EXHIBIT 10.5
COFCO CHINESE CULTURAL CENTER
LEASE AGREEMENT
WITH
FAN ENERGY INC.
COVER PAGE OF FACTS AND SUMMARY OF SALIENT INFORMATION
SECTION 01 PARTIES; TERM; PREMISES
SECTION 02 RENT; ADJUSTMENTS TO RENT; SECURITY DEPOSIT; LANDLORD'S LIEN,
RENEWAL OPTION, ADJUSTMENTS TO RENT (OPERATING COSTS), DEFINITIONS
SECTION 03 USE; RESTRICTIONS ON USE; BUILDING REQUIREMENTS; ENJOYMENT;
SERVICES BY LANDLORD
SECTION 04 ASSIGNMENT; SUBLET; RECAPTURE OF PREMISES; MORTGAGE BY LANDLORD;
SUBORDINATION; ATTORNMENT;ESTOPPEL CERTIFICATE; NOTICE TO
MORTGAGEE; SALE BY LANDLORD
SECTION 05 MAINTENANCE AND REPAIRS; RIGHT OF ENTRY; ALTERATIONS; LINES; SIGNS
SECTION 06 INSURANCE; INDEMNITY; SUBROGATION
SECTION 07 DAMAGE AND DESTRUCTION
SECTION 08 CONDEMNATION
SECTION 09 SURRENDER OF PREMISES
SECTION 10 DEFAULT; EVENTS; REMEDIES
SECTION 11 GENERAL PROVISIONS
SECTION 12 EXHIBITS
EXHIBIT "A" FLOOR PLAN
EXHIBIT "B" RULES AND REGULATIONS
PARTIES.
TENANT: LANDLORD:
Fan Energy, Inc. COFCO Investment Company, L.L.C.
State/Province of Organization: State/Province of Organization:
Nevada Arizona
Address for Notices: Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Copy of Notices To: Copy of Notices To:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇▇▇▇, Controller
TERM.
OCCUPANCY DATE: Will be March 1, 2003
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EXHIBIT 10.5 - continued
LEASED PREMISES.
Second Floor of east wing as indicated on the attached floor
plan, Suite #233, Exhibit "A".
SIZE OF PREMISES.
Approximately: 1,775 square feet of rentable area.
RENT.
Commencement Date will be on March 1, 2003
Monthly Rental: March -April 2003 $ 0.00 ($ 0.00/sq.ft.)
Months 03-12 $ 3,254.00 ($22.00/sq.ft.)
Months 13-24 $ 3,402.00 ($23.00/sq.ft.)
Months 25-36 $ 3,550.00 ($24.00/sq.ft.)
Total Rental during Lease Term: Year 1 $ 32,540.00
Year 2 $ 40,824.00
Year 3 $ 42,600.00
Total $ 115,964.00
Rental due date: Fifth day of each month.
Late Payment Charge: Three Hundred Dollars US ($300.00) per each occurrence
on rent payments received after the 10th day of the month.
Interest rate on delinquencies: Maximum legal rate or eighteen percent
(18%) per annum, whichever is less, from due date.
Expense Stop: Base year 2002 operating expenses.
PRO RATA PERCENTAGE.
Approximate Rentable square feet of Building: 165,526
Approximate Rentable square feet of Premises: 1,775
Pro-rata percentage attributable to Premises: 1.07%
Percent (1.07%) Operating Costs
Percent (1.07%) Taxes and Assessments
Percent (1.07%) Insurance
DEPOSITS.
Security Deposit: Equal to three (3) months rent - $10,650.00. The tenant
will be required to provide a security deposit equal to three months rent
totaling $10,650.00. The security deposit will be payable in three (3)
installments. The first payment of $3,550.00 will be due at the time of move-in,
which is anticipated to be March 1, 2003. The second payment of $3,550.00 is due
May 1, 2003 and the remaining $3,550.00 will be due on July 1, 2003.
USE.
General Office Use.
TENANT IMPROVEMENTS. None, Tenant leases space is "AS IS" condition.
Landlord will paint interior walls and clean carpet.
PARKING.
Tenant will be entitled to six (6) spaces during the term of the lease per
month at prevailing garage rates of $50.00 per month or $35.00 per month
depending on availability. Surface parking is free of charge during lease term.
Landlord will designate surface employee parking.
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EXHIBIT 10.5 - continued
OPTION.
Tenant is granted one (1) five-year option to extend Lease Agreement by
giving Landlord 120 days prior written notice, to the termination of this Lease
Agreement. Rental rate for option period will be at market rates.
EXHIBITS.
All Exhibits are binding on all parties of this lease agreement unless
superseded by terms and conditions of the lease agreement.
These Cover Pages are incorporated as part of this Lease and are executed by
Landlord and Tenant.
TENANT: LANDLORD:
FAN ENERGY, INC. Cofco INVESTMENT COMPANY, L.L.C.
Name: (print) Name: (print)
By: (sign) By: (sign)
Its: (title) Its: (title)
Date: Date:
Tax ID # Tax ID #
SECTION 1. PARTIES; TERMS; PREMISES
1.01 Parties.
The parties to this Lease are as shown on the cover page of this Lease.
1.02 TERM.
Except as otherwise provided in this Lease, the term of this Lease is
as shown on the cover page of this Lease.
1.03 POSSESSION OF PREMISES; DELAYED DELIVERY.
Landlord shall give written notice to Tenant that Premises shall be
available for occupancy within five (5) days after the date of said notice.
The date of delivery of possession of Premises to Tenant shall be the
Commencement Date of this Lease. If possession is not delivered to Tenant
by the scheduled Commencement Date and cause for delay is not the fault of
Tenant or its agents, the Commencement Date shall be extended to the date
possession is delivered to Tenant. If cause for the delay is the fault of
Tenant or its agents, Landlord may cancel this Lease by notice to Tenant
five (5) days prior to effective date of cancellation. Tenant will receive
one (1) day free rent for every day Landlord is late in delivering premises
to tenant substantially complete.
1.04 EARLY OCCUPANCY.
The Commencement Date of this Lease shall be the earlier of the
scheduled Commencement Date, the date possession of the Premises is
delivered to Tenant, or the date Tenant occupies, commences alterations to
or conducts business in all or any portion of the Premises.
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EXHIBIT 10.5 - continued
1.05 ACCEPTANCE OF PREMISES.
Tenant shall have thirty (30) days following occupancy or delivery of
possession of the Premises, whichever first occurs, to notify Landlord in
writing of any specific construction work Landlord had agreed in writing to
perform within the Premises and which, through no fault or request of
Tenant or its agents, has been omitted. Upon receipt of such written notice
Landlord shall cause such specified omitted work to be completed. Failure
by Tenant to so notify Landlord within the time specified shall constitute
acceptance of the Premises by Tenant.
1.06 PREMISES.
Landlord leases to Tenant and Tenant leases from Landlord the Premises
identified on the cover page of this Lease situated in the Building named
on the cover page. The approximate square footage of the Premises and the
percentage that the Premises represent of the rentable area of the Building
are shown on the cover page. The Premises are outlined on Exhibit "A"
attached.
1.07 RIGHT OF FIRST OFFER TO LEASE ADJOINING SPACE
If, prior to the expiration or sooner termination of this Lease, any
space adjoining the Premises becomes vacant and available for lease during
this Lease term, Landlord shall notify Tenant of its availability in
writing by certified mail return receipt requested, and Tenant shall have
two (2) days from the date of Landlord's notice to Tenant to advise
Landlord in writing that Tenant accepts such space offered in its present
condition, and agrees that it shall become a part of the Premises. Failure
by Tenant to notify Landlord within the time specified shall constitute
Tenant's waiver of its right to add such space to its Premises. The Base
Rent for the space offered and the approximate dates possession is to be
delivered shall be included in Landlord's notice to Tenant. Tenant's
obligation to commence payment of Base Rent shall occur on the earlier of
the date possession is delivered to Tenant by Landlord or when Tenant
occupies all or a portion of such space and continues until the expiration
or sooner termination of this Lease.
Any additional rental obligation of Tenant contained in this Lease and
based upon the relationship of area of the Premises to the rentable area of
the Building shall be adjusted to reflect the increase in the area of the
Premises. Prior to delivery of possession, Tenant shall execute an
amendment to this Lease reflecting the addition to the Premises, the
additional Base Rental, the change in ratio of the Premises to the Building
area and any other revisions necessary because of such additional space
being added to the original Premises. All other terms and conditions of
this Lease shall apply to the additional Premises.
1.08 SUBSTITUTE PREMISES
Not Applicable
1.09 MASTER DECLARATION AND CONDOMINIUM COVENANTS
Tenant has been advised that the Premises are subject to a Declaration
of Condominium Covenants, Conditions, and Restrictions as recorded with the
Maricopa County Recorder's office and Tenant agrees to abide by the terms
and conditions set forth in said document. Tenant hereby acknowledges
receipt of a copy of said Declaration of Condominium and Covenants,
Conditions and Restrictions for the COFCO Chinese Cultural Center document
is attached herewith.
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EXHIBIT 10.5 - continued
Tenant has been advised that the Premises are subject to a Master
Declaration as recorded with the Maricopa County Recorder's office and
Tenant agrees to abide by the terms and conditions set forth in said
document. Tenant hereby acknowledges receipt of a copy of said Master
Declaration of Covenants, Conditions, Restrictions and Easements for the
COFCO Phoenix Center (also known as CPC Master Association) is attached
herewith.
SECTION 2. RENT; ADJUSTMENTS TO RENT; SECURITY DEPOSIT; LANDLORD'S LIEN
2.01 RENT; WHEN DUE; WHERE PAID.
All monies payable by Tenant to Landlord under this Lease shall be
deemed to be rent and shall be payable and recoverable as rent in the
manner herein provided and Landlord shall have all rights against Tenant
for default in any such payment. Rent shall be paid to Landlord in advance,
on the fifth day of each calendar month, during the entire term of this
Lease, without abatement, deduction or set-off of any kind, it being the
intention of the parties that, to the fullest extent permitted by law,
Tenant's covenant to pay rent shall be independent of all other covenants
contained in this Lease, including without limitation, Tenant's continued
occupancy of the Premises. Tenant shall pay rent when due, in legal tender
of the jurisdiction in which the Building is located, at the address of
Landlord as set forth, or to such other person or entity or to such other
address as Landlord may designate in writing. Tenant's obligation to pay
all rent due under this Lease shall survive the expiration or earlier
termination of this Lease. Should this Lease commence on a day other than
the first day of the month or terminate on a day other than the last day of
the month, the rent for such partial month shall be prorated based on a
365-day year.
2.02 BASIC RENT.
Tenant agrees to pay the basic rent as shown on the cover page of this
Lease and as such amount may be modified from time to time in accordance
with provisions of this Lease.
2.03 INTEREST RATE ON DELINQUENCIES.
If Tenant fails to pay any rent when due, such unpaid amounts shall
bear interest from the date due until paid at the rate shown on the cover
page of this Lease.
2.04 LATE PAYMENT CHARGE.
If Tenant fails to pay any rent when due, Tenant shall pay to
Landlord, in addition to the interest provided for in Section 2.01-2, a
late payment charge for each occurrence of an amount as shown on the cover
page of this Lease to help defray the additional cost to Landlord for
processing such late payments.
2.05 MISCELLANEOUS.
These provisions for interest to be paid and late charges shall be in
addition to Landlord's other rights and remedies hereunder or at law or in
equity and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner.
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EXHIBIT 10.5 - continued
2.06 RECORDS -- INSPECTIONS.
Landlord shall maintain records concerning Estimated and Actual
Operating Costs for thirty-six (36) months following the period covered by
the statement or statements furnished Tenant, after which Landlord may
dispose of such records. Tenant and Tenant's auditors may at Tenant's sole
cost and expense inspect Landlord's records during Landlord's normal
business hours upon first furnishing Landlord sixty (60) days advance
written notice. Tenant shall, however, be entitled to only one such
inspection each calendar year.
2.07 SECURITY DEPOSIT.
Tenant has deposited with Landlord the sum of Ten Thousand Six Hundred
Fifty Dollars US ($10,650.00) as security for the full, timely and faithful
performance by Tenant of its covenants and obligations hereunder. Such
security deposit shall not bear interest. If Tenant defaults in the
performance of any of the covenants and obligations to be performed by it,
Landlord may from time to time without prejudice to any other remedy, use
such security deposit to the extent necessary to make good any arrearages
in rent or any sum as to which Tenant is in default and any other damage,
injury, expense or liability caused to Landlord by such default. This would
include any damages or deficiency in the reletting of the Premises, whether
such damages or deficiency may accrue before or after termination of this
Lease. Following any such application of the security deposit, Tenant shall
pay to Landlord on demand the amount so applied in order to restore the
security deposit to its original amount. If Tenant is not then in default
hereunder, Landlord shall return any remaining balance of security deposit
to Tenant upon termination of this Lease and after delivery of possession
of the Premises to Landlord in accordance with this Lease. If Landlord
assigns its interest in the Premises during the Lease Term, Landlord may
assign the security deposit to the assignee and thereafter Landlord shall
have no further liability for the return of such security deposit and
Tenant agrees to look solely to the new Landlord for the return of such
security deposit. This provision shall apply to every transfer or
assignment made of the security deposit to a new Landlord. Tenant agrees
that it will not assign or encumber or attempt to assign or encumber the
monies deposited as security and that Landlord and its successors and
assignees shall not be bound by any such actual or attempted assignment or
encumbrance.
2.08 LANDLORD'S LIEN.
In addition to the statutory landlord's lien, Tenant hereby grants to
Landlord a security interest to secure payment of all rent or other sums of
money due from Tenant. This lien will also secure payment of any damages or
loss which Landlord may suffer Tenant breaches any covenant, agreement, or
condition contained herein, upon all goods, wares, fixtures, furniture,
improvements, and other personal property of Tenant, and fixtures and
improvements installed by Landlord or Tenant presently or hereafter
situated on the Premises. Such property shall not be removed from the
Premises without the consent of the Landlord until all arrearages in rent
as well as any other sums of money due Landlord hereunder shall first have
been paid, and all the covenants, agreements, and conditions hereof have
been fulfilled and performed by Tenant.
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EXHIBIT 10.5 - continued
2.09 ADJUSTMENTS TO RENT - OPERATING COST INCREASES.
Tenant shall pay its pro rata share of Landlord's total annual
Operating Costs, when costs are in excess of base year 2002 operating
expenses, which shall include real estate taxes and assessments, and
insurance expenses as defined in Section 6, insurance.
2.10 ADJUSTMENTS TO RENT - REAL PROPERTY TAXES AND RENTAL TAX.
Tenant shall pay its pro rata share of all and any future increase in
real property taxes and assessments levied and assessed upon the Building
and the land upon which the Building is situated. Tenant shall pay any
excise transaction, sales, business or privilege tax (except income tax)
attributed to or measured by rental, which is now or subsequently imposed
upon by any government or unit thereof.
2.11 DEFINITIONS.
(a) Pro Rata Share: Tenant's pro rata share is defined as the ratio of the
Rentable square footage of the Premises to the total Rentable square
footage of the Building. In this Lease, Tenant's pro rata share is
(1.07%) subject to increase or decrease due to an increase or decrease
in the Rentable square footage of the Premises.
(b) Base Year: Calendar year during which this Lease commences.
(c) Comparison Year: Calendar year following the year in which the Lease
commences. Operating Costs: All expenses paid or incurred by Landlord
in connection with the leasing, ownership, management, maintenance,
operation and repair of the Building, the land, the parking facility
situated on the land and the personal property used in conjunction
therewith. Operating Costs include but are not limited to all expenses
paid or incurred by Landlord for heating, cooling, electricity, water,
gas, sewers, refuse collection, telephone charges not chargeable to
tenants and similar utilities services, the cost of supplies,
janitorial and cleaning services, window washing; insurance; the cost
of compliance with any governmental rules, regulations, requirements
or orders; cost of services of independent contractors; the cost of
compensation (including employment taxes and fringe benefits) of all
persons who perform duties in connection with such Operating Costs and
any other expense or charge (except Real Property Taxes and
assessments) which, in accordance with generally accepted accounting
and management principles, would be considered an expense of
maintaining, operating, and repairing the Building.
Operating Costs shall not include any expenses paid by any tenant
directly to the third parties, or as to which Landlord is otherwise
reimbursed by any third party or by any insurance proceeds. Landlord
may, in a reasonable manner, allocate insurance premiums for so-called
"blanket" insurance policies, which insure other properties as well as
the Building, and said allocated amounts shall be deemed to be
operating expenses. The amount so determined shall be deemed to have
been Operating Costs for such year, excluding capital expenses.
2.12 RENEWAL OPTION.
Tenant is granted one (1) five-year option to extend Lease Agreement
by giving Landlord 120 days prior written notice to the termination of this
Lease Agreement. Rental rate for option period will be at market rates.
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EXHIBIT 10.5 - continued
SECTION 3. USE; RESTRICTIONS ON USE; BUILDING REGULATIONS; ENJOYMENT;
SERVICES BY LANDLORD
3.01 USE.
The Premises shall be used only for the use specified on the cover
page of this Lease and for no other purpose. Tenant shall, at Tenant's
expense, take all actions necessary to comply with all laws, rules,
regulations, requirements, and ordinances existing or hereafter enacted or
imposed by any governmental authority having jurisdiction over the
Building, the Premises, Landlord or Tenant applicable to Tenant and
Tenant's use of the Building and the Premises.
3.02 RESTRICTIONS ON USE.
Tenant shall not:
3.02-1 Do or permit to be done anything, which will invalidate or increase
the insurance coverage on the Building or on the Premises.
3.02-2 Do or permit to be done anything in the Building or on the Premises
that may obstruct or interfere with the rights of other tenants or
occupants of the Building.
3.02-3 Use, allow, or permit the Premises to be used for any improper,
objectionable or unlawful purposes.
3.02-4 Cause, maintain, or permit any nuisance in or about the Premises.
3.02-5 Commit or permit any waste to be committed in the Premises.
3.02-6 Install in the Premises or bring into the Building any fixtures,
equipment, furniture, materials, or other objects that will overload,
damage, or obstruct any utility lines or heating or air conditioning
equipment or systems providing services to the Building or the
Premises.
3.02-7 Install in the Premises or bring into the Building any fixtures,
equipment, furniture, materials, or other objects that will overload
the floors in the Premises or in any way affect the structural
capacity or design of the Premises or the Building.
3.02-8 Install or affix any window coverings, window shades, draperies, or
material between the glass on the exterior walls of the Premises and
the Building standard window coverings, window shades, or draperies.
3.02-9 Install, remove from, or move into the Premises any furniture,
fixtures, equipment, materials, supplies, or other objects except on
such day and at such time approved in advance by Landlord.
3.02-10 Fail to comply with any written regulations, together with
revisions or additions thereto, developed and given to Tenant
periodically by Landlord.
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EXHIBIT 10.5 - continued
3.03 BUILDING REGULATIONS.
Tenant shall obey all rules and regulations of the Building as imposed by
Landlord and set forth in Exhibit "B" and incorporated as a part of this Lease.
The rules and regulations are in addition to and shall not be construed to
modify or amend this Lease in any way. Landlord shall have the right to make
changes or additions to such rules and regulations provided such changes or
additions, except those affecting the safety and operation of the Building or
the Premise, do not unreasonably affect Tenant's use of the Premises. Landlord
shall not be liable for failure of any Tenant to obey such rules and
regulations. Failure by Landlord to enforce any current or subsequent rules or
regulations against any Tenant of the Building shall not constitute a waiver
thereof.
3.04 QUIET ENJOYMENT.
Landlord represents and covenants that it has the authority to enter into
this Lease and that Tenant, provided Tenant is not in default hereunder, shall
and may peaceably and quietly occupies the Premises during the term of this
Lease and any renewal or extension thereof. Landlord agrees to make reasonable
efforts to protect Tenant from interference or disturbance by other tenants or
third persons. However, Landlord shall not be liable for any such interference
or disturbance nor shall Tenant be released from any of the obligations of this
Lease because of such interference or disturbance.
3.05 SERVICES BY LANDLORD -- TIMES AND LEVEL FURNISHED.
Landlord shall furnish Tenant with those services hereafter described.
Janitor service, refuse removal, and security service shall be furnished after
normal business hours. Except for holidays, all other services shall be
furnished between the hours of 8:00 a.m. and 5:00 p.m. on normal business
weekdays. If upon advance written request of Tenant, such services are provided
to the Premises on Saturdays, holidays, or times other than as specified, or if
due to Tenant's requirements such services of a level in excess of those
described are provided (in which event Landlord may at Tenant's expense, perform
surveys or install metering devices to measure the excess service provided),
Tenant shall pay Landlord as additional rent the cost of those services provided
based upon Landlord's schedule of rates in effect at the time such services are
furnished. If any services to be provided are suspended, interrupted, or varied
by strikes, accidents, repairs, maintenance, alterations, orders from any
governmental authority, or any cause beyond Landlord's control, Landlord shall
not be liable for any damages, direct, indirect, or consequential, or for
damages for personal discomfort, illness, or inconvenience of Tenant, its
employees, agents, or invitees, or for loss, damage or theft of Tenant's
improvements, equipment or property, unless caused by the deliberate act or
gross negligence of Landlord, its servants, agents, or employees. Suspension or
interruption shall not result in any abatement of rent, be deemed an eviction,
or relieve Tenant of performance of Tenant's obligations under this Lease.
Services furnished by Landlord are:
3.05-1 Passenger elevator service in common with others.
3.05-2 Men's and women's restrooms situated on the floor on which the
Premises are located together with hot and cold or tempered water for use in
said restroom.
3.05-3 Cold water for any restroom or lunchroom facilities installed in the
Premises by Tenant.
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EXHIBIT 10.5 - continued
3.05-4 One refrigerated drinking fountain on the floor on which the
Premises are located.
3.05-5 A clean, street-level entranceway, elevator lobby, public corridor,
and other public portions of the Building for use in common with others.
3.05-6 Building directory located in close proximity to the primary
entrance of the Building listing Tenant's name and suite number.
3.05-7 Electric current in reasonably sufficient amounts for normal
business use, including operation of building standard lighting and general
office machines of a type that require no more than a 110-volt duplex outlet.
305-8 Re-▇▇▇▇▇▇▇ and maintaining building standard fluorescent lighting
fixtures installed in the Premises.
3.05-9 Heating, ventilation, and air conditioning in season through the
existing air distribution system of the Building at such temperatures and in
such amounts as may, in the judgment of the Landlord, are reasonably required
for comfortable use and occupancy under normal business operations.
3.05-10 Janitor service and refuse removal on Monday through Friday
(exclusive of legal holidays). The level of janitor service shall not include
carpet shampooing, drapery cleaning, or cleaning, maintenance, or supplies for
food facilities, special equipment areas, athletic facilities, or security areas
located within the Premises.
3.05-11 Window washing of all exterior windows in the Premises at intervals
determined solely by Landlord, but not less than one time per year.
3.06 PARKING.
Landlord shall make available to Tenant (6) parking spaces in the
Building's parking facility on a self-parking basis or on such other basis as
may then be in effect as determined by Landlord or the operator of the parking
facility during hours of normal business operation throughout the term of this
Lease. Landlord shall furnish spaces specifically designated for the use of
Tenant in connection with such parking privileges. Tenant shall have the option
of receiving or paying for more or less than the number of spaces herein
allocated. Tenant shall comply with all rules and regulations established by
Landlord or the operator of the parking facility.
3.07 PARKING FEE.
Tenant shall pay to Landlord or, at Landlord's request, to the operator of
the parking facility, in advance, on or before the first day of each month
during the term of this Lease, the then current monthly parking rate for each
parking space allocated to Tenant. Such parking fee shall be payable by Tenant
solely for the right and privilege to park in the Building's parking facility
and for that right and privilege only without regard to actual use. The current
monthly parking rate for each space allocated to Tenant shall be that rental
which is determined by Landlord periodically.
3.08 LANDLORD'S INABILITY TO PROVIDE PARKING.
If for any reason Landlord fails or is unable to provide parking space to
Tenant or Tenant is not permitted to utilize parking space in the parking
facility for any or all of the vehicles for which Tenant is renting space at any
time during the term of this Lease, such failure or inability shall not be
deemed to be a default by Landlord as to permit Tenant to terminate this Lease,
either in whole or in part. But, Tenant's obligations to pay rental for any
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EXHIBIT 10.5 - continued
(3.08 LANDLORD'S INABILITY TO PROVIDE PARKING.)
parking space which is not provided by Landlord shall be abated for so long as
Tenant does not have the use of such parking space; such abatement shall
constitute full settlement of all claims that Tenant might otherwise have
against Landlord by reason of such failure or inability to provide Tenant with
such parking space.
3.09 LANDLORD'S RIGHTS.
Landlord shall have the right to erect barriers to the parking facility
that can be passed or removed by use of a card or other identification system.
Landlord shall have the right to promulgate rules and regulations pertaining to
any such system as may be installed. During the term of this Lease, Landlord
shall have the right to designate and to relocate visitor-parking areas;
handicapped persons' parking areas and other restricted parking areas
periodically, all at Landlord's sole discretion.
SECTION 4. ASSIGNMENT; SUBLET; RECAPTURE OF PREMISES; MORTGAGE BY
LANDLORD; SUBORDINATION; ATTORNMENT, ESTOPPEL CERTIFICATE;
NOTICE TO MORTGAGEE; SALE BY LANDLORD
4.01 ASSIGNMENT -- SUBLET.
Tenant shall not assign or mortgage this Lease or sublet all or any portion
of the Premises without Landlord's prior written consent in each instance, and
Landlord will not unreasonably withhold consent. A copy of the proposed
assignment or sublease shall accompany any request for Landlord's written
consent, which must be in a form acceptable to Landlord. Assignment, mortgaging,
or subletting, if consented to by Landlord shall either a) relieve Tenant of its
liability under this Lease or the portion of the Lease identified to be sublet,
subject to Landlords' acceptance of proposed subtenant by Tenant, or b) Tenant
shall not be released from liability for assignment or sublease and will
continue to pay to Landlord all sums due under this Lease Agreement. This
Payment shall occur either as of the effective date of the assignment or
sublease or over the term of the assignment or sublease. Consent by Landlord to
any assignment or sublease shall not operate as a waiver of the necessity for
Tenant to obtain the prior written consent of Landlord to any subsequent
assignment, mortgaging, or subletting and the terms of any such consent shall be
binding upon the assignee, mortgagee, or subtenant. Any transfer of this Lease
by merger, consolidation, or liquidation or any change in ownership of or power
to vote the majority of outstanding voting stock of Tenant or, if Tenant is a
partnership, any withdrawal, replacement, or substitution of any partner or
partners, either general or limited, whether as the result of a single or series
of transactions, shall constitute an assignment for purposes of this section.
4.02 CORPORATE TRANSFER.
Any transfer of this Lease by Tenant through merger, consolidation or
liquidation, or any change in the ownership of or power to vote the majority of
its outstanding voting stock, shall constitute an assignment and is subject to
the provisions contained herein relative to assignment. Unless Tenant's stock is
listed on a recognized security exchange or if less than eighty percent (80%) of
its stock is owned by a corporation whose stock is listed on a recognized
security exchange, an assignment forbidden under this Lease shall include one or
more sales or transfers, by operation of law or otherwise, or creation of new
stock, by which an aggregate of more than fifty percent (50%) of Tenant's stock
shall be vested in a party or parties who are non-stockholders as of the
Commencement Date of this Lease.
11
EXHIBIT 10.5 - continued
4.03 RECAPTURE OF PREMISES.
Tenant's request of Landlord's consent to an assignment of this Lease or a
subletting of all or any part of the Premises shall contain a written offer to
Landlord to recapture the Premises (or the portion thereof proposed to be
sublet, in the case of a subletting), at the lesser of (i) the then current
rental in effect under this Lease; or (ii) the rental Tenant proposes to obtain
as a result of the assignment or sublease. Upon receipt of such written offer,
Landlord shall have the option, to be exercised within thirty (30) days
following receipt of such offer, to accept the offer to recapture in accordance
with this Section. If such offer is accepted by Landlord, Tenant shall execute
an assignment of the Lease or a sublease to Landlord in a form acceptable to
Landlord, with Landlord having the right to sublease the portion of the Premises
affected to others without any requirement of obtaining Tenant's consent
therefore. Except as hereafter provided, Tenant shall not be relieved of its
liability under this Lease. If Landlord exercises its option to recapture and
the assignment or sublease from Tenant provides for a rental rate equal to the
rental rate in effect as of the date the option is exercised, Tenant shall be
released of all further liability under this Lease as of the effective date of
the assignment or sublease with respect to that portion of the Premises subject
to the assignment or sublease. If Landlord does not exercise its option within
the time herein specified and consents in writing to Tenant's request to assign
or sublease, Tenant shall, in a form acceptable to the Landlord, assign or
sublease to the assignee or subtenant named in Tenant's request within thirty
(30) days from the date of Tenant's request at a rental rate equal to the rental
rate specified in the request. In the event Tenant fails to execute and deliver
any assignment or sublease within thirty (30) days from the date of Tenant's
request, then Tenant shall again comply with all the provisions and conditions
of this Section before assigning this Lease or subletting all or any portion of
the Premises.
4.04 MORTGAGE BY LANDLORD.
Landlord shall have the right to transfer and assign in whole or in part,
each and every feature of its right and obligations hereunder and in the
Building and land upon which it is situated. Such transfer or assignment may be
made either to a corporation, trust company, bank, insurance company, lending
institution, or any subsidiary thereof, or individual or group of individuals,
and Tenant shall recognize any such transfer or assignment.
4.05 SUBORDINATION.
This Lease and all rights of the Tenant hereunder are subject and
subordinate to any deeds of trust, mortgage or other instruments of security
that do now or may hereafter cover the Building and/or the land upon which the
Building is situated or any interest of Landlord therein, and to any and all
advances made on the security thereof, and to any and all increases, renewals,
modifications, consolidations, replacements and extensions of any such deeds of
trust, mortgages, or instruments of security. This provision is hereby declared
to be self-operative and no further instrument shall be required to effect such
subordination of this Lease.
4.06 ATTORNMENT.
If the Landlord's interest is transferred to any person or entity by reason
of foreclosure or other proceedings for enforcement of any mortgage, deed of
trust or security interest, or by delivery of a deed in lieu of foreclosure or
other proceedings, Tenant shall, upon delivery to Tenant by said transferee of a
non-disturbance agreement, immediately and automatically attorn to such person
or entity. In the event of such transfer, this Lease and Tenant's rights
hereunder shall continue undisturbed so long as Tenant is not in default beyond
any applicable notice and cure periods hereunder.
12
EXHIBIT 10.5 - continued
4.07 ESTOPPEL CERTIFICATE.
Tenant will at any time and from time to time, upon not less than ten (10)
days prior written request by Landlord, execute, acknowledge and deliver to
Landlord a statement in writing executed by Tenant certifying that this Lease is
unmodified and in full effect. Or, if there have been modifications, that this
Lease is in full effect as modified, setting forth such modifications such as
the dates to which the rent has been paid, and either stating that to the
knowledge of the signer of said statement that no default exists or specifying
each such default of which the signer may have knowledge. It is intended that
any such statement executed by Tenant may be relied upon by any prospective
purchaser or mortgagee or existing mortgagee of he Building or land upon which
it is situated.
4.08 ESTOPPEL CERTIFICATE -- LANDLORD.
Landlord agrees to furnish within twenty (20) days after request by Tenant
a certificate signed by Landlord stating the date to which base rent and
additional rent has been paid by Tenant and confirming the absence or existence
of defaults hereunder of which Landlord has knowledge.
4.09 NOTICE TO MORTGAGEE.
In the event of any act or omission by Landlord that would give Tenant the
right to damages or to terminate this Lease by reason of a constructive or
actual eviction from all or part of the Premises, Tenant shall not commence
action or terminate this Lease until it shall have given written notice to
Landlord and the holder of the indebtedness or other obligation secured by a
first mortgage or first deed of trust affecting the Building or the land upon
which it is situated. If the name and address of such holder has previously been
furnished to Tenant and until a reasonable period of time for remedying such act
or omission shall have elapsed following the giving of such notice, during which
time Landlord and such holder or either of them, their agents or employees,
shall be entitled to enter the premises and do whatever may be necessary to
remedy such act or omission. During the period following the giving of such
notice and during the remedying of such act or omission, the rent shall be
abated and apportioned only to the extent that any part of the Premises shall be
untenantable.
4.10 LIABILITY OF LANDLORD -- SALE BY LANDLORD.
Tenant shall look solely to Landlord's interest in the Building and land
upon which it is situated, for recovery of any judgment against Landlord. A
sale, conveyance, or assignment of Landlord's interest in the Building shall
operate to release Landlord from liability from (and after the effective date
thereof) all of the covenants, terms, and conditions of this Lease, express or
implied, except as such may relate to the period prior to such effective date.
Tenant shall thereafter look solely to Landlord's successor in interest in and
to this Lease. This Lease shall not be affected by any such sale, conveyance, or
assignment, and Tenant shall attorn to Landlord's successor in interest
thereunder.
4.11 LIABILITY OF LANDLORD.
The liability of Landlord to Tenant for any default by Landlord under the
terms of this Lease shall be limited to the interest of Landlord in the
Building. In no event shall Tenant make any claim against the shareholders,
officers, directors, individuals, partners, or joint venturers of Landlord, or
any partners of such partners or joint venturers, for any deficiency nor shall
any such shareholders, officers, directors, individuals, partners, or joint
venturers, or any partners of such partners or joint venturers, have, or be
13
EXHIBIT 10.5 - continued
(4.11 LIABILITY OF LANDLORD)
subject to, any personal liability. The assets of such parties shall not be
subject to levy, attachment, or other enforcement of a remedy sought by Tenant
or anyone claiming by, through or under Tenant for any breach or claim
hereunder. This clause shall not be deemed to limit or deny any remedies, which
Tenant may have in the event of default by Landlord hereunder which do not
involve the personal liability of Landlord.
SECTION 5. MAINTENANCE AND REPAIRS, RIGHT OF ENTRY, ALTERATIONS, LINES, SIGNS.
5.01 MAINTENANCE AND REPAIRS BY TENANT.
Tenant shall maintain the Premises and any alterations and additions to the
Premises in good condition and repair, except for any express maintenance and
repair obligations of the Landlord set forth in this Lease; reasonable wear and
tear; and damage or destruction by fire or other casualty, which Tenant is not
obligated to repair. Without limiting the foregoing, Tenant shall repair or
replace any damage or injury whatsoever to the Premises or the Building caused
by Tenant, its agents, employees or invitees (except to the extent that Landlord
receives insurance proceeds with which to repair or replace such damage or
injury, the repair obligations of Tenant with respect to such damage or injury
being subject to the waiver of subrogation and release provisions set forth in
this Lease).
All maintenance and repairs made by Tenant shall be performed in a good and
professional manner using materials of equal or greater quality than the
original work and shall be performed only by licensed contractors first approved
by Landlord. Tenant shall require its contractor to comply with Landlord's
regulations regarding all work to be performed and to maintain such insurance
coverage's with respect thereto as may be reasonably required by Landlord.
5.02 LANDLORD'S RIGHT TO MAINTAIN OR REPAIR.
If within thirty (30) days following notice by Landlord, Tenant fails or
refuses to perform any maintenance or repair to the Premises required of Tenant
by virtue of the provisions of this Lease, or to repair or replace any damage to
the Premises or Building caused by Tenant, its agents, employees, or invitees,
Landlord may at its own option cause all required maintenance, repairs, or
replacements to be made. Tenant shall pay Landlord, within ten (10) days
following invoice therefore, all costs incurred, (plus an administrative fee of
fifteen percent (15%) of such costs), plus interest on such amount at the rate
of eighteen percent (18%) per annum from the date of expense until repaid. All
amounts so owed shall be deemed additional rental due from Tenant hereunder and
failure to pay same when due shall entitle Landlord to exercise all rights and
remedies provided by this Lease, law and equity for nonpayment of rent.
5.03 LANDLORD'S RIGHT OF ENTRY.
Landlord and its agents and employees shall have the right to enter the
Premises at reasonable hours (and, except in cases of emergency, upon reasonable
advance notice to Tenant (which notice, notwithstanding any other provision of
this Lease, may be given orally) to make inspections, or to make alterations or
repairs to the Building or the Premises for which it is responsible or which it
is entitled to make hereunder. (Tenant shall be entitled at its own option to
have an agent present during any such entry.) In the event of emergency or in
order to comply with all laws, orders, ordinances and requirements of any
governmental unit or authority (regarding which compliance is the responsibility
of Landlord), Landlord and its agents and employees shall have the right of
entry at any time and may perform any acts related to safety, protection,
14
EXHIBIT 10.5 - continued
(5.03 LANDLORD'S RIGHT OF ENTRY)
reservation or improvement of the Building or the Premises or required by such
governmental unit or authority. Except for repair of casualty damage not caused
by Tenant, its agents, employees or invitees, Tenant shall not be entitled to
any abatement or reduction of rent because of work performed within the Building
or Premises by Landlord, (provided such work is performed in a manner so as to
minimize interference with the conduct of Tenant's business within the
Premises).
Landlord shall perform all necessary repairs to the heating, ventilation,
electrical, plumbing, and air conditioning systems servicing the Premises and
the Building, excluding those systems installed specifically by or for the
benefit of the Tenant and/or the Premises. Landlord shall maintain and repair
the exterior walls, roof, foundation, and all common areas of and within the
Building so as to keep same in good condition, order, and repair.
5.04 MAINTENANCE BY LANDLORD.
Landlord will maintain and make necessary repairs of damage to the Building
corridors, lobbies, common areas, and structural members and to equipment used
to provide those services, which Landlord agrees to furnish. All costs incurred
by Landlord in performing such maintenance and repairs shall, (subject to the
provisions of operation expenses exclusions provision), be included in Operating
Expenses for the Building. Except if such damage is caused by acts or omissions
of Tenant, its agents, employees, customers, or invitees, Tenant shall (subject
to the Waiver of Recovery and release provision set forth in this Lease) pay the
entire cost of the repair of such damage. Tenant shall promptly give Landlord
written notice of any damage caused by Tenant, its agents, employees, customers,
or invitees. Tenant shall further provide Landlord immediate notice of any
defective condition in or about the Premises known to Tenant. Tenant's failure
to provide such notice shall make Tenant liable to Landlord for any expense or
damage to Landlord resulting from such defective condition. Landlord shall not
be liable for or by reason of any injury to or interference with Tenant's
business arising from the performance of any maintenance or the making of any
repairs performed by Landlord, its agents, or employees, as long as Landlord
proceeds diligently with such maintenance repairs.
5.05 ALTERATIONS BY TENANT.
Tenant, at its own expense, may make changes, additions and improvements to
the Premises provided that any change, addition or improvement shall:
(a) Be made only with prior written consent of Landlord (which consent,
except in case of changes, additions or improvements to the Premises
which are structural, visible from the exterior of the Premises or
materially and adversely affect (in Landlord's sole discretion) the
base mechanical, electrical, plumbing, and/or HVAC systems of the
Building, shall not be unreasonably withheld, delayed or conditioned).
(b) Comply with all applicable governmental and insurance company rules,
regulations and requirements.
(c) Equal or exceed the current construction standard for the Building.
(d) Be performed by a licensed contractor first approved by and in
accordance with regulations set forth by Landlord. If requested prior
to commencing work, contractor will deliver to Landlord evidence of
insurance coverage's in amounts and form satisfactory to Landlord.
15
EXHIBIT 10.5 - continued
(5.05 ALTERATIONS BY TENANT)
All work performed shall be done in such a manner as not to disturb or
disrupt the operations of the Building or of any other tenants situated in the
Building. Following completion of any changes, additions or improvements, Tenant
shall furnish Landlord with current "as-built" drawings and specifications for
the Premises reflecting such changes, additions or improvements made to the
Premises. Tenant as additional rent shall pay any increase in real estate taxes
or insurance premiums on the Building attributable to such change, addition or
improvement.
5.06 ALTERATIONS BY TENANT -- ADA COMPLIANCE.
Without limiting any other provisions of this Lease, Tenant shall at
Tenant's sole cost and expense (but subject to Landlord's prior written
approval, which shall not be unreasonably withheld), make each and every
alteration or addition to the Premises required to bring the Premises into
compliance with the requirements imposed by the Americans with Disabilities Act
(42 U.S.C. Section 12101 et seq.) and any regulations promulgated pursuant
thereto effective from time to time during the term of this Lease, and any
period of holding over by Tenant ("ADA Requirements"), if
(a) The requirement for such alteration or addition arises as a result of:
(1) Any alteration or addition by Tenant.
(2) Any violation by Tenant of any ADA Requirements.
(3) A special use of the Premises or any part thereof by Tenant or
any assignee or subtenant of Tenant (including but not limited to
use for a facility which constitutes, or if open to the public
generally would constitute, a "place of public accommodation"
under the ADA requirements).
(4) The special needs of the employee(s) of Tenant or any assignee or
subtenant of Tenant.
(b) The ADA requirements would otherwise make Tenant rather than Landlord
primarily responsible for making such alteration or addition.
5.07 ALTERATIONS BY LANDLORD -- COMMON AREAS.
Landlord reserves the right in its sole discretion to redesign, change,
rearrange, alter, reconstruct, modify, expand, reduce, or supplement any and all
of the facilities designed for the common use and convenience of all Tenants of
the Complex and/or the Building, including without limitation, parking areas,
driveways, and other common areas, so long as access to the Premises is not
materially affected thereby. Further and not in limitation of the foregoing,
Landlord shall have the right to erect additional stores or other structures in
the Complex or to add to or otherwise modify Buildings and Facilities now or
hereafter existing in the Complex. In connection with any such activity and
construction, Landlord may erect temporary scaffolds and other aids to
construction on the exterior of the Premises, provided that access to the
Premises shall not be denied to Tenant and that there shall be no encroachment
upon the interior of the Premises. Landlord shall have the right to close the
common areas or any portion thereof (including, without limitation, all
roadways, driveways, access ways, sidewalks, and parking areas, and facilities
now or hereafter within the Complex) at such times and in such manner as is
necessary or appropriate in Landlord's sole opinion, to prevent their deduction
as public rights-of-way or streets, and to do and perform such other acts in, to
and with respect to the common areas as at the time in question accord with good
and generally accepted standards of operation of mixed-use, high-rise
developments.
16
EXHIBIT 10.5 - continued
5.08 LIENS.
Tenant shall not cause liens of any kind to be filed or placed against the
Premises or the Building. If any liens are filed, with or without Tenant's
knowledge, and such liens are the result of any act, directive or action of
Tenant, its agents or employees, Tenant shall immediately at Tenant's sole cost
and expense take whatever action shall be necessary to cause such lien to be
satisfied and discharged within ten (10) days after such filing. Notwithstanding
the foregoing, Landlord shall have the right and privilege, at Landlord's
option, of paying the amount of such lien, or any portion thereof, without
inquiry as to the validity thereof. Any amounts so paid, including expenses,
reasonable attorneys' fees and interest at the rate of eighteen percent (18%)
per annum from the date of expense until repaid, shall be deemed additional rent
due from Tenant to Landlord on demand.
5.09 SIGNS.
Tenant shall not inscribe any inscription or post, place or in any manner
display any sign, notice, picture, placard, poster, or advertising matter
anywhere in or about the Building or Premises at places visible (either directly
or indirectly as an outline or shadow on a glass pane) anywhere outside the
Premises without Landlord's prior written consent. Upon expiration or
termination of this Lease, Tenant shall remove all such signs or advertising
consented to by Landlord and shall at its own expense repair any damage to the
Premises or Building caused by such removal. Such obligations shall survive
expiration or sooner termination of this Lease.
5.10 SIGNS DIRECTORY LISTING.
At Tenant's request and Landlord's expense, shall provide listings on the
Building directory of the names of Tenant and the names of any of Tenant's
officers and employees, provided that the names so listed shall not use more
than Tenant's proportionate share of the space on the Building directory.
SECTION 6. INSURANCE; INDEMNITY; SUBROGATION
6.01 INSURANCE BY LANDLORD.
Landlord shall maintain the following insurance coverage:
6.01-1 Fire insurance with an extended coverage endorsement for an amount
not less than one hundred percent (100%) of the then current replacement cost
(excluding foundation, grading, and excavation costs) of the Building, including
all improvements thereto.
6.01-2 Rental Income insurance coverage equal to not less than one hundred
percent (100%) of the then current gross annual rentals due from all Tenants of
the Building.
6.01-3 Glass Replacement insurance coverage for replacement of all glass
then situated in the Building.
6.01-4 Vandalism and Malicious Mischief insurance coverage.
6.01-5 Worker's Compensation insurance coverage for all Landlord's
employees and agents in an amount sufficient to comply with applicable laws or
regulations.
6.01-6 Commercial General Liability and Property Damage insurance coverage
on an occurrence basis with limits of not less than one million dollars
($1,000,000.00) per occurrence, or if such limits shall not be available on a
per occurrence basis, then with limits of not less than two million dollars
($2,000,000.00) per year.
17
EXHIBIT 10.5 - continued
6.01-7 Such other insurance coverage as Landlord may from time to time
determine consistent with coverage which is now or may in the future be
considered prudent for similar income producing property situated in the same
general geographic area as the Building or as may be required by any mortgagee
or creditor of Landlord.
With respect to the insurance described in Sections 6.01-1, 6.01-5 and
6.01-6 above, Landlord may exclude from coverage the tenant improvements
required to be insured by Tenant pursuant to Section 6.02 and other improvements
required to be insured by other Tenants or occupants of the Building. The named
insured on all policies of insurance maintained by Landlord shall be the
Landlord and, if required, any mortgagee or creditor of Landlord. Tenant shall
pay to Landlord as additional rent the Pro Rata Percentage (as shown on the
cover page of this Lease) of the cost of all such insurance maintained by
Landlord.
6.02 INSURANCE BY TENANT.
During the term of this Lease, Tenant shall provide Landlord with evidence,
in a form acceptable to Landlord, of insurance coverage in effect against such
perils and in such amounts as Landlord shall from time to time request in
writing. All insurance policies provided and maintained by Tenant in compliance
with Landlord's request shall be issued in a form and by an insurer acceptable
to Landlord and shall, in addition to Tenant, name as additional insured,
Landlord and any other person or entity having an interest in the Building or
land upon which it is situated whose name is furnished to Tenant by Landlord
and, if applicable, their: (i) constituent general partners; or (ii) officers,
directors and shareholders.
6.02-1 Fire insurance, including extended coverage, vandalism and malicious
mischief and demolition and debris removal, insuring, for an amount not less
than one hundred percent (100%) of the current replacement cost of all Tenant
improvements, alterations, or additions made to the Premises by Tenant, and
Tenant's trade fixtures, inventory, furniture and equipment owned, controlled or
in use by Tenant and situated in the Premises. Landlord shall have no interest
in the insurance upon Tenant's equipment and fixtures and will sign all
documents necessary in the settlement of any claim. Landlord will not carry
insurance of Tenant's property or improvements to the Premises made by Tenant.
6.02-2 Commercial General Liability and Property Damage insurance on an
occurrence basis with respect to Tenant's business and occupancy of the Premises
with limits for any one occurrence of not less than one million dollars
($1,000,000.00) or if such limits shall not be available on a per occurrence
basis, then with limits of not less than two million dollars ($2,000,000.00) per
year) or such greater amount as Landlord may reasonably require in writing from
time to time, provided that if such insurance shall have limits on a per year
basis, Tenant also shall be required to maintain an umbrella liability policy of
insurance with limits of not less than two million dollars ($2,000,000.00). Such
insurance shall contain a provision including coverage for all liabilities of,
or assumed by, Tenant under this Lease (including all of Tenant's indemnity
obligations hereunder).
6.02-3 Worker's Compensation insurance for all Tenants' employees working
in the Premises in an amount sufficient to comply with applicable laws or
regulations.
18
EXHIBIT 10.5 - continued
6.02-4 Insurance against such other perils and in such amounts as Landlord
may from time to time reasonably require in writing. Such request shall be made
on the basis that the insurance coverage requested is customary at the time for
prudent Tenants.
6.02-5 All policies of insurance maintained by Tenant shall be in a form
acceptable to Landlord and shall: (i) be issued by an insurer licensed to do
business in the state (province) in which the Building is situated; (ii) if
requested, name Landlord and any managing agent and other designee and, if
applicable, their respective: (a) constituent general partners, or (b) officers,
directors and shareholders, as the case may be, as additional insured; (iii)
require at least thirty (30) days prior written notice to Landlord of
termination, lapse of coverage or material alteration; and (iv) waive, to the
extent available, any right of recovery or subrogation against Landlord. If
requested by Landlord, Tenant shall, upon the Commencement Date of this Lease
and thereafter within thirty (30) days prior to the expiration of each such
policy, promptly deliver to Landlord certified copies or other evidence of such
policies and evidence satisfactory to Landlord that all premiums have been paid
and all policies are in effect.
6.02-6 If Tenant fails to secure or maintain any insurance coverage
required by Landlord or should insurance secured not be approved by Landlord and
such failure or approval not be corrected within thirty (30) hours after written
notice from Landlord, Landlord may, in Landlord's sole discretion, purchase such
insurance coverage required at Tenant's expense. Tenant shall reimburse Landlord
on demand for any monies expended.
6.03 BLANKET INSURANCE.
Tenant shall have the right to satisfy its insurance obligations set forth
in Section 6.02 under a blanket insurance policy or policies covering the
Premises and other of Tenant's leased or owned properties, provided that if
Tenant shall elect to insure the Premises under such blanket policy or policies:
(a) Each such policy or policies shall specify the amount or amounts, as
the case may be of the total insurance coverage allocated to the
Premises, which amount(s) shall not be less than the amount(s)
required under Section 6.02.
(b) The amounts so specified in such policy or policies or in the written
statement or certificate described in subsection (a) above, shall be
sufficient to prevent any one of the insured parties thereunder,
including Landlord, from becoming a co-insurer within the terms of the
applicable policy or policies.
(c) Any such policy or policies shall not, as to Landlord's coverage
thereunder, be subject to invalidation as a result of any act or
omission by Tenant of any kind whatsoever.
(d) The blanket policy or policies shall, with respect to the Premises,
otherwise comply with all other requirements set forth in Section
6.02, including without limitation, the requirements related to
coverage and endorsements.
6.04 INDEMNITY.
Tenant shall indemnify and hold harmless Landlord from all loss, claim,
demand, damage, liability, or expense, including attorneys' fees, resulting from
any injury to or death of any person or any loss of or damage to any property
caused by or resulting from any act, omission, or negligence of Tenant or any
19
EXHIBIT 10.5 - continued
(6.04 INDEMNITY)
officer, employee, agent, contractor, licensee, guest, invitee, or visitor of
Tenant in or about the Premises or the Building. The foregoing provision shall
be construed to make Tenant responsible for loss, damage, liability or expense
resulting from injuries to third parties caused by any act or omission of
Landlord or of any officer, employee, agent contractor, invitee or visitor of
Landlord. Landlord shall not be liable for any loss or damage to person,
property or Tenant's business sustained by Tenant, or other persons, which may
be caused by the Building or the Premises, or any appurtenances thereto, being
out of repair or by the bursting or leakage of any water, gas, sewer, or steam
pipe, or by theft, or by any act of neglect of any tenant or occupant of the
Building, or of any other person, or by any other cause whatsoever, unless
caused by the gross negligence of Landlord.
6.05 WAIVER OF RECOVERY.
Regardless of fault or negligence, Landlord and Tenant hereby waive and
release any claim arising in favor of one against the other, or anyone claiming
through either of them (including any insurance company insuring either of them
for any loss) by way of subrogation or otherwise, for any loss of or damage to
any property of either which loss or damage is recovered under any such
insurance policies. Said waiver shall be in addition to any other waiver or
release contained in this Lease with regard to loss or damage to property of
either. Landlord and Tenant shall request its insurers to consent to such waiver
and agree to waive all rights of subrogation against the other party. If the
insurer shall impose a fee for consenting to such waiver, the party benefiting
shall pay the cost imposed.
6.06 CONCURRENT INSURANCE.
Except with respect to the liability insurance required to be carried by
Section [6.02-2 or 6.02-3] hereof, neither Landlord nor Tenant shall procure
insurance concurrent in form, or contributing in the event of loss, with that
insurance required by Section 6.02 to be furnished by Tenant unless both
Landlord and Tenant are named in such insurance as the insured thereunder, with
loss payable as required by this Lease. Landlord and Tenant each agree to notify
the other immediately in writing upon the procurement of such separate
insurance.
6.07 INCREASED COST/ADDITIONAL COVERAGE.
Tenant shall not keep or use in or upon the Premises any article or
substance which may be prohibited by any insurance policy in force from time to
time covering the Premises or the Building, and Tenant shall not, directly or
indirectly, make any use of the Premises which may jeopardize any insurance
covering the Premises or the Building, or may increase the cost of such
insurance, or which may require additional insurance coverage. If the occupancy
of the Premises, the conduct of business in the Premises or any act or omission
of the Tenant in or about the Premises causes or results in any increase in
premiums for the insurance carried from time to time by the Landlord with
respect to the Premises and/or the Building or causes or results in the need for
additional insurance coverage, then Tenant shall pay to Landlord promptly upon
demand thereof the cost of such increase in premiums or the cost of such
additional coverage, as applicable.
20
EXHIBIT 10.5 - continued
SECTION 7. DAMAGE AND DESTRUCTION
7.01 DAMAGE REPAIR.
In the event the Building or the Premises shall be destroyed or rendered
untenantable either in whole or in part by fire or other casualty, Landlord may
at its option restore the Building or premises to as near their previous
condition as is reasonably possible. In the meantime, unless the damage was
caused by acts, omissions, or negligence of Tenant, its agents, employees,
contractors, or invitees, the rent shall be abated in the same proportion as the
untenantable portion of the Premises bears to the whole thereof. But, unless
Landlord within thirty (30) days after the happening of any such casualty shall
notify Tenant of its election to restore, this Lease shall not continue and
Landlord shall commence the necessary restoration. Such restoration by Landlord
shall not include replacement of Tenant's trade fixtures, furniture, equipment,
or other items that do not become part of the Building or any improvements to
the Premises in excess of those provided for in the allowance for building
standard items as of the Commencement Date of this Lease. The Tenant at no cost
to the Landlord shall perform Restoration of the Premises required beyond
Landlord's obligation. If Landlord shall elect to notify Tenant that Landlord
shall not restore, this Lease shall terminate as of the date of the occurrence
and Tenant shall promptly vacate the Premises. Upon vacating, any prepaid rent
from date of vacating shall be refunded to Tenant.
7.02 DELAY BEYOND LANDLORD'S CONTROL.
No penalty shall accrue to Landlord to delay in commencing or completing
repairs caused by adjustment of insurance claims, government requirements, or
any cause beyond Landlord's reasonable control.
7.03 BUSINESS INTERRUPTION.
No damages, compensation, or claim shall be payable by Landlord for
inconvenience, loss of business, or annoyance arising from any repair or
restoration of any portion of the Premises or of the Building. Landlord shall
use commercially reasonable efforts to affect such repairs promptly and in such
manner as not to unreasonably interfere with Tenant's occupancy.
7.04 TENANT IMPROVEMENT.
Landlord will not carry insurance of any kind on any improvements,
additions, or alterations made and paid for by Tenant or Tenant's furniture or
furnishings or on any fixtures, equipment, improvements, or appurtenances of
Tenant under this lease, and Landlord (except as provided by law by reason of
its negligence) shall not be obligated to repair any damage thereto or replace
the same. Landlord shall be obligated to make repairs or restoration only of
those portions of the Premises that were originally provided at Landlord's
expense. The repair and restoration of items not provided at Landlord's expense
shall be the obligation of Tenant.
7.05 DESTRUCTION DURING LAST YEAR OF TERM.
In case the Building shall be substantially destroyed by fire or other
causes at any time during the last year of the term of this Lease, either
Landlord or Tenant may terminate this Lease upon written notice to the other
party hereto given within thirty (30) days of the date of such destruction.
7.06 MUTUAL RELEASE.
Upon any termination of this Lease as a result of damage or destruction of
the Building or Premises as provided herein, the parties shall be released
thereby without further obligation to the other from the date possession of the
Premises is surrendered to Landlord, except for rent and any other monies which
have accrued and are then unpaid.
21
EXHIBIT 10.5 - continued
SECTION 8. CONDEMNATION
8.01 CONDEMNATION; AWARD; TERMINATION.
If the Building or Premises shall be taken or condemned for any public
purpose or for any reason whatsoever, to such an extent as to render either or
both untenantable, either Landlord or Tenant shall have the option to terminate
this Lease effective as of the date of taking or condemnation. If the taking or
condemnation does not render the Building and the Premises untenantable, this
Lease shall continue in effect and Landlord shall promptly restore the portion
not taken, to the extent possible, to the condition existing prior to the
taking. In such event, however, Landlord shall not be required to expend an
amount in excess of the proceeds received by Landlord from the condemning
authority. If, as a result of such restoration, the area of the Premises is
reduced, the rental shall be reduced proportionately. All proceeds from any
taking or condemnation shall be paid to Landlord. Tenant waives all claims
against such proceeds. A voluntary sale or conveyance in lieu of, but under the
threat of, condemnation shall be considered a taking or condemnation for public
purpose.
8.02 PARTIAL TAKING OF BUILDING AND/OR PREMISES MAKING SPACE UNTENANTABLE.
If a portion of the Building or Premises is taken or condemned and the
remainder is, in Landlord's opinion, not economically usable, Landlord shall
notify Tenant of the termination of the Lease effective as of the date of taking
and any prepaid rent shall be refunded to Tenant.
8.03 PARTIAL TAKING OF PREMISES AND TENANT ABILITY.
If a portion of the Premises is taken or condemned and the remainder is, in
Landlord's opinion, economically usable, this Lease shall terminate as to the
portion taken, effective as of the date of taking and continue as to the
remainder. Landlord shall, to the extent reasonably possible, repair and restore
the remainder to its condition as of the date of taking. Any prepaid rent shall
be applied against subsequent rental due.
8.04 VOLUNTARY SALE.
A voluntary sale or transfer in lieu of, but under the threat of,
condemnation shall be considered a taking or condemnation.
8.05 AWARD.
Landlord shall be entitled to all compensation paid as a result of such
taking or condemnation without participation by Tenant. Tenant may pursue a
claim against the condemning authority for loss of business, cost of relocation,
or cost of removal of Tenant's trade fixtures, furniture, and equipment only if
such claim does not diminish or adversely affect the compensation to be paid to
Landlord.
SECTION 9. SURRENDER OF PREMISES
9.01 SURRENDER AT TERMINATION.
Upon termination of this Lease whether caused by lapse of time or
otherwise Tenant shall:
(a) Remove Tenant's goods and effects and those of all persons claiming
under Tenant at Tenants expense.
(b) Deliver all keys to the Premises to Landlord.
(c) Surrender at once possession of the Premises to Landlord.
22
EXHIBIT 10.5 - continued
(9.01 SURRENDER AT TERMINATION)
If Tenant caused the Premises to be improved with other than building
standard ceiling suspension system, acoustical tile ceiling, fluorescent light
fixtures, millwork detail, doors, door frames, hardware, or hard surface floor
tile and base, or any corridor adjacent to the core of the Building to be other
than building standard width and construction, Tenant shall pay to Landlord an
amount equal to the cost to replace all such non-standard items with the then
building standard items and the cost to replace all such non-standard corridors
with corridors of building standard width and construction.
9.02 FAILURE TO SURRENDER.
If possession of the Premises is not immediately surrendered, Landlord may
take possession of the Premises and expel or remove Tenant and any other person
occupying all or a portion of the Premises, by force if necessary, without civil
or criminal liability.
9.03 TITLE TO IMPROVEMENTS.
Except for movable office furnishings, all improvements, alterations or
additions made by either Landlord or Tenant within the Premises shall become the
property of Landlord when the Premises are vacated by Tenant and shall remain
upon and be surrendered with the Premises without compensation to Tenant. Except
for damage by fire or casualty, the maintenance and care of such improvements
during the term of this Lease shall be the responsibility of Tenant. Wall
paneling, closets, built-in cabinets, sinks, doors, floor coverings, and
built-in units of all kinds are improvements that become the property of
Landlord. Wall hung office furniture, Tenant provided the reasonably estimated
amount to cap plumbing may remove refrigeration-sink units and other electrical
appliances and repair screw holes or other damage is paid to Landlord prior to
removal. Front reception built-in desk and laminated conference room table will
remain property of Landlord.
9.04 REMOVAL OF FURNITURE AND TRADE FIXTURES-ABANDONMENT.
All furniture, movable trade fixtures, and installed by Tenant may be
removed by Tenant at termination of the Lease. All such removals shall be
accomplished in a workmanlike manner so as not to damage the Premises or the
Building, including the structure or structural qualities of the Building or the
plumbing, electrical lines, or utilities. Any such furniture, movable trade
fixtures, and equipment not promptly removed by Tenant shall be deemed
conclusively to have been abandoned by Tenant and may be appropriated, sold,
destroyed, or otherwise disposed of by Landlord without notice to Tenant or
obligation to compensate Tenant or to account therefore. Tenant shall pay
Landlord, on demand, all costs incurred by Landlord in connection with such
abandonment.
9.05 SURRENDER WRITTEN ACCEPTANCE NECESSARY.
No act or omission by Tenant, its agents, or during the lease term,
including delivery of keys to any of Landlord's agents or employees, shall be
deemed an acceptance of a surrender of the Premises and no agreement to accept
surrender of the Premises shall be valid unless it is presented in writing and
signed by Landlord.
23
SECTION 10. DEFAULT; EVENTS; REMEDIES10.01 EVENTS OF DEFAULT.
The occurrence of any one of the following events shall constitute a
default of this Lease by Tenant:
(a) Failure of Tenant to make any payment of rent or other required
payment when due and when such failure continues for a period of ten
(10) days after mailing of written notice by Landlord to Tenant. No
notice shall be necessary if two such notices have been given during
the preceding twelve (12) month period.
(b) Failure by Tenant to take possession of the Premises within ten (10)
days following commencement of this Lease.
(c) Vacating or abandonment of all or a substantial portion of the
Premises.
(d) Failure of Tenant to comply with any provision of this Lease other
than payment of rent, with such failure continuing for ten (10) days
after mailing of written notice by Landlord to Tenant specifying the
nature of non-compliance by Tenant with reasonable particularity
provided. However, if the nature of Tenant's default is such that more
than ten (10) days are reasonably required for its cure, Tenant shall
not be in default if Tenant immediately commences or has commenced
such cure and thereafter diligently proceeds to cure such default
(within thirty (30) days).
(e) The making of an assignment or general arrangement for the benefit of
creditors by Tenant or any guarantor of Tenant's obligations under the
Lease.
(f) The filing by Tenant or any guarantor of Tenant's obligations under
this Lease of a petition under any section or chapter of the present
Federal Bankruptcy Act (or foreign equivalent) or amendment thereto or
under any similar law or statute of the United States (or foreign
country) or any state (or province) thereof. Or, the failure of the
dismissal, within ten (10) days after the filing of an involuntary
petition of bankruptcy or insolvency against Tenant or guarantor of
Tenant's obligations.
(g) The appointment of a receiver or trustee for all or substantially all
the assets of Tenant or any guarantor of Tenant's obligations under
this Lease. Such receivership shall not have been terminated or stayed
within the time permitted by law.
(h) The attachment, execution or other judicial seizure of substantially
all of Tenant's assets located in the Premises or of Tenant's interest
in this Lease where such seizure is not discharged within thirty (30)
days.
10.02 REMEDIES IN EVENT OF DEFAULT.
Upon the occurrence of any event of default, Landlord shall have the option
to do any one or more of the following without any notice or demand.
10.03 TERMINATION OF LEASE.
Terminate this Lease, in which event Tenant shall immediately surrender the
Premises to Landlord. If Tenant shall fail to do so, Landlord may without notice
and prejudice to any other remedy available, enter and take possession of the
Premises and remove Tenant or anyone occupying the Premises and its effects
without being liable to prosecution or any claim for damages. Tenant shall
indemnify Landlord for all loss and damage suffered by Landlord because of such
termination whether through inability to relet the Premises or otherwise,
including any loss of rent for the remainder of the term of this Lease. If
Landlord elects to terminate this Lease, Tenant's liability to Landlord for
damages shall survive such termination.
24
EXHIBIT 10.5 - continued
10.04 ACCELERATION OF RENT.
Declare the entire amount of all rent past due as well as that which would
have become due and payable during the remainder of the term of this Lease to be
due and payable immediately. In this event, Tenant shall pay the same to
Landlord immediately. Such payment shall constitute payment of past due rent and
payment in advance of the rent stipulated for the remainder of the Lease term.
Acceptance by Landlord of the payment of such rent shall not constitute a waiver
of any then existing default occurring thereafter.
10.05 RELETTING OF PREMISES.
Enter upon and take possession of the Premises as agent of Tenant without
terminating this Lease and without being liable to prosecution or any claim for
damages. Landlord may relet the Premises and in that connection may make any
suitable alterations or refurbish the Premises, or both, or change the character
or use of the Premises. Landlord shall not be required to relet for any use or
purpose other than that specified in this Lease or which Landlord may reasonably
consider injurious to the Premises, or to any tenant, which Landlord may
consider objectionable.
Landlord may relet all or any portion of the Premises alone or in
conjunction with other portions of the Building for a term longer or shorter
than the term of this Lease at a rental rate greater or less than the then
current rental rate provided in this Lease and upon such other terms (Including
the granting of concessions) as Landlord solely determines to be acceptable. If
Landlord elects to reenter and relet all or any portion of the Premises,
Landlord be entitled to recover as damages immediately, without waiting until
the due date of any future rent, or until the date fixed for expiration of this
Lease, the total of all rent owed and unpaid as of the date of the default. The
Landlord can also recover the costs of reentry and reletting including without
limitation the cost of any cleanup, refurbishing, removal of Tenant's property
and fixtures, expenses from Tenant's failure to quit the Premises and to leave
them in the required condition, any remodeling costs, attorneys' fees, court
costs, brokers' commissions, advertising costs, and the difference between the
rent and all of Tenant's other obligations under this Lease and the actual rent
received by Landlord from the Premises for the period commencing with the date
of the default and continuing through the date designated as the expiration date
of this Lease.
No such reentry or taking possession of the Premises shall be construed as
an election on Landlord's part to terminate this Lease unless a written notice
of such intention is given to Tenant. Landlord, however, shall have no duty to
relet the Premises and Landlord's failure to do so shall not release Tenant's
liability for rent or damages. If Landlord elects to enter and relet the
Premises, the Landlord may at any time thereafter elect to terminate this Lease
for Tenant's default. If Landlord takes possession of Premises, Landlord shall
have the right to rent any available space in the Building before reletting or
attempting to relet the Premises.
10.06 LANDLORD'S RIGHT TO PERFORM.
Tenant is obligated to do by provisions of this Lease and may enter the
Premises without being liable to prosecution or claim for damages in order to
accomplish this purpose. Tenant shall reimburse Landlord immediately upon demand
for any expenses, which Landlord may incur in complying with the terms of this
Lease on behalf of Tenant. Landlord shall not be liable for any damages to
Tenant from such action, whether caused by negligence of Landlord or otherwise.
25
EXHIBIT 10.5 - continued
10.07 REMEDIES CUMULATIVE.
The remedies, as set forth and available to Landlord because of the default
of Tenant, shall be in addition to and shall not exclude any other remedy
available to Landlord under this Lease or applicable law.
10.08 WAIVER OF REDEMPTION RIGHTS.
Tenant for itself and on behalf of any and all persons claiming through or
under it, including creditors of all kinds, does hereby waive and surrender all
right and privilege which they or any of them might have under or by reason of
any present or future law, to redeem the Premises or to have a continuance of
this Lease for its remaining term after having been dispossessed or ejected from
the Premises by process of law or under the terms of this Lease or after the
termination of this Lease as herein provided.
SECTION 11. GENERAL PROVISIONS
11.01 WAIVER.
No provisions of this Lease shall be deemed to have been waived by Landlord
unless such waiver is in writing and is signed by Landlord. Landlord's waiver of
a breach of any term or condition of this Lease shall not prevent a subsequent
act, which would have originally constituted a breach, from having the effect of
any original breach. Landlord's receipt of rent with knowledge of a breach by
Tenant of any term or condition of this Lease shall not prevent a subsequent
act, which would have originally constituted a breach, from having the effect of
any original breach. Landlord's receipt of rent with knowledge of a breach by
Tenant of any term or condition of this Lease shall not be deemed a waiver of
such breach.
Landlord's failure to enforce against Tenant or any other Tenant of the
Building any of the rules or regulations made by Landlord shall not be deemed a
waiver of such rules or regulations. No act or thing done by Landlord, its
agents or employees during this Lease Term shall be deemed an acceptance of a
surrender of the Premises and no agreement to accept a surrender of the Premises
shall be valid unless it is in writing and is signed by Landlord. The delivery
of keys to any of Landlord's agents or employees shall not serve to terminate
this Lease or surrender the Premises. No payment by Tenant or receipt by
Landlord, of a lesser amount than the rent due shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying a payment as rent be deemed an
accord and satisfaction. Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy available to Landlord.
11.02 HOLDING OVER.
If Tenant shall fail to vacate the Premises upon expiration or sooner
termination of this Lease, Tenant shall be a month-to-month Tenant and subject
to all laws of the [state or province] in which the Building is situated
applicable to such tenancy. The rent to be paid Landlord by Tenant during such
continued occupancy shall be one hundred fifty percent (150%) of the base rent
being paid by Tenant as of the date of expiration or sooner termination.
11.03 Removal Of Property.
If Tenant shall fail to remove any of its property of any nature from the
Premises or Building at the termination of this Lease or when Landlord has the
right of re-entry, and if Landlord fails to elect to pursue any remedies
available to Landlord as provided in this Lease relative to removal or
disposition of Tenant's property remaining in the Premises or Building, Landlord
26
EXHIBIT 10.5 - continued
(
11.03 Removal Of Property)
may, at its option, immediately remove and store said property without liability
for loss or damage, such storage to be for the account and at the expense of
Tenant. In the event that Tenant shall not pay the cost of storing any such
property after it has been stored for a period of thirty (30) days or more,
Landlord may at its option sell, or permit to be sold, any or all such property
at public or private sale, in such manner and at such times and places as
Landlord, in its sole discretion, may deem proper, without notice to Tenant. The
proceeds of such sale may be applied (i) to the cost and expense of such sale,
including reasonable attorneys' fees actually incurred; (ii) to the payment of
the cost for storing such property; (iii) to the payment of any other money,
which may then be or thereafter become due Landlord from Tenant under any of the
terms of this Lease; and (iv) the balance if any to Tenant.
11.04 NOTICES.
All notices or other communications between the parties shall be in writing
and shall be delivered by personal delivery, commercially recognized overnight
courier, or prepaid United States registered or certified mail, receipt
requested, addressed as set forth below. If any notice is delivered in person or
by overnight courier, such notice shall be deemed duly given upon receipt. If
any notice is delivered by United States registered or certified mail, return
receipt requested, such notice shall be deemed duly given upon the earlier of
receipt or three (3) days after deposit with the United States mail service.
Landlord and Tenant may from time to time by written notice to the other
designate another address for receipt of future notices.
All notices and other communications shall be addressed and sent to the
following addresses:
To Tenant: To Landlord:
Fan Energy Inc. COFCO Investment Company, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President Attn: ▇▇▇ ▇▇▇▇▇▇, President
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Controller
11.05 CONSENT NOT UNREASONABLY WITHHELD.
Unless otherwise specifically provided, whenever consent approval of
Landlord or Tenant is required under the terms of this Lease, such consent or
approval shall not be unreasonably withheld or delayed. Tenant's sole remedy if
Landlord unreasonably withholds or delays consent or approval shall be an action
for specific performance and Landlord shall not be liable for damages. If either
party withholds any consent or approval, such party shall on written request
deliver to the other party a written statement giving the reasons therefore.
11.06 ATTORNEYS' FEES.
If either Landlord or Tenant commences or engages in or threatens to
commence or engage in any action or litigation or arbitration against the other
party arising out of or in connection with the Lease, the Premises or the
Building, including but not limited to any action for recovery of any payment
owed by either party under the Lease, or to recover possession of the Premises,
or for damages for breach of the Lease, the prevailing party shall be entitled
to have and recover from the losing party reasonable attorneys' fees and other
costs incurred in connection with and preparation for such action.
27
EXHIBIT 10.5 - continued
If Landlord becomes involved in any litigation or dispute, threatened or
actual, by or against anyone not a party the Lease, but arising by reason of or
related to any act or omission of Tenant or Tenant's agents, contractors,
employees, licensees, directors, officers, partners, trustees, visitors, or
invitees, Tenant agrees to pay Landlord's reasonable attorneys' fees and other
costs incurred in connection with the litigation or dispute regardless of
whether a lawsuit is actually filed.
11.07 TIME OF THE ESSENCE.
In all instances where the terms and provisions of this Lease to pay any
sum or to do any act at a particular time or it is understood and agreed within
an indicated period require Tenant, it is understood and agreed that time is of
the essence.
11.08 ARBITRATION
These procedures will govern any arbitration to this lease:
a) Arbitration will be commenced by a written demand made by Landlord or
Tenant upon the other. The written demand will contain a statement of the
question to be arbitrated and the name and address of the arbitrator
appointed by the demandant. Within ten (10) days after its receipt of the
written demand, the other will give the demandant written notice of the
name and address of its arbitrator. Within ten (10) days after the date of
the appointment of the second arbitrator, the two arbitrators will meet. If
the two arbitrators are unable to resolve the question in dispute within
ten (10) days after their first meeting, they will select a third
arbitrator. The third arbitrator will be designated as chairman and will
immediately give Landlord and Tenant written notice of its appointment. The
three arbitrators will meet within ten (10) days after the appointment of
the third arbitrator. If they are unable to resolve the que3stion in
dispute within ten (10) days after their first meeting, the third
arbitrator will select a time, date, and place for a hearing and will give
Landlord and Tenant thirty (30) days' prior written notice of it. The date
for the hearing will not be more than sixty (60) days after the date of
appointment of the third arbitrator. The first two arbitrators may be
partial. The third arbitrator must be neutral. All of the arbitrators must
have these qualifications: (Qualifications of arbitrators)
b) At the hearing, Landlord and Tenant will each be allowed to present
testimony and tangible evidence and cross-examine each other's witnesses.
The arbitrators may make additional rules for the conduct of the hearing or
the preparation for it. The arbitrators will render their written decision
to Landlord and Tenant not more than thirty (30) days after the last day of
the hearing.
c) If the one of whom arbitrator is demanded fails to appoint its arbitrator
within the time specified or if the two arbitrators appointed are unable to
agree on an appointment of the third arbitrator within the time specified,
either Landlord ort Tenant may petition a justice of the Phoenix court of
the State of Arizona to appoint a third arbitrator. The petitioner will
give the other five (5) days' prior written notice before filing the
petition.
d) The arbitrator will be governed by the Arbitration Law of the State of
Arizona, and when not in conflict with such law, by the general procedures
in the Commercial Arbitration Rules of the American Arbitration
Association.
e) The arbitrators will not have power to add to modify, detract from, or
alter in any way the provisions of this lease or any amendments or
supplements to this lease. The written decision of at least two arbitrators
will be conclusive and binding upon landlord and tenant. No arbitrator is
authorized to make an award of punitive or exemplary damages.
28
EXHIBIT 10.5 - continued
(ARBITRATION)
f) Landlord and Tenant will each pay for the services of its appointees,
attorneys, and witnesses, plus one-half (1/2) of all other proper costs
relating to the arbitration.
g) The decision of the arbitrators will be final and non-appealed, and may be
enforced according to the laws of the State of Arizona.
11.09 DESIGNATED PARTIES.
Landlord may act in any matter provided for herein by its property manager
or any other person who shall from time to time be designated by Landlord by
notice to Tenant. Tenant may designate in writing a person to act on its behalf
in any matter provided for herein and may by written notice change such
designation. In the absence of such designation, the person or persons executing
this Lease for shall be deemed to be authorized to act on behalf of Tenant in
any matter provided for herein.
11.10 SUCCESSORS.
All covenants, agreements, terms, and conditions in this Lease shall apply
to and be binding upon Landlord and Tenant and their respective heirs,
executors, administrators, successors, and permitted assignees.
11.11 JOINT AND SEVERAL LIABILITY.
If there is more than one Tenant, the obligations imposed by this Lease
upon Tenant shall be joint and several. If there is a guarantor of Tenant's
obligations, the obligation imposed on Tenant shall be joint and several
obligations of Tenant and such Guarantor. Landlord need not first proceed
against the Tenant before proceeding against such Guarantor. The Guarantor shall
not be released from its guaranty for any reason whatsoever including amendments
to the Lease, waivers of default of Tenant, failure to give the Guarantor any
notices to be given Tenant, or release of any party liable for payment of
Tenant's obligations under this Lease.
11.12 MERGER.
The voluntary or other surrender of this Lease by Tenant the cancellation
of this Lease by mutual agreement of Landlord and Tenant shall not work a merger
and shall, at Landlord's option, terminate all or any subleases or subtenancies.
Landlord's option shall be exercised by notice to Tenant and all known tenants
under any sublease or subtenancy.
11.13 RELATIONSHIP OF PARTIES.
Nothing contained in this Lease shall create any of Landlord and Tenant. It
is acknowledged and agreed that Landlord does not in any way or for any purpose
become a partner of Tenant in the conduct of Tenant's business or a joint
venturer or a member of a joint or common enterprise with Tenant.
11.14 ENTIRE AGREEMENT -- CAPTIONS.
Tenant acknowledges and agrees that it has not relied upon any statement,
representation, agreement or warranty except such as may be expressly set forth
in this Lease. It is agreed by Landlord and Tenant that no amendment or
modification of this Lease shall be valid or binding unless executed in writing
by Landlord and Tenant. No provision of this Lease shall be altered, waived,
amended, or extended except in writing executed by Landlord and Tenant. The
Section headings contained in this Lease are for convenience only and shall in
no way enlarge or limit the scope or meaning of the provisions of this Lease.
29
EXHIBIT 10.5 - continued
11.15 SEVERABILITY.
If any clause or provision of this Lease is held to be illegal, invalid or
unenforceable under present or future law effective during the term of this
Lease, the remainder of this Lease shall not be affected thereby. In lieu of
such clause or provision being held to be illegal, invalid, or unenforceable,
there shall be added, as a part of this Lease, a clause or provision as similar
in terms as possible that shall be legal, valid, and enforceable.
11.16 GENDER.
Words of any gender used in this Lease shall be held and construed to
include any other gender. Words in the singular number shall be held to include
the plural unless the context otherwise requires.
11.17 BUILDING NAME.
Landlord reserves the right at any time and from time to time to change the
name by which the Building is designated.
11.18 BROKERAGE COMMISSIONS.
Tenant and Landlord each represents and warrants that it has dealt with no
broker, agent, or finder on account of this Lease. Landlord and Tenant each
agrees to defend, indemnify, and hold harmless the other from and against any
and all claims, damages and costs, including attorneys' fees, in connection with
any claim for brokerage, finder's or similar fees, or compensation related to
this Lease which may be made or alleged as a result of acts or omissions of that
party.
11.19 CORPORATE AUTHORITY.
If Tenant is a corporation, Tenant warrants that it has legal authority to
operate and is authorized to do business in the state (province) in which the
Premises are situated. Tenant also warrants that the person or persons executing
this Lease on behalf of Tenant has authority to do so and fully obligate Tenant
to all terms and provisions of this Lease. Tenant shall, upon request from
Landlord, furnish Landlord with a certified copy of resolutions of the Board of
Directors authorizing this Lease and granting authority to execute it to the
person or persons who have executed it on Tenant's behalf.
11.20 GOVERNING LAW.
This Lease shall be governed by, construed and enforced in accordance with
the laws of Arizona.
11.21 Force Majeure.
Landlord shall not be required to perform any term, condition or covenant
in this Lease so long as such performance is delayed or prevented by acts of
God, strikes, lockouts, material or labor restrictions by any governmental
authority, civil riot, floods, or any other cause not reasonable within the
control of Landlord, and which, by the exercise of due diligence, Landlord is
unable, wholly or in part, to prevent or overcome, as long as Landlord
diligently proceeds to correct such situation.
11.22 Recordation.
Tenant shall not record this Lease without the prior written consent of the
Landlord. Either party shall upon request of the other party execute and
acknowledge a "short form" memorandum of this Lease for recording purposes. The
cost of preparation and recording the memorandum shall be borne by the party
requesting execution of the memorandum.
30
EXHIBIT 10.5 - continued
SECTION 12. EXHIBITS
12.01 Exhibits.
The contents and provisions set out in any Exhibits attached hereto are
incorporated herein by reference and made a part hereof. If any provisions or
provisions set out in said Exhibits are in conflict with any other provisions of
this Lease, the provisions set forth in said Exhibit shall be controlling.
TENANT LANDLORD
Fan Energy Inc. COFCO Investment Company, L.L.C.
Name: Name:
By: By:
Its: Its:
Date: Date:
EXHIBIT "B"
BUILDING RULES AND REGULATIONS
1. Tenant shall not obstruct or interfere with the rights of other tenants of
the Building, or of persons having business in the Building, or in any way
injure or annoy such Tenants or persons.
2. Tenant shall not use the Building for lodging, sleeping, cooking or for any
immoral or illegal purpose or for any purpose that will damage the Building
or the reputation thereof or for any purposes other than those specified in
the Lease.
3. Canvassing, soliciting and peddling in the Building are prohibited and
Tenant shall cooperate to prevent such activities.
4. Tenant shall not bring or keep within the Building any animal, bicycle, or
motorcycle.
5. Tenant shall not conduct mechanical or manufacturing operations, ▇▇▇▇ or
prepare food, or place or use any flammable, combustible, explosive or
hazardous fluid, chemical device, substance or material in or about the
Building without the prior written consent of Landlord. Tenant shall comply
with all rules, orders, regulations, and requirements of the applicable
Fire Rating Bureau, or any other similar body, and Tenant shall not commit
any act or permit any object to be brought or kept in the Building that
shall increase the rate of fire or casualty insurance on the Building or on
property located therein.
6. Tenant shall not use the Building for manufacturing or for the storage of
goods, wares, or merchandise, except as such storage may be incidental to
the use of the Premises for general office purposes and except in such
portions of the Premises as may be specifically designated by Landlord for
such storage. Tenant shall not occupy the Building or permit any portion of
the Building to be occupied for the manufacture or direct sale of liquor,
narcotics or tobacco in any form. Also, unless the terms of Tenant's Lease
specifically permit otherwise, the Building shall not be used as a medical
office, ▇▇▇▇▇▇ shop, manicure shop, music, or dance studio, or employment
agency. Tenant shall not conduct in or about the Building any auction,
public or private, without the prior written approval of Landlord.
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EXHIBIT 10.5 - continued
7. Tenant shall not install for use in the Building any air conditioning unit,
engine, boiler, generator, machinery, heating unit, stove, water cooler,
ventilator, radiator, or any other similar apparatus without the prior
written consent of Landlord and then only as Landlord may direct.
8. Tenant shall not use in the Building any machines other than standard
office machines such as typewriters, calculators, copy machines, personal
computers, and similar machines, without the prior written approvals of
Landlord. All office equipment and any other device of any, electrical, or
mechanical nature shall be placed by tenant in the Premises in settings
approved by Landlord so as to absorb or prevent any vibration, noise, or
annoyance. Tenant shall not cause improper noises, vibrations, or odors
within the Building.
9. Tenant shall move all fright, supplies, furniture, fixtures, and other
personal property into, within and out of the Building only at such times
and through such entrances as may be designated by Landlord, and such
movement of such items shall be under the supervision of Landlord. Landlord
reserves the right to inspect all such freight, supplies, furniture,
fixtures, and other personal property to be brought into the Building and
to exclude from the Building all such objects which violate any of these
rules and regulations or the provisions of the Lease. Tenant shall not move
or install such objects in or about the Building in such a fashion as to
unreasonably obstruct the activities of other tenants. All such moving
shall be at the sole expense, risk, and responsibility of Tenant. Tenant
shall not use in the delivery, receipt, or other movement of freight,
supplies, furniture, fixtures, and other personal property to, from or
within the Building, any hand trucks other than those equipped with rubber
tires and side guards.
10. Tenant shall not place within the Building any safes, copy machines,
computer equipment, or other objects of unusual size or weight, nor shall
Tenant place within the Building any objects that exceed the floor weight
specifications of the Building without the prior written consent of
Landlord. Landlord shall prescribe the placement and positioning of all
such objects within the Building and such objects shall in all cases be
placed upon plates or Landlord shall prescribe footings of such size as.
11. Tenant shall not deposit any trash, refuse, cigarettes, or other substances
of any kind within or out of the Building, except in the refuse containers
provided therefore. Tenant shall not introduce into the Building any
substance which might add an undue burden to the cleaning or maintenance of
the Premises or the Building. Tenant shall exercise its best efforts to
keep the sidewalks, entrances, passages, courts, lobby areas, garages, or
parking areas, elevators, escalators, stairways, vestibules, public
corridors, and halls in and about the Building (hereinafter "Common Areas")
clean and free from rubbish.
12. Tenant shall use the Common Areas only as a means of ingress and egress and
Tenant shall permit no loitering by any persons upon Common Areas or
elsewhere within the Building. The Common Areas and roof of the Building
are not for the use of the general public, and Landlord shall in all cases
retain the right to control or prevent access thereto by all persons whose
presence, in the judgment of Landlord, shall be prejudicial to the safety,
character, reputation, or interests of the Building and its tenants. Tenant
shall not enter the mechanical rooms, air conditioning rooms, electrical
closets, janitorial closets, or similar areas or go upon the roof of the
Building without the prior written consent of Landlord.
32
EXHIBIT 10.5 - continued
13. Tenant shall not use the washrooms, restrooms, and plumbing fixtures of the
Building, and appurtenances thereto, for any other purposes than the
purposes for which they were constructed, and Tenant shall not deposit any
sweepings, rubbish, rags or other improper substances therein. Tenant shall
not waste water by interfering or tampering with faucets or otherwise. If
Tenant or Tenants servants, employees, agents, contractors, jobbers,
licenses, invitees' guests, or visitors cause any damage to such washrooms,
restrooms, plumbing fixtures, or appurtenances, such damage shall be
repaired at tenants expense and Landlord shall not be responsible
therefore.
14. Tenant shall not ▇▇▇▇, paint, drill into, cut, string wires within, or in
any way deface any part of the Building, without the prior written consent
of Landlord and as Landlord may direct. Upon removal of any wall
decorations or installations of floor coverings by Tenant, tenant at
tenant's sole cost and expense shall repair any damage to the walls or
floors. Without limitation upon any of the provisions of the Lease, Tenant
shall refer all contract representatives, installation technicians,
janitorial workers and other mechanics, artisans, and laborers rendering
any service in connection with the repair, maintenance, or improvement of
the Premises to Landlord for Landlord's supervision, approval, and control
before performance of any such service. This paragraph 14 shall apply to
all work performed in the Building, including without limitation
installation of telephones, computers, electrical, and electronic devises
of any kind and attachments and installations of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment, or any other
portion of the Building. Plans and specifications for such work prepared at
Tenants sole expense, shall be submitted to Landlord and shall be subject
to Landlords prior written approval in each instance before the
commencement of work. Tenant shall construct all installations,
alterations, and additions in a good and professional manner and only good
grades of materials shall be used in connection therewith. The means by
which telephone, computer and similar wires are to be introduced to the
Premises and the location of telephones, call boxes, and other office
equipment affixed to the Premises shall be subject to the prior written
approval of Landlord. Tenant shall not lay linoleum or similar floor
coverings so that the same shall come into direct contact with the floor of
the Premises. If linoleum or other similar floor covering is to be used, an
interlining of builders deadening felt shall be first affixed to the floor,
by a paste or other material soluble in water. The use of cement or other
similar adhesive material is expressly prohibited.
15. Landlord shall have the right to prohibit any publicity, advertising, or
use of the name of the Building by tenant, which in Landlord's opinion
tends to impair the reputation of the Building or its desirability as a
building for offices. Upon written notice from Landlord, Tenant shall
refrain from or discontinue any such publicity, advertising, or use of the
Building Name.
16. The sashes, sash doors, skylights, windows, and doors that reflect or admit
light or air into the Common Areas shall not be covered or obstructed by
Tenant through placement of objects upon windowsills or otherwise. Tenant
shall cooperate with Landlord in obtaining maximum effectiveness of the
cooling system of the Building by closing drapes and other window coverings
when the sun's rays fall upon windows of the Premises. Tenant shall not
obstruct, alter, or in any way impair the efficient operation of Landlord's
heating, ventilating, air conditioning, electrical, fire, safety, or
lighting systems, nor shall Tenant tamper with or change the setting of any
thermostat or temperature control valves in the Building.
33
EXHIBIT 10.5 - continued
17. Subject to applicable fire or other safety regulations, all doors opining
onto Common Areas and all doors upon the perimeter of the Premises shall be
kept closed and locked during non-business hours, except when in use for
ingress or egress. If Tenant uses the Premises after regular business hours
or on non-business days, Tenant shall lock any entrance doors to the
Building or to the Premises used by tenant immediately after using such
doors.
18. Employees of Landlord shall not be requested by Tenant to receive or carry
messages for or to tenant or any other person, nor contract with nor render
free or paid services to tenant or Tenants servants, employees,
contractors, jobbers, agents, invitees, licensees, guests, or visitors. In
the event that any of Landlords employees perform any such services, such
employees shall be deemed to be agents of Tenant regardless of whether or
how payment is arranged for such services. Tenant herby indemnifies and
holds Landlord harmless from any and all liability in connection with any
such services and any associated injury or damage to property or injury or
death to persons resulting there from.
19. All Keys to the exterior doors of the Premises shall be obtained by tenant
from Landlord, and Tenant shall pay to Landlord a reasonable deposit
determined by Landlord from time to time for such keys. Tenant shall not
make duplicate copies of such keys. Tenant shall not install additional
locks or bolts of any kind upon any of the doors or windows of or within
the Building nor shall Tenant make any changes in existing locks or
mechanism thereof. Tenant shall upon the termination of its tenancy provide
Landlord with the combinations to all combination locks on safes, safe
cabinets, and other key-controlled mechanisms therein, whether or not
Landlord furnished such keys to tenant. In the event of the loss of any key
furnished to tenant by Landlord, tenant shall pay to Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key
if Landlord shall be deemed it necessary to make such a change.
20. Landlord shall in no case be liable for damages for the admission or
exclusion of any person from the Building. In case of invasion, mob, riot,
public excitement, or other commotion, Landlord reserves the right to
prevent access to the Building for the safety of Tenants and protection of
property in the Building.
21. For purposes hereof, the terms "Landlord", "Tenant", "Building", and
"Premises" are defined in the Lease to which these Rules and Regulations
are attached. Wherever Tenant is obligated under these Rules and
Regulations to do or refrain from doing an act or thing, such obligation
shall include the exercise by tenant of its best efforts to secure
compliance with such obligation by the servants, employees, contractors,
jobbers, agents, invitees, licensees, guests, and visitors of Tenant. The
term "Building" shall include the Premises, and any obligations of Tenant
hereunder with regard to the Building shall apply with equal force to the
Premises and to other parts of the Building.
Fan Energy, Inc. COFCO Investment Company, L.L.C.
Name: Name:
By: By:
Its: Its:
Date: Date:
34