
applicable to the Demised Premises, the Buildings or the Improvements, or any
part thereof, or the sidewalks, curbs, passageways, alleys, entrances, coverings
or roof-like structures placed upon or extending over any sidewalk, or any space
adjacent thereto, or to the use or manner of use of the Demised Premises, the
Building or the Improvements, or any part thereof, or the owners, lessees or
occupants thereof. The foregoing shall include the matters set forth in SS.8.05.
Lessor hereby represents and warrants to Lessee that it has received no notice
that the Demised Premises are not in compliance with any law, ordinance, order,
rule, regulation or requirement of any federal, state or municipal governments,
or any other body exercising functions similar to those of any of the foregoing.
ss.9.012. Lessee shall likewise observe and comply with, or shall
cause to be observed and complied with, all the requirements of the general
comprehensive liability insurance, the "Special Form Property Insurance," so
called, and any other insurance policies at any time in force with respect to
the Demised Premises, the Building and Improvements.
ss.9.013. Lessee shall have the right, after prior written notice to
Lessor, to contest by appropriate legal proceedings, diligently conducted in
good faith, in the name of Lessee or Lessor or both, without cost or expense to
Lessor, the validity or application of any law, ordinance, order, rule,
regulation or requirement of the nature referred to herein, subject to the
following:
(a) If by the terms of any such law, ordinance, order,
rule, regulation or requirement, compliance therewith pending the
prosecution of any such proceeding may legally be delayed without
the incurrence of any lien, charge, liability or penalty of any kind
against the Demised Premises, the Building or the Improvements or
Lessee's leasehold interest therein and without subjecting Lessor to
any liability, civil or criminal, for failure so to comply
therewith, Lessee may delay compliance therewith until the final
deter mination of such proceeding.
(b) If any lien, charge or civil liability would be
incurred by reason of any such delay, Lessee nevertheless, on the
prior written consent of Lessor (such consent not to be unreasonably
withheld), may contest as aforesaid and delay as aforesaid, provided
that such delay would not subject Lessor to criminal liability and
Lessee (i) furnishes to
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Lessor security, reasonably satisfactory to Lessor against any loss
or injury by reason of such contest or delay, and (ii) prosecutes
the contest with due diligence and in good faith.
(c) Lessor shall, at Lessee's sole cost and expense,
including reasonable attorneys' fees, execute and deliver any
appropriate papers which may be necessary or proper to permit Lessee
to contest the validity or application of any such law, ordinance,
order, rule, regulation or requirement. Lessee shall indemnify
Lessor from any loss, cost or expense arising from such proceedings.
ARTICLE 10
CONSTRUCTION; DISCHARGE OF LIENS
ss.10.01. Lessor shall be responsible for the construction of the
Building and Improvements, in accordance with the provisions of this ARTICLE 10.
ss.10.02. Lessor has caused to be prepared the outline
specifications and site plan for the Building and Improvements attached hereto
as EXHIBITS "C" AND "D" (the "Preliminary Plans"). If Lessor has not already
done so, Lessor shall choose an architect who shall cause to be prepared final
plans for the construction of the Building and Improvements based upon the
Preliminary Plans (the "Final Plans").
ss.10.03. After preparation of the Final Plans Lessor shall award a
construction contract to a contractor. The contractor shall commence and
diligently prosecute to completion, the construction of the Building and
Improvements in substantial conformance with the Final Plans. Lessor's approval
of the Final Plans for the Building and Improvements, shall not be deemed a
representation or warranty that the Final Plans comply with all laws and
ordinances. Lessor shall have no liability whatsoever for the Building or
Improvements or construction defects or the failure of the contractor to
construct the Buildings and Improvements in accordance with the Final Plans and
all laws and ordinances. Lessor shall, and hereby does, assign to Lessee, on a
non-exclusive basis all of the contractor's warranties and all other warranties
in respect of such construction. Title to the Buildings and Improvements shall
be in Lessor at all times. Lessor agrees, in its construction contract with a
contractor, to give Lessee the right, during construction, to pay for additions
to the construction project, at Lessee's sole expense, including additional
contractor supervision costs and changes to work already completed. All such
additions shall be communicated to the contractor through Lessor. The
construction contract shall provide that Lessee or Lessee's subcontractor shall
have reasonable access to the property to construct any Improvements or
additions to the job site, with the consent of the contractor, and after
approval of same by Lessor, such consent not to be unreasonably withheld.
ss.10.015. Lessee shall not create or permit to be created or to
remain, and shall, as to any matter arising after the Lease Date caused by
Lessee, discharge, any lien, encumbrance or charge (levied on account of any
Imposition or any mechanic's or materialman's lien or any mortgage, security
interest or otherwise) which might be or become a lien, encumbrance or charge
upon the Demised Premises or the Building or any part thereof or the income
therefrom having a priority or preference over or ranking on a parity with the
interest of Lessor in the Demised Premises or the Building or Improvements or
any part
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thereof or the income therefrom, or which would have a parity or priority over
any Fee Mortgage and Lessee shall not suffer any other matter or thing whereby
the interest of Lessor or a Fee Mortgagee in the Demised Premises or any part
thereof or Lessor's interest in the Demised Premises, the Building and
Improvements or the income therefrom might be impaired; provided that any
Imposition may, after the same becomes a lien on the Demised Premises or the
Building, be paid or contested in accordance with ARTICLE 4 and any mechanic's,
laborer's or materialman's lien may be discharged in accordance with SS.10.02.
In order to further assure Lessor that no mechanic's, laborer's or materialmen's
lien will be placed or remain against the Pad, Lessee, prior to any construction
by Lessee costing more the Five Thousand Dollars ($5,000.00), shall furnish to
Lessor a bond or other assurances satisfactory to Lessor that such persons shall
be paid.
ss.10.026. If any mechanic's or materialman's lien shall at any time
be filed against the Demised Premises or the Building or Improvements or any
part thereof (other than in connection with the initial construction
contemplated by ARTICLE 10), Lessee, within thirty (30) days after notice of the
filing thereof, shall cause the same to be discharged of record by payment,
deposit, bond, order of a court of competent jurisdiction or otherwise. If
Lessee shall fail to cause such lien to be discharged within such period, then,
in addition to any other right or remedy, Lessor may, but shall not be obligated
to, discharge the same either by paying the amount claimed to be due or by
procuring the discharge of such lien by deposit or by bonding proceedings, and
in any such event Lessor shall be entitled, if Lessor so elects, to compel the
prosecution of an action for the enforcement of such lien by the lienor and to
pay the amount of the judgment in favor of the lienor with interest, costs and
allowances. Lessee agrees to reimburse and to pay to the Lessor on demand any
amount so paid by Lessor and all costs and expense, including reasonable
attorneys' fees, incurred by Lessor in connection therewith, together with
interest thereon at the Default Rate from the respective dates of Lessor's
notice to Lessee of the making of the payment or the incurring of the cost and
expense, including such reasonable attorneys' fees.
ARTICLE 11
NO WASTE
ss.11.011. Lessee shall not do or suffer any waste to the Demised
Premises or the Building or Improvements.
ARTICLE 12
USE OF DEMISED PREMISES
ss.12.011. Lessee shall continuously use the Pad for warehouse,
general office, storage and metal fabrication and for no other purposes. Lessee
shall not use or allow the Demised Premises or the Building or the Improvements
or any part thereof to be used or occupied for any unlawful purpose or in
violation of any laws and shall not suffer any act to be done or any condition
to exist on the Demised Premises or the Building or Improvements or any part
thereof or any article to be brought thereon, which may be dangerous, or which
may, in law, constitute a nuisance, public or private, or which may make void or
voidable any insurance then in force with respect thereto. Notwithstanding the
foregoing permitted uses, the Demised Premises shall not be used for an adult
bookstore, adult novelty shop, theater, adult theater, bar, nightclub, place of
adult performances or the sale of pornography.
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ss.12.012. Lessee shall not suffer or permit the Demised Premises or
the Building or Improvements or any portion thereof, to be used by the public,
as such, without restriction or in such manner as might reasonably tend to
impair Lessor's title to the Demised Premises or to Lessor's reversionary
interest in the Building and Improvements, or in such manner as might reasonably
make possible a claim or claims of adverse possession by the public, as such, or
of implied dedication of the Demised Premises or the Building or the
Improvements or any portion thereof.
ARTICLE 13
ENTRY ON DEMISED PREMISES BY LESSOR
ss.13.011. In addition to Lessor's right of entry under any other
provision of this Lease, Lessee shall permit Lessor and its authorized
representatives to enter the Pad at all reasonable times after reasonable notice
for the purpose of (a) inspecting the same, and (b) making any necessary repairs
thereto and performing any work therein that may be necessary by reason of
Lessee's failure to make any such re pairs or perform any such work or to
commence the same for thirty (30) days after written notice from Lessor or
without notice in case of an emergency. Nothing herein contained shall create or
imply any duty upon the part of Lessor to make any such repairs or do any such
work.
ss.13.012. Lessor shall have the right to enter the Pad at all
reasonable times during usual business hours and after reasonable telephone
notice to Lessee for the purpose of showing the same to prospective purchasers,
mortgagees, or lessees. Lessor may place "for sale" and/or "for lease" signs on
the Demised Premises.
ARTICLE 14
DAMAGE OR DESTRUCTION
ss.14.011. In case of damage to or destruction of the Demised
Premises or the Building or Improvements by fire or other casualty, Lessee, at
Lessee's sole cost and expense, shall restore, repair, replace, rebuild or alter
the same as nearly as possible to their value, condition and character
immediately prior to such damage or destruction. Such restoration, repairs,
replacements, rebuilding or alterations shall be commenced with due diligence,
and in good faith, and prosecuted with due diligence and in good faith, subject
to Force Majeure. In the event of damage to or the destruction of the Demised
Premises and/or the Building and Improvements resulting in a loss exceeding in
the aggregate Two Thousand Five Hundred Dollars ($2,500.00), Lessee shall
promptly give written notice thereof to Lessor.
ss.14.012. All insurance money shall be paid to and held by Lessor,
or if paid to Lessee, Lessee shall immediately and simultaneously pay the
insurance money to Lessor, and Lessor shall then pay such insurance money to
Lessee during the course of reconstruction on account of such damage or
destruction, less the actual cost, fees and expenses, if any, incurred in
connection with the adjustment of the loss, and any amount deposited for
demolition and reconstruction shall be applied to the payment of the cost of the
demolition, restoration, repairs, replacement, rebuilding or alterations,
including the cost of temporary repairs or the protection of property pending
the completion or permanent restoration, repairs, replacements, rebuilding or
alterations (all of which temporary repairs, protection of property and
permanent restoration,
14
repairs, replacement, rebuilding or alterations are hereinafter collectively
referred to as the "restoration"). Upon the completion of, and payment for, the
restoration, any balance of the insurance money at the time available for
distribution shall be paid to Lessee.
ss.14.013. If the Demised Premises and the Buildings and
Improvements shall be damaged or destroyed by fire or other casualty within two
(2) years prior to the expiration of the Lease Term and the cost of restoration
exceeds the sum of Two Hundred Fifty Thousand Dollars ($250,000.00), during any
Lease Term, as estimated by a licensed architect or a licensed professional
engineer, selected by Lessee and approved in writing by Lessor (such approval
not to be unreasonably withheld and, if Lessor fails to act thereon within ten
(10) days from time of receipt thereof, Lessor shall be deemed to have approved
Lessee's selection) Lessee shall have the option of:
(a) restoring, repairing, replacing, rebuilding or
altering the Demised Premises, Building and Improvements as provided
in this Lease, or
(b) terminating this Lease by written notice to Lessor
given within sixty (60) days after such destruction or damage.
ss.14.014. In the event of a termination under SS.14.03.(B), Lessee
shall not be entitled to any portion of the proceeds of any insurance except for
insurance which covers possessions of Lessee which Lessee has the right to
remove pursuant to SS.8.01, including but not limited to, the fire insurance,
all of which shall become the sole property of the Lessor.
ss.14.015. At the time of a termination under SS.14.03.(B), Lessee
shall at once surrender and deliver up the Demised Premises and the Building and
Improvements and the furnishings, equipment and records therein into the
possession and use of Lessor and remove all of its personal effects unrelated to
the operation of the Demised Premises. Lessee upon such termination, surrender
and removal, shall be released and discharged from any and all obligations that
would have otherwise thereafter accrued had this Lease not been so terminated.
ARTICLE 15
CONDEMNATION
ss.15.011. If at any time during the Lease Term, title to the whole
or materially all of the Demised Premises shall be taken by the exercise of the
right of condemnation or eminent domain, or by agreement between Lessor, Lessee
and those authorized to exercise such right, this Lease shall terminate and
expire on the date of such taking, and the Minimum Rent required to be paid by
Lessee shall be appor tioned and paid to the date of such taking. For purposes
of this SS.15.01 "materially all of the Demised Premises" shall be deemed to
have been taken if the portion of the Demised Premises not so taken cannot be so
repaired or reconstructed so as to constitute a complete rentable structure
capable of producing a pro portionately fair and reasonable net annual income,
after the payment of all expenses thereof and all Minimum Rent and other charges
required to be paid by Lessee hereunder and after performance of all covenants,
agreements, terms and provisions herein and by law provided to be performed and
paid by Lessee. The average net annual income produced by the Demised Premises
during the two (2) year period (or such
15
shorter period if this Lease has not been in existence for two (2) years)
immediately preceding such a taking shall be deemed to constitute a fair and
reasonable net annual income for the purposes of this SS.15.01.
ss.15.012. In the event of the taking of the whole or materially all
of the Demised Premises at any time during the Lease Term, the rights of Lessor
and Lessee to share in the net proceeds of any award for the Demised Premises,
Building and Improvements and damages upon any such taking shall be as follows
and in the following order of priority:
(a) To Lessor, that portion of the award that shall
represent compensation for the value of the Demised Premises the
Building and Improvements.
(b) To Lessor, an amount representing the excess, if
any, of the fair market value of the Leasehold for the Lease Term
over the Minimum Rent payable hereunder.
(c) To Lessee (to the extent available after the payment
in (a) and (b) above), the proceeds attributable to Lessee's
personal property.
ss.15.013. If at any time during the Lease Term, title to less than
the whole or less than materially all of the Demised Premises shall be taken as
aforesaid, all of the award or awards resulting from said condemnation shall be
held by Lessor and applied and paid over to the cost of demolition, repair and
restoration in the same manner and subject to the same conditions as those
provided in SS.SS.14.01 and 14.02 hereof with respect to insurance and other
monies. Any balance remaining in the hands of Lessor after payment of such costs
of demolition, repair and restoration as aforementioned, shall be retained by
Lessor and the Minimum Rent adjusted as provided in SS.15.04.
ss.15.014. If title to less than the whole or less than materially
all of the Demised Premises shall be taken as aforesaid, this Lease shall
continue, but the Minimum Rent thereafter payable by Lessee shall be reduced
from the date of such partial taking in the same proportion as the number of
square feet in the Demised Premises left after the taking bears to the total
number of square feet in the Demised Premises immediately prior to such taking.
Notwithstanding the foregoing, there shall be no adjustment or abatement of
Minimum Rent in the event that a portion of the Demised Premises are taken or
dedicated to the public for the purposes of streets, roads, drainage, utilities,
or other easements and such takings or dedications have no material detrimental
impact on the business then being conducted on the Demised Premises.
ss.15.015. If the temporary use of the whole or any part of the
Demised Premises or the Building or Improvements shall be taken by any lawful
power or authority, by the exercise of the right of condemnation or eminent
domain, or by agreement between Lessee and those authorized to exercise such
right, Lessee shall give prompt notice thereof to Lessor, and the term of this
Lease shall not be reduced or affected in any way. Lessee shall continue to pay
in full the Minimum Rent and other charges required to be paid hereunder,
without reduction or abatement, and Lessee shall be entitled to receive for
itself any award or payment made for such use.
16
ARTICLE 16
MORTGAGES, ASSIGNMENTS, SUBLEASES AND
TRANSFERS OF LESSEE'S INTEREST
ss.16.011. Lessee shall not assign, mortgage or transfer this Lease
or sublease the whole or any portion of the Pad without Lessor's written
consent, which consent shall not be unreasonably withheld. Lessor may request
detailed information on the finances and operating history of any proposed
assignee or sublessee. Lessor shall not be deemed to have unreasonably withheld
its consent if it reasonably disapproves the financial condition or operational
history of the proposed sublessee or assignee. Upon any assignment to which
Lessor has consented, and the assumption of this Lease by the assignee, Lessee
shall not be released from any obligations under this Lease falling due and
arising out of events occurring after the date of the assignment and assumption.
Lessor may condition its consent on the sublessee or assignee agreeing to pay
Minimum Rent and other charges hereunder directly to Lessor rather than Lessee.
ss.16.012. Lessor's consent to any single assignment, sublease or
other transfer of the whole or any portion of the Pad shall not be deemed to be
a consent to any subsequent assignment, sublease or other transfer.
ss.16.03. Assignment, subleasing or any other transfer of this Lease
shall not affect the viability or the right of Lessee to exercise any option in
this Lease.
ARTICLE 17
DEFAULT
ss.17.011. The following occurrences shall be deemed Events of
Default ("Events of Default"):
(a) if any monetary sum due hereunder, including without
limitation, Minimum Rent and Impositions, shall not be paid within
seven (7) days after written notice that same was not paid when due
and payable as to the first such notice in any twelve (12) month
period and within three (3) days after written notice that the same
was not paid when due and payable as to all subsequent notices in
any twelve (12) month period;
(b) Any failure by Lessee to observe or perform any
other provision, covenant or condition of this Lease to be observed
or performed by Lessee where such failure continues for thirty (30)
days after written notice thereof by Lessor to Lessee, provided that
if the nature of such failure is such that the same cannot
reasonably be cured within such thirty (30) day period, Lessee shall
not be deemed to have committed an Event of Default if it shall
commence such cure within such thirty (30) day period after Lessor's
notice and thereafter rectify and cure said failure within ninety
(90) days;
(c) Abandonment of the Demised Premises by Lessee; or
17
(d) A general assignment by Lessee for the benefit of
creditors, or the filing by or against Lessee of any proceeding
under any insolvency or bankruptcy law, unless in the case of a
proceeding filed against Lessee the same is dismissed within sixty
(60) days, or the appointment of a trustee or receiver to take
possession of all or substantially all of the assets of Lessee,
unless possession is restored to Lessee within thirty (30) days, or
any execution or other judicially authorized seizure of all or
substantially all of Lessee's assets located upon the Demised
Premises or of Lessee's interest in this Lease, unless such seizure
is discharged within thirty (30) days, or Lessee's convening of a
meeting of its creditors or any class thereof for the purpose of
effecting a moratorium upon or composition of its debts;
(e) Any occurrence of one or more of the events set
forth in SS.17.01(A), (B), (C) or (D) which is thereafter cured
whether or not Lessor is obligated under this Lease to accept
Lessee's tender of cure and whether or not such cure was timely
made, but which has occurred in three (3) consecutive months or in
any four (4) months of any twelve-month period.
ss.17.012. In the event of an Event of a Default by Lessee, Lessor,
in addition to any other remedies available to it at law or in equity and
without being considered an election of remedies, at its option, may without
further notice or demand of any kind to Lessee or any other person:
(a) Declare the Lease Term ended and reenter the Demised
Premises and the Buildings and take possession thereof and remove
all persons therefrom, and Lessee shall have no further claim
thereon or hereunder, except for any personal effects that Lessee
uses on a day-to-day basis; or
(b) Without declaring this Lease ended, reenter the
Demised Premises and the Buildings and occupy the whole or any part
thereof for and on account of Lessee and collect any unpaid rentals
and other charges, which have become payable, or which may
thereafter become payable; or
(c) Even though Lessor may have reentered the Demised
Premises and the Buildings, thereafter elect to terminate this Lease
and all of the rights of Lessee in or to the Demised Premises and
the Buildings.
ss.17.013. Should Lessor have reentered the Demised Premises and the
Buildings under the provisions of SS.17.02(B), Lessor shall not be deemed to
have terminated this Lease, or the liability of Lessee to pay any Minimum Rent
or other charges thereafter accruing, or to have terminated Lessee's liability
for damages under any of the provisions hereof, by any such reentry or by any
action, in unlawful detainer or otherwise, to obtain possession of the Demised
Premises, unless Lessor shall have notified Lessee in writing that it has
elected to terminate this Lease. Lessee further covenants that the service by
Lessor of any notice pursuant to the unlawful detainer statutes of the State
where the Pad is situated and the surrender of possession pursuant to such
notice shall not (unless Lessor elects to the contrary at the time of or at any
time subsequent to the serving of such notices and such election is evidenced by
a written notice to Lessee) be deemed to be a termination of this Lease.
18
ss.17.014. Should Lessor elect to terminate this Lease pursuant to
the provisions of subparagraph SS.17.02(A) OR (C) above, Lessor may recover from
Lessee as damages, the following:
(a) The worth at the time of award of any unpaid Minimum
Rent which had been earned at the time of such termination; plus
(b) the worth at the time of award of the amount by
which the unpaid Minimum Rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss Lessee proves could have been reasonably avoided; plus
(c) the worth at the time of award of the amount by
which the unpaid Minimum Rent for the balance of the term after the
time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided; plus
(d) any other amount necessary to compensate Lessor for
all the detriment proximately caused by Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not
limited to any costs or expenses incurred by Lessor in (i) retaking
possession of the Demised Premises and the Buildings, including
reasonable attorneys' fees therefor, (ii) maintaining or preserving
the Demised Premises and the Buildings after such Event of Default,
(iii) preparing the Demised Premises and the Buildings for reletting
to a new tenant, including repairs (iv) leasing commissions, or (v)
any other costs necessary or appropriate to relet the Demised
Premises and the Buildings; plus
(e) at Lessor's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time
by the laws of the State where the Pad is situated.
ss.17.015. As used in SS.17.04 (A) and (B), the "worth at the time
of award" is computed by allowing interest at the Default Rate. As used in
SS.17.04 (C), the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank situated nearest to the
location of the Pad at the time of award plus one percent (1%).
ss.17.016. For all purposes of this Article, the term "other
charges" shall be deemed to be all sums required to be paid by Lessee pursuant
to the terms of this Lease. All such sums, other than the Minimum Rent, shall be
computed on the basis of the greatest monthly amount thereof accruing during the
immediately preceding sixty (60) month period, except that if it becomes
necessary to compute such amount before such a sixty (60) month period has
occurred then such amount shall be computed on the basis of the greatest monthly
amount thereof accruing during such shorter period.
ss.17.017. In the event of an Event of Default by Lessee, Lessor may
at its option permit all of Lessee's fixtures, furniture, equipment,
improvements, additions and alterations to remain on the Demised Premises and in
that event, and continuing during the length of said Events of Default, Lessor
shall have the right to take the exclusive possession of such items and to use
same, rent or charge free, until all Events of Defaults are cured or, at its
option, at any time during the term of this Lease, to require Lessee to
forthwith remove same. In the event of any entry or taking possession of the
Demised Premises and the
19
Buildings as aforesaid, Lessor shall offer to Lessee the opportunity to remove
Lessee's own personal effects that are used on a day-to-day basis. In the event
Lessee declines after reasonable notice, Lessor shall have the right, but not
the obligation, to remove therefrom all or any part of the personal property
located therein and may place the same in storage at a public warehouse at the
expense and risk of the Lessee or owner or owners thereof. In the event of any
entry or taking possession of the Demised Premises after an Event of Default,
Lessor shall use its reasonable good faith efforts to re-let the Demised
Premises.
ss.17.018. The waiver by Lessor of any breach of any term, covenant
or condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of amounts due
hereunder by Lessor shall not be deemed to be a waiver of any preceding breach
by Lessee of any term, covenant or condition of this Lease, other than the
failure of Lessee to pay the particular rental so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
rental. No covenant, term, or condition of this Lease shall be deemed to have
been waived by Lessor unless such waiver be in writing signed by Lessor.
ss.17.019. If Lessee shall fail to pay, when the same is due and
payable, any Minimum Rent or any other charges or amounts hereunder (including
without limitation, the late charge provided for in SS.17.10), or if Lessor
shall advance any sums which Lessee is obligated to pay, or if Lessor incurs any
expense on account of Lessee committing an Event of Default, such amounts shall
bear interest at the Default Rate from the date after the due date (or in the
event Lessor expends any sums, from the date of such expenditure) until paid.
ss.17.10. If Lessee shall fail to pay, during the first six (6)
months of the Lease Term within ten (10) days after the same is due and payable,
and thereafter throughout the Lease Term within five (5) days after the same is
due and payable, any Minimum Rent or any other charges or amounts hereunder,
Lessee shall pay to Lessor a late payment charge in the amount of five percent
(5%) of the amount then due to cover Lessor's additional administrative expenses
necessitated by Lessee's failure to make timely payment; provided, however,
Lessor may not enforce such late payment charge for any Minimum Rent or any
other charges or amounts hereunder due while Xxxx Xxxxxx, Xx. is the president
of Lessee and has the authority to direct the payment of such amounts. Lessor
shall not be obligated to accept any payments which have accrued a late payment
charge unless accompanied by the late payment charge. This provision for a late
payment charge shall be in addition to all of Lessor's other rights and remedies
under this Lease or at law or in equity, and shall not be construed as
liquidated damages or as limiting Lessor's remedies in any manner.
ss.17.11. The remedies given to Lessor in this Article shall be in
addition and supplemental to all other rights or remedies which Lessor may have
at law, in equity or by statute.
ARTICLE 18
INDEMNITY--LIABILITY OF LESSOR
ss.18.011. Lessee agrees to indemnify, and save harmless, Lessor and
its partners and their respective officers, directors, agents, Fee Mortgagees
and employees from and against all liability (statutory or otherwise), claims,
suits, demands, damages, judgments, costs, interest and expenses (including
20
counsel fees and disbursements) to which any of the same may (except insofar as
it arises out of any wrongful act or negligence thereof) be subject or suffer by
reason of, or by reason of any claim for, any injury to, or death of, any person
or damage to property (including any loss of use thereof) or otherwise arising
from or in connection with the use of, or from any work or thing whatsoever done
in, any part of the Demised Premises (other than by Lessor or its employees or
agents) during the Lease Term or during the period of time, if any, prior
thereto during which Lessee has been given access for the purpose of doing work
or otherwise, or arising from any condition of the Demised Premises resulting
from any Event of Default by Lessee under this Lease or from any act or
negligence of Lessee or any of its officers, directors, agents, con tractors,
servants, employees, licensees or invitees. In the event any action or
proceeding is brought against Lessor its partners or their respective officers,
directors, agents, Fee Mortgagees or employees, and upon notice from Lessor,
Lessee shall defend the same at Lessee's expense by counsel satisfactory to
Lessor.
ss.18.012. Lessor agrees to indemnify, and save harmless Lessee and
its officers, directors, agents, and employees from and against all liability
(statutory or otherwise) claims, suits, demands, damages, judgments, costs,
interest and expenses (including counsel fees and disbursements) to which any of
the same may (except insofar as it arises out of any wrongful act or negligence
thereof) be subject or suffer by reason of, or by reason of any claim for, any
entry to, or death of, any person or damage to property (including any loss of
use thereof) or otherwise arising from or in connection with Lessor's negligent
or intentional wrongful acts in or around the Pad (other than by Lessee or its
employees or agents) during the Lease Term. In the event any action or
proceeding is brought against Lessee, its partners or their respective officers,
directors, agents or employees, arising out of any of the foregoing, and upon
notice from Lessee, Lessor shall defend the same by Lessor's expense by counsel
satisfactory to Lessee.
ss.18.013. The liability of Lessor to Lessee for any default by
Lessor under the terms of this Lease shall be limited to the interest of Lessor
in the Pad and Lessee agrees to look solely to Lessor's interest in the Pad for
the recovery of any judgment from Lessor, it being understood and agreed that
Lessor or its respective trustees, directors, officers, partners, employees,
agents, beneficiaries or security holder shall not be bound by or assume any
personal liability for any obligations of Lessor and such parties' respective
properties shall not be subject to the claims of any other person or party in
respect of any such liability. The limitation of liability provided in this
paragraph is in addition to, and not in limitation of, any limitation of
liability applicable to Lessor provided by law or any other contract, agreement
or instrument.
ARTICLE 19
NOTICES
ss.19.011. All notices, demands or requests by either party to the
other shall be deemed to have been properly served or given if sent by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the parties at the addresses listed below, or to such other address
as a party may from time to time designate by written notice to the other.
Lessor: Xxxxxxx Xxxxxx, Xx.
XXXXXX DEVELOPMENT, L.L.C.
0000 Xxxxx Xxxxxxxx Xxxx
00
Xxxxx, Xxxxxxx 00000
With a copy to: Xxxxx X. Xxxx, Esq.
O'CONNOR, CAVANAGH, ET AL.
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Lessee: Xxxx Xxxxxx
COMFORT SYSTEMS USA, INC.
0000 Xxxxxxx, Xxxxx 000 Xxxx
Xxxxxxx, Xxxxx 00000
ss.19.012. Notices, demands or requests which may or shall be served
or given by certified or registered mail hereunder shall be deemed sufficiently
served or given for all purposes when deposited in the mail. Any notice, demand
or request may be personally delivered (which shall include delivery by express
courier service) addressed as set forth above, and shall be effective upon
receipt.
ARTICLE 20
QUIET ENJOYMENT--CONVEYANCE AND MORTGAGES BY LESSOR--
SUBORDINATION AND ATTORNMENT
ss.20.011. Lessee upon timely paying the Minimum Rent and fully
keeping, observing and performing all the terms, covenants, agreements,
provisions, conditions and limitations of this Lease on Lessee's part to be
kept, observed and performed, shall quietly have and enjoy the Demised Premises
during the Lease Term without hindrance or molestation by Lessor or anyone
lawfully claiming by, or through Lessor.
ss.20.012. In the event Lessor herein or any successor owner of the
Demised Premises shall convey or otherwise dispose of the Demised Premises,
then, upon the transfer of any insurance policies, and other monies or any other
securities belonging to Lessee held by Lessor pursuant to the provisions of this
Lease, to any such purchaser of the Demised Premises, all liabilities and
obligations on the part of Lessor or successor owner as Lessor under this Lease,
accruing after such conveyance or disposal, shall cease and terminate and each
successor purchaser of the Demised Premises shall, without further agreement, be
bound by Lessor's covenants and obligations but only during the period of such
ownership respectively. Nothing herein contained shall be construed to release
Lessor or any successor owner as Lessor from any liability or obligation which
otherwise matured prior to the effective date of such conveyance or disposal.
20.013. This Lease is and shall automatically be subject to any Fee
Mortgages which now or in the future may affect the Pad or any portion thereof
and to all renewals, additions, modifications, consolidation, replacements and
extensions thereof; and Lessee covenants and agrees, within ten (10) days after
Lessor's written request, to execute, acknowledge and deliver upon request any
and all documents or instruments requested by Lessor or necessary or proper to
confirm the subordination of this Lease to any Fee Mortgages or any amendments
thereto. The subordination provided herein is conditional upon Lessee's receipt
from all Fee Mortgagees, of a non-disturbance agreement essentially providing
that so long as Lessee has not committed an Event of Default, the Fee Mortgage
shall not disturb the possession of Lessee.
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ss.20.014. Notwithstanding anything to the contrary set forth
herein, Lessee hereby attorns and agrees to attorn to any person, firm or
corporation purchasing or otherwise acquiring the Pad, Demised Premises or the
real property thereunder or any portion thereof at any sale or other proceeding
or pursuant to the exercise of any rights, powers or remedies under a Fee
Mortgage, as if such person, firm or corporation had been named as Lessor
herein, it being intended hereby that if this Lease is terminated, cut off or
otherwise defeated by reason of any act or actions by the owner or holder of any
such Fee Mortgage, then, at the option of any such person, firm or corporation
so purchasing or otherwise acquiring the Pad or any portion thereof, this Lease
shall continue in full force and effect.
ARTICLE 21
CERTIFICATES BY LESSOR AND LESSEE
ss.21.011. Both Lessor and Lessee agree at any time and from time to
time upon not less than twenty (20) days' prior written notice by the other
party, to execute, acknowledge and deliver to the other party a statement in
writing certifying that this Lease is unmodified and in full force and effect
(or if there have been modifications, that the Lease is in full force and effect
as modified and stating the modifications), and the dates to which the Minimum
Rent has been paid, and stating whether or not the other party is in default in
keeping, observing or performing any term, covenant, agreement, provision,
condition or limitation contained in this Lease and, if in default, specifying
each such default, it being intended that any such statement delivered pursuant
to this SS.21.01 may be relied upon by the other party or any prospective
purchaser or Fee Mortgagee or any assignee of any Fee Mortgagee or any proposed
purchaser.
ss.21.012. Lessee's failure to deliver such statement within such
time shall be conclusive upon Lessee (a) that this Lease is in full force and
effect, without modification except as may be represented by Lessor; (b) that
there are no uncured defaults in Lessor's performance; (c) that there are no
uses of the Demised Premises which are prohibited by this Lease, and any
federal, state or local statute, rule or regulation and that such uses conform
with applicable zoning codes; and (d) that not more than one month's rent has
been paid in advance.
ARTICLE 22
COVENANTS TO RUN WITH THE LAND
ss.22.011. The terms, covenants, agreements, provisions, conditions
and limitations herein contained shall be construed as covenants running with
the land and shall bind and inure to the benefit of Lessor, its successors and
assigns, and Lessee, its successors and assigns, if any, except as otherwise pro
vided herein.
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ARTICLE 23
NON-MERGER OF ESTATES
ss.23.011. The leasehold estate of Lessor and the leasehold estate
of the Lessee shall at all times be separate and apart, and shall in no event be
merged, notwithstanding the fact that this Lease or the leasehold estate created
hereby, or any interest in either thereof, may be held directly or indirectly by
or for the account of any person who shall own the fee estate in the Demised
Premises, and Lessee's interest in the Lease; and no such merger of estates
shall occur by operation of law, or otherwise, unless and until all persons at
the time having any interest in the fee interest in the Demised Premises and all
persons having any interest in the Lease or the leasehold estate shall join in
the execution of a written instrument effecting such merger of estates.
ARTICLE 24
APPROVAL
ss.24.011. Whenever in this Lease the approval or consent of any
party is required or desired, unless otherwise expressly provided, such party
shall not withhold or delay its approval or consent unreasonably, and unless a
different time limit is provided in any section of this Lease, such approval or
disapproval shall be given within twenty (20) days following receipt of request
for such approval or consent, and if not so given, the same shall conclusively
be deemed to have been approved by said party. Provided, however, any such
request for approval or consent shall specifically refer to this SS.24.01 and
shall also state that the party receiving the notice has twenty (20) days to
approve or consent and that if it fails to do so, the approval or consent shall
conclusively deemed to have been approved or consented to.
ARTICLE 25
MEMORANDUM OF LEASE
ss.25.011. This Lease shall not be recorded, but a memorandum of
this Lease shall be executed, delivered and recorded by the parties at the
election of either party.
ARTICLE 26
SECURITY DEPOSIT
ss.26.01. If at any time during the Lease Term Xxxx Xxxxxx, Xx. is
no longer the president of Lessee and authorized to direct the payment of
Minimum Rent or any other charges or amounts hereunder, in addition to Minimum
Rent, Lessee shall pay to Lessor a Security Deposit in the amount of Forty-Four
Thousand One Hundred Seventy-Five and No/100 Dollars ($44,175.00). Said deposit
shall be held by Lessor without liability for interest, as security for the
faithful performance by Lessee of all of the terms of this Lease to be observed
and performed by Lessee.
24
ss.26.02. If any sum payable by Lessee to Lessor shall be overdue
and unpaid or should Lessor make payments on behalf of Lessee, or if Lessee
shall fail to perform any of the terms of this Lease, then Lessor may, at its
option and without prejudice to any other remedy that Lessor may have on account
thereof, appropriate and apply the entire Security Deposit, or so much thereof
as may be necessary to compensate Lessor, toward the payment of Minimum Rent or
Impositions or loss or damage sustained by Lessor due to such breach on the part
of Lessee; and Lessee shall upon demand restore the Security Deposit to the
original sum.
ss.26.03. Lessor may deliver the Security Deposit to the purchaser
of Lessor's interest in the Demised Premises and thereupon Lessor shall be
discharged from any further liability with respect to the Security Deposit.
ARTICLE 27
SIGNS
ss.27.011. At its own expense, Lessee shall be allowed to place and
install any lawful signs on the Demised Premises as allowed by the City of
Xxxxxxxx and any deed restrictions that may affect the Demised Premises.
ARTICLE 28
MISCELLANEOUS
ss.28.011. This Lease constitutes the entire agreement between the
parties hereto with respect to the matters set forth herein and supersedes any
and all other prior written or oral agreements or understandings with respect to
this transaction. This Lease may not be modified in any respect except by
instruments signed in writing by both parties hereto.
ss.28.012. In the event of any action or proceeding brought by
either party against the other under this Lease the prevailing party shall be
entitled to recover for the fees of its attorneys in such action or proceeding
such amount as the court may adjudge as reasonable attorneys' fees.
ss.28.013. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns, if any, of the parties
hereto.
ss.28.014. The words "Lessor" and "Lessee" as used herein shall
include the plural as well as the singular. Words used in masculine gender
include the feminine and neuter. The marginal headings and titles to the
paragraphs of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
ss.28.015. This Lease, its construction, validity and effect, shall
be governed and construed by and in accordance with the laws of the State of
Arizona.
25
ss.28.016. It is understood and agreed between the parties hereto
that their relationship at all times shall remain that of Lessor and Lessee, and
that nothing herein contained shall be deemed, held or construed as the creation
of a partnership or joint venture as between the parties hereto in the conduct
of Lessee's business; nor shall Lessor be liable for any debts, liabilities or
obligations incurred by Lessee in the conduct of its business.
ss.28.017. If any provision of this Lease shall be determined to be
void by any court of competent jurisdiction, then such determination shall not
affect any other provisions of this Lease and all such other provisions shall
remain in full force and effect; and it is the intention of the parties hereto
that if any provision of this Lease is capable of two constructions, one of
which would render the provision void and the other of which would render the
provision valid, then the provision shall have the meaning which renders it
valid.
ss.28.018. Time is of the essence of this Lease and each and all of
its provisions.
ss.28.019. The waiver by Lessor of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of
any term, covenant or condition of this Lease, other than the failure of Lessee
to pay the particular rental so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such rent.
ss.28.10. All the terms, covenants and conditions contained in this
Lease to be performed by either party, if such party shall consist of more than
one person or organization, shall be deemed to be joint and several.
ss.28.11. Lessee promises, covenants and agrees to not remain in
possession of all or any part of the Demised Premises after the expiration of
the Lease Term, without the express written consent of Lessor. No acceptance of
Minimum Rent and no act or statement by any employee, servant or agent of Lessor
shall constitute the consent of Lessor to Lessee's holding over. Should Lessee
hold over without the express written consent of Lessor, such tenancy shall be
at the sufferance of Lessor, and not a renewal hereof or an extension for any
further term, and in such case, Minimum Rent and other monetary sums due here
under shall be payable at three (3) times the amount set forth in this Lease and
at the time specified in this Lease and such tenancy at sufferance shall be
subject to every other term, covenant and agreement contained herein. Lessee
understands that Lessor is relying on Lessee's covenant to not hold over and to
surrender the Demised Premises at the termination of the Lease Term. In the
event Lessee holds over, Lessee shall be liable for all Lessor's direct and
consequential damages, including costs, fees, expenses, damages and attor neys'
fees incurred by Lessor as a result of Lessee's holding over without Lessor's
express written consent, including, but not limited to, damages and expenses
incurred by Lessor for its inability to deliver possession of the Demised
Premises to a new lessee.
ss.28.12. Lessee and Lessor each hereby represent and warrant to the
other party that it has had no dealings with any real estate broker, finder or
agent in connection with the negotiations of this Lease and that it knows of no
real estate broker, company, finder or agent who is or might be entitled to a
commission in connection with the execution of this Lease and Lessee and Lessor
each covenant and agree to indemnify and save the other party harmless from any
and all loss, cost and liability that may arise from a breach of this warranty.
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ss.28.13. No representations, inducements, understanding or anything
of any nature whatsoever, made, stated or represented by Lessor or anyone acting
for or on Lessor's behalf, either orally or in writing, have induced Lessee to
enter into this Lease, and Lessee acknowledges, represents and warrants that
Lessee has entered into this Lease under and by virtue of Lessee's own
independent investigation.
ss.28.14. If Lessor desires to finance, refinance or sell the
Demised Premises, any part thereof or the Building of which the Demised Premises
are a part, Lessee and all guarantors of Lessee's performance hereunder shall
deliver to any potential lender or purchaser designated by Lessor such financial
statements of Lessee and such guarantors as may be reasonably required by such
lender or purchaser, including but not limited to Lessee's financial statements
for the past three (3) years. All such financial statements shall be received by
Lessor and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
IN WITNESS WHEREOF, the Lessor and Lessee have each caused this
Lease to be executed the day and year first above written.
LESSOR:
XXXXXX DEVELOPMENT, L.L.C.,
an Arizona limited liability company
By: ________________________________
Xxxxxxx Xxxxxx, Xx., Member
LESSEE:
TRI-CITY MECHANICAL, INC.,
an Arizona corporation
By: ________________________________
Its: _______________________________
27
EXHIBIT "A"
[To Lease between XXXXXX DEVELOPMENT, L.L.C. and TRI-CITY MECHANICAL, INC. dated
July __, 1997]
DEMISED PREMISES
Approximately 6.5 acres located in Chandler, Arizona on Xxxxxxxxx
Xxxx, xxxx xx 00xx Xxxxxx.
28
EXHIBIT "B"
[To Lease between XXXXXX DEVELOPMENT, L.L.C. and TRI-CITY MECHANICAL, INC. dated
July ___, 1997]
EXTENDED LEASE TERM MINIMUM RENT
Upon receipt by Lessor of a notice that Lessee is exercising an
option to extend the Initial Lease Term as provided in ss.2.02 of the Lease,
Lessor and Lessee shall attempt to determine the market rent for the Extended
Lease Term, with the market rent to reflect the Minimum Rent which are of a type
then typical in the rental market and to be based on the market rental for new
leases being executed as of one year prior to the expiration of the Initial
Lease Term including periodic increases (the "Valuation Date"). In determining
the market rent for the Extended Lease Term, due consideration shall be given,
among other things, to the length of the Extended Lease Term; the amount of the
Minimum Rent; whether or not such Minimum Rent should be subject to periodic
Consumer Price Index or other adjustments; allowances to Lessee for, and the
making by Lessor of improvements; liability of Lessee for reimbursable expenses;
and the respective maintenance responsibilities of Lessor and Lessee; provided,
however, the market rent for the Extended Lease Term shall not be less than the
Minimum Rent in effect at the end of the Initial Lease Term; the effect of all
such considerations shall be reflected in the Minimum Rent and periodic
adjustments to Minimum Rent; no other provisions of this Lease shall be
modified; and Lessor shall have no tenant improvement construction obligations.
Lessor, within thirty (30) days after the later of the Valuation
Date or the receipt of Lessee's option notice, shall present Lessee in writing
with the proposed market rental. If Lessee is dissatisfied with the proposed
market rental presented by Lessor, Lessee may, by delivery to Lessor of notice
within ten (10) days thereafter, elect to rescind Lessee's exercise of the
option, in which event all rights of Lessee under this EXHIBIT "B" shall
terminate. If Lessee does not so rescind Lessee's notice of exercise, then
Lessee shall, within thirty (30) days after receipt of Lessor's proposed market
rental, either accept the market rental proposed by Lessor or present Lessor in
writing with its proposed market rental. Within five (5) days thereafter, Lessor
shall either accept Lessee's proposal market rental or notify Lessee that the
proposed market rental is unacceptable. If the proposed market rental is
unacceptable to Lessor, and/or if Lessor and Lessee are unable to agree as to
the renewal market rental at least six (6) months prior to the expiration of the
Initial Lease Term, Lessor and Lessee will jointly appoint an appraiser to
determine whether the market rental (including adjustment provisions) first
proposed by Lessor or the market rental (including adjustment provisions) first
proposed by Lessee is the rental which most accurately reflects the fair market
rental at the Valuation Date. If Lessor and Lessee fail to agree upon an
appraiser with five (5) months prior to the expiration of the Initial Lease
Term, such appraiser will be appointed by the then President of the Local
Chapter of The American Society of Appraisers and will be experienced in the
appraisal of office, commercial and industrial properties in the Phoenix
metropolitan area. The decision of such appraiser will be in writing and in
duplicate; will be delivered to each of the parties to the Lease; and will
either select all aspects of Lessor's first proposal (including adjustment
provisions) or of Lessee's first proposal (including adjustment provisions) as
the market rental provisions most reflective of the fair market conditions at
the Valuation Date. The fair market rental provisions selected by the appraiser
shall then be the rental rate provisions for the Extended Lease Term, subject to
the limitations and adjustments to such market rental rate
29
set forth in this EXHIBIT "B" for determining the actual rental payable for the
Extended Lease Term. The fee of the appraiser will be paid equally by Lessor and
Lessee. If no determination is made prior to the commencement of the Extended
Lease Term, Lessee will continue to pay to Lessor the Minimum Rent with
bi-annual adjustments in effect at the end of the Initial Lease Term immediately
preceding such Extended Lease Term and, upon such fair market rental being
determined, Lessee will pay to Lessor the difference between the rent already
paid by Lessee for the Extended Lease Term and the actual amount of rent
attributable to the Extended Lease Term through the date of such determination.
Upon the determination of the fair market rental as aforesaid, the parties will
enter into an amendment to the Lease stating the Minimum Rent for the Extended
Lease Term.
30
EXHIBIT "C"
[To Lease between NOTHUM DEVELOPMENT, L.L.C. and TRI-CITY MECHANICAL, INC. dated
July ___, 1997]
OUTLINE SPECIFICATIONS
31
EXHIBIT "D"
[To Lease between NOTHUM DEVELOPMENT, L.L.C. and TRI-CITY MECHANICAL, INC. dated
July ___, 1997]
SITE PLAN
32
