EXHIBIT 10.16
LOGO AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only
________11/30____________, 1999, Is made by and between XXXXXXXXX CORPORATION, a
California corporation ("LESSOR") and RESEARCH ENGINEERS, INC., a Delaware
corporation ("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 as
00000 Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx located in the County of
Orange, State of California and generally described as (describe briefly the
nature of the property and, If applicable, the "Project", If the property Is
located within a Project) approximately 40,000 square foot office/warehouse
building on approximately 100,000 square feet of land ("PREMISES"). (SEE ALSO
PARAGRAPH 2)
1.3 Term: Fifteen (15) years and 2 weeks ("Original Term") commencing December
15, 1999 ("Commencement Date") and ending December 31, 2014 ("Expiration Date").
(SEE ALSO PARAGRAPH 3)
1.4 EARLY POSSESSION: N/A ("EARLY POSSESSION DATE"). (See also Paragraphs 3.2
and 3.3)
1.5 BASE RENT: $25,437.50 per month ("Base Rent"), payable on the first day of
each month commencing January, 2000, payable to Xxxxxxxxx Corp. (See also
Paragraph 4) 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: $12,718.75 as Base Rent for the period
December 15 - December 31, 1999
1.7 SECURITY DEPOSIT: $101,750 (1) ("Security Deposit"). (See also Paragraph 5)
1.8 AGREED USE: Any lawful use (See also Paragraph 6)
1.9 INSURING PARTY. Lessee is the "Insuring Party" unless otherwise stated
herein. (See also Paragraph 8)
1.10 Deleted.
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("Guarantor"). (See also Paragraph 37)
1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum, 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 size set forth in this Lease, or that may have been
used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.
2.2. CONDITION. Lessor shall deliver the Premises to Lessee broom clean and free
of debris on the Commencement Date or the Early Possession Date, whichever first
occurs ("Start Date"), and, so long as the required service contracts described
in Paragraph 7.1 (b) below are obtained by Lessee within thirty (30) days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"),
loading doors, If any, and all other such elements in the Premises, other than
those constructed by Lessee, shall be in good operating condition on said date
and that the structural elements of the roof, bearing walls and foundation of
any buildings on the Premises (the "Building") shall be free of material
defects. If a non-compliance with said warranty exists as of the Start Date,
Lessor shall, as Lessor's sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor's expense. If, after the Start Date,
Lessee does not give Lessor written notice of any non-compliance with this
warranty within: (I) one year as to the surface of the roof and the structural
portions of the roof, foundations and bearing walls, (ii) six (6) months as to
the HVAC systems, (iii) thirty (30) days as to the remaining systems and other
elements of the Building, correction of such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.
2.3. COMPLIANCE. Lessor warrants that the Improvements on the Premises comply
with all applicable laws, covenants or restrictions of record, building codes,
regulations and ordinances ("Applicable Requirements") in effect on the Start
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. NOTE: Lessee is responsible for
determining whether or not the zoning Is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with warranty within six (6) months following the Start Date,
correction of that non-compliance shall be the obligation of Lessee at Lessee's
sole cost and expense. If the Applicable Requirements are hereafter changed (as
opposed to being in existence at the Start Date, which Is addressed in Paragraph
6.2(e) below) so as to require during the term of this Lease the construction of
an addition to or an alteration of the Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of
such work as follows:
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(1) provided that Lessee is not in default hereunder, on January 1, 2005,
the security deposit shall be reduced to $50,875 and any security
deposit held by Lessor in excess of such amount shall be immediately
returned to Lessee.
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(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are
required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the
cost thereof exceeds six (6) months' Base Rent, Lessee may instead
terminate this Lease unless Lessor notifies Lessee. in writing, within ten
(10) days after receipt of Lessee's termination notice that Lessor has
elected to pay the difference between the actual cost thereof and the
amount equal to six (6) months' Base Rent. If Lessee elects termination,
Lessee shall immediately cease the use of the Premises, which requires such
Capital Expenditure, and deliver to Lessor written notice specifying a
termination date at least ninety (90) days thereafter. Such termination
date shall, however. in no event be earlier than the last day that Lessee
could legally utilize the Premises without commencing such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the specific and unique
use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay
for such costs pursuant to the provisions of Paragraph 7.1 (c); provided,
however, that if such Capital Expenditure is required during the last two
years of this Lease (1), Lessor shall have the option to terminate this
Lease upon ninety (90) days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within ten (10) days after receipt of Lessor's
termination notice that Lessee will pay (2). If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure,
Lessee may advance such funds and deduct same, with Interest, from Rent
until Lessor's share of such costs have been fully paid. If Lessee is
unable to finance Lessor's share, or if the balance of the Rent due and
payable for the remainder of this Lease is not sufficient to fully
reimburse Lessee on an offset basis, Lessee shall have the right to
terminate this Lease upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital Expenditures
are intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee
as a result of an actual or proposed change in use, change in intensity of
use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any
right to terminate this Lease.
2.4. ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee's intended use,
(b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate
to its occupancy of the Premises, and (c) neither Lessor, Lessor's agents,
nor any Broker has made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In
addition, Lessor acknowledges that: (a) Broker has made no representations,
promises or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (b) it is Lessor's sole
responsibility to investigate the financial capability and/or suitability
of all proposed tenants.
2.5. LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in Paragraph
2 shall be of no force or effect if immediately prior to the Start Date
Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
3. TERM.
3.1. TERM. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2. EARLY POSSESSION. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be
abated for the period of such early possession. All other terms of this
Lease (including but not limited to the obligations to pay Real Property
Taxes and insurance premiums and to maintain the Premises) shall, however,
be in effect during such period. Any such early possession shall not affect
the Expiration Date.
3.3. Deleted.
3.4. Deleted.
4. RENT.
4.1. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2. PAYMENT. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one
(1) full calendar month shall be prorated based upon the actual number of
days of said month. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or place as Lessor may from time to
time designate in writing. Acceptance of a payment which is less than the
amount then due shall not be a waiver of Lessor's rights to the balance of
such Rent, regardless of Lessor's endorsement of any check so stating.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sub lessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor's reasonable judgment,
to account for increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease (3) and
following such change the financial condition of Lessee is, in Lessor's
reasonable judgment, significantly reduced, Lessee shall deposit such additional
monies with Lessor as shall be sufficient to cause the Security Deposit to be at
a commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.
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(1) and the cost thereof exceeds six (6) months Base Rent,
(2) the difference between the actual cost thereof and six (6) months Base Rent.
(3) , which change in control requires the consent of Lessor pursuant to Article
12 below,
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6. USE.
6.1. USE. Lessee shall use and occupy the Premises only for the Agreed Use, or
any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that
disturbs owners and/or occupants of, or causes damage to neighboring
properties. Lessor shall not unreasonably withhold or delay its consent to
any written request for a modification of the Agreed Use, so long as the
same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, is not
significantly more burdensome to the Premises. If Lessor elects to withhold
consent, Lessor shall within five (5) business days after such request give
written notification of same, which notice shall include an explanation of
Lessor's objections to the change in use.
6.2. HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "Hazardous Substance" as used in
this Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either:
(i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor
to any governmental agency or third party under any applicable statute or
common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products,
by-products or fractions thereof. Lessee shall not engage in any activity
in or on the Premises which constitutes a Reportable Use of Hazardous
Substances without the express prior written consent of Lessor and timely
compliance (at Lessee's expense) with all Applicable Requirements.
"Reportable Use" shall mean (i) the installation or use of any above or
below ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business
plan is required to be filed with, any governmental authority, and/or (iii)
the presence at the Premises of a Hazardous Substance with respect to which
any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed
Use, so long as such use is in compliance with all Applicable Requirements,
is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor
to any liability therefor. In addition, Lessor may condition its consent to
any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises
and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on
or before Lease expiration or termination) of protective modifications
(such as concrete encasements) and/or increasing the Security Deposit.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause to believe,
that a Hazardous Substance has come to be located in, on, under or about
the premises, (in violation of any applicable law) other than as
previously, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.
(c) LESSEE REMEDIATION. Lessee shall not cause or permit any Hazardous
Substance to be spilled or 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 or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or
involving any Hazardous Substance brought onto the Premises during the term
of this Lease, by or for Lessee, or any third party.
(d) LESSEE INDEMNIFICATION. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and
against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising
out of or involving any Hazardous Substance brought onto the Premises by or
for Lessee, or any third party (provided, however, that Lessee shall have
no liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties). Lessee's
obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or
termination of this Lease. NO TERMINATION, CANCELLATION OR RELEASE
AGREEMENT ENTERED INTO BY LESSOR AND LESSEE SHALL RELEASE LESSEE FROM ITS
OBLIGATIONS UNDER THIS LEASE WITH RESPECT TO HAZARDOUS SUBSTANCES, UNLESS
SPECIFICALLY SO AGREED BY LESSOR IN WRITING AT THE TIME OF SUCH AGREEMENT.
(e) Deleted.
(f) Deleted.
(g) LESSOR TERMINATION OPTION. If a Hazardous Substance Condition occurs during
the term of this Lease, unless Lessee is legally responsible therefor (in
which case Lessee shall make the investigation and remediation thereof
required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph
6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i)
investigate and remediate such Hazardous Substance Condition, if required,
as soon as reasonably possible at Lessor's expense, in which event this
Lease shall continue in full force and effect, or (ii) if the estimated
cost to remediate such condition exceeds twelve (12) times the then monthly
Base Rent or $100,000. whichever is greater, give written notice to Lessee,
within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such Hazardous Substance Condition, of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of
such notice. In the event Lessor elects to give a termination notice,
Lessee may, within ten (10) days thereafter, give written notice to Lessor
of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal
to twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater. Lessee shall provide Lessor with said funds or satisfactory
assurance thereof within thirty (30) days following such commitment. In
such event, this Lease shall continue in full force and effect, and Lessor
shall proceed to make such remediation as soon as reasonably possible after
the required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided,
this Lease shall terminate as of the date specified in Lessor's notice of
termination.
6.3. LESSEE'S, COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
6.4. INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as defined In
Paragraph 30 below) and consultants shall have the right to enter into Premises,
for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease (1). The cost of any such inspections shall
be paid by Lessor.
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1) Such right of entry shall be exercisable only upon not less than
forty-eight (48) hours prior written notice. Lessee shall have the
right to require that all persons entering the Premises be escorted by
Lessee's personnel.
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7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERNATIONS.
7.1. LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2
(Lessor's Obligations). 9 (Damage or Destruction), and 14 (Condemnation),
Lessee shall, at Lessee's sole expense, keep the Premises, Utility
Installations, and Alterations in good order, condition and repair (whether
or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee's
use, any prior use, the elements or the age of such portion of the
Premises), including, but not limited to, all equipment or facilities, such
as plumbing, heating, ventilating, air-condition, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures,
walls (interior and exterior), foundations, ceilings, roofs (1), windows,
doors, plate glass, skylights, landscaping, driveways, parking lots,
fences, retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order,
condition and state of repair. Lessee shall, during the term of this Lease,
keep the exterior appearance of the Building in a first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the
exterior repainting of the Building.
(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance
of the following equipment and improvements ("Basic Elements"), if any, if
and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and
pressure vessels, (iii) fire extinguishing systems, including fire alarm
and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof
covering and drains, (vi) driveways and parking lots, (vii) clarifiers
(viii) basic utility feed to the perimeter of the Building, and (ix) any
other equipment, if reasonably required by Lessor.
(c) REPLACEMENT. Subject to Lessee's indemnification of Lessor as set forth in
Paragraph 8.7 below, and without relieving Lessee of liability resulting
from Lessee's failure to exercise and perform good maintenance practices,
if the Basic Elements described in Paragraph 7.1 (b) cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor,
and the cost thereof shall be prorated between the Parties and Lessee shall
only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is the number of
months of the useful life of such replacement as such useful life is
specified pursuant to Federal income tax regulations or guidelines for
depreciation thereof (including interest on the unamortized balance as is
then commercially reasonable in the judgment of Lessor's accountants), with
Lessee reserving the right to prepay its obligation at any time.
7.2. LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
and footnote 1 to Section 7.1 (a), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of the
Lease.
7.3. UTILITY INSTALLATIONS, TRADE FIXTURES; ALTERATIONS
(a) Definitions; Consent Required. The term "UTILITY INSTALLATIONS" refers to
all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the
Premises. The term "ALTERATIONS" shall mean any modification of the
improvements, other than Utility Installations or Trade Fixtures, whether
by addition or deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY
INSTALLATIONS" are defined as structural Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent which
shall not be unreasonably withheld. Lessee may, however, make
non-structural Utility Installations and Alterations to the interior of the
Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed
$50,000 in the aggregate or $10,000 in any one year.
(b) CONSENT. Any Alterations or Utility Installations that Lessee shall desire
to make and which require the consent of the Lessor shall be presented to
Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (I) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the
plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor
with as-built plans and specifications if applicable.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility. If Lessee shall
contest the validity of any such lien, claim or demand, then Lessee shall,
at its sole expense defend and protect itself, Lessor and the Premises
against the same and shall pay and satisfy any such adverse judgment that
may be rendered thereon before th enforcement thereof. If Lessor shall
require. If Lessor elects to participate in any such action, Lessee shall
pay Lessor's attorneys' fees and costs.
7.4. OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee
Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.
(b) REMOVAL. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent (3).
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or groundwater
contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.
PAGE 4
Initials WL WB
PAGE 4A
(1) Lessee shall be responsible for the routine maintenance and repair of
the roof only from and after the date that the roof existing as of the
date of this Lease is replaced by Lessor at Lessor's cost and expense.
In no event shall Lessee be responsible for replacement of the roof.
(2) Lessee shall have the right to puncture the roof in connection with the
installation of any additional Utility Installations and Alterations
necessary for its use of the Premises so long as (i) such punctures are
made in such a way that it does not damage the integrity of the roof;
and (ii) such punctures are performed under the supervision of a
licensed roofing contractor.
(3) ; provided, however, that Lessor shall have no right to require the
removal of any Lessee Owned Alterations or Utility Installations
present on the Premises OF the Building as of the date of this Lease.
Initials WL WB
-4A-
8. INSURANCE INDEMNITY.
8.1. PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required under
Paragraph 8. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.
8.2. LIABILITY INSURANCE
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a Commercial
General Liability Policy of Insurance protecting Lessee and Lessor against
claims for bodily injury, personal injury and property damage based upon or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "ADDITIONAL LNSURED-MANAGERS OR LESSORS OF PREMISES
ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT"
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 "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor whose insurance shall be considered excess
Insurance only.
(b) CARRIED BY LESSOR. Lessor shall maintain at Lessor's expense, liability
insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3. PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor, with loss payable to Lessor,
any groundlessor, and to any Lender(s) insuring loss or damage to the Premises.
The amount of such insurance shall be equal to the full replacement cost of the
Premises, as the same shall exist from time to time, or the amount required by
any Lenders, but in no event more than the commercially reasonable and available
insurable value thereof. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor.
If the coverage is available 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 debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain 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 $10,000 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss.
(b) RENTAL VALUE. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. 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 Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) ADJACENT PREMISES. If the Premises are part of a larger building, or of
a group of buildings owned by Lessor which are adjacent to the Premises, the
Lessee shall pay for any increase in the premiums for the property insurance of
such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
8.4. LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance coverage on
all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations
and Utility Installations. Such insurance shall be full replacement cost
coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds
from any such insurance shall be used by Lessee for the replacement of personal
property. Trade Fixtures and Lessee Owned Alterations and Utility Installations.
Lessee shall provide Lessor with written evidence that such insurance is in
force.
(b) Deleted.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no representation
that the limits or forms of coverage of insurance specified herein are adequate
to cover Lessee's property, business operations or obligations under this Lease.
8.5. INSURANCE POLICIES. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the premises
are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current
issue of "Best's Insurance Guide", or such other rating as may be required
by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the
Start Date, deliver to Lessor certified copies of policies of such
insurance or certificates evidencing the existence and amounts of the
required insurance. No such policy shall be cancelable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall, at least thirty (30) days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge
the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand. Such policies shall be for a term of at least one year,
or the length of the remaining term of this Lease, whichever is less. If
either Party shall fail to procure and maintain the insurance required to
be carried by it, the other Party may, but shall not be required to ,
procure and maintain the same.
8.6. WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to
be insured against herein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any
deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as
the insurance is not invalidated thereby.
8.7. INDEMNITY. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises,
Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses
and/or liabilities arising out of, involving, or in connection with, the
use and/or occupancy of the Premises by Lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee
shall upon notice defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to be
defended or indemnified.
8.8. EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for injury
or damage to the' person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, Invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other
cause, whether the said injury or 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. 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) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the cost of which to repair is less than fifty percent (50%) of
the replacement cost of the Premises.
PAGE 5
Initials XX XX
Xxxxxx shall notify Lessee in writing within thirty (30) days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to the
premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, the cost of which to repair would exceed fifty percent (50%) of
the replacement cost of the Premises. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or discovery
of a condition involving the 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 any applicable insurance proceeds available to Lessee on a
reasonable basis for that purpose. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds (except as to the deductible which is
Lessee's responsibility) as and when required to complete said repairs. In
the event, however, such shortage was due to the fact that, by reason of
the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have
no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor
with the funds to cover same, or adequate assurance thereof, within ten
(10) days following receipt of written notice of such shortage and request
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 such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within
ten (10) days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain in full force and effect; or (ii) have
this Lease terminate thirty (30) days thereafter. Lessee shall not be
entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there
may be some insurance 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),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force
and effect, or (ii) terminate this Lease by giving written notice to Lessee
within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage. Such termination shall be effective sixty (60)
days following the date of such notice. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within ten (10) days
after receipt of the termination notice to give written notice to Lessor of
Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within thirty (30) days after making such
commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make
the required commitment, this Lease shall terminate as of the date
specified in the termination notice.
9.4. TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days following such Destruction. If the damage or destruction was caused by
the willful misconduct of Lessee, Lessor shall have the right to recover
Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5. DAMAGE NEAR END OF TERM. If at any time during the last six (6) months of
this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor may terminate
this Lease effective sixty (60) days following the date of occurrence of
such damage by giving a written termination notice to Lessee within thirty
(30) days after the date of occurrence of such damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this
Lease or to purchase the Premises, then Lessee may preserve this Lease by,
(a) exercising such option and (b) providing Lessor with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the
repairs on or before the earlier of (I) the date which is thirty (30) days
after Lessee's receipt of Lessor's written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option
expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover a
shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to
exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate on the date specified in the
termination notice and Lessee's option shall be extinguished.
9.6. ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent and all other charges payable by Lessee
for the period required for the repair, remediation or restoration of such
damage shall be abated in proportion to the degree to which Lessee's use of the
Premises is impaired, but not to exceed the proceeds received from the Rental
Value insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) REMEDIES. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within ninety (90) days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee's election to terminate this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives such notice
and such repair or restoration is not commenced within thirty (30) days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within said thirty (30) days, this
Lease shall continue in full force and effect. "COMMENCE" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7. TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be used by
Lessor.
9.8. WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease shall
govern the effect of any 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. DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "'REAL
PROPERTY TAXES" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance. personal income or estate taxes); improvement bond; and/or
license fee imposed upon or levied against any legal or equitable interest
of Lessor in the Premises, Lessor's right to other income therefrom, and/or
Lessor's business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated
PAGE 6
Initials WL WB
with reference to the Building address and where the proceeds so generated are
to be applied by the city, county or other local taxing authority of a
jurisdiction within which the Premises are located. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring during the term of this
Lease, including but not limited to, a change in the ownership of the Premises.
10.2.
(a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes applicable
to the Premises during the term of this Lease. All such payments shall be made
at least ten (10) days prior to any delinquency date. Lessee shall promptly
furnish Lessor with satisfactory evidence that such taxes have been paid. If any
such taxes shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee's share of such taxes shall be prorated to
cover only that portion of the tax xxxx applicable to the period that this Lease
is in effect, and Lessor shall reimburse Lessee for any overpayment. If Lessee
shall fail to pay any required Real Property Taxes, Lessor shall have the right
to pay the same, and Lessee shall reimburse Lessor therefor upon demand.
(b) Deleted.
10.3. JOINT ASSESSMENT. If the Premises are not separately assessed, Lessee's
liability shall be an equitable proportion of the Real Property Taxes for
all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by lessor from the respective
valuations assigned in the assessor's work sheets or such other information
as may be reasonably available.
10.4. PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency, all taxes
assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee. When possible, Lessee shall cause such property to be
assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee's
property within ten (10) days after receipt of a written statement.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT AND SUBLETTING.
12.1. LESSOR'S CONSENT REQUIRED.
(a) (1)Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent, (2)
(b) (3)
(c) (4)
(d) DELETED
(e) (5)
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 sub
lessee 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 Rent or for the performance of any other obligations to be performed
by Lessee.
(b) LESSOR MAY ACCEPT RENT OR PERFORMANCE OF LESSEE'S OBLIGATIONS FROM ANY
PERSON OTHER THAN LESSEE PENDING APPROVAL OR DISAPPROVAL OF AN ASSIGNMENT.
NEITHER A DELAY IN THE APPROVAL OR DISAPPROVAL OF SUCH ASSIGNMENT NOR THE
ACCEPTANCE OF RENT OR PERFORMANCE SHALL CONSTITUTE A WAIVER OR ESTOPPEL OF
LESSOR'S RIGHT TO EXERCISE ITS REMEDIES FOR LESSEE'S DEFAULT OR BREACH.
(c) Lessor's consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the
performance of Lessee's obligations under this Lease, including any assignee or
sub lessee, without first exhausting Lessor's remedies against any other person
or entity responsible therefore to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sub lessee, including but not limited to the intended use and/or
required modification of the Premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested.
(f) Any assignee of, or sub lessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
12.3. ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The following
terms and conditions shall apply to any subletting by Lessee of all or any
part OF the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest
in all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee's obligations, Lessee may
collect said Rent. Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason OF the collection of Rent, be deemed
liable to the sub lessee for any failure of Lessee to perform and comply with
any of Lessee's obligations to such sub lessee. Lessee hereby irrevocably
authorizes and directs any such sub lessee, upon receipt of a written notice
PAGE 7
Initials WL WB
PAGE 7A
1) Lessee shall have the right to assign this Lease or to sublet the Premises
in whole or in part to any entity which controls, is controlled by, or is'
under common control with Lessee ("Affiliate Lease"), provided that Lessee
provides written notice to Lessor of any such subletting and of the
identity of such assignee or sub lessee and provided that the obligation of
Lessee shall not be diminished or affected in any manner by reason of such
assignment or subletting. Except for the foregoing,
2) which consent shall not be unreasonably withheld. Lessor hereby approves a
sublease (the "Existing Sublease") of approximately 1500 square. feet to
PCS Building Management.
3) A sale or transfer of any stock of Lessee shall not constitute a transfer
or assignment and shall not require the consent of Lessor.
4) Where Lessor's consent is required hereunder,
5) Except with respect to the Existing Sublease, in the event that Lessee
assigns the Lease or sublets an area in excess of thirty percent (30%) of
the Premises, Lessee shall share with Lessor on a 50-50 basis the amount by
which the rent or other consideration paid by such assignee or sub lessee
exceeds the rent payable by Lessee hereunder (determined on a per square
foot basis after taking into account standard brokerage commissions to
unaffiliated third parties. Furthermore, in the case of an assignment or
subletting, Lessor shall have the option to release Lessee from liability
under this Lease, in which event Lessor shall lease directly to the
proposed assignee and Lessor shall be entitled to retain all rent without
any obligation to share any excess rent with Lessee.
Initials WL WB
-7A-
from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sub lessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require
sub lessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sub lessor 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 sub
lessee to such sub lessor or for any prior Defaults or Breaches of such
sublessor.
(c) Any matter requiring the consent of the sub lessor under a sublease
shall also require the consent of Lessor.
(d) No sub lessee 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 sub lessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sub lessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sub lessee.
13. DEFAULT; BREACH; REMEDIES.
13.1. DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules
under this Lease. A "BREACH" is defined as the occurrence of one or more of
the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of five (5) business days following written
notice to lessee.
(c) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) a Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning any
guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of ten (10) days following written notice to
Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
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 if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a
"debtor" as defined In 11 U.S.C. 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 that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the time of
execution of this Lease.
13.2. REMEDIES. If lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining
of reasonably required bonds, insurance policies, or governmental'
licenses, permits or approvals. The costs and expenses of any such
performance by lessor shall be due and payable by Lessee upon receipt of
invoice 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 by Lessee to be by cashier's check.
In the event of a Breach, lessor may, with or without further notice or
demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and lessee shall immediately
surrender possession to Lessor. In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of
award-exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the lessee's failure to perform its
obligations under 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 any leasing commission paid by Lessor in connection with this lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this lease shall not waive lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and lessee's right to possession and recover the
Rent as it becomes due, in which event Lessee may sublet or assign, subject only
to reasonable limitations. Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or
Judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of lessee's right to
possession shall not relieve Lessee from liability
PAGE 8
Initials WL WB
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. Deleted.
13.4. LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee of
Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and
late charges, which may be imposed upon Lessor by any Lender. Accordingly,
if any Rent shall not be received by Lessor within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a one-time late charge equal to five (5%) of
each such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall
in no event constitute a waiver of Lessee's Default of Breach with respect
to such overdue amount, nor prevent the exercise of any of the other rights
and remedies granted hereunder.
13.5. INTEREST. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor within ten (10) days of when due as to
scheduled payments (such as Base Rent) or within thirty (30) days following
the date on which it was due for non-scheduled payment, shall bear interest
from the date when due, as to scheduled payments, or the thirty-first
(31st) day after it was due as to non-scheduled payments. The interest
("INTEREST") charged shall be equal to the prime rate reported In the Wall
Street Journal as published closest prior to the date when due plus four
percent (4%), but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for
in Paragraph 13.4.
13.6. BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor, thirty (30) days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days are reasonably required for its
performance, then Lessor shall not be in breach if performance is commenced
within such thirty (30) day period and thereafter diligently pursued to
completion.
(b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event that neither
Lessor nor Lender cures said breach within thirty (30) days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent an amount equal to the greater of one month's Base Rent or the
Security Deposit, and to pay an excess of such expense under protest, reserving
Lessee's right to reimbursement from Lessor. Lessee shall document the cast of
said cure and supply said documentation to lessor.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "CONDEMNATION"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may. at
Lessee's option, to be exercised In writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Deleted.
15.1. Deleted.
15.2. Deleted.
15.3. Deleted.
16. ESTOPPEL CERTIFICATES.
(a) Each party (as "RESPONDING PARTY") shall within ten (10) days after
written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "ESTOPPEL CERTIFICATE" 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.
(b) If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such ten day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
PAGE 9
Initials WL WB
(c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.
17. DEFINITION OF XXXXXX. The term "LESSOR" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above and subject to the provisions of Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders of the
Lessor's interest in this Lease shall remain liable and responsible with regard
to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and Is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility OF the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. NOTICES.
23.1. NOTICE REQUIREMENTS. All notices required or permitted by this Lease shall
be in writing and may be delivered in person (by hand or by courier) or may
be sent by regular, certified or registered mail or U.S. Postal Service
Express Mall, with postage prepaid, or by facsimile transmission, and shall
be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this
Lease shall be that Party's address for delivery or mailing of notices.
Either Party may by written notice to the other specify a different address
for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all
notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter
designate in writing.
23.2. DATE OF NOTICE. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on
the, receipt card, or if no delivery date is shown, the postmark thereon.
If sent by regular mail the notice shall be deemed given forty-eight (48)
hours after the same is addressed as required herein and mailed with
postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantee next day delivery shall be deemed given
twenty-four (24) hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means
shall be deemed delivered upon telephone confirmation of receipt, provided
a copy is also delivered via delivery or mail. If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, 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. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over with the consent of Lessor, then the Base
Rent shall be applicable during the month immediately preceding the expiration
or termination. Nothing contained herein shall be construed as consent by Lessor
to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the parties, but rather
according to its fair meaning as a whole, as if both parties had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1. SUBORDINATION. This Lease and any Option granted hereby shall be subject
and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions
thereof. Lessee agrees that the holders of any such Security Devices (in
this Lease together referred to as "Lender") shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease.
Any Lender may elect to have this Lease and/or any Option granted hereby
superior to the lien of Its Security Device by giving written notice
thereof to Lessee, whereupon this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2. ATTORNMENT. Subject to the non-disturbance provisions of Paragraph 30.3,
Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device,
and that in the event of such new
PAGE 10
Initials WL WB
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 (ill) 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 at this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance AgRl8m8nt") from the Lender which
Non-Disturbance Agreement provides that Lessee's possession of the
Premises, and this Lease, Including any options to extend the term hereof,
will not be disturbed 10 long as Lessee Is not in Breach hereof and attorns
to the record owner of the Premises. Further, within sixty (60) days after
the execution of this Lease, Lessor shall use Its commercially reasonable
efforts to obtain a Non-Disturbance Agreement from the holder of any
pre-existing Security Device which Is secured by the Premises. In the event
that Lessor Is unable to provide the Non-Disturbance Agreement within said
sixty (60) days, then Lessee may, at Lessee's option, directly contact
Lessor's lender and attempt to negotiate for the execution and delivery of
a Non-Disturbance Agreement.
30.4. SELF-EXECUTING. The agreements contained In this Paragraph 30 shall be
effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender In connection
with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to
separately document any subordination, attornment and/or Non-Disturbance
Agreement provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding Is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, Judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
In accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses Incurred In the preparation and
service of notices of Default and consultations In connection therewith, whether
or not a legal action Is subsequently commenced in connection with such Default
or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, In the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Sale" signs. Lessee may at any time place on or about
the Premises any ordinary "FOR SUBLEASE" sign.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise an standard of reasonableness in determining whether to
permit an auction.
34. SIGNS. (1)
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate In the
Premises; provided, however, that Lessor may elect to continue anyone or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such Interest.
36. CONSENTS. Except as otherwise provided herein; 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 consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default
or Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any then existing Default or Breach, except as may be otherwise
specifically stated In writing by Lessor at the time of such consent. The
failure to specify herein any particular condition to Lessor's consent shall not
preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent Is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish Its reasons
In writing and In reasonable detail within ten (10) business days following such
request.
37. Deleted.
37.1. Deleted.
37.2. Deleted.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part ot be
observed and performed under this Lease, Lessee shallhave quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. OPTIONS.
39.1. DEFINITION. "OPTION" shall mean: (a) the right to extend the term of or
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor: (c) the right to purchase
or the right of first refusal to purchase the Premises or other property of
Lessor.
39.2. OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in this
Lease is personal to the original Lessee and cannot be assigned or
exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises.
39.3. MULTIPLE OPTIONS. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
39.4. EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing
until said Default is cured. (ii) during the period of time any Rent is
unpaid (without regard to whether notice thereof is given to Lessee), (iii)
during the time Lessee I s in Xxxxx of this Lease, or (iv) in the event
that Lessee has been given three (3) or more notices of separate Default,
whether or not the Defaults are cured, during the 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) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after
such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give notice thereof) (ii)
Lessor gives to Lessee three (3) or more notices of separate Default during
any twelve (12) month period whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.
PAGE 11
Initials WL WB
PAGE 11A
(1) Subject to compliance with all Applicable Requirements and reasonable
approval by Lessor, Lessee shall be entitled to all signage rights on the
Premises except that no signs shall be placed on the roof.
Initials WL WB
-11A-
40. DELETED.
41. SECURITY MEASURES. Lessee here acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Les or 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 utility easements that
Lessor deems necessary, and to cause the recordation of such easements so long
as such easements 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.
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.
44. AUTHORITY. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this lease on its behalf. Each party shall, within thirty
(30) days after request, deliver to the other party satisfactory evidence of
such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to tease to
the other Party. This lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change lessee's obligations hereunder, lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. MULTIPLE PARTIES. If more than 'one person or entity Is named herein as
either lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease __ is __ is not attached to this Lease.
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 TINTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
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ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
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1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEQASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
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See Addendum to Lease attached hereto and incorporated herein by reference.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: SF, CA Executed at: Costa Mesa, CA
on: 11-30-99 on: 12-1-99
BY LESSOR: BY LESSEE: Research Engineers, Inc.
BY: /s/Wm. X. Xxxxxxxxx BY: /s/ Xxxxx X. Xxxxx
Name Printed: Wm. X. XXXXXXXXX Name Printed: XXXXX X. XXXXX
Title: President Title: Sr. VP, CFO, & Secretary
NOTE: These 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 Xx. Xxxxxx Xxxxxx, Xxxxx
000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. (000) 000-0000. Fax No. (000) 000-0000.
PAGE 12
ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE - NET
This Addendum is attached to and forms a part of that certain Standard
Industrial/Commercial Single Tenant Lease - Net by and between XXXXXXXXX
CORPORATION, a California corporation, as Lessor, and RESEARCH ENGINEERS, INC.,
a California corporation, as Lessee, for the Premises located at 00000 Xxxx
Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx (the "Lease"). This Addendum modifies and
supplements the Lease by adding the following paragraphs thereto:
1. BASE RENT ADJUSTMENT. The Base Rent for the Premises shall be adjusted
every thirty-six (36) months during the initial term to reflect any change
in the cost of living, the first such adjustment to be effective as of
January 1, 2003. Each date upon which the Base Rent is to be adjusted is
hereinafter referred to as an "Adjustment Date". The adjustment, if any,
shall be calculated upon the basis of the United States Department of
Labor, Bureau of Labor Statistics Consumer Price Index of Urban Wage
Earners and Clerical Workers (Revised Series), Subgroup "all items,"
entitled "Consumer Price Index of Urban Wage Earners and Clerical Workers
(Revised Series), Los Angeles-Anaheim-Riverside Average, (1982 -1984 =
100). The Index for said subgroup published for the month prior to the
Commencement Date or the most recent Adjustment Date, as applicable, shall
be considered the "base." The then current Base Rent shall be adjusted by
the percentage increase, if any, in the Index published prior to each
Adjustment Date for the last month over the "base"; provided, however, that
in no event shall the Base Rent after such adjustment be less than the Base
Rent in effect immediately prior to such adjustment, notwithstanding the
fact that the Index may, as of the adjustment date, be less than the
"base," and in no event shall the Base Rent after such adjustment exceed
one hundred nine percent (109%) of the Base Rent in effect immediately
prior to such adjustment. When the Base Rent is determined, Lessor shall
give Lessee written notice to that effect indicating how the new Base Rent
figure was computed. Within fifteen (15) days after Lessor's receipt of
written request therefor, Lessor shall supply to Lessee such supporting
documentation for such adjustment as Lessee may reasonably request.
If at the rental adjustment date there shall not exist the Consumer Price
Index of Urban Wage Earners and Clerical Workers (Revised Series) in the
same format as recited in this clause, Lessor shall substitute any official
index published by the Bureau of Labor Statistics, or successor or similar
governmental agency, as may then be in existence and shall be most nearly
equivalent hereto.
2. EXTENSION OPTIONS.
(a) Provided Lessee is not in Breach or Default under this Lease, and no event
or circumstance has occurred which, with th~ giving of notice or the
passage of time, or both, would constitute a Default or Breach under this
Lease, Lessee shall have two (2) consecutive options to extend the term of
this Lease (the "Extension Options") each FOR a five (5) year period (the
"Extension Terms").
(b) Each Extension Term shall commence when the Original Terms as previously
extended, expires. Each Extension Term shall be on all of the same terms
and conditions as applicable to the Original Term, except FOR the Base
Rent, which shall be determined as provided herein below.
(c) Lessee shall exercise an Extension Option, if at all, by delivering to
Lessor written notice of Lessee's election to exercise such Extension
Option not less than six
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(6) months prior to expiration of the Original Term, as such term may have been
previously extended.
(d) Effective as of commencement of each Extension Term (an "FMRR Adjustment
Date"), the Base Rent then payable under the Lease shall be adjusted to an
amount equal to the Fair Market Rental Rate of the Premises ("FMRR")
determined as provided herein below. For purposes of this Lease, FMRR shall
mean the annual current rent per rentable square foot that a willing lessee
would pay and a willing lessor would accept, dealing at arm's length, for
comparable space as the Premises, giving consideration to annual rental
rates per rentable square foot, improvements, the brokerage commissions, if
any, which would be paid by a Lessor in a similar transaction, tenant
improvement allowances typically provided tenants for similar buildings,
any economic concessions (such as free rent) typically provided to tenants
in similar type transactions, the quality of construction of the building
and the Premises and other generally applicable terms and consideration of
tenancy for the space in question at or about the time that such FMRR is
deemed to take effect.
(e) The FMRR and new Base Rent for the Extension Term shall be determined as
follows:
(i) Lessor and Lessee shall attempt to agree upon the FMRR for an
Extension Term within thirty (30) days after Lessee has exercised an
Extension Option for an Extension Term.
(ii) If Lessor and Lessee are unable to agree on the FMRR within such
thirty (30) day period, then Lessor and Lessee shall, within ten (10)
days thereafter, attempt to agree upon a mutually acceptable Appraiser
(as defined herein below) to establish the new FMRR. As used in
xxxx.Xxxxx, the term "Appraiser" shall mean a real estate broker with
at least five (5) years' full-time experience in industrial building
leasing in the geographic area in which the Premises are located. If
Lessor and Lessee agree on an Appraiser, they shall appoint such
Appraiser within ten (10) days thereafter, and such sole Appraiser
shall, within thirty (30) days thereafter, determine the FMRR in
accordance with this Lease. The cost of the sole Appraiser shall be
borne equally by Lessor and Lessee.
(iii) If Lessor and Lessee cannot agree on a mutually acceptable Appraiser
within said ten (10) day period, then either party may, by giving
notice to the other party, select and appoint the Appraiser of their
choice to establish the FMRR. Each party shall bear the cost of the
Appraiser appointed by it. If either party does not select an
Appraiser within ten (10) days following receipt of written notice of
the other party's selection of an Appraiser, then the Appraiser
appointed by the other party shall be the sole Appraiser and shall,
within thirty (30) days thereafter, determine the FMRR in aC90rdance
with this Lease.
(iv) If two Appraisers are appointed by the parties, then the two
Appraisers shall attempt, within thirty (30) days after appointment of
the latter of them, to agree on the determination of the FMRR in
accordance with this Lease.
(v) If the two Appraisers cannot agree on the FMRR within such time
period, then, within ten (10) days after expiration of such thirty
(30) day period, then the two Appraisers shall select a third
Appraiser, who shall have not previously acted in any capacity for
Lessor, Lessee or either Appraiser. If the two Appraisers are unable
to agree on the third Appraiser, either Lessor or
- 2 -
Lessee, by giving ten (10) days' notice to the other party, can apply
to the presiding judge of the Superior Court of Orange County, for the
selection of a third Appraiser. The costs of the third Appraiser shall
be equally borne by both Lessor and Lessee.
v. Within thirty (30) days after the selection of the third Appraiser, a
majority of the Appraisers shall determine the FMRR. If a majority of
the Appraisers are unable to agree on the FMRR within such thirty (30)
day period, the three determinations of the FMRR derived by each
Appraiser shall be added together and their total divided by three
(3); the resulting quotient shall be the FMRR; provided, however, that
if the lowest determination of FMRR and/or the highest determination
of FMRR are/is more than ten percent (10%) lower and/or higher than
the middle determination of FMRR, the lowest and/or the highest
determination of FMRR shall be discarded, and the others averaged
together to determine the FMRR (or if both the lowest and highest
determination are both discarded, the middle determination of FMRR
shall control).
vi. Upon the establishment of the FMRR, the new Base Rent under the Lease
shall be the greater of (1) the FMRR so established, or (ii) the then
existing Base Rent.
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