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Exhibit 10.18
SINGLE TENANT LEASE
1. Basic Provision ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only
June 7, 1999, is made by and between Capellino/Xxxxxxxx
("Lessor") and Sierra Precision, Inc. ("Lessee"),(collectively
the "Parties," or individually a "Party").
1.2 Premises: That certain real property, including all improvement
therein or to be provided by Lessor under the terms this Lease,
and commonly known as Lot #2 - Southside of Arrow Route between
White Oak and Oakwood, Rancho Cucamonga, located in the County
of San Bernardino, State of California, and generally described
as (describe briefly the nature of the property and, if
applicable, the "Project", if the property is located within a
Project) an approximate 35,140 square foot single story concrete
tilt-up building on an approximate 79,500 square foot parcel of
land. Part of a 50 acre master planned business park known as
Arrow Park.("Premises). (See also Paragraph 2)
1.3 Term: Ten (10) years and -0- months ("Original Term") commencing
see paragraph #50 ("Commencement Date") and ending see paragraph
#50 ("Expiration Date"). See also paragraph 3)
1.4 Base Rent: $18,010.00 per month ("Base Rent"), payable on the
first (1st) day of each month commencing the second (2nd) month
of the lease term (See also Paragraph 4) if this box is checked,
there are provisions in this Lease for the Base Rent to be
adjusted. See Paragraph #51
1.5 Base Rent Paid Upon Execution: 18,010.00 as Base Rent for the
period first (1st) month of lease term.
1.6 Security Deposit: $22,315.00 ("Security Deposit). (See also
Paragraph 5)
1.7 Agreed Use: Office manufacturing and distribution of instrument
gages and all related legal uses. (See also Paragraph 6)
1.8 Insuring Party. Lessor is the "Insuring Party" unless otherwise
stated herein. (see also Paragraph 8)
1.9 Real Estate Brokers: (See also Paragraph 15)
1.10 Xxxxxxx & Wakefield of CA., Inc. represents both Lessor and
Lessee ("Dual Agency").
(b) Payment to Brokers: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Broker the fee
agreed to in their separate written agreement (or if there is no
such agreement, the sum of ---% of the total Base Rent for the
brokerage services rendered by said Broker).
1.11 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 55 and Exhibits A and B, all
of which constitute a part of this Lease.
3. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental,
and upon all of the terms, covenants and conditions set forth in
this Lease. Unless otherwise provided herein, any statement of
size set forth in this Lease, or that may have been used in
calculating rental, is an approximation which the Parties agree
is reasonable and the rental based thereon is not subject to
revision whether or not the actual size is more or less
2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom
clean and free of debris on the Commencement Date or the Early
Possession Date, whichever first occurs ("Start Date"), and , so
long and the required service contracts described in Paragraph
7.1(b) below are obtained by Lessee within thirty (30) days
following the Start Date, warrants the to be constructed
electrical, plumbing, fire sprinkler, lighting, heating,
ventilating and air conditioning systems ("HVAC"), loading
doors, if any, and all other such elements in the Premises will
be in good operating condition on said date and that the
structural elements of the xxxx, bearing walls and foundation of
any buildings on the Premises (the "Building") shall be free of
material defects. If a non-compliance with said warranty exists
as of the Start Date, Lessor shall, as Lessor's sole obligation
with respect to such matter, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such
non-compliance with said warranty exists as of the Start Date,
Lessor shall as Lessor's sole obligation with respect to such
matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance,
rectify same at Lessor's expense. If, after the Start Date,
Lessee does not give Lessor written notice of any non-compliance
with this warranty within: (I) one year as to the surface of the
roof and the structural portions of the roof, foundation and
bearing walls, (ii) one year as to the HVAC systems, (iii)
thirty (30) days as to the remaining systems and other elements
of the building, correction of such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3 COMPLIANCE. Lessor warranty that the improvements on the
Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and
ordinances ("APPLICABLE REQUIREMENTS") in effect on the
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Start Date. Said warranty does not apply to the Lessee. NOTE:
Lessee is responsible for determining whether or not the zoning
is appropriate for Lessee's intended use, and acknowledges that
past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except
as otherwise provided promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If
Lessee does not give Lessor written notice of a non-compliance
with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation
of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed (as opposed to being in
existence at the Start Date, which is addressed in Paragraph
6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building,
the remediation of any hazardous Substance, or the reinforcement
or other physical modification of the Building ("CAPITAL
EXPENDITURE"), Lessor and Lessee shall allocate the cost of such
work as follows
(a) Subject to paragraph 2.39c) below, if such Capital
Expenditures are required as a result of the specific and unique
use of the Premises by Lessee as compared with uses by tenants
in general, Lessee shall be fully responsible for the cost
thereof, provided, however that if such Capital Expenditure is
required during the last two (2) years of this Lease and the
cost thereof exceeds six (6) months' Base Rent, Lessee may
instead terminate this Lease unless Lessor notifies Lessee, in
writing, within ten (10) days after receipt of Lessee's
termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such
Capital Expenditure and deliver to lessor written notice
specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be
earlier than the last day the Lessee could legally utilize the
Premises without commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as,
governmentally mandated seismic modifications), then lessor and
Lessee shall allocate the obligation to pay for such costs
pursuant to the provisions of Paragraph 7.1(c); provided,
however, that if such Capital Expenditure is required during the
last two years of this Lease or if Lessor reasonably determines
that it is not economically feasible to pay its share thereof,
Lessor shall have the option to terminate this Lease upon ninety
(90) days prior written notice to Lessee unless Lessee notifies
Lessor, in writing within ten (10) days after receipt of
Lessor's termination notice that Lessee may advance such funds
and deduct same, with Interest, from Rent until Lessor's share
of such costs have been fully paid. If Lessee is unable to
finance Lessor's share, or if the balance of the Rent due and
payable for the remainder of this Lease is not sufficient to
fully reimburse Lessee on an offset basis, Lessee shall have the
right to terminate this Lease upon thirty (30) days written
notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary,
unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an
actual or proposed change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee
shall be fully responsible for the cost thereof, and Lessee
shall not have any right to terminate this Lease.
2.4 Acknowledgements. In addition, Lessor acknowledges that" (a)
Broker has made no representations, promises or warranties
concerning Lessee's ability to honor the Lease or suitability to
occupy the Premises, and (b) it is Lessor's sole responsibility
to investigate the financial capability and/or suitability of
all proposed tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
paragraph 2 shall be of no force or effect if immediately prior
to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any
necessary corrective work.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay
Base Rent shall be abated for the period of such early
possession. All terms of this Lease (including but not limited
to the obligations to pay Real Property Taxes and insurance
premiums and to maintain the Premises) shall, however, be in
effect during such period. Any such early possession shall not
affect the Expiration Date.
3.3 Delay in possession. See Paragraph 54 in Addendum
3.4 Lessee Compliance. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with
its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to
perform all of its obligations under this Lease from and after
the Start Date, including the payment of Rent, notwithstanding
Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform
any other conditions prior to or
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concurrent with the Start Date, the Start Date shall occur but
Lessor may elect to withhold possession until such conditions
are satisfied.
4. Rent
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are
deemed to be rent (`Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or
deduction (except as specifically permitted in this Lease), on
or before the day on which it is due. Rent for any period during
the term hereof which if for less than one (1) full calendar
month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its
address stated herein or to such other persons or place as
Lessor may from time to time designate in writing. Acceptance of
a payment which is less than the amount then due shall not be a
waiver of Lessor's right to the balance of such Rent, regardless
of Lessor's endorsement of any check so stating.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of
its obligations under this Lease. If lessee fails to pay Rent, or
otherwise Defaults under this Lease, Lessor may use, apply or retain all
or any portion of said Security Deposit for the payment of any amount
due Lessor or to reimburse or compensate Lessor for any liability,
expense, loss or damage which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request
therefore deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent
increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional moneys with Lessor so that the
total amount of the Security Deposit shall at all times bear the same
proportion to the increased Based Rent as the initial Security Deposit
bore to the initial Base Rent. Should the Agreed Use be amended to
accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to
increase the Security Deposit to the extent necessary, in Lessor's
reasonable judgment, to account for any increased wear and tear that the
Premises may suffer as a result thereof. If a change in control of
Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor's reasonable judgment, significantly
reduced, Lessee shall deposit such additional monies with Lessor as
shall be sufficient to cause the Security Deposit to be as commercially
reasonable level based on said change in financial condition. Lessor
shall not be required to keep the Security Deposit separate from it
general accounts. Within fourteen (14) days after the expiration or
termination of this Lease, if Lessor elects to apply the Security
Deposit only to unpaid Rent, and otherwise within thirty (30) days after
the Premises have been vacated pursuant to Paragraph 7.4(C) below,
Lessor shall return that portion of the Security Deposit not used or
applied by Lessor. No part of the Security Deposit shall be considered
to be held in trust, to bear interest or to be prepayment for any monies
to be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not
use or permit the use of the Premises in a manner that is
unlawful, created damage, waste of a nuisance, or that disturbs
owners and/or occupants of, causes damaged to neighboring
properties. Lessor shall not unreasonably withhold or delay its
consent to any written request for a modification of the Agreed
Use, so long as the same will not impair the structural
integrity of the improvements on the Premises or the mechanical
or electrical systems therein, is not significantly more
burdensome to the Premises. If Lessor elects to withhold
consent, Lessor shall within five (5) business days after such
request give written notification of same, which notice shall
include an explanation of Lessor's objections to the change in
use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The Term "Hazardous
Substance" as used in this Lease shall mean any product,
substance, or waste whose presence, use, manufacture,
disposal, transportation, or release, either by itself
or in combination with other materials expected to be on
the Premises, is either: (i) potentially injurious to
the public health, safety or welfare, the environment or
the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential
liability of Lessor to any governmental agency or third
party under any applicable statue or common law theory.
Hazardous Substances shall include, but not limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or
any products, by products or fractions thereof. Lessee
shall not engage in any activity in or on the Premises
which constitutes a Reportable Use of Hazardous
Substances without the express prior written consent of
Lessor and timely compliance (at Lessee's expense) with
all Applicable Requirements. "Reportable Use" shall mean
(i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage,
use transportation, or disposal of a Hazardous Substance
that requires a permit from, or with respect to which a
report, notice, registration or business plan is
required to be filed with, any governmental authority,
and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable
Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may
use any ordinary and customary materials
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reasonably required to be used in the normal course of
the Agreed Use, so long as such is in compliance with
all Applicable Requirement, is not a Reportable use, and
does not expose the Premises or neighboring property to
any meaningful risk of contamination or damage or expose
Lessor to any liability therefore. In addition, lessor
may condition its consent to any Reportable Use upon
receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the
public, the Premises and/or the environment against
damage, contamination, injury and/or liability,
including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements)
and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has
reasonable cause to believe, that hazardous Substance
has come to be located in, on under or about the
Premises, other than as previously consented by Lessor,
Lessee shall immediately give written notice of such
fact to Lessor, and provide Lessor with a copy of any
report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or release in, on
under, or about the Premises (including throughout the
plumbing or sanitary sewer system) and shall promptly,
at Lessee's expense, take all investigatory and/or
remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security
and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous
Substance brought on the Premises during the term of
this Lease, by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend
and hold Lessor, its agents, employees, lenders and
ground lessor, if any, harmless from and against any and
all loss of rent and/or damages, liabilities,
judgements, claims, expenses, penalties, and attorneys'
and consultants' fees arising out of or involving any
Hazardous Substance brought onto the Premises by or for
Lessee, or any third party (provided, however, the
Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous
Substance under the Premises from adjacent properties).
Lessee's obligations shall include, not be limited to,
the effects of any contamination or injury to person,
property or the environment created or suffered by
Lessee, and the cost of investigation, removal,
remediation, restoration, restoration and/or abatement,
and shall survive the expiration or termination of this
Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Less
from it obligations under the Lease with respect to
Hazardous substances, unless specifically so agreed by
Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Lessor and its successors and
assigns shall indemnify, defend, reimburse and hold
Lessee, its employees and lenders, harmless from and
against any and all environmental damages, including the
cost of remediation, which existed as a result of
Hazardous Substances on the Premises prior to the Start
Date or which are caused by the gross negligence or will
misconduct of Lessor, its agents or employees. Lessor's
obligations, as and when required by the Applicable
Requirements, shall include but not be limited to, the
cost of investigation, removal, remediation, restoration
and/or abatement, and shall survive the expiration or
termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or
remediation measures required by governmental entities
having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start
Date, unless such remediation measure is required as a
result of Lessee's use (including "Alterations", as
defined in paragraph 7.3(a) below) of the Premises, in
which event lessee shall be responsible for such
payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing
Lessor and Lessor's agents to have reasonable access to
the Premises at reasonable times in order to carry out
Lessor's investigative and remedial responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance
Condition occurs during the term of this Lease, unless
Lessee is legally responsible therefore (in which case
Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this
Lease shall continue in full force and effect, but
subject to Lessor's right under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either
(i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible
at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds
twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to
Lessee, within thirty (30) days after receipt by Lessor
of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor's desire to terminate
this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give
a termination notice, Lessee may, within ten (10) days
thereafter, give written notice to Lessor of Lessee's
commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition
exceeds an amount equal to twelve (12) times the then
monthly Base Rent or $100,000,
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whichever is greater. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within
thirty (30) days following such commitment. In such
event, this Lease shall provide Lessor with said funds
or satisfactory assurance thereof within thirty (30)
days following such commitment. In such event, this
Lease shall continue in full force and effect, and
Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are
available. If lessee does not give such notice and
provide the required funds or assurance thereof within
the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.
6.3 Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole
expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any
applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants which
relate in any manner to the Premises, without regard to whether
said requirements are now in effect or become effective after
the Start Date. Lessee shall, within ten (10 days after receipt
of Lessor's written request, provide Lessor with copies of all
permits and other documents, and other information evidencing
Lessee's compliance with any Applicable Requirements specified
by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint
or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined
in Paragraph 30 below) and consultants shall have the right to
enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times with proper notice to Lessee
for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of
any such inspections shall be paid by Lessor, unless a violation
of Applicable Requirements, or a contamination is found to exist
or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as
such inspection is reasonably related to the violation or
contamination.
7. Maintenance; Repairs, Utility Installations: Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance
with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense,
keep the Premises, Utility Installations, and
Alterations in good order, condition and repair (whether
or not the portion of the Premises requiring repairs, or
the means of repairing the same, are reasonably or
readily accessible to lessee, and whether or not the
need for such repairs occurs as a result of Lessee's
use, any prior use, the elements or the age of such
portion of the Premises), including, but not limited to,
all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior and exterior),
foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking
lots, fences, retaining walls, signs, sidewalks and
parkways located in, on or adjacent to the Premises.
Lessee, in keeping the Premises in good order, condition
and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and
maintenance of the service contracts required by
Paragraph 7.1(b) below. Lessee's obligations shall
include restorations, replacements or renewals when
necessary to keep the Premises and all improvements
thereon or a part thereof in good order, condition and
state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a
first-class condition consistent with the exterior
appearance of other similar facilities of-comparable age
and size in the vicinity, including, when necessary, the
exterior repainting of the Building.
(b) Service Contracts. Lessee shall, at Lessee's sole
expense, procure and maintain contracts with copies to
Lessor, in customary form and substance for, and with
contractors specializing and experienced in the
maintenance of the following equipment improvements
("Basic Elements"), if any, if and when installed on the
Premises: (I) HVAC equipment, (iii) fire extinguishing
systems, including fire alarm and/or smoke detection,
(iv) landscaping and irrigation systems, (v) roof
covering and drains, (vi) driveways and parking lots,
(viii) clarifiers, and (ix) any other equipment, if
reasonably required by Lessor.
(c) Replacement. Subject to Lessee's indemnification of
Lessor as set forth in Paragraph 8.7 below, and without
relieving Lessee of liability resulting from Lessee's
failure to exercise and perform good maintenance
practices, if the Basic Elements described in Basic
Elements shall be replaced by Lessor, and the cost
thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the
remainder of the term of this Lease, on the date on
which Base Rent is due, an amount equal to the product
of multiplying the cost of such replacement by a
fraction, the numerator of which in one, and the
denominator of which is the number of months of the
useful life of such replacement as such useful life is
specified pursuant to Federal income tax regulations or
guidelines for depreciation thereof (including interest
on the unamortized balance as
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is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right
to prepay its obligation at any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and
14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair
and maintain the Premises, or the equipment therein, all of
which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of
any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alteration.
(a) Definitions; Consent Required. The term "Utility
Installations" refers to all floor and window coverings,
air lines, power panels, electrical distribution,
security and fire protection systems, communication
systems, lighting fixtures, HVAC equipment, plumbing,
and fencing in or on the Premises. The term
"Trade-Fixtures' shall mean Lessee's machinery and
equipment that can be removed without doing material
damage to the Premises. The term "Alterations" shall
mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by
addition or deletion. "Lessee Owned Alterations and/or
Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee
shall not make any Alterations or Utility Installations
to the Premises without Lessor's prior written consent.
Such consent shall not be unreasonably withheld and
shall be deemed to be given if Lessor does not respond
in writing to such request within ten (10) days. Lessee
may, however, make non-structural Utility Installations
to the interior of the premises (excluding the roof)
without such consent by upon notice to Lessor, as long
as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any
existing walls, and the cumulative cost thereof during
this Lease as extended does not exceed $50,000 in the
aggregate or $10,000 in any one year.
(b) Consent. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the
consent of the Lessor shall be presented to Lessor in
written from with detailed plans. Consent shall be
deemed conditioned upon Lessee's: (i) acquiring all
applicable governmental permits, (ii) furnishing Lessor
with copies of both the permits and the plans and
specifications prior to commencement of the work, and
(iii) compliance with all conditions of said permits and
other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner
with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-build
plans and specifications. For work which costs and
amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee
providing a lien and completion bond in an amount equal
to one and one-half times the estimated cost of such
Alteration or Utility Installation and/or upon Lessees'
posting an additional Security Deposit with Lessor.
(c) Indemnification. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been
furnished to or for Lessee at or for use on the
Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or
any interest therein. Lessee shall give Lessor not less
than ten (10) days' notice prior to the commencement of
any work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility. If
Lessee shall contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense
defend and protect itself Lessor and the Premises
against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee
shall furnish a surety bond in an amount equal to one
and one-half times the amount of such contested lien,
claim or demand, indemnifying Lessor against liability
for the same. If lessor elects to participate in any
such action, Lessee shall pay Lessor's attorneys' fees
and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal
or elect ownership as hereinafter provided, all
Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part
of the Premises. Lessor may, at any time, elect in
writing to be the owner of all or any specified part of
the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per Paragraph 7.4(b) hereof,
all Lessee Owned Alterations and Utility Installations
shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by
Lessee Owned Alterations and Utility Installations
shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by
Lessee with the Premises.
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(b) Removal. By delivery to Lessee of written notice from
Lessor not earlier than ninety (90) and not later than
thirty (30) days prior to the end of the term of this
Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the
expiration or termination of this Lease. Lessor may
require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations
made without the required consent.
(c) Surrender/Restoration. Lessee shall surrender the
Premises by the Expiration Date or any earlier
termination date, with all of the improvements, parts
and surfaces thereof broom clean and free of debris, and
in good operating order, condition and state of repair,
ordinary wear and tear accepted. "Ordinary wear and
tear" shall not include any damage or deterioration that
would have been prevented by good maintenance practice.
Lessee shall repair and damage occasioned by the
installation, maintenance or removal of Trade Fixtures,
Lessee Owned Alterations and/or Utility Installations,
furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the
removal, replacement , or remediation of any soil,
material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property of Lessee and shall
be removed by Lessee. The failure by Lessee to timely
vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph
26 below.
8. Insurance; Indemnity.
8.1 Payment for Insurance. Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost
attributable to liability Insurance carried by Lessor under
Paragraph 8.2(b) in excess of $2,000,000 per occurrence.
Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the
Lease term. Payment shall be made by Lessee to Lessor within ten
(10) days following receipt of an invoice.
8.2 Liability Insurance.
(a) Carried by lessee. Lessee shall obtain and keep in force
a Commercial General Liability Policy of Insurance
protecting Lessee and Lessor against claims for bodily
injury, personal injury and property damaged based upon
or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant
thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less
that $1,000,000 per occurrence with and "Additional
Insured-Managers or Lessors of Premises Endorsement" and
contain the "Amendment of the Pollution Exclusion
Endorsement" for damaged caused by heat, smoke or fumes
from a hostile fire. The Policy shall not contain any
intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" "or
the performance of Lessee's indemnity obligations under
the Lease. The limits of said insurance shall not,
however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder. All insurance
carried by Lessee shall be primary to and not
contributory with any similar insurance carried by
Lessor, which insurance shall be considered excess
insurance on.
(b) Carried by Lessor. Lessor shall maintain liability
insurance as described in Paragraph 8.2(a), in addition
to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall
obtain and keep in force a policy or policies in the
name of Lessor, with loss payable to Lessor, any
groundlessor, and to any Lender(s) insuring loss or
damage to the Premises. The amount of such insurance
shall be equal to the full replacement cost of the
Premises, as the same shall exist from time to time, or
the amount required by any Lenders, but in no event more
than the commercially reasonable and available insurable
value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee's personal property shall be
insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available commercially
appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris
removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or
policies shall also contain and agreed valuation
provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage
amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban
Consumers for the city nearest to where the Premises are
located. If such insurance coverage as a deductible
clause, the deductible amount shall not exceed $1,000
per occurrence, and Lessee shall be liable for such
deductible amount in the event of an Insured Loss.
(b) Rental Value. the Insuring Party shall obtain and keep
in force a policy or policies in the name of Lessor with
loss payable to Lessor and any Lender, insuring the loss
of the full Rent for (1) year. Said insurance shall
8
provide that in the event the Lease is terminated by
reason of an insured loss, the period of indemnity for
such coverage shall be extended beyond the date of the
completion of repairs of replacement of the Premises, to
provide for one full year's loss or Rent from the date
of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Lessee,
for the next twelve (12) month period. Lessee shall be
liable for any deductible amount in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay
for any increase in the premiums for the property
insurance of such building or buildings if said increase
is caused by Lessee's act, omissions, use or occupancy
of the Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property,
Trade Fixtures, and Lessee owned Alterations and Utility
Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000
per occurrence. The proceeds from any such insurance
shall be used by Lessee for the replacement of person
property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations. Lessee shall provide Lessor
with written evidence that such insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as
will reimburse Lessee for direct or indirect loss of
earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or
attributable to prevention of access to the Premises as
a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of
insurance specified herein are adequate to cover
Lessee's property, business operations or obligations
under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the
state where the Premises are located, maintaining during the
policy term "General Policyholders Rating" of at least B+, V, as
set forth in the most current issue of "Best's Insurance Guide",
or such other rating as may be required by Lender. Lessee shall
not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the State
Date, deliver to Lessor certified copies of policies of such
insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancelable or
subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessor
with evidence of renewals or "insurance" binders" evidencing
renewal thereof, or Lessor may order such insurance and charge
the cost thereof to Lessee, which amount shall be payable by
Lessee to Lessor upon demand. Such policies shall be for a term
of at least one year, or the length of the remaining term of
this Lease, whichever is less. If either Party shall fail to
procure and maintain the insurance required to be carried by it,
the other Party may, but shall not be required to, procure and
maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the
other, and waive their entire right to recover damages against
the other, for loss of or damaged to its property arising out of
or incident to the perils required to be insured against herein.
The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to
subrogation that such companies may have against Lessor or
Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 Indemnity. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold
harmless the Premises, lessor and its agents, Lessor's master or
ground lessor, partners and Lenders, from and against any and
all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee. If any
action or proceeding is brought against Lessor by reason of any
of the foregoing matters, Lessee shall upon notice defend the
same at Lessee's expense by counsel reasonably satisfactory to
lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be
defended or indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise
or other property of Lessee, Lessee's employees, contractors,
invites, customers, or any other person in or about the
Premises, whether such damage or injury is caused by or results
from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or
damaged results from conditions arising upon the Premises or
upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be
liable for any damages arising from any act or neglect of any
other tenant of Lessor. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be
liable for injury to lessee's business or for any loss of income
or profit therefrom.
9. Damage or Destruction.
9
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or
destruction to the improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations,
which can reasonably be repaired in six (6) months or
less from the date of damage or destruction. Lessor
shall notify Lessee in writing within thirty (30) days
from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or
destruction to the Premises, other than Lessee owned
Alterations and Utility Installation and Trade Fixtures,
which cannot reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor
shall notify lessee in writing within thirty (30) days
from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a),
irrespective of any deductible amounts or coverage
limits involved.
(d) "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of
the occurrence to their condition existing immediately
prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the
occurrence or discovery of a condition involving the
present of, or a contamination by a Hazardous Substance
as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damaged - Insured Loss. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's
expense, repair such damage (but not Lessee's Trade Fixtures or
Lessee Owned Alterations and Utility Installations) as soon as
reasonably possible and this Lease shall continue in full force
and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total
cost to repair of which is $10,000 or less, and in such event,
Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding
the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in
proceeds (except as to the deductible which is Lessee's
responsibility) as and when required to complete said repairs.
In the event, however, such shortage was due to the fact that,
by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor
with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such
shortage and request therefore. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the
party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full
force and effect. If such funds or assurance are not received,
Lessor may nevertheless elect by written notice to lessee within
ten (10) days thereafter to: (i) make such restoration and
repair as is commercially reasonable with lessor paying any
shortage in proceeds, in which case this Lease shall remain in
full force and effect; or (ii) have this Lease terminate thirty
(30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood
or earthquake shall be subject to paragraph 9.3, notwithstanding
that there may be some insurance overage, but the net proceeds
of any such insurance shall be made available for the repairs if
made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent
or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may either: (i) repair such
damage as soon as reasonably possible at Lessor's expense, in
which event this lease shall continue in full force and effect,
or (ii) terminate this Lease by giving written notice to Lessee
within thirty (30) days after receipt by Lessor of Knowledge of
the occurrence of such damage. Such termination shall be effect
sixty (60) days following the date of such notice. In the event
Lessor elects to terminate this Lease, Lessee shall have the
right within ten (10) days after receipt of the termination
notice to give written notice to lessor of Lessee's commitment
to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue
in full force and effect, and lessor shall proceed to make such
repairs as soon as reasonably possible after the required funds
are available. If lessee does not make the required commitment,
this lease shall terminate as of the date specified in the
termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall
terminate sixty (60) days following such Destruction. If the
damage or destruction was caused by the gross negligence or
willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in
Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of this Lease there is damage for which the cost to
repair exceeds on (1) month's Base Rent, whether or not an
Insured Loss, Lessor may terminate this Lease effective sixty
(60) days following the date of occurrence of such damage by
giving a written termination notice to Lessee within thirty (30)
days after the date of occurrence of such damage.
Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising
such option and (b) providing Lessor
10
with any shortage in insurance proceeds )or adequate assurance
thereof) needed to make the repairs on or before the earlier of
(i) the date which is ten days after lessee's receipt of
Lessor's written notice purporting to terminate this Lease, or
(ii) the day prior to the date upon which such option expires.
If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at
Lessor's commercially reasonable expense, repair such damage as
soon as reasonably possible and this Lease shall continue in
full force and effect. If lessee fails to exercise such option
and provide such funds or assurance during such period, then
this Lease shall terminate on the date specified in the
termination notice and Lessee's option shall be extinguished.
9.6 Abatement of Rent; lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Condition for
which Lessee is not responsible under this Lease, the
Rent payable by Lessee for the period required for the
repair, remediation or restoration of such damage shall
be abated in proportion to the degree to which lessee's
use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All
other obligations of Lessee hereunder shall be performed
by Lessee, and Lessor shall have no liability for any
such damage, destruction, remediation, repair or
restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a
substantial and meaningful way, such repair or
restoration within thirty (30) days after such
obligation shall accrue, Lessee may, at any time prior
to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which
Lessee has actual notice, of Lessee's election to
terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee has
actual notice, of Lessee's election to terminate this
Lease on a date not less than sixty (60) days following
the giving of such notice. If Lessee give such notice
and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate
as of the date specified in said notice. If the repair
or restoration is commenced within said thirty (30)
days, this Lease shall continue in full force and effect
"Commence" shall mean either the unconditional
authorization of the preparation of the required plans,
or the beginning of the actual work on the Premises,
whichever first occurs.
9.7 Termination-Advance Payments. Upon termination of this Lease
pursuant to paragraph 6.2(g) or Paragraph 9, an equitable
adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lessor, Lessor shall,
in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be used by
Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damaged to or destruction
of the Premises with respect to the termination of this Lease
and hereby waive the provisions of any present or future statute
to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 Definition of "Real Property Taxes." As used herein, the term
"Real Property Taxes" shall include any form of assessment; real
estate, general special, ordinary or extraordinary, or rental
levy or tax (other than inheritance, personal income or estate
taxes); improvement bond; and/or license fee imposed upon or
levied against any legal or equitable interest of Lessor in the
Premises, Lessor's right to other income therefrom, and/or
Lessors business of leasing, by any authority having the direct
or indirect power to tax and where the funds are generated with
reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are
located. The term "Real Property Taxes" shall also include any
tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this
Lease, including but not limited to a change in the ownership of
the Premises.
10.2
(a) Payment of Taxes. Lessee shall pay the Real Property
Taxes applicable to the Premises during the term of this
Lease. Subject to paragraph 10.2(b), all such payments
shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish lessor
with satisfactory evidence that such taxes have been
paid. If any such taxes shall cover any period of time
prior to or after the expiration or termination of this
Lease, Lessee's share of such taxes shall be prorated to
cover only that portion of the tax xxxx applicable that
this lease is in effect, and Lessor shall reimburse
Lessee for any overpayment. If Lessee shall fail to pay
any required Real Property Taxes, Lessor shall have the
right to pay the same, and Lessee shall reimburse Lessor
therefore upon demand.
(b) Advance Payment. In the event Lessee incurs a late
charge on any Rent payment, Lessor may, at Lessor's
option, estimate the current Real Property Taxes, and
require that such taxes be paid in advance to Lessor by
Lessee, either: (1) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the
applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to
require payment monthly in advance, the monthly payment
shall be an amount equal to the amount of the estimated
installment of taxes divided by he number of month
remaining before the month in which said installment
becomes delinquent. When the actual amount of the
applicable tax xxxx is know, the amount of such equal
monthly advance payments shall be adjusted as required
to provide the funds needed to pay the applicable taxes.
If the amount collected by Lessor is insufficient to pay
such Real Property Taxes when due, Lessee shall pay
Lessor, upon demand, such additional sums as are
necessary to pay such obligations. All moneys paid to
Lessor under this paragraph may be intermingled with
other moneys of Lessor ad shall not bear interest. In
the event of a Breach by Lessee in the performance of
its obligations
11
under this Lease, then any balance of funds paid to
Lessor under the provisions of this Paragraph may at the
option of Lessor by treated as an additional Security
Deposit.
10.3 Joint Assessment. if the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included
within the tax parcel assessed, such proportion to be
conclusively determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information
as may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee. When possible,
Lessee shall cause such property to be assessed and billed
separately from the real property of Lessor. If any of Lessee's
said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to
lessee's property within ten (10) days after receipt of a
written statement.
11. Utilities. Lessee shall pay for all water, gas, heat, light power,
telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. if any such services are
not separately metered to Lessee, lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered.
12. Assignment and Subletting
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber )collectively,
"assign or assignment") or sublet all or any part of
Lessee's interest in this lease or in the Premises
without Lessor's prior written consent.
(b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a
cumulative basis of twenty-five percent (25%) or more of
the voting control of Lessee shall constitute a change
in control for this purpose.
(c) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per
Paragraph 12.1(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor
elects to treat such unapproved assignment or subletting
as a noncurable Breach, Lessor may either: (i) terminate
this lease, or (ii) upon (30) days written notice,
increase the monthly Base Rent to one hundred ten
percent (110%) of the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment, (i)
the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar
adjustment to one hundred ten percent (110%) of the
price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased to One
Hundred Ten Percent (110%) of the scheduled adjusted
rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by
Lessor shall be limited to compensatory damages and/or
injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the
express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii)
after the primary liability of Lessee for the payment of
Rent or for the performance of any other obligations to
be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending
approval or disapproval of an assignment. Neither a
delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall
constitute a waiver or estoppel of Lessor's right to
exercise its remedies for lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall
not constitute a consent to any subsequent assignment or
subletting.
(d) In the event of any Default or Breach by Lessee, Lessor
may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of Lessee's
obligations under this Lease, including any assignee or
sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefore
to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant
to Lessor's determination as to the financial and
operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not
limited to the intended use and/or require modification
of the premises, if any, together with a fee of $1,000
or ten percent (10%) of the current monthly Base Rent
applicable to the portion of the Premises which is the
subject of the proposed assignment or sublease,
whichever is greater, as consideration for Lessor's
considering and processing said request. Lessee agrees
to provide Lessor with such other or additional
information and/or documentation as may be reasonably
requested.
(f) Any assignee of, or sublessee under, this Lease shall,
by reason of accepting such assignment or entering into
such sublease, be deemed to have assumed and agreed to
conform and comply with each and every term, covenant,
condition and obligation herein to be observed or
performed by Lessee during the term of said assignment
or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or
sublease to which Lessor has specifically consented to
in writing.
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12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by
Lessee of all or any part of the Premises and shall be deemed
included in all subleases under this Lease whether or not
expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease,
and Lessor may collect such Rent and apply same toward
Lessee's obligations under this lease; provided,
however, that until a Breach shall occur in the
performance of Lessee's obligations, Lessee may collect
said Rent. Lessor shall not, by reason of foregoing or
any assignment of such sublease, nor by reason of the
collection of Rent, be deemed liable to the sublease for
any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee
shall rely upon any such notice from Lessor and shall
pay all Rents to Lessor without any obligation or right
to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the
sublessor under such sublease from the time of the
exercise of said option to the expiration of such
sublease; provided, however, lessor shall not be liable
for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or
Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written
consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by lessee to the sublessee, who shall have the
right to cure the Default of Lessee within the grace
period, if any, specified in such notice. The sublessee
shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the
sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants,
conditions or rules under this Lease. A "Breach" is defined as
the occurrence of one or more of the following Defaults , and
the failure of Lessee to cure such Default within any applicable
grace period:
(a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable
level of security, or where the coverage of the property
insurance described in Paragraph 8.3 is jeopardized as a
result thereof, or without providing reasonable
assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party, when
due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this
Lease which endangers or threatens life or property,
where such failure continues for a period of three (3)
business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements,
(ii) the service contracts, (iii) the rescission of an
unauthorized assignment or subletting, (iv) a Estoppel
Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii)
any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which
Lessor may reasonably require of Lessee under the terms
of this Lease, where any such failure continues for a
period of ten (10) days following written notice to
Lessee, unless such non-compliance is beyond the control
of Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules
adopted under Paragraph 40 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above,
where such Default continues for a period of forty-five
(45) days after written notice; provided, however, that
if the nature of Lessee's Default is such that more than
forty-five (45) days are reasonably required for its
cure, then it shall not be deemed to be a Breach if
Lessee commences such cure within said forty-five (45)
day period and thereafter diligently prosecutes such
cure to completion.
(e) the occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the
benefit of creditors; (ii) becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this
Lease, where possession is not restored to Lessee within
thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of lessee's
assets located at the Premises or of Lessee's interest
in this Lease, where such seizure is not discharged
within thirty (30) days; provided, however, in the event
that any provision of this subparagraph (e) is contrary
to any applicable law, such provision shall be of no
force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery that any financial statement of lessee or
of any Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed (i) the death of a Guarantor, (ii)
the termination of a Guarantor's liability with respect
to this Lease other than in accordance with the terms of
such guaranty, (iii)
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a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor
the guaranty, or (v) a Guarantor's breach of its
guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written
alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and
the Guarantors that existed at the time of execution of
this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice
(or in of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses,
permits or approvals. The costs and expenses of any such
performance by Lessor shall be due and payable by Lessee upon
receipt of invoice therefore. If any check give to Lessor by
Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be
made by Lessee to be by cashier's check. In the event of a
Breach, Lessor may, with or without further notice or demand,
and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises
by any lawful means, in which case this Lease shall
terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee (i) the unpaid Rent
which had been earned at the time of termination (ii)
the worth at the time of award of the amount by which
the unpaid rent which would have been earned after
termination until the time of award exceeds the amount
of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of
award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the
amount of such rental loss that the Lessee proves could
be reasonably avoided; and (iv) any other amount
necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform
its obligations under the Lease or which in the ordinary
course of things would be likely to result therefrom,
including but not limited to the cost of recovering
possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion
of any leasing commission paid by Lessor in connection
with this Lease applicable to the unexpired term of this
Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank
of the District within which the Premises are located at
the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by lessee's Breach of
this Lease shall not waive Lessor's right to recover all
or any part thereof in a separate suit. If a notice and
grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful
detainer statute shall also constitute the notice
required by Paragraph 13.1 In such case, the applicable
grace period required by paragraph 13.1 and the unlawful
detainer statute shall run concurrently, and the failure
of Lessee to cure the Default within the greater of the
two such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to
the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and lessee's right to possession and
recover the Rent as it becomes due, in which event
Lessee may sublet or assign, subject only to reasonable
limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the
Lessor's interests, shall not constitute a termination
of the lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the
Premises are located. The expiration or termination of
this Lease and/or the termination of Lessee's right to
possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matter
occurring or accruing during the term hereof or by
reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for
Lessee of any cash or other bonus, inducement or consideration
for Lessee's entering into this Lease, all of which concessions
are hereinafter referred to as "Inducement Provisions," shall be
deemed conditioned upon Lessee's full and faithful performance
of all of the terms, covenants and conditions of this Lease.
Upon Breach of this Lease by Lessee, any such Inducement
Provision shall automatically be deemed deleted from this Lease
and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or
paid by Lessor under such an Inducement Provision shall be
immediately due and payable by Lessee to Lessor, notwithstanding
any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by
Lessor of the provisions of this paragraph unless specifically
so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and late charges which
may be imposed upon Lessor by any Lender. Accordingly, if any
Rent shall not be received by lessor within five (5) days after
such amount shall be due, then, without any requirement for
notice to lessee, Lessee shall pay to lessor a one-time late
charge equal to five percent (5%) of each such overdue amount.
The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason
of such
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late payment. Acceptance of such late charge by Lessor shall in
no even constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent the exercise of any
of the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent,
then notwithstanding any provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and
payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor within thirty (30) days
following the date on which it was due, shall bear interest from
the thirty-first (31st) day after it was due. The interest
("Interest") charged shall be equal to the prime rate reported
in the Wall Street Journal as published closest prior to the
date when due plus our percent (4%), but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to
the potential late charge provided for in paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach
of this Lease unless Lessor fails within a reasonable
time to perform an obligation required to be performed
by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than thirty (30) days
after receipt by Lessor, and any Lender whose name and
address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are reasonably
required for its performance, the Lessor shall not be in
breach if performance is commenced within such thirty
(30) day period and thereafter diligently pursued to
completion.
(b) Performance by Lessee on Behalf of Lessor. In the event
that neither Lessor nor Lender cures said breach within
thirty (30) days after receipt of said notice, or if
having commenced said cure they do not diligently pursue
it to completion, then Lessee may elect to cure said
breach at Lessee's expense and offset from Rent on
amount equal to the greater of one month's Base Rent or
the Security Deposit, and to pay in excess of such
expense under protest, reserving Lessee's right to
reimbursement from Lessor. Lessee shall document the
cost of said cure and supply said documentation to
Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said
power (collectively "Condemnation"), this Lease shall terminate as to
the part taken as for the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of
any building portion of the premises, or more than twenty-five percent
(25%) of the land area portion of the premises not occupied by any
building, is taken by Condemnation, Lessee may, at Lessee's option, to
be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease
in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of
the Premises caused by such condemnation. Condemnation awards and/or
payments shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold, the value
of the part taken, or for severance damages; provided, however, that
Lessee shall be entitled to any compensation for Lessee's relocation
expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. All Alterations and Utility Installations
made to the Premises by Lessee, for purposes of Condemnation only, shall
be considered the property of the Lessee and Lessee shall be entitled to
any and all compensation which is payable therefore. In the event that
this Lease is not terminated by reason of the Condemnation, Lessor shall
repair any damaged to the Premises caused by such Condemnation.
15. Broker's Fee.
15.1 Additional Commission. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers
otherwise agree in writing, lessor agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires any rights to the
Premises or other premises owned by Lessor and located within
the same Project, if any, within which the Premises is located,
(c) if Lessee remains in possession of the Premises, with the
consent of Lessor, after the expiration of this Lease, or (d) if
Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee
in accordance with the schedule of said Brokers in effect at the
time of the execution of this Lease.
15.2 Assumption of obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's
obligation hereunder. Each Broker shall be a third party
beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31.
If Lessor fails to pay to a Broker any amounts due as and for
commissions pertaining to this lease when due, then such amounts
shall accrue Interest. In addition, if Lessor fails to pay any
amounts to Lessee's Broker when due, Lessee's Broker may send
written notice to Lessor and lessee of such failure and if
Lessor fails to pay such amounts within ten (10) days after said
notice, lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be
deemed to be a third party beneficiary of any commission
agreement entered into by and/or between Lessor and Lessor's
Broker.
15.3 Representations and indemnities of Broker Relationships. Lessee
and Lessor each represent and warranty to the other that it has
had no dealings with any person, firm, broker or finder (other
than the Brokers, if any) in connection with this Lease, and
that no one other than said named brokers is entitled to any
commission or finder's fee in connection herewith. Lessee
15
and Lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for
compensation or charges which may be claimed by any such unnamed
broker, finder or to her similar party by reason of any dealings
or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect
thereto.
16. Estoppel Certificates.
(a) Each Party (as "Responding Party") shall within ten (10)
days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to
the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate"
from published by the American Industrial Real Estate
Association, plus such additional information,
confirmation and/or statements as may be reasonably
requested by the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver
the Estoppel Certificate within such ten day period, the
Requesting Party may execute an Estoppel Certificate
stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the
Requesting party, (ii) there are not uncured defaults in
the Requesting Party's performance, and (iii) if Lessor
is the Requesting party, not more than one month's rent
has been paid in advance. Prospective purchasers and
encumbrances may rely upon the Requesting Party's
Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the fact contained in
said Certificate.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, lessee and all Guarantors
shall deliver to any potential lender or purchaser
designed by Lessor such financial statements as may be
reasonably required by such lender or purchaser,
including but not limited to Lessee's financial
statements for the past three (3) years. All such
financial statements shall be received by Lessor and
such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee's interest in the
prior lease. In the event of a transfer of Lessor's title or interest in
the Premises or this Lease, Lessor shall deliver to the transferee or
assignee (in cash or by credit) any unused Security Deposit held by
Lessor. Except as provided in Paragraph 15, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior
Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed
by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding
only upon the Lessor as hereinabove defined. Notwithstanding the above,
and subject to the provisions of Paragraph 20 below, the original Lessor
under this Lease, and all subsequent holders of the Lessor's interest in
this Lease shall remain liable and responsible with regard to the
potential duties and liabilities of lessor pertaining to Hazardous
Substances as outline in Paragraph 6 above.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Subject to the provisions of Paragraph 17
above, the obligations of Lessor or Lessee under this Lease shall not
constitute personal obligations of Lessor or Lessee, the individual
partners of Lessor or Lessee or its or their individual partners,
directors, officers or shareholders, and Lessee shall look to the
Premises, and to no other assets of Lessor for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek
recourse against the individual partners of lessor, or its or their
individual partners, directors, officers or shareholders, or any of
their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the parties under this
Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding
shall be effective. Lessor and lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the nature,
quality and character of the Premises. Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by
either Party. The liability (including court costs and Attorneys' fees),
of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment
or modification hereto shall be limited to an amount up to the fee
received by such Broker pursuant to this Lease; provided, however, that
the foregoing limitation on each Broker's liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.
23. Notices
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or
registered mail or U.S. Postal Service Express Mail, with
postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in
this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for
delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice,
except that upon
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Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time
hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is
shown, the postmark thereon. If sent by regular mail the notice
shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight
courier that guarantee next day delivery shall be deemed given
twenty-four (24) hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon
telephone confirmation of receipt, provided a copy is also
delivered via delivery or mail. If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received
on the next business day.
24. Waivers. No waiver by lessor of the Default or Breach of any term,
covenant or condition hereof by lessee, shall be deemed a waiver of any
other term, covenant or condition hereof. Lessor's consent to, or
approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to or approval of, any subsequent or
similar act by Lessee, or be construed as the basis of an estoppel to
enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any
default or Breach by Lessee. Any payment by Lessee may be accepted by
Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force
or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of
this Lease for recording purposes. The Party requesting recordation
shall be responsible for payment of any fees applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of
this Lease. In the event that Lessee holds over, then the Base Rent
shall be increased to one hundred fifty percent (150%) of the Base Rent
applicable during the month immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by
Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all heading and titles are for the
convenience of the parties only and shall not be considered a part of
this Lease. Whenever required by the context, the singular shall include
the plural and vice versa. This Lease shall not be construed as if
prepared by one of the parties, but rather according to its fair meaning
as a whole, as if both parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of
trust, or other hypothecation or security device (collectively,
"Security Device"), now or hereafter placed upon the Premises,
to any and all advances made on the security thereof, and to all
renewals, modifications, and extensions thereof. Lessee agrees
that the holders of any such Security Devices (in this Lease
together referred to as "Lender") shall have no liability or
obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this lease and/or any
Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon
this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other
party who acquires ownership of the Premises by reason of a
foreclosure of a Security Device, and that in the event of such
foreclosure, such new owner shall not: (i) be liable for any act
or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (ii) be subject to
any offsets or defenses which Lessee might have against any
prior lessor, or (iii) be bound by prepayment of more than (1)
month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into
by Lessor after the execution of this Lease, Lessee's
subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a
"Non-Disturbance Agreement") from the Lender which
Non-Disturbance Agreement provides that Lessee's possession of
the Premises, and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not
in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of
this Lease, Lessor shall use its commercially reasonable efforts
to obtain a Non-Disturbance Agreement from the holder of any
pre-existing Security Device
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which is secured by the Premises. In the event that Lessor is
unable to provide the Non-Disturbance Agreement within said
sixty (60) days, then Lessee may, at Lessee's option, directly
contact Lessor's lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this paragraph 30
shall be effective without the execution of any further
documents; provided, however, that, upon written request from
Lessor or a Lender in connection with a safe, financing or
refinancing of the Premised, Lessee and Lessor shall execute
such further writings as my be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance
Agreement provided herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare right
hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys fees. Such fees may be awarded in the same suit or recovered
in a separate suit, whether or not such action or proceeding is pursued
to decision or judgment. The term, "Prevailing Party" shall include
without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of
its claim or defense. The attorneys' fees award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of
an emergency, and otherwise at reasonable times for the purpose of
showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary. All such activities shall be
without abatement of rent or liability to lessee. Lessor may at any time
place on the premises any ordinary "For Sale" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises
any ordinary "For Lease" signs. Lessee may at any time place on or about
the Premises any ordinary "For Sublease" sign.
33. Auctions. lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor
shall not be obligated to exercise any standard of reasonableness in
determining whether to permit an auction.
34. Signs. Except for ordinary "For Sublease" signs, lessee shall not place
any sign upon the premises without Lessor's prior written consent. All
signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the
mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease
or lesser estate in the Premises; provided, however, that Lessor may
elect to continue any one or all existing subtenancies. Lessor's failure
within ten(10) days following any such event to elect to the contrary by
written notice to the holder of any such lesser interest, shall
constitute Lessor's election to have such event constitute the
termination of such interest.
36. Consents. Except as otherwise provided herein, where ever in this Lease
the consent of a Party is required to act by of for the other Party,
such consent shall not be unreasonably withheld of delayed. Lessor's
actual reasonable costs and expenses (including but not limited to
architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefore. Lessor's consent to any act,
assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent
be deemed a waiver of any then existing Default or Breach, except as may
be otherwise specifically stated in writing by Lessor at the time of
such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time
of consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being
given. In the event that either Party disagrees with any determination
made by the other hereunder and reasonably requests the reasons for such
determination, the determining party shall furnish its reasons in
writing and in reasonable detail within ten (10) business days following
such request.
37. Guarantor.
37.1 Execution. The Guarantors, if any shall each execute a guaranty
in the form most recently published by the American Industrial
Real Estate Association, and each such Guarantor shall have the
same obligations as lessee under this Lease.
37.2 Default. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a)
evidence of the execution of the guaranty, including the
authority of the party signing on Guarantor's behalf to obligate
Guarantor, and in the case of a corporate Guarantor, a certified
copy of a resolution of its board of directors authorizing the
making of such guaranty, (b) current financial statements, (c) a
Estoppel Certificate, or (d) written confirmation that the
guaranty is still in effect.
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38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, lessee
shall have quiet possession and quiet enjoyment of the Premises during
the term hereof.
39. Options.
39.1 Definition. "Option" shall mean: (a) the right to extend the
term of a or renew this Lease or to extend or renew any lease
that Lessee has on other property of Lessor; (b) the right of
first refusal or first offer to lease either the Premises or
other property of Lessor; (c) the right to purchase or the right
of first refusal to purchase the premises or other property of
Lessor.
39.2 Options personal To Original Lessee. Lessee to provide Lessor
with documentation that any transferred or assigned options are
to entities related to Lessee.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be
exercised unless the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have not right to exercise an Option: (i)
during the period commencing with the giving of any
notice of Default and continuing until said Default is
cured, (ii) during the period of time any rent is unpaid
(without regard to whether notice thereof is given
Lessee), (iii) during the time Lessee is in Breach of
this Lease, or (iv) in the event that lessee has been
given three (3) or more notices of separate Default,
whether or not the Defaults are cured, during the (12)
month period immediately preceding the exercise of the
Option.
(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of
lessee's inability to exercise an Option because of the
provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise
of the Option, if, after such exercise and prior to the
commencement of the extended term, (i) Lessee fails to
pay Rent or a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give
notice thereof), (ii) Lessor gives to Lessee three (3)
or more notices of separate Default during any twelve
912) month period, whether or not the Defaults are
cured, or (iii) if Lessee commits a Breach of this
lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable
rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including the care and
cleanliness of the grounds including the parking, loading and unloading
of vehicles, and that Lessee will pay its fair share of common expenses
incurred in connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever
to provide same. Lessee assumes all responsibility for the protection of
the Premises, Lessee, its agents and invitees and their property from
the act of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights
and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements,
rights, dedications, maps and restrictions do not unreasonably interfere
with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.
43. Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or 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 on
its behalf. Each party shall, within thirty (30) days after request,
deliver to the other party satisfactory evidence of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Offer. preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to
lease to the other Party. This Lease is not intended to be binding until
executed and delivered by all parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest ant the time of the modification. As long as they do
not materially change Lessee's obligations hereunder, Lessee agrees to
make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of
normal financing or refinancing of the premises.
48. Multiple Parties. If more than one person or entity is names herein as
either Lessor or Lessee, such multiple Parties shall have joint and
several responsibility to comply with same terms of this Lease.
49. Mediation and Arbitration of Disputes. An addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties
and/or Brokers arising out of this Lease is not attached to this lease.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective
Signatures:
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Executed at: Torrance California Executed at: Rancho Cucamonga, CA
on: September 20, 1999 on: July 1, 1999
By LESSOR: Capellino/Xxxxxxxx By LESSEE: Sierra Precision, Inc.
By: By:
--------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxx
Title: Title: President
------------------------------
Address: 0000 Xxx Xxx Xxxx., Xxxxx 000 Address: 0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
