SINGLE-TENANT LEASE-NET
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only, June
12, 1997, is made by and between ▇▇▇▇▇▇▇▇▇▇▇ Development, L.L.C., ("Lessor") and
Orthologic Corp. ("Lessee"), (collectively the "Parties," or individually a
"Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and described
on the attached Exhibit "A" located in the County of Maricopa, State of Arizona,
and generally described as 100,000 square foot office/manufacturing facility
("Premises"). (See Paragraph 2 for further provisions.)
1.3 Term: Ten (10) years and zero (0) months ("Original Term") commencing
December 1, 1997 ("Commencement Date") and ending November 30, 2007 ("Expiration
Date"). (See Paragraph 3 for further provisions.)
1.4 Early Possession: N/A ("Early Possession Date"). (See Paragraphs 3.2
and 3.3 for further provisions.)
1.5 Base Rent: $78,145.00 per month ("Base Rent"), plus applicable
transaction privilege taxes, payable on the first day of each month commencing
December 1, 1997 (See Paragraph 4 for further provisions.) : If this box is
checked, there are provisions in this Lease for the Base Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $78,145.00 as Base Rent for the Period
December 1, 1997 to December 31, 1997.
1.7 Security Deposit: $50,000.00 ("Security Deposit"). (See Paragraph 5 for
further provisions.)
1.8 Permitted Use: General office and light manufacturing (See Paragraph 6
for further provisions.)
1.9 Insuring Party: Lessee is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes):
N/A
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represents [_] Lessor exclusively ("Lessor's Broker")[_] both Lessor and Lessee,
and
Kit ▇▇▇▇▇▇▇▇▇, ▇▇ Commercial
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represents [X] Lessee exclusively ("Lessee's Broker")[_] both Lessee and Lessor.
(See Paragraph 15 for further provisions.)
1.11 Guarantor. Deleted.
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 63 and Exhibits "A" and "B" all of which constitute a part
of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less. The parties
acknowledge that the improvements to be included in the Premises are to be
conveyed by Lessor to the City of Tempe pursuant to the City Agreement described
in Paragraph 62 below and leased back by Lessor pursuant to the City Lease
described therein, such that for so long as the City Lease is in effect, the
Premises include Lessor's leasehold interest in such improvements rather than
fee title thereto. Upon request, Lessee will confirm in writing the
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foregoing for the benefit of Lessor, the City or any other party as reasonably
requested by Lessor. After the City Lease has expired or terminated, the
Premises will include Lessor's fee interest in the improvements (subject to the
Sublease described in Paragraph 62 below).
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the Premises
(including without limitation) existing plumbing, fire sprinkler system,
lighting, air conditioning, heating, and loading doors, if any, in the Premises,
other than improvements or alterations constructed by Lessee, shall be in good
operating condition on the Commencement Date. If a non-compliance with said
warranty exists as of the Commencement Date, Lessor shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
rectify same at Lessor's expense. If Lessee does not give Lessor written notice
of a non-compliance with this warranty within one (1) year after the
Commencement Date, (except for customary Apunch list@ items for which the period
shall be thirty (30) days), correction of that non-compliance shall be the
obligation of the Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the Premises comply with all Applicable Law (including
without limitation all covenants or restrictions of record and applicable
building codes, regulations and ordinances) in effect on the Commencement Date.
Said warranty does not apply to the use to which Lessee will put the Premises or
to any Alterations or Utility Installations (as defined in Paragraph 7.3 (a))
made or to be made by Lessee. If the Premises do not comply with said warranty,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify the same at Lessor's expense. If Lessee
does not give Lessor written notice of a non-compliance with this warranty
within one (1) year following the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigations it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to Lessee's occupancy of the Premises and/or the term of this
Lease, and (c) that neither Lessor, nor any of Lessor's agents, has made any
oral or written representations or warranties with respect to the said matters
other than as set forth in this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
3. Term
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3
3.2 Early possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be
prorated for the period of such early possession. All other terms of this Lease,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
3.3 Delay In Possession. If for any reason Lessor cannot deliver possession
of the Premises to Lessee as agreed herein by the Early Possession Date, if one
is specified in Paragraph 1.4, or, if no Early Possession Date
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is specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however, that if
such written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease shall terminate and be of no further
force or effect. Except as may be otherwise provided, and regardless of when the
term actually commences, if possession is not tendered to Lessee when required
by this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or omissions of
Lessee.
4. Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of the calendar month involved. Payment of Base Rent and other charges
shall be made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful
performance of Lessee's obligations under this Lease. If Lessee fails to pay
Base Rent or other rent or charges due hereunder, or otherwise Defaults under
this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all
or any portion of said Security Deposit for the payment of any amount due Lessor
or to reimburse or compensate Lessor for any liability, cost, expense, loss or
damage (including attorneys' fees) which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said security Deposit,
Lessee shall within ten (10) days after written request therefor deposit moneys
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease. Any time the Base Rent increases during the term of this
lease, Lessee shall, upon written request from Lessor, deposit additional moneys
with Lessor sufficient to maintain the same ratio between the Security Deposit
and the Base Rent as those amounts are specified in the Basic Provisions. Lessor
shall not be required to keep all or any part of the Security Deposit separate
from its general accounts. Lessor shall, at the expiration or earlier
termination of the term hereof and after Lessee has vacated the Premises, return
to Lessee (or, at Lessor's option, to the last assignee, if any of Lessee's
interest herein), that portion of the Security Deposit not used or applied by
Lessor; provided, however, that the Security Deposit shall apply to rent due
after the Commencement Date, shall be applied to the first installment(s) of
rent due on or following the Commencement Date prior to any out-of-pocket
payment of rent by Lessee and the parties will execute a confirmation of such
application, and Lessee will have no further right or claim for refund or return
of the Security Deposit so applied. Unless otherwise expressly agreed in writing
by Lessor, no part of the Security Deposit shall be considered to be held in
trust, to bear interest or other increment for its use, or to be prepayment for
any moneys to be paid by Lessee under this Lease.
6. Use
6.1 Use. Lessee shall use and occupy the Premises only for the purposes set
forth in Paragraph 1.8, or any other use which is comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes
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damage to, neighboring premises or properties.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for liability of Lessor to any governmental agency
or third party under any applicable statute or common law theory. Hazardous
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the Premises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in Paragraph
6.3). "Reportable Use" shall mean (i) the installation or use of any above or
below ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority. Reportable Use shall
also include Lessee's being responsible for the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but in compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee in the
normal course of Lessee's business permitted on the Premises, so long as such
use is not a Reportable Use and does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to the use or presence of any Hazardous substance,
activity or storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefrom to therefor, including, but
not limited to, the installation (and removal on or before Lease expiration or
earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
same, has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor or for which Lessor's consent is not required
hereunder, Lessee shall immediately give written notice of such fact to Lessor.
Lessee shall also immediately give Lessor a copy of any statement, report,
notice, registration, application, permit, business plan, license, claim, action
or proceeding given to, or received from, any governmental authority or private
party, or persons entering or occupying the Premises, concerning the presence,
spill, release, discharge of, or exposure to, any Hazardous Substance or
contamination in, on, or about the Premises, including but not limited to all
such documents as may be involved in any Reportable Uses involving the Premises.
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
reasonable attorneys' and consultants' fees arising out of or involving any
Hazardous Substance or storage tank brought onto the Premises by or for Lessee
or under Lessee's control except as the same is caused by Lessor's gross
negligence or willful misconduct. Lessee's obligations under this Paragraph 6
shall include, but not be limited to, the effects of any contamination or injury
to person, property or the environment created or suffered by Lessee, and the
cost of
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investigation (including consultants' and attorneys' fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor in writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "Applicable Law," which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants', relating in any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law. Notwithstanding the foregoing,
Lessor shall, at its sole cost and expense, fully, diligently and in a timely
manner, comply with all Applicable Law as it relates to the specific obligations
of Lessor found in Paragraph 7.2 below only.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants' in connection therewith and/or to advise
Lessor with respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
(See Paragraph 57 for additional requirements)
7.1 Lessee's Obligations.
(a) Subject to the Provisions of Paragraphs 2.2 (Lessor's warranty as
to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc.),
6.3 (Compliance with Law), 7.2 (Lessor's obligations to repair), 9 (damage and
destruction), and 14 (condemnation), Lessee shall, at Lessee's sole cost and
expense and at all times, keep the Premises and every part thereof in good
order, condition and repair, structural and non-structural (whether or not such
portion of the Premises requiring repair, or the means of repairing the same,
are reasonably or readily accessible to Lessee, and whether or not the need for
such repairs occurs as a result of Lessee's use, any prior use, the elements or
the age of such portion of the Premises), including, without limiting the
generality
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of the foregoing, all equipment or facilities serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, about, or
adjacent to the Premises. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of, the
Premises, the elements surrounding same, or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance and/or storage tank brought onto the Premises by or for
Lessee or under its control. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. If Lessee occupies the Premises for
seven (7) years or more, Lessor may require Lessee to repaint the exterior of
the buildings on the Premises as reasonably required, but not more frequently
than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, all of which obligations
are intended to be that of the Lessee under Paragraph 7.1 hereof, except that
Lessor shall, at its cost, maintain and repair the structural elements of the
foundations, structural walls (excluding any interior or exterior decorative
surfaces and utility equipment therein or thereon), structural pillars
(excluding any interior or exterior decorative services and utility equipment
therein or thereon) and the structural elements of the roof (expressly excluding
the roof surface or coating and roof membrane), and expressly excluding any
damage done or caused by Lessee or its agents, employees, contractors, licensees
or invitees, whether or not the same involves negligence or misconduct. Lessor's
obligations under the preceding sentence shall be to perform required
maintenance, repair and/or replacements within a reasonable period after Lessor
has actual notice of the need therefor. It is the intention of the Parties that
the terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with the respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of, any needed repairs.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is
used in this Lease to refer to all carpeting, window coverings, air lines, power
panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and
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fencing in, on or about the Premises. The term "Trade Fixtures" shall mean
Lessee's machinery and equipment that can be removed without doing material
damage to the Premises. The term "Alterations" shall mean any modification of
the improvements on the Premises from that which are provided by Lessor under
the terms of this Lease, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. "Lessee Owned Alterations and/or Utility
Installations" are defined as Alterations and/or Utility Installations made by
Lessee that are not yet owned by Lessor as defined in Paragraph 7.4(a). Lessee
shall not make any Alterations or Utility Installations in, on, under or about
the Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof), as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during the term of this Lease as extended does not
exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon; (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not Less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect itself, Lessor
and the Premises against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-half
times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorneys' fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises. Lessor
may, at any time and at its option, elect in writing to Lessee to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
earlier termination of this Lease, become
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the property of Lessor and remain upon and be surrendered by Lessee with the
Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, with all
of the improvements, parts and surfaces thereof clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice or by Lessee
performing all of its obligations under this Lease. Except as otherwise agreed
or specified in writing by Lessor, the Premises, as surrendered, shall include
the Utility Installations. The obligation of Lessee shall include the repair of
any damage occasioned by the installation, maintenance or removal of Lessee's
Trade Fixtures, furnishings, equipment, and Alterations and/or Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Law and/or good practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease.
8. Insurance and Indemnity. (See Paragraph 61 for additional requirements)
8.1 Payment For Insurance. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $5,000,000 per occurrence. Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice for any amount due.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $5,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises"
Endorsement and contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) Carried By Lessor. In the event Lessor is the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not lieu of, the insurance required to be maintained
by Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds
of trust or ground leases on the Premises ("Lender(s)"), insuring loss or damage
to the
8
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by Lenders, but in no event more than the commercially reasonable and
available insurable value thereof if, by reason of the unique nature of age of
the improvements involved, such latter amount is less than full replacement
cost. If Lessor is the Insuring Party, however, Lessee Owned Alterations and
Utility Installations shall be insured by Lessee under Paragraph 8.4 rather than
by Lessor. If the coverage is available and commercially appropriate, such
policy or policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or earthquake unless required by a
Lender), including coverage for any additional costs resulting from debris
removal and reasonable amounts of coverage for enforcement of any ordinance or
law regulating the reconstruction or replacement of any undamaged sections of
the Premises required to be demolished or removed by reason of the enforcement
of any building, zoning, safety or land use laws as the result of a covered
cause of loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss, as defined
in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for (1)
year (including all real estate taxes, insurance costs, and any scheduled rental
increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an repairs or replacement of the Premises, to provide
for one full year's loss of rental revenues from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, property taxes, insurance premium costs and other
expenses, if any, otherwise payable by Lessee, for the next twelve (12) month
period. Lessee shall be liable for any deductible amount in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or if the Premises are part of a group of buildings owned by Lessor which are
adjacent to the Premises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said increase is
caused by Lessee's acts, omissions, use or occupancy of the Premises.
(d) Tenant's Improvements. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Lessee Owned Alterations and Utility
Installations in, on, or about the Premises similar in coverage to that carried
by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by the insurance required by this Paragraph 8.4 and shall
provide Lessor with written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business
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in the state where the Premises are located, and maintaining during the policy
term a "General Policyholders Rating" of at least B+, V, or such other rating as
may be required by a Lender having a lien on the Premises, as set forth in the
most current issue of "Best's Insurance Guide." Lessee shall not do or permit to
be done anything which shall invalidate the insurance policies referred to in
this Paragraph 8. If Lessee is the Insuring Party, Lessee shall cause to be
delivered to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancelable or subject to modification except after thirty (30) days
prior written notice to Lessor. Lessee shall at least thirty (30) days prior to
the expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. If the Insuring Party shall fail to procure and
maintain the insurance required to be carried by the Insuring Party under this
Paragraph 8, the other Party may, but shall not be required to, procure and
maintain the same, but at Lessee's expense.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence, willful misconduct and/or
breach of express warranties, Lessee shall indemnify, protect, defend and hold
harmless the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of rents and/or
damages, costs, liens, judgments, penalties, permits, attorneys' and
consultants' fees, expenses and/or liabilities arising out of, involving , or in
dealing with, the occupancy of the Premises by Lessee, the conduct of Lessees
business, any act, omission or neglect of Lessee, its agents, contractors,
employees or invitees, and out of any Default of Breach by Lessee in the
performance in a timely manner of any obligation of Lessee's part to be
performed under this Lease. The foregoing shall include, but not be limited to,
the defense or pursuit of any claim or any action or proceeding involved
therein, and whether or not (in the case of claims made against Lessor)
litigated and/or reduced to judgment, and whether well founded or not. In case
any action or proceeding be brought against Lessor by reason of any of the
foregoing matters, Lessee upon notice from Lessor shall defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any such
claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Except as caused by Lessor's gross
negligence, willful misconduct and/or breach of express warranties (which is not
corrected within a reasonable time) and subject to Paragraph 8.6, Lessor shall
not be liable for injury or damage to the person or goods, wares, merchandise or
other property of Lessee, Lessee's employees, contractors, invitees, customers,
or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said injury or damage results for conditions arising
upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places and regardless of whether the cause
of such damage or injury or the means of repairing the same is accessible or
not. Lessor shall not be liable for any damages arising from any act or neglect
of any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. Damage or Destruction.
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9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations,
which was caused by an event required to be covered by the insurance described
in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damage-Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Lessor does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either party.
9.3 Partial Damage-Uninsured Loss. If a Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's
11
expense and this Lease shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 13), Lessor may at Lessor's option, either: (i)
repair such damage as soon as reasonably possible at Lessor's expense, in which
event this Lease shall continue in full force and effect, or (ii) give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such damage of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage totally at Lessee's expense and without reimbursement from
Lessor. Lessee shall provide Lessor with the required funds or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate (60) days following the
date of such Premises Total Destruction, whether or not the damage or
destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is a damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial
Damage-Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid, all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9
12
and shall not commence, in a substantial and meaningful way, the repair or
restoration of the Premises within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice to Lessor and such Lenders and such repair or restoration is not
commenced within sixty (60) days after receipt of such notice, this Lease shall
terminate as of the date specified in said notice. If Lessor or Lender commences
the repair or restoration of the Premises within thirty (30) days after receipt
of such notice, this Lease shall continue in full force and effect. "Commence"
as used in this Paragraph shall mean either the unconditional authorization of
the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to investigate
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater, give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition of Lessor's desire to terminate this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of
Lessee or satisfactory assurance thereof within thirty (30) days following
Lessee's said commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such investigation and remediation
as soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee's obligations under this Lease to the same extent as provided in
Paragraph 9.6(a) for a period of not to exceed twelve months.
9.8 Termination - Advance Payments. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes to be paid by Lessee shall cover any period of
time prior to or after the expiration or earlier termination of the term hereof,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year this
13
Lease is in effect, and Lessor shall reimburse Lessee for any overpayment after
such proration. If Lessee shall fail to pay any Real Property Taxes required by
this Lease to be paid by Lessee, Lessor shall have the right to pay the same,
and Lessee shall reimburse Lessor therefor upon demand. See Paragraph 58 for
additional requirements.
(b) Advance Payment. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to the
Premises, and to require such current year's Real Property Taxes to be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax ▇▇▇▇ is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.
10.2 Definition of "Real Property Taxes". As used herein, the term "Real
Property Taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, any lease excise tax (including but
not limited to any government property lease excise tax due under A.R.S.
'42-1901 et seq. because of the City Lease described in Paragraph 62 below and
the City's ownership of improvements), and any commercial rental tax, (other
than inheritance, personal, income or estate taxes) imposed upon the Premises by
any authority having the direct or indirect power to tax, including any city,
state or federal government, or any school, agricultural, sanitary, fire,
street, drainage or other improvement district thereof, levied against any legal
or equitable interest of Lessor or Lessee in the Premises or against Lessee's
Alterations, Utility Improvements or Trade Fixtures, and any charge or
assessment of any kind whatsoever resulting from the Premises inclusion in any
property owners association.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with the Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property or, at Lessor's option, as provided in Paragraph
10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other
14
utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion, to be determined by Lessor, of all charges jointly
metered with other premises.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively "assignment")
or sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more or the voting control of Lessee shall constitute a change
in control for this purpose, except to the extent it results from the trading of
securities on any national or regional stock exchange.
(c) The involvement of Lessee or its assets in any transactions, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of the execution
by Lessor of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transactions
constituting such reduction, at whichever time said Net Worth of Lessee was or
is greater, shall be considered an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent. "Net Worth of Lessee" for purposes
of this Lease shall be the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented to assignment or subletting as a noncurable Breach, Lessor
shall have the right to either: (i) terminate this Lease, or (ii) upon thirty
(30) days written notice ("Lessor's Notice"), increase the monthly Base Rent to
fair market value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the new fair market
value, if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's
Notice, with any overpayment credited against the next installment(s) of Base
Rent coming due, and any underpayment for the period retroactively to the
effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction or
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by
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Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval of disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent subletting and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
any one else responsible for the performance of the Lessee's obligations under
this Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) The occurrence of a transaction described in Paragraph 12.1(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased to an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
amount required to establish such Security Deposit a condition to Lessor's
consent to such transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of this or any
other assignment of such sublease to Lessor, nor by reason of the collection of
the rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating
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that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against said sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
observe, comply with or perform any of the terms, covenants, conditions or rules
applicable to Lessee under this Lease. A "Breach" is defined as the occurrence
of any one or more of the following Defaults, and, where a grace period for cure
after notice is specified herein, the failure by Lessee to cure such Default
prior to the expiration of the applicable grace period, and shall entitle Lessor
to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor or to a third party,
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where any such failure in this subparagraph
continues for a period of three (3) business days following written notice
thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
to provide Lessor with reasonable written evidence (in duly executed original
form, if applicable) of (i) compliance with applicable law per Paragraph 6.3,
(ii) the inspection, maintenance and service contracts required under Paragraph
7.1(b), (iii) the recision of an unauthorized assignment or subletting per
Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the
subordination or non-subordination of this Lease per Paragraph 30, (vi) the
guaranty of the performance of Lessee's obligations under this Lease if required
under Paragraphs 1.11 and 37, (vii) the execution of any document requested
under Paragraph 42 (easements), or (viii) any other documentation or information
which Lessor may reasonably require of Lessee under the terms of this Lease,
where any such failure continues for a period of ten (10) days following written
notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than
17
those described in subparagraphs (a), (b) or (c) above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. '101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in the Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefore. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of term after the time of award exceeds
the amount of such rental loss that the Lessee proves could be reasonably
avoided; and (iv) any other amount necessary to compensate Lessor for all the
detriment proximately caused by the Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including but not limited to the cost of recovering possession
of the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, and that portion of the
leasing commission paid by Lessor applicable to the unexpired term of this
Lease. The worth at the time of award of the amount referred to in provision
(iii) of the prior sentence shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's
Default or Breach of this Lease shall not waive Lessor's right to recover
damages under this Paragraph. If termination of this Lease is obtained through
the provisional remedy of unlawful detainer, Lessor shall have the right to
recover in such proceeding the unpaid rent and
18
damages as are recoverable therein, or Lessor may reserve therein the right to
recover all or any part thereof in a separate suit for such rent and/or damages.
If a notice and grace period required under subparagraphs 13.1(b), (c) or (d)
was not previously given, a notice to pay rent or quit, or perform or quit, as
the case may be, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by subparagraphs 13.1(b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1 (b), (c) or (d) and
under the unlawful detainer statue shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect
after Lessee's Breach and abandonment and recover the rent as it becomes due,
provided Lessee has the right to sublet or assign, subject only to reasonable
limitations. See Paragraphs 12 and 36 for the limitations on assignment and
subletting which limitations Lessee and Lessor agree are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under the Lease, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
(d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture In Event Of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions", shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed and observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no future force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a wavier by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee on the first day of each month
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to six percent (6%) of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's Default
or Breach with respect to such overdue amount, not prevent Lessor from
exercising any of the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding
19
Paragraph 4.1 or any other provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days after such notice are reasonably
required for its performance, then Lessor shall not be in breach of this Lease
if performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion, and further provided that such period shall be
shortened to the extent reasonably required in the event of a bona fide
emergency which, if not addressed more quickly, may result in material injury or
damage to persons or property.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "Condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the land area
not occupied by any building, is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the building located on the Premises. No reduction of
Base Rent shall occur if the only portion of the Premises taken is land on which
there is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above the legal and other
expenses incurred by Lessor in the condemnation matter, repair any damage to the
Premises caused by such condemnation, except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall be responsible for
the payment of any amount in excess of such net severance damages required to
complete such repair.
15. Deleted
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16. Tenancy Statement.
16.1. Each Party (as "Responding Party") shall within ten (10) days from
the other Party (the "Requesting Party") execute, acknowledge and deliver to the
Requesting Party a statement in writing in form similar to the then most current
"Tenancy Statement" form published by the American Industrial Real Estate
Association , plus such additional information, confirmation and/or statements
as may be reasonably requested by the Requesting Party.
16.2 If Lessor desire to finance, refinance, or sell the Premise, any part
thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as
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may be reasonably required by such lender or purchaser and are reasonably
available by Lessee, including but not limited to Lessee's financial statements
for the past three (3) years. All such financial statements shall be received by
Lessor and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is
a sublease, of the lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinafter defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of
another provision hereof.
19. Interest On Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date of which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that is has made,
and is relying solely upon, its owner investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addressees noted adjacent to Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United State Express Mail or overnight courier
21
that guarantees next day delivery shall be deemed given twenty-four (24) hours
after delivery of the same to the United States Postal Service or courier. If
any notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone confirmation of receipt of
the transmission thereof, provided a copy is also delivered via delivery or mail
in the manner expressly provided in this paragraph. If notice is received on a
Sunday or legal holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereto by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statement and/or conditions shall be of no force or effect whatsoever
unless specifically agreed to in writing by Lessor at or before the time of
deposit such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successor and assigns and be governed by the
Laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. Subject to the non-disturbance provision of Paragraph
30.3, this Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security
device (collectively, "Security Device"), now or hereafter placed by Lessor upon
the real property of which the Premises are a part, to any and all advances made
on the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and the Ground Lease, Sublease,
Declaration, Title Exceptions, Miscellaneous Exceptions, REA, City Agreement and
City Lease described in Paragraph 62 below, including any amendments, additions
or supplements thereto that are permitted under Paragraph 62 below. Lessee
agrees that the lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of
22
Lessor's default with respect to any such obligation, Lessee will give any
lender whose name and address have been furnished Lessee in writing for such
purpose notice of Lessor's default and allow such lender thirty (30) days
following receipt of such notice the cure of said default before invoking any
remedies Lessee may have by reason thereof. If any lender shall elect to have
this Lease and/or any Option granted hereby superior to the lien of its Security
Device and shall give written notice thereof to Lessee, this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
30.2. Attornment. Subject to the non-disturbance provision of Paragraph
30.3, Lessee agrees to attorn to a lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
30.3 Non-Disturbance; Recognition of Lease by SRP and PPC. With respect to
Security Devices other than the Ground Lease and the Sublease (both as defined
in Paragraph 62 below), Lessee's subordination of this Lease shall be subject to
receiving assurance (a "Non-Disturbance Agreement") from the Lender that
Lessee's possession and this Lease, including any options to extend the term
hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises. Lessor has obtained and provided to
Lessee a Nondisturbance and Recognition Agreement from SRP (as defined in
Paragraph 62) dated June 27, 1997 confirming that the Sublease is a "Permitted
Sublease" pursuant to the terms of the Ground Lease. Lessor represents and
warrants that if the Ground Lease is terminated for any reason, Lessor will
promptly take all steps set forth in Section 6.04 of the Ground Lease to protect
the Sublease as a Permitted Sublease with SRP, including obtaining the
attornment and recognition of SRP with respect to the Sublease, subject to said
Section 6.04. Lessor has obtained a Nondisturbance and Recognition Agreement
from PPC (as defined in Paragraph 62 below) dated June 27, 1997 confirming that
this Lease is a "Permitted Sublease" pursuant to Section 17.2 of the Sublease
and containing PPC's agreement not to disturb Lessee's possession subject to
Article 16 of the Sublease.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a lender, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any such subordination or non-subordination, attornment and/or
non-disturbance agreement as provided herein.
30.5 Provisions Relating to Sublease. With respect to the Sublease, as
defined in Paragraph 62 below, and without limiting the generality of the
foregoing, the parties expressly agree and acknowledge that (a) this Lease and
the rights of Lessee hereunder are subject and subordinate to the Sublease and
the rights of the Landlord thereunder; (b) if the Sublease is terminated prior
to the expiration of the term thereof, Lessee will attorn to such Landlord and
recognize such Landlord as the new Lessor hereunder; (c) in the event the
Sublease is terminated and the Landlord under the Sublease is not then receiving
rents under this Lease which result in such Landlord realizing the net amount of
the annual Minimum Rent then due under the Sublease after considering all
expenses of holding, operating and managing the building(s) within the Premises,
then notwithstanding any agreement on the part of such Landlord to recognize
this Lease, such Landlord shall have the right to terminate this Lease at any
time by the giving of 365 days prior notice to Lessee and such Landlord's making
a termination payment to Lessee in the amount equal to one year's Base Rent
payable under this Lease calculated at the rental rate in effect at the time
Landlord's written notice of termination is given. Such termination payment
shall be paid by Landlord to Lessee within fifteen (15) days after the date that
this Lease is terminated and Lessee and any other occupants of the Premises have
vacated the Premises and left it in the condition required under Article 6 of
the
23
Sublease.
31. Attorneys' Fees. If any Party brings an action or proceeding to enforce the
terms hereof or declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys' fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys fee award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. Lessor shall
be entitled to attorneys' fees, costs and expenses incurred in the preparation
and service of notice of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with such
Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of emergency, and
otherwise at reasonable times for the purpose of showing the same to prospective
purchasers, lenders, or lessees, and making such alterations, repairs,
improvements or additions to the Premises or to the building of they are a part,
as Lessor may reasonably deem necessary. Lessor may at any time place on or
about the Premises or building any ordinary "For Sale" signs and Lessor may at
any time during the last one hundred twenty (120) days of the term hereof place
on or about the Premises any ordinary "For Lease" signs. All such activities of
Lessor shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily, any auction upon the Premises without first having obtained
Lessor's prior written consent. Notwithstanding anything to the contrary in this
Lease, Lessor shall not be obligated to exercise any standard of reasonableness
in determining whether to grant such consent.
34. Signs. Lessee shall not place any signs upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises, provided; however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be
24
paid by Lessee to Lessor upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. Deleted
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions, and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary; (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13.1, whether or not the Defaults
are cured, during the twelve (12) month period immediately preceding the
exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for
a period of thirty (30)
25
days after such obligation becomes due (without any necessity of Lessor to give
notice thereof to Lessee), or (ii) Lessor gives to Lessee three or more notices
of Default under Paragraph 13.1 during any twelve month period, whether or not
the Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights, and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
survive the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustment that are made to the Base
Rent or other rent payable under this Lease. As long as they do not materially
change Lessee's obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by an
institutional, insurance company, or pension plan Lender in connection with the
obtaining of normal financing or refinancing of the property of which the
Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
26
AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED
TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE
OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION
OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY
IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE
WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at Tempe, Arizona Executed at
------------------------- -----------------------------
on July 1, 1997 on
---------------------------------- --------------------------------------
By LESSOR: By LESSEE:
▇▇▇▇▇▇▇▇▇▇▇ DEVELOPMENT, L.L.C. ORTHOLOGIC CORP., a Delaware corporation
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- -------------------------------------
Name Printed: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- -----------------------------------
Title: Member Title: CFO
------------------------------ ----------------------------------
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By:
---------------------------------- -------------------------------------
Name Printed: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name Printed:
----------------------- ---------------------------
Title: Member Title:
------------------------------ ----------------------------------
Telephone: Telephone:
-------------------------- ------------------------------
Facsimile: Facsimile:
-------------------------- ------------------------------
27
ADDENDUM TO STANDARD INDUSTRIAL LEASE/COMMERCIAL
SINGLE-TENANT LEASE - NET
49. PREMISES.
The Premises shall include the real property described in Exhibit "A"
attached hereto, containing approximately 293,056 square feet, together
with an industrial building (the "Building) to be erected thereon by
Lessor. The Building shall be erected substantially in accordance with
the plans and specifications prepared in conformity with the site plan,
floor plan and elevations described in Exhibit "B" attached hereto (the
"Approved Plans and Specifications") (subject to possible minor
deviations therefrom), as they may be modified as hereinafter provided.
50. TERM; OPTION TO EXTEND.
The term of this Lease (the "Term") shall be for ten (10) years (plus the
partial month at the beginning of the Term if the Term Commencement Date
is a day other than the first day of a calendar month), unless this Lease
is sooner terminated as hereinafter provided. The Term shall commence on
the date the Improvements are deemed completed in accordance with
Paragraph 52 (the "Term Commencement Date"). Notwithstanding the
foregoing, if Lessee takes possession of or begins to use the Premises or
any part thereof prior to the Term Commencement Date (as defined herein),
the Term of this Lease shall commence on the date such possession or use
begins. Upon the commencement of the Term, Lessor and Lessee shall
execute an amendment to this Lease specifying the commencement date and
expiration date of the Term.
Subject to compliance with the following provisions, if this Lease is in
full force and effect as of the end of the scheduled original ten (10)
year Term, Lessee shall have one (1) option to extend the Term (the
"Option") for a period of five (5) years ("Option Term") upon the terms
and provisions set forth in this Lease, except for the adjustment to Base
Rent set forth below. The Option may only be exercised by a written,
binding notice of exercise ("Notice") given by Lessee to Lessor at least
six (6) months prior to the end of the original Term in accordance with
Paragraph 23. The Notice shall not be effective or valid if a Breach
exists when the notice is given or when the Option Term would otherwise
commence, and if this Lease or Lessee's right to possession is terminated
after a Notice is given, the Notice and the Option shall be null and
void. The Base Rent for the Option Term shall be one hundred fifteen per
cent (115%) of the Base Rent in effect as of the end of the original
Term.
51. CONSTRUCTION OF THE IMPROVEMENTS.
As soon as practicably possible, Lessor shall apply for all building
permits and other governmental permits and approvals necessary for the
improvements described in the Approved Plans and Specifications (the
"Improvements"). Thereafter, Lessor at its sole expense shall proceed
diligently with the construction and completion of the Improvements in
accordance with the Approved Plans and Specifications and all applicable
governmental permits and approvals and all applicable laws, ordinances,
regulations and court
28
orders. Lessor shall complete the Improvements and they shall be ready
for occupancy by Lessee not later than December 1, 1997, as such date may
be extended by Force Majeure. As used in this Lease, the term "Force
Majeure" shall mean war, fire, earthquake, flood, unavailability of
materials and court orders (provided the court orders do not result from
the conduct of the party claiming the delay). Lessor shall notify Lessee
in writing of any Force Majeure event within fifteen (15) days after it
occurs.
Lessor hereby agrees to hold Lessee harmless from and against any liens
filed in connection with the Improvements (other than liens caused by
Lessee), including without limitation liens filed in connection with any
repair or reconstruction of the Premises by Lessor. Lessor shall
reimburse Lessee upon demand for any costs and expenses incurred in
connection with any such lien, including without limitation attorneys'
fees.
Lessor shall provide the following allowances to Lessee:
(a) $1,875,000 for Tenant Improvements.
(b) $110,000 for architectural expenses for Tenant Improvements, for
design work of Lessee's Tenant Improvements architect reasonably
approved by Lessor.
(c) $140,000 for covered parking.
(d) $30,000 for an elevator.
(e) $10,000 for signage.
(f) $75,000 for moving.
The work described in Items (a), (c), (d) and (e) will be constructed by
Sun State Builders per its contract with Lessor, at cost plus ten per
cent (10%), in accordance with plans and specifications approved by
Lessor. Lessee will deliver such plans and specifications in sufficient
time to not delay construction and if Lessee fails to do so, or makes
changes thereto, the provisions of Paragraph 54 below relating to delay
will apply thereto. Any cost in excess of the allowance for an item will
be paid by Lessee per Paragraph 54 below. If an allowance is not fully
utilized, the Base Rent will be reduced using the formula for adjustment
set forth in Paragraph 54 below. There is no allowance for art work, as
that budgeted amount is being used for improvement of the wash area.
Further, provided there is then no Breach or Default in existence under
this Lease by Lessee, Lessor agrees to provide an allowance of the lesser
of (a) $15.00 per square foot of the Building that is not built out with
the initial Tenant Improvements or (b) $375,000 (the "Future Allowance")
for future Tenant Improvements of the area of the Building that will not
be initially built out (the "Future Tenant Improvements") subject to the
following provisions:
(i) The Future Allowance must be utilized within three (3) years of
the Commencement Date. To accommodate that requirement, Lessee
must submit proposed plans and specifications for the Future
Tenant Improvements for Landlord's review and approval at least
____ months prior to the third anniversary of the Commencement
Date. The Future Tenant Improvements must be generic as reasonably
determined by Lessor.
(ii) As provided above, Sun State Builders will construct the Future
Tenant Improvements at cost plus ten per cent (10%).
(iii) The portion of the Future Allowance utilized for the Future Tenant
Improvements will be amortized over the New Term of this Lease
described in (iv) below with an interest factor of eleven per cent
29
(11%), with such amortizing amount to be included in Base Rent
upon the Commencement Date of the New Term. If the Future Tenant
Improvements cost more than the Future Allowance, the excess will
be paid by Tenant in cash per Paragraph 54.
(iv) Upon completion of the Future Tenant Improvements, as defined in
Paragraph 52, the parties will execute an amendment to this Lease
confirming the date of completion, and the Original Term will be
extended to end ten (10) years from such completion date ("New
Term"), with Base Rent after such completion date increased under
(iii) above. If Lessee interferes with or delays completion, the
date for completion shall be advanced by the period of delay, for
purposes of the New Term and Base Rent adjustment.
(v) No commissions will be paid with respect to the New Term or the
increased Base Rent.
52. COMPLETION AND DELIVERY.
The Improvements shall be deemed completed when:
(a) All work of construction has been substantially completed in
accordance with the Approved Plans and Specifications, subject to normal
minor so-called "Punch-list Items" (defined below) agreed to after an
inspection by Lessor and Lessee;
(b) The architect or engineer in charge of construction of the
Improvements has prepared, certified by his signature and delivered to
Lessor and Lessee a written statement certifying that the Improvements
have been completed in accordance with the Approved Plans and
Specifications, the working drawings and any properly authorized
construction changes, and certifying the date of such completion; and
(c) A temporary or permanent certificate of occupancy for the Building
has been delivered to Lessee.
Notwithstanding the foregoing, if issuance of a certificate of occupancy
is delayed by reason of Lessee's work, the Term of this Lease shall
commence upon substantial completion of Lessor's work, as provided in
subparagraphs (a) and (b) above, and the certificate of occupancy shall
be obtained thereafter upon completion of Lessee's work.
Lessor shall diligently complete any Punch-List Items as soon as
reasonably possible, and within sixty (60) days after the inspection by
Lessor and Lessee. "Punch-List Items," as used herein, shall refer to
minor, non-structural repairs and/or minor, non-structural replacement of
work not installed (i) in a workmanlike manner and/or (ii) in accordance
with the Approved Plans and Specifications. "Minor, non-structural
repairs and replacements" shall mean repairs and replacements that do not
interfere with the occupancy of the Building and Premises or use of the
Building and Premises for their intended purposes. If Lessor's work shall
not be completed by the scheduled completion date stated above, Lessor
shall not be subject to liability for failure to give possession by such
date. Failure to complete the work as aforesaid shall not affect the
validity of this Lease nor Lessee's obligations hereunder, but the Term
of this Lease shall not commence until Lessor has completed such work.
53. LESSEE'S WORK.
30
Lessee, at its own cost and subject to all of the terms of this Lease
(other than the obligation to pay the Net Rent and other charges
hereunder prior to the commencement of the Term), may perform work in the
Building concurrently with Lessor's work, to fit the Building for
Lessee's occupancy, provided Lessee's work does not interfere with
Lessor's work; Lessee's work may be performed through Lessor's contractor
or, if no labor discord would be caused thereby, through Lessee's own
contractor. Lessee shall not allow any liens or encumbrances of any kind
to be attached to or placed upon the Premises as a result of Lessee's
work and in the event such liens or encumbrances are discovered, Lessee
agrees to promptly satisfy and remove same. Lessee hereby agrees to hold
Lessor harmless from and against any liens caused by Lessee, and Lessee
shall reimburse Lessor upon demand for any costs and expenses incurred in
connection with any such lien, including without limitation attorneys'
fees.
54. LESSEE REQUESTED CONSTRUCTION CHANGES.
Lessee may, at any time, by a written request signed by one of Lessee's
Change Representatives and delivered or mailed in accordance with this
Lease to one of Lessor's Change Representatives at Lessor's address for
notices, make any change in the work within the general scope of
construction contemplated by the Approved Plans and Specifications,
including, but not limited to changes:
(a) in the plans, specifications or working drawings, including without
limitation the Approved Plans and Specifications; provided, however, that
no such request shall result in any major structural change to the
Building or change the "footprint" of the Building as depicted in the
Approved Plans and Specifications; or
(b) in the method or manner of performance of the work.
Lessee requested construction changes will be transmitted to Lessor only
by means of written requests ("Construction Change Requests") given in
accordance with this section. "Lessee's Change Representatives" will be
those two (2) persons designated by Lessee to Lessor in writing who will
be the only representatives of Lessee authorized to request construction
changes. Until such designation is received by Lessor, Lessor may send
requests for construction changes to Lessee's address for notices without
reference to any Lessee Change Representative, and Lessee may not make
any Construction Change Requests.
Upon receipt of any Construction Change Request issued pursuant to this
section, Lessor shall immediately proceed in accordance with the
directions contained in the Requested Construction Change Request. Lessor
shall have the right to (i) require Lessee to pay, in addition to any
other payments due under this lease, all of the increase in costs caused
by the change as such changes are completed or (ii) increase the annual
rent payable under this Lease by One Hundred Ten and No/100 Dollars
($110.00) for every One Thousand and No/100 Dollars ($1,000.00) of
increases in costs caused by the change; provided, however, that such
costs payable by Lessee for the Construction Change Request or as
increased rent shall be limited to Lessor's reasonable costs for labor
and materials, brokerage commissions, interest and other carrying costs,
and sales and excise taxes (excluding any and all overhead and
administration costs and any profit margin in excess of ten percent (10%)
of such costs) resulting from such Construction Change Request.
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If Lessee shall have requested a construction change and Lessor elects to
increase the annual rent, then within thirty (30) days after the Term
Commencement Date, Lessor and Lessee shall execute an amendment to this
lease setting forth the rent payable under this Lease, as adjusted
pursuant to this Section. Lessee shall not be required to pay Lessor any
increases in rent pursuant to this Section until such an amendment has
been executed or any arbitration of the increase in rent has been
concluded, but Lessee shall thereupon promptly pay any past due rent to
Lessor.
Except as provided in this Section, no order, statement, or conduct of
Lessee's Change Representatives, or of any manager, inspector, engineer,
architect, employee representative, or consultant of Lessee, shall be
treated as a change order under this Section.
The time period specified above for the completion of the Improvements
shall be extended by delays caused by Construction Change Requests.
Further, at Lessor's option, the Base Rent will commence to be payable at
the later of December 1, 1997 or when construction would have been
completed under Paragraph 52 above but for the Construction Change
Request.
55. LESSOR REQUESTED CONSTRUCTION CHANGES.
Lessor may, at any time, by a written request ("Lessor Change Request")
signed by one of Lessor's Change Representatives which expressly refers
to this paragraph and which is delivered or mailed in accordance with
this Lease to Lessee's Change Representatives at Lessee's address for
notices, request any reasonable change in the work within the general
scope of the construction necessary to comply with law, to obtain
required governmental permits or approvals, or to complete the
Improvements in accordance with the Approved Plans and Specifications,
including changes:
a) in the plans, specifications or working drawings, including, without
limitation the Approved Plans and Specifications; provided, however, that
no such request shall result in any major structural change to the
Building or change the "footprint" of the Building as depicted in the
Approved Plans and Specifications; and
b) in the method or manner of performance of the work or type of
materials provided, however that no such change will degrade the quality
of the Building and provided, further that no change in materials may be
requested unless the change is necessary because of any inability to
obtain the material or the new materials is necessary to comply with law
or to obtain required governmental permits or approvals.
"Lessor's Change Representatives" will be those two (2) persons
designated by Lessor to Lessee in writing who will be the only
representatives of Lessor authorized to make Lessor Change Requests.
Until such designation is received by Lessee, Lessee may send
Construction Change Requests to Lessor's address for notices without
reference to any Lessor Change Representative, and Lessor may not make
any Lessor Change Requests. Lessor Change Requests will be transmitted to
Lessee by means of a written request describing in full the requested
change, plus the reasons, effects and results of the change as compared
to the original and/or existing working drawings or plans pertaining to
the requested change. The Lessor Change Request will include drawings,
documents, specifications, and all pertinent data relating to the
requested change.
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Upon receipt of any Lessor Change Request, Lessee shall immediately begin
analysis of the Lessor Change Request. Lessee will unilaterally have the
option to:
(a) Accept the Lessor Change Request by issuing a Construction Change
Request referencing the specific Lessor Change Request.
(b) Enter into fact-finding or negotiations with Lessor pertaining to
Lessor Change Request.
(c) Reject the Lessor Change Request in writing and require the Lessor to
perform the work in accordance with the Approved Plans and Specifications
at no delay to Lessee in Building occupancy.
Should Lessee not act within ten (10) business days after submittal of
any Lessor Change Request, the requested change will be considered to be
rejected by Lessee. Under no condition will the Lessor begin work on any
Lessor Change Request until after receipt of a fully executed
Construction Change Request from Lessee.
Except as provided in this Section, no order, statement or conduct of
Lessor's Change Representatives or of any manager, inspector, engineer,
architect or other employee representative, or consultant of Lessor shall
be treated as a change request under this Section.
56. RENTAL ADJUSTMENTS.
Notwithstanding anything to the contrary contained in the Lease, the Base
Rent commencing with the sixty-first (61st) month of the term of the
Lease shall be increased to 115% of the Base Rent in the immediately
preceding month. For example, if there are no changes in the Base Rent
pursuant to Paragraph 54 or otherwise such that the Base Rent in the 60th
month is $78,145.00, the Base Rent for the 61st month shall be increased
to: $89,866.00. Applicable transaction privilege taxes will be added to
all rental amounts.
57. ADDITIONAL MAINTENANCE REQUIREMENTS.
Lessee shall maintain a contract with a fire sprinkler maintenance
company that provides quarterly inspections of the fire sprinklers on the
Premises. Lessee shall provide a copy of the contract and copies of the
quarterly inspection reports to Lessor.
Lessee shall maintain a contract with a roof maintenance company that
provides for two (2) yearly inspections, the sealing of all roof
protrusions, and any necessary repairs, including without limitation
caulking or adhesive work. Lessee shall provide copies of the contract
and copies of all inspection reports to Lessor.
Lessee shall keep all roof drains and scuppers free of debris and shall
promptly notify the roof warranty company and/or roof maintenance company
of all additional protrusions made by Lessee.
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58. PROPERTY TAXES.
Lessee will receive a ▇▇▇▇ in October of each year for the year's
property taxes to be paid to Lessor in two installments. This ▇▇▇▇ will
include transaction privilege taxes on the property taxes as required by
the State and City.
Lessor shall have the option to appeal tax valuations each year. In the
event the tax appeal service obtains a reduction in the assessor's value
as originally published for that year, Lessee shall reimburse Lessor the
fee paid to the tax service. If Lessor does not file an appeal for any
year Lessee may appeal such taxes thru a tax appeal service reasonably
approved by Lessor who shall follow reasonable instructions of Lessor to
avoid impairing the long term tax position of the Premises. All costs
shall be paid by Lessee and Lessee shall receive all benefits of such
appeals applicable to the Term.
EXAMPLE:
Property tax before appeal: $10,000.00
Property tax after appeal: $9,000.00
---------
Tax savings: $1,000.00
Tax service fee: $350.00
-------
Total tax savings for Lessee: $650.00
59. BROKERS' COMMISSIONS.
Section 15 of the Lease is hereby stricken in its entirety. Lessor agrees
to pay a brokers' commission to Kit ▇▇▇▇▇▇▇▇▇, ▇▇ Commercial (the
"Broker") for brokerage services in connection with this Lease pursuant
to the terms of a separate agreement between Lessor and said Broker and
Lessor's indemnity below shall apply thereto. Lessor and Lessee hereby
represent and warrant to one another that, except for the Broker named
above, neither has dealt with any person in such a manner to give rise to
a valid claim for a brokerage commission in connection with this Lease or
in connection with the foregoing option to purchase. If any person other
than the Broker named above shall assert a claim to a fee, commission or
other compensation on account of alleged employment as a broker, finder,
or intermediary in connection with this transaction, the party hereto
under whom the broker, finder, or intermediary is claiming shall
indemnify and hold harmless the other party against and from any such
claim and all costs, expenses and liabilities incurred in connection with
such claim or any action or proceeding brought thereon (including, but
without limitation, counsel and witness fees and court costs in defending
against such claim).
60. TAX ABATEMENT.
Lessee intends to apply for tax abatement from the City of Tempe under
A.R.S. ss.42-1901 et seq. Lessor
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will reasonably cooperate with Lessee in Lessee applying for and seeking
such tax abatement as Lessor's sole obligation with respect thereto.
Lessor makes no representations or warranties concerning the availability
or effect of tax abatement.
61. LESSOR INDEMNITY.
Lessor shall indemnify, protect, defend and hold Lessee, its agent,
employees and lenders, if any, harmless from and against any and all
damages, liabilities, judgments, costs, liens, expenses, penalties,
permits and attorneys' and consultants' fees arising out of or involving
any Hazardous Substance or storage tank brought onto the Premises by or
for Lessor or under Lessor's control or existing on the Premises as of
the earlier of the date Lessor tenders possession of the Premises to
Lessee or the date Lessee begins work under Paragraph 53. Lessor's
obligation under this paragraph shall include, but not be limited to, the
effects of any contamination or injury to person, property or the
environment created or suffered by Lessor and the cost of investigation,
(including consultants' and attorneys' fees in testing), removal,
remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or
release agreement entered into by Lessee and Lessor shall release Lessor
from its obligations under this Lease with respect to Hazardous Substance
or storage tanks, unless specifically so agreed by Lessee in writing at
the time of such agreement. Lessor's indemnity shall not include
consequential damages, including but not limited to damages for injury to
reputation, reduction of leasehold value except to the extent of actual
loss of use thereof, or future business or similar matters, or punitive
damages. Further, Lessor shall have no obligation to take remedial or
corrective action unless and to the extent such action is required of
Lessor or Lessee under Applicable Laws.
62. PROPERTY DOCUMENTS.
The parties agree and acknowledge that Lessor does not own the fee of the
Premises. Rather, the fee to the Premises is owned by Salt River Project
Agricultural Improvement and Power District, an agricultural improvement
district organized under the laws of the State of Arizona (ASRP@) who
ground leases the Premises and other property to Papago Park Center,
Inc., an Arizona corporation (APapago@), an affiliate of SRP, under and
pursuant to that Ground Lease dated March 6, 1989, as periodically
amended (the AGround Lease@). In turn, Papago has subleased the Premises
to Lessor pursuant to that Ground Sublease dated June 27, 1997 as
periodically amended (the ASublease@), which is subordinate to the Ground
Lease. Further, the Premises and other property are subject to that
Declaration of Covenants, Conditions and Restrictions dated July 18, 1990
and recorded July 27, 1990 as Document No. 90-336258, as periodically
amended thereafter and the Design Guidelines as periodically amended
(collectively, the ADeclaration@).
Lessor has provided a copy of a Commitment for Title Insurance dated
March 24, 1997 and prepared by Security Title Agency (the ATitle Report@)
to Lessee, disclosing various other title exceptions (collectively the
ATitle Exceptions@). During the development of the Premises and/or
construction of the Building and/or otherwise during the term of the
Lease, Lessor may need to grant or execute other easements, declarations
or other restrictions that will encumber the Premises as periodically
amended (the AMiscellaneous Exceptions@), including but not limited to
that Declaration of Reciprocal Easements and Maintenance Agreement dated
June 12, 1997 and recorded August 22, 1997 as Document No.
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97-0579636 as periodically amended (the AREA@). Lessee approves of the
REA and approves of all such other Miscellaneous Exceptions to be created
in the future expressly provided the same do not materially and adversely
affect Lessee's use of the Premises. The foregoing shall be automatic but
within ten (10) days of request, Lessee will acknowledge that it consents
to and is bound by any such Miscellaneous Exceptions as provided above.
In addition, Lessor has entered or will enter into that Agreement for the
Conveyance of Improvements dated July 9, 1997 with the City of Tempe as
periodically amended ("City Agreement") pursuant to which Lessor will
convey the improvements included in the Premises to the City and receive
back a leasehold interest therein pursuant to the Improvements Lease
attached to the City Agreement as periodically amended ("City Lease").
Without limiting any other provision of this Lease, Lessee expressly
agrees and acknowledges that during the term of the Lease, Lessee shall
fully and timely comply with all terms and provisions of Sections 2.05
(Governmental Approvals), 2.09.01 (Compliance with Environmental Laws), 5
(Permitted Uses), 7.01 (Construction Permitted), 7.02 (Payment Bonds),
7.03 (Performance Bonds), 7.04 (Standard of Construction), 7.05
(Mechanics' Liens), 8.01 (Maintenance), 8.02 (Right to Make Alterations),
9.03, second sentence (Removal), 9.04 (Removal of Trade Fixtures and
Personal Property), 12 (Insurance), 22.03 (Estoppel Certificates), and
22.05 (Lessor's Right to Enter, Inspect and Test) of the Ground Lease
(and any amendments thereto which do not materially and adversely affect
Lessee or which are consented to by Lessee under Paragraph 36 above), and
Section 4.1 ("Additional Rent" and "Impositions" Defined), Article 5
(Insurance), Section 6.1 (Surrender - Removable Property), Section 6.2
(Waste) Article 8 (Use and Maintenance of Premises), Article 9
(Compliance), Article 10 (Construction of Buildings and Landscaping;
Other Improvements), Article 11 (Impairment of Landlord's Title), Article
12 (Inspection), Article 22 (Estoppel Certificates), Article 24
(Adjoining Excavation) and Article 26 (Trade Fixtures, Machinery and
Equipment) of the Ground Sublease (and any amendments thereto that do not
materially and adversely affect Lessee, as well as any others consented
to by Lessee under Paragraph 36)) to the extent they relate to the
Premises and the Term (and any other period of Lessee's possession) and
expressly subject to and excluding Lessor's construction and other
obligations set forth in this Lease. Lessee shall also fully and timely
comply with all terms and provisions of the following documents to the
extent they apply to Lessee as the party in possession of the Premises
(but not to the extent they apply to any property other than the
Premises): Declaration (and any amendments thereto as permitted under
Section 10.1 of the Sublease, as well as any others consented to by
Lessee under Paragraph 36 above), Title Exceptions (and any amendments
thereto that do not materially and adversely affect Lessee, as well as
any others consented to by Lessee under Paragraph 36), REA (and any
amendments thereto that do not materially and adversely affect Lessee, as
well as any others consented to by Lessee under Paragraph 36),
Miscellaneous Exceptions (and any amendments thereto that do not
materially and adversely affect Lessee, as well as any others consented
to by Lessee under Paragraph 36), City Agreement (and any amendments
thereto approved by Lessee under Paragraph 36) and City Lease (and any
amendments thereto approved by Lessee under Paragraph 36) (collectively
the obligations of Lessee under the prior sentence and under this
sentence are the AObligations@, as if they were set forth in this Lease).
The Obligations shall not include any obligations regarding the payment
of Base Rent under the Ground Lease or Sublease. Lessee shall indemnify
and hold Lessor harmless from and against any and all liability,
responsibility, obligations, costs, damages, expenses or attorneys' fees
incurred or sustained by Lessor as a result of the failure of Lessee to
timely and fully perform the Obligations under this Paragraph 62.
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Without limiting the generality of the foregoing, Lessee shall pay and be
solely responsible for (and the Obligations shall include) all
assessments, charges, deposits, dues or other amounts payable with
respect to the Premises, and relating to periods occurring within the
Term, under the Declaration and the REA, as amended as permitted above.
Lessor represents and warrants that it has constructed and covenants that
it will construct all improvements which are Lessor's responsibility
under this Lease in full compliance with the Obligations, and that the
Premises (including such improvements) will be in full compliance with
the Obligations upon tender of possession of the Premises to Lessee.
Lessor will not agree to or consent to any amendment of the Obligations
if and to the extent the same would materially and adversely affect
Lessee's use of the Premises or its right under this Lease. Lessor will
indemnify and hold Lessee harmless from any and all liability, claims,
expenses and attorneys' fees incurred by Lessee if and to the extent the
representations and warranties in the prior two sentences are materially
incorrect or if Lessor materially fails to perform the covenants set
forth therein.
63. SUBORDINATION OF LESSOR'S LIEN ON PERSONAL PROPERTY.
At the request of Lessee, Lessor will subordinate its statutory
Landlord's lien in Lessee's personal property in the Premises to purchase
money financing (including equipment leases) for such specific personal
property in an amount not exceeding the actual purchase price (or lease
amount) thereof and/or to security for bank or other financial
institution lines of credit obtained in the ordinary course of Lessee's
business. Such subordination shall utilize a reasonable form of agreement
reasonably approved by Lessor.
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