EXHIBIT 10.17
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
(Do not use this form for Multi-Tenant Property)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
January 2, 1996, is made by and between The J. David Gladstone Institutes, a
charitable trust organized and existing under the laws of California ("LESSOR")
and BMI Acquisition Group, Inc., a California corporation ("LESSEE"),
(collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 6610 Nancy Ridge Drive, located in the County of
San Diego, State of California, and generally described as (describe briefly the
nature of the property) approximately 33,938 square feet of improved space
("PREMISES"). (See Paragraph 2 for further provisions.)
1.3 TERM: Five (5) years and Zero (0) months ("ORIGINAL TERM") commencing
as provided in Section 1 of the Addendum and ending on the date which is five
(5) years after the Commencement Date ("EXPIRATION DATE"). (See Paragraph 3 for
further provisions.)
1.4 EARLY POSSESSION: Not applicable. (See Paragraphs 3.2 and 3.3 for
further provisions).
1.5 BASE RENT: $16,969.00 per month ("BASE RENT"), payable on the first
day of each month commencing on the Commencement Date and increasing to the
following amounts on the annual anniversaries of the Commencement Date: first
anniversary $17,647.76, second anniversary $18,353.67, third anniversary
$19,087.82, and fourth anniversary $19,851.33 (See Paragraph 4 for further
provisions.)
[_] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $16,969.00 as Base Rent for the period
of the first full calendar month of the Term.
1.7 SECURITY DEPOSIT: $16,969.00 ("SECURITY DEPOSIT"). (See Paragraph 5
for further provisions.)
1.8 PERMITTED USE: General office, assembly and distribution of computer
related products (See Paragraph 6 for further provisions.)
1.9 INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10 REAL ESTATE BROKERS: The following real estate brokers (collectively,
the "BROKERS") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes):
Colliers Iliff Thorn represents
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[_] Lessor exclusively ("LESSOR'S BROKER"); [X] both Lessor and Lessee, and
_______________________________________________________________ represents
[_] Lessee exclusively ("LESSEE'S BROKER"); [_] both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 GUARANTOR. The obligations of the Lessee under the Lease are to be
guaranteed by N/A ("GUARANTOR"). (See Paragraph 37 for further provisions.)
1.12 ADDENDA. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 1 through 9 and Exhibits A all of which constitute a part of this
Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, hearing, 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 this warranty within six (6) months after the Commencement Date,
correction of that non-compliance shall be the obligation of Lessee at Lessee's
sole cost and expense. See Addendum. Section 10.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility installation (as defined in Paragraph 7.3(a)) made or to
be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefore as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither
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Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to the said matters other than as set forth in this
Lease.
2.5 LESSEE PRIOR OWNER/OCCUPANT. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any non-
compliance of the Premises with said warranties.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3. The Original Term shall be subject to
termination as provided in Section 6 of the Addendum and to extension as
provided in Section 7 of the Addendum.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease, however,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date. Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however, that if
such written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when the
term actually commences, if possession is not tendered to Lessee when required
by this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or missions of
Lessee.
4. RENT.
4.1 BASE RENT. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual
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number of days of the calendar month involved. Payment of Bass Rent and other
charges shall be made to Lessor at its address stated herein or to such other
persons or at such other addressees as Lessor may from time to time designate in
writing to Lessee. See Addendum, Section 2.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, coal expense,
loss or damage (Including attorneys' fees) which Lessor my suffer or Incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Bass Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the same ratio between the
Security Deposit and the Bass Rent as those amounts are specified in the Basic
Provisions. Lessor Shall not be required to keep all or any pad of the Security
Deposit separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, if
any, of Lessee's interest herein), that portion of the Security Deposit not used
or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no
part of the Security Deposit shall be considered to be held in trust, to bear
interest or other increment for its use, or to be prepayment for any moneys to
be paid by Lessee, as under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, or any other use which is comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for liability of Lessor to any governmental agency
or third party under any applicable statute or common law theory. Hazardous
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the Premises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost
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and expense) with all Applicable Law (as defined in Paragraph 6.3). "REPORTABLE
USE" shall mean (i) the installation or use of any above or below ground storage
tank, (ii) the generation, possession, storage, use, transportation, or disposal
of a Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but
in compliance with all Applicable Law, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of Lessee's
business permitted on the Premises, so long as such use is not a Reportable Use
and does not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may (but without any obligation to do so) condition its consent
to the use or presence of any Hazardous Substance, activity or storage tank by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefrom or therefor, including, but not limited to, the installation
(and removal on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance, or a condition involving or resulting
from same, has come to be located in, on, under or about the Premises, other
than as previously consented to by Lessor, Lessee shall immediately give written
notice of such fact to Lessor. Lessee shall also immediately give Lessor a copy
of any statement, report, notice, registration, application, permit, business
plan, license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with reaped to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor in writing at the time of such agreement.
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6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
tn a timely manner, comply with all "APPLICABLE LAW," which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants in connection therewith and/or to advise
Lessor with respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage lank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as
to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc.),
7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every pad thereof in good order, condition and
repair, structural and non-structural (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 serving the Premises, such
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as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, about, or
adjacent to the Premises Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of, the
Premises, the elements surrounding same, or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance and/or storage tank brought onto the Premises by or for
Lessee or under its control. Lessee, in keeping the Premises In good order,
condition and repair, shall exercise and perform good maintenance practices.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. If Lessee occupies the Premises for
seven (7) years or more, Lessor may require Lessee to repaint the exterior of
the buildings on the Premises as reasonably required, but not more frequently
than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including tire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 LESSOR'S OBLIGATIONS. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are Intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to, or which affords Lessee the right to make
repairs at the expense of Lessor or to terminate this Lease by reason of, any
needed repairs.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating,
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ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises. The
term "ALTERATIONS" shall mean any modification of the Improvements on the
Premises from that which are provided by Lessor under the terms of this Lease,
other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written Consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof), as long as
they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as extended does not exceed $25,000.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to LeSsor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security DeposIt with Lessor under Paragraph 36 hereof.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at Its sole expense defend and protect itself, Lessor
and the Premises against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-hail
times the amount of such contested lien claim or demand, Indemnifying Lessor
against liability for the lame, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs in participating in
such action if Lessor shall decide it is to Its best interest to do so.
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7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises Lessor
may, at any time and at its option, elect in writing to Lessee to be the owner
of all or any specified part of the Lessee Owned Alterations, and Utility
Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
earlier termination of this Lease, become the property of Lessor and remain upon
and be surrendered by Lessee with the Premises.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration of earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at an time of all or and of an Lessee Owned Alterations or Utility
Installations made without the required consent of Lessor. See Addendum, Section
9.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, with all
of the improvements, parts and surfaces thereof clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "ORDINARY WEAR AND TEAR" shall not include any damage or deterioration
that would have been prevented by good maintenance practice or by Lessee
performing all of its obligations under this Lease. Except as otherwise agreed
or specified in writing by Lessor, the Premises, as surrendered, shall include
the Utility Installations. The obligation of Lessee shall include the repair of
any damage occasioned by the installation, maintenance or removal of Lessee's
Trade Fixtures, furnishings, equipment and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good practice. Lessee's Trade Fixtures shall remain the properly of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease. See Addendum, Section 4.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all Insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 per occurrence. Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice for any amount due.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
PAGE 9
10.17-9
providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises"
Endorsement and contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not Contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "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. In the event Lessor is the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above. In addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named is an additional insured
therein.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds
of trust or ground leases on the Premises ("LENDER(S)"), insuring loss or damage
to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the unique
nature or age of the improvements involved, such latter amount is less than full
replacement cost. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations shall be insured by Lessee under Paragraph
8.4 rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of lose. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
(b) RENTAL VALUE. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said Insurance shall provide that in the event the Lease is
PAGE 10
10.17-10
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 lose. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such lose.
(c) ADJACENT PREMISES. If the Premises are part of a larger building,
or if the Premises are part of a group of buildings owned by Lessor which are
adjacent to the Premises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said increase is
caused by Lessee's acts, omissions, use or occupancy of the Premises.
(d) TENANT'S IMPROVEMENTS. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee Is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property. Lessee Owned Alterations and Utility
Installations in, on, or about the Premises similar in coverage to that carried
by the Insuring Party under Paragraph 8.3. Such Insurance shall be full
replacement cost coverage with a deductible of not to exceed $1.000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender having a lien
on the Premises, as set forth in the most current issue of "Best's Insurance
Guide." Lessee shall not do or permit to be done anything which shall invalidate
the insurance policies referred to in this Paragraph 8. If Lessee is the
Insuring Party, Lessee shall cause to be delivered to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of such insurance with the insureds and loss payable clauses as required by this
Lease. No such policy shall be cancellable or subject to modification except
after thirty (30) days prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. If the Insuring Party
shall fail to procure and maintain the insurance required to be
PAGE 11
10.17-11
carried by the Insuring Party under this Paragraph 8, the other Party may, but
shall not be required to, procure and maintain the same, but at Lessee's
expense.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7 INDEMNITY. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expanses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well rounded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters. Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
parson in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of Income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost
PAGE 12
10.17-12
of the Premises immediately prior to such damage or destruction, excluding from
such calculation the value of the land and Lessee Owned Alterations and Utility
Installations.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "INSURED LOSS" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which was caused by an event required to be covered by the insurance described
in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition Involving the presence of, or a contamination by, in
Hazardous Substance is defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE-INSURED LOSS. If a Premises Partial Damage that is an
Insured Lose occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required Insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available. Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them is 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 in such case Lessor does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial
PAGE 13
10.17-13
Damage due to flood or earthquake shall be subject to Paragraph 9.3 rather than
Paragraph 9.2, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.
9.3 PARTIAL DAMAGE-UNINSURED LOSS. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease, Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an insured Loss or was caused by a negligent or willful act of
Lessee. In the event however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the Occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("EXERCISE PERIOD"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect, it Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
PAGE 14
10.17-14
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage-Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "COMMENCE" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to investigate
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater, give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the Occurrence of such
Hazardous Substance Condition of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12)
PAGE 15
10.17-15
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with the funds required of Lessee or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in Lessor's
notice of termination. If a Hazardous Substance Condition Occurs for which
Lessee is not legally responsible, there shall be abatement of Lessee's
obligations under this Lease to the same extent as provided in Paragraph 9.6(a)
for a period of not to exceed twelve months.
9.8 TERMINATION-ADVANCE PAYMENT. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid, if any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration. If Lessee shall
bill to pay any Real Property Taxes required by this Lease to be paid by Lessee,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.
(b) ADVANCE PAYMENT. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the Current Real Property Taxes applicable to the
Premises, and to require such current year's Real Property Taxes to be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax bill is known, the amount of such actual monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before
PAGE 16
10.17-16
delinquency. If the amounts paid to Lessor by Lessee under the provisions of
this Paragraph are insufficient to discharge the obligations of Lessee to pay
such Real Property Taxes as the same become due, Lessee shall pay to Lessor,
upon Lessor's demand, such additional sums as are necessary to pay such
obligations. All moneys paid to Lessor under this paragraph may be intermingled
with other moneys of Lessor and shall not bear interest. In the event of a
Breach by Lessee in the performance of the obligations of Lessee under this
Lease, then any balance of funds paid to Lessor under the provisions of this
Paragraph may, subject to proration as provided in Paragraph 10.1(a), at the
option of Lessor, be belted as an additional Security Deposit under Paragraph 5.
10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "REAL
PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Premises or in the real property of which the Premises
are a pert, Lessor's right to rent or other income therefrom, and/or Lessor's
business of teasing the Premises. The term "REAL PROPERLY TAXES" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
effect, during the term of this Lease, including but not limited to a change in
the ownership of the Premises or in the improvements thereon, the execution of
the Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real properly of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay in reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
PAGE 17
10.17-17
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or in
the Premises without Lessor's prior written consent given under and subject to
the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "NET WORTH OF
LESSEE" for purposes of this Lease shall be the net worth of Lessee (excluding
any guarantors) established under generally accepted accounting principles
consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented to assignment or subletting as a noncurable Breach, Lessor
shall have the right to either: (i) terminate this Lease, or (ii) upon thirty
(30) days written notice ("Lessor's Notice"), increase the monthly Base Rent to
fair market rental value or one hundred ten percent (110%) of the Base Rent then
in effect, whichever is greater. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
PAGE 18
10.17-18
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other then 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 or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent subletting and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
any one else responsible for the performance of the Lessee's obligations under
this Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) The occurence of a transaction described in Paragraph 12.1(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased to an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the dual receipt by Lessor of the amount
required to establish such Security Deposit a condition to Lessor's consent to
such transaction.
PAGE 19
10.17-19
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and condition shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of this or any
other assignment of such sublease to Lessor, nor by reason of the collection of
the rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
subleases, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, un which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified tn such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
PAGE 20
10.17-20
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lease Default or Breach (as hereinafter
defined), $350.00 is a reasonable minimum sum per such occurrence for legal
services and costs in the preparation and service of a notice of Default and
that Lessor may include the cost of such services and costs in said notice as
rent due and payable to cure said Default. A "DEFAULT" is defined as a failure
by the Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "BREACH" is defined
as the occurrence of any one or more of the following Defaults, and, where a
grace period for cure after notice is specified herein, the failure by Lessee to
cure such Default prior to the expiration of the applicable grace period, and
shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 end/or
13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party,
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) days following written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any Such failure continues for a period of ten (10) days
following Mitten 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 rule adopted under Paragraph 40 hereof, that
are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. (S)101 or any
successor statute thereto (unless, in the use of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment
PAGE 21
10.17-21
of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's Interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect and not affect the validity
of the remaining provisions.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
(g) If the performance of Lessee's obligations' under this Lease is
guaranteed: (i) the death of a guarantor, (ii) the termination of a guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a guarantor's refusal to honor the guaranty, or (v) a
guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurance or security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the guarantors that existed at the time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals the costs and
expenses of any such performance by Lessor shall be due and payable by Lessee or
Lessor upon invoice therefor. If any check given to Lessor by Lessee shall not
be honored by the bank upon which it is drawn, Lessor, at its option, may
require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor, in such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not
PAGE 22
10.17-22
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 the leasing commission paid by
Lessor applicable to the unexpired term of this Lease. The worth at the time of
award of the amount referred to in provision (iii) of the prior sentence shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent. Efforts by
Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Lessor shall have the right to recover in such proceeding the unpaid
rent and damages as are recoverable therein, or Lessor may reserve therein the
right to recover all or any part thereof in a separate suit for such rent and/or
damages. If a notice and grace period required under subparagraphs 13.1(b), (c)
or (d) was not previously given, a notice to pay rent or quit, or to perform or
quit, as the case may be, given to Lessee under any statute authorizing the
forfeiture of leases for unlawful detainer shall also constitute the applicable
notice for grace period purposes required by subparagraphs 13.1(b), (c) or (d).
In such case, the applicable grace period under subparagraphs 131(b), (c) or (d)
and under the unlawful detainer statute shall run concurrently after the one
such statutory notice, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease end/or by said statue.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any Indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or spared rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended upon the occurrence of
a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under each an
PAGE 23
10.17-23
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder in the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Bass 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 tn breach of this Lease
unless fair falls within a reasonable time to perform an obligation required to
be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time
shall in no event be less than thirty (30) days after receipt by Lessor, and by
the holders of any ground lease, mortgage or deed of trust covering the Premises
whose name and address shall have been furnished Leases 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 then thirty (30) days after such notice is 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 ere taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "CONDEMNATION"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the land area
not occupied by any building, is taken by condemnation, Lessee may, 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
PAGE 24
10.17-24
as the rentable floor area of the Premises taken bears to the total rentable
floor area of the building located on the Premises. No reduction of Base Rent
shall occur if the only portion of the Premises taken is land on which there is
no building. Any award for the taking of all or any part of the Premises under
the power of eminent domain or any payment made under threat of the exercise of
such power shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages: provided, however, that Lessee shall be entitled
to any compensation separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its net
severance damages received, over and above the legal and other expenses incurred
by Lessor in the condemnation matter, repair any damage to the Premises caused
by such condemnation, except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall be responsible for the
payment of any amount in excess of such net severance damages required to
complete such repair.
15. BROKER'S FEE.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of this
Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to said
Brokers Jointly, or in such separate shams as they may mutually designate in
writing, a fee as set forth in a separate written agreement between Lessor and
said Brokers for brokerage services rendered by said Brokers to Lessor in this
transaction.
15.3 Unless Lessor and Brokers have otherwise agreed in writing, Lessor
further agrees that: (a) if Lessee exercises any Option (as defined in Paragraph
39.1) or any Option subsequently granted which is substantially similar to an
Option granted to Lessee in this Lease, or (b) if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or (c) if Lessee remains in possession of the Premises,
with the consent of Lessor, after the expiration of the term Of this Lease slier
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property In which Lessor has an Interest, or
(e) if Base Rent Is Increased, whether by agreement or operation of In
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Brokers a fee in accordance with the schedule of said Brokers In effect at
the time of the execution of this Lease.
15.4 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 Lessors obligation under this Paragraph 15. Each Broker shall be a third
party beneficiary of the provisions of this Paragraph 15 to the extent of its
interest tn any commission arising from this Lease and may enforce that right
directly against Lessor and its successors.
15.5 Lessee and Lessor each represent and warrant to the other that it has
had no dealings with any person, firm, broker or finder (other than the Broken,
If any named in Paragraph 1.10) in connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and thai no
broker or other person, firm or entity other than said named Brokers is entitled
to any commission or finder's fee in connection with said transaction. Lessee
and Lessor do each hereby agree to indemnify, protect, defend and hold the
PAGE 25
10.17-25
other harmless from and against liability for compensation or charges which may
be claimed by any such unnamed broker, finder or other similar party by reason
of any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. TENANCY STATEMENT.
16.1 Each Party (as "RESPONDING PARTY") shall within ten (10) days after
written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "TENANCY STATEMENT" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, any pad
thereof, or the building of which the Premises are a pad, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease. Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security deposit as aforesaid, the prior Lessor shall be
relieved of all liability with reaped 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 effect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day alter it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
PAGE 26
10.17-26
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 reaped to any default or breach
hereof by either Party.
23. NOTICES.
23.1 All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier or may be
sent by regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes except that notices
to Lessor shall be sent to the address specified in Section 5 of the Addendum.
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 aa Lessor may from time to time hereafter designate by
written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or it no delivery date is shown, the postmark thereon. If sent by regular
mall the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is received on
a Sunday or legal holiday, it shell be deemed received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such
PAGE 27
10.17-27
statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of
such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the Obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one 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
PAGE 28
10.17-28
Lease, including any options to extend the term hereof, will not be disturbed so
long as Lessee is not in Breach hereof and efforts to the record owner of the
Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. ATTORNEY'S FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.
PAGE 29
10.17-29
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor in amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
Interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. GUARANTOR. This Paragraph 37 intentionally omitted.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS.
39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease
PAGE 30
10.17-30
other property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend of renew this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee, or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13.1, whether or not the Defaults
are cured, during the twelve (12) month period immediately preceding the
exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three or more notices of Default under Paragraph 13.1 during any twelve
month period, whether or not the Defaults are cured, or (iii) if Lessee commits
a Breach of this Lease.
40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as wall as lot the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor
PAGE 31
10.17-31
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 to itself the right from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to Institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the pad of said Party to pay such sum or
any pad thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by In 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 pad.
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.
PAGE 32
10.17-32
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
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL FURTHER, EXERTS
SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS
TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS
SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR
THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY
SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND
TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS
LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at______________________ Executed at___________________________
on_______________________________ on____________________________________
by LESSOR: by LESSEE:
See attached See attached
- --------------------------------- --------------------------------------
_________________________________ ______________________________________
By_______________________________ By____________________________________
Name Printed:____________________ Name Printed:_________________________
Title:___________________________ Title:________________________________
By_______________________________ By____________________________________
Name Printed:____________________ Name Printed:_________________________
PAGE 33
10.17-33
Title:___________________________ Title:________________________________
Address:_________________________ Address:______________________________
_________________________________ ______________________________________
Tel.No. ( ) Fax No. ( ) Tel.No. ( ) Fax No. ( )
--------- -------- --------- -------------
NOTICE: These forms are often modified to meet changing requirements of law
and industry needs. Always write or call to make sure you are
utilizing the most current form: American Industrial Real Estate
Association, 345 South Figueroa Street, Suite M-1, Los Angeles, CA
90071, (213) 667-8777, Fax No. (213) 687-8616.
(C) Copyright 1990-By American Industrial Real Estate
Association. All rights reserved. No part of these works may be
reproduced in any form without permission in writing.
FORM 244N-3/90
PAGE 34
10.17-34
ATTACHMENT TO
-------------
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
------------------------------------------------------
Executed at____________________________
on_____________________________________
by LESSOR:
THE J. DAVID GLADSTONE INSTITUTES,
a charitable trust organized and existing under
the laws of the State of California
By: /s/ Richard Hille
-------------------------------------
Richard Hille, Director of Investments
Address: 43 Corporate Park, Suite 102
Irvine, California 92714
Telephone No.: (714) 660-8955
Fax No.: (714) 660-9031
Executed at San Diego, California
-----------------------------
on January 3, 1996
--------------------------------------
by LESSEE:
BMI ACQUISITION GROUP, INC.,
a California corporation
By: /s/ Buford B. Wiley
--------------------------------------
Print Name: Buford B. Wiley
------------------------------
Title: C.E.O.
------------------------------
10.17-35
By: /s/ Robert J. Macri
--------------------------------------
Print Name: Robert J. Macri
------------------------------
Title: Chief Financial Officer
------------------------------
Address: 7100 Convoy Court
-------------------------------
San Diego, CA 92111
-----------------------------
Telephone No.: (619) 569-3474
--------------------------
Fax No.: (619) 569-3477
--------------------------
10.17-36
ADDENDUM TO LEASE
-----------------
This Addendum to Lease is entered into by and between The J. David
Gladstone Institutes, a charitable trust organized and existing under the laws
of the State of California ("LESSOR") and BMI Acquisition Group, Inc., a
California corporation ("LESSEE") concurrently with the Standard
Industrial/Commercial Single-Tenant Lease -- Net between Lessor and Lessee (the
"LEASE") to which this Addendum is attached. The promises, covenants, agreements
and declarations made and set forth in this Addendum are intended to and shall
have the same force and effect if set forth at length in the Lease. To the
extent that the provisions of this Addendum are inconsistent with the terms and
conditions of the Lease, the terms and conditions of this Addendum shall
control. All capitalized terms used herein shall have the same meaning as
specified in the Lease.
1. Commencement Date. The Original Term shall commence upon the date
-----------------
(the "COMMENCEMENT DATE") that the Renovated Improvements to be constructed by
Lessor pursuant to the Lessee Work Letter attached hereto as Exhibit "A" and
made a part hereof are substantially completed (i.e., completed other than minor
"punchlist" items); provided, however, that the Commencement Date shall not
occur earlier than March 31, 1996.
2. Triple Net Lease. Lessor and Lessee acknowledge and agree that
----------------
Lessor will contract directly for property insurance and for rental value
insurance and will bill the costs of maintaining these insurance policies to
Lessee on a monthly basis, which payments shall be due and payable as provided
in Section 8.1 of the Lease. In addition, Lessee shall, in accordance with
Section 11 of the Lease, be responsible for the cost of utilities and services
supplied to the Premises including, without limitation, janitorial service. No
property management fee shall be charged by Lessor. Furthermore, Lessor reserves
the right to review all service contracts and in the event the Premises is not
consistently maintained by Lessee to a level reasonably acceptable to Lessor, in
a manner consistent with local industry practices, Lessor, upon reasonable
notice to Lessee, shall be entitled to contract directly with vendors for any
such services and subsequently bill Lessee for the cost of such services on a
monthly basis, which amounts shall be due and payable, as additional rent,
within ten (10) days after Lessee's receipt of invoice.
3. Limitation on Liability. The liability of Lessor with respect to
-----------------------
the Lease shall be limited solely and exclusively to Lessor's interest in the
Premises and any insurance proceeds received by Lessor. Lessee shall look to no
other assets of Lessor for the satisfaction of any liability of Lessor with
respect to the Lease. Notwithstanding any contrary provision herein or in the
Lease, Lessor shall not be liable under any circumstances for injury or damage
to, or interference with, Lessee's business including, but not limited to, loss
of profits, loss of rents or other revenues, loss of business opportunity, loss
of goodwill or loss of use, however occurring, except that, subject to the first
sentence of this Section 3 above, Lessor shall be liable to the extent such
injury, damage or loss (i) results from the gross negligence of willful
misconduct of Lessor or its employees, agents or contractors and (ii) is not
covered by insurance required to be carried by Lessee under the Lease or
actually carried by Lessee.
10.17-37
4. Holding Over. If Lessee fails to surrender the Premises upon the
------------
expiration or earlier termination of the Lease without the express written
consent of Lessor, Lessee shall become a tenant at sufferance only at a rental
rate equal to twice the monthly Base Rent payable by Lessee for the month
immediately preceding such expiration or earlier termination and Lessee shall
remain responsible for the payment of all other monetary obligations due and
payable by Lessee under the Lease. Acceptance by Lessor of Base Rent after such
expiration or earlier termination of the Term shall not result in any renewal of
the Term. The foregoing provisions are in addition to, and do not affect
Lessee's right of reentry or any other right or remedies under the Lease or as
otherwise provided at law or in equity or both. If Lessee fails to surrender the
Premises upon the expiration or earlier termination of the Term despite Lessor's
demand to do so, Lessee shall indemnify and hold Lessor harmless from and
against any and all losses, costs, damages and liabilities (including actual
attorneys' fees and costs and court costs) which Lessor may suffer as a result
of Lessee's failure to timely surrender the Premises.
5. Notices. All notices to Lessor and any payments by Lessee to
-------
Lessor under the Lease shall be sent to The J. David Gladstone Institutes, 43
Corporate Park, Suite 102, Irvine, California 92714, Attention: Mr. Richard
Hille, Director of Investments, Telephone (714) 660-8955, Fax (714) 660-9031.
6. Termination Option. Notwithstanding anything to the contrary
------------------
contained in the Lease, Lessee shall have the option ("TERMINATION OPTION") to
terminate and cancel the Lease effective as of the last day of the thirty-sixth
(36th) full calendar month of the Original Term by delivering to Lessor, on or
before the first day of the thirtieth (30th) full calendar month of the Original
Term (i) written notice of Lessee's exercise of the Termination Option and (ii)
the "Termination Fee." The "TERMINATION FEE" shall mean the unamortized balance,
as of the Termination Date, of the sum of leasing commissions paid by Lessor in
connection with the Lease plus any amounts expended by Lessor for design and
construction of improvements in the Premises pursuant to the Lessee Work Letter
attached hereto as Exhibit "A," with such amortization to be calculated on a
straight-line basis over a sixty (60) month amortization period commencing as of
the Commencement Date. Upon request from Lessee, Lessor shall promptly provide
Lessee with a determination of the amount of the Termination Fee together with
supporting documentation used by Lessor in calculating said amount. If Lessee
properly and timely exercises the Termination Option, the Lease shall expire at
midnight on the last day of the thirty-sixth (36th) full calendar month of the
Original Term.
7. Option to Extend. Lessor hereby grants to the Lessee originally-
----------------
named in the Lease ("ORIGINAL LESSEE") one (1) option to extend the Original
Term for a period of five (5) years (the "OPTION TERM"), which option shall be
exercisable only by written notice ("OPTION NOTICE") delivered by Lessee to
Lessor as provided in Section 7.2 below, provided that, as of the date of
delivery of such notice and, at Lessor's option, as of the last day of the
Original Term, Lessee is not in default under the Lease after expiration of
applicable cure periods. The right contained in this Section 7 shall be personal
to the Original Lessee and may only be exercised by the Original Lessee (and not
any assignee, sublessee or other transferee of
10.17-38
the Original Lessee's interest in this Lease) if the Original Lessee occupies
the entire Premises as of the date of the Option Notice.
7.1 The Base Rent payable by Lessee during the Option Term (the
"OPTION RENT") shall be equal to the then prevailing fair market rent for
the Premises as of the commencement date of the Option Term, but not below
the Base Rent payable by Lessee immediately prior to the Option Term. The
then prevailing fair market rent shall be the rental rate at which tenants,
as of the commencement of the Option Term, are leasing non-sublease space
comparable in size, location and quality to the Premises for a term of five
(5) years, which comparable space is located in the immediate area of the
Premises, taking into consideration the following concessions: (a) rental
abatement concessions, if any, being granted such tenants in connection
with such comparable space and (b) tenant improvements or allowances
provided or to be provided for such comparable space, taking into account,
and deducting the value of, the existing improvements in the Premises, with
such value to be based upon the age, quality and layout of the improvements
and the extent to which the same could be utilized by Lessee based upon the
fact that the precise tenant improvements existing in the Premises are
specifically suitable to Lessee.
7.2 The option contained in this Section 7 shall be exercised by
Lessee, if at all, only in the following manner: (i) Lessee shall deliver
written notice ("LNTEREST NOTICE") to Lessor on or before the date which is
ten (10) months prior to the expiration of the Original Term, stating that
Lessee is interested in exercising its option; (ii) Lessor, after receipt
of Lessee's notice, shall deliver notice (the "OPTION RENT NOTICE") to
Lessee not less than seven (7) months prior to the expiration of the
Original Term, setting forth the Option Rent; and (iii) if Lessee wishes to
exercise such option, Lessee shall, on or before the earlier of (a) the
date occurring six (6) months prior to the expiration of the Original Term,
and (b) the date occurring thirty (30) days after Lessee's receipt of the
Option Rent Notice, exercise the option by delivering the Option Notice to
Lessor. Failure of Lessee to deliver the Interest Notice to Lessor on or
before the date specified in (i) above or to deliver the Option Notice to
Lessor on or before the date specified in (iii) above shall be deemed to
constitute Lessee's failure to exercise its option to extend. If extended
for the Option Term upon all of the terms and conditions set forth in the
Lease, except that the Base Rent shall be as indicated in the Option Rent
Notice.
8. Purchase Option.
---------------
(a) Purchase Option Notice. Lessor hereby grants to Lessee the
----------------------
right and option to purchase the Premises (the "PURCHASE OPTION") on the
terms set forth in this Section 8 by delivering written notice to Lessor of
such exercise (the "PURCHASE OPTION NOTICE") on or prior to the last day of
the tenth (10th) full calendar month of the Original Term.
10.17-39
(b) Conditions Precedent to Effectiveness of Purchase Option.
--------------------------------------------------------
Notwithstanding anything to the contrary contained in this Section 8,
Lessee's exercise of the Purchase Option shall be effective only if all of
the conditions precedent set forth hereinbelow are true and correct during
the period commencing upon the date Lessee delivers the Purchase Option
Notice and continuing until the Closing Date (as that term is defined
below), unless Lessor, in Lessor's sole discretion, elects to waive any
such condition precedent in writing:
(i) Lessee shall not then be in default under the Lease;
and
(ii) Lessee shall not have assigned its interest in the
Lease or in the Purchase Option to an unrelated entity. An unrelated
entity shall be defined as any entity which is not a related entity. A
related entity shall be defined as (a) any entity which is controlled
by, controls, or is under common control with Lessee, (b) any
corporation in which Lessee or any shareholder of Lessee owns voting
stock sufficient to elect a majority of the Board of Directors of said
corporation, (c) any principal stockholder of Lessee, or (d) any
corporation a majority of the directors of which are officers,
directors and/or employees of Lessee. For purposes of the foregoing,
the terms "control," "under common control" and "controlled by" shall
mean ownership of fifty percent (50%) or more of the beneficial
interest in such related entity.
(c) Actions of Parties. Within ten (10) business days following
------------------
Lessor's receipt of the Purchase Option Notice, the parties shall proceed
to open an escrow for the purchase and sale of the Premises ("ESCROW") with
an escrow company reasonably acceptable to both Lessor and Lessee ("ESCROW
HOLDER") by delivering a fully executed copy of a definitive Purchase and
Sale Agreement and Joint Escrow Instructions (the "PURCHASE AGREEMENT") to
Escrow Holder. In addition, concurrently with delivery of the Purchase
Agreement to Escrow Holder, Lessee shall deliver to Escrow Holder a good
faith deposit in the amount of Twenty Thousand Dollars ($20,000.00), which
deposit shall be nonrefundable to Lessee except in the event of Lessor's
default under the Purchase Agreement. The Purchase Agreement shall specify
that said deposit shall be delivered to Lessor by Escrow Holder as
liquidated damages in the event of Lessee's default under the Purchase
Agreement. The Purchase Agreement shall incorporate the terms and
provisions set forth in this Section 8 and any other provisions approved by
the parties.
(d) Closing Date. The close of Escrow shall occur on or before
------------
the date (the "CLOSING DATE") which is ninety (90) days after Lessee
delivers the Purchase Option Notice to Lessor.
(e) No Contingencies to Lessee's Obligations. After Lessee's
----------------------------------------
delivery of the Purchase Option Notice, there shall be no contingencies or
conditions precedent to Lessee's obligations to close Escrow except for (i)
Lessor's delivery to Escrow Holder
10.17-40
on or before the Closing Date of a duly executed and acknowledged grant
deed conveying full title to the Premises to Lessee and (ii) the agreement
by a title company reasonably acceptable to Lessee to deliver to Lessee,
after the Closing Date, the Title Policy described in Section 8(g) below.
Notwithstanding the foregoing, throughout the Term of the Lease, Lessor
agrees to Cooperate, at Lessee's expense, with Lessee's reasonable requests
regarding title information, soil testing, survey matters, property tax
statements, building plans, "as built" drawings, permits of all kinds and
other inspections concerning the Premises so that prior to Lessee's
delivery of the Purchase Option Notice, Lessee may satisfy itself regarding
the Premises and Lessee's desire to complete the purchase of the Premises,
(f) Purchase Price. The purchase price for the Premises shall be
--------------
Two Million Dollars ($2,000,000.00), all cash at the close of Escrow.
(g) Title. Title to the Premises shall be evidenced by either a
-----
standard CLTA or ALTA Owner's Form Policy of Title Insurance issued by a
title company reasonably acceptable to Lessee ("TITLE POLICY") in the
amount of the purchase price showing title to the Premises vested in
Lessee. Lessee shall have the option to obtain an ALTA Title Policy by
providing written notice to Lessor of Lessee's agreement to pay for the
cost of the survey and the additional cost of an ALTA Title Policy in
accordance with Section 8(h) below.
(h) Costs and Prorations. Lessor shall pay for all premiums for
--------------------
a CLTA Title Policy, all documentary transfer and other taxes imposed in
connection with the sale of the Premises, one-half (1/2) of all Escrow fees
and costs, and any document recording charges and taxes imposed in
connection with the sale of the Premises. Lessee shall pay one-half(l/2) of
all Escrow fees and costs, the additional premium imposed in the event
Lessee elects to obtain an ALTA Title Policy over the premium for a CLTA
Title Policy and any costs (including survey costs) associated with an ALTA
Title Policy and the costs associated with any title endorsements. All
other costs and expenses shall be apportioned between Lessor and Lessee in
accordance with the customary practice for comparable real estate
transactions in San Diego County.
(i) Representations. Lessee acknowledges that the Purchase
---------------
Option has been granted by Lessor to Lessee based on the understanding that
exercise of the Purchase Option is entirely voluntary by Lessee, and that
the conveyance of the Premises by Lessor to Lessee is and shall be on an
"AS IS" basis, with absolutely no representations or warranties, express or
implied, regarding the condition or nature of the Premises and any
improvements thereon except for the following representations:
(i) Lessor and Lessee each represent to each other that
they have the legal power, right and authority to enter into the Lease
(and this Addendum) and the instruments referenced in this Section 8.
10.17-41
(ii) Lessor and Lessee represent to each other that
neither the execution of the Lease (and this Addendum) and the
instruments referenced herein, nor the incurrence of the obligations
set forth herein, nor the consummation of the transaction herein
contemplated conflict with or result in the material breach of any
terms, conditions or provisions of, or constitute a default under any
agreement or instrument to which Lessor or Lessee, as applicable, is a
party; and the Lease.
(iii) Any representations and warranties specifically set
forth in the Lease.
The parties agree to indemnify the other, and to hold the other
harmless from all losses, damages, costs and expenses incurred relating to
the Premises which arise form a breach of the representations made above.
Such representations shall survive, and shall not merge into, the close of
Escrow and the recordation of the grant deed for the Premises.
(j) Deliveries to Lessee Upon Closing Date. Lessor shall deliver
--------------------------------------
to Lessee upon the Closing Date, to the extent the same are in Lessor's
possession, originals or copies of all correspondence and files pertaining
to the Premises, including "as built" drawings, blue prints,
specifications, any other documents pertaining to the construction of
improvements, permits and certificates of occupancy and completion, and
other authorizations and documents relating to the Premises.
9. Air Conditioning Units. Without limitation as to Lessor's rights
----------------------
under Section 7.4(b) of the Lease, Lessor may, at Lessor's sole discretion,
require Lessee, upon the expiration or earlier termination of the Term, to
remove the air conditioning units on the slab at the rear of the building on the
Premises and to repair any damage to such slab resulting from such removal, all
at Lessee's sole cost. If Lessee fails to remove such units and repair such
damage despite Lessor's request to do so, Lessor may, upon written notice to
Lessee, cause such work to be performed and Lessee shall then reimburse Lessor
for costs incurred by Lessor in causing such work to be performed within ten
(10) days after Lessee's receipt of invoice therefor. This Section 9 shall
survive the expiration or earlier termination of the Term.
10. Condition of Ground Floor. Notwithstanding anything contained in
-------------------------
Section 2.2 of the Lease, Lessor shall cause the concrete ground floor of the
Premises to be free from defects throughout the initial five (5) year Original
Term of the Lease. However, this warranty shall not apply at any time after
Lessee has notified Lessor of its exercise of the Termination Option pursuant to
Section 6 of this Addendum above nor any time after Lessee's delivery of the
Purchase Option Notice pursuant to Section 8(a) above. Upon Lessor's receipt of
written notice from Lessee setting forth with specificity the nature and extent
of any defect in the concrete ground floor, Lessor shall cause the same to be
rectified promptly, at Lessor's expense.
10.17-42
IN WITNESS WHEREOF, Lessor and Lessee have executed this Addendum
concurrently with the Lease.
LESSOR
------
THE J. DAVID GLADSTONE INSTITUTES, a charitable
trust organized and existing under the laws of the
State of California
Date: January 5, 1995 By: /s/ Richard Hille
----------------------------------------------
Richard Hille, Director of Investments
LESSEE
------
BMI ACQUISITION GROUP, INC., a California
corporation
Date: January 3, 1996 By: /s/ Buford B. Wiley
---------------------------------------------
Print Name: Buford B. Wiley
-------------------------------------
Its: C.E.O.
-------------------------------------
Date: January 3, 1996 By: /s/ Robert J. Macri
---------------------------------------------
Print Name: Robert J. Macri
-------------------------------------
Its: Chief Financial Officer
--------------------------------------
10.17-43
EXHIBIT A
---------
LESSEE WORK LETTER
------------------
This Lessee Work Letter shall set forth the terms and conditions relating
to the renovation of the existing improvements in the Premises. This Lessee Work
Letter is essentially organized chronologically and addresses the issues of
renovation of the Premises, in sequence, as such issues will arise.
SECTION 1
---------
LESSOR'S INITIAL CONSTRUCTION IN THE PREMISES
---------------------------------------------
Lessor has constructed, at its sole cost and expense, the improvements
currently existing in the Premises. Except as provided in Section 2 of the
Lease, Lessee has inspected and hereby approves the condition of the existing
improvements, and agrees that the existing improvements shall be delivered to
Lessee (subject to renovation as provided in this Lessee Work Letter) in their
current "as-is" condition. The renovations to the existing improvements in the
Premises shall be designed and constructed pursuant to this Lessee Work Letter.
Any costs of design and construction of renovations to the existing improvements
to the Premises shall be an "Improvement Allowance Item," as that term is
defined in Section 2.2 of this Lessee Work Letter.
SECTION 2
---------
LESSEE IMPROVEMENTS
-------------------
2.1 Improvement Allowance. Lessee shall be entitled to a one-time
---------------------
improvement allowance (the "IMPROVEMENT ALLOWANCE") in the amount of One Hundred
Seventy Five Thousand Dollars ($175,000.00) for the costs relating to the design
and construction of Lessee's renovations to the improvements which are
permanently affixed to the Premises (the "RENOVATED IMPROVEMENTS"). In no event
shall Lessor be obligated to make disbursements pursuant to this Lessee Work
Letter in a total amount which exceeds the Improvement Allowance. All Renovated
Improvements for which the Improvement Allowance has been made available shall
be deemed Lessor's property under the terms of Section 7.4 of the Lease. Lessee
shall not be entitled to any payment or credit for any unused portion of the
Improvement Allowance.
2.2 Disbursement of the Improvement Allowance. Except as otherwise set
-----------------------------------------
forth in this Lessee Work Letter, the Improvement Allowance shall be disbursed
by Lessor (each of which disbursements shall be made pursuant to Lessor's
disbursement process) for costs related to the construction of the Renovated
Improvements and for the following items and costs (collectively, the
"IMPROVEMENT ALLOWANCE ITEMS"): (i) payment of the fees of the "Architect" and
the "Engineers," as those terms are defined in Section 3.1 of this Lessee Work
Letter, and payment of the fees incurred by, and the cost of documents and
materials (if any) supplied by, Lessor and
10.17-44
Lessor's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Lessee
Work Letter; (ii) the cost of any changes in the existing improvements required
by the Construction Drawings; (iii) the cost of any changes to the Construction
Drawings or Renovated Improvements required by applicable building codes (the
"CODE"); and (iv) the "Lessor Supervision Fee," as that term is defined in
Section 4.3.2 of this Lessee Work Letter.
SECTION 3
---------
CONSTRUCTION DRAWINGS
---------------------
3.1 Selection of Architect/Construction Drawings. Lessor shall retain an
--------------------------------------------
architect/space planner (the "ARCHITECT") to prepare the "Construction
Drawings," as that term is defined in this Section 3.1. If necessary, Lessor
shall also retain engineering consultants designated by Lessor (the "ENGINEERS")
to prepare all plans and engineering working drawings relating to the
structural, mechanical, electrical, plumbing, HVAC and lifesafety work of the
Renovated Improvements. The plans and drawings to be prepared by Architect and
the Engineers hereunder shall be known collectively as the "CONSTRUCTION
DRAWINGS."
3.2 Final Space Plan. As soon as reasonably possible after the date of
----------------
full execution and delivery of the Lease, Lessor shall cause the Architect to
prepare the final space plan for Renovated Improvements in the Premises
(collectively, the "FINAL SPACE PLAN"), which Final Space Plan shall include a
layout and designation of all offices, rooms and other partitioning, their
intended use, and equipment to be contained therein, and shall deliver the Final
Space Plan to Lessee for Lessee's approval. Lessee shall approve or reasonably
disapprove any draft of the Final Space Plan within two (2) business days after
Lessee's receipt thereof. Any failure of Lessee to disapprove any draft of the
Final Space Plan by written notice to Lessor within said two (2) business day
period shall be deemed to constitute Lessee's approval thereof. If Lessee
disapproves of any draft of the Final Space Plan, Lessee's notice of disapproval
shall contain a detailed explanation of the reasons for Lessee's disapproval, in
which case Lessor shall cause the Architect to revise the Final Space Plan and
to resubmit the Final Space Plan to Lessee for Lessee's approval.
3.3 Final Working Drawings. Upon Lessee's approval of the Final Space
----------------------
Plan, Lessor shall cause the Architect and the Engineers (if applicable) to
complete the architectural and engineering drawings for the Premises, and the
final architectural working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "FINAL WORKING DRAWINGS") and shall submit the same to Lessee
for LeSsee's approval. Lessee shall approve or reasonably disapprove any draft
of the Final Working Drawings within two (2) business days after Lessee's
receipt thereof. Any failure of Lessee to disapprove any draft of the Final
Working Drawings by written notice to Lessor within said two (2) business day
period shall be deemed to constitute Lessee's approval thereof. If Lessee
disapproves of any draft of the Final Working Drawings, Lessee's notice of
disapproval shall contain a detailed explanation of the reasons for Lessee's
disapproval, in which case Lessor shall
10.17-45
cause the Architect to revise the Final Working Drawings and to resubmit the
Final Working Drawings to Lessee for Lessee's approval.
3.4 Permits. The Final Working Drawings approved by Lessor and Lessee may
-------
be referred to herein as the "Approved Working Drawings." Lessor shall submit
the Approved Working Drawings to the appropriate municipal authorities for all
applicable building permits necessary to allow "Contractor," as that term is
defined in Section 4.1, below, to commence and fully complete the construction
of the Renovated Improvements (the "PERMITS"). No changes, modifications or
alterations in the Approved Working Drawings may be made without the prior
written consent of Lessor.
SECTION 4
---------
CONSTRUCTION OF THE RENOVATED IMPROVEMENTS
------------------------------------------
4.1 Contractor. A contractor designated by Lessor ("CONTRACTOR") shall
----------
construct the Renovated Improvements.
4.2 Cost Proposal. After the Approved Working Drawings are approved by
-------------
Lessor and Lessee, Lessor shall provide Lessee with a cost proposal in
accordance with the Approved Working Drawings, which cost proposal shall
include, as nearly as possible, the cost of all Improvement Allowance Items to
be incurred by Lessee in connection with the construction of the Renovated
Improvements (the "COST PROPOSAL"). Lessee shall approve and deliver the Cost
Proposal to Lessor within two (2) business days of the receipt of the same, and
upon receipt of the same by Lessor, Lessor shall be released by Lessee to
purchase the items set forth in the Cost Proposal and to commence the
construction relating to such items. The date by which Lessee must approve and
deliver the Cost Proposal to Lessor shall be known hereafter as the "COST
PROPOSAL DELIVERY DATE."
4.3 Construction of Renovated Improvements by Contractor under the
--------------------------------------------------------------
Supervision of Lessor.
- ---------------------
4.3.1 Over-Allowance Amount. On the Cost Proposal Delivery Date,
---------------------
Lessee shall deliver to Lessor cash in an amount (the "OVER-ALLOWANCE AMOUNT")
equal to the difference (if any) between (i) the amount of the Cost Proposal and
(ii) the amount of the Improvement Allowance (less any portion thereof already
disbursed by Lessor, or in the process of being disbursed by Lessor, on or
before the Cost Proposal Delivery Date). The Over-Allowance Amount shall be
disbursed by Lessor prior to the disbursement of any then remaining portion of
the Improvement Allowance, and such disbursement shall be pursuant to the same
procedure as the Improvement Allowance. In the event that, after the Cost
Proposal Date, any revisions, changes, or substitutions shall be made to the
Construction Drawings or the Renovated Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs shall be paid by Lessee to Lessor immediately upon Lessor's
request as an addition to the Over-Allowance Amount.
10.17-46
4.3.2 Lessor's Retention of Contractor. Lessor shall independently
--------------------------------
retain Contractor, on behalf of Lessee, to construct the Renovated Improvements
in accordance with the Approved Working Drawings and the Cost Proposal and
Lessor shall supervise the construction by Contractor, and the Improvement
Allowance shall be charged a construction supervision and management fee (the
"LESSOR SUPERVISION FEE") in an amount equal to the product of (i) five percent
(5%) and (ii) an amount equal to the Improvement Allowance plus the Over-
Allowance Amount (as such Over-Allowance Amount may increase pursuant to the
terms of this Lessee Work Letter).
4.3.3 Contractor's Warranties and Guaranties. Lessor hereby assigns
--------------------------------------
to Lessee all warranties and guaranties by Contractor relating to the Renovated
Improvements, and Lessee hereby waives all claims against Lessor relating to, or
arising out of the construction of, the Renovated Improvements.
SECTION 5
---------
COMPLETION OF THE RENOVATED IMPROVEMENTS;
-----------------------------------------
COMMENCEMENT DATE
-----------------
5.1 Substantial Completion. For purposes of Section 1 of the Addendum, the
----------------------
Renovated Improvements shall be deemed substantially completed upon the
completion of construction of the Renovated Improvements in the Premises
pursuant to the Approved Working Drawings, with the exception of any punch list
items and any equipment to be installed by Lessee.
5.2 Delay of the Substantial Completion. Except as provided in this
-----------------------------------
Section 5, the Commencement Date shall occur as set forth in Section 1 of the
Addendum. However, if there shall be a delay or there are delays in the
substantial completion of the Renovated Improvements, as a direct, indirect,
partial, or total result of the following (collectively, "LESSEE DELAYS"):
5.2.1 Lessee's failure to meet any of the time periods set forth in
this Lessee Work Letter;
5.2.2 Lessee's failure to timely approve any matter requiring
Lessee's approval;
5.2.3 A breach by Lessee of the terms of this Lessee Work Letter or
the Lease;
5.2.4 Changes in any of the Construction Drawings after disapproval
of the same by Lessor or because the same do not comply with Code or other
applicable laws;
5.2.5 Lessee's request for changes in the Approved Working Drawings;
10.17-47
5.2.6 Lessee's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of substantial completion of the Renovated Improvements; or
5.2.7 Any other acts or omissions of Lessee, or its agents, or
employees;
then, notwithstanding anything to the contrary set forth in the Lease or this
Lessee Work Letter and regardless of the actual date of the substantial
completion of the Renovated Improvements, the Commencement Date shall be deemed
to be the date the Commencement Date would have occurred if no Lessee Delay or
Delays, as set forth above, had occurred.
SECTION 6
---------
MISCELLANEOUS
-------------
6.1 Lessee's Entry Into the Premises Prior to Substantial Completion.
----------------------------------------------------------------
Provided that Lessee and its agents do not interfere with Contractor's work in
the Building and the Premises, Contractor shall allow Lessee access to the
Premises prior to the substantial completion of the Renovated Improvements for
the purpose of Lessee installing equipment or trade fixtures (including Lessee's
data and telephone equipment) in the Premises. Prior to Lessee's entry into the
Premises as permitted by the terms of this Section 6.1, Lessee shall submit a
schedule to Lessor and Contractor, for their approval, which schedule shall
detail the timing and purpose of Lessee's entry. Lessee shall hold Lessor
harmless from and indemnify, protect and defend Lessor against any loss or
damage to the Building or Premises and against injury to any persons caused by
Lessee's actions pursuant to this Section 6.1.
6.2 Time of the Essence in This Lessee Work Letter. Unless otherwise
----------------------------------------------
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Lessee is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Lessor's sole option, at the end of such
period the item shall automatically be deemed approved or delivered by Lessee
and the next succeeding time period shall commence.
10.17-48
SECOND AMENDMENT TO STANDARD
----------------------------
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE NET
---------------------------------------------
This Second Amendment to Standard Industrial/Commercial Single-Tenant Lease
Net is made and effective this 10th day of September, 1997, by and between THE
J. DAVID GLADSTONE INSTITUTES, a charitable trust organized and existing under
the laws of California (hereinafter "Landlord"), and BMI ACQUISITION GROUP,
INC., a California corporation (hereinafter "Tenant"), and is based on the
following facts:
A. On or about January 2, 1996, Tenant executed a Standard
Industrial/Commercial Single-Tenant Lease Net, with Addendum (hereinafter
"Lease") for the premises located at 6610 Nancy Ridge Drive, San Diego,
California (hereinafter the "Premises"). Thereafter, Landlord accepted said
Lease.
B. On or about May 19, 1997, Tenant executed a First Amendment to
Standard Industrial/Commercial Single-Tenant Lease Net (hereinafter "First
Amendment") for the Premises. Thereafter, Landlord accepted said First
Amendment.
C. As of August 1997, Lessee was in arrears in the payment of rent and
late charges under the Lease in the collective sum of $18,706.62 (the
"Arrearages").
D. Because of Lessee's Arrearages, a Notice to Pay Rent or Surrender
Possession was served on Lessee on August 26, 1997.
E. Lessee wishes to reinstate its Lease with Lessor. Lessee has agreed to
pay the delinquent sums stated in Paragraph C above, together with the
additional sum of $17,647.76 (which sum includes rent through the period ending
with the September Base Rent.) Lessor has agreed to extend the expiration date
of the Notice to Pay Rent or Surrender Possession stated in Paragraph D above,
to September 17, 1997. As consideration for said extension, Lessee has agreed to
immediately delete the Termination Option set forth in the Lease, as amended.
F. The parties now intend to amend the Lease as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, each to the other, it
is hereby agreed as follows:
1. Termination Option. The Termination Option set forth in Paragraph 6 of
------------------
the Addendum To Lease is deleted in its entirety and hereby deemed null and void
and of no further force or effect.
2. Same Meaning. The terms used herein shall be accorded the same
------------
meaning as set forth in the Lease, as amended.
10.17-49
3. Amendment Controls. Except as herein modified, the terms of the Lease,
------------------
as amended, shall remain in full force and effect. In the event that a dispute
arises between the terms of this Amendment and the terms of the Lease, as
amended, the terms of the Amendment shall control.
IN WITNESS WHEREOF, the undersigned have subscribed their names as of the
day and year first above written.
LESSOR
------
THE J. DAVID GLADSTONE INSTITUTES, a charitable
trust organized and existing under the laws of the
State of California
Date: September 17, 1997 By: /s/ Richard Hille
----------------------------------------------
Richard Hille, Director of Investments
LESSEE
------
BMI ACQUISITION GROUP, INC., a California
corporation
Date: September 10, 1997 By: /s/ Paul H. Metzinger
----------------------------------------------
Print Name: Paul H. Metzinger
--------------------------------------
Its: Executive Vice President
--------------------------------------
10.17-50
FIRST AMENDMENT TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-
TENANT LEASE-NET
This FIRST AMENDMENT is made and is effective this 2nd day of May, 1997, by
and between THE J. DAVID GLADSTONE INSTITUTES, a charitable trust organized and
existing under the laws of California (hereinafter "Lessor"), and BMI
ACQUISITION GROUP, INC., a California corporation (hereinafter "Lessee"), and is
based on the following facts:
A. On or about January 2, 1996, Lessor and Lessee executed a Standard
Industrial/Commercial Single-Tenant Lease-Net (with Addendum) (the "Lease") for
the premises located at 6610 Nancy Ridge Drive, San Diego, California (the
"Premises").
B. As of March 1997, Lessee was in arrears in its payment of rent,
property taxes, and other rent-related charges under the Lease in the collective
sum of $27,506.73 (the "Arrearages").
C. Because of Lessee's Arrearages, a Complaint for Recovery of Rent and
Recovery of Possession (Unlawful Detainer) was filed on March 19, 1997, in the
Superior Court of California, County of San Diego, bearing Case No. 00709022.
D. Lessee wishes to reinstate its Lease with Lessor. Lessee has agreed to
pay the delinquent sums stated in Paragraph B above, together with additional
sums that have accrued since the Complaint was filed in the additional aggregate
sum of $72,798.07 (which sum includes base rent, property taxes, insurance,
landscaping, late charges, attorney fees and costs through the period ending
with the May Base Rent.)
E. The parties now intend to amend the Lease as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, each to the other, it
is hereby agreed as follows:
1. Payment Of Delinquent Sum. The unpaid rents and related charges
-------------------------
described in Paragraphs B and D above, i.e. the sum of One Hundred Thousand
Three Hundred Four Dollars and Eighty Cents ($100,304.80) (hereinafter
"Delinquent Sum") shall be paid by Lessee to Lessor by wire transfer to Lessor's
bank account at Bank of America, 11501 Santa Monica Boulevard, Los Angeles,
California, on or before May 5, 1997: In the event that Lessee fails to wire
transfer the Delinquent Sum, or any part thereof, by said date, then this First
Amendment shall be null and void and of no further force or effect.
2. Reinstatement of Lease. Upon the full and timely payment of the
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Delinquent Sum described in Paragraph 1 above, the Lease will be reinstated.
3. Purchase Option. The Purchase Option set forth in Paragraph 8 of the
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Addendum To Lease is hereby deemed null and void and of no further force or
effect.
10.17-51
4. Purchase of Premises. Lessee may purchase the Premises before
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September 30, 1997, for the purchase price ("Purchase Price") of Two Million
Three Hundred Fifty Thousand Dollars ($2,350,000.00) pursuant to a definitive
Purchase and Sale Agreement and Joint Escrow Instructions ("Purchase
Agreement"), as mutually agreed to and executed by the parties, which Purchase
Agreement shall include the following terms and conditions:
4.1 The Purchase Agreement must be executed by the parties and an
escrow opened prior to May 15, 1997, by placing Two Hundred Thirty-Five Thousand
Dollars ($235,000.00) in escrow as a good faith deposit.
4.2 Any default or delinquency under the terms of this Lease by
Lessee shall result in the immediate cancellation of the escrow and forfeiture
by Lessee to Lessor of One Hundred Seventeen Thousand Five Hundred Dollar
($117,500.00) plus accrued interest. Lessee shall remain solely liable for any
escrow or cancellation costs and fees. The balance of the good faith deposit
will be returned to Lessee.
4.3 There will be no conditions to the purchase, except that Lessor
will warrant title to the Premises. Lessee acknowledges that the conveyance of
the Premises by Lessor to Lessee shall be on an "AS IS" basis, with absolutely
no representations or warranties, express or implied, regarding the condition or
nature of the Premises and any improvements thereon.
4.4 Lessor will promptly convey title upon payment in full of the
Purchase Price received and cleared in escrow on or before September 30, 1997.
4.5 No financing, credits or discounts shall be considered by Lessor.
4.6 The parties will share costs of sale as is customary in San Diego
County.
4.7 If for any reason Lessee fails to close escrow prior to September
30, 1997, Lessor shall retain One Hundred Seventeen Thousand Five Hundred
Dollars ($117,500.00) plus accrued interest. Lessee shall be responsible for any
escrow or cancellation costs and fees. The balance of the good faith deposit
will be returned to Lessee.
4.8 Lessee shall not have the authority to assign its interest in
this purchase.
5. Dismissal of Complaint. Upon Lessee's payment of the Delinquent Sum in
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full as described in Paragraph 1 above, Lessor will cause to be filed a
dismissal of the Complaint described in Paragraph C above.
6. Recitals. The recitals described in Paragraphs A through D above are
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incorporated herein by reference as though set forth in full.
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7. Terms. All capitalized terms used herein shall have the same meaning
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as specified in the Lease.
Except as herein expressly amended, the Lease is hereby ratified and
confirmed. To the extent that the provisions of the Lease conflict with the
provisions of this First Amendment, the provisions of this First Amendment shall
control.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date and year written below, intending this First Amendment to be a part of
the Lease and effective the date and year first above written
LESSOR:
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THE J. DAVID GLADSTONE INSTITUTES, a charitable
trust organized and existing under the laws of the
State of California
Date:____________________ By: /s/ Richard Hille
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Richard Hille, Director of Investments
LESSEE:
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BMI ACQUISITION GROUP, INC., a California
corporation
Date:____________________ By: /s/ Jim Farooville
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Print Name: Jim Farooville
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Its: Chairman
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Date:____________________ By:_______________________________________________
Print Name:_______________________________________
Its:_________________________________________
10.17-53