AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1. Parties: This Lease ("Lease"), dated for reference purposes only,
September 18, 1998, is made by and between W.H. POMERADO, LLC, a California
limited liability company ("Lessor"), and AETRIUM, INC., a Minnesota
corporation, San Diego Division ("Lessee"), (collectively the "Parties," or
individually a "Party").
1.2. Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 00000 Xxxxx Xxxxxx, Xxxxx, XX 00000 located in
the County of San Diego, State of California and generally described as
(describe briefly the nature of the property) Lot 89, an approximately 45,000 sf
concrete tilt-up manufacturing, distribution, office building with expansion
capability of 15,000 sf ("Premises"). (See Paragraph 2 for further provisions.)
1.3. Term: 10 years and 3 months ("Original Term") commencing See
AddendumP. 3 ("Commencement Date") and ending 123 months later ("Expiration
Date"). (See Paragraph 3 for further provisions.)
1.4. Early Possession: N/A ("Early Possession Date"). (See Paragraphs 3.2
and 3.3 for further provisions.)
1.5. Base Rent: $35,082.00 per month ("Base Rent"), payable on the first
day of each month commencing Commencement Date. (See Paragraph 4 for further
provisions.) |X| If this box is checked, there are provisions in this Lease for
the Base Rent to be adjusted.
1.6. Base Rent Paid Upon Execution: $ See AddendumP. 14 as Base Rent for
the period.
1.7. Security Deposit: $70,164.00 See Add'nP. 14 ("Security Deposit"). (See
Paragraph 5 for further provisions.)
1.8. Permitted Use: Office/warehouse/distribution use or any other
permitted use under applicable zoning or applicable law. (See Paragraph 6 for
further provisions.)
1.9. Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10. Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes):
CB Xxxxxxx Xxxxx represents
|X| Lessor exclusively ("Lessor's Broker"); | | both Lessor and Lessee, and
Colliers Xxxxx Xxxxx represents
|X| Lessee exclusively ("Lessee's Broker"): | | both Lessee and Lessor.
(See Paragraph 15 for further provisions.)
1.11. Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N/A("Guarantor"). (See Paragraph 37 for further provisions.)
1.12. Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 1 through 19 and Exhibits "1" through "6" all of which constitute a
part of this Lease.
2. 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 square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2. Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Premises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Date, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and
["extent of" - words not readable due to hole punched in page] such
non-compliance, rectify same at Lessor's expense. If Lessee does not give Lessor
written notice of a non-compliance with this warranty within thirty (30) days
after the Commencement Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3. Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to
be made by Lessee. If the Premises do not comply with said warranty, Lessor
shall, 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 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 Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
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2.4. Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.
2.5. Lessee Prior Owner/Occupant. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
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 other terms of this Lease, however,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
3.3. Delay In Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor ["d________s" - word(s) not readable due to hole punched in page]
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days alter the Commencement Date. Lessee
may, at its option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder; provided, however, that if such written notice
by Lessee is not received by Lessor within said ten (10) day period, Lessee's
right to cancel this Lease shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the term actually
commences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to what Lessee would otherwise have enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee. See
Addendum P. 3.3
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4. Rent.
4.1. Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States without offset or deduction, on or before
the day on which it is due under the terms of this Lease, Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of the calendar month involved. Payment of Base Rent and other charges
shall be made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful
performance of Lessee's obligations under this Lease. If Lessee fails to pay
Base Rent or other rent or charges due hereunder, or otherwise Defaults under
this Lease (as defined in Paragraph 13.1), 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, cost, expense, loss or
damage (including attorneys' fees) 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 therefor deposit moneys
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease. Any time the Base Rent increases during the term of this
Lease, Lessee shall, upon written request from Lessor, deposit additional moneys
with Lessor sufficient to maintain the same ratio between the Security Deposit
and the Base Rent as those amounts are specified in the Basic Provisions. Lessor
shall not be required to keep all or any part of the Security Deposit separate
from its general accounts. Lessor shall, at the expiration or earlier
termination of the term hereof and after Lessee has vacated the Premises, return
to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's
Interest herein), that portion of the Security Deposit not used or applied by
Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the
Security Deposit shall be considered to be held in trust, to bear interest or
other increment for its use, or to be prepayment for any moneys to be paid by
Lessee under this Lease.
6. Use.
6.1. Use. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, or any other use which is comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties. Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written
request by Lessee, Lessees assignees or subtenants, and by prospective assignees
and subtenants of the Lessee, its assignees and subtenants, for a modification
of said permitted purpose for which the premises may be used or occupied, so
long as the same will not impair the structural integrity of the ["improvements"
- word not readable due to hole punched in page] on the Premises, the mechanical
or electrical systems therein, is not significantly more burdensome to the
Premises and the improvements, thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days give a written notification of same, which notice shall
include an explanation of Lessor's reasonable objections to the change in use.
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6.2. Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used
in this Lease shall mean any product, substance, chemical, material or waste
whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, 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 liability of Lessor to any governmental agency
or third party under any applicable statute or common law theory. Hazardous
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the Premises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in Paragraph
6.3). "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. Reportable Use shall
also include Lessee's being responsible for the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but in compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee in the
normal course of Lessee's business permitted on the Premises, so long as such
use is not a Reportable Use and does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to the use or presence of any Hazardous Substance,
activity or storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefrom or therefor, including, but
not limited to, the installation (and removal on or before Lease expiration or
earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
same, has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice
of such fact to Lessor. Lessee shall also immediately give Lessor a copy of any
statement, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
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(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but
not be limited to, the effects of any contamination or injury to person,
["property" - word not readable due to hole punched in page] or the environment
created or suffered by Lessee, and the cost of investigation (including
consultant's and attorney's fees and testing), removal, remediation, restoration
and/or abatement thereof, or of any contamination therein involved, and shall
survive the expiration or earlier termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances or storage tanks, unless specifically so agreed by Lessor in writing
at the time of such agreement.
6.3. Lessee's Compliance with Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "Applicable Law," which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives covenants,
easements and restrictions of record, permits, the requirements of any
applicable fire insurance underwriter or rating bureau, and the recommendations
of Lessor's engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release of
any Hazardous Substance or storage tank), now in effect or which may hereafter
come into effect, and whether or not reflecting a change in policy from any
previously existing policy. Lessee shall, within five (5) days after receipt of
Lessor's written request, provide Lessor with copies of all documents and
information, including, but not limited to, permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with any
Applicable Law 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 failure by Lessee or the Premises to comply with any Applicable Law.
6.4. Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) 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
inspecting the condition of the Premises and for verifying compliance by the
Lessee with this Lease and all Applicable Laws (as defined in Paragraph 6.3),
and to employ experts and/or consultants in connection therewith and/or to
advise Lessor with respect to Lessee's activities, including but not limited to
the installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting ["same" -
word not readable due to hole punched in page] unless a Default or Breach of
this Lease, violation of Applicable Law, or a contamination, caused or
materially contributed to by Lessee is found ["to exist" - words not readable
due to hole punched in page] or be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing or imminent violation or contamination. In any such case, Lessee shall
upon request reimburse Lessor or Lessor's Lender, as the case may be, for the
costs and expenses of such inspections.
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7. Maintenance; Repairs; Utility Installations; Trade Fixtures
and Alterations.
7.1. Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to
condition), 2.3 (Lessor's warranty as to compliance with covenants, etc.), 7.2
(Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair ["structural and" - appear to be struck through] non-structural (whether
or not such 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, without
limiting the generality of the foregoing, all equipment or facilities serving
the Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired ["pressure" - word
not readable due to hole punched in page] vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior ["and exterior), foundations," - appear to be struck through]
ceilings, roofs, floors, windows, doors, plate glass, skylights landscaping,
driveways, parking lots, fences, ["retaining walls," - appear to be struck
through] signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including through 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, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control, Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. 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. If Lessee occupies the Premises for ["seven (7)" - struck
through, replaced by "eight (8)"] years or more, Lessor may require Lessee to
repaint the exterior of the buildings on the Premises as reasonably required,
but not more frequently than once every ["seven (7)" - struck through, replaced
by "eight (8)"] years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for and with
contractors specializing and experienced in, the inspection, maintenance and
service of the following equipment and improvements, if any, located on the
Premises: (i) heating, air conditioning and ventilation equipment, (ii) boiler,
fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and irrigation (v) root covering and drain
maintenance and (vi) asphalt and parking lot maintenance, See Addendum P. 8.
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7.2. Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises) 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises,
improvements located thereon, or the equipment therein, whether structural or
non-structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. 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. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to, or which affords Lessee the right to make
repairs at the expense of Lessor or to terminate this Lease by reason of any
needed repairs. See Addendum P. 20
7.3. Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is used
in this Lease to refer to all carpeting, window coverings, air lines, power
panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about 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 on the Premises from that which
are provided by Lessor under the terms of this Lease, 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 as defined
in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior written
consent. ["Lessee" - word not readable due to hole punched in page] may,
however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof), 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 the term of this Lease as extended
does not exceed $25,000.
(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 form with proposed detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities, (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and in compliance with all Applicable Law.
Lessee shall promptly upon completion thereof furnish Lessor with as-built plans
and specifications therefor. Lessor may (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation that
costs $10,000 or more upon Lessee's providing Lessor with 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 Lessee's posting an additional
Security Deposit with Lessor under Paragraph 36 hereof.
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(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 mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend 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 against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor 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, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
7.4. Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or become
the owner thereof as hereinafter provided in this Paragraph 7.4, all Alterations
and Utility Additions made to the Premises by Lessee shall be the property of
and owned by Lessee, but considered a part of the Premises. Lessor may, at any
time and at its option, elect in writing to Lessee to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may require that
any or all Lessee Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. 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 of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the end
of the last day of the Lease term or any earlier termination date, with ["all
the" - words not readable due to hole punched in page] improvements, parts and
surfaces thereof clean and free of debris and in good operating order, condition
and state of repair, ordinary wear and ["tear" - word not readable due to hole
punched in page] accepted. "Ordinary wear and tear" shall not include any damage
or deterioration that would have been prevented by good maintenance practice or
by Lessee performing all of its obligations under this Lease. Except as
otherwise agreed or specified in writing by Lessor, the Premises, as
surrendered, shall include the Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Alterations and/or Utility Installations, 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 ground water contaminated by Lessee, all as may then be
required by Applicable Law and/or good service practice. Lessee's Trade Fixtures
shall remain the property of Lessee and shall be removed by Lessee subject to
its obligation to repair and restore the Premises per this Lease.
9
8. Insurance; Indemnity.
8.1. Payment for Insurance. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 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 for any amount due.
8.2. Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee and Lessor (as an additional insured) against claims for bodily injury,
personal injury and property damage based upon, involving 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 than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" Endorsement and contain
the "Amendment of the Pollution Exclusion" for damage 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" - words not readable
due to hole punched in page] "insured contract" for the performance of Lessee's
indemnity obligations under this Lease. The limits of said insurance required by
this Lease or ["as carried" - words not readable due to hole punched in page] by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) Carried by Lessor. In the event Lessor is the Insuring Party, Lessor
shall also maintain liability insurance described in Paragraph 8.2(a), above, 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 during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and to the holders of any mortgages, deeds of trust
or ground leases on the Premises ("Lender(s)"), insuring loss ["or damage" -
words not readable due to hole punched in page] 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 Lenders, but
in no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. If Lessor is the Insuring
Party, however, Lessee Owned Alterations and Utility Installations shall be
insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is
available and 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 any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Premises required
to be demolished or removed by reason of the enforcement of any building,
zoning, safety or land use laws as the result of a covered cause of loss. Said
policy or policies shall also contain an 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 has 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, as defined in Paragraph 9.1(c).
10
(b) Rental Value. The Insuring Party shall, in addition, obtain and keep in
force during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and Lender(s), insuring the loss of the full rental
and other charges payable by Lessee to Lessor under this Lease for one (1) year
(including all real estate taxes, insurance costs, and any scheduled rental
increases). Said insurance shall 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 or
replacement of the Premises, to provide for one full year's loss of rental
revenues 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 rental income,
property taxes, insurance premium costs and other expenses, if any, 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 if
the Premises are part 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 acts, omissions, use or occupancy of the Premises.
(d) Tenant's Improvements. If the Lessor is the Insuring Party, the Lessor
shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
11
8.4. Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Lessee Owned Alterations and Utility
Installations in, on, or about the Premises similar in coverage to that carried
by the Insuring Party under Paragraph 8.3. 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 personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5. Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are ["held" -
word not readable due to hole punched in page], and maintaining during the
policy term a "General Policyholders Rating" of at least B+, V, or such other
rating as may be required by a Lender having a lien on the Premises, as set
forth in the most current issue of "Best's Insurance Guide." Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. If Lessee is the Insuring Party, Lessee shall
cause to be delivered to Lessor certified copies of policies of such insurance
or certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancellable 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. If the Insuring Party shall fail to procure and
maintain the insurance required to be carried by the Insuring Party under this
Paragraph 8, the other Party may, but shall not be required to, procure and
maintain the same, but at Lessee's expense.
8.6. Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7. Indemnity. Except for Lessor's negligence and/or breach of express
warranties, 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,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, Its agents, contractors, employees or Invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding Involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall 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 so Indemnified.
12
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, Invitees, customers, or any ether
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, air conditioning or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
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.
9.1. Definitions.
(a) "Promises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations ["and" - word
not readable due to hole punched in page] Utility Installations, the repair cost
of which damage or destruction is less than 50% of the then Replacement Cost of
the Premises immediately prior to such damage or destruction, excluding from
such calculation the value of the land and Lessee Owned Alterations and Utility
Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations,
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 building codes, ordinances or
laws, and without deduction for depreciation.
13
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2. Partial Damage - 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 the 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, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full ["replacement" - word not
entirely readable due to hole punched in page] cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance ["proceeds" - word not entirely readable due to
hole punched in page] 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 therefor. 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 Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter to 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. If in
such case Lessor does not so elect, then this Lease shall terminate sixty (60)
days following the occurrence of the damage or destruction. Unless otherwise
agreed, Lessee shall in no event have any right to reimbursement from Lessor for
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 rather than Paragraph 9.2, notwithstanding that there may be some insurance
coverage, 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 and
this Lease shall continue In full force and effect, but subject to Lessor's
["rights" - word not readable due to hole punched in page] (under Paragraph 13),
Lessor may at Lessor's option, either: (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which ["event" - word not readable
due to hole punched in page] this Lease shall continue in full force and effect,
or (ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the repair of such damage totally at Lessee's expense and without
reimbursement from Lessor. Lessee shall provide Lessor with the required funds
or satisfactory assurance thereof within thirty (30) days following Lessee's
said 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 and the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.
14
9.4. Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee, In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5. Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice ho Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, 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, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ton (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6. Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage-Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired, Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
15
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and ["and meaningful" - words not entirely readable due to hole
punched in page] way, the repair or restoration of the Premises within ninety
(90) days after such obligation shall accrue, Lessee may, at any time prior to
["the commencement" - words not entirely readable due to hole punched in page]
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 gives such notice to Lessor and such Lenders and such repair or
restoration is not commenced within thirty (30) days after receipt of such
notice, this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Premises within
thirty (30) days after receipt of such notice, this Lease shall continue in full
force and effect. "Commence" as used in this Paragraph 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. Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under 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 investigate
and 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 giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12) limes the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of
Lessee or satisfactory assurance thereof within thirty (30) days following
Lessee's said commitment. In such event this Lease shall continue in lull force
and effect, and Lessor shall proceed to make such investigation and remediation
as soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee's obligations under this Lease to the same extent as provided in
Paragraph 9.6(a) for a period of not to exceed twelve (12) months.
9.8. Termination - Advance Payments. Upon termination of this Lease
pursuant to this 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 under the terms
of this Lease.
16
9.9. Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage 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.
(a) Payment of Taxes. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover ["only the" -
words not readable due to hole punched in page] period of time within the tax
fiscal year this Lease is in effect, and Lessor shall reimburse Lessee for any
overpayment after such proration. If ["Lessee" - word not readable due to hole
punched in page] shall fail to pay any Real Property Taxes required by this
Lease to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessee shall reimburse Lessor therefor upon demand. See Addendum P. 8
(b) Advance Payment. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right at
Lessor's option, to estimate the current Real Property Taxes applicable to the
Premises, and to require such current year's Real Property Taxes to be paid in
advance to Lessor by Lessee, either: (i) 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 that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax xxxx is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lessee shall pay to Lessor, upon Lessor's 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 and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.
17
10.2. Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest or Lessor in the Premises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
["imposed" - word not readable due to hole punched in page] by reason of events
occurring, or changes in applicable law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Premises or
in the improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether or not contemplated by the Parties.
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 determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4. 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 contained in the Premises or elsewhere. When possible, Lessee ["shall
use" - words not readable due to hole punched in page] shall use its Trade
Fixtures, furnishings, equipment and all other personal properly to be assessed
and billed separately from the real property of Lessor. If ["all of" - words not
readable due to hole punched in page] Lessee's said personal property shall be
assessed with Lessor's real property. Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written statement
setting forth the taxes applicable to Lessee's property or, at Lessor's option,
as provided in Paragraph 10.1(b).
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 with other premises.
12. Assignment and Subletting.
12.1. Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively "assignment")
or sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's 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.
18
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "Net Worth of
Lessee" for purposes of this Lease shall be the net worth of Lessee (excluding
any guarantors) established under generally accepted accounting principles
consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent, ["which consent has not been
unreasonably withheld," - inserted] shall, at Lessor's option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a noncurable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice ("Lessor's Notice"), increase the monthly Base Rent to fair
market rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of ["the Lease" - words not readable due to hole punched in page]
term shall be increased in the same ratio as the new market rental bears to the
Base Rent in effect immediately prior to the market value ["adjustment" - word
not readable due to hole punched in page].
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and 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) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
19
(b) Lessor may accept any 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 any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
any one else responsible for the performance of the Lessee's obligations under
this Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(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
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 ["or ten percent (10%) of the current monthly Base Rent,
whichever is greater," - struck through] as reasonable consideration for
Lessor's considering and processing the request for consent. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as
may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering Into such sublease, be deemed, for the
benefit of Lessor, 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 in writing.
(g) The occurrence of a transaction described in Paragraph 12,1(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased to an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
amount required to establish such Security Deposit a condition to Lessor's
consent to such transaction.
20
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
[This entire Section 12.2(h) struck through]
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" - words not readable due to hole punched in page] 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 rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of this or any
other assignment of such sublease to Lessor, nor by reason of the collection of
the rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. 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 the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary, Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any 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 other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.
(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" - word not readable due to hole punched in page] 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" - word not readable due to
hole punched in page]Defaults cured by the sublessee.
21
13. Default; Breach; Remedies.
13.1. Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2
and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
["required" - word not readable due to hole punched in page] to be made by
Lessee hereunder, whether to Lessor or to a third party, as and when due, the
failure by Lessee to provide Lessor with reasonable evidence of insurance or
surety bond required under this Lease, or the failure of Lessee to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of three (3) days following written notice
thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of 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 by or on behalf of Lessor to 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,
that are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
22
(e) The occurrence of any of the following events: (i) The making by
lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. ss. 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 by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder 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) 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 breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with 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 affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), 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" - word not entirely readable due to hole punched in page] of any
such performance by Lessor shall be due and payable by Lessee to Lessor upon
invoice therefor. If any check given 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 under this Lease by Lessee to be made only by cashier's
check. In the event of a Breach of this Lease by Lessee, as defined in Paragraph
13.1, 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, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of 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 this 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 the leasing commission paid by Lessor 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 prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%). Efforts by Lessor to mitigate damages
caused by Lessee's Default or Breach of this Lease shall not waive Lessor's
right to recover damages under this Paragraph. If termination of this Lease is
obtained through the provisional remedy of unlawful detainer, Lessor shall have
the right to recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Lessor may reserve therein the right to recover all or
any part thereof in a separate suit for such rent and/or damages. If a notice
and grace period required under subparagraphs 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case may be, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by subparagraphs 13.1(b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1(b), (c) or (d) and
under the unlawful defamer statute shall run concurrently after the one such
statutory notice, 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.
23
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
(d) 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 matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3. Inducement Recapture In Event Of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
["giving" - word not readable due to hole punched in page] 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 to be performed or observed by Lessee during the term
hereof as the same may be extended. Upon the occurrence of a Breach of this
Lease by Lessee, as defined in Paragraph 13.1, 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, and recoverable by
Lessor as additional rent due under this Lease, 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.
24
13.4. Late Charges. Lessee hereby acknowledges that late payment by Lessee
to lessor of rent and other sums due hereunder will cause Lessor to incur 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 the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee' Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5. Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation
["required" - word not readable due to hole punched in page] to be performed by
Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event
be less than thirty (30) days after receipt by Lessor, and by the holders of any
ground lease, mortgage or deed of trust covering the Premises 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 after such notice are reasonably required for its
performance, then Lessor shall not be in breach of this Lease if performance is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the land area
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" - word not
entirely readable due to hole punched in page] 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 ["re_______" - word not readable
due to hole punched in page] in the same proportion as the rentable floor area
of the Premises taken bears to the total rentable floor area of the building
located on the Premises. No reduction of Base Rent shall occur if the only
portion of the Premises taken is land on which there is no building. Any award
for the taking of all or any part of the Premises under the power of eminent
domain or any payment made under threat of the exercise of such power shall be
the property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
compensation separately awarded to Lessee for Lessee's relocation expenses
and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its net
severance damages received, over and above the legal and other expenses incurred
by Lessor in the condemnation matter, repair any damage to the Premises caused
by such condemnation, except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall be responsible for the
payment of any amount in excess of such net severance damages required to
complete such repair.
25
15. Broker's Fee.
15.1. The Brokers named in Paragraph 1,10 are the procuring causes of this
Lease.
15.2. Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually designate
in writing, a fee as set forth in a separate written agreement between Lessor
and said Brokers (or in the event there is no separate written agreement between
Lessor and said Brokers, the sum of $_____________) for brokerage services
rendered by said Brokers to Lessor in this transaction.
15.3. Unless Lessor and Brokers have otherwise agreed in writing, Lessor
further agrees that: (a) if Lessee exercises any Option (as defined in Paragraph
39.1) or any Option subsequently granted which is substantially similar to an
Option granted to Lessee in this Lease, or (b) if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or (c) if Lessee remains in possession of the Premises,
with the consent of Lessor, after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Brokers a fee in accordance with the schedule of said Brokers in effect at
the time of the execution of this Lease.
26
15.4. Any buyer or transferee of Lessor's interest in this Lease, whether
such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Each Broker shall be a
third party beneficiary of the provisions of this Paragraph 15 to the extent of
its interest in any commission arising from this Lease and may enforce that
right directly against Lessor and its successors.
15.5. Lessee and Lessor each represent and warrant to the other that it has
had no dealings with any person, firm, broker or finder (other than the Brokers,
if any named in Paragraph 1.10) in connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and that no
broker or other person, firm or entity other than said named Brokers is entitled
to any commission or finder's fee in connection with said transaction. Lessee
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 other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
15.6. Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10. [Entire
Section 15 struck through.]
16. Tenancy Statement.
16.1. 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 "Tenancy Statement" form 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.
16.2. If Lessor desires to finance, refinance, or sell the Premises, any
part thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors 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. Lessor's Liability. 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 in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. 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.
27
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. 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 at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. 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.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
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.
23. Notices.
23.1. All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier service) or
["may" - word not readable due to hole punched in page] be sent by regular,
certified or registered mail or U.S. Postal Service Express Mail, 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 notice purposes. Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee. A copy of
all notices required or permitted to be given to ["Lessor" struck through and
replaced by "a party"] hereunder shall be concurrently transmitted to such party
or parties at such addresses as ["Lessor" struck through and replaced by "such
party"] may from time to time hereafter designate by written notice to ["Lessee"
struck through and replaced by "the other party or parties hereunder".] ["See
Add'm P. 21" inserted]
23.2. 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 guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is received on
a Sunday or legal holiday, it shall be deemed received on the next business day.
28
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 or of any subsequent default or breach by Lessee of
the same or 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. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor 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 or taxes 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 earlier termination of
this Lease.
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. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
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"
- words not readable due to hole punched in page] 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" - word not readable due to
hole punched in page] 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 by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
29
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 one (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 assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession 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.
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 sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's 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 attorney's fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
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.
30
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"
- word not readable due to hole punched in page] and otherwise at reasonable
times for the purpose of showing the same to prospective purchasers, lenders, or
lessees, and making such ["alterations" - word not readable due to hole punched
in page], repairs, improvements or additions to the Premises or to the building
of which they are a part, as Lessor may reasonably deem necessary. Lessor may at
any time place on or about the Premises or building any ordinary "For Sale"
signs and Lessor may at any time during the last one hundred twenty (120) days
of the term hereof place on or about the Premises any ordinary "For Lease"
signs. All such activities of Lessor shall be without abatement of rent or
liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except that Lessee
may, with Lessor's prior written consent, install (but not on the roof) such
signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). ["Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business." - struck through]
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, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election 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.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys'. engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgement 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.
31
(b) All conditions to Lessor's consent. authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein ["any
particular" - words not readable due to hole punched in page] 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" - word not readable
due to hole punched in page] reasonable with reference to the particular matter
for which consent is being given.
37. Guarantor.
37.1. If there are to be any Guarantors of this Lease per Paragraph 1.11,
the form of the guaranty to be executed by each such Guarantor shall be in the
form most recently published by the American Industrial Real Estate Association,
and each said Guarantor shall have the same obligations as Lessee under this
Lease, including but not limited to the obligation to provide the Tenancy
Statement and information called for by Paragraph 16.
37.2. It shall constitute a Default of the Lessee under this Lease if any
such Guarantor fails or refuses, upon reasonable request by Lessor to give: (a)
evidence of the due execution of the guaranty called for by this Lease,
including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said Guaranty, and including
in the case of a corporate Guarantor, a certified copy of a resolution of its
board of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance 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 of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. Options.
39.1. Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right ["to purchase" - words not readable due to hole punched in
page] the Premises, or the right of first refusal to purchase the Premises, or
the right of first offer to purchase the Premises, or the right to ["purchase" -
word not readable due to hole punched in page] other property of Lessor, or the
right of first refusal to purchase other property of Lessor, or the right of
first offer to purchase other property of Lessor.
32
39.2. Options Personal to Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
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 to extend or renew this Lease have been validly exercised,
39.4. Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option. notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
["commencing" - word not readable due to hole punched in page] with the giving
of any notice of Default under Paragraph 13.1 and continuing until the noticed
Default is cured, or (ii) during the period of time any monetary obligation due
Lessor from Lessee is unpaid (without regard to whether notice thereof is given
Lessee), or (iii) during the time Lessee is in Breach of this Lease, or (iv) in
the event that Lessor has given to Lessee three (3) or more notices of Default
under Paragraph 13.1, whether or not the Defaults are cured, during the twelve
(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) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
tar a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of Default under Paragraph 13.1 during any
twelve (12) 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 part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
33
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 acts 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. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease, ["together with interest at the rate provided under Paragraph 19" -
inserted].
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, ["Lessee" - word not entirely readable due to hole punched in page]
shall, within thirty (30) days after request by Lessor, deliver to Lessor
evidence satisfactory to Lessor 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 Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. 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 an Institutional, Insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
34
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL FURTHER EXPERTS SHOULD BE CONSULTED
TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE
OF ASBESTOS' STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION
OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES' THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE IF THE SUBJECT PROPERTY IS
LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE
WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
35
Executed at El Cajon, California Executed at St. Xxxx, Minnesota
on ___________________________________ _______________________________
by LESSOR: by LESSEE:
W.H. Pomerado LLC Aetrium Incorporated
By Its Manager: Hamann Properties, Inc.
By:___________________________________ By:____________________________
Name Printed: Xxxxx Xxxxxx Name Printed: Xxxxxxx Xxxxx
Title: Secretary Title: Group Vice President
By:___________________________________ By:____________________________
Name Printed:_________________________ Name Printed:__________________
Address: 000 X. Xxxxxxx Xxx. Address: 0000 Xxxxx Xxxxxx
Xx Xxxxx, XX 00000 Xx. Xxxx, XX 00000
Tel #: 000-000-0000 Fax #: 000-000-0000 Tel. # 000-000-0000 Fax # 000-000-0000
San Diego: 000-000-0000
Net
NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxx X-0, Xxx Xxxxxxx, XX 00000, (000) 000-0000, Fax No. (213)
000-0000.
36
ADDENDUM TO LEASE
This Addendum to Lease ("Addendum") is made by and between W.H. POMERADO
LLC, a California limited liability company ("LESSOR"), and AETRIUM
INCORPORATED., a Minnesota corporation ("LESSEE"), and is intended to supplement
that certain Standard Industrial/Commercial Single-Tenant Lease-Net between
LESSOR and LESSEE dated September 17, 1998 ("Lease") to which this Addendum is
annexed. If there is any inconsistency between this Addendum and the Lease, the
terms of this Addendum shall supersede and control. LESSOR and LESSEE agree as
follows:
1. Premises and Building Shell Description. The Premises shall be located
on the real property legally depicted in EXHIBIT "1" annexed to this Addendum.
The Building Shell, as defined in section 4 of this Addendum, shall be designed
and constructed in accordance with the general design elements shown on those
certain "Site Plan", "Floor Plan" and "Elevation drawings prepared by Xxxxxxx X.
Xxxxx & Associates, Inc., which LESSEE hereby approves ("Approved Drawings"); a
copy of the Approved Drawings is attached as EXHIBIT "2" to this Addendum. The
components of the Building Shell construction shall also conform to the
specifications attached as EXHIBIT "3" to this Addendum ("Specifications").
Following the execution of this Lease, LESSOR shall cause final plans and
specifications ("Working Drawings") for the Building Shell to be prepared and
submitted to LESSEE for its approval in accordance with the requirements of
subsection 1.2 of this Addendum and not later than November 15, 1998.
Notwithstanding any other provisions in this Lease, LESSOR shall be entitled to
make modifications to the Building Shell design and/or Specifications as
provided in subsection 1.2 of this Addendum.
1.1 Planned Size and Final Measurement. It is planned that the
Building Shell (as defined below) will contain approximately 45,000 rentable
square feet on the ground level of the Building Shell and the structural
elements for an approximately 15,000 rentable square foot mezzanine level as
more particularly described in section 4 of this Addendum. All square footage
measurements shall be from the roof "drip line" and shall otherwise be made in
accordance with the BOMA standards for industrial/commercial projects. Following
Substantial Completion (as defined below) of the Building Shell per field
measurement, LESSOR will, in good faith, certify the actual rentable square feet
of the Building Shell to establish the exact rentable square feet for all
purposes of the Lease.
1.2 Modifications. LESSEE agrees that LESSOR may make modifications to
the Building Shell design on account of government or lender requirements and
otherwise as reasonably determined by LESSOR; provided, however, any such
modifications shall not: (a) increase or decrease the rentable square feet of
the Building by more than 2%; (b) materially relocate the Premises from the area
shown in the Approved Drawings; (c) materially change the Specifications; (d)
reduce the number of planned parking spaces or significantly change ingress and
egress to the Building or (e) materially increase the cost or decrease the
utilization of Tenant Improvements.
2. Rent. "Rent" for the Premises shall be the sum of (a) the Base Rent
described in subsection 2.1 of this Addendum, subject to adjustment as provided
in subsections 1.1 and 2.2 of this Addendum, (b) the amount of Operating
Expenses payable by LESSEE as provided in section 8 of this Addendum, and (c)
any other amounts becoming payable by LESSEE under the Lease. The Rent shall be
payable on the first day of each month.
2.1 Base Rent. The monthly Base Rent set forth in Paragraph 1.5 of the
Lease for the first Lease Year (as defined below) of the Original Term
represents the full Base Rent payable beginning upon the Commencement Date
consisting of (a) an amount determined by multiplying the amount of $.52 per
rentable square foot by the estimated total 45,000 rentable square feet of the
Premises ("SF Rate Rent), and (b) adding to such amount, the sum of $11,682 per
month for the Allowance Amortization Charge as determined under subsection 2.3
of this Addendum. Such Base Rent shall be subject to adjustment as follows: (i)
if there is a variance in the rentable square footage of the Premises as
actually constructed, the Base Rent for the first Lease Year shall be adjusted
based on the actual rentable square feet within the Premises multiplied times
$.52 per rentable square foot; and/or (ii) if the full amount of the Tenant
Improvement Allowance is not disbursed, then the Base Rent shall be adjusted to
reflect a lower Allowance Amortization Charge as calculated under subsection 2.3
of this Addendum.
2.2 Increase in SF Rate Rent. The SF Rate Rent shall be increased at
the beginning of the second Lease Year and at the beginning of each Lease Year
thereafter until the sixth Lease Year, in an amount equal to three percent (3%)
of the amount of the scheduled SF Rate Rent for the immediately preceding Lease
Year. At the beginning of the sixth Lease Year and at the beginning of each
Lease Year thereafter, the SF Rate Rent shall be increased in an amount equal to
three and one-half percent (3.5%) of the amount of the scheduled SF Base Rent
for the immediately preceding Lease Year.
2.3 Tenant Improvement Allowance Amortization. As more particularly
provided in section 4 of this Addendum, LESSOR will provide a Tenant Improvement
Allowance in the amount of up to $900,000.00 to pay for Tenant Improvement Costs
(as defined below) for Tenant Improvements requested by LESSEE. The term
"Allowance Amortization Charge" means an amount to be included in the Base Rent
calculated as follows: (a) from and after the Commencement Date, determine the
aggregate amount of the Allowance expended by LESSOR for Tenant Improvements;
(b) amortize eighty percent (80%) of the amount of the Allowance actually used
based on an economic return equivalent to eleven percent (11%) per annum to
derive a monthly payment sufficient to pay in full an amount equal to 80% of the
Allowance and such economic return over a period of time equal to one hundred
and twenty (120) months and the remaining twenty percent (20%) of the amount of
the Allowance actually used based on an economic return equivalent to eleven
percent (11%) per annum to derive a monthly payment sufficient to pay in full an
amount equal to 20% of the Allowance and such economic return over a period of
time equal to three hundred months; and (c) the resulting monthly payment shall
equal the Allowance Amortization Charge. If the amount of the Allowance
Amortization Charge is determined after the Commencement Date on account of a
delay in finalizing the Tenant Improvement Costs, then LESSEE shall pay LESSOR
the amount accruable from the Commencement Date to the end of the then current
month, adjusted for any Free Rent within fifteen (15) days after LESSOR's
billing for such accrued amounts, and shall thereafter pay the monthly Allowance
Amortization Charge with each payment of Base Rent.
2.4 Free Rent. Provided LESSEE is not in default under the terms of
the Lease, LESSOR hereby agrees to give LESSEE the first three months of the
term free of Base Rent. LESSEE shall still be obligated to pay the Operating
Expenses as provided in section 8 of this Addendum during such free Base Rent
period.
3. Effective Date/Term/Commencement Date. Notwithstanding any other
provision of the Lease, this Lease shall be effective upon execution by LESSOR
and LESSEE ("Effective Date") and shall constitute a legally binding contract
for LESSOR to deliver possession of the Premises in accordance with the
requirements of this Lease and for LESSEE to accept possession and pay the
rentals beginning on the Commencement Date. Notwithstanding that the Effective
Date of this Lease is the date of execution of this Lease, LESSEE's obligation
to commencement payment of the Rent payable under this Lease shall not commence
until the occurrence of the Commencement Date.
3.1 Commencement Date. Except as otherwise provided in subsection 4.5
of this Addendum, the Commencement Date of the Lease shall be the date of the
Substantial Completion (as defined below) of the Building Shell and the Tenant
Improvements; provided, however, the Commencement Date shall not be earlier than
July 31, 1999 nor later than November 30, 1999, except (a) with LESSEE's
consent, in its sole discretion, (b) on account of delays caused by LESSEE as
described in subsection 4.5 of this Addendum, or (c) for delays not the fault of
the LESSOR or LESSOR's contractor caused by fire, earthquake or other
unavoidable casualties or inclement weather conditions not reasonably
anticipatable, extraordinary governmental action other than usual permit and
inspection procedures, delays encountered in processing building permits and
other governmental approvals or inspections, delays encountered as a result of
the discovery of any unknown or concealed conditions affecting the Premises,
delays caused by general area wide labor or material shortages or labor disputes
(such as strikes or lock-outs), or any other causes not the fault of LESSOR or
LESSOR's Contractor, subcontractors, agents or employees. If the Substantial
Completion is not achieved by December 31, 1990 except for delays per this
section then LESSEE may elect to be released from all LEASE obligations and be
refunded the deposit.
3.2 Lease Term/"Lease Year" Defined. Unless otherwise provided, the
initial Term of the Lease ("Original Term") shall be a period of ten (10) years
and three (3) months beginning on the Commencement Date; provided, however, if
the Commencement Date occurs other than on the first day of a calendar month,
the Original Term shall be deemed extended for a period of time equal to the
number of days between the Commencement Date and the beginning of the first full
calendar month following the Commencement Date. The term "Lease Year" means each
consecutive period of twelve (12) months during the Lease Term, provided that
(a) if the "Commencement Date" is other than the first day of a calendar month,
then the first Lease Year shall be a period of twelve (12) months plus the
period between the Commencement Date and the first day of the first full
calendar month thereafter; and (b) the last Lease Year shall be a period of
three (3) months.
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3.3 LESSOR's Delay. In the event that the Commencement Date is delayed
beyond twelve (12) months from the execution of this Lease solely on account of
the Default of LESSOR or on account of the fault of LESSOR's Contractor in
failing to timely cause Substantial Completion of the Building Shell and Tenant
Improvements, LESSEE shall be entitled to a "Delay Credit" in the amount of the
lesser of (a) $30,000.00 per month, or any part thereof, or (b) the amount
actually paid to LESSEE's existing landlord in excess of the scheduled monthly
rent in effect at the end of the term of LESSEE's existing lease on account of
LESSEE's continued possession of its existing premises. Any Delay Credit shall
be applied to the Base Rent becoming due on the fourth month of the first Lease
Year and each month thereafter, until fully applied. Except for such Delay
Credit, LESSOR shall not otherwise have any liability to LESSEE whatsoever on
account of a delay in the Commencement Date caused by LESSOR or its Contractor.
4. Building Shell and Tenant Improvements. LESSOR, at its expense, shall
cause the construction of the Building Shell. The phrase "Building Shell" means
the improvements to be constructed as shown in the Approved Drawings, the
Specifications and the Approved Working Drawings, including (a) roofing, fascia,
exterior walls, doors and windows, (b) footings and concrete floors, (c) "shell"
fire sprinkler system in accordance with minimum code requirements, (d) conduits
and pipes for telephone, electricity, water, fire sprinklers and sewage brought
to "stub out" termination points in or above a perimeter wall of the Building,
(e) a main electrical termination panel for the Building, (f) paving and finish
of parking areas, entrance areas and walkways, (g) landscaping as shown on the
Approved Drawings and as otherwise reasonably determined by LESSOR, (h) site
improvements consisting of street, gutters, sidewalks, curbs, storm drains and
erosion control (construction period and permanent) as required to comply with
governmental requirements, and (i) structural elements, consisting of footings
and exterior wall reinforcement only for a future mezzanine level consisting of
approximately 15,000 rentable square feet ("Mezzanine Area").
4.1 Tenant Improvements Description. The costs of completing the
initial Tenant Improvements will be shared by LESSOR and LESSEE as described in
subsection 4.4 of this Addendum. The phrase "Tenant Improvements" means all
interior improvements which are not a part of the Building Shell, including (a)
partitions, walls, and doors, (b) all surface finishes, including wall
coverings, paint, floor coverings, suspended ceilings and other similar items,
(c) duct work, heat pumps, vents, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within the
Premises, (d) electrical distribution systems (including panels, subpanels,
wires and outlets), lighting fixtures, outlets, switches and other electrical
work to be installed in the Premises, (e) plumbing lines, fixtures and
accessories, (f) all fire and life safety control systems such as fire walls and
fire alarms (including piping, wiring and accessories) to be located in the
Premises, and fire sprinklers and lines attributable to the Tenant Improvements
and/or LESSEE's fixture, furnishing or equipment, beyond that included in
Exhibit 3, 5.3, (g) entrance door signage and directory listings, as authorized
by LESSOR, (h) improvements required for compliance with Title 24, and (i)
flooring, suspended ceilings, air conditioning and heating, walls and stairways
for a portion of the Mezzanine Area, if elected by LESSEE; provided, however,
LESSEE's trade fixtures, equipment and personal property (including telephone
systems, chairs, tables, furniture and other equipment used in LESSEE's
business) shall not be considered a part of the Tenant Improvements.
4.2 Design of Tenant Improvements. LESSEE shall furnish to LESSOR for
its approval, a space plan showing the configuration of the Improved Office
Space no later than November 1, 1998, which shall be the Approved Space Plan
following LESSOR's approval. LESSEE shall furnish to LESSOR, a complete set of
plans and specifications detailing all Tenant Improvements no later than
February 1, 1999 ("Tenant Improvement Plans"). Unless otherwise approved by
LESSOR, the Tenant Improvement Plans will be prepared by the Architect, who
shall also obtain permits for the plans. If LESSEE delays in providing the Space
Plan or the Tenant Improvement Plans, such delay shall not change the
Commencement Date of the Lease, which shall be the date the Premises would have
been available for occupancy, but for any such delay. The Tenant Improvement
Plans shall be subject to LESSOR's prior approval, which will not be
unreasonably withheld; provided, however, LESSOR shall have the absolute right
of disapproval, in its sole discretion, of any Tenant Improvements which (a)
alter or otherwise affect any structural component of the Building and(b) are
visible from the exterior of the Premises. LESSOR shall have fifteen (15) days
after receipt of the Tenant Improvement Plans in which to approve or disapprove
the Tenant Improvement Plans. If LESSOR does not disapprove the Tenant
Improvement Plans within such fifteen (15) day period, LESSOR shall be deemed to
have approved the Tenant Improvement Plans. If LESSOR reasonably disapproves the
Tenant Improvement Plans, LESSEE, at its expense, shall promptly cause the
Tenant Improvement Plans to be revised and resubmitted to LESSOR for its review
and approval within fifteen (15) days from notice of LESSOR's disapproval.
Following LESSOR's approval, LESSOR will have the Architect submit the Tenant
Improvement Plans ("Approved Tenant Improvement Plans") for government plan
checking and a building permit, if required, provided, LESSOR shall have the
right to approve any changes required by such governmental authorities. The
final Tenant Improvement Plans shall be subject to any changes required by
governmental authorities.
3
4.2.1 "Improved Space" Defined. The term "Improved Space" means
portions of the rentable area of the Building Shell other than those to be used
for shipping, which are improved with suspended ceilings, air conditioning and
heating systems, finished flooring and walls other than the perimeter walls
forming the Building Shell.
4.3 Approved Contractor. Hamann Construction, a licensed general
contractor, will be the general contractor for construction of the Building
Shell and the Tenant Improvements. LESSOR and LESSEE hereby approve Hamann
Construction acting as the general contractor ("Contractor").
4.3.1 LESSEE's Subcontractors' Bids. LESSEE shall have the right
to approve, which approval shall not be unreasonably withheld, the subcontract
proposals ("Bids") for the Major Trades (as defined below) required for
construction of the Tenant Improvements. No later than thirty (30) days prior to
the commencement of construction, LESSOR shall cause Contractor to deliver to
LESSEE Bids for each Major Trade from no less than three (3) licensed
subcontractors together with a written notice specifying the Bids, which
Contractor recommends for acceptance. LESSEE shall have the right to reasonably
disapprove of the Bids selected by Contractor by giving LESSOR written notice of
any objection that LESSEE may have to one or more of the Bids within ten (10)
days from LESSEE's receipt of the Bids from Contractor; provided, however,
LESSEE shall not have the right to disapprove all Bids within a Major Trade.
LESSEE's notice of disapproval shall explain in detail the basis for the
disapproval of any Bid recommended by Contractor. Contractor shall have the
right to utilize any subcontractors submitting Bids for which LESSEE does not
timely give notice of its disapproval. The term "Major Trades" means portions of
the construction work consisting of the supply or installation of electrical,
heating and air conditioning, fire sprinkler system, framing, drywall, plumbing,
painting, floor coverings, suspended ceilings, glass, doors and ceramic tile.
4.4 Payment of Tenant Improvement Costs. The phrase "Tenant
Improvement Costs" means all direct and indirect costs of furnishing,
constructing and installing the Tenant Improvements, including (a) any costs
incurred by LESSOR for design and/or architectural services of the Architect in
preparing the Tenant Improvement Plans, (b) government permit costs applicable
to the Tenant Improvements, (c) amounts payable to Contractor for
overhead/profit, job site supervision, cleanup, trash and janitorial services as
shown in the Cost Breakdown Tenant Improvement which is annexed to this Addendum
as EXHIBIT "4", except that the 12% overhead and profit fee payable to
Contractor shall not apply to the costs of (i) the design of the Tenant
Improvements, or (ii) the building permit(s) for construction of the Tenant
Improvements, or (iii) "hard costs" exceeding the Tenant Improvement Allowance
but not exceeding $1,100,000 (d) the actual "hard costs" of construction of the
Tenant Improvements and (e) financing costs attributable to financing to pay the
LESSOR's Allowance, including, construction period interest from the initial
loan funding until the Commencement Date, loan points, fees and other costs
customarily incurred in connection with such financing; provided, however,
financing costs incurred after the Commencement Date shall not be included in
determining the Tenant Improvement Costs.
4.4.1 Estimate for Tenant Improvement Costs. Prior to the
commencement of construction, LESSOR shall cause Contractor to make a final
selection of the Bids for each Major Trade and LESSOR shall provide final
estimates of all other Tenant Improvement Costs ("Estimated Tenant Improvement
Costs"). LESSOR shall provide LESSEE written notice of such Estimated Tenant
Improvement Costs, which notice will include copies of the Bids for the Major
Trades.
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4.4.2 LESSOR's Allowance. LESSOR agrees to pay a maximum of
$900,000.00 for the Tenant Improvement Costs ("Allowance"). The Allowance shall
be applied solely to pay the cost of the Tenant Improvements, and under no
circumstances shall LESSEE be entitled to any payment on account of any unused
portion of the Allowance following completion of the Tenant Improvements and
payment of the Tenant Improvement Costs. The amount of the Allowance actually
expended for payment of Tenant Improvement Costs shall be the amount used to
determine the amount of the Allowance Amortization Charge under subsection 2.3
above. LESSOR shall pay its share of the Tenant Improvement Costs as
construction progresses in the same manner that LESSEE is required to pay its
Initial Contribution under subsection 4.4.3 of this Addendum.
4.4.3 LESSEE's Payment/Initial Contribution. Except for LESSOR's
Allowance, LESSEE shall be responsible for the payment of all Tenant Improvement
Costs. The amount of LESSEE's initial contribution will be determined based on
the Estimated Tenant Improvement Costs, and LESSEE shall pay to LESSOR, as
provided in this subsection, an amount equal to the difference between LESSOR's
Allowance and the Estimated Tenant Improvement Costs ("Initial Contribution").
LESSEE shall pay such Initial Contribution in installments, based on the
percentage of completion of the Tenant Improvements, as reasonably determined by
LESSOR, and each installment will be due and payable within 10 days of LESSOR's
delivery of an invoice to LESSEE. Such payments shall be paid to an
institutional fund control established by LESSOR for payment of the Tenant
Improvement Costs. The amount of each installment payment of the Initial
Contribution shall be calculated by multiplying the amount of LESSEE's Initial
Contribution by the percentage of progress as determined by LESSOR and then
multiplying that product by ninety percent (90%).
4.4.4 Final Reconciliation. Following completion of the
construction of the Tenant Improvements, LESSOR shall to deliver to LESSEE a
final accounting of the Tenant Improvement Costs. If additional amounts are due
from LESSEE on account of differences between the LESSEE's payments on Estimated
Tenant Improvement Costs and the actual costs incurred, LESSEE shall reimburse
LESSOR in the amount of such difference following completion of the construction
of the Tenant Improvements and within fifteen (15) days from receipt of a
written notice and accounting from LESSOR's accounting. If such final accounting
shows that the actual Tenant Improvement Costs are less than the LESSEE's
payment on Estimated Tenant Improvement Costs, then LESSEE shall be entitled to
a credit in the amount of any excess paid by LESSEE, which credit shall be
applied to the next payment of Base Rent then becoming due.
4.4.5 Costs Attributable to Changes. LESSEE will be responsible
for payment of any excess Tenant Improvement Costs resulting from any changes to
the Work requested by LESSEE or necessitated by government requirements,
following LESSOR's approval of the Tenant Improvement Plans. Any such changes
shall result in the recalculation of the Estimated Tenant Improvement Costs and
LESSEE's required payments under Section 4.4.3 of this Addendum.
4.4.6 Inspection of Records. LESSEE, or its designated
representative, shall have the right during the course of performance of the
construction of the Building Shell and the Tenant Improvements and in connection
with the final reconciliation of the Tenant Improvement Costs as provided in
subsection 4.4.4 of this Addendum to a reasonable review of books and records
maintained by LESSOR and Contractor relating to such costs. Such right of
inspection is exercisable on reasonable written notice to LESSOR and during the
regular business hours of LESSOR or Contractor, whichever is applicable.
4.5 Completion and Acceptance of Building Shell and Tenant
Improvements. The Commencement Date of the Lease shall not occur until
Substantial Completion (as defined in subsection 4.5.2 of this Addendum), except
if Substantial Completion is delayed on account of LESSEE's failure to timely
submit the Tenant Improvement Plans (or any revisions thereto), LESSEE's request
for special materials, finishes or installations (i.e. materials which are not
readily available or customarily and ordinarily used in similarly situated
construction work) not shown in the Tenant Improvement Plans as approved by
LESSOR, changes to the approved Tenant Improvement Plans requested by LESSEE,
LESSEE's failure to timely pay amounts required to be paid by LESSEE in
connection with such construction or other delays caused by LESSEE. If such
delays are encountered, the Commencement Date of this Lease shall occur prior to
Substantial Completion of the Tenant Improvements and as of the date such Tenant
Improvements would have been substantially completed but for such delays by
LESSEE. LESSEE and LESSOR shall conduct a walk-through inspection of the
Premises and prepare and sign a punch-list of all items needing additional work
by LESSOR, and LESSEE shall thereafter have an additional sixty (60) days in
which to identify to LESSOR any construction deficiencies or defects which were
not readily observable at the time of the preparation of the first punch-list,
whereupon any items so identified in no more than three (3) additional
punch-lists and agreed to by LESSOR following consultation with LESSEE, will be
added to the final punch-list. The punch-lists to be prepared by LESSEE shall
not include any damage to the Premises caused by LESSEE's move-in, which damage
shall be repaired or corrected by LESSEE, at its expense. If LESSEE fails to
submit the final punch-list to LESSOR within the sixty (60) day period
immediately following the Commencement Date, it shall be deemed that there are
no items needing additional work or repair. LESSOR's contractor shall complete
all reasonable punch-list items within thirty (30) days after the walk-through
inspection and within thirty (30) days following LESSOR's receipt of any
additional punch-lists, or as soon as practicable thereafter. Upon LESSOR or
LESSOR's contractor's indication to LESSEE of the completion of such punch-list
items, LESSEE shall acknowledge the completion of such items in writing to
LESSOR. If LESSEE fails either to so acknowledge the completion of such items
within seven (7) days of such stated completion or within such seven day period
to specify in writing to LESSOR in reasonable detail any such previously listed
punch-list items that remain uncompleted, all such items shall be deemed
approved by LESSEE.
5
4.5.1 Construction/Substantial Completion. Promptly following the
approval of the Tenant Improvement Plans and conditioned upon LESSEE's timely
payment of the LESSEE's Initial Contribution, LESSOR shall cause Contractor to
cause the Substantial Completion of the Tenant Improvements in no event later
than the date determined in subsection 3.1 of this Addendum. Following the
Substantial Completion, LESSOR shall cause Contractor to correct all immaterial
defects and deficiencies to fully complete the Tenant Improvements as soon as
reasonably possible.
4.5.2 "Substantial Completion" Defined. The term "Substantial
Completion" means the date upon which LESSOR satisfies all of the following
requirements: (a) the construction of the Building Shell is substantially
completed in accordance with the Approved Working Drawings, as modified only by
any changes requested by LESSEE or as otherwise permitted by this Lease, subject
only to minor corrective work which does not affect or limit LESSEE's use of the
Premises; (b) the construction of the Tenant Improvements is substantially
completed in accordance with the Tenant Improvement Plans as modified only by
any changes requested by LESSEE or as otherwise permitted by this Lease, subject
only to minor corrective work which does not affect or limit LESSEE's use of the
Premises; (c) LESSOR has procured a certificate of occupancy (whether temporary
or permanent) or other applicable permit permitting LESSEE's immediate use and
occupancy of the Premises; and (d) LESSOR has given LESSEE written notice
stating that such Substantial Completion has occurred and that the Premises are
available for LESSEE's immediate possession and occupancy ("Notice of
Possession").
4.5.3 LESSOR's Enforcement of Contractor's Warranties. LESSOR has
obtained from Contractor the following warranties ("Contractor's Warranties"):
"CONTRACTOR unconditionally warrants all materials and equipment
furnished under this Contract will be new, unless otherwise specified and
approved in advance by LESSEE, and that all Work will be of good quality,
free from material faults and defects and in conformance with the Contract
Documents. CONTRACTOR, at its expense, shall repair or replace any Work
requiring replacement or repair within one (1) year from completion of the
Project, except with respect to the roof membrane only, which CONTRACTOR
will repair or replace within two (2) years as required to prevent water
penetration. In the event CONTRACTOR fails to timely perform its warranty
obligation, OWNER shall have the right to cause such repairs or
replacements and CONTRACTOR shall be liable for the reasonable costs of
such repairs or replacements. In the event of any action to enforce a
warranty claim, the prevailing party shall be entitled to recover its
reasonable attorney's fees and costs."
6
Notwithstanding the limitation on LESSOR's warranty under Paragraph 2.2 of the
Lease or the time for enforcement of LESSOR's warranty has expired, to the
extent LESSOR has any claim under the Contractor's Warranties on account of any
defect or deficiency in the construction of the Premises, upon the written
request of LESSEE, LESSOR shall take such commercially reasonable action as
necessary to enforce any such warranties or claims for the benefit of LESSEE to
the extent LESSEE incurs or will incur any out-of-pocket expense or cost in the
performance of its obligations under this Lease for the repair or maintenance of
the Premises on account of any items covered by the Contractor's Warranties as a
result of any such defects or deficiencies, provided that LESSOR shall first be
entitled to recover its Legal Expenses (as defined below) prior to any
reimbursement to LESSEE of any such out-of-pocket expenses; provided, however,
if LESSOR determines, based on its good faith belief, that pursuit of such claim
against Contractor would not be commercially reasonable, then LESSOR shall have
the right to satisfy its obligations under this section by assigning to LESSEE
the right to enforce any such Contractor's Warranties, provided any such
assignment shall be effective only to the extent LESSEE incurs or will incur any
out-of-pocket expense or cost in the performance of its obligations under this
Lease for the repair or maintenance of the Premises on account of any items
covered by the Contractor's Warranties as a result of any such defects or
deficiencies, and LESSOR shall be entitled to receive any excess recovery after
deduction of LESSEE's Legal Expenses. The term "Legal Expenses" means reasonable
attorneys' fees and costs (including any expert witness fees), including
attorneys' fees and costs in connection with the enforcement of any award or
judgment or any appellate proceedings, which Legal Expenses are incurred by
LESSOR in the event LESSOR elects to enforce warranties or claims in any legal
proceedings against Contractor, or incurred by LESSEE, in the event LESSOR
assigns the right to LESSEE to enforce such warranties or claims directly
against Contractor.
4.5.4 Exclusion From Common Area Operating Expenses.
Notwithstanding any other provision, any costs of repairs or replacement of any
patent or latent defect or deficiency identified during the period the
applicable Contractor's Warranties remain in effect shall not be included in
calculating Common Area Operating Expenses.
5. LESSOR's Contingencies. LESSOR's obligations under the Lease are subject
to satisfaction of the following contingencies within one month following full
execution of the Lease: (a) LESSOR procures a commitment for a construction loan
and permanent loan on terms and conditions reasonably acceptable to LESSOR; (b)
LESSOR reasonably determines that the total cost of all governmental fees,
exactions and charges for development of the Building Shell and the Allowance of
LESSOR shall not exceed $50,000; and (c) LESSOR approves the disclosures in
LESSEE's Hazardous Materials Questionnaire described in section 11 of this
Addendum. LESSOR agrees to use its reasonable, best efforts to satisfy the
contingencies described in preceding clauses (a) and (b) within one month
following full execution of the Lease, and LESSOR shall have thirty (30) days
following the receipt of the Hazardous Materials Questionnaire to give LESSEE
notice of its approval or disapproval under preceding clause (c). LESSOR will
promptly give LESSEE notice as and when each contingency is satisfied. If LESSOR
does not give notice to LESSEE that all contingencies have been satisfied within
one month following full execution of the Lease, then either LESSOR or LESSEE
shall have the right to terminate the Lease by giving the other notice of such
decision. If the Lease is so terminated, LESSOR shall return the Security
Deposit to LESSEE and neither party will have any further obligations under the
Lease, except that the obligation of LESSEE to provide indemnification to LESSOR
as provided in section 6 of this Addendum shall survive such termination.
6. Access to Premises/Indemnification. LESSEE and its agents, employees and
design consultants shall be entitled to reasonable access to the property for
the purpose of carrying out the preparation of the Tenant Improvement Plans and
inspecting the progress of the construction of the Building Shell or the Tenant
Improvements. LESSEE's entitlement to access shall be conditioned upon LESSEE
giving LESSOR prior written notice of the date and time for such access, which
shall not be less than three (3) business days prior to the desired access date.
LESSEE agrees that it will pay for the cost or expense of any repairs or
replacements, including damage to landscaping, roads, irrigation systems,
utilities and other improvements, resulting from LESSEE's exercise of the access
rights provided in this section, and LESSEE shall indemnify, defend and hold
harmless LESSOR and Contractor from and against any loss, liability, claim,
expense (including reasonable attorneys' fees and court costs) or damage
resulting from LESSEE's exercise of such access rights, including, without
limitation, any claims arising from the activities of LESSEE or its agent,
employees or design consultants. LESSOR may require, upon reasonable notice to
LESSEE, that LESSEE provide evidence of adequate general liability insurance
coverage from an insurer acceptable to LESSOR and name LESSOR as an additional
insured under LESSEE's policy as a condition to LESSEE's exercise of such access
rights. LESSEE agrees not to interfere with the progress of the construction on
the property or otherwise interfere with any other activities of LESSOR or its
agents or contractors while present on the property.
7
6.1 LESSEE's Fixturization. No later than thirty (30) days prior to
the expected date of Substantial Completion of the Building, LESSOR shall permit
LESSEE to enter upon the Premises for the purposes of permitting LESSEE to
commence installation of LESSEE's machinery and trade fixtures ("Fixturization
Period"). LESSEE agrees to carry out such work in such manner as will not
interfere with the Contractor's work. LESSOR shall not be responsible for
securing the Premises or liable for any loss or damage to any such machinery or
trade fixtures installed by LESSEE prior to the delivery of possession of the
Premises. LESSEE shall not be responsible for payment of any of the Rent during
the Fixturization Period, provided LESSEE shall be responsible for compliance
with all other terms and conditions of the Lease, including the provisions in
Paragraph 8.2 (a) of the Lease requiring LESSEE to maintain certain insurance.
7. No Restriction on LESSOR'S Remedies. In the event that LESSEE Defaults
under the Lease by failing or refusing to take possession of the Premises and
commence paying the rent, nothing in the Lease is intended to nor shall it be
applied to restrict any rights or remedies that LESSOR may have on account of
such Default, including, without limitation, LESSOR's entitlement to recover
consequential and incidental damages from LESSEE on account of such breach.
LESSEE acknowledges that it is aware that, based upon LESSEE's inducement in
entering into this Lease, LESSOR is entering into a contract to purchase the
land on which the Building is to be constructed and is purchasing such land,
LESSOR is procuring financing in connection with such acquisition and to pay for
the costs of construction of the Building Shell and the Allowance, LESSOR is
otherwise making a substantial investment of its own funds and creditworthiness
to acquire the land and develop the Building, and, in the event of such Default
by LESSEE, LESSOR will suffer substantial damages and losses, including lost
profits and the economic value of the loss of use of its invested funds and
credits in the real estate development project which is the subject of this
Lease.
8. LESSEE's Payment of Operating Expenses. Subject to subsection 8.1 below,
beginning on the Commencement Date, in addition to payment of the Base Rent,
LESSEE shall be responsible for payment of all "Operating Expenses" (as defined
below). The term "Operating Expenses" means the following expenses and costs of
the ownership and operation of the Premises: (a) amounts payable for maintenance
contracts required to be procured pursuant to Paragraph 7.1(b) of the Lease (but
not the cost of repairs or replacements payable by LESSEE), (b) insurance
required to be maintained by LESSOR or LESSEE under the Lease (exclusive of the
insurance maintained by LESSEE under Paragraph 8.4 of the Lease), (c) Real
Property Taxes, (d) a reasonable reserve for replacement of the roof and
heating/air conditioning units, (e) assessments and dues payable to any
association or other governing body established pursuant to any covenants,
conditions or restrictions affecting the Premises as of the date of the Lease,
(f) payment of Xxxxx Xxxx Bond installments, (g) a fire sprinkler monitoring
contract if payable separate from the fire sprinkler maintenance contract
described in Paragraph 7.1(b) of the Lease, (h) the Administrative Fee described
in subsection 8.2 of this Addendum, and (i) the reasonable amount of other
ordinary and necessary expenses and costs of operation of the Premises, which
are customarily incurred in the operation of similarly situated real estate
projects; provided, however, the term "Operating Expenses" does not include (i)
the costs of repairs or maintenance required to be performed by LESSEE to the
extent such costs exceed the amount of any reserves accumulated from the
Operating Expense collections for the particular repair or maintenance item, or
(ii) any other items of expense or cost which the terms of the Lease expressly
require be paid or incurred by LESSEE, including all utility and trash charges
payable by LESSEE under Paragraph 11 of the Lease. Interest at the Xxxxx Fargo
savings account rate on any unused portion of the above reserves shall accrue to
the reserve account and not to the LESSOR.
8.1 Method of Payment. LESSEE shall pay to LESSOR monthly, as
additional rent, an amount equal to 1/12 of the projected annual Operating
Expenses. Such amount shall be due and payable concurrently with the payment of
the applicable Base Rent. Prior to the beginning of each Lease Year, LESSOR will
provide LESSEE an annual estimated Operating Budget ("Estimated Operating
Budget") for each calendar year or partial year. Subject to LESSEE's payment to
LESSOR of the Operating Expenses as provided in this Addendum, LESSOR shall make
prompt payment of the Operating Expenses. Any excess or deficit from the
estimates shown in the Estimated Operating Budget will be credited or billed to
LESSEE within sixty (60) days following the end of the applicable calendar year,
and LESSOR shall concurrently furnish LESSEE with a detailed statement showing
the actual Operating Expenses incurred for such year. Any deficit will be
payable as additional rent within ten (10) days of receipt of a final Operating
Budget setting forth the actual expenditures for the applicable year and the
deficit. Any excess shall be credited against the next payments of Operating
Expenses due from LESSEE. A copy of the Estimated Operating Budget for the first
calendar year is attached to the Lease as EXHIBIT "5", provided that LESSEE
acknowledges that such budget represents only LESSOR's good faith estimate of
the such expenses and that actual expenses may vary. LESSEE further acknowledges
that the amounts and/or categories of expense will likely vary in future years
as the Premises ages. Promptly following LESSEE's request, LESSOR shall furnish
LESSEE with such additional information as LESSEE may reasonably request with
respect to such Operating Expenses.
8
8.2 LESSOR'S Administrative Services. LESSOR agrees to provide certain
administrative services to assist LESSEE in the performance of LESSEE's
obligations under Paragraphs 7, 8.2, 8.3 and 10 of the Lease in consideration
for LESSEE's monthly payment of an administrative fee to LESSOR two percent (2%)
of the SF Rate Rent per month ("Administrative Fee"). Such Administrative Fee
shall be payable as a part of the Operating Expenses payable by LESSEE. LESSOR's
administrative services shall consist of the following: LESSOR shall procure, on
behalf of LESSEE, maintenance contracts required to be procured by LESSEE under
Paragraph 7.1(b) of the Lease, and shall otherwise procure bids and contract
proposals from contractors when necessary for LESSEE's performance of its
general maintenance and repair obligations under Paragraph 7.1(a) of the Lease.
Except with the prior written consent of LESSEE, major items of expense
exceeding $10,000.00 shall be competitively bid and LESSOR shall not submit any
contracts or proposals for any of such services to be performed by LESSOR or any
affiliate of LESSOR, except to the extent such affiliation is disclosed to
LESSEE and such contract is competitively priced. LESSOR shall not be liable for
any acts or omissions of any such contractors, nor for LESSEE's default in
failing to perform any obligation under the Lease, except to the extent of
LESSOR's failure to pay any Operating Expense from funds previously provided by
LESSEE for the payment of such Operating Expense.
9. Additional Insurance Provisions. In addition to the insurance to be
maintained by LESSEE pursuant to Paragraph 8.2(a) of the Lease, LESSOR shall
have the right, but not the obligation, to maintain, at LESSOR's sole cost and
expense, any additional general liability insurance that LESSOR may elect to
procure for the sole and exclusive benefit of LESSOR. LESSEE shall not be
obligated to reimburse LESSOR for the cost of any such additional liability
insurance and LESSEE shall not be named as an insured under any such additional
insurance nor shall the existence of such additional insurance effect any
obligations or liabilities of LESSEE under the Lease.
10. Option to Extend. Subject to the provisions of Paragraph 39 of the
Lease, LESSEE shall have the option to extend the Lease Term for one additional
term of five (5) years, which option is exercisable only by LESSEE giving LESSOR
written notice of the election to exercise such option no earlier than fifteen
(15) months and no later than nine (9) months before the expiration of the
Original Term. If LESSEE fails for any reason to timely give such Election
Notice, such option rights shall automatically terminate and be of no further
force or effect and LESSEE shall not have any other right to extend the Original
Term. LESSEE may withdraw a notice to elect to excercise the option up to nine
months before the end of the term of the Lease.
10.1 Remaining Lease Terms Remaining Lease Terms. Except as provided
in this subsection and in subsection 10.2 of this Addendum, if LESSEE elects to
extend the Original Term, all other terms and conditions of the Lease, including
annual Base Rent Adjustments of 3.5%, shall remain in effect during such
extended term. LESSEE shall have no further right to extend the term of the
Lease; and the Base Rent applicable during the option term shall be determined
in accordance with subsection 10.2 of this Addendum.
10.2 Adjustment to Base Rent. The Base Rent for the first Lease Year
of the extension period shall be an amount equal to the "fair rental value" of
the Premises as determined in the following manner:
(a) Within thirty (30) days from LESSEE's Election Notice, LESSOR and
LESSEE shall meet in an effort to negotiate, in good faith, the fair rental
value of the Premises for the first year of the option period. If LESSOR
and LESSEE have not agreed upon such fair rental value of the Premises at
least ninety (90) days prior to the beginning of the applicable option
period, the fair rental value shall be determined by appraisal, by one or
more appraisers ("Appraiser(s)"). The Appraisers shall have at least five
(5) years experience in the appraisal of commercial/industrial real
property in the area in which the Premises is located and shall be members
of professional organizations such as M.A.I. or equivalent.
(b) If LESSOR and LESSEE are not able to agree upon the fair rental
value of the Premises within the prescribed time period, then LESSOR and
LESSEE shall attempt to agree in good faith upon a single Appraiser not
later than seventy-five (75) days prior to the beginning of the applicable
option period. If LESSOR and LESSEE are unable to agree upon a single
Appraiser within such time period, then LESSOR and LESSEE shall each
appoint one Appraiser not later than sixty-five (65) days prior to the
beginning of the applicable option period. Within ten (10) days thereafter,
the two (2) appointed Appraisers shall appoint a third Appraiser. If either
LESSOR or LESSEE fails to appoint its Appraiser within the prescribed time
period, the single Appraiser appointed shall determined the fair rental
value of the Premises. If both parties fail to appoint Appraisers within
the prescribed time periods, then the first Appraiser thereafter selected
by a party shall determine the fair rental value of the Premises. Each
party shall bear the cost of its own Appraiser and the parties shall share
equally the cost of the single or third Appraiser, if applicable.
9
(c) For the purposes of such appraisal, the term "fair rental value"
shall mean the price that a ready and willing tenant would pay, as of the
beginning of the applicable option period, as monthly Base Rent to a ready
and willing landlord of property comparable to the Premises if such
property were exposed for lease on the open market for a reasonable period
of time and taking into account all of the purposes for which such property
may be used. If a single Appraiser is chosen, then such Appraiser shall
determine the fair rental value of the Premises. Otherwise, the fair rental
value of the Premises shall be the arithmetic average of the two (2) of the
three (3) appraisals which are closest in amount, and the third appraisal
shall be disregarded. LESSOR and LESSEE shall instruct the Appraiser(s) to
complete the determination of the fair rental value not later than thirty
(30) days prior to the beginning of the applicable option period. If the
fair rental value is not determined prior to the beginning of the option
period, then LESSEE shall continue to pay to LESSOR the Base Rent
applicable to the Premises immediately prior to such extension, until the
fair rental value is determined. When the fair rental value of the Premises
is determined, LESSOR shall deliver notice thereof to LESSEE, and if the
fair rental value is higher, LESSEE shall pay to LESSOR, within ten (10)
days after receipt of such notice, the difference between the Base Rent
actually paid by LESSEE to LESSOR and the new Base Rent determined
hereunder.
(d) Notwithstanding any other provision of this Lease, in no event
shall the Base Rent for the first Lease Year of the extension term be less
than the Base Rent in effect for the last Lease Year of the Original Term
("Prior Base Rent"). If the fair rental value of the Premises determined
under this section is less than the Prior Base Rent, then the Base Rent for
the first Lease Year of the extension term shall equal the Prior Base Rent.
(e) The Base Rent determined for the first Lease Year shall be
adjusted at the beginning of the second Lease Year and at the beginning of
each Lease Year thereafter during the extension term. The Base Rent shall
be increased in an amount equal to three and one-half percent (3.5%) of the
amount of the scheduled Base Rent for the immediately preceding Lease Year.
(f) In the event the foregoing extension is exercised, LESSEE will
receive a Tenant Improvement retrofit allowance equal to two dollars
($2.00) per square foot of the Premises, which will be credited against
Base Rent due under the extension term in the first month after evidence of
money spent on the building is presented to LESSOR, until credited in full.
11. Hazardous Materials Questionnaire. Without limiting LESSEE's
obligations under Paragraph 6.2 of the Lease regarding compliance with
Applicable Laws concerning Hazardous Substances, LESSEE shall, within ten (10)
days from the execution, complete and deliver to LESSOR for its approval under
section 5 of this Addendum and, following such approval, filing with applicable
government authorities, a Hazardous Materials Questionnaire in the form as set
forth in EXHIBIT "6" annexed to this Addendum.
12. Additional Provisions Regarding Tenancy Statement. In addition to the
information required under Paragraph 16 of the Lease, LESSOR may also require
that LESSEE certify to the absence of any violations of any Hazardous Substance
Laws and require that LESSEE provide and certify to an updated Hazardous
Materials Questionnaire.
10
13. Corporate Resolution. Within ten (10) days of Lease execution, LESSEE
shall provide LESSOR with a certified copy of a Corporate Resolution authorizing
the person(s) designated below to execute this Lease on the behalf of LESSEE and
thereupon become a binding contractual obligation of LESSEE.
14. Security Deposit. If LESSEE is not in default on or before the
Commencement Date of the Lease, then 1/2 of the security deposit under Paragraph
1.7 of the Lease will be applied to the Base Rent becoming due during the fourth
month of the first Lease Year.
15. Rent Adjustment Upon Assignment or Sublease. The provisions of this
section shall only apply during the Original Term of the Lease and shall not
apply during the option period Provided that LESSEE is not in Default under the
Lease, if LESSEE subleases or assigns the Premises, LESSEE shall pay to LESSOR,
as additional rental due under this Lease, at LESSOR's option, the following
amounts: (a) in the case of an assignment, LESSOR shall be entitled to receive
an amount equal to fifty percent (50%) of the total value of the consideration
received by LESSEE on account of such assignment, less an amount equal to any
real estate commissions payable by LESSEE on account of the assignment of this
Lease amortized over the duration of the Lease following the applicable
assignment, and the additional amount payable to LESSOR shall be paid within
five (5) days from the date(s) as and when LESSEE receives such consideration;
and (b) in the case of a sublease(s), an amount equal to fifty percent (50%) of
the Excess Rental payable by any subtenant on account of such sublease less the
costs of any real estate commissions payable by LESSEE amortized over the
duration of the sublease. The term "Excess Rental" means the rent or other
consideration received by LESSEE from the subtenant in excess of the amount of
Base Rent, additional rent and other charges payable by LESSEE under this Lease.
In no event shall this provision be construed or applied to reduce the Base Rent
or other charges payable by LESSEE under this Lease, nor modify, waive or
otherwise affect LESSOR's entitlement to increase the rentals payable under this
Lease pursuant to Paragraph 12.1(d) of the Lease in the event of an assignment
or subletting without the consent of LESSOR. For purposes of this Paragraph,
LESSEE will not be deemed to be in Default if all conditions of Default noticed
by LESSOR to LESSEE in connection with LESSEE's request for consent to the
applicable assignment or subletting are cured within the grace periods allowed
therefor under Paregraph 13.1 of the Lease.
16. Limited Right to Holdover. Notwithstanding Paragraph 26 of the Lease,
Lessee shall have the right to retain possession of the Premises for a maximum
six months after upon the expiration (but not the earlier termination) of this
Lease or any renewal or extension term, LESSEE shall have the right to holdover
and retain possession of the Premises for a maximum period of six (6) months
subject to LESSEE's compliance with each of the following requirements and
conditions: (a) At least one hundred twenty (120) days prior to the expiration
of the then-current term, LESSEE shall give written notice ("Holdover Notice")
to LESSOR of its election to holdover, which notice shall state the period of
the holdover, which shall not be less than three (3) months nor more than six
(6) months ("Holdover Period"); (b) LESSEE shall not be in Default or Breach of
the Lease either at the time of the giving of the Holdover Notice or at the time
of the commencement of the Holdover Period; (c) LESSEE shall pay as Base Rent
(i) for the first three months of the Holdover Period, an amount equal to 125%
of the Base Rent in effect for the month immediately preceding the Holdover
Period, and (ii) for the second three months, if applicable, an amount equal to
150% of the Base Rent in effect for the month immediately preceding the
beginning of the Holdover Period; and (d) LESSEE shall continue to comply with
all of the other terms, covenants and conditions of this Lease, including the
payment of any other rent, charges or fees payable during the Lease term. If
LESSEE complies with each of the above-described conditions, LESSEE's holdover
shall be deemed to be with the consent of LESSOR and the provisions of Paragraph
26 of the Lease shall not apply. Upon expiration of the Holdover Period stated
in the Holdover Notice, LESSEE shall have no further right to holdover or retain
possession of the Premises. If LESSEE does not timely give a Holdover Notice or
LESSEE otherwise fails to comply with each of the above-described requirements
and conditions, LESSEE shall have no right to retain possession of the Premises
or any part thereof beyond the expiration of this Lease, and the provisions of
Paragraph 26 of the Lease shall apply.
17. Additional Provisions Regarding Alteration Removal. Notwithstanding any
contrary provision in Paragraph 7.4(b) of the Lease, LESSEE may request in
writing, at the time of submitting any Alterations or Utility Installations for
LESSOR's consent, that LESSOR agree not to require the removal of any of such
LESSEE's Alterations or Utility Installations upon expiration of the Lease. If
LESSEE makes such request, LESSOR shall notify LESSEE at the time of giving such
consent whether or not LESSOR will require the removal of any of LESSEE's
Alterations or Utility Installations, and LESSOR's failure to so notify LESSEE
shall constitute a waiver of LESSOR's right to require LESSEE to remove such
Alterations or Utility Installations upon expiration of the Lease. If LESSOR
gives such notice that it will require such removal, then LESSEE shall be
obligated to remove such Alterations or Utility Installations upon expiration of
the Lease.
11
18. Additional Provisions Regarding Hazardous Materials. Subject to the
limitations described in this section, LESSOR shall indemnify, defend and hold
harmless LESSEE from and against any action, demand or claim (including a claim
for reasonable attorneys' fees and court costs) constituting a Third Party Claim
(as defined below) which is based solely on any Hazardous Substance
contamination in, under or about the Premises (including groundwater) which
existed as of the Commencement Date of the Lease ("Preexisting Contamination"),
but only to the extent LESSEE incurs a loss, liability, claim and/or expense
exceeding the sum of $5,000.00. The phrase "Third Party Claim" means a lawsuit,
administrative action or other proceeding commenced and maintained by any
governmental agency or by any owner or occupant of adjacent land other than the
Premises o cause the remediation of any Preexisting Contamination. LESSEE shall
promptly give LESSOR notice of any such Third Party Claim. LESSOR's obligation
of indemnification includes the obligation to defend the Third Party Claims,
after LESSEE has first paid losses, liabilities, costs and/or expenses in excess
of $5,000.00 on account of such Third Party Claim. LESSEE shall reasonably
cooperate, without expense to LESSOR, with LESSOR in such defense. LESSOR's
indemnification obligation under this section does not (a) increase or expand
any obligation of LESSOR under Paragraph 9.7 of the Lease to cause the
remediation of any such Preexisting Contamination, (b) modify, waive or
otherwise change any of LESSOR's rights under Paragraph 9.7 of the Lease,
including the right to terminate the Lease, or (c) otherwise subject LESSOR to
any liability for losses of or damages to LESSEE resulting from the disruption
of LESSEE's business operation on the Premises on account of such Preexisting
Contamination and/or from any order or judgment resulting from such Third Party
Claim limiting or restricting the use or occupancy of the Premises, provided the
preceding provision does not affect LESSEE's entitlement to abatement of rent in
accordance with Paragraph 9.7 of the Lease.
19. No Binding Offer. LESSOR'S SUBMISSION OF THIS DOCUMENT FOR EXAMINATION,
NEGOTIATION AND/OR SIGNATURE BY LESSEE DOES NOT CONSTITUTE AN OFFER TO LEASE,
NOR A RESERVATION OF, NOR AN OPTION FOR THE LEASE OF THE PREMISES. THE DOCUMENT
SHALL NOT BE BINDING AND IN EFFECT AGAINST EITHER PARTY UNTIL AT LEAST ONE
COUNTERPART OF THIS LEASE IS FULLY EXECUTED AND DELIVERED BY LESSOR AND LESSEE.
20. LESSOR's Maintenance Obligations. Notwithstanding the provisions of
Subparagraphs 7.1 and 7.2 of the Lease, LESSOR, not LESSEE, shall be responsible
for the maintenance and repair of certain LESSOR Maintained Improvements. The
phrase "LESSOR Maintained Improvements", refers only to and is limited to the
structural elements of the Building Shell, being the structural portion of the
exterior Building Shell walls, foundations and structural roof (but not the
non-structural roof membrane, roof drainage system, gutters and downspouts,
which shall be maintained by LESSEE).
20.1 Limitations on LESSOR's Responsibility. LESSOR's obligation for
repair and maintenance of the LESSOR Maintained Improvements is limited to
maintaining the LESSOR Maintained Improvements in an operable condition and
sound structural condition, and LESSEE, not LESSOR, shall be responsible for any
painting or other resurfacing of the exterior surfaces of exterior or interior
walls or LESSOR Maintained Improvements in order to maintain such improvements
in a neat and attractive appearance. LESSOR shall not be in default of its
repair and maintenance obligation if LESSOR performs the required repairs or
maintenance within thirty (30) days after written notice from LESSEE of the need
for such repairs or maintenance. If, due to the nature of a particular repair or
maintenance obligation, more than thirty (30) days is reasonably required to
complete such repairs or maintenance, LESSOR shall not be in default so long as
LESSOR commences work within such thirty (30) day period and diligently
prosecutes the work to completion. Except as expressly provided in this section,
no abatement of rent and no liability of LESSOR shall result for any injury to
or interference with LESSEE's business from the making of or failure to make any
repairs or replacements, and LESSEE waives and releases its rights, if any, to
make repair at LESSOR's expense, under California Civil Code Sections 1941-42 or
any similar law, statute or ordinance in effect now or in the future; provided,
however, nothing in the preceding provisions shall limit LESSOR's liability for
the costs and expenses of such maintenance or repair obligations.
Notwithstanding the foregoing, if any such repair and or maintenance obligation
of LESSOR constitutes an emergency situation involving significant property
damage or personal injury, LESSOR shall make such repair as soon as commercially
reasonable following notice from LESSEE. If LESSOR cannot perform such repair or
maintenance obligation in time to mitigate any such significant property damage
or personal injury, LESSEE shall have the right to perform such maintenance and
repair and LESSOR shall reimburse LESSEE for the reasonable, out-of-pocket cost
thereof within thirty (30) days from the receipt of an invoice from LESSEE,
which invoice shall include backup information substantiating the expenses. In
the case of such emergency situations, the notice given to LESSOR may be made by
telephonic communication so long as LESSEE continues with its best efforts to
contact a responsible employee or agent of LESSOR or LESSOR's designated manager
until successful and LESSEE simultaneously sends a facsimile transmission to
LESSOR notifying LESSOR of the emergency. If LESSEE's ability to conduct its
business from the Premises is materially impaired as a result of LESSOR's
default in failing to timely perform its maintenance and repair obligations, the
Base Rent shall be abated in the same manner and to the same extent as provided
in Paragraph 9.6 of the Lease with respect to damage or destruction of the
Premises until LESSOR has cured any such default.
12
20.2 Exclusions. The provisions of Paragraph 9 (damage and
destruction) and Paragraph 14 (condemnation) of the Lease shall control in the
event of any damage, destruction or condemnation of any of the LESSOR Maintained
Improvements. In addition, LESSOR shall have no responsibility to maintain or
repair such LESSOR Maintained Improvements in the following circumstances:
(a) repairs or replacements are necessitated by LESSEE's failure to
promptly perform its repair and maintenance obligations of other
improvements;
(b) repairs or replacements are necessitated by any intentional or
negligent act or omission of LESSEE, its employees, agents or contractors,
including misuse or abuse of the LESSOR Maintained Improvements;
(c) to the extent that LESSEE makes any modification or alteration of
any of the LESSOR Maintained Improvements, with or without the consent of
LESSOR, including, without limitation, penetrations of the roof or
structural elements, and LESSEE shall be deemed to have assumed full
responsibility for the repair and maintenance of any improvements so
modified, altered or added;
(d) repairs or replacements are necessitated by LESSEE exceeding the
designed load bearing capacities of the walls, foundations, roof structure,
floor slab or other structural elements;
(e) repairs or replacements of the Building Shell plumbing and sewer
lines resulting from normal blockages and not from any defect or deficiency
in such improvements; or
(f) repairs or replacement to the Building Shell electrical system
resulting from any unusual or intensive power demand requirements of
LESSEE, or on account of any power fluctuation or other malfunction
attributable to equipment or other electrical system improvements to be
maintained by LESSEE.
21. Additional Notice Procedures. In the event that any notice is given by
personal delivery, messenger or courier service, the date of delivery of such
notice shall be the date such notice is actually delivered to the recipient.
Notwithstanding any contrary provision in Paragraph 23 of the Lease, the
addresses of LESSOR and LESSEE for notice, unless otherwise changed by a written
notice, shall be as follows:
If to LESSOR: Hamann Consolidated, Inc.
Attn: Xxxxxxx X. Xxxxxx, Pres.
000 X. Xxxxxxx Xxxxxx
Xx Xxxxx, XX 00000
Fax No. (000) 000-0000
If to LESSEE: Aetrium Incorporated
Attn: Xxxxx Xxxxxxx
00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
13
With a Copy to: Aetrium Incorporated
Attn: Chief Executive Officer
0000 Xxxxx Xxxxxx
Xxxxx Xx. Xxxx, XX 00000
Fax No. (000) 000-0000
IN WITNESS WHEREOF, LESSOR and LESSEE have executed this Addendum to Lease
to be effective as of the date set forth herein.
"LESSOR"
W.H. POMERADO LLC,
a California limited liability company
By: Hamann Properties, Inc.,
a California corporation,
Its Manager
By: ___________________________
Xxxxx Xxxxxx, Secretary
"LESSEE"
AETRIUM INCORPORATED
a Minnesota corporation
By: __________________________________
Xxxxxxx Xxxxx, Group Vice President
14
EXHIBITS
Exhibit "1" Legal Description
Exhibit "2" Building Plans
2.1 Site Plan
2.2 Floor Plan
2.3 Building Elevation
2.4 Rendering
Exhibit "3" Building Shell Specifications
Exhibit "4" Blank Tenant Improvement Specifications
Exhibit "5" 0000 Xxxxxxxxx Xxxxxx Xxxx Operating Expenses Budget
Exhibit "6" Hazardous Materials Questionnaire
15
EXHIBIT "1"
Legal Description
Xxx 00 xx Xxxx xx Xxxxx Xxxxx Xx. 00-00, Xxxx XX, in the City of Poway,
State of California, according to map thereof No. 12572, filed inthe office of
the County Recorder of San Diego County, February 28, 1990, as Instrument No.
90-107515.
16
EXHIBIT "3"
BUILDING SHELL SPECIFICATIONS
Concrete Tilt-up Shell Building for Aetrium, Inc.
September 19 , 1998
1 DESIGN, ENGINEERING, AND PERMITS:
.1 Drawings to be drawn, engineered and permitted by Xxxxxxx X. Xxxxx,
Architect. All architectural drawings, structural engineering, shell
plumbing drawings, shell electrical drawings, shell energy
calculations, landscaping drawings, and civil engineering are
included. Where the plans differ from these specifications, the
specifications shall control.
.2 Any and all additional space planning, interior design, energy
calculations,mechanical, electrical, or plumbing drawings required for
the tenant improvements will be the responsibility of the tenant.
Tenant shall be responsible for all warehouse racking design,
permitting and installation.
.3 Tenant shall be responsible for all Construction Costs associated with
the Tenant Improvements subject to the Tenant Improvement Allowance as
specified in Paragraph 4.1 of the Addendum to the Lease dated
September 17, 1998 .
.4 All shell building permits, third party inspections, special
inspections required by the City and all utility fees (including
SDG&E) are included. There will be additional permit and inspection
fees required for the tenant improvements which will be the
responsibility of the Tenant.
.5 The following Shell Building plans are hereby approved will be
initialed and attached to the Lease: 1) Site Plan 2) Floor Plan, 3)
Elevations and 4) Rendering.
.6 The Shell Architect will be responsible for all external ADA
compliance, PID approvals and POA approvals.
2 SITE WORK:
.1 Necessary construction staking and site survey is included.
.2 Grading and required soils reporting and testing are included.
Buildings to be designed in conformance with the existing soils
reports. Shell Contractor shall be responsible for site grading to
balance.
.3 We include all necessary shell building utility lines to and on the
site including primary and secondary electrical, telephone conduits,
fire hydrants and water mains per code requirements, fire services,
and storm drains. We include a gas service to the building provided
that tenant elects to install gas appliances, sufficient to induce
SDG&E to engineer and install requested service type at the time of
initial construction. Cable TV service is not included.
.4 One drive Aprons to be provided as shown on Site Plan.
.5 Dock area to be drained to the site storm drainage.
.6 Landscaping to include soils amendments, plant materials and automatic
sprinkler systems to City standards and of equal quality to Lot 73B.
.7 We include building numbers and all other code-required signage such
as handicap signs but exclude Tenant name/logo signage or lettering.
.8 One (1) trash enclosure sufficient to accommodate one three yard bin
and two (2) trash enclosures sufficient to accommodate two three yard
bins will be provided.
.9 Protective 4" concrete filled, steel bollards will be installed where
required by the City or the Utility companies.
.10 The Lot will not be fenced.
1
.11 One 10' x 10' compressor enclosure will be supplied adjacent to the
building with two concrete sides, metsl roof and a chain link fence(
or equivalent to be determined) and gate on the front.
.12 One approximately 12' x 12' x 12" concrete pad for a nitrogen tank
will be supplied at a location to be specified by LESSEE.
.13 One Patio/ lunch area as generally depicted on the site plan (EXHIBIT
2.1)with concrete paving and screen walls.
3 CONCRETE WORK:
.1 The concrete slabs will be minimum 5 1/2" thick, 4,000 psi concrete,
reinforced with #3's at 18" on center. Concrete footings will be
engineered and constructed per industry standards. All concrete
sealers, sealing of slab joints and smooth dowels at control joints
are excluded.
.2 We exclude visqueen or other waterproofing in the slab areas. If
Lessee desires to install vapor sensitive floorings such as
vinyl-reinforced tiles, sheet vinyl or epoxy coatings, then
waterproofing, alternative concrete mixes, and/or vapor testing should
be considered. We do not recommend the storage of boxes or other
non-porous materials directly on the concrete slab.
.3 Concrete walls will be engineered and constructed with thicknesses and
concrete strengths per the industry standards. (i.e.: minimum 6 1/2"
wall thickness and minimum strengths of 3,000 psi). We exclude
texture.
.4 All parking and drive areas to be non-reinforced, 2,500 psi,
broom-finished concrete on native, 5 1/2" thick in car parking areas
and 7" thick in truck traffic areas.
.5 On site sidewalks to be 3 1/2" thick.
.6 Onsite curbs to be 6" x 6" extruded in areas of low traffic and
monolithic in areas subject to truck traffic.
.7 French drains and waterproofing at below grade walls are excluded.
4 ROOF:
.1 Roof to be panelized roof structure, 24' clear with 8" round metal
interior posts. Warehouse areas to be designed for 11 psf with 2x4
subpurlins and area over mezznanine to be disigned for 13 psf with 2x6
subpurlins. Additionally, roof will support 500 lbs of extra equipment
at any purlin.
.2 Roofing to be a four-ply built up roof with a two-year guarantee.
.3 We include 35 non-ventilated, curb-mounted, 4' x 8' Bristolite
fiberglass skylights, framing for 35 additional skylights, and 70 14"
rotary vents. Location of skylights and rotary vents will be
coordinated with the Space Planner and the Shell Architect .
.4 It has been our intention to provide parapets on all sides high enough
to hide standard mechanical equipment (30"); however, additional roof
screening if required by the City would be a tenant improvement item.
.5 Roof drains to be ABS plastic and interior mounted.
.6 Contractor will coordinate location and installation of
Tenant-provided factory curbs and roof jacks for HVAC units.
Contractor to include rough framing supports for the HVAC as part of
the Shell. The goal is to avoid any penetrations of the roof membrane
during Tenant Improvement Construction.
2
5 MECHANICAL:
.1 ABS plastic underground plumbing to the building is included. We
include one backflow prevention device, 1 1/2" domestic water service,
at least one hose bib per building face and appropriate water line
grounds for the electrical system. Provided that locations are
supplied in a timely manner so that they can be installed before the
slab is poured, we include plumbing stub-ins for up to 30 plumbing
fixtures. Permit fees, gas piping, top out and finish plumbing for
said fixtures are excluded.
.2 Air conditioning and condensate (except for any code-required exhaust
of the electrical room) will be a part of the tenant improvement work.
.3 Shell building Fire Sprinklers are included to a density of .45/3000
with plugs for future tenant improvements (locations to be coordinated
with the space planner prior to City plan check submittal of the
Tenant Improvements drawings). We include fire service and fire
service fees, but exclude in-rack sprinklers, xxxx boxes or other
special locking mechanisms, fire extinguishers, supervisory alarm
panels and tenant improvement drops.
6 ELECTRICAL:
.1 Contractor to provide required switch gear, main disconnect, and
transformer to supply 3,000 amps of 480/277 3 phase, 4 wire power to
the building..
.2 Primary phone service for both buildings will be terminated in the
computer/phone rooms. Locations will be coordinated with the Space
Planner.
.3 We exclude all power distribution and lighting.
.4 The exterior of the building will be lit with 14 90 watt,
high-pressure sodium wallpacks mounted on the building.
.5 All other electrical will be part of the tenant improvements.
7 EXTERIOR FINISH:
.1 The exterior of building will be painted with two coats of Xxxxxx
paint.
.2 Soffit areas will be finished with exterior gypsum ceiling board and
skim coat. We exclude Xxxx molding.
.3 Exterior doors to be 3' x 7' 1 3/4", 18 gauge, metal doors with
Schlage "L" series, lever-handled, mortise locks with tamper-resistant
butts and weather-stripping if necessary. We include three (3)
personnel doors at the concrete perimeter walls, two glass doors at
the cafeteria and glass double doors at the front entry.
.4 Overhead doors to be 26 gauge Porvene Roll-ups or equal as follows: 1)
Two 9' x 10' Dock High Doors and 2) Two (2) 12' x 14' Grade Doors.
.5 We include 2,500 square feet blue-reflective, medium-performance, LOF
or equal glass, with Kynar finished aluminum frames. We exclude
operable windows.
8 INTERIOR FINISH:
.1 All office and interior improvements are part of the tenant
improvement work.
.2 We exclude all appliances, equipment, equipment installation, and
associated electrical.
.3 We exclude draperies, blinds and other window treatments.
.4 We exclude all insulation.
3
.5 Our price includes structural provisions for an approximately 15,000
square foot 125 psf future mezzanine including increased exterior wall
reinforcement and footings only.
4
Triple Net Calculations for Pomerado Business Park, Lot 89 3/21/2000
AETRIUM
Leased SF 45,000
Total Bldg. SF 45,000
Percentage of Project 100.00%
Annually Monthly Monthly
Description Annual /sf of bldg /sf of bldg NNN
Bonds $38,072.23 $0.8460 $0.0705 $3,172.69
LMD $2,760.62 $0.0613 $0.0051 $230.05
Property Taxes $22,384.89 $0.4974 $0.0415 $1,865.41
Owners Association $1,612.19 $0.0358 $0.0030 $134.35
Administrative Fee $5,292.00 $0.1176 $0.0098 $441.00
Insurance $2,160.00 $0.0480 $0.0040 $180.00
Utilities:
Electricity BY TENANT $0.0000 $0.0000 $0.00
Telephone $162.00 $0.0036 $0.0003 $13.50
Alarm - FIRE ONLY $450.00 $0.0100 $0.0008 $37.50
Landscape Water $0.00 $0.0000 $0.0000 $0.00
Security BY TENANT $0.0000 $0.0000 $0.00
HVAC Maint. $4,050.00 $0.0900 $0.0075 $337.50
Elevator Maint. & Reserve N/A $0.0000 $0.0000 $0.00
Landscape $3,375.00 $0.0750 $0.0063 $281.25
Roof Maint. & Reserve $3,375.00 $0.0750 $0.0063 $281.25
Painting Reserve $891.00 $0.0198 $0.0017 $74.25
Paving Maint. & Reserve $2,250.00 $0.0500 $0.0042 $187.50
TOTAL $86,834.93 $1.9297 $0.1608 $7.236.24
Per month for AETRIUM $7,236.24 $0.1608
Assumptions
Saleable Acreage 3.999
Net Acreage 3.276
Bonds $11,621.56 Annually
Landscape Maint. District $842.68 Annually
Prop Taxes 1.12% of Appraised Value $1,998,651
Owners Association $492.12 Annually
Monthly Rental rate $0.49
Monthly NNN Rent $22,050.00
Management Fee Percentage 2.00%
Management Fee $0.1176 Annually/sf
Insurance $0.0480 Annually/sf
Utilities:
Electricity BY TENANT Annually/sf
Telephone $0.0036 Annually/sf
Alarm $0.0100 Annually/sf
Landscape Water $0.0720 Annually/sf
Security BY TENANT Annually/sf
HVAC Maint. $0.0900 Annually/sf
Elevator Maint. & Reserve $0.0234 Annually/sf
Landscape $0.0750 Annually/sf
Roof Maint. & Reserve $0.0750 Annually/sf
Painting Reserve $0.0198 Annually/sf
Paving Maint. & Reserve $0.0500 Annually/sf
[Remaining Exhibits intentionally omitted]
