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EXHIBIT 10.9
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference
purposes only, March 28, 1996, is made by and between Nordhoff Industrial
Complex, a California General Partnership ("Lessor") and Netcom Systems, Inc., a
California corporation ("Lessee"), (collectively, the "Parties," or individually
a "Party").
1.2 Premises: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known by the street address of 20500 Nordhoff Street, Chatsworth,
located in the County of Los Angeles, State of California, and generally
described as (describe briefly the nature of the property) an approximately
23,014 square foot concrete tilt-up building situated on approximately 47,045
square feet of land, zoned MR-2. CC&R's attached hereto and made a part of this
Lease by reference ("Premises"). (See Paragraph 2 for further provisions.)
1.3 Term: Five (5) years and 0 months ("Original Term")
commencing April 15, 1996 ("Commencement Date") and ending April 14, 2001
("Expiration Date"). (See Paragraph 3 for further provisions.
1.4 Early Possession: See Addendum Paragraph 49 ("Early
Possession Date"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent: $16,800.00 per month ("Base Rent"), payable
on the first day of each month commencing See Addendum 49. (See Paragraph 4 for
further provisions.) [X] If this box is checked, there are provisions in this
Lease for the Base Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $16,800.00 as Base Rent
for the Base rent for first month of Lease term.
1.7 Security Deposit: $16,800.00 ("Security Deposit"). (See
Paragraph 5 for further provisions.)
1.8 Permitted Use: Assembly, distribution and sales of
computer network test equipment and related legal uses. (See Paragraph 6 for
further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party" unless
otherwise stated herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
DELPHI BUSINESS PROPERTIES represents
[ ] Lessor exclusively ("Lessor's Broker"); [X] both Lessor and Lessee, and
represents
[ ] Lessee exclusively ("Lessee's Broker"); [ ] both Lessee and Lessor.
(See Paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this
Lease are to be guaranteed by: N/A ("Guarantor"). (See Paragraph 37 for further
provisions.)
1.12 Addenda. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 61 and Exhibits ___ all of which constitute
a part of this Lease.
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2. Premises.
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, is an approximation
which Lessor and Lessee agree is reasonable and the rental 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, fire sprinkler system, lighting, air conditioning,
heating, and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall 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 non-compliance with this warranty within
thirty (30) 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 to Lessee that the improvements on the Premises comply
with all applicable covenants or restrictions of record and applicable building
codes, regulations and ordinances in effect on the Commencement Date. Said
warranty does not apply to the use to which Lessee will put the Premises or to
any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made
or to be made by Lessee. If the Premises do not comply with said warranty,
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 the same at Lessor's expense. If Lessee
does not give Lessor written notice of a non-compliance with this warranty
within six (6) months following the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a)
that it has been advised by the Brokers 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, compliance with Applicable
Law, as defined in Paragraph 6.3) 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 and assumes all
responsibility therefor as the same relate to Lessee's occupancy of the Premises
and/or the term 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 the said matters other than as set forth in this Lease.
2.5 Lessee 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.
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 Lessee totally or partially
occupies the Premises prior to the Commencement Date, the obligation to pay Base
Rent shall be abated for the period of such early possession. All other terms of
this Lease, however, (including but not limited to the obligations to pay Real
Property Taxes and insurance premiums and to maintain the Premises) 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 as agreed herein by the Early
Possession Date, if one is specified in Paragraph 1.4,
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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 perform 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 thereafter, cancel this
Lease, in which event the Parties shall be discharged from all obligations
hereunder; provided, however, that if such written notice by Lessee is not
received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease shall terminate and be of no further force or effect. Except as may
be otherwise provided, and regardless of when the 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 what Lessee
would otherwise have 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 cause payment of Base Rent and
other rent or charges, as the same may be adjusted from time to time, to be
received by Lessor in lawful money of the United States, without offset or
deduction, on or before the day on which it is due under the terms of this
Lease. Base Rent and all other rent and charges for any period during the term
hereof which is for less than one (1) full calendar month shall be prorated
based upon the actual number of days of the calendar 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.
5. Security Deposit. Lessee shall deposit with Lessor upon
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 therefor deposit moneys with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Any time the Base Rent
increases during the term of this Lease, Lessee shall, upon written request from
Lessor, deposit additional moneys with Lessor sufficient to maintain the same
ratio between the Security Deposit and the Base Rent as those amounts are
specified in the Basic Provisions. 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 Lessor's 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
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any moneys to be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for
the purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of the
premises in a manner that creates waste or a nuisance, or that disturbs owners
and/or occupants of, or causes damage to, neighboring premises or properties.
Lessor hereby agrees to not unreasonably withhold or delay its consent to any
written request by Lessee, Lessees assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not impair structural integrity of the
improvements on the Premises, the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises and the improvements thereon,
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to
withhold such
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consent, Lessor shall within five (5) business days give a written notification
of the 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 term
"Hazardous Substance" as used in this Lease shall mean any product, substance,
chemical, material or waste whose presence, nature, quantity and/or intensity of
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 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, by-products or fractions
thereof. Lessee shall not engage in any activity in, on 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 Law (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.
Reportable Use shall also include Lessee's being responsible for the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Law requires 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 in compliance with all Applicable Law,
use any ordinary and customary materials reasonably required to be used by
Lessee in the normal course of Lessee's business permitted on the Premises, 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 the use or presence of any
Hazardous Substance, activity or storage tank 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 therefrom or therefor,
including, but not limited to, the installation (and 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, or a condition
involving or resulting from same, has come to be located in, on, under or about
the Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. Lessee shall also
immediately give Lessor a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action or proceeding given
to, or received from, any governmental authority or private party, or persons
entering or occupying the Premises, concerning the presence, spill, release,
discharge of, or exposure to, any Hazardous Substance or contamination in, on,
or about the Premises, including but not limited to all such documents as may be
involved in any Reportable Uses involving the Premises.
(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 loss of
rents and/or damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, permits and attorney's and consultant's fees arising out of or
involving any Hazardous Substance or storage tank brought onto the Premises by
or for Lessee or under Lessee's control. Lessee's obligations under this
Paragraph 6 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 consultant's and
attorney's 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 or storage
tanks, unless specifically so agreed by Lessor in writing at the time of such
agreement.
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6.3 Lessee's Compliance with Law. Except as otherwise
provided in this Lease, Lessee, shall, at Lessee's sole cost and expense, fully,
diligently and in a timely manner, comply with all "Applicable Law," which term
is used in this Lease to include 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 consultants, relating in any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or 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 or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. 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 Law 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 Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s)
(as defined in Paragraph 8.3(a)) 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 Laws (as defined in
Paragraph 6.3), and to employ experts and/or consultants in connection therewith
and/or to advise Lessor with respect to Lessee's activities, including but not
limited to the installation, operation, use, monitoring, maintenance, or removal
of any Hazardous Substance or storage tank 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, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or 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 any 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
(Lessor's warranty as to condition), 2.3 (Lessor's warranty as to compliance
with covenants, etc), 7.2 (Lessor's obligations to repair), 9 (damage and
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, structural and non-structural (whether or not such
portion of the Premises requiring repairs, 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 serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrant fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control. 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
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thereon or a part thereof in good order, condition and state of repair. If
Lessee occupies the Premises for seven (7) years or more, Lessor may require
Lessee to repaint the exterior of the buildings on the Premises as reasonably
required, but not more frequently than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in, the
inspection, maintenance and service of the following equipment and improvements,
if any, located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 Lessor's Obligations. Except for the warranties and
agreements of Lessor contained in Paragraphs 2.2 (relating to condition of the
Premises), 2.3 (relating to compliance with covenants, restrictions and building
code), 9 (relating to destruction of the Premises) and 14 (relating to
condemnation of the Premises), it is intended by the Parties hereto that Lessor
have no obligation, in any manner whatsoever, to repair and maintain the
Premises, the improvements located thereon, or the equipment therein, whether
structural or non structural, all of which obligations are intended to be that
of the Lessee under Paragraph 7.1 hereof. It is the intention of the Parties
that the terms of this Lease govern the respective obligations of the Parties as
to maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of, any needed repairs.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility
Installations" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, heating,
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 that can be removed without doing material damage to the Premises. The
term "Alterations" shall mean any modification of the improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "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 as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof), as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as extended does not exceed $25,000.
(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 Lessor in written form with proposed 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: (i) 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 in
compliance with all Applicable Law. Lessee shall promptly upon completion
thereof furnish 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 $10,000 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
and/or upon Lessee's posting an additional Security Deposit with Lessor under
Paragraph 36 hereof.
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(c) Indemnification. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use on the Premises, which claims are or may be secured by
any mechanics' 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, 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 the 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 or become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Additions 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 and be surrendered by Lessee with
the Premises.
(b) Removal. Unless otherwise agreed in writing,
Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or earlier termination of this Lease,
notwithstanding their installation may have been consented to by Lessor. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations 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, with all of the improvements, parts and surfaces thereof 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 in writing by Lessor, the Premises, as
surrendered, shall include the 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
Alterations and/or 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 Law 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 for Insurance. Regardless of whether the Lessor
or Lessee is the Insuring Party, Lessee shall pay for all insurance required
under this Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor in excess of $1,000,000 per occurrence.
Premiums for policy periods commencing prior to or extending beyond the Lease
term shall be prorated to correspond to the Lease term. Payment shall be made by
Lessee to Lessor within ten (10) days following receipt of an invoice for any
amount due.
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 and Lessor (as an
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additional insured) 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" 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 "insure a contact" 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. In the event Lessor is the
Insuring Party, 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 Properly Insurance-Building, Improvements and Rental
Value.
(a) Building and Improvements. The Insuring Party
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 the holders
of any mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Premises. The amount of such insurance shall be
equal to the full replacement cost of the Premises, as the same shall exist from
time to time, or the amount required by Lenders, 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. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such 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 any undamaged sections of the Premises 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 cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance 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. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in
addition, 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 Lender(s),
insuring the loss of the full rental and other charges payable by Lessee to
Lessor under this Lease for one (1) year (including all real estate taxes,
insurance costs, and any scheduled rental increases). Said insurance shall
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, property taxes, insurance premium costs and other
expenses, if any, otherwise payable by Lessee, for the next twelve (12) month
period. Losses shall be liable for any deductible amount in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a
larger building, or if the Premises are part of a group of buildings owned by
Lessor which are adjacent to the Premises, the Lessee
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shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.
(d) Tenant's Improvements. If the Lessor is the
Insuring Party, the 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. If Lessee is the Insuring
Party, the policy carried by Lessee under this Paragraph 8.3 shall insure Lessee
Owned Alterations and Utility Installations.
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, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and 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 Rating" of at least B +, V, or such other rating as may be
required by a Lender having a lien on the Premises, 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
Paragraph 8. If Lessee is the Insuring Party, Lessee shall cause to be delivered
to Lessor certified copies of policies of such insurance or certificates
evidencing the existence and amounts of such insurance with the insureds and
loss payable clauses as required by this Lease. No such policy shall be
cancellable or subject to modification except after thirty (30) days' prior
written notice to Lessor. Lessee shall at least thirty (30) days prior to 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. If the Insuring Party shall fail to procure and
maintain the insurance required to be carried by the Insuring Party under this
Paragraph 8, the other Party may, but shall not be required to, procure and
maintain the same, but at Lessee's expense.
8.6 Waiver of Subrogation. Without affecting any other
rights or remedies, Lessee and Lessor ("Waiving Party") 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 of or damage to the Waiving
Party's 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 any deductibles applicable thereto.
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, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of involving, or in dealing 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, and
whether well founded or not. 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,
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contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
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 the 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, or 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 tenant of Lessor.
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 improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations, the repair cost of which damage or
destruction is less than 50% of the then Replacement Cost of the Premises
immediately prior to such damage or destruction, excluding from such calculation
the value of the land and Lessee Owned Alterations and Utility Installations.
(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 50% or more of
the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction
to improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, 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 Partial Damage - Insured Loss. If a 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; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make the
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, 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, the party responsible for making the repairs 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
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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 in such case Lessor
does not so elect, 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 a 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, but subject to
Lessor's rights under Paragraph 13), 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 written
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 giving 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 Lessee's said commitment. 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 and 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 a 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 8.6.
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 (1) month's Base Rent, whether or not an Insured Loss, Lessor
may, at Lessor's option, terminate this Lease effective sixty (60) days
following 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, within twenty (20) days following the occurrence of
the damage, or before the expiration of the time provided in such option for its
exercise, whichever is earlier ("Exercise Period"), (i) exercising such option
and (ii) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs. If Lessee duly exercises such
option during said Exercise 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 falls to exercise such
option and provide such funds or assurance during said Exercise Period, then
Lessor may at Lessor's option terminate this Lease as of the expiration of said
sixty (60) day period following the occurrence of such damage by giving written
notice to Lessee of Lessor's election to do so within ten (10) days after the
expiration of the Exercise Period, notwithstanding any term or provision in the
grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph
9.2 (Partial Damage - Insured), whether or not Lessor or Lessee repairs or
restores the Premises, the Base Rent, Real Property Taxes, insurance premiums,
and other charges, if any, payable by Lessee hereunder for the period during
which such damage, its repair or the restoration continues (not to exceed the
period for which rental value insurance is required under Paragraph 8.3(b)),
shall be abated in proportion to the degree to which
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Lessee's use of the Premises is impaired. Except for abatement of Bass Rent,
Real Property Taxes, insurance premiums, 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 repair 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 receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
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 Law and this Lease shall continue in full force and effect, but
subject to Lessor's rights under 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 $100,000, 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 giving 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 investigation and remediation of such Hazardous Substance
Condition totally at Lessee's expense and without reimbursement from Lessor
except to the extent of 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 Lessee's said commitment. 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 and the required
funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the times specified above, this Lease
shall terminate as of the date specified in Lessor's notice of termination. If a
Hazardous Substance Condition occurs for which Lessee is not legally
responsible, there shall be abatement of Lessee's obligations under this Lease
to the same extent as provided in Paragraph 9.6(a) for a period of not to exceed
twelve (12) months.
9.8 Termination - Advance Payments. Upon termination of this
Lease pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee 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 Waive Statutes. Lessor and Lessee agree that the terms
of this Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessee shall pay the Real Property
Taxes, as defined in Paragraph 10.2, applicable to the Premises during the term
of this Lease. Subject to Paragraph 10.1(b), all such payments shall be made at
least ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or
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after the expiration or earlier termination of the term hereof, Lessee's share
of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year this Lease is in effect, and Lessor shall reimburse
Lessee for any overpayment after such proration. If Lessee shall fail to pay any
Real Property Taxes required by this Lease to be paid by Lessee, Lessor shall
have the right to pay the same, and Lessee shall reimburse Lessor therefor upon
demand.
(b) Advance Payment. In order to insure payment when
due and before delinquency of any or all Real Property Taxes, Lessor reserves
the right, at Lessor's option, to estimate the current Real Property Taxes
applicable to the Premises, and to require such current year's Real Property
Taxes to be paid in advance to Lessor by Lessee, either: (i) in a lump sum
amount equal to the installment due, at least twenty (20) days prior to the
applicable delinquency rate, or (ii) monthly in advance with the payment of the
Base Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be that equal monthly amount which, over the number of months
remaining before the month in which the applicable tax installment would become
delinquent (and without interest thereon), would provide a fund large enough to
fully discharge before delinquency the estimated installment of taxes to be
paid. When the actual amount of the applicable tax bill is known, the amount of
such equal monthly advance payment shall be adjusted as required to provide the
fund needed to pay the applicable taxes before delinquency. If the amounts paid
to Lessor by Lessee under the provisions of this Paragraph are insufficient to
discharge the obligations of Lessee to pay such Real Property Taxes as the same
become due, Lessee shall pay to Lessor, upon Lessor's demand, such additional
sums as are necessary to pay such obligations. All moneys paid to Lessor under
this Paragraph may be intermingled with other moneys of Lessor and shall not
bear interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.
10.2 Definition of "Real Property Taxes." 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 Premises 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 Premises or in the real property of which
the Premises are a part, 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 Premises or in the improvements thereon, the
execution of this Lease, or any modification, amendment or transfer thereof, and
whether or not contemplated by the Parties.
10.3 Joint Assessment. If the Premises are not separately
assessed, Lessee's liability 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.
10.4 Personal Property Taxes. Lessee shall pay prior to
delinquency all taxes assessed against and levied upon Lessee Owned Alterations,
Utility Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause its 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 personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property or, at Lessor's option, as provided in Paragraph
10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
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12. Assignment and Subletting.
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,
"assignment") 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 36.
(b) A change in the control of Lessee shall
constitute an assignment requiring Lessor's consent. The transfer, on a
cumulative basis, of twenty-five percent (25%) or more of the voting control of
Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, refinancing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee's assets
occurs, which results or will result in a reduction of the Net Worth of Lessee,
as hereinafter defined, by an amount equal to or greater than twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at the
time of the execution by Lessor of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its consent. "Net
Worth of Lessee" for purposes of this Lease shall be the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles consistently applied.
(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(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unconsented to assignment or subletting as a noncurable 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 to fair market rental value or one hundred ten percent (110%) of the Base
Rent then in effect, whichever is greater. 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 market value 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 (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%)
of the price previously in effect, whichever is greater, (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 market rental bears to the Base Rent in effect immediately prior to the
market value adjustment.
(e) Lessee's remedy for any breach of this Paragraph
12.1 by Lessor shall be limited to compensatory damages and 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, or (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
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approval or disapproval of such assignment nor the acceptance of any rent or
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 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 on the Lease or sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or sublease.
(d) In the event of any Default or Breach of
Lessee's obligations under this Lease, Lessor may proceed directly against
Lessee, any Guarantors or any one else responsible for the performance of the
Lessee's obligations under this Lease, including the sublessee, without first
exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.
(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 $1,000 or ten percent (10%) of the
current monthly Base Rent, whichever is greater, 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.
(g) The occurrence of a transaction described in
Paragraph 12.1(c) shall give Lessor the right (but not the obligation) to
require that the Security Deposit be increased to an amount equal to six (6)
times the then monthly Base Rent, and Lessor may make the actual receipt by
Lessor of the amount required to establish such Security Deposit a condition to
Lessor's consent to such transaction.
(h) Lessor, as a condition to giving its consent to
any assignment or subletting, may require that the amount and adjustment
structure of the rent payable under this Lease be adjusted to what is then the
market value and/or adjustment structure for property similar to the Premises as
then constituted.
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 this 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
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the rents and other charges due and to become due under the sublease. Sublessees
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 said
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 sublessee 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), $350.00 is a reasonable minimum 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"
is defined as a failure by the Lessee to observe, comply with or perform any of
the terms, covenants, conditions or rules applicable to Lessee under this Lease.
A "Breach" 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, shall entitle Lessor to pursue the remedies set forth
in Paragraphs 13.2 and/or 13.3:
(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 or any other
monetary payment required to be made by Lessee hereunder, whether to Lessor or
to a third party, 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 Law per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the recision of an unauthorized
assignment or subletting per Paragraph 12.1(b), (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.
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(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 (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 thirty (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.C.
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 (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity
of the remaining provisions.
(f) The discovery by Lessor that any financial
statement given to Lessor by Lessee or any Guarantor of Lessee's obligations
hereunder 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 terms 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 assurance or 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 policies, 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 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
all 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
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of the leasing commission paid by Lessor 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 prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%). Efforts by Lessor to mitigate damages
caused by Lessee's Default or Breach of this Lease shall not waive Lessor's
right to recover damages under this Paragraph. 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 therein 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 subparagraphs 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 subparagraphs 13.1 (b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1 (b), (c) or (d) and
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two 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 abandonment and recover the rent as it becomes due,
provided Lessee has the right to sublet or assign, subject only to reasonable
limitations. See Paragraphs 12 and 36 for the limitations on assignment and
subletting which limitations Lessee and Lessor agree 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 the 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 for free or abated rent or other 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
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no 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 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 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 trust deed
covering the Premises. Accordingly, if any installment of rent or any other sum
due from Lessee shall not be received by Lessor or Lessor's designee within five
(5) days after such amount shall be due, then, without any requirement for
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
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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 the holders of any ground lease, mortgage or deed of
trust covering the Premises whose name and address shall have been furnished
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 reasonably 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
land area not occupied by any building, 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 building located on the Premises. No reduction of
Base Rent shall occur if the only portion of the Premises taken is land on which
there is no building. 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 exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in 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 loss 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 the legal and other
expenses incurred by Lessor in the condemnation matter, repair any damage to the
Premises caused by such condemnation, except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall be responsible for
the payment of any amount in excess of such net severance damages required to
complete such repair.
15. Broker's Fee.
15.1 The Brokers named in Paragraph 1.10 are the procuring
causes of this Lease.
15.2 Upon execution of this Lease by both Parties, Lessor
shall pay to said Brokers 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 Brokers (or in the event there is no separate
written agreement between Lessor and said Brokers, the sum of $Sep agreement)
for brokerage services rendered by said Brokers to Lessor in this transaction.
15.3 Lessee and Lessor each represent and warrant to the
other that it has had no dealings with any person, firm, broker or finder (other
than the Brokers, if any named in Paragraph 1.10) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Brokers is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, attorneys' fees
reasonably incurred with respect thereto.
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15.4 Lessor and Lessee hereby consent to and approve all
agency relationships, including any dual agencies, indicated in Paragraph 1.10.
16. Tenancy Statement.
16.1 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 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 If Lessor desires to finance, refinance, or sell the
Premises, any part thereof, or the building of which the Premises are a part,
Lessee and all Guarantors of Lessee's performance hereunder shall deliver to any
potential lender or purchaser designated by Lessor such financial statements of
Lessee and such Guarantors as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past three (3) years. All such financial statements shall be received by Lessor
and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
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,
or, if this is a sublease, of the Lessee's interest in the prior lease. 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, 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 no 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
(30) days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
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 solely 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.
23. Notices.
23.1 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, 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
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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 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 States 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 confirmation of receipt of the transmission
thereof, provided a copy is also delivered via delivery or mail. If notice is
received on a Sunday or 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 of any other term, covenant or condition hereof.
Lessor's consent to, or approval of, any 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 preceding Default or
Breach by Lessee of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted. 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. Lessee has no right to retain possession
of the Premises or any part thereof beyond the expiration or earlier termination
of this Lease.
27. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at 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 initiated
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 all
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
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obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
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 new owner shall not: (i)
be liable for any act or omission of any prior lessor 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 (1) 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 term 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 the 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. Attorney's Fees. If any Party or Broker brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) or Broker in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorney's 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 attorney's fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorney's fees reasonably incurred. Lessor shall be entitled to
attorney's fees, costs and expenses incurred in the 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.
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 of which
they are a part, 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 twenty (120) 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. Lessee shall not place any sign upon the "Premises,
except that Lessee may, with Lessor's prior written consent, install (but not on
the roof) such signs as are reasonably required to advertise Lessee's own
business. 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
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Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof and the right to install, and all revenues from
the installation of, such advertising signs on the Premises, including the roof,
as do not unreasonably interfere with the conduct of Lessee's business.
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 lesser 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' or 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, practice or storage tank, shall be
paid by Lessee to Lessor upon receipt of an invoice and supporting documentation
therefor.
Subject to Paragraph 12.2(e) (applicable to assignment or subletting),
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. Except
as otherwise provided, 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
imposition 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 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 said 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 called for by Paragraph 16.
37.2 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 of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, and including
in the case of a corporate Guarantor, a certified copy of a resolution of its
board of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signature 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 observance and performance of all of the covenants, conditions
and provisions on Lessee's part to be
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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 Paragraph 39 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 Lessee. 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 by
any person or entity other than 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 as 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 Default under Paragraph 13.1,
whether or not the Defaults are cured, during the twelve (12) month period
immediately preceding the exercise of the Option.
(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) days 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 Default 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. Multiple Buildings. If the Premises are part of a group of
buildings controlled by Lessor, Lessee agrees that it will abide by, keep and
observe all reasonable 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 such other buildings and
their invitees, and that Lessee will pay its fair share of common expenses
incurred in connection therewith.
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
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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 to itself the right, from time to
time, to grant, without the consent or joinder of Lessee, such easements, rights
and dedications that Lessor deems necessary, and to cause the recordation of
parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably 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 Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed 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 EASE 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 SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF
ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES
AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY
SOLELY UPON THE ADVICE OF
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THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE. IF THE SUBJECT PROPERTY IS LOCATED 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 on the dates specified
above to their respective signatures.
Executed at Los Angeles, California Executed at Los Angeles, California
on March 29, 1996 on March 29, 1996
by LESSOR: by LESSEE:
NORDHOFF INDUSTRIAL COMPLEX, NETCOM SYSTEMS, INC.,
a California General Partnership a California Corporation
By By
--------------------------------- --------------------------------------
Name Printed: Gerald L. Katell Name Printed: Marc Hamon
Title: General Partner Title: President
By By
--------------------------------- --------------------------------------
Name Printed: Name Printed:
Title: Title:
Address: 1455 Atlantic Drive Address: 21818 Lassen Street, Unit 6
Pacific Palisades, CA 90272 Chatsworth CA 91311
Tel. No. (___) 459-7200 Tel. No. (818) 704-5109
Fax No. (___) 459-9856 Fax No. (818) 709-7881
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the
most current form: American Industrial Real Estate Association, 345
South Figueroa Street, Suite M-1, Los Angeles, CA 90071. (213) 687-8777.
Fax. No. (213) 687-8616.
ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE- NET
March 28, 1996
By and between Nordhoff Industrial Complex, a California General Partnership,
Lessor, and Netcom Systems, Inc., a California corporation, Lessee
This Addendum is attached to and made apart of the above referenced instrument,
and all references herein to the Lease shall include this Addendum.
49. Commencement Date. The "Commencement Date" hereunder shall be
April 15, 1996, or such later date as Lessor delivers possession of the Premises
to Lessee in the condition required hereunder. Lessee shall not be entitled to
possession of the Premises prior to the Commencement Date, except upon such
terms and conditions as may hereafter be agreed to in writing between Lessor and
Lessee. Lessee shall not be required to pay Base Rent for the second and fourth
month of the Lease Term, and the Base Rent paid upon execution as set forth in
paragraph in paragraph 1.6 shall be credited to the first month of the Lease
Term. In the event the Commencement Date is a day other than the first day of a
calendar month, the Base Rent payable three months after the Commencement Date
shall be for the prorated portion of the balance of such month, and thereafter,
commencing on the first day of the next following calendar month, the full
amount of the Base Rent shall be payable on the first day of each calendar
month. A prorated Base Rent shall be payable for the last partial month of the
Lease Term. This lease shall commence on the later of April 15, 1996 or on the
date on which the Lessor completes the tenant improvements as defined in
paragraph 51 below.
50. See attached Addendum to Standard Lease-Rent Adjustments-Initial
Term, made a part hereof by reference.
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51. Lessor Tenant Improvements. Prior to commencement date, Lessor,
at Lessors sole cost and expense shall complete the following:
a. Paint the interior office space to match the existing paint
color.
b. Replace the existing carpet with carpet of like quality and
color.
In addition, Lessor shall insure that the Premises conforms to the ADA
if required. Any required corrective work shall not be required to be completed
by the commencement date, but shall be completed as expeditiously as possible.
52. Lessee Tenant Improvements. Lessor shall construct the tenant
improvements as stated within this paragraph, upon submission of a plan by
Lessee. However, prior to construction Lessee shall pay to Lessor the actual
cost of these improvements plus a construction management fee which are an
actual cost to the Lessor. The work pursuant to this paragraph shall be
completed in a timely workmanlike manner, but the work pursuant to this
paragraph shall not effect the commencement date. Lessee tenant improvements are
as follows:
a. Add two (2) doors.
b. Relocate three (3) doors in three (3) offices to opposite walls.
c. Remove three (3) walls that divide three offices.
d. Close off three (3) doors.
53. Holdover Rent. If, not withstanding the provisions of the Lease,
Lessee is a holdover tenant following expiration of the Lease Term, Lessee shall
be obligated to pay during any such Holdover tenancy an amount equal to 150% of
all rent that was payable hereunder during the last month of the Lease Term.
54. Option to Extend. Provided Lessee has not been and is not in
default of any term or condition of this Lease as of the commencement of the
renewal term, lessee shall have the one option to renew the term of the lease
for one additional five year term, on the same terms and conditions of the
Lease, except that the Base Rent shall be adjusted to the then prevailing market
rental rate for a comparable leases in the comparable areas of the West San
Fernando Valley Area. Such option shall be exercised (if at all) by Lessee
giving Lessor at least 270 days prior irrevocable written notice.
The prevailing market rental shall be determined in the following
manner:
Prevailing market rental rate shall be determined taking into account
all relevant factors, including (to the extent relevant) number of months of
free rent, if any (which shall be part of the determination of the rental rate),
Lessee improvement obligations, moving allowances, and leasing commissions and
costs. The term "comparable leases" shall not include leases entered into under
special circumstances affecting the economics of the tenancies, including
following the exercise of options to lease space at other than then current
prevailing market rate, the lease of awkward or unusually shaped space or space
without windows or other usual amenities, leases entered into under conditions
where the Lessor was forced to lease the space by external legal, economic, or
other pressures not generally applicable to the market, or the sublease or space
by a sublessor not primarily in the business of leasing space. Prior to the date
which is five (5) months before the expiration of the then current term, and
assuming that Lessee has properly exercised its option to renew, Lessor shall
give Lessee notice of Lessor's proposed prevailing market rental value for the
Premises. Lessee shall give Lessor written notice within thirty (30) days
thereafter as to whether or not Lessee agrees with Lessor's proposed prevailing
market rental value. If Lessee disagrees with Lessor's proposed prevailing
market rental value, the parties shall negotiate in good faith to resolve their
differences for a period of thirty (30) days. Upon the expiration of such thirty
(30) day period, if the parties are not in agreement as to such fair market
rental value by giving written notice to the other party, such notice containing
the name of an appraiser appointed by such initiating party. Within fifteen (15)
days thereafter, the party receiving such notice shall appoint its own appraiser
and give notice thereof to the initiating party. If the second
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appraiser is not appointed within such fifteen day period, then the appraiser
selected by the initiating party shall determine the fair market rental value of
the Premises, and such appraisal shall be binding upon the parties. If the
second appraiser is timely appointed, then the two appraisers shall confer and
attempt to agree on the prevailing market value. If the two appraisers are
unable to agree, but the higher appraisal is no more than ten percent (10%)
higher than the lower appraisal, then the prevailing market rental value shall
be the average of the two appraisals. If the higher appraisal is more than ten
percent (10%) greater than the lower appraisal, the two appraisers shall
together select a third appraiser who shall also determine the prevailing market
rental value. If three appraisers are ultimately appointed and any two
appraisers agree on the prevailing market rental value, the value agreed upon by
the two appraisers shall be the prevailing market rental value. If the three
appraisers all determine different prevailing market rental values, then the
prevailing market rental value shall be the average of the two closest
appraisals.
All appraisers shall be members of the MAI and shall have at least ten
(10) years' experience appraising similar property in the West San Fernando
Valley Area. Each party shall bear the cost of the appraiser appointed by such
party, and the parties shall share equally in the cost of the third appraiser,
if appointed.
If the two appraisers initially appointed are unable to agree on a third
appraiser, then either party shall have the right to apply to the presiding
judge of the Superior Court having jurisdiction over the Premises for the
appointment of a third appraiser.
The rent determined in accordance to the foregoing shall be subject to
adjustments pursuant to the attached Addendum to Standard Lease paragraph
59-Rent Adjustments - Extended Term.
55. Sublease Profits. Lessee shall pay to Lessor, as additional Base
Rent, fifty percent (50%) of any "profits" from any sublease of the Premises or
a portion thereof or an assignment of the Lease. For purpose of this paragraph,
"Profits" shall mean the amount by which (i) all rentals and other payments
received by Lessee during the preceding calendar month from or on behalf of
subtenants hereunder exceeds (ii) the sum of (x) all Base Rent paid hereunder
during the proceeding calendar month, plus (y) all attorney fees, brokerage
commissions, and other direct out-of-pocket payments made by Lessee to obtain
subtenants or an assignment, plus (z) the cost to Lessee of all Leasehold
improvements (this is excluding furniture, equipment and machinery) made to
obtain such subtenants or assignee, all amortized over the term of any sublease
or assignment.
56. Dispute Resolution. The parties hereto agree that any dispute of
controversy arising out of or relating to this Lease, or to the interpretation,
performance, or breach thereof, shall be heard and decided by means of a
reference pursuant to Section 638 et seq. of the Code of Civil Procedure of the
State of California. Such reference shall be made to a retired judge of the
Superior Court of the State of California (the "Referee") who shall hear such
dispute or controversy until the final determination thereof pursuant to Article
VI, Section 21, of the California Constitution, Section 638 et seq. of the
California Code of Civil Procedure, and Rule 244 (a) of the California Rules of
Court. The term "Referee" as used herein is intended to refer to and include the
term "Temporary Judge" as used in the said provisions of the California
Constitution and the California Rules of Court. The Referee shall be selected by
mutual agreement of the Parties from the list of retired judges maintained by
the Superior Court of the State of California for the County of Los Angeles,
Central District. If the Parties are unable to agree upon a retired judge to
serve as the Referee, then upon petition by either Party to the presiding judge
of the Superior Court of the State of California for the County of Los Angeles,
Central District (or such other judge as the presiding judge may designate for
such purpose), such judge shall in his or her sole discretion select the
particular retired judge who shall serve as the Referee. The cost of the Referee
shall initially be divided equally between the Parties, it being understood and
agreed that, upon judgment, the prevailing Party shall be entitled to
reimbursement from the other Party of all costs of litigation, including the
cost of the Referee.
57. Option to Purchase - Right of First Presentation. Before Lessor
shall, during the original term hereof, sell the Property, Lessor shall give
Lessee written notice (a "Purchase Notice") specifying a proposal for the
purchase price of the Property, the closing date of the purchase, and a list of
the responsibility for closing expenses. Lessor shall not be obligated to have
received any offer to purchase the Property at the time the Purchase Notice is
given. Lessee shall have ten (10) days following the
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Purchase Notice to elect irrevocably to purchase the Property identified on the
terms specified in the Purchase Notice, which election shall be evidenced by
written notice given by Lessee to Lessor (a "Purchase Acceptance Notice"). If
Lessee fails timely to give a Purchase Acceptance Notice, Lessor shall be free
to sell the Property to any other party or parties at a price not less than the
price set forth in the Purchase Notice, for a period of 12 months following
delivery of the Purchase Notice.
58. Title. Lessee is entering into this Lease subject to all matters
of title of record with respect to the Premises, which specifically include, but
are not limited to, that certain instrument entitled Declaration of Protective
Covenants for Nordhoff Industrial Complex, recorded as Instrument No. 79- 812910
on July 24, 1979 in the official records of Los Angeles County, California.
59. See attached Addendum to Standard Lease-Rent
Adjustments-Extended Term.
60. Lessor Liability. Notwithstanding any other provision of this
Lease, in no event shall Lessor be liable to Lessee for any consequential
damages or any damages to Lessee's business or lost profits. Furthermore, all
liability of Lessor under the Lease shall be limited to Lessor's interest in the
Premises. Lessor's interest in the Premises shall be deemed to include any
proceeds of any insurance policy held by Lessor relating to the Premises. No
recourse shall be had by Lessee for any reason to any assets of Lessor, or
Lessor's partners, other than Lessor's interest in the Premises.
61. Financial Information. If at any time during the Lease Term
Lessee is not a publicly held company, then (i) Lessee shall provide Lessor with
financial statements and information concerning Lessee in substantially the same
form as would be publicly available if Lessee were a company subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
(ii) Lessee authorizes Lessor to obtain any and all information concerning the
financial condition and credit of Lessee, including credit reports, that Lessor
may deem necessary or appropriate in connection with this Lease, including all
such information as may be required by any person to whom Lessor intends to
grant a Security Device. Lessee consents to having Lessor disclose this Lease to
any person as may be necessary to obtain credit information concerning Lessee.
LESSOR: LESSEE:
NORDHOFF INDUSTRIAL COMPLEX, NETCOM SYSTEMS, INC.
a California General Partnership a California Corporation
By: By:
--------------------------------- -------------------------------------
Name Printed: Gerald L. Katell Name Printed: Marc Harmon
Date: Date:
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RENT ADJUSTMENT(S) --- INITIAL LEASE TERM
ADDENDUM TO
STANDARD LEASE
Dated March 28, 1996
By and Between (Lessor) NORDHOFF INDUSTRIAL COMPLEX
(Lessee) NETCOM SYSTEMS, INC.
Property Address: 20500 NORDHOFF STREET, CHATSWORTH, CA 91311
Paragraph 50
A. RENT ADJUSTMENTS: INITIAL LEASE TERM
The monthly rent for each month of the adjustment period(s) specified
below shall be increased using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
[X] I. Cost of Living Adjustment(s) (COL)
(a) On (Fill in COL Adjustment Date(s): November 1, 1997; May 1,
1999; November 1, 2000 the monthly rent payable under paragraph 1.5 ("Base
Rent") of the attached Lease shall be adjusted by the change, if any, from the
Base Month specified below, in the Consumer Price Index of the Bureau of Labor
Statistics of the U.S. Department of Labor for (select one): [ ] CPIW (Urban
Wage Earners and Clerical Workers) or [ ] CPI U (All Urban Consumers), for (Fill
in Urban Area): Los Angeles - Anaheim - Riverside, All Items (1982-1984 = 100),
herein referred to as "C.P.I."
(b) The monthly rent payable in accordance with paragraph AI(a) of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the C.P. I. of the calendar month 2 (two) months
prior to the month(s) specified in paragraph AI(a) above during which the
adjustment is to take effect, and the denominator of which shall be the C. P.I.
of the calendar month which is two (2) months prior to (select one): X the first
month of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or
[ ] (Fill in Other "Base Month"): ___________________. The sum so calculated
shall constitute the new monthly rent hereunder, but in no event, shall any such
new monthly rent be less than the rent payable for the month immediately
preceding the date for rent adjustment.
(c) In the event the compilation and/or publication of the C.P.I.
shall be transferred to any other governmental department or bureau or agency or
shall be discontinued, then the index most nearly the same as the C.P.I. shall
be used to make such calculation. In the event that Lessor and Lessee cannot
agree on such alternative index, then the matter shall be submitted for decision
to the American Arbitration Association in accordance with the then rules of
said association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitrators shall be paid equally by Lessor and
Lessee.
(d) Said increases shall not exceed ten (10%) percent, nor be less
than four (4%) percent, per adjustment period.
(a) On (Fill in MRV Adjustment Date(s): ________________________ the
________________________________________________________________________________
monthly rent payable under paragraph 1.5 ("Base Rent") of the attached Lease
shall be adjusted to the "Market Rental Value" of the property as follows:
1) Four months prior to the Market Rental Value (MRV)
Adjustment Date(s) described above, Lessor and Lessee shall meet to establish an
agreed upon new MRV for the specified term. If agreement cannot be reached,
then:
i) Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30 days.
Any associated costs will be split equally between the parties, or
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ii) Both Lessor and Lessee shall each immediately select and
pay the appraiser or broker of their choice to establish a MRV within the next
30 days. If, for any reason, either one of the appraisals is not completed
within the next 30 days, as stipulated, then the appraisal that is completed at
that time shall automatically become the new MRV. If both appraisals are
completed and the two appraisers/brokers cannot agree on a reasonable average
MRV then they shall immediately select a third mutually acceptable
appraiser/broker to establish a third MRV within the next 30 days. The average
of the two appraisals closest.
Initials: Initials:
--------- ---------
RENT ADJUSTMENT(S)
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 345 South Figueroa
Street, Suite M-1, Los Angeles, CA 90071. (213) 687-8777. Fax No. (213)
687-8616.
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RENT ADJUSTMENT(S) --- EXTENDED LEASE TERM
ADDENDUM TO
STANDARD LEASE
Dated March 28, 1996
By and Between (Lessor) NORDHOFF INDUSTRIAL COMPLEX
(Lessee) NETCOM SYSTEMS, INC.
Property Address: 20500 NORDHOFF STREET, CHATSWORTH, CA 91311
Paragraph 59
A. RENT ADJUSTMENTS: EXTENDED LEASE TERM
The monthly rent for each month of the adjustment period(s) specified below
shall be increased using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
I. Cost of Living Adjustment(s) (COL)
(a) On (Fill in COL Adjustment Date(s): November 1, 2002,
May 1, 2004; November 1, 2005 the monthly rent payable under paragraph 1.5
("Base Rent") of the attached Lease shall be adjusted by the change, if any,
from the Base Month specified below, in the Consumer Price Index of the Bureau
of Labor Statistics of the U.S. Department of Labor for (select one): [X] CPI W
(Urban Wage Earners and Clerical Workers) or [ ] CPI U (All Urban Consumers),
for (Fill in Urban Area): Los Angeles - Anaheim - Riverside, All Items
(1982)-1984 = 100), herein referred to as "C.P.I."
(b) The monthly rent payable in accordance with paragraph
AI(a) of this Addendum shall be calculated as follows: the Base Rent set forth
in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the C.P.I. of the calendar month 2 (two) months
prior to the month(s) specified in paragraph AI(a) above during which the
adjustment is to take effect, and the denominator of which shall be the C.P.I.
of the calendar month which is two (2) months prior to (select one): [ ] the
first month of the term of this Lease as set forth in paragraph 1.3 ("Base
Month") or /X/ (Fill in Other "Base Month"): May 2001. The sum so calculated
shall constitute the new monthly rent hereunder, but in no event, shall any such
new monthly rent be less than the rent payable for the month immediately
preceding the date for rent adjustment.
(c) In the event the compilation and/or publication of the
C.P.I. shall be transferred to any other governmental department or bureau or
agency or shall be discontinued, then the index most nearly the same as the
C.P.I. shall be used to make such calculation. In the event that Lessor and
Lessee cannot agree on such alternative index, then the matter shall be
submitted for decision to the American Arbitration Association in accordance
with the then rules of said association and the decision of the arbitrators
shall be binding upon the parties. The cost of said Arbitrators shall be paid
equally by Lessor and Lessee.
(d) Said increase shall not exceed ten (10%) percent, nor be
less than four (4%) percent, per adjustment period.
Initials: Initials:
--------- ---------
RENT ADJUSTMENT(S)
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33
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 345 South Figueroa
Street, Suite M-1, Los Angeles, CA 90071. (213) 687-8777. Fax No. (213)
687-8616.
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34
NORDHOFF INDUSTRIAL COMPLEX
FIRST AMENDMENT TO STANDARD INDUSTRIAL LEASE/COMMERCIAL LEASE
This First Amendment is dated May 20, 1996 and is by and between Nordhoff
Industrial Complex, a California General Partnership ("Landlord"), and Netcom
Systems, Inc., a California Corporation ("Tenant").
The following changes are made to the original lease dated March 28, 1996 (the
"Lease") between Landlord and Tenant:
1. Paragraph 7.4 (b). is deleted and replaced with the following new
paragraph:
7.4. Ownership; Removal, Surrender; and Restoration.
(b) Removal. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor. Lessee shall,
at the Lessee's sole expense, promptly repair any damage to the Premises
resulting from the removal of Lessee Owned Alterations including signage. The
building repair shall be of first class quality and workmanship. Upon removal of
signage, the building shall be repaired, sealed with a waterproofing material
and painted to match the existing color.
Except as specifically set forth by this First Amendment, the Lease shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the date and year first written above.
LESSOR: LESSEE:
NORDHOFF INDUSTRIAL COMPLEX, NETCOM SYSTEMS, INC.,
a California General Partnership a California Corporation
By: By:
--------------------------------- -------------------------------------
Name Printed: Gerald L. Katell Name Printed: Marc Hamon
Date: 8/9/96 Date: 7/29/96
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SECOND AMENDMENT TO LEASE
This Second Amendment to Standard Industrial/Commercial Single-Tenant
Lease - Net (the "Second Amendment") is entered into as of this 26th day of
March, 1997 by and between Nordhoff Industrial Complex, a California general
partnership, ("Lessor") and Netcom Systems, Inc., a California corporation
("Lessee") with reference to the following recitals.
RECITALS:
A. On or about March 28, 1996, Lessor and Lessee entered into a
Standard Industrial/Commercial Single-Tenant Lease - Net (the "ORIGINAL LEASE")
for that certain premises located at 20500 Nordhoff Street in Chatsworth,
California (the "EXISTING PREMISES"). On or about May 20, 1996, Lessor and
Lessee entered into a "FIRST AMENDMENT to Standard Industrial Lease/Commercial
Lease (the "First Amendment"). The Original Lease and the First Amendment are
hereinafter collectively referred to as the "LEASE".
B. Lessor and Lessee wish to amend the Lease on the terms and
conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. New Premises. On the Effective Date (as defined below), Lessee
shall deliver possession of the Existing Premises to Lessor and from and after
the Effective Date the "Premises" for purposes of the Lease shall mean the real
property and improvements commonly known as 20550 Nordhoff Street (for purposes
of this Second Amendment the "NEW PREMISES") and generally depicted on Exhibit
"A" attached hereto.
2. Delivery of Existing Premises. On the Effective Date, Lessee
shall deliver possession of the Existing Premises to Lessor in the condition
required by Paragraph 7.4(c) of the Original Lease. Lessee acknowledges and
agrees that all of Lessee's personal property must be removed from the Existing
Premises on or before the Effective Date.
3. Extended Term. The term of the Lease is hereby extended to the
date which is five (5) years after the Effective Date. Provided, however, if the
Effective Date occurs on a date other than the first day of a calendar month,
the term of the Lease shall be from the Effective Date until the date which is
five (5) years after the first day of the calendar month immediately following
the calendar month in which the Effective Date occurs.
4. New Base Rent. Prior to the Effective Date, Lessee shall
continue to pay the Base Rent and all other charges described in the Lease as if
this Second Amendment had not been entered into. From and after the Effective
Date, the Base Rent shall be determined as follows:
(a) Initial Base Rent. Commencing on the Effective Date and
continuing until the date which is twenty (20) calendar months after the
Effective Date, the monthly Base Rent shall be Thirty Seven Thousand Four
Hundred Forty Dollars ($37,440) (the "NEW BASE RENT"). Provided, however, if the
Effective Date occurs on a date other than the first day of a calendar month,
the New Base Rent shall commence on the Effective Date and continue until the
date which is twenty (20) months after the first day of the calendar month
immediately following the calendar month in which the Effective Date occurs. The
first day after the last day of the twenty (20) month period referred to above
is hereinafter referred to as the "FIRST ADJUSTMENT DATE".
(b) Adjustments to Base Rent During Initial Term. On the
First Adjustment Date and on the date which is twenty (20) months after the
First Adjustment Date (hereinafter the "NEW COL ADJUSTMENT DATES"), the New Base
Rent shall be increased in accordance with the terms and conditions of the
addendum to the Original Lease entitled "Rent Adjustment(s) --- Initial Lease
Term" (hereinafter the "PRIMARY TERM RENT ADJUSTMENT ADDENDUM"). As of the
Effective Date, the "COL Adjustment Dates" described in the Primary Term Rent
Adjustment Addendum shall be deleted and the New COL Adjustment Dates shall be
substituted in their place. As of the Effective
36
Date, the Base Month (as defined in the Primary Term Rent Adjustment Addendum)
shall be the calendar month which is two (2) months prior to the Effective Date.
(c) Adjustments to Base Rent During Option Term. If the term
of the Lease is extended pursuant to paragraph 54 of the "Addendum to Standard
Industrial/Commercial Single- Tenant Lease - Net" (the "ADDENDUM") attached to
the Original Lease, the prevailing market Base Rent determined in accordance
with paragraph 54 for the option term shall continue to be subject to adjustment
in accordance with the addendum to the Original Lease entitled "Rent
Adjustment(s): Extended Lease Term" (hereinafter the "EXTENDED TERM RENT
ADJUSTMENT ADDENDUM"). As of the Effective Date, the "COL Adjustment Dates"
described in the Extended Term Rent Adjustment Addendum shall be deleted and the
following new COL Adjustment Dates shall be substituted in their place: the date
which is twenty (20) calendar months after the first day of the option term and
the date which is forty (40) calendar months after the first day of the option
term. As of the Effective Date, the Base Month (as defined in the Extended Term
Rent Adjustment Addendum) shall be the calendar month which is two (2) months
prior to the first day of the option term.
5. Security Deposit. As of the Effective Date, Lessee shall pay to
Lessor Twenty Thousand Six Hundred Forty Dollars ($20,640) and this amount shall
be added to Lessee's existing Security Deposit (as defined in Paragraph 1.7 of
the original Lease).
6. Effective Date.
(a) Definition of Effective Date. Lessor anticipates that
the Improvements will be Substantially Completed (as defined below) on or about
June 1, 1997. For purposes of this Amendment, the Effective Date shall be the
date which is two (2) days after the date on which the construction of the
Improvements (as defined in the Work Letter Agreement attached hereto) are
Substantially Complete. The Improvements shall be deemed to be "SUBSTANTIALLY
COMPLETE" on the earlier to occur of the following dates: (i) the date the
Improvements are substantially complete (except for minor "punch-list" items
that do not unreasonably interfere with Lessee's use or enjoyment of the New
Premises and except for completion of any trade fixtures, utility installations
or other improvements being installed by Lessee) or (ii) the date Lessee
commences business operations in the New Premises. If the Effective Date occurs
on a date other than the first day of a calendar month, the Base Rent due during
the calendar month in which the Effective Date occurs shall be prorated on a per
diem basis based on the Base Rent due under the Lease prior to the Effective
Date and the Base Rent due under the Lease after the Effective Date.
(b) Lessee Delays. For purposes of this Second Amendment,
"LESSEE DELAYS" means any delay in the completion of the Improvements resulting
from any act or failure to act by Lessee or Lessee's employees, agents,
independent contractors, consultants and/or any other person performing or
required to perform services on behalf of Lessee. For each day that the
Substantial Completion of the Improvements is delayed due to a Lessee Delay,
Lessee shall pay to Lessor Six Hundred Eighty Eight Dollars ($688).
7. Early Entry. Lessee shall have the right to enter the New
Premises prior to the Substantial Completion of the Improvements to install
phone systems, furniture, fixtures and other equipment, and early entry for such
purposes shall not constitute the commencement of business operations by Lessee
at the New Premises. Lessee agrees that: (i) Lessee shall not materially
interfere with Lessor or Lessor's contractors completing work within the New
Premises; (ii) Lessee, together with its employees, agents and independent
contractors will be subject to and will work under the direction of Lessor's
contractor; (iii) prior to entry upon the New Premises by Lessee, Lessee agrees
to pay for and provide to Lessor certificates evidencing the existence and the
amounts of liability insurance for the New Premises; and (iv) Lessee and its
agents and contractors agree to comply with all applicable laws, regulations,
permits and other approvals required to perform its work at the New Premises.
8. Improvements to Premises.
(a) Improvements Paid for by Lessor. Lessor agrees to pay,
at Lessor's sole cost and expense, for the following items:
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(i) the cost of installing the exterior windows
identified on Exhibit "B" attached hereto (the "EXTERIOR WINDOWS"). The Exterior
Windows shall be of the same general type, design and quality as the existing
exterior windows at the New Premises;
(ii) the cost of installing new carpet inside the New
Premises (the "NEW CARPET"). The New Carpet shall be of a quality that is
comparable to the quality of the carpet in Lessee's Existing Premises and the
color of the carpet shall be reasonably acceptable to Lessor;
(iii) the cost of painting the interior walls of the
New Premises with paint of a quality that is comparable to the quality of the
paint in Lessee's Existing Premises;
(iv) the cost of replacing the existing air
conditioning units on the roof of the New Premises;
(v) the cost of repairing faucets, toilets or other
broken fixtures in the bathrooms presently located in the New Premises;
(vi) to the extent required by the existing City of
Los Angeles (the "CITY") ordinances relating to seismic safety, the cost of
causing the ceiling of the New Premises to comply with such laws; and
(vii) if at the time Lessee obtains a permit from the
City for the construction of the Improvements (as defined in the Work Letter
Agreement attached hereto as Exhibit "C"), the City requires that certain
improvements be made to the Premises to comply with the requirements of Title
24, fifty percent (50%) of the cost of constructing such improvements shall be
paid by Lessor and fifty percent (50%) of the cost shall be paid by Lessee.
(b) Other Lessee Improvements. Lessor agrees to cause the
Improvements to be constructed by a contractor selected by Lessor. Lessee shall
pay all costs of constructing the Improvements. The cost of constructing the
Improvements shall mean all costs of any type or nature incurred by Lessor to
cause the Improvements to be constructed including, but not limited to,
architectural and engineering fees, the cost of labor and materials, the cost of
insurance and permits and any construction management or similar fees paid by
Lessor to its management company. The estimated cost of constructing the
Improvements shall be paid by Lessee to Lessor in weekly progress payments (or
in longer intervals, at Lessor's discretion), based on Lessor's determination of
the amount of work completed and the monies owed to third parties involved in
the construction of the Improvements (e.g., contractors, subcontractors,
materialmen, Lessor's management company). The progress payments shall be paid
by Lessee to Lessor within five (5) days after demand by Lessor. It is the
intention of Lessor and Lessee that Lessor not be obligated to advance any cost
of constructing the Improvements and that Lessor receive all amounts payable
with respect to the construction of the Improvements prior to Lessor being
obligated to pay such amounts to third parties. It shall be a default by Lessee
under the Lease if Lessee fails to pay the monies requested by Lessor as
provided above within the required five (5) day periods.
(c) Paragraphs 51 and 52 of the Addendum shall not apply to
the New Premises.
9. Repairs to New Premises. Lessor shall repair at its sole cost
and expense any latent structural defects in the New Premises. Except as
otherwise provided in this paragraph 9 and in paragraph 8 above, Lessee
acknowledges that it is accepting the New Premises in its "as is" condition
without any representation or warranty from Lessor.
10. Option to Purchase. Paragraph 57 of the Addendum is hereby
deleted in its entirety.
11. Earthquake Insurance. Notwithstanding anything to the contrary
contained in the Lease (including, but not limited to, Paragraph 8.3(a) of the
Original Lease), from and after the date of this Second Amendment, Lessee shall
reimburse Lessor for the cost of any earthquake insurance purchased by Lessor
for the New Premises; provided, however, in no event shall such reimbursement
exceed Three Thousand Dollars ($3,000.00) in any one calendar year.
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38
12. Signs. Lessor shall have the right to place "for sale" and/or
"for lease" signs on the Premises from and after the date of this Second
Amendment.
13. Parking. Part of the Premises is composed of a parking lot area.
Lessee shall be entitled to use up to one hundred seventy-nine (179) parking
spaces in the parking lot area. Lessor reserves the right to permit other
persons or entities to use the remaining parking spaces in the parking lot area.
14. Brokers. Lessee and Lessor each represent and warrant to the
other that neither have had any dealings with any person, firm, broker or finder
other than Delphi Business Properties ("Broker") in connection with the
negotiation of this Second Amendment and/or consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than Broker is entitled to any commission or finder's fee in connection with
this Amendment. Lessee and Lessor hereby agree to indemnify, defend, protect and
hold harmless the other from and against liability for compensation or charges
which may be claimed by any broker, finder or other similar party (other than
Broker) by reason of any dealings or actions of the indemnifying party,
including any costs, expenses, or attorneys' fees reasonably incurred with
respect thereto.
15. General. If there is a conflict between the terms and conditions
of this Second Amendment and the terms and conditions of the Lease, the terms
and conditions of this Second Amendment shall control. Except as modified by
this Second Amendment, all terms and conditions of the Lease shall remain
unmodified and in full force and effect. Unless otherwise defined herein,
capitalized terms used in this Second Amendment shall have the same meaning as
capitalized terms used in the Lease.
16. Counterparts and Facsimile. This Second Amendment may be
executed in counterparts. Each counterpart shall be deemed an original, and all
counterparts shall be deemed the same instrument with the same effect as if all
parties hereto had signed the same signature page. In addition, a copy of this
Second Amendment executed by a party hereto and telecopied to the other party
shall be deemed to constitute delivery of an originally executed copy of this
Second Amendment to the other party. A facsimile signature shall be enforceable
to the same extent as an original signature.
IN WITNESS WHEREOF, the parties hereby execute this Second Amendment as
of the date first written above.
"LESSOR"
Nordhoff Industrial Complex,
a California general partnership
By:
-------------------------------------
Gerald L. Katell, General Partner
"LESSEE"
Netcom Systems, Inc.,
a California corporation
By:
-------------------------------------
Marc Hamon, President
-4-
39
EXHIBIT "A"
New Premises
40
EXHIBIT "B"
Exterior Windows
41
EXHIBIT "C"
WORK LETTER AGREEMENT
This Work Letter Agreement ("AGREEMENT") is entered into by and between
Netcom Systems, Inc. ("Lessor") and Nordhoff Industrial Complex ("LESSEE").
Concurrently with the execution of this Agreement, Lessor and Lessee have
entered into a Second Amendment to Lease (the "SECOND AMENDMENT"). In
consideration of the mutual covenants hereinafter contained, Lessor and Lessee
hereby agree as follows:
1. Lessee Improvement Coordinator. Within three (3) days after the
Second Amendment is executed by Lessor and Lessee, Lessor and Lessee shall each
designate in writing the name of one person who shall be that party's tenant
improvement representative. All communication concerning the tenant improvements
shall be directed to the appropriate party's tenant improvement representative.
Lessee shall not have the right or authority to instruct Lessor's contractor to
take any action. Any action Lessee desires Lessor's contractor to take shall be
communicated by Lessee to Lessor's tenant improvement representative, and
Lessor's tenant improvement representative shall give the necessary instructions
to the contractor.
2. Plans and Specifications.
(a) Plans. Attached hereto as Exhibit 1 and incorporated
herein by this reference are plans and specifications (the "PLANS") which have
been approved by Lessor and Lessee. The Plans describe the improvements (the
"IMPROVEMENTS") which will be made to the Premises by Lessor. Lessor shall
construct the Improvements using Lessor's building standard materials (the
"STANDARDS"). Except as set forth in the Plans, Lessor shall not be obligated to
make any other improvements to the Premises.
3. Specifications for Building Standard Improvements.
Specifications and details for the Standards are available from Lessor. No
deviations shall be permitted from the Standards.
4. Construction of Improvements.
(a) Construction. Within a reasonable period following the
receipt of a building permit, Lessor shall instruct its contractor to commence
construction of the Improvements.
(b) Completion. Lessor shall endeavor to cause the
contractor to substantially complete construction of the Improvements in a
diligent manner, but Lessor shall not be liable for any loss or damage as a
result of delays in construction or delivery of possession of the Premises.
5. Change Orders. If Lessee desires to make any change in the Plans
which is reasonable and practical (which shall be conclusively determined by
Lessor), such change may only be requested by the delivery to Lessor by Lessee
of a proposed written "CHANGE ORDER" specifically setting forth the requested
change. Lessor shall have five (5) days from the receipt of the proposed Change
Order to provide Lessee with Lessor's disapproval of the proposed change stating
the reason(s) for such disapproval, or if Lessor approves the proposed change,
the following items: (i) a summary of any increase in the cost caused by such
change (the "CHANGE ORDER COST"), (ii) a statement of the number of days of any
delay caused by such proposed change (the "CHANGE ORDER DELAY"), and (iii) a
statement of the cost of the Change Order Delay (the "CHANGE ORDER DELAY
EXPENSE"), which Change Order Delay Expense shall be the product of the number
of days of delay multiplied by Six Hundred Eighty Eight Dollars ($688). Lessee
shall then have three (3) business days to approve the Change Order Cost, the
Change Order Delay and the Change Order Delay Expense. If Lessee approves these
items, Lessor shall promptly execute the Change Order and cause the appropriate
changes to the Plans to be made. If Lessee fails to respond to Lessor within
said three (3) business day period, the Change Order Cost, the Change Order
Delay and the Change Order Delay Expense shall be deemed disapproved by Lessee
and Lessor shall have no obligation to perform any work set forth in the
proposed Change Order. The Change Order Cost shall include all costs associated
with the Change Order, including, without limitation, architectural fees,
engineering
42
fees and construction costs, as conclusively determined by Lessor. The Change
Order Delay shall include all delays caused by the Change Order, including,
without limitation, all design and construction delays, as conclusively
determined by Lessor. The Change Order Cost and the Change Order Delay Expense
shall be paid by Lessee to Lessor by check within five (5) days after the Change
Order is approved by Lessee.
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EXHIBIT 1
PLANS