LEASE AGREEMENT
1. PARTIES
This Lease, dated February 1, 1984, for reference purposes only, is made by
and between Carroll Ridge Park, a California General Partnership (herein called
"Lessor"), and Elgar Corporation, a California Corporation (herein called
"Lessee").
2. DESCRIPTION OF PREMISES
Lessor hereby leases to Lessee and Lessee hires from Lessor on the terms,
covenants and conditions hereinafter set forth, the real property described in
Exhibit "A" attached hereto together with the improvements described below. Said
real property and improvements are described in the map and floor plan attached
hereto as Exhibit "B." Said real property and improvements are hereinafter
referred to as the leased premises. Effective on the vacation by the City of
San Diego of Carroll Park Court, the leased premises shall include said Carroll
Park Court. The leased premises are being transferred to Lessee subject to all
those matters set forth in Exhibit "C" attached hereto.
3. TERM
3.1 INITIAL TERM - The initial term of this Lease shall be for ten (10)
years commencing on August 1, 1984 (the "commencement date") and ending on July
31, 1994, unless sooner terminated pursuant to any provision hereof.
3.2 OPTION TO RENEW - Lessee shall have the option to extend the Lease for
two (2) additional periods of five (5) years each. Lessee may exercise its right
to extend for the first option term by notifying Lessor of its election to so
extend no later than sixty (60) days prior to the termination of the initial
Lease term period and no earlier than six (6) months prior to said termination
and for the second option term by giving notice not later than sixty (60) days
prior to the termination of the term under the first option and no earlier than
six (6) months prior to said termination. Provided, however, Lessee shall have
no extension right if at the time for giving such notice or at the commencement
of such extension there exists any uncured default hereunder by Lessee for which
Lessee has received ten (10) days prior written notice from Landlord. All terms
and conditions of this Lease shall remain in full force and effect during the
option term except that the rent payable hereunder by Lessee to Lessor for the
first year of each option term shall be adjusted to the fair market rental of
the land and building (but excluding all Lessee's Improvements) as of the
commencement of each option term. For purposes of this Lease, unfair market
rental shall be determined by agreement between the parties within ten (10) days
after Lessee notifies Lessor of its intention to exercise the Option hereunder.
If within said ten (10) days the parties are unable to agree upon a "fair market
rental," then each shall select an appraiser within five (5) days thereafter
with a designation of "M.A.I." or in the event M.A.I., appraisers are no longer
available, a comparable designation and within five (5) days after such
appointment, the two appraisers shall agree upon a third appraiser. Within
thirty (30) days thereafter, the appraisers shall notify the parties in writing
their appraisal of the fair market rental and the average of the two
appraisals, which are closest in amount shall be deemed the fair market rental.
Each party shall pay the cost of its own appraiser and the parties shall share
the cost of the third appraiser. In the event the appraisals are not returned to
the parties prior to the commencement of the option term, Lessee shall continue
to pay rent at the then current rate until the determination of the fair rental
value whereupon the rent shall be adjusted retroactively to the fair market
rental and any additional amounts shall be paid to the Lessor by Lessee with the
next regular monthly payment following such determination. For a period of one
hundred twenty (120) days after the determination of the fair market rental by
the parties, as set forth above Lessee shall have the right to terminate the
Lease by delivering written notice to Lessor of its election to so terminate. In
the event, such notice is delivered to Lessor within said one-hundred twenty
(120) day period; the Lease shall terminate sixty (60) days thereafter. Lessee
shall be responsible for the payment of rent to Lessor in the amount determined
to be the fair market rental until the date of such termination.
3.3 COMMENCEMENT AND POSSESSION - Notwithstanding the commencement
date, Lessor shall deliver to Lessee Possession (as defined below) of the
manufacturing warehouse portion of the leased premises consisting of
approximately 44,000 square feet on or before July 1, 1984 and Possession of the
office portion of the leased premises consisting of approximately 43,000 square
feet on or before September 1, 1984. For purposes of this Section 3.3, the term
"Possession" shall mean the earlier to occur of (i) the tender of actual
physical possession of the leased premises by Lessor to Lessee accompanied by a
Certificate of occupancy from the City of San Diego or an agreement from the
City of San Diego that the leased premises may be occupied without such
Certificate, or (ii) the operation of Lessee's business from the leased
premises. If Lessor shall not have completed and delivered Possession of the
entire leased premises within one hundred twenty (120) days from the
commencement date, Lessee may, at Lessee's option, by notice in writing to
Lessor within ten (10) days thereafter, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If Lessee occupies
the leased premises prior to the commencement date, such occupancy shall be
subject to all provisions hereof except payment of rent. Notwithstanding
occupancy or the date of delivery of Possession, neither the commencement date
nor the termination date hereunder shall be delayed or advanced. Lessor
acknowledges and agrees that its failure to deliver Possession of the leased
premises to Lessee at the time and in the manner set forth above shall cause
Lessee damage in an amount which would be impractical or difficult to calculate,
but a reasonable estimate of, which would be Five Hundred Dollars ($500.00) for
each day after July 1, 1984 and until delivery of Possession of the
manufacturing warehouse, and Two Hundred Dollars ($200.00) for each day after
September l, 1984 and until delivery of Possession of the office facilities.
Therefore, Lessor and Lessee agree that, in addition to Lessee's right to cancel
the Lease as set forth above and the reduction of rent as set forth in Section
4.1, in the event of the delay in delivery of Possession to Lessee, Lessor shall
pay liquidated damages to Lessee in the amount of Five Hundred Dollars ($500.00)
per day for each day of delay after July 1, 1984 with respect to the
manufacturing warehouse and Two Hundred Dollars ($200.00) per day for each day
after September 11, 1984, with respect to the office building until the Lease is
terminated if terminated as set forth above. Lessor's obligations hereunder are
subject to any extensions pursuant to the force majeure clause set forth in the
General Provisions below.
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4. RENT
4.1 MONTHLY RENTAL - Lessee agrees to pay Lessor fixed monthly rent for
the building structure of $0.54 per square foot based upon the number of square
feet of the entire leased premises as built. Based upon the agreed area of the
entire leased premises of 87,000 square feet, the total fixed monthly rent shall
be $46,980. Fixed monthly rent shall be payable in advance, without prior notice
or demand and without set off or deduction, in lawful money of the United States
of America. Subject to Section 3.2 above, rent shall commence on August 1, 1984
with the first payment thereof due on August 10, 1984 in the amount of
Fifty-Eight Thousand Seven Hundred Twenty-Five Dollars ($58,725.00) for the
period from August 1, 1984 to September 9, 1984 and thereafter rent in the
amount of Forty-Six Thousand Nine Hundred Eighty Dollars ($46,980.00) per month
for the period from the 10th of such month to the 10th of the next month shall
be paid on the 10th day of each and every calendar month during the term hereof.
Provided however, if Possession of the office portion of the leased premises is
not tendered to Lessee on or before September 1, 1984, a pro-rata portion of the
rent here under shall be abated by 49.4% for each day of delay retroactive to
August 1, 1984, until the time such Possession is tendered to Lessee; and if
Possession of the manufacturing portion of the leased premises is not tendered
to Lessee on or before July 1, 1984, a pro-rata portion of the rent hereunder
shall be abated by 50.6% for each day from July 1, 1984, until the time such
Possession is tendered to Lessee. Provided further, if Possession of the office
portion of the leased premises is tendered to Lessee on or before September 1,
1984, Lessee shall pay as additional rent to Lessor an amount equal to 49.4% of
a pro-rata portion of the rent for each day prior to September 1, 1984 that such
Possession is tendered to Lessee.
4.2 RENTAL ADJUSTMENT - The fixed monthly rent under Section 4.1 of
this Lease shall be subject to adjustment upwards only at the end of each one
year period of the lease term hereof including option periods, if any. For the
first month of the second year, as determined by Section 3.1 of this Lease, and
the first month of every year thereafter for the duration of this Lease the
monthly rental for the ensuing twelve (12) months shall be adjusted upward only
at the rate of five percent (5%) per year, using the monthly rental of the
previous year as the base to calculate such increase. The rent so fixed and
adjusted shall be the rent for the one-year period commencing with the date on
which said rent is to be adjusted as herein provided. The rent for the last
month prior to the adjustment date shall be increased by the pro-rata increase
in the rent for the first ten (10) day of the next succeeding month. Provided,
however, if one or both of the options to extend the Lease are exercised by
Lessee the adjustment for the first year of each option term shall be as
provided in Section 3.2 rather than this Section 4.2.
5. CONSTRUCTION
5.1 LESSOR'S IMPROVEMENTS - Lessor agrees that subject to the force
majeure clause in the General Provisions below, it will at its own cost and
expense construct and deliver possession of a building and other improvements
on, the leased premises to Lessee on the dates specified in Section 3.3 above
consisting of all specifications (the "Lessor's improvements") set forth in the
following plans:
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(a) Sholders a Sanford Grading Plan for Elgar Job #10403A (page 1 of
1).
(b) Roger Deweese Associates Elgar Preliminary Flatwork and Grading
January 26, 1984 (page 1 of 1).
(c) Austin Hansen, Inc. pages 1A-11 inclusive entitled Elgar dated
1/26/84.
(d) Beckett and Wong pages Sl-10 inclusive Job #2881.
(e) Landscaping Plans and Specifications prepared by Lessor and
approved by Lessee, which approval will not be unreasonably withheld. Lessor
shall deliver such plans and specifications to Lessee on or before February 15,
1984 and Lessee shall have ten (10) working days thereafter to notify Lessor of
its disapproval of such plans and specifications or the same shall be deemed
approved. The term "working days" shall include the days Monday through Friday
only. If Lessee disapproves said plans and specifications within said ten (10)
working day period and the parties are unable to agree upon plans and
specifications within five (5) days thereafter, they shall submit the matter to
arbitration in San Diego County within twenty (20) days thereafter in accordance
with the rules of the American Arbitration Association. Any delays caused
hereunder shall not relieve the Lessor of its obligations under Section 3.3
hereof nor affect Lessee's right to liquidated damages and abatement of rent.
The above plans and specifications may not be altered or modified except
for nonmaterial field changes or requirements of the City of San Diego, without
the prior written consent of Lessee, which consent shall not be unreasonably
withheld.
5.2 LESSEE'S IMPROVEMENTS - Lessee shall, at its own cost and expense,
provide Lessor with plans and specifications for completion of interior
improvements to the building on the leased premises to the satisfaction of
Lessee (hereinafter referred to as "Lessee's Improvements"). Lessee shall
deliver to Lessor the plans and specifications for Lessee's Improvements in the
manufacturing portion of the leased premises on or before February 15, 1984 and
in the office portion of the leased premises on or before April 1, 1984, thirty
(30) days after receipt of the respective plans and specifications, Lessor shall
provide Lessee with a written construction cost bid on the Lessee's Improvements
from Lessor's contractor. Within fifteen (15) days thereafter, Lessee shall have
the right to approve or disapprove such bid. Failure of Lessee to either approve
or disapprove such bid in writing within said fifteen (15) day period shall be
deemed an approval by Lessee. In the event, Lessee disapproves such bid, Lessor
shall have no responsibility with respect to the Lessee's Improvements and
Lessee will be required to construct Lessee's Improvements without the
assistance of Lessor. Also, in the event Lessee disapproves such bid, the term
"Possession" as used in Section 3.3 shall be redefined to mean actual tender
possession of the premises with substantial completion and the recordation of a
Notice of Completion. If Lessee elects to provide its own Lessee's improvements,
Lessor shall allow Lessee access to the building on or before June 1, 1984 for
installation of Lessee's Improvements. Lessee and Lessor shall cooperate in
installation of the Lessee's Improvements and Lessee shall do nothing to delay,
hinder, or interfere with Lessor's construction hereunder. In the event, Lessee
approves such bid; Lessor shall have the responsibility to construct Lessee's
Improvements on the terms set forth below:
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(a) Lessor shall construct Lessee's Improvements in accordance with
the plans and specifications submitted by Lessee prior to the dates upon
which Lessor is to tender possession of the Leased Premises to Lessee under
Section 3.3. Lessor's failure to complete the Lessee's Improvements at the
times set forth in Section 3.3 shall entitle Lessee to all rights and
remedies under Section 3.3 including liquidated damages. Provided, however,
it shall be Lessee's responsibility to obtain from the City of San Diego
approval for such plans and specifications for Lessee's Improvements in the
manufacturing warehouse portion of the leased premises and deliver the same
to Lessor on or before April 1, 1984 and for Lessee's Improvements in the
office portion of the leased premises and deliver the same to Lessor on or
before June 1, 1984. In the event Lessee fails to obtain such approvals by
such dates, the dates upon which possession is to be tendered under Section
3.3 hereof shall be delayed one day for each day such approvals are
delayed.
(b) Lessor shall complete the Lessee's Improvements for a cost not to
exceed the bid price plus any change orders approved in writing by Lessee,
which approval will not be unreasonably withheld. Lessee shall be
responsible to pay all City and utility fees with respect to the
construction of Lessee's Improvements directly to the City. All other costs
and fees for Lessee's Improvements shall be paid by Lessor to the
contractor. Lessee agrees to pay Lessor the amounts required by the
contractor (to the extent those amounts do not exceed the bid price or any
approved changes) within twenty (20) days after receipt from Lessor of
invoices from the contractor.
All Lessees' Improvements shall be and remain the property of Lessee until
termination or expiration of the Lease at which time they shall immediately
become the property of Lessor. Provided, however, if the Lease is terminated by
Lessee pursuant to Section 3.3 hereof, Lessor shall reimburse Lessee the amounts
paid by Lessee to Lessor for such Improvements to the extent Lessor is benefited
by such Improvements.
6. USE AND QUIET ENJOYMENT
6.1 The Lessee may use and occupy the leased premises for manufacturing
storage, general office, and any other lawful purpose reasonably related thereto
except that Lessee shall not use or occupy nor permit the leased premises or any
part thereof to be used or occupied for any unlawful business, use, or purpose,
nor for any business, use or purpose deemed disreputable or extra-hazardous, nor
for any purpose or in any manner which is in violation of any present or future
governmental laws or regulations. Any extra hazardous use, to which Lessee
wishes to engage in, must be consented to by Lessor in writing.
6.2 The Lessee, upon payment of the rent herein reserved and upon the
performance of all its obligations under this Lease, shall at all times during
the Lease term and during any extension or renewal term peaceably hold and
quietly enjoy the leased premises without interruption by the Lessor, any
mortgagee, or any other person, firm or corporation claiming under either of
them.
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7. UTILITIES
Lessee shall pay for all water, gas, heat, light, power, telephone service
and all other services to the leased premises.
8. INSURANCE AND INDEMNITY
8.1 LIABILITY INSURANCE - Lessee shall, during the entire term here of at
its expense obtain and keep in full force and effect a policy of Combined Single
Limit, Bodily Injury and Property Damage Insurance with respect to the leased
premises, the sidewalks in front of the leased premises, and the business
operated by Lessee and any subtenants of Lessee in the leased premises in which
the limits of public liability shall be not less than $1,000,000.00 per
occurrence. The policy shall contain cross liability endorsements and shall
insure performance by Lessee of the indemnity provisions of this Section B. The
policy shall name Lessee as insured and Lessor, any person, firms or
corporations designated by Lessor as an additional insured, and shall contain a
clause that the insurer will not cancel or change the insurance without first
giving the Lessor thirty (30) days prior written notice. The insurance shall in
an insurance company approved by Lessor and a copy of the policy or a
certificate of insurance shall be delivered to Lessor. Not more frequently than
each 3 years, if, in the reasonable opinion of Lessor, the amount of liability
insurance required hereunder is inadequate, Lessee shall increase said insurance
coverage as required by Lessor. If Lessee installs and uses a boiler and the
leased premises, it shall obtain boiler broad form insurance in a reasonable
amount in the name of Lessor and Lessee.
8.2 PROPERTY INSURANCE - Lessee shall obtain and keep in force during the
term of this Lease a policy or policies of insurance covering loss or damage to
the leased premises, in the amount equal to the actual replacement cost of the
insurable portion of the leased premises at the time of loss, against all perils
included within the classification of fire, extended coverage vandalism
malicious mischief, special extended perils (all risk) and sprinkler leakage.
Said insurance shall provide for payment of loss thereunder to Lessor or to the
holder of a first mortgage or deed of trust encumbering Lessor's interest in
the leased premises or any portion thereof. If Lessee shall fail to procure and
maintain said insurance Lessor may, but shall not be required top procure and
maintain the same, but at the expense of Lessee; bills for above premiums shall
be rendered by Lessor to Lessee, and shall be due from, and payable by Lessee
when rendered, and the amount thereof shall be deemed to be, and be paid as,
additional rent.
8.3 BLANKET POLICY OF INSURANCE - Notwithstanding anything to the contrary
contained herein, Lessee's obligation to carry the insurance provided for in
this Section 8 may be brought within the coverage of a so called blanket policy
or policies of insurance carried and maintained by Lessee.
8.4 INDEMNIFICATION OF LESSOR - Lessee will indemnify Lessor and save it
harmless from and against any and all claims, actions, damages, liability, and
expense in connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the leased
premises, or the occupancy or use by Lessee of the leased premises or any part
thereof, or occasioned wholly or in part by any act or omission of
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Lessee, its agents, contractors, employees, servants, Lessees or
concessionaires. (However, Lessor shall be liable for its negligent or willful
acts or omissions and those of its agents, contractors, employees and servants.)
In case Lessor shall, without fault on its part, be made a party to any
litigation by reason of the above, then Lessee shall protect and hold Lessor
harmless and shall pay all costs, expenses and reasonable attorney's fees
incurred or paid by Lessor in connection with such litigation. Lessee shall also
pay all costs, expenses and reasonable attorney's fees that may be incurred or
paid by Lessor in enforcing the covenants and agreements in this Lease.
8.5 WAIVER OF SUBROGATION - Lessor and Lessee each hereby waive any and
all rights of recovery against the other, or against the officers, employees,
agents and representatives of the other, for loss of or damage to such
waiving party or its property or the property of others under its control to
the extent that such loss or damage is insured against under any insurance
policy in force at the time of such loss or damages. Lessee shall, upon
obtaining the policies of insurance required hereunder, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation
is contained in this Lease.
9. ALTERATIONS AND IMPROVEMENTS
No alteration, addition or improvement to the leased premises, except
non-structural changes which will cost less than $25,000, shall be made by the
Lessee without the written consent of Lessor, which consent will not be
unreasonably withheld and all such alterations, additions and improvements will
be completed in a lien free manner. All alterations, additions and improvements
by Lessee shall be in compliance with applicable building codes and in
conformance with building plans previously approved by Lessor. Any alteration,
addition, or improvement made by Lessee and any fixtures installed as part
thereof shall become the property of Lessor upon the expiration or other sooner
termination of this Lease.
10. GOVERNMENTAL REGULATIONS
Lessee shall, at Lessee's sole cost and expense, comply with all of the
requirements of all City, County, Municipal, State, Federal and other applicable
governmental authorities, now in force, or which may hereafter be in force,
pertaining to the leased premises, including the installation of additional
facilities as required for the conduct and continuance of occupancy of the
leased premises, and shall faithfully observe in the use of the leased premises
all municipal and county ordinances and state and federal statutes now in force
or which may hereafter be in force.
11. MAINTENANCE AND REPAIR
11.1 LESSEE'S OBLIGATIONS - Lessee shall during the term of this Lease
and any renewal or extension thereof, keep the premises in as good order and
repair as it is at the date of the commencement of this Lease including the
removal of all garbage, refuse, trash and the like at Lessee's expense,
reasonable wear and tear excepted. Lessee shall maintain the grounds of the
leased premises in a neat and orderly fashion, including but not limited to the
parking area, the cutting of grass, the watering of the grass and watering of
trees and shrubs. Lessee shall not
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be obliged to make any repair which is occasioned by defective materials or
defective workmanship in the Lessor's Improvements, and such repairs shall be
made by Lessor at its own expense.
11.2 LESSOR'S OBLIGATIONS - Lessor shall maintain in good working
order and be responsible for the repair of the slab and all structural portions
of the walls (other than Lessee Improvement walls), and roof and glazing
problems caused by structural defects. Lessor shall also be responsible for
keeping, maintaining, and repairing any leaks in the roof for a period of two
years after the commencement of this Lease. Lessor shall not be responsible for
repair of any of the above mentioned items for damage caused by Lessee, in which
case, Lessee shall be responsible for such repairs. Lessee agrees to replace all
glass hereafter broken on said leased premises during the term hereof not
covered by Lessor's obligation hereunder.
12. SURRENDER UPON TERMINATION
Lessee shall on the last day of: the term, or upon the sooner termination
of the term, peaceably and quietly surrender the leased premises to the Lessor
including all alterations, replacements, changes or additions placed by the
Lessee thereon, in as good condition and repair as at the commencement, of the
term, and as any new structures, replacements, additions, or improvements
constructed, erected, added or placed thereon by Lessee are when completed, with
the natural wear and tear thereof excepted. Lessee shall also, upon termination
or expiration of this Lease, remove all personal property located upon the
leased premises belonging to Lessee or being kept thereat by Lessee. Unless
other arrangements are made with Lessor, any personal property remaining on the
leased premises subsequent to the expiration of the Lease term may be removed by
Lessor and stored by Lessor at Lessee's expense.
13. AUCTIONS AND SIGNS
13.1 Lessee shall not conduct, or permit to be conducted any sale by
auction on the leased premises. Lessee shall not display nor direct any
lettering, signs, advertisement, awning, or any other projection in or on the
leased premises or in or on the building of which forms a part without the prior
written consent of Lessor, which consent shall not be unreasonably withheld.
14. LESSOR RIGHT OF ACCESS
Lessor or its agent shall have the right to enter the leased premises at
reasonable times in order to examine it, to show it to prospective purchasers or
Lessees, or to make such decorations, repairs, alterations, improvements or
additions as the Lessor may deem necessary to desirable. Lessor shall be allowed
to take all material into and upon the leased premises that may be required
therefor without the same constituting an eviction of the Lessee in whole or in
part. The rent reserved shall not abate while decorations, repairs, alterations,
improvements or additions are being made whether by reason of loss or
interruption of the business of the Lessee or otherwise. Unless Lessee has
exercised its right of extension, Lessee shall permit "For Rent" signs to be put
and remain on said premises, sixty (60) days before the expiration of the
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term of this Lease or any renewal as appropriate, without hindrance or
molestation. Lessor agrees that when entering upon the leased premises for the
purposes set forth in this paragraph, it shall do so at a reasonable time and
shall attempt to do so with the least amount of disruption to Lessee.
15. REAL PROPERTY TAXES
15.1 PAYMENT OF TAXES - Lessee shall pay all real property taxes
applicable to the leased premises during the term of this Lease. All such
payments shall be made prior to the delinquency date of such payment. Lessee
shall promptly furnish Lessor with satisfactory evidence that such taxes have
been paid. If any such taxes paid by Lessee shall cover any period of time prior
to or after the expiration of the term hereof, Lessee's share of such taxes
shall be equitably prorated to cover only the period of time within the tax
fiscal year during which this Lessor shall be in effect, and Lessor shall
promptly repay such amount to Lessee.
15.2 DEFINITION OF "REAL PROPERTY" TAX - As used herein, the term
"real property tax" shall include any form of assessment, license fee,
commercial rental tax, levy, penalty, or tax (other than income, inheritance or
estate taxes) imposed by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district thereof, on any
legal or equitable interest of Lessor in the leased premises or in the real
property of which the leased premises are a part, as against Lessor's right to
rent therefrom, or as against Lessor's business of leasing the leased premises.
15.3 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied on trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the leased premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from
the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within 10 days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
16. ABANDONMENT
Lessee shall not vacate nor abandon the leased premises at any time during
the term of this Lease, nor permit the leased premises to remain unoccupied for
a period longer than ten (10) consecutive days during the term of this Lease;
and if Lessee shall abandon, vacate or surrender the leased premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Lessee and left on the leased premises shall, at the option of the Lessor, be
deemed abandoned.
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17. ASSIGNMENT AND SUBLETTING
CONSENT REQUIRED - Lessee will not assign this Lease in whole or in part,
nor sublet all or any part of the leased premises, without the prior written
consent of Lessor in each instance, which prior written consent Lessor agrees it
will not unreasonably withhold or delay. The consent by Lessor to any
assignment or subletting shall not constitute a waiver of the necessity for such
consent to any subsequent assignment or subletting. This prohibition against
assigning or subletting shall be construed to include a prohibition against any
assignment or subletting by operation of law. If this Lease be assigned, or if
the leased premises or any part thereof be sublet or occupied by anybody other
than Lessee, Lessor may collect rent from the assignee, sublessee or occupant,
and apply the net amount collected to the rent herein reserved, but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of this
covenant, or the acceptance of the assignee, sublessee or occupant as Lessee, or
a release of Lessee from the further performance by Lessee of covenants on the
part of Lessee herein contained. Notwithstanding any assignment or sublease,
Lessee shall remain fully liable on this Lease and shall not be released from
performing any of the terms, covenants and conditions of this Lease. Lessee may
assign this Lease as part of a merger, sale of assets or other corporation
reorganization to a parent subsidiary or successor corporation.
18. DEFAULT OF THE LESSEE
18.1 DEFAULT - The occurrence of any of the following shall constitute
a material default of this Lease by Lessee:
(a) Any failure by Lessee to pay the rent or any other monetary sums
required to be paid hereunder;
(b) The abandonment or vacation of the leased premises by Lessee;
(c) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee where such failure
continues for thirty (30) days after written notice thereof by Lessor to
Lessor provided however, that if the nature of such default is such that
the same cannot reasonably be cured within such thirty (30) day period,
Lessee shall within such period commence such cure and thereafter
diligently prosecute the same to completion;
(d) The making by Lessee of any general assignment or general
arrangement for the benefit of creditors; the filing by or against Lessee
of a petition to have Lessee adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Lessee, the same is dismissed
within sixty (60) days); the appointment of a trustee, or receiver to take
possession of substantially all of Lessee's assets located at the leased
premises or of Lessee's interest in this Lease where possession is not
restored to Lessee within sixty (60) days; or the attachment execution or
other judicial seizure of substantially all of Lessee's assets located at
the leased premises or of Lessee's interest in this Lease, where such
seizure is not discharged within sixty (60) days.
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18.2 REMEDIES IN EVENT OF DEFAULT - In the event of any such material
default by Lessee, Lessor may at any time thereafter, with or without notice and
demand and without limiting Lessor in the exercise of any right or remedy at law
or in equity which Lessor may have by reason of such default or breach:
(a) Maintain this Lease in full force and recover the rent and other
monetary charges as they become due, with the right to sue monthly or
periodically at its election, without terminating the Lessee's right of
possession, irrespective of whether Lessee shall have abandoned the leased
premises. In the event Lessor elects not to terminate the Lease, Lessor
shall have the right to attempt to relet the leased premises at such rent
and upon such conditions and for such a term and to do all acts necessary
to maintain or preserve the leased premises as Lessor deems reasonable and
necessary without being deemed to have elected to terminate the Lease
including removal of all persons and property from the leased premises;
such property may be removed and stored in a public warehouse or elsewhere
at the cost of and for the account off Lessee. In the event any such
releting occurs, this Lease shall terminate automatically upon the new
Lessee taking possession of the leased premises. Notwithstanding that
Lessor, fails to elect to terminate the Lease initially, Lessor at any time
during the term of this Lease may elect to terminate this Lease by virtue
of such previous default of Lessee.
(b) Terminate Lessee's right to possession by any lawful means, in
which case this Lease shall terminate and Lessee shall immediately
surrender possession of the leased premises to Lessor. In such event Lessor
shall be entitled to recover from Lessee all damages incurred by Lessor by
reason of Lessee's default including without limitation thereto, the
following: (i) the worth at the time of award of any unpaid rent which had
been earned at the time of such termination; plus, (ii) the worth at the
time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that is proved by Lessee could have been reasonably avoided;
plus, (iii) the worth at the time of award of the amount, which the unpaid
rent for the balance of the term after the time of award exceeds the amount
of such rental loss that is provided by Lessee could be reasonably avoided;
plus (iv) any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform his obligation
under the Lease or which in the ordinary course of things would be likely
to result therefrom; plus (v) at Lessor's electric, such other amounts in
addition to or in lieu of the foregoing is may be permitted from time to
time by applicable state law. Upon any such reentry, Lessor shall have the
right to make any reasonable repairs, alterations or modifications to the
leased premises, which Lessor in its sole discretion deems reasonable and
necessary. As used in the subparagraphs (i) and (ii) above, the "worth at
the time of award" is computed by allowing interest at the rate of ten
percent (10%) per annum from the date of default. As used in subparagraph
(iii) above, the "worth at the time of award" is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%). The term "rent," as
used in this Section, shall be deemed to be and to mean the rent to be
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paid pursuant to Section 4 and all other monetary sums required to be paid
by Lessee pursuant to the terms of this Lease.
18.3 LEGAL EXPENSE - In case suit shall be brought for enforcement
rights under this Lease, or because of the breach of any other covenant herein
contained, the losing party shall pay to the prevailing party all expenses
incurred therefore, including reasonable attorneys' fees.
19. DESTRUCTION
In the event of (a) a partial or total destruction of the leased premises
or the building containing same during said term which requires repairs to
either the leased premises or said building, or (b) the leased premises or said
building being declared unsafe or unfit for occupancy by any authorized public
authority for any reason other than Lessee's act, use or occupation which
declaration requires repairs to either the leased premises or said building.
Lessor shall forthwith make such repairs, including Lessee's Improvements and
alterations (unless Lessee elects to make such repairs), provided such repairs
can be made within one hundred twenty (120) days under the laws and regulation
or authorized public authorities, but such destruction (including any
destruction necessary in order to make repairs required by any such declaration)
shall in no way annul or void this Lease, except that Lessee shall be entitled
to a proportionate reduction of rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which the damage and
making of such repairs shall interfere with the business carried on by Lessee on
the leased premises; provided that in making such repairs, with regard to
glazing Lessor shall be obligated to replace only such glazing as shall have
been damaged by fire and other damaged glazing shall be replaced by Lessee. In
making such repairs, Lessor shall be entitled to all insurance proceeds from any
policies hereunder, which are applicable to such repairs. Within thirty (30)
days from the date of such destruction if Lessor determines in good faith such
repairs cannot be made within one hundred twenty (120) days, it shall so notify
Lessee in writing and state the estimated number of days for repair. Within
seven (7) days after receipt of Lessor's notice Lessee may terminate the Lease
upon thirty (30) days notice to Lessor if Lessee does not terminate the Lease in
this manner, Lessor shall use its best efforts to make all repairs in the time
set forth in its notice to Lessee. Notwithstanding the above, Lessor shall not
be required to proceed with repairs if there are not sufficient insurance
proceeds to cover such repairs. In such event Lessee shall have the right to (i)
terminate the Lease upon thirty (30) days notice to Lessor, (ii) continue the
Lease without repair, or (iii) to pay for that portion of the repairs not
covered by insurance.
20. SURRENDER OF LEASE NOT MERGER
The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subleases, and/or subtenancies, or may, at
the option of Lessor, operate as an assignment to them of any or all of such
subleases or subtenancies.
21. CONDEMNATION
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If any part of the leased premises shall be taken or condemned for a public
or quasi-public use, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall, as to the part so taken, terminate as of
the date title shall vest in the condemnor, and the rent payable hereunder
shall, be adjusted so that the Lessee shall be required to pay for the remainder
of the term only such portion of such rent as the fair market value of the part
remaining after the condemnation bears to the rental value of the entire leased
premises at the date of condemnation; but in such event Lessor shall have the
option to terminate this Lease as of the date when title to the part so
condemned vests in the condemnor. If all the leased premises or such part
thereof be taken or condemned so that there does not remain a
portion-susceptible for occupation hereunder, this Lease shall thereupon
terminate. If a part or all of the leased premises be taken or condemned, all
compensation awarded upon such condemnation or taking shall go to the Lessor and
the Lessee shall have no claim thereto, and the Lessee hereby irrevocably
assigns and transfers to the Lessor any right to compensation or damages to
which the Lessee may be entitled during the term hereof by reason of the
condemnation of all, or a part of the leased premises. Any dispute between
Lessor and Lessee concerning the provisions of this paragraph shall be submitted
to arbitration in accordance with the rules of the American Arbitration
Association. However, Lessee shall be entitled to any award for its trade
fixtures, relocation expenses, business losses and disruption.
22. GENERAL PROVISIONS
22.1 ESTOPPEL CERTIFICATE
(a) Either party shall at any time upon not less than ten (10) days
prior written notice from the other execute, acknowledge and deliver to the
other a statement in writing (1) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect and the date to which the rent and other charges are paid
in advance, if any, (2) acknowledging that there are not, to such party's
knowledge, any uncured defaults on the part of the other party hereunder,
or specifying such defaults if any are claimed and (3) such other
reasonable matters as may be required by the lender. Any such statement may
be conclusively relied upon by any prospective purchaser or encumbrancer of
the leased premises. The requesting party shall pay the cost of preparation
of such Estoppel certificate including attorneys' fees, but not to exceed
$500.
(b) A party's failure to deliver such statement within such time
shall be conclusive upon such party (1) that this Lease is in full force
and effect, without modification except as may be represented by the other
party (2) that there are no uncured defaults in the other party's
performance, and (3) that not more than one month's rent has been paid in
advance.
22.2 LESSOR'S LIABILITY - The term "Lessor" as used herein shall mean
only the owner or owners at the time in question of the fee title and, except as
expressly herein provided, in the event of any transfer of such title or
interest Lessor herein named (and in case of any
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subsequent transfers the then grantor) shall be relieved from and after the date
of such transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or then grantor at
the time of such transfer, in which Lessee has as interest, shall be delivered
to the grantee. The obligations contained in this Lease to be performed by
Lessor shall, subject as aforesaid, be binding on Lessor's successors and
assigns, only during their respective periods of ownership.
22.3 SEVERABILITY - Any provision of this Lease determined to be invalid by
a court of competent jurisdiction shall in no way affect any other provision
hereof.
22.4 LESSEE'S FINANCIAL STATEMENTS - Within thirty (30) days of
Lessor's request, Lessee shall supply Lessor with the most recent internal
financial statement of Lessee and, at the election of Lessor, of Lessee's parent
corporation. Lessor may not make such a request more often than once per lease
year.
22.5 TIME - Time is of the essence.
22.6 CAPTIONS - Article and paragraph captions are not a part hereof.
22.7 ENTIRE AGREEMENT - This Lease contains all agreements of the
parties with respect to any matter mentioned herein. No prior agreement or
understanding pertaining to any such matter shall be effective. It may be
modified in writing only, signed by the parties in interest at the time of the
modification.
22.8 NOTICES - Any notice required or permitted to be given hereunder
shall be in writing and may be served personally or by certified mail, return
receipt requested, postage prepaid, addressed to Lessor and Lessee respectively
at the addresses set forth after their signatures below. If notice is mailed in
the manner set forth above it shall be deemed delivered forty-eight (48) hours
after deposit in the United States mail. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee's taking
possession of the leased premises, the leased premises and Lessee's address
beneath its signature at the end of this Lease shall both constitute Lessee's
addresses for notice purposes.
22.9 WAIVER - No waiver by Lessor of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provision. Lessor's consent to or approval of
any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee.
22.10 RECORDING - The parties shall concurrently with execution hereof,
record a short form memorandum of this Lease in the Official Records of the
Recorder's Office of San Diego County.
22.11 HOLDING OVER - If Lessee remains in possession of the leased
premises or any part thereof after the expiration of the term hereof without the
express written consent of Lessor, such occupancy shall be a tenancy from
month-to-month at a rental in amount of one
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hundred ten percent (110%) of the last monthly rental plus all other charges
payable hereunder, and upon all the terms hereof applicable to a month-to-month
tenancy.
22.12 CUMULATIVE REMEDIES - No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or equity.
22.13 COVENANTS AND CONDITIONS - Each provision of this Lease
performable by Lessee shall be deemed both a covenant and a condition.
22.14 BINDING EFFECT - Subject to any provisions hereof restricting
assignment or subletting by Lessee, this Lease shall bind the parties, their
personal representatives, successors and assigns; it shall be governed by the
laws of the State of California.
22.15 SUBORDINATION - This Lease, except for Sections 23 and 24f at
Lessor's option, shall be subordinate to any ground lease, mortgage, deed of
trust or any other hypothecation for security now or hereafter placed upon the
real property of which the leased premises are a part and to any and all
advances made on the security, thereof and to all renewals, modifications,
consolidations, replacements and extensions, thereof. Notwithstanding such
subordination, Lessee's right to quiet possession of the leased premises shall
not be disturbed if Lessee is not in default and so long as Lessee shall pay the
rent and observe and perform all of the provisions of this Lease, unless this
Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee
or ground Lessor shall elect to have this Lease prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice thereof
to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust, or
ground lease, whether this Lease is dated prior or subsequent to the date of
said mortgage, deed of trust or ground lease or the date of recording thereof.
Lessee agrees to execute any documents not inconsistent with this Lease
required to effectuate such subordination or to make this Lease prior to the
lien of any ground lease, mortgage or deed of trust, as the case may be, within
ten (10) days after written demand. Provided, any such document reflects the
fact that Lessee may continue its right of quiet possession in the leased
premises in the event of any foreclosure if it attorns to the purchaser at any
foreclosure sale.
22.16 FORCE MAJEURE - Any prevention, delay or stoppage due to enemy or
hostile governmental action, civil commotion, fire or other casualty, other
similar acts of God, or extraordinary material shortages, which are-beyond the
reasonable control of the party obligated to perform, or which are caused by the
acts of the other party or the failure of the other party to fulfill its
obligations under this Lease, shall excuse the performance by such party for a
period equal to any such prevention, delay or stoppage.
22.17 NO OPTION - The submission of this Lease for examination does not
constitute a reservation of or option for the leased premises and this Lease
becomes effective as a Lease only upon execution and delivery thereof by Lessor
and Lessee.
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22.18 COVENANT AND WARRANTY OF PRIOR USE - Lessor hereby covenants,
represents and warrants to Lessee that to Lessor's knowledge the leased premises
have been raw acreage and not used in any other manner, and will not be used in
any other manner, prior to the commencement of the Lease. Specifically, Lessor
represents and warrants that it has no knowledge of any toxic waste or other
dumping that has taken place on the leased premises.
23. OPTION TO PURCHASE
Lessor hereby grants to Lessee an option to purchase the leased premises on
or before July 31, 1984 for a purchase price and on terms and conditions
mutually agreeable between the parties. Lessee may exercise this option by
delivering notice of such exercise to Lessor on or before July 1, 1984. Within
thirty (30) days after receipt of said notice, the parties agree to negotiate in
good faith to attempt to establish the price, terms and conditions of the sale
of the leased premises from Lessor to Lessee. The parties agree and acknowledge
that the covenants set forth in this Section 24 are independent of those set
forth elsewhere in the Lease. In the event, the provisions of this Section 24
are held to be invalid or unenforceable for any reason, it shall in no way
affect any other provision of this Lease.
24. RIGHT OF FIRST REFUSAL
If Lessor desires to exchange, sell, ground lease, option or otherwise
transfer excluding encumbrances, ("Transfer") or agree to Transfer all or any
part of the leased premises, Lessor shall first notify Lessee in writing of the
price and/or terms on which Lessor will Transfer. If Lessee, within thirty (30)
days after Lessor's notice has been delivered indicates in writing its agreement
to acquire the leased premises, on the terms stated in Lessor's notice, Lessor
shall Transfer the leased premises to for the price and/or on the terms stated
in Lessor's notice, except that in the event of an exchange Lessee may elect to
pay Lessor the equity value of Lessor's property rather than exchange for "like
kind" property; provided that Lessee will reasonably cooperate with Lessor in
any exchange if it is at no added cost or expense to Lessee. If Lessee does not
indicate its agreement in writing within said thirty (30) days; Lessor shall
have the right to transfer the leased premises to any purchaser, tenant or
optionee on the-same terms as stated in the notice in the event of a proposed
Transfer of the property, if Lessor does not enter into a binding contract and
escrow to Transfer within six (6) months from the date Lessor's notice is
delivered to Lessee, or in any event, if Lessor does not actually Transfer the
property within nine (9) months after Lessor's notice is delivered to Lessee any
further transaction shall be deemed a new determination by Lessor to Transfer
the leased premises and the provisions of this right of first refusal shall be
applicable. If Lessor receives an offer with respect to a Transfer of the leased
premises within said six (6) month period which is on price or financial terms
different from those set forth in Lessor's notice to Lessee, before accepting
such offer Lessor shall first notify Lessee in writing of the terms of the
offer. If Lessee, within fifteen (15) days after Lessor's notice of such
different terms has been delivered, indicates in writing its agreement to accept
the Transfer of the leased premises, Lessor shall Transfer the leased premises
to Lessee for the price and on the terms stated in the notice. If Lessee does
not indicate its agreement within said fifteen (15) days, Lessor shall have the
right
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to Transfer the leased premises to the purchaser on the terms of the notice
provided such Transfer is completed within the nine (9) month period mentioned
above.
IN WITNESS WHEREOF, Lessor and Lessee each by its duly authorized officer
have signed and sealed this Lease as of the day and year first above written.
LESSOR:
Carroll Ridge Park, a Partnership
10510 Sorrento Valley Road, Ste. 301 San Diego,
California 92121
By: H W Building Co.
By:/s/Neal Hooberman
--------------------------------------------
Neal Hooberman, President
LESSEE
Elgar Corporation, a California Corporation
8225 Mercury Court
San Diego, California 92111
By:/s/
--------------------------------------------
Its:
By:/s/
--------------------------------------------
Its:
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