STANDARD INDUSTRIAL LEASE -- NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. PARTIES. This Lease, dated, for reference purposes only, October 6, 1988,
is made by and between ▇▇▇ ▇. ▇▇▇▇▇▇ (herein called "Lessor") and Valley Records
- ▇▇▇▇▇▇ ▇▇▇▇▇ (herein called "Lessee").
2. PREMISES. Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of Yolo, State of California,
commonly known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
described as 63,720 square feet of warehouse and office space and parking spaces
for 95 cars. Lease does not include the unimproved property West of the
existing parking lot (approximately 3.07 acres). (See attached map). Said real
property including the land and all improvements therein, is herein called "the
Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for 96 months commencing on
November 1, 1988 and ending on October 31, 1996 unless sooner terminated
pursuant to any provision hereof.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said 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 be
obligated to pay rent until possession of the Premises is tendered to Lessee;
provided, however, that if Lessor shall not have delivered possession of the
Premises within sixty (60) days from said commencement date, Lessee may, at
Lessee's 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 further, however, that if such
written notice of Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease hereunder shall terminate and be
of no further force or effect.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay rent
for such period at the initial monthly rates set forth below.
4. RENT. Lessee shall pay to Lessor as rent for the Premises, monthly
payments of $15,349.00, in advance, on the 1st day of each month of the term
hereof. Lessee shall pay Lessor upon the execution hereof $15,349.00 as rent
for the month of November 1988 Rent for any period during the term hereof which
is for less than one month shall be a pro rata portion of the monthly
installment. Rent shall be payable in lawful money of the United States to
Lessor at the address stated herein or to such other persons or at such other
places as Lessor may designate in writing.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
$15,349.00 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or
applies all or any portion of said deposit, Lessee shall within ten (10) days
after written demand therefor deposit cash with Lessor in an amount sufficient
to restore said deposit to the full amount hereinabove stated and Lessee's
failure to do so shall be a material breach of this Lease. If the monthly rent
shall, from time to time, increase during the term of this Lease, Lessee shall
thereupon deposit with Lessor additional security deposit so that the amount of
security deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original monthly rent
set forth in paragraph 4 hereof. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for Office and
Warehouse or any other use which is reasonably comparable and for no other
purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to the
use for which Lessee will use the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or
ordinance in effect on such Lease term commencement date. In the event it is
determined that this warranty has been violated, then it shall be the
obligation of the Lessor, after written notice from Lessee, to promptly, at
Lessor's sole cost and expense, rectify any such violation. In the event
Lessee does not give to Lessor written notice of the violation of this
warranty within six months from the date that the Lease term commences, the
correction of same shall be the obligation of the Lessee at Lessee's sole
cost. The warranty contained in this paragraph 6.2(a) shall be of no force
or effect if, prior to the date of this Lease, Lessee was the owner or
occupant of the Premises, and, in such event, Lessee shall correct any such
violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements in
effect during the term or any part of the term hereof, regulating the use by
Lessee of the Premises. Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air conditioning,
heating, and loading doors in the Premises shall be in good operating condition
on the Lease commencement date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the nature
of the violation, to promptly, at Lessor's sole cost, rectify such violation.
Lessee's failure to give such written notice to Lessor within thirty (30) days
after the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior to
the date of this Lease, Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease commencement
date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises,
and any covenants or restrictions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Lessee acknowledges that neither Lessor nor Lessor's agent has made
any representation or warranty as to the present or future suitability of the
Premises for the conduct of Lessee's business.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. Lessee shall keep in good order, condition
and repair the Premises and every part thereof, 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 of the foregoing, all
plumbing, heating, air conditioning, (Lessee shall procure and maintain, at
Lessee's expense, an air conditioning system maintenance contract)
ventilating, electrical, lighting facilities and equipment within the
Premises, fixtures, walls (interior and exterior), foundations, ceilings,
roofs (interior and exterior), floors, windows, doors, plate glass and
skylights located within the Premises, and all landscaping, driveways,
parking lots, fences and signs located on the Premises and sidewalks and
parkways adjacent to the Premises.
7.2 SURRENDER. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned
NET INITIALS:
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by the installation or removal of Lessee's trade fixtures, furnishings and
equipment. Notwithstanding anything to the contrary otherwise stated in this
Lease, Lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air conditioning,
plumbing and fencing on the premises in good operating condition.
7.3 LESSOR'S RIGHTS. If Lessee fails to perform Lessee's obligations
under this Paragraph 7, or under any other paragraph of this Lease, Lessor
may at its option (but shall not be required to) enter upon the Premises
after ten (10) days' prior written notice to Lessee (except in the case of an
emergency, in which case no notice shall be required), perform such
obligations on Lessee's behalf and put the same in good order, condition and
repair, and the cost thereof together with interest thereon at the maximum
rate then allowable by law shall become due and payable as additional rental
to Lessor together with Lessee's next rental installment.
7.4 LESSOR'S OBLIGATIONS. Except for the obligations of Lessor under
Paragraph 6.2(a) and 6.3(a) (relating to Lessor's warranty), Paragraph 9
(relating to destruction of the Premises) and under Paragraph 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 nor the building located thereon nor the equipment therein,
whether structural or non structural, all of which obligations are intended
to be that of the Lessee under Paragraph 7.1 hereof. Lessee expressly waives
the benefit of any statute now or hereinafter in effect which would otherwise
afford Lessee the right to make repairs at Lessor's expense or to terminate
this Lease because of Lessor's failure to keep the premises in good order,
condition and repair.
7.5 ALTERATIONS AND ADDITIONS. (a) Lessee shall not, without
Lessor's prior written consent make any alterations, improvements, additions,
or Utility Installations in, on or about the Premises, except for
nonstructural alterations not exceeding $2,500 in cumulative costs during the
term of this Lease. In any event, whether or not in excess of $2,500 in
cumulative cost, Lessee shall make no change or alteration to the exterior of
the Premises nor the exterior of the building(s) on the Premises without
Lessor's prior written consent. As used in this Paragraph 7.5 the term
"Utility Installation" shall mean carpeting, window coverings, air lines,
power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing. Lessor may require that
Lessee remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration of the term, and restore the Premises
to their prior condition. Lessor may require Lessee to provide Lessor, at
Lessee's sole cost and expense, a lien and completion bond in an amount equal
to one and one-half times the estimated cost of such improvements, to insure
Lessor against any liability for mechanic's and materialmen's liens and to
insure completion of the work. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval
of Lessor, Lessor may require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations
in, or about the Premises that Lessee shall desire to make and which requires
the consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner.
(c) 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 in
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 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 itself and Lessor
against the same and shall pay and satisfy any such adverse judgement that
may be rendered thereon before the enforcement thereof against the Lessor or
the Premises, upon the condition that if Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to
such contested lien claim or demand indemnifying Lessor against liability for
the same and holding 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.
(d) Unless Lessor requires their removal, as set forth in
Paragraph 7.5(a), all alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at
the expiration of the term. Notwithstanding the provisions of this Paragraph
7.5(d), Lessee's machinery and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2.
8. INSURANCE INDEMNITY.
8.1 INSURING PARTY. As used in this Paragraph 8, the term "Insuring
Party" shall mean the party who has the obligation to obtain the Property
Insurance required hereunder. The insuring party shall be designated in
Paragraph 46 hereof. In the event Lessor is the insuring party, Lessor shall
also maintain the liability insurance described in paragraph 8.2 hereof, in
addition to, and not in lieu of, the insurance required to be maintained by
Lessee under said paragraph 8.2 but Lessor shall not be required to name
Lessee as an additional insured on such policy. Whether the insuring party
is the Lessor or the Lessee, Lessee shall, as additional rent for the
Premises, pay the cost of all insurance required hereunder, except for that
portion of the cost attributable to Lessor's liability insurance coverage in
excess of $1,000,000 per occurrence. If Lessor is the insuring party Lessee
shall, within ten (10) days following demand by Lessor, reimburse Lessor for
the cost of the insurance so obtained.
8.2 LIABILITY INSURANCE. Lessee shall, at Lessee's expense obtain and
keep in force during the term of this Lease a policy of Combined Single
Limit, Bodily Injury and Property Damage insurance insuring Lessor and Lessee
against any liability arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be a combined single limit policy in an amount not less than
$500,000 per occurrence. The policy shall insure performance by Lessee of
the indemnity provisions of this Paragraph 8. The limits of said insurance
shall not, however, limit the liability of Lessee hereunder.
8.3 PROPERTY INSURANCE. (a) The insuring party shall obtain
and keep in force during the term of this Lease a policy or policies of
insurance covering loss or damage to the Premises, in the amount of the full
replacement value thereof, as the same may exist from time to time, which
replacement value is now $ _________________, but in no event less than the
total amount required by lenders having liens on the Premises, against all
perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, flood (in the event same is required by a
lender having a lien on the Premises), and special extended perils ("all
risk" as such term is used in the insurance industry). Said insurance shall
provide for payment of loss thereunder to Lessor or to the holders of
mortgages or deeds of trust on the Premises. The insuring party shall, in
addition, obtain and keep in force during the term of this Lease a policy of
rental value insurance covering a period of one year, with loss payable to
Lessor, which insurance shall also cover all real estate taxes and insurance
costs for said period. A stipulated value or agreed amount endorsement
deleting the coinsurance provision of the policy shall be procured with said
insurance as well as an automatic increase in insurance endorsement causing
the increase in annual property insurance coverage by 2% per quarter. If the
insuring party shall fail to procure and maintain said insurance the other
party may, but shall not be required to, procure and maintain the same, but
at the expense of Lessee. 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.
(b) 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, then Lessee shall pay for any increase in the property
insurance of such other building or buildings if said increase is caused by
Lessee's acts, omissions, use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure
Lessee's fixtures, equipment or tenant improvements unless the tenant
improvements have become a part of the Premises under paragraph 7, hereof.
But if Lessee is the insuring party the Lessee shall insure its fixtures,
equipment and tenant improvements.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in
Companies holding a "General Policyholders Rating" of at least B plus, 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".
The insuring party shall deliver to the other party copies of policies of
such insurance or certificates evidencing the existence and amounts of such
insurance with loss payable clauses as required by this paragraph 8. No such
policy shall be cancellable or subject to reduction of coverage or other
modification except after thirty (30) days' prior written notice to Lessor.
If Lessee is the insuring party Lessee shall, at least thirty (30) days prior
to the expiration of such policies, furnish Lessor with renewals or "binders"
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not
do or permit to be done anything which shall invalidate the insurance
policies referred to in Paragraph 8.3. If Lessee does or permits to be done
anything which shall increase the cost of the insurance policies referred to
in Paragraph 8.3, then Lessee shall forthwith upon Lessor's demand reimburse
Lessor for any additional premiums attributable to any act or omission or
operation of Lessee causing such increase in the cost of insurance. If Lessor
is the insuring party, and if the insurance policies maintained hereunder
cover other improvements in addition to the Premises. Lessor shall deliver to
Lessee a written statement setting forth the amount of any such insurance
cost increase and showing in reasonable detail the manner in which it has
been computed.
8.5 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for loss or damage arising out of or incident to the perils insured against
under paragraph 8.3, which perils occur in, on or about the Premises, whether
due to the negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon obtaining the
policies of insurance required hereunder, give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.
8.6 INDEMNITY. Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and
shall further indemnify and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any negligence of the Lessee, or any of Lessee's agents,
contractors, or employees, and from and against all costs, attorney's fees,
expenses and liabilities incurred in the defense of any such claim or any
action or proceeding brought thereon; and in case any action or proceeding be
brought against Lessor by reason of any such claim. Lessee upon notice from
Lessor shall defend the same at Lessee's expense by counsel satisfactory to
Lessor. Lessee, as a material part of the consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons, in, upon or
about the Premises arising from any cause and Lessee hereby waives all claims
in respect thereof against Lessor.
8.7 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other
person in or about the Premises, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Lessee. Lessor shall not be liable for
any damages arising from any act or neglect of any other tenant, if any, of
the building in which the Premises are located.
NET INITIALS:
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9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall herein mean damage or destruction
to the Premises to the extent that the cost of repair is less than 50% of the
then replacement cost of the Premises. "Premises Building Partial Damage" shall
herein mean the damage or destruction to the building of which the Premises are
a part to the extent that the cost of repair is less than 50% of the then
replacement cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the extent that the cost of repair is 50% or more of the then
replacement cost of the Premises. "Premises Building Total Destruction" shall
herein mean damage or destruction to the building of which the Premises are a
part to the extent that the cost of repair is 50% or more of the then
replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 PARTIAL DAMAGE -- INSURED LOSS. Subject to the provisions of
paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is an Insured Loss and which falls into the
classification of Premises Partial Damage or Premises Building Partial
Damage, then Lessor shall, at Lessor's expense, repair such damage, but not
Lessee's fixtures, equipment or tenant improvements unless the same have
become a part of the Premises pursuant to Paragraph 7.5 hereof as soon as
reasonably possible and this Lease shall continue in full force and effect.
Notwithstanding the above, if the Lessee is the insuring party, and if the
insurance proceeds received by Lessor are not sufficient to effect such
repair, Lessor shall give notice to the Lessee of the amount required in
addition to the insurance proceeds to effect such repair. Lessee shall
contribute the required amount to Lessor within ten days after Lessee has
received notice from Lessor of the shortage in the insurance. When Lessee
shall contribute such amount to Lessor, Lessor shall make such repairs as
soon as reasonably possibly and this Lease shall continue in full force and
effect. Lessee shall in no event have any right to reimbursement for any such
amounts so contributed.
9.3 PARTIAL DAMAGE -- UNINSURED LOSS. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease
there is damage which is not an Insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee (in which event
Lessee shall make the repairs at Lessee's expense), 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
the date of occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, as of the date of the occurrence of such damage. In the
event Lessor elects to give such notice of Lessor's intention to cancel and
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
intention to repair such damage at Lessee's expense, without reimbursement
from Lessor, in which event this Lease shall continue in full force and
effect, and Lessee shall proceed to make such repairs as soon as reasonably
possible. If Lessee does not give such notice within such 10-day period this
Lease shall be cancelled and terminated as of the date of the occurrence of
such damage.
9.4 TOTAL DESTRUCTION. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction
required by any authorized public authority), which falls into the
classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of such
total destruction.
9.5 DAMAGE NEAR END OF TERM.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option cancel
and terminate this Lease as of the date of occurrence of such damage by giving
written notice to the Lessee of Lessor's election to do so within 30 days after
the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said option may
be exercised has not yet expired, Lessee shall exercise such option, if it is to
be exercised at all, no later than 20 days after the occurrence of an Insured
Loss falling within the classification of Premises Partial Damage during the
last six months of the term of this Lease. If Lessee duly exercises such option
during said 20 day period, Lessor shall, at Lessor's expense, repair such damage
as soon as reasonably possible and this Lease shall continue to full force and
effect. If Lessee fails to exercise such option during said 20 day period, then
Lessor may at Lessor's option terminate and cancel this Lease as of the
expiration of said 20 day period by giving written notice to Lessee of Lessor's
election to do so within 10 days after the expiration of said 20 day 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 paragraphs 9.2 or 9.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the provisions of
this Paragraph 9, the rent payable hereunder for the period during such damage,
repair or restoration continues shall be abated in proportion to the degree to
which Lessee's use of the Premises is impaired. Except for abatement of rent, if
any, Lessee have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accure, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.7 TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return Lessee so much of Lessee's security deposit as has not
theretofore been applied to Lessor.
9.8 WAIVER. Lessor and Lessee waive the provisions of any statutes which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessee shall pay the real property tax, as defined
in paragraph 10.2, applicable to the Premises during the term of this Lease.
All such payments shall be made at least ten (10) days prior to the delinquency
date of such payment. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes paid by Lessee shall
cover any period of time prior to or after the expiration 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 during which this Lease shall be in
effect, and Lessor shall reimburse Lessee to the extent required. If Lessee
shall fail to pay any such taxes, Lessor shall have the right to pay the same,
in which case Lessee shall repay such amount to Lessor with Lessee's next rent
installment together with interest at the maximum rate then allowable by law.
10.2 DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on 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, as against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of "real property tax," or (ii) the nature of
which was hereinbefore included within the definition of "real property tax," or
(iii) which is imposed for a service or right not charged prior to June 1, 1978,
or, if previously charged, has been increased since June 1, 1978, or (iv) which
is imposed as a result of a transfer, either partial or total, of Lessor's
interest in the Premises or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such transfer,
or (v) which is imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof.
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.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the
real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable
to Lessee within 10 days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, the fire sprinkler system and the monthly cost of monitoring said
system, and other utilities and services supplied to the Premises, together with
any taxes thereon. If any such services are not separately metered to Lessee,
Lessee shall pay a reasonable proportion to be determined by Lessor of all
charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no subletting
or assignment shall release Lessee of Lessee's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignee of
Lessee or any successor of Lessee, in the performance of any of the terms
hereof, Lessor may proceed directly against Lessee without the necessity of
exhausting remedies against said assignee. Lessor may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignees.
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of Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining its or their consent thereto and such action shall not relieve Lessee
of liability under this Lease.
12.4 ATTORNEY'S FEES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.
13. DEFAULTS; REMEDIES.
13.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three days after written notice thereof
from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to
Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice
to Pay Rent or Quit shall also constitute the notice required by this
subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of 30 days after written notice thereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such that more than
30 days are reasonably required for its cure, then Lessee shall not be deemed to
be in default if Lessee commenced such cure within said 30-day period and
thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C. Section 101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within 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 30 days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within 30 days. Provided, however, in the event that
any provision of this paragraph 13.1(d) is contrary to any applicable law, such
provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor
in interest of Lessee or any guarantor of Lessee's obligation hereunder, and any
of them, was materially false.
13.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession 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, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's fees,
and any real estate commission actually paid; the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to Paragraph 15
applicable to the unexpired term of this lease.
(b) 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 the rent as
it becomes due hereunder.
(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. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
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 30-day period and thereafter
diligently prosecutes the same to completion.
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 on Lessor by the
terms of any 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 within ten (10) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to 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 with respect
to such overdue amount, nor 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 rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any
other provision of this Lease to the contrary.
13.5 IMPOUNDS. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to
Lessor, if Lessor shall so request, in addition to any other payments required
under this Lease, a monthly advance installment, payable at the same time as the
monthly rent, as estimated by Lessor, for real property tax and insurance
expenses on the Premises which are payable by Lessee under the terms of this
Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance premiums. 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 and insurance premiums as the same become due, Lessee shall pay to Lessor,
upon Lessor's demand, such additional sums 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 default in the
obligations of Lessee to perform under this Lease, then any balance remaining
from funds paid to Lessor under the provisions of this paragraph may, at the
option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property tax and insurance
premiums.
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 10% of the floor area of the
building on the Premises, or more than 25% of the land area of the Premises
which is not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only 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 rent shall be reduced in the
proportion that the floor area of the building taken bears to the total floor
area of the building situated on the Premises. No reduction of rent shall occur
if the only area taken is that which does not have a building located thereon.
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 award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, 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 pay any amount in excess of
such severance damages required to complete such repair.
15. BROKER'S FEE.
(a) Upon execution of this Lease by both parties, Lessor shall pay to
__________________________________________________________________ Licensed real
estate broker(s), a fee as set forth in a separate agreement between Lessor and
said broker(s), or in the event there is no separate agreement between Lessor
and said broker(s), the sum of $_______________, for brokerage services rendered
by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as defined
in paragraph 39.1 of this Lease, which is granted to Lessee under this Lease, or
any subsequently granted option which is substantially similar to an Option
granted to Lessee under this Lease, or if Lessee acquires any rights to the
Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or if Lessee remains in possession of the Premises after
the expiration of the term of this Lease after having failed to exercise an
Option, or if said broker(s) are the procuring cause of any other lease or sale
entered into between the parties pertaining to the Premises and/or any adjacent
property in which Lessor has an interest, then as to any of said transactions,
Lessor shall pay said broker(s) a fee in accordance with the schedule of said
broker(s) in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on
behalf of any person, corporation, association, or other entity having an
ownership interest in said real property or any part thereof, when such fee is
due hereunder. Any transferee of Lessor's interest in this Lease, whether such
transfer is by agreement or by operation of law, shall be deemed to have assumed
Lessor's obligation under this Paragraph 15. Said broker shall be a third party
beneficiary of the provisions of this Paragraph 15.
16. ESTOPPEL CERTIFICATE.
(a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be
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conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except XXXXX represented by Lessor, (ii) that there are
no uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be confirmed by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three years' financial statements of Lessee. 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 only the
owner or owners at the time in question of the fee title or a lessee's
interest in a ground lease of the Premises, and except as expressly provided
in Paragraph 15, in the event of any transfer of such title or interest,
Lessor herein named (and in case of any subsequent transfers then the
grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the
time of such transfer, in which Lessee has an interest, shall be delivered to
the grantee. The obligations contained in this Lease to be performed by
Lessor shall, subject as aforesaid, be binding on Lessor's successors and
assigns, only during their respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the
maximum rate then allowable by law from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease,
provided, however, that interest shall not be payable on late charges
incurred by Lessee nor on any amounts upon which late charges are paid by
Lessee.
20. TIME OF ESSENCE. Time is of the essence.
21. ADDITIONAL RENT. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification. Except as otherwise stated in
this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in Paragraph 15 hereof nor any cooperating broker on this transaction
nor the Lessor or any employees or agents of any of said persons has made any
oral or written warranties or representations to Lessee relative to the
condition or use by Lessee of said Premises and Lessee acknowledges that
Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability of the Premises and the compliance
thereof with all applicable laws and regulations in effect during the term of
this Lease except as otherwise specifically stated in this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be
in writing and may be given by personal delivery or by certified mail, and
if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or to Lessor at the address noted below the signature of
the respective parties, as the case may be. Either party may by 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 notice purposes. 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 notice to Lessee.
24. WAIVERS. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee
of the same or any other provision. 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 act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee
of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such
preceding breach at the time of acceptance of such rent.
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.
26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of
the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions
of this Lease pertaining to the obligations of Lessee, but all options and
rights of first refusal, if any, granted under the terms of this Lease shall
be deemed terminated and be of no further effect during said month to month
tenancy.
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. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of Paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State wherein the Premises are located.
30. SUBORDINATION.
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation or security
now or hereafter placed upon the real property of which the Premises are a
part and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of
this Lease, unless this Lease is otherwise terminated pursuant to its terms.
If any mortgagee, trustee or ground lessor shall elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground lease, and shall
give written notice thereof to Lessee, this Lease shall be deemed prior to
such mortgage, deed of trust, or ground lease, whether this Lease is dated
prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure
to execute such documents within 10 days after written demand shall
constitute a material default by Lessee hereunder, or, at Lessor's option,
Lessor shall execute such documents on behalf of Lessee as Lessee's
attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint
Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to
execute such documents in accordance with this paragraph 30(b).
31. ATTORNEY'S FEES. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the
court. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
32. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders, or lessees, and making
such alterations, repairs, improvements or additions to the Premises or to
the building of which they are a part as Lessor may deem necessary or
desirable. Lessor may at any time place on or about the Premises any ordinary
"For Sale" signs and Lessor may at any time during the last 120 days of the
term hereof place on or about the Premises any ordinary "For Lease " signs,
all without rebate of rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, 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 sign upon the Premises without Lessor's
prior written consent except that Lessee shall have the right, without the
prior permission of Lessor to place ordinary and usual for rent or sublet
signs thereon.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36. CONSENTS. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent
shall not be unreasonably withheld.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph the word "Options" has the
following meaning: (1) the right or option 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; (2) the option or 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; (3) the right or option 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 or option 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.
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39.2 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assinged to any Lessee Affiliate
as defined in paragraph 12.2 of this Lease. The Options herein granted to
Lessee are not assignable separate and apart from this Lease.
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 option to extend or renew this Lease has been so 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 time commencing from the date Lessor gives to Lessee a notice of
default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the
default alleged in said notice of default is cured, or (ii) during the period
of time commencing on the day after a monetary obligation to Lessor is due
from Lessee and unpaid (without any necessity for notice thereof to Lessee)
continuing until the obligation is paid, or (iii) at any time after an event
of default described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any
necessity of Lessor to give notice of such default to Lessee), or (iv) in the
event that Lessor has given to Lessee three or more notices of default under
paragraph 13.1(b), where a late charge has become payable under paragraph
13.4 for each of such defaults, or paragraph 13.1(c), whether or not the
defaults are cured, during the 12 month period prior to the time that Lessee
intends to exercise the subject 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 30 days after such obligation becomes due (without
any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee
fails to commence to cure a default specified in paragraph 13.1(c) within 30
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessee commits a default described in paragraph 13.1(a). 13.1(d) or
13.1(e) (without any necessity of Lessor to give notice of such default to
Lessee), or (iv) Lessor gives to Lessee three or more notices of default
under paragraph 13.1(b), where a late charge becomes payable under paragraph
13.4 for each such default, or paragraph 13.1(c), whether or not the defaults
are cured.
40. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then 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 building and grounds, the parking of vehicles and the preservation of
good order therein as well as for the convenience of other occupants and
tenants of the building. The violations of any such rules and regulations
shall be deemed a material breach of this Lease by Lessee.
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 Lessee, its
agents and invitees from acts of third parties.
42. EASEMENTS. Lessor reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, 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 shall
sign any of the aforementioned documents upon request of Lessor and failure
to do so shall constitute a material breach of this Lease.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regared 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 Lessee 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 behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor evidence of such authority satisfactory to
Lessor.
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. INSURING PARTY. The insuring party under this lease shall be the Lessee.
47. ADDENDUM. Attached hereto is an addendum or addenda containing paragraphs
51 through 52 which constitutes a part of this Lease.
48. OCCUPANCY: Should any governmental authority require any additional
improvements because of the Lessee's occupancy, other than that which is
stated in this Lease, it shall be at the Lessee's own expense.
49. VANDALISM: Lessee agrees, at Lessee's expense, to maintain in full force
for the term of this lease, a policy of burglary insurance which will insure
Lessor against any damage to the demised premises as the result of break-in
or attempted break-in.
50. This Lease shall replace the Lease dated April 10, 1987 and addendum
dated August 25, 1988. This Lease shall go into effect and become binding at
the time the above mentioned lease and addendum are assigned to ▇▇▇ ▇. ▇▇▇▇▇▇.
See addendum attached hereto and incorporated herein, which provides for
changes and additions to this Lease. The Addendum is hereby construed to be
an integral and material part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY 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. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL
AND TAX CONSEQUENCES OF THIS LEASE.
THE PARTIES HERETO HAVE EXECUTED THIS LEASE AT THE PLACE ON THE DATES
SPECIFIED IMMEDIATELY ADJACENT TO THEIR RESPECTIVE SIGNATURES.
Executed at Woodland, California ▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- --------------------------------
on By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------- ------------------------------
Address ▇.▇. ▇▇▇ ▇▇▇▇ By
------------------------------------- ------------------------------
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------- "LESSOR" (Corporate seal)
Executed at Woodland, California Valley Records Company
--------------------------------- --------------------------------
on 10-12-88 By /s/ Barnet ▇. ▇▇▇▇▇
------------------------------------------ ------------------------------
Address ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ By
------------------------------------- ------------------------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------- "LESSEE" (Corporate seal):
FOR THESE FORMS WRITE OR CALL THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇-▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ FORM 204N 780
ADDENDUM TO LEASE
51. TENANT IMPROVEMENTS.
The Lessee intends to make improvements to the building including but not
limited to insulating the entire West wall of the building (excepting the
office area wall), construct a covered patio area, add 5,000 square feet of
office space including bathrooms and install skylights and roof insulation
in the North warehouse section of the building. The Lessee shall provide
the Lessor a copy of the proposed detailed plans and costs.
52. TENANT IMPROVEMENT COSTS.
Upon completion of the above improvements the Lessor will pay to the
Licensed General Contractor responsible for said improvements, an amount
not to exceed One Hundred and Fifty Thousand Dollars ($150,000.00). The
actual amount paid by the Lessor for the Tenant Improvements shall be
returned to the Lessor by the Lessee paying additional rent amortized over
a four (4) year period including twelve (12%) percent interest. EXAMPLE: If
the Tenant Improvements cost is One Hundred and Fifty Thousand Dollars
($150,000.00), the rent increase beginning upon Lessor's payment for the
Tenant Improvements, will be Three Thousand Nine Hundred and Fifty Dollars
and Seven Cents ($3,950.07) per month for forty eight (48) months.
LESSOR: LESSEE:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇/VALLEY RECORDS
BY: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇ BY: /s/ Barnet ▇. ▇▇▇▇▇
--------------------------- ---------------------------
DATE: 11/17/88 DATE: 10-12-88
------------------------- -------------------------
SECOND ADDENDUM TO LEASE
This Addendum relates to that certain Lease dated October 6, 1988, between
▇▇▇ ▇. ▇▇▇▇▇▇ ("Lessor") and VALLEY RECORDS--▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee"), the term
of which was originally scheduled to begin November 1, 1988, and which was
executed by ▇▇▇▇▇▇ ▇▇▇▇▇ on October 12, 1988 (the "Lease").
RECITALS
A. Lessor is the owner of the premises described in paragraph 2 of the
Lease (the "Premises").
▇. ▇▇▇▇▇▇ has leased the Premises to PANATTONI, ▇▇▇▇▇ & ▇▇▇▇▇▇
DEVELOPMENT COMPANY, a general partnership ("Panattoni"), pursuant to a lease
dated June 20, 1986, and expiring on June 30, 1991 (the "Master Lease").
C. Lessee is the Subtenant under a Sublease dated April 10, 1987,
pursuant to which PANATTONI DEVELOPMENT COMPANY subleased approximately 41,600
square feet of the Premises to Lessee for a term commencing on June 1, 1987, and
ending on June 30, 1991 (the "Sublease").
D. Pursuant to paragraph 54 of the Master Lease, Lessor has the right to
terminate the Master Lease upon 30 days' written notice to Panattoni. In such
event, the Sublease shall be assigned by Panattoni to Lessor without
consideration except for the proration of commissions.
E. Pursuant to paragraph 57 of the Master Lease, in the event the
Sublease has tenant improvements amortized beyond the
termination of the Master Lease, Lessor may reimburse Panattoni for the
unamortized principal of such tenant improvements or may continue to amortize
such payments until the principal of such tenant improvements has been paid in
full.
F. Subject to Lessor's termination of the Master Lease and the
assignment of the Sublease by Panattoni to Lessor, Lessor and Lessee desire
to terminate the Sublease and to enter into the Lease effective December 1,
1988.
ADDENDUM
1. DEPOSIT. Lessee represents and warrants to Lessor that Lessee has
deposited a security deposit with Panattoni pursuant to the Sublease in the
amount of Eleven Thousand Seven Hundred Fifty Dollars ($11,750). Lessor agrees
to give Lessee credit for such deposit against the security deposit required
under paragraph 5 of the Lease immediately upon Lessor's receipt of such deposit
from Panattoni.
2. TENANT IMPROVEMENTS.
A. Lessee represents and warrants to Lessor that Panattoni made
tenant improvements pursuant to the Sublease in the amount of Three Hundred
Thousand Dollars ($300,000), which tenant improvements are being amortized over
forty-four (44) months at the rate of Six Thousand Eight Hundred Eighteen and
18/100ths Dollars ($6,818.18) per month.
B. Lessee further represents and warrants to Lessor that twelve (12)
payments of Six Thousand Eight Hundred Eighteen and 18/100ths Dollars
($6,818.18) have been made by Lessee to Panattoni through October 1, 1988, and
that Lessee shall make an
- 2 -
additional payment of Six Thousand Eight Hundred Eighteen and 18/100ths Dollars
($6,818.18) to Panattoni on November 1, 1988.
C. Lessee further represents and warrants to Lessor that no
additional tenant improvements have been made by Panattoni on behalf of Lessee
pursuant to the Sublease, and that upon payment of thirty-two (32) additional
payments of Six Thousand Eight Hundred Eighteen and 18/100ths Dollars
($6,818.18) to Panattoni, the tenant improvements made to the Premises pursuant
to the Sublease will have been fully amortized.
▇. ▇▇▇▇▇▇ agrees to pay to Panattoni from the rent received under
paragraph 4 of the Lease the sum of Six Thousand Eight Hundred Eighteen and
18/100ths Dollars ($6,818.18) commencing on December 1, 1988, and terminating on
June 1, 1991, in payment of Lessee's obligation to amortize Lessee's tenant
improvements pursuant to the Sublease.
3. STATUS OF SUBLEASE. Lessee represents and warrants to Lessor that
neither Lessee nor Panattoni is in default under the Sublease.
In all other respects, the Lease executed by Lessee on October 6, 1988,
shall remain in full force and effect.
DATED: 10-18, 1988.
/s/ Barnet ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇/VALLEY RECORDS
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
- 3 -
TENANT'S OFFSET AND ESTOPPEL CERTIFICATE
AND PARTIAL AMENDMENT OF LEASE
THIS AGREEMENT is entered into by and between ▇▇▇▇▇ ▇▇▇▇ ("Buyer"), ▇▇▇
▇▇▇▇▇▇ ("Lessor"), and VALLEY RECORDS - ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee"), with respect to
that certain lease between Lessor and Lessee dated October 6, 1988, covering
those premises commonly known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
consisting of a 63,720 square foot warehouse and office space and parking spaces
for 95 cars (the "Lease").
Lessor intends to sell the above described real property and the
improvements thereon to Buyer. Lessee makes the following representations and
agreements for the benefit and protection of Buyer, with the understanding and
intent that Buyer will rely upon Lessee's representations and agreements in
purchasing such real property and improvements and in taking an assignment of
Lessor's interest under the Lease. Lessor, Buyer and Lessee also
desire to amend the Lease to clarify the understanding of the parties as to
several provisions of the Lease, and enter into this Agreement to do so. Lessor,
Buyer and Lessee agree that the terms of this Agreement shall bind the parties
effective upon Buyer's purchase of the real property from Lessor. Lessee hereby
certifies and represents to Buyer, its attorneys and representatives, with
respect to the Lease as follows:
1. Lessee is in full and complete possession of the premises covered by
the Lease (the "Premises"). Lessee accepts and hereby ratifies the determination
of the square footage of the Premises provided in the Lease. Lessee acknowledges
and agrees that the Lease does not include the
unimproved property west of the existing parking lot, which unimproved property
consists of approximately 3.07 acres (the "Unimproved Property"), and that
Lessee has no rights to use or occupy such Unimproved Property.
2. All space and improvements covered by the Lease have been completed
and furnished in accordance with provisions of the Lease and to the satisfaction
of Lessee, and Lessee has fully accepted the Premises.
3. Lessor has satisfied all commitments, arrangements, lease buy-outs or
understandings made to induce Lessee to enter into the Lease (including, without
limitation, any and all commitments, arrangements, lease buy-outs or
understandings in connection with the substitution of the Lease for the prior
lease dated April 10, 1987, and addendum dated August 25, 1988, which prior
lease and addendum Lessee hereby acknowledges and agrees have terminated), and
Lessor is not in default in any way in the performance of the terms and
provisions of the Lease, nor is there now any fact or condition which, with
notice or the passage of time, or both, would become such a default.
4. Lessee is not in default in any way under the terms and provisions of
the Lease, nor are there any facts or conditions which, with notice or the
passage of time, or both, would become such a default.
5. Lessee has not assigned, sublet, transferred or hypothecated Lessee's
interest under the Lease.
6. The copy of the Lease that is attached hereto as Exhibit A with each
page initialled by the undersigned, is for a total term of ninety-six (96)
months commencing November 1, 1988, and ending on October 31, 1996, and has not
been modified, altered or amended in any respect and contains the entire
agreement between Lessor and Lessee except as follows:
-2-
A. The current replacement value of the improvements on the
Premises, for the purposes of the insurance policy or policies required by
Section 8.3(a) of the Lease, is ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS
($l,700,000);
B. Pursuant to Sections 51 and 52 of the Lease, Lessee shall cause
certain improvements to be made to the Premises (including, without
limitation, insulation of the entire west wall of the building excepting
the office area wall, construction of a covered patio area, addition of
5,000 square feet of office space, construction of bathrooms, and
installation of skylights and roof insulation in the north warehouse
section of the building) pursuant to the plans and specifications for such
improvements that Lessee shall prepare or obtain. Such plans and
specifications must be approved by Lessor (or, if not approved before
Buyer's purchase of the Premises, then by Buyer) before the commencement of
any work. The Lease requires Lessor to pay directly to the licensed general
contractor making such improvements an amount not to exceed ONE HUNDRED
FIFTY THOUSAND DOLLARS ($150,000) for such improvements, and Lessee hereby
agrees that Lessee shall be solely responsible for all design, construction
and material costs and expenses incurred for such improvements that exceed
the ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) to be paid by Lessor. If
and when Buyer purchases the Premises from Lessor, Buyer, as Lessor's
successor under the Lease, shall be responsible for paying the up to ONE
HUNDRED FIFTY THOUSAND DOLLARS ($150,000) required to be paid by Lessor,
which Buyer shall pay as follows: (1) Buyer shall pay FIFTY THOUSAND
DOLLARS ($50,000) on March 1, 1989, by check made payable jointly to
-3-
Lessee and to the licensed general contractor making such improvements; (2)
Buyer shall pay the second FIFTY THOUSAND DOLLARS ($5O,OOO) on April 1,
1989, by check made payable jointly to Lessee and to the general contractor
making such improvements; and (3) Buyer shall pay the final payment of up
to FIFTY THOUSAND DOLLARS ($5O,OOO) for such improvements by check made
payable jointly to Lessee and to the general contractor making such
improvements when both (a) the City of Woodland and Lessee have
acknowledged their final acceptance and approval of all of the
improvements, and (b) satisfactory waivers of all mechanic's liens and
other lien rights have been delivered to Buyer from all contractors,
subcontractors and material suppliers, or the time for filing such liens
has expired. The amount actually paid by Buyer for such improvements (the
"TI Cost") shall be repaid, with interest at the rate of twelve percent
(12%) per annum, by Lessee as additional rent over forty-eight (48) months
pursuant to Section 52 of the Lease. Lessee hereby agrees that if the Lease
terminates for any reason before Lessee has fully repaid the TI Cost, the
entire unpaid principal balance of the TI Cost and all accrued interest
thereon shall become immediately due and payable. Lessee hereby agrees that
Lessee shall not permit any lien or encumbrance to be placed upon the
Premises as a result of or in connection with Lessee's obligation to pay
for Lessee's share of the cost of the design, construction or materials for
such improvements, and shall indemnify, defend, and hold Buyer and the
Premises harmless therefrom;
C. Lessee is hereby granted the option to extend the term of the
Lease on the same terms and
-4-
conditions as set forth therein (as modified hereby) excepting only the
rental rate, for one (1) additional period of five (5) years (the "Extended
Term") by giving written notice of Lessee's exercise of this option to
Buyer at least one hundred eighty (180) days prior to the expiration of the
initial lease term provided in the Lease, provided, however, that if Lessee
is in default on the date of giving notice of the exercise of the option,
or if Lessee is in default on the date that the Extended Term is to
commence, the Extended Term shall not commence and the Lease shall expire
at the end of the initial term. The rental rate during the Extended Term
shall be the then current market rent. Lessee and Buyer shall agree upon
the then current market rent within thirty (30) days after Lessee gives
Lessee's notice exercising the option to extend the term of the Lease. In
the event that they are unable to agree as to the then current market rent
within such time, Lessee and Buyer shall each select and retain an MAI
appraiser within fifteen (15) days thereafter. The two appraisers shall
mutually attempt to reach an agreement as to the then current market rent.
In the event that the two appraisers are not able to reach an agreement as
to the then current market rent within thirty (30) days after the last of
such two appraisers is retained, the two appraisers shall select and retain
a third MAI appraiser who shall unilaterally determine the then current
market rent. The determination of the appraiser(s) shall be final, binding
and conclusive upon Lessee and Buyer, and the cost and expense of retaining
the appraisers shall be shared equally by Lessee and Buyer; and
-5-
D. Lessee is hereby granted a right of first refusal to lease and
develop the remaining approximately 3.07 acres described in Section 1 above
as the "Unimproved Property." The term of the right of first refusal
granted hereby shall commence upon Buyer's purchase of the Premises and the
Unimproved Property and shall terminate one hundred eighty (180) days prior
to the expiration of the initial term of the Lease or upon the sooner
termination of the Lease for any reason. During the term of this right of
first refusal, Buyer shall give Lessee written notice whenever Buyer
receives a bona fide offer to lease and develop the Unimproved Property,
and Lessee shall have ten (10) working days thereafter in which to notify
Buyer in writing that Lessee shall exercise Lessee's right to lease and
develop the Unimproved Property on the same terms and conditions specified
in Buyer's notice. If Lessee does not deliver such notice to Buyer, Buyer
shall be free to enter into a lease with any other person or entity on the
terms and conditions specified in Buyer's notice and the right of first
refusal granted herein shall terminate; provided, however, that if a lease
is not entered into on the same terms and conditions specified in the
notice given by Buyer to Lessee, Lessee's right of first refusal shall not
be terminated and Buyer shall be required to give Lessee a new notice and a
new opportunity to exercise Lessee's right of first refusal in the matter
specified above before leasing the Unimproved Property on different terms.
7. As of the date of this Offset and Estoppel Certificate, the annual
base rent under the Lease is FIFTEEN THOUSAND THREE HUNDRED FORTY-NINE DOLLARS
($15,349), and Lessee is current in the payment of rent to
-6-
Lessor. The amount of the base annual rent will not decrease at any time during
the term of the Lease. In addition to the base rent, Lessee pays all maintenance
costs and expenses (and is responsible for performing all maintenance and
repairs) and for all utilities and services supplied to the Premises, all
personal property taxes on Lessee's personal property, and all real property
taxes, assessments and payments on bonds for that portion of the real property
occupied by the Premises (i.e., (a) one-half (1/2) of all real property taxes,
assessments and payments on bonds levied against the entire real property of
which the Premises are a part, and (b) all taxes on the building and all other
improvements located on the real property). The annual base rent does not
include the additional rent Lessee shall pay to repay the TI Cost, as described
in subparagraph 6B above.
8. There are no offsets or credits against annual base rent, additional
rent or any other payments payable by Lessee under the Lease, and Lessee has not
made any payment to Lessor as advance or prepaid rent, although Lessee has paid
to Lessor a security deposit of FIFTEEN THOUSAND THREE HUNDRED FORTY-NINE
DOLLARS ($15,349) pursuant to Section 5 of the Lease.
9. Notwithstanding the provisions of Section 39 (including subsections
39.1 through and including 39.4) of the Lease, Lessee does not have (a) any
option or other right to renew or extend the term of the Lease, (b) any option
or preferential right to purchase all or any part of the Premises or all or any
part of the real property of which the Premises are a part, or (c) any right,
title, or interest with respect to the Premises other than as Lessee under the
Lease. There are no understandings, contracts, agreements or commitments of any
kind whatsoever with
-7-
respect to the Lease for the Premises, except as expressly provided in the Lease
or as set forth in paragraph 6 above.
10. The Lease is in full force and effect. Lessee has no defenses,
setoffs, counterclaims or credits against Lessor or against the payments
required to be made by Lessee under the Lease, including, without limitation,
defenses, offsets, counterclaims or credits arising out of the Lease or the
operation or maintenance of the Premises or of the real property of which the
Premises are a part or in any way relating thereto or arising out of any other
transaction between Lessee and either Lessor or Panattoni, ▇▇▇▇▇ & ▇▇▇▇▇▇
Development Company, a general partnership. Lessee waives any and all claims it
might have against Lessor or Buyer (as Lessor's successor as to Lessor's
interest in the Lease and the Premises) which arise out of any acts or omissions
of Lessor or Panattoni, ▇▇▇▇▇ & ▇▇▇▇▇▇ Development Company, a general
partnership, arising prior to the date of this Offset and Estoppel Certificate,
including, without limitation, the computation, allocation and charging of any
or all costs and expenses to Lessee, and Lessee hereby certifies that such costs
and expenses have been properly computed, allocated and charged.
11. Lessee has received no notice of a prior sale, transfer, assignment,
hypothecation or pledge of the Lease or of the rents or other payments required
to be made thereby.
12. Lessee represents and warrants to Buyer that Lessee has not caused or
permitted any hazardous or toxic material, substance or waste, to be used,
stored, brought upon, disposed of or created on the Premises or the real
property of which the Premises are a part, and Lessee hereby agrees to
indemnify, defend and hold Buyer harmless from any and all claims, judgments,
damages, penalties, fines, costs, liabilities or losses (including, without
-8-
limitation, diminution in value of the Premises, damages arising from loss of
use of all or any part of the Premises or of such real property, and sums paid
in settlement of claims, attorneys' fees, consultant fees and expert fees) that
arise during or after the term of this Lease as a result of either breach by
Tenant of the above representation and warranty or contamination of such real
property by hazardous or toxic materials, substances or wastes for which Lessee
is legally liable. For the purposes of this paragraph, the terms "hazardous or
toxic material, substance or waste" shall mean any hazardous or toxic material,
substance or waste which is or becomes regulated by any local, state or federal
law, statute, act, ordinance, regulation or rule.
DATED: 2/1, 1989.
LESSEE:
VALLEY RECORDS COMPANY
By /s/ Barnet ▇. ▇▇▇▇▇
---------------------------------
Its President
--------------------------------
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
LESSOR:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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-- AND --
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YOLO PROPERTIES, INC., a California
corporation
By /s/ Yolo Properties
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Its
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BUYER:
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
By ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attorney In Fact
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ADDENDUM TO LEASE
This Addendum to Lease is dated the 21st of May, 1992, and herewith made part of
that certain Lease dated October 6, 1988, by and between ▇▇▇ ▇. ▇▇▇▇▇▇,
Landlord, and ▇▇▇▇▇▇ ▇▇▇▇▇, Valley Record Distributors, Inc., Tenant. ▇▇▇▇▇ ▇▇▇▇
is recognized as the successor to the original lessor pursuant to that certain
Tenant's Offset and Estoppel Certificate and Partial Amendment of Lease dated
February 1, 1989.
It is agreed that should there be any conflict between the provisions of this
Addendum to Lease and the provisions of said Lease, the provisions of this
Amendment to Lease shall prevail.
SECTION 3: TERM
The Lease shall be extended to a term consistent with the terms contained in the
Lease for the Pacific Grain Building, executed between Panatonni Development
Company as Landlord and Valley Record Distributors, Inc., as Tenant. The
extended lease term shall begin November 1, 1996, and run through May 31, 2003.
Tenant reserves the right to terminate this extension should the Pacific Grain
Lease be terminated.
SECTION 4: RENT
Lessee shall pay to Lessor as rent for the premises monthly payments of
$16,623.00 in advance, on the first day of each month of the extension of the
term.
SECTION 7: MAINTENANCE, REPAIRS AND ALTERATIONS
7.4 Lessor's Obligations
Lessor will be responsible for replacing the roof prior to October 1, 1993.
The parties hereto have executed this Amendment to Lease on the day and year
first written above.
"Landlord" ▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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"Tenant" Valley Record Distributors, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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