EXHIBIT 10.4
LEASE AGREEMENT DATED
NOVEMBER 11, 1992
12/5/91
STANDARD FORM
MULTI-TENANCY INDUSTRIAL LEASE
(GROSS -- BASE YEAR)
Landlord CH Westside Associated, an Arizona General Partnership
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Tenant New Directions, Inc., an Arizona Corporation
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Dated as of 11-11-92
TABLE OF CONTENTS
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NO. PAGE NO.
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1. Defined Terms..................................... 1
2. Leased Premises................................... 2
(a) Property to be Leased........................ 2
(b) Common Areas................................. 3
(c) Reserved Rights of Landlord.................. 3
3. Completion of Premises............................ 4
(a) Plans........................................ 4
(b) Scheduled Commencement Date.................. 4
(c) Remedy....................................... 4
(d) Changes...................................... 4
(e) Ready for Occupancy.......................... 5
(f) Construction Representative.................. 5
(g) Early Entry.................................. 5
(h) Quality of Construction...................... 5
4. Term.............................................. 5
5. Rent.............................................. 6
(a) Fixed Rent................................... 6
(b) (Intentionally omitted.)..................... 6
(c) Pro Rata Rent................................ 6
(d) Base Year; Limitation on Amount of
Landlord's Expenses Payable by Tenant....... 6
(e) Payment of Excess Reimbursable Expenses...... 6
(f) Net Rent..................................... 8
6. Security.......................................... 8
(a) Security Deposit............................. 8
(b) Lien and Security Interest................... 9
7. Use............................................... 9
(a) General...................................... 9
(b) Compliance with Law.......................... 9
(c) Existing Title and Condition of Premises..... 9
(d) Signs....................................... 10
(e) Governmental Regulation..................... 10
(f) Security Devices............................ 10
8. Maintenance, Repairs and Property Management..... 10
(a) Common area and building maintenance........ 10
(b) Tenant's Maintenance........................ 11
(c) Landlord's Obligations to Repair............ 11
(d) Surrender................................... 12
(e) Property Management......................... 12
9. Utilities........................................ 12
10. Alterations and Additions........................ 12
(a) Limitation.................................. 12
(b) Liens....................................... 13
(c) Removal..................................... 13
11. Insurance........................................ 13
(a) General Liability........................... 13
(b) Extended Coverage........................... 13
(c) Policies.................................... 14
(d) Waiver of Subrogation....................... 14
(e) Tenant's Contents........................... 14
(f) Workmen's Compensation...................... 15
12. Indemnity; Exemption of Landlord from Liability.. 15
(a) General..................................... 15
(b) Tenant's Business........................... 15
13. Damage or Destruction; Obligation to Rebuild..... 16
(a) Landlord's Obligation to Rebuild............ 16
(b) Abatement of Rent........................... 16
(c) Option to Terminate......................... 16
(d) Uninsured Casualties........................ 17
(e) Tenant's Waiver............................. 17
14. Taxes............................................ 17
(a) Tenant's Share of Property Taxes............ 17
(b) Tenant's Personal Property.................. 17
(c) Rent Tax.................................... 18
15. Condemnation..................................... 18
(a) Rent Reduction or Lease Termination......... 18
(b) Award....................................... 18
(c) Temporary Condemnation...................... 19
16. Assignment and Subletting........................ 19
(a) Consent..................................... 19
(b) Tenant's Continuing Liability............... 19
(c) Information................................. 20
(d) Excess Sublease Rental...................... 20
(e) Release..................................... 20
(f) Controlled Entity........................... 20
(g) Attorneys' Fees............................. 21
17. Defaults; Remedies............................... 21
(a) Defaults.................................... 21
(b) Remedies.................................... 22
(c) Late Charges................................ 25
(d) Payment or Performance by Landlord.......... 25
18. Miscellaneous.................................... 25
(a) Estoppel Certificate........................ 26
(b) Landlord's Liability........................ 26
(c) Construction................................ 26
(d) Interest on Past-Due Obligations............ 27
(e) Time of Essence............................. 27
(f) Counterparts................................ 27
(g) Incorporation of Prior Agreements;
Amendments................................. 27
(h) Notices..................................... 27
(i) Waivers..................................... 27
(j) Recording................................... 27
(k) Holding Over................................ 27
(l) Covenants and Conditions.................... 28
(m) Binding Effect.............................. 28
(n) Subordination............................... 28
(o) Attorneys' Fees............................. 28
(p) Landlord's Access........................... 28
(q) Auctions.................................... 29
(r) Merger...................................... 29
(s) Joint and Several Liability................. 29
(t) Individual Liability........................ 29
(u) Attornment.................................. 29
(v) Lender's Right to Cure...................... 29
(w) Revisions to Lease.......................... 30
(x) Administrative Charge....................... 30
(y) Substituted Premises........................ 30
19. Toxic Materials.................................. 30
(a) Definitions................................. 30
(b) Prohibition on Hazardous Materials.......... 31
(c) Exception to Prohibition.................... 32
(d) Compliance with Environmental Laws.......... 32
(e) Environmental Notices....................... 32
(f) Environmental Indemnity..................... 33
(g) Remedial Work............................... 33
(h) Landlord's Option........................... 33
(i) Injunctive Relief........................... 34
(j) Self-Help................................... 34
(k) Other Tenants............................... 34
(l) Environmental Inspection.................... 34
(m) Surrender of Premises -- Environmental
Considerations............................. 35
1. Defined Terms. Each reference in this Lease to any of the following
terms shall incorporate the data stated for that term. Other terms are as
defined in the Lease.
(a) Landlord and Landlord's CH WESTSIDE ASSOCIATES
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Address (subparagraph C/O THE ▇▇▇▇▇▇ COMPANY
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18(h)): ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, #▇▇▇
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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(b) Tenant and Tenant's NEW DIRECTIONS
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Address for Notices ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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(subparagraph 18(h)): ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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(c) Street Address of 2940 W. ▇▇▇▇▇▇▇▇
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Premises (paragraph 2): ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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(d) Approximate Square 33,962
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Footage of Premises
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(paragraph 2):
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(e) Project in which Premises CH Westside Associates
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are located (paragraph 2):
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(f) Landlord's Construction ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Representative (subparagraph 3(f))
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(g) Tenant's Construction ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
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Representative
(subparagraph 3(f))
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(h) Term (paragraph 4): Sixty (60)
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months.
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(i) Scheduled Commencement 12:01 a.m. on March 1, 1993
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Date (paragraph 4):
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(j) Fixed Rent (subpara- Months 1-6 @ $5,407.38
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Months 7-12 @ $7,471.64
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Month 13 @ $0.00
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Months 14-24 @ $7,471.64
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Month 25 @ $0.00
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Months 26-30 @ $7,471.64
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Months 31-60 @ $7,471.64
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per month
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(k) Rental Period
(subparagraph 5(a)) Monthly
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(l) Security Deposit
(subparagraph 6(a)) $5,000.00
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(m) Permitted Uses
(paragraph 7) Manufacture wood products
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(n) Cleaning Deposit
(subparagraph 8(e)) N/A
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(o) Property Management Fee One and one-half percent (1 1/2%) of gross
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(subparagraph 8(f)): rental receipts
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(p) Tenant's Share of
Insurance Expenses 100%; provided, however, if any such Expenses
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(paragraph 11) and
Property Taxes or Taxes are not specifically identifiable as
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(paragraph 14) attributable solely to the Building and the
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real property immediately adjacent to the
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Building but are attributable to the Project,
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Tenant's Share of such Expenses and Taxes shall
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be N/A%
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(q) Liability Insurance $2,000,000.00
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(subparagraph 11(a)):
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2. Leased Premises.
(a) Property to be Leased. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, subject to the terms and conditions contained
herein certain floor space (the "Premises") located in the building (the
"Building") located (or to be constructed) on that certain real property located
at the street address set forth in paragraph 1 hereof (the "Property"). The
Building is located in Landlord's Project set forth in paragraph 1 above. The
Premises, which are more particularly described on Exhibit A attached hereto and
incorporated herein by this reference, shall be deemed to extend from the top
surface of subfloor to the bottom surface of ceilings above but shall not
include the common stairways, stairwells, hallways, accessways, and pipes,
ducts, conduits, wires and appurtenant fixtures serving exclusively or in common
other parts of the Building, and (if the Premises include less than the entire
rentable area of any floor) shall not include the remainder of the Floor Common
Area (as defined below). The approximate square footage of the Premises is set
forth in paragraph 1 above.
(b) Common Areas. Tenant shall have, as appurtenant to the Premises,
rights to use in common, subject to reasonable rules from time to time made by
Landlord of which Tenant is given notice:
(i) The common stairways and accessways, loading docks and platforms
and any passageways thereto, and the common pipes, ducts, conduits, wires and
appurtenant equipment serving the Premises;
(ii) If the Premises include less than the entire rentable area of
any floor, the common lobbies, hallways, toilets and other common facilities
(the "Floor Common Area"); and
(iii) Common walkways, sidewalks, and driveways necessary for
access to the Building; greenbelt areas; and, except for parking spaces which
may be reserved for persons other than Tenant, parking spaces or area from time
to time maintained on the Project for use by tenants in and visitors to the
Building and, to the extent from time to time arranged by Landlord, maintained
on adjacent real property for such use.
(c) Reserved Rights of Landlord. Notwithstanding the foregoing, Landlord
reserves the right from time to time, without unreasonable interference with
Tenant's use:
(i) To install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for service to other parts
of the Building above the ceiling surfaces, below the floor surfaces, within the
walls and in the central core areas, and to replace any pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises which are so
located or located elsewhere outside the Premises:
(ii) To alter or relocate any other common facility; provided,
however, that substitutions are substantially equivalent or better in quality;
and
(iii) To alter the boundaries of the Property, grant easements
on the Property and dedicate for public use portions thereof without Tenant's
consent, provided that no such grant or dedication shall unreasonably interfere
with Tenant's use of the Premises or otherwise cause Tenant to incur cost or
expense.
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3. Completion of Premises.
(a) Plans. Landlord and Tenant have approved the preliminary plans and
outline specifications (the "Preliminary Plans") identified in Exhibit B for the
construction of improvements in and to the Premises. If necessary, Landlord
shall cause to be prepared final plans and specifications (the "Final Plans")
substantially in conformity with the Preliminary Plans, which need not include
working detail drawings. The term "Plans" shall hereinafter mean the Preliminary
Plans and, if and when prepared, the Final Plans. The Final Plans, if necessary,
shall be delivered to Tenant as soon as reasonably possible from the date
hereof, subject to any period of delay encountered by Landlord in such
preparation as a result of requests by Tenant for changes in the Final Plans
subsequent to the date hereof. Within ten (10) days after delivery of the Final
Plans, Tenant shall set forth in writing, with particularity and precision, any
corrections or changes necessary to bring the Final Plans into substantial
conformity with the Preliminary Plans, except that Tenant may not object to any
logical development or refinement of the Preliminary Plans. Failure to deliver
to Landlord written notice of any such corrections or changes within said ten
(10) day period shall constitute approval of the Final Plans by Tenant.
Following such approval of the Final Plans, both parties shall endorse approval
for filing purposes thereon, in duplicate, and thereafter changes may be made
only in accordance with subparagraph (d) below.
(b) Scheduled Commencement Date. Landlord, at its sole expense, shall
proceed diligently with construction and completion of the Premises
substantially in accordance with the Plans. Landlord shall complete the Premises
and they shall be Ready for Occupancy (as defined below) by Tenant not later
than the Scheduled Commencement Date set forth in paragraph 1 above; provided,
however, that such Scheduled Commencement Date shall be extended for a period of
time equal to the period of any delay or delays encountered by Landlord
affecting construction because of fire, earthquake, inclement weather, or other
acts of God, acts of the public enemy, riot, insurrection, governmental
regulations of the sales of materials or supplies or the transportation thereof,
strikes or boycotts, shortages of material or labor, Tenant's early entry under
the provisions of subparagraph (g) below, changes in the Plans pursuant to
subparagraph (d) below, or any other cause beyond the control of Landlord.
(c) Remedy. If the Premises are not completed on or before the Scheduled
Commencement Date as extended pursuant to subparagraph (b) above, the sole
remedy of either party shall be the option to terminate this Lease by the
delivery to the other party of written notice within ten (10) days after the day
three (3) months following the Scheduled Commencement Date, as extended.
(d) Changes. Tenant shall have the right to request changes in the Plans,
which request shall not be unreasonably denied, provided, however, that: (i)
such right shall not be exercised unreasonably, (ii) no such request shall
affect any structural change in the Premises, (iii) Tenant shall pay any
additional cost incurred by Landlord required to implement such change,
including without limitation loss of rents, architecture fees, increase in
construction costs and any other charges payable hereunder caused by delay, with
all said costs to be paid immediately upon demand by Landlord, and (iv) such
requests shall constitute an agreement on the part of Tenant to accept any delay
in completion caused by reviewing, processing and implementing any such changes.
(e) Ready for Occupancy. The Premises shall be deemed to be ready for
occupancy ("Ready for Occupancy") when the architect or engineer in charge of
the work of construction certifies: (i) that the work of construction has been
substantially completed in accordance with the Plans; and (ii) the date of such
completion. Landlord shall diligently complete, as soon as reasonably possible,
any items of work and adjustment not completed when the Premises are Ready for
Occupancy.
(f) Construction Representative. In connection with the original
construction of the Premises each party shall be bound by its Construction
Representative set forth in paragraph 1 above. A party may designate a
substitute Construction Representative by giving written notice to the other
party.
(g) Early Entry. With the prior written consent of Landlord, Tenant may,
at any time prior to the commencement of the Term, at its sole risk, enter upon
and install such trade fixtures and equipment in the Premises as it may elect;
provided, however, that (i) Tenant's early entry shall not interfere with
Landlord's work of construction or cause labor difficulties; (ii) Tenant shall
execute an indemnity agreement in favor of Landlord in form and substance
satisfactory to Landlord; (iii) Tenant shall pay for and provide evidence of
insurance satisfactory to Landlord; and (iv) Tenant shall pay utility charges
reasonably allocated to Tenant by Landlord. Tenant shall not use the Premises
for the
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storage of inventory or otherwise commence the operation of business prior to
the commencement of the term without the express prior written consent of
Landlord.
(h) Quality of Construction. All work shall be done in a good and
workmanlike manner and in compliance with all applicable laws and lawful
ordinances, bylaws, regulations and orders of governmental authority and of the
insurers of the Improvements. Landlord assumes no liability for special,
consequential or incidental damages of any kind. There are no representations,
warranties or guaranties, express or implied, including warranties of
merchantability or use of the Premises, except as are expressly set forth
herein. Tenant hereby waives the benefit of any rule that disclaimers of
warranty shall be construed against Landlord.
4. Term. The Term of this Lease, which shall be for the period set forth in
paragraph 1 above, shall commence on the first to occur of the following dates
(the "Commencement Date") (it being agreed that if the Term of this Lease shall
not commence within one (1) year of the Scheduled Commencement Date this Lease
shall terminate and be of no further force and effect):
(a) The Scheduled Commencement Date set forth in paragraph 1 above (as it
may be extended pursuant to the terms of paragraph 3 above);
(b) The date on which the Premises are Ready for Occupancy; or
(c) The date upon which Tenant actually commences to do business in the
Premises.
5. Rent.
(a) Fixed Rent. Tenant shall pay Landlord as fixed rent for the Premises
a sum equal to the Fixed Rent set forth in paragraph 1 on or before the first
day of each and every calendar month during the Term of this Lease, except that
Fixed Rent for the first full calendar month of the Term shall be payable
simultaneously with the execution of this Lease by Tenant.
(b) (Intentionally omitted.)
(c) Pro Rata Rent. Rent for any period during the Term which is for less
than one month shall be a pro rata portion of the Rental Period installment.
Rent shall be payable, without deduction or offset, in lawful money of the
United States to Landlord at the address stated herein or to such other persons
or at such other places as Landlord may designate in writing.
(d) Base Year; Limitation on Amount of Landlord's Expenses Payable by
Tenant. Anything in subparagraphs 5(e), 11(b) or 14(a) of this Lease to the
contrary notwithstanding, Tenant shall be obligated to pay for any calendar year
only that portion of Tenant's Share of those Operating Expenses, Insurance
Expenses and Property Taxes (hereinafter sometimes cumulatively referred to as
"Landlord's Expenses") which are in excess of the Landlord' s Expenses incurred
by the Landlord during the "Base Year," as such Base Year is determined below.
For purposes of this subparagraph 5(d),(i) the Base Year for Insurance Expenses
shall be 1993; and (ii) the Base Year for Property Taxes shall be 1993;
provided, however, if the Building has not been assessed for property tax
purposes in such year (and only the land upon which the Building is located has
been assessed), then the Base Year for Property Taxes shall be the first year
for which the Landlord's property tax assessment contains an assessment for the
Building. In addition, if the Building or Project (as applicable) does not have
an average occupancy of at least seventy-five percent (75%) during the entire
Base Year for Operating Expenses, each of the Operating Expenses for such Base
Year shall be estimated and determined by Landlord as if the Building or Project
(as applicable for determining the amount of such Operating Expense under
subparagraph l(p) above) were seventy-five percent (75%) occupied and the total
of the Operating Expenses as so estimated and determined shall be deemed to be
the Operating Expenses under this subparagraph (d) for such Base Year.
(e) Payment of Excess Reimbursable Expenses. The sums payable by Tenant
(the "Excess Reimbursable Expenses") for Landlord's Expenses under subparagraphs
5(d), 11(b) and 14(a) of this Lease shall be paid in accordance with the
following procedures:
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(i) Landlord shall prepare an annual statement (the "Annual
Statement") setting forth the sum of the Landlord's Expenses for the
applicable Base Year, the estimated Landlord's Expenses that will be
incurred by Landlord during the current calendar year ending on the
next following December 31, the portion of the estimated Landlord's
Expenses which will be Excess Reimbursable Expenses and Tenant's
Share thereof.
(ii) Landlord shall endeavor to give to Tenant such Annual
Statement on or before March 1 of each calendar year throughout the
Term of the Lease, but Landlord's failure to provide Tenant with an
Annual Statement by said date shall not constitute a waiver by
Landlord of its right to require payment by Tenant of Tenant's Share
of estimated Excess Reimbursable Expenses or actual Excess
Reimbursable Expenses.
(iii) Tenant's Share of estimated Excess Reimbursable Expenses
for the calendar year in which the Annual Statement is received shall
be divided by twelve (12) and one such installment shall be paid
concurrently with each rental payment thereafter until receipt by
Tenant of the next Annual Statement. In addition, Tenant shall pay in
full concurrently with the first monthly rent payment due following
receipt of the Annual Statement an amount equal to the excess of the
monthly installment required to be paid under the most current Annual
Statement over the monthly installment made under the preceding Annual
Statement (or the amount specified in subparagraph (v) below, as
applicable) multiplied by the number of months from January through
the month in which the Annual Statement is received by Tenant.
(iv) If Tenant's Share of actual Excess Reimbursable Expenses for
the past calendar year as shown on the Annual Statement is greater
than the payments made by Tenant for that calendar year, then
concurrently with the first monthly rent payment due following receipt
by Tenant of the Annual Statement, Tenant shall pay in full an amount
equal to such excess. If Tenant's Share of actual Reimbursable
Expenses for the past calendar year as shown on the Annual Statement
is less than the payments made by Tenant for that calendar year, the
amount of such overpayment shall be credited against the next monthly
rent payment(s) falling due.
(v) An Annual Statement need not be given during the Base Year.
In addition, if the Base Year is prior to the year in which the
Commencement Date occurs, an Annual Statement need not be given during
the period from the Commencement Date (or implementation of this
monthly payment program) until December 31 of the year in which the
Commencement Date (or implementation of this monthly payment program)
occurs and estimated payments of Excess Reimbursable Expenses during
such period and until the first Annual Statement is issued to Tenant
in the next calendar year shall be in the amount specified by
Landlord.
(vi) Even though the Term has expired and the Tenant has vacated
the Premises when the final determination is made of Tenant's Share
for the calendar year in which the Lease expires, Tenant shall
immediately pay the excess of Tenant's Share for the portion of such
year in which Tenant was in occupancy over the estimated payments made
by Tenant for that calendar year and, conversely, any overpayment made
shall be immediately rebated by Landlord to Tenant.
(vii) An administrative charge equal to five percent (5%) of the
Excess Reimbursable Expenses shall be added to each installment
payment due under this subparagraph (e) (including the estimated
payments and any reconciliation payment), which administrative charge
shall be reflected in the Annual Statement, shall be payable in
addition to the Excess Reimbursable Expenses and shall be intended to
compensate Landlord for supervision, administrative and clerical
costs.
(viii) Each Annual Statement shall be prepared in accordance
with generally recognized and established accounting practices and
each determination and Annual Statement, certified by Landlord, shall
be final and conclusive on both parties, including any determination
made by Landlord of the appropriate estimated payment during the
period prior to issuance of the first Annual Statement to Tenant.
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(f) Net Rent. Landlord shall receive the Rent set forth in this paragraph
free and clear of any and all impositions, taxes, liens, charges or expenses of
any nature whatsoever in connection with its ownership and leasing of the
Premises except for that portion of the Landlord's Expenses to be borne by
Landlord as a result of the limitations contained in subparagraph 5(d) above. In
addition to the Rent provided in this paragraph, Tenant, except for that portion
of the Landlord's Expenses to be borne by Landlord as a result of the
limitations contained in subparagraph 5(d) above, shall pay all impositions,
taxes, insurance premiums, operating charges, costs and expenses which arise or
may be contemplated under any provisions of this Lease during the Term. All of
such charges, costs and expenses shall constitute additional rent, and upon the
failure of Tenant to pay any of such costs, charges or expenses, Landlord shall
have the same rights and remedies as otherwise provided in this Lease for the
failure of Tenant to pay Rent. It is the intention of the parties hereto that
Tenant shall in no event be entitled to any abatement of or reduction in Rent or
additional rent payable hereunder, except as expressly provided herein. Any
present or future law to the contrary shall not alter this agreement of the
parties.
6. Security.
(a) Security Deposit. Tenant shall deposit with Landlord upon execution
hereof the Security Deposit set forth in paragraph 1 above as security for
Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails
to pay Rent or any other charges payable by Tenant hereunder, or otherwise
defaults with respect to any provision of this Lease, Landlord may at its option
use, apply or retain all or any portion of the Security Deposit (i) to remedy
Tenant's defaults in the payment of Rent or any other sums payable by Tenant
pursuant to the terms hereof, (ii) to repair any damage to the Premises, (iii)
to clean and otherwise maintain the Premises, or (iv) to compensate Landlord for
any other loss or damage which Landlord may suffer thereby. If Landlord so uses
or applies all or any portion of the Security Deposit, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the full amount hereinabove stated
and Tenant's failure to do so shall be a breach of and a default under this
Lease. Landlord shall not be required to keep the Security Deposit separate from
its general accounts. If Tenant performs all of Tenant's obligations hereunder,
the Security Deposit, or so much thereof as has not theretofore been applied by
Landlord, shall be returned, without payment of interest or other increment for
its use, to Tenant (or, at Landlord's option, to the last assignee, if any, of
Tenant's interest hereunder) at the expiration of the Term hereof, after Tenant
has vacated the Premises.
(b) Lien and Security Interest. Tenant hereby grants to Landlord a lien
and security interest upon all property of Tenant now or hereafter placed in or
about the Premises to secure payment of all rents and other sums payable to
Landlord hereunder and the payment of any damages or losses suffered by Landlord
by reason of Tenant's breach of this Lease. Landlord, as secured party, shall be
entitled to all rights and remedies afforded a secured party under the Arizona
Uniform Commercial Code, such rights and remedies to be in addition to and
cumulative of any landlord's lien granted by law or elsewhere in this Lease.
Tenant shall execute appropriate UCC forms upon request by Landlord.
7. Use.
(a) General. The Premises shall be used and occupied only for the
Permitted Uses set forth in paragraph 1 above and for no other purpose.
(b) Compliance with Law. Tenant shall, at Tenant's sole cost and expense,
comply with all present and future laws, ordinances, orders, declarations of
covenants and restrictions, rules, regulations and requirements of all federal,
state and municipal governments, courts, departments, commissions, boards and
officers, and any national or local Board of Fire Underwriters, or any other
body exercising functions similar to those of any of the foregoing, foreseen or
unforeseen, ordinary as well as extraordinary, which may be applicable to the
Premises, the Building, and the Property or to the use or manner of use of the
Premises. Tenant shall obtain any required certificate of occupancy with respect
to its use of the Premises, the Building and the Property within thirty (30)
days from the Commencement Date and shall deliver a copy thereof to Landlord
within such thirty (30) day period; provided, however, Landlord shall obtain any
certificate of occupancy required for the shell of the Building and any
improvements to the Premises to be made by Landlord pursuant to paragraph 3
above. Tenant shall not use or permit the use of the Premises in any manner that
will tend to create waste or a nuisance.
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(c) Existing Title and Condition of Premises. Tenant hereby accepts the
Premises in their condition existing as of the Commencement Date and also
accepts the Premises and this Lease subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, subject to all covenants, conditions and restrictions
affecting the Property, Project or Premises and subject to all liens, claims and
encumbrances currently existing against the Premises or any part thereof,
including all matters disclosed by any of the foregoing or by any exhibits
attached hereto. Landlord, in accordance with (and except as otherwise provided
in) subparagraph 8(c) below, shall be responsible for causing the roof and
bearing walls of the Premises to be in good condition and repair at the
Commencement Date and shall also cause the heating, ventilating and air
conditioning system, the plumbing system and the electrical system to be in
operating condition as of the Commencement Date. All such systems shall be
deemed in the condition required at the Commencement Date unless Tenant gives
Landlord written notice of any defect in such systems on or before ten (10) days
after the Commencement Date. Except for any representation or warranty which
may be specifically set forth in this Lease, Tenant acknowledges that neither
Landlord nor Landlord's agent have made any representations or warranties as to
the Premises, including without limitation, any representation or warranty as to
condition or fitness of the Building or the suitability of the Building for the
conduct of Tenant's business.
(d) Signs. Tenant shall not erect or install on any exterior or interior
window, any door, or any exterior wall any signs, advertising media, placards,
trademarks, drapes, screens, tinting materials, shades, blinds or similar items,
without first securing Landlord's written permission. All signs shall comply
with all applicable governmental requirements, shall conform to the design,
motif and decor of the Property and shall be in good taste, as determined in
Landlord's reasonable discretion. Landlord may also establish such sign criteria
as Landlord deems appropriate for the Property and Tenant shall cause all signs
which are located on the Premises and are visible from outside the Premises to
conform to such sign criteria. Tenant shall properly maintain all approved
signs. Upon expiration of the Lease, Tenant promptly shall remove all signs
placed in and around the Premises by Tenant and shall repair any damage to the
Premises, Building or other portions of the Project caused by the removal of
such signs. Landlord may also require Tenant to erect an exterior identifying
sign in form and substance satisfactory to Landlord, which sign shall also be
subject to all of the other provisions of this subparagraph (d).
(e) Governmental Regulation. In addition to the general obligation of
Tenant to comply with laws and without limitation thereof, Landlord shall not be
liable to Tenant nor shall this Lease be affected if any parking privileges
appurtenant to the Premises, the Building and the Property are impaired by
reason of any moratorium, initiative, referendum, statute, regulation, or other
governmental decree or action which could in any manner prevent or limit the
parking rights of Tenant hereunder. Any governmental charges or surcharges or
other monetary obligations imposed relative to parking rights with respect to
the Premises, the Building and the Property shall be considered as Property
Taxes and shall be payable by Tenant under the provisions of paragraph 14
hereof.
(f) Security Devices. Tenant may not install any alarm boxes, foil
protection tape or other security equipment on the Premises without Landlord's
prior written consent.
8. Maintenance, Repairs and Property Management.
(a) Common area and building maintenance. Tenant shall at Tenant's sole
cost and expense, perform and be responsible for the operation, cleaning,
maintenance (including but not limited to preventive maintenance) and repair of
the Building and the Property and, if applicable, the Project, including,
without limitation, the roof and walls (other than for the structural repair of
such roof and walls) and all walks, driveways, parking areas, loading areas,
lawns and landscaping and shall keep all such items and areas in good condition
and repair, Tenant shall also pay before delinquent for all utilities furnished
to the common areas of the Building and Property. If Tenant fails to perform its
obligations under this subparagraph, Landlord may perform such work or make such
payments as provided in subparagraph 17(d) below and the last four sentences of
subparagraph 8(b) below shall be construed to also apply to the work performed
or to be performed, and the costs incurred, under this subparagraph.
(b) Tenant's Maintenance. Tenant shall, at Tenant's sole cost and
expense, keep and maintain the Premises, subfloors and floor coverings in good
repair and in a clean and safe condition, casualties covered by insurance
coverage excepted to the extent of proceeds received by Landlord. Tenant shall,
at Tenant's own expense, immediately replace all interior, exterior or other
glass in or about the Premises that may be broken during the Term with glass at
least
7
equal to the specification and quality of the glass so replaced. If Tenant fails
to perform Tenant's obligations under this subparagraph, Landlord may at its
option enter upon the Premises after ten (10) days' prior written notice to
Tenant and put the same in good order, condition and repair, and the cost
thereof together with interest thereon at the rate of eighteen percent (18%) per
annum shall become due and payable as additional rental to Landlord together
with Tenant's next monthly Rent payment. Nothing herein shall imply any duty
upon the part of Landlord to do any such work and the performance thereof by
Landlord shall not constitute a waiver of Tenant's default in failing to perform
the same. Landlord may, during the progress of any such work in or on the
Premises, keep and store therein all necessary materials, tools, supplies and
equipment. Landlord shall not be liable for the inconvenience, annoyance,
disturbance, loss of business or other damage of Tenant by reason of making such
repairs or the performance of any such work, or on account of bringing
materials, tools, supplies or equipment into or through the Premises during the
course thereof, and the obligations of Tenant under this Lease shall not be
affected thereby.
(c) Landlord's Obligations to Repair. Landlord shall, at its expense,
after written notice from Tenant, repair in a prompt and diligent manner any
damage to structural portions of the roof and bearing walls of the Premises;
provided, however, that if such damage is caused by an act or omission of Tenant
or Tenant's agents, invitees, employees or contractors, then such repairs shall
be at Tenant's expense, payable to Landlord pursuant to this paragraph. There
shall be no abatement or Rent during the performance of such work. Landlord
shall not be liable to Tenant for injury or damage that may result from any
defect in the construction or conditions of the Premises and Tenant shall seek
recovery for such injury or damage solely from Tenant's insurance and/or any
other persons or entities which may be liable to Tenant. Tenant waives any right
to make repairs at the expense of Landlord under any law, statute or ordinance
now or hereafter in effect unless Tenant has given Landlord written notice of
the need for such repairs, such repairs are the obligation of Landlord under
this Lease and Landlord has failed to make the needed repairs within a
reasonable period of time after the receipt of such notice.
(d) Surrender. On the last day of the Term, or on any sooner termination
of this Lease, Tenant shall surrender the Premises to Landlord in the same
condition as when received, broom clean, ordinary wear and tear alone excepted.
Tenant shall repair any damage to the Premises, the Building and the Project
occasioned by the removal of Tenant's alterations and improvements (including,
without limitation, its trade fixtures, furnishings and equipment), which repair
shall include, without limitation, the patching and filling of holes and repair
of structural damage.
(e) Property Management. Tenant shall also pay to Landlord a sum which
will reimburse Landlord for a portion of the management fee which Landlord pays
to its property manager for the Project. The amount of such fee payable by
Tenant shall be equal to one and one-half percent (1.5%) of the gross receipts
received by Landlord from Tenant under this Lease including, but not limited to,
all items of Fixed Rent, Excess Reimbursable Expenses and other charges or sums
(other than rent tax) required to be paid by Tenant under this Lease. Sums
payable by Tenant under this subparagraph 8(f) shall be paid simultaneously with
the payment by Tenant to Landlord of the Fixed Rent or other gross receipt item
upon which such management fee is calculated.
9. Utilities. Tenant shall pay for water, gas, heat, light, power, telephone
and other utilities and services supplied to the Premises, together with any
taxes thereon. If any such services are not separately metered to Tenant, Tenant
shall pay a reasonable proportion to be determined by Landlord of all charges
jointly metered with other premises, and Landlord's determination thereof, in
good faith, shall be conclusive. Landlord reserves the right to grant easements
on the Premises, and to dedicate for public use portions thereof, without
Tenant's consent provided that no such grant or dedication shall interfere with
Tenant's use of the Premises or otherwise cause Tenant to incur cost or expense.
From time to time upon Landlord's demand, Tenant shall execute, acknowledge and
deliver to Landlord, in accordance with Landlord's instructions, any and all
documents or instruments necessary to effect Tenant's covenants herein.
10. Alterations and Additions.
(a) Limitation. Tenant shall not, without Landlord's prior written
consent, make any alterations, improvements, additions, or utility installations
(which term "utility installations" shall include ducting, power panels,
fluorescent fixtures, space heaters, conduits and wiring) in, on or about the
Premises, except for interior nonstructural alterations to the Premises costing
less than Ten Thousand Dollars ($10,000) in the aggregate over any one (1) year
period. As a condition to giving such consent, Landlord may require that Tenant
agree to (i) remove any such alterations, improvements, additions or utility
installations at the expiration of the Term and restore the Premises to their
prior
8
condition, or, in the alternative, (ii) require that such alterations,
improvements, additions or utility installations shall become the property of
Landlord and shall be left by Tenant upon the expiration of the Term. As a
further condition to giving such consent, Landlord may require Tenant to provide
Landlord, at Tenant's sole cost and expense, lien and completion bonds in an
amount equal to one and one-half (1 1/2) times the estimated cost of such
improvements to insure Landlord against any liability for mechanics' and
materialmen's liens and to insure completion of the work.
(b) Liens. Tenant shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Tenant at or for use on or
in connection with the Premises, which claims are or may be secured by any
mechanics' or materialmens' lien against the Premises or any interest therein.
Tenant shall give Landlord not less than ten (10) days' notice prior to the
commencement of any work on the Premises, and Landlord shall have the right to
post notices of non-responsibility in or on the Premises as provided by law.
(c) Removal. Unless Landlord requires their removal as set forth in
subparagraph (a) above or otherwise consents to such removal, all alterations,
improvements, additions and utility installations which may be made on or to the
Premises shall become the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Term. Notwithstanding the
provisions of this subparagraph (c), Tenant's machinery and equipment, other
than that which is affixed to the Premises so that it cannot be removed without
material damage to the Premises, shall remain the property of Tenant and may be
removed by Tenant subject to the provisions of paragraph 8(d) above.
11. Insurance.
(a) General Liability. Tenant at its sole cost and expense shall maintain
comprehensive general liability insurance ("Liability Insurance") on an
"occurrence basis" against claims for "personal injury," including without
limitation, bodily injury, death or property damage, occurring upon, in or about
the Premises, the Building and the Property, such insurance to afford immediate
minimum protection, at the time of the inception of this Lease, and at all times
during the Term, to a limit of not less than Two Million Dollars ($2,000,000)
with respect to personal injury or death to any one or more persons or to damage
to property. Such insurance shall designate, and be for the benefit of, Tenant
as the named insured and Landlord as an additional insured. Such insurance shall
also include coverage against liability for bodily injury or property damage
arising out of the use, by or on behalf of Tenant, or any other person or
organization, of any owned, non-owned, leased or hired automotive equipment in
the conduct of any and all operations called for under this Lease. The limits of
said insurance shall not, however, limit the liability of Tenant hereunder.
(b) Extended Coverage. During the Term, Landlord may procure and maintain
in full force and effect with respect to the Building, a policy or policies of
fire insurance with extended coverage endorsement attached, including vandalism
and malicious mischief coverage, and any other endorsements (such as earthquake
coverage) which Landlord may elect to obtain or which may be required by the
holder of any fee or leasehold mortgage, which insurance coverage may be in an
amount up to one hundred percent (100%) of the full insurance replacement value
(replacement cost new, including debris removal and demolition) thereof.
Landlord may further obtain, if it shall so elect, rental abatement insurance
against abatement or loss of Rent in case of fire or other casualty, in an
amount at least equal to the amount of the Rent payable by Tenant during one (1)
year next ensuing as reasonably determined by Landlord. Subject to the
limitation contained in subparagraph 5(d) above, Tenant shall pay to Landlord,
in accordance with the provisions of subparagraph 5(e) above, an amount equal to
Tenant's Share of Insurance Expenses multiplied by the premium or premiums on
insurance maintained by Landlord pursuant to this subparagraph ("Insurance
Expenses"), with appropriate proration at the beginning and end of the Term.
(c) Policies. Insurance required hereunder shall be by companies rated AX
or better in "Best's Insurance Guide" licensed to do business in the state in
which the Premises are located and acceptable to Landlord and the holder of any
mortgage or deed of trust on the Premises or any part or portion thereof. Tenant
shall deliver to Landlord copies of policies of such insurance or certificates
evidencing the existence and amounts of such insurance with loss payable clauses
satisfactory to Landlord. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30) days
written notice to Landlord. Tenant shall, within ten (10) days of the expiration
of such policies, furnished Landlord with renewals or "binders" thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant, which
amount shall be payable by Tenant upon demand. Each such policy or certificate
therefor issued by the insurer shall to the extent obtainable contain (i) a
provision that no act or omission of Tenant which would otherwise result in
forfeiture or reduction of the insurance therein provided shall affect or limit
the obligation of the
9
insurance company to pay the amount of any loss sustained and (ii) an agreement
by the insurer that such policy shall not be canceled without at least thirty
(30) days prior written notice by registered mail to Landlord. Tenant shall not
do or permit to be done anything which shall invalidate the insurance policies
referred to herein. If Tenant shall fail to procure and maintain any insurance
required to be maintained by it by virtue of any provision of this paragraph,
Landlord may, but shall not be required to, procure and maintain the same, but
at the expense of Tenant.
(d) Waiver of Subrogation. Landlord and Tenant each hereby waive any and
all rights of recovery against the other, or against the partners, officers,
employees, agents and representatives of the other, for loss of or damage to
such waiving party or its property or the property of the other under its
control to the extent that such loss or damage is insured against under any
insurance policy in force at the time of such loss or damage. Tenant shall, upon
obtaining the policies of insurance required hereunder, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.
(e) Tenant's Contents. Tenant shall assume the risk of damage to any
fixtures, goods, inventory, merchandise, equipment, furniture and leasehold
improvements which remain the property of Tenant or as to which Tenant retains
the right of removal from the Premises, and Landlord shall not be liable for
injury to Tenant's business or any loss of income therefrom relative to such
damage. Tenant shall maintain the following insurance coverage with respect to
such items during the Term:
(i) Against fire, extended coverage, and vandalism and malicious
mischief perils in an amount not less than ninety percent (90%) of the
full replacement cost thereof;
(ii) Broad form boiler and machinery insurance on a blanket
repair and replacement basis with limits per accident not less than
the replacement cost of all leasehold improvements and of all boilers,
pressure vessels, air conditioning equipment, miscellaneous electrical
apparatus and all other insurable objects owned or operated by the
Tenant or by others (other than Landlord) on behalf of Tenant in the
Premises, or relating to or serving the Premises; and;
(iii) Business interruption insurance in such an amount as will
reimburse Tenant for direct or indirect loss of earnings attributable
to all such perils insured against in subparagraphs 11(e)(i) and (ii)
hereinabove.
(f) Workmen's Compensation. Tenant shall, at its own cost and expense,
keep and maintain in full force and effect during the Term, a policy or policies
of workmen's compensation insurance covering all Tenant's employees working in
the Premises, and shall furnish Landlord with certificates thereof.
12. Indemnity; Exemption of Landlord from Liability.
(a) General. In addition to any other obligations of Tenant hereunder,
including the obligations of Tenant to provide insurance, Tenant shall indemnify
and hold Landlord harmless for, from and against any and all claims arising from
Tenant's use of the Premises, or from the conduct of Tenant's business or from
any activity, work or things done, permitted or suffered by Tenant in or about
the Premises or elsewhere and shall further indemnify and hold Landlord harmless
for, from and against any and all claims arising from any breach or default in
the performance of any obligation on Tenant's part to be performed under the
terms of this Lease, or arising from any negligence of Tenant, or any of
Tenant's agents, contractors, or employees, and for, from and against all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant upon
notice from Landlord shall defend the same at Tenant's expense by counsel
satisfactory to Landlord; provided, however, the foregoing indemnity shall not
apply to claims made as a result of the sole negligence or intentional
misconduct of Landlord. Tenant, as a material part of the consideration to
Landlord for Landlord's execution of this Lease, also hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises arising
from any cause whatsoever; hereby waives all claims in respect thereof against
Landlord; and agrees that all claims with respect thereto shall be made solely
against any insurance carried by Tenant and/or against any other persons or
entities which may be liable for such claims.
10
(b) Tenant's Business. In addition to any other obligation of Tenant
hereunder, including any obligation of Tenant to provide insurance, Tenant
hereby agrees that Landlord shall not be liable for injury to Tenant's business
or any loss of income therefrom or for damage to the goods, wares, merchandise
or other property of Tenant, Tenant's employees, invitees, customers, or any
other person in or about the Premises, nor shall Landlord be liable for injury
to the person of Tenant or Tenant's employees, agents or contractors, 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, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause whatsoever, resulting from conditions arising
upon the Premises, or from other sources or places, and regardless of whether
the cause of such damage or injury or the means of repairing the same is
inaccessible to Tenant. Instead, Tenant shall seek recovery for any such injury,
loss or damage solely from any insurance carried by Tenant and/or from any other
persons or entities which may be liable to Tenant for such injury, loss or
damage.
13. Damage or Destruction; Obligation to Rebuild.
(a) Landlord's Obligation to Rebuild. If the Premises are damaged or
destroyed during the Term, Landlord shall, except as hereinafter provided,
diligently repair or rebuild them to substantially the condition in which they
existed immediately prior to such damage or destruction; provided that any
damage which is estimated in good faith by Landlord to be under Five Thousand
Dollars ($5,000.00) shall be repaired by Tenant, and Landlord shall reimburse
Tenant upon demand for expenses incurred in such repair work to the extent of
any proceeds received by Landlord from extended coverage insurance maintained
pursuant to paragraph 11 above.
(b) Abatement of Rent. Rent due and payable hereunder shall be abated,
but only to the extent of any proceeds received by Landlord from rental
abatement insurance maintained pursuant to paragraph 11 above, during the period
commencing with such damage or destruction and ending with a substantial
completion by Landlord of the work of repair or reconstruction which Landlord is
obligated or undertakes to do.
(c) Option to Terminate. If the Building or the Premises are damaged or
destroyed to the extent that Landlord determines that the same cannot, with
reasonable diligence, be fully repaired or restored by Landlord within one
hundred eighty (180) days after the date of the damage or destruction, the sole
right of both Landlord and Tenant shall be the option to terminate this Lease as
hereinafter provided; provided, however, Tenant shall not have the right to
terminate this Lease unless Landlord determines that the Premises cannot be so
repaired or restored within such one hundred eighty (180) day period of time.
Landlord shall determine whether the Building and, if applicable, the Premises
can be fully repaired or restored within the one hundred eighty (180) day
period, and Landlord's determination shall be conclusive on Tenant. Landlord
shall notify Tenant of its determination, in writing, within thirty (30) days
after the date of the damage or destruction. If Landlord determines that the
Building, including the Premises, can be fully repaired or restored within the
one hundred eighty (180) day period, or if it is determined that such repair or
restoration cannot be made within said period but no party having the right to
do so elects to terminate within thirty (30) days from the date of said
determination, this Lease shall remain in full force and effect and Landlord
shall diligently repair and restore the damage as soon as reasonably Possible.
(d) Uninsured Casualties. Notwithstanding anything contained herein to
the contrary, in the event of damage to or destruction of all or any portion of
the building which is not fully covered (except for deductible amounts) by the
insurance proceeds received by Landlord under the insurance policies required to
be maintained pursuant to paragraph 10 above, or in the event that any portion
of such insurance proceeds must be paid over to or are retained by the holder of
any mortgage or deed of trust on the Property or Premises, Landlord may
terminate this Lease by written notice to Tenant, given within thirty (30) days
after the date of notice to Landlord that said damage or destruction is not so
covered or that the proceeds are not available for repair of the damage or
destruction. If Landlord does not elect to terminate this Lease, the Lease shall
remain in full force and effect and the Building shall be repaired and rebuilt
in accordance with the provisions for repair set forth in paragraph 8 above.
(e) Tenant's Waiver. With respect to any destruction which Landlord is
obligated to repair or may elect to repair under the terms of this paragraph,
Tenant hereby waives all right to terminate this Lease pursuant to rights
otherwise presently or hereafter accorded by the provisions of Arizona Revised
Statutes Section 33-343 or other applicable laws to tenants, except as expressly
otherwise provided herein.
11
14. Taxes.
(a) Tenant's Share of Property Taxes. Subject to the provisions of
subparagraph 5(d) above, Tenant shall pay to Landlord Tenant's Share of Property
Taxes (as set forth in paragraph 1 hereof) multiplied by the sum of the
following: all real estate taxes and all other taxes relating to the Premises,
the Building and the Property, all other taxes which may be levied in lieu of
real estate taxes, assessments, and other governmental charges, or levies,
general and special, ordinary and extraordinary, unforeseen as well as foreseen,
of any kind and nature for public improvements, services or benefits
(collectively, "Property Taxes"), which are assessed, levied, confirmed, imposed
or become a lien upon the Premises, the Building or the Property, or become
payable during the Term; provided, however that:
(i) any Property Taxes shall be prorated between Landlord and
Tenant so that Tenant shall pay only that proportion thereof which the
part of such period within the Term bears to the entire period; and
(ii) any such sum payable by Tenant, which would not otherwise be
due until after the date of the termination of this Lease, shall be
paid by Tenant to Landlord upon such termination.
Any sum payable by Tenant pursuant to this subparagraph for any period during
the Term shall be paid by Tenant in accordance with the provisions of
subparagraph 5(e) above.
(b) Tenant's Personal Property. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained on the Premises or
elsewhere. Tenant shall cause such trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the
Premises, the Building and the Property.
(c) Rent Tax. Tenant shall pay to Landlord a sum equal to the amount
which Landlord is required to pay or collect by reason of any privilege tax,
sales tax, gross proceeds tax, rent tax, or like tax levied, assessed or imposed
by any governmental authority, or subdivision thereof, upon or measured by any
Rent, Excess Reimbursable Expense, management fee, or other charges or sums
required to be paid or improvements to be made by Tenant under this Lease. Such
sum shall be paid simultaneously with the payment by Tenant to Landlord of the
Fixed Rent or other charge to which such tax is attributable or, in the case of
a tax not attributable to Fixed Rent or other charges, at such time as Landlord
shall demand payment thereof. Nothing contained in this Lease shall require
Tenant to pay any franchise, corporate, estate, inheritance, succession, or
transfer tax of Landlord or any tax upon the net income of Landlord.
15. Condemnation.
(a) Rent Reduction or Lease Termination. If the Premises or any portion
thereof is taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs (the "Condemnation
Date") and the Rent shall be reduced (as of the Condemnation Date) as provided
below. If (i) more than ten percent (10%) of the Premises is taken by
condemnation and (ii) if the balance of the Premises remaining after such
condemnation is not reasonably suitable for the use to which the Premises were
being put immediately prior to the condemnation, Landlord or Tenant may, at
either's option, to be exercised in writing only within ten (10) days after
Landlord shall have given Tenant written notice of such taking (or in the
absence of such notice, within ten (10) days of the Condemnation Date) terminate
this Lease as of the Condemnation Date. If neither Landlord nor Tenant
terminates this Lease in accordance with the foregoing, or in the event that
portion of the Premises taken by condemnation is not sufficiently large so as to
give rise to the right to terminate this Lease as above provided, this Lease
shall remain in full force and effect as to the portion of the Premises
remaining, except that the Fixed Rent shall be reduced (as of the Condemnation
Date) in the proportion that the area taken by condemnation bears to the total
area of the Premises.
(b) Award. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Landlord, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Tenant
shall be entitled to any award specifically attributed by the condemning
12
authority to loss or damage to Tenant's trade fixtures and removable personal
property or to Tenant's relocation costs. In the event that this Lease is not
terminated by reason of such condemnation, Landlord shall, to the extent of
severance damages received by Landlord in connection with such condemnation and
not paid to or retained by the holder of any mortgage or deed of trust on the
Property or the Premises, repair any damage to the Premises caused by such
condemnation except to the extent that Tenant has been reimbursed therefor by
the condemning authority (in which event such reimbursement to Tenant shall also
be applied to such repair). Tenant shall pay any amount in excess of such
severance damages required to complete such repair; provided, however, if the
severance damages are not sufficient to pay all of the repair costs and if any
specific item of repair work shall be expected to have a useful life which
extends beyond the term of this Lease (including the term of any options which
Tenant may have the right to exercise), then Tenant shall be obligated to pay
with respect to the identifiable cost of such item of repair only the portion of
the total cost of such item of repair which bears the same ratio to the total
cost of such item of repair as the remaining term of this Lease (as determined
on the Condemnation Date and including the term of any options which the Tenant
may have the right to exercise) bears to the reasonably anticipated useful life
of such item of repair.
(c) Temporary Condemnation. If the temporary use of the whole or any part
of the Premises shall be taken by condemnation, the Term shall not be reduced or
affected in any way, and Tenant in such event shall continue to pay in full the
Rent and other charges herein reserved, without reduction or abatement, and,
except to the extent that Tenant is prevented from so doing by reason of any
order of the condemning authority, shall continue to perform and observe all of
the other covenants, conditions and agreements of this Lease to be performed or
observed by Tenant as though such taking had not occurred. In the event of any
such temporary condemnation Tenant shall, so long as it is otherwise in
compliance with the provisions of this Lease, be entitled to receive for itself
any and all awards or payments made for such use of that portion of the Premises
so taken; provided, however, that Tenant shall repair any and all damages to the
Premises (whether or not covered by any award to Tenant) caused by such
temporary condemnation.
16. Assignment and Subletting.
(a) Consent. Tenant shall not voluntarily or by operation of law assign,
transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of
Tenant's interest in this Lease or in the Premises without Landlord's prior
written consent, which consent Landlord shall not unreasonably withhold.
Landlord may, however, withhold its consent to such assignment, transfer,
mortgage, subletting or other transfer or encumbrance pursuant to the preceding
sentence for substantive reasons including, without limitation, the financial
condition of the proposed assignee or transferee. Any attempted assignment,
transfer, mortgage, subletting or encumbrance without such consent shall be void
and shall constitute a breach of this Lease. The consent of Landlord to any one
assignment, transfer, mortgage, subletting, or encumbrance shall not be deemed
to be a consent to any subsequent assignment, transfer, mortgage, subletting, or
encumbrance. The transfer of more than twenty-five percent (25%) of the stock or
other ownership interest in Tenant, or the merger or consolidation of Tenant
with or into another firm or entity, shall be deemed to be a transfer of
Tenant's interest under this Lease and shall be subject to the provisions of
this subparagraph (a).
(b) Tenant's Continuing Liability. Regardless of Landlord's consent, no
subletting or assignment shall alter the primary liability of Tenant to pay the
Rent or release Tenant of Tenant's obligation to perform all other obligations
to be performed by Tenant hereunder unless Landlord's written consent shall so
specifically provide, and Landlord under no circumstances shall be obligated to
release Tenant from any such liability. The acceptance of rent by Landlord from
any other person shall not be deemed to be a waiver by Landlord of any provision
hereof.
(c) Information. In connection with any proposed assignment or sublease,
Tenant shall submit to Landlord in writing:
(i) The name of the proposed assignee or sublessee;
(ii) Such information as to the financial responsibility and
standing of said assignee or sublessee as Landlord may reasonably
require; and
(iii) All of the terms and conditions upon which the proposed
assignment or subletting is to be made.
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(d) Excess Sublease Rental. If for any sublease or assignment, Tenant
receives rent or other consideration, either directly or indirectly (by
performance of Tenant's obligations or otherwise) and either initially or over
the Term of the sublease or assignment, in excess of the Fixed Rent, Adjustments
and additional rent called for hereunder, or in the case of the sublease or
assignment of a portion of the Premises, in excess of such Fixed Rent,
Adjustments and additional rent fairly allocable to such portion, after
appropriate adjustments to assure that all other payments called for hereunder
are appropriately taken into account, Tenant shall pay to Landlord, at the same
time as Fixed Rent is due hereunder, one-half (1/2) of the excess of each such
payment of rent or other consideration received by Tenant promptly after its
receipt.
(e) Release. Whenever Landlord conveys its interest in the Premises,
Landlord shall be automatically released from the further performance of
covenants on the part of Landlord herein contained, and from any and all further
liability, obligations, costs and expenses, demands, causes of action, claims or
judgments arising from or growing out of, or connected with this Lease after the
effective date of said release. The effective date of said release shall be the
date the assignee executes an assumption of such an assignment whereby the
assignee expressly agrees to assume all of Landlord's obligations, duties,
responsibilities and liabilities with respect to this Lease. If requested,
Tenant shall execute a form of release and such other documentation as may be
required to effect the provisions of this paragraph.
(f) Controlled Entity. Notwithstanding the provisions of this paragraph
16, Tenant may assign or sublet the Premises, or any portion thereof, without
Landlord's consent, after written notice to Landlord, to any entity which
controls, is controlled by, or is under common ownership with Tenant, or to any
entity resulting from the merger or consolidation with Tenant, or to any person
or entity which acquires all the assets of Tenant as a going concern of the
business that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Tenant under this Lease. Any such
assignment shall not, in any way, affect or limit the liability of Tenant under
the terms of this Lease even if after such assignment or subletting the terms of
this Lease are materially changed or altered without the consent of Tenant, the
consent of whom shall not be necessary for such change or alteration.
(g) Attorneys' Fees. In the event that Landlord shall consent to a
sublease or assignment under subparagraph (a) above, Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection with the giving of such
consent and review of the information submitted by Tenant.
17. Defaults; Remedies.
(a) Defaults. The occurrence of any one or more of the following events
shall constitute a material default and material breach of this Lease by Tenant:
(i) The vacating or abandonment of the Premises by Tenant;
(ii) The failure by Tenant to make any payment of Rent or any
other payment required to be made by Tenant hereunder, as and when
due, where such failure shall continue for a period of three (3) days
after written notice thereof from Landlord to Tenant;
(iii) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by Tenant, other than those described in subparagraph (ii)
above, where such failure shall continue for a period of ten (10) days
after written notice thereof from Landlord to Tenant; provided,
however, that if the nature of Tenant's default is such that it is
capable of being cured but more than ten (10) days are reasonably
required for its cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within such ten (10) day period
and thereafter diligently prosecutes such cure to completion; or
(iv) The making by Tenant of any general assignment for the
benefit of creditors, the filing by or against Tenant of a petition
for order of relief in bankruptcy for the purpose of bankruptcy
liquidation or reorganization under any law relating to bankruptcy
whether now existing or hereafter enacted (including, without
limitation, any petition filed by or against Tenant under any one or
more of the following Chapters of the Bankruptcy Reform Act of 1978,
11 U.S.C. (S)(S)101-1330 ("Bankruptcy Code") as amended: Chapter 7 or
Chapter 9 or Chapter 11 or Chapter 12 or Chapter 13) except that,
14
in the case of a filing against Tenant of such a petition, such filing
shall not be a default if the petition is dismissed or discharged on
or before sixty (60) days after the filing thereof; the appointment of
a trustee or receiver to take possession of all or substantially all
of Tenant's assets located at the Premises or of Tenant's interest in
this Lease, where possession is not restored to Tenant within sixty
(60) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure is not discharged
within sixty (60) days. Unless Landlord's express written consent
thereto is first obtained, in no event shall this Lease, or any
interest herein or hereunder or any estate created hereby, be assigned
or assignable by operation of law or by, in or under voluntary or
involuntary bankruptcy liquidation or reorganization proceedings or
otherwise and in no event shall this Lease or any rights or bankruptcy
liquidation or reorganization proceedings. Any purported assignment
or transfer in violation of the provisions of this subparagraph (iv)
shall constitute a material default and breach of this Lease by Tenant
and in connection with any such default and breach Landlord shall have
the rights and remedies described in subparagraph (b) below,
including, without limitation, the election to terminate this Lease.
As used in this subparagraph (iv) the words "bankruptcy liquidation or
reorganization proceedings" shall include any proceedings under any
law relating to bankruptcy whether now existing or hereafter enacted
(including, without limitation, proceedings under any one or more of
the Bankruptcy Code as amended: Chapter 7 or Chapter 9 or Chapter 11
or Chapter 12 or Chapter 13).
(b) Remedies.
(i) In the event of any default and breach by Tenant of any of
its obligations under this Lease and notwithstanding the vacation or
abandonment of the Premises by Tenant, this Lease shall continue in
effect so long as Landlord does not expressly terminate Tenant's right
to possession in any of the manners specified in this paragraph and
Landlord may, at Landlord's option and without limiting Landlord in
the exercise of any other rights or remedies which it may have by
reason of any other rights or remedies which it may have by reason of
such default and breach, exercise all of its rights and remedies
hereunder, including, without limitation:
(A) The right to declare the Term ended and to reenter the
Premises and take possession thereof and remove all persons
therefrom, and Tenant shall have no further claim in or to the
Premises or under this Lease; or
(B) The right without declaring this Lease ended to reenter
the Premises, take possession thereof, remove all persons
therefrom and occupy or lease the whole or any part thereof for
and on account of Tenant and upon such terms and conditions and
for such rent as Landlord may deem proper and to collect such
rent or any other rent that may hereafter become payable and ap-
ply the same as provided in subparagraph (ii) below; or
(C) The right, even though Landlord may have relet the
Premises or brought an action to collect Rent and other charges
without terminating this Lease, to thereafter elect to terminate
this Lease and all of the rights of Tenant in or to the
Premises; or
(D) The right, without terminating this Lease, to bring an
action or actions to collect Rent and other charges hereunder
which are from time to time past due and unpaid or to enforce
any other provisions of this Lease imposing obligations on
Tenant, it being understood that the bringing of any such action
or actions shall not terminate this Lease unless written notice
of termination is given.
(ii) Should Landlord relet the Premises under the provisions of
subparagraph (b)(i)(B) above, Landlord may execute any lease either in
its own name or in the name of Tenant, but Tenant hereunder shall have
no right or authority whatever to collect any rent from the new
tenant. The proceeds of any such reletting shall first be applied to
the payment of the costs and expenses of reletting the Premises,
including without limitation, reasonable brokerage commissions and
alterations and repairs which Landlord, in its sole discretion, deems
reasonably necessary and advisable and to the
15
payment of reasonable attorneys' fees incurred by Landlord in
connection with the Tenant's default, the retaking of the Premises and
such reletting and, second, to the payment of any indebtedness, other
than Rent, due hereunder, including, without limitation, storage
charges owing from Tenant to Landlord. When such costs and expenses
of reletting have been paid, and if there is no such indebtedness or
such indebtedness has been paid, Tenant shall be entitled to a credit
for the net amount of rental received from such reletting each month
during the unexpired balance of the Term, and Tenant shall pay
Landlord monthly on the first day of each month as specified herein
such sums as may be required to make up the rentals provided for in
this Lease. Nothing contained herein shall be construed as obligating
Landlord to relet the whole or any part of the Premises.
(iii) Should Landlord elect to terminate this Lease under the
provisions of subparagraphs (b)(i)(A) or (C) above, Landlord shall be
entitled to recover immediately from Tenant (in addition to any other
amounts recoverable by Landlord as provided by law), the following
amounts:
(A) The worth at the time of award of the unpaid rent which
had been earned at the time of termination;
(B) 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 Tenant proves could have been reasonably avoided;
(C) 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 Tenant proves
could be reasonably avoided; and
(D) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to
perform its obligations under the Lease or which in the ordinary
course of things would be likely to result therefrom.
For purposes of computing "the worth at the time of the award" of the amount
specified in subparagraph (b)(iii)(C) above, such amount shall be discounted at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award. For purposes of computing "the worth at the time of the award" under
subparagraphs (b)(iii)(A) and (b)(iii)(8) above, an interest rate of ten percent
(10%) per annum shall be utilized.
(iv) If Landlord shall elect to reenter the Premises as provided
above, Landlord shall not be liable for damages by reason of any
reentry. Tenant hereby waives all claims and demands against Landlord
for damages or loss arising out of or in connection with any
reentering and taking possession of the Premises and waives all claims
for damages or loss arising out of or in connection with any
destruction of or damage to the Premises, or for any loss of property
belonging to Tenant or to any other person, firm or corporation which
may be in or upon the Premises at the time of such reentry.
(v) Landlord shall not be deemed to have terminated this Lease,
Tenant's right to possession of the Premises or the liability of
Tenant to pay Rent thereafter to accrue or its liability for damages
under any of the provisions hereof by any reentry hereunder or by any
action in unlawful detainer or otherwise to obtain possession of the
Premises, unless Landlord shall notify Tenant in writing that Landlord
has so elected to terminate this Lease. Tenant agrees that the service
by Landlord of any notice pursuant to the unlawful detainer statutes
or comparable statutes of the state or locality in which the Premises
are located and the surrender of possession pursuant to such notice,
shall not (unless Landlord elects to the contrary at the time of or at
any time subsequent to the service of such notice and such election
shall be evidenced by a written notice to Tenant) be deemed to be a
termination of this Lease or of Tenant's obligations hereunder. No
reentry or reletting under this paragraph shall be deemed to
constitute a surrender or termination of this Lease, or of any of the
rights, options, elections, powers and remedies reserved by Landlord
hereunder, or a release of Tenant from any of its obligations
16
hereunder, unless Landlord shall specifically notify Tenant, in
writing, to that effect. No such reletting shall preclude Landlord
from thereafter at any time terminating this Lease as herein provided.
(vi) All fixtures, furnishings, goods, equipment, chattels or
other personal property of Tenant remaining on the Premises at the
time that Landlord takes possession thereof may at Landlord's election
be stored at Tenant's expense or sold or otherwise disposed of by
Landlord in any manner permitted by applicable law.
(vii) All rights, options, elections, powers and remedies of
Landlord under the provisions of this Lease are cumulative of each
other and of every other right, option, election, power or remedy
which Landlord may otherwise have at law or in equity and all or any
of which Landlord is hereby authorized to exercise. The exercise of
one or more rights, options, elections, powers or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other
rights or remedies Landlord may have upon a breach and default under
this Lease and shall not be deemed to be a waiver of Landlord's rights
or remedies thereupon or to be a release of Tenant from Tenant's
obligations thereon unless such waiver or release is expressed in
writing and signed by Landlord.
(viii) In the event of the exercise by Landlord of any one or
more of its rights and remedies hereunder, Tenant hereby expressly
waives any and all rights of redemption, if any, granted by or under
any present or future laws.
(c) Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of Rent and other sums due hereunder will cause Landlord 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 on
Landlord by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Tenant shall
not be received by Landlord or Landlord's designee within ten (10) days after
such amount shall be due, Tenant shall pay to Landlord a late charge equal to
ten percent (10%) of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.
(d) Payment or Performance by Landlord. Landlord may, at Landlord's
option and without any obligation to do so, pay any sum or do any act which
Tenant has failed to pay or do at the time Tenant was obligated to make such
payment or perform such act and Landlord shall be entitled to recover from
Tenant, upon demand, all sums expended by Landlord in making such payment or
performing such act, together with interest thereon at the rate provided in
subparagraph 18(d) from the date of expenditure until repaid by Tenant. Such sum
and interest shall be deemed additional rent under this Lease.
18. Miscellaneous.
(a) Estoppel Certificate.
(i) Tenant shall at any time upon not less than ten (10) days'
prior written notice from Landlord execute, acknowledge, and deliver to
Landlord a statement in writing certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the Rent and other charges are
paid in advance, if any, and acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed. Any such
statement may be conclusively relied upon by any person to whom it shall
be delivered by Landlord including any prospective purchaser or
encumbrancer of the Premises, the Building, the Property, or any part
thereof.
(ii) Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant that this Lease is in full force and
effect, without modification except as may be represented by
17
Landlord; that there are no uncured defaults in Landlord's
performance; and that not more than one month's Rent has been paid in
advance.
(iii) If Landlord desires to finance or refinance the Premises,
the Building, the Property, or any part thereof, Tenant hereby agrees
to deliver to any lender designated by Landlord such financial
statements of Tenant as may be reasonably required by such lender.
Such statements shall include the past three years financial
statements of Tenant. All such financial statements shall be received
by Landlord in confidence and shall be used only for the purposes
herein set forth.
(b) Landlord's Liability. The term "Landlord" as used herein shall
mean only the owner or owners at the time in question of the fee title (or the
lessee's interest in any ground or master lease) to the Premises and in the
event of any transfer of such title, Landlord herein named (and in case of any
subsequent transfers, then grantor) shall be relieved from and after the date of
such transfer of all liability as respects Landlord's obligations thereafter to
be performed, provided that any funds in the hands of Landlord or the then
grantor at the time of such transfer in which Tenant has an interest shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Landlord shall, subject as aforesaid, be binding on Landlord's
successors and assigns only during their respective periods of ownership.
(c) Construction. Paragraph captions are solely for the convenience of
the parties and shall not be deemed to or be used to define, construe, or limit
the terms hereof. As used in this Lease, the masculine, feminine and neuter
genders shall be deemed to include the others, and the singular number shall be
deemed to include the plural, whenever the context so requires. The invalidity
of any provisions of this Lease as determined by a court of competent
jurisdiction shall in no way affect the validity of any other provision hereof.
This Lease shall be governed by the laws of the state in which the Premises are
located.
(d) Interest on Past-Due Obligations. Except as expressly herein
provided, any amount due to Landlord not paid when due shall bear interest at
the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum rate
permitted by law, from the date due until the date such amount is paid. Payment
of such interest shall be made when such amount is paid. Payment of such
interest shall not excuse or cure any default by Tenant under this Lease.
(e) Time of Essence. Time is of the essence of this Lease and all of
the covenants and obligations hereof.
(f) Counterparts. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same Lease.
(g) Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, which writing shall be
signed by the parties in interest at the time of the modification.
(h) Notices. Any notices, approvals, agreements, certificates, other
documents or communications between the parties hereto required or permitted
under this Lease shall be in writing. Any such communications shall be deemed to
have been duly given or served if delivered in hand or forty-eight (48) hours
after deposit in the United States mail, certified or registered, postage and
fees prepaid, return receipt requested, addressed to the parties at the
addresses set forth in paragraph 1 of this Lease. The address to which any such
communications shall be sent may be changed by either party hereto from time to
time by a notice mailed as aforesaid.
(i) Waivers. No waiver by Landlord of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision. Landlord's consent to or approval of
any act shall not be deemed to render unnecessary the obtaining of Landlord's
consent to or approval of any subsequent act by Tenant. The acceptance
of Rent hereunder by Landlord shall not be a waiver of any preceding breach by
Tenant of any provision hereof, other than the failure of Tenant to pay the
particular Rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent.
18
(j) Recording. Tenant shall not record this Lease without Landlord's
prior written consent and such recordation shall, at the option of Landlord,
constitute a noncurable default of Tenant hereunder. Landlord and Tenant shall,
upon the request of either party, execute, acknowledge and deliver to the other
a "short form" memorandum of this Lease for recording purposes.
(k) Holding Over. If Tenant remains in possession of the Premises or any
part thereof after the expiration of the Term or sooner termination of this
Lease with the express written consent of Landlord and without executing a new
lease, such occupancy shall be construed as a tenancy from month-to-month at a
rental equal to one hundred fifty percent (150%) of the last monthly Rent plus
all other charges payable hereunder, and upon all the terms hereof insofar as
the same are applicable to a month-to-month tenancy. Nothing contained in this
subparagraph shall be construed to grant Tenant the right to holdover without
the express written consent of Landlord.
(l) Covenants and Conditions. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
(m) Binding Effect. Subject to any provisions hereof restricting
assignment or subletting by Tenant and subject to the provision of subparagraph
(b) above, this Lease shall bind the parties and their personal representatives,
successors and assigns.
(n) Subordination.
(i) This Lease, at Landlord's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation for
security now or hereafter placed upon the Premises, the Building or the
Property, or any part or parts thereof, and to any and all advances made
on the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any present or
future mortgagee, trustee or ground lessor shall at any time elect to
have this Lease prior to the lien of its mortgage, deed of trust or
ground lease, and written notice of such election shall be given to
Tenant, this Lease shall be deemed prior to such mortgage, deed of trust,
or ground lease, whether this Lease is dated priori or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(ii) Tenant agrees to execute any documents required to
effectuate such subordination or to make this Lease prior to the lien
of any mortgage, deed of trust or ground lease, as the case may be,
and failing to do so within ten (10) days after written demand, does
hereby make, constitute and irrevocably appoint Landlord as Tenant's
attorney in fact and in Tenant's name, place and stead, to do so.
(o) Attorneys' Fees. If either party brings an action to enforce the
terms hereof or declare rights under this Lease, the prevailing party in the
final adjudication of any such action, on trial or appeal, shall be entitled to
its costs and expenses of suit, including, without limitation, its actual
attorneys' fees, to be paid by the losing party as fixed by the court. In any
situation in which a dispute is settled other than by action or proceeding,
Tenant shall pay all Landlord's costs and attorneys' fees relating thereto.
(p) Landlord's Access. Landlord and Landlord's agents shall have the
right to enter the Premises at reasonable times for the purpose of inspecting
the same, showing the same to prospective purchasers or lenders, and making such
alterations, repairs, improvements or additions to the Premises or the
improvements as Landlord may deem necessary or desirable. Landlord may at any
time place on or about the Premises any ordinary "For Sale" signs and Landlord
may at any time during the last one hundred twenty (120) days of the Term place
on or about the Premises any ordinary "For Lease" signs, all without rebate of
rent or liability to Tenant.
(q) Auctions. Tenant shall not conduct any auction on the Premises
without Landlord's prior written consent.
(r) Merger. The voluntary or other surrender of this Lease by Tenant, or
a mutual cancellation thereof, shall not work a merger, and shall, at the option
of Landlord, terminate all or any existing subtenancies or may,
19
at the option of Landlord, operate as an assignment to Landlord of any or all of
such subtenancies. During any period while Tenant is in default under this
Lease, Landlord, in addition to any other rights and remedies it may have under
this Lease, shall have the right to collect directly from any subtenant all
rentals owing to Tenant under any subtenancy and to apply such rentals to any
amounts owing to Landlord by Tenant and the payment of such amounts by the
subtenant directly to Landlord shall not be a default under the subtenancy.
(s) Joint and Several Liability. Each party signing this Lease as Tenant
shall be jointly and severally liable for the failure on the part of Tenant to
pay any sums due under the terms of this Lease or for the breach by Tenant or
any of the covenants or obligations of Tenant contained herein.
(t) Individual Liability. The obligations of Landlord under this Lease do not
constitute personal obligations of the individual partners, directors, officers,
or shareholders of Landlord, and Tenant shall look solely to the real estate
that is the subject of this Lease and to no other assets of Landlord for
satisfaction of any liability in respect of this Lease and will not seek
recourse against the individuals partners, directors, officers or shareholders
of Landlord or any of their personal assets for such satisfaction.
(u) Attornment. Tenant shall, in the event any proceedings are brought for
the foreclosure of, or in the event of exercise of the power of sale under any
mortgage or deed of trust made by the Landlord, its successors or assigns,
encumbering the Premises, or any part thereof, or in the event of termination of
the ground lease, if any, and if so requested, attorney to the purchaser upon
such foreclosure or sale or upon any grant of a deed in lieu of foreclosure and
shall recognize such purchaser as the Landlord under this Lease.
(v) Lender's Right to Cure. Tenant agrees to give the holder of any mortgage
or trust deed encumbering the Premises, by registered mail, a copy of any notice
of default or nonperformance served upon Landlord, provided that prior to such
notice, Tenant has been notified in writing (by way of Assignment of Rents and
Leases or otherwise) of the address of such mortgagee or trust deed holder.
Tenant further agrees that Landlord shall not be in default under this Lease
unless (i) Tenant has given a written notice to Landlord stating that Landlord
has failed to perform Landlord's obligations under this Lease, and (ii)
specifying with particularity the obligations which Landlord has failed to
perform, and Landlord thereafter fails to perform any of its obligations so
specified within a reasonable time after Landlord's receipt of such notice. If
Landlord shall fail to cure such nonperformance in a timely manner, then such
mortgagee or trust deed holder shall have an additional thirty (30) days within
which to cure the default, or, if such default cannot be cured within that time,
then such additional time as may be necessary if within such thirty (30) days
such mortgagee or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary, to effect such cure), in
which event this Lease shall not be terminated by Tenant while such remedies are
being so diligently pursued.
(w) Revisions to Lease. Tenant hereby agrees to make any reasonable revisions
to this Lease which may be required in good faith by a bona fide construction,
interim or permanent lender in connection with the financing of the Premises.
(x) Administrative Charge. In addition to Fixed Rent, Adjustments and other
charges hereunder, Tenant shall pay to Landlord an overall administrative charge
of five percent (5%) of any charge which is Tenant's responsibility to pay,
which Landlord pays on behalf of Tenant and for which Landlord subsequently
bills Tenant.
(y) Substituted Premises. Landlord reserves the right on not less than thirty
(30) days' prior written notice to Tenant to substitute other rentable premises
within the Project for the Premises. The substituted premises shall be equal in
size to the Premises (subject to a variation of ten percent (10%)) and shall
contain comparable tenant improvements. The Fixed Rent and Adjustments for the
substituted premises shall be the same as set forth in subparagraphs 5(a) and
5(b) above (using the same Commencement Date), except that the amount thereof
shall be proportionately adjusted to correspond to any increase or decrease in
the size of the substituted premises as compared to the Premises. All other
provisions of this Lease shall remain in full force and effect with respect to
the substituted premises, with the substituted premises thereafter being deemed
the "Premises" and the building in which the substituted premises are located
thereafter being deemed the "Building;" provided, however, Tenant's Share of
Operating Expenses, Insurance Expenses and Property Taxes shall be adjusted to
the percentage which the square footage of the substituted premises is of the
total rentable (i.e. non-common area) square footage (i) of the Building in
which the substituted
20
premises are located, or (ii) of the Project, as applicable. Landlord shall pay
all reasonable moving expenses of Tenant incidental to such substitution of
premises.
19. Toxic Materials.
(a) Definitions.
(i) As used in this Lease, the term "Hazardous Material(s)" means
any oil, flammable items, explosives, radioactive materials, hazardous or
toxic substances, material or waste or related materials including,
without limitation, any substances that pose a hazard to the Premises or
to persons on or about the Premises and any substances defined as or
included in the definition of "hazardous substance," "hazardous waste,"
"hazardous material," "toxic substance," "extremely hazardous waste,"
"restricted hazardous waste" or words of similar import, now or
subsequently regulated in any way under applicable federal, state or
local laws or regulations, including without limitation, petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos,
PCBs, urea formaldehyde foam insulation, transformers or other equipment
containing dielectric fluid, levels of polychlorinated biphenyls, or
radon gas, and similar compounds, and including any different products
and materials which are subsequently found to have adverse effects on the
environment or the health and safety of persons.
(ii) As used herein, the term "Environmental Law(s)" means any
one or all of the following: the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (42 U.S.C. (S)(S)9601 et seq.); the
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Resource Conservation and Recovery Act as amended (42 U.S.C.
(S)(S)6901, et seq.); the Safe Drinking Water Act as amended (42
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U.S.C. (S)(S)300f et seq.); the Clean Water Act as amended (33 U.S.C.
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(S)(S)1251 et seq.); the Clean Air Act as amended (42 U.S.C.
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(S)(S)7401 et seq.); the Toxic Substances Control Act as amended (15
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U.S.C. (S)(S)136 et seq.); the Solid Waste Disposal Act as amended (42
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U.S.C. (S)(S)3251 et seq.); the Hazardous Materials Transportation Act
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(49 U.S.C. (S)(S)1801 et seq.); the regulations promulgated under any
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of the foregoing; and all other laws, regulations, ordinances, standards,
policies, and guidelines now in effect or hereinafter enacted by any
governmental entity (whether local, state or federal) having jurisdiction
or regulatory authority over the Premises or the Project or over
activities conducted therein and which deal with the regulation or
protection of human health, industrial hygiene or the environment,
including the soil, subsurface soil, ambient air, groundwater, surface
water, and land use.
(iii) As used herein, the term "Environmental Activity(ies)"
means any generation, manufacture, production, pumping, bringing upon,
use, storage, treatment, release, discharge, escaping, emitting,
leaching, disposal or transportation of Hazardous Materials.
(b) Prohibition on Hazardous Materials. Except as specifically provided
in subparagraph (c) below, Tenant shall not cause or permit any Environmental
Activities in, on or about the Premises by Tenant or Tenant's agents, employees,
contractors, assignees, sublessees or invitees (hereinafter cumulatively
referred to as "Tenant's Agents") without the prior written consent of Landlord.
Landlord shall be entitled to take into account such factors or facts as
Landlord may reasonably determine to be relevant in determining whether to
consent to Tenant's proposed Environmental Activity and Landlord may attach
conditions to any such consent if such conditions are reasonably necessary to
protect Landlord's interests in avoiding potential liability upon Landlord or
damage to Landlord's property arising from any Environmental Activity by Tenant
or Tenant's Agents. In no event shall Landlord be required to consent to the
installation or use of any storage tanks on the Property.
(c) Exception to Prohibition. Notwithstanding the prohibition set forth
in subparagraph (b) above, but subject to Tenant's covenant to comply with all
Environmental Laws and with the other provisions of this paragraph 19, Tenant
may bring upon, keep and use in the Premises (but not outside the Premises) (i)
general office supplies typically used in an office or warehouse in the ordinary
course of business, such as copier toner, liquid paper, glue, ink and janitorial
supplies, so long as such supplies are used in the manner for which they were
designed and in such amounts as may be normal for the business operations
conducted by Tenant in the Premiss, and (ii) those Hazardous Materials, if
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any, described on Exhibit D attached hereto and by this reference made a part
hereof so long as Tenant has delivered to Landlord a description of the
handling, storage, use and disposal procedures to be utilized by Tenant with
respect thereto.
(d) Compliance with Environmental Laws. Tenant shall keep and maintain the
Premises in compliance with, and shall not cause or permit the Premises to be in
violation of, any Environmental Laws. All Tenant's activities at the Premises
shall be in accordance with all Environmental Laws. Additionally, Tenant shall
obtain any and all necessary permits for Tenant's activities at the Premises.
Tenant's obligations and liabilities under this paragraph 19 shall continue so
long as Landlord bears any liability or responsibility under the Environmental
Laws for any action that occurs on the Premises during the term of this Lease.
(e) Environmental Notices. Tenant shall immediately notify Landlord of, and
upon Landlord's request shall provide Landlord with copies of, the following:
(i) Any correspondence, communication or notice, oral or written,
to or from any governmental entity regarding the application of
Environmental Laws to the Premises or Tenant's operations on the
Premises including, without limitation, notices of violation, notices
to comply and citations;
(ii) Any reports filed pursuant to any Environmental Law or self-
reporting requirements;
(iii) Any permits and permit applications; and
(iv) Any change in Tenant's operations on the Premiss that will
change or has the potential to change Tenant's or Landlord's
obligations or liabilities under Environmental Laws.
Tenant shall also notify the Landlord of the release of any Hazardous Material
in, on, under, about or above the Premises, the Building, the Property or the
Project.
(f) Environmental Indemnity. Tenant shall protect, indemnify, defend (with
counsel satisfactory to Landlord) and hold harmless Landlord and its directors,
officers, partners, employees, agents, lenders, and ground lessees, if any, and
their respective successors and assigns for, from and against any and all
losses, damages, claims, costs, expenses, penalties, fines and liabilities of
any kind (including, without limitation, the cost of any investigation,
remediation and cleanup, and attorneys' fees) which, in Landlord's reasonable
opinion, are attributable to (i) any Environmental Activity on the Property or
Project or in the Building or Premises undertaken or committed by Tenant or
Tenant's Agents or caused by the negligence of such persons during the Term of
this Lease, (ii) any remedial or clean-up work undertaken by or for Tenant in
connection with Tenant's Environmental Activities or Tenant's compliance with
Environmental Laws, or (iii) the breach by Tenant of any of its obligations and
covenants set forth in this paragraph 19. Landlord shall have the right but not
the obligation to join and participate in, and control, if it so elects, any
legal proceedings initiated in connection with the Environmental Activities of
Tenant or Tenant's agents. Landlord may also negotiate, defend, approve and
appeal any action taken or issued by any applicable governmental authority with
regard to contamination of the Premiss or any portion of the Property or Project
by a Hazardous Material. Any costs or expenses incurred by Landlord for which
Tenant is responsible under this paragraph 19 or for which Tenant has
indemnified Landlord shall be reimbursed by Tenant on demand, as additional rent
and with interest thereon, as provided by subparagraph 17(d) of this Lease.
This indemnity shall survive the termination of this Lease.
(g) Remedial Work. If (i) any Environmental Activity undertaken by Tenant or
Tenant's Agents results in contamination of the Premises, Building, Property or
Project or any portion thereof, or the soil or groundwater thereunder, or (ii)
any investigation, site monitoring, containment, cleanup, removal, restoration
or other remedial work of any kind or nature ("Remedial Work") is necessary or
appropriate due to or in connection with Tenant's use or occupancy of the
Premises, then, subject to Landlord's prior written approval and any conditions
imposed by Landlord, Tenant shall promptly perform all Remedial Work, at
Tenant's sole expense and without abatement of rent, as is necessary to return
the affected portion of the Premises, Building, Property and/or Project and the
soil and groundwater to the condition existing prior to the introduction of the
contaminating Hazardous Material and to otherwise comply with all applicable
Environmental Laws. Landlord's approval of such Remedial Work shall not be
unreasonably withheld so long as such actions will not cause a material adverse
effect on the Premises, Building, Property or Project after expiration of
22
the Lease Term or any material adverse effect on the Premises, Building,
Property or Project. Landlord shall also have the right to approve any and all
contractors hired by Tenant to perform such Remedial Work. All such Remedial
Work shall be performed in compliance with all applicable laws, ordinances and
regulations and in such a manner as to minimize any interference with the use
and enjoyment of the Premiss, Building, Property and Project. All costs and
expenses of such Remedial Work shall be paid by Tenant including, without
limitation, the charges of such contractor(s), and the reasonable fees and costs
of the attorneys and consultants for Landlord incurred in connection with
monitoring or review of such Remedial Work.
(h) Landlord's Option. Landlord may elect, at Landlord's sole discretion, to
perform any Remedial Work. Landlord and Landlord's agents shall have the right
to enter the Premiss at all reasonable times to inspect, monitor and/or perform
Remedial Work. All expenses incurred by Landlord in connection with performing
Remedial Work are payable by Tenant, upon Landlord's demand, with interest
thereon, as provided by subparagraph 17(d).
(i) Injunctive Relief. Tenant's failure to abide by the terms of this
paragraph 19 shall be restrainable by injunction.
(j) Self-Help. Landlord shall have the right of "self-help" or similar remedy
in order to minimize any damages, expenses, penalties and related fees or costs
arising from or related to a violation of any Environmental Law with respect to
the Premise or the Project.
(k) Other Tenants. Other tenants of the Project may be using, handling or
storing certain Hazardous Materials in connection with such tenants' use of
their premises. The failure of another tenant to comply with applicable laws
and procedures could result in a release of Hazardous Materials and
contamination to improvements within the Project or the soil and groundwater
thereunder. In the event of such a release, the tenant responsible for the
release, and not Landlord, shall be responsible for any claim, damage or expense
incurred by Tenant by reason of such contamination and Tenant shall exhaust all
its remedies against such other tenant without any right to seek any recovery
against Landlord.
(l) Environmental Inspection. Tenant shall, if reasonably required by
Landlord on account of the activities or suspected activities of Tenant or
Tenant's agents, retain a recognized environmental consultant (the "Consultant")
acceptable to Landlord to conduct an investigation of the Premises and of other
portions of the Project deemed appropriate by Landlord ("Environmental
Assessment") (i) for Hazardous Materials contamination in, about or beneath the
Premises, the Building or the Project as a result of such activities, and (ii)
to assess all Environmental Activities of Tenant and Tenant's Agents on the
Premiss or the Project for compliance with all applicable laws, ordinances and
regulations and for the use of procedures intended to reasonably reduce the risk
of a release of Hazardous Materials. The Environmental Assessment shall be
performed in a manner reasonably calculated to discover the presence of
Hazardous Materials contamination and shall be of a scope and intensity
reflective of the general standards of professional environmental consultants
who regularly provide environmental assessment services in connection with the
transfer or leasing of real property. Additionally, the Environmental
Assessment shall take into full consideration the past and present uses of the
Property and Project and other factors unique to the Property and Project. If
Landlord obtains the Environmental Assessment because of the activities of
Tenant or Tenant's Agents, Tenant shall pay Landlord on demand the cost of the
Environmental Assessment, with interest thereon, as additional rent and in
accordance with subparagraph 17(d). If Landlord so requires, Tenant shall
comply, at its sole cost and expense, with all recommendations contained in the
Environmental Assessment, including any recommendation with respect to the
precautions which should be taken with respect to Environmental Activities on
the Premiss or the Project or any recommendations for additional testing and
studies to detect the presence of Hazardous Materials. Tenant covenants to
reasonably cooperate with the Consultant and to allow entry and reasonable
access to all portions of the Premiss for the purpose of Consultant's
investigation.
(m) Surrender of Premises -- Environmental Considerations. Prior to or after
the expiration or termination of the Lease Term, Landlord may have an
Environmental Assessment of the Property performed in accordance with
subparagraph (l) above. Tenant shall perform, at its sole cost and expense, any
Remedial Work recommended by the Consultant which is necessary to remove,
mitigate or remediate any Hazardous Materials contamination of the Premises,
Building, Property or Project in connection with any Environmental Activities of
Tenant or Tenant's Agents. Prior to surrendering possession of the Premises,
Tenant shall also, unless otherwise directed by Landlord, remove any personal
property, equipment, fixture (except for any fixture installed by Landlord)
and/or storage
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device or vessel on or about the Premises, Building, Property and/or Project
which is contaminated by or contains Hazardous Materials as a result of the
activities of Tenant or Tenant's Agents and repair all damage to the Premises,
the Building and the Project caused by such removal.
IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date
and year first above written.
"LANDLORD" "TENANT"
CH WESTSIDE ASSOCIATES, NEW DIRECTIONS, INC.,
an Arizona General Partnership an Arizona corporation
BY: ▇▇▇▇▇▇ PROPERTIES, INC. BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
a California Corporation --------------------
▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Its President
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Its President and Chief Operating Officer
CH WESTSIDE ASSOCIATES, a California
General Partnership, ▇▇▇▇▇▇ Properties, Inc.,
a Delaware Corporation, General Partner
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Vice President
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