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INDUSTRIAL REAL ESTATE LEASE
(Multi-Tenant Facility)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease
between the Landlord and Tenant named below. Other Articles,
Sections and Paragraphs of the Lease referred to in this Article
One explain and define the Basic Terms and are to be read in
conjunction with the Basic Terms.
Section 1.01. Date of Lease: June 21, 2001.
Section 1.02. Landlord (include legal entity): EJM-Arizona
Commerceplex, LLC, a Delaware limited liability company.
Address of Landlord: 0000 Xxxxx Xxxxxx Xxxx., Xxx Xxxxxxx, XX
00000.
Section 1.03. Tenant (include legal entity): Arizona
Furniture Company, Inc., a Nevada corporation.
Address of Tenant: 00000 X. Xxxx Xxxx, #00, Xxxxxxxxxx, XX 00000.
Section 1.04. Property: The Property is part of Landlord's
multi-tenant real property development known as 19th and
Pinnacle Peak Commerceplex and described or depicted in Exhibit
"A" (the "Project"). The Project includes the land, the
buildings and all other improvements located on the land, and the
common areas described in Paragraph 4.05(a). The Property is
(include street address, approximate square footage and
description)
an approximate 18,874 square foot office/warehouse located at
00000 Xxxxx 00xx Xxxxxx, Xxxxx 00, Xxxxxxx, XX . For purposes of
the Lease it is agreed and stipulated by both Landlord and Tenant
that the rentable area shall be deemed to be 18,874 square feet
regardless of any inaccuracy therein.
Section 1.05. Lease Term: 5 years 0 months
beginning on October 1, September, 2001 or such other date as is
specified in this Lease, and ending on August 31, 2006.
Section 1.06. Permitted Uses: (See Article Five)
Administrative offices, warehouse and distribution of furniture .
Section 1.07. Tenant's Guarantor: (If none, so state)
None.
Section 1.08. Brokers: (See Article Fourteen) (If none, so
state)
Landlord's Broker: Xxx & Associates (Xxxxxx &
Hobaica).
Tenant's Broker: Capital Investors Realty, LLC.
Section 1.09. Commission Payable to Landlord's Broker:
(See Article Fourteen) $ Per separate Agreement.
Section 1.10. Initial Security Deposit: (See Section 3.03)
$ 9,540.00.
Section 1.11. Vehicle Parking Spaces Allocated to Tenant:
(See Section 4.05) 15.
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: Eight Thousand Six Hundred Fifty and 00/100
Dollars ($8,650.00) per month for the first 20 months, as
provided in Section 3.01, and shall be increased on the first day
of the 21st and 41st month(s) after the Commencement Date,
as provided in Rider No. 1.
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See
Section 4.02); (ii) Utilities (See Section 4.03); (iii) Insurance
Premiums (See Section 4.04); (iv) Tenant's Initial Pro Rata Share
of Common Area Expenses 3.68 % (See Section 4.05); (v) Impounds
for Insurance Premiums and Property Taxes (See Section 4.08);
(vi) Maintenance, Repairs and Alterations (See Article Six).
Section 1.13. Landlord's Share of Profit on Assignment or
Sublease: (See Section 9.05) One Hundred percent (100
%) of the Profit (the "Landlord's Share").
Section 1.14. Riders: The following Riders are attached to
and made a part of this Lease: (If none, so state) Rider Xx. 0,
Xxxxxxx "X", Xxxxxxx "0", and Option to Extend Term Lease Rider.
ARTICLE TWO: LEASE TERM
Section 2.01. Lease of Property For Lease Term. Landlord
leases the Property to Tenant and Tenant leases the Property from
Landlord for the Lease Term. The Lease Term is for the period
stated in Section 1.05 above and shall begin and end on the dates
specified in Section 1.05 above, unless the beginning or end of
the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or
delayed under any provision of this Lease.
Section 2.02. Delay in Commencement. Landlord shall not be
liable to Tenant if Landlord does not deliver possession of the
Property to Tenant on the Commencement Date. Landlord's non-
delivery of the Property to Tenant on that date shall not affect
this Lease or the obligations of Tenant under this Lease except
that the Commencement Date shall be delayed until Landlord
delivers possession of the Property, to Tenant and the Lease Term
shall be extended for a period equal to the delay in delivery of
possession of the Property to Tenant, plus the number of days
necessary to end the Lease Term on the last day of a month. If
Landlord does not deliver possession of the Property, to Tenant
within forty-five (45) ninety (90) days after the Commencement
Date, Tenant may elect to cancel this Lease by giving written
notice to Landlord within ten (10) days after the forty-five (45)
ninety (90) day period ends. If Tenant gives such notice, the
Lease shall be canceled and neither Landlord nor Tenant shall
have any further obligations to the other. If Tenant does not
give such notice, Tenant's right to cancel the Lease shall expire
and the Lease Term shall commence upon the delivery of possession
of the Properly to Tenant. If delivery of possession of the
Property to Tenant is delayed, Landlord and Tenant shall, upon
such delivery, execute an amendment to this Lease setting forth
the actual Commencement Date and expiration date of the Lease.
Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.
Section 2.03. Early Occupancy. If Tenant occupies the
Property prior to the Commencement Date, Tenant's occupancy of
the Property shall be subject to all of the provisions of this
Lease. Early occupancy of the Property shall not advance the
expiration date of this Lease. Tenant shall pay Base Rent
(except as provided for in Paragraph 6 of Rider No. 1 attached
hereto), and all other charges specified in this Lease for the
early occupancy period.
Section 2.04. Holding Over. Tenant shall vacate the
Property upon the expiration or earlier termination of this
Lease. Tenant shall reimburse Landlord for and indemnify
Landlord against all damages which Landlord incurs from Tenant's
delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease
and Landlord thereafter accepts rent from Tenant, Tenant's
occupancy of the Property shall be a "month-to-month" tenancy,
subject to all of the terms of this Lease applicable to a month-
to-month tenancy, except that the Base Rent then in effect shall
be increased by fifty (50%).
ARTICLE THREE: BASE RENT
Section 3.01. Time and Manner of Payment. Upon execution
of this Lease, Tenant shall pay Landlord the Base Rent in the
amount stated in Paragraph 1.12(a) above for the first month of
the Lease Term. On the first day of the second month of the
Lease Term and each month thereafter, Tenant shall pay Landlord
the Base Rent, in advance, without offset, deduction or prior
demand. The Base Rent shall be payable at Landlord's address or
at such other place as Landlord may designate in writing.
Section 3.02. Cost of Living Increases. The Base Rent
shall be increased on each date (the "Rental Adjustment Date")
stated in Paragraph 1.12(a) above in accordance with the increase
in the United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index for U.S. City Average, All Urban
Consumers (all items for the geographical Statistical Area in
which the Property is located on the basis of 1982-1984 = 100)
(the "Index") as follows:
Section 3.03. Security Deposit.
(a) Upon the execution of this Lease, Tenant shall deposit
with Landlord a cash Security Deposit in the amount set forth in
Section 1.10 above. Landlord may apply all or part of the
Security Deposit to any unpaid rent or other charges due from
Tenant or to cure any other defaults of Tenant. If Landlord uses
any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a
material default under this Lease. No interest shall be paid on
the Security Deposit. Landlord shall not be required to keep
the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security
Deposit.
Section 3.04. Termination; Advance Payments. Upon
termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation), or any other
termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease,
Landlord shall refund or credit to Tenant (or Tenant's successor)
the unused portion of the Security Deposit, any advance rent or
other advance payments made by Tenant to Landlord, and any
amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by
Tenant other than Base Rent are called "Additional Rent." Unless
this Lease provides otherwise, Tenant shall pay all Additional
Rent then due with the next monthly installment of Base Rent.
The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Tenant shall pay all real
property taxes on the Property (including any fees, taxes or
assessments against, or as a result of, any tenant improvements
installed on the Property by or for the benefit of Tenant) during
the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to
the delinquency date of the taxes. Within such ten (10)-day
period, Tenant shall furnish Landlord with satisfactory evidence
that the real property taxes have been paid. Landlord shall
reimburse Tenant for any real property taxes paid by Tenant
covering any period of time prior to or after the Lease Term. If
Tenant fails to pay the real property taxes when due, Landlord
may pay the taxes and Tenant shall reimburse Landlord for the
amount of such tax payment as Additional Rent.
(a) Definition of "Real Property Tax." "Real property tax"
means: (i) any fee, license fee, license tax, business license
fee, commercial rental tax, levy, charge, assessment, penalty or
tax imposed by any taxing authority against the Property; (ii)
any tax on the Landlord's right to receive, or the receipt of,
rent or income from the Property or against Landlord's business
of leasing the Property; (iii) any tax or charge for fire
protection, streets, sidewalks, road maintenance, refuse or other
services provided to the Property by any governmental agency;
(iv) any tax imposed upon this transaction or based upon a re-
assessment of the Property due to a change of ownership, as
defined by applicable law, or other transfer of all or part of
Landlord's interest in the Property; and (v) any charge or fee
replacing any tax previously included within the definition of
real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise,
inheritance or estate taxes.
(c) Joint Assessment. If the Property is not separately
assessed, Landlord shall reasonably determine Tenant's share of
the real property tax payable by Tenant under Paragraph 4.02(a)
from the assessor's worksheets or other reasonably available
information. Tenant shall pay such share to Landlord within
fifteen (15) days after receipt of Landlord's written statement.
Notwithstanding the foregoing, Tenant's share of the real
property taxes will be determined by Tenant's pro-rata share as
specified in Paragraph 1.12(b) of the Lease, unless the assessor
has determined that Tenant's leased Property is to be assessed at
a higher value than the average of the rest of the Project, in
which case Tenant shall be responsible for such increased amount
in addition to Tenant's pro-rata share.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal property
belonging to Tenant. Tenant shall try to have personal property
taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed
with the Property, Tenant shall pay Landlord the taxes for the
personal property within fifteen (15) days after Tenant receives
a written statement from Landlord for such personal property
taxes.
Section 4.03. Utilities. Tenant shall pay, directly to the
appropriate supplier, the cost of all natural gas, heat, light,
power, sewer service, telephone, water, refuse disposal and other
utilities and services supplied to the Property. However, if any
services or utilities are jointly metered with other property,
Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services
and Tenant shall pay such share to Landlord within fifteen (15)
days after receipt of Landlord's written statement.
Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant
shall maintain a policy of commercial general liability insurance
(sometimes known as broad form comprehensive general liability
insurance) insuring Tenant against liability for bodily injury,
property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the
Property. Tenant shall name Landlord and Landlord's property
management company as an additional insured under such policy.
The initial amount of such insurance shall be Two Million Dollars
($2,000,000) per occurrence and shall be subject to periodic
increase not more than one (1) time during the Term based upon
inflation, increased liability awards, recommendation of
Landlord's professional insurance advisers and other relevant
factors. The liability insurance obtained by Tenant under this
Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii)
contain cross-liability endorsements; and (iii) insure Landlord
against Tenant's performance under Section 5.05, if the matters
giving rise to the indemnity under Section 5.05 result from the
negligence of Tenant. The amount and coverage of such insurance
shall not limit Tenant's liability nor relieve Tenant of any
other obligation under this Lease. Landlord may also obtain
comprehensive public liability insurance in an amount and with
coverage determined by Landlord insuring Landlord against
liability arising out of ownership, operation, use or occupancy
of the Property. The policy obtained by Landlord shall not be
contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease
Term, Landlord shall maintain policies of insurance covering loss
of or damage to the Property in the full amount of its
replacement value. Such policy shall contain an Inflation Guard
Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all
risk), sprinkler leakage and any other perils which Landlord
deems reasonably necessary. Landlord shall have the right to
obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not
obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Property. During the
Lease Term, Landlord shall also maintain a rental income
insurance policy, with loss payable to Landlord, in an amount
equal to one year's Base Rent, plus estimated real property taxes
and insurance premiums. Tenant shall be liable for the payment
of any deductible amount under Landlord's or Tenant's insurance
policies maintained pursuant to this Section 4.04, in an amount
not to exceed Ten Thousand Dollars ($10,000.00). Notwithstanding
the foregoing, for policies maintained by Landlord, Tenant shall
pay Tenant's pro rata share of the deductible unless the claim is
caused by any act or omission of Tenant in which case Tenant
shall be liable for 100% of the deductible amount. Tenant shall
not do or permit anything to be done which invalidates any such
insurance policies.
(c) Payment of Premiums. Subject to Section 4.08, Tenant
shall pay all premiums for the insurance policies described in
Paragraphs 4.04(a) and (b) (whether obtained by Landlord or
Tenant) within fifteen (15) days after Tenant's receipt of a copy
of the premium statement or other evidence of the amount due,
except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to
obtain as provided in Paragraph 4.04(a). For insurance policies
maintained by Landlord which cover improvements on the entire
Project, Tenant shall pay Tenant's prorated share of the
premiums, in accordance with the formula in Paragraph 4.05(e) for
determining Tenant's share of Common Area costs. If insurance
policies maintained by Landlord cover improvements on real
property other than the Project, Landlord shall deliver to Tenant
a statement of the premium applicable to the Property showing in
reasonable detail how Tenant's share of the premium was computed.
If the Lease Term expires before the expiration of an insurance
policy maintained by Landlord, Tenant shall be liable for
Tenant's prorated share of the insurance premiums. Before the
Commencement Date, Tenant shall deliver to Landlord a copy of any
policy of insurance which Tenant is required to maintain under
this Section 4.04. At least thirty (30) days prior to the
expiration of any such policy, Tenant shall deliver to Landlord a
renewal of such policy. As an alternative to providing a policy
of insurance, Tenant shall have the right to provide Landlord a
certificate of insurance, executed by an authorized officer of
the insurance company, showing that the insurance which Tenant is
required to maintain under this Section 4.04 is in full force and
effect and containing such other information which Landlord
reasonably requires.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is required to
maintain under this Lease shall include a provision which
requires the insurance carrier to give Landlord not less
than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy,
certificate or renewal to Landlord required under this Lease
within the prescribed time period or if any such policy is
canceled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in
which case Tenant shall reimburse Landlord for the cost of
such insurance within fifteen (15) days after receipt of a
statement that indicates the cost of such insurance.
(iii) Tenant shall maintain all insurance required
under this Lease with companies holding a "General Policy
Rating" of A-12 or better, as set forth in the most current
issue of "Best Key Rating Guide". Landlord and Tenant
acknowledge the insurance markets are rapidly changing and
that insurance in the form and amounts described in this
Section 4.04 may not be available in the future. Tenant
acknowledges that the insurance described in this Section
4.04 is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the
insurance required under the Lease, Tenant shall
nevertheless maintain insurance coverage which is customary
and commercially reasonable in the insurance industry for
Tenant's type of business, as that coverage may change from
time to time. Landlord makes no representation as to the
adequacy of such insurance to protect Landlord's or Tenant's
interests. Therefore, Tenant shall obtain any such
additional property or liability insurance which Tenant
deems necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance
policies maintained, Landlord and Tenant each hereby waive
any and all rights of recovery against the other, or against
the officers, employees, agents or representatives of the
other, for loss of or damage to its property or the property
of others under its control, if such loss or damage is
covered by any insurance policy in force (whether or not
described in this Lease) at the time of such loss or damage.
Upon obtaining the required policies of insurance, Landlord
and Tenant shall give notice to the insurance carriers of
this mutual waiver of subrogation.
Section 4.05. Common Areas; Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas"
shall mean all areas within the Project which are available for
the common use of tenants of the Project and which are not leased
or held for the exclusive use of Tenant or other tenants,
including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping
and planted areas. Landlord, from time to time, may change the
size, location, nature and use of any of the Common Areas,
convert Common Areas into leaseable areas, construct additional
parking facilities (including parking structures) in the Common
Areas, and increase or decrease Common Area land and/or
facilities. Tenant acknowledges that such activities may result
in inconvenience to Tenant. Such activities and changes are
permitted if they do not materially affect Tenant's use of the
Property.
(b) Use of Common Areas. Tenant shall have the
nonexclusive right (in common with other tenants and all others
to whom Landlord has granted or may grant such rights) to use the
Common Areas for the purposes intended, subject to such
reasonable rules and regulations as Landlord may establish from
time to time. Tenant shall abide by such rules and regulations
and shall use its best effort to cause others who use the Common
Areas with Tenant's express or implied permission to abide by
Landlord's rules and regulations. At any time, Landlord may
close any Common Areas to perform any acts in the Common Areas
as, in Landlord's judgment, are desirable to improve the Project.
Tenant shall not interfere with the rights of Landlord, other
tenants or any other person entitled to use the Common Areas.
(c) Specific Provision re: Vehicle Parking. Tenant shall
be entitled to use the number of vehicle parking spaces in the
Project allocated to Tenant in Section 1.11 of the Lease without
paying any additional rent. Tenant's parking shall not be
reserved and shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not
cause large trucks or other large vehicles to be parked within
the Project or on the adjacent public streets. Temporary parking
of large delivery vehicles in the Project may be permitted by the
rules and regulations established by Landlord and Tenant may also
park trucks and delivery vehicles in the truck xxxxx directly
behind the Property, however, in no event shall Tenant be
permitted to use the trucks, trailers or other delivery vehicles
for the purpose of warehouse or storage. Vehicles shall be
parked only in striped parking spaces and not In driveways,
loading areas or other locations not specifically designated for
parking. Handicapped spaces shall only be used by those legally
permitted to use them. If Tenant parks more vehicles in the
parking area than the number set forth in Section 1.11 of this
Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord's other remedies under the Lease, Tenant
shall pay a daily charge determined by Landlord for each such
additional vehicle.
(d) Maintenance of Common Areas. Landlord shall maintain
the Common Areas in good order, condition and repair and shall
operate the Project, in Landlord's sole discretion, as a first-
class industrial/commercial real property development. Tenant
shall pay Tenant's pro rata share (as determined below) of all
costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Area costs include, but are not limited
to, costs and expenses for the following: gardening and
landscaping; utilities, water and sewage charges; maintenance of
signs (other than tenants' signs); premiums for liability,
property damage, fire and other types of casualty insurance on
the Common Areas and worker's compensation insurance; all
property taxes and assessments levied on or attributable to the
Common Areas and all Common Area improvements; all personal
property taxes levied on or attributable to personal property
used in connection with the Common Areas; straight-line
depreciation on personal property owned by Landlord which is
consumed in the operation or maintenance of the Common Areas;
rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing,
resurfacing, repaving, maintaining, painting, lighting, cleaning,
refuse removal, security and similar items; reserves for roof
replacement and exterior painting and other appropriate reserves;
and a reasonable allowance to Landlord for Landlord's supervision
of the Common Areas (not to exceed five percent (5%) of the
gross rents of the Project for the calendar year, provided that,
at Landlord's option, the Project gross rents used for such
calculation shall be proportionately adjusted to reflect a ninety-
five percent (95%) stabilized occupancy, however, the supervision
fee paid to Landlord shall not exceed such limits whether or
Landlord, a third party or both provides such supervision).
Landlord may cause any or all of such services to be provided by
third parties and the cost of such services shall be included in
Common Area costs. Common Area costs shall not include
depreciation of real property, which forms part of the Common
Areas.
(e) Tenant's Share and Payment. Tenant shall pay Tenant's
annual pro rata share of all Common Area costs (prorated for any
fractional month) upon written notice from Landlord that such
costs are due and payable, and in any event prior to delinquency.
Tenant's pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of
the Lease, by the aggregate square foot area of the Project which
is leased or held for lease by tenants, as of the date on which
the computation is made. Tenant's initial pro rata share is set
out in Paragraph 1.12(b). Any changes in the Common Area costs
and/or the aggregate area of the Project leased or held for lease
during the Lease Term shall be effective on the first day of the
month after such change occurs. Landlord may, at Landlord's
election, estimate in advance and charge to Tenant as Common Area
costs, all real property taxes for which Tenant is liable under
Section 4.02 of the Lease, all insurance premiums for which
Tenant is liable under Section 4.04 of the Lease, all maintenance
and repair costs for which Tenant is liable under Section 6.04 of
the Lease, and all other Common Area costs payable by Tenant
hereunder. At Landlord's election, such statements of estimated
Common Area costs shall be delivered monthly, quarterly or at any
other periodic intervals to be designated by Landlord. Landlord
may adjust such estimates at any time based upon Landlord's
experience and reasonable anticipation of costs. Such
adjustments shall be effective as of the next rent payment date
after notice to Tenant. Within sixty (60) days after the end of
each calendar year of the Lease Term, Landlord shall deliver to
Tenant a statement prepared in accordance with generally accepted
accounting principles setting forth, in reasonable detail, the
Common Area costs paid or incurred by Landlord during the
preceding calendar year and Tenant's pro rata share. Upon receipt
of such statement, there shall be an adjustment between Landlord
and Tenant, with payment to or credit given by Landlord (as the
case may be) so that Landlord shall receive the entire amount of
Tenant's share of such costs and expenses for such period.
Provided Tenant is not in default under any of the terms or
conditions of the Lease, Landlord will provide Tenant, within
sixty (60) days of written request by Tenant and not more than
one (1) time per year, copies of all statements and/or invoices
for which Landlord has charged Tenant for that calendar year.
Section 4.06. Late Charges. Tenant's failure to pay
rent promptly may cause Landlord to incur unanticipated costs.
The exact amount of such costs are impractical or extremely
difficult to ascertain. Such costs may include, but are not
limited to, processing and accounting charges and late charges
which may be imposed on Landlord by any ground lease, mortgage or
trust deed encumbering the Property. Therefore, if Landlord does
not receive any rent payment within five (5) days after it
becomes due, Tenant shall pay Landlord a late charge equal to
seven percent (7%) ten percent (10%) of the over due amount. The
parties agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of
such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount
owed by Tenant to Landlord which is not paid when due shall bear
interest at the rate of fifteen (15%) per annum from the due date
of such amount. However, interest shall not be payable on late
charges to be paid by Tenant under this Lease. The payment of
interest on such amounts shall not excuse or cure any default by
Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate
is hereby decreased to the maximum legal interest rate permitted
by law.
Section 4.08. Impounds for Insurance Premiums and Real
Property Taxes. If requested by any ground lessor or lender to
whom Landlord has granted a security interest in the Property, or
if Tenant is more than ten (10) days late in the payment of rent
more than once in any consecutive twelve (12)-month period,
Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of
the annual real property taxes and insurance premiums payable by
Tenant under this Lease, together with each payment of Base Rent.
Landlord shall hold such payments in a non-interest bearing
impound account. If unknown, Landlord shall reasonably estimate
the amount of real property taxes and insurance premiums when
due. Tenant shall pay any deficiency of funds in the impound
account to Landlord upon written request. If Tenant defaults
under this Lease, Landlord may apply any funds in the impound
account to any obligation then due under this Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. Permitted Uses. Tenant may use the Property
only for the Permitted Uses set forth in Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or
permit the Property to be used in any way which constitutes a
violation of any law, ordinance, or governmental regulation or
order, which annoys or interferes with the rights of tenants of
the Project (in Landlord's reasonable sole opinion), or which
constitutes a nuisance or waste. Tenant shall obtain and pay for
all permits, including a Certificate of Occupancy, required for
Tenant's occupancy of the Property and shall promptly take all
actions necessary to comply with all applicable statutes,
ordinances, rules, regulations, orders and requirements
regulating the use by Tenant of the Property, including the
Occupational Safety and Health Act.
Section 5.03. Hazardous Materials. As used in this Lease,
the term "Hazardous Material" means any flammable items,
explosives, radioactive materials, hazardous or toxic substances,
material or waste or related materials, including any substances
defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable
federal, state or local laws or regulations, including without
limitation petroleum-based products, paints, solvents, lead,
cyanide, DDT, printing inks, acids, pesticides, ammonia compounds
and other chemical products, asbestos, PCBs and similar
compounds, and including any different products and materials
which are subsequently found to have adverse effects on the
environment or the health and safety of persons. Tenant shall
not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated or disposed of in
or about the Property by Tenant, its agents, employees,
contractors, sub-lessees or invitees without the prior written
consent of Landlord. Landlord shall be entitled to take into
account such other factors or facts as Landlord may reasonably
determine to be relevant in determining whether to grant or
withhold consent to Tenant's proposed activity with respect to
Hazardous Material. In no event, however, shall Landlord be
required to consent to the installation or use of any storage
tanks on the Property.
Section 5.04. Signs and Auctions. Tenant shall not place
any signs on the Property without Landlord's prior written
consent, which consent shall not be unreasonably be withheld,
provided that such signage is in compliance with the Project sign
criteria and all City and other regulatory codes. Tenant shall
not conduct or permit any auctions or sheriff's sales at the
Property.
Section 5.05. Indemnity. Tenant shall indemnify Landlord
against and hold Landlord harmless from any and all costs, claims
or liability arising from: (a) Tenant's use of the Property; (b)
the conduct of Tenant's business or anything else done or
permitted by Tenant to be done in or about the Property,
including any contamination of the Property or any other property
resulting from the presence or use of Hazardous Material caused
or permitted by Tenant; (c) any breach or default in the
performance of Tenant's obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this
Lease; or (e) other acts or omissions of Tenant. Tenant shall
defend Landlord against any such cost, claim or liability at
Tenant's expense with counsel reasonably acceptable to Landlord
or, at Landlord's election, Tenant shall reimburse Landlord for
any legal fees or costs incurred by Landlord in connection with
any such claim. As a material part of the consideration to
Landlord, Tenant assumes all risk of damage to property or injury
to persons in or about the Property arising from any cause, and
Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the
term "Tenant" shall include Tenant's employees, agents,
contractors and invitees, if applicable.
Section 5.06. Landlord's Access. Landlord or its agents
may enter the Property at all reasonable times to show the
Property to potential buyers, investors or tenants or other
parties; to do any other act or to inspect and conduct tests in
order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of
Hazardous Material; or for any other purpose Landlord deems
necessary. Landlord shall give Tenant prior notice of such entry,
except in the case of an emergency. Landlord may place customary
"For Sale" or "For Lease" signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent
and complies with all other terms of this Lease, Tenant may
occupy and enjoy the Property for the full Lease Term, subject to
the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND
ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the
Property subject to all recorded matters, laws, ordinances, and
governmental regulations and orders. Except as provided herein,
Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation as to the condition of the
Property or the suitability of the Property for Tenant's intended
use. Tenant represents and warrants that Tenant has made its own
inspection of and inquiry regarding the condition of the Property
and is not relying on any representations of Landlord or any
Broker with respect thereto. If Landlord or Landlord's Broker
has provided a Property Information Sheet or other Disclosure
Statement regarding the Property, a copy is attached as an
exhibit to the Lease.
Section 6.02. Exemption of Landlord from Liability.
Landlord shall not be liable for any damage or injury to the
person, business (or any loss of income therefrom), goods, wares,
merchandise or other property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a)
fire, steam, electricity, water, gas or rain; (b) the breakage,
leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting
fixtures or any other cause; (c) conditions arising in or about
the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant
of the Project. Landlord shall not be liable for any such damage
or injury even though the cause of or the means of repairing such
damage or injury are not accessible to Tenant. The provisions of
this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's gross negligence or willful misconduct.
Section 6.03. Landlord's Obligations.
(a) Except as provided in Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Landlord shall
keep the following in good order, condition and repair: the
foundations, exterior walls and roof of the Property (including
painting the exterior surface of the exterior walls of the
Property not more often than once every five (5) years, if
necessary) and all components of electrical, mechanical,
plumbing, heating and air conditioning systems and facilities
located in the Property which are concealed or used in common by
tenants of the Project. However, Landlord shall not be obligated
to maintain or repair windows, doors, plate glass or the interior
surfaces of exterior walls. Landlord shall make repairs under
this Section 6.03 within a reasonable time after receipt of
written notice from Tenant of the need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs
Landlord incurs under Paragraph 6.03(a) above as Common Area
costs as provided for in Section 4.05 of the Lease. Tenant
waives the benefit of any statute in effect now or in the future
which might give Tenant the right to make repairs at Landlord's
expense or to terminate this Lease due to Landlord's failure to
keep the Property in good order, condition and repair.
Section 6.04. Tenant's Obligations.
(a) Except as provided in Section 6.03, Article Seven
(Damage or Destruction) and Article Eight (Condemnation), Tenant
shall keep all portions of the Property (including structural,
nonstructural, interior, systems and equipment) in good order,
condition and repair (including interior repainting and
refinishing, as needed). If any portion of the Property or any
system or equipment in the Property which Tenant is obligated to
repair cannot be fully repaired or restored, Tenant shall
promptly replace such portion of the Property or system or
equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term. Tenant shall
maintain a preventive maintenance contract providing for the
regular inspection and maintenance of the heating and air
conditioning system by a licensed heating and air conditioning
contractor, unless Landlord maintains such equipment under
Section 6.03 above. If any part of the Property or the Project
is damaged by any act or omission of Tenant, Tenant shall pay
Landlord the cost of repairing or replacing such damaged
property, whether or not Landlord would otherwise be obligated to
pay the cost of maintaining or repairing such property. It is
the intention of Landlord and Tenant that at all times Tenant
shall maintain the portions of the Property which Tenant is
obligated to maintain in an attractive, first-class first-class
and fully operative condition and in at least as good a condition
as Tenant receives the Property on the Commencement Date of the
Lease.
(b) Tenant shall fulfill all of Tenant's obligations under
this Section 6.04 at Tenant's sole expense. If Tenant fails to
maintain, repair or replace the Property as required by this
Section 6.04, Landlord may, upon ten (10) days' prior written
notice to Tenant (except that no notice shall be required in the
case of an emergency), enter the Property and perform such
maintenance or repair (including replacement, as needed) on
behalf of Tenant. In such case, Tenant shall reimburse Landlord
for all costs incurred in performing such maintenance or repair
immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or
improvements to the Property without Landlord's prior written
consent except for non-structural alterations which do not exceed
Ten Thousand Dollars ($10,000) in cost cumulatively over the
Lease Term and which are not visible from the outside of any
building of which the Property is part. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in
form and amount satisfactory to Landlord. Tenant shall promptly
remove any alterations, additions, or improvements constructed in
violation of this Paragraph 6.05(a) upon Landlord's written
request. All alterations, additions, and improvements shall be
done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor reasonably
approved by Landlord. Upon completion of any such work, Tenant
shall provide Landlord with "as built" plans, copies of all
construction contracts, and proof of payment for all labor and
materials.
(b) Tenant shall pay when due all claims for labor and
material furnished to the Property. Tenant shall give Landlord
at least twenty (20) days' prior written notice of the
commencement of any work on the Property, regardless of whether
Landlord's consent to such work is required. Landlord may elect
to record and post notices of non-responsibility on the Property.
Section 6.06. Condition upon Termination. Upon the
termination of the Lease, Tenant shall surrender the Property to
Landlord, broom clean and in the same condition as received
except for ordinary wear and tear which Tenant was not otherwise
obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord
is required to repair under Article Seven (Damage or
Destruction). In addition, Landlord may require Tenant to remove
any alterations, additions or improvements (whether or not made
with Landlord's consent) prior to the expiration of the Lease and
to restore the Property to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which
Landlord has not required Tenant to remove shall become
Landlord's property and shall be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that
Tenant may remove any of Tenant's machinery or equipment which
can be removed without material damage to the Property. Tenant
shall repair, at Tenant's expense, any damage to the Property
caused by the removal of any such machinery or equipment. In no
event, however, shall Tenant remove any of the following
materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power
wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other
heating or air conditioning equipment; fencing or security gates;
or other similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately
upon the occurrence of any damage to the Property. If the
Property is only partially damaged (i.e., less than forty percent
(40%) fifty percent (50%) of the Property is untenantable as a
result of such damage or less than forty percent (40%) fifty
percent (50%) of Tenant's operations are materially impaired) and
if the proceeds received by Landlord from the insurance policies
described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord
shall repair the damage as soon as reasonably possible. Landlord
may elect (but is not required) to repair any damage to Tenant's
fixtures, equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not
sufficient to pay the entire cost of repair, or if the cause of
the damage is not covered by the insurance policies which
Landlord maintains under Paragraph 4.04(b), Landlord may elect
either to (i) repair the damage as soon as reasonably possible,
in which case this Lease shall remain in full force and effect,
or (ii) terminate this Lease as of the date the damage occurred.
Landlord shall notify Tenant within thirty (30) days after
receipt of notice of the occurrence of the damage whether
Landlord elects to repair the damage or terminate the Lease. If
Landlord elects to repair the damage, Tenant shall pay Landlord
the "deductible amount" (if any) under Landlord's insurance
policies and, if the damage was due to an act or omission of
Tenant, or Tenant's employees, agents, contractors or invitees,
the difference between the actual cost of repair and any
insurance proceeds received by Landlord. If Landlord elects to
terminate the Lease, Tenant may elect to continue this Lease in
full force and effect, in which case Tenant shall repair any
damage to the Property and any building in which the Property is
located. Tenant shall pay the cost of such repairs, except that
upon satisfactory completion of such repairs, Landlord shall
deliver to Tenant any insurance proceeds received by Landlord for
the damage repaired by Tenant. Tenant shall give Landlord written
notice of such election within ten (10) days after receiving
Landlord's termination notice.
(c) If the damage to the Property occurs during the last
six (6) months of the Lease Term and such damage will require
more than thirty (30) days to repair, either Landlord or Tenant
may elect to terminate this Lease as of the date the damage
occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give
written notification to the other party of such election within
thirty (30) days after Tenant's notice to Landlord of the
occurrence of the damage.
Section 7.02. Substantial or Total Destruction. If the
Property is substantially or totally destroyed by any cause
whatsoever (i.e., the damage to the Property is greater than
partial damage as described in Section 7.01), and regardless of
whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred.
Notwithstanding the preceding sentence, if the Property can be
rebuilt within four (4) six (6) months after the date of
destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in
full force and effect. Notwithstanding the foregoing, if
Landlord elects to rebuild the Property and if the damage was
caused by any act or omission of Tenant then Landlord shall
diligently work to repair the damage as soon as reasonably
possible even if such time is greater than four (4) months.
Landlord shall notify Tenant of such election within thirty (30)
days after Tenant's notice of the occurrence of total or
substantial destruction. If Landlord so elects, Landlord shall
rebuild the Property at Landlord's sole expense, except that if
the destruction was caused by an act or omission of Tenant,
Tenant shall pay Landlord the difference between the actual cost
of rebuilding and any insurance proceeds received by Landlord.
Section 7.03. Temporary Reduction of Rent. If the Property
is destroyed or damaged and Landlord or Tenant repairs or
restores the Property pursuant to the provisions of this Article
Seven, any rent payable during the period of such damage, repair
and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. However,
the reduction shall not exceed the sum of one year's payment of
Base Rent, insurance premiums and real property taxes. Except
for such possible reduction in Base Rent, insurance premiums and
real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a
result of any damage, destruction, repair, or restoration of or
to the Property.
Section 7.04. Waiver. Tenant waives the protection of any
statute, code or judicial decision which grants a tenant the
right to terminate a lease in the event of the substantial or
total destruction of the leased property. Tenant agrees that the
provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any
substantial or total destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the
power of eminent domain or sold under the threat of that power
(all of which are called "Condemnation"), this Lease shall
terminate as to the part taken or sold on the date the condemning
authority takes title or possession, whichever occurs first. If
more than twenty-five percent (25%) thirty percent (30%) of the
floor area of the building in which the Property is located, or
which is located on the Property, is taken, either Landlord or
Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice
to the other within ten (10) days after receipt of written notice
of such taking (or in the absence of such notice, within ten (10)
days after the condemning authority takes title or possession).
If neither Landlord nor Tenant terminates this Lease, this Lease
shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the
Property. Any Condemnation award or payment shall be distributed
in the following order: (a) first, to any ground lessor,
mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second,
to Tenant, only the amount of any award specifically designated
for loss of or damage to Tenant's trade fixtures or removable
personal property; and (c) third, to Landlord, the remainder of
such award, whether as compensation for reduction in the value of
the leasehold, the taking of the fee, or otherwise. If this
Lease is not terminated, Landlord shall repair any damage to the
Property caused by the Condemnation, except that Landlord shall
not be obligated to repair any damage for which Tenant has been
reimbursed by the condemning authority. If the severance damages
received by Landlord are not sufficient to pay for such repair,
Landlord shall have the right to either terminate this Lease or
make such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. Landlord's Consent Required. No portion of
the Property or of Tenant's interest in this Lease may be
acquired by any other person or entity, whether by sale,
assignment, mortgage, sublease, transfer, operation of law, or
act of Tenant, without Landlord's prior written consent, except
as provided in Section 9.02 below. Landlord has the right to
grant or withhold its consent as provided in Section 9.05 below.
Any attempted transfer without consent shall be void and shall
constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's
consent. If Tenant is a corporation or limited liability company
(L.L.C.), any cumulative transfer of 50% or more change in the
ownership of a controlling interest of the voting stock of the
corporation shall require Landlord's consent.
Section 9.02. Tenant Affiliate. Tenant may assign this
Lease or sublease the Property, without Landlord's consent, to
any corporation which controls, is controlled by or is under
common control with Tenant, or to any corporation resulting from
the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume
in writing all of Tenant's obligations under this Lease.
Section 9.03. No Release of Tenant. No transfer permitted
by this Article Nine, whether with or without Landlord's consent,
shall release Tenant or change Tenant's primary liability to pay
the rent and to perform all other obligations of Tenant under
this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent
to one transfer is not a consent to any subsequent transfer. If
Tenant's transferee defaults under this Lease, Landlord may
proceed directly against Tenant without pursuing remedies against
the transferee. Landlord may consent to subsequent assignments or
modifications of this Lease by Tenant's transferee, without
notifying Tenant or obtaining its consent. Such action shall not
relieve Tenant's liability under this Lease.
Section 9.04. Offer to Terminate. If Tenant desires to
assign the Lease or sublease the Property, Tenant shall have the
right to offer, in writing, to terminate the Lease as of a date
specified in the offer. If Landlord elects in writing to accept
the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and
all the terms and provisions of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall
continue in effect until otherwise terminated and the provisions
of Section 9.05 with respect to any proposed transfer shall
continue to apply.
Section 9.05. Landlord's Consent.
(a) Tenant's request for consent to any transfer described
in Section 9.01 shall set forth in writing the details of the
proposed transfer, including the name, business and financial
condition of the prospective transferee, financial details of the
proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and
any other information Landlord deems relevant. Landlord shall
have the right to withhold consent, if reasonable, or to grant
consent, based on the following factors: (i) the business of the
proposed assignee or subtenant and the proposed use of the
Property; (ii) the net worth and financial reputation of the
proposed assignee or subtenant; (iii) Tenant's compliance with
all of its obligations under the Lease; and (iv) such other
factors as Landlord may reasonably deem relevant. If Landlord
objects to a proposed assignment solely because of the net worth
and/or financial reputation of the proposed assignee, Tenant may
nonetheless sublease (but not assign), all or a portion of the
Property to the proposed transferee, but only on the other terms
of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall
apply:
(i) Tenant shall pay to Landlord as Additional Rent
under the Lease the Landlord's Share (stated in Section
1.13) of the Profit (defined below) on such transaction as
and when received by Tenant, unless Landlord gives written
notice to Tenant and the assignee or subtenant that
Landlord's Share shall be paid by the assignee or subtenant
to Landlord directly. The "Profit" means (A) all amounts
paid to Tenant for such assignment or sublease, including
"key" money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other
consideration paid for the assignment or sublease, including
fees under any collateral agreements, less (B) costs and
expenses directly incurred by Tenant in connection with the
execution and performance of such assignment or sublease for
real estate broker's commissions and costs of renovation or
construction of tenant improvements required under such
assignment or sublease. Tenant is entitled to recover such
costs and expenses before Tenant is obligated to pay the
Landlord's Share to Landlord. The Profit in the case of a
sublease of less than all the Property is the rent allocable
to the subleased space as a percentage on a square footage
basis.
(ii) Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or
sublease of the Property within thirty (30) days after the
transaction documentation is signed, and Landlord may
inspect Tenant's books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly
furnish to Landlord copies of all the transaction
documentation, all of which shall be certified by Tenant to
be complete, true and correct. Landlord's receipt of
Landlord's Share shall not be a consent to any further
assignment or subletting. The breach of Tenant's obligation
under this Paragraph 9.05(b) shall be a material default of
the Lease.
Section 9.06. No Merger. No merger shall result from
Tenant's sublease of the Property under this Article Nine,
Tenant's surrender of this Lease or the termination of this Lease
in any other manner. In any such event, Landlord may terminate
any or all sub-tenancies or succeed to the interest of Tenant as
sub-landlord under any or all sub-tenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's
performance of each of Tenant's obligations under this Lease is a
condition as well as a covenant. Tenant's right to continue in
possession of the Property is conditioned upon such performance.
Time is of the essence in the performance of all covenants and
conditions.
Section 10.02. Defaults. Tenant shall be in material default
under this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation
of the Property results in the cancellation of any insurance
described in Section 4.04;
(b) If Tenant fails to pay rent or any other charge within three
(3) days after written receipt from Landlord that such amounts
are when due;
(c) If Tenant fails to provide liability insurance pursuant to
Section 4.04(a) of the Lease for a period of ten (10) five (5)
days after written notice from Landlord;
(d) If Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of twenty (20) ten (10)
days after written notice from Landlord; provided that if more
than twenty (20) ten (10) days are required to complete such
performance, Tenant shall not be in default if Tenant commences
such performance within the twenty (20) ten (10)-day period and
thereafter diligently pursues its completion. However, Landlord
shall not be required to give such notice if Tenant's failure to
perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and
all notice requirements imposed by law on Landlord and is not in
addition to any such requirement.
(e) (i) If Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) if a petition for
adjudication of bankruptcy or for reorganization or rearrangement
is filed by or against Tenant and is not dismissed within sixty
(60) thirty (30) days; (iii) if a trustee or receiver is
appointed to take possession of substantially all of Tenant's
assets located at the Property or of Tenant's interest in this
Lease and possession is not restored to Tenant within sixty (60)
thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure
which is not discharged within sixty (60) thirty (30) days. If a
court of competent jurisdiction determines that any of the acts
described in this subparagraph (d) is not a default under this
Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant
transfers Tenant's interest hereunder, then Landlord shall
receive, as Additional Rent, the excess, if any, of the rent (or
any other consideration) paid in connection with such assignment
or sublease over the rent payable by Tenant under this Lease.
(f) If any guarantor of the Lease revokes or otherwise
terminates, or purports to revoke or otherwise terminate, any
guaranty of all or any portion of Tenant's obligations under the
Lease. Unless otherwise expressly provided, no guaranty of the
Lease is revocable.
Section 10.03. Remedies. On the occurrence of any
material default by Tenant, Landlord may, at any time thereafter,
with or without notice or demand and without limiting Landlord in
the exercise of any other right or remedy that Landlord may have:
(a) Terminate this Lease and the Term created hereby, in
which event Landlord may forthwith repossess the Property and be
entitled to recover forthwith as damages a sum of money equal to
the value of the Base Rent and Additional Rent provided to be
paid by Tenant for the balance of the stated Term of the Lease,
less the fair rental value of the Property for said period, and
any other sum of money and damages owed by Tenant to Landlord.
(b) Terminate Tenant's right of possession and may repossess
the Property by forcible entry or detainer suit or otherwise,
without demand or notice of any kind to Tenant and without
terminating this Lease, in which event Landlord may, but shall be
under no obligation so to do, relet all or any part of the
Property for such rent and upon such terms as shall be
satisfactory to Landlord (including the right to relet the
Property for a term greater or lesser than that remaining under
the Term of this Lease and the right to relet the Property as a
part of a larger area and the right to change the character or
use made of the Property). For the purpose of such reletting,
Landlord is authorized to decorate or to make any repairs,
changes, alterations or additions in or to the Property that may
be necessary or convenient, and if Landlord shall fail or refuse
to relet the Property, or if the Property are relet and a
sufficient sum shall not be realized from such reletting after
paying all of the costs and expenses of such decorations,
repairs, changes, alterations and additions, and the expenses of
such reletting (including leasing commissions) and of the
collection of the rent accruing therefrom to satisfy the rent
provided for in this Lease to be paid, then Tenant shall pay to
Landlord as damages a sum equal to the amount of the Base Rent
and rent adjustments reserved in this Lease for such period or
periods, or, if the Property have been relet, Tenant shall
satisfy and pay any such deficiency upon demand therefor from
time to time, and Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this paragraph
and any other sums due under this Lease from time to time, and
that no suit or recovery of any portion due Landlord hereunder
shall be any defense to any subsequent action brought for any
amount not theretofore reduced to judgment in favor of Landlord.
(c) Obtain the appointment of a receiver in any court of
competent jurisdiction, and the receiver may take possession of
any personal property belonging to Tenant and used in the conduct
of the business of Tenant being carried on in the Property.
Tenant agrees that the entry upon the Property or possession of
said personal property by said receiver shall not constitute an
eviction of Tenant from the Property or any portion thereof, and
Tenant agrees to indemnify, defend and hold Landlord harmless
for, from and against any claim of any character by any person
arising out of or in any way connected with the entry by said
receiver in taking possession of the Property or said personal
property.
No act or conduct of the Landlord, whether consisting of reentry,
taking possession, or reletting the Property or obtaining
appointment of a receiver or accepting the keys to the Property,
or otherwise, prior to the expiration of the Lease Term shall be
deemed to be or constitute an acceptance of the surrender of the
Property by the Landlord or an election to terminate this Lease
unless Landlord exercises its election under Section 10.03(a)
above. Such acceptance or election by Landlord shall only be
effected, and must be evidenced, by written acknowledgement of
acceptance of surrender or notice of election to terminate signed
by Landlord.
Section 10.04. Repayment of "Free" Rent. If this Lease
provides for a postponement of any monthly rental payments, a
period of "free" rent or other rent concession, such postponed
rent or "free" rent is called the "Abated Rent". Tenant shall be
credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully,
faithfully, and punctually performed all of Tenant's obligations
hereunder, including the payment of all rent (other than the
Abated Rent) and all other monetary obligations and the surrender
of the Property in the physical condition required by this Lease.
Tenant acknowledges that its right to receive credit for the
Abated Rent is absolutely conditioned upon Tenant's full,
faithful and punctual performance of its obligations under this
Lease. If Tenant defaults and does not cure within any
applicable grace period, the Abated Rent shall immediately become
due and payable in full and this Lease shall be enforced as if
there were no such rent abatement or other rent concession. In
such case Abated Rent shall be calculated based on the full
initial rent payable under this Lease.
Section 10.05. Cumulative Remedies. Landlord's exercise of
any right or remedy shall not prevent it from exercising any
other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. Subordination. Landlord shall have the right
to subordinate this Lease to any ground lease, deed of trust or
mortgage encumbering the Property, any advances made on the
security thereof and any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded.
Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease.
Tenant shall execute such further documents and assurances as
such lender may reasonably require, provided that Tenant's
obligations under this Lease shall not be increased in any
material way (the performance of ministerial acts shall not be
deemed material), and Tenant shall not be deprived of its rights
under this Lease. Tenant's right to quiet possession of the
Property during the Lease Term shall not be disturbed if Tenant
pays the rent and performs all of Tenant's obligations under this
Lease and is not otherwise in default. If any ground lessor,
beneficiary or mortgagee elects to have this Lease prior to the
lien of its ground lease, deed of trust or mortgage and gives
written notice thereof to Tenant, this Lease shall be deemed
prior to such ground lease, deed of trust or mortgage whether
this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording
thereof.
Section 11.02. Attornment. If Landlord's interest in the
Property is acquired by any ground lessor, beneficiary under a
deed of trust, mortgagee, or purchaser at a foreclosure sale,
Tenant shall attorn to the transferee of or successor to
Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the
protection of any statute or rule of law which gives or purports
to give Tenant any right to terminate this Lease or surrender
possession of the Property upon the transfer of Landlord's
interest.
Section 11.03. Signing of Documents. Tenant shall sign and
deliver any instrument or documents necessary or appropriate to
evidence any such attornment or subordination or agreement to do
so. If Tenant fails to do so within ten (10) days after written
request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such
instrument or document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement
certifying: (i) that none of the terms or provisions of this
Lease have been changed (or if they have been changed, stating
how they have been changed); (ii) that this Lease has not been
canceled or terminated; (iii) the last date of payment of the
Base Rent and other charges and the time period covered by such
payment; (iv) that Landlord is not in default under this Lease
(or, if Landlord is claimed to be in default, stating why); and
(v) such other representations or information with respect to
Tenant or the Lease as Landlord may reasonably request or which
any prospective purchaser or encumbrancer of the Property may
reasonably require. Tenant shall deliver such statement to
Landlord within ten (10) days after Landlord's request. Landlord
may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true
and correct.
(b) If Tenant does not deliver such statement to Landlord
within such ten (10)-day period, Landlord, and any prospective
purchaser or encumbrancer, may conclusively presume and rely upon
the following facts: (i) that the terms and provisions of this
Lease have not been changed except as otherwise represented by
Landlord; (ii) that this Lease has not been canceled or
terminated except as otherwise represented by Landlord; (iii)
that not more than one month's Base Rent or other charges have
been paid in advance; and (iv) that Landlord is not in default
under the Lease. In such event, Tenant shall be estopped from
denying the truth of such facts.
Section 11.05. Tenant's Financial Condition. Within ten
(10) days after written request from Landlord, however, not more
than one (1) time per calendar year, Tenant shall deliver to
Landlord such financial statements as Landlord reasonably
requires to verify the net worth of Tenant or within . Within ten
(10) days after written request from Landlord, Tenant shall
deliver to Landlord such financial statements as Landlord
reasonably requires to verify the net worth of Tenant or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant
shall deliver to any lender designated by Landlord any financial
statements required by such lender to facilitate the financing or
refinancing of the Property. Tenant represents and warrants to
Landlord that each such financial statement is a true and
accurate statement as of the date of such statement. All
financial statements shall be confidential and shall be used only
for the purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. Legal Proceedings. If Tenant or Landlord
shall be in breach or default under this Lease, such party (the
"Defaulting Party") shall reimburse the other party (the
"Nondefaulting Party") upon demand for any costs or expenses that
the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not
suit is commenced or judgment entered. Such costs shall include
reasonable legal fees and costs incurred for the negotiation of a
settlement, enforcement of rights or otherwise. Furthermore, if
any action for breach of or to enforce the provisions of this
Lease is commenced, the court in such action shall award to the
party in whose favor a judgment is entered, a reasonable sum as
attorneys' fees and costs. The losing party in such action shall
pay such attorneys' fees and costs. Tenant shall also indemnify
Landlord against and hold Landlord harmless from all costs,
expenses, demands and liability Landlord may incur if Landlord
becomes or is made a party to any claim or action (a) instituted
by Tenant against any third party, or by any third party against
Tenant except to the extent such claim or action is based upon
Landlord's gross negligence or willful misconduct, or by or
against any person holding any interest under or using the
Property by license of or agreement with Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for
Tenant or such other person; (c) otherwise arising out of or
resulting from any act or transaction of Tenant or such other
person; or (d) necessary to protect Landlord's interest under
this Lease in a bankruptcy proceeding, or other proceeding under
Title 11 of the United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant's
expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any
reasonable legal fees or costs Landlord incurs in any such claim
or action.
Section 12.02. Landlord's Consent. Tenant shall pay
Landlord's reasonable attorneys' fees incurred in connection with
Tenant's request for Landlord's consent under Article Nine
(Assignment and Subletting), or in connection with any other act
which Tenant proposes to do and which requires Landlord's
consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant promises, and it
is a condition to the continuance of this Lease, that there will
be no discrimination against, or segregation of, any person or
group of persons on the basis of race, color, sex, creed,
national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any
portion thereof.
Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the
current owner or owners of the fee title to the Property or
Project or the leasehold estate under a ground lease of the
Property or Project at the time in question. Each Landlord is
obligated to perform the obligations of Landlord under this Lease
only during the time such Landlord owns such interest or title.
Any Landlord who transfers its title or interest is relieved of
all liability with respect to the obligations of Landlord under
this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds
that Tenant previously paid if such funds have not yet been
applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord
to perform any of its obligations under this Lease to Landlord
and to any ground lessor, mortgagee or beneficiary under any deed
of trust encumbering the Property whose name and address have
been furnished to Tenant in writing. Landlord shall not be in
default under this Lease unless Landlord (or such ground lessor,
mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice.
However, if such non-performance reasonably requires more than
thirty (30) days to cure, Landlord shall not be in default if
such cure is commenced within such thirty (30)-day period and
thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the
contrary, the liability of Landlord for the performance of its
duties and obligations under this Lease is limited to Landlord's
interest in the Property and the Project, and neither the
Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. Severability. A determination by a court of
competent jurisdiction that any provision of this Lease or any
part thereof is illegal or unenforceable shall not cancel or
invalidate the remainder of such provision or this Lease, which
shall remain in full force and effect.
Section 13.04. Interpretation. The captions of the Articles
or Sections of this Lease are to assist the parties in reading
this Lease and are not a part of the terms or provisions of this
Lease. Whenever required by the context of this Lease, the
singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall
each include the other. In any provision relating to the
conduct, acts or omissions of Tenant, the term "Tenant" shall
include Tenant's agents' employees, contractors, invitees,
successors or others using the Property with Tenant's expressed
or implied permission.
Section 13.05. Incorporation of Prior Agreements;
Modifications. This Lease is the only agreement between the
parties pertaining to the lease of the Property and no other
agreements are effective. All amendments to this Lease shall be
in writing and signed by all parties. Any other attempted
amendment shall be void.
Section 13.06. Notices. All notices required or permitted
under this Lease shall be in writing and shall be personally
delivered or sent by certified mail, return receipt requested,
postage prepaid. Notices to Tenant shall be delivered to the
address specified in Section 1.03 above. Notices to Landlord
shall be delivered to the address specified in Section 1.02
above. All notices shall be effective upon delivery. Either
party may change its notice address upon written notice to the
other party.
Section 13.07. Waivers. All waivers must be in writing and
signed by the waiving party. Landlord's failure to enforce any
provision of this Lease or its acceptance of rent shall not be a
waiver and shall not prevent Landlord from enforcing that
provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter
accompanying a payment check shall be binding on Landlord.
Landlord may, with or without notice to Tenant, negotiate such
check without being bound to the conditions of such statement.
Section 13.08. No Recordation. Tenant shall not record this
Lease without prior written consent from Landlord. However,
either Landlord or Tenant may require that a "Short Form"
memorandum of this Lease executed by both parties be recorded.
The party requiring such recording shall pay all transfer taxes
and recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease
binds any party who legally acquires any rights or interest in
this Lease from Landlord or Tenant. However, Landlord shall have
no obligation to Tenant's successor unless the rights of
interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the
Property is located shall govern this Lease.
Section 13.10. Corporate Authority; Partnership Authority.
(a) If Tenant is a corporation or limited liability company,
each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease
binds the corporation or limited liability company. Within
thirty (30) days after this Lease is signed, Tenant shall deliver
to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other
evidence of such authority reasonably acceptable to Landlord. If
Tenant is a partnership, each person or entity signing this Lease
for Tenant represents and warrants that he or it is a general
partner of the partnership, that he or it has full authority to
sign for the partnership and that this Lease binds the
partnership and all general partners of the partnership. Tenant
shall give written notice to Landlord of any general partner's
withdrawal or addition. Within thirty (30) days after this Lease
is signed, Tenant shall deliver to Landlord a copy of Tenant's
recorded statement of partnership or certificate of limited
partnership.
Section 13.11. Joint and Several Liability. All parties
signing this Lease as Tenant shall be jointly and severally
liable for all obligations of Tenant.
Section 13.12. Force Majeure. If Landlord cannot perform
any of its obligations due to events beyond Landlord's control,
the time provided for performing such obligations shall be
extended by a period of time equal to the duration of such
events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes,
strikes, fire, flood or other casualty, shortages of labor or
material, government regulation or restriction and weather
conditions.
Section 13.13. Execution of Lease. This Lease may be
executed in counterparts and, when all counterpart documents are
executed, the counterparts shall constitute a single binding
instrument. Landlord's delivery of this Lease to Tenant shall
not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. Survival. All representations and warranties
of Landlord and Tenant shall survive the termination of this
Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by
and delivered to both Landlord and Tenant, Landlord shall pay a
real estate commission to Landlord's Broker named in Section 1.08
above, if any, as provided in the written agreement between
Landlord and Landlord's Broker. If a Tenant's Broker is named in
Section 1.08 above, Landlord's Broker shall pay an appropriate
portion of its commission to Tenant's Broker as if so provided in
any agreement between Landlord's Broker and Tenant's Broker.
Nothing contained in this Lease shall impose any obligation on
Landlord to pay a commission or fee to any party other than
Landlord's Broker.
Section 14.02. Protection of Brokers.
Section 14.03. Agency Disclosure; No Other Brokers.
Landlord and Tenant each warrant that they have dealt with no
real estate broker(s) in connection with this transaction except:
Xxx & Associates , who represents Landlord, and Capital Investors
Realty, LLC , who represents Tenant.
If Xxx & Associates represents both Landlord and Tenant,
Landlord and Tenant hereby confirm that they were timely advised
of the dual representation and that they consent to the same, and
that they do not expect said broker to disclose to either of them
the confidential information of the other party.
ARTICLE FIFTEEN: COMPLIANCE
The parties hereto agree to comply with all applicable
federal, state and local laws, regulations, codes, ordinances and
administrative orders having jurisdiction over the parties,
Project, Building, Property, property or the subject matter of
this Agreement, including, but not limited to, the 1964 Civil
Rights Act and all amendments thereto, the Foreign Investment In
Real Property Tax Act, the Comprehensive Environmental Response
Compensation and Liability Act, and The Americans With
Disabilities Act.
ADDITIONAL PROVISIONS ARE SET FORTH IN RIDER NO. 1, EXHIBIT "A",
EXHIBIT "1" AND OPTION TO EXTEND TERM LEASE RIDER ATTACHED
HERETO.
Landlord and Tenant have signed this Lease at the place and on
the dates specified adjacent to their signatures below and have
initialed all Riders which are attached to or incorporated by
reference in this Lease.
"LANDLORD"
Signed on , 2001 EJM ARIZONA COMMERCEPLEX, LLC
a Delaware limited liability
company
By: EJM Tri-State Properties,
LLC,
a Delaware limited
liability Company,
Its: Member
By: EJM Development Co.,
a California limited
partnership
Its: Member
By:
Its: General Partner
"TENANT"
Signed on _________________, 2001 Arizona Furniture
Company, Inc., a Nevada
corporation
By:
Printed Name:
_______________________
Its:
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU
CONSULT WITH A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL
HYGIENIST OR OTHER PERSON WITH EXPERIENCE IN EVALUATING THE
CONDITION OF THE PROPERTY, INCLUDING THE POSSIBLE PRESENCE OF
ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE TANKS.
