STANDARD INDUSTRIAL LEASE -- GROSS
-- AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. PARTIES. This Lease, dated for reference purposes only, June 4, 1998, is
made by and between LeRoy Hart Rentals (herein called "Lessor") and Direct
Focus, Inc. (herein called "Lessee").
2. PREMISES. Lessor hereby Leases to Lessee and Lessee Leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
that certain real property situated in the County of Clark State of
Washington, commonly know as a portion of 2650 NE Andresen Road, Vancouver,
WA 98661 and described as approximately 28,500 SF warehouse (see attached
Exhibit C). Said real property including the land and all improvements
therein, is herein called "the Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for twenty four (24) months
commencing on July 1, 1998 and ending on June 30, 2000 unless sooner
terminated pursuant to any provision hereof.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent until possession of the Premises is tendered to Lessee;
provided, however, that if Lessor shall not have delivered possession of the
Premises within (60) days from said commencement date, Lessee may, at
Lessee's option, by notice in writing to Lessor within ten (10) days thereafter
within sixty (60) days from said commencement be discharged from all
obligations hereunder; provided further, however, that is
such written notice of Lessee is not received by Lessor within said ten (10)
day period, Lessee's right to cancel this Lease hereunder shall terminate and
be of no further force or effect.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay
rent for such period at the initial monthly rates set forth below.
4. RENT. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of (SEE PARAGRAPH 52, RENT SCHEDULE), in advance, on the first day
of each month of the term hereof. Lessee shall pay Lessor upon the execution
hereof (SEE PARAGRAPH 52, RENT SCHEDULE) as rent for (SEE PARAGRAPH 52, RENT
SCHEDULE) Rent for any period during the term hereof which is for less than
one month shall be a pro rata portion of the monthly installment. Rent shall
be payable in lawful money of the United States to Lessor at the address
stated herein or to such other persons or at such other places as Lessor may
designate in writing.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof $7,590.00 + $3,240.00 (previously paid) for a total of $10,830.00 as
security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may use, apply
or retain all or any portion of said deposit for the payment of any rent or
other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor
for any loss or damage which Lessor may suffer thereby. If Lessor so uses or
applies all or any portion of said deposit, Lessee shall within ten (10) days
after written demand therefor deposit cash with Lessor in an amount
sufficient to restore said deposit to the full amount therein above stated
and Lessee's failure to do so shall be a material breach of the Lease. If the
monthly rent shall, from time to time, increase during the term of this
Lease, Lessee shall thereupon deposit with Lessor additional security deposit
so that the amount of security deposit held by Lessor shall at all times bear
the same proportion to current rent as the original security deposit so that
the amount of security deposit held by Lessor shall at all times bear the same
proportion to current rent as the original security deposit bears to the
original monthly rent set forth in Paragraph 4 hereof. Lessor shall not be
required to keep said deposit separate from its general accounts. If Lessee
performs all of Lessee's obligations hereunder, said deposit, or so much
thereof as has not theretofore been applied by Lessor shall be returned,
without payment of interest or other increment for its use to Lessee (or, at
Lessor's option, to the last assignee, if any, of Lessee's interest
hereunder) at the expiration of the term thereof, and after Lessee has
vacated the Premises. No trust relationship is created herein between Lessor
and Lessee with respect to said Security Deposit.
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6. USE.
6.1 USE. The Premises shall be used and occupied only for assembly,
testing, warehousing and distribution of Tenant's products or any other use
which is reasonably comparable and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to the
use for which Lessee will use the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or
ordinance in effect on such Lease term commencement date. In the event it is
determined that this warranty has been violated, then it shall be the
obligation of the Lessor, after written notice from Lessee, to promptly, at
Lessor's sole cost and expense, rectify and such violation. In the event
Lessee does not give to Lessor written notice of the violation of this
warranty within six months from the date that the Lease term commences, the
correction of same shall be the obligation of the Lessee at Lessee's sole
cost. The warranty contained in this Paragraph 6.2 (a) shall be of no force
or effect if, prior to the date of this Lease, Lessee was the owner or
occupant of the Premises, and, in such event, Lessee shall correct any such
violation at Lessee's sole cost.
(b) Except as provided in Paragraph 6.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises, Lessee shall not use nor permit
the use of the Premises in any manner that will tend to create waste or a
nuisance or, if there shall be more than one tenant in the building
containing the Premises, shall tend to disturb such other tenants.
(c)
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession)
and Lessor further warrants to Lessee that the plumbing, lighting, air
conditioning, heating, and loading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the event that it is
determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting
forth with specificity the nature of the violation, to promptly, at Lessor's
sole cost, rectify such violation. Lessee's failure to give such written
notice to Lessor within thirty (30) days after the Lease commencement date
shall cause the conclusive presumption that Lessor has complied with all of
Lessor's obligations hereunder. The warranty contained in this Paragraph
6.3(a) shall be of no force or effect if prior to the date of this Lease,
Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease commencement
date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises,
and any covenants or restrictions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Lessee acknowledges that either Lessor nor Lessor's agent has made
any representation or warranty as to the present or future suitability of the
Premises for the conduct of Lessee's business.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1. LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 6,
7.2 and 9 and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's agents, employees, or invitees in which event
Lessee shall repair the damage. Lessor, at Lessor's expense, shall keep in
good order, condition and repair the foundations, exterior walls and the
exterior roof of the Premises. Lessor shall not, however, be obligated to
paint such exterior, nor shall Lessor be required to maintain the interior
surface of exterior walls, windows, doors or plate glass. Lessor shall have
no obligation to make repairs under this Paragraph 7.1 until a reasonable
time after receipt of written notice of the need for such repairs. Lessee
expressly waives the benefits of any statute now or hereafter in effect which
would otherwise afford Lessee the right to make repairs at Lessor's expense
or to terminate this Lease because of Lessor's failure to keep the Premises
in good order, condition and repair.
7.2 (a) Subject to the provisions of Paragraphs 6, 78.1 and 9.
Lessor, at Lessor's expense shall keep in good order, condition and repair
the Premises and every part thereof (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily
accessible to Lessee) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, (Lessee shall procure and
maintain, at Lessor's expense, an air conditioning system maintenance
contract) ventilating, electrical and lighting facilities and equipment within
the Premises, fixtures, interior walls and interior surface of exterior
walls, ceilings, windows, doors, plate glass, and
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skylights, located within the Premises, and all landscaping, driveways,
parking lots, fences and signs located in the Premises and all sidewalks and
parkways adjacent to the Premises.
(c) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of its trade fixtures, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this Lease.
Lessee shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, space heater, air conditioning, plumbing and
fencing on the Premises in good operating conditions.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, or Utility Installations in, on or
about the Premises, except for nonstructural alterations not exceeding
$2,500.00 in cumulative costs during the term of this Lease. In any event,
whether or not in excess of $2,500.00 in cumulative cost, Lessee shall make
no change or alteration to the exterior of the Premise nor the exterior of
the building(s) on the Premises without Lessor's prior written consent. As
used in this Paragraph 7.3 the term "Utility Installation" shall mean
carpeting, window coverings, air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing and
fencing. Lessor may require that Lessee remove any or all of said
alterations, improvements, additions or Utility Installations at the
expiration of the term, and restore the Premises to their prior condition.
Lessor may require Lessee to provide Lessor, at Lessee's sole cost and
expense, a lien and completion bond in a amount equal to one and one-half
times the estimated cost of such improvements, to insure Lessor against any
liability for mechanic's and materialmen's liens and to insure completion of
the work. Should Lessee make any alterations, improvements, additions or
Utility Installations without the prior approval of Lessor, Lessor may
require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to make and
which requires the consent of the Lessor shall be presented to Lessor in
written form, with proposed detailed plans. If Lessor shall give its consent,
the consent shall be deemed conditioned upon Lessee acquiring a permit to do
so from appropriate governmental agencies, the furnishing of a copy thereof to
Lessor prior to the commencement of the work and the compliance by Lessee of
all conditions of said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of
any work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall,
in good faith, contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend itself and Lessor against the same
and shall pay and satisfy any such adverse judgement that may be rendered
thereon before the enforcement thereof against the Lessor or the Premises,
upon the condition that if Lessor shall require, Lessee shall furnish to
Lessor a surety bond satisfactory to Lessor in an amount equal to such
contested lien claim or demand indemnifying Lessor against liability for the
same and holding the Premises free from the effect of such lien or claim. In
addition, Lessor may require Lessee to pay Lessor's attorneys fees and costs
in participating in such action if Lessor shall decide it is to its best
interest to do so.
(d) Unless Lessor requires their removal, as set forth in
Paragraph 7.3(a), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may; be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at
the expiration of the term. Notwithstanding the provisions of this Paragraph
7.3(d), Lessee's machinery and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2(c).
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8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE -- LESSEE. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Combined
Single Limit Bodily Injury and Property Damage Insurance insuring Lessee and
Lessor against any liability arising out of the use, occupancy or maintenance
of the Premises and all other areas appurtenant thereto. Such insurance shall
be in an amount not less than $500,000.00 per occurrence. The policy shall
insure performance by Lessee of the indemnity provisions of the Paragraph 8.
The limits of said insurance shall not, however, limit the liability of
Lessee hereunder.
8.2 LIABILITY INSURANCE -- LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Property Damage Insurance, insuring Lessor, but not Lessee, against any
liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto in an amount not less than
$500,000.00 per occurrence.
8.3 PROPERTY INSURANCE. Lessor shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or
damage to the Premises, but not Lessee's fixtures, equipment or tenant
improvements in an amount not to exceed the full replacement value thereof,
as the same may exist from time to time, providing protection against all
perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, flood (in the event same is required by a
lender having a lien on the Premises) special extended perils ("all risk", as
such term is used in the insurance industry) but not plate glass insurance.
In addition, the Lessor shall obtain and keep in force, during the term of
this Lease, a policy of rental value insurance covering a period of one year,
with loss payable to Lessor, which insurance shall also cover all real estate
taxes and insurance costs for said period.
8.4 PAYMENT OF PREMIUM INCREASE.
(c) If the Premises are part of a larger building, then Lessee
shall not be responsible for paying any increase in the property insurance
premium caused by the acts or omissions of any other tenant of the building
of which the Premises are a part.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus or
such other rating as may be required by a lender having a lien of the
Premises, as set forth in the most current issue of "Best's Insurance Guide".
Lessee shall deliver to Lessor copies of policies of liability insurance
required under Paragraph 8.1 or certificates evidencing the existence and
amounts of such insurance. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals or
"binders" thereof, or Lessor may order such insurance and charge the cost
thereof to Lessee, which amount shall be payable by Lessee upon demand.
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in Paragraph 8.3.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for loss or damage arising out of or incident to the perils insured against
under Paragraph 8.3, which perils
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occur in, on or about the Premises, whether due to the negligence of Lessor
or Lessee or their agents, employees contractors and/or invitees. Lessee and
Lessor 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.
8.7 INDEMNITY. Lessee shall indemnify and hold harmless Lessor from
and against any and all claims arising from Lessee's use of the Premises, or
from the conduct of Lessee's business or from any activity, work or things
done, permitted or suffered by Lessee in or about the Premises or elsewhere
and shall further indemnify and hold harmless Lessor from and against any and
all claims arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any negligence of the Lessee, or any of Lessee's agents,
contractors, or employees, and from and against all costs, attorney's fees,
expenses and liabilities incurred in the defense of any such claim or any
action or proceeding brought thereon; and in case any action or proceeding be
brought against Lessor by reason of any such claim, Lessee upon notice from
Lessor shall defend the same at Lessee's expense by counsel satisfactory to
Lessor. Lessee, as a material part of the consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons, in, upon or about
the Premises arising from any cause and Lessee hereby waives all claims in
respect thereof against Lessor.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's Business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other
person in or about the Premises, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part or from other sources or places and
regardless or whether the cause of such damage or Injury of the means of
repairing the same is inaccessible to Lessee. Lessor shall not be liable for
any damages arising from any act or neglect of any other tenant, if any, of
the building in which the Premises are located.
9. DAMAGE OF DESTRUCTION.
9.1 DEFINITIONS:
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less
than 50% of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Partial Damage" shall herein mean
damage or destruction to the building of which the Premises are a part to the
extent that the cost of repair, is less than 50% of the fair market value of
such building as a whole immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50%
or more of the fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Total Destruction" shall herein
mean damage or destruction to the building of which the Premises are a part
to the extent that the cost of repair is 50% or more of the fair market value
of such building as a whole immediately prior to such damage or destruction.
(c) "Insured Loss" shall herein mean damage or destruction which
was caused by an event required to be covered by the insurance described in
Paragraph 8.
9.2 PARTIAL DAMAGE - INSURED LOSS. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of the Lease
there is damage which is not an insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, then Lessor shall, at Lessor's sole cost, repair such damage, but not
Lessee's fixtures, equipment or tenant improvements, as soon as reasonably
possible and this Lease shall continue in full force and effect.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is not an insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee (in which event
Lessee shall make the repairs at Lessee's expense), Lessor may at Lessor's
option either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
the date of the occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, as of the date of the occurrence of such damage. In the
event Lessor elects to give such notice of Lessor's intention to
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cancel and terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.4 TOTAL DESTRUCTION. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction
required by any authorized public authority), which falls into the
classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of such
total destruction.
9.5 DAMAGE NEAR END OF TERM.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option
cancel and terminate this Lease as of the date of occurrence of such damage by
giving written notice to Lessee of Lessor's election to do so within 30 days
after the date of occurrence of such damage.
(b) Notwithstanding Paragraph 9.5(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than 20 days after the
occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If
Lessee duly exercises such option during said 20 day period, Lessor shall, at
Lessor's expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise
such option during said 20 day period, then Lessor may at Lessor's option
terminate and cancel this Lease as of the expiration of said 20 day period
by giving written notice to Lessee of Lessor's election to do so within 10
days after the expiration of said 20 day period, notwithstanding any term or
provision in the grant of option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraphs 9.2 or 9.3,
and Lessor or Lessee repairs or restores the Premises pursuant to the
provisions of this Paragraph 9, the rent payable hereunder for the period
during which such damage, repair or restoration continues shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired.
Except for abatement of rent, if any, Lessee shall have no claim against
Lessor for any damage suffered by reason of any such damage, destruction,
repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence such
repair or restoration within 90 days after such obligations shall accrue,
Lessee may at Lessee's option cancel and terminate this Lease by giving
Lessor written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice.
9.7 TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
9.8 WAIVER. Lessor and Lessee waive the provisions of any statutes
which relate to termination of Leases when Leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAX INCREASE. Lessor shall pay the real property tax,
as defined in Paragraph 10.3, applicable to the Premises.
10.2 ADDITIONAL IMPROVEMENTS. Notwithstanding Paragraph 10.1 hereof,
Lessee shall pay to Lessor upon demand therefor the entirety of any increase
in real property tax if assessed solely by reason of additional improvements
placed upon the Premises by Lessee or at Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or
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extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed on the Premises by any authority having the direct or indirect power
to tax, including any city, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Premises
or in the real property of which the Premises are a part, as against Lessor's
right to rent or other income therefrom, and as against Lessor's business of
leasing the Premises. The term "real property tax" shall also include any
tax, fee, levy, assessment or charge (i) in substitution of, partially or
totally, any tax, fee, levy, assessment or charge hereinabove included within
the definition of "real property tax" or (ii) the nature of which was
hereinbefore included within the definition of "real property tax," or (iii)
which is imposed as a service or right not charged prior to June 1, 1978, or
if previously charged, has been increased since June 1, 1978, or (iv) which
is imposed as a result of a transfer, either partial or total, of Lessor's
interest in the Premises or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such
transfer, or (v) which is imposed by reason of the transaction, any
modifications or changes hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained the 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) I 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.
11. UTILITIES. Lessor shall pay for all water, gas, heat, light, power, and
other utilities and services supplied to the Premises, together with any
taxes thereon. Lessee shall pay for trash removal and telephone, and
separately metered electrical service.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance
or subletting without such consent shall be void, and shall constitute a
breach of this Lease.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of Paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Lessee under this Lease. Any such
assignment shall not, in any way, affect or limit the liability of Lessee
under the terms of this Lease even if after such assignment or subletting the
terms of this Lease are materially changed or altered without the consent of
Lessee, the consent of whom shall not be necessary.
12.3 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed to be a waiver by Lessor of
any provision hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Lessee or any successor of Lessee, in the
performance of any of the terms hereof, Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee.
Lessor may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of
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Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining is or their consent thereto and such action shall not relieve
Lessee of liability under this Lease.
12.4 ATTORNEY'S FEES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith, such attorneys fees not to exceed $350.00 for each such
request.
13. DEFAULTS; REMEDIES.
13.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed
by Lessee, other than described in Paragraph (b) above, where such failure
shall continue for a period of 30 days after written notice thereof from
Lessor to Lessee; provided, however, that if the nature of Lessee's default
is such that more than 30 days are reasonably required for its cure, then
Lessee shall not be deemed to be in default if Lessee commenced such cure
within said 30-day period and thereafter diligently prosecutes such cure to
completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets to located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within
30 days. Provided, however, in the event that any provision of the Paragraph
13.1(d) is contrary to any applicable law, such provision shall be of no
force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee or Lessee, any subtenant of Lessee, and
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand
and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises by any lawful means, in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the 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, but not limited to, the cost of recovering possession of
the Premises; expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorney's fees, and any real estate
commission actually paid; the worth at the time of award by the court having
jurisdiction thereof of the amount by which the unpaid rent for the balance
of the term after the time of such award exceeds the amount of such rental
loss for the same period that Lessee proves could be reasonably avoided; that
portion of the leasing commission paid by Lessor pursuant to Paragraph 15
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which chase this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent
as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid
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installments of rent and other unpaid monetary obligation of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time but
in no event later than thirty 930) days after written notice by Lessee to
Lessor and to the Holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to
Lessee in writing, specifying wherein Lessor has failed to perform such
obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty 930) days are required for performance then Lessor
shall not be in default if Lessor commences performance within such 30-day
period and thereafter diligently prosecutes the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur cost s not contemplated by this Lease, the exact amount of which will
be extremely difficult to ascertain. Such costs include but are not limited
to, processing and accounting charges, and late charges which may be imposed
on Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default with respect to such overdue amount,
nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of rent,
then rent shall automatically become due and payable quarterly in advance,
rather than monthly, notwithstanding Paragraph 4 or any other provision of
this Lease to the contrary.
13.5 IMPOUNDS. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease. Lessee shall pay
to Lessor, if Lessor shall so request, in addition to any other payments
required under this Lease, a monthly advance installment, payable at the same
time as the monthly rent, as estimated by Lessor, for real property tax and
insurance expenses on the Premises which are payable by Lessee under the
terms of this Lease. Such fund shall be established to insure payment when
due, before delinquency, of any or all such real property taxes and insurance
premiums. If the amounts paid to Lessor by Lessee under the provisions of this
Paragraph are insufficient to discharge the obligations of Lessee to pay such
real property taxes and insurance premiums as the same become due, Lessee
shall pay to Lessor, upon Lessor's demand, such additional sums necessary to
pay such obligations. All moneys paid to Lessor under this Paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In the
event of a default in the obligations of Lessee to perform under this Lease,
then any balance remaining from funds paid to Lessor under the provisions of
this Paragraph may, at the option of Lessor, be applied to the payment of any
monetary default of Lessee in lieu of being applied to the payment of real
property tax and insurance premiums.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said
power (all of which are herein called "condemnation", this Lease shall
terminate as to the part so taken as of the date the condemning authority
take title or possession, whichever first occurs. If more than 10% of the
floor area of the building on the Premises, or more than 25% of the land area
of the Premises which is not occupied by any building, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in writing only
within ten (10) days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the rent shall be reduced in the proportion that the floor area
of the building taken bears to the total floor area of the building situated
on the Premises. No reduction of rent shall occur if the only area taken is
that which does not have a building located thereon. Any award for the taking
of all or any part of the Premises under the power of eminent domain or any
payment made under threat of the exercise of such power shall be the property
of Lessor, whether such award shall be made as compensation for diminution in
value of the Leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any award for loss of or
damage to Lessee's trade fixtures and removable personal property. In the
event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of severance damages received by Lessor in
connection with such condemnation, repair any damage to the Premises caused
by such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess
of such severance damages required to complete such repair.
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15. BROKER'S FEE.
(a) Upon execution of this Lease by both parties, Lessor shall pay to
William Connolly of Eric Fuller & Associates, Inc. Licensed real estate
broker(s), a fee as set forth in a separate agreement between Lessor and said
broker(s), or in the event there is no separate agreement between Lessor and
said broker(s), the sum of per separate agreement, for brokerage services
rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as
defined in Paragraph 39.1 of this Lease, which is granted to Lessee under
this Lease, or any subsequently granted option which is substantially similar
to an Option granted to Lessee under this Lease, or if Lessee acquires any
rights to the Premises or other Premises described in this Lease which are
substantially similar to what Lessee would have acquired had an Option herein
granted to Lessee been exercised, or if Lessee remains in possession of the
Premises after the expiration of the term of this Lease after having failed
to exercise an Option, or if said broker(s) are the procuring cause of any
other Lease or sale entered into between the parties pertaining to the
Premises and/or any adjacent property in which Lessor has an interest, then
as to any of said transactions, Lessor shall pay said broker(s) a fee in
accordance with the schedule of said broker(s) in effect at the time of
execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but
also on behalf of any person, corporation, association, or other entity
having an ownership interest in said real property or any part thereof, when
such fee is due hereunder. Any transferee of Lessor's interest in this Lease
whether such transfer is by agreement or by operation of law, shall be deemed
to have assumed Lessor's obligation under this Paragraph 15. Said broker
shall be a third party beneficiary of the provisions of this Paragraph 15.
16. ESTOPPEL CERTIFICATE.
(a) Lessee shall at any time upon not less than ten (10) days prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) 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
and (ii) acknowledging that there are not, to Lessee's knowledge any uncured
defaults on the part of Lessor hereunder, or specifying such defaults if any
are claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premise.
(b) At Lessor's option, Lessee's failure to deliver such statement
within such time shall be a material breach of this Lease or shall be
conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor (ii) that there
are no uncured defaults in Lessor's performance, and (iii) that not more than
one month's rent has been paid in advance or such failure may be considered
by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee hereby agrees to deliver to any tender or purchaser
designated by Lessor such financial statement of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three year's financial statements of Lessee. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and
shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a Lessee's
interest in a ground Lease of the Premises, and except as expressly provided
in Paragraph 15, in the event of any transfer of such title or interest,
Lessor herein named and in case of any subsequent transfers then the 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 the then grantor at the time of such
transfer, in which Lessee has an 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.
18. SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law from the date due. Payment of such interest shall
not excuse or cure any default by Lessee under this Lease, provided, however,
that interest shall not be payable on late charges incurred by Lessee nor on
any amounts upon which late charges are paid by Lessee.
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20. TIME OF ESSENCE. Time is of the essence.
21. ADDITIONAL RENT. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No
prior agreements of understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification. Except as otherwise stated in
this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in Paragraph 15 hereof nor any cooperating broker on this transaction
nor the Lessor or any employees or agents of any of said persons has made any
oral or written warranties or representations to Lessee relative to the
condition or use by Lessee of said Premises and Lessee acknowledges that
Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability of the Premises and the compliance
thereof with all applicable laws and regulations in effect during the term of
this Lease except as otherwise specifically stated in this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and
if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or the Lessor at the address noted below the signature of
the respective parties, as the case may be. Either party may by notice to the
other specify a different address for notice purposes except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice purposes. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. WAIVERS. No waiver by Lessor or 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. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee
of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of
this Lease for recording purposes.
26. HOLDING OVER. <#>If Lessee, with Lessor's consent, remains in
possession of the Premises or any part thereof after the expiration of the
term hereof, such occupancy shall be a tenancy from month to month upon all
the provisions of this Lease pertaining to the obligations of Lessee, but all
options and rights of first refusal, if any, granted under the terms of this
Lease shall be deemed terminated and be of no further effect during said
month to month tenancy.</#> See Paragraph 51. [DELETION INITIALED]
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, whenever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of Paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State wherein the Premises are located.
30. SUBORDINATION.
(a) This Lease, at Lessor's option, shall be subordinate to any ground
Lease, mortgage, deed of trust, or any other hypothecation or security now or
hereafter placed upon the real property of which the 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 quite possession of the
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.
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(b) Lessee agrees to execute any documents required to effectuate
an atternment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground Lease, as the case may be. Lessee's failure
to execute such documents within 10 days after written demand shall
constitute a material default by Lessee hereunder, or at Lessor's option
Lessor shall execute such documents on behalf of Lessee as Lessee's
attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint
Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to
execute such documents in accordance with this Paragraph 30(b).
31. ATTORNEY'S FEES. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
court. The provisions of this Paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
32. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the
same, showing the same to prospective purchasers, lenders, or Lessees, and
making such alterations, repairs, improvements or additions to the Premises
or to the building of which they are a part as Lessor may deem necessary or
desirable. Lessor may at any time place on or about the Premises any ordinary
"For Sale" signs and Lessor may at any time during the last 120 days of the
term hereof place on or about the Premises any ordinary "For Lease" signs,
all without rebate of rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to
the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises without
Lessor's prior written consent except that Lessee shall have the right,
without the prior permission of Lessor to place ordinary and usual for rent
or sublet signs thereon.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36. CONSENTS. Except for Paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party, such consent
shall not be unreasonably withheld.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
39. OPTIONS.
39.1 DEFINITION. As used in this Paragraph the word "options" has the
following meaning: (1) the right or option to extend the term of this Lease
or to renew this Lease or to extend or renew any Lease that Lessee has on
other property of Lessor; (2) the option or right of first refusal to Lease
the Premises or the right of first offer to Lease the Premises or the right
of first refusal to Lease other property of Lessor or the right of first
offer to Lease other property of Lessor; (3) the right or option to purchase
the Premises, or the right of first refusal to purchase the Premises, or the
right of first offer to purchase the Premises or the right or option to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor or the right of first offer to purchase other
property of Lessor.
39.2 OPTIONS PERSONAL. Each option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate
as defined in Paragraph 12.2 of this Lease. The Options herein granted to
Lessee are not assignable separate and apart from this Lease.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised
unless the prior option to extend or renew this Lease has been so exercised.
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39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i)
during the time commencing from the date Lessor gives to Lessee a notice of
default pursuant to Paragraph 13.1(b) or 13.1(c) and continuing until the
default alleged in said notice of default is cured, or (ii) during the period
of time commencing on the day after a monetary obligation to Lessor is due
from Lessee and unpaid (without any necessity for notice thereof to Lessee)
continuing until the obligation is paid, or (iii) at any time after an event
of default described in Paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any
necessity of Lessor to give notice of such default to Lessee), or (iv) in the
event that Lessor has given to Lessee three or more notices of default under
Paragraph 13.1(b), where a late charge becomes payable under Paragraph 13.4
for each of such defaults, or Paragraph 13.1(c), whether or not the defaults
are cured, during the 12 month period prior to the time that Lessee intends
to exercise the subject Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the
term of this Lease (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of 30 days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails
to commence to cure a default specified in Paragraph 13.10 within 30 days
after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessee commits a default described in Paragraph 13.1(a), 13.1(d) or
13.1(e) (without any necessity of Lessor to give notice of such default to
Lessee), or (iv) Lessor gives to Lessee three or more notices of default
under Paragraph 13.1(b), where a late charge becomes payable under
Paragraph 13.4 for each such default, or paragraph 13.1(c) whether or not the
defaults are cured.
40. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may
make from time to time for the management, safety, care and cleanliness of
the building and grounds, the parking of vehicles and the preservation of
good order therein as well as for the convenience of other occupants and
tenants of the building. The violations of any such rules and regulation
shall be deemed a material breach of this Lease by Lessee.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of Lessee,
its agents and invitees from acts of third parties.
42. EASEMENTS. Lessor reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of parcel maps and restrictions, so
long as such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure
to do so shall constitute a material breach of the Lease.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment, and there shall survive
the right on the part of said party to institute suite for recovery of such
sum. If it shall be adjudged that there was no legal obligation on the part
of said party to pay such sum or any part thereof, said party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
44. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor evidence of such authority satisfactory to
Lessor.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
Standard Industrial Lease -- Gross Page 13 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
46. ADDENDUM. Attached hereto is an addendum or addenda containing
Paragraph 47 through 52 which constitute a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
THIS LEASE HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR APPROVAL. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR
THE TRANSACTION RELATING THERETO. THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
THIS LEASE.
ADDRESSES FOR NOTICES AND RENT
LESSOR LESSEE
- ------ ------
Hart Enterprises Direct Focus, Inc.
211 E. McLoughlin Blvd. 2200 NE Andresen Road
Vancouver, WA 98663 Vancouver, WA 98661
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing
the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So.
Figueroa St., M-1, Los Angeles, CA 90071. (213) 687-8777.
Standard Industrial Lease -- Gross Page 14 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
THIS LEASE IS SUBJECT TO ACCEPTANCE BY LANDLORD:
IN WITNESS WHEREOF, the parties hereto have executed this Lease the date and
year above written.
Address: 211 E. McLoughlin Blvd Owner: LeRoy Hart Rentals
Vancouver, WA 98663
By: /s/ Joseph Hart
------------------------------
Joseph Hart
Address: 2200 NE Andresen Road Tenant: Direct Focus, Inc.
Vancouver, WA 98661
By: /s/ Brian Cook
------------------------------
Brian Cook, President
LESSOR:
STATE OF Washington )
---------------------
County of Clark ) ss.
--------------------
On June 18, 1998 before me, a Notary Public in and for said County and State,
residing therein, personally appeared Joseph L. Hart, who, being duly sworn,
and he acknowledged said instrument to be its voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year last above written.
/s/ Judith A. Bray
- ------------------------------
Notary Public for Washington
My Commission Expires 2/1/99
LESSEE:
STATE OF Washington )
---------------------
County of Clark ) ss.
--------------------
On June 17, 1998 before me, a Notary Public in and for said County and State,
residing therein, personally appeared Brian R. Cook, who, being duly sworn,
and he acknowledged said instrument to be its voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year last above written.
/s/ Nora L. Rowe
- ------------------------------
Notary Public for Washington
My Commission Expires 11-12-01
Standard Industrial Lease -- Gross Page 15 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
ADDENDUM "A"
47. COMMISSION. Owner shall pay a commission or fee to ERIC FULLER &
ASSOCIATES, INC. in accordance with the provisions of a separate commission
contract. Each party represents that it has not had dealings with any other
real estate broker or salesman with respect to this Lease, and each party
shall defend, indemnify and hold harmless the other party from all costs and
liabilities including reasonable attorney's fees resulting from any claims to
the contrary.
48. AGENCY DISCLOSURE. At the signing of this Agreement the listing agent,
William M. Connelly of ERIC FULLER & ASSOCIATES represented the Landlord.
Each party signing this document confirms that prior oral and/or written
disclosure of agency was provided to him/her in this transaction.
49. HAZARDOUS MATERIALS. The Lessee, at its sole cost and expense, shall
comply with all laws, ordinances, regulations, and standards regulating or
controlling hazardous wastes or hazardous substances, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. 9601, ET SEQ.; the Hazardous
Material Transportation Act, 49 U.S.C. 1901, ET SEQ.; the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, ET SEQ.; the
Carpenter-Presley-Tanner Hazardous Substance Account Act, Health and Safety
Code section 25300, ET SEQ.; the Underground Storage of Hazardous Substance
Act, Health and Safety section 25280, ET SEQ., the Safe Drinking Water and
Toxic Enforcement Act of 1986 (Health and Safety Code section 25249.5, ET
SEQ.); and the Hazardous Waste Control Law, Health and Safety Code section
25100, ET SEQ. (the "Environmental Laws"). The Lessee hereby indemnifies and,
at all times, shall indemnify and hold harmless the Lessor, the Lessor's
trustees, directors, officers, employees, investment manager(s), attorneys,
agents and any successors to the Lessor's interest in the chain of title to
the Property, their trustees, directors, officers, employees, and agents from
and against any and all claims, suits, demands, response costs, contribution
costs, liabilities, losses, or damages, directly or indirectly arising out of
the existence, use, generation, migration, storage, transportation, release,
threatened release, or disposal of Hazardous Materials (defined below) in,
on, or under the Property or in the groundwater under the Property and the
migration or transportation of hazardous materials to or from the Property or
the groundwater underlying the Property. This indemnity extends to the costs
incurred by the Lessor or its successors to reasonably repair, clean up,
dispose of, or remove such Hazardous Materials in order to comply with the
Environmental Laws, provided the Lessor gives the Lessee not less than thirty
(30) days advance written notice of its intention to incur such costs. The
Lessee's obligations pursuant to the foregoing indemnification and hold
harmless agreement shall survive the termination of this Lease. The
subtenants, contractors, agents, or invitees of the Lessee shall not use,
generate, manufacture, store, transport, release, threaten release, or
dispose of Hazardous Materials in, on, or about the Property unless the
Lessee shall have received the Lessor's prior written consent therefore,
which the Lessor may withhold or revoke at any time in its reasonable
discretion, and shall not cause or permit the release or disposal of Hazardous
Materials from the property except in compliance with applicable
Environmental Laws. The Lessee shall not permit any person, including its
subtenants, contractors, agents, or invitees to use, generate, manufacture,
store, transport, release, threaten release, or dispose of Hazardous
Materials in, on, or about the Property or transport Hazardous Materials from
the Property unless the Lessee shall have received the Lessor's prior written
consent therefore, which the Lessor may withhold or revoke at any time in its
reasonable discretion and shall not cause or permit the release or disposal
of Hazardous Materials. The Lessee shall promptly deliver written notice to
the Lessor if it obtains knowledge sufficient to infer that Hazardous
Materials are located on the Property that are not in compliance with
applicable Environmental Laws or if any third party, including, without
limitation, any governmental agency, claims a significant disposal of
Hazardous Materials occurred on the Property or is being or has been released
from the Property, or any such party gives notice of its intention to declare
the Property to be Border Zone Property (as defined in section 25117.4 of the
California Health and Safety Code). Upon reasonable written request of the
Lessor, the Lessee, through its professional engineers and at its cost, shall
thoroughly investigate suspected Hazardous Materials contamination of the
Property. The Lessee, using duly licensed and insured contractors, shall
promptly commence and diligently complete the removal, repair, clean-up, and
detoxification of any Hazardous Materials from the Property as may be
required by applicable Environmental Laws.
Notwithstanding anything to the contrary in this Lease, nothing herein
shall prevent the Lessee from using materials other than Hazardous Materials
on the Premises as would be used in the ordinary course of the Lessee's
business as contemplated by this Lease. The Lessee does not in the course of
the Lessee's current business use Hazardous Materials. If during the term
of this Lease, the Lessee contemplates utilizing such materials (or
subleases/assigns this Lease to a subtenant or assignee who utilizes
Hazardous Materials), the Lessee shall obtain prior written approval from the
Lessor which approval shall not be unreasonably withheld. The Lessor, at its
option, and at the Lessee's expense, may cause an engineer selected by the
Lessor, to review (a) the Lessee's operations including materials used,
generated, stored, disposed, and manufactured in the Lessee's business and
(b) the Lessee's compliance with terms of this Paragraph. The Lessee
Standard Industrial Lease -- Gross Page 16 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
shall provide the engineer with such information reasonably requested by the
engineer to complete the review. The first such review may occur prior to or
shortly following commencement of the term of this Lease. Thereafter, such
review shall not occur more frequently than once each year unless cause
exists for some other review schedule. One-half (1/2) of the fees and costs
of the engineer shall be paid promptly by the Lessee to the Lessor upon
receipt of written notice of such fees and costs.
"Hazardous Materials" means any hazardous waste or hazardous substance
as defined in any federal, state, county, municipal, or local statute,
ordinance, rule, or regulation applicable to the Property, including, without
limitation, the Environmental Laws. "Hazardous Materials" shall also include
asbestos or asbestos-containing materials, radon gas, petroleum or petroleum
fractions, urea formaldehyde foam insulation, transformers containing levels
of polychlorinated biphenyls greater than 50 parts per million, and chemicals
known to cause cancer or reproductive toxicity, whether or not defined as a
hazardous waste or hazardous substance in any such statute, ordinance, rule,
or regulation,
50. ZONING DISCLAIMER. This agreement will not allow use of the Property
described in this agreement in violation of applicable land use laws and
regulations. Before signing or accepting this agreement, the person acquiring
Lease-hold to the Property should check with the appropriate city or county
planning department to verify approved uses.
51. HOLDING OVER. Tenant will, at the termination of this Lease by lapse of
time or otherwise, yield up immediate possession to Landlord. If Landlord
agrees in writing that Tenant may hold over after the expiration or
termination of this Lease, unless the parties hereto otherwise agree in
writing on the terms of such holding over, the hold over tenancy shall be
subject to termination by Landlord at any time upon not less than five
(5) days, advance written notice, or by Tenant at any time upon not less than
thirty days advance written notice, and all of the other terms and provisions
of this Lease shall be applicable during that period, except that Tenant
shall pay Landlord from time to time upon demand, as rental for the period of
any hold over, an amount equal to one and one-half (1-1/2) the Base Rent in
effect on the termination date, plus all additional rental as defined herein,
computed on a daily basis for each day of the hold over period. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease except as otherwise expressly provided. The preceding
provisions of this Paragraph 51 shall not be construed as Landlord's consent
for Tenant to hold over.
52. RENT SCHEDULE.
Months Monthly Rent
------ ------------
July 1, 1998 to November 30, 1998 $10,260.00/month/gross
December 1, 1998 to June 30, 1999 $10,830.00/month/gross
July 1, 1999 to June 30, 2000 $10,830.00/month/gross
Standard Industrial Lease -- Gross Page 17 Lessee ??
Direct Focus, Inc. 6/98 Lessor ??
EXHIBIT A
To the Lease dated June 4, 1998, between LeRoy Hart Rentals, Lessor, and
Direct Focus, Inc., Lessee.
The leased premises consists of a portion of Building B in the Hart Business
Park, which is legally described as a portion of 890 Jamison DLC.
The Premises is commonly known as:
2650 NE Andresen Road, Building B
Vancouver, WA 98661
For purposes of identification only, the Premises general location is
delineated below.
[SITE PLAN]
Standard Industrial Lease -- Gross Page 18 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
EXHIBIT B
CONDITION OF PREMISES. Lessee shall accept the Premises in their present
condition.
1. Lessee improvements at Lessee's expense:
(a) Add chain link fence to demise leased premises from balance of
building.
2. Additional Provisions:
(a) Lessee shall have exclusive use of eastern most dock high door and
access to restrooms.
Standard Industrial Lease -- Gross Page 19 Lessee [ILLEGIBLE]
Direct Focus, Inc. 6/98 Lessor [ILLEGIBLE]
EXHIBIT "C"
[FLOOR PLAN]