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Exhibit 10.3
LEASE AGREEMENT
Office
This LEASE AGREEMENT dated this 22nd day of March, 1999 by and between XXXXXXX
X. XXXXX, XX. (hereinafter referred to as "Landlord"), and WAREFORCE
INCORPORATED a California corporation (hereinafter referred to as "Tenant").
WITNESSETH
1. Leased Premises. In consideration of the rents, terms, provisions,
and covenants of this Lease Agreement, Landlord does hereby lease and let unto
Tenant and Tenant does hereby hire, lease and take from Landlord, the premises
as shown and marked on Exhibit A attached consisting of approximately 26,146
square feet (hereinafter called the "Leased Premises"), of that certain property
located at 00000 00xx Xxxxxx Xxxxx in the City of Plymouth, County of Xxxxxxxx,
Xxxxx xx Xxxxxxxxx 00000 as set forth and legally described on Exhibit B
attached hereto and made a part hereto (hereinafter called the "Building").
2. Term. To have and to hold said Leased Premises for a term of
thirty-six (36) months, commencing on the 22nd day of March 1999 ("Commencement
Date"), through the 21st day of March 2002 (hereinafter called the "Term") upon
the rentals and subject to the conditions set forth in this Lease Agreement.
3. Use of Leased Premises.
3.1 Generally. Tenant shall use the Leased Premises solely as an office
and warehouse facility. Tenant shall not use or permit upon the Leased Premises
anything that might be dangerous to life or limb. Tenant shall not, in any
manner, deface or injure any part of the Leased Premises or commit waste
thereon. Tenant shall not do anything or permit anything to be done upon the
Leased Premises which in any way would tend to create a public or private
nuisance or would tend to disturb occupants of neighboring property or would
tend to injure the reputation of the Leased Premises. Tenant shall not use or
occupy the Leased Premises or
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permit the Leased Premises to be used or occupied in a manner which would
violate any certificate of occupancy affecting the Leased Premises, or would
cause structural injury to the Improvements, or would cause the value or
usefulness of any part of the Leased Premises to diminish in any material
respect.
3.2 Compliance With Law. Tenant shall, at its sole cost and expense,
comply with (a) all laws, regulations and ordinances of any applicable
governmental authority ("Laws") affecting the Leased Premises and the occupancy,
operation or use of the Leased Premises, including those pertaining to the
Americans With Disabilities Act (the ADA), (b) all rules, orders and regulations
of the state fire marshal or fire insurance rating bureau or other similar
organization for the prevention of fire or the correction of hazardous
conditions, and (c) the requirements of all policies of public liability, fire
and other insurance at any time in force with respect to the Leased Premises.
3.3 Tenant's Business. Tenant shall observe and comply with all
conditions and requirements necessary to conduct Tenant's business operations
upon the Leased Premises, including any and all rights, licenses, permits
(including but not limited to zoning variances, special exemptions and
nonconforming uses), privileges, franchises and concessions which may be
applicable to the Leased Premises. Tenant shall, at its sole cost and expense,
procure any and all necessary permits, certificates, licenses or other
authorizations required for its use of the Leased Premises. If the owner of the
Leased Premises is required by law to join in any such application, Landlord
shall allow any applications for such permits, certificates or other
authorizations to be made in Landlord's name and shall execute any documents
required in connection with such applications promptly on request and shall
otherwise cooperate fully with Tenant in connection with such applications,
provided Tenant is otherwise in compliance with the terms and conditions hereof
and provided Landlord is not required to incur cost or expense in doing so.
4. Base Rent. Tenant agrees to pay to Landlord as base rental in lawful
money of the United States of America (hereinafter called "Base Rental") for the
Leased Premises, without notice set-off or demand, the annual sum of One Hundred
Eighty Nine Thousand Five Hundred Seventy-one
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Dollars ($189,571) payable in monthly installments of Fifteen Thousand Seven
Hundred Ninety -Seven and 58\100 Dollars ($15,797.58) commencing on the date
hereof, said monthly installments to be due and payable on the first day of each
and every month thereafter during the Term of this Lease Agreement, or any
extension or renewal thereof in advance at the office of Landlord as set forth
in this Lease Agreement or at such other place as Landlord may designate in
writing. In the event the Commencement Date falls on a date other than the first
of a month, the rental for that month shall be prorated and adjusted
accordingly.
5. Operating Costs and Expenses. Tenant shall, for the entire Term, pay
to Landlord as an item of additional rent, without any setoff or deduction
therefrom, its Proportionate Share of the annual aggregate operating costs and
expenses ("Operating Expenses") which Landlord may incur in owning, maintaining
and operating the Building during each calendar year of the Term. Tenants
"Proportionate Share" is 69.25% which is defined as Tenant's percentage of
Operating Expenses incurred by Landlord with respect to the Building (being the
decimal equivalent of a fraction, the numerator of which is the number of square
feet of the Leased Premises and the denominator of which is the number of square
feet within the entire Building). "Operating Expenses" are defined to include
all expenses and costs (but not specific costs which are separately billed to
and paid by individual tenants) of every kind and nature which the Landlord
shall pay or become obligated to pay because of or in connection with the
ownership and operation of the Building and supporting facilities of the
Building, including but not limited to all real estate taxes and annual
installments of special or other assessments payable with respect to the
Building, and all other taxes, service payments in lieu of taxes, excises,
levies, fees, or charges, general and special, ordinary and extraordinary, of
any kind, which are assessed, levied, charged, confirmed or imposed by any
public authority upon the Building, its operations or the rent provided for in
this Lease; costs of any contest of such taxes, including attorney's fees,
management fees, insurance premiums, utility costs, janitorial costs, Building
security costs, costs of wages, maintenance costs (relating to the Building and
adjacent land including sidewalks, skyways, landscaping and parking or service
areas, common areas, service contracts, equipment and supplies) and all other
costs of any nature whatsoever which for federal tax purposes may be expensed
rather than capitalized, but exclusive only of
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leasing commissions, depreciation, costs of tenant improvements and payments of
principal and interest on any mortgages, deeds of trusts, or other security
devices covering the Building.
As soon as reasonably practicable prior to the commencement of each
calendar year during the Term, Landlord shall furnish to Tenant as estimate of
Operating Expenses for the ensuing calendar year and Tenant's Proportionate
Share thereof. Tenant shall pay, as additional rent hereunder, together with
each installment of Base Rental, one-twelfth (1/12th) of its estimated annual
Proportionate Share of Operating Expenses. As soon as reasonably practicable
after the end of each calendar year during the Term, Landlord shall furnish to
Tenant a statement of the actual Operating Expenses for the previous calendar
year, including Tenant's Proportionate Share of Operating Expenses, and within
thirty (30) days thereafter Tenant shall pay to Landlord, or Landlord shall
credit to the next rent payments due Landlord from Tenant or at the end of the
Term by a refund, as the case may be, any difference between the actual
Operating Expenses and the estimated Operating Expenses paid by Tenant. Tenant's
Proportionate Share of Operating Expenses for the years in which this Lease
commences and terminates shall be prorated by multiplying the actual Operating
Expenses by a fraction the numerator of which is the number of days of that year
of the Term and the denominator of which is 365. Notwithstanding any other
provision herein to the contrary, it is agreed that in the event that the
Building is not fully occupied at any time during the Term, an adjustment shall
be made in computing the Operating Expenses for such year so that the Operating
Expenses shall be computed for such year as though the Building had been fully
occupied during such year.
6. Security Deposit. None.
7. Obligations of Landlord. So long as Tenant shall perform each and
every obligation to be performed by Tenant hereunder, Landlord agrees that
Tenant shall quietly Leased Premises in accord with the provisions hereof and
that Landlord shall:
(a) Keep the foundations, the exterior walls and the roof of the
Building in good repair, ordinary wear and tear excepted;
provided, however, if the need for such repairs is directly or
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indirectly attributable to or results from any activity being
conducted by Tenant within the Leased Premises, Tenant agrees
to reimburse Landlord for all costs and expenses incurred by
Landlord with respect to such repairs. Landlord shall commence
any repairs it is required to do hereunder as soon as
reasonably practicable after receiving written notice from
Tenant of the necessity for such repairs, but in no event
shall Landlord be required to make any other repairs.
(b) Maintain all common areas within the Building or land adjacent
thereto, including, but not limited to, the exterior
improvements to the property adjacent to the Building such as
shrubbery, landscaping, fencing and exterior lighting; and
(3) Maintain all electrical, plumbing or other systems which
service not only the Tenant, but all tenants in the building.
To the extent that any of the foregoing constitute "Operating Expenses"
as defined in Paragraph 5 of this Lease , the same shall be allocated to the
Tenant as set forth in said paragraph. It is understood that Landlord does not
warrant that any of the services and utilities referred to above will be free
from interruption from causes beyond the reasonable control of Landlord. Such
interruption of service or utilities shall never be deemed an eviction or
disturbance of Tenant's use and possession of the Leased Premises or any part
thereof or render Landlord liable to Tenant for damages by abatement of rent or
otherwise or relieve Tenant from performance of Tenant's obligations under this
Lease.
8. Maintenance and Repair.
8.1 Acceptance by Tenant. Tenant's taking possession of the Leased
Premises constitutes acknowledgment that Tenant has received the Leased Premises
in good order and condition. Landlord makes no warranty or representation
regarding the physical condition of any part of the Leased Premises or to the
suitability or fitness of the Leased Premises or any part thereof for any
particular purpose.
8.2 Tenant's Maintenance Obligations. During the Term hereof
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Tenant shall, at its expense, take good care of the Leased Premises (including
all of Landlord's fixtures and appurtenances therein or thereon) and shall
complete and perform all routine maintenance and repairs to the Leased Premises
as soon as same are necessary, including, but not limited to all HVAC repairs to
the Leased Premises. Tenant shall obtain at its expense a HVAC maintenance
contract to provide routine service to the HVAC system in the Leased Premises.
Tenant shall not be required to make capital improvements/repairs to the Leased
Premises. Tenant's obligations to maintain, repair and replace the Leased
Premises shall exclude all (i) building systems located within the Building that
service the entire Building (ii) broken or damaged glass, provided that if such
damage was caused by the negligence of the Tenant or its customers or employees
any costs of repair shall be charged to Tenant; (iii) damage by vandals (iv) the
common area walls, ceilings, floors and floor coverings (including carpets and
tiles of the common area of the Building); (v) the exterior improvements to the
Land such as shrubbery, landscaping, fencing and exterior lighting; (vi) snow
plowing and ice removal; (vii) the common areas located within the Building,
including the common entrances, corridors, doors and windows, stairways and
lavatory facilities; and (vii) all necessary repairs and replacements to the
roof, exterior and bearing walls of the Building and support beams, foundation
columns and lateral support thereto. All repairs made by the Tenant shall be
equal in quality and workmanship to the original work. Any of the foregoing
expenses incurred by Landlord in performing its duties which shall constitute
"Operating Expenses" as defined in Paragraph 5 shall be allocated to the Tenant
as provided therein.
8.3 Failure to Maintain. If Tenant fails to comply with the provisions
of this Section 8, Landlord may give Tenant written notice of such failure to
comply, specifying the maintenance or repairs to be made by Tenant. If the
maintenance or repairs are not completed by Tenant within twenty (20) days after
said notice, Landlord may have the work done at Tenant's expense, and the cost
of the same shall become Additional Rent payable by Tenant to Landlord upon
written demand from Landlord. Notwithstanding the foregoing, if the maintenance
or repair is not susceptible of cure within twenty (20) days or if any cause
beyond Tenants reasonable control (except for payments to be made by Tenant)
delays Tenants completion of the maintenance or repair, said twenty (20) day
period shall be extended by the length of the delay so long as Tenant
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has commenced the cure within said twenty (20) day period and diligently
prosecutes the same thereafter. if the required maintenance and repairs are of
an emergency nature or threaten the security or safety of the Building or
persons, Landlord may act on Tenant's behalf without notice to Tenant.
9. Covenants of Tenant. Tenant agrees, during the Lease Term or any
extension or renewal thereof that it shall:
(a) Observe and comply with all governmental ordinances, laws and
regulations and all such rules and regulations as from time to
time may be put in effect by Landlord, or Landlord's
designated managing agent, for the general safety, comfort,
and convenience of Landlord, occupants and tenants of the
Building, including, without limitation, Building signage and
graphics standards, use of designated common areas and other
Building areas, security measures, and similar matters.
(b) Give Landlord and Landlord's managing agent access to the
Leased Premises, at any time during emergencies and at all
reasonable times, without charge or diminution of rent, to
enable Landlord to examine or exhibit the same and to make
such inspections, repairs, additions and alterations as
Landlord deems necessary or may be required to make hereunder.
(c) Keep the Leased Premises in good order and condition; Tenant
shall be responsible for payment of all costs incurred by
Landlord in replacing all broken glass with glass of the same
quality, save only glass broken by fire and extended coverage
risks; and Tenant shall commit no waste on the Leased
Premises.
(d) Pay for all replacement electric lamps and ballasts in the
Leased Premises.
(e) Upon the termination of this Lease in any manner whatsoever,
remove Tenant's goods and effects and those of any other
person claiming under Tenant, and quit and deliver up the
Leased Premises to Landlord peaceably and quietly in as good
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order and condition as the same are in at the commencement of
the term or thereafter were put in by Landlord or Tenant,
reasonable use and wear expected. Goods and effects not
removed by Tenant at the termination of this Lease, however
terminated, shall be considered abandoned, and Landlord may
dispose of the same as it deems expedient at Tenant's expense.
Tenant shall be responsible for payment of all costs incurred
by Landlord for any restoration of the Leased Premises needed
by virtue of the removal of Tenant's goods and effects whether
removed by Tenant or Landlord.
(f) Not assign this Lease or sublet all or any part of the Leased
Premises voluntarily, involuntarily or by operation of law, or
through change in the ownership of Tenant if Tenant is a
corporation or a partnership, without first obtaining
Landlord's written consent thereto.
(g) Not place signs on or about the Leased Premises or the
Building without first obtaining Landlord's written consent
thereto.
(h) Not overload, damage or deface the Leased Premises or the
Building or do any act which may make void or voidable any
insurance on the Leased Premises or the Building, or which may
render an increased or extra premium payable for insurance.
(i) Not install asbestos or any asbestos containing material
within the Leased Premises or the Building and not make any
alterations or additions to the Leased Premises without the
prior written consent of the Landlord and until payment and
completion bonds therefore have been approved by Landlord; and
all alterations, additions or improvements (including
carpeting or other floor covering) which may be made by either
of the parties hereto upon the Leased Premises, except
moveable office furniture and equipment, shall at Landlord's
election, be the property of Landlord and shall remain upon
and be surrendered with the Leased Premises, as a part
thereof, at the termination of this Lease.
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(j) Keep the Leased Premises and the Building free from any
mechanics', materialmens', contractors' or other liens arising
from, or any Claims for damages growing out of, any work
performed, materials furnished or obligations incurred by or
on behalf of Tenant. Tenant shall indemnify and hold harmless
Landlord from and against any such lien, or claim or action
thereon, and reimburse Landlord promptly upon demand therefore
by Landlord for costs of suit and reasonable attorneys' fees
incurred by Landlord in connection with any such lien, claim
or action.
(k) Maintain at its expense at all times during the Term (i) a
policy or policies of public liability insurance with respect
to the Leased Premises and the business of Tenant, with limits
of not less than $1,000,000 combined single limit; and (ii) a
policy or policies of all risk insurance insuring Tenant's
leasehold improvements, trade fixtures and other personal
property for the full insurable value thereof. All such
insurance policies shall provide for at least thirty (30) days
prior written notice to Landlord before cancellation or
amendment, name Landlord as an additional insured thereon,
filed with Landlord prior to Tenant's occupancy of the Leased
Premises and at all times thereafter during the Term.
10. Hazardous Substances. Tenant and Landlord agree to the definition
of Hazardous Substance as follows: the term "Hazardous Substance", as used in
this paragraph, shall mean those substances and waste which are defined as
hazardous in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., including, but not
limited to, those substances listed in the United States Department of
Transportation Hazardous Materials Table (49 CFR 172.101) and shall include,
without limitation, flammables, explosives, radioactive materials, asbestos,
polychlorinated biphenyls (PCBs), chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances including, without limitation, Freon or other chlorofluorocarbons
declared to be hazardous or toxic or regulated or banned under any law or
regulation now or hereafter enacted or promulgated by any government authority
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(hereinafter, collectively, "Hazardous Substances").
Tenant shall not cause or permit to occur: (a) any violation of any
federal, state, or local law, ordinance, or regulation now or hereafter enacted,
related to environmental conditions on, under, or about the Leased Premises, or
arising from Tenant's use or occupancy of the Leased Premises, including, but
not limited to, soil and ground water conditions; or (b) the use, generation,
release, manufacture, refining, production, processing, storage or disposal of
any Hazardous Substance on, under or about the Leased Premises, or the
transportation to or from the Leased Premises of any Hazardous Substance.
Tenant agrees to Environmental Cleanup as follows: (a) Tenant shall, at
Tenant's own expense, comply with all laws regulating the use, generation,
storage, transportation, or disposal of Hazardous Substances ("Laws"); (b)
Tenant shall, at Tenant's own expense, make all submissions to, provide all
information required by, and comply with all requirements of all governmental
authorities (the "Authorities") under the Laws; (c) should any Authority or any
third party demand that a cleanup plan be prepared and that a cleanup be
undertaken because of any deposit, spill, discharge, or other release of
Hazardous Substances that occurs during the term of this Lease, at or from the
Leased Premises, or which arises at anytime from Tenant's use or occupancy of
the Leased Premises, then Tenant shall, at Tenants own expense, prepare and
submit the required plans and all related bonds and other financial assurances;
and Tenant shall carry out all such cleanup plans; (d) Tenant shall promptly
provide all information regarding the use, generation, storage of
transportation, or disposal of Hazardous Substances that is requested by
Landlord. If Tenant fails to fulfill any duty imposed under this Paragraph
within a reasonable time, Landlord may do so; and in such case, Tenant shall
cooperate with Landlord in order to prepare all documents Landlord deems
necessary or appropriate to determine the applicability of the Laws to the
Leased Premises and Tenant's use thereof, and for compliance therewith, and
Tenant shall execute all documents promptly upon Landlord's request. No such
action by Landlord and no attempt made by Landlord to mitigate damages under any
Law shall constitute a waiver of any of Tenant's obligations under this
Paragraph; (e) Tenant will, at and to the extent of any written request of
Landlord remove from the Leased Premises at the end of Term, at Tenant's expense
and in accordance with
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any applicable laws or regulations, equipment (including refrigeration equipment
and enhancements to the Building's standard HVAC systems) that contains, uses or
generates Freon or any other chlorofluorocarbons, whether or not such removal is
then required by applicable laws or regulations; (f) Tenant's obligations and
liabilities under this Paragraph shall survive the expiration of this Lease.
Tenant agrees to Tenant's Indemnity as follows: (a) Tenant shall indemnify,
defend, and hold harmless Landlord, the manager of the property, and their
respective officers, directors, beneficiaries, shareholders, partners, agents,
and employees from all fines, suits, procedures, claims, and actions of every
kind, and all costs associated therewith (including attorneys' and consultants'
fees) arising out of or in any way connected with any deposit, spill, discharge,
or other release of Hazardous Substances that occurs during the term of this
Lease, at or from the Leased Premises, or which arises at any time from Tenant's
use or occupancy of the Leased Premises, or from Tenant's failure to provide all
information, make all submissions, and take all steps required by all
Authorities under the Laws and all other environmental laws; (b) Tenant's
obligations and liabilities under this Paragraph shall survive the expiration of
this Lease.
Tenant's obligations under this Paragraph to do or not to do a
specified act shall extend to and include Tenant's obligation for all conduct of
Tenant's employees, agents and invitees.
11. Alterations and Additions.
11.1 Tenant's Alterations. Tenant may, at any time and from time to
time during the term of this Lease and at its sole cost and expense, make
additions to or alterations, substitutions, removals or replacements of the
Improvements ("Alterations") provided, however, that (a) the total market value
of the Leased Premises shall not be lessened by reason of any such Alterations,
(b) any Alterations shall be done in a good and workmanlike manner, (c) all such
Alterations shall be expeditiously completed and in compliance with all
applicable Laws, (d) the nature, scope and effect of the Alterations shall be
subject to Landlord's prior written consent, which consent shall not be
unreasonably withheld, but which consent may be conditioned upon Tenant removing
all or part of the proposed Alterations at its expense at the expiration or
termination of
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this Lease and restoring the Leased Premises to the condition existing prior to
the Alterations, (e) the plans and specifications for all Alterations shall be
submitted to Landlord for Landlord's review and approval, which approval shall
not be unreasonably withheld, (f) all Alterations shall be completed by
contractors and subcontractors reasonably acceptable to Landlord and further, as
a condition of the approval of Alterations, Landlord may specify which
contractors and subcontractors must be used with respect to the Alterations, (g)
Tenant shall comply with all reasonable insurance requirements of Landlord,
together with any other reasonable requirements of the holder of any mortgage
covering the Leased Premises; and (h) Tenant shall promptly pay all costs and
expenses and discharge any and all liens arising with respect to the
construction of the Alterations. Title to all Alterations made by Tenant, except
trade fixtures, shall become the property of Landlord at the termination of this
Lease. Upon the request of Landlord, Tenant shall deposit with Landlord a surety
bond or other security satisfactory to Landlord to assure the completion of any
such Alterations. Tenant shall procure and pay for all required permits,
certificates and licenses in connection with Alterations.
11.2 Landlord Alterations. Landlord shall have no obligation relating
to alterations or the improvements to the Leased Premises. Notwithstanding the
foregoing, however, Landlord shall at all times have the right to further
improve the Land, in its absolute discretion including, without limitation, the
right to erect onto the Land parking structure(s) or facilities or additional
building(s) provided that no such improvements to the Land shall unreasonably
interfere with access to and/or use of the Leased Premises.
12. Loss by Casualty. In the event of any damage or destruction to the
Leased Premises by fire or other cause during the term hereof, the following
provisions shall apply;
(a) If the Building is damaged by fire or any other cause to such
extent that the cost of restoration, as reasonably estimated
by Landlord, will equal or exceed thirty percent (30%) of said
replacement value of the Building (exclusive of foundations)
just prior to the occurrence of the damage, or if in the
opinion of the Landlord such damages cannot be restored or
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repaired within one hundred twenty (120) days from the date of
such casualty, then Landlord may, no later than the sixtieth
(60th) day following the damage, give Tenant written notice of
Landlord's election to terminate this Lease.
(b) If the cost of restoration as estimated by Landlord will equal
or exceed fifty percent (50%) of said replacement value of the
Building and if the Leased Premises are not suitable as a
result of said damage for the purposes for which they are
demised hereunder, in the reasonable opinion of Tenant, then
Tenant may, no later than the sixtieth (60th) day following
the damage, give Landlord a written notice of election to
terminate this Lease.
(c) If the cost of restoration as estimated by Landlord shall
amount to less than thirty percent (30%) of said replacement
value of the Building, or if, despite the cost, Landlord does
not elect to terminate this Lease, Landlord shall restore the
Building and the Leased Premises with reasonable promptness,
subject to delays beyond Landlord's control and delays in the
making of insurance adjustments by Landlord; and Tenant shalt
have no right to terminate this Lease except as herein
provided Landlord shall not be responsible for restoring or
repairing leasehold improvements installed by or paid for by
Tenant.
(d) In the event of either of the elections to terminate, this
Lease shall be deemed to terminate on the date of the receipt
of the notice of election and all rentals shall be paid up to
the date. Tenant shall have no claim against Landlord for the
value of any unexpired term of this Lease.
(e) In any case where damage to the Building shall materially
affect the Leased Premises so as to render them unsuitable in
whole or in part for the purposes for which they are demised
hereunder, then, a portion of the rent based upon the amount
of the extent to which the Leased Premises are rendered
unsuitable shall be abated until repaired or restored.
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13. Eminent Domain. In the event of any eminent domain or condemnation
proceeding or private sale in lieu thereof in respect to the Leased Premises
during the term thereof, the following provisions shall apply:
(a) If the whole of the Leased Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use
or purpose, then the term of the Lease shall cease and
terminate as of the date possession shall be taken in such
proceeding and all rental shall be paid up to that date.
(b) If any part constituting less than the whole of the Leased
Premises shall be acquired or condemned as aforesaid, and in
the event that said partial taking or condemnation shall
materially affect the Leased Premises so as to render the
Leased Premises unsuitable for the business of the Tenant, in
the reasonable opinion of Landlord, then the term of this
Lease shall cease and terminate as of the date possession
shall be taken by the condemning authority and rent shall be
paid to the date of such termination.
In the event of a partial taking or condemnation of the Leased
Premises which shall not materially affect the Leased Premises
so as to render the Leased Premises unsuitable for the
business of the Tenant, in the reasonable opinion of the
Landlord, this Lease shall continue in full force and affect
but with a proportionate abatement of the Base Rental and
additional rent based on the portion, if any, of the Leased
Premises taken. Landlord reserves the right, at its option, to
restore the Building and the Leased Premises to substantially
the same condition as they were prior to such condemnation. In
such event, Landlord shall give written notice to Tenant,
within 30 days following the date possession shall be taken by
the condemning authority, of Landlord's intention to restore.
Upon Landlord's notice of election to restore, Landlord shall
commence restoration and shall restore the Building and the
Leased Premises with reasonable promptness, and Tenant shall
have no right to terminate this Lease except as herein
provided. Upon completion of such restoration, the rent shall
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be adjusted based upon the portion, if any, of the Leased
Premises restored.
(c) All damages in the event of any condemnation shall belong to
the Landlord, however, Tenant shall have the right to claim
and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or
recoverable by Tenant in Tenant's own right on account of any
and all damage to Tenant's business by reason of the
condemnation and for or on account of any cost or loss to
which Tenant might be put in removing Tenant's merchandise,
furniture, fixtures, leasehold improvements and equipment.
14. Liability and Indemnity. Save for its gross negligence, Landlord
shall not be responsible or liable to Tenant for any loss or damage (i) that may
be occasioned by or through the acts or omissions of persons occupying any part
of the Building or any persons transacting any business in or about the Building
or persons present in or about the Building for any other purpose or (ii) for
any loss or damage resulting to Tenant or its property from burst, stopping or
leaking water, sewer, sprinkler or steam pipes or plumbing fixtures or from any
failure of or defect in any electric line, circuit or facility. Tenant shall
defend, indemnify and save Landlord harmless from and against all liabilities,
damages, claims, costs, charges, judgments and expenses, including, but not
limited to, reasonable attorneys' fees, which maybe imposed upon or incurred or
paid by or asserted against Landlord, the Leased Premises or any interest
therein or in the Building by reason of or in connection with any use, non-use,
possession or operation of the Leased Premises, or any part thereof, any
negligence or tortious act on the part of Tenant or any of its agents,
contractors, servants, employees, licensees or invitees, any accident, injury,
death or damage to any person or property occurring in, on or about the Leased
Premises or any part thereof, and any failure on the part of Tenant to perform
any of the terms or conditions of this Lease provided, however, that nothing
contained in this paragraph shall be deemed to require Tenant to indemnify
Landlord with respect to any gross negligence or tortious act committed by
Landlord or to any extent prohibited by law.
15. Default.
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15.1 Events of Default. Any of the following occurrences or acts
shall constitute an event of default under this Lease:
15.1.1 Lease Terms. Tenant (a) fails to make payment of any
installment of Base Rent or Additional Rent within
five (5) days after the date when due or (b) fails to
observe or perform any of Tenant's other covenants,
agreements or obligations pursuant to this Lease and
fails to cure such non-monetary default within twenty
(20) days after Landlord's written notice to Tenant
specifying such default or defaults;
15.1.2 Insolvency. Tenant files a petition in bankruptcy or
is adjudicated a bankrupt or insolvent or makes an
assignment for the benefit of its creditors or admits
in writing its inability to pay its debts generally
as they become due and such petition, adjudication,
assignment or admission is not discharged or denied
within thirty (30) days;
15.1.3 Appointment. A receiver, trustee or liquidator of all
or substantially all of the property of Tenant or of
the Leased Premises is appointed in any proceeding
brought by Tenant and such appointment is not
discharged within thirty (30) days;
15.1.4 Abandonment. The Leased Premises are abandoned or
left unoccupied for thirty (30) calendar days;
15.1.5 Other Agreements. Tenant shall default in any other
agreement relating to the sale of the assets of
Kennsco, Inc., to which agreement Tenant is a party.
15.2 Extension of Cure Period. Notwithstanding the foregoing
provisions of this Section 14, if a default not related to the
payment of amounts to Landlord is not susceptible of cure
within the specified time period due to causes beyond Tenant's
reasonable control (except for payments to be made by Tenant),
the specified period shall be extended a reasonable period of
time (not to exceed sixty (60) days), provided Tenant has
commenced the cure within said specified period and diligently
prosecutes the same thereafter.
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15.3 Termination. Upon an event of default, Landlord shall have the
right (but not the obligation) to terminate this Lease by
written notice to Tenant. Thereupon, all right, title and
interest of Tenant shall immediately expire as fully and
completely as if the date specified were the Termination Date.
In that event, Tenant shall then peaceably and quietly quit
the Leased Premises and surrender the same to Landlord, but
Tenant shall remain liable as provided in Section 14.4 of this
Lease. If such notice is given, Landlord shall have the
immediate right of reentry and possession of the Leased
Premises and the right to remove all persons and property from
the Leased Premises. Upon taking possession, Landlord may make
such alterations and repairs to the Leased Premises as
Landlord deems necessary and appropriate and Landlord may,
from time to time, relet all or any portion of the Leased
Premises for such term or terms and such rental or rentals and
upon such other terms and conditions as Landlord, it in its
sole discretion, deems advisable.
15.4 Landlord's Reentry Without Termination. Landlord may elect to
reenter and obtain possession of the Leased Premises by reason
of or following an event of default, with or without
terminating this Lease in the manner set forth in Section 14.3
above. Thereupon, Landlord shall have the right, at Landlord's
option and without notice: (a) to repair or alter the Leased
Premises in such manner as Landlord may deem necessary or
advisable so as to put the Leased Premises in good order and
to make the same rentable and O,) to relet the Leased Premises
or any part of the Leased Premises. No such reentry or taking
of possession of the Leased Premises by Landlord shall be
construed as an election on Landlord's part to terminate this
Lease unless a notice of such intention be given to Tenant or
unless the termination of this Lease is decreed by a court of
competent jurisdiction.
15.4.1 Payment of Landlord's Expenses. If Landlord does
reenter the Leased Premises, Tenant shall pay to
Landlord on demand all expenses incurred by Landlord
in (a) obtaining possession, (b) altering, repairing
and putting the Leased Premises in good order and
condition,
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and (c) reletting the same, including (i) reasonable
fees of attorneys, architects, and other experts
and (ii) any other legitimate expenses or
commissions.
15.4.2 Continuing Payment of Rent. In the event of any
expiration or termination of Term of this Lease or
re-entry or possession of the Leased Premises by
reason of the occurrence of an Event of Default,
Tenant shall pay to Landlord all Base Rent,
Additional Rent and all other sums required to be
paid by Tenant through and including the date of such
expiration, termination, reentry or repossession; and
thereafter, until the end of what would have been the
Term of this Lease in the absence of such expiration,
termination, re-entry or re-possession (whether or
not the Leased Premises shall have been relet) and
Tenant shall be liable to Landlord for and shall pay
to Landlord, as liquidated and agreed current
damages, all Base Rent, Additional Rent and all other
sums which would be payable under this Lease by
Tenant in the absence of such expiration,
termination, re-entry or repossession less the net
proceeds, if any, of any reletting affected for the
account of Tenant after deducting therefrom the
expenses set forth in Section 14.4.1 hereof Tenant
shall pay such current damages on the days on which
Base Rent would be payable under this Lease in the
absence of such expiration, termination, re-entry or
repossession and Landlord shall be entitled to
recover the same from Tenant on each day. Landlord
shall have, from time to time, the right to begin and
maintain successive actions or other legal
proceedings against Tenant for the recovery of such
amounts and such other sums payable pursuant to this
Lease. At any time after such termination or
repossession, whether or not Landlord shall have
collected any current damages as aforesaid, Landlord
shall be entitled to recover from Tenant, and Tenant
shall pay to Landlord on demand, as and for
liquidated and final damages for Tenant's default
hereunder (in addition to Landlord's expenses set
forth in Section 14.4.1 hereof) an amount equal to
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the then present value of the excess of the Base Rent
and other sums or charges reserved under this Lease
from the date of such termination or repossession for
what would be the then unexpired Term if the same had
remained in effect, over the amount of rent Tenant
establishes that Landlord could in all likelihood
actually receive for the Leased Premises for the same
period. Said present value to be arrived at on the
basis of a discount of four percent (4%) per annum.
Tenant's liability hereunder shall survive the
termination or expiration of this Lease or any action
to secure possession of the Leased Premises. Nothing
contained in this Lease shall be deemed to require
Landlord to wait until the Termination Date to begin
such action or other legal proceedings.
16. Additional Rights of Landlord.
16.1 Enforcement Rights. No right or remedy in this Lease conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy of Landlord shall be cumulative and
in addition to any other right or remedy given Landlord pursuant to this Lease,
or now or at any time existing at law or in equity. In addition to the other
remedies provided by this Lease, Landlord shall be entitled to (a) injunctive
relief in case of the violation or attempted or threatened violation of any of
the covenants, agreements, conditions or provisions of this Lease, (b) a decree
compelling performance of any of the covenants, agreements, conditions or
provisions of this Lease, or (c) any other remedy allowed to Landlord at law or
in equity.
16.2 Non waiver. The failure of Landlord to insist at any time upon
Tenant's strict performance of any of the covenants or agreements contained in
this Lease shall not be construed as a waiver or a relinquishment of such
covenants or agreements for the future. Landlord's receipt of any Base Rent or
Additional Rent, with knowledge of a breach by Tenant of any covenant or
agreement contained in this Lease shall not be deemed a waiver of such breach.
No waiver by either party of any provision of this Lease shall be deemed to have
been made unless
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expressed in writing and signed by the party waiving the same.
17. Notices. All rent and other payments required to be made by Tenant
shall be payable to Landlord at the address set forth below, or any other
address Landlord may specify' from time to time by written notice delivered to
Tenant. All payments required to be made by Landlord to Tenant shall be payable
to Tenant at the address set forth below, or at any other address within the
United States as Tenant may specify from time to time by written notice. Any
written notice or document required or permitted to be delivered by this Lease
shall be deemed to be delivered (whether or not actually received) when
deposited in United States mail, postage paid, certified mail, return receipt
requested, addressed to the parties at their respective address set out below:
TENANT: Xxxxxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX. 90245
Attn.: General Counsel
LANDLORD: Xxxxxxx X. Xxxxx, Xx.
000 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
18. Option to Extend Term. Provided Tenant is not in default of this
Lease, Tenant is hereby granted the option to extend the term of this Lease for
one additional term of two (2) years which shall commence on the first day after
the end of the initial term of this Lease. Said option shall only be exercised
by Tenant delivering written notice thereof to Landlord not less than one
hundred eighty (180) days prior to the expiration of the initial term. The terms
and conditions during the extended term shalt be the same as the terms and
conditions during the initial term of this Lease, except that the annual Base
Rental payable during each lease year during the extended term shall be two
hundred twenty five thousand ($225,000) dollars and shall be payable in equal
monthly installments of eighteen thousand seven hundred fifty ($18,750) dollars
in advance on or before the first day of each calendar month during the extended
term.
19. Holding Over. In the event of holding over by Tenant after the
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expiration or termination of this Lease, Tenant shall be deemed to be occupying
said Leased Premises as a Tenant from month to month subject to all of the
applicable terms and provisions of this Lease, except that Tenant shall pay
Landlord as rental for the period of such hold over an amount equal to 150% of
the rent payable by Tenant for the immediately proceeding month. Tenant agrees
to vacate and deliver the Leased Premises to Landlord upon Tenant's receipt of
written notice from Landlord to vacate. The rental payable during the hold over
period shall be payable to Landlord on demand. No holding over by Tenant with or
without consent of Landlord, shalt operate to extend this Lease except as
otherwise expressly provided.
20. Subordination to Mortgage. Tenant agrees that this Lease shall be
subordinate to any first mortgage that may now or hereafter be placed upon the
Building or any part thereof, and to any and all advances to be made thereunder,
and to the interest thereon, and all renewals, replacements, and extensions
thereof, provided the mortgagee named in such mortgage shall agree to execute an
agreement, sometimes referred to as a "non-disturbance agreement", which shall
provide that, so long as Tenant shall not be in default under this Lease,
Tenant's possession of the Leased Premises and its rights under this Lease shall
not be disturbed by said mortgage, by foreclosure, or otherwise. In confirmation
of such subordination, Tenant shall execute and deliver within ten (10) days
following a request therefore, any reasonable instrument, in recordable form, as
required by Landlord's mortgagee. In the event of any mortgagee electing to have
the Lease Agreement a prior encumbrance to its mortgage, then in such event upon
such mortgagee noting Tenant to that effect, this Lease Agreement shall be
deemed prior in encumbrance to the said mortgage, whether this Lease Agreement
is dated prior to or subsequent to the date of said mortgage.
21. Estoppel Certificates. Tenant agrees, within ten (10) days
following Landlord's request, to execute either an estoppel certificate
addressed to any mortgagee of Landlord or any purchaser of Landlord's interest
or a third party agreement among Landlord, Tenant and such mortgagee(s)
certifying as to such facts (if true) and agreeing to such notice provisions and
other matters as may be reasonably required by Landlord or Landlord's mortgagee.
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22. Successors and Assignees. This Lease shall be binding upon and
inure to the benefit of Landlord, its successors and assignees and shall be
binding upon and inure to the benefit of Tenant, its successors, and to the
extent assignments may be approved by Landlord hereunder, Tenants assigns.
23. Rights Cumulative; Governing Law. All rights and remedies of
Landlord under this Lease shall be cumulative and none shall exclude any of the
rights or remedies allowed by law; and this Lease is declared to be a Minnesota
State contract, and all of the terms hereof shall be construed according to the
laws of said state.
24. Attorney's Fees. In the event either party places the enforcement
of this Lease or any part thereof, or the collection of any rent due or to
become due hereunder, or recovery of the possession of the Leased Premises in
the hands of an attorney, or file suit upon the same, the non-prevailing (or
defaulting) party shall pay the other parties reasonable attorney's fees and
court costs as any court shall deem reasonable and equitable.
25. Access; Changes in Building Facilities; Name. All portions of the
Building except the inside surfaces of all walls and doors bounding the Leased
Premises, and any space in or adjacent to the Leased Premises used for shafts,
stacks, pipes, conduits, fan rooms, ducts electric or other utilities, sinks or
other Building facilities, and the use thereof, as well as access thereto
through the Leased Premises for the purposes of operation, maintenance,
decoration and repair, are reserved to Landlord and Landlord's managing agent.
Landlord reserves the right, at any time, without incurring any liability to
Tenant therefor, to make such changes in or to the Building and the fixtures and
equipment thereof, as well as in or to the street entrances, halls, passages,
concourse, elevators, escalators, stairways and other improvements thereof, as
it may deem necessary or desirable. Landlord may adopt any name for the Building
and Landlord reserves the right to change the name or address of the Building at
anytime.
26. Commissions. Unless otherwise agreed in writing, if Tenant has
dealt with any person or real estate broker in respect to leasing or renting
space in the Building. excepting the exclusive leasing agent for
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the Building, Tenant shall be solely responsible for the payment of any fee due
said person or firm and Tenant shall hold Landlord free and harmless from and
against any liability in respect thereto. Landlord shall be solely responsible
for the payment of any fee due the exclusive leasing agent for the Building.
27. Assignment by Tenant. Tenant shall not assign or in any manner
transfer or encumber this Lease or the Leased Premises or any interest in or of
the same, nor sublet all or any part of the Leased Premises, nor permit
occupancy by anyone with, through or under it, without the previous written
consent of Landlord which consent will not be unreasonably withheld. Consent by
Landlord to one or more assignment of this Lease or to one or more subletting of
the Leased Premises shall not operate as a waiver of Landlord's rights under
this Section 27 to any subsequent assignment or subletting. This prohibition
includes any subletting, assignment or transfer which would otherwise occur by
operation of law. Notwithstanding the foregoing, Tenant may, without Landlord's
consent, sublease the Leased Premises to any company owned and controlled by
Tenant provided any such sublease shall be subject to the terms of this Lease
and further provided that any sublease shall not relieve, limit or release
Tenant from any liability to Landlord hereunder for the full and timely
performance of this Lease. No assignment or subletting shall release Tenant or
any guarantor of this Lease of any of its obligations under this Lease or be
construed or taken as a waiver of any of Landlord's rights or remedies pursuant
to this Lease.
Landlord and Tenant agree that the absence of any one of the following
factors, or any other reasonable factor, may be reasonable grounds for denying
the Tenant's request:
(i) Financial strength of the proposed subtenant/assignee must be
at least equal to that of the existing Tenant;
(ii) Business reputation of the proposed subtenant/assignee must be
in accordance with generally acceptable commercial standards;
(iii) Use of the Leased Premises by the proposed
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subtenant/assignee must be reasonably acceptable to Lender;
(iv) Percentage rents of the proposed subtenant/assignee, or the
prospect of percentage rents, must be at least equal to that
of the existing Tenant;
(v) Managerial and operational skills of the proposed
subtenant/assignee must be the same as those of the existing
Tenant;
(vi) Use of the Leased Premises by the proposed subtenant/assignee
will not violate or create any potential violation of any
laws;
(vii) Use of the Leased Premises will not violate any other
agreements affecting the Premises, the Landlord or other
Tenants.
28. Waiver of Subrogation. Anything in this Lease to the contrary not
withstanding, Landlord and Tenant hereby waive and release each other of and
from any and all rights or recovery, claim, action or cause of action, against
each other, their agents, officers and employees for any loss or damage that may
occur to the Leased Premises, improvements to the Building of which the Leased
Premises are a part, or personal property (building contents) within the
Building, by reason of fire or the elements regardless of cause of origin,
including negligence of Landlord or Tenant and their agents, officers and
employees. Each party to this Lease agrees immediately to give each insurance
company which has issued to its policies of fire and extended coverage
insurance, written notice of the terms of the mutual waiver as contained in this
paragraph, and to have the insurance policies property endorsed, if necessary,
to prevent the invalidation of the insurance coverages by reason of the mutual
waivers contained in this paragraph.
29. General. This Lease does not create the relationship of principal
and agent or of partnership or of joint venture or of any association between
Landlord and Tenant, the sole relationship between Landlord and Tenant being
that of landlord and tenant. No waiver of any default of Tenant hereunder shall
be implied from any omission by
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Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect any default other than the
default specified in the express waiver and that only for the time and to the
extent therein stated. Each term and each provision of this Lease Agreement
performable by Tenant shall be construed to be both a covenant and a condition.
The marginal or topical headings of the several paragraphs and clauses are for
convenience only and do not define, limit or construe the contents of such
paragraphs or clauses. All preliminary negotiations are merged into and
incorporated in this Lease Agreement. This Lease Agreement can only be modified
or amended by an agreement in writing signed by the parties hereto. All
provisions hereof shall be binding upon the heirs, successors and assigns of
each party hereto.
30. Right of Landlord To Enter Premises: Right to Show. Landlord, its
employees and agents, may at all reasonable times enter the Leased Premises for
the purposes of inspection, cleaning, repairing, altering or improving the
Leased Premises or said Building, and shall have the right to place signs
advertising availability of the Leased Premises for lease at any time during the
last six months of the lease Term. During such period, Landlord shall also have
the right to display the Leased Premises to prospective purchasers or lessees
provided that Landlord shall not unreasonably interfere with the conduct of
Tenant's business.
31. Right of Tenant to Terminate Lease. Notwithstanding anything to the
contrary contained herein, Tenant may, twenty-four (24) months after the date of
execution of this Agreement, terminate this Agreement upon ninety (90) days
prior written notice, which notice may be given in anticipation of the
occurrence of the following events, without further obligation or liability to
Landlord, if:
(i) Tenant does not, as measured by Tenant's accountant using
Generally Accepted Accounting Principals, have a positive cash
flow for the cumulative twenty-four (24) month period; or
(ii) Tenant, does not, as measured by Tenant's accountant using
Generally Accepted Accounting Principals, have a positive net
profit for the cumulative twenty-four (24) month period; and
(iii) If either (i) or (i) above apply, Tenant has made a good faith
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effort to sublet the property herein.
32. Incorporation of Exhibits. The following exhibits to this Lease are
hereby incorporated by reference for all purposes as fully as if set forth at
length herein:
EXHIBIT A Floor Plan of Leased Premises
EXHIBIT B Legal Description of Building
IN WITNESS WHEREOF, the respective parties hereto have caused this
Lease to be executed as of the day and year first above written.
TENANT:
WAREFORCE INCORPORATED
By: /s/Xxx Xxxxxxxx
---------------
Its: General Counsel
---------------
LANDLORD:
/s/Xxxxxxx Xxxxx
----------------
XXXXXXX X. XXXXX, XX.
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