EXHIBIT 10.11
LEASE
(Multi Tenant)
between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
and
BIG DOG U.S.A., INC.,
a California corporation
TABLE OF CONTENTS
Page
1. Parties...............................................................1
2. Premises, Parking and Common Areas....................................1
2.1 Premises.........................................................1
2.2 Vehicle Parking..................................................1
2.3 Common Areas -- Definition.......................................2
2.4 Common Areas -- Lessee's Rights..................................2
2.5 Common Areas -- Rules and Regulations............................2
2.6 Common Areas -- Changes..........................................3
2.7 Roof Access......................................................4
3. Term..................................................................4
3.1 Term.............................................................4
3.2 Delay in Possession..............................................4
3.3 Early Possession.................................................5
4. Rent..................................................................5
4.1 Base Rent........................................................5
4.2 Operating Expenses...............................................5
4.3 Rent Escalations - Initial Term.................................10
5. Security Deposit.....................................................12
6. Use..................................................................12
6.1 Use.............................................................12
6.2 Compliance with Law.............................................12
6.3 Conditions of Premises..........................................13
7. Maintenance, Repairs, Alterations and Common Area Services...........14
7.1 Lessor's Obligations............................................14
7.2 Lessee's Obligations............................................14
7.3 Alterations and Additions.......................................15
7.4 Utility Additions...............................................20
7.5 Condition of Premises Upon Termination; Additional Use
Provisions......................................................20
8. Insurance; Indemnity.................................................21
9. Damage or Destruction................................................25
9.1 Definitions.....................................................25
9.2 Premises Partial Damage; Premises Building Partial Damage.......26
9.3 Premises Total Destruction; Premises Building Total
Destruction; Industrial Center Buildings Total Destruction......27
9.4 Damage Near End of Term.........................................27
9.5 Abatement of Rent; Lessee's Remedies............................28
9.6 Termination -- Advance Payments.................................29
9.7 Waiver..........................................................29
10.Real Property Taxes..................................................29
10.1 Payment of Taxes...............................................29
10.2 Additional Improvements........................................29
10.3 Definition of "Real Property Tax"..............................29
10.4 Joint Assessment...............................................30
10.5 Personal Property Taxes........................................30
10.6 Additional Provisions Regarding Real Property Taxes............30
11.Utilities............................................................31
12.Assignment and Subletting............................................31
12.1 Lessor's Consent Required......................................31
12.2 Lessee Affiliate...............................................32
12.3 Lessees Other Than Individuals.................................33
12.4 Terms and Conditions of Assignment.............................33
12.5 Terms and Conditions Applicable to Subletting..................33
12.6 Attorney's Fees................................................35
13.Default Remedies.....................................................36
13.1 Default........................................................36
13.2 Remedies.......................................................37
13.3 Default by Lessor..............................................39
13.4 Late Charges...................................................39
13.5 Notice Before Late Charge......................................40
14.Condemnation.........................................................40
▇▇.▇▇▇▇▇▇'s Commissions.................................................41
16.Estoppel Certificate.................................................41
17.Lessor's Liability...................................................42
18.Severability.........................................................42
19.Interest on Past-due Obligations.....................................42
20.Time of Essence......................................................43
21.Additional Rent......................................................43
22.Incorporation of Prior Agreements; Amendments........................43
23.Notices..............................................................43
24.Waivers..............................................................44
25.Recording............................................................44
26.Holding Over.........................................................45
27.Cumulative Remedies..................................................45
28.Covenants and Conditions.............................................45
29.Binding Effect; Choice of Law........................................45
30.Subordination........................................................45
31.Attorneys Fees.......................................................46
32.Lessor's Access......................................................46
33.Auctions.............................................................47
34.Signs................................................................47
35.Merger...............................................................47
36.Consents.............................................................47
37.Guarantor............................................................47
38.Quiet Possession.....................................................47
39.Options..............................................................48
39.1 Definition.....................................................48
39.2 Options Personal...............................................48
39.3 Multiple Options...............................................48
39.4 Effect of Default on Options...................................48
39.5 Option.........................................................49
39.6 Fair Market Rent...............................................50
39.7 Rent Escalations - Option Term.................................52
▇▇.▇▇▇▇▇▇▇▇ Measures....................................................54
41.Easements............................................................54
42.Performance Under Protest............................................54
43.Authority............................................................54
44.Intentionally Omitted................................................55
45.Amendments to Lease..................................................55
▇▇.▇▇▇▇▇▇▇ Tanks........................................................55
47.Hazardous Materials..................................................56
47.1 Lessee's Covenants Regarding Hazardous Materials...............56
47.2 Indemnification of Lessor......................................58
47.3 Preexisting Conditions.........................................58
47.4 Studies........................................................58
48.Lessor's Default.....................................................59
49.Offer................................................................59
50.Lessor Improvements..................................................59
51.Lessee Improvement Allowance.........................................59
52.Signage Right........................................................60
LEASE
1. Parties. This Lease, dated, for reference purposes only, November
4, 1997, is made by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation (herein called "Lessor") and BIG DOG U.S.A., INC., a
California corporation (herein called "Lessee").
2. Premises, Parking and Common Areas
2.1 Premises. Lessor hereby leases to Lessee and Lessee
leases from Lessor for the term, at the rental, and upon all of the conditions
set forth herein, that certain real property situated in the County of Los
Angeles, State of California, commonly known as ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and described as the portion containing 136,198 square
feet of the building (the "Building") located on the property shown on Exhibit
"A" hereto, said 136,198 square feet herein referred to as the "Premises," and
cross-hatched on Exhibit "A" attached hereto, including rights to the Common
Areas as hereinafter specified but not including any rights to the roof of the
Premises or to any building in the Industrial Center. The Premises are a portion
of the Building. The Premises, the building, the Common Areas, the land upon
which the same are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "Industrial Center."
2.2 Vehicle Parking. Lessee shall be entitled to exclusive
use of all of the vehicle parking spaces, on those portions of the Common Areas
shown as Lessee's Parking on Exhibit "B" hereto (Lessee's Parking Area:). Lessee
shall not use parking spaces outside of Lessee's Parking Area. Said parking
spaces shall be used only for parking by vehicles no larger than full size
passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles are herein referred to as
"Oversized Vehicles."
2.2.1 Lessee shall not permit or allow any vehicles
that belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked (a) in the
▇▇▇▇▇ Parking Area (as defined below) or the ▇▇▇▇▇ Truck Area (as defined below)
(except to the extent ▇▇▇▇▇ (as defined below) has consented thereto) or (b) any
other areas outside of Lessee's Parking Area.
2.2.2 If Lessee permits or allows any of the
prohibited activities described in paragraph 2.2 of this Lease, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and charge
the cost to Lessee, which cost shall be immediately payable upon demand by
Lessor.
2.2.3 That portion of the parking for the Industrial
Center shown as "▇▇▇▇▇ Parking Area" on Exhibit "B" is subject to a grant of
exclusive parking rights to another tenant ("▇▇▇▇▇") in the Building (the "▇▇▇▇▇
Parking Area") and that portion of the parking for the Industrial Center shown
as "▇▇▇▇▇ Truck Area" on Exhibit "B" is subject to a grant of a right to enclose
that area with fencing (the "▇▇▇▇▇ Truck Area"). Lessee's right to use the
Common Area is subject to rights of ▇▇▇▇▇ to fence the ▇▇▇▇▇ Truck Area. Lessee
shall not interfere with access by ▇▇▇▇▇, or by ▇▇▇▇▇'▇ employees, agents,
contractors or invitees, to and from the ▇▇▇▇▇ Parking Area and the ▇▇▇▇▇ Truck
Area.
2.3 Common Areas - Definition. The term "Common Areas" is
defined as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center that are provided and designated by the
Lessor from time to time for the general non-exclusive use of Lessor, Lessee and
of other lessees of the Industrial Center and their respective employees,
suppliers, shippers, customers and invitees, including parking areas, loading
and unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.4 Common Areas- Lessee's Rights. Lessor hereby grants to
Lessee, for the benefit of Lessee and its employees, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive (other
than Lessee's exclusive parking provided for under Paragraph 2.2) right to use,
in common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Industrial Center. Under no circumstances
shall the right herein granted to use the Common Areas be deemed to include the
right to store any property, temporarily or permanently, in the Common Areas.
Any such storage shall be permitted only by the prior written consent of Lessor
or Lessor's designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.5 Common Areas-Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations with respect thereto.
Lessee agrees to abide by and conform to all such rules and regulations, and to
cause its employees, suppliers, shippers, customers, and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.
Notwithstanding the foregoing, in the event Lessee notifies Lessor of any
material non-compliance with the Rules and Regulations by another lessee of the
Industrial Center which adversely affects Lessee's use and enjoyment of the
Premises or the Common Areas, Lessor shall use its reasonable efforts to cause
such other lessee to comply with the rules and regulations that are enforceable
against such lessee. Lessor agrees to enforce all rules, regulations and
restrictions in a commercially reasonable manner against Lessee. The Rules and
Regulations are attached to this Lease. The enforceability of the Rules and
Regulations against other lessees is subject to such other lessees' approval of
the Rules and Regulations in accordance with the terms of their respective
leases.
2.6 Common Areas - Changes. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(1) To make changes to the Common Areas, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, landscaped
areas and walkways;
(2) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises
remains available and provided that five days' prior written notice
(except in the case of emergencies, where no notice shall be required)
is given to Lessee;
(3) To add additional buildings and improvements to
the Common Areas;
(4) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial
Center, or any portion thereof;
(5) To do and perform such other acts and make such
other changes in, to or with respect to the Common Areas and
Industrial Center as Lessor may, in the exercise of sound business
judgment, deem to be appropriate.
2.6.2 Lessor shall at all times provide the parking
facilities required by applicable law and in no event shall the number of
parking spaces that Lessee is entitled to under paragraph 2.2 be reduced.
2.6.3 In Lessor's exercise of its rights under
Paragraphs 2.6(a) and (e), Lessor shall permit Lessee reasonable access to the
Premises at all times and not unreasonably interfere with the physical operation
of Lessee's business.
2.7 Roof Access. Lessee shall allow ▇▇▇▇▇, and ▇▇▇▇▇'▇
employees, agents and contractors, to have access to the roof of the Building by
means of the roof access in the Premises during normal business hours.
3.0 Term
3.1 Term. The term of this Lease shall be for Ten (10) years
commencing on January 1, 1998 (the "Commencement Date") and ending on the date
that is ten (10) years after the Commencement Date unless sooner terminated
pursuant to any provision hereof. Lessor and Lessee shall promptly execute an
amendment to the Lease confirming the commencement and expiration dates of the
initial term as soon as the Commencement Date is determined, but failure to
execute that amendment shall not affect the Commencement Date. If the
Commencement Date falls on a day that is other than the first day of a calendar
month, the number of months for purposes of rent adjustments under this Lease
shall be measured from the first day of the calendar month in which the
Commencement Date falls.
3.2 Delay in Possession. Notwithstanding the later
Commencement Date, Lessee shall be given possession of the Premises on the first
business day (the "Early Access Date") after the date (the "Execution Date") of
full execution and delivery of this Lease. If for any reason Lessor fails to
deliver possession of the Premises to Lessee by the Early Access Date, Lessor
shall not be subject to liability therefor, nor shall such failure affect the
validity of this Lease. Notwithstanding the foregoing, if Lessor shall not have
delivered possession of the Premises by 5:00 p.m. Los Angeles time on December
31, 1997 (the "Outside Date") with Lessor's Work (as defined in Paragraph 50)
completed Lessee may, at Lessee's option, by notice in writing to Lessor no
later than 5:00 p.m. Los Angeles time on the first business day after the
Outside Date, cancel this Lease, in which event the parties shall be discharged
from all obligations hereunder; provided further, however, that if such written
notice of Lessee is not received by Lessor by 5:00 p.m. Los Angeles time on the
first business day after the Outside Date, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect. Lessee
acknowledges that after delivery of possession to Lessee, Lessor shall continue
to have the right to enter the Premises to perform the work necessary to
complete Lessor's Work. Lessee further acknowledges that due to Lessor's
construction of Lessor's Work there will exist disruption of and interference
with Lessee's use of the Premises. No such disruption or interference or
presence on the Premises by Lessor or its contractors to perform Lessor's Work
shall be deemed to be a failure by Lessor to deliver possession. In the event
Lessor's Work is not completed by November 26, 1997, the Commencement Date shall
be extended for one day for each day after November 26, 1997, if substantial
completion of Lessor's Work is delayed for reasons other than the acts or
omissions of Lessee.
3.3 Early Possession. Lessee's use and occupancy of the
Premises prior to the Commencement Date shall be subject to all provisions
hereof, provided, however, Lessee shall have no obligation to pay Base Rent (as
defined below) until the Commencement Date. From and after the date of
commencement of Lessee's early occupancy and use of the Premises, Lessee shall
be responsible for payment of all costs and expenses (other than Base Rent)
payable by Lessee under this Lease.
4.0 Rent
4.1. Base Rent. Lessee shall pay to Lessor, as Base Rent for
the Premises, without any offset or deduction, except as may be otherwise
expressly provided in this Lease, on the first day of each month of the term
hereof, monthly payments in advance of $53,798.21. The Base Rent is subject to
adjustment as provided herein. Lessee shall pay Lessor upon the execution hereof
$53,798.21 as Base Rent for the first month after the Commencement Date (and if
such first month is a partial month, the balance shall be applied to the next
month). Rent for any period during the term hereof which is for less than one
month shall be a pro rata portion of the Base Rent. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other places as Lessor may designate in writing.
4.2 Operating Expenses. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of all Operating Expenses, as hereinafter defined, during each calendar
year of the term of this Lease, in accordance with the following provisions:
(1) "Lessee's Share" is defined, for purposes of
this Lease, as 39.36%.
(2) "Operating Expenses" is defined, for purposes of
this Lease, as all costs incurred by Lessor, if any, for:
(1) The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:
(aa) The Common Areas, including
parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area, lighting facilities
and fences and gates.
(bb) Trash disposal services;
(cc) Tenant directories;
(dd) Fire detection systems
including sprinkler system maintenance and repair.
(ee) Security services;
(ff) Any other service to be
provided by Lessor that is elsewhere in this Lease
stated to be an "Operating Expense."
(2)Any deductible portion of an insured loss
concerning the Building or the Common Areas (unless such cost is
otherwise excluded from Operating Expenses pursuant to the term of
this Lease).
(3)The cost of the premiums for the liability and
property insurance policies to be maintained by Lessor under paragraph
8 hereof; provided that if Lessor elects to self-insure or includes
the Premises under blanket insurance policies covering multiple
properties, then the cost included in Operating Expenses shall include
the portion of the reasonable cost of such self-insurance or blanket
insurance that is allocated to the Premises;
(4)The amount of the real property tax to be paid by
Lessor under paragraph 10.1 hereof;
(5)The cost of water, gas and electricity to service
the Common Areas;
(6)The cost of Lessor's performing the maintenance
obligations described in paragraph 7.1, including replacements;
(7)The cost of operating, repairing, replacing and
maintaining the Building, the roof, and any other utilities or
equipment, wherever situated, that are for the common use of the
tenants of the Building or Industrial Center; and
(8)The cost of a Commercial General Liability policy
of insurance, insuring Lessor, but not Lessee, against liability
arising out of the ownership, use, occupancy or maintenance of the
Industrial Center, in amounts determined by Lessor, if Lessor
determines to obtain such insurance.
Notwithstanding the provisions of Section 4.2 or anything else in the Lease to
the contrary, Operating Expenses shall not include the following:
(i) Any ground lease rental;
(ii) Costs incurred by Landlord for the
repair of damage to the extent Landlord is reimbursed by
insurance proceeds;
(iii) Costs incurred with respect to
improvements made for other lessees or occupants in the
Industrial Center that are not available to or do not benefit
Lessee or that are incurred in renovating or maintaining
vacant space for other potential lessees;
(iv) Marketing costs including leasing
commissions, attorneys' fees, space planning costs, and other
costs and expenses incurred in connection with leases,
sublease and/or assignment negotiations and transactions with
present or prospective lessees or other occupants of the
Industrial Center;
(v) Expenses in connection with services or
other benefits which are provided to another lessee and not
offered or available to Tenant;
(vi) Costs incurred by Lessor due to the
violation by Lessor or any other lessee of the terms and
conditions of any lease of space in the Industrial Center;
(vii) Overhead and profit increments paid to
Lessee or to its agents or affiliates for goods and/or
services in the Industrial Center to the extent the same
exceeds the costs of such goods and/or services that could be
obtained from unaffiliated third parties on a competitive
basis;
(viii) Lessor's corporate overhead and
general and administrative expense;
(ix) Tax penalties incurred as a result of
Lessor's negligence, inability or unwillingness to make
payments and/or file any income tax or informational returns
when due;
(x) Costs arising from remedial work or the
presence of Hazardous Materials (as defined in Paragraph 47)
in or about the Industrial Center or the site on which is
resides (the "Site"), including, without limitation, Hazardous
Materials in the ground water or soil, but only to the extent
the same are (1) Preexisting Conditions (as defined in
Paragraph 47.3), or (2) due to the introduction of such
Hazardous Materials to the Industrial Center or the Site by
Lessor or a lessee (other than Lessee) of the Industrial
Center;
(xi) Costs arising from Lessor's
charitable or political contributions;
(xii) Costs (including in connection
therewith all attorneys' fees and costs of settlement
judgments and payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or
actual claims litigation or arbitrations pertaining to the
Lessor and/or the Industrial Center and/or Site.
(xiii) The cost of the maintenance, repair
or replacement of the structural elements of the foundations,
or exterior walls or of the truss system and wall ledger for
the roof.
(3) The inclusion of the improvements, facilities and
services set forth in paragraph 4.2(b)(i) of the definition of
Operating Expenses shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide
those services unless the Industrial Center already has the same,
Lessor already provides the services, or Lessor has agreed elsewhere in
this Lease to provide the same or some of them.
(4) Lessee's Share as set forth in paragraph 4.2(a),
above, is Lessee's Share of Operating Expenses applicable only to the
Building in which the Premises are located. The percentage set forth in
paragraph 4.2(a) has been determined by dividing the approximate square
footage of the Premises by the total approximate square footage of
rentable space contained in the Building. It is understood and agreed
that the percentage figure set forth in 4.2(a) is an approximation
which Lessor and Lessee agree is reasonable and shall not be subject to
revision except in connection with an actual change in the size of the
Premises or a change in the space available for lease in the Building.
(5) Lessee's Share of Operating Expenses applicable
to the Industrial Center shall be reasonably determined by Lessor as
the percentage created by dividing the square footage of the Premises
by the total square footage of the Buildings in the Industrial Center
that are involved in the item covered by the particular expense.
(6) Lessee's Share of Operating Expenses shall be
payable by Lessee monthly or quarterly, as determined by Lessor, within
ten (10) business days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however,
an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each
twelve-month period of the Lease term, on the same day as the Base Rent
is due hereunder. In the event that Lessee pays Lessor's estimate of
Lessee's Share of Operating Expenses as aforesaid, Lessor shall deliver
to Lessee within sixty (60) days after the expiration of each calendar
year, or as soon thereafter as practicable, a reasonably detailed
statement showing Lessee's Share of the actual Operating Expenses
incurred during the preceding year. If Lessee's payments under this
paragraph 4.2(f) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be entitled to credit the
amount of such overpayment against Lessee's Share of Operating Expenses
and Base Rental next falling due. If Lessee's payments under this
paragraph during said preceding year were less than Lessee's Share as
indicated on said statement, Lessee shall pay to Lessor the amount of
the deficiency within ten (10) business days after delivery by Lessor
to Lessee of said statement.
(7) Lessor and Lessee shall promptly adjust between
them by appropriate cash payment any balance determined to exist with
respect to Lessee's Share of Operating Expenses after the end of the
calendar year in which this Lease terminates, prorating for any partial
year involved.
(1)
(8) In the event of any dispute as to the amount of
Operating Expenses as set forth in Lessor's Statement of Operating
Expenses delivered to Lessee, Lessee shall have the right, after
reasonable notice and at reasonable times within one year after the
final statement for such Operating Expenses is delivered to Lessee, to
inspect and photocopy (at Lessee's expense) Lessor's accounting record
with respect to Lessee's Share of Operating Expenses. If, after such
inspection and photocopying, Lessee still disputes the amount of
Operating Expenses as set forth in Lessor's Statement, Lessee shall be
entitled to retain an independent, certified public accountant
reasonably approved by Lessor to audit Lessor's record to determine the
proper amount of such Operating Expenses and the proper amount payable
by Lessee pursuant to this Lease. Lessee agrees to pay the cost of such
audit, provided that Lessor shall pay such cost if the audit reveals
that Lessor's determination of Operating Expenses as set forth in
Lessor's statement overstated Operating Expenses by 5% or more. If such
audit reveals an overstatement or understatement of Operating Expenses,
the amount of the differential shall be promptly reimbursed to Lessee
by Lessor or paid by Lessee to Lessor, as the case may be.
4.3 Rent Escalations - Initial Term
(1) On the first day of each of the 31st, 61st and
91st months of the term of this Lease, the monthly Base Rent payable
under Paragraph 4.1 of this Lease shall be adjusted by the increase, if
any, from the date this Lease commenced, in the Consumer Price Index of
the Bureau of Labor Statistics of the U.S. Department of Labor for
Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-Riverside,
California (1982-84=100), "All Items", herein referred to as "C.P.I."
(2) The monthly Base Rent payable in accordance with
Paragraph (a) above shall be calculated as follows: the Base Rent
payable as set forth in Paragraph 4.1 of this Lease, shall be
multiplied by a fraction the numerator of which shall be the C.P.I. of
the calendar month during which the adjustment is to take effect, and
the denominator of which shall be the C.P.I. for the calendar month in
which the original Lease term commences. The sum so calculated shall
constitute the new monthly Base Rent hereunder, subject to Subparagraph
(e), below.
(3) Pending receipt of the required C.P.I. and
determination of the actual adjustment, Lessee shall pay an estimated
adjusted rental, as reasonably determined by Lessor by reference to the
then available C.P.I. information. Upon notification of the actual
adjustment after publication of the required C.P.I., any overpayment
shall be credited against the next installment of rent due, and any
underpayment shall be immediately due and payable by Lessee. Lessor's
failure to request payment of an estimated or actual rent adjustment
shall not constitute a waiver of the right to any adjustment provided
for in this Lease or this Paragraph 4.3.
(4) In the event the compilation and/or publication
of the C.P.I. shall be transferred to any other governmental department
or bureau or agency or shall be discontinued, then the index most
nearly the same as the C.P.I. shall be used to make such calculation.
In the event that Lessor and Lessee cannot agree on such alternative
index, then the matter shall be submitted for decision to the American
Arbitration Association in accordance with the then rules of said
association and the decision of the Arbitrators shall be binding upon
the parties. The cost of said Arbitrators shall be paid equally by
Lessor and Lessee.
(5) The adjustment(s) required by this Rent
Escalation Paragraph shall be subject to the following additional
agreements:
(1)The increase under Subparagraph (b), above, shall
be subject to the following minimum and maximum percentage
increases per year involved in the adjustment period, on a
cumulative but non-compounded basis:
Minimum yearly percentage increase:3%
Maximum yearly percentage increase:5%
The "adjustment period" is defined as the period commencing with the month
designated in Subparagraph (b) as the reference for determining the
"denominator", and ending with the month preceding the month designated therein
as the reference for determining the "numerator". Should the adjustment period
include a partial year, the minimum and maximum percentages shall be prorated
for that partial year by multiplying them by a fraction, the numerator of which
shall be the number of full calendar months or major portion thereof contained
in said partial year, and the denominator of which is twelve (12).
(2)The new monthly Base Rent shall in no event be
less than the monthly Base Rent scheduled to be paid
immediately preceding the rent adjustment.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $53,798.21 as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) business days after written demand therefor deposit cash with
Lessor in an amount sufficient to restore said deposit to the full amount then
required of Lessee and Lessee's failure to do so shall be a material breach of
this Lease. If the monthly rent shall, from time to time, increase during the
term of this Lease, Lessee shall, at the time of such increase, deposit with
Lessor additional money as a security deposit so that the total amount of the
security deposit held by Lessor shall at all times bear the same proportion to
the then current Base Rent as the initial security deposit bears to the initial
Base Rent set forth in paragraph 4. Lessor shall not be required to keep said
security deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignee, if any, of Lessee's interest hereunder) at the expiration of
the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security Deposit.
6.0 Use
6.1 Use. The Premises shall be used and occupied only for
warehousing, distribution, sale and manufacture (including screen printing and
embroidery) of Lessee's apparel and other products and for no other purpose;
provided, however, that the area used for sales to the public shall not exceed
2% of the gross floor area of the Premises.
6.2 Compliance with Law
(1) Lessor warrants to Lessee that the Premises, in
the state existing on the date that the Lease term commences, but
without regard to alterations by Lessee or to the use for which Lessee
will occupy the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, rule,
regulation or ordinance in effect on such Lease term commencement date.
In the event it is determined that this warranty has been violated,
then it shall be the obligation of the Lessor, after written notice
from Lessee, to promptly, at Lessor's sole cost and expense, rectify
any such violation. In the event Lessee does not give to Lessor written
notice of the violation of this warranty within 24 months from the date
that the Lease term commences, the correction of same shall be the
obligation of Lessee at Lessee's sole cost. The warranty contained in
this paragraph 6.2(a) shall be of no force or effect if, prior to the
date of this Lease, Lessee was an owner or occupant of the Premises
and, in such event, Lessee shall correct any such violation at Lessee's
sole cost.
(2) Except as provided in paragraph 6.2(a) Lessee
shall, at Lessee's expense, promptly comply with all applicable
statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements of any fire insurance
underwriters or rating bureaus, now in effect or which may hereafter
come into effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term hereof,
relating in any manner to the Premises and the occupation and use by
Lessee of the Premises and of the Common Areas. Lessee shall not use
nor permit the use of the Premises or the Common Areas in any manner
that will tend to create waste or a nuisance or shall tend to disturb
other occupants of the Industrial Center.
6.3 Conditions of Premises
(1) Lessor shall deliver the Premises to Lessee clean
and free of debris on the Lease commencement date (unless Lessee is
already in possession) and Lessor warrants to Lessee that the plumbing,
lighting, air conditioning, heating, and loading doors in the Premises
other than those portions constructed by Lessee shall be in good
operating condition on the Lease commencement date. In the event that
it is determined that this warranty has been violated, then it shall be
the obligation of Lessor, after receipt of written notice from Lessee
setting forth with specificity the nature of the violation, to
promptly, at Lessor's sole cost, rectify such violation. Lessee's
failure to give such written notice to Lessor within 12 months after
the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The
warranty contained in this paragraph 6.3(a) shall be of no force or
effect if prior to the date of this Lease, Lessee was an owner or
occupant of the Premises.
(2) Except as otherwise provided in this Lease,
Lessee hereby accepts the Premises in their condition existing as of
the Lease commencement date or the date that Lessee takes possession of
the Premises, whichever is earlier, subject to all applicable zoning,
municipal, county and state laws, ordinances and regulations governing
and regulating the use of the Premises, and any covenants, easements or
restrictions of record and accepts this Lease subject thereto and to
all matters disclosed thereby and by any exhibits attached hereto.
Lessee acknowledges that neither Lessor nor Lessor's agent has made any
representation or warranty as to the present or future suitability of
the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs, Alterations and Common Area Services.
7.1 Lessor's Obligations. Subject to the provisions of
paragraph 4.2 (Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) 7.5,
(Condition of Premises Upon Termination) and 9 (Damage or Destruction) and
except for damage caused by any negligent or intentional act or omission of
Lessee, Lessee's employees, suppliers, shippers, customers, or invitees, in
which event Lessee shall repair the damage, Lessor, at Lessor's expense, subject
to reimbursement pursuant to paragraph 4.2, shall keep in good condition and
repair the foundations, exterior walls, structural condition of interior bearing
walls, and roof of the Premises, as well as the parking lots, walkways,
driveways, landscaping, fences, signs and utility installations of the Common
Areas and all parts thereof. Lessor shall not, however, be obligated to paint
the interior surface of exterior walls, nor shall Lessor be required to
maintain, repair or replace windows, doors or plate glass of the Premises, or to
maintain or repair anything required to be maintained by Lessee under paragraph
7.2. The cost to Lessor of painting the exterior walls shall be an Operating
Expense. Lessor shall have no obligation to make repairs under this paragraph
7.1 until a reasonable time after receipt of written notice from Lessee of the
need for such repairs. Lessee expressly waives the benefits of any statute now
or hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair. Lessor shall
not be liable for damages or loss of any kind or nature by reason of Lessor's
failure to furnish any Common Area services when such failure is caused by
accident, breakage, repairs, strikes, lockout, or other labor disturbances or
disputes of any character or by any other cause beyond the reasonable control of
Lessor.
7.2 Lessee's Obligations
(1) Subject to the provisions of paragraphs 6 (Use),
7.1 (Lessor's Obligations), and 9 (Damage or Destruction), and except
for damage to the Premises caused by any negligent or intentional act
or omission of Lessor or its employees, agents, contractors or
invitees, in which event Lessor shall repair the damage at its expense
(subject to paragraph 9), Lessee, at Lessee's expense, shall keep in
good order, condition and repair the Premises and every part thereof
(whether or not the damaged portion of the Premises or the means of
repairing the same are reasonably or readily accessible to Lessee)
including, without limiting the generality of the foregoing, the
non-structural elements of foundations, exterior walls, interior
bearing walls, and roof of the Premises, any plumbing, heating,
ventilating and air conditioning systems (Lessee shall procure and
maintain, at Lessee's expense, a ventilating and air conditioning
system maintenance contract), electrical and lighting facilities and
equipment within the Premises, or that serves only the Premises
wherever situated, fixtures, interior walls and interior surfaces of
exterior walls, ceilings, windows, doors, plate glass, and skylights
located within the Premises. Lessor reserves the right to procure and
maintain the ventilating and air conditioning system maintenance
contract and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand for the cost thereof.
(2) If Lessee fails to perform Lessee's obligations
under this paragraph 7.2 or under any other paragraph of this Lease,
Lessor may enter upon the Premises after ten (10) days' prior written
notice to Lessee (except in the case of emergency, in which no notice
shall be required) perform such obligations on Lessee's behalf and put
the Premises in good order, condition and repair, and the cost thereof
together with interest thereon at the Interest Rate shall be due and
payable as additional rent to Lessor together with Lessee's next Base
Rent installment.
(3) On the last day of the term hereof, or on any
sooner termination, Lessee shall surrender the Premises to Lessor in
the same condition as received, ordinary wear and tear excepted, broom
clean and free of debris. Any damage or deterioration of the Premises
shall not be deemed ordinary wear and tear if the same could have been
prevented by generally prevailing maintenance practices. Lessee shall
repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, alterations, furnishings and
equipment. Notwithstanding anything to the contrary otherwise stated in
this Lease, Lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing and fencing on the Premises in good operating
condition.
7.3 Alterations and Additions
(1) Lessee shall not, without Lessor's prior written
consent make any alterations, improvements, additions, or Utility
Installations in, on or about the Premises, or the Industrial Center,
except for nonstructural alterations to the Premises not exceeding
$2,500 in costs as to any single project (the "Threshold Amount")
during the term of this Lease. In any event, whether or not in excess
of the Threshold Amount, Lessee shall make no change or alteration to
the exterior of the Premises nor the exterior of the Building nor the
Industrial Center without Lessor's prior written consent. As used in
this paragraph 7.3 the term "Utility Installation" shall mean
carpeting, window coverings, air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing, and fencing. Lessor may require that Lessee
remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration or earlier termination of the
term, and restore the Premises and the Industrial Center to their prior
condition. Lessor may require Lessee to provide Lessor, at Lessee's
sole cost and expense, a lien and completion bond in an amount equal to
one and one-half times the estimated cost of such improvements, to
insure Lessor against any liability for mechanic's and materialmen's
liens and to insure completion of the work; provided, however, that so
long as Big Dog U.S.A., Inc., a California corporation, is the Lessee,
Lessor shall not require a lien and completion bond unless the cost of
the work for the particular project exceeds $50,000. Should Lessee make
any alterations, improvements, additions or Utility Installations
without the prior approval of Lessor, Lessor may, at any time during
the term of the Lease, require that Lessee remove any or all of the
same, excluding the improvements made pursuant to Paragraph 51.
(2) Any alterations, improvements, additions, or
Utility Installations made by Lessee during the term of this Lease
shall be done in a good and workmanlike manner and of good and
sufficient materials, and Lessee shall, within thirty (30) days after
completion of such alteration, improvements, addition or Utility
Installation, provide Lessor with as-built plans and specifications for
same. Notwithstanding anything contained in this Lease to the contrary,
Paragraphs 7.3(d)(i)(bb) and (cc) shall apply to non-structural
alterations, improvements, additions or Utility Installations not
exceeding the Threshold Amount.
(3) Any alterations, improvements, additions or
Utility Installations in or about the Premises or the Industrial Center
that Lessee shall desire to make and which requires the consent of the
Lessor shall be presented to Lessor in written form, with proposed
detailed plans. If Lessor shall give its consent, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from
appropriate governmental agencies, the furnishing of a copy thereof to
Lessor prior to the commencement of the work and the compliance by
Lessee of all conditions of said permit in a prompt and expeditious
manner.
(1)
(4) For any additions, alterations, improvements, or
Utility Installations requiring Lessor's prior written consent:
(1)Lessee shall:
(aa) Request Lessor's approval
in writing at least thirty (30) days prior to
proposed construction.
(bb) Employ a California licensed
architect, contractor and structural engineer in
connection with the proposed construction, if the
work is structural or, in the case of non-structural
work, if the employment of such person is appropriate
in connection with the work being performed and the
cost of such work exceeds $20,000.
(cc) Be fully responsible for the
acts of Lessee's consultants, employees, contractors,
subcontractors, invitees and agents, and cause them
to fully comply with any applicable terms of this
Lease and documents referred to by this Lease and all
applicable laws, rules and regulations.
(dd) Enter into written agreements
with an architect and general contractor on standard
American Institute of Architects (AIA) form or
reasonable equivalent for the contract itself as well
as payment schedules, change orders, etc. Copies of
executed agreements will be forwarded to Lessor
within five (5) days of execution.
(ee) Cause to be obtained an
applicable building permit for any and all
construction and modifications, and construct the
additions and alterations and perform the
construction work in accordance with all applicable
laws, including without limitation the Americans With
Disabilities Act.
(2)Lessee's Architect shall:
(aa) Be licensed by the State of
California.
(bb) Design and specify within the
parameters of the building work letter (if any) and
approved building specifications (if any) or have
received specific written exceptions from Lessor.
(cc) Secure Lessor's written
approval before submitting plans to the general
contractor for bidding or to governmental agencies
for approval.
(dd) Secure Lessor's written
approval of any changes or alternates to the plans
recommended by the general contractor or required by
governmental agencies.
(ee) Submit a copy of the final
application for permit and issued permit to Lessor.
(ff) Incorporate the building
standard details (if any) supplied by Lessor onto the
drawings.
(gg) Submit final plans for
Lessor's written approval prior to construction.
(hh) Be available for final
inspection with Lessor at job completion.
(ii) Secure Lessor's written
approval of details of any changes in specifications
or finishes during construction.
(jj) Provide samples and
specifications as required by Lessor.
(kk) Sign off on the as-built
drawings as the Architect's certification that the
improvements have, in fact, been built as per the
Architect's design.
(3)Lessee's General Contractor and/or Subcontractors
shall:
(aa) Be licensed by the State of
California.
(bb) Have substantial experience
providing similar quality and quantity of
improvements. Work history shall be provided to
Lessor prior to being awarded contract.
(cc) Have a bonding capacity
equal to or exceeding the valuation of the job.
(dd) Maintain in full force and
effect, throughout the duration of its performance
under the contract with the Lessee, a Worker's
Compensation insurance policy and a Commercial
General Liability insurance policy issued by an
insurer satisfactory to Lessor with liability
coverage of not less than $1,000,000.00 for personal
injury and $500,000.00 to cover property damage. The
Commercial General Liability insurance policy shall
include assumption of contractual liability.
Certificates of insurance containing a thirty (30)
day cancellation clause shall be furnished to Lessor
prior to commencement of performance under the
construction contract naming Lessor (The Prudential
Insurance Company of America) and its managing agent
(currently ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of California, Inc.)
as additional insureds.
(ee) Provide a construction
schedule to Lessor prior to commencement of work and
weekly written progress reports.
(ff) Warrant the General
Contractor's work and that of the General
Contractor's subcontractors, for a minimum of one
(1) year.
(gg) Provide Lessor with as-
built drawings of all improvements.
(4) All approvals by Lessor, as herein provided for,
shall not be unreasonably withheld. All requests to be
submitted to Lessor shall be submitted through Lessor's
managing agent.
(5) Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for
Lessee at or for use in the Premises, which claims are or may be
secured by any mechanic's or materialmen's lien against the Premises,
or the Industrial Center, or any interest therein. Lessee shall give
Lessor not less than thirty (30) days' notice prior to the commencement
of any work in the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises or the Building as
provided by law. If Lessee shall, in good faith, contest the validity
of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises or the
Industrial Center, upon the condition that if Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to such contested lien claim or demand indemnifying
Lessor against liability for the same and holding the Premises and the
Industrial Center free from the effect of such lien or claim. In
addition, Lessor may require Lessee to pay Lessor's attorneys fees and
costs in participating in such action if Lessor shall decide it is to
Lessor's best interest to do so.
(6) All alterations, improvements, additions and
Utility Installations (unless they constitute trade fixtures of
Lessee), which may be made on the Premises, shall be the property of
Lessor and shall remain upon and be surrendered with the Premises at
the expiration or earlier termination of the Lease term, unless Lessor
requires their removal pursuant to paragraph 7.3(a). Notwithstanding
the provisions of this paragraph 7.3(f), Lessee's machinery and
equipment, other than that which is affixed to the Premises so that it
cannot be removed without material damage to the Premises, and other
than Utility Installations, shall remain the property of Lessee and may
be removed by Lessee subject to the provisions of paragraph 7.2.
. Lessor reserves the right to install new or additional
utility facilities throughout the Building and the Common Areas for the benefit
of Lessor or Lessee, or any other lessee of the Industrial Center, including,
but not by way of limitation, such utilities as plumbing, electrical systems,
security systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Lessee's use of the Premises.
7.5 Condition of Premises Upon Termination; Additional Use Provisions.
7.5.1 Lessee shall maintain the Premises as provided in
Paragraph 7.2 and in accordance with the requirements of any covenants or
restrictions as may from time to time be applicable to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices and any damage or deterioration shall not be
deemed "ordinary wear and tear" if the same could have been prevented by good
maintenance practice. Lessee's obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair, subject to Lessor's obligations under Paragraph 7.1. Notwithstanding
anything contained in the Lease to the contrary, Lessee shall make all repairs
whatsoever on the Premises necessitated by the negligence, misconduct or fault
of Lessee, or its agents, licensees, contractors or invitees.
7.5.2 Notwithstanding anything to the contrary in paragraph
7.2 of this Lease, upon termination of this Lease, Lessee shall leave all
plumbing, heating (including space heaters), air conditioning, electrical and
mechanical systems, on the Premises and in good condition and operating order,
reasonable wear and tear excepted, and Lessee shall upon demand pay to Lessor
that portion of the cost to restore such items to good condition and operating
order.
7.5.3 Notwithstanding anything to the contrary contained in
this Lease, the Premises shall not be used for the warehousing or distribution
of hazardous or explosive products, substances or materials, or of products,
substances or materials that are detrimental to the Premises, the Industrial
Center or other tenants thereof.
8. Insurance; Indemnity
8.1 Lessee hereby agrees to indemnify, defend and hold
harmless Lessor, its successors, assigns, subsidiaries, directors, officers,
agents and employees from and against any and all damage, loss, liability or
expense including, but not limited to, reasonable attorney's fees and legal
costs suffered by same directly or by reason of any claim, suit or judgement
brought by or in favor of any person or persons for damage, loss or expense due
to, but not limited to, bodily injury, including death resulting anytime
therefrom, and property damage sustained by such person or persons which arises
out of, is occasioned by or in any way attributable to the use or occupancy of
the Premises by the Lessee, the acts or omission of the Lessee, its agents,
employees or any other contractors or invitees brought onto said Premises by the
Lessee, or any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, except to the
extent caused by the negligence or wilful misconduct of Lessor, its employees,
and agents. If any action or proceeding is brought against Lessor by reason of
any such claim, Lessee, upon notice from Lessor, shall defend same at Lessee's
expense by counsel reasonably satisfactory to Lessor (it being agreed that
Lessor's good faith belief that a conflict of interest exists or may reasonably
exist in the event that Lessor and Lessee are represented by the same counsel
shall constitute reasonable grounds for Lessor's insistence on separate
counsel). Such loss or damage shall include, but not be limited to, any injury
or damage to Lessor's personnel (including death resulting anytime therefrom) on
the Premises. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the Building or Industrial Center in
which the Premises are located. Lessee agrees that the obligations assumed
herein shall survive the termination of this Lease.
8.2 Lessee hereby agrees to maintain in full force and effect
at all times during the term of this Lease, at Lessee's own expense, for the
protection of Lessee, Lessor and Lessor's property manager, as their interest
may appear, policies of insurance issued by a responsible carrier or carriers to
Lessor which afford the following coverages:
(1) Workers' Compensation with statutory limits.
(2) Employers' Liability insurance with the
following minimum limits:
Bodily injury by disease per person $1,000,000
Bodily injury by accident policy limit $1,000,000
Bodily injury by disease policy limit $1,000,000
(3) Property insurance on a special causes of loss
insurance form covering any and all personal property of Lessee
including but not limited to improvements, betterments, furniture,
fixtures, Utility Installations, and equipment in an amount not less
than their full replacement cost, with a deductible not to exceed
$10,000. This policy should contain a waiver of subrogation.
(4) Commercial General Liability Insurance including
Broad Form Property Damage and Contractual Liability with the following
minimum limits:
General Aggregate $2,000,000
Products/Completed Operations Aggregate $2,000,000
Each Occurrence $1,000,000
Personal & Advertising Injury $1,000,000
Medical Payments $5,000 per person
(5) Umbrella/Excess Liability on a following form
basis with the following minimum limits:
General Aggregate $10,000,000
Each Occurrence $10,000,000
The limits of said insurance in this Paragraph 8.2 shall not, however,
limit the liability of Lessee hereunder.
8.3 If Lessor is providing property insurance on the Premises,
then Lessor shall, at all times during the term of this Lease, maintain the
following insurance:
(1) A policy or policies of all-risk property
insurance, issued by and binding upon some solvent insurance company,
insuring for the full replacement cost of the building on the Premises.
Lessor shall not be obligated to insure, and shall not assume any
liability or risk of loss for, any of Lessee's furniture, equipment,
machinery, goods, supplies, utility installations, improvements, or
alterations upon the Premises. This policy shall contain an agreed
amount endorsement and be written with no coinsurance. Lessor may, but
shall not be obligated to, obtain earthquake and flood insurance.
(2) Rent insurance on an all-risk basis in an amount
equal to all that is called for under Paragraph 4 of this Lease (Base
Rent and any additional rents payable under this Lease including tax
and insurance costs) for a period of at least twelve (12) months
commencing with the date of loss.
(3) Boiler and machinery insurance in an amount
satisfactory to Lessor on a comprehensive coverage form.
8.4 The Lessee shall deliver to Lessor prior to taking
possession of the Premises, and thereafter at least thirty (30) days prior to
expiration of such policy, certificates of insurance evidencing the above
coverage with limits not less than those specified above. Insurance required
hereunder shall be in companies holding a "General Policyholders Rating" of at
least A-VIII as set forth in the most current issue of "Best's Insurance Guide".
Such Certificates with the exception of Worker's Compensation, shall name
Lessor, its subsidiaries, directors, agents and employees, and its property
manager as additional insureds and shall expressly provide that the interest of
same herein shall not be affected by a breach by Lessee of any insurance policy
provision for which such Certificates evidence coverage. Further, all
Certificates shall expressly provide that no less than thirty (30) days prior
written notice shall be given to Lessor in the event of material alteration to
or cancellation of the coverage evidenced by such Certificates.
8.5 Lessor may secure and maintain, at Lessee's expense,
increased amounts of insurance and other insurance coverage in such limits, as
Lessor may require in its reasonable judgment to afford Lessor adequate
protection consistent with the practices of institutional owners of comparable
properties.
8.6 Lessor makes no representation that the limits of
liability specified to be carried by Lessee under the term of this Lease are
adequate to protect Lessee against Lessee's undertaking under this Paragraph 8
and in the event Lessee believes that any such insurance coverage called for
under this Lease is insufficient, Lessee shall provide, at its own expense, such
additional insurance as Lessee deems adequate.
8.7 Anything in this Lease to the contrary notwithstanding,
Lessor and Lessee hereby waive and release each other of and from any and all
rights of recovery, claims, action or cause of action, against each other, their
agents, officers and employees, for any loss or damage that may occur to the
Premises, improvements to the building of which the Premises are a part,
personal property (building contents) within the building on the Premises, any
furniture, equipment, machinery, goods or supplies not covered by this Lease
which Lessee may bring or obtain upon the Premises or any additional
improvements which Lessee may construct on the Premises, by reason of fire, the
elements or any other cause to the extent the same is insured against under the
terms of all risk property insurance policies, regardless of cause or origin,
including negligence of Lessor or Lessee and their agents, officers and
employees. Because this Paragraph will preclude the assignment of any claim
mentioned in it by way of subrogation (or otherwise) to an insurance company (or
any other person) each party to this Lease agrees immediately to give to each
insurance company, written notice of the terms of the mutual waivers contained
in this Paragraph, and to have the insurance policies properly endorsed if
necessary to prevent the invalidation of the insurance coverages by reason of
the mutual waivers contained in this Paragraph. Lessee also waives and releases
Lessor, its agents, officers and employees of and from any and all rights of
recovery, claim, action or cause of action for any loss or damage to the extent
the same is insured against under any other policies of insurance carried by
Lessee.
8.8 Payment of Premium Increase.
(1) After the term of this Lease has commenced,
Lessee shall not be responsible for paying Lessee's Share of any
increase in the property insurance premium for the Industrial Center
specified by Lessor's insurance carrier as being caused by the use,
acts or omissions of Lessor or any other lessee of the Industrial
Center, or by the nature of Lessor's or such other lessee's occupancy
which create an extraordinary or unusual risk.
(2) Lessee, however, shall pay the entirety of any
increase in the property insurance premium for the Industrial Center
over what is was immediately prior to the commencement of the term of
this Lease if the increase is specified by Lessor's insurance carrier
as being caused by the nature of Lessee's occupancy or any act or
omission of Lessee.
8.9 Exemption of Lessor from Liability. Lessee hereby agrees
that Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Industrial Center, nor shall Lessor be liable
for injury to the person of Lessee, Lessee's employees, agents or contractors,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures, or from any other cause, whether said damage
or injury results from conditions arising upon the Premises or upon other
portions of the Industrial Center, or from other sources or places and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Lessee, Lessor shall not be liable for any
damages arising from any act or neglect of any other lessee, occupant or user of
the Industrial Center, nor from the failure of Lessor to enforce the provisions
of any other lease of the Industrial Center. Notwithstanding anything in this
Paragraph 8.9 to the contrary, but subject to Paragraph 8.7, nothing in this
Paragraph 8.9 shall limit Lessor's liability for injuries to natural persons or
direct damage to property to the extent caused by the active negligence or
wilful misconduct of Lessor, its employees or agents.
9. Damage or Destruction
9.1 Definitions
(1) "Premises Partial Damage" shall mean if the
Premises are damaged or destroyed to the extent that the cost of repair
is less than fifty percent of the then replacement cost of the
Premises.
(2) "Premises Total Destruction" shall mean if the
Premises are damaged or destroyed to the extent that the cost of repair
is fifty percent or more of the then replacement cost of the Premises.
(3) "Premises Building Partial Damage" shall mean if
the Building of which the Premises are a part is damaged or destroyed
to the extent that the cost to repair is less than fifty percent of the
then replacement cost of the Building.
(4) "Premises Building Total Destruction" shall mean
if the Building of which the Premises are a part is damaged or
destroyed to the extent that the cost to repair is fifty percent or
more of the then replacement cost of the Building.
(5) "Industrial Center Buildings" shall mean all of
the buildings on the Industrial Center site.
(6) "Industrial Center Buildings Total Destruction"
shall mean if the Industrial Center Buildings are damaged or destroyed
to the extent that the cost of repair is fifty percent or more of the
then replacement cost of the Industrial Center Buildings.
(7) "Insured Loss" shall mean damage or destruction
which was caused by an event required to be covered by the insurance
described in paragraph 8 or where the cost to restore is less than 5%
of the then replacement cost of the Building. The fact that an Insured
Loss has a deductible amount shall not make the loss an uninsured loss.
(8) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to
the condition that existed immediately prior to the damage occurring
excluding all improvements made by lessees.
9.2 Premises Partial Damage; Premises Building Partial
Damage.
(1) Insured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term of this Lease
there is damage which is an Insured Loss and which falls into the
classification of either Premises Partial Damage or Premises Building
Partial Damage, then Lessor shall, at Lessor's expense, repair such
damage to the Premises, but not Lessee's fixtures, equipment, tenant
improvements or Utility Installations, as soon as reasonably possible
and this Lease shall continue in full force and effect.
(2) Uninsured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term of this Lease
there is damage which is not an Insured Loss and which falls within the
classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee or its
agents, contractors or invitees (in which event Lessee shall make the
repairs at Lessee's expense), which damage prevents Lessee from using
the Premises, Lessor may at Lessor's option either (i) repair such
damage as soon as reasonably possible at Lessor's expense, in which
event this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days after the date of the
occurrence of such damage of Lessor's intention to cancel and terminate
this Lease as of the date of the occurrence of such damage. In the
event Lessor elects to give such notice of Lessor's intention to cancel
or terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor
of Lessee's intention to repair such damage at Lessee's expense,
without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make
such repairs as soon as reasonably possible. If Lessee does not give
such notice within such 10-day period this Lease shall be cancelled and
terminated as of the date of the occurrence of such damage.
0.1 Premises Total Destruction; Premises Building Total
Destruction; Industrial CenterBuildings Total Destruction
9.3 Premises TotalDestruction; Premises Building Total
.estruction; Industrial Center BuildingsTotal Destruction
(3) Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage,
whether or not it is an Insured Loss, and which falls into the
classifications of either (i) Premises Total Destruction, or (ii)
Premises Building Total Destruction, or (iii) Industrial Center
Buildings Total Destruction, then Lessor may at Lessor's option either
(i) repair such damage or destruction, but not Lessee's fixtures,
equipment, tenant improvements or Utility Installations as soon as
reasonably possible at Lessor's expense, and this Lease shall continue
in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of occurrence of such damage of
Lessor's intention to cancel and terminate this Lease, in which case
this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.3 Damage Near End of Term
(1) Subject to paragraph 9.4(b), if at any time
during the last six months of the term of this Lease there is
substantial damage, whether or not an Insured Loss, which falls within
the classification of Premises Partial Damage, Lessor may at Lessor's
option cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to Lessee of Lessor's election to
do so within 30 days after the date of occurrence of such damage.
(2) Notwithstanding paragraph 9.4(a), in the event
that Lessee has an option to extend or renew this Lease, and the time
within which said option may be exercised has not yet expired, Lessee
shall exercise such option, if it is to be exercised at all, no later
than twenty (20) days after the occurrence of an Insured Loss falling
within the classification of Premises Partial Damage during the last
six months of the term of this Lease. If Lessee duly exercises such
option during said twenty (20) day period, Lessor shall, at Lessor's
expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease
shall continue in full force and effect provided Lessee first deposits
with Lessor any shortfall in necessary funds. If Lessee fails to
exercise such option during said twenty (20) day period, then Lessor
may at Lessor's option terminate and cancel this Lease as of the
expiration of said twenty (20) day period by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the
expiration of said twenty (20) day period, notwithstanding any term or
provision in the grant of option to the contrary.
9.4 Abatement of Rent; Lessee's Remedies
(1) In the event Lessor repairs or restores the
Premises pursuant to the provisions of this paragraph 9, the rent
payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to
which Lessee's use of the Premises is impaired. Except for abatement of
rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or
restoration.
(2) If Lessor shall be obligated to repair or
restore the Premises under the provisions of this paragraph 9 and shall
not commence such repair or restoration within 100 days after such
obligation shall accrue, Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's
election to do so at any time prior to the commencement of such repair
or restoration. In such event this Lease shall terminate as of the date
of such notice. In the event that Lessor shall be obligated to repair
or restore the Premises pursuant to Paragraph 9 of this Lease and shall
not commence such repair or restoration within 100 days after such
obligation shall accrue, the right of Lessee to terminate this Lease
pursuant to this Paragraph 9.5(b) shall be the sole right and remedy of
Lessee against Lessor, and Lessor shall have no other liability to
Lessee, for damages, specific performance or otherwise, in connection
with any such failure.
(3) If any repair or restoration Lessor shall be
obligated to or shall elect to undertake under the provisions of this
Paragraph 9 is estimated by Lessor's architect to take more than 270
days from the event of damage to complete, either party at such party's
election, may cancel and terminate this Lease by giving the other party
written notice of the electing party's election to do so at any time
prior to the commencement of such repair or restoration. In such event,
this Lease shall terminate as of the date of such notice.
9.5 Termination-Advance Payment. Upon termination of this
Lease pursuant to this paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor,
Lessor shall, in addition, return to Lessee so much of Lessee's security deposit
as has not theretofore been applied by Lessor.
9.6 Waiver. Lessor and Lessee waive the provisions of any
statute which relate to termination of leases when leased property is destroyed
and agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes
10.1 Payment of Taxes. Lessor shall pay the real property
tax, as defined in paragraph 10.3, applicable to the Industrial Center subject
to reimbursement by Lessee of Lessee's Share of such taxes in accordance with
the provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 Additional Improvements. Lessee shall not be responsible
for paying Lessee's Share of any increase in real property tax specified in the
tax assessor's records and work sheets as being caused by additional
improvements placed upon the Industrial Center by other lessees or by Lessor for
the exclusive enjoyment of such other lessees. Lessee shall, however, pay to
Lessor at the time that Operating Expenses are payable under paragraph 4.2(c)
the entirety of any increase in real property tax if assessed solely by reason
of additional improvements placed upon the Premises by Lessee or at Lessee's
request.
10.3 Definition of "Real Property Tax". As used herein, the
term "real property tax" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the Industrial Center
or any portion thereof by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Industrial
Center or in any portion thereof, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Industrial
Center. The term "real property tax" shall also include any tax, fee, levy,
assessment or charge (i) in substitution of, partially or totally, any tax, fee,
levy, assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax" or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978 or (iv) which is imposed as a result of a transfer,
either partial or total, of Lessor's interest in the Industrial Center or which
is added to a tax or charge hereinbefore included within the definition of real
property tax by reason of such transfer, or (v) which is imposed by reason of
this transaction, any modifications or changes hereto, or any transfers hereof.
10.4 Joint Assessment. If the Industrial Center is not
separately assessed, Lessee's Share of the real property tax liability shall be
an equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed, such proportion to be
determined by Lessor from the respective valuations assigned in the assessor's
work sheets or such other information as may be reasonably available, Lessor's
reasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes
(1) Lessee shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Lessee contained in the Premises or
elsewhere. When possible, Lessee shall cause said trade fixtures,
furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Lessor.
(2) If any of Lessee's said personal property shall
be assessed with Lessor's real property, Lessee shall pay to Lessor the
Shares attributable to Lessee within ten (10) days after receipt of a
written statement setting forth the taxes applicable to Lessee's
property.
10.6 Additional Provisions Regarding Real Property Taxes.
Lessor shall have the sole right to contest or appeal any real property taxes or
assessments applicable to all or any portion of the Industrial Center and to
seek a reduction in the assessed valuation of all or any portion of the
Industrial Center (collectively, "Tax Contests"). Any refund of real property
taxes resulting from any such Tax Contest shall be applied first to reimburse
Lessor for its costs and expenses in connection with the Tax Contest (including,
without limitation attorneys' fees and the costs of consultants) and then, out
of and to the extent of the balance of such refund, Lessor shall reimburse to
Lessee the portion of such reduction attributable to the Premises and the term
of this Lease, as and to the extent previously paid by Lessee as part of
Lessee's Share of Operating Expenses.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to the
Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building. Electrical Power capacity to Lessee for the
Premises shall be 1200 AMP, 277/480 volt, 3-phase power.
12. Assignment and Subletting
12.1 Lessor's Consent Required. Lessee shall not voluntarily
or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer
or encumber all or any part of Lessee's interest in the Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and shall
constitute a noncurable breach of this Lease without the need for notice to
Lessee under paragraph 13.1. If at any time or from time to time during the term
of this Lease, Lessee desires to assign or sublet all or any part of Lessee's
interest in this Lease or in the Premises, Lessee shall give prior written
notice to Lessor setting forth the terms of the proposed assignment or
subletting and the space so proposed to be assigned or sublet. Such assignment
or sublease shall be subject to, without limitation, all the conditions in this
Paragraph 12 and the following conditions:
(1) The assignment or sublease shall be on the terms
set forth in the notice given to Lessor. Any subsequent changes or
modifications will require Lessor's prior written consent.
(2) Lessee acknowledges that Lessor's agreement to
lease these Premises to Lessee at the rent and terms stated herein is
made in material reliance upon Lessor's evaluation of this particular
Lessee's background, experience and ability, as well as the nature of
the use of the Premises by this Lessee as set forth in Paragraph 6. In
the event that Lessee shall request Lessor's written consent to assign
or sublease the Premises as required in this Paragraph 12.1, then each
such request for consent shall be accompanied by the following:
(1) Financial statements of the proposed
assignee or sublessee;
(2) A statement of the specific uses for
which the Premises will be utilized by the proposed assignee
or sublessee; and
(3) Preliminary plans prepared by an architect or
civil engineer for all alterations to the Premises that are
contemplated to be made by Lessee, the proposed assignee or
sublessee.
(3) No assignment or sublease shall be valid and no
assignee or sublessee shall take possession of the Premises assigned or
subleased until an executed counterpart of such assignment or sublease
has been delivered to Lessor.
(4) No sublessee or assignee shall have a right
further to sublet or assign.
12.2 Lease Affiliate. Notwithstanding the provisions of
paragraph 12.1 hereof, Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any corporation or other person or entity
which controls, is controlled by or is under common control with Lessee, or to
any corporation or entity resulting from the merger or consolidation with
Lessee, or to any person or entity which acquires all the assets of Lessee as a
going concern of the business that is being conducted on the Premises, all of
which are referred to as "Lessee Affiliate," provided that before such
assignment shall be effective said assignee shall assume, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease, even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
0.2 Lessees Other Than Individuals 12.3 Lessees Other Than Individuals
------------------------------ ------------------------------
(1) If Lessee is a partnership, a transfer of any
interest of a general partner, a withdrawal of any general partner from
the partnership, or the dissolution of the partnership, shall be deemed
to be an assignment of this Lease.
(2) If Lessee is a corporation, unless Lessee is a
public corporation whose stock is regularly traded on a national stock
exchange, or is regularly traded in the over-the-counter market and
quoted on NASDAQ, any sale or other transfer of a percentage of capital
stock of Lessee which results in a change of controlling persons, or
the sale or other transfer of substantially all of the assets of
Lessee, shall be deemed to be an assignment of this Lease.
12.3 Terms and Conditions of Assignment. Regardless of
Lessor's consent, no assignment shall release Lessee of Lessee's obligations
hereunder or alter the primary liability of Lessee to pay the Base Rent and
Lessee's Share of Operating Expenses, and to perform all other obligations to be
performed by Lessee hereunder. Lessor may accept rent from any person other than
Lessee pending approval or disapproval of such assignment. Neither a delay in
the approval or disapproval of such assignment nor the acceptance of rent shall
constitute a waiver or estoppel of Lessor's right to exercise its remedies for
the breach of any of the terms or conditions of this paragraph 12 of this Lease.
Consent to one assignment shall not be deemed consent to any subsequent
assignment. In the event of default by any assignee of Lessee or any successor
of Lessee, in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies against
said assignee, Lessor may consent to subsequent assignments of this Lease or
amendments or modifications to this Lease with assignees of Lessee, without
notifying Lessee, or any successor of Lessee, and without obtaining its or their
consent thereto and such action shall not relieve Lessee of liability under this
Lease.
12.4 Terms and Conditions Applicable to Subletting.
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
included in subleases:
(1) Lessee hereby assigns and transfers to Lessor
all of Lessee's interest in all rentals and income arising from any
sublease heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a default shall occur in the
performance of Lessee's obligations under this Lease, Lessee may,
subject to paragraph 12.1(e) receive, collect and enjoy the rents
accruing under such sublease. Lessor shall not, by reason of this or
any other assignment of such sublease to Lessor nor by reason of the
collection of the rents from a sublessee, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee under such sublease. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon
receipt of a written notice from Lessor stating that a default exists
in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents due and to become due under the sublease, Lessee
agrees that such sublessee shall have the right to rely upon any such
statement and request from Lessor, and that such sublessee shall pay
such rents to Lessor without any obligation or right to inquire as to
whether such default exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim
against such sublessee or Lessor for any such rents so paid by said
sublessee to Lessor.
(2) No sublease entered into by Lessee shall be
effective unless and until it has been approved in writing by Lessor
which Lessor shall not unreasonably withhold. In entering into any
sublease, Lessee shall use only such form of sublease as is reasonably
satisfactory to Lessor, and once approved by Lessor, such sublease
shall not be materially changed or modified without Lessor's prior
written consent. Any sublessee shall, by reason of entering into a
sublease under this Lease, be deemed, for the benefit of Lessor, to
have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations
as are contrary to or inconsistent with provisions contained in a
sublease to which Lessor has expressly consented in writing.
(3) If Lessee's obligations under this Lease have
been guaranteed by third parties, then a sublease, and Lessor's consent
thereto, shall not be effective unless said guarantors give their
written consent to such sublease and the terms thereof.
(4) The consent by Lessor to any subletting shall not
release Lessee from its obligations or alter the primary liability of
Lessee to pay the rent and perform and comply with all of the
obligations of Lessee to be performed under this Lease.
(5) The consent by Lessor to any subletting shall
not constitute a consent to any subsequent subletting by Lessee or to
any assignment or subletting by the sublessee. However, Lessor may
consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining their
consent and such action shall not relieve such persons from liability.
(6) In the event of any default under this Lease,
Lessor may proceed directly against Lessee, any guarantors or any one
else responsible for the performance of this Lease, including the
sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefor to Lessor, or any security held
by Lessor or Lessee.
(7) In the event Lessee shall default in the
performance of its obligations under this Lease, Lessor, at its option
and without any obligation to do so, may require any sublessee to
attorn to Lessor, in which event Lessor shall undertake the obligations
of Lessee under such sublease from the time of the exercise of said
option to the termination of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by
such sublessee to Lessee or for any other prior defaults of Lessee
under such sublease.
(8) Each and every consent required of Lessee under a
sublease shall also require the consent of Lessor.
(9) No sublessee shall further assign or sublet all
or any part of the Premises without Lessor's prior written consent.
(10) Lessor's written consent to any subletting of
the Premises by Lessee shall not constitute an acknowledgment that no
default then exists under this Lease of the obligations to be performed
by Lessee nor shall such consent be deemed a waiver of any then
existing default, except as may be otherwise stated by Lessor at the
time.
(11) With respect to any subletting to which Lessor
has consented, Lessor agrees to deliver a copy of any notice of default
by Lessee to the sublessee. Such sublessee shall have the right to cure
a default of Lessee within ten (10) days after service of said notice
of default upon such sublessee, and the sublessee shall have a right of
reimbursement and offset from and against Lessee for any such defaults
cured by the sublessee.
12.5 Attorney's Fees. In the event Lessee shall assign or
sublet the Premises or request the consent of Lessor to any assignment or
subletting or if Lessee shall request the consent of Lessor for any act Lessee
proposes to do then Lessee shall pay Lessor's reasonable attorney's and/or
consultants' fees incurred in connection therewith, such attorney's fees not to
exceed $350.00 for each such request. Notwithstanding anything to the contrary
in this Paragraph 12.6, the parties agree that a payment of $750.00 is a
reasonable fee for Lessor's review of Lessee's request to assign or sublet.
13. Default Remedies
13.1 Default. The occurrence of any one or more of the
following events shall constitute a material default of this Lease by Lessee:
(1) The vacating or abandonment of the Premises
by Lessee.
(2) The failure by Lessee to make any payment of rent
or any other payment required to be made by Lessee hereunder, as and
when due, where such failure shall continue for a period of ten (10)
days after written notice thereof from Lessor to Lessee. In the event
that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to
applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit
shall also constitute the notice required by this subparagraph.
(3) Except as otherwise provided in this Lease, the
failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in paragraph (b) above, where such failure
shall continue for a period of thirty (30) days after written notice of
such failure from Lessor to Lessee; provided, however, that if the
nature of Lessee's noncompliance is such that more than thirty (30)
days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commenced such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure
to completion. To the extent permitted by law, such thirty (30) day
notice shall constitute the sole and exclusive notice required to be
given to Lessee under applicable Unlawful Detainer statutes.
(4) (i) The making by Lessee of any general
arrangement or general assignment for the benefit of creditors; (ii)
Lessee becomes a "debtor" as defined in 11 U.S.C. ss. 101 or any
successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii)
the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where possession is not restored to
Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located
at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days. In the event that
any provision of this paragraph 13.1(d) is contrary to any applicable
law, such provision shall be of no force or effect.
(5) The discovery by Lessor that any financial
statement given to Lessor by Lessee, any assignee of Lessee, any
subtenant of Lessee, any successor in interest of Lessee or any
guarantor of Lessee's obligations hereunder, was materially false.
(6) If the performance of Lessee's obligations under
this Lease is guaranteed: (i) the death of a guarantor, (ii) the
termination of a guarantor's liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a guarantor's
becoming insolvent or the subject of a bankruptcy filing, (iv) a
guarantor's refusal to honor the guaranty, or (v) a guarantor's breach
of its guaranty obligation on an anticipatory breach basis, and
Lessee's failure, within sixty (60) days following written notice by or
on behalf of Lessor to Lessee of any such event, to provide Lessor with
written alternative assurance or security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the guarantors that existed at the
time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative
duty or obligation of Lessee under this Lease, within ten (10) business days
after written notice to Lessee (or in case of an emergency, without notice),
Lessor may at its option (but without obligation to do so), perform such duty or
obligation on Lessee's behalf including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. In the event of a
breach of this Lease by Lessee, as defined in Paragraph 13.1, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such breach, Lessor may:
(1) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease and the term
hereof shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the worth at the time of the award
of the unpaid rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of
award of the amount by which the unpaid rent for the balance of the
term after the time of award exceeds the amount of such rental loss
that the Lessee proves could be reasonably avoided; and (iv) any other
amount necessary to compensate Lessor for all the detriment proximately
caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to
result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of the leasing commission paid by Lessor applicable to
the unexpired term of this Lease. The worth of the time of award of the
amount referred to in provisions (i) and (ii) of the prior sentence
shall be calculated based on an interest rate equal to the Interest
Rate. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent. Efforts by Lessor to
mitigate damages caused by Lessee's breach of this Lease shall not
waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve therein the right to recover all or any part thereof
in a separate suit for such rent and/or damages. If a notice and grace
period required under subparagraphs 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit,
as the case may be, given to Lessee under any statute authorizing the
forfeiture of leases for unlawful detainer shall also constitute the
applicable notice for grace period purposes required by subparagraphs
13.1(b), (c) or (d). In such case, the applicable grace period under
subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer
statute shall run concurrently after the one such statutory notice, and
the failure of Lessee to cure the default within the greater of the two
such grace periods shall constitute both an unlawful detainer and
breach of this Lease entitling Lessor to the remedies provided for in
this Lease and/or by said statute.
(2) Continue the Lease and Lessee's right to
possession in effect (in California under California Civil Code Section
1951.4) after Lessee's breach and abandonment and recover the rent as
it becomes due, provided Lessee has the right to sublet or assign,
subject only to reasonable limitations. See Paragraphs 12 and 36 for
the limitations on assignment and subletting which limitations Lessee
and Lessor agree are reasonable. Acts of maintenance or preservation,
efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(3) Pursue any other remedy now or hereafter
available to Lessor under the laws or judicial decisions of the State
of California. Unpaid installments of rent and other unpaid monetary
obligations of Lessee under the terms of this Lease shall bear interest
from the date due at the maximum rate allowed by law.
(4) The expiration or termination of this Lease
and/or the termination of Lessee's right to possession shall not
relieve Lessee from liability under any indemnity provisions of this
Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee's occupancy of the Premises.
13.3 Default by Lessor. Lessor shall not be in default unless
Lessor fails to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late
payment by Lessee to Lessor of Base Rent, Lessee's Share of Operating Expenses
or other sums due hereunder will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Property. Accordingly, if any installment of Base Rent,
Operating Expenses or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to 3% of such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payment by Lessee. Acceptance of such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. 1.1
13.5 Notice Before Lage Charges. Notwithstanding the
provisions of Paragraph 13.4, the 3% late charge described in Paragraph 13.4
shall not be imposed with respect to the first late payment in any calendar year
unless the applicable payment due from Lessee is not received by Lessor or
Lessor's designee within ten (10) days following written notice from Lessor that
such payment was not received when due. Following the first such written notice
from Lessor in any calendar year (and regardless of whether such payment is then
received within such 10-day period), a late charge will be imposed without
notice (as set forth in Paragraph 13.4) for any subsequent payment due from
Lessee during such calendar year which is not received within ten (10) days of
its due date.
14. Condemnation. If the Premises or any portion thereof or the
Industrial Center are taken under the power of eminent domain, or sold under the
threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first occurs.
If more than ten percent of the floor area of the Premises, or more than twenty
percent of that portion of the Common Area designated as parking for the
Industrial Center is taken by condemnation, Lessee may, at Lessee's option, to
be exercised in writing only within ten (10) days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such notice, within
ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the rent shall be reduced in the proportion
that the floor area of the Premises taken bears to the total floor area of the
Premises. No reduction of rent shall occur if the only area taken is that which
does not have the Premises located thereon. Any award for the taking of all or
any part of the Premises under the power of eminent domain or any payment made
under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any award for loss of or damage to
Lessee's trade fixtures and removable personal property. In the event that this
Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of severance damages received by Lessor in connection with such
condemnation, repair any damage to the Premises caused by such condemnation
except to the extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall pay any amount in excess of such severance damages
required to complete such repair.
15. Broker's Commissions
Lessee and Lessor each represent and warrant to the other that neither
has had any dealings with any person, firm, broker or finder (other than those
persons, if any, whose names are set forth at the end of this paragraph 15) in
connection with the negotiation of this Lease and/or the consummation of the
transaction contemplated hereby, and no other broker or other person, firm or
entity is entitled to any commission or finder's fee in connection with said
transaction and Lessee and Lessor do each hereby indemnify and hold the other
harmless from and against any costs, expenses, attorneys' fees or liability for
compensation, commission or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying party. Named brokers:
Lessor's Broker: CB Commercial Real Estate Group, Inc.
Lessee's Broker: ▇▇▇ & Associates
The commission payable to Lessor's Broker with respect to this Lease shall be
pursuant to the terms of the separate commission agreement in effect between
Lessor and Lessor's Broker. Lessor's Broker shall pay a portion of its
commission to Lessee's Broker, if so provided in any agreement between Lessor's
Broker and Lessee's Broker. Nothing in this Lease shall impose any obligation on
Lessor to pay a commission or fee to any party other than Lessor's Broker.
16. Estoppel Certificate
(1) Each party (as "responding party") shall at any
time upon not less than ten (10) business days' prior written notice
from the other party, ("requesting party") execute, acknowledge and
deliver to the requesting party a statement in writing (i) certifying
that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect) and the date
to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to the responding party's
knowledge, any uncured defaults on the part of the requesting party, or
specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer
of the Premises or of the business of the requesting party.
(2) At the requesting party's option, the failure to
deliver such statement within such time shall be a material default of
this Lease by the party who is to respond, without any further notice
to such party, or it shall be conclusive upon such party that (i) this
Lease is in full force and effect, without modification except as may
be represented by the requesting party, (ii) there are no uncured
defaults in the requesting party's performance, and (iii) if Lessor is
the requesting party, not more than one month's rent has been paid in
advance.
(3) If Lessor desires to finance, refinance, or sell
the Property, or any part thereof, Lessee hereby agrees to deliver to
any lender or purchaser designated by Lessor such financial statements
of Lessee as may be reasonably required by such lender or purchaser.
Such statements shall include the past three (3) years' financial
statements of Lessee. All such financial statements shall be received
by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. Lessor's Liablity. The term "Lessor" as used herein shall mean only
the owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Industrial Center, in the event of any
transfer of such title or interest. Lessor herein named (and in case of any
subsequent transfers then the grantor) shall be relieved from and after the date
of such transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at the
Interest Rate. Payment of such interest shall not excuse or cure any default by
Lessee under this Lease; provided, however, that interest shall not be payable
on late charges incurred by Lessee nor on any amounts upon which late charges
are paid by Lessee. As used herein, the term "Interest Rate" means the lesser of
(a) a floating annual interest rate equal to five percent (5%) over the prime
rate (for corporate loans at large United States money center commercial banks)
published in The Wall Street Journal on the first business day of each month, or
(b) the maximum rate permitted by applicable law. In the event that The Wall
Street Journal fails to publish such a prime rate, the "prime rate" shall be the
prime rate or reference rate quoted by a national bank having offices in
California selected by Lessor in its sole discretion.
1.
20. Time of Essence. Time is of the essence with respect to the
obligations to be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under
the terms of this Lease, including but not limited to Lessee's Share of
Operating Expenses and insurance and tax expenses payable shall be deemed to be
rent.
22. Incorporation of Prior Agreements; Amendments of Prior Agreements;
Amendments. This Lease contains all agreements of the parties with respect to
any matter mentioned herein. No prior or contemporaneous agreement or
understanding pertaining to any such matter shall be effective. This Lease may
be modified in writing only, signed by the parties in interest at the time of
the modification. Except as otherwise stated in this Lease, Lessee hereby
acknowledges that neither the real estate broker listed in paragraph 15 hereof
nor any cooperating broker on this transaction nor the Lessor or any employee or
agents of any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of the
Premises or the Property and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease except as otherwise
specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery or by certified mail
and if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or to Lessor at the address noted below the signature of the
respective parties, as the case may be. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.
Any notice given pursuant to this Lease shall be personally delivered,
delivered by Federal Express or comparable overnight courier, providing written
evidence of delivery, or delivered by U.S. registered or certified mail, return
receipt requested, postage prepaid and sent to Lessor and Lessee at the
following addresses:
LESSOR:
Prudential Real Estate Investors
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Counsel
With a copy by the same method to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of California, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
LESSEE:
Big Dog Sportswear
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Real Estate Administrator
or such other address as either party may from time to time designate as its
notice address by notifying the other party thereof. Notice so sent shall be
deemed given (a) when personally delivered, or (b) on the first business day
following deposit with Federal Express or a comparable overnight courier service
providing written evidence of delivery, or (c) five business days following
deposit in the United States mail, if notice is sent by registered or certified
mail, return receipt requested, postage prepaid.
24. Waivers. No waiver by any party of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by the
other party of the same or any other provision. Lessor's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the particular
rent so accepted, regardless of Lessor's knowledge of such preceding breach at
the time of acceptance of such rent.
25. Recording. Lessee shall not record this Lease.
26. Holding Over. If Lessee, with Lessor's consent, remains in
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month to month upon all of the
provisions of this Lease pertaining to the obligations of Lessee, except that
the monthly rent shall be 120% of the rent payable in the last month of the
lease term but all Options, if any, granted under the terms of this Lease shall
be deemed terminated and be of no further effect during said month to month
tenancy.
27. Cummulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable
by Lessee shall be deemed both a covenant and condition.
29. Binding Effect;Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Industrial Center is located and any litigation concerning this Lease
between the parties hereto shall be initiated in the county in which the
Industrial Center is located.
30. Subordination
(1) This Lease, and any Option granted hereby, at
Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter
placed upon the Industrial Center and to any and all advances made on
the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. Notwithstanding
such subordination, Lessee's right to quiet possession of the Premises
shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions
of this Lease, unless this Lease is otherwise terminated pursuant to
its terms. If any mortgagee, trustee or ground lessor shall elect to
have this Lease and any Options granted hereby prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to
such mortgage, deed of trust, or ground lease, whether this Lease or
such Options are dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording
thereof.
(2) Lessee agrees to execute any documents required
to effectuate an attornment, a subordination or to make this Lease or
any Option granted herein prior to the lien of any mortgage, deed of
trust or ground lease, as the case may be, provided that Lessee's
failure to execute such documents within ten (10) business days after
written demand shall constitute a material default by Lessee hereunder
without further notice to Lessee or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's
attorney-in-fact. Lessee does hereby make, constitute and irrevocably
appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place
and stead, to execute such documents in accordance with this paragraph
30(b).
31. Attorneys Fees
31.1 If either party brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such proceeding, action, or appeal thereon, shall be entitled to his
reasonable attorney's fees and such fees as may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment. The term, "prevailing party" shall include,
without limitation, a party who obtains legal counsel or brings an action
against the other by reason of the other's breach or default, or who defends
such action, and substantially obtains or defeats the relief sought, whether by
compromise, settlement, judgment, or abandonment of the claim or defense by the
other party.
31.2 The attorney's fee award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully reimburse
all attorney's fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to attorney's fees, costs and
expenses incurred in the preparation and service of notices of default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such default. Lessor and Lessee agree
that $150.00 is a reasonable sum per occurrence for legal services and costs per
preparation and service of a notice of default and that Lessor may include
$150.00 as additional rent due in each such notice of default as an amount that
must be paid to cure said default.
32. Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting same,
showing the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises or the Building any
ordinary "For Sale" signs and Lessor may at any time during the last 120 days of
the term hereof place on or about the Premises any ordinary "For Lease" signs.
All activities of Lessor pursuant to this paragraph shall be without abatement
of rent, nor shall Lessor have any liability to Lessee for the same.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises or the Common
Areas without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises or the
Industrial Center without Lessor's prior written consent. Under no circumstances
shall Lessee place a sign on any roof of the Industrial Center.
35. Merger. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. Consents. Except for paragraphs 33, 34, 46 and 47 hereof, wherever
in this Lease the consent of one party is required to an act of the other party,
such consent shall not be unreasonably withheld or delayed and wherever this
Lease grants the other party the right to take action, exercise discretion, make
a judgment or other determination, or request or require documents or other
items, and the same is not expressly stated to be in the "sole discretion" (or
words of similar meaning) of such party, such party shall act reasonably and in
good faith.
37. Guarantor. In the event that there is a guarantor of this Lease,
said guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessor covenants that
Lessee shall have quiet possession of the Premises for the entire term hereof
peacefully and quietly have, hold and enjoy without hindrance, ejection or
molestation by any person lawfully claiming under Lessor, subject to all of the
provisions of this Lease and all easements, covenants, conditions and
restrictions of record. The individuals executing this Lease on behalf of Lessor
represent and warrant to Lessee that they are fully authorized and legally
capable of executing this Lease on behalf of Lessor and that such execution is
binding upon all parties holding an ownership interest in the Property.
39. Options
39.1 Definition. As used in this paragraph, the word "Option"
has the following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Industrial Center or other property of
Lessor or the right of first offer to lease other space within the Industrial
Center or other property of Lessor; (3) the right or option to purchase the
Premises or the Industrial Center, or the right of first refusal to purchase the
Premises or the Industrial Center, or the right of first offer to purchase the
Premises or the Industrial Center, or the right or option to purchase other
property of Lessor, or the right of first refusal to purchase other property of
Lessor or the right of first offer to purchaser other property of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this
Lease is personal to Lessee and may not be exercised or be assigned, voluntarily
or involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate as
defined in Paragraph 12.2 of this Lease and any assignee of Lessee's entire
interest in this Lease consented to by Lessor. The Options herein granted to
Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any
multiple options to extend or renew this Lease a later option cannot be
exercised unless the prior option to extend or renew this Lease has been so
exercised.
39.4 Effect of Default on Options
(1) Lessee shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option to the
contrary, (i) during the time commencing from the date Lessor gives to
Lessee a notice of default pursuant to Paragraphs 13.1(b) or 13.1(c)
and continuing until the default alleged in said notice of default is
cured, or (ii) during the period of time commencing on the day after a
monetary obligation to Lessor is due from Lessee and unpaid (without
any necessity for notice thereof to Lessee) continuing until the
obligation is paid, or (iii) at any time after an event of default
described in Paragraphs 13.1(a), 13.1(d), 13.1(e) or 13.1(f) (without
any necessity of Lessor to give notice of such default to Lessee), or
(iv) in the event that Lessor has given to Lessee three or more notices
of default under Paragraph 13.1(b), where a late charge has become
payable under Paragraph 13.4 for each of such defaults, or Paragraph
13.1(c), whether or not the defaults are cured, during the 12 month
period prior to the time that Lessee intends to exercise the subject
Option.
(2) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee's
inability to exercise an Option because of the provisions of Paragraph
39.4(a).
(3) All rights of Lessee under the provisions of an
Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and during the term of this Lease, (i) Lessee fails
to pay to Lessor a monetary obligation of Lessee for a period of 30
days after such obligation becomes due (without any necessity of Lessor
to give notice thereof to Lessee), or (ii) Lessee fails to commence to
cure a default specified in Paragraph 13.1(c) within 30 days after the
date that Lessor gives notice to Lessee of such default and/or Lessee
fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessee commits a default described in Paragraphs 13.1(a),
13.1(d), 13.1(e) or 13.1(f) (without any necessity of Lessor to give
notice of such default to Lessee).
39.5 Option. Lessor hereby grants to Lessee the option to
extend the term of this Lease for a five (5) year period commencing on the date
the prior term expires (the "Option Period") upon each and all of the following
terms and conditions:
(1) Lessee gives to Lessor, and Lessor actually
receives, on a date which is prior to the date that the Option Period
would commence (if exercised) by at least six (6) and not more than
nine (9) months, a written notice of exercise of the option to extend
this Lease for said additional term, time being of the essence. If said
notification of the exercise of said option is not so given and
received, this option shall automatically expire;
(2) The provisions of Paragraph 39, including the
provision relating to default of Lessee set forth in Paragraph 39.4, of
this Lease are conditions of this option;
(3) All of the terms and conditions of this Lease
except where specifically modified by this option shall apply, except
that Lessee shall have no further option to extend the term of this
Lease;
(4) Any prior Lessee that has not been expressly
released from liability under this Lease, and any guarantor of the
Lessee's performance hereunder, expressly reaffirms in writing the
extension of their liability for the term of the option; and
(5) Subject to adjustment as provided in Paragraph
39.7, the monthly Base Rent for each month of the Option Period shall
be the Fair Market Rent (as defined below) of the Premises as of the
commencement of the Option Period, but in no event less than the
monthly Base Rent scheduled to be paid during the month prior to the
commencement of the Option Period.
39.6 Fair Market Rent
(1) The term "Fair Market Rent" as used in this Lease
is defined to mean the rent, including all escalations, at which
tenants are leasing non-sublease, non-encumbered, non-equity space
comparable in size and quality to the Premises for the Option Period as
to which Fair Market Rent is being determined in the Mid Cities Area,
giving appropriate consideration to the annual rental rates per square
foot and the standard of measurement by which the square footage is
measured. In determining Fair Market Rent it shall be assumed that:
(1) The Premises are in good condition and repair and
there shall be no deduction for depreciation, obsolescence or
deferred maintenance except that attributable to Lessor's
failure to meet its maintenance obligations under this Lease
(but less reasonable wear and tear as long as well maintained
by Lessee).
(2) The Premises would be leased for the period of
the option being exercised by a tenant with the credit
standing of Lessee, as the same exists at that time.
(3) The Premises would be leased on the same terms of
this Lease insofar as the obligations for repair, maintenance,
insurance and real estate taxes existed as of the expiration
of the original term of this Lease.
(4) No deduction shall be given nor consideration
given to allowances for free rent.
(5) The Premises will be used for its highest
and best use.
(6) The rent escalation in Paragraph 39.7 will
be applicable.
(2) Determination By Lessor. Lessor shall initially
determine the Fair Market Rent in each instance, and shall give Lessee
notice (the "Market Rent Notice") of such determination and the basis
on which such determination was made on or before the 60th day prior to
the date on which such determination is to take effect, or as soon
thereafter as is reasonably practicable.
(3) Disputes re Fair Market Rent. In the event that
Lessee notifies Lessor in writing, on or before the 20th business day
following any Market Rent Notice, that Lessee disagrees with the
applicable determination, Lessor and Lessee shall negotiate in good
faith to resolve such dispute within 10 business days thereafter (The
30th business day after any Market Rent Notice is referred to herein as
the "Outside Agreement Date.") If not resolved by the Outside Agreement
Date each party shall submit to the other its determination of Fair
Market Rent and the dispute shall be submitted to arbitration in
accordance with the following paragraph titled "Arbitration
Procedures." Until any such dispute is resolved, any applicable
payments due under this Lease shall correspond to Lessor's
determination and, if Lessee's determination becomes the final
determination, Lessor shall refund any overpayments to Lessee, within 5
business days following the final resolution of the dispute.
(4) Arbitration Procedures.
(1)Lessor and Lessee shall each appoint one
arbitrator who shall by profession be a real estate broker who
shall have been active over the 5-year period ending on the
date of such appointment in the leasing of properties similar
to the Premises in the surrounding area of Los Angeles County.
The determination of the arbitrators shall be limited solely
to the issue of whether Lessor's or Lessee's submitted Fair
Market Rent for the Premises is the closest to the actual Fair
Market Rent for the Premises as determined by the arbitrators,
taking into account the requirements of this subparagraph
regarding the same. Each such arbitrator shall be appointed
within 15 days after the Outside Agreement Date. Lessor and
Lessee may not consult with either such arbitrator prior to
resolution.
(2) The two arbitrators so appointed shall within 15
days of the date of the appointment of the last appointed
arbitrator, meet and attempt to reach a decision as to whether
the parties shall use Lessor's or Lessee's submitted Fair
Market Rent, and shall notify Lessor and Lessee of their
decision, if any.
(3) If the two arbitrators are unable to reach a
decision, the two arbitrators shall, within 30 days of the
date of the appointment of the last appointed arbitrator,
agree upon and appoint a 3rd arbitrator who shall be a broker
who shall be qualified under the same criteria set forth
hereinabove for qualification of the initial 2 arbitrators.
(4) The 3 arbitrators shall, within 30 days of the
appointment of the 3rd arbitrator, reach a decision as to
whether the parties shall use Lessor's or Lessee's submitted
Fair Market Rent, and shall notify Lessor and Lessee thereof.
(5) The decision of the majority of the 3 arbitrators
shall be binding upon Lessor and Lessee.
(6) If either Lessor or Lessee fails to appoint an
arbitrator within 15 days after the Outside Agreement Date,
the arbitrator appointed by one of them shall reach a
decision, notify Lessor and Lessee thereof, and such
arbitrator's decision shall be binding upon Lessor and Lessee.
(7) If the 2 arbitrators fail to agree upon and to
appoint a 3rd arbitrator, then the appointment of the 3rd
arbitrator shall be dismissed, and the matter to be decided
shall be forthwith submitted to arbitration under the
provisions of the American Arbitration Association, but
subject to the instructions set forth in this Lease.
(8) The cost of arbitration shall be paid by Lessor
and Lessee equally.
39.7 Rent Escalations - Option Term
(1) Upon the commencement of the 31st month of the
Option Period, the monthly Base Rent payable under Paragraph 4 of the
Lease as modified by Paragraph 39, shall be adjusted by the increase,
if any, from the date the Option Period commenced, in the C.P.I.
(2) The monthly base rent payable in accordance with
Paragraph 39.7(a), above shall be calculated as follows: The Base Rent
payable as set forth in Paragraph 4 of the Lease as modified by
Paragraph 39, shall be multiplied by a fraction the numerator of which
shall be the C.P.I. of the calendar month during which the adjustment
is to take effect, and the denominator of which shall be the C.P.I. for
the calendar month in which the Option Period commences. The sum so
calculated shall constitute the new monthly Base Rent hereunder,
subject to Paragraph 39.7(e) below.
(3) Pending receipt of the required C.P.I. and
determination of the actual adjustment, Lessee shall pay an estimated
adjusted rental, as reasonably determined by Lessor by reference to the
then available C.P.I. information. Upon notification of the actual
adjustment after publication of the required C.P.I., any overpayment
shall be credited against the next installment of rent due, and any
underpayment shall be immediately due and payable by Lessee. Lessor's
failure to request payment of an estimated or actual rent adjustment
shall not constitute a waiver of the right to any adjustment provided
for in the Lease or this Paragraph 39.7.
(4) In the event the compilation and/or publication
of the C.P.I. shall be transferred to any other governmental department
or bureau or agency or shall be discontinued, then the index most
nearly the same as the C.P.I. shall be used to make such calculation.
In the event that Lessor and Lessee cannot agree on such alternative
index, then the matter shall be submitted for decision to the American
Arbitration Association in accordance with the then rules of said
association and the decision of the Arbitrators shall be binding upon
the parties. The cost of said Arbitrators shall be paid equally by
Lessor and Lessee.
(5) The adjustment(s) required by this Paragraph 39.7
shall be subject to the following additional agreements:
(1) The increase under Paragraph 39.7(b), above,
shall be subject to the following minimum and maximum
percentage increases per year involved in the adjustment
period, on a cumulative and compounded basis:
Minimum yearly percentage increase:3%
Maximum yearly percentage increase:5%
The "adjustment period" is defined as the period commencing
with the month designated in Paragraph 39.7(b), above, as the
reference for determining the "denominator", and ending with
the month preceding the month designated therein as the
reference for determining the "numerator". Should the
adjustment period include a partial year, the minimum and
maximum percentages shall be prorated for that partial year by
multiplying them by a fraction, the numerator of which shall
be the number of full calendar months or major portion thereof
contained in said partial year, and the denominator of which
is twelve (12).
(2) The new monthly Base Rent shall in no event be
less than the rent scheduled to be paid immediately preceding
the rent adjustment.
40. Security Measures. Lessee hereby acknowledges that Lessor shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Industrial Center. Lessee
assumes all responsibility for the protection of Lessee, its agents and invitees
and the property of Lessee and of Lessee's agents and invitees from acts of
third parties. Nothing herein contained shall prevent Lessor at Lessor's sole
option, from providing security protection for the Industrial Center or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
41. Easements. Lessor reserves to itself the right, from time to time,
to grant such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so long
as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee shall sign
any of the aforementioned documents upon request of Lessor and failure to do so
shall constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
42. Performance Under Protest. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said party
to pay such sum or any part thereof, said party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
43. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. Intentionally Omitted
45. Amendments to Lease
45.1 At such times as a rental adjustment is made to this
Lease by virtue of any provision of this Lease, the parties shall execute a
written amendment to this Lease to reflect said change.
45.2 Lessee agrees to make any non-monetary modifications to
this Lease that may be required by an institutional mortgagee of Lessor.
46. Storage Tanks
46.1 Notwithstanding anything to the contrary in Paragraph
7.3 hereof, Lessee shall not install storage tanks of any size or shape in the
Premises, above or below ground, without the consent of the Lessor which can be
withheld in Lessor's sole discretion. If Lessor elects to grant its consent,
Lessor shall have the right to condition its consent upon Lessee agreeing to
give to Lessor such assurances that Lessor, in its sole discretion, deems
necessary to protect itself against potential problems concerning the
installation, use, removal and contamination of the Premises as a result of the
installation and/or use of such tank, including but not limited to the
installation of a concrete encasement for said tank. Lessee shall comply at its
expense with all applicable permit and/or registration requirements and repair
any damage caused by the installation, maintenance or removal of such tank. Upon
termination of the Lease, Lessee shall, at its sole cost and expense, remove any
tank from the Premises, remove and replace any contaminated soil or materials
(and compact or treat the same as then required by law) and repair any damage or
change to the Premises caused by said installation and/or removal. Nothing
contained herein shall be construed to diminish or reduce Lessee's obligations
under Paragraph 47.
46.2 Lessor shall have the right to employ experts and/or
consultants, at Lessee's expense, to advise Lessor with respect to the
installation, operation, monitoring, maintenance and removal and restoration of
any such tank.
47. Hazardous Materials
47.1 Lessee's Covenants Regarding Hazardous Materials
(1) Lessor's Prior Consent. Notwithstanding anything
contained in this Lease to the contrary, Lessee has not caused or
permitted, and shall not cause or permit any "Hazardous Materials" (as
defined in subparagraph (b) below) to be brought upon, kept, stored,
discharged, released or used in, under or about the Premises by Lessee,
its agents, employees, contractors, subcontractors, licensees or
invitees, unless (1) such Hazardous Materials are reasonably necessary
to Lessee's business and will be handled, used, kept, stored and
disposed of in a manner which complies with all "Hazardous Materials
Laws" (as defined in subparagraph (b) below); (2) Lessee will comply
with such other rules or requirements as Lessor may from time to time
impose, including without limitation that (i) such materials are in
small quantities, properly labeled and contained, (ii) such materials
are handled and disposed of in accordance with the highest accepted
industry standards for safety, storage, use and disposal, (iii) such
materials are for use in the ordinary course of business (i.e., as with
office or cleaning supplies), (3) notice of and a copy of the current
material safety data sheet is provided to Lessor for each such
Hazardous Material, and (4) Lessor shall have granted its prior written
consent to the use of such Hazardous Materials.
(2) Compliance with Hazardous Materials Laws. As
used herein, the term "Hazardous Materials" means any (1) oil,
petroleum, petroleum products, flammable substances, explosives,
radioactive materials, hazardous wastes or substances, toxic wastes or
substances or any other wastes, materials or pollutants which (i) pose
a hazard to the Premises or to persons on or about the Premises or (ii)
cause the Premises to be in violation of any Hazardous Materials Laws
(as hereinafter defined); (2) asbestos in any form, urea formaldehyde
foam insulation, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls, or
radon gas; (3) chemical, material or substance defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or words of similar import
under any applicable local, state or federal law or under the
regulations adopted or publications promulgated pursuant thereto,
including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
ss. 9601, et seq.; the Resources Conservation Recovery Act, 42 U.S.C.
ss. 6901, et seq.; the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. ss. 1801, et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. ss. 1251, et seq.; Sections 25115,
25117, 25122.7, 25140, 25249.8, 25281, 25316 and 25501 of the
California Health and Safety Code; and Title 22 of the California Code
of Regulations, Division 4.5, Chapter 11; (4) other chemical, material
or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or may or could pose a hazard to the health
and safety of the occupants of the Premises or the owners and/or
occupants of property adjacent to or surrounding the Premises, or any
other Person coming upon the Premises or adjacent property; and (5)
other chemical, materials or substance which may or could pose a hazard
to the environment. As used here the term "Hazardous Materials Laws"
means any federal, state or local laws, ordinances, regulations or
policies relating to the environment, health and safety, and Hazardous
Materials (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof) or
to industrial hygiene or the environmental conditions on, under or
about the Premises, including, without limitation, soil, groundwater
and indoor and ambient air conditions. Lessee shall at all times and in
all respects comply with all Hazardous Materials Laws.
(3) Hazardous Materials Removal. Upon expiration or
earlier termination of this Lease, Lessee shall, at Lessee's sole cost
and expense, cause all Hazardous Materials brought on the Premises with
Lessor's consent to be removed from the Premises in compliance with all
applicable Hazardous Materials Laws. If Lessee or its employees,
agents, or contractors violates the provisions of the foregoing two
paragraphs, or if Lessee's acts, negligence, or business operations
contaminate, or expand the scope of contamination of, the Leased
Premises from such Hazardous Materials, then Lessee shall promptly, at
Lessee's expense, take all investigatory and/or remedial action
(collectively, the "Remediation") that is necessary in order to clean
up, remove and dispose of such Hazardous Materials causing the
violation on the Leased Premises or the underlying groundwater or the
properties adjacent to the Leased Premises to the extent such
contamination was caused by Lessee, in compliance with all applicable
Hazardous Materials Laws. Lessee shall further repair any damage to the
Leased Premises caused by the Hazardous Materials contamination. Lessee
shall provide prior written notice to Lessor of such Remediation, and
Lessee shall commence such Remediation no later than thirty (30) days
after such notice to Lessor and diligently and continuously complete
such Remediation. Such written notice shall also include Lessee's
method, time and procedure for such Remediation and Lessor shall have
the right to require reasonable changes in such method, time or
procedure of the Remediation. Lessee shall not take any Remediation in
response to the presence of any Hazardous Materials in or about the
Premises or enter into any settlement agreement, consent decree or
other compromise in respect to any claims relating to any Hazardous
Materials in any way connected with the Premises, without first
notifying Lessor of Lessee's intention to do so and affording Lessor
ample opportunity to appear, intervene or otherwise appropriately
assert and protect Lessor's interests with respect thereto.
(4) Notices. Lessee shall immediately notify Lessor
in writing of: (i) any enforcement, cleanup, removal or other
governmental or regulatory action threatened, instituted, or completed
pursuant to any Hazardous Materials Laws with respect to the Premises;
(ii) any claim, demand, or complaint made or threatened by any person
against Lessee or the Premises relating to damage, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous
Materials; and (iii) any reports made to any governmental authority
arising out of any Hazardous Materials on or removed from the Premises.
Lessor shall have the right (but not the obligation) to join and
participate, as a party, in any legal proceedings or actions affecting
the Premises initiated in connection with any Hazardous Materials Laws.
47.2 Indemnification of Lessor. Lessee shall indemnify,
protect, defend and forever hold Lessor harmless from any and all damages,
losses, expenses, liabilities, obligations and costs arising out of any failure
of Lessee to observe any of the covenants contained in paragraphs 46 and 47.
47.3 Preexisting Conditions. Notwithstanding anything to the
contrary in this Lease, Lessee shall not be liable to Lessor under this Lease
for any cost associated with Hazardous Materials, if any, to the extent that the
Hazardous Materials existed on the Premises prior to the date of this Lease and
were not brought on to the Premises by Lessee, its agents, employees,
contractors, subcontractors, licensees or invitees (the "Preexisting
Conditions"). Without limiting any other provision of this Lease, Lessee shall
provide Lessor with the original of any notices or other documents received by
Lessee in connection with the Preexisting Conditions.
47.4 Studies. Lessee acknowledges receipt of a copy of that
certain Soil and Ground Water Investigation, Former Best Foods Facility, Santa
Fe Springs, California dated June 10, 1996 prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Associates, and that certain Environmental Site Assessment, Mid Counties
Business Park, 15700 and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
dated June 11, 1996, prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates (collectively,
"Hazardous Substance Reports"). Lessor, except as provided in the following
sentence of this paragraph, makes no representations or warranties whatsoever to
Lessee regarding: (i) the Hazardous Substance Reports (including, without
limitation, the contents and/or accuracy thereof) or (ii) the presence or
absence of toxic or Hazardous Materials in, at, or under the Premises, the
Building or the Industrial Center. Lessor does acknowledge to Lessee that: (i)
Lessor has not authorized any other studies for hazardous or toxic materials at
the Premises or Building other than the Hazardous Substance Reports; and (ii)
Lessor does not know of any surveys for toxic or Hazardous Materials at the
Premises or the Building other than the Hazardous Substance Reports.
Notwithstanding the preceding sentence, Lessee: (a) shall not rely on and Lessee
hereby represents to Lessor that it has not relied on the Hazardous Substance
Reports; and (b) shall make such studies and investigations, conduct such tests
and surveys, and engage such specialists as Lessee deems appropriate to fairly
evaluate the Premises and any risks from hazardous or toxic materials. In
connection with any inspections or tests to be conducted by Lessee at the
Premises or Building, Lessee shall first notify Lessor of each proposed
inspection or test and the scope, impact, and intent thereof and obtain Lessor's
written consent to perform the same. Lessee shall restore the Premises and the
property on which the leased premises are located to the condition existing
immediately prior to any such test and/or inspection and will provide Lessor
with true and complete copies of any survey or report obtained by or for the
benefit of Lessee in connection with hazardous or toxic materials that concern
the Building, the Industrial Center or the Premises.
48. Lessor's Default
Any damages or judgments arising out of Lessor's default of
its obligations under this Lease shall be satisfied only out of Lessor's
interest and estate in the Industrial Center, and Lessor shall have no personal
liability beyond such interest and estate with respect to such damages or
judgments.
49. Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease. This Lease
shall become binding upon Lessor and Lessee only when fully executed by Lessor
and Lessee.
50. Lessor Improvements. Lessor shall construct on the Premises at
Lessor's cost the following improvements ("Lessor's Work") prior to November 26,
1997:
50.1 A demising wall between the Premises and the adjacent
leasable area in the Building.
51. Lessee Improvement Allowance. Lessor shall provide to Lessee a
building allowance (the "Lessee Improvement Allowance"), not to exceed
$183,867.30, to be disbursed to Lessee in reimbursement of costs reasonably
incurred by Lessee in the design and construction of improvements in the
Premises in accordance with plans and specifications reasonably approved by
Lessor (the "Approved Plans"). Provided that such improvements shall have been
completed substantially in accordance with the Approved Plans, as reasonably
determined by Lessor, Lessor shall disburse the Lessee Improvement Allowance to
Lessee one time only, 30 days following the date on which Lessee commences its
ordinary business operations in the Premises, upon receipt by Lessor of invoices
and other evidence in form and substance reasonably satisfactory to Lessor in
support of the performance of the work and the payment therefor by Lessee,
together with appropriate lien releases. Lessor shall have no obligation to make
any disbursement of the Lessee Improvement Allowance after December 31, 1998.
52. Signage Right. Lessee shall have the right, at its sole cost and
expense, to install a sign on the exterior of the Building and on 2 shared
monument signs as shown on the attached Signage Exhibit identifying its name and
logo. The graphics, materials, color, design, lettering, size, location and
specifications of Lessee's signage shall be subject to the prior written
approval of Lessor, which approval shall not be unreasonably withheld or
delayed, and the approval of the City of Santa Fe Springs. The signs shall be
installed and maintained, at Lessee's sole cost and expenses, pursuant to an
installation and maintenance program approved and supervised by Lessor. At the
expiration or earlier termination of this Lease, Lessor shall, at Lessee's sole
cost and expense, cause the sign to be removed and the exterior of the Building
and Common Area affected by the signs to be restored to the condition existing
prior to the installation of the signs Lessor may disapprove any signage that
contains a name which relates to an entity or individual which is of a character
or reputation, or is associated with a political orientation or faction, which
is materially inconsistent with the quality of the Industrial Center, or which
would otherwise reasonably offend the landlord of a comparable building or that
would conflict with any covenants in leases of space in the Industrial Center.
This signage right is personal to Big Dog U.S.A.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
"LESSOR" "LESSEE"
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA BIG DOG U.S.A., INC. a
California corporation
By ▇▇▇▇▇▇▇ & Wakefield of California,
Inc.
Its Managing Agent By /s/▇▇▇▇▇▇▇ ▇▇▇▇
Executive Vice President
By _______________________
______________________ By __________________________
Printed Name and Title __________________________
Printed Name and Title
By _______________________
---------------------
Printed Name and Title
Executed on__________________ Executed on__________________
LEASE GUARANTY
This Lease Guaranty ("Guaranty"), dated as of November 4, 1997, is
executed by BIG DOG HOLDINGS, INC., a Delaware corporation ("Guarantor") in
favor of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
("Landlord"), in conjunction with, and to induce Landlord to enter into, that
certain Lease of even date herewith (the "Lease") between Landlord and BIG DOG
U.S.A., a California corporation ("Tenant"), pursuant to which Landlord is
leasing to Tenant certain real property (the "Premises") more particularly
described in the Lease. Capitalized terms used and not otherwise defined in this
Guaranty shall have the meanings set forth for them in the Lease.
In consideration of the foregoing, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees as follows:
1. Guaranty of Tenant's Obligations. Guarantor hereby unconditionally
and irrevocably guarantees to Landlord (a) the prompt payment by Tenant of all
Base Rent, additional rent and other amounts from time to time owing to Landlord
under the Lease, and (b) the prompt and diligent performance and observance of
all other obligations and provisions of the Lease by Tenant. The payment of all
such amounts and the performance and observance of all such other obligations
and provisions shall be collectively referred to herein as the "Tenant
Obligations." This Guaranty will apply to the Lease, any extension or renewal of
the Lease, and any holdover term following the term of the Lease, or any such
extension or renewal.
2. Modification of Lease; Assignment and Subletting. Guarantor agrees
that the Lease may be supplemented, amended and/or otherwise modified from time
to time without Guarantor's consent, in which event this Guaranty shall continue
to apply to the Lease as so modified. In addition, no assignment or subletting
of all or any portion of Tenant's interests in the Lease shall impair or affect
the continuing force of this Guaranty. Notwithstanding the foregoing, in the
event that, following any assignment of Tenant's interests in the Lease (in
accordance with the Lease) to a person or entity not affiliated with Tenant,
Landlord and such assignee modify the Lease in such a way as to increase any
Tenant Obligation, Guarantor shall not, unless Guarantor then otherwise consents
in writing, be liable for the incremental portion of such Tenant Obligation
corresponding to such increase.
3. Guarantor Waivers. Guarantor hereby waives, to the fullest extent
allowed by law, all suretyship rights, defenses and other benefits to which it
might otherwise be entitled. Without limiting the generality of the foregoing:
(a) Landlord shall be entitled to proceed against Guarantor with respect to any
unfulfilled Tenant Obligation regardless of whether Landlord has proceeded, is
then proceeding, or intends to proceed, against Tenant or any other person with
respect thereto, and Guarantor expressly waives the benefits of Section 2845 of
the Civil Code of California; (b) Landlord shall not be required to furnish
Guarantor with copies of any notices given or required to be given to Tenant
under the Lease, including without limitation notices of default, except as
provided in the Lease; (c) Guarantor's liability for the Tenant Obligations
shall not be affected, released, terminated, discharged or impaired by (i) the
existence of any bankruptcy, insolvency, reorganization or similar proceeding
with respect to Tenant or any other person, (ii) any exercise, non-exercise or
delay or lack of diligence in the exercise of remedies by Landlord against
Tenant or any other person (except to the extent that the same has resulted in
the fulfillment of the applicable Tenant Obligation), (iii) any assignment or
other transfer (voluntary or involuntary) of Tenant's interests in the Lease,
(iv) the rejection of the Lease in any bankruptcy proceeding with respect to
Tenant, or any other release or discharge of Tenant in any bankruptcy,
insolvency, reorganization or similar proceeding; (v) any amendment of the
Lease; (vi) any change in the time, manner or place of payment, performance or
observance of any of the Tenant Obligations; (vii) any waiver of, or any
assertion or enforcement or failure or refusal to assert or enforce, or any
consent or indulgence granted by Landlord with respect to a departure from, any
term of the Lease, including without limitation the waiver of any default by
Tenant, or the making of any other arrangement with, or the accepting of any
compensation or settlement from, Tenant; provided that to the extent that Lessor
provides Lessee with a written waiver of, or written agreement with respect to a
consent or indulgence with respect to a departure from, any term of the Lease,
the Tenant Obligations for which Guarantor is liable under the Guaranty shall be
deemed modified to reflect the terms of such written waiver or agreement; (viii)
any other guaranty now or hereafter executed by Guarantor or any other guarantor
or the release of any other guarantor from liability for the payment,
performance or observance of any of the Tenant Obligations, whether by operation
of law or otherwise; or (ix) any defect in or invalidity of the Lease caused by
Tenant; and (d) Guarantor hereby expressly waives (i) notice of acceptance of
this Guaranty and of any change in the financial condition of Tenant, (ii)
presentment, demand and protest, (iii) until such time as all defaulted Tenant
Obligations are fulfilled, all right of subrogation with respect to any
obligation of Tenant that is fulfilled by Guarantor hereunder, (iv) the right to
trial by jury in any action or proceeding arising out of or with respect to this
Guaranty or the interpretation, breach or enforcement hereof, (v) the right to
interpose any setoff or counterclaim in any action or proceeding arising out of
or with respect to this Guaranty, and (vi) any right or claim of right to cause
a marshalling of the assets of Tenant or to cause Landlord to apply to any
Tenant Obligation any security deposit or to proceed against Tenant or any
collateral or security held by Landlord at any time or in any particular order.
The liability of Guarantor hereunder shall be reinstated and revived, and the
rights of Landlord under this Guaranty shall continue, with respect to any
amount at any time paid on account of any Tenant Obligation which shall
thereafter be required to be restored or returned by Landlord upon the
bankruptcy, insolvency or reorganization of Tenant or any other person, or
otherwise, as though such amount had not been paid. Guarantor subordinates any
liability or indebtedness of Tenant held by Guarantor to the Tenant Obligations.
4. Jurisdiction. All disputes with respect to this Guaranty, and all
actions to enforce this Guaranty, may be adjudicated in the state courts of
California or the federal court sitting in California; and Guarantor hereby
irrevocably submits to the jurisdiction of such courts in any action relating to
this Guaranty. To the fullest extent permitted by law, this submission to
California jurisdiction shall be self-operative and no further instrument or
action, other than service of process, shall be required to confer jurisdiction
over Guarantor in any such court. Nothing in this paragraph shall be construed
to limit the right of Landlord to serve process in any manner permitted by law,
or to institute any action against Guarantor in the courts of other appropriate
jurisdictions.
5. Notices All notices and other communications provided for in this
Guaranty shall be in writing and be delivered to the appropriate party at its
address as follows:
If to Guarantor:
Big Dog Holdings
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▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
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If to Landlord:
The Prudential Realty Group
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▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Regional Counsel
With a copy by the same method to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of California, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Addresses for notice may be changed from time to time by written notice to all
other parties. All communications shall be effective when actually received;
provided, however, that nonreceipt of any communication as the result of a
change of address of which the sending party was not notified or as the result
of a refusal to accept delivery shall be deemed receipt of such communication.
6. Attorneys' Fees. In the event that any litigation is commenced with
respect to this Guaranty, the party prevailing in such litigation shall be
entitled to recover, in addition to such other relief as may be granted, its
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and court costs, whether or not taxable, as awarded by a court
of competent jurisdiction.
7. Representations and Warranties. Guarantor represents and warrants to
Landlord that: (a) the execution, delivery and performance of this Guaranty by
Guarantor will not violate any provision of any law, regulation, order or decree
of any governmental authority or of any court binding on Guarantor, or conflict
with, result in a breach of or constitute a default under any provision of any
instrument to which Guarantor is a party or which it or any of its property is
bound, and will not result in the imposition or creation of any lien, charge or
encumbrance on, or security interest in, any of its property pursuant to the
provisions of any of the foregoing; and (b) this Guaranty has been duly executed
and delivered by Guarantor and constitutes a legal, valid and binding obligation
of Guarantor, enforceable against it in accordance with its terms, subject as to
enforcement of rights and remedies to any applicable bankruptcy, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally and doctrines of equity affecting the availability of specific
enforcement or other equitable remedies.
8. Estoppel Certificate. Landlord, by its acceptance of this Guaranty,
and Guarantor agree that (a) each will, from time to time, within 10 days
following request by the other (the "Requesting Party"), execute and deliver to
the Requesting Party a statement certifying that this Guaranty is unmodified and
in full force and effect (or if modified, that it is in full force and effect as
modified and stating such modifications), and (b) such certificates may be
relied upon by anyone holding or proposing to acquire from or through Landlord
or Guarantor any interest in the premises of which the Premises are a part or by
any mortgagee or prospective mortgagee of such premises or any interest therein
or by any prospective assignee or subtenant of Tenant.
9. Miscellaneous. This Guaranty shall (a) remain in full force and
effect until the payment, performance or observance in full of the Tenant
Obligations and all other amounts payable under this Guaranty, (b) be binding
upon Guarantor, its heirs, legal representatives, successors and assigns, and
(c) inure to the benefit of and be enforceable by Landlord and its successors
and assigns or by any person to whom Landlord's interest in the Lease or any
part thereof, including the rents, may be assigned, whether by way of mortgage
or otherwise. Wherever in this Guaranty reference is made to Landlord or Tenant,
the same shall be deemed to refer also to the then heir, legal representative,
successor or assign of Landlord or Tenant, respectively. No provision of this
Guaranty that is held to be inoperative, unenforceable or otherwise invalid
shall affect the remaining provisions, and to this end all provisions hereof
shall be severable. In the event that more than one person or entity executes
this Guaranty as Guarantor, the obligations of each shall be joint and several.
Time is of the essence of this Guaranty. This Guaranty shall be governed by the
laws of the State of California.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed as of the date first written above.
"Guarantor":
BIG DOG HOLDINGS, INC.,
a Delaware corporation
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
Executive Vice President