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STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
September 30, 1997 is made by and between Bank of America National Trust and
Savings Association ("LESSOR") and Pacific Sunwear of California, Inc., a
California corporation ("LESSEE"), (collectively the "PARTIES," or individually
a "PARTY").
1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 5200 East La Palma Avenue, located in
the City of Anaheim, County of Orange, State of California, with zip code 92807,
as outlined on Exhibit "A" attached hereto ("PREMISES"). The "BUILDING" is that
certain building containing the Premises and generally described as (describe
briefly the nature of the Building): the Premises constitute approximately
176,299 square feet and are a portion of an industrial building having
approximately 266,963 square feet as shown on Exhibit "A". In addition to
Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the Building or to any other buildings in
the Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." (Also
see Paragraph 2.)
1.2(b) PARKING: 315 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and 35 reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)*
1.3 TERM: Ten (10) years and 0 months ("ORIGINAL TERM") commencing on
the Commencement Date (as defined in Paragraph 49) and ending on the Expiration
Date (as defined in Paragraph 49).
1.5 BASE RENT: In the amounts shown on the schedule contained in
Paragraph 53. ("BASE RENT"), payable on the first (1st) day of each month
commencing on the Commencement Date (Also see Paragraph 4.), subject to
abatement as provided in Paragraph 53.
1.6(a) BASE RENT PAID UPON EXECUTION: $65,230.63 as Base Rent for the
third (3rd) month of the Original Term.
1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: 66.0387 percent
("LESSEE'S SHARE") as determined by [X] prorata square footage of the Premises
as compared to the total square footage of the Building.
1.7 SECURITY DEPOSIT: $91,800.00 ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)
1.8 PERMITTED USE: Administrative offices, manufacturing and
distribution of apparel, footwear and accessories and all activities related
thereto ("PERMITTED USE") (Also see Paragraph 6.)
1.9 INSURING PARTY. Lessor is the "INSURING PARTY." (Also see
Paragraph 8.)
1.10(a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[x] The Seeley Company represents Lessor exclusively ("LESSOR'S BROKER");
[X] CB Commercial represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ] __________________________ represents both Lessor and Lessee ("DUAL
AGENCY"). (Also see Paragraph 15.)
1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s).
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)
1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 84, and Exhibits A through B, all of which
constitute a part of this Lease.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within 90
days after the Commencement Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)), made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within nine (9) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"APPLICABLE LAWS") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to said matters other than as set forth in this
Lease.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
* See Addendum attached hereto and made a part hereof.
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2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "PERMITTED SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)*
(a) Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right
after notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
(c) Lessor shall at the Commencement Date of this Lease,
provide the parking facilities required by Applicable Law.
2.7 COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center and interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general-non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.8 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas, except as provided in Paragraph 57. Any such storage shall
be permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right after notice,
in addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Lessee, which cost shall be immediately payable
upon demand by Lessor.
2.9 COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable and nondiscriminatory Rules and
Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees
to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.
2.10 COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or
any portion thereof; and
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be
appropriate.*
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation to
pay Base rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee.*
4. RENT.
4.1 BASE RENT. Lessee shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before the day
on which it is due under the 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
full month shall be prorated based upon the actual number of days of the month
involved. Payment of Base Rent and other charges shall be made to Lessor at its
address stated herein or to such other persons or at such other addresses as
Lessor may from time to time designate in writing to Lessee.
4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as
hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:
(a) "COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Industrial Center, including, but not limited
to, the following:
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:
(aa) The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators and roof.
(bb) Exterior signs and any tenant
directories.
(cc) Fire detection and sprinkler systems.
(ii) The cost of water, gas, electricity and
telephone to service the Common Areas.
(iii) Trash disposal, property management and security
services and the costs of any environmental inspections.
(iv) Reserves set aside for maintenance and repair
of Common Areas.
(v) Real Property Taxes (as defined in Paragraph
10.2) to be paid by Lessor for the Building and the Common Areas under
Paragraph 10 hereof.
(vi) The cost of the premiums for the insurance
policies maintained by Lessor under Paragraph 8 hereof.
(vii) Any deductible portion of an insured loss
concerning the Building or the Common Areas.
(viii) Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.
(b) Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are
not specifically attributable to the Building or to any other building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center.
(c) The inclusion of the Improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Industrial Center already has the same.
Lessor already provides the services, or Lessor has agreed elsewhere in this
Lease to provide the same or some of them.
(d) Lessee's Share of Common Area Operating Expenses shall
be payable by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual
Common Area Operating Expenses incurred during the preceding year. If Lessee's
payments under this Paragraph 4.2(d) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be credited the amount of
such over-
*See Addendum
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payment against Lessee's Share of Common Area Operating Expenses next becoming
due: If Lessee's payments under this Paragraph 4.2(d) during said preceding
year were less than Lessee's Share as indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency within ten (10) days after delivery
by Lessor to Lessee of said statement.
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Leases (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, or to be prepayment for any monies to be paid by Lessee
under this Lease.*
6. USE.
6.1 PERMITTED USE.
(a) Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use
or permit the use of the Premises in a manner that is unlawful, creates waste or
a nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The 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 potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation; or disposal or 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, governmental authority, and (iii)
the presence in, on or about the Premises of a Hazardous Substance with respect
to which any Applicable Laws require that a notice be given to persons entering
or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but upon notice to Lessor
and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor
such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Lessor's option, removal on or before
Lease expiration or earlier termination of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit Under Paragraph 5 hereof.*
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously consented
to by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 8.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee; and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved; and shall survive the expiration of earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.*
6.3 LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or 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), now in effect or which may hereafter
come into effect. Lessee shall, within five (5) days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including but not limited to permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.
6.4 INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lenders") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. The costs and expenses of any
such inspections shall be paid by the party requesting same, unless a Default
or Breach of this Lease by Lessee or a violation of Applicable Requirements or
a contamination, caused or materially contributed to by Lessee, is found to
exist or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.*
7. MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all Improvements thereon or a part thereof in good order, condition
and state of repair.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.*
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire, sprinkler, and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke
*See Addendum
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detection systems and equipment, fire hydrants; parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor
shall not be obligated to paint the interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.*
7.3 UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, 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 which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the cost
thereof does not exceed $20,000.
(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 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 be in compliance with all Applicable
Requirements. 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 $20,000 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.
(c) LIEN PROTECTION. 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
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, 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 claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.
7.4 OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises
by Lessee shall be the property of and owned by Lessee, but considered a part
of the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any 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,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease, Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice, Lessee's trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED
CONTRACT" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood 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 Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.*
(b) RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s); insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, Insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said Insurance may provide that
in the event the Lease is terminated by reason of an insured loss, the period
of Indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year's loss of rental revenues from the date of any such loss. Said Insurance
shall contain an agreed valuation provision in lieu of any co-insurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, Real Property Taxes, insurance premium costs and other
expenses, if any, otherwise payable, for the next 12-month period. Common Area
Operating Expenses shall include any deductible amount in the event of such
loss.
(c) ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
(d) LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become property of Lessor under
the terms of this Lease.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already, carried, maintain insurance coverage on all
of Lessees's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall: be full replacement cost coverage with a deductible. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property and the restoration of Trade Fixtures and Lessee-Owned Alterations and
Utility Installations. Upon request from Lessor, Lessee shall provide Lessor
with written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a Lender,
as set forth in the most current issue of "Best's Insurance Guide." Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in
* See Addendum.
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this Paragraph 8, Lessee shall cause to be delivered to Lessor, within seven
(7) days after the earlier of the Early Possession Date or the Commencement
Date, certified copies of, or certificates evidencing the existence and amounts
of, the Insurance required under Paragraph 8.2(a) and 8.4. No such policy shall
be 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.*
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort),
against the other, for loss or damage to their property arising out of or
incident to the perils required to be insured against under Paragraph 8. The
effect of such releases and waivers of the right to recover damages shall not
be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property damage insurance waive any
right to subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby.
8.7 INDEMNITY. Except for Lessor's negligence, or Lessor's contractors',
agents' or employees' willful misconduct, and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperative with Lessee in such defense. Lessor need not have first paid
any such claim in order to be so indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, 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 said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee of Lessor nor from the failure by Lessor to enforce the
provisions of any other lease in the Industrial Center. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.
(c) "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or build the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto; including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction.*
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If Premises Partial Damage that is
not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give 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
date of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the funds or assurance thereof within the
times specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days 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 (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (Or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten (10) days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee
fails to exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate as of the date set forth in the first
sentence of this Paragraph 9.5.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. * Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after the receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
* See Addendum.
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to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $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 date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.8 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.
10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term, "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the calculation
of Real Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.
10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional Improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency of all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion of all such charges jointly metered or billed with other premises in
the Building, in the manner and within the time periods set forth in Paragraph
4.2(d).
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of 50% 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 exists immediately prior to said transaction or
transactions constituting such reduction 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, or a non-curable Breach without
the necessity of any notice and grace period.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent and such action shall not relieve such persons from
liability under this Lease or the sublease.
(d) In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. 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.
* See Addendum
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(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 by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.
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) *Lessor shall not, by reason of the foregoing provision
or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rent from a sublessee, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rent and other charges due and to become due under
the sublease. Sublessee shall rely upon such statement and request from Lessor
and shall pay such rents and other charges to Lessor without any obligation or
right to inquire as to whether such Breach exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right or
claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.
(b) In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior defaults or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.
(d) No sublease under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" by Lessee is defined as a failure
by Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "BREACH" by Lessee
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies 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, Lessee's Share of
Common Area Operating Expenses, or any other monetary payment required to be
made by Lessee hereunder as and when due, the failure by Lessee to provide
Lessor with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues for
a period of five (5) days following written notice thereof by or on behalf of
Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this lease, where any such failure
continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice thereof
by or on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than 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. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this Subparagraph 13.1(e) is
contrary to any applicable law, such provision shall be of no force or effect,
and shall not affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement
of Lessee or of any Guarantor, given to Lessor by Lessee or any guarantor, was
materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the 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 assurances of security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance 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 own option, may require all future payments for a 9-month period
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 provides 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 provides 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 of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit for such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer 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 (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. Lessor and
Lessee agree that the limitations on assignment and subletting in this Lease
are reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
*See Addendum
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(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 *
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any Installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) 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 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 six (6) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.*
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are 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 portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or 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 Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority.*
15. BROKERS' FEES.
15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.
15.4 REPRESENTATIONS AND WARRANTIES. 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 as named in Paragraph 1.10(a) 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 Broker(s) 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, and/or attorneys' fees
reasonably incurred with respect thereto.
16. TENANCY AND FINANCIAL STATEMENTS.
16.1 TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall
within ten (10) days after written notice from the other Party (the "REQUESTING
PARTY") execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "TENANCY STATEMENT" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchase designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in 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 ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus two percent (2%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential 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. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail
return receipt requested or U.S. Postal Service Express Mail, with postage
prepaid, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party's signature on
this Lease shall be that Party's address for delivery or mailing of notice
purposes. Either Party may by written notice to the other specify a different
address for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for the purpose of
mailing or delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designated by written notice to Lessee.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown or acceptance of delivery is
refused the postmark thereon. Notices delivered by United States Express Mail or
overnight courier that guarantees next day
* See Addendum.
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delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.
24. WAIVER. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof, Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provisions of this Lease requiring such consent.
Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given Lessor
by Lessee may be accepted by Lessor on account of moneys or damages due Lessor
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
23. 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. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to 150% of the Base Rent
applicable during the month immediately preceding such expiration or earlier
termination. Nothing contained herein shall be construed as a consent by Lessor
to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
and 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
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. 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 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 he 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 Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorneys' fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorneys' fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs. All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.*
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the exterior of the
Premises or the Building, 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 so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions of
Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.
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 leaser 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' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering
and responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. GUARANTOR.
37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.
37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor
(and of the party signing on Guarantor's behalf) to obligate such Guarantor on
said guaranty, and resolution of its board of directors authorizing the making
of such guaranty, together with a certificate of incumbency showing the
signatures of the persons authorized to sign on its behalf, (b) current
financial statements of Guarantor as may from time to time be requested by
Lessor, (c) a Tenancy statement, or (d) written confirmation that the guaranty
is still in effect.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
*See Addendum.
MULTI-TENANT--MODIFIED NET
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39. OPTIONS*
39.1 DEFINITION. As used in this Lease, the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease 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 time Lessee is in Breach of this Lease, or (iii) in the event that
Lessor has given to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during the twelve (12) month period immediately preceding the
exercise of the Option, whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a)
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessor gives to Lessee three (3) or more notices of
separate Defaults under Paragraph 13.1 during any twelve (12) month period,
whether or not the Defaults are cured, or (ii) if Lessee commits a Breach of
this Lease.
40. RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all nondiscriminatory reasonable rules and regulations ("Rules and
Regulations") which Lessor may make from time to time for the management,
safety, care, and cleanliness of the grounds, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
*See Addendum
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LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE
THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Los Angeles, California Executed at: Anaheim, California
------------------------- ----------------------------
on: October 17, 1997 on: October 13, 1997
---------------------------------- -------------------------------------
By LESSOR: By LESSEE:
Bank of America National Trust and Pacific Sunwear of California, Inc.
- ------------------------------------- ----------------------------------------
Savings Association a California corporation
- ------------------------------------- ----------------------------------------
By: /s/ KENT PETERS By: /s/ CARL WOMACK
---------------------------------- -------------------------------------
Name Printed: Kent Peters Name Printed: Carl Womack
------------------------ ---------------------------
Title: Vice President Title: CFO
------------------------------- ----------------------------------
By: [SIG] By: /s/ GREG H. WEAVER
---------------------------------- -------------------------------------
Name Printed: Peter Daniels Name Printed: Greg H. Weaver
------------------------ ---------------------------
Title: Vice President Title: Chief Executive Officer
------------------------------- ----------------------------------
Address: 333 S. Beaudry Avenue Address: 5037 East Hunter Avenue
----------------------------- --------------------------------
21st Floor, Los Angeles, CA 90017 Anaheim, CA 92807
- ------------------------------------- ----------------------------------------
Telephone: (213) 345-0425 Telephone: (714) 693-8066
--------------------- ------------------------
Facsimile: (213) 345-9128 Facsimile: (714) 693-8165
--------------------- ------------------------
and after the Commencement Date the
notice address shall be the Premises
BROKER: BROKER:
Executed at: Executed at:
------------------------- ----------------------------
on: on:
---------------------------------- -------------------------------------
By: By:
---------------------------------- -------------------------------------
Name Printed: Name Printed:
------------------------ ---------------------------
Title: Title:
------------------------------- ----------------------------------
Address: Address:
----------------------------- --------------------------------
- ------------------------------------- ----------------------------------------
Telephone: ( ) Telephone: ( )
--------------------- ------------------------
Facsimile: ( ) Facsimile: ( )
--------------------- ------------------------
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 South
Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE -- MODIFIED NET
BY AND BETWEEN
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("LESSOR")
AND
PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
DATED SEPTEMBER 30, 1997
49. COMMENCEMENT DATE:
Lessor and Lessee agree that the estimated Commencement Date shall be
December 15, 1997 ("Estimated Commencement Date"). The actual Commencement
Date shall be the earlier of (i) the date Lessee occupies the Premises for
its business purposes (which shall include without limitation the storage
of inventory) or (ii) the later of (a) the Estimated Commencement Date or
(b) the date the Base Lessee Improvements, the Lessee Improvements and the
Additional Lessee Improvements (collectively, the "Total Lessee
Improvements") are substantially completed; provided that such date shall
be accelerated by one day for each day that substantial completion of the
Total Lessee Improvements is delayed by Lessee's Delays. The term of the
Lease shall expire on the date (the "Expiration Date") that is the last
day of the calendar month in which the tenth anniversary of the
Commencement Date falls, subject to extension pursuant to Paragraph 54 of
this Lease.
50. TERM:
The Term of the Lease shall commence on the Commencement Date, and shall
continue, subject to earlier termination as provided herein, until the
Expiration Date. In the event permission is given to Lessee to enter or
occupy all or a portion of the Premises prior to the Commencement Date,
such occupancy shall be subject to all of the terms and conditions of this
Lease, except that if such entry is pursuant to Paragraph 52, Lessee shall
not be obligated to pay Base Rent and any other amount payable by Lessee
under this Lease.
Lessor shall use all reasonable efforts to make the Premises available on
the Estimated Commencement Date. If for any reason, however, Lessor cannot
deliver possession of the Premises to Lessee on said 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 be obligated to
pay rent or perform any other obligations of Lessee under the terms of
this Lease, except as may be otherwise provided in this Lease, until the
Commencement Date shall have occurred. If, however, the Commencement Date
shall not have occurred on or before February 3, 1998 for any reason,
other than Lessee's Delays (defined below) or any reason beyond the
reasonable control of Lessor, Lessee shall receive an offset of Base Rent
for each day after such date that the Commencement Date shall not have
occurred. Such date will be adjusted forward for each day that substantial
completion of the Total Lessee Improvements is delayed by Lessee's Delays.
For purposes of this Paragraph 50, Lessor's inability to obtain a building
permit within 14 business days after receipt of Lessee's interior
construction drawings shall be deemed a delay for a reason beyond the
reasonable control of Lessor.
If the Commencement Date shall not have occurred on or before May 1, 1998
for any reason, other than Lessee's Delays or any reason beyond the
reasonable control of Lessor, Lessee may, at its option, by notice in
writing to Lessor within 10 days after that date, cancel this Lease, in
which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of
Lessee is not received by Lessor within said 10-day period, Lessee's right
to cancel this Lease hereunder shall terminate and be of no further force
or effect.
51. SUBSTANTIAL COMPLETION:
The work to be performed by Lessor under this Lease shall be deemed
substantially completed on the date on which all of the following shall
have been satisfied: (a) all work required for an Occupancy Permit shall
have been completed and it is legally permissible to occupy the Premises,
(b) all work to be performed by Lessor under Paragraph 55 shall have been
completed to the extent that the Premises can be used by Lessee without
material interference with the operations of its business, excluding
punchlist items or other noncritical elements of the Lessee Improvements,
and (c) all mechanical systems in the Premises are in good operating order.
52. EARLY ACCESS:
Lessor shall, subject to the following terms and conditions, permit Lessee,
and Lessee's agents, to enter the Premises during the seventy-five (85) day
period prior to the Estimated Commencement Date:
(a) Lessee shall give Lessor reasonable prior written notice of such
access to the Premises, which notice must contain or be accompanied
by: (i) a description and schedule for the work to be performed in the
Premises; (ii) the names and addresses of all contractors performing
such work; (iii) copies of all contracts pertaining to the performance
of such work; (iv) copies of all licenses and permits required in
connection with the performance of such work; and (v) certificates of
insurance and instruments of indemnification against all claims,
costs, expenses, damages, suits,
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fines, penalties, actions, causes of action, and liabilities which may
arise in connection with such work. Each of the foregoing shall be
subject to Lessor's approval, which approval shall not be arbitrarily
withheld. Notwithstanding the foregoing, Lessor agrees not to
unreasonably withhold its consent with respect to Items (i) through
(v) of this Paragraph 52(a) related to the installation by SDI
Industries of Lessee's material handling system in the distribution
center portion of the Premises.
(b) Such early access is subject to reasonable scheduling by Lessor.
(c) Lessee's agents, contractors, workers, mechanics, suppliers, and
invitees must work in harmony and not interfere with Lessor and
Lessor's contractor in doing work in the Premises, in other premises,
and common areas of the Building, and in the general operation of the
Building. If at any time such entry shall cause or threaten to cause
disharmony or interference, including labor disharmony, Lessor may
withdraw its permission upon written notice to Lessee.
(d) In the event that Lessor's work in the Premises and Lessee's work in
the Premises (pursuant to the permission granted herein) progress
simultaneously, Lessor shall not be liable for injury to any person or
for damage to any property of Lessee, Lessee's employees, agents,
licensees, or invitees, from any cause whatsoever, occurring upon or
about the Premises, and Lessee shall indemnify and save Lessor
harmless from any and all liability and claims arising out of or
connected with any such injury or damage. Lessee will not permit any
lien on any part of the Building allegedly resulting from any work or
materials furnished or obligations incurred by or for Lessee. Lessee
will discharge any such lien of record immediately upon its filing.
(e) Lessee agrees that it is liable to Lessor for any damage to the
Premises or to any portion of the work in the Premises caused by
Lessee or any of Lessee's employees, agents, licensees, or invitees.
53. BASE RENT:
Commencing on the Commencement Date, the Base Rent payable by Lessee to
Lessor during the Term of this Lease shall be as follows:
------------------------------------------------------------------
MONTHS PER SQ. FT. NNN PER MO. NNN
------ --------------- -----------
*BASED ON SQ. FT.
------------------------------------------------------------------
1 - 2 0 cents $ 0
3 - 30 37 cents $65,230.63
31 - 60 40.7 cents $71,753.69
61 - 90 44.77 cents $78,929.06
91 - 120 49.25 cents $86,827.26
------------------------------------------------------------------
The obligation to pay Base Rent shall be abated for the first two (2)
months of the Term of this Lease. All other terms of this Lease, however,
including but not limited to the obligations to pay Lessee's Share of
Common Area Operating Expenses, together with the insurance required by
Paragraph 8, and the amount of any monthly amortized Additional Lessee
Improvement Allowance, shall be in effect during such period.
54. OPTION TO EXTEND:
54.1 Grant of Option. Lessee shall have the right, but not the obligation,
to extend the Term of this Lease for two (2) additional periods of
five (5) years each (the "Extension Period"), provided that the
following criteria are met:
(a) Lessee is not in default under any provision of this Lease beyond
any applicable cure periods either (i) as of the date the
"Extension Notice" (as defined below) is delivered to Lessor or
(ii) as of the date of the commencement of the Extension Period;
and
(b) Lessee has not assigned or subleased any portion of the Premises
other than as permitted by Paragraph 12 of this Lease.
54.2 Exercise of Option. Lessee may exercise its right to extend the Term
only by delivering written notice to Lessor of Lessee's desire to so
extend the Term no later than six (6) months nor earlier than nine (9)
months prior to the commencement of the Extension Period ("Lessee's
Notice"), subject to the Monthly Base Rent determination by Lessor in
accordance with Paragraph 54.3.
54.3 Monthly Base Rent for Extension Period. Within thirty (30) days of
Lessor's receipt of Lessee's Notice, Lessor shall deliver written
notice to Lessee which shall provide for Monthly Base Rent for the
Extension Period equal to 95% of an amount equal to the fair market
rental (the "Fair Market Rent") for the Premises determined by Lessor
according to the rental then being charged
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for comparable space in comparable deals in buildings of similar size
and construction in Anaheim, Yorba Linda and Fullerton (the "Market Rent
Notice"). In determining comparable space, appropriate consideration
shall be given to the level and type of improvements contained in the
Premises and the use of the Premises as a corporate headquarters for the
lessee. "Comparable deals" shall mean leases which are approximately as
long, and commencing at approximately the same time, as the applicable
Extension Period. "Comparable deals" shall not include any transactions
where the lessor of the subject building is in default under its
mortgage or other indebtedness, or is currently, or has within the prior
12 months been involved in foreclosure proceedings on the applicable
building. "Comparable deals" shall also exclude transactions which are
subleases or whereby the lessee has some form of equity participation in
the deal. Notwithstanding the foregoing, in no event shall the Monthly
Base Rent for the Extension Period be less than the sum of (a) the
Monthly Improvement Payment (as defined below) and (b) Base Rent payable
by Lessee for the month prior to the commencement of the Extension
Period. In the event that Lessee notifies Lessor in writing, on or
before the 20th business day following any Market Rent Notice, that
Lessee disagrees with the applicable determination, Lessor and Lessee
shall negotiate in good faith to resolve such dispute within 10 business
days thereafter (The 30th business day after any Market Rent Notice is
referred to herein as the "Outside Agreement Date"). If not resolved by
the Outside Agreement Date each party shall submit to the other its
determination of Fair Market Rent and the dispute shall be submitted to
arbitration in accordance with the following paragraph titled
"Arbitration Procedures." Until any such dispute is resolved, any
applicable payments due under this Lease shall correspond to Lessor's
determination and, if Lessee's determination becomes the final
determination, Lessor shall refund any overpayments to Lessee, within 5
business days following the final resolution of the dispute.
54.4 Arbitration Procedures.
(i) Lessor and Lessee shall each appoint one arbitrator who
shall by profession be a real estate broker who shall have been active
over the 5-year period ending on the date of such appointment in the
leasing of properties similar to the Premises in Anaheim, Yorba Linda
and Fullerton. The determination of the arbitrators shall be limited
solely to the issue of whether Lessor's or Lessee's submitted Fair
Market rent for the Premises is the closest to the actual Fair Market
Rent for the Premises as determined by the arbitrators, taking into
account the requirements of this subparagraph regarding the same. Each
such arbitrator shall be appointed within 15 days after the Outside
Agreement Date. Lessor and Lessee may not consult with either such
arbitrator prior to resolution.
(ii) The two arbitrators so appointed shall within 15 days of
the date of the appointment of the last appointed arbitrator, meet and
attempt to reach a decision as to whether the parties shall use Lessor's
or Lessee's submitted Fair Market Rent, and shall notify Lessor and
Lessee of their decision, if any.
(iii) If the two arbitrators are unable to reach a decision,
the two arbitrators shall, within 30 days of the date of the appointment
of the last appointed arbitrator, agree upon and appoint a 3rd
arbitrator who shall be a broker who shall be qualified under the same
criteria set forth hereinabove for qualification of the initial 2
arbitrators.
(iv) The 3 arbitrators shall, within 30 days of the
appointment of the 3rd arbitrator, reach a decision as to whether the
parties shall use Lessor's or Lessee's submitted Fair Market Rent, and
shall notify Lessor and Lessee thereof.
(v) The decision of the majority of the 3 arbitrators shall
be binding upon Lessor and Lessee.
(vi) If either Lessor or Lessee fails to appoint an
arbitrator within 15 days after the Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify
Lessor and Lessee thereof, and such arbitrator's decision shall be
binding upon Lessor and Lessee.
(vii) If the 2 arbitrators fail to agree upon and to appoint a
3rd arbitrator, than the appointment of the arbitrator shall be
dismissed, and the matter to be decided shall be forthwith submitted to
arbitration under the provisions of the American Arbitration
Association, but subject to the instructions set forth in this Lease.
(viii) The cost of arbitration shall be paid by Lessor and
Lessee equally.
Upon determination of the Fair Market Rent, Lessor shall prepare and
deliver to Lessee an amendment to this Lease (the "Extension Amendment")
which provides for the extension of the term pursuant to the provisions
hereof with a Monthly Base Rent equal to 95% of the Fair Market Rent.
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54.5 Time of the Essence. Time shall be of the essence regarding all the
periods set forth above for the exercise of the option and execution
of the Extension Amendment. The failure of Lessee to timely exercise
the option as provided in Paragraph 54.2 and 54.3 above shall cause
this option to automatically cease and terminate and, in such event,
this Lease shall terminate without extension.
54.6 Non-Transferable Option. The option granted herein is granted solely
to Lessee and is not assignable or transferable and any attempt to
assign or transfer this option shall be void and of no force or
effect; excluding, however, any permitted assignment as provided in
Paragraph 12 of this Lease.
55. LESSEE IMPROVEMENTS:
55.1 Approved Plans and Schedule. Lessor shall, at its sole cost and
expense, construct the base Lessee Improvements and the Lessee
Improvements and subject to reimbursement of Lessor by Lessee pursuant
to Paragraph 55.4, the Additional Lessee Improvements, pursuant to
interior construction drawings sufficient to permit accurate bidding
by the contractors ("Approved Plans") prepared by Lessee and approved
by Lessor and described on Exhibit "B." Lessor acknowledges receipt of
Lessee's space plan on August 11, 1997, and Lessee's interior
construction drawing on September 17, 1997, and approval thereof.
Lessee may select its own interior architect. The Lessor and the
Project Manager (as defined below) shall obtain bids from Oltmans
Construction, Snyder Langston and two other qualified contractors
selected by Lessor for construction of the work provided for under
this Paragraph 55. The Project Manager shall provide Lessee with
copies of the bids received from each of the contractors and will make
reasonable efforts to consult with Lessee with respect to negotiating
with the contractor selected by Lessor the portions of the contract
relating to the office improvements, and during the bidding process
and construction period.
55.2 Base Lessee Improvements. Lessor shall, at its sole cost and expense,
construct the following improvements to the Premises (the "Base Lessee
Improvements"):
(a) Upgrade the sprinkler system in the southwest high bay warehouse
area of the Premises; provided, however, that in no event shall
Lessor be required to spend in excess of $20,000, and any cost
that exceeds such amount shall be paid by Lessee out of the
Additional Lessee Improvement Allowance;
(b) Reconfigure the parking area of the Industrial Center in
accordance with a plan prepared by Lessor and approved by Lessee
("Parking Plan") to provide lessee with 350 parking spaces.
(c) Repaint the exterior of the Building.
(d) Demise the Premises from the easterly, adjacent space consisting
of approximately 90,664 square feet ("Adjacent Space") of the
Building in accordance with Exhibit "A," provided that Lessee
shall be responsible for the cost of any alterations to the
existing security system resulting from demising the Building,
and the cost of any repair or upgrades to such security system
requested by Lessee; provided, however, that Lessor shall use
reasonable efforts, at no additional cost to Lessor, to preserve
intact and not damage the existing security system. Any cost of
the alterations of the existing security system may be paid by
Lessee out of the Additional Lessee Improvement Allowance.
(e) Separate the utilities servicing the Premises to function
independently of the Adjacent Space in the Building, including
electrical, HVAC and lighting; and
(f) Remove the existing racking system from the Premises no later
than October 1, 1997, which will remain Lessor's personal
property.
55.3 Lessee Improvements. Lessor shall, at its sole cost and expense,
construct certain improvements in the Premises (the "Lessee
Improvements") substantially in accordance with the Approved Plans and
all applicable rules, regulations, laws or ordinances; provided,
however, that in no event shall Lessor be required to spend in excess
of $300,000 (the "Lessee Improvement Allowance") to build the Lessee
Improvements. The cost of the Lessee Improvements that exceeds the
amount of the Lessee Improvement Allowance shall be treated as a
contribution by Lessor of a portion of the Additional Lessee
Improvement Allowance under Paragraph 55.4. The Lessee Improvement
Allowance may be used only for the cost of the Lessee Improvements as
described in Paragraph 55.5 below.
55.4 Additional Lessee Improvements. Upon Lessee's request, Lessor shall
construct certain additional improvements in the Premises (the
"Additional Lessee Improvements") substantially in accordance with the
Approved Plans, and all applicable rules, regulations, laws or
ordinances. Lessor shall contribute up to $800,000 ("Additional Lessee
Improvement Allowance") towards the costs of the Additional Lessee
Improvements and any such amounts contributed will be repaid by
Lessee, plus 10% interest per annum, in equal monthly installments
amortized over the Term of the Lease (the
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"Monthly Improvement Payment"). Such additional payments will be made
at the same time and in the same manner as Rent under this Lease. Lessee
shall be required to pay any costs in excess of the Additional Lease
Improvement Allowance within fifteen (15) days after receiving written
notice from Lessor describing such excess costs.
55.5 Lessee Improvement Allowance. The cost of the Lessee Improvements and
Additional Lessee Improvements shall include the cost of all labor and
materials for the construction and installation of the Lessee
Improvements and Additional Lessee Improvements respectively; the cost
of all permits, licenses and fees; all amounts paid to Lessor's
contractors under and pursuant to contracts for the construction and
installation of the Lessee Improvements and Additional Lessee
Improvements respectively; all architectural, engineering, space
planning and other consultants' fees; all amounts paid for mechanical
drawings, plans, specifications, shop drawings, designs and layouts;
and incidental costs related to the foregoing. The cost of Lessee
Improvements and Additional Lessee Improvements shall not include, and
Lessor shall not charge, any fees for Lessor's profit, overhead or
supervision. The Lessee Improvement Allowance shall not include, and
Lessee shall be responsible for, the cost to remove or alter the excess
mezzanine area of the Premises. Lessee, at its option, may retain,
alter, move or remove all or any portion of the mezzanine. At the
expiration of the term, Lessee shall remove the mezzanine at Lessor's
sole cost and expense.
55.6 Lessee-Initiated Changes. Lessee shall be permitted to initiate changes
in the design and construction requirements of the Lessee Improvements
throughout the course of the construction of the Lessee Improvements.
Said changes shall be incorporated by Lessor at actual cost, with a
maximum fee mark-up by Lessor's general contractor limited to the
general contract base fee percentage. Design/engineering reimbursements
for Lessee-initiated changes shall be based upon design/engineering
consultant actual costs including time and materials. All costs of
Lessee-initiated changes requiring revisions, including engineering,
estimating, coordination, layout, and printing of drawings,
specification changes, and any other incidental expenses, shall be
included in the cost of the Lessee Improvements and Additional Lessee
Improvements respectively.
55.7 Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor shall have
no obligation to Lessee for defects in design, workmanship or
materials, but shall use its reasonable best efforts to enforce the
contractor's obligations therefor and shall, as appropriate under the
terms of the Lease given the allocation of maintenance responsibility
between Lessor and Lessee, assign to Lessee any manufacturer's
warranties with respect to the work or the Premises.
55.8 Work Done by Lessee. Any work done by Lessee in the Premises shall be
done at Lessee's sole cost and expense in accordance with the terms of
this Lease and only with Lessor's prior consent and in conformity with
a valid building permit and all applicable rules, regulations, laws and
ordinances. Any work done by Lessee shall be done in a good and
workmanlike manner with good and sufficient materials, and shall be
done only by contractors approved by Lessor. Lessor hereby approves of
SDI Industries as Lessee's contractor and of SDI's subcontractors for
the installation of a material handling system in the distribution
center in the Premises during the early access period.
55.9 Acceptance of Lessee Improvements. Lessee shall notify Lessor in
writing of any items that Lessee deems incomplete or incorrect in order
for the Premises to be acceptable to Lessee within ninety (90) days
following completion of the Lessee Improvements and Additional Lessee
Improvements. Lessee shall be deemed to have accepted the Premises as
improved and to have approved construction if Lessee does not deliver
such a list to Lessor within said number of days.
55.10 Other Improvements. Lessor shall, at its sole cost and expense, be
responsible to make any alterations to the Building (but not the
Premises) during the Term of the Lease and any Extension Period, as and
if required for compliance with the Americans with Disabilities Act
("ADA"), so long as such compliance is not a result of Lessee's specific
use of the Building or Lessee's Alterations under Paragraph 7.3. With
respect to the Premises, including, without limitation, the Base Lessee
Improvements and Additional Lessee Improvements, any alterations to the
bathroom, showers or elevator required by the ADA as interpreted and
applied on the Commencement Date shall be made, at Lessor's sole cost
and expense without deduction from the Lessee Improvement Allowance or
the Additional Lessee Improvement Allowance. Any such alterations shall
be separately itemized and priced by Lessor's contractor. Lessee shall,
at its sole cost and expense, be responsible (a) to make any alterations
to the Premises required due to any changes in the ADA, including
without limitation the interpretation and application thereof, after the
Commencement Date, or required due to Lessee's specific use of the
Premises or due to any Alterations under Paragraph 7.3 performed by
Lessee in the Premises after the Commencement Date, and (b) for the cost
of any alterations to the Building required for compliance with the ADA
arising out of Lessee's specific use of the Premises or due to any of
Lessee's Alterations under Paragraph 7.3. The cost associated with any
seismic retrofit of the Premises, as and if required, whether under
current or future law, shall be the responsibility of Lessor except to
the extent required due to the unique nature of Lessee's use, the Lessee
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Improvements, the Lessee Additional Improvements or Lessee's
Alterations. Lessor's costs under this Paragraph 55.10 shall not
be included in Lessee's Share of Common Area Expenses.
55.11 Lessee Delays. If Lessor is delayed in substantially completing
any work to be performed by Lessor under this Paragraph 55 as a
result of any of the following circumstances or events ("Lessee
Delays"), the Commencement Date shall not be deferred by reason
of such delay:
(a) Lessee's failure to furnish the space plan by August 11,
1997;
(b) Lessee's failure to respond within one business day to
any request of Lessor for additional information or
approval as necessary in connection with the completion
of the Total Lessee Improvements;
(c) Lessee's failure to furnish interior construction
drawings by September 17, 1997;
(d) Lessee's request for any special, long-lead materials or
installations as part of the Lessee Improvements or
Additional Lessee Improvements; provided, however, that
Lessor notifies Lessee of any such materials or
installation within 10 days after receiving bids from
the general contractor;
(e) Lessee's changes in any drawings, plans, or
specifications to the Approved Plans, including without
limitation the time consumed at revising plans or in
revising the Approved Plans by reason of Lessee's
changes;
(f) Any changes initiated by Lessee by reason of Lessee's
disapproval of cost proposals or resulting in the
preparation of revised cost proposals;
(g) Field changes to the construction work by Lessee;
(h) The delivery, installation, or completion of any Lessee-
finish work performed by Lessee's employees or agents;
(i) The performance of any work done by Lessee, or any
failure to complete or delay in completion of such
work; or
(j) Any other act or omission of Lessee.
55.12 Project Manager. The project manager for the Total Lessee
Improvements shall be ZB Investment Company (the "Project
Manager"). Lessee agrees to reimburse Lessor within 10 days
after demand for Lessee's share of the cost of the Project
Manager in the amount of $3,000.00 per month, not to exceed
$21,000.00 in the aggregate. The Project Manager's duties shall
include handling the bids pursuant to Paragraph 55.1,
negotiating with the bidding contractors, assisting Lessor in
selecting the contractor, negotiation of the terms of the
contractor's contract, giving written notice to Lessee of
potential Lessee Delays, and making final determinations of
whether a Lessee Delay has occurred and of the extent of the
Lessee Delay.
56. FIRST RIGHT OF OFFER:
No later than 30 days prior to commencing marketing for releasing (as
defined below) the balance of the space in the Building that becomes
available (as defined below) (the "Offer Space"), Lessor shall first
offer to lease such space to Lessee by a written notice (a "First Offer
Notice") Lessee thereupon shall have the right ("ROFO") to lease all of
the Offer Space at the ROFO Fair Market Rent (as defined below) for the
remaining term of the Lease (including the option to extend pursuant to
Paragraph 54 at the Monthly Base rent as determined therein for the
application Extension Period). The ROFO shall be exercised by Lessee
notifying Lessor, within ten days after Lessee's receipt of the First
Offer Notice, of Lessee's exercise of its right to lease such Offer
Space upon the terms set forth herein. If Lessee so notifies Lessor,
Lessor shall deliver the Offer Space to Lessee upon the date such space
is available and shall prepare an amendment to this Lease adding the
Offer Space to the Premises on the date of delivery on the terms set
forth herein, which amendment shall be delivered to Lessee promptly
after exercise and executed by Lessee within 15 days after Lessee's
receipt of same from Lessor. For purposes of this Paragraph 56, ROFO
Fair Market Rent shall mean the monthly Base Rent then being charged for
comparable space and comparable deals in buildings of similar size and
construction in Anaheim, Yorba Linda and Fullerton. In determining
comparable space, appropriate consideration shall be given to the level
and type of improvements contained in the Offer Space. "Comparable
deals" shall mean leases which are approximately as long, and commencing
at approximately the same time, as the leasing of the Offer Space
through the end of the initial term. "Comparable deals" shall not
include any transactions where the lessor of the subject building is in
default under its mortgage or other indebtedness, or is currently, or
has within the prior 12 months been involved in foreclosure proceedings
on the applicable building. "Comparable deals" shall also exclude
transactions which are subleases or whereby the Lessee has some form of
equity participation in the deal. Lessor shall give Lessee notice in
writing within 30 days after Lessee's exercise of the ROFO of the ROFO
Fair Market Rent (the "ROFO Market Rent Notice"). In the event the
Lessee notifies Lessor in writing, on or before the 20th business day
following the ROFO Market Rent Notice, that Lessee disagrees with the
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applicable determination, Lessor and Lessee shall negotiate in good faith
to resolve such dispute within 10 business days thereafter (the 30th
business day after any ROFO Market Rent Notice is referred to herein as the
"ROFO Outside Agreement Date.)" If not resolved by the ROFO Outside
Agreement Date, each party shall submit to the other its determination of
ROFO Fair Market Rent and the dispute shall be submitted to arbitration in
accordance with Paragraph 54.4 with the following modifications: (i) the
word "ROFO" is inserted before the words "Fair Market Rent" and "Outside
Agreement Date" each place they appear, (ii) the words "Offer Space" are
substituted for the word "Premises" each place it appears, and (iii) the
last sentence of Paragraph 54.4 is deleted. Until any dispute as to ROFO
Fair Market Rent is resolved, any applicable payments due under this Lease
shall correspond to Lessor's determination and, if Lessee's determination
becomes the final determination, Lessor shall refund any overpayments to
Lessee, within 5 business days following the final resolution of the
dispute. Lessor shall be deemed to be "releasing" any such Offer Space when
the first lease of such Offer Space entered into within the first year
after the Commencement Date terminates and the Offer Space becomes
available. The Offer Space shall be deemed to be "available" as of any date
only to the extent it has not been subject to or comprised of expansion
option, first offer, or a lease to an existing tenant in occupancy of such
space, unless such tenant has specified in writing that it has no interest
in re-leasing such space. In event that Lessee does not timely accept the
offer contained in any Offer Notice, or in the event that Lessee accepts
any such offer but Lessee does not execute an amendment within 15 days
after Lessee's receipt of same from Lessor which adds such Offer Space to
the Premises, Lessor shall have the right to lease such Offer Space to any
other person on any terms and Lessee shall have no further rights under
this Paragraph. The provisions of Paragraph 39 are applicable to this right
of first offer. In addition, Lessee shall have no rights to exercise its
ROFO rights during any period in which it is not in occupancy of 100% of
the Premises or in which an assignment of this Lease or a sublease of the
Premises is in effect.
57. TRAILER STORAGE; RESERVED PARKING:
Lessee may store trailers overnight within the loading area outlined in
Exhibit "A" next to the loading docks of the Premises, subject to Paragraph
40. The location of the Reserved Parking Spaces shall be designated by
Lessor, subject to Lessee's approval, which shall not be unreasonably
withheld or delayed.
58. CONDITIONS, COVENANTS AND RESTRICTIONS:
Lessor shall provide Lessee a copy of any conditions, covenants and
restrictions that may be of record in connection with the Industrial
Center.
59. HAZARDOUS SUBSTANCES:
To the best of Lessee's current actual knowledge, without inquiry or
investigation, there is no asbestos nor any other Hazardous Substances
including, but not limited to, radon gas, PCBs, lead base paint, ground
water contamination, industrial, radioactive or chemical waste,
urea-formaldehyde insulation, and underground storage tanks on or under, or
within the Industrial Center in violation of applicable law.
In addition to the terms of Paragraph 6.2, Lessee shall disclose to Lessor
in writing whether any Hazardous Substances will be used, stored or
disposed in the Premises, which disclosure shall include an inventory of
such substances, and provide a use, storage and disposal plan for the
handling of such substances. Lessor may disapprove of the use, storage
and/or disposal of such substances within the Premises at Lessor's sole
discretion.
Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction
with respect to the existence of Hazardous Substances on the Premises or
the Building which are not brought on to the Premises, Building or Common
Areas by Lessee. Lessee shall fully cooperate in any such activities at
the request of Lessor, including allowing Lessor and Lessor's agents to
have reasonable access to the Premises at reasonable times in order to
carry out Lessor's investigative and remedial responsibilities. The costs
incurred by Lessor for such investigation and remediation shall not be
included in Lessee's Share of Common Area Operating Expenses. Any
liability of Lessor with respect to this covenant shall be satisfied only
out of Lessor's interest and estate in the Premises and Building, and
Lessor shall have no personal liability beyond such interest and estate
with respect to such obligations. This covenant shall be of no further
force or effect with respect to Bank of America National Trust and Savings
Association from and after its sale of the Premises and Building.
60. ASSIGNMENT AND SUBLETTING:
The parties agree that it would be reasonable for Lessor to condition its
consent to any proposed assignment or sublease on Lessee's agreement to
pay to Lessor 50% of rent received from the assignee or sublessee by
Lessee in excess of the rent payable by Lessee pursuant to this Lease
after deducting any direct expenses incurred by Lessee in connection with
such assignment or sublease including, but not limited to, any changes,
alterations and improvements to the Premises, and any brokerage
commissions, and on Lessee's payment to Lessor of 50% of all other
consideration given, directly or indirectly, by the assignee or sublessee
to Lessee in consideration of any such assignment or sublease. It is the
intention of Lessor and
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Lease that the foregoing provisions shall apply to any consideration
received by Lessee from sub-sublessees or future assignees, regardless of
the number of levels thereof. Any rent or other consideration which is to
be paid to Lessor by Lessee pursuant to this paragraph shall be paid
promptly upon receipt by Lessee.
61. ADDITIONAL PERMITTED USES (PARAGRAPH 1.8):
The Permitted Uses shall also include any other use permitted by Applicable
Laws; provided that Permitted Uses shall exclude any use which (a) violates
any certificate of occupancy in force for the Premises, the Building or any
part thereof, (b) causes or is likely to cause damage to the Building or
any part thereof or any equipment, facilities or other systems therein; (c)
constitutes a violation of law; (d) violates a requirement or condition of
the standard fire insurance policy issued for the Buildings, (e) impairs
the character, reputation, image or appearance of the Building; (f) impairs
the proper and economic maintenance, operation or repair of the Building or
any part thereof; (g) constitutes a nuisance, annoyance or inconvenience to
other lessees or occupants of the Building or interferes with or disrupts
the use or occupancy of any area of the Building (other than the Premises)
by other lessees or occupants; (h) interferes with the transmission or
reception of microwave, television, radio or other communications signals
by antennae located on the roof or elsewhere in the Building; (i) results
in repeated demonstrations, bomb threats or other events which require
evacuation of any part of the Building or otherwise disrupt the use,
occupancy or quiet enjoyment thereof by other lessees and occupants, or (j)
involves the use of any part of the Premises for: (1) a restaurant or bar;
(2) the storage, manufacture or sale of food, beverages, liquor, tobacco in
any form or drugs (except that Lessee may maintain vending machines for the
use of its officers, employees and invitees and except that Lessee's
officers and employees may bring food, beverages, tobacco and medicine onto
the Premises for their personal and lawful consumption); (3) the storage,
use, treatment, manufacture or sale of Hazardous Substances (as defined
below); (4) the business of photocopying or offset printing (but Lessee may
use part of the Premises for photocopying or offset printing for its own
business); (5) medical or dental offices or laboratories; (6) a school or
classroom; (7) the retail sale or auction of merchandise, goods or property
of any kind; or (8) cooking (except that Lessee may maintain coffee or
lunch rooms with coffee makers and microwave ovens for the exclusive use of
Lessee's officers, employees and invitees), lodging or sleeping. No noise,
vibration or odor shall be permitted to escape from the Premises.
62. ADDITION TO END OF PARAGRAPH 2.10:
Lessor agrees to exercise its rights under this Paragraph 2.10 in a manner
designed to minimize to the extent reasonably possible interference with
Lessee's business and consistent with the practices of owners of similar
parks in the Anaheim area. No capital expenditures for changes to the
Common Areas pursuant to Paragraphs 2.10(a), (c), (d) or (f) shall be
included in Common Area Operating Expenses for purposes of this Lease.
63. AUDIT RIGHT AND ADDITIONS TO PARAGRAPH 4.2:
The following is added to the end of Paragraph 4.2:
"(e) In the event of any dispute as to the amount of Operating Expenses
as set forth in Lessor's statement of Operating Expenses delivered to
Lessee, Lessee shall have the right, after reasonable notice and at
reasonable times within one year after the final statement for such
Operating Expenses is delivered to Lessee, to inspect and photocopy (at
Lessee's expense) Lessor's accounting records with respect to Lessee's
Share of Operating Expenses. If, after such inspection and photocopying,
Lessee still disputes the amount of Operating Expenses as set forth in
Lessor's statement, Lessee shall be entitled to retain an independent
certified public accountant reasonably approved by Lessor to audit
Lessor's records to determine the proper amount of such Operating
Expenses and the proper amount payable by Lessee pursuant to this Lease.
Lessee agrees to pay the cost of such audit, provided that Lessor shall
pay such cost if the audit reveals that Lessor's determination of
Operating Expenses as set forth in Lessor's statement overstated
Operating Expenses by 5% or more. Lessor shall be required to maintain
records of all Operating Expenses for one year after the final statement
for such Operating Expenses. If such audit reveals an overstatement or
understatement of Operating Expenses, the amount of the differential
shall be promptly reimbursed to Lessee by Lessor or paid by Lessee to
Lessor, as the case may be."
(f) Lessor may not submit a statement to Lessee demanding increased
rents representing increased Common Area Operating Expenses if more than
twelve months have elapsed since the end of the calendar year in which
the increased Common Area Operating Expenses were paid or incurred
unless the increased Common Area Operating Expenses relate to
adjustments in Real Property Taxes."
(g) For the purposes of determining the amount to be included in Common
Area Operating Expenses with respect to capital improvements, costs of
the capital improvements shall be amortized over the useful life of such
improvements on a straight line basis, including imputed interest at the
prime rate charged by the largest state chartered bank in California
plus 2% per annum."
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(h) "Lease Year" means each consecutive twelve (12) month period
during the term of the Lease; provided that the first Lease Year
shall commence on the Commencement Date and end on the last day of
the eleventh month thereafter, the second and each succeeding Lease
Year shall commence on the first day of the next calendar month and
the last Lease Year shall end on the Expiration Date. The actual
fees incurred by Lessor for management and administration of the
Industrial Center shall be included in Common Area Expenses;
provided that the maximum amount for property management that may be
included in Common Area Operating Expenses in any Lease Year (the
"Measurement Year") shall equal the Management Fee Cap (as defined
below). As used in this Paragraph "Management Fee Cap" initially
means $0.09 per square foot. On the first day of the second Lease
Year and every succeeding Measurement Year during the term of the
Lease the Management Fee Cap shall be increased by the lesser of (i)
the percentage increase in the CPI (as defined below) for the first
full calendar month of the Measurement Year as compared to the CPI
for the first full calendar month of the prior Lease Year or (ii)
5%. The Management Fee Cap calculated for any Lease Year pursuant to
the foregoing shall be prorated on an actual day basis for any Lease
Year that is less than 12 full calendar months. As used herein the
term "CPI" means the Consumer Price Index of the Bureau of Labor
Statistics of the U.S. Department of Labor for Urban Wage Earners
and Clerical Workers, Los Angeles-Anaheim-Riverside, California
(1982-1984=100), "all items". In the event the compilation and/or
publication of the CPI shall be transferred to any other
governmental department of bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI as
determined by Lessor shall be used to make such calculation."
64. INTEREST ON SECURITY DEPOSIT UNDER PARAGRAPH 5:
The Security Deposit held by Lessor shall bear interest during each
calendar year for the benefit of Lessee at a rate equal to the rate paid
from time to time on Bank of America one year certificates of deposit
issued on the first business day of such calendar year. Lessee shall pay
all Federal and State income taxes attributable to that interest.
Provided no Default exists under the Lease, Lessor shall disburse to
Lessee the accrued interest on the Security Deposit during each calendar
year or credit Lessee's obligation to pay Base Rent in a like amount
within 15 days after the expiration of such calendar year. The attorney's
fees against which the Security Deposit may be applied as provided in
Paragraph 5 of the printed portion of the Lease shall be limited to those
attorney's fees determined by a court or admitted in writing by Lessee to
be due and owing Lessor from Lessee.
65. ADDITION TO SECTION 6.2:
The following Section 6.2(d) is added to the Lease:
"(d) Notwithstanding anything to the contrary in this Lease, Lessee
shall not be liable to Lessor under this Lease for any cost
associated with Hazardous Substances, if any, to the extent that
the Hazardous Substances existed on the Premises prior to the date
of this Lease and were not brought on to the Premises by Lessee,
its agents, employees, contractors, subcontractors, licensees or
invitees.
66. NOTICE OF ENTRY:
Notwithstanding anything to the contrary in Paragraphs 6.4 or 32, except
in the case of emergency or during periods in which Lessee is in default
under this Lease, Lessor shall give Lessee notice in advance of Lessor's
intent to enter the Premises and such entry shall be made during Lessee's
business hours.
67. ADDITION TO END OF PARAGRAPH 7.1(b):
The following is added at the end of Paragraph 7.1(b):
"not to exceed the costs for those services generally charged in
the area where the Premises are located for comparable services to
comparable buildings."
68. ADDITION TO END OF PARAGRAPH 7.2:
The following is added at the end of Paragraph 7.2:
"The cost of painting the exterior of the Building (after the
initial exterior painting provided for in Paragraph 55) shall be a
Common Area Operating Expenses and shall be treated as a capital
expenditure for purposes of amortization under Paragraph 4.2(g)."
69. LIMITATION ON PARAGRAPH 7.3:
With respect only to the portion (the "Warehouse Area") of the Premises
other than the office areas, Lessor's prior approval shall not be
required with respect to any Alterations by Lessee provided that such
Alterations (a) are not visible from the outside of the Premises, (b) do
not involve puncturing, relocating or removing the roof or any existing
walls, or changing or interfering with the fire sprinkler or fire
detection systems, (c) do not involve the plumbing, electrical or HVAC
systems in the Premises, and (d) do not involve the
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structural elements of the Building. Notwithstanding the last sentence of
Paragraph 7.3(b), Lessor agrees not to require a lien and completion bond
unless Lessor believes it is reasonably necessary to protect Lessor given
the cost, nature and extent of the work and the parties responsible for
the performance and payment therefor.
70. ADDITION TO PARAGRAPH 7.4(b):
The following is added at the end of Paragraph 7.4(b):
"Prior to commencing any addition, alteration or improvement, Lessee
may request that Lessor waive Lessee's obligation to remove such
addition, alteration or improvement at the end of the term. Any such
waiver must be in writing and shall only apply to the additions,
alterations or improvements described therein. Notwithstanding
anything to the contrary in Paragraph 7.4, (a) Lessee shall not be
required to remove any of the improvements to the office area of the
Premises made by Lessor at the commencement of the term, and (b)
Lessee shall remove all Alterations and Table Fixtures from the
Warehouse Area at the expiration or earlier termination of this
Lease."
71. ADDITION TO END OF PARAGRAPH 8.3(a):
The following is added at the end of Paragraph 8.3(a):
"The Lessor may, but shall not be obligated to, maintain earthquake
insurance. In the event Lessor maintains earthquake insurance, the
cost of that insurance shall be included as a Common Area Operating
Expense; provided that the maximum amount of earthquake insurance
premiums that may be included in the Common Area Operating Expenses
in any Lease Year shall be $0.26 per square foot. The maximum amount
calculated for any Lease year pursuant to the foregoing shall be
prorated on an actual day basis for any Lease Year that is less than
12 full calendar months."
72. ADDITION TO END OF PARAGRAPH 8.5:
The following is added at the end of Paragraph 8.5:
"Lessee shall be permitted to provide the insurance required under
this Lease by obtaining a blanket policy or policies to be
maintained by Lessee. The coverages afforded to Lessee and Lessee
and Lessee's Lenders under this Lease shall in no way be limited,
diminished or reduced under such blanket policy or policies."
73. ADDITION TO PARAGRAPH 9.2:
The following is added at the end of Paragraph 9.2:
"Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3 rather than Paragraph 9.2 in the event there is any
shortage of insurance proceeds."
74. ADDITION TO PARAGRAPH 9.6.(a):
The following is added after the first sentence of Paragraph 9.6(a):
"The period of abatement shall continue after the completion of
Lessor's repairs and restoration for the reasonable period for
Lessee to repair or replace Lessee's trade fixtures, alterations and
utility installations, but not to exceed 30 days from the completion
of Lessor's repair and restoration; provided, however, the 30-day
period after completion of Lessor's work may be extended up to an
additional 30 days to the extent the abatement does not exceed the
proceeds from insurance required to be carried under Paragraph
8.3(b) applicable to, and received by Lessor with respect to, that
additional 30-day period."
75. ADDITION TO PARAGRAPH 12.1(b):
The following is added to Paragraph 12.1(b):
"If Lessee is a public corporation whose stock is regularly traded
on a national stock exchange, or is regularly traded in the
over-the-counter market and quoted on NASDAQ, the provisions of this
Paragraph 12.1(b) shall not apply to transfers of stock on those
exchanges or markets."
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76. SUBSTITUTION FOR PARAGRAPH 13.3:
The following is substituted for Paragraph 13.3:
"Upon the occurrence of a Breach (as defined in Paragraph 13.1) of
this Lease by Lessee, an amount shall be due and payable by Lessee
to Lessor equal to (A) (a) the sum of (i) the Lessee Improvement
Allowance, (ii) the value of free Base Rent (i.e., the Base Rent
stated in Paragraph 53 to be abated) multiplied by (b) a fraction
the numerator of which is the number of months remaining in the
initial term of the Lease on the date of the termination of the
Lease and the denominator of which is 120, plus (B) the unamortized
portion of the Additional Lessee Improvement Allowance then
remaining unpaid with such amortization being made in the same
manner as the Monthly Improvement Payment has been calculated under
Paragraph 55.4 of this Lease."
77. NOTICE BEFORE LATE CHARGE UNDER PARAGRAPH 13.3:
Notwithstanding the provisions of 13.4, the 6% late charge described
in Paragraph 13.4 shall not be imposed with respect to the first
late payment in any calendar year unless the applicable payment due
from Lessee is not received by Lessor or Lessor's designee within 10
days following written notice from Lessor that such payment was not
received when due. Following the first such written notice from
Lessor in any calendar year (and regardless of whether such payment
is then received within such 10-day), a late charge will be imposed
without notice (as set forth in Paragraph 13.4) for any subsequent
payment due to Lessor during such calendar year which is not
received within 10 days of its due date.
78. ADDITION TO PARAGRAPH 14:
The following is added at the end of Paragraph:
"If the amounts available to Lessor or restoration under the
preceding sentence are inadequate to repair such damage to the
Premises, Lessee may elect to contribute the amount of the
shortfall. In the event Lessee does not elect to contribute the
amount of the shortfall, Lessor may elect either to (a) fund the
shortfall itself, in which event Lessor shall proceed with the
repair and restoration, or (b) terminate this Lease."
79. SUBSTITUTION FOR PARAGRAPH 15.2:
The following is substituted for Paragraph 15.2:
"ADDITIONAL TERMS. Unless Lessor and Lessee's Broker have
otherwise agreed in writing, Lessor agrees that if Lessee's Broker
is a procuring cause of any Lease of other space in the Building
other than the Premises and Lessee's Broker provides Lessor with the
written agreement of Lessee and Lessee's Broker designating Lessee's
Broker as the exclusive representative and agent of Lessee with
respect to the lease of that expansion space, then Lessor shall pay
Lessee's Broker a brokerage fee in connection with that expansion
equal to 2 1/2% of the Base Rent payable during the first five years
of the initial term of that expansion and 1 1/2% of the Base Rent
payable with respect to the second five years of the initial term of
that expansion. No commission or other fee shall be payable to
Lessee's Broker with respect to any extension of the term of this
Lease or the extension of any term of any Lease for other space in
the Building. Notwithstanding the foregoing in the event that any
other broker claims to be entitled to a broker's fee or commission
with respect to that expansion by reason of any dealings with
Lessee, then Lessee's Broker shall have no rights under this
Paragraph 15.2 to any fees or commission with respect to that
expansion."
80. ADDITION TO PARAGRAPH 30.1:
The following is added to the end of Paragraph 30.1:
"Lessor hereby represents to Lessee that there are no Lenders
holding any Security Device with respect to the Premises of the date
of the execution of this Lease."
81. SIGNS UNDER PARAGRAPH 34:
Lessor hereby approves Lessee's proposed signage as shown on the
Signage Exhibit attached to this Lease.
82. HVAC UNIT REPLACEMENT:
Lessor agrees that with respect to the 4 HVAC units described below
(each an "Old Unit"), Lessor shall replace each Old Unit at Lessor's
sole cost and expense promptly after such Old Unit ceases to
operate. As used herein, "ceases to operate" means any one of the
following elements of an Old Unit requires replacement: (a) heat
exchanger, (b) evaporation coils, (c) condenser coils, or (d)
compressor. The
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replacement of Old Units, when made shall be with comparable new HVAC units of
at least the same tonnage. The Old Units are as follows:
Manufacture Model # Serial # Tonnage Location
AC-1 Carrier 50DD024-600 RO 96371 20 N.W. corner
AC-2 Carrier 50DD028-600 SO 98824 25 S.W. corner
AC-3 Carrier 50DP012-600 OO 96215 10 S.E. corner
AC-4 Carrier 50DD024-600 RO 96370 20 N.E. corner
83. ACCESS BY BANK OF AMERICA. Lessee hereby agrees that Bank of America,
National Trust and Savings Association ("BofA") and any entity which
controls, is under common control with or its controlled by BofA
(collectively, the "BofA Parties") shall have use of and access to the
following portions of the Premises):
(a) restrooms;
(b) loading doors 8 and 9;
(c) forklift room for recharging of BofA Parties' forklifts at night;
(d) forklift recharging equipment;
(e) portions of the Premises necessary for access to the areas described
in (a)-(d) above, including ingress and egress of trucks, forklifts
and personnel to and from the Adjacent Space.
BofA's rights of access under this Paragraph shall terminate at 11:59 p.m.
on December 31, 1997, and shall be exercised by BofA so as to not
unreasonably interfere with the construction of the Total Lessee
Improvements. During the period of BofA's access under this Paragraph,
Lessee shall not be liable for injury to any person or for damage to any
property of BofA employees, agents, contractors, licensees, or invitees,
from any cause whatsoever, occurring upon or about the Premises, and BofA
shall indemnify and save Lessee harmless from any and all liability and
claims arising out of or connected with any such injury or damage.
84. COMMISSIONS. The commissions payable to the Brokers with respect to this
Lease are as follows: $158,159.63 payable to Lessor's Broker and
$239,886.53 payable to Lessee's Broker.
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[MAP OF PACIFIC SUNWEAR PREMISES]
EXHIBIT "A"
25
EXHIBIT "B"
APPROVED PLANS
The following plans prepared by H. Hendy Associates dated September 16,
1997 for Job No. 785:
ARCHITECTURAL
T Title sheet
T-2 Key Plan
A-1.1 First Floor Partition Plan
A-1.2 Second Floor Partition Plan
A-2.1 First Floor Reflected Ceiling Plan
A-2.2 Second Floor Reflected Ceiling Plan
A-3.1 First Floor Telephone & Electrical Plan
A-3.2 Second Floor Telephone & Electrical Plan
A-4.1 First Floor Finish Plan
A-4.2 Second Floor Finish Plan
A-5 Door Schedule & Details
A-6 Restroom Plans & Details
A-7 Millwork
A-8 Millwork
A-9 Stair Plans and Finish Elevations
ELECTRICAL
E-1 Symbols, Schedules & Title 24 Calculations
E-2 First Floor Electrical Lighting Plan
E-3 First Floor Electrical Power Plan
E-4 Second Floor Electrical Lighting Plan
E-5 Second Floor Electrical Lighting Plan
E-6 Single Line Diagram & Specifications
E-7 Panel Schedules
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MECHANICAL
M0-1 Schedules, Notes and Title 24 Calculations
M1-1 First Floor Reflected Ceiling Plan
M1-2 Second Floor Reflected Ceiling Plan
M2-1 HVAC Details and Controls
PLUMBING
P0-1 Schedules, Notes, and Title 24 Calculations
P1-1 First Floor Demolition Plan
P1-2 Second Floor Demolition Plan
P2-1 First Floor Plumbing Plan
P2-2 Second Floor Plumbing Plan
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[SIGNAGE EXHIBIT GRAPH]
28
RULES AND REGULATIONS
1. All shipping pallets shall be stored within the Premises and not outside
of the Building.
2. Tenants shall deposit all trash and rubbish in their own container in
such a manner that styrofoam packing and other materials are not
scattered throughout the complex by wind.
3. Tenant shall cooperate with the other tenants within the complex as to
truck parking and/or "spotting" to insure all tenants have easy access
to their respective loading areas.
Page 1 of 1
29
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
January 12, 1998 is made by and between The Realty Associates Fund IV, L.P., a
Delaware limited partnership ("LESSOR") and Pacific Sunwear of California, Inc.,
a California corporation ("LESSEE"), (collectively the "PARTIES," or
individually a "PARTY").
1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 5200 East La Palma Avenue, located in
the City of Anaheim, County of Orange, State of California, with zip code 92807,
as outlined on Exhibit A attached hereto ("PREMISES"). The "BUILDING" is that
certain building containing the Premises and generally described as (describe
briefly the nature of the Building): the Premises constitute approximately
90,664 square feet and are a portion of an industrial building having
approximately 266,963 square feet as shown on Exhibit A. In addition to Lessee's
rights to use and occupy the Premises as hereinafter specified, Lessee shall
have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the Building or to any other buildings in
the Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." (Also
see Paragraph 2.)
1.2(b) PARKING: 112 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and 17 reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)
1.3 TERM: See Paragraph 50.
1.5 BASE RENT: $ See Par. 53 per month ("BASE RENT"), payable on the
first (1st) day of each month commencing on the Commencement Date (Also see
Paragraph 4.)
1.6(a) BASE RENT PAID UPON EXECUTION: $32,639.04 as Base Rent for the
first (1st) month of the Original Term.
1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: 33.9613 percent
("LESSEE'S SHARE") as determined by [X] prorata square footage of the Premises
as compared to the total square footage of the Building.
1.7 SECURITY DEPOSIT: $32,639.04 ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)
1.8 PERMITTED USE: Administrative offices, manufacturing and
distribution of apparel, footwear and accessories and all activities related
thereto ("PERMITTED USE") (Also see Paragraph 6.)
1.9 INSURING PARTY. Lessor is the "INSURING PARTY." (Also see
Paragraph 8.)
1.10(a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[x] None represents Lessor exclusively ("LESSOR'S BROKER");
[X] CB Commercial represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ] __________________________ represents both Lessor and Lessee ("DUAL
AGENCY"). (Also see Paragraph 15.)
1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s).
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)
1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 75, and Exhibits A through B, all of which
constitute a part of this Lease.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
ninety (90) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)), made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within nine (9) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"APPLICABLE LAWS") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to said matters other than as set forth in this
Lease.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
(C) American Industrial Real Estate Association 1993
MULTI-TENANT -- MODIFIED NET
30
2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "PERMITTED SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right
after notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
(c) Lessor shall at the Commencement Date of this Lease,
provide the parking facilities required by Applicable Law.
2.7 COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center and interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general-non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.8 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas, except as provided in Paragraph 57. Any such storage shall
be permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right after notice,
in addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Lessee, which cost shall be immediately payable
upon demand by Lessor.
2.9 COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable and nondiscriminatory Rules and
Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees
to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.
2.10 COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or
any portion thereof; and
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be
appropriate.*
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation to
pay Base rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee.*
4. RENT.
4.1 BASE RENT. Lessee shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before the day
on which it is due under the 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
full month shall be prorated based upon the actual number of days of the month
involved. Payment of Base Rent and other charges shall be made to Lessor at its
address stated herein or to such other persons or at such other addresses as
Lessor may from time to time designate in writing to Lessee.
4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as
hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:
(a) "COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Industrial Center, including, but not limited
to, the following:
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:
(aa) The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators and roof.
(bb) Exterior signs and any tenant
directories.
(cc) Fire detection and sprinkler systems.
(ii) The cost of water, gas, electricity and
telephone to service the Common Areas.
(iii) Trash disposal, property management and security
services and the costs of any environmental inspections.
(iv) Reserves set aside for maintenance and repair
of Common Areas.
(v) Real Property Taxes (as defined in Paragraph
10.2) to be paid by Lessor for the Building and the Common Areas under
Paragraph 10 hereof.
(vi) The cost of the premiums for the insurance
policies maintained by Lessor under Paragraph 8 hereof.
(vii) Any deductible portion of an insured loss
concerning the Building or the Common Areas.
(viii) Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.
(b) Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are
not specifically attributable to the Building or to any other building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center.
(c) The inclusion of the Improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Industrial Center already has the same.
Lessor already provides the services, or Lessor has agreed elsewhere in this
Lease to provide the same or some of them.
(d) Lessee's Share of Common Area Operating Expenses shall
be payable by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual
Common Area Operating Expenses incurred during the preceding year. If Lessee's
payments under this Paragraph 4.2(d) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be credited the amount of
such over-
*See Addendum
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payment against Lessee's Share of Common Area Operating Expenses next becoming
due: If Lessee's payments under this Paragraph 4.2(d) during said preceding
year were less than Lessee's Share as indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency within ten (10) days after delivery
by Lessor to Lessee of said statement.
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Leases (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, or to be prepayment for any monies to be paid by Lessee
under this Lease.*
6. USE.
6.1 PERMITTED USE.
(a) Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use
or permit the use of the Premises in a manner that is unlawful, creates waste or
a nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The 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 potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation; or disposal or 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, governmental authority, and (iii)
the presence in, on or about the Premises of a Hazardous Substance with respect
to which any Applicable Laws require that a notice be given to persons entering
or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but upon notice to Lessor
and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor
such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Lessor's option, removal on or before
Lease expiration or earlier termination of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit Under Paragraph 5 hereof.*
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously consented
to by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 8.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee; and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved; and shall survive the expiration of earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.*
6.3 LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or 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), now in effect or which may hereafter
come into effect. Lessee shall, within five (5) days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including but not limited to permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.
6.4 INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("LENDERS") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. The costs and expenses of any
such inspections shall be paid by the party requesting same, unless a Default
or Breach of this Lease by Lessee or a violation of Applicable Requirements or
a contamination, caused or materially contributed to by Lessee, is found to
exist or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.*
7. MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all Improvements thereon or a part thereof in good order, condition
and state of repair.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire, sprinkler, and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke
*See Addendum
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detection systems and equipment, fire hydrants; parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor
shall not be obligated to paint the interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.*
7.3 UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, 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 which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the cost
thereof does not exceed $20,000.
(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 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 be in compliance with all Applicable
Requirements. 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 $20,000 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.
(c) LIEN PROTECTION. 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
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, 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 claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.
7.4 OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises
by Lessee shall be the property of and owned by Lessee, but considered a part
of the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any 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,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease, Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice, Lessee's trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED
CONTRACT" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood 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 Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.*
(b) RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s); insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, Insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said Insurance may provide that
in the event the Lease is terminated by reason of an insured loss, the period
of Indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year's loss of rental revenues from the date of any such loss. Said Insurance
shall contain an agreed valuation provision in lieu of any co-insurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, Real Property Taxes, insurance premium costs and other
expenses, if any, otherwise payable, for the next 12-month period. Common Area
Operating Expenses shall include any deductible amount in the event of such
loss.
(c) ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
(d) LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become property of Lessor under
the terms of this Lease.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already, carried, maintain insurance coverage on all
of Lessees's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall: be full replacement cost coverage with a deductible. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property and the restoration of Trade Fixtures and Lessee-Owned Alterations and
Utility Installations. Upon request from Lessor, Lessee shall provide Lessor
with written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a Lender,
as set forth in the most current issue of "Best's Insurance Guide." Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in
* See Addendum.
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this Paragraph 8, Lessee shall cause to be delivered to Lessor, within seven
(7) days after the earlier of the Early Possession Date or the Commencement
Date, certified copies of, or certificates evidencing the existence and amounts
of, the Insurance required under Paragraph 8.2(a) and 8.4. No such policy shall
be 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.*
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort),
against the other, for loss or damage to their property arising out of or
incident to the perils required to be insured against under Paragraph 8. The
effect of such releases and waivers of the right to recover damages shall not
be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property damage insurance waive any
right to subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby.
8.7 INDEMNITY. Except for Lessor's negligence, or Lessor's contractors',
agents' or employees' willful misconduct, and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperative with Lessee in such defense. Lessor need not have first paid
any such claim in order to be so indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, 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 said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee of Lessor nor from the failure by Lessor to enforce the
provisions of any other lease in the Industrial Center. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.
(c) "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or build the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto; including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction.*
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If Premises Partial Damage that is
not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give 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
date of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the funds or assurance thereof within the
times specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days 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 (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (Or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten (10) days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee
fails to exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate as of the date set forth in the first
sentence of this Paragraph 9.5.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. * Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after the receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
* See Addendum.
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to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $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 date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.8 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.
10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term, "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the calculation
of Real Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.
10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional Improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency of all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion of all such charges jointly metered or billed with other premises in
the Building, in the manner and within the time periods set forth in Paragraph
4.2(d).
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of fifty
percent (50%) 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 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, or a non-curable Breach without
the necessity of any notice and grace period.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent and such action shall not relieve such persons from
liability under this Lease or the sublease.
(d) In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. 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.
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(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 by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.
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) *Lessor shall not, by reason of the foregoing provision
or any other assignment of such sublease to Lessor, nor by reason of the
collection of the rent from a sublessee, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to
such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rent and other charges due and to become due under
the sublease. Sublessee shall rely upon such statement and request from Lessor
and shall pay such rents and other charges to Lessor without any obligation or
right to inquire as to whether such Breach exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right or
claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.
(b) In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior defaults or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.
(d) No sublease under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" by Lessee is defined as a failure
by Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "BREACH" by Lessee
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies 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, Lessee's Share of
Common Area Operating Expenses, or any other monetary payment required to be
made by Lessee hereunder as and when due, the failure by Lessee to provide
Lessor with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues for
a period of five (5) days following written notice thereof by or on behalf of
Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this lease, where any such failure
continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice thereof
by or on behalf of Lessor to Lessee; provided, however, that if the nature of
Lessee's Default is such that more than 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. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this Subparagraph 13.1(e) is
contrary to any applicable law, such provision shall be of no force or effect,
and shall not affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement
of Lessee or of any Guarantor, given to Lessor by Lessee or any guarantor, was
materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the 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 assurances of security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance 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 own option, may require all future payments for a 9-month period
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 provides 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 provides 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 of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit for such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer 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 (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. Lessor and
Lessee agree that the limitations on assignment and subletting in this Lease
are reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
*See Addendum
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(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 [DELETED]
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any Installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) 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 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 six (6) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.*
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are 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 portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or 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 Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority.*
15. BROKERS' FEES.
15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.
15.4 REPRESENTATIONS AND WARRANTIES. 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 as named in Paragraph 1.10(a) 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 Broker(s) 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, and/or attorneys' fees
reasonably incurred with respect thereto.
16. TENANCY AND FINANCIAL STATEMENTS.
16.1 TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall
within ten (10) days after written notice from the other Party (the "REQUESTING
PARTY") execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "TENANCY STATEMENT" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchase designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in 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 ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus two percent (2%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential 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. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail
return receipt requested or U.S. Postal Service Express Mail, with postage
prepaid, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party's signature on
this Lease shall be that Party's address for delivery or mailing of notice
purposes. Either Party may by written notice to the other specify a different
address for notice purposes, except that upon Lessee's taking possession of the
Premises, the Premises shall constitute Lessee's address for the purpose of
mailing or delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designated by written notice to Lessee.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown or acceptance of delivery is
refused the postmark thereon. Notices delivered by United States Express Mail or
overnight courier that guarantees next day
* See Addendum.
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delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.
24. WAIVER. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof, Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provisions of this Lease requiring such consent.
Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given Lessor
by Lessee may be accepted by Lessor on account of moneys or damages due Lessor
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
23. 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. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein
shall be construed as a consent by Lessor to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
and 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
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. 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 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 he 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 Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
to enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorneys' fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorneys' fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs. All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.*
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the exterior of the
Premises or the Building, 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 so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions of
Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.
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 leaser 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' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. Lessor shall not be entitled to
be reimbursed for more than One Thousand Five Hundred Dollars ($1,500) of
attorney's fees with respect to any single assignment or sublease request by
Lessee. In addition to the deposit described in Paragraph 12.2(e), Lessor may,
as a condition to considering any such request by Lessee, require that Lessee
deposit with Lessor an amount of money (in addition to the Security Deposit held
under Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor
will incur in considering and responding to Lessee's request. Any unused portion
of said deposit shall be refunded to Lessee without interest. Lessor's consent
to any act, assignment of this Lease or subletting of the Premises by Lessee
shall not constitute an acknowledgment that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any then
existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. GUARANTOR.
37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.
37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor
(and of the party signing on Guarantor's behalf) to obligate such Guarantor on
said guaranty, and resolution of its board of directors authorizing the making
of such guaranty, together with a certificate of incumbency showing the
signatures of the persons authorized to sign on its behalf, (b) current
financial statements of Guarantor as may from time to time be requested by
Lessor, (c) a Tenancy statement, or (d) written confirmation that the guaranty
is still in effect.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
*See Addendum.
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39. OPTIONS*
39.1 DEFINITION. As used in this Lease, the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease 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 time Lessee is in Breach of this Lease, or (iii) in the event that
Lessor has given to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during the twelve (12) month period immediately preceding the
exercise of the Option, whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a)
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessor gives to Lessee three (3) or more notices of
separate Defaults under Paragraph 13.1 during any twelve (12) month period,
whether or not the Defaults are cured, or (ii) if Lessee commits a Breach of
this Lease.
40. RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all nondiscriminatory reasonable rules and regulations ("Rules and
Regulations") which Lessor may make from time to time for the management,
safety, care, and cleanliness of the grounds, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
*See Addendum
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(C) American Industrial Real Estate Association 1993
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LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE
THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Executed at: Anaheim, California
------------------------- ----------------------------
on: on: 1/15/98
---------------------------------- -------------------------------------
By LESSOR: By LESSEE:
The Realty Associates Fund IV, L.P. Pacific Sunwear of California, Inc.
- ------------------------------------- ----------------------------------------
By: Realty Associates Fund IV, LLC a California corporation
- ------------------------------------- ----------------------------------------
Its General Partner
--------------------------------- By: /s/ CARL WOMACK
------------------------------------
By: TA Realty Corporation Name Printed: Carl Womack
---------------------------------- ---------------------------
Manager
--------------------------------- Title: CFO
By: [SIG] ----------------------------------
---------------------------------
Name Printed: [ILLEGIBLE] By: Greg H. Weaver
------------------------ -------------------------------------
Title: SVP
------------------------------- Name Printed: /s/ GREG H. WEAVER
Address: c/o TA Associates Realty -------------------------------------
45 Milk Street
Boston, MA 02109 Title: Chairman - CEO
Attn: Henry G. Brauer ----------------------------------
----------------------------
Telephone: (617) 338-4309 Address: 5037 East Hunter Avenue
-------------------------- ----------------------------------
Facsimile: (617) 338-5054 Anaheim, CA 92807
-------------------------- ----------------------------------------
Telephone: (714) 693-8066
-----------------------
----------------------------------------
Facsimile: (714) 693-8165
------------------------
And after the Commencement Date the notice address shall be the premises under
that certain lease dated September 30, 1997, between Bank of America and Lessee
for 5200 East La Palma Avenue, Anaheim, California (hereinafter referred to s
the "9/30/97 Lease").
MULTI-TENANT--MODIFIED NET
(C) American Industrial Real Estate Association 1993
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE - MODIFIED NET BY AND BETWEEN
THE REALTY ASSOCIATES FUND IV, L.P., A DELAWARE LIMITED PARTNERSHIP
AND
PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
DATED JANUARY 12, 1998
49. Commencement Date. Lessor and Lessee agree that the estimated
Commencement Date shall be June 1, 1998 ("Estimated Commencement Date"). The
actual Commencement Date shall be the later of (a) the Estimated Commencement
Date or (b) the date which is sixty 60) days after the improvements to the
Premises described on Exhibit B attached hereto (the "Base Improvements") are
substantially completed by Lessor; provided that such date shall not be earlier
than the Commencement Date of the 9/30/97 Lease. The Actual Commencement Date
shall be accelerated by one (1) day for each day that substantial completion of
the Base Improvements is delayed by Lessee's Delays. The term of the Lease shall
expire on the last day of the calendar month in which the tenth (10th)
anniversary of the 9/30/97 Lease Commencement Date falls, subject to extension
pursuant to paragraph 54 of this Lease ("Expiration Date").
50. Term. The Term of the Lease shall commence on the Commencement Date
and shall continue, subject to earlier termination as provided herein, until the
Expiration Date (the "Original Term"). In the event permission is given to
Lessee to enter or occupy all or a portion of the Premises prior to the
Commencement Date, such occupancy shall be subject to all of the terms and
conditions of this Lease, except that if such entry is pursuant to Paragraph 52,
Lessee shall not be obligated to pay Base Rent and any other amount payable by
Lessee under this Lease.
Lessor shall use all reasonable efforts to make the Premises available
on the Estimated Commencement Date. If for any reason, however, Lessor cannot
deliver possession of the Premises to Lessee on said 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 be obligated to pay rent or perform any other
obligations of Lessee under the terms of this Lease, except as may be otherwise
provided in this Lease, until the Commencement Date shall have occurred. If,
however, the Commencement Date shall not have occurred on or before June 1,
1998, for any reason, other than Lessee's Delays (defined below) or any reason
beyond the reasonable control of Lessor, Lessee shall receive an offset of Base
Rent for each day after such date that the Commencement Date shall not have
occurred. Such date will be adjusted forward for each day that substantial
completion of the Base Improvements is delayed by Lessee's Delays.
If the Commencement Date shall not have occurred on or before August 1,
1998, for any reason, other than Lessee's Delays or any reason beyond the
reasonable control of Lessor, Lessee may, at its option, by notice in writing to
Lessor within ten (10) days after that date, cancel this Lease, in which event
the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said 10-day period, Lessee's right to cancel this Lease hereunder
shall terminate and be of no further force or effect.
51. Substantial Completion. The work to be performed by Lessor under
this Lease shall be deemed substantially completed on the date on which all of
the following shall have been satisfied: (a) all work required for an occupancy
permit for the Premises shall have been completed and it is legally permissible
to occupy the Premises, (b) Lessor shall have substantially completed the Base
Improvements and all punch list items shall have been certified by the Architect
as being complete, and (c) all mechanical systems in the Premises are in good
operating order.
52. Early Access. Lessor shall, subject to the following terms and
conditions, permit Lessee, and Lessee's agents, to enter the Premises during the
sixty (60) day period prior to the Estimated Commencement Date:
1
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(a) Lessee shall give Lessor reasonable prior written notice of
such access to the Premises, which notice must contain or be accompanied
by (i) a description and schedule for the work to be performed in the
Premises; (ii) the names and addresses of all contractors performing
such work; (iii) copies of all contracts pertaining to the performance
of such work (iv) copies of all licenses and permits required in
connection with the performance of such work; and (v) certificates of
insurance and instruments of indemnification against all claims, costs,
expenses, damages, suits, fines, penalties, actions, causes of action
and liabilities which may arise in connection with such work. Each of
the foregoing shall be subject to Lessor's approval, which approval
shall not be arbitrarily withheld.
(b) Such early access is subject to reasonable scheduling by
Lessor.
(c) Lessee's agents, contractors, workers, mechanics, suppliers
and invitees must work in harmony and not interfere with Lessor and
Lessor's contractors in doing work in the Premises, in other premises,
common areas of the Building, and in the general operation of the
Building. If at any time such entry shall cause or threaten to cause
disharmony or interference, including labor disharmony, Lessor may
withdraw its permission upon written notice to Lessee.
(d) In the event that Lessor's work in the Premises and Lessee's
work in the Premises (pursuant to the permission granted herein)
progress simultaneously, Lessor shall not be liable for injury to any
person or for damage to any property of Lessee, Lessee's employees,
agents, licensees or invitees, from any cause whatsoever, occurring upon
or about the Premises, and Lessee shall indemnify and save Lessor
harmless from any and all liability and claims arising out of or
connected with any such injury or damage. Lessee will not permit any
lien on any part of the Building allegedly resulting from any work or
materials furnished or obligations incurred by or for Lessee. Lessee
will discharge any such lien of record immediately upon filing.
(e) Lessee agrees that it is liable to Lessor for any damage to
the Premises or to any portion of the work in the Premises caused by
Lessee or any of Lessee's employees, agents, licensees or invitees.
53. Base Rent. Commencing on the Commencement Date, the Base Rent
payable by Lessee to Lessor during the Term of this Lease shall be as follows:
Months Per Sq. Ft. NNN Per Mo. NNN
------ --------------- -----------
*Based on Sq. Ft.
1-30 36(cent) $32,639.04
31-60 39(cent) $35,358.96
61-90 42(cent) $38,078.88
91-Exp. Date 45(cent) $40,798.80
54. Option to Extend.
54.1 Grant of Option. Lessee shall have the right, but not the
obligation, to extend the Term of this Lease for two (2) additional periods of
five (5) years each (the "Extension Period"), provided that the following
criteria are met:
(a) Lessee is not in default under any provision of this Lease
beyond any applicable cure periods either (i) as of the date the
"Extension Notice" (as defined
2
42
below) is delivered to Lessor or (ii) as of the date of the commencement
of the Extension Period; and
(b) Lessee has not assigned or subleased any portion of the
Premises other than as permitted by Paragraph 12 of this Lease.
54.2 Exercise of Option. Lessee may exercise its right to extend
the Term only by delivering written notice to Lessor of Lessee's desire to so
extend the Term no later than six (6) months nor earlier than nine (9) months
prior to the commencement of the Extension Period ("Lessee's Notice"), subject
to the Monthly Base Rent determination by Lessor in accordance with Paragraph
54.3.
54.3 Monthly Base Rent for Extension Period. Within thirty (30)
days of Lessor's receipt of Lessee's Notice, Lessor shall deliver written notice
to Lessee which shall provide for Monthly Base Rent for the Extension Period
equal to Ninety-five percent (95%) of an amount equal to the fair market rental
(the "Fair Market Rent") for the Premises determined by Lessor according to the
rental then being charged for comparable space in comparable deals in buildings
of similar size and construction in Anaheim, Yorba Linda and Fullerton (the
"Market Rent Notice"). In determining comparable space, appropriate
consideration shall be given to the level and type of improvements contained in
the Premises and the use of the Premises as a corporate headquarters for the
Lessee. "Comparable Deals" shall mean leases which are approximately as long and
commencing at approximately the same time as the applicable Extension Period.
Comparable Deals shall not include any transactions where the lessor of the
subject building is in default under its mortgage or other indebtedness, or is
currently, or has within the prior twelve (12) months been involved in
foreclosure proceedings on the applicable building. Comparable Deals shall also
exclude transactions which are subleases or whereby the lessee has some form of
equity participation in the deal. Notwithstanding the foregoing, in no event
shall the Monthly Base Rent for the Extension Period be less than the Base Rent
payable by Lessee for the month prior to the commencement of the Extension
Period. In the event that Lessee notices Lessor in writing, on or before the
twentieth (20th) business day following any Market Rent Notice, that Lessee
disagrees with the applicable determination, Lessor and Lessee shall negotiate
in good faith to resolve such dispute within ten (10) business days thereafter.
(The thirtieth (30th) business day after any Market rent Notice is referred to
herein as the "Outside Agreement Date.") If not resolved by the Outside
Agreement Date, each party shall submit to the other its determination of Fair
Market Rent, and the dispute shall be submitted to arbitration in accordance
with the following paragraph titled "Arbitration Procedures." Until any such
dispute is resolved, any applicable payments due under this Lease shall
correspond to Lessor's determination and, if Lessee's determination becomes the
final determination, Lessor shall refund any overpayments to Lessee, within five
(5) business days following the final resolution of the dispute.
54.4 Arbitration Procedures.
(a) Lessor and Lessee shall each appoint one arbitrator who shall
by profession be a real estate broker who shall have been active over
the five (5) year period ending on the date of such appointment in the
leasing of properties similar to the Premises in Anaheim, Yorba Linda
and Fullerton. The determination of the arbitrators shall be limited
solely to the issue of whether Lessor's or Lessee's submitted Fair
Market Rent for the Premises is the closest to the actual Fair Market
Rent for the Premises as determined by the arbitrators, taking into
account the requirements of this subparagraph regarding the same. Each
such arbitrator shall be appointed within fifteen (15) days after the
Outside Agreement Date. Lessor and Lessee may not consult with either
such arbitrator prior to resolution.
(b) The two arbitrators so appointed shall within fifteen (15)
days of the date of the appointment of the last-appointed arbitrator
meet and attempt to reach a decision as to whether the parties shall use
Lessor's or Lessee's submitted Fair Market Rent and shall notify Lessor
and Lessee of their decision, if any.
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43
(c) If the two arbitrators are unable to reach a decision, the
two arbitrators shall, within thirty (30) days of the date of the
appointment of the last-appointed arbitrator, agree upon and appoint a
third arbitrator who shall be a broker who shall be qualified under the
same criteria set forth hereinabove for qualification of the initial two
arbitrators.
(d) The three arbitrators shall, within thirty (30) days of the
appointment of the third arbitrator, reach a decision as to whether the
parties shall use Lessor's or Lessee's submitted Fair Market Rent and
shall notify Lessor and Lessee thereof.
(e) The decision of the majority of the three arbitrators shall
be binding upon Lessor and Lessee.
(f) If either Lessor or Lessee fails to appoint an arbitrator
within fifteen (15) days after the Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify
Lessor and Lessee thereof, and such arbitrator's decision shall be
binding upon Lessor and Lessee.
(g) If the two arbitrators fail to agree upon and to appoint a
third arbitrator, then the appointment of the third arbitrator shall be
dismissed, and the matter to be decided shall be forthwith submitted to
arbitration under the provisions of the American Arbitration
Association, but subject to the instructions set forth in this Lease.
(h) The cost of arbitration shall be paid by Lessor and Lessee
equally.
Upon determination of the Fair Market Rent, Lessor shall prepare
and deliver to Lessee an amendment to this Lease (the "Extension Amendment")
which provides for the extension of the Term pursuant to the provisions hereof
with a Monthly Base Rent equal to Ninety-five percent (95%) of the Fair Market
Rent.
54.5 Time of the Essence. Time shall be of the essence regarding
all the periods set forth above for the exercise of the option and execution of
the Extension Amendment. The failure of Lessee to timely exercise the option as
provided in Paragraphs 54.2 and 54.3 above shall cause this option to
automatically cease and terminate and, in such event, this Lease shall terminate
without extension.
54.6 Nontransferable Option. The option granted herein is granted
solely to Lessee and is not assignable or transferable, and any attempt to
assign or transfer this option shall be void and of no force or effect;
excluding, however, any permitted assignment as provided in Paragraph 12 of this
Lease.
55. Base Improvements.
55.1 Approved Plans and Schedule. Lessor shall, at its sole cost
and expense, construct the Base Improvements.
55.2 Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor
shall have no obligation to Lessee for defects in design, workmanship or
materials, but shall use its reasonable best efforts to enforce the contractor's
obligations therefor and shall, as appropriate under the terms of the Lease
given the allocation of maintenance responsibility between Lessor and Lessee,
assign to Lessee any manufacturer's warranties with respect to the work or the
Premises.
55.3 Work Done by Lessee. Any work done by Lessee in the Premises
shall be done at Lessee's sole cost and expense in accordance with the terms of
this Lease and only with Lessor's prior consent and in conformity with a valid
building permit and all applicable rules, regulations, laws and ordinances. Any
work done by Lessee shall be done in a good and
4
44
workmanlike manner with good and sufficient materials and shall be done only by
contractors approved by Lessor.
55.4 Acceptance of Improvements. Lessee shall notify Lessor in
writing of any items that Lessee deems incomplete or incorrect in order for
Premises to be acceptable to Lessee within ninety (90) days following completion
of the Base Improvements. Lessee shall be deemed to have accepted the Premises
as improved and to have approved construction if Lessee does not deliver such a
list to Lessor within said number of days.
55.5 Other Improvements. Lessor shall, at its sole cost and
expense, be responsible to make any alterations to the Building (but not the
Premises) during the Term of the Lease and any Extension Period, as and if
required for compliance with the Americans with Disabilities Act ("ADA"), so
long as such compliance is not a result of Lessee's specific use of the Building
or Lessee's Alterations under Paragraph 7.3. With respect to the Premises,
including, without limitation, the Base Improvements, any alterations to any
bathroom required by the ADA as interpreted and applied on the Commencement Date
shall be made, at Lessor's sole cost and expense. Lessee shall, at its sole cost
and expense, be responsible (a) to make any alterations to the Premises required
due to any changes in the ADA, including without limitation the interpretation
and application thereof, after the Commencement Date, or required due to
Lessee's specific use of the Premises or due to any Alterations under Paragraph
7.3 performed by Lessee in the Premises after the Commencement Date, and (b) for
the cost of any alterations to the Building required for compliance with the ADA
arising out of Lessee's specific use of the Premises or due to any of Lessee's
Alterations under Paragraph 7.3. The cost associated with any seismic retrofit
of the Premises, as and if required, whether under current or future law, shall
be the responsibility of Lessor except to the extent required due to the unique
nature of Lessee's use. Lessor's costs under this Paragraph 55.5 shall not be
included in Lessee's Share of Common Area Expenses.
55.6 Lessee's Delays. If Lessor is delayed in substantially
completing any work to be performed by Lessor under this Paragraph 55 as a
result of any act or omission of Lessee's agents, contractors, assignees or
subtenants ("Lessee Delays"), the Commencement Date shall not be deferred by
reason of such delay. The Project Manager (as defined in the 9/30/97 Lease)
shall give written notice to Lessee of potential Lessee Delays and make the
final determination of whether a Lessee Delay has occurred and the extent of the
Lessee Delay.
55.7 Trailer Storage; Reserved Parking. Lessee may store trailers
overnight within the loading area outlined in Exhibit "A" next to the loading
docks of the Premises, subject to paragraph 40. The location of the reserved
parking spaces shall be designated by Lessor, subject to Lessee's approval,
which shall not be unreasonably withheld or delayed.
56. Hazardous Substances. To the best of Lessor's current actual
knowledge, without inquiry or investigation, there is no asbestos nor any other
Hazardous Substances including, but not limited to, radon gas, PCB's, lead-base
paint, ground water contamination, industrial, radioactive or chemical waste,
urea-formaldehyde insulation and underground storage tanks on or under, or
within the Industrial Center in violation of applicable law.
In addition to the terms of Paragraph 6.2, Lessee shall disclose to
Lessor in writing whether any Hazardous Substances will be used, stored or
disposed of in the Premises, which disclosure shall include an inventory of such
substances and provide a use, storage and disposal plan for the handling of such
substances. Lessor may disapprove of the use, storage and/or disposal of such
substances within the Premises at Lessor's sole discretion.
Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises or the Building
which are not brought to the Premises, Building or Common Areas by Lessee.
Lessee shall fully cooperate in any such activities at the request of Lessor,
including allowing Lessor and Lessor's agents to have reasonable access to the
Premises at reasonable times in order to carry out Lessor's investigative and
remedial responsibilities. The costs
5
45
incurred by Lessor for such investigation and remediation shall not be included
in Lessee's Share of Common Area Operating Expenses. Any liability of Lessor
with respect to this covenant shall be satisfied only out of Lessor's interest
and estate in the Premises and Building, and Lessor shall have no personal
liability beyond such interest and estate with respect to such obligations.
57. Assignment and Subletting. Notwithstanding anything to the contrary
contained in this Lease, Lessor shall provide Lessee with written notice of its
approval or disapproval of an assignment or sublease within five (5) days after
receiving from Lessee (a) a written request for approval or disapproval of an
assignment or sublease and (b) a copy of the proposed assignment or sublease.
Lessor's failure to give Lessee written disapproval of an assignment or sublease
within such five (5) day period shall constitute Lessor's approval of the
assignment or sublease. Lessee shall retain all rent and other consideration
received by Lessee from an assignee or sublessee.
58. Additional Permitted Uses (Paragraph 1.8). The Permitted Uses shall
also include any other use permitted by Applicable Laws; provided that Permitted
Uses shall exclude any use which (a) violates any certificate of occupancy in
force for the Premises, the Building or any part thereof; (b) causes or is
likely to cause damage to the Building or any part thereof or any equipment,
facilities or other systems therein; (c) constitutes a violation of law; (d)
violates a requirement or condition of the standard fire insurance policy issued
for the Buildings; (e) impairs the character, reputation, image or appearance of
the Building; (f) impairs the proper and economic maintenance, operation or
repair of the Building or any part thereof; (g) constitutes a nuisance,
annoyance or inconvenience to other lessees or occupants of the Building or
interferes with or disrupts the use or occupancy of any area of the Building
(other than the Premises) by other lessees or occupants; (h) interferes with the
transmission or reception of microwave, television, radio or other
communications signals by antennae located on the roof or elsewhere in the
Building; (i) results in repeated demonstrations, bomb threats or other events
which require evacuation of any part of the Building or otherwise disrupt the
use, occupancy or quiet enjoyment thereof by other lessees and occupants; or (j)
involves the use of any part of the Premises for : (1) a restaurant or bar; (2)
the storage, manufacture or sale of food, beverages, liquor, tobacco in any form
or drugs (except that Lessee may maintain vending machines for the use of its
officers, employees and invitees and except that Lessee's officers and employees
may bring food, beverages, tobacco and medicine onto the Premises for their
personal and lawful consumption); (3) the storage, use, treatment, manufacture
or sale of Hazardous Substances (as defined below); (4) the business of
photocopying or offset printing (but Lessee may use part of the Premises for
photocopying or offset printing for its own business); (5) medical or dental
offices or laboratories; (6) a school or classroom; (7) the retail sale or
auction of merchandise, goods or property of any kind; or (8) cooking (except
that Lessee may maintain coffee or lunch rooms with coffee makers and microwave
ovens for the exclusive use of Lessee's officers, employees and invitees),
lodging or sleeping. No noise, vibration or odor shall be permitted to escape
from the Premises.
59. Addition to End of Paragraph 2.10. Lessor agrees to exercise its
rights under this Paragraph 2.10 in a manner designed to minimize to the extent
reasonably possible interference with Lessee's business and consistent with the
practices of owners of similar parks in the Anaheim area. No capital
expenditures for changes to the Common Areas pursuant to Paragraphs 2.10(a),
(c), (d) or (f) shall be included in Common Area Operating Expenses for purposes
of this Lease.
60. Audit Right and Additions to Paragraph 4.2. The following is added
to the end of Paragraph 4.2:
"(e) In the event of any dispute as to the amount of Operating
Expenses as set forth in Lessor's statement of Operating Expenses
delivered to Lessee, Lessee shall have the right, after reasonable
notice and at reasonable times within one year after the final statement
for such Operating Expenses is delivered to Lessee, to inspect and
photocopy (at Lessee's expense) Lessor's accounting records with respect
to Lessee's share of Operating Expenses. If after such inspection and
photocopying Lessee still disputes the amount of Operating Expenses as
set forth in Lessor's statement, Lessee shall be entitled to retain an
independent certified public
6
46
accountant reasonably approved by Lessor to audit Lessor's records to
determine the proper amount of such Operating Expenses and the proper
amount payable to Lessee pursuant to this Lease. Lessee agrees to pay
the cost of such audit, provided that Lessor shall pay such costs if the
audit reveals that Lessor's determination of Operating Expenses as set
forth in Lessor's statement overstated Operating Expense by five percent
(5%) or more. Lessor shall be required to maintain records of all
Operating Expenses for one year after the final statement for such
Operating Expenses. If such audit reveals an overstatement or
understatement of Operating Expenses, the amount of the differential
shall be promptly reimbursed to Lessee by Lessor or paid by Lessee to
Lessor, as the case may be.
(f) Lessor may not submit a statement to Lessee demanding
increased rents representing increased Common Area Operating Expenses if
more than twelve (12) months have elapsed since the end of the calendar
year in which the increased Common Area Operating Expenses were paid or
incurred unless the increased Common Area Operating Expenses relate to
adjustments in Real Property Taxes.
(g) For the purposes of determining the amount to be included in
Common Area Operating Expenses with respect to capital improvements,
costs of the capital improvements shall be amortized over the useful
life of such improvements on a straight-line basis, including imputed
interest at the prime rate charged by the largest state-chartered bank
in California plus two percent (2%) per annum.
(h) "Lease Year" means each consecutive twelve (12) month period
during the term of the Lease; provided that the first Lease Year shall
commence on the Commencement Date and end on the last day of the
eleventh (11th) month thereafter, the second and each succeeding Lease
Year shall commence on the first day of the next calendar month, and the
last Lease Year shall end on the Expiration Date. The actual fees
incurred by Lessor for management and administration of the Industrial
Center shall be included in Common Area Expenses; provided that the
maximum amount for property management that may be included in Common
Area Operating Expenses in any Lease Year (the "Measurement Year") shall
equal the Management Fee Cap (as defined below). As used in this
Paragraph, "Management Fee Cap" initially means $0.09 per square foot.
On the first day of the second Lease Year and every succeeding
Measurement Year during the term of the Lease, the Management Fee Cap
shall be increased by lesser of (i) the percentage increase in the CPI
(as defined below) for the first full calendar month of the Measurement
Year as compared to the CPI for the first full calendar month of the
prior Lease Year or (ii) five percent (5%). The Management Fee Cap
calculated for any Lease Year pursuant to the foregoing shall be
prorated on an actual-day basis for any Lease Year that is less than
twelve (12) full calendar months. As used herein, the term "CPI" means
the Consumer Price Index of the Bureau of Labor Statistics of the U.S.
Department or Labor for Urban Wage Earners and Clerical Workers, Los
Angeles-Anaheim-Riverside, California (1982-1984=100), "all items." In
the event the compilation and/or publication of the CPI 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 CPI as
determined by Lessor shall be used to make such calculation."
61. Interest on Security Deposit Under Paragraph 5. The Security Deposit
held by Lessor shall bear interest during each calendar year for the benefit of
Lessee at a rate equal to the rate paid from time to time on Bank of America
one-year certificates of deposit issued on the first business day of such
calendar year. Lessee shall pay all federal and state income taxes attributable
to that interest. Provided no Default exists under the Lease, Lessor shall
disburse to Lessee the accrued interest on the Security Deposit during each
calendar year or credit Lessee's obligation to pay Base Rent in a like amount
within fifteen (15) days after the expiration of such calendar year. The
attorneys' fees against which the Security Deposit may be applied as provided in
Paragraph 5 of the
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47
printed portion of the Lease shall be limited to those attorneys' fees
determined by a court or admitted in writing by Lessee to be due and owing
Lessor from Lessee.
62. Addition to Section 6.2. The following Section 6.2(d) is added to
the Lease:
"(d) Notwithstanding anything to the contrary in this Lease,
Lessee shall not be liable to Lessor under this Lease for any cost
associated with Hazardous Substances, if any, to the extent that the
Hazardous Substances existed on the Premises prior to the date of this
Lease and were not brought on to the Premises by Lessee, its agents,
employees, contractors, subcontractors, licensees or invitees."
63. Notice of Entry. Notwithstanding anything to the contrary in
Paragraphs 6.4 or 32, except in the case of emergency or during periods in which
Lessee is in default under this Lease, Lessor shall give Lessee notice in
advance of Lessor's intent to enter the Premises, and such entry shall be made
during Lessee's business hours.
64. Addition to End of Paragraph 7.1(b). The following is added at the
end of Paragraph 7.1(b):
"not to exceed the costs for those services generally charged in the
area where the Premises are located for comparable services to
comparable buildings."
65. Addition to End of Paragraph 7.2. The following is added at the end
of Paragraph 7.2:
"The cost of painting the exterior of the Building (after the initial
exterior painting provided for in Paragraph 55) shall be a Common Area
Operating Expense and shall be treated as a capital expenditure for
purposes of amortization under Paragraph 4.2(g)."
66. Limitation on Paragraph 7.3. With respect only to the portion (the
"Warehouse Area") of the Premises other than the office area, Lessor's prior
approval shall not be required with respect to any Alterations by Lessee
provided that such Alterations (a) are not visible from the outside of the
Premises, (b) do not involve puncturing, relocating or removing the roof or any
existing walls, or changing or interfering with the fire sprinkler or fire
detection systems, (c) do not involve the plumbing, electrical or HVAC systems
in the Premises, and (d) do not involve the structural elements of the Building.
Notwithstanding the last sentence of Paragraph 7.3(b), Lessor agrees not to
require a lien and completion bond unless Lessor believes it is reasonably
necessary to protect Lessor given the cost, nature and extent of the work and
the parties responsible for the performance and payment therefor.
67. Addition to Paragraph 7.4(b). The following is added at the end of
Paragraph 7.4(b):
"Prior to commencing any addition, alteration or improvement, Lessee may
request that Lessor waive Lessee's obligation to remove such addition,
alteration or improvement at the end of the term. Any such waiver must
be in writing and shall only apply to the additions, alterations or
improvements described therein. Notwithstanding anything to the contrary
in Paragraph 7.4, (a) Lessee shall not be required to remove any of the
improvements to the office area of the Premises made by Lessor at the
commencement of the term, and (b) Lessee shall remove all Alterations
and Trade Fixtures from the Warehouse Area at the expiration or earlier
termination of this Lease."
68. Addition to End of Paragraph 8.3(a). The following is added at the
end of Paragraph 8.3(a):
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48
"The Lessor may, but shall not be obligated to, maintain earthquake
insurance. In the event Lessor maintains earthquake insurance, the cost
of that insurance shall be included as a Common Area Operating Expense;
provided that the maximum amount of earthquake insurance premiums that
may be included in the common Area Operating Expenses in any Lease Year
shall be $0.26 per square foot. The maximum amount calculated for any
Lease Year pursuant to the foregoing shall be prorated on an actual-day
basis for any Lease Year that is less than twelve (12) full calendar
months.
69. Addition to End of Paragraph 8.5. The following is added at the end
of Paragraph 8.5:
"Lessee shall be permitted to provide the insurance required under this
Lease by obtaining a blanket policy or policies to be maintained by
Lessee. The coverages afforded to Lessee and Lessee's Lenders under this
Lease shall in no way be limited, diminished or reduced under such
blanket policy or policies."
70. Addition to Paragraph 9.2. The following is added at the end of
Paragraph 9.2:
"Premises Partial Damage due to flood or earthquake shall be subject to
Paragraph 9.3 rather than Paragraph 9.2 in the event there is any
shortage of insurance proceeds."
71. Addition to Paragraph 9.6(a). The following is added after the first
sentence of Paragraph 9.6(a):
"The period of abatement shall continue after the completion of Lessor's
repairs and restoration for the reasonable period for Lessee to repair
or replace Lessee's trade fixtures, alterations and utility
installations, but not to exceed thirty (30) days from the completion of
Lessor's repair and restoration; provided, however, the thirty (30) day
period after completion of Lessor's work may be extended up to an
addition thirty (30) days to the extent the abatement does not exceed
the proceeds from insurance required to be carried under Paragraph
8.3(b) applicable to, and received by Lessor with respect to, that
additional thirty (30) day period."
72. Addition to Paragraph 12.1(b). The following is added to Paragraph
12.1(b):
"If Lessee is a public corporation whose stock is regularly traded on a
national stock exchange, or is regularly traded in the over-the-counter
market and quoted on NASDAQ, the provisions of this Paragraph 12.1(b)
shall not apply to transfers of stock on those exchanges or markets."
72. Notice before Late Charge Under Paragraph 13.4. Notwithstanding the
provisions of 13.4, the six percent (6%) late charge described in Paragraph 13.4
shall not be imposed with respect to the first late payment in any calendar year
unless the applicable payment due from Lessee is not received by Lessor or
Lessor's designee within ten (10) days following written notice from Lessor that
such payment was not received when due. Following the first such written notice
from Lessor in any calendar year (and regardless of whether such payment is then
received within such ten (10) day period), a late charge will be imposed without
notice (as set forth in Paragraph 13.4) for any subsequent payment due to Lessor
during such calendar year which is not received within ten (10) days of its due
date.
73. Addition to Paragraph 14. The following is added at the end of
Paragraph 14:
"If the amounts available to Lessor for restoration under the preceding
sentence are inadequate to repair such damage to the Premises, Lessee
may elect to contribute the amount of the shortfall. In the event Lessee
does not elect to contribute the amount
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of the shortfall, Lessor may elect either to (a) fund the shortfall
itself, in which event Lessor shall proceed with the repair and
restoration, or (b) terminate this Lease."
74. Addition to Paragraph 30.1. The following is added to the end of
Paragraph 30.1:
"Lessor hereby represents to Lessee that there are no Lenders holding
any Security Device with respect to the Premises as of the date of the
execution of this Lease."
75. Option to Terminate.
75.1 Termination Date. Lessee shall have the option (the
"Termination Option") to terminate this Lease as of the last day of the sixtieth
(60th) full calendar month of the initial Term (the "Termination Date"). This
Termination Option is granted subject to the following terms and conditions:
(a) Notice. Lessee shall give Lessor not less than two hundred
seventy (270) days advance written notice of its election to exercise
the Termination Option (i.e., notice must be given not later than the
two hundred seventieth (270th) day prior to the Termination Date), time
being of the essence; and
(b) Termination Fee. Lessee pays to Lessor on or before the
Termination Date, a cash termination payment (the "Termination Payment")
in the amount of Seventy Thousand Seven Hundred Seventeen and 92/100
Dollars ($70,717.92); provided, however, (i) if on or before the
Termination Date Lessor has leased the Premises to a new tenant, (ii)
the new tenant leases the Premises from Lessor for the first and/or
second month following the Terminate Date and (iii) Lessor receives rent
from the new tenant applicable to the first and/or second month
following the Termination Date Lessor shall refund to Lessee the New
Tenant Rent (as defined below). The New Tenant Rent shall equal the rent
Lessor receives from the new tenant that is applicable to the first
and/or second month after the Termination Date. In no event shall the
refund to Lessee exceed the amount of the Termination Payment.
Notwithstanding the foregoing, if the new tenant is an assignee or
sublessee of Lessee, no Termination Payment shall be payable by Lessee
to Lessor.
75.2 Terms. If Lessee timely and properly exercises the
Termination Option, all rent payable under this Lease shall be paid through and
apportioned as of the Termination Date (in addition to payment by Lessee of the
Termination Payment); neither party shall have any rights, liabilities, or
obligations under this Lease for the period accruing after the Termination Date,
except those which, by the provisions of this Lease, expressly survive the
expiration or termination of the term of this Lease; Lessee shall surrender and
vacate the Premises and deliver possession thereof to Lessor on or before the
Termination Date in the condition required under this Lease for surrender of the
Premises (except Lessor shall accept the Premises in "as is" condition if the
new tenant was an assignee or sublessee of Lessee); and at Lessor's option,
Lessee shall enter into a written agreement reflecting the termination of this
Lease upon the terms provided for herein, which agreement shall be executed
within thirty (30) days after Lessee exercises the Termination Option.
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50
ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE -- MODIFIED NET
BY AND BETWEEN
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("LESSOR")
AND
PACIFIC SUNWEAR OF CALIFORNIA, INC. ("LESSEE")
DATED SEPTEMBER 30, 1997
49. COMMENCEMENT DATE:
Lessor and Lessee agree that the estimated Commencement Date shall be
December 15, 1997 ("Estimated Commencement Date"). The actual
Commencement Date shall be the earlier of (i) the date Lessee occupies
the Premises for its business purposes (which shall include without
limitation the storage of inventory) or (ii) the later of (a) the
Estimated Commencement Date or (b) the date the Base Lessee
Improvements, the Lessee Improvements and the Additional Lessee
Improvements (collectively, the "Total Lessee Improvements") are
substantially completed; provided that such date shall be accelerated by
one day for each day that substantial completion of the Total Lessee
Improvements is delayed by Lessee's Delays. The term of the Lease shall
expire on the date (the "Expiration Date") that is the last day of the
calendar month in which the tenth anniversary of the Commencement Date
falls, subject to extension pursuant to Paragraph 54 of this Lease.
50. TERM:
The Term of the Lease shall commence on the Commencement Date, and shall
continue, subject to earlier termination as provided herein, until the
Expiration Date. In the event permission is given to Lessee to enter or
occupy all or a portion of the Premises prior to the Commencement Date,
such occupancy shall be subject to all of the terms and conditions of
this Lease, except that if such entry is pursuant to Paragraph 52,
Lessee shall not be obligated to pay Base Rent and any other amount
payable by Lessee under this Lease.
Lessor shall use all reasonable efforts to make the Premises available
on the Estimated Commencement Date. If for any reason, however, Lessor
cannot deliver possession of the Premises to Lessee on said 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 be
obligated to pay rent or perform any other obligations of Lessee under
the terms of this Lease, except as may be otherwise provided in this
Lease, until the Commencement Date shall have occurred. If, however, the
Commencement Date shall not have occurred on or before February 3, 1998
for any reason, other than Lessee's Delays (defined below) or any reason
beyond the reasonable control of Lessor, Lessee shall receive an offset
of Base Rent for each day after such date that the Commencement Date
shall not have occurred. Such date will be adjusted forward for each day
that substantial completion of the Total Lessee Improvements is delayed
by Lessee's Delays. For purposes of this Paragraph 50, Lessor's
inability to obtain a building permit within 14 business days after
receipt of Lessee's interior construction drawings shall be deemed a
delay for a reason beyond the reasonable control of Lessor.
If the Commencement Date shall not have occurred on or before May 1,
1998 for any reason, other than Lessee's Delays or any reason beyond the
reasonable control of Lessor, Lessee may, at its option, by notice in
writing to Lessor within 10 days after that date, cancel this Lease, in
which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of
Lessee is not received by Lessor within said 10-day period, Lessee's
right to cancel this Lease hereunder shall terminate and be of no
further force or effect.
51. SUBSTANTIAL COMPLETION:
The work to be performed by Lessor under this Lease shall be deemed
substantially completed on the date on which all of the following shall
have been satisfied: (a) all work required for an Occupancy Permit shall
have been completed and it is legally permissible to occupy the
Premises, (b) all work to be performed by Lessor under Paragraph 55
shall have been completed to the extent that the Premises can be used by
Lessee without material interference with the operations of its
business, excluding punchlist items or other noncritical elements of the
Lessee Improvements, and (c) all mechanical systems in the Premises are
in good operating order.
52. EARLY ACCESS:
Lessor shall, subject to the following terms and conditions, permit
Lessee, and Lessee's agents, to enter the Premises during the
seventy-five (75) day period prior to the Estimated Commencement Date:
(a) Lessee shall give Lessor reasonable prior written notice of such
access to the Premises, which notice must contain or be
accompanied by: (i) a description and schedule for the work to be
performed in the Premises; (ii) the names and addresses of all
contractors performing such work; (iii) copies of all contracts
pertaining to the performance of such work; (iv) copies of all
licenses and permits required in connection with the performance
of such work; and (v) certificates of insurance and instruments
of indemnification against all claims, costs, expenses, damages,
suits,
Initials: _______
Initials: _______
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51
fines, penalties, actions, causes of action, and liabilities
which may arise in connection with such work. Each of the
foregoing shall be subject to Lessor's approval, which approval
shall not be arbitrarily withheld. Notwithstanding the foregoing,
Lessor agrees not to unreasonably withhold its consent with
respect to Items (i) through (v) of this Paragraph 52(a) related
to the installation by SDI Industries of Lessee's material
handling system in the distribution center portion of the
Premises.
(b) Such early access is subject to reasonable scheduling by Lessor.
(c) Lessee's agents, contractors, workers, mechanics, suppliers, and
invitees must work in harmony and not interfere with Lessor and
Lessor's contractor in doing work in the Premises, in other
premises, and common areas of the Building, and in the general
operation of the Building. If at any time such entry shall cause
or threaten to cause disharmony or interference, including labor
disharmony, Lessor may withdraw its permission upon written
notice to Lessee.
(d) In the event that Lessor's work in the Premises and Lessee's work
in the Premises (pursuant to the permission granted herein)
progress simultaneously, Lessor shall not be liable for injury to
any person or for damage to any property of Lessee, Lessee's
employees, agents, licensees, or invitees, from any cause
whatsoever, occurring upon or about the Premises, and Lessee
shall indemnify and save Lessor harmless from any and all
liability and claims arising out of or connected with any such
injury or damage. Lessee will not permit any lien on any part of
the Building allegedly resulting from any work or materials
furnished or obligations incurred by or for Lessee. Lessee will
discharge any such lien of record immediately upon its filing.
(e) Lessee agrees that it is liable to Lessor for any damage to the
Premises or to any portion of the work in the Premises caused by
Lessee or any of Lessee's employees, agents, licensees, or
invitees.
53. BASE RENT:
Commencing on the Commencement Date, the Base Rent payable by Lessee to
Lessor during the Term of this Lease shall be as follows:
================================================================================
MONTHS PER SQ. FT. NNN PER MO. NNN
------ --------------- -----------
*BASED ON SQ. FT.
-------------------------------------------------------------------
1 - 2 0(cent) $ 0
3 - 30 37(cent) $65,230.63
31 - 60 40.7(cent) $71,753.69
61 - 90 44.77(cent) $78,929.06
91 - 120 49.25(cent) $86,827.26
================================================================================
The obligation to pay Base Rent shall be abated for the first two (2)
months of the Term of this Lease. All other terms of this Lease,
however, including but not limited to the obligations to pay Lessee's
Share of Common Area Operating Expenses, together with the insurance
required by Paragraph 8, and the amount of any monthly amortized
Additional Lessee Improvement Allowance, shall be in effect during such
period.
54. OPTION TO EXTEND:
54.1 Grant of Option. Lessee shall have the right, but not the
obligation, to extend the Term of this Lease for two (2)
additional periods of five (5) years each (the "Extension
Period"), provided that the following criteria are met:
(a) Lessee is not in default under any provision of this Lease
beyond any applicable cure periods either (i) as of the
date the "Extension Notice" (as defined below) is
delivered to Lessor or (ii) as of the date of the
commencement of the Extension Period; and
(b) Lessee has not assigned or subleased any portion of the
Premises other than as permitted by Paragraph 12 of this
Lease.
54.2 Exercise of Option. Lessee may exercise its right to extend the
Term only by delivering written notice to Lessor of Lessee's
desire to so extend the Term no later than six (6) months nor
earlier than nine (9) months prior to the commencement of the
Extension Period ("Lessee's Notice"), subject to the Monthly Base
Rent determination by Lessor in accordance with Paragraph 54.3.
54.3 Monthly Base Rent for Extension Period. Within thirty (30) days
of Lessor's receipt of Lessee's Notice, Lessor shall deliver
written notice to Lessee which shall provide for Monthly Base
Rent for the Extension Period equal to 95% of an amount equal to
the fair market rental (the "Fair Market Rent") for the Premises
determined by Lessor according to the rental then being charged
Initials: _______
Initials: _______
-2-
52
for comparable space in comparable deals in buildings of similar
size and construction in Anaheim, Yorba Linda and Fullerton (the
"Market Rent Notice"). In determining comparable space,
appropriate consideration shall be given to the level and type of
improvements contained in the Premises and the use of the
Premises as a corporate headquarters for the lessee. "Comparable
deals" shall mean leases which are approximately as long, and
commencing at approximately the same time, as the applicable
Extension Period. "Comparable deals" shall not include any
transactions where the lessor of the subject building is in
default under its mortgage or other indebtedness, or is
currently, or has within the prior 12 months been involved in
foreclosure proceedings on the applicable building. "Comparable
deals" shall also exclude transactions which are subleases or
whereby the lessee has some form of equity participation in the
deal. Notwithstanding the foregoing, in no event shall the
Monthly Base Rent for the Extension Period be less than the sum
of (a) the Monthly Improvement Payment (as defined below) and (b)
Base Rent payable by Lessee for the month prior to the
commencement of the Extension Period. In the event that Lessee
notifies Lessor in writing, on or before the 20th business day
following any Market Rent Notice, that Lessee disagrees with the
applicable determination, Lessor and Lessee shall negotiate in
good faith to resolve such dispute within 10 business days
thereafter (The 30th business day after any Market Rent Notice is
referred to herein as the "Outside Agreement Date.") If not
resolved by the Outside Agreement Date each party shall submit to
the other its determination of Fair Market Rent and the dispute
shall be submitted to arbitration in accordance with the
following paragraph titled "Arbitration Procedures." Until any
such dispute is resolved, any applicable payments due under this
Lease shall correspond to Lessor's determination and, if Lessee's
determination becomes the final determination, Lessor shall
refund any overpayments to Lessee, within 5 business days
following the final resolution of the dispute.
54.4 Arbitration Procedures.
(i) Lessor and Lessee shall each appoint one
arbitrator who shall by profession be a real estate broker who
shall have been active over the 5-year period ending on the date
of such appointment in the leasing of properties similar to the
Premises in Anaheim, Yorba Linda and Fullerton. The determination
of the arbitrators shall be limited solely to the issue of
whether Lessor's or Lessee's submitted Fair Market Rent for the
Premises is the closest to the actual Fair Market Rent for the
Premises as determined by the arbitrators, taking into account
the requirements of this subparagraph regarding the same. Each
such arbitrator shall be appointed within 15 days after the
Outside Agreement Date. Lessor and Lessee may not consult with
either such arbitrator prior to resolution.
(ii) The two arbitrators so appointed shall within
15 days of the date of the appointment of the last appointed
arbitrator, meet and attempt to reach a decision as to whether
the parties shall use Lessor's or Lessee's submitted Fair Market
Rent, and shall notify Lessor and Lessee of their decision, if
any.
(iii) If the two arbitrators are unable to reach a
decision, the two arbitrators shall, within 30 days of the date
of the appointment of the last appointed arbitrator, agree upon
and appoint a 3rd arbitrator who shall be a broker who shall be
qualified under the same criteria set forth hereinabove for
qualification of the initial 2 arbitrators.
(iv) The 3 arbitrators shall, within 30 days of the
appointment of the 3rd arbitrator, reach a decision as to whether
the parties shall use Lessor's or Lessee's submitted Fair Market
Rent, and shall notify Lessor and Lessee thereof.
(v) The decision of the majority of the 3
arbitrators shall be binding upon Lessor and Lessee.
(vi) If either Lessor or Lessee fails to appoint an
arbitrator within 15 days after the Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision,
notify Lessor and Lessee thereof, and such arbitrator's decision
shall be binding upon Lessor and Lessee.
(vii) If the 2 arbitrators fail to agree upon and to
appoint a 3rd arbitrator, then the appointment of the 3rd
arbitrator shall be dismissed, and the matter to be decided shall
be forthwith submitted to arbitration under the provisions of the
American Arbitration Association, but subject to the instructions
set forth in this Lease.
(viii) The cost of arbitration shall be paid by Lessor
and Lessee equally.
Upon determination of the Fair Market Rent, Lessor shall prepare
and deliver to Lessee an amendment to this Lease (the "Extension
Amendment") which provides for the extension of the Term pursuant
to the provisions hereof with a Monthly Base Rent equal to 95% of
the Fair Market Rent.
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54.5 Time of the Essence. Time shall be of the essence regarding all
the periods set forth above for the exercise of the option and
execution of the Extension Amendment. The failure of Lessee to
timely exercise the option as provided in Paragraph 54.2 and 54.3
above shall cause this option to automatically cease and
terminate and, in such event, this Lease shall terminate without
extension.
54.6 Non-Transferable Option. The option granted herein is granted
solely to Lessee and is not assignable or transferable and any
attempt to assign or transfer this option shall be void and of no
force or effect; excluding, however, any permitted assignment as
provided in Paragraph 12 of this Lease.
55. LESSEE IMPROVEMENTS:
55.1 Approved Plans and Schedule. Lessor shall, at its sole cost and
expense, construct the Base Lessee Improvements and the Lessee
Improvements and subject to reimbursement of Lessor by Lessee
pursuant to Paragraph 55.4, the Additional Lessee Improvements,
pursuant to interior construction drawings sufficient to permit
accurate bidding by the contractors ("Approved Plans") prepared
by Lessee and approved by Lessor and described on Exhibit "B."
Lessor acknowledges receipt of Lessee's space plan on August 11,
1997, and Lessee's interior construction drawing on September 17,
1997, and approval thereof. Lessee may select its own interior
architect. The Lessor and the Project Manager (as defined below)
shall obtain bids from Oltmans Construction, Snyder Langston and
two other qualified contractors selected by Lessor for
construction of the work provided for under this Paragraph 55.
The Project Manager shall provide Lessee with copies of the bids
received from each of the contractors and will make reasonable
efforts to consult with Lessee with respect to negotiating with
the contractor selected by Lessor the portions of the contract
relating to the office improvements, and during the bidding
process and construction period.
55.2 Base Lessee Improvements. Lessor shall, at its sole cost and
expense, construct the following improvements to the Premises
(the "Base Lessee Improvements"):
(a) Upgrade the sprinkler system in the southwest high bay
warehouse area of the Premises; provided, however, that in
no event shall Lessor be required to spend in excess of
$20,000, and any cost that exceeds such amount shall be
paid by Lessee out of the Additional Lessee Improvement
Allowance;
(b) Reconfigure the parking area of the Industrial Center in
accordance with a plan prepared by Lessor and approved by
Lessee ("Parking Plan") to provide Lessee with 350 parking
spaces.
(c) Repaint the exterior of the Building.
(d) Demise the Premises from the easterly, adjacent space
consisting of approximately 90,664 square feet ("Adjacent
Space") of the Building in accordance with Exhibit "A,"
provided that Lessee shall be responsible for the cost of
any alterations to the existing security system resulting
from demising the Building, and the cost of any repair or
upgrades to such security system requested by Lessee;
provided, however, that Lessor shall use reasonable
efforts, at no additional cost to Lessor, to preserve
intact and not damage the existing security system. Any
cost of the alterations of the existing security system
may be paid by Lessee out of the Additional Lessee
Improvement Allowance.
(e) Separate the utilities servicing the Premises to function
independently of the Adjacent Space in the Building,
including electrical, HVAC and lighting; and
(f) Remove the existing racking system from the Premises no
later than October 1, 1997, which shall remain Lessor's
personal property.
55.3 Lessee Improvements. Lessor shall, at its sole cost and expense,
construct certain improvements in the Premises (the "Lessee
Improvements") substantially in accordance with the Approved
Plans and all applicable rules, regulations, laws or ordinances;
provided, however, that in no event shall Lessor be required to
spend in excess of $300,000 (the "Lessee Improvement Allowance")
to build the Lessee Improvements. The cost of the Lessee
Improvements that exceeds the amount of the Lessee Improvement
Allowance shall be treated as a contribution by Lessor of a
portion of the Additional Lessee Improvement Allowance under
Paragraph 55.4. The Lessee Improvement Allowance may be used only
for the cost of the Lessee Improvements as described in Paragraph
55.5 below.
55.4 Additional Lessee Improvements. Upon Lessee's request, Lessor
shall construct certain additional improvements in the Premises
(the "Additional Lessee Improvements") substantially in
accordance with the Approved Plans, and all applicable rules,
regulations, laws or ordinances. Lessor shall contribute up to
$800,000 ("Additional Lessee Improvement Allowance") towards the
costs of the Additional Lessee Improvements and any such amounts
contributed will be repaid by Lessee, plus 10% interest per
annum, in equal monthly installments amortized over the Term of
the Lease (the
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"Monthly Improvement Payment"). Such additional payments will be
made at the same time and in the same manner as Rent under this
Lease. Lessee shall be required to pay any costs in excess of the
Additional Lessee Improvement Allowance within fifteen (15) days
after receiving written notice from Lessor describing such excess
costs.
55.5 Lessee Improvement Allowance. The cost of the Lessee Improvements
and Additional Lessee Improvements shall include the cost of all
labor and materials for the construction and installation of the
Lessee Improvements and Additional Lessee Improvements
respectively; the cost of all permits, licenses and fees; all
amounts paid to Lessor's contractors under and pursuant to
contracts for the construction and installation of the Lessee
Improvements and Additional Lessee Improvements respectively; all
architectural, engineering, space planning and other consultants'
fees; all amounts paid for mechanical drawings, plans,
specifications, shop drawings, designs and layouts; and
incidental costs related to the foregoing. The cost of Lessee
Improvements and Additional Lessee Improvements shall not
include, and Lessor shall not charge, any fees for Lessor's
profit, overhead or supervision. The Lessee Improvement Allowance
shall not include, and Lessee shall be responsible for, the cost
to remove or alter the excess mezzanine area of the Premises.
Lessee, at its option, may retain, alter, move or remove all or
any portion of the mezzanine. At the expiration of the term,
Lessee shall remove the mezzanine at Lessee's sole cost and
expense.
55.6 Lessee-Initiated Changes. Lessee shall be permitted to initiate
changes in the design and construction requirements of the Lessee
Improvements throughout the course of the construction of the
Lessee Improvements. Said changes shall be incorporated by Lessor
at actual cost, with a maximum fee mark-up by Lessor's general
contractor limited to the general contract base fee percentage.
Design/engineering reimbursements for Lessee-initiated changes
shall be based upon design/engineering consultant actual costs
including time and materials. All costs of Lessee-initiated
changes requiring revisions, including engineering, estimating,
coordination, layout, and printing of drawings, specification
changes, and any other incidental expenses, shall be included in
the cost of the Lessee Improvements and Additional Lessee
Improvements respectively.
55.7 Lessor's Obligations. Notwithstanding Paragraph 2.3, Lessor shall
have no obligation to Lessee for defects in design, workmanship
or materials, but shall use its reasonable best efforts to
enforce the contractor's obligations therefor and shall, as
appropriate under the terms of the Lease given the allocation of
maintenance responsibility between Lessor and Lessee, assign to
Lessee any manufacturer's warranties with respect to the work or
the Premises.
55.8 Work Done by Lessee. Any work done by Lessee in the Premises
shall be done at Lessee's sole cost and expense in accordance
with the terms of this Lease and only with Lessor's prior consent
and in conformity with a valid building permit and all applicable
rules, regulations, laws and ordinances. Any work done by Lessee
shall be done in a good and workmanlike manner with good and
sufficient materials, and shall be done only by contractors
approved by Lessor. Lessor hereby approves of SDI Industries as
Lessee's contractor and of SDI's subcontractors for the
installation of a material handling system in the distribution
center in the Premises during the early access period.
55.9 Acceptance of Lessee Improvements. Lessee shall notify Lessor in
writing of any items that Lessee deems incomplete or incorrect in
order for the Premises to be acceptable to Lessee within ninety
(90) days following completion of the Lessee Improvements and
Additional Lessee Improvements. Lessee shall be deemed to have
accepted the Premises as improved and to have approved
construction if Lessee does not deliver such a list to Lessor
within said number of days.
55.10 Other Improvements. Lessor shall, at its sole cost and expense,
be responsible to make any alterations to the Building (but not
the Premises) during the Term of the Lease and any Extension
Period, as and if required for compliance with the Americans with
Disabilities Act ("ADA"), so long as such compliance is not a
result of Lessee's specific use of the Building or Lessee's
Alterations under Paragraph 7.3. With respect to the Premises,
including, without limitation, the Base Lessee Improvements, the
Lessee Improvements and Additional Lessee Improvements, any
alterations to the bathroom, showers or elevator required by the
ADA as interpreted and applied on the Commencement Date shall be
made, at Lessor's sole cost and expense without deduction from
the Lessee Improvement Allowance or the Additional Lessee
Improvement Allowance. Any such alterations shall be separately
itemized and priced by Lessor's contractor. Lessee shall, at its
sole cost and expense, be responsible (a) to make any alterations
to the Premises required due to any changes in the ADA, including
without limitation the interpretation and application thereof,
after the Commencement Date, or required due to Lessee's specific
use of the Premises or due to any Alterations under Paragraph 7.3
performed by Lessee in the Premises after the Commencement Date,
and (b) for the cost of any alterations to the Building required
for compliance with the ADA arising out of Lessee's specific use
of the Premises or due to any of Lessee's Alterations under
Paragraph 7.3. The cost associated with any seismic retrofit of
the Premises, as and if required, whether under current or future
law, shall be the responsibility of Lessor except to the extent
required due to the unique nature of Lessee's use, the Lessee
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Improvements, the Lessee Additional Improvements or Lessee's
Alterations. Lessor's costs under this Paragraph 55.10 shall not
be included in Lessee's Share of Common Area Expenses.
55.11 Lessee Delays. If Lessor is delayed in substantially completing
any work to be performed by Lessor under this Paragraph 55 as a
result of any of the following circumstances or events ("Lessee
Delays"), the Commencement Date shall not be deferred by reason
of such delay:
(a) Lessee's failure to furnish the space plan by August 11,
1997;
(b) Lessee's failure to respond within one business day to any
request of Lessor for additional information or approval
as necessary in connection with the completion of the
Total Lessee Improvements;
(c) Lessee's failure to furnish interior construction drawings
by September 17, 1997;
(d) Lessee's request for any special, long-lead materials or
installations as part of the Lessee Improvements or
Additional Lessee Improvements; provided, however, that
Lessor notifies Lessee of any such materials or
installation within 10 days after receiving bids from the
general contractor;
(e) Lessee's changes in any drawings, plans, or specifications
to the Approved Plans, including without limitation the
time consumed at revising plans or in revising the
Approved Plans by reason of Lessee's changes;
(f) Any changes initiated by Lessee by reason of Lessee's
disapproval of cost proposals or resulting in the
preparation of revised cost proposals;
(g) Field changes to the construction work by Lessee;
(h) The delivery, installation, or completion of any
Lessee-finish work performed by Lessee's employees or
agents;
(i) The performance of any work done by Lessee, or any failure
to complete or delay in completion of such work; or
(j) Any other act or omission of Lessee.
55.12 Project Manager. The project manager for the Total Lessee
Improvements shall be ZB Investment Company (the "Project
Manager"). Lessee agrees to reimburse Lessor within 10 days after
demand for Lessee's share of the cost of the Project Manager in
the amount of $3,000.00 per month, not to exceed $21,000.00 in
the aggregate. The Project Manager's duties shall include
handling the bids pursuant to Paragraph 55.1, negotiating with
the bidding contractors, assisting Lessor in selecting the
contractor, negotiation of the terms of the contractor's
contract, giving written notice to Lessee of potential Lessee
Delays, and making final determinations of whether a Lessee Delay
has occurred and of the extent of the Lessee Delay.
56. FIRST RIGHT OF OFFER:
No later than 30 days prior to commencing marketing for releasing (as
defined below) the balance of the space in the Building that becomes
available (as defined below) (the "Offer Space"), Lessor shall first
offer to lease such space to Lessee by a written notice (a "First Offer
Notice") Lessee thereupon shall have the right ("ROFO") to lease all of
the Offer Space at the ROFO Fair Market Rent (as defined below) for the
remaining term of the Lease (including the option to extend pursuant to
Paragraph 54 at the Monthly Base Rent as determined therein for the
applicable Extension Period). The ROFO shall be exercised by Lessee
notifying Lessor, within ten days after Lessee's receipt of the First
Offer Notice, of Lessee's exercise of its right to lease such Offer
Space upon the terms set forth herein. If Lessee so notifies Lessor,
Lessor shall deliver the Offer Space to Lessee upon the date such space
is available and shall prepare an amendment to this Lease adding the
Offer Space to the Premises on the date of delivery on the terms set
forth herein, which amendment shall be delivered to Lessee promptly
after exercise and executed by Lessee within 15 days after Lessee's
receipt of same from Lessor. For purposes of this Paragraph 56, ROFO
Fair Market Rent shall mean the monthly Base Rent then being charged for
comparable space and comparable deals in buildings of similar size and
construction in Anaheim, Yorba Linda and Fullerton. In determining
comparable space, appropriate consideration shall be given to the level
and type of improvements contained in the Offer Space. "Comparable
deals" shall mean leases which are approximately as long, and commencing
at approximately the same time, as the leasing of the Offer Space
through the end of the initial term. "Comparable deals" shall not
include any transactions where the lessor of the subject building is in
default under its mortgage or other indebtedness, or is currently, or
has within the prior 12 months been involved in foreclosure proceedings
on the applicable building. "Comparable deals" shall also exclude
transactions which are subleases or whereby the Lessee has some form of
equity participation in the deal. Lessor shall give Lessee notice in
writing within 30 days after Lessee's exercise of the ROFO of the ROFO
Fair Market Rent (the "ROFO Market Rent Notice"). In the event the
Lessee notifies Lessor in writing, on or before the 20th business day
following the ROFO Market Rent Notice, that Lessee disagrees with the
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applicable determination, Lessor and Lessee shall negotiate in good
faith to resolve such dispute within 10 business days thereafter (the
30th business day after any ROFO Market Rent Notice is referred to
herein as the "ROFO Outside Agreement Date.)" If not resolved by the
ROFO Outside Agreement Date, each party shall submit to the other its
determination of ROFO Fair Market Rent and the dispute shall be
submitted to arbitration in accordance with Paragraph 54.4 with the
following modifications: (i) the word "ROFO" is inserted before the
words "Fair Market Rent" and "Outside Agreement Date" each place they
appear, (ii) the words "Offer Space" are substituted for the word
"Premises" each place it appears, and (iii) the last sentence of
Paragraph 54.4 is deleted. Until any dispute as to ROFO Fair Market Rent
is resolved, any applicable payments due under this Lease shall
correspond to Lessor's determination and, if Lessee's determination
becomes the final determination, Lessor shall refund any overpayments to
Lessee, within 5 business days following the final resolution of the
dispute. Lessor shall be deemed to be "releasing" any such Offer Space
when the first lease of such Offer Space entered into within the first
year after the Commencement Date terminates and the Offer Space becomes
available. The Offer Space shall be deemed to be "available" as of any
date only to the extent it has not been subject to or comprised of
expansion option, first offer, or a lease to an existing tenant in
occupancy of such space, unless such tenant has specified in writing
that it has no interest in re-leasing such space. In event that Lessee
does not timely accept the offer contained in any Offer Notice, or in
the event that Lessee accepts any such offer but Lessee does not execute
an amendment within 15 days after Lessee's receipt of same from Lessor
which adds such Offer Space to the Premises, Lessor shall have the right
to lease such Offer Space to any other person on any terms and Lessee
shall have no further rights under this Paragraph. The provisions of
Paragraph 39 are applicable to this right of first offer. In addition,
Lessee shall have no rights to exercise its ROFO rights during any
period in which it is not in occupancy of 100% of the Premises or in
which an assignment of this Lease or a sublease of the Premises is in
effect.
57. TRAILER STORAGE; RESERVED PARKING:
Lessee may store trailers overnight within the loading area outlined in
Exhibit "A" next to the loading docks of the Premises, subject to
Paragraph 40. The location of the Reserved Parking Spaces shall be
designated by Lessor, subject to Lessee's approval, which shall not be
unreasonably withheld or delayed.
58. CONDITIONS, COVENANTS AND RESTRICTIONS:
Lessor shall provide Lessee a copy of any conditions, covenants and
restrictions that may be of record in connection with the Industrial
Center.
59. HAZARDOUS SUBSTANCES:
To the best of Lessor's current actual knowledge, without inquiry or
investigation, there is no asbestos nor any other Hazardous Substances
including, but not limited to, radon gas, PCBs, lead base paint, ground
water contamination, industrial, radioactive or chemical waste,
urea-formaldehyde insulation, and underground storage tanks on or under,
or within the Industrial Center in violation of applicable law.
In addition to the terms of Paragraph 6.2, Lessee shall disclose to
Lessor in writing whether any Hazardous Substances will be used, stored
or disposed in the Premises, which disclosure shall include an inventory
of such substances, and provide a use, storage and disposal plan for the
handling of such substances. Lessor may disapprove of the use, storage
and/or disposal of such substances within the Premises at Lessor's sole
discretion.
Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having
jurisdiction with respect to the existence of Hazardous Substances on
the Premises or the Building which are not brought on to the Premises,
Building or Common Areas by Lessee. Lessee shall fully cooperate in any
such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable
times in order to carry out Lessor's investigative and remedial
responsibilities. The costs incurred by Lessor for such investigation
and remediation shall not be included in Lessee's Share of Common Area
Operating Expenses. Any liability of Lessor with respect to this
covenant shall be satisfied only out of Lessor's interest and estate in
the Premises and Building, and Lessor shall have no personal liability
beyond such interest and estate with respect to such obligations. This
covenant shall be of no further force or effect with respect to Bank of
America National Trust and Savings Association from and after its sale
of the Premises and Building.
60. ASSIGNMENT AND SUBLETTING:
The parties agree that it would be reasonable for Lessor to condition
its consent to any proposed assignment or sublease on Lessee's agreement
to pay to Lessor 50% of rent received from the assignee or sublessee by
Lessee in excess of the rent payable by Lessee pursuant to this Lease
after deducting any direct expenses incurred by Lessee in connection
with such assignment or sublease including, but not limited to, any
changes, alterations and improvements to the Premises, and any brokerage
commissions, and on Lessee's payment to Lessor of 50% of all other
consideration given, directly or indirectly, by the assignee or
sublessee to Lessee in consideration of any such assignment or sublease.
It is the intention of Lessor and
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Lessee that the foregoing provisions shall apply to any consideration
received by Lessee from sub- sublessees or future assignees, regardless
of the number of levels thereof. Any rent or other consideration which
is to be paid to Lessor by Lessee pursuant to this paragraph shall be
paid promptly upon receipt by Lessee.
61. ADDITIONAL PERMITTED USES (PARAGRAPH 1.8):
The Permitted Uses shall also include any other use permitted by
Applicable Laws; provided that Permitted Uses shall exclude any use
which (a) violates any certificate of occupancy in force for the
Premises, the Building or any part thereof, (b) causes or is likely to
cause damage to the Building or any part thereof or any equipment,
facilities or other systems therein; (c) constitutes a violation of law;
(d) violates a requirement or condition of the standard fire insurance
policy issued for the Buildings, (e) impairs the character, reputation,
image or appearance of the Building; (f) impairs the proper and economic
maintenance, operation or repair of the Building or any part thereof;
(g) constitutes a nuisance, annoyance or inconvenience to other lessees
or occupants of the Building or interferes with or disrupts the use or
occupancy of any area of the Building (other than the Premises) by other
lessees or occupants; (h) interferes with the transmission or reception
of microwave, television, radio or other communications signals by
antennae located on the roof or elsewhere in the Building; (i) results
in repeated demonstrations, bomb threats or other events which require
evacuation of any part of the Building or otherwise disrupt the use,
occupancy or quiet enjoyment thereof by other lessees and occupants, or
(j) involves the use of any part of the Premises for: (1) a restaurant
or bar; (2) the storage, manufacture or sale of food, beverages, liquor,
tobacco in any form or drugs (except that Lessee may maintain vending
machines for the use of its officers, employees and invitees and except
that Lessee's officers and employees may bring food, beverages, tobacco
and medicine onto the Premises for their personal and lawful
consumption); (3) the storage, use, treatment, manufacture or sale of
Hazardous Substances (as defined below); (4) the business of
photocopying or offset printing (but Lessee may use part of the Premises
for photocopying or offset printing for its own business); (5) medical
or dental offices or laboratories; (6) a school or classroom; (7) the
retail sale or auction of merchandise, goods or property of any kind; or
(8) cooking (except that Lessee may maintain coffee or lunch rooms with
coffee makers and microwave ovens for the exclusive use of Lessee's
officers, employees and invitees), lodging or sleeping. No noise,
vibration or odor shall be permitted to escape from the Premises.
62. ADDITION TO END OF PARAGRAPH 2.10:
Lessor agrees to exercise its rights under this Paragraph 2.10 in a
manner designed to minimize to the extent reasonably possible
interference with Lessee's business and consistent with the practices of
owners of similar parks in the Anaheim area. No capital expenditures for
changes to the Common Areas pursuant to Paragraphs 2.10(a), (c), (d) or
(f) shall be included in Common Area Operating Expenses for purposes of
this Lease.
63. AUDIT RIGHT AND ADDITIONS TO PARAGRAPH 4.2:
The following is added to the end of Paragraph 4.2:
"(e) In the event of any dispute as to the amount of Operating
Expenses as set forth in Lessor's statement of Operating Expenses
delivered to Lessee, Lessee shall have the right, after
reasonable notice and at reasonable times within one year after
the final statement for such Operating Expenses is delivered to
Lessee, to inspect and photocopy (at Lessee's expense) Lessor's
accounting records with respect to Lessee's Share of Operating
Expenses. If, after such inspection and photocopying, Lessee
still disputes the amount of Operating Expenses as set forth in
Lessor's statement, Lessee shall be entitled to retain an
independent certified public accountant reasonably approved by
Lessor to audit Lessor's records to determine the proper amount
of such Operating Expenses and the proper amount payable by
Lessee pursuant to this Lease. Lessee agrees to pay the cost of
such audit, provided that Lessor shall pay such cost if the audit
reveals that Lessor's determination of Operating Expenses as set
forth in Lessor's statement overstated Operating Expenses by 5%
or more. Lessor shall be required to maintain records of all
Operating Expenses for one year after the final statement for
such Operating Expenses. If such audit reveals an overstatement
or understatement of Operating Expenses, the amount of the
differential shall be promptly reimbursed to Lessee by Lessor or
paid by Lessee to Lessor, as the case may be."
(f) Lessor may not submit a statement to Lessee demanding
increased rents representing increased Common Area Operating
Expenses if more than twelve months have elapsed since the end of
the calendar year in which the increased Common Area Operating
Expenses were paid or incurred unless the increased Common Area
Operating Expenses relate to adjustments in Real Property Taxes."
(g) For the purposes of determining the amount to be included in
Common Area Operating Expenses with respect to capital
improvements, costs of the capital improvements shall be
amortized over the useful life of such improvements on a straight
line basis, including imputed interest at the prime rate charged
by the largest state chartered bank in California plus 2% per
annum."
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(h) "Lease Year" means each consecutive twelve (12) month period
during the term of the Lease; provided that the first Lease Year
shall commence on the Commencement Date and end on the last day
of the eleventh month thereafter, the second and each succeeding
Lease Year shall commence on the first day of the next calendar
month and the last Lease Year shall end on the Expiration Date.
The actual fees incurred by Lessor for management and
administration of the Industrial Center shall be included in
Common Area Expenses; provided that the maximum amount for
property management that may be included in Common Area Operating
Expenses in any Lease Year (the "Measurement Year") shall equal
the Management Fee Cap (as defined below). As used in this
Paragraph "Management Fee Cap" initially means $0.09 per square
foot. On the first day of the second Lease Year and every
succeeding Measurement Year during the term of the Lease the
Management Fee Cap shall be increased by the lesser of (i) the
percentage increase in the CPI (as defined below) for the first
full calendar month of the Measurement Year as compared to the
CPI for the first full calendar month of the prior Lease Year or
(ii) 5%. The Management Fee Cap calculated for any Lease Year
pursuant to the foregoing shall be prorated on an actual day
basis for any Lease Year that is less than 12 full calendar
months. As used herein the term "CPI" means the Consumer Price
Index of the Bureau of Labor Statistics of the U.S. Department of
Labor for Urban Wage Earners and Clerical Workers, Los
Angeles-Anaheim-Riverside, California (1982- 1984=100), "all
items". In the event the compilation and/or publication of the
CPI shall be transferred to any other governmental department of
bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI as determined by Lessor shall be used
to make such calculation."
64. INTEREST ON SECURITY DEPOSIT UNDER PARAGRAPH 5:
The Security Deposit held by Lessor shall bear interest during each
calendar year for the benefit of Lessee at a rate equal to the rate paid
from time to time on Bank of America one year certificates of deposit
issued on the first business day of such calendar year. Lessee shall pay
all Federal and State income taxes attributable to that interest.
Provided no Default exists under the Lease, Lessor shall disburse to
Lessee the accrued interest on the Security Deposit during each calendar
year or credit Lessee's obligation to pay Base Rent in a like amount
within 15 days after the expiration of such calendar year. The
attorneys' fees against which the Security Deposit may be applied as
provided in Paragraph 5 of the printed portion of the Lease shall be
limited to those attorneys' fees determined by a court or admitted in
writing by Lessee to be due and owing Lessor from Lessee.
65. ADDITION TO SECTION 6.2:
The following Section 6.2(d) is added to the Lease:
"(d) Notwithstanding anything to the contrary in this Lease,
Lessee shall not be liable to Lessor under this Lease for any
cost associated with Hazardous Substances, if any, to the extent
that the Hazardous Substances existed on the Premises prior to
the date of this Lease and were not brought on to the Premises by
Lessee, its agents, employees, contractors, subcontractors,
licensees or invitees.
66. NOTICE OF ENTRY:
Notwithstanding anything to the contrary in Paragraphs 6.4 or 32, except
in the case of emergency or during periods in which Lessee is in default
under this Lease, Lessor shall give Lessee notice in advance of Lessor's
intent to enter the Premises and such entry shall be made during
Lessee's business hours.
67. ADDITION TO END OF PARAGRAPH 7.1(B):
The following is added at the end of Paragraph 7.1(b):
"not to exceed the costs for those services generally charged in
the area where the Premises are located for comparable services
to comparable buildings."
68. ADDITION TO END OF PARAGRAPH 7.2:
The following is added at the end of Paragraph 7.2:
"The cost of painting the exterior of the Building (after the
initial exterior painting provided for in Paragraph 55) shall be
a Common Area Operating Expense and shall be treated as a capital
expenditure for purposes of amortization under Paragraph 4.2(g)."
69. LIMITATION ON PARAGRAPH 7.3:
With respect only to the portion (the "Warehouse Area") of the Premises
other than the office areas, Lessor's prior approval shall not be
required with respect to any Alterations by Lessee provided that such
Alterations (a) are not visible from the outside of the Premises, (b) do
not involve puncturing, relocating or removing the roof or any existing
walls, or changing or interfering with the fire sprinkler or fire
detection systems, (c) do not involve the plumbing, electrical or HVAC
systems in the Premises, and (d) do not involve the
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structural elements of the Building. Notwithstanding the last sentence
of Paragraph 7.3(b), Lessor agrees not to require a lien and completion
bond unless Lessor believes it is reasonably necessary to protect Lessor
given the cost, nature and extent of the work and the parties
responsible for the performance and payment therefor.
70. ADDITION TO PARAGRAPH 7.4(B):
The following is added at the end of Paragraph 7.4(b):
"Prior to commencing any addition, alteration or improvement,
Lessee may request that Lessor waive Lessee's obligation to
remove such addition, alteration or improvement at the end of the
term. Any such waiver must be in writing and shall only apply to
the additions, alterations or improvements described therein.
Notwithstanding anything to the contrary in Paragraph 7.4, (a)
Lessee shall not be required to remove any of the improvements to
the office area of the Premises made by Lessor at the
commencement of the term, and (b) Lessee shall remove all
Alterations and Trade Fixtures from the Warehouse Area at the
expiration or earlier termination of this Lease."
71. ADDITION TO END OF PARAGRAPH 8.3(A):
The following is added at the end of Paragraph 8.3(a):
"The Lessor may, but shall not be obligated to, maintain
earthquake insurance. In the event Lessor maintains earthquake
insurance, the cost of that insurance shall be included as a
Common Area Operating Expense; provided that the maximum amount
of earthquake insurance premiums that may be included in the
Common Area Operating Expenses in any Lease Year shall be $0.26
per square foot. The maximum amount calculated for any Lease Year
pursuant to the foregoing shall be prorated on an actual day
basis for any Lease Year that is less than 12 full calendar
months. "
72. ADDITION TO END OF PARAGRAPH 8.5:
The following is added at the end of Paragraph 8.5:
"Lessee shall be permitted to provide the insurance required
under this Lease by obtaining a blanket policy or policies to be
maintained by Lessee. The coverages afforded to Lessee and
Lessee's Lenders under this Lease shall in no way be limited,
diminished or reduced under such blanket policy or policies."
73. ADDITION TO PARAGRAPH 9.2:
The following is added at the end of Paragraph 9.2:
"Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3 rather than Paragraph 9.2 in the event
there is any shortage of insurance proceeds."
74. ADDITION TO PARAGRAPH 9.6.(A):
The following is added after the first sentence of Paragraph 9.6(a):
"The period of abatement shall continue after the completion of
Lessor's repairs and restoration for the reasonable period for
Lessee to repair or replace Lessee's trade fixtures, alterations
and utility installations, but not to exceed 30 days from the
completion of Lessor's repair and restoration; provided, however,
the 30-day period after completion of Lessor's work may be
extended up to an additional 30 days to the extent the abatement
does not exceed the proceeds from insurance required to be
carried under Paragraph 8.3(b) applicable to, and received by
Lessor with respect to, that additional 30-day period."
75. ADDITION TO PARAGRAPH 12.1(B):
The following is added to Paragraph 12.1(b):
"If Lessee is a public corporation whose stock is regularly
traded on a national stock exchange, or is regularly traded in
the over-the-counter market and quoted on NASDAQ, the provisions
of this Paragraph 12.1(b) shall not apply to transfers of stock
on those exchanges or markets."
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76. SUBSTITUTION FOR PARAGRAPH 13.3:
The following is substituted for Paragraph 13.3:
"Upon the occurrence of a Breach (as defined in Paragraph 13.1)
of this Lease by Lessee, an amount shall be due and payable by
Lessee to Lessor equal to (A) (a) the sum of (i) the Lessee
Improvement Allowance, (ii) the value of free Base Rent (i.e.,
the Base Rent stated in Paragraph 53 to be abated) multiplied by
(b) a fraction the numerator of which is the number of months
remaining in the initial term of the Lease on the date of the
termination of the Lease and the denominator of which is 120,
plus (B) the unamortized portion of the Additional Lessee
Improvement Allowance then remaining unpaid, with such
amortization being made in the same manner as the Monthly
Improvement Payment has been calculated under Paragraph 55.4 of
this Lease."
77. NOTICE BEFORE LATE CHARGE UNDER PARAGRAPH 13.4:
Notwithstanding the provisions of 13.4, the 6% late charge described in
Paragraph 13.4 shall not be imposed with respect to the first late
payment in any calendar year unless the applicable payment due from
Lessee is not received by Lessor or Lessor's designee within 10 days
following written notice from Lessor that such payment was not received
when due. Following the first such written notice from Lessor in any
calendar year (and regardless of whether such payment is then received
within such 10-day), a late charge will be imposed without notice (as
set forth in Paragraph 13.4) for any subsequent payment due to Lessor
during such calendar year which is not received within 10 days of its
due date.
78. ADDITION TO PARAGRAPH 14:
The following is added at the end of Paragraph 14:
"If the amounts available to Lessor for restoration under the
preceding sentence are inadequate to repair such damage to the
Premises, Lessee may elect to contribute the amount of the
shortfall. In the event Lessee does not elect to contribute the
amount of the shortfall, Lessor may elect either to (a) fund the
shortfall itself, in which event Lessor shall proceed with the
repair and restoration, or (b) terminate this Lease."
79. SUBSTITUTION FOR PARAGRAPH 15.2:
The following is substituted for Paragraph 15.2:
"Additional Terms. Unless Lessor and Lessee's Broker have
otherwise agreed in writing, Lessor agrees that if Lessee's
Broker is a procuring cause of any Lease of other space in the
Building other than the Premises and Lessee's Broker provides
Lessor with the written agreement of Lessee and Lessee's Broker
designating Lessee's Broker as the exclusive representative and
agent of Lessee with respect to the lease of that expansion
space, then Lessor shall pay Lessee's Broker a brokerage fee in
connection with that expansion equal to 2 1/2% of the Base Rent
payable during the first five years of the initial term of that
expansion and 1 1/2% of the Base Rent payable with respect to the
second five years of the initial term of that expansion. No
commission or other fee shall be payable to Lessee's Broker with
respect to any extension of the term of this Lease or the
extension of any term of any Lease for other space in the
Building. Notwithstanding the foregoing, in the event that any
other broker claims to be entitled to a broker's fee or
commission with respect to that expansion by reason of any
dealings with Lessee, then Lessee's Broker shall have no rights
under this Paragraph 15.2 to any fees or commission with respect
to that expansion."
80. ADDITION TO PARAGRAPH 30.1:
The following is added to the end of Paragraph 30.1:
"Lessor hereby represents to Lessee that there are no Lenders
holding any Security Device with respect to the Premises as of
the date of the execution of this Lease."
81. SIGNS UNDER PARAGRAPH 34:
Lessor hereby approves Lessee's proposed signage as shown on the Signage
Exhibit attached to this Lease.
82. HVAC UNIT REPLACEMENT
Lessor agrees that with respect to the 4 HVAC units described below
(each an "Old Unit"), Lessor shall replace each Old Unit at Lessor's
sole cost and expense promptly after such Old Unit ceases to operate. As
used herein, "ceases to operate" means any one of the following elements
of an Old Unit requires replacement: (a) heat exchanger, (b) evaporation
coils, (c) condenser coils, or (d) compressor. The
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replacement of Old Units, when made, shall be with comparable new HVAC
units of at least the same tonnage. The Old Units are as follows:
Manufacture Model # Serial Tonnage Location
AC-1 Carrier 50DD024-600 RO 96371 20 N.W. corner
AC-2 Carrier 50DD028-600 SO 99824 25 S.W. corner
AC-3 Carrier 50DP012-600 OO 96215 10 S.E. corner
AC-4 Carrier 50DD024-600 RO 96370 20 N.E. corner
83. ACCESS BY BANK OF AMERICA. Lessee hereby agrees that Bank of America,
National Trust and Savings Association ("BofA") and any entity which
controls, is under common control with or is controlled by, BofA
(collectively, the "BofA Parties") shall have use of and access to the
following portions of the Premises):
(a) restrooms;
(b) loading doors 8 and 9;
(c) forklift room for recharging of BofA Parties' forklifts at night;
(d) forklift recharging equipment;
(e) portions of the Premises necessary for access to the areas
described in (a)-(d) above, including ingress and egress of
trucks, forklifts and personnel to and from the Adjacent Space.
BofA's rights of access under this Paragraph shall terminate at 11:59
p.m. on December 31, 1997, and shall be exercised by BofA so as to not
unreasonably interfere with the construction of the Total Lessee
Improvements. During the period of BofA's access under this Paragraph,
Lessee shall not be liable for injury to any person or for damage to any
property of BofA employees, agents, contractors, licensees, or invitees,
from any cause whatsoever, occurring upon or about the Premises, and
BofA shall indemnify and save Lessee harmless from any and all liability
and claims arising out of or connected with any such injury or damage.
84. COMMISSIONS. The commissions payable to the Brokers with respect to this
Lease are as follows: $158,159.63 payable to Lessor's Broker and
$239,886.53 payable to Lessee's Broker.
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