EXHIBIT 10.1
LEASE AGREEMENT
(SINGLE TENANT)
Between
ONTARIO WAREHOUSE I, INC.,
a Florida corporation
as Landlord
and
EMERSON RADIO CORP.,
a Delaware corporation
as Tenant
Premises Location: 11500 Philadelphia Street, Mira Loma, California
TABLE OF CONTENTS
Page
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1. PREMISES AND TERM....................................................1
1.1 Lease and Premises..........................................1
1.2 Term........................................................1
1.3 Condition of the Premises; Commencement Date................1
1.4 Early Entry into Premises...................................2
1.5 Extension Option............................................3
2. RENT AND SECURITY DEPOSIT............................................4
2.1 Base Rent...................................................5
2.2 Intentionally Omitted.......................................5
2.3 Security Deposit............................................5
2.4 Additional Rent.............................................5
2.5 Payment of Rent.............................................8
2.6 Late Payments...............................................8
3. USE..................................................................8
3.1 Use of Premises.............................................8
3.2 Hazardous Materials.........................................9
4. TAXES...............................................................12
4.1 Payment of Real Property Taxes.............................12
4.2 Liability for all Personal Property Taxes..................12
5. LANDLORD'S MAINTENANCE AND REPAIR...................................12
5.1 Landlord's Obligations.....................................12
5.2 Procedure and Liability....................................12
6. TENANT'S MAINTENANCE AND REPAIR.....................................13
6.1 Tenant's Maintenance.......................................13
6.2 Maintenance/Service Contracts..............................13
7. ALTERATIONS.........................................................13
8. LIENS...............................................................14
9. SIGNS...............................................................14
9.1 Landlord's Signage Program.................................14
9.2 Criteria for Changes.......................................14
10. UTILITIES...........................................................14
11. FIRE AND CASUALTY DAMAGE............................................15
11.1 Notice of Destruction......................................15
11.2 Loss Covered by Insurance..................................15
11.3 Loss Not Covered by Insurance..............................15
11.4 Tenant's Termination Option; Damage Near End of Term.......15
11.5 ...........................................................15
11.6 Destruction of Improvements and Personal Property..........15
11.7 Exclusive Remedy...........................................16
12. INDEMNITY AND INSURANCE.............................................16
12.1 Waiver and Indemnity.......................................16
12.2 Landlord's Insurance.......................................16
12.3 Tenant's Insurance Obligations.............................16
12.4 Evidence of Coverage.......................................17
12.5 Waiver of Subrogation......................................17
13. LANDLORD'S RIGHT OF ACCESS..........................................17
14. ASSIGNMENT AND SUBLETTING...........................................18
14.1 Landlord's Consent.........................................18
14.2 Fees.......................................................18
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TABLE OF CONTENTS
(continued)
Page
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14.3 Notice to Landlord; Landlord's Recapture Right.............18
14.4 Bonus Rent.................................................19
14.5 Continuing Tenant Obligations..............................19
14.6 Waiver, Default and Consent................................19
14.7 Restructuring of Business Organizations....................19
14.8 Assignment of Sublease Rent................................19
14.9 Assignment in Bankruptcy...................................19
14.10 Assumption of Obligations..................................19
15. CONDEMNATION........................................................19
15.1 Total Taking...............................................19
15.2 Partial Taking.............................................19
15.3 Condemnation Award.........................................20
15.4 Exclusive Remedy...........................................20
16. SURRENDER AND HOLDING OVER..........................................20
16.1 Surrender..................................................20
16.2 Holding Over...............................................20
17. QUIET ENJOYMENT.....................................................20
18. EVENTS OF DEFAULT...................................................20
18.1 Failure to Pay Rent........................................20
18.2 Insolvency.................................................20
18.3 Appointment of Receiver....................................20
18.4 Bankruptcy.................................................21
18.5 Attachment.................................................21
18.6 Vacation of Premises.......................................21
18.7 Certificates...............................................21
18.8 Failure to Discharge Liens.................................21
18.9 False Financial Statement..................................21
18.10 Failure to Comply with Lease Terms.........................21
19. LANDLORD'S REMEDIES.................................................21
19.1 Termination................................................21
19.2 Continuation of Lease......................................22
19.3 Appointment of Receiver....................................22
19.4 Late Charge................................................22
19.5 Interest...................................................22
19.6 Attorneys' Fees............................................22
19.7 Injunction.................................................22
19.8 Intentionally Omitted......................................22
19.9 Right of Landlord to Perform...............................22
19.10 Waiver of Right of Redemption..............................22
19.11 No Waiver..................................................22
19.12 Cumulative Remedies........................................22
20. LANDLORD DEFAULT; TENANT'S REMEDIES.................................23
20.1 Landlord's Default.........................................23
20.2 Tenant's Remedies..........................................23
20.3 Non-Recourse...............................................23
20.4 Sale of Premises...........................................23
21. MORTGAGES...........................................................23
21.1 ...........................................................23
21.2 ...........................................................24
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TABLE OF CONTENTS
(continued)
Page
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22. GENERAL PROVISIONS..................................................24
22.1 Singular and Plural........................................24
22.2 Interest on Past-Due Obligations...........................24
22.3 Time of Essence............................................24
22.4 Binding Effect.............................................24
22.5 Choice of Law..............................................24
22.6 Captions...................................................24
22.7 Certificates...............................................24
22.8 Amendments.................................................25
22.9 Entire Agreement...........................................25
22.10 Waivers....................................................25
22.11 Attorneys' Fees............................................25
22.12 Merger.....................................................25
22.13 Survival of Obligations....................................25
22.14 Severability...............................................25
22.15 Security Measures..........................................25
22.16 Easements..................................................25
22.17 Multiple Parties...........................................26
22.18 Conflict...................................................26
22.19 No Third Party Beneficiaries...............................26
22.20 Effective Date/Nonbinding Offer............................26
22.21 Notices....................................................26
22.22 Water, Oil and Mineral Rights..............................26
22.23 Confidentiality............................................26
22.24 Broker's Fees..............................................27
22.25 Remedies Cumulative........................................27
22.26 Return of Check............................................27
22.27 Effect of Refund...........................................27
22.28 No Recordation of Lease....................................27
22.29 Authority..................................................27
22.30 Interpretation.............................................27
22.31 Landlord's Approvals.......................................27
22.32 Additional Provisions......................................27
22.33 Waiver of Right to Trial by Jury...........................27
22.34 Intentionally Omitted......................................27
22.35 Relationship of Parties....................................27
22.36 Net Lease..................................................27
23. LIMITATION OF LIABILITY.............................................27
TABLE OF EXHIBITS
EXHIBIT A - ......Premises
EXHIBIT B - ......Landlord's Work
EXHIBIT C - ......Intentionally Deleted
EXHIBIT D - ......Tenant Sign Criteria
EXHIBIT E - ......Environmental Questionnaire
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STANDARD INDUSTRIAL LEASE AGREEMENT - SINGLE TENANT
THIS STANDARD INDUSTRIAL LEASE AGREEMENT (this "LEASE"), dated as of
the date set forth in Item 1 of the Basic Lease Provisions, below, is made and
entered into by and between ONTARIO WAREHOUSE I, INC., a Florida corporation,
hereinafter referred to as "LANDLORD," and, EMERSON RADIO CORP., a Delaware
corporation, hereinafter referred to as "ORIGINAL TENANT."
BASIC LEASE PROVISIONS
1 EFFECTIVE DATE: December 6, 2005 (the "EFFECTIVE DATE")
2 LANDLORD: Ontario Warehouse I, Inc.
ADDRESS (FOR NOTICES) (SS. 22.21): c/o L&B Realty Advisors, Inc.
8750 North Central Expressway, Suite 800
Dallas, Texas 75231-6437
Attn: Merrill Curtis
Telephone No.: (214) 989-0697
Fax No.: (214) 989-0600
With copies to:
Real Estate Manager
CB Richard Ellis
17811 Sky Park Circle, Suite H
Irvine, CA 92614
Attn: Buffi Hendrix
Telephone No.: 949-221-9431 Ext 204
Fax No.: 949-975-0570
and:
Paul Hastings Janofsky & Walker LLP
515 South Flower Street
25th Floor
Los Angeles, CA 90071
Attn: David A. Blumenfeld, Esq.
ADDRESS (FOR RENT): Phone: (213) 683-6291
Fax: (213) 627-0705
All Rent shall be sent to:
Ontario Warehouse I, Inc.
P.O. Box 72356
Dept. 2356-35
Los Angeles, CA 90084-2356
3 TENANT: Emerson Radio Corp
ADDRESS (FOR NOTICES) 9 Entin Road
(SS. 22.21): Parsippany, New Jersey 07054
Attn: Frank Guerriero
Phone: (973) 428-2020
Fax: (973) 428-2019
with copies to:
Emerson Radio Corp
9 Entin Road
Parsippany, New Jersey 07054
Attn: Christina Iatrou, Assistant General Counsel
Phone: (973) 428-2074
Fax: (973) 428-2010
4 PREMISES (SS. 1.1): The parcel of land situated in the City of Mira Loma,
County of Riverside, State of California, and
commonly known as 11500 Philadelphia Street,
described on Exhibit "A", together with all
improvements thereon, including, but not limited to
that certain approximately 180,632 square foot
industrial warehouse building and all parking areas
located thereon (as defined in Paragraph 1.1).
5 BUILDING ADDRESS (SS. 1.1): 11500 Philadelphia Street, Mira Loma, California 91762
1
6 COMMENCEMENT DATE (SS. 1.2): The later to occur of (a) January 1, 2006 and (b) the
earlier to occur of (i) the date of Landlord's
delivery of the Premises to Tenant with the Material
Landlord's Work (as defined in Exhibit "B")
substantially complete (or the date on which Landlord
would have delivered the Premises to Tenant with the
Material Landlord's Work substantially complete but
for the occurrence of any Tenant Delays (defined in
Paragraph 1.3.1(b), below) and (ii) the date on which
Tenant commences business occupancy of the Premises
or any material portion thereof (delivery and storage
of product shall not constitute business occupancy).
7 TERM (SS. 1.2): Sixty-Two (62) months from the Commencement Date
8 INTENTIONALLY OMITTED
9 MONTHLY BASE RENT (SS. 2.1): MONTHS MONTHLY BASE RENT RATE MONTHLY BASE RENT
-------- ------------------------ -----------------
1 - 2* $0.335/sq. ft./mo. $60,511.72/mo.
3 - 32 $0.335/sq. ft./mo. $60,511.72/mo.
33 - 62 $0.3585/sq. ft./mo. $64,756.57/mo.
*Subject to rent abatement in accordance with
Paragraph 2.1, below.
10 FIRST MONTH'S RENT (SS. 2.1): Base Rent $60,511.72
Taxes & Operating Expenses $10,837.92
TOTAL $71,349.64
11 SECURITY DEPOSIT (SS. 2.3): None
12 TENANT'S PROPORTIONATE SHARE (SS. 2.4): 100%
13 USE OF PREMISES (SS. 3.1): Warehousing and distribution of products witH
reasonably incidental office uses.
14 INTENTIONALLY OMITTED:
15 TENANT'S LIABILITY INSURANCE AMOUNT CGL Policy - $2,000,000 per occurrence $5,000,000
(SS. 12.3.1): aggregate
Automobile Policy - $2,000,000 per occurrence
$5,000,000 aggregate
16 BROKER(S) (SS. 22.24): LANDLORD'S: CB Richard Ellis, representing Landlord exclusively
TENANT'S: Cushman & Wakefield, representing Tenant exclusively
This Lease shall consist of the foregoing Items of the Basic Lease
Provisions, and the provisions of the Standard Lease Provisions (the "STANDARD
LEASE PROVISIONS") (consisting of Articles through 23 which follow) and Exhibits
"A" through "E", inclusive, all of which are incorporated herein by this
reference as of the Effective Date. In the event of any conflict between the
provisions of the Basic Lease Provisions and the provisions of the Standard
Lease Provisions, the Standard Lease Provisions shall control. Any initially
capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Standard Lease Provisions.
2
STANDARD LEASE PROVISIONS
1. PREMISES AND TERM.
1.1 LEASE AND PREMISES. Landlord leases to Tenant (defined below), and
Tenant leases from Landlord, certain premises (the "PREMISES") described in ITEM
4 of the Basic Lease Provisions, including, without limitation, the industrial
warehouse building (the "BUILDING") located at the address described in ITEM 5
of the Basic Lease Provisions, all as more particularly shown on EXHIBIT A
attached hereto and incorporated herein. Subject to Tenant's measurement right
as set forth below, Landlord and Tenant hereby agree that the rentable square
footage of the Premises set forth in ITEM 4 of the Basic Lease Provisions shall
be conclusive and binding on the parties. As used herein, "TENANT" shall mean
Original Tenant and any assignee of all of Original Tenant's right title and
interest under this Lease.
Within sixty (60) days after Landlord's delivery to Tenant of
possession of the Premises, Landlord and/or Tenant (the "REMEASURING PARTY")
shall each have the right, at their option, upon delivery of written notice (the
"REMEASUREMENT NOTICE") to the other party (the "NON-REMEASURING PARTY"), to
remeasure the Premises in accordance with a "Gross Drip Line" measurement
standard, and to deliver notice (the "REMEASURED RSF NOTICE") of the results
thereof to the Non-Remeasuring Party. In the event that such remeasurement shall
indicate a rentable area which is different than that set forth in ITEM 4 of the
Basic Lease Provisions, then the Non-Remeasuring Party may, at its option, upon
delivery of written notice (the "RSF OBJECTION NOTICE") to the Remeasuring Party
within ten (10) business days following its receipt of the Remeasured RSF
Notice, object to the results set forth in such Remeasured RSF Notice, in which
event, the rentable area of the Premises shall be remeasured (in accordance with
a "Gross Drip Line" measurement standard) by a qualified consultant or architect
mutually selected by Landlord and Tenant, and the result of the same shall be
binding upon both Landlord and Tenant. In the event that a Remeasurement Notice
is not timely delivered, the rentable area of the Premises shall be as set forth
in ITEM 4 of the Basic Lease Provisions, and shall not be subject to
remeasurement or modification. Further, in the event that following delivery of
a Remeasurement Notice, an RSF Objection Notice is not timely delivered, the
rentable area of the Premises shall be as set forth in the Remeasured RSF Notice
in question and shall not be subject to remeasurement or modification. In the
event the rentable area of the Premises determined pursuant to the provisions of
this Paragraph 1.1 (the "REMEASURED AREA") indicates that the actual rentable
area of the Premises differs from the amount set forth in ITEM 4 above by more
than two percent (2%), the Monthly Base Rent shall be adjusted to reflect the
Remeasured Area of the Premises.
1.2 TERM. The term of this Lease shall commence on the "COMMENCEMENT
DATE" specified in or established pursuant to ITEM 6 of the Basic Lease
Provisions, and except as otherwise provided herein, shall continue in full
force and effect through the number of months provided in ITEM 7 of the Basic
Lease Provisions (the "INITIAL TERM"); provided, however, that if the
Commencement Date is a date other than the first day of a calendar month, the
Term shall consist of the remainder of the calendar month in which the
Commencement Date occurs, plus said number of full calendar months. As used
herein, "TERM" shall mean, collectively, the Initial Term, and if the same shall
be duly exercised by Tenant. the Option Term (defined in Section 1.5.1(a),
below).
1.3 CONDITION OF THE PREMISES; COMMENCEMENT DATE.
1.3.1 PREMISES LEASED IN AN AS IS CONDITION.
(A) Except as otherwise expressly provided in this Paragraph
1.3.1, Tenant acknowledges that it has inspected the Premises and accepts the
same in their present "AS-IS" condition as suitable for the purpose for which
the Premises are leased. Tenant further agrees that (a) Tenant shall, subject to
the express provisions of this Lease, accept the Premises in its then existing
"AS-IS," "WITH ALL FAULTS" condition on the Commencement Date and (b) except as
specifically provided otherwise in this Paragraph 1.3.1(a) and except for the
Landlord's Work (as defined EXHIBIT "B" attached hereto) specifically described
in this Lease, Landlord shall have no duty or obligation to improve, or pay for
any improvement for, the Premises or any portion thereof (or correct any
violation of any Applicable Laws (defined in Paragraph 3.1.2, below); provided,
however, that notwithstanding the foregoing, Landlord shall (i) deliver the
Premises to Tenant (B) in material compliance with all Applicable Laws (provided
that Landlord may utilize exemptions, variances and/or grandfather provisions
contained in any Codes (as defined in Schedule 1 to Exhibit "B") to effect
compliance therewith) and (B) with the warehouse floor of the Building in broom
clean condition and free of debris, (ii) cause the existing operating systems,
including the plumbing, fire sprinkler, electrical, lighting, HVAC Systems
(defined in Paragraph 6.2), windows and loading doors and load levelers located
in the Building (the "BUILDING OPERATING SYSTEMS") to be in good working order
and (iii) cause the Landlord Maintenance Items (defined in Paragraph 5.1, below)
to be in good condition and repair.
1
(B) If the Premises are not in the condition required in
Paragraph 1.3.1(a) (i) - (iii), above, on the Commencement Date and Landlord
shall fail to complete or commence any necessary corrective work or repairs to
remedy the same within thirty (30) days after Landlord's receipt of written
notice from Tenant, then upon delivery of an additional ten (10) business days
notice to Landlord specifying that Tenant is taking such required action, Tenant
may perform the necessary corrective work and make the necessary repairs
(provided, however, that if Landlord shall commence to perform such corrective
work or repairs within such additional ten (10) business day period, Tenant
shall have no rights under this Paragraph 1.3.1(b) or otherwise to perform such
work or repairs), and if such work or repairs were required under the terms of
this Lease to be performed by Landlord, then Tenant shall be entitled to
reimbursement by Landlord of its reasonable, out-of-pocket costs incurred in
performing the same. If Landlord does not deliver a detailed written objection
to Tenant, within thirty (30) days after its receipt of an invoice from Tenant
setting forth a reasonably particularized breakdown of the out-of-pocket costs
incurred by Tenant in performing work or repairs permitted under this Paragraph
1.3.1(b) to performed by Tenant and that Tenant claims should have been
performed by Landlord, then Tenant shall be entitled to deduct from the next
installment (or installments) of Rent payable hereunder, the amount of its
reasonable. out-of-pocket costs set forth in such invoice. If, however, Landlord
delivers to Tenant within thirty (30) days after receipt of Tenant's invoice, a
written objection to the payment of such invoice, setting forth with reasonable
particularity Landlord's reasons for its claim that such work or repairs did not
have to be taken by Landlord pursuant to the terms of this Lease or that the
charges are excessive, then Tenant shall not be entitled to such deduction from
Rent, and the parties hereto agree that any such dispute shall be resolved by
arbitration under the auspices of the American Arbitration Association.
Notwithstanding anything to the contrary in this Lease, in the event that Tenant
shall perform any work or repairs permitted to be performed by Tenant under this
Paragraph 1.3.1(b) that will affect the Building Operating Systems or the
structural integrity of the Building, Tenant shall use only those contractors
used by Landlord in the Building for work on the Building Operating Systems or
the Building structure.
(C) A Certificate of Occupancy has previously been issued for
the Premises which permits its use as a warehouse and distribution center.
Tenant shall, if required under Applicable Laws to permit Tenant's use of the
Premises for its specific business operations and purposes, at Tenant's expense,
cause a new Certificate of Occupancy to be in effect for the Building such that
the Premises may be legally occupied for Tenant's use of the Building for its
specific business operations and purposes. Landlord shall, at no cost to
Landlord, reasonably cooperate with Tenant toward securing any such new
Certificate of Occupancy for the Premises.
(D) Tenant further acknowledges that, except as expressly
provided otherwise herein, no representations or promises were made by Landlord
or any agent of Landlord to repair, alter, remodel or improve the Premises.
1.3.2 COMMENCEMENT DATE.
(A) Landlord shall endeavor to tender delivery to Tenant of
the Premises in the condition required hereunder on or before the Commencement
Date; provided, however, that, notwithstanding anything to the contrary
contained herein, in the event that Landlord shall deliver to Tenant possession
of the Premises on a date other than the date specified in ITEM 6 of the Basic
Lease Provisions, the Commencement Date shall be deemed to be the date on which
Landlord tenders possession of the Premises, either physically or by written
notice, to Tenant with the Material Landlord's Work substantially completed (the
"DELIVERY CONDITION"). If this Lease is executed before the Premises shall
become vacant or otherwise available, or if any present tenant or occupant of
the Premises holds over, and Landlord cannot acquire possession of the Premises
in time to deliver them by the Commencement Date, or if delivery to Tenant of
the Premises is delayed for any other reason, except to the extent expressly
provided otherwise in Paragraph 1.3.2(b) or Paragraph 3.1.4, below, this Lease
shall not be void or voidable, and Landlord shall not be deemed to be in default
hereunder, nor shall Landlord be liable for any loss or damage directly or
indirectly arising out of or resulting from such holdover or other delay in
delivery. Subject to Paragraph 1.3.2(b), below, Tenant agrees to accept
possession of the Premises on the date on which Landlord is able to tender
delivery of the same, which date shall thenceforth be deemed the Commencement
Date. After the Commencement Date, Tenant shall, upon demand, execute and
deliver to Landlord a letter of acceptance of delivery of the Premises
specifying the Commencement Date.
(B) Notwithstanding the foregoing, in the event that Landlord
shall fail to tender to Tenant delivery of possession of the Premises in the
Delivery Condition on or before the Outside Delivery Date (defined below) or the
Absolute Delivery Date (defined below), Tenant may elect to terminate this Lease
by delivery to Landlord of a notice (the "TERMINATION NOTICE"), which
termination shall be effective thirty (30) days after Landlord's receipt of the
Termination Notice; provided, however, that in the event that, within such
thirty (30) day period, Landlord shall tender to Tenant delivery of possession
of the Premises in Delivery Condition, the Termination Notice shall be null,
void and of no force or effect and the Term of this Lease shall commence on the
date on which Landlord shall tender to Tenant delivery of Possession of the
Premises in the Delivery Condition. As used herein, "OUTSIDE DELIVERY DATE"
shall mean March 1, 2006 and "ABSOLUTE DELIVERY DATE" shall mean April 1, 2006;
provided, however, that notwithstanding anything to the contrary herein, (i)
each of the Outside Delivery Date and the Absolute Delivery Date shall be
extended on a day for day basis for each day of Tenant Delay (defined below) and
(ii) the Outside Delivery Date (but not the Absolute Delivery Date) shall also
be extended on a day for day basis for each day of Qualifying Holdover Delay
(defined below) (with the parties hereto agreeing that notwithstanding anything
to the contrary in this Lease (including, without limitation, in Section 3.1.4,
below), the Absolute Delivery Date shall be extended only as a result of Tenant
Delays and not for any other reason). As used herein, "TENANT DELAY" shall mean
any delay in the delivery of possession of the Premises and substantial
completion of the Landlord's Work caused by or relating to (A) any breach by
Tenant of the provisions of this Lease, (B) any failure of Tenant to timely take
any action required to be taken by Tenant hereunder; (C) any changes requested
by Tenant to the Landlord's Work; (D) any interference by Tenant or any other
Tenant's Party with the performance of the Landlord's Work; and (E) any other
event specified to be a Tenant Delay in this Lease. For purposes hereof, a
"QUALIFYING HOLDOVER DELAY" shall mean any delay in the delivery of possession
of the Premises and substantial completion of the Landlord's Work caused by or
relating to any failure by any tenant occupying the Premises or any portion
thereof to surrender to Landlord possession of its premises or any portion
thereof upon the expiration of termination of the term of its lease (a "CURRENT
TENANT HOLDOVER"); provided, however, that no such Current Tenant Holdover by
any such tenant shall cause a Qualifying Holdover Delay unless Landlord shall
use commercially reasonable efforts to cause such Current Tenant Holdover to end
as soon as reasonably possible.
2
1.4 EARLY ENTRY INTO PREMISES. Following recapture by Landlord of the
Premises from the current occupant, and on the condition that, (a) this Lease
shall have been fully executed; (b) Tenant shall have (i) paid to Landlord (in
the form of a check) the first month's payment of Rent in the amount specified
in ITEM 10 of the Basic Lease Provisions, (ii) deposited with Landlord (in the
form of cash or a cashiers check) the Security Deposit in the amount specified
in ITEM 11 of the Basic Lease Provisions, and (iii) provided to Landlord proof
(in a form that is satisfactory to Landlord in Landlord's good faith discretion)
that Tenant is carrying all of the insurance that Tenant is required to carry
under the Lease (including, without limitation, under Paragraphs 7(d) and 12.3,
below); and (c) Landlord shall have granted its written consent to such early
entry and occupancy by Tenant (items (a), (b) and (c) collectively, the "EARLY
OCCUPANCY CONDITIONS"), Tenant may enter into the Premises for the sole purpose
of delivering its products to the Premises for warehousing and for preparing the
Premises for Tenant's occupancy. Such early entry will not advance the
Commencement Date. During the period (the "EARLY OCCUPANCY PERIOD") commencing
on the date (the "EARLY OCCUPANCY DATE") on which Tenant first enters and
occupies the Premises under this Paragraph 1.4 and continuing through the
Commencement Date, all of the provisions of this Lease shall apply to Tenant
(including, without limitation, Tenant's obligations to the indemnify Landlord
in accordance with Paragraph 12.1 and Tenant's obligations to carry insurance in
accordance with Paragraphs 7(d) and 12.3 of this Lease); provided, however, that
Tenant shall have no obligations to pay Base Rent (defined in Paragraph 2.1,
below) under Paragraph 2.1, below, or any Additional Rent (defined in Paragraph
2.4, below) payable under Paragraph 2.4, below during or with respect to such
Early Occupancy Period. If Tenant is granted early entry to and occupies the
Premises during the Early Occupancy Period, Landlord shall not be responsible
for any loss, including theft, damage or destruction to any work or material
installed or stored by Tenant at the Premises or for any injury to Tenant or its
agents, employees, contractors, subcontractors, subtenants, assigns or invitees
(collectively, "TENANT'S PARTIES") unless caused by Landlord's negligence or
willful misconduct. Landlord shall have the right to post appropriate notices of
non-responsibility and to require Tenant to provide Landlord with evidence that
Tenant has fulfilled its obligation to provide insurance pursuant to Paragraphs
7(d) and 12.3 of this Lease prior to granting Tenant occupancy of the Premises
pursuant to this Paragraph 1.4.
1.5 EXTENSION OPTION.
1.5.1 GRANT; EXERCISE. Landlord hereby grants to Original Tenant
and to any Successor (defined below) of Original Tenant (each a "QUALIFIED
TENANT") one (1) option to extend the Term (the "EXTENSION OPTION") with respect
to the entire Premises for a period of five (5) years (the "OPTION TERM"). The
Extension Option shall be exercised, if at all, only by the delivery to Landlord
by a Qualified Tenant of written notice thereof (the "OPTION EXERCISE NOTICE")
not more than twelve (12) months nor less than nine (9) months prior to the then
scheduled expiration date of the Term, which Option Exercise Notice shall
reference this Paragraph 1.5, and state that Tenant is electing to exercise its
Extension Option. Subject to the provisions of this Lease, upon the exercise of
an Extension Option, the Term, as it applies to the Premises, shall be extended
for a period of five (5) calendar years (sixty (60) calendar months). As used
herein, "SUCCESSOR" means any person or entity of reasonable financial standing
which acquires in good faith in a single transaction or in a series of related
transactions (by merger, consolidation, transfer of assets or otherwise) this
Lease and all or substantially all of the other property and assets of Tenant,
and assumes by written instrument all of Tenant's liabilities hereunder.
1.5.2 OPTION BASE RENT. The monthly Base Rent (the "OPTION BASE
RENT") payable by Tenant during the Option Term (if any) shall be equal to the
greater of (a) the Base Rent then in effect during the month immediately
preceding the date on which the initial Term shall expire, or (b) the product of
(i) the number of square feet contained within the Premises then subject to this
Lease (ii) the FMRR (defined in Paragraph 1.5.3, below) for the Premises as of
the first day (the "ADJUSTMENT DATE") of the Option Term, as determined in
accordance with this Paragraph 1.5 and (iii) 0.97 (i.e., 97%).
1.5.3 DEFINITION OF FMRR. The "FMRR" of the Premises for an Option
Term shall be the prevailing fair market rental rate per square foot of rentable
area for leases of space that is comparable in size and quality to the Premises
then being offered and accepted for lease in the Comparable Buildings (defined
below) in current arms-length, nonrenewal, nonequity, transactions for a
nonrenewal term comparable to the Option Term, which annual rent per square foot
shall take into account and make adjustment for the existence, timing and amount
of any increases in rent following term commencement in the comparison
transactions, and shall at all times take into consideration and make adjustment
for all other material differences in all terms, conditions or factors
applicable to the transaction in question hereunder or applicable to one or more
of the comparison transactions used to determine the FMRR (including, without
limitation, the creditworthiness of the tenant under such comparison
transactions (as compared to the creditworthiness of Tenant)) which a
sophisticated tenant or sophisticated landlord would believe would have a
material impact on a "fair market rental" determination; provided, however, that
(i) the presence, amount or absence of brokerage commissions in either the
subject transaction or the comparison transactions shall be disregarded, (ii)
any rent abatement or other free rent of any type provided in comparison
transactions for the period of the performance of any tenant improvement work
(i.e., any "construction period") shall be disregarded, and (iii) if any tenant
improvements or allowance provided in any comparison transaction shall be taken
into account, the value of the existing tenant improvements (from a general
market perspective to a comparable warehouse user) in the Premises (but without
regard to their value, usability or function to Tenant and without regard to the
fact that Tenant is occupying the Premises). As used herein, "COMPARABLE
Buildings" shall mean comparable commercial/industrial buildings (with
comparable access to freeways and other transportation facilities) in the
vicinity of the Premises (i.e. in the Mira Loma, California area) at the time of
the determination of the FMRR by Landlord.
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1.5.4 PROCEDURE FOR DETERMINING THE FMRR. For purposes of
determining the FMRR, the following procedure shall apply:
(A) If Tenant has timely given the Option Exercise Notice with
respect to the Extension Option, Landlord shall within thirty (30) days
thereafter deliver to Tenant a written notice of Landlord's determination of
what the FMRR would be during the Option Term ("LANDLORD'S OPTION RENT NOTICE").
Within ten (10) business days after Tenant's receipt of Landlord's Option Rent
Notice, Tenant shall give Landlord a written notice ("TENANT'S OPTION RESPONSE
NOTICE") electing either (i) to accept the FMRR set forth in Landlord's Option
Rent Notice, in which case the FMRR shall be the FMRR set forth in Landlord's
Option Rent Notice, or (ii) to not accept Landlord's determination of the FMRR,
in which case a representative(s) of Landlord and a representative(s) of Tenant
shall meet at a mutually agreeable time and place and endeavor in good faith to
agree upon the FMRR on or before the date that is twenty (20) business days
after Landlord's receipt of Tenant's Option Response Notice (the "OUTSIDE
AGREEMENT DATE"). If Landlord and Tenant are unable to agree upon the FMRR by
the Outside Agreement Date, then the FMRR shall be determined by arbitration
pursuant to subsection 1.5.4(b), below. If Tenant fails to deliver Tenant's
Option Response Notice within the ten (10) business day period following its
receipt of Landlord's Option Rent Notice, Tenant shall conclusively be deemed to
have rejected Landlord's determination of the FMRR as set forth in Landlord's
Option Rent Notice.
(B) If Landlord and Tenant shall fail to agree upon the FMRR
by the Outside Agreement Date, then, within twenty (20) business days
thereafter, Tenant shall submit to Landlord Tenant's determination of the FMRR
and such determination, along with Landlord's last written offer with respect to
FMRR shall be submitted to arbitration (as Tenant's and Landlord's "SUBMITTED
FMRR", respectively) in accordance with the following:
(I) Landlord and Tenant shall each appoint one arbitrator
who shall by profession be a real estate broker who shall have been active over
the five (5) year period ending on the date of such appointment in the leasing
of industrial warehouse properties in the Inland Empire area. The determination
of the arbitrators shall be limited solely to the issue as to whether Landlord's
or Tenant's Submitted FMRR is the closest to the actual FMRR, as determined by
the arbitrators, taking into account the requirements of this Paragraph 1.5.
Each such arbitrator shall be appointed within fifteen (15) days after the
Outside Agreement Date. If either Landlord or Tenant fails to appoint an
arbitrator within fifteen (15) days after the applicable Outside Agreement Date,
the arbitrator appointed by the other shall solely render a decision as to the
FMRR, notify Landlord and Tenant thereof, and such arbitrator's decision shall
be binding upon Landlord and Tenant.
(II) The two arbitrators so appointed shall within ten (10)
days of the date of the appointment of the last appointed arbitrator agree upon
and appoint a third arbitrator who shall be a real estate broker who shall have
been active over the five (5) year period ending on the date of such appointment
in the leasing of industrial warehouse properties in the Inland Empire,
California area. If the two arbitrators fail to agree upon and appoint a third
arbitrator, or both parties fail to appoint an arbitrator, then the appointment
of the third arbitrator or any arbitrator shall be dismissed and the matter to
be decided shall be promptly submitted to arbitration under the provisions of
the American Arbitration Association, but subject to the instructions set forth
in this Paragraph 1.5.
(III) The three arbitrators shall within thirty (30) days of
the appointment of the third arbitrator reach a decision as to whether the
parties shall use Landlord's or Tenant's Submitted FMRR and shall notify
Landlord and Tenant thereof.
(IV) The decision of the majority of the three arbitrators
shall be binding upon Landlord and Tenant, shall be in writing and shall be non
appealable, and counterpart copies thereof shall be delivered to Landlord and
Tenant. A judgment or order based upon such award may be entered in any court of
competent jurisdiction. In rendering their decision and award, the arbitrators
shall have no power to vary, modify or amend any provision of this Lease.
(V) Each party shall pay the cost of the arbitrator selected
by such party plus one-half of any other costs incurred in the arbitration,
including the cost of the third arbitrator.
1.5.5 LEASE TERMS FOR OPTION TERM. If Tenant duly exercises the
Extension Option in accordance with this Paragraph 1.5, Landlord and Tenant
shall execute an amendment reflecting the terms and conditions set forth in this
Paragraph 1.5, including, without limitation, that except as otherwise provided
in this Paragraph 1.5, the Term shall be extended on the same terms and
conditions as applicable immediately preceding the commencement of the
applicable Option Term.
1.5.6 CONDITIONS TO EXERCISE OF EXTENSION OPTION. The rights
contained in this Paragraph 1.5, (a) shall be personal to the Original Tenant
and any Successor of the Original Tenant, and may not be exercised by any other
Transferee (defined in Paragraph 14.1, below) of Tenant's interest (or any
portion thereof) in this Lease and (b) may only be exercised with respect to the
entire Premises leased by Tenant at the time Tenant delivers its Option Exercise
Notice. Notwithstanding anything in this Lease to the contrary, at the election
of Landlord, any attempted exercise by Tenant of the Extension Option shall be
invalid, ineffective, and of no force or effect if, on the date of such
attempted exercise of the Extension Option or on the date on which the Option
Term is scheduled to commence there is an uncured Event of Default by Tenant
under this Lease (which has not been waived in writing by Landlord. If Tenant
does not timely deliver an Option Exercise Notice with respect to the Extension
Option pursuant to the provisions of this Paragraph 1.5 within the applicable
time period, time being of the essence, then at the election of Landlord, Tenant
shall be deemed to have forever waived and relinquished the Extension Option,
and any other options or rights to renew or extend the Term effective after the
then applicable Expiration Date shall terminate and shall be of no further force
or effect.
2. RENT AND SECURITY DEPOSIT.
Rent (as defined below) shall accrue hereunder from the Commencement
Date set forth in ITEM 8 of the Basic Lease Provisions. The Base Rent (defined
below) plus the Additional Rent (defined below) together with any other sums
payable by Tenant under this Lease shall collectively constitute the "RENT."
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2.1 BASE RENT. As consideration for the leasing of the Premises, Tenant
shall pay to Landlord as base rent the amounts per month provided in ITEM 9 of
the Basic Lease Provisions, as adjusted pursuant to Paragraph 2.2 ("BASE RENT").
The first full calendar month's Base Rent, together with any partial calendar
month's Base Rent, shall be due and payable upon execution of this Lease and
thereafter, a monthly installment of Base Rent, in the amount specified in ITEM
9 of the Basic Lease Provisions, subject to the adjustments described herein,
shall be due and payable without demand and without offset or deduction (except
as expressly provided otherwise in Paragraph 1.3.1(b) or Paragraph 3.1.4 of this
Lease) on or before the first day of each calendar month during the term
following the Commencement Date. Base Rent for any fractional calendar month at
the commencement or end of the Term shall be prorated on a daily basis based on
a thirty (30) day month. Notwithstanding anything herein to the contrary and
provided that an Event of Default (as defined in Article 18) is not then in
effect under this Lease, Tenant's obligation to pay Base Rent under this
Paragraph 2.1 and Additional Rent under Paragraph 2.4, below, for the first
(1st) and second (2nd) months of the Term shall be abated (such that, subject to
the terms of this Lease, during the first (1st) and second (2nd) months of the
Term, Tenant shall have no obligation to pay any amount for Base Rent under this
Paragraph 2.1 or for Additional Rent under Paragraph 2.4).
2.2 Intentionally Omitted.
2.3 SECURITY DEPOSIT. Tenant shall deposit with Landlord upon
execution of this Lease the sum provided in ITEM 11 of the Basic Lease
Provisions ("SECURITY DEPOSIT"), which sum shall be held by Landlord in its
general accounts, without obligation for interest, as security for the
performance of all of Tenant's covenants and obligations under this Lease, it
being expressly understood and agreed that the Security Deposit is not an
advance rental deposit or a measure of Landlord's damages in case of Tenant's
default. Upon the occurrence of any Event Of Default (as defined in Paragraph 18
below) by Tenant, Landlord may, without prejudice to any other remedy provided
herein or provided by law, use the Security Deposit to the extent necessary to
make good any arrears of Rent or other payments due Landlord hereunder, all of
which shall be deemed to be Rent, and any other damage, injury, expense or
liability caused by such Event Of Default; and Tenant shall pay to Landlord on
demand the amount so applied in order to restore the Security Deposit to its
original amount. Any remaining balance of the Security Deposit shall be returned
by Landlord to Tenant within thirty (30) days after the Premises have been
vacated pursuant to Paragraph 16.1 below, provided all of Tenant's obligations
under this Lease have been fulfilled. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be a prepayment of any
Rent.
2.4 ADDITIONAL RENT.
2.4.1 DEFINITION. In addition to the Base Rent set forth in
Paragraph 2.1, Tenant agrees to pay Tenant's Proportionate Share (defined in
Paragraph 2.4.2, below) of (a) Taxes, as defined in and payable by Landlord
pursuant to Paragraph 4.1 below and (b) Operating Expenses, as defined in and
incurred pursuant to Paragraph 2.4.3 below (collectively, "ADDITIONAL RENT").
2.4.2 TENANT'S PROPORTIONATE SHARE. "TENANT'S PROPORTIONATE SHARE,"
as used in this Lease, shall mean the percentage figure in ITEM 12 of the Basic
Lease Provisions.
2.4.3 OPERATING EXPENSES. Subject to Paragraph 2.4.4, below,
"OPERATING EXPENSES" shall mean all costs, fees, amounts, disbursements and
expenses of every kind and nature paid or incurred by or on behalf of Landlord
with respect to any Expense Year (defined in Paragraph 2.4.5, below), as
determined by Landlord in its good faith discretion, in connection with its
ownership, operation, maintenance, insurance, restoration (only to the extent of
Permitted Capital Expenses (defined below)), management, replacement (only to
the extent of Permitted Capital Expenses) or repair of the Premises in a first
class manner (but taking into account Landlord's limited obligations to operate,
maintain and repair the Premises hereunder), including, without limitation, any
amounts paid or incurred with respect to:
(A) Landlord's Operational Expenses (as defined in Paragraph
5.1 below); provided, however, that to the extent such costs are (i) for
Permitted Capital Items (defined in Section 2.4.4(m), below), in each case the
cost of each such Permitted Capital Item shall be amortized (with interest at a
rate equal to the floating commercial loan rate announced from time to time by
such national recognized money-center bank as Landlord shall in good faith
select, as its prime or reference rate, plus 2% per annum (the "INTEREST RATE"))
over the useful life (the "USEFUL LIFE") of such Permitted Capital Item, as
reasonably determined by Landlord in accordance with sound accounting principles
consistently applied (defined below) (such amortized costs of Capital Items that
are includable in Operating Expenses are referred to herein as "PERMITTED
CAPITAL EXPENSES" ) and (ii) are incurred by Landlord in connection with the
painting of the Premises (or any portion thereof) at any time during the Term
("PAINTING COSTS"), such Painting Costs shall be amortized by Landlord on a
straight line basis over a period of five (5) years. Any cost of Permitted
Capital Items which are amortized, shall result in equal payments being included
in Operating Expenses for the Expense Year of the expenditure and all succeeding
Expense Years during the amortization period (provided, however, that Tenant
shall have no obligation to pay any such amortization payments that are
allocable to any Expense Year during which no portion of the Term occurs).
(B) Premiums for property, casualty, liability, rent
interruption, earthquake, terrorism, flood or other types of insurance carried
by Landlord (whether carried on a portfolio or individual building basis) from
time to time pursuant to Paragraph 12.2 below, and deductibles thereunder
actually paid by Landlord with respect thereto; provided, however, that any
costs incurred for deductibles under any earthquake insurance policies shall be
amortized in the manner provided in Paragraph 2.4.3(a), above, with the
amortization period being stipulated for such costs ten (10) years.
(C) Intentionally Omitted
5
(D) Accountants' and consultants' fees and expenses reasonably
incurred in connection with the management, operation, administration,
maintenance, and repair of the Premises (but taking into account Landlord's
limited obligations to operate, maintain and repair the Premises hereunder).
(E) Attorneys', accountants' and consultants' fees and
expenses reasonably incurred in connection with (and to the to the extent that
such fees and expenses relate to) seeking or obtaining reductions in or refunds
of Property Taxes, or components thereof, or the costs of contesting the
validity or applicability of any governmental enactments which may affect
Operating Expenses.
(F) A management fee for the management, maintenance,
administration or operation of the Premises in an amount that is consistent with
Institutional Owner Practices (and which shall, during the Initial Term, not
exceed an amount equal to three percent (3%) of the Base Rent payable hereunder
with respect to such Expense Year).
(G) Sales, use and excise taxes on goods and services
purchased by Landlord in connection with its performance of its obligations
hereunder.
(H) Intentionally Omitted
(I) Intentionally Omitted
(J) Intentionally Omitted
2.4.4 The following expenses shall not be included within Operating
Expenses chargeable to Tenant:
(A) Any ground lease rental;
(B) Costs, including permit, license and inspection costs,
incurred by Landlord with respect to the installation of improvements or
incurred in renovating or otherwise improving, decorating, painting or
redecorating space in the Building;
(C) Marketing costs, including leasing commissions, attorneys'
fees incurred by Landlord in connection with the negotiation and preparation of
letters, deal memos, letters of intent, leases subleases and/or assignments,
space planning costs, and other similar costs and expenses;
(D) That portion of the cost of goods and/or services provided
by Landlord to the extent in excess of market rates;
(E) Interest, principal, points and fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building or the land thereunder;
(F) Attorney's fees except as set forth in Paragraph 2.4.3(e)
above;
(G) Lessor's general corporate overhead;
(H) Reserves for future expenses;
(I) Any costs or expenses for which Landlord is paid or
reimbursed by insurance;
(J) All interest and penalties incurred as a result of
Landlord's negligent or willful failure to pay bills as the same become due;
(K) Costs associated with the operation of the business of the
entity which constitutes Landlord as the same are distinguished from the costs
of operation of the Premises, including accounting and legal matters, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the Premises or the entity constituting Landlord and costs incurred
by Landlord to the extent in connection with or as a result of Landlords
ownership, operation or management of any properties other than the Premises;
(L) Costs (in excess of deductible amounts, which shall be
included in Operating Expenses under Section 2.4.3(a), above) incurred for the
restoration and repair of the Premises following a Casualty (defined in
Paragraph 11.1, below) or a Taking (defined in Paragraph 15.1, below);
(M) The cost of any form of improvements, additions, repairs,
or replacements to the Premises or to the systems, equipment or machinery
operated or used in connection with the Premises that, under sound accounting
and property management principles consistently applied, constitute a capital
item, addition, repair, improvement, or replacement (collectively, "CAPITAL
ITEMS"), except for costs incurred for any Capital Items that: (i) are intended
to reduce Operating Expenses or to effect other economies in the operation or
maintenance of the Premises (a "COST SAVINGS DEVICE"), (ii) are required under
any Applicable Law which first becomes effective after (or which is first
enforced after) the Effective Date to require such improvements, additions,
repairs, or replacements (or which are otherwise requested in writing by
Tenant), or that are first required for the implementation of any conservation
measure mandated by any Law, (iii) are required to be incurred by Landlord in
connection with the performance by Landlord of any of its obligations hereunder
(including, without limitation, under Paragraph 5.1, below), (any such Capital
Items described in clauses (i) through (iii), above, the "PERMITTED CAPITAL
ITEMS") the amortized (in accordance with Paragraph 2.4.3(a), above) shall be
included in Operating Expenses; or
6
(N) Costs incurred in connection with the testing,
remediation, removal, handling or reporting of any Hazardous Materials on the
Premises (other than any Hazardous Materials which become present (or which are
reasonably expected to be present)in, on, under or about any part of the
Premises as a result of any act or omission of Tenant or any of the other
Tenant's Parties); or
The foregoing schedule of exclusions from Operating Expenses
is intended to function solely as an exclusionary listing and shall not be
interpreted to permit or authorize any cost or expense to be included in
Operating Expenses which is not permitted to be included in Operating Expenses
under the other express terms and conditions of this Lease. In no event shall
Landlord bill Tenant for more than 100% of the cost actually incurred by
Landlord for Operating Expenses.
2.4.5 MONTHLY PAYMENTS AND ANNUAL RECONCILIATION. On the first day
of each month of the Term, Tenant shall pay Landlord a sum equal to 1/12 of the
estimated amount of Additional Rent for that particular Expense Year based on
Landlord's reasonable estimate thereof, to be delivered to Tenant on or about
the date that is ninety (90) days following the end of each Expense Year during
the Term. The monthly payments are subject to increase or decrease as determined
by Landlord to reflect revised estimates of such costs. Tenant shall pay within
thirty (30) days following demand therefor by Landlord any increases in
estimated Additional Rent upon receipt of any initial or revised estimate
retroactive to the first month of the applicable Expense Year. The payments made
by Tenant shall be reconciled annually, and following such reconciliation,
Landlord shall deliver to Tenant a statement setting forth Tenant's
Proportionate Share of actual Operating Expenses and Taxes (the "ACTUAL
STATEMENT"). If Tenant's total payments of Additional Rent with respect to such
Expense Year are less than the actual Additional Rent due under Paragraph 2.4.1,
Tenant shall pay the difference within ten (10) days following demand therefor
by Landlord; if the total payments of Additional Rent made by Tenant with
respect to such Expense Year are more than the actual Additional Rent due under
Paragraph 2.4.1, Landlord shall retain such excess and credit it to Tenant's
next accruing Additional Rent payments, except at the end of the Term, when any
excess will be refunded. Any failure or delay by Landlord in delivering any
estimate, demand or reconciliation shall not affect the rights and obligations
of the parties hereunder; provided, however, that Tenant shall have no
obligation to pay any Operating Expenses for which it receives its first bill or
statement more than one (1) year following the delivery by Landlord of
Landlord's Actual Statement for the Expense Year to which such amounts relate
(except to the extent the same relates to Property Taxes and utilities, which
may be billed to Tenant at a later date, but in no event later than two (2)
years after the delivery by Landlord of Landlord's Actual Statement for the
Expense Year in question). As used in this Lease. "EXPENSE YEAR" shall mean each
Fiscal Year (defined below) in which any portion of the Term of this Lease
falls, through and including the Fiscal Years in which the Term of this Lease
commences and expires. As used herein, "FISCAL YEAR" shall mean the twelve (12)
consecutive month period commencing on October 1 of each calendar year and
expiring on September 30 of the following calendar year, or any other twelve
(12) consecutive month period selected in good faith by Landlord as its fiscal
year (and in the event that during the Term of this Lease Landlord shall elect
to change its fiscal year, a Fiscal Year may be a period of less than twelve
(12) months to the extent required to accommodate such change in the Fiscal
Year).
2.4.6 TENANT'S AUDIT RIGHTS. Provided that Tenant is not then in
default, Tenant shall have the right, once each Expense Year, to cause a
Qualified Person (as defined below) to reasonably review supporting data for any
portion of the applicable Actual Statement delivered by Landlord in accordance
with the following procedure; provided, however, that Tenant shall not have the
right to audit all documentation relating to Premises operations as this would
far-exceed the relevant information necessary to properly document a
pass-through billing statement; provided, further however, that real estate tax
statements, and information on utilities, repairs, maintenance and insurance
will be made available to Tenant in accordance with the following:
(A) In the event that Tenant shall desire to exercise its
right under this Paragraph 2.4.6 to cause a Qualified Person to reasonably
review supporting data for any portion of the applicable Actual Statement, (i)
Tenant shall, within thirty (30) days after any Actual Statement is delivered,
deliver a written notice to Landlord specifying the portions of the Actual
Statement that it claims to be incorrect and (ii) Tenant shall simultaneously
pay to Landlord all amounts due from Tenant to Landlord as specified in the
Actual Statement. In no event shall Tenant be entitled to withhold, deduct, or
offset any monetary obligation of Tenant to Landlord under the Lease (including
without limitation, Tenant's obligation to make all payments of Rent) pending
the completion of and regardless of the results of any review of records under
this Paragraph. The right of Tenant under this Paragraph may only be exercised
once for any Actual Statement, and if Tenant fails to meet either of the
conditions specified in clause (i) and (ii) of the first sentence of this
Paragraph 2.4.6(a), each of which is a condition precedent to the exercise by
Tenant of its audit rights under this Paragraph 2.4.6, the right of Tenant under
this Paragraph with respect to a particular Actual Statement shall be deemed
waived.
(B) Tenant agrees that any review of records under this Paragraph
shall be at the sole expense of Tenant and shall be conducted by a Qualified
Person. Tenant acknowledges and agrees that the information contained in any
records reviewed under this Paragraph constitute confidential information of
Landlord ("LANDLORD'S PROPRIETARY INFORMATION"), which shall not be disclosed to
anyone other than the Qualified Person performing the review, the principals of
Tenant who receive the results of the review, and Tenant's legal representatives
and accounting employees. Unless required by any applicable law, court order,
legal process or applicable securities rules or regulations, the disclosure of
such information to any other person, whether or not caused by the conduct of
Tenant, shall constitute an Event Of Default of this Lease.
7
(C) Any errors disclosed by the review shall be promptly
corrected by Landlord, provided, however, that if Landlord disagrees with any
such claimed errors, another review (the "FINAL REVIEW") shall be made by a
reputable Certified Public Accounting firm mutually approved by Landlord and
Tenant which has not been engaged by either party for the past three (3) years.
The Final Review shall be binding on the parties and the cost thereof shall be
shared equally by Landlord and Tenant unless (a) the Final Review indicates that
Tenant was overcharged by 5% or more with respect to amounts payable as
Additional Rent under this Paragraph 2.4 for the applicable Expense Year, in
which case Landlord shall bear the cost of the Final Review or (b) the Final
Review indicates that Tenant was undercharged with respect to amounts payable as
Additional Rent under this Paragraph 2.4 for the applicable Expense Year, in
which case Tenant shall bear the cost of the Final Review. In the event that is
determined that, with respect to any Expense Year, Tenant has paid an amount in
excess of its obligations to pay Additional Rent under this Paragraph 2.4, the
amount of such overpayment (plus, if it is determined that Tenant was
overcharged by an amount in excess of 5% with respect to its obligations to pay
Additional Rent under this Paragraph 2.4 for any Expense Year, interest on such
amounts at the Interest Rate) shall be credited against Tenant's subsequent
installment obligations to pay the estimated Additional Rent (or shall be paid
to Tenant, if the Lease Term has expired). In the event that it is determined
that, with respect to any Expense Year, Tenant has paid an amount that is less
than its obligations to pay Additional Rent under this Paragraph 2.4, the amount
of such underpayment shall be paid by Tenant to Landlord with the next
succeeding installment obligation of estimated Additional Rent. A "QUALIFIED
PERSON" means an independent, third-party accountant or other person (including
members of Tenant's own internal accounting or finance staff) experienced in
accounting for income and expenses of industrial projects engaged solely by
Tenant on terms which do not entail any compensation based or measured in any
way upon any savings in Additional Rent that might be achieved through the audit
process and which has agreed, pursuant to a written non-disclosure agreement
(the form of which shall be determined by Landlord in Landlord's good faith
discretion) not to disclose and to keep confidential all of Landlord's
Proprietary Information to which it is provided access during its inspection of
Landlord's records.
2.5 PAYMENT OF RENT. The first full calendar month's Rent shall be
due and payable upon execution of this Lease in the total amount shown in ITEM
10 of the Basic Lease Provisions. Thereafter, Tenant shall pay to Landlord all
amounts due from Tenant to Landlord hereunder, whether for Rent or otherwise, in
lawful money of the United States, at the place set forth in ITEM 2 of the Basic
Lease Provisions, or at such other addresses as Landlord may have hereafter
specified by written notice, without any deduction or offset except as expressly
set forth in Paragraph 1.3.1(b) or Paragraph 3.1.4 of this Lease. Base Rent and
Additional Rent shall be paid to Landlord without demand and without offset or
deduction except as expressly set forth in Paragraph 1.3.1(b) or Paragraph 3.1.4
of this Lease, in advance on the first day of each and every calendar month
during the Term. All other amounts due and payable to Landlord pursuant to the
terms hereof shall be paid to Landlord upon demand pursuant to the terms of this
lease. The Base Rent or Additional Rent for any fractional calendar month at the
commencement or end of the Term shall be prorated on a daily basis. Wherever in
this Lease Tenant is obligated to pay an amount "immediately" or "on demand"
such amount shall be payable within thirty (30) days following Tenant's receipt
of Landlord's invoice therefor, which shall, if applicable, be accompanied by
reasonable supporting documentation.
2.6 LATE PAYMENTS. Tenant acknowledges that late payment by Tenant
of any sum owed to Landlord under this Lease (including, but not limited to any
amount due as Rent hereunder) will cause Landlord to incur costs not
contemplated by this Lease, the exact amounts of which are extremely difficult
and impracticable to fix. Such costs include, without limitation, processing and
accounting charges, time spent addressing the issue with Tenant, and late
charges that may be imposed on Landlord by the terms of any obligation or note
secured by any encumbrance covering the Premises. Therefore, if any installment
of Rent or other material payment due from Tenant is not received by Landlord
when due within five (5) days following the date due more than once in any
twelve (12) calendar month period, Tenant shall pay to Landlord an additional
sum (a "LATE CHARGE") in an amount equal to five percent (5%) of the overdue
Rent or other payment as a late charge. Late Charges shall be deemed Rent and
shall be paid by Tenant to Landlord immediately upon written demand. The parties
agree that this late charge represents a fair and reasonable estimate of the
administrative and other costs that Landlord will incur by reason of a late
payment by Tenant. Acceptance of any Late Charge shall not constitute a waiver
of Tenant's default with respect to the overdue payment, nor prevent Landlord
from exercising any of the other rights and remedies available to Landlord under
this Lease, at law or in equity.
3. USE.
3.1 USE OF PREMISES.
3.1.1 GENERAL. Subject to any additional uses or limitations on
use contained in ITEM 13 of the Basic Lease Provisions, the Premises shall be
used only for the purpose of receiving, storing, shipping and selling (other
than retail) products, materials and merchandise made and/or distributed by
Tenant, for reasonably incidental office uses and for such other lawful purposes
as may be directly incidental thereto (the "AGREED USE"), and for no other use
or purpose. Outside storage (except inside of trucks and trailers parked in the
truck court located on the south side of the Building) is prohibited without
Landlord's prior written consent, which may be withheld in Landlord's sole and
absolute discretion. Tenant acknowledges and agrees that, except to the extent
expressly set forth in this Lease, Landlord has not made any representations or
warranties with respect to the suitability of the Premises for Tenant's uses.
Tenant and Tenant's Parties shall at all times comply with all nondiscriminatory
rules and regulations (to the extent such rules and regulations are consistent
with Institutional Owner Practices) regarding the Premises as Landlord may
establish from time to time; provided, however, that (a) in the event of a
conflict between such rules and regulations and this Lease, this Lease shall
prevail and control and (b) Tenant shall have no liability hereunder for any
breach of any such rules and regulations unless and until Tenant has received
notice of such breach and has been afforded opportunity to cure the same. As
used herein, "INSTITUTIONAL OWNER PRACTICES" shall mean the practices of the
majority of the institutional owners of institutional grade commercial warehouse
projects in the Inland Empire area.
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3.1.2 COMPLIANCE WITH LAWS. Tenant shall be responsible for and
shall at its own cost and expense obtain any and all licenses and permits
necessary to permit the Agreed Use of the Premises by Tenant for its specific
business operations and purposes (as opposed to legal occupancy of the Premises
in general). Except as expressly provided in this Lease, Tenant shall comply
with all laws (including, without limitation, the Americans with Disabilities
Act of 1990 (the "ADA")), ordinances, building codes, rules, regulations, orders
and directives of any governmental authority having jurisdiction (including
without limitation any certificate of occupancy) now or in the future applicable
to the Premises (collectively, "APPLICABLE LAWS") applicable to Tenant's
Alterations (defined below) or use of the Premises. Tenant shall not place a
load upon the floor of the Premises which exceeds the load per square foot which
such floor was designed to carry and/or which is allowed by law. Tenant shall
promptly comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances in, on, at, about or upon, or connected
with, the Premises, all at Tenant's sole cost and expense. Tenant shall not
permit any objectionable or unpleasant odors, smoke, dust, gas, noise or
vibrations to emanate from the Premises, nor take any other action which would
constitute a nuisance or would disturb or endanger any other persons.
3.1.3 INCREASE IN INSURANCE. Tenant shall not permit the Premises
to be used for any purpose or in any manner (including without limitation any
method of storage) which would render the insurance thereon void or the
insurance risk more hazardous or cause the state insurance authority to disallow
any sprinkler credits. If any increase in the fire and extended coverage
insurance premiums paid by Landlord is caused by Tenant's use and occupancy of
the Premises, or if Tenant vacates the Premises and causes any increase in such
premiums, then Tenant shall pay as Rent, immediately upon demand, the amount of
such increase to Landlord, and, upon demand by Landlord, shall, at Tenant's sole
cost and expense, correct the cause of such disallowance, increased cost,
penalty or surcharge to the satisfaction of the particular insurance provider or
authority, as applicable.
3.1.4 RENT ABATEMENT. In the event that, any Abatement Event
(defined below), shall cause a material and substantial interference with
Tenant's use or occupancy of the Building or a material portion thereof for the
Agreed Use, and Tenant does not use, the Building or a material portion thereof,
then Tenant shall give Landlord notice of such Abatement Event, and if such
Abatement Event continues for five (5) consecutive days after Landlord's receipt
of any such notice (the "ELIGIBILITY PERIOD"), then Tenant's obligations to pay
Base Rent and Additional Rent under Paragraph 2.4, above, shall be abated or
reduced, as the case may be, after expiration of the Eligibility Period for such
time that there shall continue to exist a material and substantial interference
with Tenant's use or occupancy of the Building or a material portion thereof for
the Agreed Use and Tenant shall not use the Building or a material portion
thereof, in the proportion that the rentable area of the portion of the Premises
with respect to which there shall exist a material and substantial interference
with Tenant's use of the same for the Agreed Use and which Tenant does not use,
bears to the total rentable area of the Premises. If, however, Tenant reoccupies
any portion of the Premises during such period, the Base Rent and Additional
Rent allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant to Landlord from the
date Tenant reoccupies such portion of the Premises. As used herein, "ABATEMENT
EVENT" shall mean only: (a) any failure by Landlord to substantially complete
the Additional Landlord's Work on or before the Outside Completion Date (defined
below); (b) any (i) alteration or construction by Landlord in the Building or
the Premises after the Commencement Date, (ii) any repair or maintenance which
Landlord is required to perform hereunder and which Landlord fails to perform
after the Commencement Date; (c) any failure, for any reason within Landlord's
reasonable control, to provide services, utilities or access to the Premises; or
(d) the presence of any Hazardous Materials in, on, under or about, the Premises
or any portion thereof (or the abatement by Landlord thereof in accordance with
Paragraph 3.1.4, below) that were present in, on, under or about the Premises on
the Effective Date or that become present in, on, under or about the Premises or
any portion thereof at any time after the Effective Date other than as a result
of any act or omission of Tenant or any other Tenant's Party. As used herein,
the "OUTSIDE COMPLETION DATE" shall mean April 15, 2006; provided, however, that
notwithstanding anything to the contrary herein, the Outside Completion Date
shall be extended on a day for day basis for each day of delay in substantial
completion of the material Landlord's Work that is caused by a Tenant Delay or a
Qualifying Holdover Delay. Such right to abate Base Rent and Additional Rent
under this Paragraph 3.1.4 shall be Tenant's sole and exclusive remedy at law or
in equity for an Abatement Event; provided, however, that such right to abate
rent (for an Abatement Event) under this Section 3.1.4 shall not in any manner
prohibit the exercise by Tenant of its right to terminate this Lease in
accordance with and under Section 1.3.2(b), above (to the extent permitted
thereunder); provided, further, however, that if Landlord has not cured any such
Abatement Event (other than any Abatement Event described in clause (a), above)
within one hundred eighty (180) days after the Landlord's receipt of written
notice of the Abatement Event from Tenant, Tenant shall additionally have the
right to terminate this Lease during the first five (5) business days of each
calendar month following the end of such one hundred eighty (180) day period and
continuing until such time as Landlord shall have cured the Abatement Event,
which right may be exercised only by delivery of notice to Landlord (the
"ABATEMENT EVENT TERMINATION NOTICE") during such five (5) business-day period,
and shall be effective as of the date set forth in the Abatement Event
Termination Notice (which date shall not be less than thirty (30) days nor more
than ninety (90) days after the date Tenant delivers the Abatement Event
Termination Notice).
3.2 HAZARDOUS MATERIALS.
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3.2.1 GENERAL. Except for the incidental use of certain commonly
used products in customary amounts for routine cleaning and maintenance of
floors, bathrooms, windows, kitchens, and administrative offices, landscaping,
parking areas and other improvements on the Premises, and except for materials
typically contained within Tenant's consumer products; all other hazardous
materials have been disclosed by Tenant to Landlord in the Environmental
Questionnaire (as defined below) ("PERMITTED HAZARDOUS MATERIALS"), Tenant
hereby represents, warrants and covenants that Tenant will not (and shall not
permit or any other Tenant's Party to) produce, use, store, generate, treat,
release, remediate, discharge, dispose of, handle, manufacture, or transport any
Hazardous Materials (as defined below) in, on, at, under, about, to or from the
Premises (the foregoing activities are sometimes referred to herein,
collectively, as "HAZARDOUS MATERIALS ACTIVITIES"). Tenant has fully and
accurately completed Landlord's Pre-Leasing Environmental Exposure Questionnaire
("ENVIRONMENTAL QUESTIONNAIRE") attached hereto as EXHIBIT E, which is
incorporated herein by this reference. Tenant shall not, without Landlord's
prior written consent in Landlord's sole and absolute discretion, cause or
permit any Hazardous Material (except for Permitted Hazardous Materials) to be
brought upon, placed, stored, or used on, in, at, under or about the Premises by
Tenant or Tenant's Parties, and shall not permit any Hazardous Materials to be
manufactured, generated, blended, handled, recycled, disposed of, or released
on, in, at, under or about the Premises by Tenant or Tenant's Parties. Tenant
shall not excavate, disturb or conduct any testing of any soils in, on, under or
about the Premises without obtaining Landlord's prior written consent (in
Landlord's sole and absolute discretion), and any investigation or remediation
in, on, under or about the Premises shall be conducted only by a consultant
approved in writing by Landlord and pursuant to a work letter approved in
writing by Landlord. Tenant shall not violate any Environmental Laws (defined
below) in its use of the Premises or conduct of its business operations
therefrom. As used herein, "HAZARDOUS MATERIAL" means any chemical, substance,
material, controlled substance, object, waste or any combination thereof, which
is or may be hazardous to human health, safety or to the environment due to its
radioactivity, ignitability, corrosiveness, reactivity, explosiveness, toxicity,
carcinogenicity, infectiousness or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, benzene, toluene, ethyl benzene, xylenes, waste oil, asbestos, radon,
polychlorinated biphenyls (PCBs), degreasers, solvents, and any and all of those
chemicals, substances, materials, controlled substances, objects, wastes or
combinations thereof which are now or may become in the future listed, defined
or regulated in any manner as "hazardous substances," "hazardous wastes," "toxic
substances," "solid wastes" or bearing similar or analogous definitions pursuant
to any and all Environmental Laws. As used herein, "ENVIRONMENTAL LAWS" means
any federal state or local laws, ordinances, codes, statutes, regulations,
administrative rules, policies and orders, and other authority, existing now or
in the future, which classify, regulate, list or define hazardous substances,
materials, wastes contaminants, pollutants and/or the Hazardous Materials,
pertaining to (a) the existence, release, threatened release, use, storage,
handling, generation, remediation and/or transportation of Hazardous Materials,
or (b) health, industrial hygiene or the environmental conditions in, on, under,
above or about the Premises, including without limitation the following statutes
and regulations, and any other legal authority, regulations, or policies
relating to or implementing such statutes and regulations:
(A) FEDERAL. Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA" or "Superfund"), as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. ss.
9601 et seq.; Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
ss. 6901 et seq.; Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 et seq.; Clean Air
Act ("CAA"), 42 U.S.C. ss. 78401 et seq.; Toxic Substances Control Act ("TSCA"),
12 U.S.C. ss. 2601 et seq.; Federal Water Pollution Control Act, 33 U.S.C. ss.
1317 et seq.; The Refuse Act of 1899, 33 U.S.C. ss. 407; Occupational Safety and
Health Act , 29 U.S.C. ss. 651 et seq.; Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq.; United States Department of Transportation
Table (49 C.F.R. 172.101 and amendments thereto) and the Environmental
Protection Agency Table (40 C.F.R. Part 302 and amendments thereto);
(B) CALIFORNIA. Carpenter-Presley-Tanner Hazardous Substance
Account Act ("CALIFORNIA SUPERFUND"), Cal. Health & Safety Code ss. 25300 et
seq.; California Hazardous Waste Control Act, Cal. Health & Safety Code Sections
25100 et seq.; Porter-Cologne Water Quality Control Act ("PORTER-COLOGNE ACT"),
Cal. Water Code ss. 13000 et seq.; Hazardous Waste Disposal Land Use Law, Cal.
Health & Safety Code ss. 5220 et seq.; Safe Drinking Water and Toxic Enforcement
Act of 1986 ("PROPOSITION 65"), Cal. Health & Safety Code ss. 25249.5 et seq.;
Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code ss.
25280 et seq.; California Hazardous Substance Act, Cal. Health & Safety Code ss.
28740 et seq.; Air Resources Law, Cal. Health & Safety Code ss. 39000 et seq.;
Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety
Code ss.ss. 25500-25541; Toxic Pits Cleanup Act of 1984 ("TCPA"), Cal. Health &
Safety Code ss.ss. 25208-25208.17;
(C) OTHER LAWS AND REGULATIONS. All other regulations
promulgated pursuant to said foregoing laws or any amendments or replacement
thereof, provided such amendments or replacements shall in no way limit the
original scope and/or definition of Hazardous Materials defined herein as of the
execution date of this Lease.
3.2.2 REPORTING. Tenant and any subtenant of Tenant shall submit to
Landlord, within ten (10) business days following its receipt of the same (or if
prepared by Tenant or any such subtenant of Tenant, within ten (10) business
days following its preparation of the same), a full and complete copy of each of
the following:
(A) Any written communication, demand, complaint, pleading,
threat, notice or inquiry received or communicated by Tenant or any subtenant of
Tenant that is received from or delivered to any governmental agency, any
adjacent landowner, or any other third party relating in any way to: (i) any
Hazardous Material Activities by Tenant or any other Tenant's Party or any
federal, state, local or other governmental or quasi-governmental approval with
respect to the existence, release, use, storage, handling, generation,
remediation or transportation of Hazardous Materials by Tenant or any other
Tenant's Party ("HAZARDOUS MATERIAL PERMIT"), (ii) the actual or alleged
presence and/or release of any Hazardous Materials by Tenant or any other
Tenant's Party or other adverse environmental condition in, on, under, about or
adjacent to the Premises, (iii) any bodily injury or property injury or property
damage suffered in connection with any Hazardous Material Activities by Tenant
or any other Tenant's Party occurring (or environmental condition located) in,
on, about or under the Premises, or (iv) any actual or alleged violation of any
Environmental Law by Tenant or any other Tenant's Party relating to, or
occurring in, under, on or about the Premises; and
(B) Any environmental or Hazardous Materials assessment, audit
or report prepared by or for Tenant or any other Tenant's Party relating in any
manner to the Premises.
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3.2.3 DISCLOSURE AND WARNING OBLIGATIONS. Tenant shall also comply
with all laws, ordinances and regulations regarding warning obligations with
respect to the presence of Hazardous Materials at the Premises and any Hazardous
Materials Activities at the Premises by Tenant or any other Tenant's Party or as
otherwise may be required by law. Tenant acknowledges and agrees that it will
promptly notify Landlord prior to reporting to any governmental or
quasi-governmental agencies any matters relating to Hazardous Materials or
Hazardous Materials Activities by Tenant or any other Tenant's Party at the
Premises and Landlord shall have the right to review such reports. So long as
Tenant will not be in violation of any laws requiring Tenant to make such
reports, Landlord shall have the right to assume control over the making of such
reports to the applicable governmental or quasi-governmental agencies. Tenant
further agrees to cooperate with Landlord in complying with all Environmental
Laws regarding the disclosure of the presence or danger of Hazardous Materials,
including, without limitation, all notices or other requirement under California
Health and Safety Code Section 25915 et seq., and 25249.5 et seq. and California
Code of Regulations Section 12000 et seq., and 25249.5 et seq. and California
Code of Regulations Section 12000 et seq or any successor laws. Notwithstanding
the foregoing, Tenant shall, prior to delivering any notices required by this
Paragraph 3.2.3, to any governmental entity or agency, deliver written notice to
Landlord of the same so as to afford Landlord ample opportunity to take over
such obligation if Landlord so desires.
3.2.4 LANDLORD'S RIGHTS. Landlord shall have the right (but not the
obligation) to enter upon the Premises as is reasonably necessary in order to
cure any non-compliance by Tenant with the terms of this Paragraph 3.2 or any
Environmental Laws or any release, discharge, spill, improper use, storage,
handling or disposal of Hazardous Materials by Tenant or any other Tenant's
Party on, in, at, under, from, or about the Premises, regardless of the quantity
of any such release, discharge, spill, improper use, storage, handling or
disposal of Hazardous Materials on or about the Premises, the full cost of which
shall be deemed to be Rent and shall be due and payable by Tenant to Landlord
immediately upon demand.
3.2.5 DEFAULT; TERMINATION OF LEASE. If any material information
provided to Landlord by Tenant in the Environmental Questionnaire, or otherwise
relating to information concerning Hazardous Materials is false, incomplete, or
misleading in any material respect, the same shall be deemed an Event Of Default
by Tenant under this Lease. Landlord shall have the right to terminate the
Lease, after delivery of written notice to Tenant and after Tenant has been
afforded a reasonable opportunity to cure, in the event that (i) any use of the
Premises by Tenant involves the generation or storage, use, treatment or
disposal of Hazardous Materials in a manner or for a purpose prohibited by any
governmental agency or authority; (ii) Tenant has been required by any lender or
governmental authority to take remedial action in connection with Hazardous
Materials contaminating the Premises if the contamination resulted from Tenant's
action, negligent inaction or use of the Premises; or (ii) Tenant is subject to
an enforcement order issued by any governmental authority in connection with the
use, disposal or storage of Hazardous Materials on the Premises (unless Tenant
is diligently seeking compliance with such enforcement order).
3.2.6 INDEMNIFICATION. Without limiting in any way Tenant's
obligations under any other provision of this Lease, Tenant and its successors
and assigns shall indemnify, protect, defend and hold Landlord, Landlord's
Advisor and Landlord's Managing Agent, and each of their partners, officers,
directors, shareholders, employees, agents, lenders, contractors and each of
their respective successors and assigns (collectively, the "LANDLORD INDEMNIFIED
PARTIES") harmless from any and all Claims (defined in Paragraph 12.1, below),
including, without limitation, damages arising out of the diminution in the
value of or loss of use of the Premises (or any portion thereof) and sums paid
in settlement of claims, which arise during or after the Term in whole or in
part as a result of or related in any manner to the presence or suspected
presence of any Hazardous Materials, in, on, at, under, from or about the
Premises and/or other adjacent properties due to, caused by or in any manner
related to Tenant's or Tenant's Parties' activities or negligent failures to
act, on or about the Premises.
3.2.7 REMEDIATION OBLIGATIONS OF LANDLORD AND TENANT.
(A) TENANT'S OBLIGATIONS. In the event any investigation or
monitoring of site conditions or any clean-up, containment, restoration, removal
or other remedial work (collectively, the "REMEDIAL WORK") is required under any
Applicable Law (including, without limitation, any Environmental Law), or by any
governmental entity as the result of any Hazardous Materials Activities by
Tenant or any other Tenant's Party upon, about, in, at, above or beneath the
Premises, Tenant shall, at Tenant's sole cost and expense, perform or cause to
be performed the Remedial Work in compliance with all Applicable Laws. All
Remedial Work shall be performed by one or more qualified contractors, selected
by Tenant and approved in advance in writing by Landlord in Landlord's
reasonable discretion. All costs and expenses reasonably incurred by Landlord in
connection with such Remedial Work shall be paid by Tenant.
(B) LANDLORD'S OBLIGATIONS.
(I) To Landlord's Actual Knowledge (defined below), as of
the Effective Date, no Hazardous Materials are present in, on, under or about
the Premises (or any portion thereof) in violation of Environmental Laws and
there has been no release of Hazardous Materials into the Environment from the
Premises. As used herein, "LANDLORD'S ACTUAL KNOWLEDGE" shall mean the actual
knowledge of Buffi Hendrix (the Landlord's third-party property manager) and
Merrill Curtis (the Landlord's third-party asset manager) as of the Effective
Date with no duty of inquiry or investigation. Landlord represents that prior to
the date of mutual execution of this Lease, it has provided Tenant with a copy
of any and all environmental assessments for the Premises in Landlord's
possession which are dated within 24 months prior to the Effective Date.
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(II) Subject to Section 3.2.7(a), above, in the event that
during the Term of this Lease, (A) it is determined that there exists in, on,
under or about the Premises any Hazardous Materials, (x) which existed in, on,
under or about the Premises prior to the Effective Date in a condition requiring
remediation under Environmental Laws or (y) which became present in, on, under
or about the Premises after the Effective Date as a result of the release of
such Hazardous Materials in, on, under or about the Premises by an agent,
employee or contractor of Landlord and (B) if (x) a governmental agency having
jurisdiction with respect to the presence of Hazardous Materials in, under, on
or about the Premises requires remediation of such Hazardous Materials, or (y)
the presence of such Hazardous Materials in, on, under or about the Premises
unreasonably and materially affects the safety of Tenant's employees or the
operation of Tenant's business or creates a significant health hazard for
Tenant's employees, then Landlord shall, at Landlord's sole cost and expense and
not as an Operating Expense, (1) with reasonable promptness and diligence,
commence to investigate the scope of the Hazardous Materials contamination
required to be so remediated, (2) prepare a remediation plan therefor consistent
with Applicable Laws and (3) abate or remediate such contamination (to the
extent required under Applicable Laws) in accordance with all Applicable Laws
and perform all other Remedial Work in connection therewith.
(III) In the event the existence or the remediation of any
Hazardous Materials that Landlord is required to remediate under this Section
3.2.7(b) shall materially and substantially interfere with Tenant's use of the
Premises or a material portion thereof for the Agreed Use for a period in excess
of the Eligibility Period (and on the condition that Tenant actually does not
use the Premises or a substantial portion thereof), Tenant shall be entitled to
Rent Abatement in accordance with Paragraph 3.1.4, above. Except as expressly
provided otherwise in Section 3.1.4, above, Landlord shall have no form of
liability or responsibility for any release into the environment of or
contamination from Hazardous Materials to the extent the same results from (A)
any act, omission, negligence or misconduct of Tenant or any Tenant's Party or
(B) except with respect to any Hazardous Materials which are required to be
remediated by Landlord under Paragraph 3.2.7(b)(ii), above, any act or omission
of any third party (i.e., and entity or individual that is not an agent,
employee or contractor of Landlord).
4. TAXES
4.1 PAYMENT OF REAL PROPERTY TAXES. Landlord shall pay all real
property taxes; current installments of any general or special assessments;
license fees, commercial rental taxes, in lieu taxes, levies, charges, penalties
or similar impositions imposed by any authority having the direct power to tax,
and which are to be paid by or are incurred by Landlord, including but not
limited to, the following: (a) any tax on or measured by Rent received by
Landlord from the Premises or as against Landlord's business of leasing the
Premises; (b) any assessment, tax, fee, levy or charge imposed by governmental
agencies for such services applicable to the Premises as fire protection,
street, sidewalk and road maintenance, transportation, refuse removal and for
other governmental services formerly provided without charge to property owners
or occupants; and (c) costs of determining, filing, contesting and appealing any
such tax, assessment or charge, including accountants', attorneys' and
consultants' fees (collectively, "TAXES"); provided, however that Taxes shall
not include (i) any income, inheritance, estate or corporate franchise taxes of
Landlord or (ii) any assessments incurred by Landlord on a voluntary basis.
Taxes shall also include any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of Taxes. It is hereby acknowledged by
Tenant and Landlord that Proposition 13 was adopted by the voters of California
in June 1978 and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, transportation, refuse removal and other
governmental services formerly provided without charge to property owners or
occupants. It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies and charges, and all similar
assessments, taxes, fees, levies and charges be included within the definition
of Taxes for purposes of this Lease.
4.2 LIABILITY FOR ALL PERSONAL PROPERTY TAXES. Tenant shall be liable
for all taxes levied or assessed against personal property, furniture, fixtures,
Tenant Improvements and Alterations, additions or improvements placed by or for
Tenant in or on the Premises (collectively, "TENANT IMPROVEMENT TAXES"). If any
such taxes for which Tenant is liable are, (a) levied or assessed against
Landlord or Landlord's property and if Landlord elects to pay the same, or (b)
if the assessed value of Landlord's property is increased by inclusion of
personal property, furniture, fixtures, above-standard Tenant Improvements or
alterations, additions or improvements placed by or for Tenant in the Premises,
and Landlord elects to pay the Taxes based on such increase, Tenant shall pay to
Landlord, immediately upon Landlord's demand therefor, the amount paid by
Landlord for such Tenant Improvement Taxes.
5. LANDLORD'S MAINTENANCE AND REPAIR.
5.1 LANDLORD'S OBLIGATIONS. Landlord shall (a) maintain and repair (or shall
cause the performance of maintenance and repair of) the Landlord Repair Items
(defined below) in good condition and repair, reasonable wear and tear excepted
and (b) shall retain a third party roof inspector to inspect the roof of the
Building and report to Landlord thereon. As used herein, the term "LANDLORD
REPAIR ITEMS" shall mean only (i) the structural and exterior portions of the
Building (including the roof, foundation and the structural soundness of the
exterior walls of the Building), (ii) the roof membrane, (iii) painting of the
Premises, and (iv) the Shared Fire Pump Station (defined below), and the term
"walls" as used herein shall not include windows, glass or plate glass, doors,
special store fronts or office entries, unless otherwise specified by Landlord
in writing. The cost of all of the foregoing, including the cost of all
supplies, equipment, tools and materials, together with utility costs not
otherwise charged directly to Tenant, all wages and benefits of employees and
independent contractors engaged by Landlord in performing Landlord's maintenance
and repair obligations hereunder with respect to the Premises, all expenses for
any license, permit and inspection fees required in connection with the
operation, maintenance or repair of the Premises, are collectively referred to
herein as "LANDLORD'S OPERATIONAL EXPENSES." To the extent that a cost incurred
as a Landlord's Operational Expense is for any Permitted Capital Items (or for
the painting of the Premises or any portion thereof), the cost thereof shall be
amortized in accordance with Paragraph 2.4.3(a), above.
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5.2 PROCEDURE AND LIABILITY. Tenant shall immediately upon becoming
aware of same give Landlord written notice of any defect or the need for repair
of the items for which Landlord is responsible, after which Landlord shall have
reasonable opportunity to repair the same or cure such defect. Landlord's
liability with respect to any defects, repairs or maintenance for which Landlord
is responsible under any of the provisions of this Lease shall be limited to the
cost of such repairs or maintenance or the curing of such defect. If Tenant or
Tenant's Parties negligently caused any damage necessitating such repair, then
Tenant shall pay to Landlord the cost thereof, immediately upon demand therefor.
Except as otherwise specifically provided in this Lease, Landlord shall not be
required to furnish any services or facilities or to make any repairs or
alterations in, about or to the Premises or any improvements hereafter erected
thereon. Except as otherwise set forth in this Lease, Tenant hereby assumes the
full and sole responsibility for the condition, operation, repair, replacement,
maintenance and management of the Premises and all improvements hereafter
erected thereon, and, except as provided otherwise herein, Tenant hereby waives
any rights created by any law now or hereafter in force to make repairs to the
Premises or improvements hereafter erected thereon at Landlord's expense or to
terminate this Lease or offset or abate Rent by reason of any failure of
Landlord to make repairs to the Premises. Tenant hereby waives the benefit of
California Civil Code Sections 1941 and 1942, and any other statute providing a
right to make repairs and deduct the cost thereof from the Rent.
6. TENANT'S MAINTENANCE AND REPAIR.
6.1 TENANT'S MAINTENANCE. Tenant shall, at its own cost and expense,
keep and maintain all parts of the Premises (except those listed as Landlord's
responsibility in Paragraph 5.1 above) in good and sanitary condition, promptly
making all necessary repairs and replacements, including but not limited to,
windows, glass and plate glass, doors, any special store front or office entry,
interior walls and finish work, floors and floor covering, the Building
Operating Systems (and any extensions, additions or improvements thereto), dock
boards, truck doors, dock bumpers, dock plates, fixtures, termite and pest
extermination, and regular removal of trash and debris; provided, however, that
the parties hereto agree that Tenant's obligations under this Paragraph 7.1
shall not reduce or excuse Landlord's obligations to deliver the Premises to
Tenant in the condition required pursuant to Paragraph 1.3.1, above. Subject to
Landlord's obligations under Section 5.1, above, Tenant shall maintain, repair
(including renovation, restoration, replacement, and refurbishment) and operate
the Premises, including but not limited to, mowing grass and general
landscaping, maintenance of parking areas, driveways and alleys, parking lot
sweeping, paving and restriping, exterior lighting, pest control and window
washing. If Tenant shall fail to perform any maintenance or make any repair for
which Tenant is responsible within ten (10) business days following notice from
Landlord requiring the same, Landlord and its agents and contractors shall have
the right, but not the obligation, to enter upon the Premises and perform such
maintenance or repairs, the full cost of which shall be deemed to be Rent and
shall be due and payable by Tenant to Landlord immediately upon demand. In the
case of emergency, Landlord, its agents and contractors may enter upon the
Premises to perform such maintenance or repairs without the necessity of prior
notice to Tenant. Tenant shall maintain its trash receptacles at the Premises.
Repairs made by Tenant pursuant to this Paragraph 6 shall be made in accordance
with all Applicable Laws, including without limitation, the ADA.
6.2 MAINTENANCE/SERVICE CONTRACTS. Tenant shall, at its sole cost and
expense, purchase and keep in full force and effect a regularly scheduled
preventive maintenance/service contract with a reputable and qualified
maintenance contractor for the servicing and repair of all hot water, heating,
ventilation and air conditioning systems ("HVAC SYSTEMS") and equipment within
the Premises. The above described maintenance contractors and maintenance
contracts must be approved in writing by Landlord or Landlord's Managing Agent
(defined below) in advance in their reasonable discretion, and each such service
contract shall include all services recommended by the equipment manufacturer
within the operation/maintenance manual and shall become effective (and a copy
thereof delivered to Landlord and Landlord's Managing Agent) within thirty (30)
days following the date Tenant takes possession of the Premises. Tenant shall
cause each such maintenance contractor to deliver to Landlord a copy of each and
every report and invoice prepared or delivered by each such maintenance
contractor.
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7. ALTERATIONS
Tenant shall make no alterations, additions or improvements
(collectively, "ALTERATIONS") to the Premises (including, without limitation,
roof and wall penetrations) or any part thereof without obtaining the prior
written consent of Landlord in each instance; provided, however, that Landlord's
prior consent shall not be required for any Alterations that are interior,
cosmetic changes costing less than $25,000 in each instance that do not require
issuance of a building permit ("PERMITTED ALTERATIONS"). Such consent may be
granted or withheld in Landlord's reasonable discretion, provided, however, that
notwithstanding the foregoing, Landlord may withhold its consent in its sole and
absolute discretion, to any Alteration that would cause a Design Problem
(defined below). Landlord may impose as a condition to such consent such
requirements as Landlord, acting consistently with Institutional Owner
Practices, may deem necessary or desirable, including, without limitation that:
(a) Landlord shall be furnished with working drawings for Landlord's approval
before work commences; (b) Landlord shall reasonably approve the contractor by
whom the work is to be performed; (d) Tenant or Tenant's contractor shall obtain
adequate course of construction and general liability insurance shall be in
place and naming Landlord as an additional insured under the contractor's
liability and property insurance policies; (e) Tenant shall comply with
Landlord's instructions relating to the manner in which the work is to be
performed. Tenant shall reimburse Landlord for all out-of-pocket costs and
expenses incurred by Landlord for any architectural or engineering services
reasonably required in connection with any Alterations (including, without
limitation, Landlord's review of the plans, specifications and budget for
purposes of determining whether to grant consent to any proposed Alterations)
and, if and to the extent reasonable (taking into account the nature of the
Alterations proposed), for out-of-pocket costs incurred for third party
supervision of the construction of Alterations. All such alterations, additions
or improvements must be performed in a good and workmanlike and first-class
manner in compliance with all Applicable Laws and diligently prosecuted to
completion. Tenant shall deliver to Landlord, (i) prior to commencement of such
work, a copy of the building permit and/or any other required governmental
approvals or consents with respect thereto, and, (ii) immediately upon
completion of the work, a certificate of occupancy, if applicable. Should Tenant
make any alterations without Landlord's prior written consent, or without
satisfaction of any of the conditions established by Landlord in conjunction
with granting such consent, Landlord shall have the right, in addition to and
without limitation of any right or remedy Landlord may have under this Lease, at
law or in equity, to require Tenant to remove all or some of the alterations,
additions or improvements at Tenant's sole cost and restore the Premises to the
same condition as existed prior to undertaking, constructing or installing the
alterations, additions or improvements or if Tenant shall fail to do so,
Landlord may cause such removal or restoration to be performed at Tenant's
expense and the cost thereof shall be Rent to be paid by Tenant to Landlord
immediately upon demand. Landlord shall have the right, by notice provided to
Tenant at the time it grants its consent to any Alteration (or at any time with
respect to any Permitted Alterations) to require Tenant, at Tenant's expense, to
remove any and all Alterations and to restore the Premises to its prior
condition upon the expiration or sooner termination of this Lease. Tenant shall
notify Landlord in writing at least ten (10) business days prior to the
commencement of any such work in or about the Premises, and Landlord shall have
the right at any time and from time to time to post and maintain notices of
non-responsibility in or about the Premises. Upon completion of any Alterations,
Tenant agrees to cause a timely Notice of Completion to be recorded in the
office of the Recorder of the County of Riverside in accordance with the
provisions of Section 3093 of the Civil Code of the State of California or any
successor statute, and Tenant shall deliver to the Building management office,
within thirty (30) days following completion of the Alterations, a reproducible
copy of the "as built" drawings of the Alterations. For purposes of this Lease,
a "DESIGN PROBLEM" shall be deemed to exist if any portion of any Alterations:
(i) adversely affects the exterior appearance of the Premises, (ii) adversely
affects the Building Operating Systems, (iii) would be reasonably likely to
adversely affect the structural soundness of any of the structural elements of
the Building, (iv) requires Landlord to provide additional services (above and
beyond those normally provided) to the Premises, (iv) could result in a higher
frequency of (or more severe) injuries to persons and/or damage to property, (v)
fails to comply with any Applicable Laws.
8. LIENS
Tenant shall have no authority, express or implied, to create
or place (or allow to be created or placed) any lien or encumbrance of any kind
or nature whatsoever upon, or in any manner to bind, the interest of Landlord or
Tenant in the Premises or to charge the Rent payable hereunder for any claim in
favor of any person dealing with Tenant, including those who may furnish
materials or perform labor for any construction or repairs. Tenant shall pay or
cause to be paid the full amount of all sums due and payable by it on account of
any labor performed or materials furnished in connection with any work performed
by Tenant on the Premises, in every case, before such amounts become delinquent.
Tenant shall discharge of record by payment, bonding or otherwise any lien filed
against the Premises on account of any labor performed or materials furnished in
connection with any work performed by Tenant on the Premises immediately upon
the filing of any claim of lien. Tenant shall indemnify, defend and hold
Landlord harmless from any and all Claims arising out of or related to asserted
claims or liens against the leasehold estate or against the right, title and
interest of Landlord in the Premises or this Lease arising from or relating any
act or agreement of Tenant or any of the Tenant's Parties. Tenant agrees to give
Landlord immediate written notice of the placing of any lien or encumbrance
against the Premises or Tenant's leasehold estate. Landlord shall have the
right, at Landlord's option, of paying and discharging the same or any portion
thereof without inquiry as to the validity thereof, and any amounts so paid,
including expenses and any late charges, shall be Rent immediately due and
payable to Landlord by Tenant upon delivery of a bill therefor.
9. SIGNS
9.1 LANDLORD'S SIGNAGE PROGRAM. Tenant shall abide by the terms of
Landlord's signage program attached hereto as EXHIBIT D and incorporated herein.
Upon vacation of the Premises or the removal or alteration of its sign for any
reason, Tenant shall be responsible, at its sole cost and expense, for the
maintenance, repair, restoration, painting and/or replacement of the structure
to which signs are attached to its original condition, reasonable wear and tear
excepted. If Tenant fails to perform such work, Landlord may cause the same to
be performed, and the cost thereof shall be Rent immediately due and payable by
Tenant to Landlord upon delivery of a bill therefor. Attached hereto as EXHIBIT
D-2 is a rendering showing Tenant's proposed signage (location, size,
configuration, content) which Landlord hereby approves. Tenant's corporate
colors and logo are hereby approved by Landlord.
9.2 CRITERIA. Tenant shall not erect or install any signs, window or
door lettering, placards, decorations or advertising media of any type which are
visible from the exterior of the Premises (a) unless the same comply with all
applicable laws and sign ordinances and (b) without the prior written consent of
Landlord, which consent shall not be withheld except to the extent that any
proposed sign constitutes an Objectionable Sign (defined below). All signs shall
be in compliance with all Applicable Laws and all covenants, conditions and
restrictions relating to the Premises, and no sign shall constitute an
Objectionable Sign. All signs shall be maintained by Tenant (at Tenant's sole
cost and expense) in a good and first class condition and in proper operating
order at all times. As used herein, an "OBJECTIONABLE SIGN" shall mean and
include any signs, window or door lettering, placards, decorations or
advertising media of any type which are visible from the exterior of the
Premises and which includes a name or logo which relates to an entity which is
of a character or reputation, or is associated with a political faction or
orientation, that is reasonably objectionable to Landlord acting consistently
with Institutional Owner Practices.
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10. UTILITIES
Tenant shall pay for all water, gas, heat, light, telephone,
sewer and sprinkler charges and for other utilities and services used on or from
the Premises, together with any taxes, penalties, surcharges or the like
pertaining thereto and any maintenance charges for utilities (in every case,
before such amounts become delinquent), and shall furnish all electric light
bulbs and tubes to the Premises; provided, however, that Landlord shall retain a
third party contractor who shall maintain and service the fire pumping station
(the "SHARED FIRE PUMP STATION") which services the Building and another
building owned by Landlord and Tenant shall, within ten (10) days following
receipt of Landlord's written demand therefor together with reasonable
supporting documentation, reimburse Landlord for fifty percent (50%) of the
costs incurred by Landlord in connection with such maintenance and servicing of
such Shared Fire Pumping Station in accordance with Paragraph 5.1, above.
Landlord shall in no event be liable for any damages directly or indirectly
resulting from or arising out of the interruption or failure of utility services
on the Premises. Tenant shall have no right to terminate this Lease nor shall
Tenant be entitled to any abatement in Rent as a result of any such interruption
or failure of utility services except as set forth in Paragraph 3.1.4. No such
interruption or failure of utility services shall be deemed to constitute a
constructive eviction of Tenant.
11. FIRE AND CASUALTY DAMAGE
11.1 NOTICE OF DESTRUCTION. If the Premises are damaged or destroyed by
fire, earthquake or other casualty (a "CASUALTY"), Tenant shall give immediate
written notice thereof to Landlord.
11.2 LOSS COVERED BY INSURANCE. If at any time prior to the expiration
or termination of this Lease, the Premises are wholly or partially damaged or
destroyed and the cost to complete the appropriate restoration and repair the
Premises exceeds the amount of insurance proceeds available to Landlord in
connection with such Casualty by an amount in excess of $75,000.00 (the
"LANDLORD CONTRIBUTION LIMIT") or if Tenant agrees in writing to fund the amount
in excess of the Landlord Contribution Limit that is required to complete the
appropriate restoration and repair, then:
11.2.1 If all restoration and repair to the Premises can, in Landlord's
judgment, be completed within one hundred eighty (180) days following the date
of notice to Landlord of such damage or destruction without the payment of
overtime or other premiums, Landlord shall, at Landlord's expense (provided
Landlord can obtain all necessary governmental permits and approvals therefor at
reasonable cost and on reasonable conditions), repair the same, and this Lease
shall remain in full force and effect and a proportionate reduction of Rent
shall be allowed Tenant for such portion of the Premises as shall be rendered
inaccessible or unusable to Tenant during the period of time that such portion
is unusable or inaccessible.
11.2.2 If all restoration and repairs to the Premises cannot, in
Landlord's judgment, be completed within one hundred eighty (180) days following
the date of notice to Landlord of such damage or destruction without the payment
of overtime or other premiums, Landlord may, at Landlord's sole and absolute
option, by written notice to Tenant given within sixty (60) days after notice to
Landlord of the occurrence of such damage or destruction, (i) elect to repair
such damage or destruction at Landlord's expense (provided Landlord can obtain
all necessary governmental permits and approvals therefor at reasonable cost and
on reasonable conditions), and in such event, this Lease shall continue in full
force and effect but the Rent shall be proportionately reduced as provided in
Paragraph 11.2.1 or (ii) elect to terminate this Lease or (b) if such damage
renders the Premises or a material portion thereof, totally or partially
inaccessible or unusable by Tenant in the ordinary conduct of Tenant's business,
Tenant may by written notice to Landlord given within sixty (60) days of the
occurrence of such damage or destruction, elect to Terminate this Lease.
11.3 LOSS NOT COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises are totally or partially
damaged or destroyed and the cost to complete the appropriate restoration and
repair of the Premises exceeds the insurance proceeds available to Landlord in
connection with such Casualty by an amount in excess of the Landlord
Contribution Limit, then unless Tenant shall agree in writing to fund the amount
in excess of the Landlord Contribution Limit that is required to complete the
appropriate restoration and repair of the Premises, Landlord may, at its option,
upon written notice to Tenant within sixty (60) days after notice to Landlord of
the occurrence of such damage or destruction, (i) elect to repair such damage or
destruction at Landlord's expense (provided Landlord can obtain all necessary
governmental permits and approvals therefor at reasonable cost and on reasonable
conditions), and in such event, this Lease shall continue in full force and
effect but the Rent shall be proportionately reduced as provided in Paragraph
11.2.1 or (ii) elect to terminate this Lease. If Landlord elects to repair or
restore such damage or destruction, this Lease shall continue in full force and
effect, but the Rent shall be proportionately reduced as provided in Paragraph
11.2.1. If Landlord elects to terminate this Lease under this Paragraph 11.3,
such termination shall be effective as of the date of the occurrence of such
damage or destruction. For purposes of this Paragraph 11.3 (and Paragraph 11.2)
in the event that any Holder of any Security Document (as such terms are defined
in Paragraph 21.1, below) requires that any insurance proceeds with respect to
any Casualty be applied to the outstanding balance of the obligation secured by
such Security Document (and such requirement by such Holder is permitted under
then Applicable Laws and under the applicable Security Document), such insurance
proceeds shall not be "available to Landlord".
11.4 TENANT'S TERMINATION OPTION; DESTRUCTION NEAR END OF TERM. If, at
any time prior to the expiration or termination of this Lease, the Premises are
totally or partially damaged or destroyed, such damage or destruction renders
the Premises or a material portion thereof, totally or partially inaccessible or
unusable by Tenant for the Agreed Use, and if all appropriate restoration and
repairs to the Premises cannot, in Landlord's judgment, be completed within one
hundred eighty (180) days following the date of notice to Landlord of such
damage, Tenant may by written notice to Landlord given at any time prior to the
earlier of the date on which Landlord delivers notice to Tenant that Landlord is
electing to restore and repair the Premises or the date on which Landlord
commences to restore and repair the damage to the Premises, elect to Terminate
this Lease. If the Premises are wholly or partially damaged or destroyed within
the final six (6) months of the Term and Tenant has not exercised its Extension
Option, either Tenant or Landlord may, at its option, elect to terminate this
Lease upon written notice given to the other within thirty (30) days following
such damage or destruction.
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11.5 If Tenant or Landlord elects to terminate this Lease under this
Paragraph 11, such termination shall be effective as of the date of the
occurrence of such damage or destruction
11.6 DESTRUCTION OF IMPROVEMENTS AND PERSONAL PROPERTY. In the event of
any damage to or destruction of the Premises, under no circumstances shall
Landlord be required to repair, replace or compensate Tenant, Tenant's Parties
or any other person for the repair, restoration or replacement of (a) any and
all trade fixtures, machinery and equipment, telecommunications equipment, data
cabling, movable partitions, furniture and items of personal property owned by
Tenant, any of the Tenant's Parties or any other person located in, on or about
the Premises (collectively, the "TENANT'S PERSONAL PROPERTY"), or (b) any and
all Alterations or Tenant Improvements (collectively, the "LEASEHOLD
IMPROVEMENTS"), additions or improvements installed in the Premises by or on
behalf of Tenant, and unless this Lease shall be terminated by Landlord or
Tenant under Paragraph 11.2.2, Paragraph 11.3 or Paragraph 11.4, above, Tenant
shall promptly repair and replace all such Tenant's Personal Property and
Leasehold Improvements at Tenant's sole cost and expense.
11.7 EXCLUSIVE REMEDY. The provisions of this Paragraph 11 shall
constitute Tenant's sole and exclusive remedy in the event of damage or
destruction to the Premises, and Tenant waives and releases all statutory rights
and remedies in favor of Tenant in the event of damage or destruction, including
without limitation those available under California Civil Code Sections 1932 and
1933(4). No damages, compensation or claim shall be payable by Landlord for any
inconvenience, any interruption or cessation of Tenant's business, or any
annoyance, arising from any damage or destruction of all or any portion of the
Premises.
12. INDEMNITY AND INSURANCE
12.1 WAIVER AND INDEMNITY.
12.1.1 TENANT'S WAIVER AND INDEMNITY. Except to the extent caused by
the negligence or willful misconduct of Landlord or its agents, employees or
contractors, Tenant hereby assumes all risk of damage to property or injury to
persons in, upon or about the Premises and releases and waives all claims and
causes of action against all Landlord Indemnified Parties for any damage to
persons or property (including, without limitation, loss of profits and
intangible property) in any way relating to Tenant's use and occupancy of the
Premises, including, without limitation, as a result of the buildings and
improvements located in the Premises becoming out of repair, the leakage of gas,
oil, water, steam or electricity emanating from their usual conduits, or the
performance by Landlord or Landlord's contractors, employees or agents of the
Landlord's Work or any other work. Tenant shall indemnify, protect, defend and
hold the Landlord Indemnified Parties harmless from and against any and all
claims, judgments, damages, liabilities, losses, sums paid in settlement of
claims, costs and expenses (including, but not limited to, reasonable attorneys'
fees and litigation costs), obligations, liens and causes of action, whether
threatened or actual, direct or indirect (collectively, "CLAIMS"), which arise
out of, are occasioned by or which are in any way attributable to or related to
(a) any cause in or on the Premises during the Early Occupancy Period, the Term
or any holdover period (but only to the extent covered by the insurance policies
Tenant is required to carry pursuant to the provisions of Paragraph 12.3,
below), (b) any negligent acts or omissions or willful misconduct of Tenant or
Tenant's Parties, in, on or about the Premises during the Early Occupancy
Period, the Term, or any holdover period or (c) Tenant's actions under Paragraph
1.3.1(b), above; provided, however, that Tenant's indemnity of the Landlord
Indemnified Parties pursuant to this Paragraph 12.1 shall not in any event apply
to any Claims arising out of any negligence or willful misconduct of Landlord or
any of its agents, employees or contractors. Notwithstanding and in addition to
the foregoing, because Tenant must carry insurance pursuant to Paragraph 12.3.2,
below, to cover the Tenant's Personal Property and the Leasehold Improvements
within the Premises, Tenant hereby agrees to protect, defend, indemnify and hold
Landlord harmless from any Claims with respect to any such property, to the
extent such Claims are covered by the type of insurance required to be carried
by Tenant pursuant to Paragraph 12,3.2 even if resulting from the negligence or
willful misconduct of Landlord or any of its agents, employees or contractors.
12.1.2 LANDLORD'S INDEMNITY. Landlord shall indemnify, protect,
defend and hold the Tenant Indemnified Parties harmless from and against any and
all Claims which arise out of, are occasioned by or which are in any way
attributable to or related to any negligent acts or omissions or willful
misconduct of the Landlord or any of its agents, employees or contractors in,
on, or about the Premises during the Early Occupancy Period, the Term, or any
holdover period (subject to the provisions of the last sentence of Paragraph
12.1.1, above); provided, however, that, except as set forth below, the terms of
the foregoing indemnity shall not apply to the extent such Claims arise from the
negligent acts or willful misconduct of Tenant or any other Tenant's Party.
Notwithstanding and in addition to the foregoing, because pursuant to the
provisions of Paragraph 12.2, below, Landlord is required to maintain property
damage insurance on the Base Building (defined below), Landlord hereby agrees to
protect, defend, indemnify and hold Tenant harmless from any Claims with respect
to the Base Building (defined below) to the extent such Claims are covered by
Landlord's property damage insurance, even if resulting from the negligent acts
or willful misconduct of the Tenant or any other Tenant's Party.
12.2 LANDLORD'S INSURANCE. Landlord shall maintain insurance
covering the Base Building and Landlord's ownership and operation thereof in
such types and amounts as it deems necessary or desirable, which may include,
without limitation, liability, property damage and/or loss of rental income
coverage; provided, however, that the types and amounts of insurance coverage
carried by Landlord with respect to the Base Building shall, in all cases, be
consistent with Institutional Owner Practices. Such insurance shall be for the
sole benefit of Landlord and under its sole control. The premiums for any such
insurance shall be included in Operating Expenses. As used herein, the "BASE
BUILDING" shall mean only the Building Shell and Core and the Building Operating
Systems. The "BUILDING SHELL AND CORE" shall include only the structural
portions of the Building and Premises, including the foundation, floor/ceiling
slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts,
stairs, parking areas, landscaping, fountains, and men's and women's washrooms
located in the office portion of the Building (but shall not include any men's
and women's washrooms located in the office portion of the Building).
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12.3 TENANT'S INSURANCE OBLIGATIONS. Tenant agrees that at all times
from and after the date Tenant is given access to the Premises for any reason,
Tenant shall carry and maintain, at its sole cost and expense, the following
types, amounts and forms of insurance:
12.3.1 GENERAL LIABILITY INSURANCE; AUTOMOBILE INSURANCE. A broad
form comprehensive general liability or commercial general liability policy
covering property damage, personal injury, advertising injury and bodily injury,
and including blanket contractual liability coverage for obligations under this
Lease, covering the Premises in an amount of not less than the amount per
occurrence specified in ITEM 15 of the Basic Lease Provisions, and an automobile
insurance policy covering owned, hired and non-owned vehicles used by Tenant or
any of the Tenant's Parties in an amount of not less than the amount per
occurrence specified in ITEM 15 of the Basic Lease Provisions. Such policy shall
be in the occurrence form with a per location general aggregate, and (if Tenant
assigns this Lease to a non-Affiliate) shall not include deductibles in excess
of commercially reasonable amounts. Tenant shall pay any deductibles. The
amounts of such insurance required hereunder shall be subject to adjustment from
time to time as required by Landlord based the amounts of such insurance
generally required at such time for comparable tenants, premises and buildings
in the general geographical location of the Building or the requirements of the
Holder of any Security Document.
12.3.2 PROPERTY INSURANCE. A policy or policies, including the
Boiler and Machinery Perils and the Special Causes of Loss form of coverage
("ALL RISKS"), including vandalism and malicious mischief, theft, sprinkler
leakage (including earthquake sprinkler leakage) and water damage coverage in an
amount equal to the full replacement value, new without deduction for
depreciation, on an agreed amount basis (no co-insurance requirement), of all of
the Tenant's Personal Property located in the Premises and all Leasehold
Improvements located in the Premises. Such insurance shall also include business
interruption and extra expense coverage for Tenant's operations and debris
removal coverage for removal of property of Tenant and Tenant's Parties which
may be damaged within the Premises, and (if Tenant assigns this Lease to a
non-Affiliate) shall not include deductibles in excess of commercially
reasonable amounts. Tenant shall pay any deductibles under Tenant's insurance
policies.
12.3.3 BUSINESS INTERRUPTION INSURANCE. At all times during the Term
of this Lease, Tenant shall procure and maintain business interruption insurance
in such amount as will reimburse Tenant for direct or indirect loss of earnings
attributable to all perils insured against in Paragraph 12.3.2 for a period of
not less than twelve (12) months.
12.3.4 WORKERS' COMPENSATION INSURANCE. Workers' compensation
insurance, including employers' liability coverage, shall comply with applicable
California law. Such insurance shall include a waiver of subrogation in favor of
Landlord, if available.
12.4 EVIDENCE OF COVERAGE. All of the policies required to be
obtained by Tenant pursuant to Paragraph 12.3 shall be with companies and in
form satisfactory to Landlord. Each insurance company providing coverage shall
have a current Best's Rating of "A-XII" or better. Upon notice from Landlord,
Tenant shall add Landlord, L&B Realty Advisors, Inc. ("LANDLORD'S ADVISOR"), and
any management agent from time to time designated by Landlord ("LANDLORD'S
MANAGING AGENT") and any lender of Landlord as additional insureds and shall
provide that any coverage to additional insureds shall be primary (such that
when any policy issued to Landlord provides duplicate coverage or is similar in
coverage, Landlord's policy will be excess over Tenant's policies). Tenant shall
provide Landlord or Landlord's Managing Agent, if any, with certificates and
copies of endorsements of insurance acceptable to Landlord issued by each of the
insurance companies issuing any of the policies required pursuant to the
provisions of Paragraph 12.3, and said certificates and endorsements shall
provide that the insurance issued thereunder shall not be altered, canceled or
non-renewed until after thirty (30) days' written notice of such pending
alteration, cancellation or non-renewal (10 days for nonpayment of premiums) is
provided to Landlord. "Claims made" policies shall not be permitted. Each policy
shall permit the waiver of subrogation in Paragraph 12.5 below. Evidence of
insurance coverage shall be furnished to Landlord prior to Tenant's possession
of the Premises and thereafter not fewer than fifteen (15) days prior to the
expiration date of any required policy. Tenant may satisfy its insurance
obligations hereunder by carrying such insurance under a so-called blanket
policy or policies of insurance which are acceptable to Landlord. If Tenant
fails to obtain any insurance required hereby or provide evidence thereof to
Landlord, Landlord may, but shall not be obligated to, and Tenant hereby
appoints Landlord as its agent to, procure such insurance and bill the cost of
the insurance (plus the amount of any other costs incurred by Landlord in
obtaining such insurance) to Tenant. Tenant shall pay such costs to Landlord as
Rent with the next monthly payment of Base Rent.
12.5 WAIVER OF SUBROGATION. Each of Landlord and Tenant waives any
and all rights of recovery against the other for or arising out of or relating
to damage to or destruction or loss of any property to the extent that such
property damage or destruction or loss is of a type that is covered by the
property damage insurance that is required to carry under this Paragraph 12 by
Landlord or Tenant, as applicable, and in the event of any such damage to or
destruction or loss of property, each party shall look solely to, and seek
recovery only from, its property damage insurance carriers.
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13. LANDLORD'S RIGHT OF ACCESS
Tenant shall permit Landlord and its employees and agents, at
their expense, at reasonable times upon not less than twenty-four hours advance
notice (and at any time and without notice in case of emergency): (a) to enter
into and upon the Premises to inspect them, to protect the Landlord's interest
therein, or to post notices of non-responsibility, (b) to take all necessary
materials and equipment into the Premises, and perform necessary work therein,
and (c) to perform periodic environmental audits, inspections, investigations,
testing and sampling of the Premises, and to review and copy any relevant
non-confidential documents, materials, data, inventories, financial data,
notices or correspondence to or from private parties or governmental authorities
in connection therewith. Landlord shall, in connection with any entry into the
Premises, give notice as provided above and employ commercially reasonable
efforts to minimize any disturbance of Tenant's conduct of its business from the
Premises. Landlord may at any time, place on or about the Premises any ordinary
"for sale" and, during the last six (6) months of the Term (unless Tenant
exercises its renewal option), "for lease" signs. Tenant shall also permit
Landlord and its employees and agents, upon request, to enter the Premises or
any part thereof, at reasonable times during normal business hours, to show the
Premises to any fee owners, lessors of superior leases, holders of encumbrances
on the interest of Landlord under the Lease, or prospective purchasers, or
mortgagees. During the period of six (6) months prior to the expiration date of
this Lease (unless Tenant exercises a renewal option), Landlord may exhibit the
Premises to prospective tenants. Except as provided otherwise in Paragraph
3.1.4, above, no entry into the Premises by Landlord under this Paragraph 13
shall cause or permit any abatement of Rent by Tenant for any reason or
constitute or be deemed to constitute a constructive eviction.
14. ASSIGNMENT AND SUBLETTING
14.1 LANDLORD'S CONSENT.
14.1.1 Tenant shall not, either involuntarily or voluntarily or by
operation of law or otherwise, assign, mortgage, pledge, hypothecate, encumber
or permit any lien to attach to, or transfer this Lease or any interest herein,
or sublet the Premises or any part thereof, or permit the Premises to be
occupied by anyone other than Tenant or Tenant's employees (each a "TRANSFER"
and any person or entity to whom a Transfer is made or sought to be made is
referred to herein as a "TRANSFEREE"), except with the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed; provided,
however, that the parties hereto agree that it shall be reasonable for Landlord
to withhold its consent for, without limitation, the following reasons: (a)
Tenant is in default of this Lease; (b) the Transferee is not willing to assume
in writing all of Tenant's obligations hereunder as are applicable to the space
(the "SUBJECT SPACE") that is the subject of the proposed Transfer; (c) the
Transferee has a financial condition which is reasonably unsatisfactory to
Landlord or Landlord's mortgagee; (d) the Premises will be used for purposes
different than the Agreed Use or for a purpose that is prohibited by any
Applicable Laws; (e) the proposed Transferee has been required by a prior
landlord, lender or governmental authority to take remedial action in connection
with Hazardous Materials contaminating a property where the contamination
resulted from such party's acts or omissions, or the proposed Transferee is or
has been subject to an enforcement order issued by any governmental agency in
connection with any violation of Environmental Laws or release of Hazardous
Materials into the environment; or (f) the assignee or subtenant requires
extensive alterations to the Premises.
14.1.2 Notwithstanding anything to the contrary in this Article 14,
Landlord's consent shall not be required for (a) an assignment of all of
Tenant's interest under this Lease to a Successor (defined below) or to Original
Tenant's corporate parent or (b) a sublease by Tenant of all or any portion of
the Premises to an Affiliate of Tenant (a "PERMITTED TRANSFER"), but only on the
condition that, (i) any such Permitted Transfer is not a subterfuge by Tenant to
avoid its obligations under this Lease; (ii) Tenant shall give Landlord at least
thirty (30) days prior notice of any such Permitted Transfer, (iii) Original
Tenant (and any Successors and/or other assignees) shall remain primarily liable
for all of the obligations to be performed by the Tenant under this Lease, and
(iv) in the event of an assignment of this Lease to a Successor or Tenant's
corporate parent, such Successor or corporate parent, as applicable, shall
assume all accrued and prospective obligations and liabilities of Tenant under
this Lease in a writing reasonably satisfactory to Landlord and there shall be
no adverse effect on the creditworthiness of the Tenant under the Lease. A
"SUCCESSOR" means any entity that acquires in a single transaction or in a
series of related transactions (by merger, combination, consolidation, transfer
of assets or otherwise) this Lease and all or substantially all of the other
property and assets of Original Tenant (or a prior Successor), or with which, or
into which Original Tenant (or a prior Successor) is merged, combined,
reorganized or consolidated or which acquires Original Tenant (or a prior
Successor) and which assumes by written instrument all of Tenant's liabilities
and obligations under this Lease. An "AFFILIATE" means, , as to any designated
person or entity, any other person or entity which controls, is controlled by or
is under common control with, such designated person or entity (and, as used in
this Paragraph 14.1.2, "control" means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
person or entity, or ownership of any sort, whether through the ownership of
voting securities, by contract or otherwise).
14.2 FEES. With respect to each Transfer proposed to be consummated
by Tenant, whether or not Landlord shall grant consent, Tenant shall,
immediately upon demand therefor, pay to Landlord as Rent hereunder, all of
Landlord's review and reasonable processing fees, and costs, as well as any good
faith professional, attorneys', accountants', engineers' or other consultants'
fees (collectively, "REVIEW EXPENSES") incurred by Landlord relating to such
proposed Transfer; provided, however, that in no event shall such Review
Expenses exceed $2,500 for a Transfer in the ordinary course of business;
provided, further, however, that the above dollar limitation shall not apply to
any Transfer with respect to which Tenant or the prospective Transferee shall
request documentation in addition to, or material modification of, Landlord's
commercially reasonable form of "Consent to Sublease" or "Assignment and
Assumption of Lease and Consent" for granting such consent.
14.3 NOTICE TO LANDLORD; LANDLORD'S RECAPTURE RIGHT.
14.3.1 If Tenant desires to Transfer this Lease or any interest
herein, then at least fifteen (15) business days (but no more than one hundred
eighty (180) days) prior to the proposed effective date of the proposed
Transfer, Tenant shall submit to Landlord a written request (a "TRANSFER
NOTICE") for Landlord's consent, which Transfer Notice shall include: (a) the
name and address of the proposed Transferee, (b) a description of the Subject
Space, (c) the base rent and all other compensation to be paid to Tenant in
connection with the proposed Transfer, (d) a description of the Transferee's
proposed use of the Subject Space, (e) the proposed effective date of the
Transfer, (f) a description of any terms of the proposed Transfer which differ
from the provisions of this Lease and (g) such other information concerning such
proposed Transfer and Transferee as Landlord (acting consistently with
Institutional Owner Practices) may require.
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14.3.2 In the event that Tenant delivers a Transfer Notice with
respect to any Transfer for (a) a Subject Space containing substantially all of
the rentable area contained within the Premises for (b) a term that includes
substantially all of the then remaining portion of the Term (not including any
unexercised Option Terms, with the parties hereto agreeing that any Transfer for
a term that is scheduled to expire at any time during the last three (3) months
of the Term (not including any unexercised Option Terms) shall be deemed to be
for substantially all of the then remaining portion of the Term), then at any
time within fifteen (15) business days after Landlord's receipt of all (but not
less than all) of the information and documents described in Paragraph 14.3.1,
above, Landlord may, at its option, in the exercise of its sole and absolute
discretion, by written notice to Tenant, elect to: (i) sublease the Premises or
the portion thereof proposed to be Transferred by Tenant upon the same terms as
those offered to the proposed subtenant; (ii) take an assignment of this Lease
upon the same terms as those offered to the proposed assignee in the proposed
Transfer; or (iii) terminate this Lease.
14.4 BONUS RENT. If any interest in this Lease is assigned or all or
any portion of the Premises is subleased, Landlord shall receive fifty percent
(50%) of all of the Bonus Rent (defined below) to be realized from such
assignment or subletting. The "BONUS RENT" shall mean any lump sum payment or
other value received by Tenant, plus any base rent, percentage rent or periodic
compensation received by Tenant from or for the benefit of an assignee or
sublessee in excess of (a) all amounts owed for Rent and other charges pursuant
to this Lease, which amounts shall be recovered in full prior to any profit
sharing, and (b) all reasonable commissions and fees paid to any real estate
broker or finder who is unaffiliated with Tenant in connection with the
assignment or subletting, which amounts shall be recovered in full prior to any
profit sharing; and (c) any free rent, abated rent, tenant improvement or
demising costs, legal fees and all other reasonable costs of the transaction. If
a portion of the Premises is subleased, the amount in clause (a) shall be
prorated based on the portion of the Premises' rentable area to be subleased.
The Bonus Rent shall be paid by Tenant to Landlord as Rent immediately upon
Tenant's receipt of each payment from its assignee or sublessee.
14.5 CONTINUING TENANT OBLIGATIONS. No subleasing or assignment shall
relieve Tenant from liability for payment of all forms of Rent and other charges
herein provided or from Tenant's obligations to keep and be bound by the terms,
conditions and covenants of this Lease.
14.6 WAIVER, DEFAULT AND CONSENT. The acceptance of Rent from any other
person shall not be deemed to be a waiver of any of the provisions of this Lease
or a consent to a Transfer of the Premises or any portion thereof. Any attempted
Transfer without the Landlord's prior written consent shall, at Landlord's
election, be null void and of no force or effect and shall constitute an Event
Of Default under this Lease. Consent to any Transfer shall not be deemed a
consent to any future Transfer.
14.7 RESTRUCTURING OF BUSINESS ORGANIZATIONS. For purposes of this
Lease, each of the following shall constitute an assignment which shall be
subject to the provisions of this Paragraph 14: if Tenant assigns this lease to
a corporation or other entity whose stock or other equity interests are not
publicly held and not traded through an exchange or over the counter, (i) the
dissolution, merger, consolidation or other reorganization of such entity, the
sale or other transfer of more than an aggregate of fifty percent (50%) of the
voting shares or other interests of or in such entity (other than to immediate
family members by reason of gift or death), within a twelve (12) month period,
or (ii) the sale, mortgage, hypothecation or pledge of more than an aggregate of
fifty percent (50%) of the value of the unencumbered assets of such entity
within a twelve (12) month period.
14.8 ASSIGNMENT OF SUBLEASE RENT. Tenant immediately and irrevocably
assigns to Landlord, as security for Tenant's obligations under this Lease, all
rents from any subletting of all or any part of the Premises, and Landlord, as
assignee and as attorney-in-fact for Tenant for purposes hereof, or a receiver
for Tenant appointed on Landlord's application, may collect such rents and apply
same toward Tenant's obligations under this Lease; provided, however, that until
the occurrence of an Event Of Default by Tenant, Tenant shall have the right and
license to collect such rents.
14.9 ASSIGNMENT IN BANKRUPTCY. If this Lease is assigned to any person
or entity pursuant to the provisions of the United States Bankruptcy Code, 11
U.S.C. 101 et seq., or such similar laws or amendments thereto which may be
enacted from time to time (the "BANKRUPTCY CODE"), any and all monies or other
considerations payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant or of
the estate of Tenant within the meaning of the Bankruptcy Code. Any and all
monies or other considerations constituting Landlord's property under the
preceding sentence not paid or delivered to Landlord shall be held in trust for
the benefit of Landlord and be promptly paid or delivered to Landlord.
14.10 ASSUMPTION OF OBLIGATIONS. Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed, without further act or deed, to have assumed all of the obligations
arising under this Lease on and after the date of such assignment. Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption.
15. CONDEMNATION
15.1 TOTAL TAKING. If the whole or any substantial part of the Premises
shall be taken or damaged because of the exercise of the power of eminent
domain, whether by condemnation proceedings or otherwise, including acts or
omissions constituting inverse condemnation, or any transfer of the Premises or
portion thereof in avoidance of the exercise of the power of eminent domain
(collectively, a "TAKING"), and the Taking would prevent or materially interfere
with the use of the Premises by Tenant for the Agreed Use for a period in excess
of one hundred eighty (180) days, this Lease shall terminate effective when the
physical Taking of the Premises shall occur.
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15.2 PARTIAL TAKING. If part of the Premises shall be subject to a
Taking and this Lease is not terminated as provided in the Paragraph 15.1 above,
this Lease shall not terminate but the Rent payable hereunder during the
unexpired portion of this Lease shall be reduced in proportion to the area of
the Premises rendered unusable by Tenant.
15.3 CONDEMNATION AWARD. The entire award or compensation for any
Taking of the Premises, or any part thereof, or for diminution in value, shall
be the property of Landlord, and Tenant hereby assigns its interest in any such
award to Landlord; provided, however, Landlord shall have no interest in any
separate award made to Tenant for loss of business, for relocation purposes, or
for the taking of Tenant's Personal Property.
15.4 EXCLUSIVE REMEDY. This Paragraph 15 shall be Tenant's sole and
exclusive remedy in the event of any Taking. Each party hereby waives the
provisions of Sections 1265.130 and 1265.150 of the California Code of Civil
Procedure and the provisions of any successor or other law of like import.
16. SURRENDER AND HOLDING OVER
16.1 SURRENDER. Upon the expiration or sooner termination of this
Lease, Tenant shall surrender the Premises in as good condition as when
received, reasonable wear and tear excepted, broom clean and free of trash and
rubbish, and free from all tenancies or occupancies by any person. Tenant shall
remove all of Tenant's Personal Property from the Premises prior to the
expiration or earlier termination of this Lease and shall, at its own cost,
completely repair any and all damage to the Premises and the Building resulting
from or caused by such removal by Tenant of Tenant's Personal Property.. All of
the Leasehold Improvements or other alterations, additions and improvements to
the Premises (including, without limitation, all wall coverings, floor
coverings, built-in cabinets, paneling and the like) shall become the property
of Landlord and remain on the Premises at the end of the Term, unless Landlord
shall, by written notice given to Tenant (which, except with respect to any
Permitted Alterations, shall be delivered at the time Landlord grants its
consent to such Alterations), require Tenant to remove some or all of such
Leasehold Improvements, in which event Tenant shall promptly remove prior to the
date of such expiration or termination the Leasehold Improvements designated by
Landlord to be so removed and shall promptly restore, patch and repair any
resulting damage, all at Tenant's sole expense.
16.2 HOLDING OVER. If Landlord agrees in writing that Tenant may hold
over after the expiration or earlier termination of this Lease, unless the
parties hereto otherwise agree in writing as to the terms of such holding over,
the holdover tenancy shall be subject to termination by Landlord or Tenant at
any time upon not less than thirty (30) days' prior written notice. If Tenant
holds over without the consent of Landlord, the same shall be a tenancy at
sufferance only, which shall be terminable by Landlord at any time and (a) if
Tenant shall fail to surrender and deliver to Landlord possession of the
Premises in accordance with the terms of this Lease on or before the date on
which this Lease shall terminate or expire, Tenant shall be liable to Landlord
for any and all actual damages incurred by Landlord (and shall reimburse
Landlord for all of Landlord's actual costs and expenses (including, without
limitation, for attorney's fees) in connection with Tenant's failure to
surrender the Premises in accordance with the terms of this Lease on or before
the date on which this Lease shall terminate or expire, and (b) if Tenant shall
fail to surrender and deliver to Landlord possession of the Premises in
accordance with the terms of this Lease on or before the date that is ninety
(90) days following the termination or expiration of this Lease, Tenant shall
additionally indemnify, defend and hold Landlord harmless from and against any
and all Claims, including, without limitation, all lost profits and other
consequential damages, attorneys' fees, consultants' fees and court costs
incurred or suffered by or asserted against Landlord by reason of Tenant's
failure to surrender the Premises on or before the date that is ninety (90) days
following the termination or expiration of this Lease. All of the other terms
and provisions of this Lease shall be applicable during any holdover period,
with or without consent, except that Tenant shall pay to Landlord from time to
time upon demand, as Rent for the period of any holdover without Landlord's
consent, an amount equal to one hundred fifty percent (150%) of the then
applicable Base Rent plus one hundred percent (100%) of all Additional Rent in
effect on the termination date, computed on a daily basis for each day of the
holdover period. Except to the extent expressly provided in the first sentence
of this Paragraph 16.2, no holding over by Tenant, whether with or without
consent of Landlord, shall operate to extend this Lease. The preceding
provisions of this Paragraph 16.2 shall not be construed as Landlord's consent
to any holding over by Tenant.
17. QUIET ENJOYMENT
Provided that Tenant performs all of its obligations
hereunder, Tenant shall peaceably and quietly have, hold and enjoy the Premises
for the Term without hindrance or molestation from Landlord, subject to the all
of the terms and provisions of this Lease, any ground lease, any mortgage or
deed of trust now or hereafter encumbering the Premises, and all matters of
record.
18. EVENTS OF DEFAULT.
The occurrence of any of the following events shall be deemed
to constitute a material default and breach of this Lease by Tenant (an "EVENT
OF DEFAULT"):
18.1 FAILURE TO PAY RENT. Tenant shall fail to pay any installment of
the Rent herein reserved or any other payment or reimbursement to Landlord
required herein within five (5) days after notice that the same is due.
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18.2 INSOLVENCY. Tenant or any guarantor of Tenant's obligations
hereunder (if any) shall generally not pay its debts as they become due or shall
admit in writing the inability to pay its debts or shall make a general
assignment for the benefit of creditors.
18.3 APPOINTMENT OF RECEIVER. A receiver or trustee (or similar
official) shall be appointed for all or substantially all of the assets of
Tenant.
18.4 BANKRUPTCY. The filing of any voluntary petition by Tenant under
the Bankruptcy Code, or the filing of an involuntary petition by Tenant's
creditors, which involuntary petition remains undischarged for a period of
ninety (90) days.
18.5 ATTACHMENT. The attachment, execution or other judicial seizure or
non-judicial seizure of all or substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a period of
fifteen (15) business days after the levy thereof.
18.6 VACATION OF PREMISES. Tenant shall vacate or abandon all or a
substantial portion of the Premises, while Tenant is in default of the Rent or
other charges due under this Lease.
18.7 CERTIFICATES. Any failure by Tenant to execute and deliver any
statement or document described in Paragraph 21 or any Estoppel Certificate
(defined in Paragraph 22.7, below) requested to be so executed and delivered by
Landlord within the time periods specified therein applicable thereto, where
such failure continues for five (5) days after delivery of written notice of
such failure by Landlord to Tenant.
18.8 FAILURE TO DISCHARGE LIENS. Tenant shall fail to discharge or bond
over any lien placed upon the Premises in violation of Paragraph 8 hereof within
fifteen (15) days after written notice.
18.9 FALSE FINANCIAL STATEMENT. Landlord discovers that any financial
statement given to Landlord by Tenant, any assignee, subtenant or successor in
interest of Tenant, or any guarantor of Tenant's obligations hereunder, or any
of them, was materially false when given to Landlord.
18.10 FAILURE TO COMPLY WITH LEASE TERMS. Tenant shall fail to comply
with any other material term, provision or covenant of this Lease, and shall not
cure such failure within thirty (30) days after written notice thereof to
Tenant; provided, however, that if the nature of such default is such that it is
curable but cannot reasonably be cured within a thirty (30) day period, no Event
of Default by Tenant shall exist if Tenant commences the curing of such default
and thereafter diligently prosecutes such cure to completion.
19. LANDLORD'S REMEDIES
Upon the occurrence of any Event Of Default, Landlord may, at
its option without further notice or demand and in addition to any other rights
and remedies hereunder or at law or in equity, do any or all of the following:
19.1 TERMINATION. Terminate Tenant's right to possession of the
Premises by any lawful means upon at least 3 days' written notice, in which case
Tenant shall immediately surrender possession of the Premises to Landlord and,
in addition to any rights and remedies Landlord may have at law or in equity,
Landlord shall have the following rights:
19.1.1 Re-enter the Premises then or at any time thereafter and
remove all persons and property and possess the Premises, without prejudice to
any other remedies Landlord may have by reason of Tenant's default or of such
termination, and Tenant shall have no further claim hereunder.
19.1.2 Recover all damages incurred by Landlord by reason of the
default, including without limitation (i) the worth at the time of the award of
the payments owed by Tenant to Landlord under this Lease that were earned but
unpaid at the time of termination; (ii) the worth at the time of the award of
the amount by which the payments owed by Tenant to Landlord under the Lease that
would have been earned after the date of termination until the time of the award
exceeds the amount of the loss of payments owed by Tenant to Landlord under this
Lease for the same period that Tenant proves could have been reasonably avoided;
(iii) the worth at the time of the award of the amount by which the payments
owed by Tenant to Landlord for the balance of the Term after the time of the
award exceeds the amount of the loss of payments owed by Tenant for the same
period that Tenant proves could have been reasonably avoided; (iv) all
reasonable costs incurred by Landlord in retaking possession of the Premises and
restoring them to good order and condition; (v) all costs, including without
limitation brokerage commissions, advertising costs and restoration and
remodeling costs, incurred by Landlord in reletting the Premises; plus (vi) any
other amount, including without limitation actual attorneys' fees reasonably
incurred and audit expenses, necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom. "The worth at the time of the award," as used in clauses (i) and (ii)
of this Paragraph, is to be determined by computing interest as to each unpaid
payment owed by Tenant to Landlord under the Lease, at the lesser of the
Interest Rate plus four percent (4%) or the highest interest rate permitted by
law ("DEFAULT RATE"). "The worth at the time of the award," as referred to in
clause (iii) of this Paragraph, is to be determined by discounting such amount,
as of the time of award, at the discount rate of the San Francisco Federal
Reserve Bank, plus 1%.
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19.1.3 Remove, at Tenant's sole risk, any and all
personal property in the Premises and place such
in a public or private warehouse or elsewhere at the sole cost and expense and
in the name of Tenant. Any such warehouse shall have all of the rights and
remedies provided by law against Tenant as owner of such property. If Tenant
shall not pay the cost of such storage within thirty (30) days following
Landlord's demand, Landlord may, subject to the provisions of applicable law,
sell any or all such property at a public or private sale in such manner and at
such times and places as Landlord deems proper, without notice to or demand upon
Tenant. Tenant waives all claims for damages caused by Landlord's removal,
storage or sale of the property and shall indemnify and hold Landlord free and
harmless from and against any and all loss, cost and damage, including without
limitation court costs and attorneys' fees. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact, coupled with an interest, with all rights
and powers necessary to effectuate the provisions of this subparagraph.
19.2 CONTINUATION OF LEASE. Maintain Tenant's right to possession, in
which case this Lease shall continue in effect whether or not Tenant shall have
abandoned the Premises. In such event, Landlord may enforce all of Landlord's
rights and remedies under this Lease, including the right to recover rent as it
becomes due hereunder, and, at Landlord's election, to re-enter and relet the
Premises on such terms and conditions as Landlord deems appropriate. Without
limiting the generality of the foregoing, Landlord shall have the remedy
described in California Civil Code Section 1951.4 (Lessor may continue lease in
effect after lessee's breach and abandonment and recover rent as it becomes due,
if Lessee has right to sublet or assign, subject only to reasonable
limitations). If Landlord relets the Premises or any portion thereof, any rent
collected shall be applied against amounts due from Tenant. Landlord may execute
any lease made pursuant hereto in its own name, and Tenant shall have no right
to collect any such rent or other proceeds. Landlord's re-entry and/or reletting
of the Premises, or any other acts, shall not be deemed an acceptance of
surrender of the Premises or Tenant's interest therein, a termination of this
Lease or a waiver or release of Tenant's obligations hereunder. Landlord shall
have the same rights with respect to Tenant's improvements and personal property
as under Paragraph 19.1 above, even though such re-entry and/or reletting do not
constitute acceptance of surrender of the Premises or termination of this Lease.
19.3 APPOINTMENT OF RECEIVER. Cause a receiver to be appointed in any
action against Tenant and to cause such receiver to take possession of the
Premises and to collect the rents or bonus rent derived therefrom. The foregoing
shall not constitute an election by Landlord to terminate this Lease unless
specific notice of such intent is given.
19.4 LATE CHARGE. Charge late charges as provided in Paragraph 2.7.
19.5 INTEREST. Charge interest on any amount not paid when due as
provided in Paragraph 22.2. Interest shall accrue from the date funds are first
due or, if the payment is for funds expended by Landlord on Tenant's behalf,
from the date Landlord expends such funds.
19.6 ATTORNEYS' FEES. Collect, upon demand, all reasonable attorneys'
fees and expenses incurred by Landlord in enforcing its rights and remedies
hereunder.
19.7 INJUNCTION. To restrain by injunction or other equitable means any
breach or anticipated breach of this Lease by Tenant.
19.8 Intentionally Omitted
19.9 RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense. If Tenant shall fail to pay any sum of money, other than
Base Rent, required to be paid by it hereunder or shall fail to perform any
other act on its part to be performed hereunder, then, in addition to and
without prejudice to any other right or remedy of Landlord (including, without
limitation, any right or remedy provided under Paragraph 6), Landlord may cure
the same at the expense of Tenant (i) immediately and without notice in the case
(a) of emergency or (b) where such default will result in the violation of any
Applicable Law or the cancellation of any insurance policy maintained by
Landlord and (ii) in any other case if such default continues for ten (10)
business days from the receipt by Tenant of notice of such default from
Landlord. Any sums so paid by Landlord (and all costs actually incurred by
Landlord in connection with any action by Landlord under this Paragraph 19.9),
together with interest thereon at the Default Rate from the date of such
payment, shall be payable to Landlord as Rent immediately upon demand, and
Landlord shall have the same rights and remedies in the event of nonpayment as
in the case of default by Tenant in the payment of Rent.
19.10 WAIVER OF RIGHT OF REDEMPTION. Tenant hereby waives for Tenant
and for all those claiming under Tenant all right now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
Notwithstanding any provision of this Lease to the contrary, the expiration or
termination of this Lease and/or the termination of Tenant's rights to
possession of the Premises shall not discharge, relieve or release Landlord or
Tenant from any obligation or liability whatsoever under any indemnity provision
of this Lease which is intended to survive such expiration, including without
limitation the provisions of Paragraph 12.1 hereof.
19.11 NO WAIVER. Nothing in this Paragraph 19 shall be deemed to affect
Landlord's rights to indemnification for liability or liabilities arising prior
to termination of this Lease for personal injury or property damages under the
indemnification clause or clauses contained in this Lease. No acceptance by
Landlord of a lesser sum than the Rent then due shall be deemed to be other than
on account of the earliest installment of such rent due, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such installment or pursue any other remedy provided in this Lease.
The delivery of keys to the Premises to Landlord or to Landlord's agent or any
employee thereof shall not constitute a surrender of the Premises or effect a
termination of this Lease, whether or not the keys are thereafter retained by
Landlord, and notwithstanding such delivery, Tenant shall be entitled to the
return of such keys at any reasonable time upon request until this Lease shall
have been terminated.
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19.12 CUMULATIVE REMEDIES. The specific remedies to which Landlord may
resort under the terms of this Lease are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which it may be lawfully
entitled in case of any breach or threatened breach by Tenant of any provisions
of this Lease. In addition to the other remedies provided in this Lease,
Landlord shall be entitled to a restraint by injunction of the violation or
attempted or threatened violation of any of the covenants, conditions or
provisions of this Lease or to a decree compelling specific performance of any
such covenants, conditions or provisions..
20. LANDLORD DEFAULT; TENANT'S REMEDIES.
20.1 LANDLORD'S DEFAULT. Landlord shall not be in default under this
Lease unless Landlord fails to perform obligations required of Landlord within
thirty (30) days after written notice is delivered by Tenant to Landlord and to
the holder of any mortgages or deeds of trust (collectively, "LENDER") covering
the Premises whose name and address shall have theretofore been furnished to
Tenant in writing, specifying in detail the obligation which Landlord has failed
to perform; provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord or Lender commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion. All obligations of Landlord hereunder shall be construed as
covenants, not conditions.
20.2 TENANT'S REMEDIES. In the event of any default, breach or
violation of Tenant's rights under this Lease by Landlord, Tenant's exclusive
remedies shall be an action for specific performance or action for actual
damages. Tenant hereby waives the benefit of any laws granting it the right to
perform Landlord's obligation, a lien upon the property of Landlord and/or upon
Rent due Landlord, or the right to terminate this Lease or withhold Rent on
account of any Landlord default.
20.3 NON-RECOURSE.
20.3.1 Notwithstanding anything to the contrary contained in this
Lease or in any exhibits, riders or addenda hereto attached (collectively the
"LEASE DOCUMENTS"), it is expressly understood and agreed by and between the
parties hereto that: (a) the recourse of Tenant or its successors or assigns
against Landlord (and the liability of Landlord to Tenant, its successors and
assigns) with respect to (i) any actual or alleged breach or breaches by or on
the part of Landlord of any representation, warranty, covenant, undertaking or
agreement contained in any of the Lease Documents or (ii) any matter relating to
Tenant's occupancy of the Premises (collectively, "LANDLORD'S LEASE
UNDERTAKINGS") shall be limited to solely an amount equal to Landlord's equity
interest in the Premises and any insurance proceeds or condemnation proceeds
relating to the Premises that are received by Landlord; (b) Tenant shall have no
recourse against any other assets of Landlord or its officers, directors or
shareholders; (c) except to the extent of Landlord's equity interest in the
Premises, no personal liability or personal responsibility of any sort with
respect to any of Landlord's Lease Undertakings or any alleged breach thereof is
assumed by, or shall at any time be asserted or enforceable against, Landlord,
Landlord's Advisor, or Landlord's Managing Agent, or against any of their
respective directors, officers, shareholders, employees, agents, constituent
partners, beneficiaries, trustees or representatives, and (d) at no time shall
Landlord be responsible or liable to Tenant for any lost profits, lost economic
opportunities or any form of consequential or punitive damages (collectively,
"CONSEQUENTIAL DAMAGES") as the result of any actual or alleged breach by
Landlord of Landlord's Lease Undertakings.
20.3.2 Notwithstanding anything to the contrary contained in this
Lease or in any other Lease Documents, at no time shall Tenant be responsible or
liable to Landlord for any Consequential Damages as the result of any actual or
alleged breach by Tenant of its obligations under this Lease; provided, however,
that notwithstanding the above, this Section 20.3.2 shall not limit or otherwise
affect Tenant's liability for Consequential Damages resulting from a holdover of
the Premises by Tenant beyond the date that is ninety (90) days after the
expiration or earlier termination of this Lease, subject to the provisions of
Paragraph 16.2 of this Lease.
20.4 SALE OF PREMISES. In the event of any sale or transfer of the
Premises (and provided that any unapplied portion of the security deposit held
by the seller, transferor or assignor (collectively, "SELLER") is delivered or
credited to the purchaser, transferee or assignee (collectively, "PURCHASER")),
on the condition that the Purchaser shall (by written instrument or operation of
law) assume all of the obligations of Landlord hereunder to be performed after
the date of the sale or transfer, the Seller shall be and hereby is entirely
freed and relieved of all agreements, covenants and obligations of Landlord
thereafter to be performed and it shall be deemed and construed without further
agreement between the parties or their successors in interest or between the
Seller and the Purchaser on any such sale, transfer or assignment that such
Purchaser has assumed and agreed to carry out any and all agreements, covenants
and obligations of Landlord hereunder.
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21. MORTGAGES.
21.1 Landlord will provide Tenant with an SNDAA (defined below) from
all lenders and ground lessors having an interest in the Premises promptly
following the execution of this Lease. This Lease and all of Tenant's rights
hereunder shall be subject and subordinate at all times to any deed of trust,
mortgage or ground lease which may now or hereafter affect the Premises, and to
all renewals, modifications, consolidations, replacements and extensions thereof
(collectively, "SECURITY DOCUMENTS"). Subject to the terms of this Paragraph
21.1, such subordination shall be effective without the necessity of the
execution by Tenant of any additional document for the purpose of evidencing or
effecting such subordination. If any such Security Document is foreclosed or
terminated, as applicable, at the election of Landlord's successor in interest,
Tenant agrees, for the benefit of such successor in interest, to attorn to such
successor in interest and become its tenant on the terms and conditions of this
Lease for the remainder of the Term, and if required, to enter into a new lease
with such successor in interest in the form of this Lease; provided, however,
that Tenant's agreement hereunder to (a) subordinate its interest hereunder to
the lien of any Security Document and (B) to attorn to and recognize as the
landlord hereunder, the Holder of such Security Document is conditioned upon the
delivery to Tenant of a subordination, non-disturbance, and attornment agreement
(each, an "SNDAA") in favor Tenant (on each such Holder's standard form of SNDAA
(or in any other commercially reasonable form)). Landlord or any Holder shall
have the right to subordinate or cause to be subordinated any such Security
Document to this Lease and in such case, in the event of the termination or
transfer of Landlord's estate or interest in the Premises by reason of any
termination or foreclosure of any Security Document, Tenant shall,
notwithstanding such subordination, attorn to and become the Tenant of the
successor in interest to Landlord at the option of such successor in interest.
At the request of Landlord or the holder ("HOLDER") of any Security Document,
Tenant shall, within ten (10) business days, execute, acknowledge and deliver
promptly in recordable form any commercially reasonable instrument or SNDAA that
Landlord or such Holder may request. In addition, at the request of Landlord or
any Holder of any Security Document and subject to reimbursement as provided
above, Tenant shall, within ten (10) business days, execute, acknowledge and
deliver promptly in recordable form any instrument that Landlord or such holder
may request to make this Lease superior to such Security Document.
21.2 Tenant agrees to give each Holder of any Security Document, in a
manner required under Paragraph 22.21, below, a copy of any notice of default
served upon the Landlord by Tenant, provided that prior to such notice Tenant
has been notified in writing of the address of such Holder (hereafter, a
"NOTIFIED PARTY"). Tenant further agrees that if Landlord shall have failed to
cure such default within thirty (30) days after such notice to Landlord (or if
such default cannot be cured or corrected within that time, then within such
additional time as may be necessary if Landlord has commenced such cure within
such thirty (30) days and is diligently pursuing the remedies or steps necessary
to cure or correct such default), then prior to Tenant pursuing any remedy for
such default provided hereunder, at law or in equity, the Notified Party shall
have an additional thirty (30) days to attempt to cure or correct such default
(or if such default cannot reasonably be cured or corrected within that time,
then such additional time as may be necessary if the Notified Party has
commenced within such thirty (30) days and is diligently pursuing the remedies
or steps necessary to cure or correct such default).
22. GENERAL PROVISIONS
22.1 SINGULAR AND PLURAL. Words of any gender used in this Lease shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, unless the context otherwise
requires.
22.2 INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein
provided to the contrary, any amount due to Landlord 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 Tenant under
this Lease, provided, however, that interest shall not be payable on late
charges incurred by Tenant.
22.3 TIME OF ESSENCE. Time is of the essence of this Lease and the
performance of all obligations hereunder.
22.4 BINDING EFFECT. The terms, provisions and covenants and conditions
contained in this Lease shall apply to, inure to the benefit of, and be binding
upon, the parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein expressly provided.
22.5 CHOICE OF LAW. This Lease shall be governed by the laws of the
State of California applicable to contracts made and to be performed in such
state without regard to its choice of laws rules and/or principles.
22.6 CAPTIONS. The captions inserted in this Lease are for convenience
only and in no way define, limit or otherwise describe the scope or intent of
this Lease, or any provision hereof, or in any way affect the interpretation of
this Lease.
22.7 ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS.
22.7.1 Tenant agrees from time to time within ten (10) days after
request of Landlord, to deliver to Landlord, or Landlord's designee, (a) an
"ESTOPPEL CERTIFICATE" certifying as to those facts for which certification has
been requested by Landlord or any current or prospective purchaser, holder of
any mortgages or deed of trust, ground lessor or master lessor, including, but
without limitation, (i) 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), (ii) the date to
which Rent has been paid, (iii) the unexpired Term of this Lease and (iv) such
other matters pertaining to this Lease as may be requested by Landlord or
Landlord's designee (including any provisions customarily required by any holder
of a mortgage or deed of trust or ground lessor including, without limitation,
an agreement on the part of Tenant to furnish to such holder or ground lessor,
as applicable, written notice of any Landlord default and a reasonable
opportunity for such holder or ground lessor to cure such default prior to
Tenant being able to terminate this Lease). Tenant's failure to timely deliver
such certificate (after Landlord's delivery of a second notice and lapse of five
(5) days) shall be conclusive upon Tenant that this Lease is in full force and
effect, without modification except as may be represented by Landlord, that
there are no uncured defaults in Landlord's performance, and that not more than
one (1) month's rent has been paid in advance Tenant acknowledges and agrees
that any Estoppel Certificate delivered pursuant to this Paragraph 22.7 may be
relied upon by any prospective purchaser of the fee of the Building or the
Premises or any holder of any mortgage or deed of trust, any ground lessor or
any other like encumbrancer thereof or any assignee of any such encumbrance upon
the Building or the Premises. Landlord agrees that, in connection with a sale or
financing of Tenant, Landlord shall, upon not less than ten (10) days notice,
execute and deliver to Tenant a commercially reasonable Estoppel Certificate
(which Landlord agrees may include certifications as to the matters described in
clauses (i), (ii) and (iii), above and such other factual matters pertaining to
this Lease as may be requested by Tenant or its designee).
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22.7.2 At any time during the Term, Tenant shall, upon ten (10) days'
prior notice from Landlord, provide Landlord with then current financial
statements and financial statements for each of the two (2) years prior to the
then current calendar year for Tenant (and any guarantor, if any); provided,
however, if such financial statements are not available to the general public,
except in the case where Landlord is requesting such financial statements for
delivery to an existing or prospective lender (a "REQUESTING LENDER"), (a) in
connection with a new loan (a "PREMISES LOAN") (or modification or extension of
an existing loan) secured in whole or in part by some form of mortgage, deed of
trust or other security interest in the Project (or some interest therein) or
(b) under circumstances where the failure to so deliver such financial
statements would (or could, with notice, the passage of time, or both)
constitute a default under any document relating to a Premises Loan, Tenant
shall not be required to provide those financial statements which are not
available to the general public; provided, further, however, that
notwithstanding the foregoing, in the circumstances described in either
exception (a) or (b) of the foregoing proviso, Tenant shall be required to
provide the financial statements of Tenant and its guarantor (if any) in the
form required hereunder only to the Requesting Lender (but not to Landlord).
Such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and shall, to the extent audited in
the ordinary course of Tenant's business, be audited by an independent certified
public accountant (provided, however, that the parties hereto agree that Tenant
shall not be required under this Paragraph 22.7.2 to produce or to provide any
financial statements or documents that are not produced by Tenant in the
ordinary course of its business). Notwithstanding the foregoing, at any time
that Original Tenant or any Successor thereto is the Tenant under this Lease, is
a public traded entity and its financial statements shall be publicly available,
all of the terms and provisions of this Article Paragraph 22.7.2 (and the
foregoing requirement to provide financial statements) shall not apply.
22.8 AMENDMENTS. This Lease may not be altered, changed or amended
except by an instrument in writing signed and dated by both parties hereto.
Tenant agrees to make such reasonable modifications to this Lease as may be
required by any lender in connection with the obtaining of financing or
refinancing of the Premises or any portion thereof, provided that Landlord
reimburses Tenant for its costs incurred in connection therewith, subject to the
limitation set forth in Paragraph 14.2.
22.9 ENTIRE AGREEMENT. This Lease constitutes the entire understanding
and agreement of Landlord and Tenant with respect to the subject matter of this
Lease, and contains all of the covenants and agreements of Landlord and Tenant
with respect thereto, and supersedes all prior agreements or understandings.
Landlord and Tenant each acknowledge that no representations, inducements,
promises or agreements, oral or written, have been made by Landlord or Tenant,
or anyone acting on behalf of Landlord or Tenant, which are not contained
herein, and any prior agreements, promises, negotiations, or representations not
expressly set forth in this Lease are of no force or effect.
22.10 WAIVERS. The waiver by either party of any term, covenant,
agreement or condition herein contained shall not be deemed to be a waiver of
any subsequent breach of the same or any other term, covenant, agreement or
condition herein contained, nor shall any custom or practice which may arise
between the parties in the administration of this Lease be construed to waive or
lessen the right of either party to insist upon the performance by the other in
strict accordance with all of the provisions of this Lease. The subsequent
acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of
any preceding breach by Tenant of any provisions, covenant, agreement or
condition of this Lease, other than the failure of Tenant to pay the particular
Rent so accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such Rent.
22.11 ATTORNEYS' FEES. If either Landlord or Tenant commences or
engages in, or threatens to commence or engage in, an action by or against the
other party arising out of or in connection with this Lease or the Premises,
including but not limited to any action for recovery of Rent due and unpaid, to
recover possession or for damages for breach of this Lease, the prevailing party
shall be entitled to have and recover from the losing party reasonable
attorneys' fees and other costs incurred in connection with the action,
preparation for such action, any appeals relating thereto and enforcing any
judgments rendered in connection therewith.
22.12 MERGER. The voluntary or other surrender of this Lease by Tenant
or a mutual cancellation hereof shall not constitute a merger. Such event shall,
at the option of Landlord, either terminate all or any existing subtenancies or
operate as an assignment to Landlord of any or all of such subtenancies.
22.13 SURVIVAL OF OBLIGATIONS. Paragraphs 2.4, 3.2, 4.2, 8, 12.1, 12.5,
and 16 and all other obligations of Landlord or Tenant hereunder which by their
express terms survive the termination or expiration of this Lease and that are
not fully performed as of the expiration or earlier termination of the Term,
shall survive the expiration or earlier termination of the Term, including
without limitation, all payment obligations with respect to Rent and all
obligations concerning the condition of the Premises.
22.14 SEVERABILITY. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws effective during
the Term, the remainder of this Lease shall not be affected thereby, and in lieu
of each clause or provision of this Lease that is illegal, invalid or
unenforceable, there shall be added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid or unenforceable clause
or provision as may be possible and be legal, valid and enforceable.
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22.15 SECURITY MEASURES. Tenant hereby acknowledges that the Rent
payable to Landlord hereunder does not include the cost of guard service or
other security measures, and that Landlord shall have no obligation whatsoever
to provide same. Tenant assumes all responsibility for the protection of Tenant,
Tenants' Parties and the Tenant's Personal Property from acts of third parties
other than Landlord.
22.16 EASEMENTS. Landlord reserves to itself the right, from time to
time, to grant such easements, rights and dedications that Landlord deems
necessary or desirable, and to cause the recordation of parcel maps, easement
agreements and covenants, conditions and restrictions, so long as such
easements, rights, dedications, maps and covenants, conditions and restrictions
do not unreasonably and materially interfere with Tenant's use of the Premises
for the Agreed Use.
22.17 MULTIPLE PARTIES. If more than one person or entity is named as
Tenant herein, the obligations of Tenant hereunder shall be the joint and
several responsibility of all persons or entities so named and the signature or
verbal agreement (as appropriate) of any one of such persons or entities shall
be sufficient to bind all such persons or entities to any consent, waiver,
approval, estoppel, statement, amendment to this Lease or other agreement
relating to this Lease.
22.18 CONFLICT. Any conflict between the printed provisions of this
Lease and any typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
22.19 NO THIRD PARTY BENEFICIARIES. This Lease is not intended by
either party to confer any benefit on any third party, including without
limitations any broker, finder, or brokerage firm.
22.20 EFFECTIVE DATE/NONBINDING OFFER; COUNTERPARTS/FACSIMILE
SIGNATURES. The submission of this Lease to Tenant or its Broker or other agent,
does not constitute an offer to Tenant to lease the Premises. This Lease shall
have no force and effect until (i) it is executed and delivered by Tenant to
Landlord and (ii) it is fully reviewed and executed by Landlord; provided,
however, that, upon execution of this Lease by Tenant and delivery to Landlord,
such execution and delivery by Tenant shall constitute an offer by Tenant to
Lease the Premises upon the terms and conditions set forth herein, and in
consideration of the time and expense incurred by Landlord in preparing this
Lease and reviewing Tenant's credit, Tenant agrees (and has agreed that) such
offer shall be irrevocable for two (2) days following the date on which Tenant
shall deliver to Landlord an executed counterpart of this Lease. The parties
hereto agree that this Lease may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which shall constitute
one and the same instrument. The parties hereto further agree that such executed
counterparts may be delivered by facsimile which, upon transmission to the other
party, shall have the same force and effect as delivery of the original signed
counterpart, provided that original signature pages shall follow promptly
thereafter.
22.21 NOTICES. Each provision of this Lease or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by one party to the other shall be deemed to be complied with when and if the
following steps are taken:
22.21.1 All Rent and other payments required to be made hereunder
shall be payable to the applicable party hereto as follows: to Landlord at the
address set forth in ITEM 2 of the Basic Lease Provisions, and to Tenant at the
address set forth in ITEM 3 of the Basic Lease Provisions, or at such other
addresses as the parties may have hereafter specified by written notice. All
obligations to pay Rent and/or any other amounts under the terms of this Lease
shall not be deemed satisfied until such Rent and other amounts have been
actually received by the respective party.
22.21.2 Wherever any notice or demand is required or permitted
hereunder, such notice or demand shall be in writing. Any notice or document
required or permitted to be delivered hereunder shall be deemed to be delivered
(a) upon personal delivery; (b) upon confirmation of delivery by Federal Express
or other reputable overnight delivery service; or (c) upon written or printed
confirmation of delivery by telegraph, telecopy or other electronic written
transmission device; correctly addressed to the parties hereto as follows: if to
Tenant, at the address specified in ITEM 3 of the Basic Lease Provisions, and if
to Landlord, then at the address specified in ITEM 2 of the Basic Lease
Provisions; or at such other address as the recipient may theretofore have
specified by written notice; provided, however, that notwithstanding any
provision of this Lease to the contrary, in the case where California statutory
law requires that any notice, notice to quit or pay rent, summons or complaint
(or any other form of writing required in connection with the assertion of
rights against Tenant, the enforcement of Tenant's obligations under this Lease
or the termination of Tenant's rights hereunder) (collectively, "STATUTORY
WRITTEN NOTICES OR COMPLAINTS") must be delivered or served in a particular
form, delivered to or served on Tenant through delivery to or service on a
particular representative of Tenant, delivered or served in a particular manner
(or by a particular method), for purposes of determining compliance with such
applicable statutory requirements, any such Statutory Written Notice or
Complaint may be delivered to Tenant at the Premises (with a copy to Tenant at
the address specified in ITEM 3 of the Basic Lease Provisions) and the time,
manner or method of delivery of all such Statutory Written Notices or Complaints
delivered to or served on Tenant at the address specified in ITEM 3 of the Basic
Lease Provisions shall be disregarded (so long as copies of such Statutory
Written Notices or Complaints are delivered to Tenant the address specified in
ITEM 3 of the Basic Lease Provisions within two (2) business days of delivery of
the same to Tenant at the Premises), and if the timing, manner and, method of
delivery and form of the Statutory Written Notice or Complaint delivered to
Tenant at the Premises shall satisfy the applicable statutory requirements, then
such statutory requirements shall be deemed satisfied with respect to the
timing, manner, and method of delivery and form with respect to all Tenant
addressees as of the date of delivery to Tenant at the Premises.
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22.22 WATER, OIL AND MINERAL RIGHTS. Landlord reserves all right, title
or interest in water, oil, gas or other hydrocarbons, other mineral rights and
air and development rights, together with the sole and exclusive right of
Landlord to sell, lease, assign or otherwise transfer the same, but without any
right of Landlord or any such transferee to enter upon the Premises during the
Term except as otherwise provided herein.
22.23 CONFIDENTIALITY. Except as required to be disclosed by any
applicable law, court order, legal process or applicable securities rules or
regulations, Landlord and Tenant each agree to keep this Lease and its terms,
covenants, obligations and conditions, and any financial information provided in
connection herewith, strictly confidential and not to disclose such matters to
any other landlord, tenant, prospective tenant, or broker; provided, however,
Tenant may provide a copy of this Lease to its attorneys, accountants and
bankers, and to a non-party solely in conjunction with Tenant's reasonable and
good faith effort to secure an assignee or sublessee for the Premises.
22.24 BROKER'S FEES. Landlord and Tenant each represent and warrant
that it has dealt with no broker, agent or other person in connection with this
transaction and that no broker, agent or other person brought about this
transaction, other than the brokerage firm specified in ITEM 16 of the Basic
Lease Provisions, if any, and each party shall indemnify, defend, protect and
hold the other harmless from and against any claims, losses, liabilities,
demands, costs, expenses or causes of action by any other broker, agent or other
person claiming a commission or other form of compensation by virtue of having
dealt with such party with regard to this leasing transaction.
22.25 REMEDIES CUMULATIVE. All rights, privileges and remedies of the
parties are cumulative and not alternative or exclusive to the extent permitted
by law, except as otherwise provided herein.
22.26 RETURN OF CHECK. If Tenant's check, given to Landlord in payment
of any sum, is returned by the bank for non-payment, Tenant shall pay to
Landlord immediately on demand, as Rent, all expenses incurred by Landlord as a
result thereof.
22.27 EFFECT OF REFUND. If Landlord receives payment by Tenant after an
Event Of Default has occurred, and subsequently returns or refunds such payment
to Tenant, such refund shall have the effect of withdrawing Landlord's
acceptance of such payment, as if such payment had never been accepted.
22.28 NO RECORDATION OF LEASE. Neither this Lease nor any memorandum
hereof may be recorded.
22.29 AUTHORITY. If Tenant is a corporation, partnership, limited
liability company or other similar entity, 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. Tenant shall, within thirty (30)
days following execution of this Lease, deliver to Landlord upon request
evidence of such authority satisfactory to Landlord.
22.30 INTERPRETATION. This Lease shall be construed according to its
terms without regard to which party, or which party's attorneys, prepared its
form.
22.31 LANDLORD'S APPROVALS. Except where the provisions of this Lease
expressly provide that Landlord's consent or approval must be reasonably given,
all consents or approvals of Landlord sought or required pursuant to the terms
of this Lease may be given or withheld in Landlord's sole and absolute
discretion.
22.32 ADDITIONAL PROVISIONS. Those additional provisions set forth in
EXHIBIT F, if any, are hereby incorporated by this reference as if fully set
forth herein.
22.33 WAIVER OF RIGHT TO TRIAL BY JURY. TO THE FULLEST EXTENT PERMITTED
BY LAW, LANDLORD AND TENANT EACH EXPRESSLY WAIVE THEIR RIGHT TO TRIAL BY JURY IN
ANY TRIAL HELD AS A RESULT OF A CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE IN WHICH LANDLORD AND TENANT ARE ADVERSE PARTIES. THE FILING OF A
CROSS-COMPLAINT BY ONE AGAINST THE OTHER IS SUFFICIENT TO MAKE THE PARTIES
"ADVERSE.".
22.34 FORCE MAJEURE. Neither Landlord nor Tenant shall incur any
liability to the other with respect to, and shall not be responsible for any
failure to perform, any of their obligations hereunder (other than Tenant's
monetary obligations hereunder) if such failure is caused by any reason beyond
the control of Landlord or Tenant, as applicable, including, but not limited to,
strike, labor trouble, governmental rule, regulations, ordinance, statute or
interpretation, or by fire, earthquake, civil commotion, or failure or
disruption of utility services (collectively, a "FORCE MAJEURE EVENT"). The
amount of time for either Landlord or Tenant to perform any of its obligations
hereunder (other than Tenant's monetary obligations hereunder) shall be extended
on a day for day basis for each day that Landlord or Tenant, as applicable, is
delayed in performing such obligation by reason or any Force Majeure Event,
whether similar to or different from the foregoing types of occurrences.
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22.35 RELATIONSHIP OF PARTIES. This Lease does not create the
relationship of principal and agent, or of partnership, joint venture, or of any
association or relationship between Landlord and Tenant, the sole relationship
between Landlord and Tenant being that of landlord and tenant.
23. LIMITATION OF LIABILITY.
In consideration of the benefits accruing hereunder, Tenant
and all successors and assigns covenant and agree that, in the event of any
actual or alleged failure, breach or default hereunder by Landlord:
23.1 the sole and exclusive remedy shall be against Landlord and
Landlord's assets as specified in Paragraph 20.3 hereof;
23.2 no partner, shareholder, director, or officer of Landlord,
Landlord's Advisor or Landlord's Managing Agent shall be sued or named as party
in any suit or action (except as may be necessary to secure jurisdiction of
Landlord);
23.3 no service of process shall be made against any partner,
shareholder, director, or officer of Landlord (except as may be necessary to
secure jurisdiction of Landlord), Landlord's Advisor or Landlord's Managing
Agent;
23.4 no partner, shareholder, director, or officer of Landlord,
Landlord's Advisor or Landlord's Managing Agent shall be required to answer or
otherwise plead to any service of process;
23.5 no judgment will be taken against any partner, director, or
officer of Landlord, Landlord's Advisor or Landlord's Managing Agent;
23.6 any judgment taken against any partner, shareholder, director, or
officer of Landlord, Landlord's Advisor or Landlord's Managing Agent may be
vacated and set aside at any time without hearing;
23.7 no writ of execution will ever be levied against the assets of any
partner, director, or officer of Landlord, Landlord's Advisor or Landlord's
Managing Agent; and
23.8 these covenants and agreements are enforceable by Landlord,
Landlord's Advisor and Landlord's Managing Agent and any partner, shareholder,
director, or officer of Landlord, Landlord's Advisor or Landlord's Managing
Agent.
Tenant agrees that each of the foregoing covenants and agreements shall
be applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or at common law.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered
this Lease as of the day and year first above written.
LANDLORD: TENANT:
ONTARIO WAREHOUSE I, INC., EMERSON RADIO CORP.,
a Florida corporation a Delaware corporation
By: /S/ Mark P. Faraldo By: /S/ Frank Gueriero
Name: Mark P. Faraldo Name: Frank Guerriero
Title: Vice President & Secretary Its: Vice President - Operations,
Emerson Radio Consumer Products Corporation