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Exhibit 10.16
LEASE AGREEMENT
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This Agreement, dated as of March 2, 2001, is made by and between
▇▇▇▇▇▇ Associates, a California limited partnership (hereinafter referred to as
"Lessor"), and Deposition Sciences, Incorporated, an Ohio corporation
(hereinafter referred to as "Lessee").
BASIC PROVISIONS
1.1 This Agreement shall become effective when (i) signed by all
parties hereto upon the date of the party last signing, (ii) upon receipt by the
Lessee of executed Nondisturbance and Attornment Agreements as set forth in
Paragraph 13.14 of this Lease, (iii) upon execution of the lease guaranty by
Advanced Lighting Technologies, Inc. (hereinafter "ADLT"), (iv) upon the
submission into escrow of the Option Fee; (v) ▇▇▇▇ ▇▇▇▇▇▇ and his affiliates
shall have acquired 100% of the partnership interests of Lessor and all required
consents to such acquisition have been obtained, (vi) ▇▇▇▇ ▇▇▇▇▇▇ shall have
filed a notice of recission with respect to the notice of default recorded
August 7, 2000, as instrument 00-078996 Official Records of Sonoma County,
California, (vii) Lessee shall have received satisfactory estoppel certificates
from the holders of all deeds of trust filed against the Property, including
among other things, a representation concerning the outstanding balance, default
rate and existing defaults; and (viii) Lessee, at its expenses, shall have
obtained a leasehold policy and optionee's policy of title insurance as set
forth in the Option Agreement, hereinafter the "Effective Date". The foregoing
notwithstanding, if the Effective Date has not occurred by March 16, 2001, this
Lease shall automatically terminate.
1.2. Subject to Section 1.1 Lessor hereby leases to Lessee and Lessee
hereby leases from Lessor that certain real property, together with all
improvements situated thereon, located in the City of Santa ▇▇▇▇, County of
Sonoma, State of California, commonly known as ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, and more
particularly described in that legal description in the exhibit attached hereto,
marked Exhibit "A" and made part hereof by reference together with all rights
and appurtenances belonging or appertaining thereto, consisting of a 143,000
square foot +/- single story concrete office and industrial building, including
mezzanine, located on approximately 8.9 acres of land, aka APN ▇▇▇-▇▇▇-▇▇▇
(hereinafter the "Premises"). Lessee has reviewed and approved the usable and
rentable square footage and the area boundaries of the land of the Premises
1.3 This Lease is intended to be a "NET, NET, NET" lease, and Lessee
shall pay all expenses associated with maintaining and operating the premises
from and after the Commencement Date, as defined in Section 2.1 hereof,
including, without limitation, real estate taxes, utilities, maintenance costs,
repairs costs and insurance premiums as set forth herein. Under no circumstances
or conditions, whether now existing or hereafter arising, or whether within or
beyond the present contemplation of the parties, shall the Lessor or its
successors or assigns be expected or required to make any payment of any kind
whatsoever, or be under any other obligation liability hereunder, except as
herein otherwise specifically set forth.
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TERM
2.1 ORIGINAL TERM. The Lessee, its permitted successors and assigns are
to have and to hold the premises for an original term of ten (10) years. The
original term shall commence to run from March 16, 2001, if all of the
conditions set forth in Paragraph 1.1 of this Agreement (indicated as items (i)
through (viii)) are satisfied or waived by the Lessee. The date the original
term commences shall be called the "Commencement Date".
2.2 OPTION TO RENEW LEASE. If Lessee desires to continue to occupy and
use the Premises after the expiration of the initial ten (10) year term hereof,
Lessee may, upon giving Lessor at least six (6) months written notice prior to
the expiration of the initial ten (10) year term hereof, continue this Lease for
a period of not more than one five (5) year period beyond the initial ten (10)
year term hereof under the same terms and conditions as herein set forth and
with the annual rental for each year of the additional five (5) year period to
be calculated in the same manner as annual rentals are calculated under
Paragraph 3.3 of this Agreement with said annual rental to be paid in equal
monthly installments in advance as provided in Paragraph 3.1 below.
Notwithstanding the foregoing, in no event shall the Base Rent during the option
period be less than the Base Rent for Year 10.
2.3 EARLY OCCUPANCY. Prior to the Commencement Date, Lessee may enter
the Premises with the prior written consent and approval of Lessor for the
purpose of making leasehold improvements and installing its furniture, fixtures
and equipment and for the purpose of making a phased transition of its
personnel.
RENT
3.1 ORIGINAL BASE RENT. Lessee shall pay a minimum annual rent to
Lessor, without notice or demand, commencing as of the Commencement Date, as
defined herein, for the term of this Lease as set forth below ("Base Rent").
Such rent shall be paid in twelve (12) equal installments in advance, on or
before the first day of each calendar month of the term of this Lease. If the
"Commencement Date" is on a date other than the first of the month then the
first partial month's rent shall accrue as due on the first day of the month
following the "Commencement Date" together with the first full month's rent.
Said partial rent payment shall be calculated pro rata based upon the number of
days of such partial month.
3.2 BASE RENT. The Base Rent shall be:
Base Base
Annual Rental Monthly Rent
Per Year Per Month
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Year 1 $1,068,000.00 $ 89,000.00
3.3 BASE RENT INCREASE THROUGH YEAR 10. Commencing at the beginning of
Year 2, the Base Rent shall increase by three percent (3%) per year compounded
annually.
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3.4 DELINQUENT PAYMENT.
3.4.1 LATE CHARGE. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any lender. Accordingly, if any Rent
shall not be received by Lessor within ten (10) days after such amount shall
become due, then, without any requirement of notice to Lessee, Lessee shall pay
to Lessor a one time late charge equal to five percent (5%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's default or breach by Lessor.
3.4.2 INTEREST. Any monetary payment due Lessor hereunder, other
than late charges, not received by Lessor, within fifteen (15) days following
the date on which it was due as to scheduled payments or within thirty (30) days
following the date on which it was due for nonscheduled payments, shall bear
interest from such extended date. The interest rate charged shall be eight
percent (8%) per annum, or the maximum interest rate allowable by law, whichever
is less. Interest is payable in addition to the late charge set forth above.
TAXES AND UTILITIES
4.1 IN GENERAL. Lessee shall pay before they become delinquent taxes
imposed from and after the Commencement Date of this Lease upon or against all
land, building, furniture, fixtures, and equipment and improvements which are
subject to this Lease, now or hereafter assessed, either in the name of the
Lessor, fee owner, or Lessee, except income, estate, inheritance or other
similar taxes or impositions which may be levied or assessed against Lessor or
its successors in title.
4.2 LESSEE'S PAYMENT OBLIGATION. Lessee shall pay, as assessed or as
billed by Lessor: (i) all real estate taxes, including assessments, bonds and
other like payments due on the Premises, including the land, building, and
improvements thereon, any increase in real estate taxes; and (ii) all property
taxes assessed on fixtures, personal property, machinery, equipment and
furniture installed by or for Lessee in the premises and all taxes on
improvements made by or for Lessee in and to the premises. Lessee's liability to
pay real estate taxes shall be prorated on the basis of a 365 day year to
account for any fractional portion of a fiscal year included in the term at its
commencement and expiration. Lessee shall not be responsible to pay any interest
or penalties due to any act or omission of Lessor absent a default of Lessee in
its obligation to pay real estate taxes provided herein.
4.3 REAL ESTATE TAXES DEFINED. As used in this Lease, the term "real
estate taxes" shall include any form of assessment, levy, penalty or tax imposed
by any authority having the direct or indirect power to tax or assess including,
without limitation, any city, county, state or federal government, or any
improvement or other district thereof. Notwithstanding anything to the contrary
herein, Lessee shall not be obligated to pay any income, inheritance, estate,
gift,
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succession, sales, use, or transfer tax, nor shall Lessee be obligated to pay
any personal property, corporation, franchise, payroll, excess profits, excise,
or privilege tax which may be assessed or levied against Lessor.
4.4 SUBSTITUTE TAXES. If at any time the methods of taxation prevailing
at the commencement of the term hereof shall be altered so that, by virtue of no
underlying new legislation providing that the taxes or fees therein levied,
assessed or imposed are in lieu of or are a substitute for the whole or any part
of the taxes (as herein above defined) presently levied, assessed or imposed, or
there shall be levied, assessed and imposed: (i) a tax, wholly or partially as a
capital levy or otherwise, on the rents received therefrom, (ii) a tax measure
by or based on whole or in part on the premises and imposed upon Lessor, or
(iii) a tax or license fee measured by the rents payable or by any other means
by Lessee hereunder, then to the extent that the same would be payable if the
premises were the only property of Lessor subject thereto, Lessee shall pay and
discharge the same as herein provided. Notwithstanding anything to the contrary
herein, Lessee shall not be obligated to pay any income, inheritance, estate,
gift, succession, sales, use, or transfer tax, nor shall Lessee be obligated to
pay any personal property, corporation, franchise, payroll, excess profits,
excise, or privilege tax which may be assessed or levied against Lessor.
4.5 DUE DATE. The taxes and other impositions payable by Lessee shall
be paid not later than the date on which such taxes become delinquent and a
receipted tax ▇▇▇▇ shall be exhibited to the Lessor upon request. In the event
Lessee fails to pay said taxes and other impositions within the time provided,
the Lessor may, after notice, pay same, in which event the Lessee shall remain
liable to and obligated to repay Lessor the amount so advanced together with
interest thereon at the lower of: (i) the maximum rate permitted by law; or (ii)
the annual rate of eight percent (8%) per annum, plus any late penalties
thereon. In the event any taxes or impositions may be payable in installments,
Lessee shall have the right to pay the same as such installments fall due.
4.6 DEFAULT. Failure to pay any sums due herein shall be classified as
a default under the term of this Lease, Lessor shall be able to take all
necessary actions under the default sections provided herein.
4.7 LESSEE'S RIGHT TO CONTEST TAX. Lessee at its sole cost shall have
the right, at any time, to seek a reduction in the assessed valuation of the
premises or to contest any real estate taxes that are to be paid by Lessee. If
Lessee seeks a reduction or contests the real estate taxes, the failure of
Lessee to pay the real estate taxes shall not constitute a default as long as
Lessee complies with this Section. Lessor shall not be required to join in any
proceeding or contest brought by Lessor unless the provisions of any law require
that the proceeding or contest be brought by or in the name of Lessor or any
owner of the Property. In that case, Lessor shall join in the proceeding or
contest or permit it to be brought in Lessor's name as long as Lessor is not
required to bear any cost. Lessee, on final determination of the proceeding or
contest, shall immediately pay or discharge any decision or judgment rendered,
together with all costs, charges, interest, and penalties incidental to the
decision or judgment.
4.8 TAXES ARE CURRENT Lessor represents that all real estate taxes on
the Premises are current through the installment due up to the Commencement Date
of this Lease.
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4.9 UTILITIES. From and after the Commencement Date, Lessee shall pay
for all water, gas, heat, air conditioning, light power, sewer charges,
plumbing, telephone service, garbage and all other services and utilities
supplied to the Premises, together with any taxes thereon.
USE
5.1 IN GENERAL. The Lessee shall use and occupy the Premises for the
light manufacturing of thin film coatings research and development, and related
warehouse and office functions (hereinafter the "Agreed Use"). In conducting its
business on the premises, Lessee covenants to conform to all applicable laws,
regulations, and licensing requirements and shall not use the Premises or suffer
the Premises to be used for any unlawful purpose. Lessee may, at any time and in
its sole discretion, change the use of the Premises to any use allowed by law.
Such a change may be made without Lessor's consent, however, Lessee shall
provide written notice of such change to Lessor within sixty (60) days after
such change has been effected.
5.2 PROHIBITED USES. Lessee shall not do or permit anything to be done
in or about the Premises nor bring or keep anything therein which is not within
the permitted use of the Premises or which will cause a cancellation of any
insurance policy covering the premises or any part thereof. Lessee shall not do
or permit anything to be done in or about the Premises which will constitute a
nuisance or use or allow the premises to be used for any unlawful purpose.
Lessee shall not commit or allow to be committed any waste in or upon the
Premises.
5.3 COMPLIANCE WITH LAWS. Lessee shall, at Lessee's sole expense,
materially comply with all present and future laws, rules, requirements,
ordinances, orders, directions and regulations of any state, municipal, or other
governmental or lawful authority, affecting the Premises or appurtenances
thereto; and Lessee shall, at Lessee's sole expense, make such alternations and
additions to the Premises as may be required to materially comply with all
present and future laws, rules, requirements, ordinances, orders, directions and
regulations of any state, municipal, or other governmental or lawful authority;
and Lessee shall not use the Premises or permit anything to be done in or about
the Premises which will in any way constitute a material violation of any
present or future laws, rules, requirements, ordinances, orders, directions and
regulations of any state, municipal, or other governmental or lawful authority,
or with the present or future requirements of any board of fire insurance
underwriters or other similar bodies relating to or affecting the condition, use
or occupancy of the Premises.
5.4 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for a potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by- products or fractions
thereof, and any substances listed by Proposition 65. Lessee shall not
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engage in any activity in or on the Premises which constitutes a Reportable Use
of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee's expense) with all Applicable Requirements.
"Reportable Use" shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Lessee may use any ordinary and customary materials reasonably required to be
used in the normal course of the Agreed Use, so long as such use is in
compliance with all Applicable Requirements and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
(c) LESSEE REMEDIATION. From and after the Commencement Date,
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 as required by law, whether or not formally
ordered or required, for the cleanup to any contamination of, and for the
maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.
(d) LESSEE INDEMNIFICATION. From and after the Commencement Date,
Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders
and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expense, penalties, and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties). Lessee's obligations shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release
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Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.
(e) LESSOR INDEMNIFICATION. Lessor and its successor and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Commencement Date or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees, or which
migrate or migrated onto the Premises from adjacent properties. Lessor's
obligations, as and when required by the Applicable Requirements, shall include,
but not be limited to, the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease.
(f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Commencement Date, unless such
remediation measure is required as a result of Lessee's use of the Premises, in
which event Lessee shall be responsible for such payment. Lessee shall cooperate
fully in any such activities at the request of Lessor, including allowing Lessor
and Lessor's agents to have reasonable access to the Premises at reasonable
times in order to carry out Lessor's investigative and remedial responsibility.
5.5 Lessee shall comply with all the requirements of all easements,
cross-easements, joint maintenance obligations and similar matters applicable to
the premises that may be had by any governmental agency, state or federal, city
or county, and Lessee shall comply with all the terms therein while occupying
the premises as Lessee herein.
PHYSICAL CONDITION OF PREMISES
6.1 ACCEPTANCE OF PREMISES. Prior to the Commencement Date, Lessee has
conducted various reviews, inspections, etc. as part of its diligence review of
the premises, including without limitation review of title matters, physical
condition of the Premises, fitness for Lessee's Agreed Use, the presence of
Hazardous Substances, and the available utility hookups and facilities. With the
exception of those matters expressly set forth in this Lease, including without
limitation the Lessor's contribution to the roof and structural repairs set
forth in Section 6.2 of this Lease, Lessee unconditionally accepts the premises
"AS IS" in its current condition.
6.2 LESSOR'S CONTRIBUTION. Lessee shall be entitled to have Lessor make
a one time contribution of one half of the cost of roof replacement and related
structural repairs to the building and improvements on the premises at the
commencement of this lease, provided that in no event shall Lessor's
contribution exceed the sum of twenty six thousand dollars ($26,000.00).
6.3 REPAIRS AND MAINTENANCE. From and after the Commencement Date,
Lessee shall keep in reasonably good order, condition and repair, the Premises
and every part thereof, structural or nonstructural, and all adjacent sidewalks,
landscaping, driveways, parking lots and signs located within or adjacent to the
Premises. Lessor shall not incur any expenses or have any
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obligation of any kind whatsoever in connection with the repair and maintenance
of the Premises. Lessee expressly waives the benefits of California Civil Code
Sections 1932, 1941 and 1942, and any other present or future law or statute
which would otherwise afford Lessee the right to make repairs at Lessor's
expense. Lessee shall do all acts necessary to comply with all applicable laws,
rules, requirements, ordinances, orders, directions and regulations of any
public authority relating to its maintenance obligations as set forth herein.
6.4 CONDITION ON SURRENDER. Upon the expiration or earlier termination
of this Lease, Lessee shall surrender the Premises in the same condition as
received, ordinary wear and tear excepted. Lessee shall remove, at Lessee's sole
cost and expense, any and all toxins or hazardous materials in, on under or
about the Premises which are a result of Lessee's use, generation, storage or
disposal of such materials, in, on, under or about the Premises. Lessee shall
repair, at Lessee's sole cost and expense, all damage to the Premises caused by
or connected to the removal of any personal property from the Premises,
including, without limitation, damage caused by business or trade fixtures,
furniture, movable partitions and machinery and equipment not affixed to the
Premises.
6.5 LESSOR'S RIGHT TO REPAIR. In the event Lessee fails to perform
Lessee's repair and maintenance obligations as herein provided, Lessor shall
give Lessee notice to do such acts as are reasonably required to repair or
maintain the Premises. If Lessee fails to do the work within thirty (30) days of
said notice, or fails to diligently supervise completion of the work within that
time, then Lessor shall have the rights (but not the obligation) to do such acts
and expend such funds as are reasonably required to perform such work. Any
amounts so expended by Lessor shall be paid by Lessee promptly after demand,
with interest from the date expended by Lessor at the lower of: (i) the maximum
rate permitted by law; or (ii) the annual rate of eight percent (8%), compounded
annually, such interest rate to go into effect the fifteenth (15th) day after
written demand from the Lessor. Lessor shall reasonably coordinate such
maintenance with Lessee to minimize any interference with the use of the
Premises by Lessee.
6.6 IMPROVEMENTS AND ALTERATIONS. During the term of the Lease
Agreement, Lessee shall have the right to alter, renovate or improve upon the
demised Premises from time to time, except if the improvements alter the
existing exterior walls or demolish the building or roof, or in any way increase
the square footage above one hundred forty three thousand (143,000) square feet,
then Lessor's written approval must be had and obtained, but Lessor will not
unreasonably withhold said approval. Lessee, at his sole cost and expense, will
hold harmless and indemnify the Lessor against any liability for mechanic's or
materialmen's liens and insure completion of the work. Lessee agrees to pay all
material and labor directly to any contractor or subcontractor on the job to
insure that no mechanics liens are posted against the property when the
alteration, additions, improvements, or utility installations are installed and
provide proof of same to Lessor with the necessary release of mechanics lien
document provided by said contractor or subcontractor as they are received.
Lessee further agrees to maintain appropriate worker's compensation insurance
for any alterations it conducts on the Premises.
6.7 LESSOR'S RIGHTS TO LESSEE'S IMPROVEMENTS. All personal property,
trade fixtures, and equipment installed by Lessee, including, without
limitation, conventional and specialized HVAC systems, fans, ventilation hoods,
and installed shelving and counters, shall, at the
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expiration or earlier termination of this Lease, remain the property of Lessee
and may be removed by Lessee; provided however, should any of such property be
left by Lessee after it surrenders the Premises, Lessor shall have the right to
remove said items from the Premises and treat them as "abandoned property" under
Section 1951.3 of the Civil Code or any amended text related thereto, and said
property made be removed and sold by Lessor and all costs, expenses, attorney's
fees and damages related thereto shall be charged against Lessee. Lessee agrees
to repair and replace any damage or destruction to the Premises caused by the
removal of said equipment, trade or personal fixtures. Lessor shall provide to
Lessee's lender a landlord waiver in the form attached hereto as Exhibit B.
6.8 LIENS. The Lessor and Lessee covenant each with the other not to
permit any liens, encumbrances or judgments to be filed against the Premises on
account of non-payment or dispute with respect to labor or materials furnished
in connection with construction or any subsequent repairs, modifications or
additions thereto, nor shall the parties permit any judgments, liens or
attachments to lie or attach against the Premises for any other reason. Should
any lien, encumbrance or judgment of any nature be filed against the Premises,
the party from whose fault or alleged debt such lien arises shall within sixty
(60) days cause such lien, encumbrance or judgment to be removed by substitution
of collateral or otherwise. Failure to do so shall be a breach of this Lease and
the party that caused such lien, encumbrance or judgment to be filed against the
Premises shall pay all reasonable costs, expenses, attorneys' fees, and damages
related thereto to remove the same.
ASSIGNMENT AND SUBLETTING
7.1 NO ASSIGNMENT WITHOUT CONSENT. Lessee shall not assign this Lease
or any interest herein (by operation of law or otherwise) without the prior
written consent of Lessor first being obtained, said consent shall not be
unreasonably withheld by Lessor. As used herein, the term "assignment" shall not
include a merger of Lessee, the sale of a majority of Lessee's assets or the
sale of Lessee's stock. Any purported assignment without such consent shall be
void, and, Lessor may, at its option, terminate this Lease. Lessee may sublet a
portion of the Premises to any third party it deems fit, provided that no such
subletting shall relieve Lessee from any obligation to Lessor under this Lease.
7.2 PROCEDURE FOR CONSENT. In the event that Lessee should desire to
assign this Lease, Lessee shall provide Lessor with written notice of such
desire at least sixty (60) days in advance of the effective date of such
assignment. Such notice shall include (i) the name of the proposed assignee,
(ii) the nature of business to be conducted by the proposed assignee in the
Premises, (iii) the terms and conditions of the proposed assignment and (iv) the
most recent financial statements of the assignee as Lessor may request. Lessor
shall not unreasonably withhold its consent to a proposed assignment. Unless
Lessor gives written notice to Lessee of its disapproval of any proposed
assignment with ten (10) days of such notice, Lessor will be deemed to have
approved of such proposed assignment.
7.3 NO RELEASE ON ASSIGNMENT. If the Lease is assigned and a new
Lessee is accepted by the Lessor then the old Lessee shall not be released from
any of the Lessee's obligations hereunder and the old Lessee and the new Lessee
shall be jointly and severally liable to comply
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to all of the terms, conditions and covenants stated within this Lease. The
consent to any subsequent or further assignment use shall not be waived by the
consent of one assignment. In order for any assignment to be binding on Lessor,
Lessee must deliver to Lessor, promptly after execution thereof, an executed
copy of such assignment whereby the assignee shall expressly assume the
obligations of Lessee and all of the Lease terms, conditions and covenants under
this Lease.
7.4 NO WAIVER BY ACCEPTANCE. The acceptance of rental payments by
Lessor from any other person or third party shall not be deemed to be a waiver
by Lessor of any provision hereof. The consent to one assignment shall not be
deemed consent to any subsequent assignment. Said assignment allowed once shall
not be a waiver to a right to assignment unless the specific terms and
conditions, stated herein, are met by the new successor Lessee.
7.5 ATTORNEYS' FEES. Lessee shall pay Lessor's reasonable attorneys'
fees and costs incurred in connection with Lessee's request to assign this
Lease, whether or not Lessor consents to the proposed transfer, but not in
excess of one thousand dollars ($1,000.00). Nothing in this Section 7.5 shall
limit the attorneys' fees which Lessor may recover on breach of Section 7.1 or
other provision of this Lease.
INDEMNIFICATION
8.1 INDEMNIFICATION OF LESSOR. Except as provided in Section 5.4(e)
hereof, Lessee shall indemnify Lessor against and hold Lessor harmless from any
and all claims arising from Lessee's use of the Premises; from the conduct of
Lessee's business; from any activity, work or other things done, permitted or
suffered by Lessee in, on or about the Premises; and shall further indemnify
Lessor against and hold Lessor harmless from any and all claims arising from any
breach or default of this Lease; from any act or activity of any third party on
or about the Premises; and from any act or negligence of the Lessee, or any
officer, agent, employee, guest or invitee of Lessee, including without
limitation any claims, actions, and proceedings not covered by insurance. Lessor
agrees to exhaust all insurance coverage provided by Lessee pursuant to this
Lease prior to seeking any recovery from Lessee for damages not covered by such
insurance. Lessee, upon notice from Lessor, shall defend Lessor from the same at
Lessee's expense, by counsel reasonably satisfactory to Lessor. Lessee, as a
material part of the consideration given to Lessor for this Lease assumes all
risk of damage to the Premises or injury to persons in, on or about the Premises
from any cause other than the sole negligence or willful misconduct of Lessor,
its agents, servants or employees and Lessee waives all claims in respect
thereof against Lessor except for claims related to the sole negligence or
willful misconduct of Lessor, its agents, servants or employees. Lessee shall
give prompt written notice to Lessor in case of any casualty or accidents in, on
or about the Premises. Lessor, its agents, servants, or employees shall not be
liable for any loss or damage to persons or property, including, without
limitation, any liability resulting from fire, explosion, falling plaster,
steam, gas, electricity, water or rain which may leak from any part of the
Premises or from the pipes, appliances or plumbing works therein, or from
dampness or any other cause whatsoever, unless caused by or due to the sole
negligence or willful misconduct of Lessor, its agents, servants, or employees.
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8.2 WAIVER OF SUBROGATION. As long as their respective insurers so
permit, Lessor and Lessee mutually waive their respective rights of recovery
against each other for any loss insured by fire and extended casualty coverage,
and any other property insurance policies existing for the benefit of the
respective parties. Each party shall apply to their insurers to obtain said
waivers. Each party shall obtain any special endorsements, if required by their
insurer, to evidence compliance with the aforementioned wavier.
INSURANCE
9.1 IN GENERAL. From and after the Commencement Date, Lessee shall
carry and maintain, at Lessee's sole cost and expense, the types of insurance in
the amounts specified and in the forms set forth below.
9.2 PUBLIC LIABILITY INSURANCE. Lessee shall maintain a comprehensive
public liability and property damage policy insuring against any and all
liability of Lessee and Lessor with respect to the Premises or arising out of
the maintenance, use, or occupancy thereof, including, without limitation,
products liability coverage and coverage insuring Lessee's performance of the
indemnity provisions of Section 8.1 above, in the amount of Two Million Dollars
($2,000,000.00) combined single limit (bodily injury and property damage). The
Lessee shall, within ten (10) days of written request, deposit with the Lessor a
certificate showing such insurance to be then in force naming Lessor as
additional insureds.
9.3 FIRE, FLOOD, AND EXTENDED CASUALTY INSURANCE. Lessee shall maintain
fire and extended casualty coverage, including endorsements for flood damage,
for the Premises in an amount not less than the total replacement cost of the
Premises, which the parties agree is currently eight million dollars
($8,000,000.00.) At Lessee's option, it may satisfy its obligation to provide
insurance coverage hereunder by obtaining coverage from its own Qualified
Insurer or by paying the cost of premiums charged by Lessor's existing
insurer(s).
9.4 QUALIFIED INSURERS. With respect to all insurance policies required
to be maintained by this Lease, each insurance company must have a net worth of
at least Fifty Million Dollars ($50,000,000.00) and must be licensed to do
business in the State of California and maintain a "General Policyholder's
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by the holder of a
mortgage or deed of trust on the Premises.
9.5 CROSS-LIABILITY ENDORSEMENTS. All required insurance policies shall
be endorsed with cross-liability endorsements stating that in the event that a
claim is brought by one insured against another insured under the policy, or by
an employee of one insured against another insured under the policy, each
insured shall be considered a separate insured for purposes of the insurance.
9.6 ADJUSTMENTS OF AMOUNTS OF COVERAGE. The amounts of the limits of
all required insurance policies shall be subject to increase from time to time,
but not more frequently than every five (5) years. Such increases shall be
affected by notice from Lessor to Lessee and shall not be greater than the
amount of insurance coverage carried by similar businesses for similar
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properties in the area. Lessee shall secure the increased coverage required in
the notice from Lessor within thirty (30) days of receiving the notice thereof,
and shall thereafter promptly deliver to Lessor endorsements or receipt
evidencing the increased coverage and the payment of additional premiums. Such
increases shall be effected by notice from Lessor to Lessee and shall be
mutually agreeable by Lessor and Lessee and shall not be greater than the amount
of insurance coverage carried by similar businesses or similar properties in the
area. If Lessor and Lessee cannot agree then this specific dispute shall be
subject to arbitration, as stated herein. Lessor shall be given notice of the
coverage thereof, and shortly thereafter Lessee shall promptly deliver to Lessor
endorsements or receipts evidencing the increased coverage.
9.7 ADDITIONAL INSUREDS. Lessee shall cause all required insurance
policies to name Lessor (and the holder of any mortgage or deed of trust on the
Premises) as additional insureds.
9.8 NOTICE OF CANCELLATION OF POLICIES. Lessee shall cause all required
insurance policies to include any undertaking by the insurer to give Lessor (and
the holder of any mortgage or deed of trust on the Premises, if any) thirty (30)
days' prior written notice of any cancellation or change in scope or amount of
coverage of such policy.
9.9 EVIDENCE OF INSURANCE. Lessee shall furnish Lessor (and the holder
of any mortgage or deed of trust on the Premises) with certificates of insurance
or endorsements evidencing Lessee's complete compliance with all of the
requirements of this Article.
9.10 FAILURE OF LESSEE TO OBTAIN INSURANCE. In the event that Lessee
defaults in his obligation to maintain the insurance coverage herein required,
Lessor may (but shall not be obligated to) obtain and maintain the required
insurance coverage. Lessee agrees to repay Lessor on demand on the date that the
next installment of the Base Rent hereunder is due, all of the monies Lessor has
so expended, with interest thereon from the date expended at the annual rate of
eight percent (8%), compounded annually, such interest to be determined as of
the date due, all due and payable by Lessor along with the late penalty provided
herein.
DAMAGE OR DESTRUCTION
10.1 LESSEE'S DUTY TO RESTORE PREMISES. If at any time during the term
of this Lease the Premises are totally or partially damaged or destroyed, Lessee
shall, in the shortest time practicable and no later than six (6) months after
receiving the necessary governmental building approvals (which approvals must be
received with in six (6) months of the damage or destruction of the Premises),
restore the Premises to substantially the same condition as they were in
immediately before such damage or destruction; provided however, that unless
such damage or destruction is due to the fault of Lessee (i) Lessee's financial
obligation shall be limited to the amount of insurance coverage required by
Article 9 of this Lease and (ii) Lessee's shall have no obligation to undertake
physical restoration of the Premises unless more than two (2) years remains on
the lease term. If required by this Section, Lessee will do all acts reasonably
necessary to promptly obtain the necessary governmental building approvals and
Lessor shall diligently cooperate with Lessee to obtain these approvals. Lessor
shall approve all changes in the condition of the Premises occasioned by the
restoration work. Lessee's obligation to restore the Premises shall not be
affected by Lessee's failure to obtain or maintain the insurance Lessee
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is required to carry under this Lease. If Lessee fails to restore the Premises
as herein required, Lessor may restore the Premises. Lessor shall not be
required to restore the Lessee any of his alterations, improvements, trade
fixtures or personal property, such excluded items being the sole responsibility
of Lessee to restore, except to the extent that such alterations, improvements,
trade fixtures or personal property can be restored with insurance proceeds.
10.2 NO ABATEMENT OF RENT PENDING RESTORATION. Lessee agrees to carry
business interruption insurance to cover its obligation to pay Rent under this
Lease. To the extent of such business interruption insurance, to cover not less
than two (2) years, the Rent due hereunder shall not be abated during
restoration. Lessee shall not be entitled to collect from Lessor any
compensation for damages for loss of business or for any inconvenience or
annoyance occasioned by any damage, destruction, repair or restoration, unless
Lessor unreasonably causes the delay of any repair or restoration work.
10.3 ESCROW ACCOUNT. Funds from Lessee's insurer from the partial or
total destruction of the Premises shall immediately be deposited into a separate
and discreet insured bank account held jointly in the name of Lessor and Lessee
and shall be used solely for the restoration of the Premises or the replacement
of Lessee's personal property. In the event that the Premises are not rebuilt or
only partially rebuilt, funds not used to rebuild or restore the Premises shall
be the property of Lessor, to the extent of the replacement cost of the Premises
before the damage or destruction, which costs shall be deemed to include all of
Lessor's personal property, equipment and fixtures of the Premises. If they
cannot be restored then Lessee shall be entitled to any insurance proceeds that
relate or are owned by Lessee under the terms of the policies, defined herein.
10.4 ENTRY BY LESSOR. Lessor reserves and shall during normal business
hours the right to enter after three (3) business days notice to Lessee the
Premises to inspect the same, to post notices of non-responsibility, and to
repair the Premises after Lessee has failed to do the same and after written
request by Lessor to make said repairs, and may for that purpose erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed, always providing that the entrance to the
Premises shall not be unreasonably blocked thereby, and further providing that
the business of the Lessee shall not be unreasonably interfered with by Lessor
and that Lessor's right of entry is subject to Lessee's right to maintain its
trade secrets, other intellectual property, and classified or confidential
operations.. Lessee waives any claim for damages or for any injury or
inconvenience to or interference with Lessee's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby unless
Lessor is a cause of the same. If there is an unreasonable interference with
Lessee's business by Lessor herein, then the rent shall be abated. If Lessor, on
the other hand, has to repair the Premises because Lessee has not met its
commitments under the terms and conditions of this Lease to repair the same then
there will be no abatement of rent as defined herein. Lessee shall always be
entitled to quiet possession and enjoyment as defined herein as long as the
terms and conditions of the Lease are complied with.
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DEFAULT
11.1 LESSEE'S DEFAULT. The occurrence of any one or more of the
following events shall constitute a default and breach of this Lease by Lessee.
(a) The failure by Lessee to make any rental payment or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of thirty (30) days after written notice
thereof by Lessor to Lessee.
(b) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease, other than those described in
Sections 11.1(a) and 11.1(b) herein, where such failure shall continue for a
period of thirty (30) days after written notice thereof by Lessor to Lessee;
provided, however, if the nature of Lessee's default is such that more than
thirty (30) days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commences such cure within said thirty (30)
day period and thereafter diligently pursues such cure to a prompt completion.
If Lessee does not pursue such a cure to a prompt completion, then Lessor shall
have the right to terminate this Lease.
(c) The making by Lessee of any general assignment or general
arrangement for the benefit of creditors; or the filing by or against Lessee of
a petition to have Lessee adjudged a bankrupt, or a petition for reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Lessee, the same is dismissed within sixty (60) days); or
the appointment of a trustee or a receiver to take possession of all or
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.
(d) If Lessee permits, commits, suffers, or maintains any unlawful
act, nuisance or waste on or about the Premises, which materially damages the
Premises.
11.2 REMEDIES ON DEFAULT. In the event any default under or breach of
this lease by Lessee, Lessor shall have:
(a) The right, subject to applicable law, to re-enter to Premises
and dispossess Lessee and the legal representatives of Lessee and all other
occupants of the Premises by unlawful detainer or other summary proceeding, or
otherwise as permitted by law, and remove their property and regain possession
of the Premises (but Lessor shall not be obligated to effect such removal) and
said property may, at Lessor's option, be stored or otherwise dealt with as
provided within this Lease or as applicable law may then provide or permit,
including but not limited to the right of Lessor to sell or otherwise dispose of
the same or to store the same, or any part thereof, in a warehouse or elsewhere
at the expense and risk of and for the account of Lessor. These sums shall
accrue interest and late penalties as provided herein.
(b) The rights and remedies provided by California Civil Code
Section 1951.2 to recover from Lessee upon termination of the Lease:
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(i) The worth at the time of the award of the unpaid rent or
other charges which had been earned at the date of termination; plus
(ii) The worth at the time of the award of the amount by which
the unpaid rent and other charges which would have been earned after termination
until the time of the award exceeds the amount of such rental loss which Lessee
proves could have been reasonably avoided; plus
(iii) The worth at the time of the award of the amount by
which the unpaid rent and other charges for the balance of the Lease term after
the time of the award exceeds the amount of rental loss which Lessee proves
could be reasonably avoided; plus
(iv) Any other amounts necessary to compensate Lessor for all
detriment proximately caused by Lessee's failure to perform its obligations
hereunder or which, in the ordinary course of affairs, would likely result
therefrom including, without limitation, costs of removing Lessee improvements
and installing new improvements, attorneys' fees and leasing commissions; and
(v) At Lessor's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted by applicable California law from
time to time. As used in subparagraphs (i) and (ii) above, the "worth at the
time of the award" is computed by allowing interest at the Default Rate of eight
percent (8%) per annum compounded annually.
(c) Lessor may terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event, Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default, including, without limitation, the costs
of recovering possession (including reasonable attorneys' fees incurred); the
costs incurred in re-letting the Premises; the worth, at the time of award, by
the court having jurisdiction thereof, of the amount by which all unpaid rents
for the balance of the term hereunder after the time of the award exceeds the
amount of the loss of these rents that Lessee proves could be reasonably
avoided; and that portion of any leasing commission paid or required to be paid
by Lessor and applicable to the unexpired term of this Lease.
(d) Lessor may maintain Lessee's right to possession, in which
case this Lease shall continue in effect whether or not Lessee shall have
abandoned the Premises. In such event, Lessor shall be entitled to enforce all
of Lessor's rights and remedies under this Lease, including the right to recover
rental payments as they become due hereunder.
(e) Nothing herein shall relieve Lessor's obligation under
applicable law to mitigate its damages.
11.3 ACCEPTANCE OF MONIES/DELAYED INTEREST PAYMENTS. The acceptance by
Lessor of some but not all of the rent specified in a "Three Day Notice to Pay
Rent or Quit" shall not bar the Lessor from commencing an unlawful detainer
proceeding predicated upon the notice given for the amount specified in the
notice less the partial payment.
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11.4 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform the obligations required of Lessor within thirty (30) days
after written notice by Lessee to Lessor, specifying in detail the obligations
Lessor has failed to perform; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days are required for performance,
then Lessor shall not be in default if Lessor commences performance within such
thirty (30) day period and thereafter diligently pursues the same to completion.
If Lessor does not diligently perform to completion Lessor's obligations, Lessee
shall have the right to terminate this Lease, in addition to any other right
Lessee may have in law or in equity.
EMINENT DOMAIN
12.1 TOTAL-PERMANENT. If at any time during the term of this Lease or
any extension thereof, the entire Premises or, in the judgment of the Lessee,
such a substantial portion thereof as would render the balance of the Premises
not suitable for the use to which the Premises was being utilized immediately
prior thereto by the Lessee, shall be taken or appropriated by any competent
authority for public or quasi-public use, this Lease shall terminate upon the
date that possession is surrendered to the condemning authority, at which time
all rights and obligations between the parties shall cease and rents and other
charges apportioned. Notwithstanding any provision of this Lease or by operation
of law that leasehold improvements may be or shall become the property of the
Lessor at the expiration of the full term hereof, the loss of all improvements
paid for by the Lessee, the loss of Lessee's leasehold estate, and such
additional relief as may be provided by law shall be the basis of Lessee's
damages to a portion of the total award if only one award is made. Lessor shall
be entitled to any and all income, rent, award and any interest thereon
whatsoever which may be paid or made in connection with such public or quasi
public use or purpose under any taking of any land or building. Lessee hereby
assigns to Lessor its entire interest in any and all such awards and shall have
no claim against Lessor for the value of any award that Lessor is allowed to
claim in any Eminent Domain proceeding. Lessor hereby assigns to Lessee its
entire interest in any and all such awards that pertain to Lessee and Lessor
shall have no such claim against Lessee for the value of any award to which
Lessee is entitled.
12.2 PARTIAL-PERMANENT. In the event of a permanent taking or
appropriation not resulting in a termination of this Lease, the Lessee shall be
entitled to a reduction of rent in such amount as shall be just and equitable.
In consideration of such reduction of rent, the Lessee waives any claim for
damage to or loss of its leasehold interest, all of such award being payable to
the Lessor, who shall use so much thereof as may be necessary to restore the
Premises as nearly as possible to it original condition. Lessee shall have the
option to perform such restoration, provided the whole of such award or such
portion thereof as may be necessary to accomplish the restoration is made
available to Lessee. In regards to the reduction of rent if the Lessor and
Lessee cannot agree to what the reduction in rent shall be, then they shall
submit this claim to arbitration as provided herein. Lessor shall be entitled to
any and all partial or permanent taking and award in relation to any interest
the Lessor has in said property. Lessee shall be able to claim any and all
losses, damages or expenses in relation to the taking which relates to Lessee's
property, including, without limitation, the building.
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12.3 TOTAL-TEMPORARY. If the taking of the whole of the Premises or
such portion thereof as would render the use of the property, in Lessee's sole
opinion, not suitable for Lessee's use as set forth above, shall be taken for a
period of one (1) year or less, the terms of this Lease shall be tolled and, all
rent and other charges payable to Lessor shall ▇▇▇▇▇ from the time possession of
the Premises is surrendered to the taking authority and recommence when
possession is restored to the Lessee. The basis for Lessee's damages against the
condemning authority, if allowable, or against the total award shall be as
suffered by Lessee for the interruption of Lessee's business and such additional
relief as may be provided by law. If such taking shall extend beyond one (1)
year, the taking shall, for the purposes of this Lease and at the option of
Lessee, be considered permanent with the basis of Lessee's damages computed as a
total permanent. Lessor shall be entitled to any and all damages in relation to
the total temporary taking which shall include loss of rent, loss of costs and
expenses in this Lease or any other damages or expenses which Lessor has a right
to under the laws of eminent domain. Lessee shall have any and all rights to
damages for its damages, costs and expenses against the government agency
carrying out said eminent domain procedure.
12.4 PARTIAL-TEMPORARY. If less than the whole of the Premises or less
than such portion thereof as would render the use of the Premises not suitable
for Lessee's purposes as aforesaid is taken, Lessee shall be entitled to a
reduction of rental as is just and equitable, upon such date as possession is
surrendered to the taking authority and continuing until possession is restored
to the Lessee. In consideration of such reduction of rental, Lessee waives all
rights to any portion of the award as may be payable to the Lessor. Lessee shall
be entitled to any award that it is entitled to from the condemning authorities
as a Lessee. In regards to determination of the rent said item if not agreed by
Lessor and Lessee shall be submitted to arbitration as provided herein.
12.5 GENERAL-EMINENT DOMAIN. In any taking of the Premises, whether
pursuant to Paragraph 12.1, 12.2, 12.3 or 12.4, Lessee shall be entitled to
claim an award for loss of business, depreciation of merchandise and fixtures,
fixture and equipment damage, removal and reinstallation costs, and Lessor shall
not be entitled to any portion of such award, or to make a claim therefor.
However, if Lessee either before or after taking possession of the Premises
shall have made, at its own expense, leasehold improvements, material
alterations or structural changes and repairs to the Premises, Lessee and not
Lessor shall be entitled to any award, whether to Lessor or Lessee, for the
unamortized balance of Lessee's cost of such leasehold improvements,
alterations, changes and repairs. Should the Lessor and Lessee be unable to
agree as to the division of any singular award or the amount of any reduction of
rents and other charges, such dispute shall be submitted for resolve to the
court exercising jurisdiction of the condemnation proceedings, each party
bearing its respective costs and attorneys' fees for such determination. If the
dispute is between Lessor and Lessee and not the condemnation agency then it may
be submitted to arbitration as provided herein or it may continue in said court
proceeding whichever will bring the quickest result.
12.6 NO PENDING PROCEEDINGS. Lessor Covenants that at the Commencement
Date hereof it has no actual or constructive knowledge of any proposed
condemnation of any part of the Premises.
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MISCELLANEOUS PROVISIONS
13.1 LEASEHOLD MORTGAGE. Lessee shall have no right to enter into a
leasehold mortgage during the term of this lease.
13.2 ARBITRATION. If any dispute arises under the terms of this Lease
between Lessor and Lessee, other than a default in any Rent or other payment due
by Lessee in favor of Lessor, such dispute shall be resolved through mandatory
arbitration conducted pursuant to the provisions of California Code of Civil
Procedure Sections 1280 et seq. by an arbitrator selected from the panel of the
Judicial Arbitration and Mediation Service ("JAMS") in accordance with its
rules. All arbitration decisions shall be held at Santa Rosa, California, and
shall be binding on the parties with no right of appeal. All costs of
arbitration shall be born equally by the Lessor and Lessee. Each side shall bear
its own costs and attorneys' fees arising out of any arbitration proceeding
conducted pursuant to this Section. Nothing herein shall impair any remedy of
Lessor pursuant to Article 11 of this Lease or pursuant to operation of law to
recover damages and/or restitution of the Premises on Lessee's default in
payment of Rent or any other sums due under this Lease.
13.3 EXHIBITS. The Exhibits affixed to this Lease are incorporated into
this Lease in their entirety by this reference.
13.4 WAIVER. The waiver by Lessor of any term, covenant or condition
herein contained shall not be deemed to be a waiver of any other term, covenant
or condition or of any subsequent breach of the same or any other term, covenant
or condition herein contained.
13.5 INTERPRETATION. The titles and headings of the various sections of
this Lease are used only for convenience of reference and do not explain, modify
or place any construction on any of the provisions of this Lease. Whenever the
context requires, the singular or plural number shall include the other number,
and each gender shall include all other genders. No listing of specific items or
matters shall limit the scope of the language of this Lease, and the terms
"including" and "including, without limitation" shall not be construed to limit
any statements or matters preceding it. The term "obligation" is used in its
broadest sense, and includes all primary, secondary, direct, indirect, fixed and
contingent obligations. Whenever the terms "prompt notice" or "notify
immediately" or words of similar import are used to refer to any notice to be
given or any act to be performed by Lessee, they shall mean notice given or act
performed not later than five business (5) days after the occurrence of the
event for which notice or action is required, unless another time period is made
expressly applicable.
13.6 TIME OF THE ESSENCE. Time is of the essence of this Lease and of
each provision in which performance is a factor.
13.7 SUCCESSORS AND ASSIGNS. The covenants and conditions contained in
this Lease, subject to the provisions above as to assignment, shall apply to and
bind the heirs, successors, executors, administrators and assigns of the parties
hereto.
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13.8 QUIET POSSESSION. Upon Lessee paying the rental payments reserved
hereunder and observing and performing all of the covenants, conditions and
provisions, Lessee is hereunder required to observe and perform, Lessee shall
have quiet possession of the Premises for the entire term hereof, subject to all
the provisions of this Lease.
13.9 AMENDMENTS. No provision of this Lease may be amended or added to,
except by an agreement in writing signed by the parties hereto or their
respective successors in interest. This Lease shall not be effective nor binding
on any party until fully executed by both parties hereto.
13.10 PARTIAL INVALIDITY. Any provision of this Lease which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provisions hereof and such other provisions shall remain in full force and
effect.
13.11 CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive, but shall, whenever possible, be cumulative with all remedies
at law or in equity.
13.12 CHOICE OF LAW. This Lease shall be governed by the laws of the
State of California.
13.13 ATTORNEYS' FEES. Except as is set forth in Section 13.2 of this
Lease, if either party commences an action against the other arising out of or
in connection with this Lease, the party substantially prevailing shall be
entitled to recover from the other party all reasonable costs, including,
without limitation, reasonable attorneys' fees.
13.14 NONDISTURBANCE AND ATTORNMENT: SUBORDINATION. Lessor agrees to
and shall obtain, in writing, from the holder of any lien of any mortgage or
deed of trust of any bank, insurance company, individual, or other institutional
lender, now or hereafter in force against the Premises a Nondisturbance and
Attornment Agreement (herein after referred to as "NDA") substantially in the
form attached hereto as Exhibit C. In the event that the Premises become subject
to any foreclosure proceedings brought against Lessor, or the power of sale
under any mortgage or deed of trust made by Lessor, Lessee shall attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as
Lessor under this Lease and this Lease shall not terminate.
This Lease and any Option to Purchase granted to Lessee shall
be subject and subordinate to any mortgage, deed of trust, or other
hypothecation or security device (collectively "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof, provided
Lessee has received an NDA. Lessee agrees that the holders of any such Security
Devices (in this Lease together referred to as "Lender") shall have no liability
or obligations to perform any of the obligations of Lessor under this Lease
except as provided in the NDA. Any Lender may elect to have this Lease and/or
any Option to Purchase granted to Lessee deemed superior to the lien of its
Security Devices by giving written notice thereof to Lessee, whereupon this
Lease and such Option to Purchase shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.
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Notwithstanding the foregoing provisions of this Section 13.14
with respect to Security Devices in place on the Effective Date, Lessor shall
only be obligated to obtain a Nondisturbance and Attornment Agreement from ▇▇▇▇▇
Fargo Bank, who presently holds a Security Device placed on the Premises as to
this Lease and not as to any Option to Purchase granted to Lessee in a form
acceptable to ▇▇▇▇▇ Fargo Bank. Lessor shall also obtain an NDA from ▇▇▇▇ ▇▇▇▇▇▇
as to his Security Devices, with respect to this Lease and any Option to
Purchase, and that ▇▇▇▇ ▇▇▇▇▇▇ further agrees to release his Security Device in
the event Lessee exercises its option under the Option Agreement.
13.15 NOTICES. All notices of other communications required or
permitted hereunder shall be in writing, and shall be personally delivered or
sent by registered or certified mail, postage prepaid, return receipt requested,
or sent by electronic facsimile, by overnight mail, or by Federal Express and
shall be deemed received upon the earlier of (i) if personally delivered, the
date of delivery to the address of the person to receive such notice, (ii) if
mailed, on the date of posting by the United States Post Office, (iii) if given
by electronic facsimile, by overnight mail or by Federal Express, when received
by the other party. Notices shall be given at the following addresses:
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Associates
Attn: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Law Offices of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
Lessee: Deposition Sciences, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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21
13.16 BROKERS. Each party hereto represents that it has not had any
dealings or contact with any real estate broker, finder, or other person with
respect to this Lease except for ▇▇▇▇▇▇ & Coppin, Inc. Other than commissions on
this Lease, if any, owed to ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc., which shall be paid by
Lessor, each party shall hold harmless the other party from all damages
resulting from any claims that may be asserted against the other party by any
broker, finder or other person, with whom the first party has, or purportedly
has, dealt.
13.17 ESTOPPEL. Each party shall, within fifteen (15) days after notice
from the other party, execute and deliver to the requesting party, in recordable
form, a certificate stating that this Lease is unmodified and in full force and
effect, or in full force and effect as modified, and stating the modifications.
The certificate shall also state the amount of the Base Rent, the date to which
any rental payments have been paid in advance, and the amount of the security
deposit or prepaid rent, if any. Failure to deliver the certificate within
fifteen (15) days shall be conclusive upon the obligated party for the benefit
of the requesting party and any successor that this Lease is in full force and
effect and has not been modified except as may be represented by the requesting
party.
Lessee shall deliver to lenders designated by Lessor such financial
statements of Lessee as may be reasonably required by such lender. If, at any
time during this Lease, Lessor desires to finance, refinance, or sell the
Premises or any part thereof, Lessee, hereby agrees to deliver to lenders or
purchasers designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall include
the past two years' financial statements of Lessee. All such financial
statements shall be received by Lessor and/or such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
13.18 COUNSEL. Both parties have had the opportunity to consult
attorneys and advisors of their respective choice prior to signing this Lease
and have full knowledge of the consequences of any of the items stated herein.
13.19 EXECUTION. All parties to this Lease agree to execute, sign and
deliver any and all other documents necessary to carry out the terms and
conditions of this Lease.
13.20 WARRANTY OF AUTHORITY. Lessee represents and warrants that it has
passed a resolution by their Board of Directors, authorizing and approving the
person signing herein to bind the corporation to said Lease and approving all of
the terms and conditions of said Lease agreement. Lessor warrants that it is a
duly organized and existing California limited partnership and that its general
partner has the authority to execute this Lease.
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13.21 ENTIRE AGREEMENT. Except as to matters subject to the
accompanying Option to Purchase, this Lease constitutes the entire agreement and
understanding between the parties concerning the matters covered by this Lease,
and supersedes all prior and contemporaneous agreements, statements,
understandings, terms, conditions, negotiations, representations and warranties,
whether oral or written, made by Lessor or Lessee concerning the matters covered
by this Lease.
LESSOR
▇▇▇▇▇▇ Associates
A California Limited Partnership
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
General Partner
LESSEE:
DEPOSITION SCIENCES, INCORPORATED
an Ohio corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
The undersigned hereby agrees to guarantee the obligations of the lessee
hereunder.
GUARANTOR:
ADVANCED LIGHTING AND TECHNOLOGIES
an Ohio corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Agreed and Acknowledged:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Exhibits:
Exhibit A: Legal Description of Property
Exhibit B: Landlord Waiver
Exhibit C: Nondisturbance and Attornment Agreement
Page 22 of 22