LEASE
THIS LEASE is made as of this 29th day of January, 1999, by and between
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation
(hereinafter called "Landlord") and Athletic Training Equipment Company,
Inc., a Delaware corporation and a wholly owned subsidiary of Sport
Supply Group, Inc. (hereinafter called "Tenant").
1. PREMISES
Landlord leases to Tenant and Tenant leases from Landlord, upon the
terms and conditions hereinafter set forth, those premises (the
"Premises") outlined in red on Exhibit A and described in the Basic
Lease Information. The Premises may be all or part of the building (the
"Building'') or of the project (the "Project") which consists of one
building. The Building and Project are outlined in blue and green
respectively on Exhibit A.
2. POSSESSION AND LEASE COMMENCEMENT
A. Construction of Improvements. The term commencement date
("Term Commencement Date") shall be the earlier of the date on which:
(1) Tenant takes possession of some or all of the Premises for the
conduct of Tenant's business, or (2) the Improvements constructed or to
be constructed in the Premises shall have been substantially completed
in accordance with the plans and specifications referenced in Paragraph
39 hereof, whether or not substantial completion of the Building itself
shall have occurred, and a certificate of occupancy is issued for the
Premises. If for any reason Landlord cannot deliver possession of the
Premises to Tenant on the Estimated Term Commencement Date, Landlord
shall not be subject to any liability therefore, nor shall Landlord be
in default hereunder; provided, however, if substantial completion of
the Improvements has not occurred and a certificate of occupancy has not
been issued on or before (i) June 11, 1999, Tenant shall be entitled to
a credit against the first Base Rent otherwise payable hereunder in an
amount equal to $708.33 per day for each day that shall elapse from June
11, 1999 until substantial completion has been achieved and a
certificate of occupancy has been issued for the Premises, and (ii)
October 1, 1999, Tenant shall have the right to terminate this Lease by
written notice to Landlord, in which event this Lease shall terminate
and the parties shall have no further rights or obligations hereunder.
Substantial completion shall have occurred notwithstanding Tenant's
submission of a punch list to Landlord, which Tenant shall submit, if at
all, within thirty (30) days after the Term Commencement Date. Tenant
shall, upon demand, execute and deliver to Landlord a letter of
acceptance of delivery of the Premises. Landlord agrees that it shall
provide Tenant with advance written notice if Tenant will not be able to
have lawful occupancy of (i) the factory portion of the Premises by May
1, 1999 for the purpose of making such portion of the Premises ready for
the conduct of Tenant's business to be conducted therein, and (ii) the
office portion of the Premises by June 1, 1999 for the purpose of making
such portion of the Premises ready for the conduct of Tenant's business
to be conducted therein, such written notice to be provided by Landlord
to Tenant at least 60 days prior to the applicable date set forth in
clause (i) or (ii) as applicable.
3. TERM
The Term of this Lease shall commence on the Term Commencement Date
and continue in full force and effect for the number of months specified
as the Length of Term in the Basic Lease Information or until this Lease
is terminated as otherwise provided herein. If the Term Commencement
Date is a date other than the first day of the calendar month, the Term
shall be the number of months of the Length of Term in addition to the
remainder of the calendar month following the Term Commencement Date.
4. USE
A. General. Tenant shall use the Premises for the Permitted Use
and for no other use or purpose. Tenant shall control Tenant's
employees, agents, customers, visitors, invitees, licensees,
contractors, assignees and subtenants (collectively, "Tenant's Parties")
in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the Parking Density at any time. Tenant and Tenant's Parties
shall have the nonexclusive right to use, in common with other parties
occupying the Building or Project, the parking areas and driveways of
the Project, subject to such rules and regulations as Landlord may from
time to time prescribe.
B. Limitations. Tenant shall not permit any odors, smoke, dust,
gas, substances, noise or vibrations to emanate from the Premises, nor
take any action which would constitute a nuisance or would disturb,
obstruct or endanger any other tenants of the Building or Project in
which the Premises are situated or interfere with their use of their
respective premises. Storage outside the Premises of materials,
vehicles or any other items is prohibited. Tenant shall not use or
allow the Premises to be used for any immoral or unlawful purpose, nor
shall Tenant cause or maintain or permit any nuisance in, on or about
the Premises. Tenant shall not commit or suffer the commission of any
waste in, on or about the Premises. Tenant shall not allow any sale by
auction upon the Premises, or place any loads upon the floors, walls or
ceilings which endanger the structure, or place any harmful liquids in
the drainage system of the Building or Project. No waste, materials or
refuse shall be dumped upon or permitted to remain outside the Premises
except in trash containers placed inside exterior enclosures designed
for that purpose by Landlord. Landlord shall not be responsible to
Tenant for the non-compliance by any other tenant or occupant of the
Building or Project with any of the above referenced rules or any other
terms or provisions of such tenant's or occupant's lease or other
contract.
C. Compliance with Regulations. By entering the Premises, Tenant
accepts the Premises, subject to all existing or future applicable
municipal, and federal and other governmental statutes, regulations,
laws and ordinances, including zoning ordinances and regulations
governing and relating to the use, occupancy and possession of the
Premises and the use, storage, generation and disposal of Hazardous
Materials (hereinafter defined) in, on and under the Premises
(collectively "Regulations"). Except for preexisting violations, Tenant
shall, at Tenant's sole expense, strictly comply with all Regulations
now in force or which may hereafter be in force relating to Tenant's
specific use of the Premises (it being understood and agreed that any
such Regulations that are applicable to property owners generally, such
as sprinklering requirements, shall be complied with by Landlord at its
sole expense) and/or the use, storage, generation of Hazardous Materials
in, on and under the Premises. Tenant shall at its sole cost and
expense obtain all licenses or permits necessary to Tenant's use of the
Premises (other than a certificate of occupancy which shall be
Landlord's obligation). Tenant shall promptly comply with the
reasonable requirements of any board of fire underwriters or other
similar body now or hereafter constituted. Tenant shall not do or
permit anything to be done in, on, or about the Premises or bring or
keep anything which will in any way increase the rate of any insurance
upon the Premises, Building, or Project, or upon any contents therein or
cause a cancellation of said insurance or otherwise affect said
insurance in any manner. Tenant shall indemnify, defend, protect and
hold Landlord harmless from and against any loss, cost, expense, damage,
attorneys' fees or liability arising out of the failure of Tenant to
comply with any applicable law for which Tenant is responsible hereunder
or comply with the requirements as set forth herein.
D. Hazardous Materials. Tenant shall not cause, or allow any of
Tenant's Parties to cause, any Hazardous Materials to be used,
generated, stored or disposed of on or about the Premises, the Building
or the Project (other than materials used in the ordinary course of
Tenant's business which shall be used by Tenant in compliance with all
applicable laws). As used in this Lease, "Hazardous Materials" shall
include, but not be limited to, hazardous, toxic and radioactive
materials and those substances defined as "Hazardous Substances",
"Hazardous Materials", "Hazardous Wastes", "Toxic Substances", or other
similar designations in any federal, state or local law, regulation, or
ordinance. Landlord shall have the right at all reasonable times to
inspect the Premises and to conduct tests and investigations to
determine whether Tenant is in compliance with the foregoing provisions,
the costs of all such inspections, tests and investigations to be borne
by Tenant if it is determined that Tenant is not in compliance with
applicable laws. Tenant shall indemnify, defend, protect and hold
Landlord harmless from and against all liabilities, losses, costs and
expenses, demands, causes of action, claims or judgments directly or
indirectly arising out of the use, generation, storage or disposal of
Hazardous Materials by Tenant or any of Tenant's Parties, which
indemnity shall include, without limitation, the cost of any required or
necessary repair, cleanup or detoxification, and the preparation of any
closure or other required plans, whether such action is required or
necessary prior to or following the termination of this Lease. Neither
the written consent by Landlord to the use, generation, storage or
disposal of Hazardous Materials nor the strict compliance by Tenant with
all laws pertaining to Hazardous Materials shall excuse Tenant from
Tenant's obligation of indemnification pursuant to this Paragraph 4.D.
Tenant's obligations pursuant to the foregoing indemnity shall survive
the termination of this lease.
5. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with any reasonable
rules and regulations Landlord may from time to time prescribe in
writing for the purpose of maintaining the proper care, cleanliness,
safety, traffic flow and general order of the Premises or Project.
Tenant shall cause Tenant's Parties to comply with such rules and
regulations. Landlord shall not be responsible to Tenant for the non-
compliance by any other tenant or occupant of the Building or Project
with any of the rules and regulations. The rules and regulations are
attached hereto as Exhibit "C" and made a part hereof.
6. RENT
A. Base Rent. Tenant shall pay to Landlord, without demand
throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the
first day of each calendar month, in lawful money of the United States,
without deduction or offset whatsoever, at the address specified in the
Basic Lease Information or to such other place as Landlord may from time
to time designate in writing. Base Rent for the first full month of the
Term shall be paid by Tenant upon Tenant's execution of this Lease. If
the obligation for payment of Base Rent commences on other than the
first day of a month, then Base Rent shall be prorated and the prorated
installment shall be paid on the first day of the calendar month next
succeeding the Term Commencement Date.
B. Additional Rent. All monies other than Base Rent required to
be paid by Tenant hereunder, including, but not limited to, the interest
and late charge described in Paragraph 26.D., any monies spent by
Landlord pursuant to Paragraph 30, and Tenant's Proportionate Share of
Basic Operating Cost, as specified in Paragraph 7 of this Lease, shall
be considered additional rent ("Additional Rent"). "Rent" shall mean
Base Rent and Additional Rent.
7. BASIC OPERATING COST
A. Basic Operating Cost. In addition to the Base Rent required
to be paid hereunder, Tenant shall pay as Additional Rent, Tenant's
Proportionate Share, as defined in the Basic Lease Information, of Basic
Operating Cost in the manner set forth below. Landlord shall account
for each item of Basic Operating Cost as either a cost attributable to
the Building or to the Project, as determined by Landlord in Landlord's
sole discretion, and unless provided to the contrary in this Lease,
Tenant shall pay the applicable Tenant's Proportionate Share of each
such Basic Operating Cost, as set forth in the Basic Lease Information.
Basic Operating Cost shall mean all reasonable expenses and costs of
every kind and nature which Landlord shall pay or become obligated to
pay, because of or in connection with the management, maintenance,
preservation and operation of the Project and its supporting facilities
(determined in accordance with generally accepted accounting principles,
consistently applied) including but not limited to the following:
(1) Taxes. All real property taxes, possessory interest taxes,
business or license taxes or fees, service payments in lieu of such
taxes or fees, annual or periodic license or use fees, excises, transit
charges, housing fund assessments, open space charges, assessments,
levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind (including
fees "in lieu" of any such tax or assessment) which are assessed,
levied, charged, confirmed, or imposed by any public authority upon the
Project, its operations or the Rent (or any portion or component
thereof) (all of the foregoing being hereinafter collectively referred
to as "real property taxes"), or any tax imposed in substitution,
partially or totally, or any tax previously included within the
definition of real property taxes, or any additional tax the nature of
which was previously included within the definition of real property
taxes except (a) inheritance or estate taxes imposed upon or assessed
against the Project, or any part thereof or interest therein, and (b)
taxes computed upon the basis of net income of Landlord or the owner of
any interest therein, except as otherwise provided in the following
sentence. Basic Operating Cost shall also include any taxes,
assessments, or any other fees imposed by any public authority upon or
measured by the monthly rental or other charges payable hereunder,
including, without limitation, any gross income tax or excise tax levied
by the local governmental authority in which the Project is located, the
federal government, or any other governmental body with respect to
receipt of such rental, or upon, with respect to or by reason of the
development, possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any
portion thereof, or upon this transaction or any document to which
Tenant is a party creating or transferring an interest or an estate in
the Premises. In the event that it shall not be lawful for Tenant to
reimburse Landlord for all or any part of such taxes, the monthly rental
payable to Landlord under this Lease shall be revised to net to Landlord
the same net rental after imposition of any such taxes by Landlord as
would have been payable to Landlord prior to the payment of any such
taxes.
(2) Insurance. All insurance premiums and costs, including but
not limited to, any deductible amounts, premiums and cost of insurance
incurred by Landlord, as more fully set forth in Paragraph 8.A. herein.
(3) Repairs and Improvements. Repairs, replacements and general
maintenance for the Premises, Building and Project (except for those
repairs expressly made the financial responsibility of Landlord pursuant
to the terms of this Lease, repairs to the extent paid for by proceeds
of insurance or by Tenant or other third parties, and alterations
attributable solely to tenants of the Project other than Tenant). Such
repairs, replacements, and general maintenance shall include the cost of
any capital improvements made to or capital assets acquired for the
Project, Building, or Premises before or after the Term Commencement
Date that reduce any other Basic Operating Cost, are reasonably
necessary for the health and safety of the occupants of the Project, or
are made to the Project, Building or Premises by Landlord before or
after the date of this Lease and are required under any governmental
law, regulation, or requirements for project approval pursuant to a law
enacted after the date of this Lease, such costs or allocable portions
thereof to be amortized over such reasonable period as is consistent
with the useful life of the item in question in accordance with
generally accepted accounting principles, together with interest on the
unamortized balance at the "prime rate" charged at the time such
improvement or capital assets are constructed or acquired by Xxxxx Fargo
Bank, N.A. (San Francisco), plus two (2) percentage points, but in no
event more than the maximum rate permitted by law.
(4) Services. All expenses relating to maintenance, janitorial
and service agreements and services, and costs of supplies and equipment
used in maintaining the Premises, Building and Project and the equipment
therein and the adjacent sidewalks, driveways, parking and service
areas, including, without limitation, alarm service, window cleaning,
elevator maintenance, Building exterior maintenance and landscaping.
(5) Utilities. Utilities which benefit all or a portion of the
Premises, Building or Project.
(6) Management Fee. A management and accounting cost recovery fee
equal to 3.25% of the sum of Base Rent and Basic Operating Cost.
(7) Legal and accounting. Legal and accounting expenses relating
to the Project, including the cost of audits by certified public
accountants.
Notwithstanding the foregoing, Basic Operating Cost shall not
include the following:
(i) amounts for which Landlord is entitled to be reimbursed from
any source (including, but not limited to, warranties provided in
connection with the initial construction of the Building, insurance
proceeds, and tenants of the Building);
(ii) capital expenditures other than as expressly provided above;
(iii) Landlord's expenses in leasing space in the Building
including, without limitation, leasing commissions, tenant improvement
costs and legal fees related to leasing space in the Building;
(iv) promotional and advertising costs;
(v) costs incurred due to Landlord's violation of any lease;
(vi) interest, principal or any other charges related to mortgages
or other debt of Landlord;
(vii) any costs, fines or penalties incurred due to violation
by Landlord of any rule or regulation or legal requirement;
(viii) amounts paid by Landlord to its affiliates, or affiliates
of the management company, which exceed the amounts that would have been
paid for the services or goods in question to an independent third party
in an arm's length transaction;
(ix) Landlord's overhead and general administrative expenses;
(x) costs for items and services which Landlord provides
selectively to one or more tenants of the Building other than Tenant
(provided that repairs performed by Landlord relating to the premises
leased by a particular tenant may be included within Basic Operating
Cost if (i) the tenant in question is not required to reimburse Landlord
for the cost of the repair, and (ii) such repairs are otherwise in the
nature of common area charges and made for the benefit of all tenants of
the Building); and
(xi) tort claims not covered by insurance.
In no event shall Landlord be entitled to recover more than its
actual Basic Operating Cost in any year period. If any expense falls in
more than one category, it shall be counted only once.
Basic Operating Cost shall not include specific costs incurred for
the account of, separately billed to and paid by specific tenants.
B. Payment of Estimated Basic Operating Cost. "Estimated Basic
Operating Cost" for any particular year shall mean Landlord's estimate
of the Basic Operating Cost for such fiscal year made prior to
commencement of such fiscal year as hereinafter provided. Landlord
shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are
reconciled with prior periods in accordance with generally accepted
accounting principles applied in a consistent manner. During the last
month of each fiscal year during the Term, or as soon thereafter as
practicable, Landlord shall give Tenant written notice of the Estimated
Basic Operating Cost for the ensuing fiscal year. Tenant shall pay
Tenant's Proportionate Share of the Estimated Basic Operating Cost with
installment of Base Rent for the fiscal year to which the Estimated
Basic Operating Cost applies in monthly installments on the first day of
each calendar month during such year, in advance. If at any time during
the course of the fiscal year, Landlord determines that Basic Operating
Cost is projected to vary from the then Estimated Basic Operating Cost
by more than ten percent (10%), Landlord may, by written notice to
Tenant, revise the Estimated Basic Operating Cost for the balance of
such fiscal year, and Tenant's monthly installments for the remainder of
such year shall be adjusted so that by the end of such fiscal year
Tenant has paid to Landlord Tenant's Proportionate Share of the revised
Estimated Basic Operating Cost for such year.
C. Computation of Basic Operating Cost Adjustment. "Basic
Operating Cost Adjustment" shall mean the difference between Estimated
Basic Operating Cost and Basic Operating Cost for any fiscal year
determined as hereinafter provided. Within one hundred twenty (120)
days after the end of each fiscal year, as determined by Landlord, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a
statement of Basic Operating Cost for the Fiscal year just ended,
accompanied by a computation of Basic Operating Cost Adjustment. If
such statement shows that Tenant's payment based upon Estimated Basic
Operating Cost is less than Tenant's Proportionate Share of Basic
Operating Cost, then Tenant shall pay to Landlord the difference within
twenty (20) days after receipt of such statement. If such statement
shows that Tenant's payment of Estimated Basic Operating Cost exceeds
Tenant's Proportionate Share of Basic Operating Cost, then (provided
that Tenant is not in default under this Lease) Landlord shall pay to
Tenant the difference within twenty (20) days after delivery of such
statement to Tenant. If this Lease has been terminated or the term
hereof has expired prior to the date of such statement, then the Basic
Operating Cost Adjustment shall be paid by the appropriate party within
twenty (20) days after the date of delivery of the statement. Should
this Lease commence or terminate at any time other than the first day of
the fiscal year, Tenant's Proportionate Share of the Basic Operating
Cost adjustment shall be prorated by reference to the exact number of
calendar days during such fiscal year that this Lease is in effect.
D. Net Lease. This shall be a net Lease and Base Rent shall be
paid to Landlord absolutely net of all costs and expenses, except as
specifically provided to the contrary in this Lease. The provisions for
payment of Basic Operating Cost and the Basic Operating Cost Adjustment
are intended to pass on to Tenant and reimburse Landlord for all costs
and expenses of the nature described in Paragraph 7.A. incurred in
connection with the ownership, maintenance and operation of the Building
or Project in accordance with the terms hereof.
E. Tenant Audit. In the event that Tenant shall dispute the
amount set forth in any statement provided by Landlord under Paragraph
7.B or 7.C. above, Tenant shall have the right, not later than twenty
(20) days following the receipt of such statement and upon the condition
that Tenant shall first deposit with Landlord the full amount in
dispute, to cause Landlord's books and records with respect to Basic
Operating Cost for such fiscal year to be audited by certified public
accountants selected by Tenant and subject to Landlord's reasonable
right of approval. The Basic Operating Cost Adjustment shall be
appropriately adjusted on the basis of such audit. If such audit
discloses a liability for a refund in excess of five percent (5%) of
Tenant's Proportionate Share of the Basic Operating Cost Adjustment
previously reported, the cost of such audit shall be borne by Landlord:
otherwise the cost of such audit shall be paid by Tenant. If Tenant
shall not request an audit in accordance with the provisions of this
Paragraph 7.E. within twenty (20) days after receipt of Landlord's
statement provided pursuant to Paragraph 7.B. or 7.C., such statement
shall be final and binding for all purposes hereof.
8. INSURANCE AND INDEMNIFICATION
A. Landlord's Insurance. Landlord agrees to maintain insurance
insuring the Building against fire, lightning, vandalism and malicious
mischief (including, if Landlord elects, "All Risk" coverage,
earthquake, and/or flood insurance), in an amount not less than eighty
percent (80%) of the replacement cost thereof, with deductibles and the
form and endorsements of such coverage as selected by Landlord. Such
insurance may also include, at Landlord's option, insurance against loss
of Base Rent and Additional Rent, in an amount equal to the amount of
Base Rent and Additional Rent payable by Tenant for a period of at least
twelve (12) months commencing on the date of loss. Such insurance shall
be for the sole benefit of Landlord and under Landlord's sole control.
Landlord shall not be obligated to insure any furniture, equipment,
machinery, goods or supplies which Tenant may keep or maintain in the
Premises, or any leasehold improvements, additions or alterations within
the Premises. Landlord may also carry such other insurance as Landlord
may deem prudent or advisable, including, without limitation, liability
insurance in such amounts and on such terms as Landlord shall determine.
B. Tenant's Insurance.
(1) Property Insurance. Tenant shall procure at Tenant's sole
cost and expense and keep in effect from the date of this Lease and at
all times until the end of the Term, insurance on all personal property
and fixtures of Tenant and all improvements made by or for Tenant to the
Premises, insuring such property for the full replacement value of such
property.
(2) Liability Insurance. Tenant shall procure at Tenant's sole
cost and expense and keep in effect from the date of this Lease and at
all times until the end of the Term either Comprehensive, General
Liability insurance or Commercial General Liability insurance applying
to the use and occupancy of the Premises and the Building, and any part
of either, and any areas adjacent hereto, and the business operated by
Tenant, or by any other occupant on the Premises. Such insurance shall
include Broad Form Contractual Liability Insurance coverage insuring all
of Tenant's indemnity obligations under this Lease. Such coverage shall
have a general aggregate limit of Two Million Dollars ($2,000,000.00).
In addition, Tenant shall carry umbrella liability coverage of
$25,000,000.
All such policies shall be written to apply to all bodily injury, property
damage or loss, personal injury and other covered loss, however occasioned,
occurring during the policy term, shall be endorsed to add Landlord
and any party holding an interest to which this Lease
may be subordinated as an additional insured, and shall provide that
such coverage shall be primary and that any insurance maintained by
Landlord shall be excess insurance only. Such coverage shall also
contain endorsements: (i) deleting any employee exclusion on personal
injury coverage, (ii) including employees as additional insured; (iii)
deleting any liquor liability exclusion; and (iv) providing for coverage
of employer's automobile non-ownership liability. All such insurance
shall provide for severability of interests; shall provide that an act
or omission of one of the named insured shall not reduce or avoid
coverage to the other named insured; and shall afford coverage for all
claims based on acts, omissions, injury and damage, which claims
occurred or arose (or the onset of which occurred or arose) in whole or
in part during the policy period. Said coverage shall be written on an
"occurrence" basis, if available. If an "occurrence" basis form is not
available, Tenant must purchase "tail" coverage for the most number of
years available, and Tenant must also purchase "tail" coverage if the
retroactive date of an "occurrence" basis form is changed so as to leave
a gap in coverage for occurrences that might have occurred in prior
years. If a "claims made" policy is ever used, the policy must be
endorsed so that Landlord is given the right to purchase "tail" coverage
should Tenant for any reason not do so or if the policy is to be
canceled for nonpayment of premium.
(3) General Insurance Requirements. All coverages described in
this Paragraph 8.B. shall be endorsed to provide Landlord with thirty
(30) days' notice of cancellation or change in terms. If at any time
during the Term the amount or coverage of insurance which Tenant is
required to carry under this Paragraph 8.B. is, in Landlord's reasonable
judgment, materially less than the amount or type of insurance coverage
typically carried by owners or tenants of properties located in the
general area in which the Premises are located which are similar to and
operated for similar purposes as the Premises, Landlord shall have the
right to require Tenant to increase the amount or change the types of
insurance coverage required under this Paragraph 8.B. All insurance
policies required to be carried under this Lease shall be written by
companies rated A + XII or better in "Best's Insurance Guide" and
authorized to do business in Nevada. Any insurance policy required to be
carried by Tenant hereunder may have a $10,000 deductible. Tenant shall
deliver to Landlord on or before the Term Commencement Date, and
thereafter at least thirty (30) days before the expiration dates of the
expiring policies, certified copies of Tenant's insurance policies, or a
certificate evidencing the same issued by the insurer thereunder,
showing that all premiums have been paid for the full policy period;
and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates, Landlord may, at Landlord's
option and in addition to Landlord's other remedies in the event of a
default by Tenant hereunder, procure the same for the account of Tenant,
and the cost thereof shall be paid to Landlord as Additional Rent.
C. Indemnification. Landlord shall not be liable to Tenant for
any loss or damage to person or property caused by theft fire, acts of
God, acts of a public enemy, riot, strike, insurrection, war, court
order, requisition or order of governmental body or authority or for any
damage or inconvenience which may arise through repair or alteration of
any part of the Building or Project or failure to make any such repair,
except (i) to the extent attributable to Landlord's negligence, willful
misconduct or breach of its obligations under this Lease or (ii) as
expressly otherwise provided in Paragraph 10. Tenant shall indemnify,
defend by counsel acceptable to Landlord, protect and hold Landlord
harmless from and against any and all liabilities, losses, costs,
damages, injuries or expenses, including reasonable attorneys' fees and
court costs, arising out of or related to: (1) claims of injury to or
death of persons or damage to property occurring or resulting directly
or indirectly from the use or occupancy of the Premises by Tenant, or
from activities of Tenant, Tenant's Parties or anyone in or about the
Premises or Project, (2) claims for work or labor performed, or for
materials or supplies furnished to or at the request of Tenant in
connection with performance of any work done for the account of Tenant
within the Premises or Project, and (3) claims arising from any breach
or default on the part of Tenant in the performance of any covenant
contained in this Lease. The foregoing indemnity shall not be
applicable to claims arising from the negligence or willful misconduct
of Landlord or from Landlord's breach of its obligations under this
Lease. The provisions of this Paragraph shall survive the expiration or
termination of this Lease with respect to any claims or liability
occurring prior to such expiration or termination.
9. WAIVER OF SUBROGATION
To the extent permitted by law, Landlord and Tenant each waive any
right to recover against the other for (a) damages to property: (b)
damages to the Premises or any part thereof; and (c) claims arising by
reason of the foregoing due to hazards covered by insurance. This
provision is intended to waive fully, and for the benefit of each party,
any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by each party
pursuant to this Lease shall include, without limitation, a waiver of
subrogation by the carrier which conforms to the provisions of the
paragraph. This Paragraph 9 overrides any other provision in this Lease
to the contrary.
10. LANDLORD'S REPAIRS AND SERVICES
Landlord shall at Landlord's expense maintain the structural
soundness of the structural beams of the roof, foundations and exterior
walls of the Building, as well as all other structural components of the
Building, in good repair, reasonable wear and tear excepted. The term
"exterior walls" as used herein shall not include windows, glass or
plate glass, doors, special store fronts or office entries. Landlord
shall perform on behalf of Tenant and other tenants of the Project, as
an item of Basic Operating Cost, the maintenance of the Building,
Project, and public and common areas of the Project, including but not
limited to the roof, pest extermination, the landscaped areas, parking
areas, driveways, the truck staging areas, rail spur areas, fire
sprinkler systems, sanitary and storm sewer lines, utility services,
electric and telephone equipment servicing the Building(s), exterior
lighting, hot water, heating and air conditioning systems and anything
which affects the operation and exterior appearance of the Project,
which determination shall be at Landlord's reasonable discretion.
Except for the expenses directly involving the items specifically
described in the first sentence of this Paragraph 10, Tenant shall
reimburse Landlord for all such costs in accordance with Paragraph 7.
Any damage caused by or repairs necessitated by any act of Tenant may be
repaired by Landlord at Landlord's option and at Tenants expense.
Tenant shall immediately give Landlord written notice of any defect or
need of repairs after which Landlord shall have a reasonable opportunity
to repair same. Landlord's liability with respect to any defects,
repairs, or maintenance for which Landlord is responsible under any of
the provisions of this Lease shall be limited to the cost of such
repairs or maintenance. All repair and maintenance by Landlord shall be
done by Landlord in a manner consistent with other first-class
industrial properties in the Sparks, Nevada area.
11. TENANT'S REPAIRS
Tenant shall at Tenant's expense maintain all parts of the Premises
in a good, clean and secure condition and promptly make all necessary
repairs and replacements, including but not limited to all windows,
glass, doors, walls and wall finishes, floor covering, heating,
ventilation and air conditioning systems, truck doors, dock bumpers,
dock plates and levers, plumbing work and fixtures, downspouts,
electrical and lighting systems, and fire sprinklers; provided, however,
Tenant shall have no obligation to make any such repairs, maintenance or
replacements which are otherwise Landlord's obligations hereunder; and
provided, further that Tenant shall have no obligation to make any such
repairs, maintenance or replacements as are necessitated due to
construction or material defects in the initial construction of the
Improvements which repairs, maintenance and replacements shall be made
by Landlord at its sole cost and expense . Tenant shall at Tenant's
expense also perform regular removal of trash and debris. If required
by the railroad company, Tenant agrees to sign a joint maintenance
agreement governing the use of the rail spur, if any. Tenant shall, in
the event Landlord does not, as provided for in Paragraph 10 above, at
Tenant's own expense, enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor for servicing
all hot water, heating and air conditioning systems and equipment within
or serving the Premises. The maintenance contractor and the contract
must be approved by Landlord (which approval shall not be unreasonably
withheld or delayed). The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance
manual and must become effective and a copy thereof delivered to
Landlord within thirty (30) days after the Term Commencement Date.
Tenant shall not damage any demising wall or disturb the integrity and
support provided by any demising wall and shall, at its sole expense,
immediately repair any damage to any demising wall caused by Tenant or
Tenant's Parties.
12. ALTERATIONS
Tenant shall not make, or allow to be made, any alterations or
physical additions in, about or to the Premises without obtaining the
prior written consent of Landlord, which consent shall not be
unreasonably withheld with respect to proposed alterations and additions
which: (a) comply with all applicable laws, ordinances, rules and
regulations; (b) are in Landlord's opinion compatible with the Project
and its mechanical, plumbing, electrical, heating/ventilation/air
conditioning systems; and (c) will not interfere with the use and
occupancy of any other portion of the Building or Project by any other
tenant or its invitees. Specifically, but without limiting the
generality of the foregoing, Landlord shall have the right of written
consent for all plans and specifications for the proposed alterations or
additions, construction means and methods, all appropriate permits and
licenses, any contractor or subcontractor to be employed on the work of
alteration or additions, and the time for performance of such work.
Tenant shall also supply to Landlord any documents and information
reasonably requested by Landlord in connection with Landlord's
consideration of a request for approval hereunder. Tenant shall
reimburse Landlord for all costs which Landlord may incur in connection
with granting approval hereunder. Tenant shall reimburse Landlord for
all costs which Landlord may incur in connection with granting approval
to Tenant for any such alterations and additions, including any costs or
expenses which Landlord may incur in electing to have outside architects
and engineers review said plans and specifications. All such
alterations, physical additions or improvements shall remain the
property of Tenant until termination of this Lease, at which time they
shall be and become the property of Landlord if Landlord so elects;
provided, however, that Landlord may, at Landlord's option, require that
Tenant, at Tenant's expense, remove any or all alterations, additions,
improvements and partitions made by Tenant and restore the Premises by
the termination of this Lease, whether by lapse of time, or otherwise,
to their condition existing prior to the construction of any such
alterations, additions, partitions or leasehold improvements; provided,
however, Tenant shall, in no event, be required to remove any of the
Improvements initially constructed by Landlord pursuant to the terms
hereof. All such removals and restoration shall be accomplished in a
good and workmanlike manner so as not to cause any damage to the
Premises or Project whatsoever. If Tenant fails to so remove such
alterations, additions, improvements and partitions or Tenant's trade
fixtures or furniture Landlord may keep and use them or remove any of
them and cause them to be stored or sold in accordance with applicable
law, at Tenant's sole expense. In addition to and wholly apart from
Tenant's obligation to pay Tenant's Proportionate Share of Basic
Operating Cost, Tenant shall be responsible for and shall pay prior to
delinquency any taxes or governmental service fees, possessory interest
taxes, fees or charges in lieu of any such taxes, capital levies, or
other charges imposed upon, levied with respect to or assessed against
its personal property, on the value of the alterations, additions or
improvements within the Premises, and on Tenant's interest pursuant to
this Lease. To the extent that any such taxes are not separately
assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced to Tenant by Landlord. Notwithstanding anything to the
contrary contained herein, Tenant may, without Landlord's consent, make
alterations and additions to the Premises which are nonstructural in
character and the aggregate cost of which does not exceed $10,000 per
project. Tenant agrees to give Landlord written notice of such
alterations promptly following the completion thereof.
13. SIGNS
All signs, notices and graphics of every kind or character, visible
in or from public view or corridors, the common areas or the exterior of
the Premises, shall be subject to Landlord's prior written approval
(which approval shall not be unreasonably withheld). Tenant shall not
place or maintain any banners whatsoever or any window decor in or on
any exterior window or window fronting upon any common areas or service
area or upon any truck doors or man doors without Landlord's prior
written approval. Any installation of signs or graphics on or about the
Premises and Project shall be subject to any applicable governmental
laws, ordinances, regulations and to any other requirements reasonably
imposed by Landlord. Tenant shall remove all such signs and graphics
prior to the termination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury or defacement of the
Premises, Building or Project and any other improvements contained
therein, and Tenant shall repair any injury or defacement, including
without limitation, discoloration caused by such installation or
removal.
14. INSPECTION/POSTING NOTICES
After reasonable notice, except in emergencies where no such notice
shall be required, Landlord, and Landlord's agents and representatives,
shall have the right to enter the Premises to inspect the same, to
clean, to perform such work as may be permitted or required hereunder,
to make repairs or alterations to the Premises or Project or to other
tenant spaces therein, to deal with emergencies, to post such notices as
may be permitted or required by law to prevent the perfection of liens
against Landlord's interest in the Project or to exhibit the Premises to
prospective tenants (provided that exhibiting the Premises to
prospective tenants shall be limited to the final 180 days of the Lease
Term), purchasers, encumbrances or others, or for any other purpose as
Landlord may deem necessary or desirable; provided, however, that
Landlord shall use reasonable efforts not to unreasonably interfere with
Tenant's business operations. Tenant shall not be entitled to any
abatement of Rent by reason of the exercise of any such right of entry.
At any time within six (6) months prior to the end of Term, Landlord
shall have the right to erect on the Premises and/or Project a suitable
sign indicating that the Premises are available for lease.
15. UTILITIES
Tenant shall pay directly for all water, gas, heat, air
conditioning, light, power, telephone, sewer, sprinkler charges and
other utilities and services used on or from the Premises, together with
any taxes, penalties, surcharges or the like pertaining thereto, and
maintenance charges for utilities and shall furnish all electric light
bulbs, ballasts and tubes. If any such services are not separately
metered to Tenant, Tenant shall pay a reasonable proportion, as
reasonably determined by Landlord, of all charges jointly serving other
premises. Landlord shall not be liable for any damages directly or
indirectly resulting from nor shall the Rent or any monies owed Landlord
under this Lease herein reserved be abated by reason of: (a) the
installation, use or interruption of use of any equipment used in
connection with the furnishing of any such utilities or services; (b)
the failure to furnish or delay in furnishing any such utilities or
services when such failure or delay is caused by acts of God or the
elements, labor disturbances of any character, or any other accidents or
other conditions beyond the reasonable control of Landlord; or (c) the
limitation, curtailment, rationing or restriction on use of water,
electricity, gas or any other form of energy or any other service or
utility whatsoever serving the Premises or Project. Notwithstanding the
foregoing, in the event of any interruption in the furnishing of any
such utilities or services, Landlord shall use its best efforts to
restore such utilities and services as soon as possible.
Notwithstanding anything to the contrary contained herein, if any such
interruption in the utilities or services is due to Landlord's
negligence or intentional act or omission, and the Premises are rendered
untenantable as a result of such interruption, Tenant shall be entitled
to an abatement of all rent from the time such interruption commenced
until all services and utilities are fully restored. Landlord shall be
entitled to cooperate voluntarily and in a reasonable manner with the
efforts of national, state or local governmental agencies or utility
suppliers in reducing energy or other resource consumption. The
obligation to make services available hereunder shall be subject to the
limitations of any such voluntary, reasonable program.
16. SUBORDINATION
This Lease shall be subject and subordinate at all times to: (a)
all ground leases or underlying leases which may now exist or hereafter
be executed affecting the Premises and/or the land upon which the
Premises and Project are situated, or both; and (b) any mortgage or deed
of trust which may now exist or be placed upon said Project, land,
ground leases or underlying leases, or Landlord's interest or estate in
any of said items which is specified as security; provided, however, the
subordination of this Lease to any such ground lease, mortgage or deed
of trust hereafter existing is expressly conditioned upon Tenant and the
ground lessor or mortgagee in question entering into a subordination,
non-disturbance and attornment agreement in form and substance
reasonably acceptable to Tenant ("SNDA"). Landlord represents and
warrants that there are no mortgages, deeds of trusts or ground leases
that affect the Building as of the date hereof. Notwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such
liens to this Lease. In the event that any ground lease or underlying
lease terminates for any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn to and
become the Tenant of the successor in interest to Landlord in accordance
with the terms of the applicable SNDA. Within ten (10) days after
request by Landlord, Tenant shall execute and deliver any additional
documents evidencing Tenant's attornment or the subordination of this
Lease, in accordance with the terms hereof, with respect to any such
ground leases or underlying leases or any such mortgage or deed of
trust, in the form reasonably requested by Landlord or by a ground
landlord, mortgagee, or beneficiary under a deed of trust.
17. FINANCIAL STATEMENTS
At the request of Landlord, Tenant shall provide to Landlord the
current publicly available financial statement of Tenant's parent
entity, Sport Supply Group, Inc., which Landlord shall use solely for
purposes of this Lease and in connection with the ownership, management
and disposition of the Project.
18. ESTOPPEL CERTIFICATE
Tenant agrees from time to time, within ten (10) days after request
of Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, the
date to which Rent has been paid, the unexpired portion of this Lease,
and such other matters pertaining to this Lease as may be reasonably
requested by Landlord. Failure by Tenant to execute and deliver such
certificate shall constitute an acceptance of the Premises and
acknowledgment by Tenant that the statements included are true and
correct without exception. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the
Project or any interest therein. The parties agree that Tenant's
obligation to furnish certificates in a timely fashion is a material
inducement for Landlord's execution of the Lease. Tenant shall be
entitled to make such qualifications to the statements contained in such
estoppel certificate as are necessary to make them factually accurate.
19. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord upon execution of the Lease,
a Security Deposit as stated in the Basic Lease Information, which sum
shall be held by Landlord, without obligation for interest, as security
for the performance of Tenant's covenants and obligations under this
Lease. The Security Deposit is not an advance rental deposit or a
measure of damages incurred by Landlord in case of Tenant's default.
Upon the occurrence of any event of default by Tenant, Landlord may,
from time to time, without prejudice to any other remedy provided herein
or provided by law, use such fund to the extent necessary to make good
any arrears of Rent or other payments due to Landlord hereunder, and any
other damage, injury, expense or liability caused by such event of
default, and Tenant shall pay to Landlord, on demand, the amount so
applied in order to restore the Security Deposit to its original amount.
Although the Security Deposit shall be deemed the property of Landlord,
any remaining balance of such deposit shall be returned by Landlord to
Tenant at such time after termination of this Lease that all of Tenant's
obligations under this Lease have been fulfilled. Landlord may use and
commingle the Security Deposit with other funds of Landlord.
20. TENANT'S REMEDIES
The liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of the
individual or other partners, directors, officers and shareholders of
Landlord, and Tenant agrees to look solely to Landlord's interest in the
Project for the recovery of any amount from Landlord, and shall not look
to other assets of Landlord nor seek recourse against the assets of the
individual or other partners, directors, officers, and shareholders of
Landlord. Any lien obtained to enforce any such judgment and any levy
of execution thereon shall be subject and subordinate to any lien,
mortgage or deed of trust on the Project. The foregoing shall not be a
limitation on Tenant's right to exercise any equitable remedies to which
it is entitled or other remedies expressly granted to Tenant under this
Lease. It is agreed that if Landlord fails to perform any of its
obligations hereunder and such failure continues beyond the time
reasonably necessary to cure same following written notice from Tenant
to Landlord, Tenant may take such actions as are necessary to cure such
failure. Landlord agrees to reimburse Tenant upon demand for all sums
expended by Tenant in curing Landlord's failure, together with interest
thereon at the maximum non-usurious rate permitted by applicable law;
provided, however, if Landlord fails to reimburse Tenant for such
amounts, Tenant may offset same against rent due under the Lease.
21. ASSIGNMENT AND SUBLETTING
A. General. Tenant shall not assign or sublet the Premises or
any part thereof without Landlord's prior written approval except as
provided herein. Landlord agrees not to unreasonably withhold or delay
its consent to any proposed assignment or subletting. Notwithstanding
the foregoing, Tenant may, without Landlord's consent (i) assign this
Lease or sublease the Premises to any person or entity that controls, is
controlled by, or is under common control with, Tenant, and (ii) assign
this Lease in connection with the sale of substantially all of the
assets of Tenant as an entirety. In addition, the merger, consolidation
or other change in the ownership or control of the Tenant shall not
constitute an assignment or subletting or require Landlord's consent;
provided that in case of a merger, the net worth of the surviving entity
immediately following the transaction is equal to or greater than the
net worth of Tenant immediately prior to the transaction. The
transactions described in the immediately preceding two sentences are
hereinafter collectively referred to as the "Permitted Transactions".
If Tenant desires to assign this Lease or sublet any or all of the
Premises (other than in connection with a Permitted Transaction), Tenant
shall give Landlord written notice ten (10) days prior to the
anticipated effective date of the assignment or sublease. Landlord
shall then have a period of five (5) days following receipt of such
notice to notify Tenant in writing that Landlord elects either: (1) to
terminate this Lease as to the space so affected as of the date so
requested by Tenant; or (2) to permit Tenant to assign this Lease or
sublet such space, subject, however, to Landlord's prior written
approval of the proposed assignee or subtenant and any related documents
or agreements associated with the assignment or sublease. If Landlord
should fail to notify Tenant in writing of such election within said
period, Landlord shall be deemed to have waived option (1) above, but
written approval by Landlord of the proposed assignee or subtenant shall
be required. If Landlord does not exercise the option provided in
subitem (1) above, Landlord's consent to a proposed assignment or sublet
shall not be unreasonably withheld. Without limiting the other
instances in which it may be reasonable for Landlord to withhold
Landlord's consent to an assignment or subletting, Landlord and Tenant
acknowledge that it shall be reasonable for Landlord to withhold
Landlord's consent in the following instances: The use of the Premises
by such proposed assignee or subtenant would not be a permitted use or
would increase the Parking Density of the Project; the proposed assignee
or subtenant is a governmental agency; the proposed assignee or
subtenant is a person with whom Landlord is negotiating to lease space
in the Project; the assignment or subletting would entail any
alterations which would lessen the value of the leasehold improvements
in the Premises; or if Tenant is in default of any obligation of Tenant
under this Lease, or Tenant has defaulted under this Lease on three (3)
or more occasions during any twelve (12) months preceding the date that
Tenant shall request consent. Failure by Landlord to approve a proposed
assignee or subtenant shall not cause a termination of this Lease. Upon
a termination under this Paragraph 21.A., Landlord may lease the
Premises to any party, including parties with whom Tenant has negotiated
an assignment or sublease, without incurring any liability to Tenant.
B. Bonus Rent. Any Rent or other consideration realized by
Tenant under any such sublease or assignment in excess of the Rent
payable hereunder, after amortization of a reasonable brokerage
commission, shall be divided and paid, ten percent (10%) to Tenant,
ninety percent (90%) to Landlord. This Paragraph 21(B) shall not be
applicable to any Permitted Transaction.
C. Liability. No assignment or subletting by Tenant shall
relieve Tenant of any obligation under this Lease. Any assignment or
subletting which conflicts with the provisions hereof shall be void.
22. AUTHORITY OF PARTIES
Landlord represents and warrants that it has full right and
authority to enter into the Lease and to perform all of Landlord's
obligations hereunder. Tenant represents and warrants that it has full
right and authority to enter into this Lease and to perform all of
Tenant's obligations hereunder.
23. CONDEMNATION
A. Condemnation Resulting in Termination. If the whole or any
substantial part of the Project of which the Premises are a part should
be taken or condemned for any public use under governmental law,
ordinance or regulation, or by right of eminent domain, or by private
purchase in lieu thereof, and the taking would prevent or materially
interfere with the Permitted Use of the Premises, this Lease shall
terminate and the Rent shall be abated during the unexpired portion of
this Lease, effective when the physical taking of said Premises shall
have occurred.
B. Condemnation Not Resulting in Termination. If a portion of
the Project of which the Premises are a part should be taken or
condemned for any public use under any governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and this Lease is not terminated as provided in Paragraph
23.A. above, this Lease shall not terminate, but the Rent payable
hereunder during the unexpired portion of the Lease shall be reduced,
beginning on the date when the physical taking shall have occurred, to
such amount as may be fair and reasonable under all of the
circumstances.
C. Award. Landlord shall be entitled to any and all payment,
income, rent, award, or any interest therein whatsoever which may be
paid or made in connection with such taking or conveyance and Tenant
shall have no claim against Landlord or otherwise for the value of any
unexpired portion of this Lease. Notwithstanding the foregoing, any
compensation specifically awarded Tenant for loss of business, Tenant's
personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.
24. CASUALTY DAMAGE
A. General. If the Premises or Building should be damaged or
destroyed by fire, tornado or other casualty, Tenant shall give
immediate written notice thereof to Landlord. Within thirty (30) days
after Landlord's receipt of such notice, Landlord shall notify Tenant
whether in Landlord's opinion such repairs can reasonably be made
either: (1) within ninety (90) days; (2) in more than ninety (90) days
but in less than one hundred eighty (180) days; or (3) in more than one
hundred eighty (180) days from the date of such notice. Landlord's
reasonable determination shall be binding on Tenant.
B. Less than 90 Days. If the Premises or Building should be
damaged by fire, tornado or other casualty but only to such extent that
rebuilding or repairs can in Landlord's estimation be reasonably
completed within ninety (90) days after the date of such damage, this
Lease shall not terminate, and provided that insurance proceeds are
available to fully repair the damage, Landlord shall proceed to rebuild
and repair the Premises in the manner determined by Landlord, except
that Landlord shall not be required to rebuild, repair or replace any
part of the partitions, fixtures, additions and other leasehold
improvements (other than the Improvements constructed by Landlord
pursuant to the terms of this Lease) which may have been placed in on or
about the Premises. If the Premises are untenantable in whole or in
part following such damage, the Rent payable hereunder during the period
in which they are untenantable shall be abated proportionately, but only
to the extent the Premises are unfit for occupancy.
C. Greater Than 90 Days. If the Premises or Building should be
damaged by fire, tornado or other casualty but only to such extent that
rebuilding or repairs can in Landlord's estimation be reasonably
completed in more than ninety (90) days but in less than one hundred
eighty (180) days, then Landlord shall have the option of either: (1)
terminating the Lease effective upon the date of the occurrence of such
damage, in which event the Rent shall be abated during the unexpired
portion of the Lease; or (2) electing to rebuild or repair the Premises
to substantially the condition in which they existed prior to such
damage, provided that insurance proceeds are available to fully repair
the damage, except that Landlord shall not be required to rebuild,
repair or replace any part of the partitions, fixtures, additions and
other improvements (other than the Improvements constructed by Landlord
pursuant to the terms of this Lease) which may have been placed in, on
or about the Premises. If the Premises are untenantable in whole or in
part following such damage, the Rent payable hereunder during the period
in which they are untenantable shall be abated proportionately, but only
to the extent the Premises are unfit for occupancy. Notwithstanding
anything to the contrary contained herein, in the event that Landlord
should fail to complete any repairs and rebuilding under Section 24(B)
or this Section 24(C) within one hundred eighty (180) days after the
date upon which Landlord is notified by Tenant of such damage, such
period of time to be extended for delays caused by the fault or neglect
of Tenant or because of acts of God, acts of public agencies, labor
disputes, strikes, fires, freight embargoes, rainy or stormy weather,
inability to obtain materials, supplies or fuels, or delays of the
contractors or subcontractors or any other causes or contingencies
beyond the reasonable control of Landlord (but shall not be extended due
to inavailability of insurance proceeds), Tenant may at Tenant's option
within ten (10) days after the expiration of such one hundred eighty
(180) day period (as such may be extended), terminate this Lease by
delivering written notice of termination to Landlord as Tenant's
exclusive remedy, whereupon all rights hereunder shall cease and
terminate thirty (30) days after Landlord's receipt of such termination
notice.
D. Greater Than 180 days. If the Premises or Building should be
so damaged by fire, tornado or other casualty that rebuilding or repairs
cannot in Landlord's estimation be completed within one hundred eighty
(180) days after such damage, this Lease shall terminate and the Rent
shall be abated during the unexpired portion of this Lease, effective
upon the date of the occurrence of such damage.
E. Uninsured Casualty. Notwithstanding anything herein to the
contrary, in the event that the Premises or Building are damaged or
destroyed and are not fully covered by the insurance proceeds received
by Landlord or in the event that the holder of any indebtedness secured
by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, then in either case
Landlord shall have the right to terminate this Lease by delivering
written notice of termination to Tenant within thirty (30) days after
the date of notice to Landlord that said damage or destruction is not
fully covered by insurance or such requirement is made by any such
holder, as the case may be, whereupon all rights and obligations
hereunder shall cease and terminate; provided, however, if Landlord does
not so wish to terminate this Lease, Landlord shall rebuild the Building
and the Premises to their condition existing immediately prior to the
occurrence of the casualty in question within a reasonable time and rent
shall be abated proportionately to the extent that the Premises are
unfit for occupancy.
F. If the fire or other casualty is caused by the negligence of
Tenant, Tenant shall not be entitled to the rent abatement to which
Tenant is otherwise entitled under this Section 24 from and after the
date on which Landlord's rental interruption insurance stops paying
Landlord for the loss of rental arising out of such fire or other
casualty.
25. HOLDING OVER
If Tenant shall retain possession of the Premises or any portion
thereof without Landlord's consent following the expiration of the Lease
or sooner termination for any reason, then Tenant shall pay to Landlord
for each day of such retention 150% of the amount of the daily Base Rent
as of the last month prior to the date of expiration or termination.
Tenant shall also indemnify, defend, protect and hold Landlord harmless
from any loss, liability or cost, including reasonable attorneys' fees,
resulting from delay by Tenant in surrendering the Premises, including,
without limitation, any claims made by any succeeding tenant founded on
such delay. Acceptance of Rent by Landlord following expiration or
termination shall not constitute a renewal of this Lease, and nothing
contained in this Paragraph 25 shall waive Landlord's right of reentry
or any other right. Unless Landlord consents in writing to Tenant's
holding over, Tenant shall be only a Tenant at sufferance, whether or
not Landlord accepts any Rent from Tenant while Tenant is holding over
without Landlord's written consent. Additionally, in the event that
upon termination of the Lease, Tenant has not fulfilled its obligation
with respect to repairs and cleanup of the Premises or any other Tenant
obligations as set forth in this Lease, then Landlord shall have the
right to perform any such obligations as it deems necessary at Tenant's
sole cost and expense, and any time required by Landlord to complete
such obligations shall be considered a period of holding over and the
terms of this Paragraph 25 shall apply.
26. DEFAULT
A. Events of Default. The occurrence of any of the following
shall constitute an event of default on the part of Tenant:
(1) Nonpayment of Rent. Failure to pay any installment of Rent or
any other amount due and payable hereunder upon the date when said
payment is due and the continuation of such failure for a period of ten
(10) days after written notice from Landlord to Tenant.
(2) Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters
specified in subparagraph (1) of this Paragraph 26.A., such failure
continuing for thirty (30) days after written notice of such failure;
provided, however, that if such failure cannot be cured through the
exercise of reasonable diligence within such 30-day period, Tenant shall
have such additional time as is reasonably necessary to cure such
failure so long as Tenant commences its curative efforts within such 30-
day period and diligently prosecutes same to completion.
(3) General Assignment. A general assignment by Tenant for the
benefit of creditors.
(4) Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filling of an involuntary petition by
Tenant's creditors, which involuntary petition remains undischarged for
a period of 45 days. In the event that under applicable law the trustee
in bankruptcy or Tenant has the right to affirm this Lease and continue
to perform the obligations of Tenant hereunder, such trustee or Tenant
shall, in such time period as may be permitted by the bankruptcy court
having jurisdiction, cure all defaults of Tenant hereunder outstanding
as of the date of the affirmance of this Lease and provide to Landlord
such adequate assurances as may be necessary to ensure Landlord of the
continued performance of Tenant's obligations under this Lease.
(5) Receivership. The employment of a receiver to take possession
of substantially all of Tenant's assets or the Premises, if such
appointment remains undismissed or undischarged for a period of 45 days
after the order therefore.
(6) Attachment. The attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Premises,
if such attachment or other seizure remains undismissed or undischarged
for a period of 45 days after the levy thereof.
B. Remedies Upon Default.
(1) Termination. In the event of the occurrence of any event of
default, Landlord shall have the right to give a written termination
notice to Tenant, and on the date specified in such notice, Tenant's
right to possession shall terminate, and this Lease shall terminate
unless on or before such date all arrears of rental and all other sums
payable by Tenant under this Lease and all costs and expense incurred by
or on behalf of Landlord hereunder shall have been paid by Tenant and
all other events of default of this Lease by Tenant at the time existing
shall have been fully remedied to the satisfaction of Landlord. At any
time after such termination, Landlord may recover possession of the
Premises or any part thereof and expel and remove therefrom Tenant and
any other person occupying the same, by any lawful means, and again
repossess and enjoy the Premises without prejudice to any of the
remedies that Landlord may have under this Lease, or at law or equity by
reason of Tenant's default or of such termination.
(2) Continuation After Default. Even though an event of default
may have occurred this Lease shall continue in effect for so long as
Landlord does not terminate Tenant's right to possession under Paragraph
26.B. (1) hereof, and Landlord may enforce all of Landlord's rights and
remedies under this Lease, including without limitation, the right to
recover Rent as it becomes due, and Landlord, without terminating this
Lease, may exercise all of the rights and remedies of a landlord. Acts
of maintenance, preservation or efforts to lease the Premises or the
appointment of a receiver upon application of Landlord to protect
Landlord's interest under this Lease shall not constitute an election to
terminate Tenant's right to possession.
C. Damages After Default. Should Landlord terminate this Lease
pursuant to the provisions of Paragraph 26.B. (1) hereof, Landlord shall
have the rights and remedies of a Landlord. Upon such termination, in
addition to any other rights and remedies to which Landlord may be
entitled under applicable law, Landlord shall be entitled to recover
from Tenant: (1) the worth at the time of award of the unpaid Rent and
other amounts which had been earned at the time of termination, (2) the
worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds
the amount of such Rent loss the Tenant proves could have been
reasonably avoided; (3) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of such Rent loss that the Tenant proves could
be reasonably avoided; and (4) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform Tenant's obligations under this Lease or which, in the ordinary
course of things, would be likely to result therefrom. The "worth at
the time of award" of the amounts referred to in (1) and (2), above
shall be computed at the lesser of the "prime rate" as announced from
time to time by Xxxxx Fargo Bank, N.A. (San Francisco), plus five (5)
percentage or the maximum interest rate allowed by law ("Applicable
Interest Rate"). The "worth at the time of award" of the amount
referred to in (3) above shall be computed by discounting such amount at
the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of the award. If this Lease provides for any periods during
the Term during which Tenant is not required to pay Base Rent or if
Tenant otherwise receives a Rent concession, then upon the occurrence of
an event of default, Tenant shall owe to Landlord the full amount of
such Base Rent or value of such Rent concession, plus interest at the
Applicable Interest Rate, calculated from the date that such Base Rent
or Rent concession would have been payable. Upon the occurrence of any
event of default hereunder, Landlord shall use its reasonable efforts to
mitigate its damages arising out of such event of default.
D. Late Charge. If any installment of Rent is not paid promptly
when due, such amount shall bear interest at the Applicable Interest
Rate from the date on which said payment shall be due until the date on
which Landlord shall receive said payment. In addition, Tenant shall
pay Landlord a late charge equal to five percent (5%) of the delinquency
of any Base Rent that is not paid within ten (10) days after its due
date, to compensate Landlord for the loss of the use of the amount not
paid and the administrative cost caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of such delinquencies would be
difficult to compute and the amount stated herein represent a reasonable
estimate thereof. This provision shall not relieve Tenant of Tenant's
obligation to pay Rent at the time and in the manner herein specified.
E. Remedies Cumulative. All rights, privileges and elections or
remedies of the patties are cumulative and not alternative, to the
extent permitted by law and except as otherwise provided herein.
27. LIENS
Tenant shall keep the Premises free from Liens arising out of or
related to work performed, materials or supplies furnished or
obligations incurred by Tenant or in connection with work made, suffered
or done by or on behalf of Tenant in or on the Premises or Project. In
the event that Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the same to be released of record by
payment or posting of a proper bond, Landlord shall have, in addition to
all other remedies provided herein and by law, the right, but not the
obligation, to cause the same to be released by such means as Landlord
shall deem proper, including payment of the claim giving rise to such
lien. All sums paid by Landlord on behalf of Tenant and all expenses
incurred by Landlord in connection therefore shall be payable to
Landlord by Tenant on demand with interest at the Applicable Interest
Rate. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or
which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Project and any other party having an interest therein,
from mechanics' and material men's liens, and Tenant shall give Landlord
not less than ten (10) business days prior written notice of the
commencement of any work in the Premises or Project which could lawfully
give rise to a claim for mechanics' or material men's liens.
28. [INTENTIONALLY OMITTED]
29. TRANSFERS BY LANDLORD
In the event of a sale or conveyance by Landlord of the Building or
a foreclosure by any creditor of Landlord, the same shall operate to
release Landlord from any liability upon any of the covenants or
conditions, express or implied, herein contained in favor of Tenant, to
the extent required to be performed after the passing of title to
Landlord's successor-in-interest. In such event, Tenant agrees to look
solely to the responsibility of the successor-in-interest of Landlord
under this Lease with respect to the performance of the covenants and
duties of "Landlord" to be performed after the passing of title to
Landlord's successor-in-interest. This Lease shall not be affected by
any such sale and Tenant agrees to attorn to the purchaser or assignee.
Landlord's successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform all of the obligations of
"Landlord" to the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building.
30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
All covenants and agreements to be performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole
cost and expense and without any abatement of Rent except as otherwise
expressly provided herein. If Tenant shall fail to pay any sum of
money, other than Base Rent and Basic Operating Cost, required to be
paid by Tenant hereunder or shall fail to perform any other act on
Tenant's part to be performed hereunder, and such failure shall continue
for thirty (30) days after notice thereof by Landlord (provided,
however, that if any such failure cannot be cured through the exercise
of reasonable diligence within thirty (30) days, Tenant shall be
entitled to such additional time as is reasonably necessary to cure such
failure so long as Tenant commences its curative efforts within such
thirty (30) day period and diligently prosecutes same to completion),
Landlord may, but shall not be obligated to do so, and without waiving
or releasing Tenant from any obligation of Tenant, make any such payment
or perform any such act on Tenant's part to be made or performed. All
sums, so paid by Landlord and all necessary incidental costs together
with interest thereon at the Applicable Interest Rate from the date of
such payment by Landlord shall be payable to Landlord on demand, and
Tenant covenants to pay such sums, and Landlord shall have, in addition
to any other right or remedy of Landlord, the same right and remedies in
the event of the non-payment thereof by Tenant as in the case of default
by Tenant in the payment of Base Rent and Basic Operating Cost.
31. WAIVER
If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other
term, covenant or condition contained herein. The acceptance of Rent by
Landlord shall not constitute a waiver of any preceding breach by Tenant
of any term, covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time Landlord
accepted such Rent. Failure by Landlord or Tenant to enforce any of the
terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or to decrease the right of Landlord or
Tenant to insist thereafter upon strict performance by the other party.
Waiver by Landlord or Tenant of any term, covenant or condition
contained in this Lease may only be made by a written document signed by
the waiving party.
32. NOTICES
Each provision of this Lease or of any applicable governmental
laws, ordinances, regulations and other requirements with reference to
sending, mailing or delivery of any notice or the making of any payment
by Landlord or Tenant to the other shall be deemed to be complied with
when and if the following steps are taken:
A. Rent. All rent and other payments required to be made by
Tenant to Landlord hereunder shall be payable to Landlord at the address
set forth in the Basic Lease Information, or at such other address as
Landlord may specify from time to time by written notice delivered in
accordance herewith. Tenant's obligation to pay Rent and any other
amounts to Landlord under the terms of this Lease shall not be deemed
satisfied until such Rent and other amount have been actually received
by Landlord.
B. Other. All notices, demands, consents and approvals which may
or are required to be given by either party to the other hereunder shall
be in writing and either personally delivered, sent by commercial
overnight courier, or mailed, certified or registered, postage prepaid,
and addressed to the party to be notified at the address for such party
as specified in the Basic Lease Information or to such other place as
the party to be notified may from time to time designate by at least
fifteen (15) days notice to the notifying party. Notices shall be
deemed served upon receipt or refusal to accept delivery. Tenant
appoints as its agent to receive the service of all default notices and
notice of commencement of unlawful detainer proceedings the person in
charge of or apparently in charge of occupying the Premises at the time,
and, if there is no such person, then such service may be made by
attaching the same on the main entrance of the Premises.
33. ATTORNEY'S FEES
In the event that, following an event of default, Landlord 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 possession of
the Premises in the hands of an attorney, Tenant shall pay to Landlord,
upon demand, Landlord's reasonable attorneys' fees and court costs. In
any action which Landlord or Tenant brings to enforce its respective
rights hereunder, the unsuccessful party shall pay all costs incurred by
the prevailing party including reasonable attorneys' fees, to be fixed
by the court, and said costs and attorneys' fees shall be a part of the
judgment in said action.
34. SUCCESSORS AND ASSIGNS
This Lease shall be binding upon and inure to the benefit of
Landlord, its successors and assigns, and shall be binding upon and
inure to the benefit of Tenant, its successors, and to the extent
assignment is approved by Landlord hereunder, Tenant's assigns.
35. FORCE MAJEURE
Whenever a period of time is herein prescribed for action to be
taken by Landlord or Tenant, Landlord or Tenant (as applicable) shall
not be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays due to strikes,
riots, acts of God, shortages of labor or materials, war, governmental
laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of Landlord or Tenant (as
applicable).
36. BROKERAGE COMMISSION
Landlord shall pay a brokerage commission to Broker (if any is
named in the Basic Lease Information) in accordance with a separate
agreement between Landlord and Broker. Tenant warrants to Landlord that
Tenant's sole contact with Landlord or with the Premises in connection
with this transaction has been directly with Landlord and the Broker (if
any) identified in the Basic Lease Information, and that no other broker
or finder can properly claim a right to a commission or a finder's fee
based upon contact between the claimant and Tenant with respect to
Landlord or the Premises. Each party shall indemnify, defend by counsel
acceptable to the other party, protect and hold the other party harmless
from and against any loss, cost or expense, including, but not limited
to attorneys' fees and costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Premises and
this Lease which claim is made by the broker or finder claiming by,
through or under the indemnifying party (other than Broker, whose
commission shall be paid by Landlord).
37. MISCELLANEOUS
A. General. The term "Tenant" or any pronoun used in place
thereof shall indicate and include the masculine or feminine, the
singular or plural number, individuals, firms or corporations, and their
respective successors, executors, administrators and permitted assigns,
according to the context hereof.
B. Time. Time is of the essence regarding this Lease and all of
its provisions.
C. Choice of Law. This Lease shall in all respects be governed
by the laws of the State of Nevada.
D. Entire Agreement. This Lease, together with its Exhibits,
contains all the agreements of the parties hereto and supersedes any
previous negotiations. There have been no representations made by the
Landlord or understandings made between the parties other than those set
forth in this Lease and its exhibits.
E. Modification. This Lease may not be modified except by a
written instrument by the parties hereto.
F. Severability. If, for any reason whatsoever, any of the
provisions hereof shall be unenforceable or ineffective, all of the
other provisions shall be and remain in full force and effect.
G. Recordation. Tenant shall not record this Lease or a short
form memorandum hereof.
H. Examination of Lease. Submission of this Lease to Tenant does
not constitute an option or offer to lease and this Lease is not
effective otherwise until execution and delivery by both Landlord and
Tenant.
I. Accord and Satisfaction. No payment by Tenant of a lesser
amount than the Rent nor any endorsement on any check or letter
accompanying any check or payment of Rent shall be deemed an accord and
satisfaction of full payment of Rent, and Landlord may accept such
payment without prejudice to Landlord's right to recover the balance of
such Rent or to pursue other remedies.
J. Easements. Landlord may grant easements on the Project and
dedicate for public use portions of the Project without Tenant's
consent, provided that no such grant or dedication shall substantially
interfere with Tenant's use of the Premises. Upon Landlord's demand,
Tenant shall execute, acknowledge and deliver to Landlord documents,
instruments, maps and plats necessary to effectuate Tenant's covenants
hereunder.
K. Drafting and Determination Presumption. The parties
acknowledge that this Lease has been agreed to by both the parties, that
both Landlord and Tenant have consulted with attorneys with respect to
the terms of this Lease and that no presumption shall be created against
Landlord because Landlord drafted this Lease. Except as otherwise
specifically set forth in this Lease, with respect to any consent,
determination or estimation of Landlord required in this Lease or
requested of Landlord, Landlord's consent, determination or estimation
shall be made in Landlord's good faith opinion, whether objectively
reasonable or unreasonable.
L. Exhibits. Exhibits A, B and C attached hereto are hereby
incorporated herein by this reference.
M. No Light, Air or View Easement. Any diminution or shutting
off of light, air or view by any structure which may be erected on lands
adjacent to or in the vicinity of the Building shall in no way affect
this Lease or impose any liability on Landlord.
N. No Third Party Benefit. This Lease is a contract between
Landlord and Tenant and nothing herein is intended to create any third
party benefit.
ADDITIONAL PROVISIONS:
38. MONTHLY RENTAL:
Months 1-60: $18,125.50 per month ($0.29 PSF)
39. TENANT IMPROVEMENTS
Landlord agrees to provide a Tenant Improvement Allowance of
$360,000 for the plans, permits and construction of approximately 9,000
square feet of Tenant improvements ("Improvements"). The final plan for
these Tenant Improvements must be approved by Landlord (which approval
shall not be unreasonably withheld or delayed). Upon final approval of
such plans and specifications for the Improvements by Landlord and
Tenant, Landlord shall cause the same to be constructed in accordance
with such agreed-to plans and specifications and all applicable laws.
Tenant shall have the right to approve the final cost of constructing
the Improvements, and if Tenant fails to approve same the parties shall
mutually agree to engage in value engineering and otherwise cooperate
with one another so that the final cost of constructing the Improvements
is acceptable to Tenant. Tenant shall not be liable for the payment of
any such costs of construction that it does not approve in writing.
Upon completion of the construction of the Improvements, Landlord shall
assign to Tenant on a non-exclusive basis (it being agreed that Landlord
shall retain the right to itself pursue all such warranties) all
contractors', subcontractors' and manufacturers' warranties in
connection with the construction of the Improvements. If the cost of
constructing the Improvements: (i) exceeds $360,000, Landlord shall pay
the excess cost ("Excess") and in such event the monthly Base Rent shall
be increased by the monthly amount needed to fully amortize the Excess
over the Lease Term (at an interest rate of 10% per annum) in equal
monthly installments (each such installment to include both principal
and interest); or (ii) is less than $360,000, the difference shall be
credited to Base Rent due hereunder over the initial Term of this Lease
in equal monthly amounts; provided, however, in no event shall such
credit reduce Base Rent to an amount less than $0.27 per square foot of
area in the Premises per month. Landlord shall not be entitled to
charge a construction management fee, but it is acknowledged that its
general contractor will charge a contractor's fee in an amount approved
by Landlord and Tenant.
40. RENEWAL OPTION
Provided Tenant is not in default of its obligations or has not
been in default (following the expiration of all notice and cure periods
provided herein), Tenant shall have two (2) five year options to renew
this lease of the entire Premises in "as is" condition on the same terms
and conditions herein, except that Base Rent for the first five (5) year
option period shall be $0.29 per square foot, and for the second five
(5) year option period, Base Rent shall be $.33 per square foot. Notice
of Tenant's intention to exercise this option must be given to Landlord
in writing not less than one hundred eighty (180) prior to the
expiration of the Lease Term or the first renewal term, as applicable.
This option shall apply only to the primary Tenant and not to the
assignee or subtenant of Tenant (other than an assignee or subtenant in
a Permitted Transaction).
41. EARLY OCCUPANCY
Tenant shall have the right to enter the Premises on the date
("Early Occupancy Date") that is the later of (i) the date on which
Tenant can lawfully occupy the Premises for purpose of preparing same
for the conduct of Tenant's business, or (ii) May 1, 1999. All terms
and conditions of the Lease, except the payment of Base Rent shall be in
full force beginning on the Early Occupancy Date. Landlord waives all
Base Rent that might otherwise be payable hereunder for the first three
(3) months immediately following the Early Occupancy Date. After these
three months have elapsed, and provided that the Term Commencement Date
has occurred, the payment of Base Rent shall commence and the rent
schedule contained in Paragraph 38 shall apply (subject to any accrued
credit against Base Rent that is provided in Paragraph 2(A) of this
Lease). This provision overrides any conflicting provision in the
Lease.
42. RIGHT OF FIRST REFUSAL AND EXPANSION OPTION
(a) If Tenant is not in default of any terms or conditions of this
Lease (following the expiration of all notice and cure periods provided
for herein), Tenant shall have the Right of First Refusal to lease the
approximately twenty thousand square foot space immediately adjacent to
its existing Premises during the initial thirty (30) months of this
Lease. Tenant shall have forty-eight (48) hours after receipt of
written notice from Landlord ("ROFR Notice") to elect to lease the
adjacent space under the same terms offered to a third party. If Tenant
does not elect to lease such space upon such terms, Landlord shall have
the right to lease the space to the third party upon terms that are not
more favorable to the third party than those proposed to Tenant in the
ROFR Notice; provided, however, if Landlord fails to enter into such
lease with the third party, Tenant's rights hereunder shall be
reinstated. Upon the expiration or termination of any lease with the
third party, or the termination of the third party's right of
possession, Tenant's rights hereunder shall be similarly reinstated.
(b) In addition to the right of first refusal provided above,
Tenant shall have the right from time to time during the Term of this
Lease to elect to expand the Premises to include the approximately
20,000 square feet of space immediately adjacent to the Premises, or
portion thereof, upon the same terms and conditions as provided in this
Lease as are applicable to the initial Premises leased hereunder, except
that (i) the Base Rent shall be (A) $0.27 per square foot of area in the
expansion area per month during the initial 5-year Term of this Lease,
(B) $0.29 per square foot of area in the expansion area per month during
the first renewal term, and (C) $0.33 per square foot of area in the
expansion area per month during the second renewal term; and (ii) the
space shall be delivered to Tenant in an "as is" condition. Any such
option shall be exercised by at least 14 days' prior written notice to
Landlord. Notwithstanding the foregoing, it is agreed that (i) if
Landlord delivers a ROFR Notice pursuant to Paragraph 42(a) above, and
if Tenant desires to lease such space within the 48 hour period provided
in said Paragraph 42(a), Tenant shall do so upon the terms set forth in
the ROFR Notice, rather than the terms set forth in this Paragraph
42(b); and (ii) Tenant shall not have the right to exercise its
expansion option under this Paragraph 42(b) if such approximately 20,000
square feet of space has been previously leased to a third party in
accordance with the terms of Paragraph 42(a) above.
43. EARLY TERMINATION
Tenant may terminate this Lease beginning thirty (30) months after
this Lease commences. In order to terminate this Lease, Tenant shall:
1. Have not been in default of the terms of the Lease (following the
expiration of all notice and cure periods provided for herein).
2. Remit to Landlord the applicable cancellation fee amount pursuant
to the amortization schedule attached hereto as Exhibit "B" and made a
part hereof.
3. Give Landlord one hundred and eighty (180) days written notice of
the option to terminate. Tenant may not deliver this written notice to
Landlord until the 25th month of Tenant's Lease.
4. Tenant shall deliver the herein described Premises to the Landlord
in the condition required by the Lease.
44. GOOD WORKING ORDER
Landlord (i) will deliver all electrical, HVAC, plumbing,
mechanical, sprinkler, life safety and other systems serving the
Premises, which systems existed prior to, and were not constructed or
installed as a part of, the construction of the Improvements pursuant to
paragraph 39 (such as, without limitation, the transformer serving the
Premises), in good working order at the commencement of this Lease and
(ii) shall repair, maintain and/or replace same, as necessary, to keep
same in good working order during the first 90 days of the Term.
45. EXPANSION OPTION
It is hereby understood and agreed that in the event Tenant
requires at least 90,000 square feet and Landlord and Tenant shall have
executed a new Lease Agreement for the larger premises at any Xxxxxxx
Associates, or successor, managed property in Reno/Sparks, then this
Lease shall be canceled as of the commencement date of the new lease
covering the larger space, provided that (i) Tenant is not, and has not
been, in default of the terms of this Lease (following the expiration of
all notice and cure periods provided for herein), (ii) Tenant remits to
Landlord any monies due at the time in question pursuant to the
amortization schedule attached hereto as Exhibit "B" and made a part
hereof, (iii) on the commencement date of the new lease, Tenant shall
deliver the herein demised Premises to the Landlord in condition
required by this Lease Agreement, and (iv) Landlord has found a
replacement tenant for the Tenant's original Premises.
Upon such cancellation, both parties shall be released from any
further obligations accrued prior to such cancellation. The terms of
the new Lease shall be at least five (5) years at a rental rate, terms,
and conditions as if offered to other tenants for a comparable space in
a comparable location in Reno/Sparks.
46. LANDLORD'S AGREEMENT. Landlord hereby waives all landlord's liens
whether statutory or otherwise. Concurrently with the execution hereof,
and as a condition to Tenant's obligations hereunder, Landlord shall
execute and deliver to Tenant a "Landlord's Agreement" in the form
required by Tenant's lender (LaSalle Business Credit, Inc.).
47. CONTINGENCY.
Notwithstanding anything to the contrary contained herein,
Landlord's and Tenant's obligations hereunder are contingent upon the
effective termination of the existing lease relating to the Premises
between Landlord and Perfect Fit Industries ("Perfect Fit Lease") within
3 days after the date on which this Lease is fully executed by Landlord
and Tenant. Landlord shall give Tenant written notice, prior to the
expiration of such 3-day period, if the Perfect Fit Lease has not been
terminated. If the Perfect Fit Lease is not so terminated within such
3-day period, either party may terminate this Lease by written notice to
the other party in which event the security deposit and any prepaid rent
shall be immediately refunded to Tenant, and the parties shall have no
further rights or obligations hereunder; provided, however, if Landlord
fails to give Tenant written notice, within such 3-day period, of the
non-termination of the Perfect Fit Lease (i) the contingency set forth
in this Paragraph 47 shall be deemed to have been satisfied, (ii)
neither party shall have the right to terminate this Lease, and (iii)
this Lease shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this lease the day
and year first above written.
"LESSOR" (LANDLORD)
The Northwestern Mutual Life Insurance Company,
a Wisconsin corporation
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Date: January 29, 1999
Its: Director-Field Asset Management
"LANDLORD's AGENT"
Xxxxxxx & Associates
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx Date: January 29, 1999
Its: President
"LESSEE" (TENANT)
Athletic Training Equipment Company, Inc., a Delaware corporation, a
wholly owned subsidiary of the Sport Supply Group, Inc.
By: /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx Date: January 29, 1999
Its: President
