DERMODY
P R O P E R T I E S
STANDARD INDUSTRIAL LEASE For Landlord Use Only:
(NET-NET-NET) Building #: 15
Lease Preparation Date: October 26, 1999
Landlord: DERMODY FAMILY LIMITED PARTNERSHIP I, A WASHINGTON LIMITED
PARTNERSHIP, AND GUILA DERMODY TURVILLE, A MARRIED WOMAN DEALING WITH HER SOLE
AND SEPARATE PROPERTY, LOCATED AT 1200 FINANCIAL BOULEVARD, P. O. BOX 7097,
RENO, NEVADA 89510
Tenant: iGo CORPORATION, A DELAWARE CORPORATION, FKA BATTERY EXPRESS, INC. DBA
1-800-BATTERIES
Trade Name (dba): iGo
1. LEASE TERMS
1.01 Premises: The Premises referred to in this Lease contain an
approximately eighty-five thousand, four hundred twenty-eight (85,428) square
foot building (the "Building") as described on Exhibit A attached hereto. The
address of the Premises is: 9393 GATEWAY DRIVE, RENO, NEVADA 89511.
1.02 Project: The Project in which the Premises are located contain
approximately five and 72/100ths (5.72) acres of land and all improvements
including the Premises located thereon as shown on Exhibit A. There are no other
tenants of the Landlord in the Project.
1.03 Tenant's Notice Address: TENANT'S NOTICE ADDRESS IS THE ADDRESS OF
THE PREMISES , ATTN: LOU BORREGO.
1.04 Landlord's Notice Address: LANDLORD'S NOTICE ADDRESS IS P. O. BOX
7097, RENO, NEVADA 89510, ATTN: DAVID E. LIGON.
1.05 Tenant's Permitted Use: WAREHOUSING, DISTRIBUTION, LIGHT
MANUFACTURING, AND ASSEMBLY OF MOBILE ELECTRONIC DEVICES AND ACCESSORIES AND
RELATED OFFICE USES IN FULL COMPLIANCE WITH THE TERMS OF THIS LEASE.
1.06 Lease Term: The Lease Term is for fourteen (14) years and
commences on the date of closing (the "Lease Commencement Date") under that
certain Sales Agreement and Joint Escrow Instructions dated December, 1999 by
and between Landlord as "Purchaser," and Lockheed Martin Corporation, a Maryland
corporation ("LMC"), as "Seller," for the acquisition by Landlord of the Project
and any amendments or restatements thereof (the "Sale Agreement") and expires
fourteen (14) years thereafter. Tenant shall also be entitled to the options to
1
extend the Lease Term for two (2) additional five (5) year periods (each, an
"Extension Term" and collectively, the "Extension Terms") as defined in Section
41.01 below, subject to and in compliance with the terms and conditions
specified in Article 41. below. For purposes of this Lease, the terms "Lease
Term," "term of the Lease," and "term" shall mean and include the initial period
of the Lease specified above, together with the Extension Term(s) to the extent
exercised by Tenant pursuant to Section 41.01 below, and the term "Initial Lease
Term," shall mean the initial period of the Lease as specified above. Landlord
and Tenant acknowledge and agree that this Lease and the parties' respective
obligations hereunder are conditioned upon Landlord's acquiring title to the
Project under the Sale Agreement as more particularly set forth in Section 42.01
below.
1.07 Base Monthly Rent: Landlord and Tenant acknowledge and agree that
this Lease is intended to qualify as a "Section 467 Lease" pursuant to Section
467 of the Internal Revenue Code of 1986, as amended. Base Monthly Rent during
the Initial Lease Term shall accrue and be allocated, and be payable in
accordance with the schedules attached hereto as Exhibits B-1 and B-2. Landlord
and Tenant represent, warrant, covenant, and agree that they shall recognize and
report for federal income tax purposes rental income and expense and interest
income and expense in accordance with the columns entitled "Proportional Rent
Amount" and "Interest," respectively, and that Base Monthly Rent is payable in
accordance with the column entitled " Payment" set forth on Exhibit B-2.
1.08 Security Deposit: ONE HUNDRED FORTY THOUSAND DOLLARS ($140,000) in
lawful money of the United States of America. The Security Deposit shall be held
and disbursed pursuant to the provisions of Section 6.01 below.
1.09 Proportionate Share: Tenant's Proportionate Share is ONE HUNDRED
PERCENT (100%) based upon the total square footage of the Building and the total
square footage of the Premises.
1.10 Index: [INTENTIONALLY DELETED]
1.11 Parking: Tenant is entitled to all vehicle parking spaces located
within the Project subject to the provisions of Section 8.01 of the Lease.
1.12 Tenant Improvements: During the Lease Term, Landlord will be under
no obligation to alter, change, decorate or improve the Premises.
2. DEMISE AND POSSESSION
2.01 Landlord leases to Tenant and Tenant leases from Landlord the
Premises. By entering the Premises, Tenant acknowledges that it has examined the
Premises and accepts the Premises in their present condition, subject to the
provisions of this Section 2.01. Landlord represents and warrants to Tenant
that, as of the Lease Commencement Date, (1) the Premises shall be dusted,
vacuumed, and reasonably cleaned for occupancy; the irrigation system servicing
the Premises shall be in good working order; the exterior and interior windows
shall be cleaned; one of the skylights above the stairs shall be repaired; a
hole in the drywall shall be repaired; and the hardwood decks shall be
weatherproofed; and (2) to Landlord's, "knowledge," (i) the improvements on the
Premises comply with all applicable laws, building codes, ordinances and
regulations in effect when such improvements were constructed; (ii) the
2
electrical, plumbing, fire sprinkler, lighting, HVAC systems, dock doors, and
structural integrity of the roof, walls, foundation shall be in good operating
condition and free of material defects, and (iii) the Project is in compliance
with all Environmental Laws (as hereinafter defined). For purposes of this
Lease, the term "knowledge" shall mean the actual knowledge of John A. Dermody
and David E. Ligon on the Lease Commencement Date, without the imputation of any
constructive knowledge. John A. Dermody and David E. Ligon are primarily
responsible for property acquisitions by Landlord. Tenant agrees to notify
Landlord not later than six (6) months after the Lease Commencement Date of any
items which need correction under the foregoing warranty, and after such notice,
Landlord agrees to exercise its commercially reasonably efforts to correct the
same as promptly as reasonably possible. The foregoing warranty shall expire six
(6) months from the Lease Commencement Date. Landlord shall give prompt written
notice to Tenant upon learning of any fact, occurrence, or other basis which
causes or could reasonably be expected to cause a breach of any of the
representations and warranties specified in this Section 2.01 above. Landlord
acknowledges that Tenant has agreed with LMC to occupy the Premises for a term
ending on the Lease Commencement Date. As a result, Tenant acknowledges and
agrees that it will have had possession and occupancy of the Premises prior to
the Lease Commencement Date and the reasonable opportunity to investigate the
same. Except as expressly set forth in this Section 2.01, nothing contained in
this Lease, including any Exhibits hereto, shall be interpreted or is intended
in any way as a representation or warranty by Landlord as to the quantity,
quality, or fitness of the Premises, including, without limitation, a fitness
for any particular purpose, each of which is expressly disclaimed by Landlord
hereunder. Tenant acknowledges and agrees that, except as expressly set forth in
this Section 2.01, (1) Landlord is not making and has not made at any time any
warranties or representations of any kind or character, express or implied with
respect to the Premises or Project, including, but not limited to, any
warranties or representations as to habitability, merchantability, or fitness
for a particular purpose, and (2) Tenant is occupying the Premises "as is, where
is, with all faults," and (3) Tenant has reviewed and approved the status of
title to the Project, and Tenant has not relied on and will not rely on, and
Landlord is not liable for or bound by any express or implied warranties,
guarantees, statements, representations, or information pertaining to the
Project or Premises or relating thereto made or furnished by Landlord or any of
its representatives, or any real estate broker or agent representing or
purporting to represent Landlord, to whomever made or given, directly or
indirectly, orally or in writing, unless specifically set forth in this Lease.
Without limiting the foregoing, Tenant specifically acknowledges and agrees that
the land included in the Project includes only Assessor's Parcel No. 160-240-05
(comprising approximately 5.72 acres of land) and specifically does not include
the parcel of land described as Assessor's Parcel No. 160-290-05 which is owned
by South Meadows and contains existing volleyball courts, landscaping, horseshoe
pit, and other related facilities.
2.02 [INTENTIONALLY DELETED]
3. BASE MONTHLY RENT
3.01 Base Monthly Rent: On the first day of every calendar month of the
Lease Term commencing on the one month anniversary of the Lease Commencement
Date (January 1, 2000 assuming a December 1, 1999 Lease Commencement Date for
purposes of illustration only), Tenant will pay, without deduction or offset,
prior notice or demand, Base Monthly Rent as set forth in Section 1.07 and 41.02
3
at the place designated by Landlord. However, the second month's Base Monthly
Rent and Security Deposit are due and payable upon execution of this Lease. In
the event that the Lease Term commences or ends on a day other than the first
day of a calendar month, a prorated amount of Base Monthly Rent shall be due on
the first day of the second month following the Lease Commencement Date and/or
the final partial month of the Lease Term, as applicable, and each will be
calculated using a thirty (30) day month. Both parties agree to complete and
execute a Commencement Date Certificate in the form of Exhibit E attached hereto
within ten (10) days of the Lease Commencement Date.
3.02 [INTENTIONALLY DELETED]
3.03 Any installment of rent or any other charge payable which is not
paid within ten (10) days after it becomes due will be considered past due and
Tenant will pay to Landlord as Additional Rent a late charge equal to twelve
percent (12%) per annum of such installment for each month or fractional month
transpiring from the date due until paid. A twenty-five dollar ($25.00) handling
charge will be paid by Tenant to Landlord for each returned check and,
thereafter, Tenant will pay all future payments of rent or other charges due by
money order or cashier's check. In the event a late charge is assessed for three
(3) consecutive rental periods, whether or not it is collected, the rent shall
without further notice become due and payable quarterly in advance
notwithstanding any provision of this Lease to the contrary. If Tenant shall be
served with a demand for the payment of past due rent, any payments tendered
thereafter to cure any default by Tenant shall be made only by cashier's check.
3.04 [INTENTIONALLY DELETED]
4. COMMON AREAS
4.01 Definitions: "Common Areas": "Common Area" is defined as all areas
and facilities outside the Premises and within the exterior boundary line of the
Project that are provided and designated by Landlord for the non-exclusive use
of Landlord and Tenant and their respective employees, agents, customers and
invitees. Common Areas include, but are not limited to: all parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, corridors, landscaped areas and any restrooms.
4.02 Subject to the provisions of Section 8.01 below, Tenant, its
employees, agents, customers and invitees have the non-exclusive right (in
common with Landlord) to use of the Common Areas. Tenant agrees to abide by and
conform to, and to cause its employees, agents, customers and invitees to abide
by and conform to all rules and regulations established by Landlord subject to
provisions of Section 24.
4.03 Landlord has the right, in its sole discretion, from time to time,
to: (1) as required in the case of emergency, by governmental or administrative
authority or under any law, rule, or regulation to make changes to the Common
Areas, including without limitation, changes in the location, size, shape and
number of driveways, entrances, parking spaces, parking areas, ingress, egress,
direction of driveways, entrances, corridors parking areas and walkways; (2)
4
close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (3) as required in the case
of emergency, by governmental or administrative authority or under any law,
rule, or regulation to add additional buildings and improvements to the Common
Areas; (4) use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project or any portion thereof; and (5) do and
perform any other acts or make any other changes in, to or with respect to the
Common Areas and Project as Landlord may, be required in the case of emergency,
by governmental or administrative authority, or under any law, rule, or
regulation.
5. ADDITIONAL RENT
5.01 All charges payable by Tenant other than Base Monthly Rent are
called "Additional Rent". Unless this Lease provides otherwise, Additional Rent
is to be paid with the next monthly installment of Base Monthly Rent and is
subject to the provisions of Section 3.03. The term "rent" whenever used in this
Lease means Base Monthly Rent and Additional Rent.
5.02 Operating Costs
A. "Operating Costs" are all costs and expenses of ownership,
operation, maintenance, management, repair and insurance incurred by Landlord
for the Project including, but not limited to the following: all supplies,
materials, labor and equipment, used in or related to the operation and
maintenance of the Common Areas; all utilities, including but not limited to:
water, electricity, gas, heating, lighting, sewer, waste disposal related to the
maintenance or operation of the Common Areas; all air-conditioning and
ventilating costs related to the maintenance or operation of the Project; all
Landlord's costs in managing, maintaining, repairing, operating and insuring the
Project, including, for example, clerical, supervisory, and janitorial staff;
all maintenance, management and service agreements, including but not limited
to, janitorial, security, trash removal related to the maintenance or operation
of the Project; all legal and accounting costs and fees for licenses and permits
related to the ownership and operation of the Project; all insurance premiums
and costs of fire, casualty, and liability coverage, rent abatement and
earthquake insurance and any other type of insurance related to the Project,
including any deductible for a loss attributable to the Premises; all operation,
maintenance and repair costs to the Common Areas, including but not limited to,
sidewalks, walkways, parkways, parking areas, loading and unloading areas, trash
areas, roadways, driveways, corridors, and landscaped area, including for
example, costs of resurfacing and restriping parking areas; all maintenance and
repair costs of building exteriors (including painting, asphalt repair and
replacement and roof maintenance, repair and replacement), restrooms used in
common by Landlord and Tenant and signs and directories of the Project;
amortization (along with reasonable financing charges) of capital improvements
made to the Project which may be required by any government authority or which
will improve the operating efficiency of the Project (which amortization shall
be over the life of the improvement); a reasonable reserve for repairs and
replacement; a five percent (5%) fee for Landlord's supervision of the Common
Areas (five percent (5%) of the total above mentioned costs and expenses
incurred in a calendar year). Operating Costs will not include depreciation of
the Project.
5
B. Tenant shall pay to Landlord Tenant's Proportionate Share of the
Operating Costs as indicated in Section 1.09. Such payment shall be paid by
Tenant with and in addition to the monthly payment of Base Monthly Rent.
C. Failure by Landlord to provide Tenant with a statement by April 1st
of each year shall not constitute a waiver by Landlord of its right to collect
Tenant's share of Operating Costs for a particular calendar year; Landlord's
right to charge Tenant for such expenses in subsequent years is not waived.
D. Subject to the provisions of this paragraph 5.02D, Tenant shall have
the right to inspect and audit Landlord's records with respect to Operating
Costs during normal business hours at Landlord's business premises upon
reasonable notice and in a reasonable manner, at Tenant's sole cost and expense,
but not more frequently than annually. Tenant's audit rights shall be limited to
Operating Costs for which Landlord received an invoice within the twelve (12)
month period immediately prior to the date of such audit.
5.03 Taxes
A. "Real Project Taxes" are: (i) any fee, license fee, license tax,
business license fee, commercial rental tax, levy, charge, assessment, penalty
or tax imposed by any taxing authority against the Project; (ii) any tax or fee
on Landlord's right to receive, or the receipt of, rent or income from the
Project or against Landlord's business of leasing the Project, (iii) any tax or
charge for fire protection, streets, sidewalks, road maintenance, refuse or
other services provided to the Project by any governmental agency; (iv) any tax
based upon a re-assessment of the Project due to a change in ownership or
transfer of all of part or Landlord's interest in the Project; (v) any charge or
fee replacing, substituting for, or in addition to any tax previously included
within the definition of real property tax; and (vi) the Landlord's cost of any
tax protest relating to any of the above. Real Project Taxes do not, however,
include Landlord's federal or state income, franchise, inheritance or estate
taxes, or penalties assessed against Landlord, unless such penalties are caused
by a default by Tenant under this Lease.
B. Tenant shall pay to Landlord Tenant's Proportionate Share of the
Real Project Taxes as indicated in Section 1.09. Such payment shall be paid by
Tenant quarterly upon being invoiced for such taxes in addition to the monthly
payment of Base Monthly Rent.
C. Personal Property Taxes: Tenant will pay all taxes charged against
trade fixtures, furnishing, equipment or any other personal property belonging
to Tenant. Tenant will have personal property taxes billed separately from the
Project. If any of Tenant's personal property is taxed with the Project, Tenant
will pay Landlord the taxes for the personal property upon demand by Landlord.
5.04 Based on Tenant's Proportionate Share defined in Section 1.09,
Tenant agrees to pay as Additional Rent to Landlord its share of any parking
charges, utility surcharges, water service payments, PUD and CC&R assessments
and dues, occupancy taxes, subject to the provisions of Section 7.02 below, any
other costs resulting from the statutes or regulations, or interpretations
thereof, enacted by any governmental authority in connection with the use or
occupancy of the Project or the parking facilities serving the Project, or any
6
part thereof, and all other costs resulting from any requirements or
restrictions affecting the Project.
5.05 [INTENTIONALLY DELETED]
6. SECURITY DEPOSIT
6.01 If Tenant defaults with respect to any provision of this Lease,
Landlord may retain, use or apply all or any part of the Security Deposit to
compensate Landlord for any loss or damage suffered by Tenant's default
including but not limited to, the payment of Base Monthly Rent, Additional Rent
or other rental sums due, and for payment of amounts Landlord is obligated to
spend by reason of Tenant's default. If any portion is so retained, used or
applied, Tenant, upon demand, will deposit with Landlord an amount sufficient to
restore the deposit to its original amount, as adjusted pursuant to this Section
6.01. Landlord will not be required to keep the Security Deposit separate from
its general funds, and except as specifically provided in this Section 6.01,
Tenant will not be entitled to interest on it. If as of the Fifth (5th)
anniversary of the Lease Commencement Date, (i) Tenant has fully and faithfully
performed every provision of this Lease, (ii) no event of default under this
Lease has occurred which remains uncured, (iii) there exists no facts or
circumstances which, with the provision of notice or the passage of time, or
both, would constitute an event of default under this Lease, and (iv) Landlord
approves Tenant's financial condition in Landlord's reasonable discretion in
accordance with the following provisions, Seventy Thousand Dollars ($70,000) of
the Security Deposit together with accrued interest thereon as provided below,
will be returned to Tenant. Landlord's approval of Tenant's financial condition
shall be based upon Tenant's financial capability to satisfy its obligations
under the Lease as compared to the financial condition of other tenants of
Landlord under comparable lease agreements, in Landlord's reasonable discretion.
In the event each of the foregoing conditions are satisfied on the 5th
anniversary of the Lease Commencement Date, then Tenant shall also be paid
interest on the Seventy Thousand Dollar ($70,000) portion of the Security
Deposit to be refunded, which shall accrue at the rate of four percent (4%) per
annum, compounded semi-annually. In the event any of the foregoing conditions
are not satisfied on the 5th anniversary of the Lease Commencement Date as
specified above, then Landlord shall retain such portion of the Security Deposit
together with interest as set forth above, which was to be returned or paid to
Tenant subject to the provisions of this Section 6.01. If Tenant fails to
satisfy any of the foregoing conditions as of the Fifth (5th) anniversary of the
Lease Commencement Date, Tenant's compliance with the foregoing conditions shall
be reevaluated again on the Tenth (10th) anniversary of the Lease Commencement
Date, and, in the event each of the foregoing conditions are satisfied on the
Tenth (10th) anniversary of the Lease Commencement Date, then Tenant shall be
refunded Seventy Thousand Dollars ($70,000) of the Security Deposit, together
with interest thereon accruing as provided above. In the event any of the
foregoing conditions are also not satisfied on the Tenth (10th) anniversary of
the Lease Commencement Date as specified above, then Landlord shall retain such
portion of the Security Deposit together with interest as set forth above, which
was to be returned or paid to Tenant subject to the provisions of this Section
6.01. Any remaining balance of the Security Deposit held by Landlord will be
returned to Tenant within thirty (30) days after expiration of the Lease Term,
including any Extension Term(s), subject to application as provided in this
Section 6.01 above. In no event will Tenant have the right to apply any part of
the Security Deposit to any rents payable under this Lease.
7
7. USE OF PREMISES: QUIET CONDUCT; COMPLIANCE
7.01 The Premises may be used and occupied only for Tenant's Permitted
Use as shown in Section 1.05 and for no other purpose, without obtaining
Landlord's prior written consent. Landlord shall not unreasonably withhold or
delay its consent to any written request for modification of the Permitted Use,
so long as the same will not impair or adversely affect the structural integrity
of the improvements included in the Premises, and the mechanical, electrical,
fire sprinkler, structural, or other systems therein, or the exterior appearance
of the Building and other improvements included in the Project, and so long as
such modified Permitted Use otherwise complies with all governmental and
administrative requirements, all laws, rules, and regulations then in effect,
and the terms and conditions of this Lease. Tenant will comply with all laws,
ordinances, orders and regulations affecting the Premises. Tenant will not
perform any act or carry on any practices that injure the Project or the
Premises or be a nuisance or menace, or disturb the quiet enjoyment of other
lessees in the Project including but not limited to equipment which causes
vibration, use or storage of chemicals, except in full compliance with all
governmental and administrative requirements, and all laws, rules, codes, and
regulations, or heat or noise which is not properly insulated. Tenant will not
cause, maintain or permit any outside storage on or about the Premises. In
addition, Tenant will not allow any condition or thing to remain on or about the
Premises which diminishes the appearance or aesthetic qualities of the Premises
and/or the Project or the surrounding property.
7.02 Compliance.
A. Tenant acknowledges and agrees that Tenant is occupying the Premises
"as is, where is, and with all faults," pursuant to and except as expressly set
forth in, Section 2.01 above. In the event any applicable law, covenant or
restriction of record, building code, regulation or ordinance (individually, an
"Applicable Requirement" and collectively, "Applicable Requirements") require
during the Lease Term the construction of an addition to or an alteration of the
Project, or the reinforcement or other physical modification of the Building or
other portion of the Project ("Capital Expenditure"), Landlord and Tenant shall
allocate the cost of such work as follows.
B. If such Capital Expenditure is required (1) as a result of the
specific use of the Premises by Tenant as compared with uses by tenants in
general, or (2) for any other reason prior to the date two (2) years prior to
the expiration of the Initial Lease Term, Tenant shall be fully responsible for
the cost thereof. Notwithstanding the above, the full cost of any Capital
Expenditures which are triggered by Tenant as a result of an actual or proposed
change in use, change in intensity or use, or modification, addition, or
alteration to the Premises shall be the full responsibility of Tenant.
C. If such Capital Expenditure (1) is not the result of the specific
use of the Premises by Tenant or any other matter identified in the last
sentence of paragraph 7.02B above (such as governmentally mandated seismic
modifications), or (2) such Capital Expenditure is required on or after the date
two (2) years prior to the expiration of the Initial Lease Term for any other
reason not identified in clause (1) of this paragraph 7.02C., Landlord and
Tenant shall allocate the obligation to pay for such costs pursuant to the
provisions of this Paragraph 7.02C; provided, however, that if Landlord
8
reasonably determines that it is not economically feasible to pay its share
thereof, Landlord shall have the option to terminate this Lease upon ninety (90)
days prior written notice to Tenant unless Tenant notifies Landlord, in writing,
within ten (10) days after receipt of Landlord's termination notice that Tenant
will pay for such Capital Expenditure. If Landlord does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Tenant may
advance such funds and deduct same, with interest, from Base Monthly Rent until
Landlord's share of such costs has been fully paid. If Tenant is unable to
finance Landlord's share, or if the balance of the Base Monthly Rent due and
payable for the remainder of this Lease is not sufficient to fully reimburse
Tenant on an offset basis, Tenant shall have the right to terminate this Lease
upon thirty (30) days written notice to Landlord. Such termination date shall,
however, in no event be earlier than the last day that Tenant could legally use
the Premises without commencing such Capital Expenditure. The cost of any
Capital Expenditure required under this Paragraph 7.02C shall be considered an
Operating Cost covered by Paragraph 5.02A above. If the Premies or the systems
of the Premises cannot be repaired other than at a cost which is in excess of
Fifty Percent (50%) of the cost of replacing them, then the cost thereof shall
be amortized over the useful life of the improvement pursuant to Paragraph 5.02A
above, and Tenant shall only be obligated to pay, each month during the
remainder of the Lease Term (including any Extension Term(s)), on the date on
which Base Monthly Rent is due, an amount equal to the product of multiplying
the cost of such replacement by a fraction, the numerator of which is one, and
the denominator of which is the number of months of the useful life of such
replacement as such useful life is specified pursuant to Federal income tax
regulations or guidelines for depreciation thereof (including interest on the
unamortized balance as is then commercially reasonable in the judgment of
Landlord's accountants), with Tenant reserving the right to prepay its
obligation at any time.
7.03 As used in this Lease, the term "Hazardous Waste" means:
A. Those substances defined as "hazardous substances", "hazardous
materials", "toxic substances", "regulated substances", or "solid waste" in the
Toxic Substance Control Act, 15 U.S.C.ss. 2601 ET. SEQ., as now existing or
hereafter amended ("TSCA"), the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C.ss. 9601 ET. SEQ., as now
existing or hereafter amended ("CERCLA"), the Resource, Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 ET. SEQ., as now existing or
hereafter amended ("RCRA"), the Federal Hazardous Substances Act, 15 U.S.C.ss.
1261 ET. SEQ., as now existing or hereafter amended ("FHSA"), the Occupational
Safety and Health Act of 1970, 29 U.S.C.ss.651 ET. SEQ., as now existing or
hereafter amended ("OSHA"), the Hazardous Materials Transportation Act, 49
U.S.C.ss. 1801 ET. SEQ., as now existing or hereafter amended ("HMTA"), and the
rules and regulations now in effect or promulgated hereafter pursuant to each
law referenced above;
B. Those substances defined as "hazardous waste", "hazardous material",
or "regulated substances" in Nev. Rev. Stat. ch 459, 1989 Nev. Stat. ch. 598 and
1989 Nev. Stat. ch 363, or in the regulations now existing or hereafter
promulgated pursuant thereto or in the Uniform Fire Code, 1988 edition;
9
C. Those substances listed in the United States Department of
Transportation table (49 CFRss.172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); and
D. Such other substances, mixtures, materials and waste which are
regulated under applicable local, state or federal law, or which are classified
as hazardous or toxic under federal, state or local laws or regulations (all
laws, rules and regulations referenced in paragraphs (a), (b), (c) and (d) are
collectively referred to as "Environmental Laws").
7.04 Tenant's Covenants. Tenant does not intend to and Tenant will not,
nor will Tenant allow any other person (including partnerships, corporations and
joint ventures), during the term of this Lease to manufacture, process, store,
distribute, use, discharge or dispose of any Hazardous Waste in, under or on the
Project, the Common Areas, or any property adjacent thereto. Notwithstanding the
foregoing, Tenant may use any ordinary and customary materials reasonably
required to be used in the normal course of its Permitted Use (such as the
storage of batteries and the use of small amounts of cleaning solvents), so long
as such use is in full compliance with all governmental and administrative
requirements, and all laws, rules, codes, regulations, including, without
limitation, all Environmental Laws, and does not expose the Project or any
neighboring property to any risk of contamination or damage or expose the
Landlord to any liability therefor.
A. Tenant shall notify Landlord promptly in the event of any spill or
release of Hazardous Waste into, on, or onto the Project regardless of the
source of spill or release, whenever Tenant knows or suspects that such a
release occurred.
B. Tenant will comply with all Environmental Laws in operations at or
near the Project which could lead to the imposition on the Tenant or the
Landlord of liability or the creation of a lien on the Project, under the
Environmental Laws.
C. Tenant shall, upon twenty-four (24) hour prior notice by Landlord
and during normal working hours (except in the case of emergency), permit
Landlord or Landlord's agent access to the Project to conduct an environmental
site assessment with respect to the Project.
7.05 Indemnity. Tenant for itself and its successors and assigns
undertakes to protect, indemnify, save and defend Landlord, its agents,
employees, directors, officers, shareholders, affiliates, consultants,
independent contractors, successors and assigns (collectively the "Indemnitees")
harmless from any and all liability, loss, damage and expense, including
reasonable attorneys' fees, claims, suits and judgments that Landlord or any
other Indemnitee, whether as Landlord or otherwise, may suffer as a result of,
or with respect to:
A. The violation by Tenant or Tenant's agents, employees, invitees,
licensees or contractors of any Environmental Law, including the assertion of
any lien thereunder and any suit brought or judgment rendered regardless of
whether the action was commenced by a citizen (as authorized under the
Environmental Laws) or by a government agency;
10
B. To the extent caused, directly or indirectly by Tenant or Tenant's
agents, employees, invitees, licensees or contractors, any spill or release of
or the presence of any Hazardous Waste affecting the Project whether or not the
same originates or emanates from the Project or any contiguous real estate,
including any loss of value of the Project as a result of a spill or release of
or the presence of any Hazardous Waste;
C. To the extent caused, directly or indirectly by Tenant or Tenant's
agents, employees, invitees, licensees or contractors, any other matter
affecting the Project within the jurisdiction of the United States Environmental
Protection Agency, the Nevada State Environmental Commission, the Nevada
Department of Conservation and Natural Resources, or the Nevada Department of
Commerce, including costs of investigations, remedial action, or other response
costs whether such costs are incurred by the United States Government, the State
of Nevada, or any Indemnitee;
D. To the extent caused, directly or indirectly by Tenant or Tenant's
agents, employees, invitees, licensees or contractors, liability for clean-up
costs, fines, damages or penalties incurred pursuant to the provisions of any
applicable Environmental Law; and
E. To the extent caused, directly or indirectly by Tenant or Tenant's
agents, employees, invitees, licensees or contractors, liability for personal
injury or property damage arising under any statutory or common-law tort theory,
including, without limitation, damages assessed for the maintenance of a public
or private nuisance, or for the carrying of an abnormally dangerous activity,
and response costs.
7.06 Remedial Acts. In the event of any spill or release of or the
presence of any Hazardous Waste affecting the Project, caused by Tenant, its
employees, agents, invitees, licensees, or contractors, whether or not the same
originates or emanates from the Project or any contiguous real estate, and/or if
Tenant shall fail to comply with any of the requirements of any Environmental
Law, Landlord may, without notice to Tenant, at its election, but without
obligation so to do, gives such notices and/or cause such work to be performed
at the Project and/or take any and all other actions as Landlord shall deem
necessary or advisable in order to remedy said spill or release of Hazardous
Waste or cure said failure of compliance and any amounts paid as a result
thereof, together with interest at the rate equal to the product of twelve
percent (12%) per annum of such installment for each month or fractional month
transpiring from the date due until paid.
7.07 Settlement. Landlord upon giving Tenant thirty (30) days prior
notice (or such shorter period as may be required by governmental, court or
administrative order or requirement, or any law, rule, or regulation) shall have
the right in good faith to pay, settle or compromise, or litigate any claim,
demand, loss, liability, cost, charge, suit, order, judgment or adjudication
under the belief that Tenant is liable therefor, whether liable or not, without
the consent or approval of Tenant unless Tenant within said period shall protest
in writing and simultaneously with such protest deposit with Landlord collateral
satisfactory to Landlord sufficient to pay and satisfy any penalty and/or
interest which may accrue as a result of such protest and any judgment or
judgments as may result, together with attorney's fees and expenses, including,
but not limited to, environmental consultants.
11
8. PARKING
8.01 Tenant and Tenant's customers, suppliers, employees, and invitees
have the exclusive right to park in the parking facilities located on the
Project. Tenant agrees to reasonably cooperate with Landlord in the use of the
parking facilities. To the extent required by governmental or administrative
authority, by law, rule, code or regulation or by emergency, Landlord reserves
the right to make changes in the parking from time to time. Tenant acknowledges
and agrees that Landlord shall be under no obligation to enforce Tenant's
exclusive parking rights as set forth in this Section 8.01.
9. UTILITIES
9.01 Tenant will be responsible for and shall pay for all water, gas,
heat, light, power, sewer, electricity, or other services metered, chargeable to
or provided to the Premises separate from and in addition to the costs outlined
in Section 5.02 dealing with the utility costs for Common Area Maintenance.
Tenant agrees to cause such billings to be transferred to Tenant's name as of
the Lease Commencement Date.
9.02 Landlord will not be liable or deemed in default to Tenant nor
will there be any abatement of rent for any interruption or reduction of
utilities or services not caused by any act of Landlord or any act reasonably
beyond Landlord's control. Tenant agrees to comply with energy conservation
programs implemented by Landlord by reason of enacted laws or ordinances.
9.03 Tenant will contract and pay for all telephone and such other
services for the Premises subject to the provisions of 10.03.
10. ALTERATIONS, MECHANIC'S LIENS
10.01 Tenant will not make any alterations to the Premises without
Landlord's prior written consent. Landlord's consent shall be contingent upon
Tenant providing Landlord with the following items or information, all subject
to Landlord's reasonable and prompt approval: (i) Tenant's contractor, (ii)
certificates of insurance by Tenant's contractor for commercial general
liability insurance with limits not less than $2,000,000 General
Aggregate,$1,000,000 Products/Complete Operations Aggregate,$1,000,000 Personal
& Advertising Injury, $1,000,000 Each Occurrence, $50,000 Fire Damage, $5,000
Medical Expense, $1,000,000 Auto Liability (Combined Single Limit, including
Hired/Non-Owned Auto Liability), Workers Compensation, including Employer's
Liability, as required by state statute endorsed to show Landlord as an
additional insured and for worker's compensation as required and (iii) detailed
plans and specifications for such work. Tenant agrees that it will have its
contractor execute a waiver of mechanic's lien upon payment for work and that
Tenant will remove any mechanic's lien placed against the Project within twenty
(20) days of receipt of notice of lien by bonding pursuant to Section 108.2413
of the NRS or otherwise. In addition, before alterations may begin, valid
building permits or other permits or licenses required must be furnished to
Landlord, and, once the alterations begin, Tenant will diligently and
continuously pursue their completion. At Landlord's option, any alterations may
become part of the realty and belong to Landlord. If requested by Landlord,
Tenant will pay, prior to the commencement of the construction, an amount
12
determined by Landlord necessary to cover the costs of demolishing such
alterations and/or the cost of returning the Premises to its condition prior to
such alterations. As a further condition to giving such consent, Landlord may
require Tenant to provide Landlord, at Tenant's sole cost and expense, a payment
and performance bond in form acceptable to Landlord, in a principal amount not
less than one and one-half times the estimated costs of such alterations, to
ensure Landlord against any liability for mechanic's and materialmen's liens and
to ensure completion of work. Tenant, at Landlord's option, shall at Tenant's
expense remove all alterations and repair all damage to the Premises.
10.02 Notwithstanding anything in Section 10.01 to the contrary, Tenant
may, with written consent of Landlord, which consent shall not be unreasonably
withheld or delayed, install trade fixtures, equipment, and machinery in
conformance with the ordinances of the applicable city and county, and they may
be removed upon termination of its Lease provided the Premises are not damaged
by their removal.
10.03 Any private telephone systems and/or other related
telecommunications equipment and lines must be installed within Tenant's
Premises and, upon termination of this Lease removed and the Premises restored
to the same condition as before such installation.
10.04 Tenant will pay all costs for alterations and will keep the
Premises, the Project and the underlying property free from any liens arising
out of work performed for, materials furnished to or obligation incurred by
Tenant.
10.05 Landlord will have the right to alter any public areas in and
around the Project as may be required by governmental or administrative
authority or by law, rule, code or regulation. Notwithstanding anything which
may be contained in this Lease, Tenant understands this right of Landlord and
agrees that such construction will not be deemed to constitute a breach of this
Lease by Landlord and Tenant waives any such claim which it might have arising
from such construction.
11. FIRE INSURANCE: HAZARDS AND LIABILITY INSURANCE
11.01 Except as expressly provided as Tenant's Permitted Use, or as
otherwise consented to by Landlord in writing, Tenant shall not do or permit
anything to be done within or about the Premises which will increase the
existing rate of insurance on the Project and shall, at its sole cost and
expense, comply with any requirements, pertaining to the Premises, of any
insurance organization insuring the Project and Project-related apparatus.
Tenant agrees to pay to Landlord, as Additional Rent, any increases in premiums
on policies resulting from Tenant's Permitted Use or other use consented to by
Landlord which increases Landlord's premiums or requires extended coverage by
Landlord to insure the Premises.
11.02 Tenant, at all times during the term of this Lease and at
Tenant's sole expense, will maintain a policy of standard fire and extended
coverage insurance with "all risk" coverage on all Tenant's improvements and
alterations in or about the Premises and on all personal property and equipment
to the extent of at least ninety percent (90%) of their full replacement value.
The proceeds from this policy will be used by Tenant for the replacement of
personal property and equipment and the restoration of Tenant's improvements
13
and/or alterations. This policy will contain an express waiver, in favor of
Landlord, of any right of subrogation by the insurer.
11.03 Tenant, at all times during the term on this Lease and at
Tenant's sole expense, will maintain a policy of commercial general liability
coverage with limits of not less than $2,000,000 combined single limit for
bodily injury and property damage insuring against all liability of Tenant and
its authorized representatives arising out of or in connection with Tenant's use
or occupancy of the Premises.
11.04 All insurance will name Landlord and/or Landlord's designated
partners and affiliates as an additional insured and will include an express
waiver of subrogation by the insurer in favor of Landlord and Tenant and will
release Landlord from any claims for damage to any person, to the Premises, and
to the Project, and to Tenant's personal property, equipment, improvements and
alterations in or on the Premises of the Project, caused by or resulting from
risks which are to be insured against by Tenant under this Lease. All insurance
required to be provided by Tenant under this Lease will (a) be issued by an
insurance company authorized to do business in the state in which the Premises
are located and which has and maintains a rating of A/X in the Best's Insurance
Reports or the equivalent, (b) be primary and noncontributing with any insurance
carried by Landlord, and (c) contain an endorsement requiring at least thirty
(30) days prior written notice of cancellation to Landlord before cancellation
or change in coverage, scope or limit of any policy. Tenant will deliver a
certificate of insurance or a copy of the policy to Landlord within thirty (30)
days of execution of this Lease and will provide evidence of renewed insurance
coverage at each anniversary, and prior to the expiration of any current
policies; however, in no event will Tenant be allowed to occupy the Premises
before providing adequate and acceptable proof of insurance as stated above.
Tenant's failure to provide evidence of this coverage to Landlord may, in
Landlord's sole discretion, constitute a default under this Lease.
12. INDEMNIFICATION AND WAIVER OF CLAIMS
12.01 Tenant waives all claims against Landlord for damage to any
property in or about the Premises and for injury to any persons, including death
resulting therefrom, regardless of cause or time of occurrence, except for
damage caused by Landlord's employees', agents', visitors' or licensees' gross
negligence or intentional misconduct. Tenant will defend, indemnify and hold
Landlord harmless from and against any and all claims, actions, proceedings,
expenses, damages and liabilities, including attorney's fees, arising out of,
connected with, or resulting from any use of the Premises by Tenant, its
employees, agents, visitors or licensees, including, without limitation, any
failure of Tenant to comply fully with all of the terms and conditions of this
Lease except for any damage or injury which is the direct result of the gross
negligence or intentional misconduct by Landlord, its employees, agents,
visitors or licensees.
13. REPAIRS
13.01 Tenant shall, at its sole expense, keep and maintain the Project
and every part thereof (except such items as Landlord agrees to repair as
provided in Section 13.05 below), including interior and exterior windows,
skylights, doors, plate glass, any store fronts, the roof, parking area,
14
landscaping, building exterior, and the interior of the Premises, in good and
sanitary order, condition and repair. Tenant will, also, at its sole cost keep
and maintain all utilities, fixtures, plumbing and mechanical equipment used by
Tenant in good order and repair and furnish all expendables (light bulbs, paper
goods, soaps, etc.) used in the Premises. The standard for comparison and need
of repair will be the condition of the Premises at the time of commencement of
this Lease and all repairs will be made by a licensed and bonded contractor
approved by Landlord.
13.02 Tenant will not make repairs to the Premises at the cost of
Landlord whether by deductions of rent or otherwise, or vacate the Premises or
terminate the Lease if repairs are not made. If during the Lease Term, any
alteration, addition or change to the Premises is required by legal authorities,
subject to the provisions of Section 7.02 above, Tenant, at its sole expense,
shall promptly make the same. Landlord reserves the right to make any such
repairs not made or maintained in good condition by Tenant and Tenant shall
reimburse Landlord for all such costs upon demand.
13.03 If repairs deemed necessary by Landlord or any government
authority are not made by Tenant within the prescribed time frame as provided in
writing, Tenant shall be in default of this Lease.
13.04 Tenant shall, at its own expense, within thirty (30) days of the
Lease Commencement Date, contract with a vendor acceptable to Landlord for the
maintenance service of the HVAC which will be furnished to the Landlord upon
request. If Tenant fails to obtain and maintain such a maintenance service
contract Landlord shall have the right to obtain such a maintenance service
contract at the expense of Tenant.
13.05 Landlord shall keep and maintain the structural soundness of the
roof, foundations, and exterior walls of the Premises in good repair, except
that Landlord shall not be responsible for any repairs or maintenance provided
herein caused by Tenant's misuse of the Project, Tenant's or Tenant's agents',
employees', invitees', licensees', or contractors' negligence or intentional
misconduct not covered by insurance maintained by Landlord on the Project, or
the failure of Tenant to perform or observe any conditions or agreements
contained in this Lease. Landlord shall not be required to commence any repairs
and shall not have any liability or responsibility therefor, except upon notice
of the need therefor from Tenant and a reasonable opportunity to complete the
same. All repair costs by Landlord under this Section 13.05 shall be considered
part of the Operating Costs of the Project as specified in paragraph 5.02A
above. Landlord agrees to exercise commercially reasonable efforts to conduct
such repairs as promptly as possible after receiving notice from Tenant in a
manner which will not unreasonably and materially interfere with Tenant's
occupancy of, or the conduct of Tenant's business from, the Premises.
13.06 In the event Landlord or Tenant (the "Determining Party") has
determined that the other party (the "Maintaining Party") has not made the
repairs or complied with their maintenance obligations specified in Sections
13.02 and 13.05, respectively, the Determining Party shall thereafter notify the
Maintaining Party in writing. If the Maintaining Party disagrees with the
Determining Party's determination, Landlord and Tenant agree to negotiate in
good faith in an attempt to resolve the dispute. In the event Landlord and
Tenant have not resolved the dispute within thirty (30) days after the
Maintaining Party's receipt of the Determining Party's notice, then either party
15
may submit the dispute to binding arbitration. The dispute shall be resolved by
a sole arbitrator, whose decision shall be final and binding on the parties. The
parties shall select the arbitrator by mutual agreement or, if the parties fail
to agree upon an arbitrator within ten (10) days from the date of the election
to arbitrate, the arbitrator shall be selected by the American Arbitration
Association. The Commercial Arbitration Rules of the American Arbitration
Association shall govern the arbitration, including selection of the arbitrator
if the parties cannot agree upon the arbitrator. The parties shall each bear
their own costs associated with the arbitration and shall share equally the cost
of the arbitrator. In the event that either party fails to comply with the terms
of the arbitrator's final decision, either party may petition a court of
competent jurisdiction to enter a judgment upon the arbitrator's final decision.
The arbitration shall be held in Reno, Nevada. Nothing in this Section 13.06
shall be construed to preclude any party from seeking injunctive relief or
exercising any of its other rights and remedies pursuant to this Lease.
14. AUCTIONS, SIGNS, AND LANDSCAPING
14.01 Tenant will not conduct or permit to be conducted any sale by
auction on the Premises. All landscaping and the placement, size, and quality of
signs shall be subject to Landlord's prior written approval, which shall not be
unreasonably withheld or delayed. Tenant will not make alterations or additions
to the landscaping and will not place any signs nor allow the placement of any
signs, which are visible from the outside, on or about any building of the
Project, nor in any landscape area, without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed.
15. ENTRY BY LANDLORD
15.01 Tenant will permit Landlord and Landlord's agents to enter the
Premises at all reasonable times and upon reasonable notice (except in the case
of emergency or as may be required by law, rule, or regulation, or court,
administrative, or governmental order or requirement for which no notice is
required) for the purpose of inspecting the same, or for the purpose of
maintaining the Project, or for the purpose of making repairs, alterations or
additions to any portion of the Project, including the erection and maintenance
of such scaffolding, canopies, fences and props as may be required, or for the
purpose of posting notices of nonresponsibility for alterations, additions or
repairs , or for the purpose of showing the Premises to prospective tenants
during the last six months of the Lease Term, or placing upon the Project any
usual or ordinary "for sale" signs, without any rebate of rents and without any
liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned. Tenant will permit Landlord at any time within
sixty (60) days prior to the expiration of this Lease, to place upon the
Premises any usual or ordinary "to let" or "to lease" signs. Tenant will not
install a new or additional lock or any bolt on any door of the Premises without
the prior written consent of Landlord, which will not be unreasonably withheld.
If Landlord gives its consent, such work shall be undertaken by a locksmith
approved by Landlord, at Tenant's sole cost.
16
16. ABANDONMENT
16.01 Tenant will not vacate or abandon the Premises, which shall be
deemed to occur any time during the Lease Term if Tenant does not conduct
business for a period of fifteen (15) consecutive days and/or leaves the
Premises unoccupied for any period of time. If Tenant abandons, vacates or
surrenders the Premises, or is dispossessed by process of law, or otherwise, any
personal property belonging to Tenant left in or about the Premises will, at the
option of Landlord be deemed abandoned and may be disposed of by Landlord in the
manner provided for by the laws of the state in which the Premises are located.
17. DESTRUCTION
17.01 In the case of total destruction of the Premises, or any portion
of the Premises substantially interfering with Tenant's use thereof, whether by
fire or other casualty, not caused by the fault or negligence of Tenant, its
agents, employees, servants, contractors, subtenants, licensees, customers or
business invitees, this Lease shall terminate except as herein provided. If
Landlord notifies Tenant in writing within forty-five (45) days of such
destruction of Landlord's election to repair said damage, and if Landlord
proceeds to and does repair such damage with reasonable dispatch not to exceed
two hundred forty (240) days, this Lease shall not terminate, but shall continue
in full force and effect, except that Tenant shall be entitled to a reduction in
the minimum rent in an amount equal to that proportion of the minimum rent which
the number of square feet of floor space in the unusable portion bears to the
total number of square feet of floor space in the Premises. Said reduction shall
be prorated so that the rent shall only be reduced for those days any given area
is actually unusable. Landlord agrees to utilize commercially reasonable efforts
in connection with such construction so that it does not materially and
unreasonably interfere with Tenant's use of the Premises. In the event Landlord
has not substantially completed such restoration within the two hundred forty
(240) day time period as provided above, then after expiration of such time
period, Tenant may provide Landlord with a notice of its intention to terminate
this Lease (a "Termination Notice"). In the event Landlord substantially
completes the restoration within thirty (30) days of receipt of the Termination
Notice, then this Lease shall not terminate. In the event Landlord does not
substantially complete the restoration within such thirty (30) day period, then
the Lease shall terminate as of the expiration of such thirty (30) day period.
Any such termination shall be effective as of the date of such damage or
destruction. In the event Landlord elects to repair the Premises as provided
above, Landlord agrees to exercise commercially reasonably efforts to locate
temporary premises then owned by Landlord and not subject to lease or
negotiation with another prospective tenant of Landlord (the "Temporary
Premises"), for Tenant to occupy during such period of repair and
reconstruction. During such period of occupancy, Tenant shall be required to pay
to Landlord the fair rental value of the Temporary Premises. The foregoing shall
not constitute a requirement by Landlord to construct or acquire a building for
the Temporary Premises, attempt to cause the early termination of the occupancy
rights of any existing tenants, or cease or defer negotiations with prospective
tenants. In determining compliance with the time periods specified above, such
periods shall be extended for delays caused by labor disputes, civil commotion,
war, warlike operations, invasion, rebellion, hostilities, military or usurped
power, sabotage, governmental regulations or control, fire or other casualty,
inability to obtain any materials or services, acts of God and other causes
beyond Landlord's control. If this Lease is terminated pursuant to this Section
17
17 and if Tenant is not in default hereunder, rent shall be prorated as of the
date of termination, any security deposited with Landlord shall be returned to
Tenant, less any reasonable offsets and all rights and obligations hereunder
shall cease and terminate.
17.02. Notwithstanding the foregoing provisions, in the event the
Premises or any portion thereof shall be damaged by fire or other casualty due
to the fault or negligence of Tenant, its agents, employees, servants,
contractors, subtenants, licensees, customers or business invitees, then,
without prejudice to any other rights and remedies of Landlord, this Lease shall
not terminate, the damage shall be repaired at Tenant's cost to the extent not
covered by Landlord's insurance maintained on the Project, and there shall be no
apportionment or abatement of any rent.
17.03 [INTENTIONALLY DELETED]
17.04 The provisions of this Article 17. with respect to Landlord shall
be limited to such repair as is necessary to place the Premises in the condition
existing as of the date of the damage or destruction (excluding Tenant's trade
fixtures, equipment, and other personal property) and when placed in such
condition the Premises shall be deemed restored and rendered tenantable promptly
following which time Tenant, at Tenant's expense shall repair or replace its
stock in trade, fixtures, furniture, furnishings, floor coverings and equipment,
and if Tenant has closed, Tenant shall promptly reopen for business.
17.05 All insurance proceeds payable under any rental insurance and any
property insurance applicable to the Project or Premises shall be payable solely
to Landlord and Tenant shall have no interest therein. Tenant shall in no case
be entitled to compensation for damages on account of any annoyance or
inconvenience in making repairs under any provision of this Lease. Except to the
extent provided for in this Article 17, neither the rent payable by Tenant nor
any of Tenant's other obligations under any provision of this Lease shall be
affected by any damage to or destruction of the Premises or any portion thereof
by any cause whatsoever.
18. ASSIGNMENT, SUBLETTING AND TRANSFERS OF OWNERSHIP
18.01 Except for a Permitted Assignment (as provided in Section 18.08
below) Tenant will not, without Landlord's prior written consent, assign, sell,
mortgage, encumber, convey or otherwise transfer all or any part of Tenant's
leasehold estate, or permit the Premises to be occupied by anyone other than
Tenant and Tenant's employees or sublet the premises or any portion thereof
(collectively called "Transfer"). Tenant must supply Landlord with any and all
documents deemed necessary by Landlord to evaluate any proposed Transfer at
least sixty (60) days in advance of Tenant's proposed Transfer date.
18.02 Except for a Permitted Assignment (as provided in Section 18.08
below), Landlord need not consent to any Transfer for reasons including, but not
limited to, whether or not: (a) in the reasonable judgment of Landlord the
transferee is of a character or is engaged in a business which is not in keeping
with the standard of Landlord for the Project; (b) in the reasonable judgment of
Landlord any purpose for which the transferee intends to use the Premises is not
in keeping with the standards of Landlord for the Project; provided in no event
may any purpose for which transferee intends to use the Premises be in violation
18
of this Lease; (c) the portion of the Premises subject to the transfer is not
regular in shape with appropriate means of entering and exiting, including
adherence to any local, county or other governmental codes, or is not otherwise
suitable for the normal purposes associated with such a Transfer; or (d) Tenant
is in default under this Lease or any other Lease with Landlord.
18.03 In the event Landlord consents to a Transfer, Tenant will pay
Landlord Fifty percent (50%) of the excess, if any, of the rent and other
charges reserved in the Transfer over the allocable portion of the rent and
other charges hereunder for that portion of the Premises subject to the
Transfer. For the purpose of this section, the rent reserved in the Transfer
will be deemed to include any lump sum payment or other consideration given to
Tenant in consideration for the Transfer. Tenant will pay or cause the
transferee to pay to Landlord this additional rent together with the monthly
installments of rent due.
18.04 Any consent to any Transfer which may be given by Landlord, the
acceptance of any rent, charges or other consideration by Landlord from Tenant
or any third party, or the consummation of any Permitted Assignment will not
constitute a waiver by Landlord of the provisions of this Lease or a release of
Tenant from the full performance by it of the covenants stated herein; and any
consent given by Landlord to any Transfer will not relieve Tenant (or any
transferee of Tenant) from the above requirements for obtaining the written
consent of Landlord to any subsequent Transfer.
18.05 If a default under this Lease should occur while the Premises or
any part of the Premises are assigned, sublet or otherwise Transferred
(including, without limitation, a Permitted Assignment), Landlord, in addition
to any other remedies provided for within this Lease or by law, may at its
option collect directly from the transferee all rent or other consideration
becoming due to Tenant under the Transfer and apply these monies against any
sums due to Landlord by Tenant; and Tenant authorizes and directs any transferee
to make payments of rent or other consideration direct to Landlord upon receipt
of notice from Landlord. No direct collection by Landlord from any transferee
should be construed to constitute a novation or a release of Tenant or any
guarantor of Tenant from the further performance of its obligations in
connection with this Lease.
18.06 If Tenant is a corporation or a partnership, the issuances of any
additional stock or equity interest and/or the transfer, assignment or
hypothecation of any stock or interest in such corporation or partnership in the
aggregate in excess of Twenty-five percent (25%) of such interests, as the same
may be constituted as of the date of this lease, whether directly or indirectly,
shall be deemed to be a Transfer within the meaning of this Section 18.
18.07 In the event Tenant requests Landlord's consent to an Assignment,
Sub-Let or Transfer of Tenant's interest in the leased Premises, Tenant agrees
to pay Landlord all reasonable attorney's fees incurred by Landlord for any
legal services for document review of any and all documents deemed necessary by
Landlord and Tenant to Assign, Sub-let or Transfer Tenant's interest in the
leased Premises.
18.08 Notwithstanding the foregoing or any other provision of this
Lease, Tenant shall be entitled to (1) assign its entire interest in this Lease
and the Premises to an Affiliate (as hereinafter defined) of Tenant, and (2)
19
sublease all or any portion of the Premises ("Permitted Assignment"), without
the prior written consent of Landlord on the following terms of conditions. For
purposes of this Lease, the term "Affiliate" shall mean an entity Controlling,
Controlled by, or under common Control (as hereinafter defined) with Tenant. The
term "Control" or any derivation thereof shall mean the ownership of a majority
of the ownership interest in such entity and the possession, directly or
indirectly, of the irrevocable power to direct or cause the direction of the
management and policies of such entity, whether through such ownership of voting
securities or by contract or otherwise. No Permitted Assignment shall release or
otherwise affect Tenant's obligations under this Lease or constitute an express
or implied consent to any other assignment, sublease, Transfer, or other
Permitted Assignment of all or any part of Tenant's leasehold estate or any
interest therein, or the occupation of the Premises by anyone other than Tenant
or Tenant's employees, unless expressly provided in writing by Landlord in
accordance with the provisions of this Article 18. Tenant shall provide Landlord
with prompt notice of any Permitted Assignment and copies of all documentation
executed by Tenant in connection therewith, which shall include an express and
unconditional proportionate assumption by the permitted assignee or subtenant of
Tenant's obligations under this Lease.
19. BREACH BY TENANT
19.01 Tenant will be in breach of this Lease if at any time during the
term of this Lease (and regardless of the pendency of any bankruptcy,
reorganization, receivership, insolvency or other proceedings in law, in equity
or before any administrative tribunal which have or might have the effect of
preventing Tenant from complying with the terms of this Lease):
A. Tenant fails to make payment of any installment of Base Monthly
Rent, Additional Rent, or of any other sum herein specified to be paid by
Tenant, within ten (10) days of when due; or
B. Tenant fails to observe or perform any of its other covenants,
agreements or obligations hereunder, and such failure is not cured within twenty
(20) days after Landlord's written notice to Tenant of such failure; provided,
however, that if the nature of Tenant's obligation is such that more than twenty
(20) days are required for performance, then Tenant will not be in breach if
Tenant commences performance within such 20 day period and thereafter diligently
prosecutes the same to completion; or
C. Tenant, Tenant's assignee, subtenant, guarantor, or occupant of the
Premises becomes insolvent, makes a transfer in fraud of its creditors, makes a
transfer for the benefit of its creditors, is the subject of a bankruptcy
petition, is adjudged bankrupt or insolvent in proceedings filed against Tenant,
a receiver, trustee, or custodian is appointed for all or substantially all of
Tenant's assets, fails to pay its debts as they become due, convenes a meeting
of all or a portion of its creditors, or performs any acts of bankruptcy or
insolvency, including the selling of its assets to pay creditors; or
D. Tenant has abandoned the Premises as defined in paragraph 16 above.
20
E. Tenant fails to take possession of the Premises within thirty (30)
days of receiving notice by Landlord that the Premises are available.
20. REMEDIES OF LANDLORD
20.01 Nothing contained herein shall constitute a waiver of Landlord's
right to recover damages by reason of Landlord's efforts to mitigate the damage
to it by Tenant's default; nor shall anything in this Section adversely affect
Landlord's right, as in this Lease elsewhere provided, to indemnification
against liability for injury or damages to persons or property occurring prior
to a termination of this Lease.
20.02 All cure periods provided herein shall run concurrently with any
periods provided by law.
20.03 In the event of default, as designated herein above, in addition
to any other rights or remedies provided for herein or at law or in equity,
Landlord, at its sole option, shall have the following rights:
A. The right to declare the term of this Lease ended and reenter the
Premises and take possession thereof, and to terminate all of the rights of
Tenant in and to the Premises.
B. The right, without declaring the term of this Lease ended, to
reenter the Premises and to occupy the same, or any portion there of, for and on
account of the Tenant as hereinafter provided, and Tenant shall be liable for
and pay to Landlord on demand all such expenses as Landlord may have paid,
assumed or incurred in recovering possession of the Premises, including costs,
expenses, attorney's fees and expenditures placing the same in good order, or
preparing or altering the same for reletting, and all other expenses,
commissions and charges paid by the Landlord in connection with reletting the
Premises. Any such reletting may be for the remainder of the term of this Lease
or for a longer or shorter period. Such reletting shall be for such rent and on
such other terms and conditions as Landlord, in its sole discretion, deems
appropriate. Landlord may execute any lease made pursuant to the terms hereof
either in the Landlord's own name or in the name of Tenant or assume Tenant's
interest in any existing subleases to any tenant of the Premises, as Landlord
may see fit, and Tenant shall have no right or authority whatsoever to collect
any rent from such tenants, subtenants, of the Premises. In any case, and
whether or not the Premises or any part thereof is relet, Tenant, until the end
of the Lease term shall be liable to Landlord for an amount equal to the amount
due as Rent hereunder, less net proceeds, if any of any reletting effected for
the account of Tenant. Landlord reserves the right to bring such actions for the
recovery of any deficits remaining unpaid by the Tenant to the Landlord
hereunder as Landlord may deem advisable from time to time without being
obligated to await the end of the term of the Lease. Commencement of maintenance
of one or more actions by the Landlord in this connection shall not bar the
Landlord from bringing any subsequent actions for further accruals. In no event
shall Tenant be entitled to any excess rent received by Landlord over and above
that which Tenant is obligated to pay hereunder; or
C. The right, even though it may have relet all or any portion of the
Premises in accordance with the provisions of subsection B. above, to thereafter
at any time elect to terminate this Lease for such previous default on the part
21
of the Tenant, and to terminate all the rights of Tenant in and to the Premises.
20.04 Pursuant to the rights of re-entry provided above, Landlord may
remove all persons from the Premises and may, but shall not be obligated to,
remove all property therefrom, and may, but shall not be obligated to, enforce
any rights Landlord may have against said property or store the same in any
public or private warehouse or elsewhere at the cost and for the account of
Tenant or the owner or owners thereof. Tenant agrees to hold Landlord free and
harmless from any liability whatsoever for the removal and/or storage of any
such property, whether of Tenant or any third party whomsoever. Such action by
the Landlord shall not be deemed to have terminated this Lease.
20.05 If Tenant breaches this Lease and abandons the Premises before
the end of the term, or if its right of possession is terminated by Landlord
because of Tenant's breach of this Lease, then this Lease may be terminated by
Landlord at its option. On such Termination Landlord may recover from Tenant, in
addition to the remedies permitted at law:
A. The worth, at the time of the award, of the unpaid Base Monthly
Rents and Additional Rents which had been earned at the time this Lease is
terminated;
B. The worth, at the time of the award, of the amount by which the
unpaid Base Monthly Rents and Additional Rents which would have been earned
after the date of termination of this Lease until the time of award exceeds the
amount of the loss of rents that Tenant proves could be reasonably avoided;
C. The worth, at the time of the award, of the amount by which the
unpaid Base Monthly Rent and Additional Rents for the balance of the Lease Term
after the time of award exceeds the amount of such rental loss for such period
as the Tenant proves could have been reasonably avoided; and
D. Any other amount, and court costs, necessary to compensate Landlord
for all detriment proximately caused by Tenant's breach of its obligations under
this Lease, or which in the ordinary course of events would be likely to result
therefrom. The detriment proximately caused by Tenant's breach will include,
without limitation, (i) expenses for cleaning, repairing or restoring the
Premises, (ii) expenses for altering, remodeling or otherwise improving the
Premises for the purpose of reletting the Premises, (iii) brokers' fees and
commissions, advertising costs and other expenses of reletting the Premises,
(iv) costs of carrying the Premises such as taxes, insurance premiums, utilities
and security precautions, (v) expenses of retaking possession of the Premises,
(vi) reasonable attorney's fees and court costs, (vii) any unearned brokerage
commissions paid in connection with this Lease, (viii) reimbursement of any
previously waived Base Rent, Additional Rent, free rent or reduced rental rate,
and (ix) any concession made or paid by Landlord to the benefit of Tenant in
consideration of this Lease including, but not limited to, any moving
allowances, contributions or payments by Landlord for tenant improvements or
build-out allowances or assumptions by Landlord of any of the Tenant's previous
lease obligations.
22
20.06 In any action brought by the Landlord to enforce any of its
rights under or arising from this Lease, Landlord shall be entitled to receive
its costs and legal expenses including reasonable attorneys' fees, whether or
not such action is prosecuted to judgment.
20.07 The waiver by Landlord of any breach or default of Tenant
hereunder shall not be a waiver of any preceding or subsequent breach of the
same or any other term. Acceptance of any Rent payment shall not be construed to
be a waiver of the Landlord of any preceding breach of the Tenant.
20.08 All past due amounts owed by Tenant under the terms of this Lease
shall bear interest at twelve percent per annum unless otherwise stated.
20.09 Notwithstanding any other provision of this Lease, if this Lease
is terminated at any time prior to the expiration of the Lease Term for any
reason other than a default by Landlord, then Landlord shall, without limiting
or affecting any of Landlord's rights and remedies hereunder, or otherwise at
law or in equity, be entitled to retain all Base Monthly Rent paid by Tenant
prior to the accrual thereof under Section 467 of the Internal Revenue Code in
accordance with the Schedule set forth in Section 1.07 above.
21. SURRENDER OF LEASE NOT MERGER
21.01 The voluntary or other surrender of this Lease by Tenant, or
mutual cancellation thereof, will not work a merger and will, at the option of
Landlord, terminate all or any existing transfers, or may, at the option of
Landlord, operate as an assignment to it of any or all of such transfers.
22. ATTORNEYS FEES/COLLECTION CHARGES
22.01 In the event of any legal action or proceeding between the
parties hereto, reasonable attorneys' fees and expenses of the prevailing party
in any such action or proceeding will be added to the judgment therein. Should
Landlord be named as defendant in any suit brought against Tenant in connection
with or arising out of Tenant's occupancy hereunder, Tenant will pay to Landlord
its costs and expenses incurred in such suit, including reasonable attorney's
fees.
22.02 If Landlord utilizes the services of any attorney at law for the
purpose of collecting any rent due and unpaid by Tenant after five (5) days
written notice to Tenant of such nonpayment of rent or in connection with any
other breach of this Lease by Tenant, Tenant agrees to pay Landlord reasonable
attorneys' fees as determined by Landlord for such services, regardless of the
fact that no legal action may be commenced or filed by Landlord
23. CONDEMNATION
23.01 If twenty-five percent (25%) or more of the square footage of the
Premises is taken for any public or quasi-public purpose by any lawful
government power or authority, by exercise of the right of appropriation,
reverse condemnation, condemnation or eminent domain, or sold to prevent such
taking, and if the remaining portion of the Premises will not be reasonably
23
adequate for the operation of Tenant's business after Landlord completes such
repairs or alterations as Landlord elects to make, either Tenant or the Landlord
may at its option terminate this Lease by notifying the other party hereto of
such election in writing within twenty (20) days after such taking. Landlord
shall endeavor to provide Tenant with a notice upon Landlord's becoming aware of
a condemnation action affecting the Project; provided, however, that failure of
Landlord to so notify Tenant shall not constitute a default by Landlord under
this Lease or otherwise provide Tenant with any cause of action for liability or
otherwise against Landlord. Tenant will not because of such taking assert any
claim against the Landlord or the taking authority for any compensation because
of such taking, and Landlord will be entitled to receive the entire amount of
any award without deduction for any estate of interest of Tenant.
Notwithstanding the foregoing, Tenant may make a claim with the condemning
authority for replacement of Tenant's trade fixtures and personal property
installed by Tenant and its cost of relocation, to the extent that the foregoing
does not reduce the amount payable to Landlord as a result of any such taking.
If less than twenty-five percent (25%) of the Premises is taken, Landlord at its
option may terminate this Lease. If Landlord does not so elect, Landlord will
promptly proceed to restore the Premises to substantially its same condition
prior to such partial taking, allowing for any reasonable effects of such
taking, and a proportionate allowance based on the loss of square footage will
be made to Tenant for the rent corresponding to the time during which, and to
the part of the Premises, which, Tenant is deprived on account of such taking
and restoration.
24. RULES AND REGULATIONS
24.01 Tenant will faithfully observe and comply with any Rules and
Regulations promulgated by Landlord for the Project and Landlord reserves the
right to modify and amend them as it deems necessary. Landlord will not be
responsible to Tenant for the nonperformance by any other Tenant or occupant of
the Project of any of said Rules and Regulations.
24.02 In the event that Tenant fails to cure any violations of such
Rules and Regulations following ten (10) days written notice by Landlord, such
failure to cure shall be deemed a material breach of this Lease by Tenant.
25. ESTOPPEL CERTIFICATE
25.01 Tenant will execute and deliver to Landlord, within ten (10)
business days of Landlords written demand, a statement in writing certifying
that this Lease is in full force and effect, and that the Base Monthly Rent and
Additional Rent payable hereunder is unmodified and in full force and effect
(or, if modified, stating the nature of such modification) and the date to which
rent and other charges are paid, if any, and acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or
specifying such defaults if they are claimed and such other matters as Landlord
may reasonably request. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant that (1)
this Lease is in full force and effect, without modification except as may be
represented by Landlord; (2) there are no uncured defaults in Landlord's
performance and (3) not more than one (1) month's rents has been paid in
advance.
24
26. SALE BY LANDLORD
26.01 In the event of a sale or conveyance by Landlord of the Project
the same shall operate to release Landlord from any liability upon any of the
covenants or conditions, expressed or implied, herein contained in favor of
Tenant, and in such event Tenant agrees to look solely to the responsibility of
the successor in interest of Landlord in and to this Lease. This Lease will not
be affected by any such sale, and Tenant agrees to attorn to the purchaser or
assignee.
27. NOTICES
27.01 All notices, statements, demands, requests, consents, approvals,
authorizations, offers, agreements, appointments, or designations under this
Lease by either party to the other will be in writing and will be considered
sufficiently given and served upon the other party if sent by certified or
registered mail, return receipt requested, postage prepaid, delivered
personally, or by a national overnight delivery service and addressed as
indicated in 1.03 and 1.04.
28. WAIVER
28.01 The failure of Landlord to insist in any one or more cases upon
the strict performance of any term, covenant or condition of the Lease will not
be construed as a waiver of a subsequent breach of the same or any other
covenant, term or condition; nor shall any delay or omission by Landlord to seek
a remedy for any breach of this Lease be deemed a waiver by Landlord of its
remedies or rights with respect to such a breach.
29. HOLDOVER
29.01 If Tenant remains in the Premises after the Lease expiration date
with the consent of the Landlord, and has not given prior written notice to
Landlord, such continuance of possession by Tenant will be deemed to be a
month-to-month tenancy at the sufferance of Landlord terminable on thirty (30)
day notice at any time by either party. All provisions of this Lease, except
those pertaining to term and rent, will apply to the month-to-month tenancy.
Tenant will pay a new Base Monthly Rent in an amount equal to 125% of the Base
Monthly Rent payable for the last full calendar month during the term of this
Lease. Upon expiration or earlier termination of this Lease, Tenant agrees to
vacate the Premises in good and clean condition, reasonable wear and tear
excepted, in compliance with the move out standards set forth on Exhibit G
attached hereto.
30. DEFAULT OF LANDLORD/LIMITATION OF LIABILITY
30.01 In the event of any default by Landlord hereunder, Tenant agrees
to give notice of such default, by registered mail, to Landlord at Landlord's
Notice Address as stated in 1.04 and to offer Landlord a reasonable opportunity
to cure the default. In the event of any actual or alleged failure, breach or
default hereunder by Landlord, Tenant's sole and exclusive remedy will be
against Landlord's interest in the Project, and Landlord, its directors,
officers, employees and any partner of Landlord will not be sued, be subject to
service or process, or have a judgement obtained against him in connection with
any alleged breach or default, and no writ of execution will be levied against
25
the assets of any partner, shareholder or officer of Landlord. The covenants and
agreements are enforceable by Landlord and also by any partner, shareholder or
officer of Landlord.
31. SUBORDINATION
31.01 At the election of Landlord or any mortgagee with a lien on the
Project or any ground lessor with respect to the Project, provided that a
non-disturbance agreement reasonably acceptable to Tenant is first executed,
this Lease will be subject and subordinate at all times to (a) all ground leases
or underlying leases which may now exist or hereafter be executed affecting the
Project, and (b) the lien of any mortgage or deed of trust which may now exist
or hereafter be executed in any amount for which the Project, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security. In the event that any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant will,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord, at the option of such successor in interest.
Tenant covenants and agrees to execute and deliver to Landlord any document or
instrument reasonably requested by Landlord or its ground lessor, mortgagee or
beneficiary under a deed of trust evidencing such subordination of this Lease
with respect to any such ground lease or underlying leases or the lien of any
such mortgage or deed of trust. Tenant hereby irrevocably appoints Landlord as
attorney-in-fact of Tenant to execute, deliver and record any such document in
the name and on behalf of Tenant.
32. DEPOSIT AGREEMENT
32.01 Landlord and Tenant hereby agree that Landlord will be entitled
to immediately endorse and cash Tenant's good faith rent and the Security
Deposit check(s) accompanying this Lease. It is further agreed and understood
that such action will not guarantee acceptance of this Lease by Landlord, but,
in the event Landlord does not accept this Lease, such deposits will be promptly
refunded in full to Tenant. This Lease will be effective only after Tenant has
received a copy fully executed by both Landlord and Tenant.
33. GOVERNING LAW
33.01 This Lease is governed by and construed in accordance with the
laws of the State of Nevada, and venue of any suit will be in the county where
the Premises are located unless the Premises are not located in Nevada in which
case the venue will be Washoe County in the State of Nevada.
34. NEGOTIATED TERMS
34.01 This Lease is the result of the negotiations of the parties and
has been agreed to by both Landlord and Tenant after prolonged discussion.
35. SEVERABILITY
26
35.01 If any provision of this Lease is found to be unenforceable, all
other provisions shall remain in full force and effect.
36. BROKERS
36.01 Each party ("Indemnifying Party") warrants that it has had no
dealings with any broker or agent in connection with this Lease, and each
Indemnifying Party covenants to pay, hold harmless and indemnify the other party
from and against any and all cost, expense or liability for any compensation,
commissions and charges claimed by any broker or agent acting by or through the
Indemnifying Party, with respect to this Lease or its negotiation.
37. QUIET POSSESSION
37.01 Tenant, upon paying the rentals and other payments herein
required from Tenant, and upon Tenant's performance of all of the terms,
covenants and conditions of this Lease on its part to be kept and performed, may
quietly have, hold and enjoy the Premises during the Term of this Lease without
disturbance from Landlord or from any other person claiming through Landlord.
38. MISCELLANEOUS PROVISIONS
38.01 Whenever the singular number is used in this Lease and when
required by the context, the same will include the plural, and the masculine
gender will include the feminine and neuter genders, and the word "person" will
include corporation, firm, partnership, or association. If there is more than
one Tenant, the obligations imposed upon Tenant under this Lease will be joint
and several.
38.02 The headings or titles to paragraphs of this Lease are not a part
of this Lease and will have no effect upon the construction or interpretation of
any part of this Lease.
38.03 This instrument contains all of the agreements and conditions
made between the parties to this Lease. Tenant acknowledges that neither
Landlord nor Landlord's agents have made any representation or warranty as to
the suitability of the Premises to the conduct of Tenant's business. Any
agreements, warranties or representations not expressly contained herein will in
no way bind either Landlord or Tenant, and Landlord and Tenant expressly waives
all claims for damages by reason of any statement, representation, warranty,
promise or agreement, if any, not contained in this Lease.
38.04 Time is of the essence of each term and provision of this Lease.
38.05 Except as otherwise expressly stated, each payment required to be
made by Tenant is in addition to and not in substitution for other payments to
be made by Tenant.
38.06 Subject to Article 18, the terms and provisions of this Lease are
binding upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of Landlord and Tenant.
27
38.07 All covenants and agreements to be performed by Tenant under any
of the terms of this Lease will be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent.
38.08 In consideration of Landlord's covenants and agreements
hereunder, Tenant hereby covenants and agrees not to disclose any terms,
covenants or conditions of this Lease to any other party without the prior
written consent of Landlord, except as may be required by law, including,
without limitation, the Securities Act of 1933, as amended from time to time.
38.09 Tenant agrees it will provide to Landlord such financial
information as is required to be disclosed by Tenant from time to time under the
Securities Act of 1933, the Securities Exchange Act of 1934, and otherwise by
law, as Landlord may reasonably request for the purpose of obtaining
construction and/or permanent financing or refinancing for the Project or in
connection with a sale thereof. In the event Tenant is not subject to the
reporting requirements of the Securities Act of 1933 or the Securities Exchange
Act of 1934, Tenant shall provide Landlord with such financial information as
Landlord may reasonably request for the purpose of obtaining construction and/or
permanent financing or refinancing for the Project or in connection with a sale
thereof.
38.10 If Tenant shall request Landlord's consent and Landlord shall
fail or refuse to give such consent, Tenant shall not be entitled to any damages
for any withholding by Landlord of its consent; Tenant's sole remedy shall be an
action for specific performance or injunction, and such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
to unreasonably withhold its consent or where as a matter of law Landlord may
not unreasonably withhold its consent.
38.11 Whenever a day is appointed herein on which, or a period of time
is appointed in which, either party is required to do or complete any act,
matter or thing, the time for the doing or completion thereof shall be extended
by a period of time equal to the number of days on or during which such party is
prevented from, or is reasonably interfered with, the doing or completion of
such act, matter or thing because of labor disputes, civil commotion, war,
warlike operation, sabotage, governmental regulations or control, fire or other
casualty, inability to obtain materials, or to obtain fuel or energy, weather or
other acts of God, or other causes beyond such party's reasonable control
(financial inability excepted); provided, however, that nothing contained herein
shall excuse Tenant from the prompt payment of any Rent or charge required of
Tenant hereunder.
38.12 No slot machine or other gambling game shall be permitted on the
Premises without the prior written consent of Landlord. The Premises shall not
be used for any "adult bookstore" or "adult motion picture theater" as said
terms are defined in NRS 278.0221, or any similar use, notwithstanding any local
zoning codes or ordinances or any other provisions of law to the contrary
permitting such use.
38.13 All representations, warrants, covenants, and agreements of the
parties hereto shall survive the expiration or earlier termination of this
Lease.
28
38.14 Simultaneously with the execution of this Lease, Landlord and
Tenant shall execute the Memorandum of Lease in the form of Exhibit H-1 attached
hereto, setting forth the parties, description of the Premises, the Lease
Commencement Date, and term provisions of this Lease. Tenant shall cause said
Memorandum of Lease to be recorded in the Official Records of the County
Recorder of Washoe County, Nevada. In addition, simultaneously with the
execution of this Lease, Tenant agrees to execute the Quitclaim Deed in the form
of Exhibit H-2 attached hereto and Landlord is authorized to record such
Quitclaim Deed in the Official Records of the County Recorder of Washoe County,
Nevada, at any time after expiration of the Lease Term (including any Extension
Terms) or earlier termination of this Lease.
39. CHANGE ORDERS
39.01 [INTENTIONALLY DELETED]
40. SPECIAL PROVISIONS
40.01 Special provisions of this Lease numbers 41, 42 and 43 are a part
of this Lease and Exhibits A (Depiction of Premises), B-1 and B-2 (Base Monthly
Rent Schedules), C (Tenant Questionnaire), D (Rules and Regulations), E
(Commencement Date Certificate), and G (Move Out Standards), and H (H-1,
Memorandum of Lease, and H-2, Quitclaim Deed) are attached hereto and made a
part hereof.
41. OPTIONS TO EXTEND LEASE TERM
41.01 Tenant is hereby granted the options (each, an "Extension
Option," and collectively, the "Extension Options") to extend the Lease Term for
two (2) additional periods of five (5) years (each, an "Extension Term," and
collectively, the "Extension Terms"), each beginning on the day after expiration
of the Initial Lease Term or the first Extension Term, as the case may be, and
expiring on the date five (5) years thereafter (unless terminated sooner
pursuant to any other terms or provisions of the Lease), on all of the same
terms and conditions as set forth in the Lease, but at an adjusted Base Monthly
Rent as set forth in Section 41.02 below (and without any additional option to
extend the Lease Term after the expiration of the second Extension Term). The
Extension Options may be exercised by Tenant only by delivery of written notice
of such exercise (the "Extension Notice") to Landlord, which Extension Notice
must be received by Landlord at least two hundred twenty-five (225) days before
the expiration of the Initial Lease Term or the first Extension Term, as
applicable. If Tenant fails to timely deliver the Extension Notice, or if this
Lease is terminated pursuant to any of its other terms or provisions prior to
the expiration of the Initial Lease Term or the first Extension Term, as
applicable, all remaining Extension Options shall lapse, and Tenant shall have
no right to extend or further extend the Lease Term. The Extension Options shall
be exercisable by Tenant on the express conditions that (i) at the time of
delivery of Tenant's Extension Notice and at all times thereafter and prior to
the commencement of the applicable Extension Term, Tenant shall not be in
monetary default under this Lease, (ii) Tenant has not previously been in
monetary default (whether or not such default has been timely cured) under this
Lease on more than three (3) occasions during the Lease Term, and (iii) except
for a Permitted Assignment, Tenant has not assigned this Lease, sublet all or
any part of the Premises, or otherwise Transferred this Lease, it being
29
understood that, except in the case of a Permitted Assignment, the Extension
Options are personal to the original named Tenant under this Lease. In the event
of any such assignment, sublease, or other Transfer other than a Permitted
Assignment, all unexercised Extension Options shall lapse and shall be null and
void and of no further force or effect. After agreement by Landlord and Tenant
on the Base Monthly Rent as provided in Section 41.02 below, Tenant's obligation
to renew shall be irrevocable by Tenant.
41.02 Base Monthly Rent during each Extension Term, including any
interim increases thereof, shall be the "Market Rent" of the Premises, as
hereinafter provided. The term "Market Rent" for the Premises during the
applicable Extension Term shall mean the rent, including all escalations, at
which an unrelated landlord and tenant, with neither being under undue influence
or duress, would be willing to lease the Project based upon its highest and best
use and for a five-year term. Tenant and Landlord agree to negotiate the amount
of Market Rent for the Project in good faith for a period of forty-five (45)
days after exercise by Tenant of each Extension Option as provided in Section
41.01 above (the "Negotiation Period"). In the event Landlord and Tenant agree
upon the Base Monthly Rent pursuant to the foregoing provisions within the
Negotiation Period, then Tenant's obligation to renew for the applicable
Extension Term shall become irrevocable. In the event Tenant and Landlord are
unable to agree upon the Base Monthly Rent within the Negotiation Period, then
at any time after expiration of the Negotiation Period, and prior to any
subsequent agreement on the amount of Base Monthly Rent, Landlord or Tenant may
terminate Tenant's right to lease the Premises for the applicable Extension Term
(but not the remaining portion of the then existing Lease Term) by delivering
written notice to the other. Landlord's and Tenant's agreement on Base Monthly
Rent for the applicable Extension Term shall be evidenced by a written amendment
to this Lease Agreement executed by Landlord and Tenant.
42. CONDITION PRECEDENT
42.01 Landlord and Tenant acknowledge and agree that this Lease and the
parties' respective obligations hereunder including, without limitation, the
obligations included in Article 43. below shall be conditioned upon the
acquisition by Landlord of title to the Project pursuant to the Sale Agreement,
and in the event Landlord does not acquire title to the Project pursuant to the
Sale Agreement or any amendments or restatements thereof, or otherwise, then
this Lease Agreement shall be null and void and the parties shall have no rights
or obligations hereunder. Upon the closing under the Sale Agreement, the Lease
Commencement Date shall occur, the current lease between LMC and South Meadows
Properties Limited Partnership (the "Existing Lease") shall automatically
terminate, and this Lease shall take effect. Tenant represents, warrants,
acknowledges and agrees that Landlord shall have no liability or obligation
whatsoever with respect to or in any way related to the Existing Lease.
43. ROBB DRIVE LEASE AGREEMENT
43.01 Landlord and Tenant acknowledge and agree that the lease
agreement between Landlord, as successor-in-interest to Elite Instruments, Inc.,
a Nevada corporation, and Tenant (the "Robb Drive Lease Agreement") for the
premises located at 2301 Robb Drive, Reno, Nevada (the "Robb Drive Premises")
shall be canceled in accordance with the terms and conditions set forth in this
Article 43. Tenant agrees to vacate the Robb Drive Premises in good and clean
30
condition by January 31, 2000 (the "Robb Drive Premises Vacation Date"). Tenant
shall be relieved of the obligation to pay base monthly rent and all other rent
and other monetary obligations under the Robb Drive Lease Agreement (the "Robb
Drive Rent") and all other obligations under the Robb Drive Lease Agreement
accruing or arising after the date six (6) months after the Lease Commencement
Date (the "Robb Drive Lease Termination Date"); provided, however, that Landlord
and Tenant acknowledge and agree that Tenant will not be relieved of any of
Tenant's obligations under the Robb Drive Lease Agreement which arise or accrue
prior to the Robb Drive Lease Termination Date, all of which shall survive the
termination of the Robb Drive Lease Agreement. Nothing contained herein shall be
intended to or shall be deemed to release Tenant from or waive Landlord's rights
with respect to any obligations of Tenant or any default by Tenant under the
Robb Drive Lease Agreement prior to the Robb Drive Lease Termination Date.
Landlord agrees to exercise commercially reasonable efforts to release the Robb
Drive Premises on commercially reasonable terms. In the event that Landlord
enters into a binding lease agreement with a third party tenant prior to the
Robb Drive Lease Termination Date, (1) Tenant shall receive a credit against the
Robb Drive Rent payable by Tenant through the Robb Drive Lease Termination Date
in the amount of rent actually received by Landlord prior to the Robb Drive
Lease Termination Date under such third party lease agreement, and (2) Tenant
shall not be responsible for any obligations other than Robb Drive Rent which
arise or accrue after the date possession of the Robb Drive Premises is granted
to such third party. In the event Landlord executes a lease agreement with a
third party prior to or on the Robb Drive Lease Termination Date, Tenant shall
be responsible for fifty percent (50%) of the lease commission paid by Landlord
attributable to the then remaining lease term under the Robb Drive Lease
Agreement. In the event Landlord executes a lease agreement with a third party
subsequent to the Robb Drive Lease Termination Date, Landlord shall be
responsible for one hundred percent (100%) of the lease commission payable by
Landlord, if any, with respect thereto.
43.02 Tenant represents, warrants, covenants and agrees with Landlord
that on the Lease Commencement Date and on the Robb Drive Lease Termination
Date, (1) there are no existing defaults by Landlord under the Robb Drive Lease
Agreement, (2) Landlord shall be relieved of all obligations under the Robb
Drive Lease Agreement as of the Lease Commencement Date, (3) the Robb Drive
Lease Agreement is the only agreement, written, oral, or otherwise between
Landlord and Tenant pertaining to the Robb Drive Premises and the Robb Drive
Lease Agreement has not been amended, superseded, added to or interpreted, in
writing, orally, or otherwise, at any time, (4) no party other than Tenant has
any right to, or interest in, the Robb Drive Premises, (5) upon delivery of the
Robb Drive Premises in accordance with this Article 43, Landlord shall receive
good and absolute title to the Robb Drive Premises free and clear of any and all
liens, charges, encumbrances or claims of whatever kind or nature arising out
of, or in connection with, Tenant's use, occupancy, or operation of the Robb
Drive Premises, and Tenant does not have any claim or action of any kind or
nature against the Landlord arising under or pursuant to the Robb Drive Lease or
in connection with the Robb Drive Premises.
43.03 Tenant shall completely vacate the Robb Drive Premises and
deliver actual physical possession of the Robb Drive Premises and improvements
to Landlord on or before the Robb Drive Premises Vacation Date. Immediately upon
vacating the Robb Drive Premises, Tenant shall deliver to Landlord all keys,
pass keys, key cards, plans, specifications, designs, blueprints, permits and
similar items relating to the Robb Drive Premises and all other items and
31
information in its possession necessary for Landlord to obtain complete access
to the Robb Drive Premises otherwise related thereto. Tenant shall cause the
utilities and services to the Robb Drive Premises to be read as of the Robb
Drive Lease Termination Date and such bills will be sent to and paid by Tenant.
Tenant agrees to terminate any and all contracts and agreements of any kind with
agents, consultants, advisors, or dealers for the management, maintenance, or
other services otherwise relating to the Robb Drive Premises as of the Robb
Drive Premises Vacation Date. Any property remaining in the Robb Drive Premises
after the Robb Drive Premises Vacation Date shall be absolutely, irrevocably,
and conclusively presumed to have been abandoned, and may either be retained by
Landlord as its property, or sold or otherwise disposed of in such manner as
Landlord shall determine in its sole and absolute discretion. If any part
thereof shall be sold, Landlord may receive and retain the proceeds of such sale
for its own benefit.
43.04 Except as otherwise provided in this Article 43., Landlord and
Tenant agree that all rights of Tenant under the Robb Drive Lease Agreement
shall automatically, absolutely, and irrevocably terminate and Tenant's interest
in the Robb Drive Lease Agreement and the Robb Drive Premises shall be
completely extinguished for all purposes and all respects at 5:00 p.m. on the
Robb Drive Premises Vacation Date, as if the Robb Drive Premises Vacation Date
were the date set forth in the Robb Drive Lease Agreement for the expiration
thereof. Except as otherwise provided in the immediately following sentence,
Landlord and Tenant agree that the termination of the Robb Drive Lease Agreement
shall be self-executing and effective without the need for further
documentation. Landlord and Tenant agree to execute, acknowledge, and deliver to
the other party such other documents, including, without limitation, a
Memorandum of Termination of Lease, in a form and content reasonably acceptable
to the parties, as reasonably requested by the other party.
43.05 In the event Tenant fails to relinquish complete possession of
the Robb Drive Premises and deliver the same to Landlord in accordance with the
provisions of this Article 43. or otherwise fails to perform its obligations to
this Article 43., Landlord shall have the right to avail itself of any and all
rights and remedies which Landlord may have under this agreement, or otherwise
at law or in equity.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year indicated by Landlord's execution date as written below.
Individuals signing on behalf of a Tenant warrant that they have the
authority to bind their principals. In the event that Tenant is a corporation,
Tenant shall deliver to Landlord, concurrently with the execution and delivery
of this Lease, a copy of corporate resolutions adopted by Tenant authorizing
said corporation to enter into and perform the Lease and authorizing the
execution and delivery of the Lease on behalf of the corporation by the parties
executing and delivering this Lease. THIS LEASE, WHETHER OR NOT EXECUTED BY
TENANT, IS SUBJECT TO ACCEPTANCE AND EXECUTION BY LANDLORD, ACTING ITSELF OR BY
ITS AGENT.
Landlord: Dermody Family Limited Tenant: iGo Corporation, a Delaware
Partnership I, a Washington corporation
limited partnership, and Guila
Dermody Turville
By: /s/ Lou Borrego
--------------------------------
By: Dermody Family Limited Liability
Company I, a Washington limited
liability company, its general Its: Lou Borrego, VP Operations
partner -------------------------------
(Name, Title)
By: /s/ John A. Dermody
-----------------------------
John A. Dermody, Member Date: 12-10-99
---------------------
(Execution Date)
Date: 12-13-99
---------------------
(Execution Date)
/s/ Guila Dermody Turville
- ---------------------------
Guila Dermody Turville
Date: 12-15-99
---------------------
(Execution Date)
32