EXHIBIT 10.61
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-MODIFIED NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
February 13, 1998 is made by and between NORTH COUNTY INDUSTRIAL.
PARK, L.P. and DATRON WORLD COMMUNICATIONS INC. (collectively the
"Parties," or individually a "Party").
1.2(a) Premises: That certain portion of the Building, including
all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of Lot E, Vista
Commerce Center, located in the City of Vista County of San Diego,
State of California, with zip code 92083, as outlined on Exhibit 1
attached hereto ("Premises"). The "Building" is that certain building
containing the Premises and generally described as (describe briefly
the nature of the Building): 106,000 s.f. concrete tilt-up building of
which the Premises will consist of approx. 70,000 rentable square
feet.
In addition to Lessee's rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to the
Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, exterior walls
or utility raceways of the Building or to any other buildings in the
Industrial Center. The Premises, the Building, the Common Areas, the
land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the
"Industrial Center." (Also see Paragraph 2.)
1.2(b) Parking: 200 unreserved vehicle parking spaces ("Unreserved
Parking Spaces"); and n/a reserved vehicle parking spaces ("Reserved
Parking Spaces"), (Also see Paragraph 2.6.)
1.3 Term: 10 years and 1 months ("Original Term") commencing See
Addendum 2 ("Commencement Date") and ending 10 years later
("Expiration Date"). (Also see Paragraph 3.)
1.4 Early Possession: see Addendum 2. ("Early Possession Date").
(Also see Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $ See Add. 3 per month ("Base Rent"), payable on
the first day of each month commencing Commencement Date (Also see
Paragraph 4.)
[] If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum 3.2 attached hereto.
1.6 (a) Base Rent Paid Upon Execution: $ -0- as Base Rent for the
period. See Addendum 12
1.6 (b) Lessee's Share of Common Area Operating Expenses: See Add.
4 percent ( %) ("Lessee's Share") as determined by other criteria
as described in Addendum 4.
1.7 Security Deposit: $58,800.00 ("Security Deposit"). (Also see
Paragraph 5.) See Addendum 12
1.8 Permitted Use: General office, sales administration or any other
use or purpose permitted under applicable zoning and other applicable
laws. Manufacturing, assembly, research and development, storage.
("Permitted Use") (Also see Paragraph 6.)
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see
Paragraph 8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in
this transaction and are consented to by the Parties (check applicable
boxes):
[] CB Commercial Real Estate Group represents Lessor exclusively
("Lessor's Broker");
[] Diversified Properties/CB Commercial represents Lessee
exclusively ("Lessee's Broker"); or
[ ] _______________________________ represents both Lessor and
Lessee ("Dual Agency"). (Also see Paragraph 15.)
1.10(b) Payment to Brokers. Upon the execution of this Lease by
both Parties, Lessor shall pay to said Broker(s) jointly, or in such
separate shares as they may mutually designate in writing, a fee as
set forth in a separate written agreement between Lessor and said
Broker(s) (or in the event there is no separate written agreement
between Lessor and said Broker(s), the sum of $_____) for brokerage
services rendered by said Broker(s) in connection with this
transaction.
1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by Datron Systems Incorporated See Exhibit "7"
("Guarantor"). (Also see Paragraph 37.)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 1 through 18, and Exhibits "1" through "17"
all of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all
of the terms, covenants and conditions set forth in this Lease. Unless
otherwise provided herein, any statement of square footage set forth
in this Lease, or that may have been used in calculating rental and/or
Common Area Operating Expenses, is an approximation which Lessor and
Lessee agree is reasonable and the rental and Lessee's Share (as
defined in Paragraph 1.6(b)) based thereon is not subject to revision
whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that
the existing plumbing, electrical systems, fire sprinkler system,
lighting, air conditioning and heating systems and loading doors, if
any, in the Premises, other than those constructed by Lessee, shall be
in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same
at Lessor's expense. If Lessee does not give Lessor written notice of
a noncompliance with this warranty within ninety days after the
Commencement Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants that any improvements (other than those constructed by Lessee
or at Lessee's direction) on or in the Premises which have been
constructed or installed by Lessor or with Lessor's consent or at
Lessor's direction shall comply with all applicable covenants or
restrictions of record and applicable building codes, regulations and
ordinances in effect on the Commencement Date. Lessor further warrants
to Lessee that Lessor has no knowledge of any claim having been made
by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with
regard to the Premises as of the Commencement Date. Said warranties
shall not apply to any Alterations or Utility Installations (defined
in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do
not comply with said warranties, Lessor shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from
Lessee given within six (6) months following the Commencement Date and
setting forth with specificity the nature and extent of such non
compliance, take such action, at Lessor's expense, as may be
reasonable or appropriate to rectify the non-compliance. Lessor makes
no warranty that the Permitted Use in Paragraph 1.8 is permitted for
the Premises under Applicable Laws (as defined in Paragraph 2.4).
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to
the condition of the Premises (including but not limited to the
electrical and fire sprinkler systems, security, environmental
aspects, seismic and earthquake requirements, and compliance with the
Americans with Disabilities Act and applicable zoning, municipal,
county, state and federal laws, ordinances and regulations and any
covenants or restrictions of record (collectively, "Applicable Laws" )
and the present and future suitability of the Premises for Lessee's
Intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference
thereto, and assumes all responsibility therefore as the same relate
to Lessee's occupancy of the Premises and for the terms of this Lease;
and (c) that neither Lessor, nor any of Lessor's agents, has made any
oral or written representations or warranties with respect to said
matters other than as set forth in this Lease.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior
to the date set forth in Paragraph 1.1 Lessee was the owner or
occupant of the Premises. In such event, Lessee shall, at Lessee's
sole cost and expense, correct any non-compliance of the Premises with
said warranties.
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in
Paragraph 1.2(b) on those portions of the Common Areas designated from
time to time by Lessor for parking. Lessee shall not use more parking
spaces than said number. Said parking spaces shall be used for parking
by vehicles no larger than full-size passenger automobiles or pickup
trucks, herein called "Permitted Size Vehicles." Vehicles other than
Permitted Size Vehicles shall be parked and loaded or unloaded as
directed by Lessor in the Rules and Regulations (as defined in
Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that belong to
or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded,
or parked in areas other than those designated by Lessor for such
activities.
(b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right,
without notice, in addition to such other rights and remedies that it
may have, to remove or tow away the vehicle involved and charge the
cost to Lessee, which cost shall be immediately payable upon demand by
Lessor.
(c) Lessor shall at the Commencement Date of this Lease, provide
the parking facilities required by Applicable Law.
2.7 Common Areas - Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center and Interior utility raceways
within the Premises that are provided and designated by the Lessor
from time to time for the general non exclusive use of Lessor, Lessee
and other lessees of the Industrial Center and their respective
employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped
areas.
2.8 Common Areas - Lessee's Rights. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers,
contractors, customers and invitees, during the term of this Lease,
the non-exclusive right to use, in common with others entitled to such
use, the Common Areas as they exist from time to time, subject to any
rights, powers, and privileges reserved by Lessor under the terms
hereof or under the terms of any rules and regulations or restrictions
governing the use of the Industrial Center. Under no circumstances
shall the right herein granted to use the Common Areas be deemed to
include the right to store any property, temporarily or permanently,
in the Common Areas. Any such storage shall be permitted only by the
prior written consent of Lessor or Lessor's designated agent, which
consent may be revoked at any time. In the event that any unauthorized
storage shall occur then Lessor shall have the right, without notice,
in addition to such other rights and remedies that it may have, to
remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9 Common Areas - Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to
time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 40.
Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the noncompliance with said
rules and regulations by other lessees of the Industrial Center.
2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to the Common Areas, Including, without
limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, landscaped
areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any
portion thereof; and
(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be
appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises
after the Early Possession Date but prior to the Commencement Date,
the obligation to pay Base Rent shall be abated for the period of such
early occupancy. All other terms of this Lease, however, (including
but not limited to the obligations to pay Lessee's Share of Common
Area Operating Expenses and to carry the insurance required by
Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the
Original Term.
3.3 Delay in Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if
one is specified in Paragraph 1.4, or if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to
any liability therefor, nor shall such failure affect the validity of
this Lease, or the obligations of Lessee hereunder, or extend the term
hereof, but in such case, Lessee shall not, except as otherwise
provided herein, be obligated to pay rent or portion any other
obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to
Lessor within ten (10) days after the end of said sixty (60) day
period, cancel this Lease, in which event the parties shall be
discharged from all obligations hereunder, provided further, however,
that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect. Except
as may be otherwise provided, and regardless of when the Original Term
actually commences, if possession is not tendered to Lessee when
required by this Lease and Lessee does not terminate this Lease, as
aforesaid, the period free of the obligation to pay Base Rent, if any,
that Lessee would otherwise have enjoyed shall run from the date of
delivery of possession and continue for a period equal to the period
during, which the Lessee would have otherwise enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or
omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges,
as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before
the day on which it is due under the forms of this Lease. Base Rent
and all other rent and charges for any period during the term hereof
which is for less than one full month shall be prorated based upon the
actual number of days of the month involved. Payment of Base Rent and
other charges shall be made to Lessor at its address stated herein or
to such other persons or at such other addresses as Lessor may from
time to time designate in writing to Lessee.
4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b)) of an Common Area Operating Expenses,
as hereinafter defined, during each calendar year of the term of this
Lease, in accordance with the following provisions: See Addendum 16
(a) "Common Area Operating Expenses" are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership
and operation of the Industrial Center, including, but not limited to,
the following:
(i) The operation, repair and maintenance, in neat, clean, good
order and condition, of the following:
(aa) The Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, Irrigation systems;
Common Area lighting facilities, fences and gates, elevators and roof.
(bb) Exterior signs and any tenant directories.
(cc) Fire detection and sprinkler systems.
(ii) The cost of water, gas, electricity and telephone to service
the Common Areas.
(iii) Trash disposal, property management and security services
and the costs of any environmental inspections.
(iv) Reserves set aside for maintenance and repair of Common
Areas.
(v) Real Property Taxes (as defined in Paragraph 10.2) to be paid
by lessor for the Building and the Common Areas under Paragraph 10
hereof.
(vi) The cost of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.
(vii) Any deductible portion of an insured loss concerning the
Building or the Common Areas.
(viii) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.
(b) Any Common Area Operating Expenses and Real Property Taxes that
are specifically attributable to the Building or to any other building
in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other
building. However, any Common Area Operating Expenses and Real
Property Taxes that are not specifically attributable to the Building
or to any other building or to the operation, repair and maintenance
thereof, shall be equitably allocated by Lessor to all buildings in
the Industrial Center.
(c) The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities
or to provide those services unless the Industrial Center already has
the same, Lessor already provide the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.
(d) Lessee's Share of Common Area Operating Expenses shall be payable
by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessors
option, however, an amount may be estimated by Lessor from time to
time of Lessee's Share of annual Common Area Operating Expenses and
the same shall be payable monthly or quarterly, as Lessor shall
designate, during each 12 month period of the Lease term, on the same
day as the Base Rent is due hereunder. Lessor shell deliver to Lessee
within (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual
Common Area Operating Expenses incurred during the preceding year. If
Lessee's payments under this Paragraph
4.2(d) during said preceding year exceed Lessee's share as indicated
on said statements, Lessee shall be credited the amount of such, over-
payment against Lessee's Share of Common Area Operating expenses next
becoming due. If Lessee's payments under this Paragraph 4.2(d) during
said preceding year were less than Lessee's Share as Indicated on said
statement, Lessee shall pay to Lessor the amount of the deficiency
within ten (10) days after delivery by Lessor to Lessee of said
statement.
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as
security for Lessee's faithful performance of Lessee's obligations
under this Lease. If Lessee fails to pay Base Rent or other rent or
charges due hereunder, or otherwise Defaults under this Lease (as
defined in Paragraph 13.1, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost,
expense, loss or damage (including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or
any portion of said Security Deposit, Lessee shall within ten (10)
days after written request therefore deposit monies with Lessor
sufficient to restore said Security Deposit to the full amount
required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts.
Lessor shall, at the expiration or earlier termination of the term
hereof and after Lessee has vacated the Premises, return to Lessee
(or, at Lessors option, to the last assignee, if any, of Lessee's
interest herein), that portion of the Security Deposit not used or
applied by Lessor. Unless otherwise expressly agreed in writing by
Lessor, no part of the Security Deposit shall be considered be held in
trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which
is reasonably comparable thereto, and for no other purpose. Lessee
shall not use or permit the use of the Premises in a manner that is
unlawful, creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to the Premises or neighboring premises
or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay
its consent to any written request by Lessee, Lessee's assignees or
subtenants, and by prospective assignees and subtenants of Lessee, its
assignees and subtenants, for a modification of said Permitted Use, so
long as the same will not impair the structural integrity of the
improvements on the Premises or in the Building or the mechanical or
electrical systems therein, does not conflict with uses by other
lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible
pursuant to this Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business days after such request
give a written notification of same, which notice shall include an
explanation of Lessor's reasonable objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The form "Hazardous
Substance" as used in this Lease shall mean any product, substance,
chemical, material or waste whose presence, nature, quantity and/or
intensity or existence, use, manufacture, disposal, transportation,
spill, release or effect, either by itself or in combination with
other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the
environment, or the Premises (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of
Lessor to any governmental agency or third party under any applicable
statute or common law theory. Hazardous Substance shall include, but
not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any
products or by-products thereof. Lessee shall not engage in any
activity in or about the Premises which constitutes a Reportable Use
(as hereinafter defined) of Hazardous Substances without the express
prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3), "Reportable Use" shall mean (i) the
Installation or use of any above or below ground storage tank, (ii)
the generation, possession, storage, use, transportation, or disposal
of a Hazardous Substance that requires a permit from, or with respect
to which a report, notice, registration or business plan is required
to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to
which any Applicable Laws require that a notice be given to persons
entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior
consent, but upon notice to Lessor and in compliance with all
Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the
Permitted Use, so long as such use is not a Reportable Use and does
not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may (but without any obligation to do
so) condition its consent to any Reportable Use of any Hazardous
Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to
protect itself, the public, the Premises and the environment against
damage, contamination or injury and/or liability therefor, including
but not limited to the installation (and, at Lessor's option, removal
on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements) and/or the deposit of an additional Security Deposit
under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously
consented to by Lessor, Lessee shall immediately give Lessor written
notice thereof, together with a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim,
action, or proceeding given to, or resolved from, any governmental
authority or private party concerning the presence, spill, release,
discharge of, or exposure to, such Hazardous Substance including but
not limited to all such documents as may be involved in any Reportable
Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about
the Premises (including, without limitation, through the plumbing or
sanitary sewer system).
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and
the Premises, harmless from and against any and all damages,
1iabililies, judgments, costs, claims, liens, expenses, penalties,
loss of permits and attorneys' and consultants' fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for
Lessee or by anyone under Lessee's control. Lessee's obligations under
this Paragraph 6.2(c) shall include, but not be limited to, the
effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of
investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof,
or of any contamination therein involved, and shall survive the
expiration or earlier termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with
respect to Hazardous Substances, unless specifically so agreed by
Lessor in writing' at the time of such agreement.
6.3 Lessee's Compliance with Requirements. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner,
comply with all "Applicable Requirements," which term is used in this
Lease to mean all laws, rules, regulations; ordinances, directives,
covenants, easements and restrictions of record, permits, the
requirements of any applicable fire insurance underwriter or rating
bureau, and the recommendations of Lessor's engineers and/or consul
tants, relating in any manner to the Premises (including but not
limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under about the Premises, including
soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation,
maintenance, removal, transportation, storage, spill, or release of
any Hazardous Substance), now in effect or which may hereafter come
into effect. Lessee shall, within five (5) days after receipt of
Lessor's written request, provide Lessor with copies of all documents
and information, including but not limited to permits, registrations,
manifests, applications, reports and certificates, evidencing Lessee's
compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies
of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable
Requirements.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders
of any mortgages, deeds of trust or ground leases on the Premises
("Lenders") shall have the right to enter the Premises at any time in
the case of an emergency, and otherwise at reasonable times, for the
purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable Requirements
(as defined in Paragraph 6.3), and Lessor shall be entitled to employ
experts end/or consultants in connection therewith to advise Lessor
with restrict to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or
removal of any Hazardous Substance on or from the Premises. The costs
and expenses of any such Inspections shall be paid by the party
requesting same, unless a Default or Breach of this Lease by Lessee or
a violation of Applicable Requirements or a contamination, caused or
materially contributed to by Lessee, is found to exist or to be
imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent
violation or contamination. In such case, Lessee shall upon request
reimburse Lessor or Lessor's Lender, as the case may be, for the costs
and expenses of such Inspections.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2
(Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole cost and expense and at
all times, keep the Premises and every part thereof in good order,
condition and repair (whether or not such portion of the Premises
requiring repair, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including,
without limiting the generality of the foregoing, all equipment or
facilities specifically serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose
connections if within the Premises, fixtures, interior walls, interior
surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights, but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2 below. Lessee, in
keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to
keep the Premises and all improvements thereon or a pan thereof in
good order, condition and state of repair.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and
substance for and with a contractor specializing and experienced in
the inspection, maintenance and service of the heating, air
conditioning and ventilation system for the Premises. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain the
contract for the heating, air conditioning and ventilating systems,
and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
for the cost thereof.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days'
prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on
Lessee's behalf, and put the Premises in good order, condition and
repair, in accordance with Paragraph 13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7,1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor,
subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire
sprinkler and/or standpipe and hose (if located in the Common Areas)
or other automatic tire extinguishing system including fire alarm
and/or smoke detection and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as
providing the services for which there is a Common Area Operating
Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to
paint the interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass
of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the Building, Industrial Center or
Common Areas in good order, condition and repair.
7.3 Utility Installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required. The term "Utility
installations" is used in this Lease to refer to all air lines, power
panels, electrical distribution, security, fire protection systems,
communications systems, lighting fixtures, healing, ventilating and
air conditioning equipment, plumbing, and fencing in, on or about the
Premises. The term "Trade Fixtures" shall mean Lessee's machinery and
equipment which can be removed without doing material damage to the
Premises. The term "Alterations" shall mean any modification of the
improvements on the Premises which are provided by Lessor under the
terms of this Lease, other than Utility Installations or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are
defined as Alterations and/or Utility Installations made by Lessee
that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee
shall not make nor cause to be made any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's
prior written consent. Lessee may, however, make alterations and non-
structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to
Lessor, so long as they are not visible from the outside of the
Premises, do not involve puncturing, relocating or removing the roof
or any existing walls, or changing or interfering with the fire
sprinkler or fire detection systems and the current cost thereof on
any one occasion does not exceed $25,000.00.
(b) Consent. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the
Lessor shall be presented to the Lessor in written form with detailed
plans. All consents given by Lessor, whether by virtue of Paragraph
7.3(a) or by subsequent specific consent, shall be deemed conditioned
upon: (1) Lessee's acquiring all applicable permits required by
governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of
the work thereon; and (iii) the compliance by Lessee with all
conditions of said permits In a prompt and expeditious manner. Any
Alterations or Utility installations by Lessee during the term of this
Lease shall be done in a good and workmanlike manner, with good and
sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish to
Lessor with as-built plans and specifications therefor, Lessor may,
(but without obligation to do so) condition its consent to any
requested Alteration or Utility Installation that costs $25,000.00 or
more upon Lessee's providing Lessor with a lien and completion bond in
an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation.
(c) Lien Protection. Lessee shall pay when due all claims for
labor or materials furnished or alleged to have been furnished to or
for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in, on, or about the Premises'
that will cost $25,000.00 or more, and Lessor shall have the right to
post notices of non-responsibility in or on the Premises as provided
by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense,
defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof against the Lessor or
the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-
half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for same, as required by law for
the holding of the Premises free from the effect of such lien or
claim. In addition, Lessor may require Lessee to pay Lessor's
attorney's fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal and
to cause Lessee to become the owner thereof as hereinafter provided in
this Paragraph 7.4, all Alterations and Utility Installations made to
the Premises by Lessee shall be the property of and owned by Lessee,
but considered a part of the Premises, Lessor may, at any time and at
its option, elect in writing to Lessee to be the owner of all or any
specified part of the Lessee-owned Alterations and Utility
Installations. Unless otherwise instructed per Subparagraph 7.4(b)
hereof, all Lessee-Owned Alterations and Utility Installations shall,
at the expiration or earlier termination of this Lease, become the
property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) Removal. Unless otherwise agreed in writing. Lessor may require
the removal at any time of all or any part of any Alternations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and
state of repair, ordinary wear and tear excepted. Ordinary wear and
tear shall not include any damage or deterioration that would have
been prevented by good maintenance practice or by Lessee performing
all of its obligations under this Lease. Except as otherwise agreed or
specified herein, the Premises, as surrendered, shall include the
Alterations and Utility Installations. The obligation of Lessee shall
include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as
well as the removal of any storage tank installed by or for Lessee,
and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by
Applicable Requirements and/or good practice. Lessee's Trade Fixtures
shall remain the property of Lessee and shall be removed by Lessee
subject to its obligation to repair and restore the Premises per this
Lease.
8. Insurance; Indemnity.
8.1 Payment of Premiums. The cost of the premiums for the
Insurance policies maintained by Lessor under this Paragraph 8 shall
be a Common Area Operating Expense pursuant to Paragraph 4.2 hereof.
Premiums for policy periods commencing prior to, or extending beyond,
the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of
insurance protecting Lessee, Lessor and any Lender(s) whose names have
been provided to Lessee in writing (as additional insureds) against
claims for bodily injury, personal injury and property damage based
upon, involving or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
Insurance shall be on an occurrence basis providing single limit
coverage in an amount not less than $1,000,000 per occurrence with an
"Additional Insured-Managers or Lessors of Premises" endorsement and
contain the Amendment of the Pollution Exclusion endorsement for
damage caused by heat: smoke or fumes from a hostile fire. The policy
shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the performance
of Lessee's indemnity obligations under this Lease. The limits of
said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall also maintain liability insurance
described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall
not be named as an additional insured therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to any Lender(s), insuring
against loss or damage to the Premises. Such insurance shall be for
full replacement cost, as the same shall exist from time to time, or
the amount required by any Lender(s), but in no event more than the
commercially reasonable and available insurable value thereof if, by
reason of the unique nature or age of the improvements involved, such
latter amount is less than full replacement cost. Lessee-Owned
Alternations and Utility Installations, Trade Fixtures and Lessee's
personal property shall be insured by Lessee pursuant to Paragraph
8.4. If the coverage is available and commercially appropriate,
Lessor's policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage
for the enforcement of any ordinance or law regulating the
reconstruction or replacement of nay undamaged sections of the
Building required to be demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as the
result of a covered loss but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in
lieu of any co-insurance clause, waiver of subrogation, and inflation
guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for
the city nearest to where the Premises are located.
(b) Rental Value. Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and any Lender(s), insuring the
loss of the full rental and other charges payable by all lessees of
the Building to Lessor for one year (including all Real Property
Taxes, insurance costs, all Common Area Operating Expenses and any
scheduled rental increases). Said insurance may provide that in the
event the Lease is terminated by reason of an insured loss, the period
of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide
for one full year's loss of rental revenues from the date of any such
loss. Said insurance shall contain an agreed valuation provision in
lieu of any coinsurance clause, and the amount of coverage shall be
adjusted annually to reflect the projected rental income, Real
Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating
Expenses shall include any deductible amount in the event of such
loss.
(c) Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common
Areas or other buildings in the Industrial Center if said increase is
caused by Lessee's acts, omissions, use or occupancy of the Premises.
(d) Lessee's Improvements. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and
Utility Installations unless the item in question has become the
property of Lessor under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or,
at Lessor's option, by endorsement to a policy already carried,
maintain insurance coverage on all of Lessee's personal property,
Trade Fixtures and Lessee-Owned Alterations and Utility Installations
in, on, or about the Premises similar in coverage to that carried by
Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to
exceed $5,000 per occurrence. The proceeds from any such insurance
shall be used by Lessee for the replacement of personal property and
the restoration of Trade Fixtures and Lessee-Owned Alterations and
Utility Installations. Upon request from Lessor, Lessee shall provide
Lessor with written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the
Premises are located, and maintaining during the policy term a General
Policyholders Ratings of at least B+, V, or such other rating as may
be required by a Lender, as set forth in the most current issue of
"Best's Insurance Guide." Lessee shall not do or permit to be done
anything which, shall invalidate the insurance policies referred to in
this Paragraphs 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date
or the Commencement Date, certified copies of, or certificates
evidencing the existence and amounts of, the insurance required under
Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or
subject to modification except after thirty (30) days' prior written
notice to Lessor, Lessee shall at least thirty (30) days prior the
expiration of such policies, furnish Lessor with evidence of renewals
or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract
or in tort) against the other, for loss or damage to their property
arising out of or incident to the perils required to be insured
against under Paragraph 8. The effect of such releases and waivers of
the right to recover damages shall not be limited by the amount of
insurance carried or required, or by an deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance
companies issuing property damage insurance waive any right to
subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of
rents and/or damages, costs, liens, judgments, penalties, loss of
permits, attorneys' and consultants' fees, expenses and/or liabilities
arising out of, involving, or in connection with, the occupancy of the
Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the
performance in a timely manner of any obligation on Lessee's part to
be performed under this Lease. The foregoing shall include, but not be
limited to, the defense or pursuit of any claim or any action or
proceeding involved therein, and whether or not (in the case of claims
made against Lessor) litigated and/or reduced to judgment. In case any
action or proceeding be brought against Lessor by reason of any of the
foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor
and Lessor shall cooperate with Lessee in such defense. Lessor need
not have first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees,
customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, storm,
electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from
any other cause, whether said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building of
which the Premises are a part, from other sources or places, and
regardless of whether the cause of such damage or injury or the means
of repairing the same is accessible or not. Lessor shall not be liable
for any damages arising from any act or neglect of any other lessee of
Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center. Notwithstanding Lessor's
negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any
loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less
than fifty percent (50%) of the then Replacement Cost (as defined In
Paragraph 9.1(d)) of the Premises (excluding Lessee-Owned Alterations
and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and
Trade Fixtures) immediately prior to such damage or destruction. In
addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures
of any lessees of the Building, the cost of which damage or
destruction is fifty per cent (50%) or more of the total Replacement
Cost (excluding Lessee-Owned Alterations and Utility Installations and
Trade Fixtures of any lessees of the Building) of the Building shall,
at the option or Lessor, be deemed to be Premises Total Destruction.
(c) "Insured Loss" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by
the insurance described in Paragraph 8.3(a) irrespective of any
deductible amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition,
debris removal and upgrading required by the operation of applicable
building codes, ordinances or laws, and without deduction for
depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination
by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or
under the Premises.
9.2 Premises Partial Damage - Insured Loss. If Premises Partial
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's
expense, repair such damage (but not Lessee's Trade Fixtures or Lessee-
Owned Alterations and Utility Installations) as soon as reasonably
possible and this Lease shall continue in full force and effect. In
the event, however, that there is a shortage of insurance proceeds and
such shortage is due to the fact that, by reason of the unique nature
of the improvements in the Premises, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance
thereof, within ten (10) days following receipt of written notice of
such shortage and request therefor, if Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, Lessor
shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect
by written notice to Lessee within ten (10) days thereafter to make
such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain
in full force and effect. If Lessor does not receive such funds or
assurance within such ten (10) day period, and if Lessor does not so
elect to restore and repair, then this Lease shall terminate sixty
(60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to
flood or earthquake shall be subject to Paragraph 9.3 rather than
Paragraph 9.2, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either party.
9.3 Partial Damage - Uninsured Loss. If Premises Partial Damage that
is not an insured Loss occurs, unless caused by a negligent or willful
act of Lessee (in which event Lessee shall make the repairs at
Lessee's expense and this Lease shall continue in full force and
effect), Lessor may at Lessor's option, either (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give writ
ten notice to Lessee within thirty (30) days after receipt by Lessor
of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date
of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the repair
of such damage totally at Lessee's expense and without reimbursement
from Lessor. Lessee shall provide Lessor with the required funds or
satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such repairs
as soon as reasonably possible after the required funds are available.
If Lessee does not give such notice and provide the funds or assurance
thereof within the times specified above, this Lease shall terminate
as of the date specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required
by any authorized public authority), this Lease shall terminate sixty
(60) days following the date of such Premises Total Destruction,
whether or not the damage or destruction is an Insured Loss or was
caused by a negligent or willful act of Lessee. In the event, however,
that the damage or destruction was caused by Lessee, Lessor shall have
the right to recover Lessor's damages from Lessee except as released
and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to
repair exceeds one month's Base Rent, whether or not an Insured Loss,
Lessor may, at Lessor's option, terminate this Lease effective sixty
(60) days (allowing the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within thirty
(30) days after the date of occurrence of such damage. Provided,
however, if Lessee at that time has an exercisable option to extend
this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any
shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is
ten (10) days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option expires. If Lessee duly exercises such option
during such period and provides Lessor with funds (or adequate
assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or
assurance during such period, then this Lease shall terminate as of
the date set forth in the first sentence of this Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the
Base Rent, Common Area Operating Expenses and Other charges, if any,
payable by Lessee hereunder (or the period during which such damage or
condition, its repair, remediation or restoration continues, shall be
abated in proportion to the degree to which Lessee's use of the
Premises is impaired, but not in excess of proceeds from insurance
required to be carried under Paragraph 8.3(b). Except for abatement of
Base Rent, Common Area Operating Expenses and other charges, if any,
as aforesaid, all other obligations of Lessee hereunder shall be
performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such damage, destruction, repair,
remediation or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not
commence, in a substantial and meaningful way, the repair or
restoration of the Premises within ninety (90) days after such
obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate, this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives
such notice to Lessor and such Lenders and such repair or restoration
is not commenced within thirty (30) days after receipt of such notice,
this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Premises
within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "Commence" as used in this
Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work
on the Premises, whichever occurs first.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required
by Applicable Requirements to this Lease shall continue in full force
and effect, but subject to Lessor's rights under Paragraph 6.2(c) and
Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon
as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost
to investigate and remediate such condition exceeds twelve (12) times
the then monthly Base Rent or S100,000 whichever is greater, give
written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance
Condition of Lessor's desire to terminate this Lease as of the date
sixty (60) days following the date of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this
Lease, Lessor shall have the right within ten (10) days alter the
receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the excess costs of (a) Investigation and
remediation of such Hazardous Substance Condition to the extent
required by Applicable Requirements, over (b) an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater.
Lessee shall provide Lessor with the funds required of Lessee or
satisfactory assurance thereof within thirty (30) days following said
commitment by Lessee. In such event this Lease shall continue in full
force and effect, and Lessor shall proceed to make such investigation
and remediation as soon as reasonably possible after the required
funds are available. If Lessee does not give such notice and provide
the required funds or assurance thereof within the time period
specified above, this Lease shall terminate as of the date specified
in Lessor's notice of termination.
9.8 Termination ~ Advance Payments. Upon termination of this
Lease pursuant to this Paragraph 9, Lessor shall return to Lessee any
advance payment made by Lessee to Lessor and so much of Lessee's
Security Deposit as has not been, or is not then required to be, used
by Lessor under the terms of this Lease.
9.9 Waiver of Statutes. Lessor and Lessee agree that the forms of this
Lease shall govern the effect of any damage to or destruction of the
Premises and the Building with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute
to the extent it is inconsistent herewith.
10. Rea1 Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Industrial Center, and
except as otherwise provided in Paragraph 10.3, any such amounts shall
be included in the calculation of Common Area Operating Expenses in
accordance with the provisions of Paragraph 4.2.
10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any
license fee, commercial rental tax, improvement bond or bonds, levy or
tax (other than inheritance, personal income or estate taxes) imposed
upon the Industrial Center by any authority having the direct or
indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street,
drainage, or other improvement district thereof, levied against any
legal or equitable interest of Lessor in the Industrial Center or any
portion thereof, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises.
The term "Real Property Taxes" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of
events occurring, or changes in Applicable Law taking effect, during
the term of this Lease, including but not limited to a change in the
ownership of the Industrial Center or in the improvements thereon, the
execution of this Lease, or any modification, amendment or transfer
thereon and whether or not contemplated by the Parties. In calculating
Real Property Taxes for any calendar year, the Real Property Taxes for
any real estate tax year shall be included in the calculation of Real
Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.
10.3 Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records
and work sheets as being caused by additional improvements placed upon
the Industrial Center by other lessees or by Lessor for the exclusive
enjoyment of such other lessees. Notwithstanding Paragraph 10.1
hereof, Lessee shall, however, pay to Lessor at the time Common Area
Operating Expenses are payable under Paragraph 4.2, the entirety of
any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable
proportion of the Real Property Taxes for all of the land and
improvements included within the tax parcel assessed, such proportion
to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or such other information as may be
reasonably available, Lessor's reasonable determination thereof, in
good faith shall be conclusive.
10.5 Lessee's Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee-Owned Alterations
and Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee contained in the Premises or stored
within the Industrial Center. When possible, Lessee shall cause its
Lessee-Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Lessor. If any of
Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the Taxes attributable to Lessee's property
within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay directly for all utilities and
services supplied to the Premises, including but not limited to
electricity, telephone, security, gas and cleaning of the Premises,
together with any taxes thereon. If any such utilities or services
are not separately metered to the Premises or separately billed to the
Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly metered or billed
with other premises in the Building, in the manner and within the time
periods set forth in Paragraph 4.2(d).
12. Assignment and Subletting. See Addendum 17.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"assign") or sublet all or any part of Lessee's interest in this Lease
or in the Premises without Lessor's prior written consent given under
and subject to the terms of Paragraph 39.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1, or a
non-curable Breach without the necessity of any notice and grace
period. If Lessor elects to treat such unconsented to assignment or
subletting as a non-curable Breach, Lessor shall have the right to
either: (i) terminate this Lease; or (ii) upon thirty (30) days'
written notice ("Lessor's Notice"), increase the monthly Base Rent for
the Premises to the greater of the then fair market rental value of
the Premises, as reasonably determined by Lessor, or one hundred ten
percent (110%) of the Base Rent then in effect. Pending determination
of the new fair market rental value, if disputed by Lessee, Lessee
shall pay the amount set forth in Lessor's Notice, with any
overpayment credited against the next installment(s) of Base Rent
coming due, and any underpayment for the period retroactively to the
effective date of the adjustment being due and payable immediately
upon the determination thereof. Further, in the event of such Breach
and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar
adjustment to the then fair market value as reasonably determined by
Lessor (without the Lease being considered an encumbrance or any
deduction for depreciation or obsolescence, and considering the
Premises at its highest and best use and in good condition) or one
hundred ten percent (110%) or the price previously in effect, (ii) any
index-oriented rental or price adjustment formulas contained in this
Lease shall be adjusted to require that the base index be determined
with reference to the index applicable to the time of such adjustment,
and (iii) any fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased in the same ratio as the new
rental bears to the Base Rent in effect immediately prior to the
adjustment specified in Lessor's Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall
not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease,
(ii) release Lessee of any obligations hereunder, nor (iii) alter the
primary liability of Lessee for the payment of Base Rent and other
sums due Lessor hereunder or for the performance of any other
obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or
disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of any rent for
performance shall constitute a waiver or estoppel of Lessor's right to
exercise its remedies for the Default or Breach by Lessee of any of
the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by
the assignee or sublessee. However, Lessor may consent to subsequent
sublettings and assignments of the sublease or any amendments or
modifications thereto without notifying Lessee or anyone else liable
under this Lease or the sublease and without obtaining their consent,
and such action shall not relieve such persons from liability under
this Lease or the sublease.
(d) In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or anyone else responsible for the performance of the
Lessee's obligations under this Lease, including any sublessee,
without first exhausting Lessor's remedies against any other person or
entity responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting
shall be in writing accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but
not limited to the intended use and/or required modification of the
Premises, if any, together with a non-refundable deposit of $500.00,
as reasonable consideration for Lessor's considering and processing
the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be
reasonably requested by lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be
deemed, for the benefit of Lessor, to have assumed and agreed to
conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or
sublease to which Lessor has specifically consented in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee
of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly Incorporated
therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and
Lessor may collect such rent and income and apply same toward Lessee's
obligations under this Lease; provided, however, that until a Breach
(as defined in Paragraph 13.1) shall occur in the performance of
Lessee's obligations under this Lease, Lessee may, except as otherwise
provided in this Lease, receive, collect and enjoy the rents accruing
under such sublease, Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublessee, be deemed
liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee under such
Sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become
due under the sublease. Sublessee shall rely upon any such statement
and request from Lessor and shall pay such rents and other charges to
Lessor without any obligation or right to inquire as to whether such
Breach exists and notwithstanding any notice from or claim from Lessee
to the contrary. Lessee shall have no right or claim against such
sublessee, or, until the Breach has been cured, against Lessor, for
any such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in
which event Lessor shall undertake the obligations of the sublessor
under such sublease from the time of the exercise of said option to
the expiration of such sublease; provided, however, Lessor shall not
be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any other prior defaults or
breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.
(d) No subleases under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without
Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure
the Default of Lessee within the grace period, if any, specified in
such notice. The sublessee shall have a right of reimbursement and
offset from and against Lessee for any such Defaults cured by the
sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), S350.00 is a reasonable sum per such occurrence
for legal services and costs in the preparation and service of a
notice of Default, and that Lessor may include the cost of such
services and costs in said notice as rent due and payable to cure said
default. A "Default" by Lessee is defined as a failure by Lessee to
observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "Breach"
by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is
specified herein, the failure by Lessee to cure such Default prior to
the expiration of the applicable grace period, and shall entitle
Lessor to pursue the remedies sot forth in Paragraphs 13.2 and/or
19.3:
(a) The vacating of the Premises without the Intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common
Area Operating Expenses, or any other monetary payment required to be
made by Lessee hereunder as and when due, the failure by Lessee to
provide Lessor with reasonable evidence of insurance or surety bond
required under this Lease, or the failure of Lessee to fulfill any
obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) days
following written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with
Applicable Requirements per Paragraph 6.3, (ii) the Inspection,
maintenance and service contracts required under Paragraph 7.1 (b),
(iii) the rescission of an unauthorized assignment or subletting per
Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37, (v)
the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under
this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document requested under Paragraph 42 (easements), or
(viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this lease, where any
such failure continues for a period of ten (10) days following written
notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40
hereof that are to be observed, complied with or performed by Lessee,
other than those described in Subparagraphs 13.1 (a), (b) or (c),
above, where such Default continues for a period of thirty (30) days
after written notice thereof by or on behalf of Lessor to Lessee;
provided, however, that if the nature of Lessee's Default is such that
more than they (30) days are reasonably required for its cure, then it
shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of
creditors: (ii) Lessee's becoming a "debtor" as defined in 11 U.S.
Code Section 101 or any successor statute thereto (unless, in the case
of a petition filed against Lessee, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where possession is
not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in
this Lease, where such seizure is not discharged within thirty (30)
days; provided, however, in the event that any provision of this
Subparagraph 13.1(e) is contrary to any applicable law, such provision
shall be of no force or effect, and shall not affect the validity of
the remaining provisions.
(f) The discovery by Lessor that any financial statement of
Lessee or of any Guarantor, given to Lessor by Lessee or any
Guarantor, was materially false.
(g) If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in
accordance with the forms of such guaranty, (iii) a Guarantor's
becoming insolvent or the subject of a bankruptcy filing, (iv) a
Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach
of its guaranty obligation on an anticipatory breach basis, and
Lessee's failure, within sixty (60) days following written notice by
or on behalf of Lessor to Lessee of any such event, to provide Lessor
with written alternative assurances of security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed
at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after
written notice to Lessee (or in case of an emergency, without notice),
Lessor may at its option (but without obligation to do so), perform
such duty or obligation on Lessee's behalf, including but not limited
to the obtaining of reasonably required bonds, insurance polices, or
governmental licenses, permits or approvals. The costs and expenses of
any such performance by Lessor shall be due and payable by Lessee to
Lessor upon Invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at
its own option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check in the event of a
Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or
without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of
such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover
from Lessee: (i) the worth at the time of the award of the unpaid rent
which had been earned at the time of termination; (ii) 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 rental loss that the Lessee proves could have been
reasonably avoided (iii) 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 rental loss that the Lessee proves
could be reasonably avoided and (iv) any other amount necessary to
compensate Lessor for a11 the detriment proximately caused by the
Lessee's failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom,
including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth
at the time of award of the amount referred to in provision (iii) of
the immediately preceding sentence shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco or the Federal Reserve Bank District in which the Premises
are located at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessees Default or Breach of this
Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Lessor may reserve the right to recover all or
any part thereof in a separate suit for such rent and/or damages. If a
notice and grace period required under Subparagraph 13.1 (b), (c) or
(d) was not previously given, a notice to pay rent or quit, or to
perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b),(c) or (d). In such case, the applicable grace
period under the unlawful detainer statue shall run concurrently after
the one such statutory notice, and the failure of Lessee to cure the
Default within the greater of the two (2) such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by
said statute.
(b) Continue, the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4)
after Lessee's Breach and recover the rent as it becomes due, provided
Lessee has the right to sublet or assign, subject only to reasonable
limitations. Lessor and Lessee agree that the limitations on
assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver to protect the Lessor's interest under this
Lease, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee
from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of
Lessee's occupancy of the Premises.
13.3 Inducement Recapture In Event of Breach. Any agreement by Lessor
or free or abated rent or either charges applicable to the Premises,
or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into
this Lease, all of which concessions are hereinafter referred to as
"Inducement Provisions" shall be deemed conditioned upon Lessee's full
and faithful performance of all of the forms, covenants and conditions
of this Lease to be performed or observed by Lessee during the term
hereof the same may be extended. Upon the occurrence of a Breach (as
defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this
lease and of not further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid
by Lessor under such an Inducement Provision shall be immediately due
and payable by Lessee to Lessor, and recoverable by Lessor, as
additional rent due under this Lease, notwithstanding any subsequent
cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this Paragraph
13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at
the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause
Lessor to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges,
and late charges which may be imposed upon Lessor by the terms of any
ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within fifteen
(15) days after such amount shall be due, then, without any
requirement of notice to Lessee, Lessee shall pay to Lessor a late
charge equal to six percent (6%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by
lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late
charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding Paragraph
4.1 or any other provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in
advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this
Paragraph 13.5, a reasonable time shall in no event be less than
thirty (30) days after receipt by Lessor, and by any Lender(s) whose
name and address shall have been furnished to Lessee in writing for
such purpose, of written notice specifying wherein such obligation of
Lessor has not been performed; provided, however, that if the nature
of Lessor's obligation is such that more than thirty (30) days after
such notice are reasonable required for its performance, then Lessor
shall not be in breach of this Lease if performance is commenced
within such thirty (30) day period and thereafter diligently pursued
to completion.
14. Condemnation. If the Premises or any portion thereof are taken
under the power of eminent domain or sold under the threat of the
exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as
of the date the condemning authority takes title or possession,
whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the
portion of the Common Areas designated for Lessee's parking, is taken
by condemnation, Lessee may, at Lessee's option, to be exercised in
writing within ten (10) days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in
full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as
the rentable floor area of the Premises taken bears to the total
rentable floor area of the Premises. No reduction of Base Rent shall
occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of
the exorcise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution of value of
the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any compensation,
separately awarded to Lessee for Lessee's relocation expenses and/or
toss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent
of its net severance damages received, over and above Lessee's Share
of the legal and other expenses incurred by Lessor in the condemnation
matter, repair any damage to the Premises caused by such condemnation
authority. Lessee shall be responsible for the payment of any amount
in excess of such net severance damages required to complete such
repair.
15. Brokers' Fees.
16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each Party (as "Responding Party") shall
within ten (10) days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting
Party a statement in writing in a form similar to the then most
current "Tenancy Statement" form published by The American Industrial
Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the
Requesting Party.
16.2 Financial Statement. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchaser
designated by Lessor such financial statements of Lessee and such
Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the
past three (3) years. All such financial statements shall be received
by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean
the owner or owners at the time in question of the fee title to the
Premises. In the event of a transfer of Lessor's title or interest in
the Premises or in this Lease, Lessor shall deliver to the transferee
or assignee (in cash or by credit) any unused Security Deposit held by
Lessor at the time of such transfer or assignment. Except as provided
in Paragraph 15.3, upon such transfer or assignment and delivery of
the Security Deposit, as aforesaid, the prior Lessor shall be relieved
of all liability with respect to the obligations and/or covenants
under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in now way
affect the validity of any other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within
thirty days following the date on which it was due, shall bear
interest from the date due at the prime rate charged by the largest
state chartered bank in the state in which the Premises are located
plus four percent (4%) per annum, but not exceeding the maximum rate
allowed by law.
20. Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the
Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease are deemed to be rent.
22. No Prior or other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any matter
mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective, Lessor and Lessee each represents
and warrants to the Brokers that it has made, and is relying safely
upon, its own investigation as to the nature, quality, character and
financial responsibility of the other Party to this Lease and as to
the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or
breach hereof by either Party. Each Broker shall be an intended third
party beneficiary of the provisions of this Paragraph 22.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or
by messenger or courier service) or may be sent by regular, certified
or registered mail or U.S. Postal Service Express Mail, with postage
prepaid, or by facsimile transmission during normal business hours,
and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may by written notice to the
other specify a different address for notice purposes, except that
upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering
notices to Lessee. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such
party or parties at such addresses as Lessor may from time to time
hereafter designate by written notice to Lessee.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is shown,
the postmark thereon. If sent by regular mail, the notice shall be
deemed given forty eight (48) hours after the same is addressed as
required herein and mailed with postage prepaid. Notices delivered by
United Stales Express Mail or overnight courier that guarantees next
day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier.
If any notice is transmitted by facsimile transmission or similar
means, the same shall be deemed served or delivered upon telephone or
facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is
received on a Saturday or a Sunday or a legal holiday, it shall be
deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of
any other term, covenant or condition hereof, or of any subsequent
Default or Breach by Lessee of the same or any other term, covenant or
condition hereof. Lessor's consent to, or approval of, any such act
shall not be deemed to render unnecessary the obtaining of Lessor's
consent to, or approval of, any subsequent or similar act by Lessee or
be construed as the basis of an estoppel to enforce the provision or
provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting
rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given
Lessor by Lessee may be accepted by Lessor on account of moneys or
damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such
statements and/or conditions shall be of no force or effect whatsoever
unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The Party requesting
recordation shall be responsible for payment of any fees or taxes
applicable thereto.
26. No Right to Holdover. See Addendum 18.
27. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all
other remedies in law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon
the parties, their personal representatives, successors and assigns
and be governed by the laws of the State in which the Premises are
located. Any litigation between the Parties hereto concerning this
Lease shall be initialed in the county in which the Premises are
located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of Trust,
or other hypothecation or security device (collectively, "Security
Device"), now or hereafter placed by Lessor upon the real property of
which the Premises are a part, to any and all advances made on the
security thereof, and to a11 renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders
holding any such Security Device shall have no duty, liability or
obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any
such obligation, Lessee will give any Lender whose name and address
have been furnished Lessee in writing for such purpose notice of
Lessor's default pursuant to Paragraph 13.C. If any Lender shall elect
to have this Lease and/or any Option granted hereby superior to the
lien of its Security Device and shall give written notice thereof to
Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party
who acquires ownership of the Premises by reason of a foreclosure of a
Security Device and that in the event of such foreclosure, such now
owner shall not: (i) be liable for any act of omission of any prior
1essor or with respect to events occurring prior to acquisition of
ownership, (ii) be subject to any offsets or defenses which Lessee
might have against any prior lessor, or (iii) be bound by prepayment
of more than one month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of
this Lease shall be subject to receiving assurance (a non-disturbance
agreement) from the Lender that Lessee's possession and this Lease,
including any options to extend the form hereof, will not be disturbed
so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents;
provided, however, that upon written request from Lessor or a Lender
in connection with a sale, financing or refinancing of Premises,
Lessee and Lessor shall execute such further writings as may be
reasonably required to separately document any such subordination or
non-subordination, attornment and/or non-disturbance agreement as is
provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or
proceeding, to enforce the forms hereof or declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such, proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys'
fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to
decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker
of its claim or defense. The attorneys' fee award shall not be
computed in accordance with any court fee schedule, but shall be such,
as to fully reimburse all attorneys' fees reasonably incurred. Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in
preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.
Broker(s) shall be intended third party beneficiaries of This
Paragraph 31. ,
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's
agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times for the
purpose of showing the same to prospective purchasers, lenders, or
Lessees, and making such alterations, repairs, improvements or
additions to the Premises or to the Building, as Lessor may reasonably
deem necessary. Lessor may at any time place on or about the Premises
or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place
on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability
to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises
without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall
not be obligated to exercise any standard of reasonableness in
determining whether to grant such consent.
34. Signs. The installation of any sign on the Premises by or for
Lessee shall be subject to the provisions of Paragraph 7 (Maintenance,
Repairs, Utility Installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights
to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor
shall be entitled to all revenues from such advertising signs. See
Addendum 13.
35. Termination; Merger. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by
Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically
terminate any sublease or lesser estate in the Premises; provided,
however, Lessor shall, in the event of any such surrender, termination
or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by
written notice to the holder of any such lessor interest, shall
constitute Lessor's election to have such event constitute the
termination of such interest.
36. Consents.
{a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and
expenses (including but not limited to architects', attorneys',
engineers' and other consultants' fees) incurred in the consideration
of, or response to, a request by Lessee for any Lessor consent
pertaining to this Lease or the Premises, including but not limited to
consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of
an invoice and supporting documentation therefor. In addition to the
deposit described in Paragraph 12.2(e), Lessor may, as a condition to
considering any such, request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit
held under Paragraph 5) reasonably calculated by Lessor to represent
the cost Lessor will incur in considering and responding to Lessee's
request. Any unused portion of said deposit shall be refunded to
Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not
constitute an acknowledgment that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any
then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify
herein any particular condition to Lessor's consent shall not preclude
the impositions by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the
particular matter for which consent is being given.
37. Guarantor.
37.1 Form of Guaranty. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each
such Guarantor shall be in the form most recently published by The
American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease, including
but not limited to the obligation to provide the Tenancy Statement and
information required in Paragraph 16.
37.2 Additional Obligations of Guarantor. It shall constitute a
Default of the Lessee under this Lease if any such Guarantor fails or
refuses, upon reasonable request by Lessor to give: (a) evidence of
the due execution of the guaranty called for by this Lease, including
the authority at the Guarantor (and of the party signing on Guarantors
behalf) to obligate such Guarantor on said guaranty, and resolution of
its board of directors authorizing the making of such guaranty,
together with a certificate of incumbency showing the signatures of
the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by
Lessor, (c) a Tenancy Statement, or (d) written confirmation that the
guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the
Premises and the performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this
Lease, Lessee shall have quiet possession of the Premises for the
entire term hereof subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Lease, the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the
right of first refusal to lease other property of Lessor or the right
of first offer to lease other property of Lessor: (c) the right to
purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the
right to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor, or the right of first
offer to purchase other property of Lessor.
39.2 Options Personal to Original Lease. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in
Paragraph 1.1 hereof, and cannot be voluntarily or involuntarily
assigned or exercised try any person or entity other then said
original Lessee while the original Lessee is in full and actual
possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee
are not assignable, either an a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from
this Lease in any manner, by reservation or
otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be
exercised unless the prior Options to extend or renew this Lease have
been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the
period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or
(ii) during the period of time any monetary obligation due Lessor from
Lessee is unpaid (without regard to whether notice thereof is given
Lessee), or (iii) during the time Lessee is in Breach of this Lease,
or (iv) in the event that Lessor, has given to Lessee three (3) or
more notices of separate Default under Paragraph 13.1 during the
twelve (12) month period immediately preceding the exercise of the
Option, whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of Paragraph
39.4(a)
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding
Lessee's due and timely exercise of the Option, if, after such
exercise and during the term of this Lease, (i) Lessee fails to pay to
Lessor a monetary obligation of Lessee for a period of thirty (30)
stays after such obligation becomes due (without any necessity of
Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph
13.1 during any twelve (12) month period, whether or not the Defaults
are cured, or (iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and
keep and observe all reasonable rules and regulations (Rules and
Regulations) which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking
and unloading of vehicles and the preservation of good order, as well
as for the convenience of other occupants or tenants of the Building
and the Industrial Center and their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard service
or other security measures, and that Lessor shall have no obligation
whatsoever to provide same. Lessee assumes all responsibility for the
protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties.
42. Reservations. Lessor reserves the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements,
rights of way, utility raceways, and dedications that Lessor deems
necessary, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights of way, utility
raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any
such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise
as to any amount or sum of money to be paid by one Party to the other
under the provisions hereof, the Party against whom the obligation to
pay the money is asserted shall have the right to make payment "under
protest" and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said Party to
institute suit for recovery of such sum. If it shall be adjudged that
there was no legal obligation on the part of said Party to pay such
sum or any part thereof, said Party shall be entitled to recover such
sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. Authority. If either Party hereto is a corporation, trust, or
general or limited partnership, each individual executing this Lease
on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. If
Lessee is a corporation, trust or partnership, Lessee shall, within
thirty (30) days after request by Lessor, deliver to Lessor evidence
satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be
controlled by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Lessor or Lessee or
Lessor's agent or Lessee's agent and submission of same to Lessee or
Lessor shall not be deemed an offer to lease. This Lease is not
intended to be binding until executed and delivered by all Parties
hereto.
47. Amendments. This Lease may be modified only in writing, signed by
the parties in interest at the time of the modification. The Parties
shall amend this Lease from time to time to reflect any adjustments
that are made to the Base Rent or other rent payable under this Lease.
As long as they do not materially change Lessee's obligations
hereunder, Lessee agrees to make such reasonable non-monetary
modifications to this Lease as may be reasonably required by an
institutional insurance company or pension plan Lender in connection
with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein,
if more than one person or entity is named herein as either Lessor or
Lessee, the obligations of such multiple parties shall be the joint
and several responsibility of all persons or entities named herein as
such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS
LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES
HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF
THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND
PURPOSE,OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE
CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE
PRESENCE OF ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS
SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEOUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON
THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES
OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN
CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED
SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the
dates specified above their respective signatures.
Executed at: El Cajon, California
on: March 24, 1998
By LESSOR:
North County Industrial Park LP
by: Whammy, Inc., General Partner
By: /s/ JEFFREY C. HAMANN
Name Printed: Jeffrey C. Hamman
Title: President
By: /s/ DANIEL M. WHITAKER
Name Printed: Daniel M. Whitaker
Title: Secretary
Address: 475 W. Bradley Avenue
El Cajon, CA 9202
Telephone: (619) 440-7424
Facsimile: (619) 440-8914
Executed at: Escondido, California
on: March 23, 1998
By LESSEE:
Datron World Communications Inc.
By: /s/ WILLIAM L. STEPHAN
Name Printed: William L. Stephan
Title: Secretary/Treasurer
Address: 304 Enterprise Street
Escondido, CA 92029
Telephone: (760) 747-1079
Facsimile: (760) 747-2474
ADDENDUM TO LEASE
This Addendum to Lease ("Addendum") is made by and between NORTH
COUNTY INDUSTRIAL PARK, L.P., a California limited partnership
("LESSOR") and DATRON WORLD COMMUNICATIONS INC., a California
corporation ("LESSEE") and is intended to supplement that certain
Standard Industrial/Commercial Multi-Tenant Lease-Modified Net between
LESSOR and LESSEE dated February 13, 1998, ("Lease") to which this
Addendum is annexed. If there is any inconsistency between this
Addendum and the Lease, the terms of this Addendum shall supersede and
control. LESSOR and LESSEE agree as follows:
1. Premises and Building Shell Description. "Building" means the
freestanding building denoted on the site plan ("Site Plan"), which is
annexed to this Addendum as EXHIBIT "1", as VISTA COMMERCE CENTER Lot
E and the "Premises" means and refers to the portion of the Building
as depicted in EXHIBIT "1", which is being leased to LESSEE pursuant
to this Lease. The Building is planned to consist of the Building
Shell Improvements as described in section 5 of this Addendum, subject
to subsection 1.2 of this Addendum. The Building Shell Improvements
are being designed and constructed substantially in accordance with
those certain preliminary architectural plans dated February 24, 1998
prepared by Paul Giese ("Architect") which are more particularly
described in EXHIBIT "2" annexed to this Addendum ("Preliminary
Building Shell Plans"). The components of the Building Shell
Improvements construction shall also conform to the specifications
attached as EXHIBIT "3" to this Addendum ("Building Shell
Specifications").
1.1 Planned Size and Final Measurement. It is planned that the
Building will contain approximately 106,000 rentable square feet, of
which the Premises will consist of approximately single story 70,000
rentable square feet. All square footage measurements shall be from
the roof "drip line" and in accordance with the Building Owners and
Managers Association International ("BOMA") standards. Following
Substantial Completion (as defined below) of all of the Building Shell
Improvements and the Tenant Improvements, LESSOR will, in good faith,
certify the actual rentable square feet of the Premises to establish
the exact rentable square feet for all purposes of the Lease. If
LESSEE disputes LESSOR's certification of the actual rentable square
feet of the Premises, LESSEE shall notify LESSOR in writing within ten
(10) days of LESSEE's receipt of the certified rentable square feet of
the Premises from LESSOR of LESSEE's intent to exercise its rights
under this section. In such event, LESSOR and LESSEE shall submit the
dispute concerning rentable square feet of the Premises to the
Architect, and the Architect's certification of rentable square feet
of the Premises will be binding upon LESSOR and LESSEE.
1.2 Modifications. LESSEE agrees that LESSOR may make modifications to
the Building Shell Improvements design on account of government or
lender requirements and otherwise as reasonably determined by LESSOR;
provided, however any such modifications shall not: (a) increase or
decrease the total rentable square feet of the Premises by more than
two percent (2%); (b) materially change the Building Shell
Specifications; or (c) materially and adversely affect LESSEE's use of
the Premises.
2. Effective Date/Term/Commencement Date. Notwithstanding any other
provision of the Lease, this Lease shall be effective upon execution
by LESSOR and LESSEE ("Effective Date") and shall constitute a legally
binding contract for LESSOR to deliver possession of the Premises in
accordance with the requirements of this Lease and for LESSEE to
accept possession and pay the rentals beginning upon the Commencement
Date (as defined below). Notwithstanding that the Effective Date of
this Lease is the date of execution of this Lease, LESSEE's obligation
to commence payment of the rentals payable under this Lease shall not
commence until the occurrence of the Commencement Date. The obligation
to pay Rent shall be abated for the first month of the term of the
Lease. All other terms of the Lease, however, (including but not
limited to the obligation to pay real property taxes and insurance
premiums and to maintain the premises) shall be in effect during the
rental abatement period.
2.1 Commencement Date. Except as otherwise provided in section 5.5 of
this Addendum, the term "Commencement Date" means the date of the
Substantial Completion (as defined below) of the Building Shell
Improvements and the Tenant Improvements. The term "Completion Date
means February 1,1999, provided such date shall be subject to
extension (a) on account of delays caused by LESSEE as described in
subsection 5.5 of this Addendum, (b) for delays caused by fire,
earthquake or other unavoidable casualties or inclement weather
conditions not reasonably anticipatable, (c) extraordinary or unusual
governmental action other than usual permit and inspection procedures,
(d) for delays encountered as a result of the discovery of any unknown
or concealed conditions affecting the Premises, (e) for delays caused
by general area-wide labor or material shortages or labor disputes
(such a strikes or lockouts), or any other causes not the fault of
LESSOR or LESSOR's Contractor, subcontractors, agents or employees or
(S) by one (1) day for each day after October 30, 1998, the issuance
of the building permit for the Tenant Improvements is delayed,
provided such delay is caused by LESSEE per Sections 5.2, 5.3, 5.4.1,
5.5, 5.7, 7 and 9.
2.2 LESSOR's Delay. In the event that the Completion is delayed on
account of the Default of LESSOR or on account of the fault of
LESSOR's Contractor in failing to timely cause Substantial Completion
of the Building Shell and Tenant Improvements, LESSEE shall be
entitled to a Delay Credit" against the Rent becoming due on and after
the Commencement Date in an amount equal to one (1) day of Rent for
each day that the Completion Date is so delayed.
2.3 Commencement Date Delay. Notwithstanding Section 2.2, the LESSOR
will have until October, 15, 1998 to notify the LESSEE of up to a 90
day delay in the Commencement Date beyond February 1, 1999. If the
LESSOR so notifies the LESSEE in writing, then the Delay Credit per
section 2.2 will be reduced to S3,70.0 per month or any part thereof
during such 90 day delay period only and the "Delay Credit" per
Section 2.2 will be calculated from the new Commencement Date.
2.4 Lease Term. The initial of the Lease ("Lease Terms") shall be a
period of ten (10) years beginning one month after the Commencement
Date; and ending one hundred twenty (120) consecutive months later;
provided, however, if the Commencement Date occurs other than on the
first day of a calendar month, the Initial Lease Term shall be deemed
extended for a period of time equal to the number of days between the
Commencement Date and the beginning of the first full calendar month
following the Commencement Date. The initial term of the Lease is
subject to extension in accordance with section 8 of this Addendum.
2.5 "Lease Year" Defined. The term "Lease Year" means each consecutive
twelve (12) month period during the Lease Term; provided, however, in
the case of the first Lease Year, such Lease Year shall be a period of
time beginning on the Commencement Date and ending twelve (12)
consecutive months following the Commencement Date, and each
subsequent Lease Year shall be determined from the anniversary of the
expiration of such first Lease Year; provided, further, however, if
the Commence Date occurs other than on the first day of a calendar
month, the first Lease Year shall be deemed extended for a period time
equal to the number of days between the Commencement Date and the
beginning of the first full calendar month following the Commencement
Date.
2.6 The first month after the Commencement Date shall be Rent free.
3. Rent. "Rent" for the Premises shall be the sum of (a) the Base Rent
described in subsection 3.1 of this Addendum, subject to adjustment as
provided in subsection 3.2 of this Addendum, (b) the Allowance
Amortization Charge as determined under subsection 3.3 of this
Addendum, (c) LESSEE's Share of Common Area Operating Expenses as
defined in Paragraph 4 of the Lease, and (d) any other amounts
becoming payable by LESSEE under the Lease. The Rent shall be payable
on the first day of each month.
3.1 Base Rent. The monthly Base Rent set forth in Paragraph 1.5 of the
Lease for the first Lease Year (as defined below) of the Original Term
represents the full Base Rent payable upon the Commencement Date
determined by multiplying the amount of S.42 per rentable square foot
by the estimated total 70,000 rentable square feet of the Premises. If
there is a variance in the rentable square footage of the Premises as
actually constructed, the Base Rent for the first Lease Year shall be
adjusted based on the actual rentable square feet within the Premises
multiplied times $.42 per rentable square foot.
3.2 Increase in Rent. The Rent shall be increased at the beginning of
the second Lease Year, and at the beginning of each Lease Year
thereafter, by an amount equal to 3% of the sum of Base Rent plus
Allowance Amortization charge in effect during the immediately
preceding Lease Year.
3.3 Tenant Improvement Allowance Amortization. As more particularly
provided in section 5 of this Addendum, LESSOR will provide a Tenant
Improvement Allowance ("Allowance") to pay a portion of the Tenant
Improvement Costs (as defined below). The term "Allowance Amortization
Charge" means an amount to be added to the Base Rent, and shall be
payable by LESSEE as a part of the Rent from and after the
Commencement Date, which is calculated as follows: (a) determine the
aggregate amount of the Allowance expended by LESSOR for the Tenant
Improvements Costs; (b) amortize the amount of the Allowance based on
an economic return equivalent to eleven percent (11 %) per annum to
derive a monthly payment sufficient to pay in full an amount equal to
the Allowance and such economic return over a period of time from the
Commencement Date to the end of the Lease term specified in Lease
Paragraph 1.3; and (c) the resulting monthly payment shall equal the
Allowance Amortization Charge. If the amount of the Allowance
Amortization Charge is determined after the Commencement Date on
account of a delay in finalizing the Tenant Improvement Costs, then
LESSEE shall pay LESSOR the amount accruable from the Commencement
Date to the end of the then current month, adjusted for any Free Rent
within fifteen (15) days after LESSOR's billing for such accrued
amounts, and shall thereafter pay the monthly Allowance Amortization
Charge with each payment of Base Rent. LESSEE shall have the right to
pay in full the remaining unamortized balance of the Allowance during
the last thirty (30) days of any Lease Year, provided that any such
payment must be in the full amount of the unamortized balance of the
Allowance as of the date of the payment, and LESSOR shall not be
obligated to accept any lesser payment or payments at any other time.
Upon LESSEE's full payment of the unamortized balance of the
Allowance, the Allowance Amortization Charge shall no longer be
payable by LESSEE as additional rent.
4. LESSEE's Share of Common Area Operating Expenses. The LESSEE's
Share of Common Area Operating Expenses stated in Paragraph 1.6(b) of
the Lease is an estimate based on the estimated rentable square feet
to be included in the Industrial Center, the Building and the
Premises. Following completion, the actual percentage will be adjusted
to equal a percentage determined by dividing the rentable square feet
in the Premises by the total rentable square feet, as certified by
LESSOR, in the Industrial Center. Notwithstanding any other provision
of the Lease, LESSOR agrees that the property management fee allocable
to LESSEE's Share of Common Area Operating Expenses shall not exceed
two percent (2%) of the Base Rent. In addition, LESSEE shall have the
right, at its expense, to audit or otherwise inspect the books and
records of LESSOR regarding the calculation of the Common Area
Operating Expenses.
5. Building Shell Improvements and Tenant Improvements. LESSOR, at its
expense, shall construct the Building Shell Improvements. The phrase
"Building Shell Improvements" means the improvements comprising the
Building to be constructed as shown in the Building Shell Plans and
the Building Shell Specifications, including (a) roofing, fascia,
exterior walls, doors and windows, and truck doors (both at grade and
at dock level), (b) footings and concrete floors, (c) fire sprinkler
system, (d) conduits and pipes for telephone, electricity, water, fire
sprinklers and sewer brought to "stub out", termination points in or
above a perimeter wall of the Premises, (e) a main electrical
termination panel for the Building, (f) paving and finish of parking
areas, entrance areas and walkways, (g) landscaping for the Industrial
Center as reasonably determined by LESSOR, and (h) site improvements
consisting of street, gutters, sidewalks, curbs, storm drains and
erosion control (construction period and permanent) as required to
comply with governmental requirements
5.1 Tenant Improvements. The phrase "Tenant Improvements" means all
interior improvements which are not a part of the Building Shell
Improvements, including (a) partitions, walls, doors, (b) all interior
surface finishes, including wall coverings, paint, floor coverings,
suspended ceilings and other similar items, (c) duct work, heat pumps,
vents, filters, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within
the Premises, (d) electrical distribution systems (including panels,
subpanels, wires and outlets), lighting fixtures, outlets, switches
and other electrical work to be installed in the Premises, (e)
plumbing lines, fixtures and accessories, (f) all fire and life safety
control systems such as fire walls and fire alarms (including piping,
wiring and accessories) to be located in the Premises, (g) entrance
door signage and directory listings, as authorized by LESSOR, (h)
improvements required for compliance with Title 24, (i) level
mechanism for load docks; provided, however, LESSEE's trade fixtures,
equipment and personal property (including telephone systems, chairs,
tables, furniture, movable partitions and other equipment used in
LESSEE's business) shall not be considered part of the Tenant
Improvements.
5.2 Design of Tenant Improvements. LESSEE shall furnish to LESSOR for
its approval, a space plan showing the configuration of the Improved
Office Space no later than May I5, 1998, which shall be the Approved
Space Plan following LESSOR's approval. LESSEE shall furnish to LESSOR
a complete set of plans and specifications detailing all Tenant
Improvements no later than June 30, 1998 ("Tenant Improvement Plans).
Unless otherwise approved by LESSOR, the Tenant Improvement Plans will
be prepared by the Architect, who shall also obtain permits for the
plans. Should Architect, in LESSEE's sole opinion, not progress in a
timely fashion to meet the June 30, 1998, requirement for the Tenant
Improvement Plans, LESSEE may select a different architect/space
planner to develop the Tenant Improvement Plans. In such event, all
expenses incurred by LESSOR's Architect shall not be part of the
Allowance, and all expenses incurred by LESSEE's architect shall be
part of the Allowance and shall be reimbursed by LESSOR to LESSEE on a
monthly basis. Further, the June 30, 1998, date outlined herein shall
be adjusted forward by the amount of days from May 15, 1998 to the
date LESSEE gives written notice of its election to terminate
Architect. If LESSEE does not execute and deliver the Lease on or
before March 1, 1998, or if LESSEE delays in providing the Approved
Space Plan and/or the Tenant Improvement Plans such delays shall not
change the Commencement Date of the Lease, which shall be the date the
Premises would have been available for occupancy, but for any such
delay; provided such delays will delay the date for Substantial
Completion. The Tenant Improvement Plans shall be subject to LESSOR's
prior approval, which will not be unreasonably withheld; provided,
however, LESSOR shall have the absolute right of disapproval, in its
sole discretion, of any Tenant Improvements which (a) alter or
otherwise affect any structural component of the Building, (b) are
visible from the exterior of the Premises, (c) do not conform to the
Approved Space Plan for the Improved Office Space, or (d) the Tenant
Improvement Plans specify materials which are not readily available or
customarily and ordinarily used in similarly situated construction
work where the procurement of such materials would cause a delay in
Substantial Completion. LESSOR shall respond within fifteen (15) days
after receipt of the Tenant Improvement Plans in which to approve or
disapprove in writing the Tenant Improvement Plans. If LESSOR
disapproves the Tenant Improvement Plans, it shall state with
specificity the reasons for such disapproval. If LESSOR reasonably
disapproves the Tenant Improvement Plans, LESSEE shall promptly cause
the Tenant Improvement Plans to be revised and resubmitted to LESSOR
for its review and approval within fifteen (15) days from notice of
LESSOR's disapproval. Following LESSOR's approval, LESSOR will have
the Architect submit the Tenant Improvement Plans for government plan
checking and a building permit, if required, provided, LESSOR shall
have the right to approve any changes required by such governmental
authorities. The final Tenant Improvement Plans shall be subject to
any changes required by governmental authorities.
5.3 Approved Contractor. Hamann Construction, a licensed general
contractor, will be the general contractor for construction of the
Building Shell Improvements and Tenant Improvements. LESSOR and LESSEE
hereby approve Hamann Construction acting as the general contractor
("Contractor"). Contractor's agreed-upon markup (profit and overhead)
for the Tenant Improvements will be 12% of the actual costs incurred
in the development and construction of the Tenant Improvements
exclusive only of the costs of the preparation of the Tenant
Improvement Plans and government permits. LESSEE shall have the right
to review the subcontract proposals ("Bids") for the Major Trades (as
defined below) required for construction of the Tenant Improvements.
No later than thirty (30) days prior to the commencement of
construction, LESSOR shall cause Contractor to deliver to LESSEE Bids
for each Major Trade from no less than three (3) licensed and
qualified subcontractors together with a written notice specifying the
Bids which Contractor recommends for acceptance. LESSEE shall have the
right to reasonably disapprove one of the Bids for each of the Major
Trades selected by Contractor by giving LESSOR written notice of any
objection that LESSEE may have to such Bids within five (5) days from
LESSEE's receipt of the Bids from Contractor; provided, however,
LESSEE shall not have the right to disapprove more than one (1) bid
within a Major Trade, and Contractor shall have the right to select
any of the remaining Bids in such Major Trade category. LESSEE's
notice of disapproval shall explain in detail the basis for the
disapproval of any Bid recommended by Contractor. Contractor shall
have the right to utilize any subcontractors submitting Bids for which
LESSEE does not timely give notice of its disapproval. The term "Major
Trades" means portions of the construction work: consisting of the
supply or installation of electrical, heating and air conditioning,
fire sprinkler system, framing, drywall, plumbing, painting, floor
coverings, suspended ceilings, glass, doors and ceramic tile.
5.3.1 Project Schedule. Contractor shall provide to LESSEE a project
schedule for both the Shell Building and the Tenant Improvements
within three months of the execution of the Lease. Thereafter,
Contractor shall provide LESSEE monthly updates to the Project
Schedule.
5.4 Allowance for Tenant Improvement Costs. LESSOR agrees to pay a
maximum of $980,000.00 ("Allowance") for Tenant Improvement Costs as
defined below. The Allowance shall be applied solely to pay the cost
of such Tenant Improvements, and under no circumstances shall LESSEE
be entitled to any payment on account of any unused, portion of the
Allowance following completion of the Tenant Improvements and payment
of the Tenant Improvement Costs. The amount of the Allowance actually
advanced by LESSOR shall be used to calculate the amount of the
Allowance Amortization Charge described in subsection 3.3 of this
Addendum.
5.4.1 Excess Costs Payable BY LESSEE. LESSEE will be responsible for
payment of any excess Tenant Improvement Costs which exceed the amount
of the Allowance payable by LESSOR under subsection of this Addendum.
LESSEE shall deposit funds with LESSOR (or make such other
arrangements to guaranty payment of such excess costs as are
acceptable to LESSOR) in an amount equal to such excess prior to the
issuance of the building permit for construction of the Tenant
Improvements, except in the case of excess costs resulting from
changes during construction.
Any construction changes shall be subject to LESSOR's approval and
LESSEE shall deposit funds with LESSOR to pay such costs within five
(S) days following notice of Contractor's cost for any change.
5.5 Completion and Acceptance of Building Shell and Tenant
Improvements. The Commencement Date of the Lease shall not occur until
Substantial Completion (as defined in subsection 5.5.1 of this
Addendum) of the Building Shell Improvements reasonably required for
occupancy of the Building, and the Tenant Improvements.
Notwithstanding the preceding provisions, if Substantial Completion is
delayed on account of LESSEE's failure to timely submit the Tenant
Improvement Plans (or any revisions thereto), LESSEE's request for
special materials, finishes or installations (i.e. materials which are
not readily available or customarily and ordinarily used in similarly
situated construction work) not shown in the Tenant Improvement Plans
as approved by LESSOR, changes to the Approved Space Plan or approved
Tenant Improvement Plans requested by LESSEE or other delays caused by
LESSEE, the Commencement Date of this Lease shall occur prior to
Substantial Completion and as of the date Substantial Completion would
have occurred but for such delays by LESSEE. Notwithstanding the
foregoing, a delay in Substantial Completion attributable to LESSEE
for actions other than those deadlines outlined in section
5.2 shall not be deemed to have occurred unless LESSOR gives LESSEE
notice of its action causing such delay and LESSEE fails to take
actions necessary to prevent a delay of LESSEE's obligations hereunder
condoning for three days after receipt of written notice from LESSOR
specifying LESSEE's action which will cause such delay.
5.5.1 "Substantial Completion" Defined. The term Substantial
Completion" means the date upon which LESSOR reasonably satisfies all
of the following requirements: (a) the construction of the applicable
Building Shell Improvements is substantially completed, subject only
to minor corrective work which does not affect or limit LESSEE's use
of the Premises; provided, LESSOR shall complete any such minor work
within thirty (30) days; (b) the construction of the applicable Tenant
Improvements is substantially completed in accordance with the Tenant
Improvement Plans as modified only by any changes requested by LESSEE
and approved by LESSOR or as otherwise permitted by this Lease,
subject only to minor corrective work which does not affect or limit
LESSEE's use of the Premises; provided, LESSOR shall complete any such
minor work within thirty (30) days; (c) LESSOR has procured a
certificate of occupancy (whether temporary or permanent) or other
applicable permit permitting LESSEE's immediate use and occupancy of
the Building; and (d) LESSOR has given LESSEE written notice stating
that such Substantial Completion has occurred and that the Premises
are available for LESSEE's immediate possession and occupancy ("Notice
of Possession"). LESSOR shall give LESSEE at least ten (10) days
written notice in advance of the estimated date of Substantial
Completion.
5.5.2 Condition of Premises. Prior to the Commencement Date, LESSEE
and LESSOR shall conduct a walk-through inspection of the Premises and
prepare and sign a punch-list of all items needing additional work by
LESSOR, and LESSEE shall thereafter have an additional sixty (60) days
in which to identify to LESSOR any construction deficiencies or
defects which were not readily observable at the time of the
preparation of the first punch-list, whereupon say items so identified
in no more than three (3) additional punch-lists and agreed to by
LESSOR following consultation with LESSEE, will be added to the final
punch-list. The punch-lists to be prepared by LESSEE shall not include
any damage to the Premises caused by LESSEE's move-in, which damage
shall be repaired or corrected by LESSEE, at its expense. If LESSEE
fails to submit the final punch-list to LESSOR within the sixty (60)
day period immediately following the Commencement Date, it shall be
deemed that there are no items needing additional work or repair.
LESSOR's contractor shall complete all reasonable punch-list items
within thirty (30) days after the walk-through inspection and within
thirty (30) days following LESSOR's receipt of any additional
punch-lists, or as soon as practicable thereafter. Upon LESSOR or
LESSOR's contractor's indication to LESSEE of the completion of such
punch-list items, LESSEE shall acknowledge the completion of such
items in writing to LESSOR. If LESSEE fails either to so acknowledge
the completion of such items within seven (7) days of such stated
completion or within such seven day period to specify in writing to
LESSOR in reasonable detail any such previously listed punch-list
items that remain uncompleted, all such items shall be deemed approved
by LESSEE.
5.6 LESSOR's Enforcement of Contractor Warranties. LESSOR has obtained
from Contractor the following warranties ("Contractor Warranties"):
"CONTRACTOR unconditionally warrants all materials and equipment
furnished under this Contract will be new, unless otherwise specified,
and that all Work will be of good quality, free from material faults
and defects and in conformance with the Contract Documents.
CONTRACTOR, at its expense, shall repair or replace any Work requiring
replacement or repair within one (1) year from completion of the
Project, except with respect to the roof membrane only, which
CONTRACTOR will repair or replace within two (2) years as required to
prevent water penetration. In the event CONTRACTOR fails to timely
perform its warranty obligation, OWNER shall have the right to cause
such repairs or replacements and CONTRACTOR shall be liable for the
reasonable costs of such repairs or replacements.
LESSOR agrees to take such commercially reasonable action as necessary
to enforce such Contractor Warranties for the repair or maintenance of
the Premises on account of any items covered by the Contractor
Warrantees, including patent or latent defects or deficiencies in the
Premises.
5.6.1 Exclusion From Common Area Operating Expenses. Notwithstanding
any other provision, any costs of repairs or replacement of any patent
or latent defect or deficiency identified during the period the
applicable Contractor Warranties remain in effect shall not be
included in calculating Common Area Operating Expenses.
5.7 LESSEE's Fixturization. No later than thirty (30) days prior to
the expected date of Substantial Completion of the Building, LESSOR
shall permit LESSEE to enter upon the Premises for the purposes of
permitting LESSEE to commence installation of LESSEE's machinery and
trade fixtures ("Fixturization Period"). LESSEE agrees to carry out
such work in such manner as will not interfere with Contractor's work.
LESSOR shall not be responsible for securing the Premises or liable
for any loss or damage to any such machinery or trade fixtures
installed by LESSEE prior to the delivery of possession of the
Premises. LESSEE shall not be responsible for payment of any of the
Rent during the Fixturization Period, provided LESSEE shall be
responsible for compliance with all other terms and conditions of the
Lease, including the provisions in Paragraph 8 of the Lease requiring
LESSEE to maintain certain insurance.
6. Hazardous Materials Questionnaire. Without limiting LESSEE's
obligations under Paragraph 6 of the Lease regarding compliance with
Hazardous Substance Laws, LESSEE shall, within ten (10) days from the
execution of the Lease, complete and deliver to LESSOR for its filing
with applicable government authorities a Hazardous Materials
Questionnaire in the form as set forth in EXHIBIT "4" annexed to this
Addendum.
7. Additional Provisions Regarding Financial Statements.
Notwithstanding the provisions of Paragraph 16.2 of the Lease, LESSOR
agrees to accept the audited financial statements of Guarantor in lieu
of separate financial statements from LESSEE so long as LESSEE's
financial performance is reported only as a part of Guarantor's
consolidated financial statements; provided, however, LESSEE agrees to
cooperate with LESSOR to provide information concerning LESSEE's
separate business and financial affairs to the extent required by
LESSOR's lender.
8. Option to Extend. Subject to the provisions of Paragraph 39 of the
Lease, LESSEE shall have the option to extend the Lease Term for one
additional term of five (5) years, which option is exercisable only by
LESSEE giving LESSOR written notice of the election to exercise such
option ("Election Notice") no earlier than twelve (12) months and no
later than nine (9) months before the expiration of the Original Term.
If LESSEE fails for any reason to timely give such Election Notice,
such option rights shall automatically terminate and be of no further
force or effect and LESSEE shall not have any other right to extend
the Original Term.
8.1 Remaining Lease Terms. Except as provided in this subsection and
in subsection 8.2 of this Addendum, if LESSEE elects to extend the
Original Term, all other terms and conditions of the Lease shall
remain in effect during such extended term except: (a) no tenant
improvements or allowances shall be provided by LESSOR, and LESSEE
shall be deemed to have extended the term of the Lease and accepted
the Premises "AS IS" in their then-existing condition and without
representation or warranty from LESSOR; (b) upon expiration of the
five (5) year extension, LESSEE shall have no further right to extend
the term of the Lease; and (c) the Base Rent applicable during the
option term shall be determined in accordance with subsection 8.2 of
this Addendum.
8.2 Adjustment to Base Rent. The Base Rent for the extension period
shall be an amount equal to the "far rental value" of the Premises as
determined in the following manner:
(a) Within thirty (30) days from LESSEE's Election Notice, LESSOR
and LESSEE shall meet in an effort to negotiate, in good faith, the
fair rental value of the Premises for the option period. If LESSOR and
LESSEE have not agreed upon the fair rental value of the Premises at
least ninety (90) days prior to the beginning of the applicable option
period, the fair rental value shall be determined by appraisal, by one
or more appraisers ("Appraiser(s)"). The Appraisers shall have at
least five (5) years experience in the appraisal of
commercial/industrial real property in the area in which the Premises
is located and shall be members of professional organizations such as
M.A.I. or equivalent.
(b) If LESSOR and LESSEE are not able to agree upon the fair
rental value of the Premises within the prescribed time period, then
LESSOR and LESSEE shall attempt to agree in good faith upon a single
Appraiser not later than seventy-five (75) days prior to the beginning
of the applicable option period. If LESSOR and LESSEE are unable to
agree upon a single Appraiser within such time period, then LESSOR and
LESSEE shall each appoint one Appraiser not later than sixty-five (65)
days prior to the beginning of the applicable option period. Within
ten (10) days thereafter, the two (2) appointed Appraisers shall
appoint a third Appraiser. If either LESSOR or LESSEE fails to appoint
its Appraiser within the prescribed time period, the single Appraiser
appointed shall determined the fair rental value of the Premises. If
both parties fail to appoint Appraisers within the prescribed time
periods, then the first Appraiser thereafter selected by a party shall
determine the fair rental value of the Premises. Each party shall bear
the cost of its own Appraiser and the parties shall share equally the
cost of the single or third Appraiser, if applicable.
(c) For the purposes of such appraisal, the term "fair rental
value. shall mean the price that a ready and willing tenant would pay,
as of the beginning of the applicable option period, as monthly rent
to a ready and willing landlord of property comparable to the Premises
if such property were exposed for lease on the open market for a
reasonable period of time and taking into account all of the purposes
for which such property may be used. If a single Appraiser is chosen,
then such Appraiser shall determine the fair rental value of the
Premises. Otherwise, the fair rental value of the Premises shall be
the arithmetic average of the two (2) of the three (3) appraisals
which are closest in amount, and the third appraisal shall be
disregarded. LESSOR and LESSEE shall instruct the Appraiser(s) to
complete the determination of the fair rental value not later than
thirty (30) days prior to the beginning of the applicable option
period. If the fair rental value is not determined prior to the
beginning of the, option period, then LESSEE shall continue to pay to
LESSOR the Base Rent applicable to the Premises immediately prior to
such extension, until the fair rental value is determined. When the
fair rental value of the Premises is determined, LESSOR shall deliver
notice thereof to LESSEE, and if the fair rental value is higher,
LESSEE shall pay to LESSOR, within ten (10) days after receipt of such
notice, the difference between the Base Rent actually paid by LESSEE
to LESSOR and the new Base Rent determined hereunder.
(d) Notwithstanding any other provision of this Lease, in no event
shall the Base Rent in effect for the last year of the Original Term
be decreased on account of the operation of this section.
9. Corporate Resolution. Within ten (10) days of Lease execution,
LESSEE shall provide LESSOR with a certified copy of a Corporate
Resolution authorizing William L. Stephan sign this Lease on behalf of
DATRON WORLD COMMUNICATIONS INC.
10. Estimated Operating Expense Budget. A copy of the 1998 Estimated
Common Area Operating Expenses Budget is attached to this Addendum as
EXHIBIT "5". LESSEE acknowledges that (a) this estimate is being
provided only to illustrate the projected amounts and categories of
expense and that actual results may be different than the estimates;
and (b) it is aware that amounts and categories of expense may vary in
future years as the Premises ages. Common Area Operating Expenses
shall not increase by more than five percent (5%) per year
cumulatively not including property taxes.
11. Current Rules and Regulations. Pursuant to Paragraph 2.9 of the
Lease, LESSOR has adopted the Rules and Regulation annexed to this
Addendum as EXHIBIT "6", and such Rules and Regulations shall remain
in effect until changed by LESSOR in accordance with the Lease.
12. Security Deposit. If LESSEE is not in default at Commencement of
the Lease then 1/2 of the security deposit under section 1.7 of the
Lease will be applied to the second month's rent, when due.
13. Signage. LESSEE shall be granted primary building signage (two
sides of the building) and monument signage at the entrance and corner
of the site. If a single user moves into the balance of the Project,
they will be permitted to install a sign on their end of the building.
If the building is leased to multiple tenants, they will be limited to
door signage.
14. Additional Provisions Regarding Parking. Notwithstanding any other
provision, LESSEE shall have the right to mark any of the parking
spaces set aside on EXHIBIT "1" as LESSEE's parking spaces with
carefully painted lettering or logo identifying LESSEE not exceeding
18" by 12".
15. Antennas. Subject to LESSEE's compliance, at its expense, with all
Applicable Laws as defined in subparagraph 2.4 of the Lease, LESSOR
consents to LESSEE's installation of one 60' tower and three 20' whip
antennas at the locations shown on EXHIBIT "1". Said tower and
antennas shall be for the private use of the LESSEE and not for any
other commercial purpose.
16. Additional Provisions Regarding Common Area Operating Expenses.
(e) Common Area Operating Expenses shall include reasonable
expenditures which would be capitalized in accordance with generally
accepted accounting principles, but such expenditure shall be prorated
on an annual basis over the useful life of the improvement or facility
so replaced or rehabilitated, and from the date of any expenditure,
there shall be included in Common Area Operating Expenses during any
single Lease Year only the pro rata portion of that expenditure as is
properly allocable to such Lease Year. Common Area Operating Expenses
shall not include:
(1) the cost of any additional or extraordinary services provided
to other tenants of the Building;
(2) costs paid for directly by LESSEE;
(3) principal and interest payments on loans secured by deeds of
trust recorded against the Industrial
Center;
(4) real estate sales or leasing brokerage commissions;
(5) executive salaries of off-site personnel employed by LESSOR
except for the charge (or pro rata share) of the manager of the
Industrial Center;
(6) expenses for repairs or other work occasioned by fire,
windstorm or other insured casualty (excluding any insurance
deductible therefrom);
(7) expenses incurred in leasing or procuring new tenants,
including any advertising costs associated with vacant spaces in the
Premises, Building or Industrial Center;
(8) legal expenses incurred in enforcing or negotiating the terms
of any lease, or in connection with any financing or syndication of
the Industrial Center;
(9) interest or amortization payments on any debt and rent
payable under any lease to which this Lease is subject and all costs
and expenses associated with any such debt or lease;
(10) expenses incurred by LESSOR to the extent the same are
reimbursed from any other tenant, occupants of the Industrial Center
or third parties (other than as Common Area Operating Expenses
reimbursed or other similar reimbursement from such other parties);
and
(11) interest or penalties due for late payment by LESSOR, of any
Common Area Operating.
17. Additional Provisions Regarding Assignment and Subletting. Subject
to Subparagraph 12.2 of the Lease and except as provided in subsection
17.2 below, LESSOR agrees to consent to LESSEE's assignment of the
Lease or any subleasing of a portion of the Premises in any Permitted
Transaction (as defined below); provided, however, any such assignment
or subleasing shall not release or otherwise affect the liability of
LESSEE, or any Guarantor, for the obligations under this Lease.
17.1 "Permitted Transaction" Defined. The phrase Permitted
Transaction" means and refers to an assignment or sublease in
connection with a transaction being undertaken in good faith and not
for the purpose of indirectly subletting or assigning the Lease
through a step transaction or otherwise, and which meets any one of
the following requirements:
(a) an assignment or sublease to a subsidiary, affiliate, division
or corporation controlling, controlled by or under common control with
LESSEE;
(b) an assignment or sublease to a successor corporation related
to LESSEE by merger, consolidation, nonbankruptcy reorganization or
government action;
(c) an assignment of the Lease or sublease to another entity,
which is not affiliated with LESSEE ("Unaffiliated Transferees) in
conjunction with the concurrent good faith sale and transfer to such
Unaffiliated Transferee of substantially all of LESSEE's assets; or
(d) LESSEE's sale of capital stock through the NYSE, AMEX or any
other major public exchange, and any such sale shall not be deemed an
assignment, subletting or ocher transfer of this Lease or the Premises
requiring LESSOR's consent.
17.2 Exception. Prior to the consummation of any Permitted
Transaction, LESSEE shall cause the proposed assignee or subtenant to
complete and submit to LESSOR a Hazardous Materials Questionnaire in
the form as set forth in EXHIBIT "4" signed by the proposed assignee
or subtenant. Notwithstanding any other provision, LESSOR shall have
the right to decline to consent to any Permitted Transaction in which
the assignee's or subtenant's use of the Premises would increase the
risk of contamination of any Hazardous Substance as compared to the
risk presented by LESSEE's use of the Premises.
17.3 Additional Rental. Except in the case of a Permitted Transaction,
fifty percent (50%) of any sums or other economic consideration
(without deduction) received by LESSEE as a result of an assignment or
subletting to which LESSOR has consented, whether denominated rentals
under the assignment or sublease or otherwise, which exceed, in the
aggregate, the total sums which LESSEE is obligated to pay LESSOR
under this Lease (prorated to reflect obligations allocable to that
portion of the Premises subject to a sublease) shall be payable to
LESSOR as additional rental under this Lease without affecting or
reducing any other obligation of LESSEE under this Lease. Such amounts
shall be due and payable within fifteen (15) days from LESSEE's
receipt. In the event of subletting of only a portion of the Premises,
in calculating whether the rent received by LESSEE exceeds the rent
payable under this Lease, the rent payable under the Lease shall be
prorated according to the square footage involved in order to reflect
the rent applicable to the space sublet. In no event shall this
provision be construed or applied to reduce the Base Rent or other
charges payable by LESSEE under this Lease, nor modify, waive or
otherwise affect LESSOR's rights and remedies in the event of a
sublease or assignment (other than a Permitted Transaction) without
LESSOR's consent. In the cases of an assignment or sublease (other
than a Permitted Transaction) to which LESSOR has not given its
consent, in addition to all other rights and remedies, LESSOR may
elect, by giving LESSEE written notice, to adjust the rentals payable
under this Lease based on the then fair rental value of the Premises.
18. Additional Provisions Regarding Holdover. If LESSEE remains in
possession of all or any part of the Premises after the expiration of
the Term, with the consent of LESSOR, such tenancy shall be from
month-to-month only and not a renewal hereof or any extension for any
further teen, and in such case, Base Rent shall be increased to an
amount equal to one hundred fifty percent (150%) of the Base Rent paid
during the last month of the Term and all other sums due hereunder
shall be payable in the amount and at the time applicable at the time
of expiration and at the time specified in this Lease and such
month-to-month tenancy shall be subject to every other term, covenant
and agreement of this Lease.
"LESSOR"
NORTH COUNTY INDUSTRIAL PARK, L.P.,
a California limited partnership
By: WHAMMY, INC.,
a California corporation, General Partner
Dated: 3/24/1998 By: /S/JEFFREY C. HAMMAN
President
Dated: 3/30/1998 By: /s/DANIEL M. WHITAKER
Secretary
"LESSEE"
DATRON WORLD COMMUNICATIONS INC.,
a California corporation
Dated: March 23, 1998 By: /s/WILLIAM L. STEPHAN
Secretary/Treasurer