[LOGO -- SIOR]
California Chapters of the
Society of Industrial and Office Realtors,[R] Inc.
INDUSTRIAL REAL ESTATE LEASE
(MULTI-TENANT FACILITY)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease
between the Landlord and Tenant named below. Other Articles,
Sections and Paragraphs of the Lease referred to in this Article
One explain and define the Basic Terms and are to be read in
conjunction with the Basic Terms.
Section 1.01. Date of Lease: March , 1997
Section 1.02. Landlord (include legal entity): MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., both California
corporations Address of Landlord: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 1.03. Tenant (include legal entity): Southern
Electronics Distributors, Inc., a Georgia corporation
Address of Tenant: ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attn: ▇▇▇ ▇▇▇▇▇▇
Section 1.04. Property: The Property is part of Landlord's
multi-tenant real property development known as that
approximately 100,000 sq. ft. industrial building situated on
4.72 acres of land and more commonly known as 18835 and ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ and described or depicted
in Exhibit "A" (the "Project"). The Project includes the land, the
buildings and all other improvements located on the land, and the
common areas described in Paragraph 4.05(a). The Property is
(include street address, approximate square footage and
description) that approximately 50,000 sq. ft. portion of the
Project as shown outlined in yellow on Exhibit "A" attached
hereto and made a part hereof and more commonly known as ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, City of Industry, CA
Section 1.05. Lease Term: 5 years -- months beginning on
April 1, 1997 or such other date as is specified in this Lease,
and ending on March 31, 2002
Section 1.06. Permitted Uses: (See Article Five)
Warehousing, distribution and incidental sale of electronics and
related office use.
Section 1.07. Tenant's Guarantor: (If none, so state) None
Section 1.08. Brokers: (See Article Fourteen) (If none, so
state)
Landlord's Broker: Majestic Realty Co.
Tenant's Broker: ▇▇▇ & Associates
Section 1.09. Commission Payable to Landlord's Broker: (See
Article Fourteen) $ per separate agreement
Section 1.10. Initial Security Deposit: (See Section 3.03)
$18,000.00
Section 1.11. Vehicle Parking Spaces Allocated to Tenant:
(See Section 4.05) Fifty six (56) parking spaces as shown in
green on Exhibit "A" for Tenant's exclusive use.
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: EIGHTEEN THOUSAND AND NO/100 Dollars
($18,000.00) per month for the first thirty-six (36) months, as
provided in Section 3.01, and shall be increased on the first day
of the thirty-seventh (37) month(s) after the Commencement Date,
to NINETEEN THOUSAND SIX HUNDRED SIXTY-NINE AND NO/100
($19,669.00)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above
the "Base Real Property Taxes" (See Section 4.02); (ii) Utilities
(See Section 4.03); (iii) Increased Insurance Premiums above
"Base Premiums" (See Section 4.04); (iv) Tenant's Initial Pro
Rata Share of Common Area Expenses 50% (See Section 4.05); (v)
Impounds for Tenant's Share of Insurance Premiums and Property
Taxes (See Section 4.08); (vi) Maintenance, Repairs and
Alterations (See Article Six).
Section 1.13. Costs and Charges Payable by Landlord: (a)
Base Real Property Taxes (See Section 4.02); (b) Base Insurance
Premiums (See Section 4.04(c)); (c) Maintenance and Repair (See
Article Six).
Section 1.14. ▇▇▇▇▇▇▇▇'s Share of Profit on Assignment or
Sublease: (See Section 9.05) fifty percent (50%) of the Profit
(the "Landlord's Share").
Section 1.15. Riders: The following Riders are attached to
and made a part of this Lease: (If none, so state)
Rider pages 1 through 8, Option to Extend Term Lease Rider and
Exhibits "A", "B", "C" and "D".
ARTICLE TWO: LEASE TERM
Section 2.01. Lease of Property For Lease Term. Landlord
leases the Property to Tenant and Tenant leases the Property from
Landlord for the Lease Term. The Lease Term is for the period
stated in Section 1.05 above and shall begin and end on the dates
specified in Section 1.05 above, unless the beginning or end of
the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or
delayed under any provision of this Lease.
Section 2.02. Delay in Commencement. If delivery of
possession of the Property of Tenant is delayed, pursuant to
Section 13.12 below, Landlord and Tenant shall, upon such
delivery, execute an amendment to this Lease setting forth the
actual Commencement Date and expiration date of the Lease.
Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.
Section 2.03. Early Occupancy. If Tenant occupies the
Property prior to the Commencement Date, ▇▇▇▇▇▇'s occupancy of
the Property shall be subject to all of the provisions of this
Lease. Early occupancy of the Property shall not advance the
expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the early occupancy
period. (See Insert 2.03)
Section 2.04. Holding Over. Tenant shall vacate the Property
upon the expiration or earlier termination of this Lease. Tenant
shall reimburse Landlord for and indemnify Landlord against all
damages which Landlord incurs from ▇▇▇▇▇▇'s delay in vacating the
Property. If Tenant does not vacate the Property upon the
expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, ▇▇▇▇▇▇'s occupancy of the
Property shall be a "month-to-month" tenancy, subject to all of
the terms of this Lease applicable to a month-to-month tenancy,
except that the Base Rent then in effect shall be increased by
twenty-five percent (25%).
See Section 2.05. See Rider.
ARTICLE THREE: BASE RENT
Section 3.01. Time and Manner of Payment. Upon execution of
this Lease, Tenant shall pay Landlord the Base Rent in the amount
stated in Paragraph 1.12(a) above for the first month of the
Lease Term. On the first day of the second month of the Lease
Term and each month thereafter, Tenant shall pay Landlord the
Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such
other place as Landlord may designate in writing.
Section 3.02. Cost of Living Increases.
Intentionally deleted.
Section 3.03. Security Deposit; Increases.
(a) Upon the execution of this Lease, Tenant shall deposit
with Landlord a cash Security Deposit in the amount set forth in
Section 1.10 above. Landlord may apply all or part of the
Security Deposit to any unpaid rent or other charges due from
Tenant or to cure any other defaults of Tenant. If Landlord uses
any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after
Landlord's written request. Tenant's failure to do so shall be a
material default under this Lease. No interest shall be paid on
the Security Deposit. Landlord shall not be required to keep the
Security Deposit separate from its other accounts and no trust
relationship is created with respect to the Security Deposit.
(b) Each time the Base Rent is increased, Tenant shall
deposit additional funds with Landlord sufficient to increase the
Security Deposit to an amount which bears the same relationship
to the adjusted Base Rent as the initial Security Deposit bore to
the initial Base Rent.
Section 3.04. Termination; Advance Payments. Upon
termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation) or any other
termination not resulting from ▇▇▇▇▇▇'s default, and after Tenant
has vacated the Property in the manner required by this Lease,
Landlord shall refund or credit to Tenant (or ▇▇▇▇▇▇'s successor)
the unused portion of the Security Deposit, any advance rent or
other advance payments made by Tenant to Landlord, and any
amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by Tenant
other than Base Rent are called "Additional Rent." Unless this
Lease provides otherwise, Tenant shall pay all Additional Rent
then due with the next monthly installment of Base Rent. The term
"rent" shall mean Base Rent and Additional Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Landlord shall pay the "Base Real
Property Taxes" on the Property during the Lease Term. The annual
Base Real Property Taxes for the Property are TWENTY-FIVE
THOUSAND SIX HUNDRED SEVENTY-FOUR AND 99/100 DOLLARS
($25,674.99). Tenant shall pay Landlord the amount, if any, by
which the real property taxes during the Lease Term exceed the
Base Real Property Taxes. Subject to paragraph 4.02(c), Tenant
shall make such payments within fifteen (15) days after receipt
of Landlord's statement showing the amount and computation of
such increase. Landlord shall reimburse Tenant for any real
property taxes paid by Tenant covering any period of time prior
to or after the Lease Term.
(b) Definition of "Real Property Tax." "Real property tax"
means: (i) any fee, license fee, license tax, business license fee,
commercial rental tax, levy, charge, assessment, penalty or tax
imposed by any taxing authority against the Property; (ii) any tax on
the Landlord's right to receive, or the receipt of, rent or income
from the Property or against Landlord's business of leasing the
Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to
the Property by any governmental agency; (iv) any tax imposed
upon this transaction or based upon a re-assessment of the
Property due to a change of ownership, as defined by applicable
law, or other transfer of all or part of Landlord's interest in
the Property; and (v) any charge or fee replacing any tax
previously included within the definition of real property tax.
"Real property tax" does not, however, include Landlord's federal
or state income, franchise, inheritance or estate taxes. (See
Insert 4.02(b))
(c) Joint Assessment. If the Property is not separately
assessed, Landlord shall reasonably determine Tenant's share of
the real property tax payable by Tenant under Paragraph 4.02(a)
from the assessor's worksheets or other reasonably available
information. Tenant shall pay such share to Landlord within
fifteen (15) days after receipt of Landlord's written statement.
(See Insert 4.02(c))
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal
property belonging to ▇▇▇▇▇▇. Tenant shall try to have
personal property taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed with
the Property, Tenant shall pay Landlord the taxes for the
personal property within fifteen (15) days after ▇▇▇▇▇▇
receives a written statement from Landlord for such personal
property taxes.
Section 4.03. Utilities. Tenant shall pay, directly to the
appropriate supplier, the cost of all natural gas, heat, light,
power, sewer service, telephone, water, refuse disposal and other
utilities and services supplied to the Property. However, if any
services or utilities are jointly metered with other property,
Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services
and Tenant shall pay such share to Landlord within fifteen (15)
days after receipt of Landlord's written statement.
Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant
shall maintain a policy of commercial general liability insurance
(sometimes known as broad form comprehensive general liability
insurance) insuring Tenant against liability for bodily injury,
property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the
Property. Tenant shall name Landlord as an additional insured
under such policy. The initial amount of such insurance shall be
One Million Dollars ($1,000,000) per occurrence and shall be
subject to periodic increase based upon inflation, increased
liability awards, recommendation of Landlord's professional
insurance advisers and other relevant factors. The liability
insurance obtained by Tenant under this Paragraph 4.04(a) shall
(i) be primary and non-contributing; (ii) contain cross-liability
endorsements; and (iii) insure Landlord against Tenant's
performance under Section 5.05, if the matters giving rise to the
indemnity under Section 5.05 result from the negligence of
Tenant. The amount and coverage of such insurance shall not limit
Tenant's liability nor relieve Tenant of any other obligation
under this Lease. Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by
Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The
policy obtained by Landlord shall not be contributory and shall
not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease
Term, Landlord shall maintain policies of insurance covering lose
of or damage to the Property in the full amount of its
replacement value. Such policy shall contain an Inflation Guard
Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all
risk), sprinkler leakage and any other perils which Landlord
deems reasonably necessary. Landlord shall have the right to
obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not
obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Property. During the
Lease Term, Landlord shall also maintain a rental income
insurance policy, with loss payable to Landlord, in an amount
equal to one year's Base Rent, plus estimated real property taxes
and insurance premiums. Tenant shall be liable for the payment of
any commercially reasonable deductible (which shall not apply to
rental abatement coverage) amount under Landlord's Section
4.04(b) insurance (subject to the provisions of Article Seven) or
Tenant's insurance policies maintained pursuant to this Section
4.04, in an amount not to exceed Ten Thousand Dollars ($10,000).
Tenant shall not do or permit anything to be done which
invalidates any such insurance policies.
(c) Payment of Premiums.
(i) Landlord shall pay the "Base Premiums" for the
insurance policies maintained by Landlord under, Paragraph
4.04(b). The annual Base Premiums for the Property are EIGHT
HUNDRED FIFTY-NINE AND 45/100 DOLLARS ($859.45).
(ii) (See Insert 4.04(c)(ii). Subject to Section 4.05,
Tenant shall pay Landlord the increases over the Base
Premiums within fifteen (15) days after receipt by Tenant of
a copy of the premium statement or other evidence of the
amount due. If the insurance policies maintained by Landlord
cover improvements or real property other than the Property,
Landlord shall also deliver to Tenant a statement of the
amount of the premiums applicable to the Property showing,
in reasonable detail, how such amount was computed. If the
Lease Term expires before the expiration of the insurance
period, Tenant's liability shall be pro rated on an annual
basis.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is required to maintain
under this Lease shall include a provision which requires
the insurance carrier to give Landlord not less than thirty
(30) days' written notice prior to any cancellation or
modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate
or renewal to Landlord required under this Lease within the
prescribed time period or if any such policy is canceled or
modified during the Lease Term without Landlord's consent,
Landlord may obtain such insurance, in which case Tenant
shall reimburse Landlord for the cost of such insurance
within fifteen (15) days after receipt of a statement that
indicates the cost of such insurance.
(iii) Tenant shall maintain all insurance required
under this Lease with companies holding a "General Policy
Rating' of A-12 or better, as set forth in the most current
issue of "Best Key Rating Guide". Landlord and Tenant
acknowledge the insurance markets are rapidly changing and
that insurance in the form and amounts described in this
Section 4.04 may not be available in the future. Tenant
acknowledges that the insurance described in this Section
4.04 is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the
insurance required under the Lease, Tenant shall
nevertheless maintain insurance coverage which is customary
and commercially reasonable in the insurance industry for
Tenant's type of business, as that coverage may change from
time to time. ▇▇▇▇▇▇▇▇ makes no representation as to the
adequacy of such insurance to protect ▇▇▇▇▇▇▇▇'s or ▇▇▇▇▇▇'s
interests. Therefore, Tenant shall obtain any such
additional property or liability insurance which Tenant
deems necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance
policies maintained, Landlord and Tenant each hereby waive
any and all rights of recovery against the other, or against
the officers, employees, agents or representatives of the
other, for loss of or damage to its property or the
property of others under its control, if such loss or damage
is covered by any insurance policy in force (whether or not
described in this Lease) at the time of such loss or damage.
Upon obtaining the required policies of insurance, Landlord
and Tenant shall give notice to the insurance carriers of
this mutual waiver of subrogation.
Section 4.05. Common Areas; Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas"
shall mean all areas within the Project which are available for
the common use of tenants of the Project and which are not leased
or held for the exclusive use of Tenant or other tenants,
including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping
and planted areas. Landlord, from time to time, may change the
size, location, nature and use of any of the Common Areas,
convert Common Areas into leasable areas, construct additional
parking facilities (including parking structures) in the Common
Areas, and increase or decrease Common Area land and/or
facilities. Tenant acknowledges that such activities may result
in inconvenience to Tenant. Such activities and changes are
permitted if they do not materially affect Tenant's use of the
Property or reduce Tenant's 56 allocated vehicle parking spaces
except on a temporary basis for the purpose of performing
Landlord's maintenance obligations set forth below or as a result
of a damage or destruction; provided, however that Landlord,
shall use its best commercially reasonable efforts to provide
alternate parking to Tenant during the term of such temporary
restriction on the parking spaces. Further, notwithstanding the
fact that Tenant's 56 allocated vehicle parking areas are
exclusively for the use of Tenant, such parking spaces shall be
deemed to be "Common Areas" for purposes of the definition of
such term in this Section 4.05 for maintenance, and repair
obligations of Landlord.
(b) Use of Common Areas. Tenant shall have the nonexclusive
right (in common with other tenants and all others to whom
Landlord has granted or may grant such rights) to use the Common
Areas for the purposes intended, subject to such reasonable rules
and regulations as Landlord may establish from time to time.
Tenant shall abide by such rules and regulations and shall use
its best effort to cause others who use the Common Areas with
▇▇▇▇▇▇'s express or implied permission to abide by Landlord's
rules and regulations. At any time, Landlord may temporarily close
any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project. Tenant
shall not interfere with the rights of Landlord, other tenants or
any other person entitled to use the Common Areas.
(c) Specific Provision re: Vehicle Parking. Tenant shall be
entitled to use the number of vehicle parking spaces in the
Project allocated to Tenant in Section 1.11 of the Lease without
paying any additional rent. Tenant's parking shall be reserved &
shall be limited to vehicles no larger than standard size
automobiles or pickup utility vehicles. Tenant shall not cause
large trucks or other large vehicles to be parked within the
Project or on the adjacent public streets. Temporary parking of
large delivery vehicles in the Project may be permitted by the
rules and regulations established by Landlord. Vehicles shall be
parked only in striped parking spaces and not in driveways,
loading areas or other locations not specifically designated for
parking. Handicapped spaces shall only be used by those legally
permitted to use them. If Tenant parks more vehicles in the
parking area than the number set forth in Section 1.11 of this
Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord's other remedies under the Lease, Tenant
shall pay a daily charge determined by Landlord for each such
additional vehicle.
(d) Maintenance of Common Areas. Landlord shall maintain the
Common Areas in good order, condition and repair and shall
operate the Project, in Landlord's sole discretion, as a first-class
industrial/commercial real property development. Tenant
shall pay Tenant's pro rata share (as determined below) of all
costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Areas costs include, but are not limited
to, costs and expenses for the following: gardening and
landscaping subject to the specific limitations of Article Sixteen
of the Rider; utilities, water and sewage charges; maintenance of
signs (other than tenants' signs); premiums (to the extent not
covered by Section 4.04(c) above) for liability, property damage,
fire and other types of casualty insurance on the Common Areas
and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common areas and all
Common Area improvements (to the extent not covered by Section
4.02(a) above); repairing, resurfacing, repaving, maintaining,
painting, lighting, cleaning, refuse removal, security and
similar items; and the right (which Landlord does not have any
present expectation to exercise but which Landlord reserves) to a
reasonable allowance to Landlord for Landlord's supervision of
the Common Areas (not to exceed three percent (3%) of the gross
rents of the Project for the calendar year). Landlord may cause
any or all of such services to be provided by third parties and
the cost of such services shall be included in Common Area costs.
Common Area costs shall not include depreciation of real property
which forms part of the Common Areas.
(e) Tenant's Share and Payment. Tenant shall pay Tenant's
annual pro rata share of all Common Area costs (prorated for any
fractional month) upon written notice from Landlord that such
costs are due and payable, and in any event prior to delinquency.
Tenant's pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of
the Lease, by the aggregate square foot area of the Project which
is leased or held for lease by tenants, as of the date on which
the computation is made. Tenant's initial pro rata share is set
out in Paragraph 1.13(b). Any changes in the Common Area costs
and/or the aggregate area of the Project leased or held for lease
during the Lease Term shall be effective on the first day of the
month after such change occurs. Landlord may, at Landlords''
election, estimate in advance and charge to Tenant as Common Area
costs, all real property taxes for which Tenant is liable under
Section 4.02 of the Lease, all insurance premiums for which
Tenant is liable under Section 4.04 of the Lease, all maintenance
and repair costs for which Tenant is liable under Section 6.04 of
the Lease, and all other Common Area costs payable by Tenant
hereunder. At Landlord's election, such statements of estimated
Common Area costs shall be delivered monthly, quarterly or at any
other periodic intervals to be designated by Landlord. Landlord
may adjust such estimates at any time based upon ▇▇▇▇▇▇▇▇'s
experience and reasonable anticipation of costs. Such adjustments
shall be effective as of the next rent payment date after notice
to Tenant. Within sixty (60) days after the end of each calendar
year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted
accounting principles setting forth, in reasonable detail, the
Common Area costs paid or incurred by Landlord during the
preceding calendar year and ▇▇▇▇▇▇'s pro rata share. Upon receipt
of such statement, there shall be an adjustment between Landlord
and Tenant, with payment to or credit given by Landlord (as the
case may be) so that Landlord shall receive the entire amount of
Tenant's share of such costs and expenses for such period.
(See Insert 4.05(f))
Section 4.06. Late Charges. ▇▇▇▇▇▇'s failure to pay rent
promptly may cause Landlord to incur unanticipated costs. The
exact amount of such costs are impractical or extremely difficult
to ascertain. Such costs may include, but are not limited to,
processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive
any rent payment within ten (10) days after it becomes due,
Tenant shall pay Landlord a late charge equal to ten percent
(10%) of the overdue amount. The parties agree that such late
charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount
owed by Tenant to Landlord which is not paid when due shall bear
interest at the rate of fifteen percent (15%) per annum from the
due date of such amount. However, interest shall not be payable
on late charges to be paid by Tenant under this Lease. The
payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate
specified in this Lease is higher than the rate permitted by law,
the interest rate is hereby decreased to the maximum legal interest
rate permitted by law.
Section 4.08. Impounds for Insurance Premiums and Real
Property Taxes. If Tenant is more than ten (10) days late in the
payment of rent more than twice in any consecutive twelve (12) -month
period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of
the annual real property taxes and insurance
premiums payable by Tenant under this Lease, together with each
payment of Base Rent. Landlord shall hold such payments in a
non-interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and
insurance premiums when due. Tenant shall pay any deficiency of
funds in the impound account to Landlord upon written request. If
Tenant defaults under this Lease, Landlord may apply any funds in
the impound account to any obligation then due under this Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. Permitted Uses. Tenant may use the Property
only for the Permitted Uses set forth in Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or
permit the Property to be used in any way which constitutes a
violation of any law, ordinance, or governmental regulation or
order, which interferes with the rights of tenants of the
Project, or which constitutes a nuisance or waste. Subject to the
provisions of Section 6.01, Tenant shall obtain and pay for all
permits, including a Certificate of Occupancy, required
specifically for Tenant's use and occupancy of the Property and
shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and
requirements regulating the use by Tenant of the Property,
including the Occupational Safety and Health Act.
(See Rider Section 5.03)
Section 5.04. Signs and Auctions. Tenant shall not place any
signs on the Property without Landlord's prior written consent.
Tenant shall not conduct or permit any auctions or sheriff's
sales at the Property.
Section 5.05. Indemnity. Except for claims arising out of
the negligent act or omissions of Landlord, Tenant shall
indemnify Landlord against and hold Landlord harmless from any
and all costs, claims or liability arising from: (a) Tenant's use
of the Property; (b) the conduct of Tenant's business or anything
else done or knowingly permitted by Tenant to be done in or about
the Property, including any contamination of the Property or any
other property resulting from the presence or use of Hazardous
Material caused or knowingly permitted by Tenant; (c) any breach
or default in the performance of Tenant's obligations under this
Lease; (d) any misrepresentation or breach of warranty by Tenant
under this Lease; or (e) other acts or omissions of Tenant. Tenant
shall defend Landlord against any such cost, claim or liability at
Tenant's expense with counsel reasonably acceptable to Landlord
or, at Landlord's election, Tenant shall reimburse Landlord for
any reasonable legal fees or costs incurred by Landlord in
connection with any such claim. As a material part of the
consideration to Landlord, ▇▇▇▇▇▇ assumes all risk of damage to
property or injury to persons in or about the Property arising
from any cause, and Tenant hereby waives all claims in respect
thereof against Landlord, except for any claim arising out of
Landlord's gross negligence or willful misconduct and except as
otherwise provided in this Lease. As used in this Section, the
term "Tenant" shall include Tenant's employees, agents,
contractors and invitees, if applicable. (See Insert 5.05)
Section 5.06. Landlord's Access. Landlord or its agents may
enter the Property at all reasonable times to show the Property
to potential buyers, investors or tenants or other parties; to do
any other act or to inspect and conduct tests in order to monitor
Tenant's compliance with all applicable environmental laws and
all laws governing the presence and use of Hazardous Material; or
for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place customary "For Sale" or "For Lease"
signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent and
complies with all other terms of this Lease, Tenant may occupy
and enjoy the Property for the full Lease Term, subject to the
provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIR AND
ALTERATIONS
Section 6.01. Existing Conditions. Except as provided
herein, ▇▇▇▇▇▇ accepts the Property in its presently "as-is"
condition as of the execution of the Lease, subject to all
recorded matters, laws, ordinances, and governmental regulations
and orders. Except as provided herein, ▇▇▇▇▇▇ acknowledges that
neither ▇▇▇▇▇▇▇▇ nor any agent of Landlord has made any
representation as to the condition of the Property or the
suitability of the Property for ▇▇▇▇▇▇'s intended use. Tenant
represents and warrants that Tenant has made its own inspection
of and inquiry regarding the condition of the Property and that
except as provided specifically herein, Tenant is not relying on
any representations of Landlord or any Broker with respect
thereto. (See Insert 6.01)
Section 6.02. Exemption of Landlord from Liability. Landlord
shall not be liable for any damage or injury to the person,
business (or any loss of income therefrom), goods, wares,
merchandise or other property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a)
fire, steam, electricity, water, gas or rain; (b) the breakage,
leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting
fixtures or any other cause; (c) conditions arising in or about
the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant
of the Project. Landlord shall not be liable for any such damage
or injury even though the cause of or the means of repairing such
damage or injury are not accessible to Tenant. The provisions of
this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's gross negligence or willful misconduct.
Section 6.03. Landlord's Obligations. Subject to the
provisions of Article Seven (Damage or Destruction) and Article
Eight (Condemnation), and except for damage caused by any act or
omission of Tenant, or Tenant's employees, agents, contractors or
invitees, Landlord shall keep the foundation, roof and structural
portions of exterior walls of the improvements on the Property in
good order, condition and repair. However, Landlord shall not be
obligated to maintain or repair windows, doors, plate glass or
the surfaces of walls. Landlord shall not be obligated to make
any repairs under this Section 6.03 until a reasonable time after
receipt of a written notice from Tenant of the need for such
repairs. Tenant waives the benefit of any present or future law which
might give Tenant the right to repair the Property at Landlord's
expense or to terminate the Lease because of the condition of the
Property.
Section 6.04. Tenant's Obligations.
(a) Except as otherwise provided in this Lease, including,
without limitation, in Section 5.03, 6.01 and 6.03, Article Seven
(Damage or Destruction), Article Eight (Condemnation), and
Article 16 (Landscaping), Tenant shall keep all portions of the
Property (including nonstructural, interior, systems and
equipment) in god order, condition and repair (including interior
repainting and refinishing, as needed). If any portion of the
Property or any system or equipment in the Property which Tenant
is obligated to repair cannot be fully repaired or restored,
Tenant shall promptly replace such portion of the Property or
system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if
the benefit or useful life of such replacement extends beyond the
Lease Term (as such term may be extended by exercise of any
options), the useful life of such replacement shall be prorated
over the remaining portion of the Lease Term (as extended). Tenant
shall be liable only for that portion of the cost which is
applicable to the Lease Term (as extended), and Tenant shall
maintain a preventive maintenance contract providing for the
regular inspection and maintenance of the heating and air
conditioning system by a licensed heating and air conditioning
contractor. Landlord shall have the right, upon written notice to
Tenant, to undertake the responsibility for preventive
maintenance of the heating and air conditioning system at
Tenant's expense. In addition, Tenant shall, at Tenant's expense,
repair any damage to the roof, foundation or structural portions
of walls caused by Tenant's acts or omissions. It is the
intention of Landlord and Tenant that, at all times during the
Lease Term, Tenant shall maintain the Property in an attractive,
first-class and fully operative condition.
(b) Tenant shall fulfill all of Tenant's obligation under
this Section 6.04 at Tenant's sole expense. If Tenant fails to
maintain, repair or replace the Property as required by this
Section 6.04, Landlord may, upon thirty (30) days' prior notice
to Tenant (except that no notice shall be required in the case of
emergency), enter the Property and perform such maintenance or
repair (including replacement, as needed) on behalf of Tenant. In
such case, Tenant shall reimburse Landlord for all costs incurred
in performing such maintenance or repair immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or
improvements to the Property without Landlord's prior written
consent, except for non-structural alterations which do not exceed
Ten Thousand Dollars ($10,000) in cost cumulatively during any
one calendar year of the Lease Term and which are not visible
from the outside of any building of which the Property is part.
Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord.
Tenant shall promptly remove any alterations, additions, or
improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and
improvements shall be done in a good and workmanlike manner, in
conformity with all applicable laws and regulations, and by a
contractor approved by Landlord. Upon completion of any such
work, Tenant shall provide Landlord with "as built" plans, copies
of all construction contracts, and proof of payment for all labor
and materials. (See Insert 6.05(a))
(b) Tenant shall pay when due all claims for labor and
material furnished to the Property. Tenant shall give Landlord at
least twenty (20) days' prior written notice of the commencement
of any work on the Property, regardless of whether ▇▇▇▇▇▇▇▇'s
consent to such work is required. Landlord may elect to record
and post notices of non-responsibility on the Property.
Section 6.06. Condition upon Termination. Upon the
termination of the Lease, ▇▇▇▇▇▇ shall surrender the Property to
Landlord, broom clean and in the same condition as received
except for ordinary wear and tear which Tenant was not otherwise
obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage or do any act
which Landlord is required to repair or do under this lease or
which is not otherwise an obligation of Tenant under this Lease.
Without limiting the foregoing, Tenant shall not be obligated to
repair any damage which Landlord is required to repair under
Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or
improvements (whether or not made with ▇▇▇▇▇▇▇▇'s consent) prior
to the expiration of the Lease and to restore the Property to its
prior condition, all at Tenant's expense. All alterations,
additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier
termination of the Lease, except that Tenant may remove any of
Tenant's machinery or equipment which can be removed without
material damage to the Property. Tenant shall repair, at Tenant's
expense, any damage to the Property caused by the removal of any
such machinery or equipment. In no event, however, shall Tenant
remove any of the following materials or equipment (which shall
be deemed Landlord's property) without Landlord's prior written
consent: any power wiring or power panels; lighting or lighting
fixtures; wall coverings; drapes, blinds or other window
coverings; carpets or other floor coverings; heaters, air
conditioners or any other heating or air conditioning equipment;
fencing or security gates; or other similar building operating
equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon
the occurrence of any material damage to the Property. If the
property is only partially damaged (i.e., less than fifty percent
(50%) of the Property is untenantable as a result of such damage or
less than fifty percent (50%) of Tenant's operations are materially
impaired) and (See Insert 7.01(a)) are sufficient to pay for the
necessary repairs (clause (i) and (ii) above being herein together
referred to as "Applicable Insurance") this Lease shall remain in
effect and Landlord shall repair the damage as soon as reasonably
possible. Landlord may elect (but is not required) to repair any
damage to Tenant's fixtures, equipment, or improvements.
(b) If the insurance proceeds received by Landlord under
clause 7.01(a)(ii) above are not sufficient to pay the entire
cost of repair, or if the cause of the damage is not covered by
the Applicable Insurance policies Landlord may elect either to
(i) repair the damage as soon as reasonably possible, in which
case this Lease shall remain in full force and effect, or (ii)
terminate this Lease as of the date the damage occurred. Landlord
shall notify Tenant within thirty (30) days after receipt of
notice of the occurrence of the damage whether Landlord elects to
repair the damage or terminate the Lease. If Landlord elects to
repair the damage, Tenant shall pay Landlord the "deductible
amount" (if any) up to $10,000 under Landlord's insurance
policies, if the damage was due solely to an act or omission of
Tenant, or Tenant's employees, agents, contractors or invitees.
If Landlord elects to terminate this Lease, Tenant may elect to
continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building
in which the Property is located. Tenant shall pay the cost of
such repairs, except that upon satisfactory completion of such
repairs, Landlord shall deliver to Tenant any insurance proceeds
received by Landlord for the damage repaired by Tenant. Tenant
shall give Landlord written notice of such election within ten
(10) days after receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six
(6) months of the Lease Term and such damage will require more
than thirty (30) days to repair, either Landlord or Tenant may
elect to terminate this Lease as of the date the damage occurred,
regardless of the sufficiency of any insurance proceeds. The party
electing to terminate this Lease shall give written notification
to the other party of such election within thirty (30) days after
▇▇▇▇▇▇'s notice to Landlord of the occurrence of the damage.
Section 7.02. Substantial or Total Destruction. If the
Property is substantially or totally destroyed by any cause
whatsoever (i.e., the damage to the Property is greater than
partial damage as described in Section 7.01), and regardless of
whether Landlord receives any insurance proceeds, this Lease
shall terminate the later of (i) the date the destruction
occurred and (ii) the date Tenant ceases to do business at the
Property. Notwithstanding the preceding sentence, if the Property
can be rebuilt within six (6) months after the date of
destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in
full force and effect. Landlord shall notify Tenant of such
election within thirty (30) days after ▇▇▇▇▇▇'s notice of the
occurrence of total or substantial destruction. If Landlord so
elects, Landlord shall rebuild, the Property at Landlord's sole
expense, except that if the destruction was caused solely by an
act or omission of Tenant, Tenant shall pay Landlord the
"deductible amount" (if any) under ▇▇▇▇▇▇▇▇'s insurance policies
up to $10,000. (See Insert 7.02)
Section 7.03. Temporary Reduction of Rent. If the Property
is destroyed or damaged and Landlord or Tenant repairs or
restores the Property pursuant to the provisions of this Article
Seven, any rent payable during the period of such damage, repair
and/or restoration shall be reduced according to the degree, if
any, to which ▇▇▇▇▇▇'s use of the Property is impaired. Except
for such possible reduction in Base Rent, insurance premiums and
real property taxes, Tenant shall not be entitled to any
compensation, reduction or reimbursement from Landlord as a result
of any damage, destruction, repair, or restoration of or to the
Property.
Section 7.04. Waiver. Tenant waives the protection of any
statute, code or judicial decision which grants a tenant the
right to terminate a lease in the event of the substantial or
total destruction of the leased property. Tenant agrees that the
provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any
substantial or total destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the
power of eminent domain or sold under the threat of that power
(all of which are called "Condemnation"), this Lease shall
terminate as to the part taken or sold on the date the condemning
authority takes title or possession, whichever occurs first. If
more than twenty percent (20%) of the floor area of the building
in which the Property is located, or which is located on the
Property, is taken, either Landlord or Tenant may terminate this
Lease as of the date the condemning authority takes title or
possession, (see Insert 8) by delivering written notice to the
other within ten (10) days after receipt of written notice of
such taking (or in the absence of such notice, within ten (10)
days after the condemning authority takes title or possession).
If neither Landlord nor Tenant terminates this Lease, this Lease
shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the
Property. Any Condemnation award or payment shall be distributed
in the following order: (a) first, to any ground lessor, mortgagee
or beneficiary under a deed of trust encumbering the Property,
the amount of its interest in the Property; (b) second, to
Tenant, only the amount of any award specifically designated for
loss of or damage to Tenant's trade fixtures or removable
personal property loss of good will and moving and relocation
expenses; and (c) third, to Landlord, the remainder of such
award, whether as compensation for reduction in the value of the
leasehold, the taking of the fee, or otherwise. If this Lease is
not terminated, Landlord shall repair any damage to the Property
caused by the Condemnation, except that Landlord shall not be
obligated to repair any damage for which Tenant has been
reimbursed by the condemning authority. If the severance damages
received by Landlord are not sufficient to pay for such repair,
Landlord shall have the right to either terminate this Lease or
make such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. ▇▇▇▇▇▇▇▇'s Consent Required. No portion of the
Property or of Tenant's interest in this Lease may be acquired by
any other person or entity, whether by sale, assignment,
mortgage, sublease, transfer, operation of law, or act of Tenant,
without ▇▇▇▇▇▇▇▇'s prior written consent, except as provided in
Section 9.02 below. Landlord has the right to grant or withhold
its consent as provided in Section 9.05 below. Any attempted
transfer without consent shall be void. If Tenant is a
partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's
consent. If Tenant is a corporation, any change in the ownership
of a controlling interest of the voting stock of the corporation
shall require Landlord's consent.
Section 9.02. Tenant Affiliate. Tenant may assign this Lease
or sublease the Property, without ▇▇▇▇▇▇▇▇'▇'s consent, to any
corporation which controls, is controlled by or is under common
control with Tenant, or to any corporation resulting from the
merger of or consolidation with Tenant or to any person or entity
which acquires all or substantially all of the assets of Tenant
of the business conducted at the Property ("Tenant's Affiliate").
In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.
Section 9.03 No Release of Tenant. No transfer permitted by
this Article Nine, whether with or without Landlord's consent,
shall release Tenant or change Tenant's primary liability to pay
the rent and to perform all other obligations of Tenant under
this Lease. ▇▇▇▇▇▇▇▇'s acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If
▇▇▇▇▇▇'s transferee defaults under this Lease, Landlord may
proceed directly against Tenant without pursuing remedies against
the transferee. ▇▇▇▇▇▇▇▇ may consent to subsequent assignments or
modifications of this Lease by ▇▇▇▇▇▇'s transferee, with notice
to ▇▇▇▇▇▇. Such action shall not relieve ▇▇▇▇▇▇'s liability under
this Lease.
Section 9.04. Offer to Terminate.
Intentionally Deleted
Section 9.05. Landlord's Consent.
(a) ▇▇▇▇▇▇'s request for consent to any transfer described
in Section 9.01 shall set forth in writing the details of the
proposed transfer, including the name, business and financial
condition of the prospective transferee, financial details of the
proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and
any other information Landlord deems relevant. Landlord shall
have the right to withhold consent, if reasonable, or to grant
consent, based on the following factors: (i) the business of the
proposed assignee or subtenant and the proposed use of the
Property; (ii) the net worth and financial reputation of the
proposed assignee or subtenant; (iii) Tenant's compliance with
all of its obligations under the Lease; and (iv) such other
factors as Landlord may reasonably deem relevant. If Landlord
objects to a proposed assignment solely because of the net worth
and/or financial reputation of the proposed assignee, Tenant may
nonetheless sublease (but not assign), all or a portion of the
Property to the proposed transferee, but only on the other terms
of the proposed transfer.
(b) If Tenant assigns or sublease, the following shall
apply:
(i) Tenant shall pay to Landlord as Additional Rent
under the Lease the Landlord's Share (stated in Section
1.14) of the Profit (defined below) on such transaction as
and when received by ▇▇▇▇▇▇, unless ▇▇▇▇▇▇▇▇ gives written
notice to Tenant and the assignee or subtenant that
Landlord's Share shall be paid by the assignee or subtenant
to Landlord directly. The "Profit" means, with respect to
any assignment of sublease to a party who is "not a Tenant"
Affiliate, (A) all amounts paid to Tenant for such
assignment of sublease, including "key" money, monthly rent
in excess of the monthly rent payable under the Lease, and
all fees and other consideration paid for the assignment or
sublease, including fees under any collateral agreements,
less (B) costs and expenses directly incurred by Tenant in
connection with the execution and performance of such
assignment or sublease for real estate broker's commissions
and costs of renovation or construction of tenant
improvements required under such assignment or sublease.
Tenant is entitled to recover such costs and expenses before
Tenant is obligated to pay the Landlord's Share to Landlord.
The Profit in the case of a sublease of less than all the
Property is the rent allocable to the subleased space as a
percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or
sublease of the Property within thirty (30) days after the
transaction documentation is signed, and Landlord may
inspect Tenant's books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly
furnish to Landlord copies of all the transaction
documentation, all of which shall be certified by Tenant to
be complete, true and correct. ▇▇▇▇▇▇▇▇'s receipt of
Landlord's Share shall not be a consent to any further
assignment or subletting. The breach of Tenant's obligation
under this Paragraph 9.05(b) shall be a material default of
the Lease.
Section 9.06. No Merger. No merger shall result from
▇▇▇▇▇▇'s sublease of the Property under this Article Nine,
▇▇▇▇▇▇'s surrender of this Lease or the termination of this Lease
in any other manner. In any such event, Landlord may terminate
any or all subtenancies or succeed to the interest of ▇▇▇▇▇▇ as
sublandlord under any or all subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. ▇▇▇▇▇▇'s performance of
each of Tenant's obligations under this Lease is a condition as well
as a covenant. ▇▇▇▇▇▇'s right to continue in possession of the
Property is conditioned upon such performance. Time is of the essence
in the performance of all covenants and conditions.
Section 10.02. Defaults. Tenant shall be in material default
under this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of
the Property results in the cancellation of any insurance described in
Section 4.04;
(b) If Tenant fails to pay rent or any other charge when due; and
such default shall have continued for a period of ten (10) days after
▇▇▇▇▇▇'s receipt of written notice thereof.
(c) If Tenant fails to perform any of ▇▇▇▇▇▇'s non-monetary
obligations under this Lease for a period of thirty (30) days after
written notice from Landlord; provided that if more than thirty (30)
days are required to complete such performance, Tenant shall not be in
default if Tenant commences such performance within the thirty
(30)-day period and thereafter diligently pursues its completion.
However, Landlord shall not be required to give such notice if
▇▇▇▇▇▇'s failure to perform constitutes a non-curable breach of this
Lease. The notice required by this Paragraph is intended to satisfy
any and all notice requirements imposed by law on Landlord and is not
in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) if a petition for
adjudication of bankruptcy or for reorganization or rearrangement is
filed by or against Tenant and is not dismissed within thirty (30)
days; (iii) if a trustee or receiver is appointed to take possession
of substantially all of Tenant's assets located at the Property or of
Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of
Tenant's assets located at the Property or of Tenant's interest in
this Lease is subjected to attachment, execution or other judicial
seizure which is not discharged within thirty (30) days. If a court of
competent jurisdiction determines that any of the acts described in
this subparagraph (d) is not a default under this Lease, and a trustee
is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest
hereunder, then Landlord shall receive, as Additional Rent, the
excess, if any, of the rent (or any other consideration) paid in
connection with such assignment or sublease over the rent payable by
Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise
terminates, or purports to revoke or otherwise terminate, any guaranty
of all or any portion of Tenant's obligation under the Lease. Unless
otherwise expressly provided, no guaranty of the Lease is revocable.
Section 10.03. Remedies. On the occurrence of any material
default (as defined in Section 10.02 above) by ▇▇▇▇▇▇, Landlord may,
at any time thereafter, with or without notice or demand and without
limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant
shall immediately surrender possession of the Property to Landlord. In
such event, Landlord shall be entitled to recover from Tenant all
damages incurred by Landlord by reason of Tenant's default, including
(i) the worth at the time of the award of the unpaid Base Rent,
Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of
the amount by which the unpaid Base Rent, Additional Rent and other
charges which ▇▇▇▇▇▇▇▇ would have earned after termination until the
time of the award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided; (iii) the worth at the
time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which ▇▇▇▇▇▇ would have paid for the
balance of the Lease term after the time of award exceeds the amount
of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iv) any other amount necessary to compensate Landlord for
all the detriment proximately caused by ▇▇▇▇▇▇'s failure to perform
its obligations under the Lease or which in the ordinary course of
things would be likely to result thereform, including, but not limited
to, any costs or expenses Landlord incurs in maintaining or preserving
the Property after such default, the cost of recovering possession of
the Property, expenses of reletting, including necessary renovation or
alteration of the Property, Landlord's reasonable attorneys' fees
incurred in connection therewith, and any real estate commission paid
or payable. As used in subparts (i) and (ii) above, the "worth at the
time of the award" is computed by allowing interest on unpaid amounts
at the rate of fifteen percent (15%) per annum, or such lesser amount
as may then be the maximum lawful rate. As used in subpart (iii)
above, the "worth at the time of the award" is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%). If Tenant
has abandoned the Property, Landlord shall have the option of (i)
retaking possession of the Property and recovering from Tenant the
amount specified in this Paragraph 10.03(a), or (ii) proceeding under
Paragraph 10.03(b); Landlord shall have the remedy described in
California Civil Code Section 1951.4 (lessor may continue lease in
effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has the right to sublet or assign, subject only
to reasonable limitations);
(b) Maintain Tenant's right to possession, in which case this
Lease shall continue in effect whether or not Tenant has abandoned the
Property. In such event, Landlord shall be entitled to enforce all of
Landlord's rights and remedies under this Lease, including the right
to recover the rent as it becomes due;
(c) Pursue any other remedy now or hereafter available to
Landlord under the laws or indicial decisions of the state in which
the Property is located.
Section 10.04. Repayment of "Free" Rent.
Intentionally deleted.
Section 10.05. Automatic Termination. Notwithstanding any other
term or provision hereof to the contrary, provided that Landlord is
entitled to terminate this Lease in accordance with the terms thereof,
the Lease shall terminate on the occurrence of any act which affirms
the Landlord's intention to terminate the Lease as provided in Section
10.03 hereof, including the filing of an unlawful detainer action
against Tenant. On such termination, ▇▇▇▇▇▇▇▇'s damages for default
shall include all costs and fees, including reasonable attorneys' fees
that Landlord incurs in connection with the filing, commencement,
pursuing and/or defending of any action in any bankruptcy court or
other court with respect to the Lease; the obtaining of relief from
any stay in bankruptcy restraining any action to evict Tenant; or the
pursuing of any action with respect to Landlord's right to possession
of the Property. All such damages suffered (apart from Base Rent and
other rent payable hereunder) shall constitute pecuniary damages which
must be reimbursed to Landlord prior to assumption of the Lease by
Tenant or any successor to ▇▇▇▇▇▇ in any bankruptcy or other
proceeding.
Section 10.06. Cumulative Remedies. ▇▇▇▇▇▇▇▇'s exercise of any
right or remedy shall not prevent it from exercising any other right
or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. Subordination. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof
and any renewals, modifications, consolidations, replacement or
extensions thereof, whenever made or recorded. Tenant shall cooperate
with Landlord and any lender which is acquiring a security interest in
the Property or the Lease. Tenant shall execute such further documents
and assurances as such lender may reasonably require in the form
attached hereto as Exhibit "B" or such other form as is then
reasonably required by Landlord's lender, or as can be negotiated by
Tenant with ▇▇▇▇▇▇▇▇'s lender, provided that Tenant's obligations
under this Lease shall not be increased in any material way (the
performance of ministerial acts shall not be deemed material), and
Tenant shall not be deprived of its rights under this Lease. ▇▇▇▇▇▇'s
right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any
ground lessor, beneficiary or mortgagee elects to have this Lease
prior to the lien of its ground lease, deed of trust or mortgage and
gives written notice thereof to Tenant, this Lease shall be deemed
prior to such ground lease, deed of trust or mortgage whether this
Lease is dated prior to subsequent to the date of said ground lease,
deed of trust or mortgage or the date of recording thereof. (See
Insert 11.01)
Section 11.02. Attornment. If ▇▇▇▇▇▇▇▇'s interest in the Property
is acquired by any ground lessor, beneficiary under a deed of trust,
mortgagee, or purchaser at a foreclosure sale, Tenant shall attorn to
the transferee of or successor to ▇▇▇▇▇▇▇▇'s interest in the Property
and recognize such transferee or successor as Landlord under this
Lease. Tenant waives the protection of any statute or rule of law
which gives or purports to give Tenant any right to terminate this
Lease or surrender possession of the Property upon the transfer of
Landlord's interest.
Section 11.03. Signing of Documents. Tenant shall sign and
deliver any reasonable instrument or documents necessary or
appropriate to evidence any such attornment or subordination or
agreement to do so.
Section 11.04. Estoppel Certificates.
(a) Upon ▇▇▇▇▇▇▇▇'s written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement in the form
attached hereto as Exhibit "C" or such other form as is then
reasonably required by ▇▇▇▇▇▇▇▇'s lender or purchaser, or as can be
negotiated by Tenant with Landlord's lender or purchaser certifying:
(i) that none of the terms or provisions of this Lease have been
changed (or if they have been changed, stating how they have been
changed); (ii) that this Lease has not been canceled or terminated;
(iii) the last date of payment of the Base Rent and other charges and
the time period covered by such payment; (iv) that to Tenant's
knowledge Landlord is not in default under this Lease (or, if Landlord
is claimed to be in default, stating why); and (v) such other
representations or information with respect to Tenant or the Lease as
Landlord may reasonably request or which any prospective purchaser or
encumbrancer of the Property may require. Tenant shall deliver such
statement to Landlord within ten (10) days after ▇▇▇▇▇▇▇▇'s request.
Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true and
correct.
(b) If Tenant does not deliver such statement to Landlord within
such ten (10) -day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this Lease have not been
changed except as otherwise represented by Landlord; (ii) that this
Lease has not been canceled or terminated except as otherwise
represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that
Landlord is not in default under the Lease. In such event, Tenant
shall be estopped from denying the truth of such facts.
Section 11.05. Tenant's Financial Condition. Within ten (10) days
after written request from Landlord, Tenant shall deliver to Landlord
such financial statements as Landlord reasonably requires to verify
the net worth of Tenant or any assignee, subtenant, or guarantor of
Tenant. In addition, but not more than once in any twelve (12) month
period, Tenant shall deliver to any lender designated by Landlord any
financial statements required by such lender to facilitate the
financing or refinancing of the Property. Tenant represents and
warrants to Landlord that each such financial statement is a true and
accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the
purposes set forth in this Lease. With respect to the financial
statements of the original Tenant under this Lease, ▇▇▇▇▇▇'s annual
report, together with any financial information available to
shareholders of Tenant, shall be sufficient to satisfy the
requirements of this Section 11.05.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. Legal Proceedings. If Tenant or Landlord shall be
in breach or default under this Lease, such party (the "Defaulting
Party") shall reimburse the other party (the "Nondefaulting Party")
upon demand for any costs or expenses that the Nondefaulting Party
incurs in connection with any breach or default of the Defaulting
Party under this Lease, whether or not suit is commenced, or judgment
entered. Such costs shall include reasonable legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall
award to the party in whose favor a judgment is entered, a reasonable
sum as attorneys' fees and costs. The losing party in such action
shall pay such attorneys' fees and costs. Tenant shall also indemnify
Landlord against and hold Landlord harmless from all costs, expenses,
demands and liability Landlord may incur if Landlord becomes or is
made a party to any claim or action (a) instituted by Tenant against
any third party, or by any third party against Tenant, or by or
against any person holding any interest under or using the Property by
license of or agreement with Tenant; (b) for foreclosure of any lien
for labor or material furnished to or for Tenant or such other person;
(c) otherwise arising out of or resulting from any act or transaction
of Tenant or such other person; or (d) necessary to protect Landlord's
interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended.
Tenant shall defend Landlord against any such claim or action at
Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any
reasonable legal fees or costs Landlord incurs in any such claim or
action.
Section 12.02. Landlord's Consent. Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection with ▇▇▇▇▇▇'s
request for ▇▇▇▇▇▇▇▇'s consent under Article Nine (Assignment and
Subletting) or in connection with any other act which ▇▇▇▇▇▇ proposes
to do and which requires ▇▇▇▇▇▇▇▇'s consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimiantion. Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of, any person or group of
persons on the basis of race, color, sex, creed, national origin or
ancestry in the leasing, subleasing, transferring, occupancy, tenure
or use of the Property or any portion thereof.
Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the
current owner or owners of the fee title to the Property or Project or
the leasehold estate under a ground lease of the Property or Project
at the time in question. Each Landlord is obligated to perform the
obligations of Landlord under this Lease only during the time such
Landlord owns such interest or title. Any Landlord who transfers its
title or interest is relieved of all liability with respect to the
obligations of Landlord under this Lease to be performed on or after
the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have
not yet been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord
to perform any of its obligations under this Lease to Landlord and to
any ground lessor, mortgagee or beneficiary under any deed of trust
encumbering the Property whose name and address have been furnished to
Tenant in writing. Landlord shall not be in default under this Lease
unless Landlord (or such ground lessor, mortgage or beneficiary) fails
to cure such non-performance within thirty (30) days after receipt of
Tenant's notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default
if such cure is commenced within such thirty (30) -day period and
thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary,
the liability of Landlord for the performance of its duties and
obligations under this Lease is limited to Landlord's interest in the
Property and the Project, the rents and insurance and condemnation
proceeds and neither the Landlord nor its partners, shareholders,
officers or other principals shall have any personal liability under
this Lease. (See Insert 13.02(d))
Section 13.03. Severability. A determination by a court of
competent jurisdiction that any provision of this Lease or any part
thereof is illegal or unenforceable shall not cancel or invalidate the
remainder of such provision or this Lease, which shall remain in full
force and effect.
Section 13.04. Interpretation. The captions of the Articles or
Sections of this Lease are to assist the parties in reading this Lease
and are not a part of the terms or provisions of this Lease. Whenever
required by the context of this Lease, the singular shall include the
plural and the plural shall include the singular. The masculine,
feminine and neuter genders shall each include the other. In any
provision relating to the conduct, acts or omissions of Tenant, the
term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with ▇▇▇▇▇▇'s
expressed or implied permission.
Section 13.05. Incorporation of Prior Agreements; Modifications.
This Lease is the only agreement between the parties pertaining to the
lease of the Property and no other agreements are effective. All
amendments to this Lease shall be in writing and signed by all
parties. Any other attempted amendment shall be void.
Section 13.06. Notices. All notices required or permitted under
this Lease shall be in writing and shall be personally delivered or
sent by certified mail, return receipt requested, postage prepaid.
Notices to Tenant shall be delivered to the address specified in
Section 1.03 above, except that upon ▇▇▇▇▇▇'s taking possession of the
Property, the Property shall be Tenant's address for notice purposes.
Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery.
Either party may change its notice address upon written notice to the
other party.
Section 13.07. Waivers. All waivers must be in writing and signed
by the waiving party. Landlord's failure to enforce any provision of
this Lease or its acceptance of rent shall not be a waiver and shall
not prevent Landlord from enforcing that provision or any other
provision of this Lease in the future. No statement on a payment check
from Tenant or in a letter accompanying a payment check shall be
binding on Landlord. Landlord may, with or without notice to Tenant,
negotiate such check without being bound to the conditions of such
statement.
Section 13.08. No Recordation. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord
or Tenant may require that a "Short Form" memorandum of this Lease
executed by both parties be recorded. The party requiring such
recording shall pay all transfer taxes and recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease binds
any party who legally acquires any rights or interest in this Lease
from Landlord or Tenant. However, Landlord shall have no obligation to
▇▇▇▇▇▇'s successor unless the rights or interests of ▇▇▇▇▇▇'s
successor are acquired in accordance with the terms of this Lease. The
laws of the state in which the Property is located shall govern this
Lease.
Section 13.10. Corporate Authority; Partnership Authority. If
Tenant is a corporation, each person signing this Lease on behalf of
Tenant represents and warrants that he has full authority to do so and
that this Lease binds the corporation. Within thirty (30) days after
this Lease is signed, Tenant shall deliver to Landlord a certified
copy of a resolution of Tenant's Board of Directors authorizing the
execution of this Lease or other evidence of such authority reasonably
acceptable to Landlord. If Tenant is a partnership, each person or
entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full
authority to sign for the partnership and that this Lease binds the
partnership and all general partners of the partnership. Tenant shall
give written notice to Landlord of any general partner's withdrawal or
addition. Within thirty (30) days after this Lease is signed, ▇▇▇▇▇▇
shall deliver to Landlord a copy of ▇▇▇▇▇▇'s recorded statement of
partnership or certificate of limited partnership.
Section 13.11. Joint and Several Liability. All parties signing
this Lease as Tenant shall be jointly and severally liable for all
obligations of Tenant.
Section 13.12. Force Majeure. If Landlord cannot perform any of
its obligations due to events beyond Landlord's control, the time
provided for performing such obligations shall be extended by a period
of time equal to the duration of such events except that the
Commencement Date shall not be extended beyond May 1, 1997. Events
beyond ▇▇▇▇▇▇▇▇'s control include, but are not limited to, acts of
God, war, civil commotion, labor disputes, strikes, fire, flood or
other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.13. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument. ▇▇▇▇▇▇▇▇'s
delivery of this Lease to Tenant shall not be deemed to be an offer to
lease and shall not be binding upon either party until executed and
delivered by both parties.
Section 13.14. Survival. All respresentations and warranties of
Landlord and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by and
delivered to both Landlord and Tenant, Landlord shall pay a real
estate commission to Landlord's Broker named in Section 1.08 above, if
any, as provided in the written agreement between Landlord and
▇▇▇▇▇▇▇▇'s Broker, or the sum stated in Section 1.09 above for
services rendered to Landlord by Landlord's Broker in this
transaction. Landlord shall pay Landlord's Broker a commission if
Tenant exercises any option to extend the Lease Term or to buy the
Property, or any similar option or right which Landlord may grant to
Tenant, or if Landlord's Broker is the procuring cause of any other
lease or sale entered into between Landlord and Tenant covering the
Property. Such commission shall be the amount set forth in Landlord's
Broker's commission schedule in effect as of the execution of this
Lease. If a Tenant's Broker is named in Section 1.08 above, ▇▇▇▇▇▇▇▇'s
Broker shall pay an appropriate portion of its commission to Tenant's
Broker if so provided in any agreement between ▇▇▇▇▇▇▇▇'s Broker and
▇▇▇▇▇▇'s Broker. Nothing contained in this Lease shall impose any
obligation on Landlord to pay a commission or fee to any party other
than ▇▇▇▇▇▇▇▇'s Broker.
Section 14.02. Protection of Brokers. If Landlord sells the
Property, or assigns Landlord's interest in this Lease, the buyer or
assignee shall, by accepting such conveyance of the Property or
assignment of the Lease, be conclusively deemed to have agreed to make
all payments to Landlord's Broker thereafter required of Landlord
under this Article Fourteen. ▇▇▇▇▇▇▇▇'s Broker shall have the right to
bring a legal action to enforce or declare rights under this
provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such
attorneys' fees shall be fixed by the court in such action. This
Paragraph is included in this Lease for the benefit of Landlord's
Broker.
Section 14.03. Broker's Disclosure of Agency. ▇▇▇▇▇▇▇▇'s Broker
hereby discloses to Landlord and Tenant and Landlord and Tenant hereby
consent to Landlord's Broker acting in this transaction as the agent
of (check one):
[X] Landlord exclusively; or
[ ] both Landlord and Tenant.
Section 14.04. No Other Brokers. Tenant represents and warrants
to Landlord that the brokers named in Section 1.08 above are the only
agents, brokers, finders or other parties with whom ▇▇▇▇▇▇ has dealt
who are or may be entitled to any commission or fee with respect to
this Lease or the Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS
ATTACHED HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL
PROVISIONS ARE INSERTED, PLEASE DRAW A LINE THROUGH THE SPACE BELOW.
Landlord and ▇▇▇▇▇▇ have signed this Lease at the place and on
the dates specified adjacent to their signatures below and have
initialled all Riders which are attached to or incorporated by
reference in this Lease.
"LANDLORD"
Signed on March 26, 1997 MAJESTIC REALTY CO., a Califronia
corporation
at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. N By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
6th Floor Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
City of Industry, CA 91746 By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President-Finance
PATRICIAN ASSOCIATES, INC., a California
corporation
By: /s/▇.▇. ▇▇▇▇▇▇
Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
"TENANT"
Signed on March 11, 1997 SOUTHERN ELECTRONICS DISTRIBUTORS, INC.,
at Tucker, GA a Georgia corporation
By: ▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and COO
RIDER TO INDUSTRIAL REAL ESTATE LEASE
This Rider ("Rider") is made and entered into MAJESTIC REALTY
CO. and PATRICIAN ASSOCIATES, INC., both California corporations
("Landlord") and SOUTHERN ELECTRONICS DISTRIBUTORS, INC., a
Georgia corporation ("Tenant"), and dated as of the date set
forth in Section 1.01 of the Industrial Real Estate Lease between
Landlord and Tenant ("Lease") to which this Rider is attached.
The promises, covenants, agreements and declarations made and set
forth herein are intended to and shall have the same force and
effect as if set forth at length in the body of the Lease. To the
extent that the provisions of this Rider are inconsistent with
the terms and conditions of the Lease, the terms and conditions
of this Rider shall control.
SECTION 2.03 EARLY OCCUPANCY.
At any time after the execution of this Lease, Tenant, its
agents and contractors shall have the right to enter the Property
in order to install the tenant improvements (including the signs)
described in Article 20 and to prepare the Property for
occupancy. Notwithstanding any contrary provision of this Lease,
any such early entry by Tenant shall not accelerate the
Commencement Date or require the payment by Tenant of Base Rent
or Additional Rent.
SECTION 2.05 TERMINATION RIGHT.
Tenant shall have the right to terminate this Lease effective
at any time on or after the commencement of the fourth (4th)
"Lease Year", as that term is defined below, (the "Termination
Date"), provided that: (a) Tenant has not exercised its right to
lease the "First Offer Space," as that term is defined in Section
17.1, pursuant to the terms of Article 17, below; (b) landlord
receives written notice (the "Termination Notice") from Tenant on
or before the date which is six (6) months prior to the
Termination Date stating that Tenant intends to terminate this
Lease pursuant to the terms and conditions of this Section 2.05;
(c) concurrent with ▇▇▇▇▇▇▇▇'s receipt of the Termination Notice,
Landlord receives from Tenant a sum which shall equal the then
unamortized brokers fee which shall be amortized over the Term of
this Lease on a straight line basis at an interest rate of 2% per
annum as consideration for and as a condition precedent to such
early termination; and (d) Tenant is not in material default
under this Lease as of the date of Tenant's delivery of the
termination Notice or Termination Date. Provided that Tenant
terminates this Lease pursuant to the terms of this Section 2.05,
this Lease shall automatically terminate and be of no further
force or effect as of the Termination Date; and Landlord and
Tenant shall be relieved of their respective obligations under
this Lease, provided, however, notwithstanding anything to the
contrary contained in this Lease, any obligation of Tenant or
Landlord under this Lease which accrues prior to the Termination
Date and is not satisfied by Tenant or Landlord prior to the
Termination Date (e.g., ▇▇▇▇▇▇'s payment of Other Periodic
Payments) then landlord or Tenant, as the case may be, shall have
all the rights and remedies with respect to such obligations as
set forth in this Lease. By way of illustration of the foregoing
payment calculation, if Tenant elects to termination this Lease
effective as of the commencement of the fourth (4th) "Lease
Year," the termination fee shall be the sum of $18,316.80. By way
of further illustration, if Tenant elects to terminate this Lease
effective as of the commencement of the fifth (5th) Lease Year,
the termination fee shall be the sum of $9,331.20. Upon ▇▇▇▇▇▇'s
delivery of the Termination Notice, ▇▇▇▇▇▇'s rights to thereafter
extend this Lease Term pursuant to the terms of the Extended Term
Lease Rider shall terminate and be of no further force or effect.
The tenant shall vacate the Property pursuant to this Lease, and
surrender and deliver exclusive possession thereof to Landlord on
or before the Termination Date in accordance with the provisions
of this Lease. In the event Tenant retains possession of the
Property or any part thereof after the Termination Date, then the
provisions of Section 2.04 of this Lease shall apply. The rights
contained in this Section 2.05 shall be personal to the Tenant
(the "Original Tenant") and may only be exercised by the Original
Tenant (and not any assignee, sublessee or other transferee of
Tenant's interest in this Lease) if the Original Tenant occupies
the entire Property. For purposes of this Section 2.05, the term
"Lease Year" shall mean each consecutive twelve (12) month period
during the Lease Term.
4.02(b) DEFINITION OF "REAL PROPERTY TAX."
"Real property tax" shall not include any item described in (i)
through (v) above that is attributable primarily to the business
or activities of any tenant or occupant of any portion of the
Project other than the Property.
4.02(c) JOINT ASSESSMENT.
So long as Tenant leases the Property described in Section
1.04 of this Lease, ▇▇▇▇▇▇'s share of the real property tax
payable by Tenant under Section 4.02(a) shall not exceed fifty
percent (50%) of the amount by which the real property taxes for
the Project exceed $51,349.98.
4.04(c)(ii) PAYMENT OF PREMIUMS
Subject to adjustment pursuant to the last sentence of this
Section 4.04(c)(ii), Tenant shall pay Landlord the amount, if
any, by which the insurance premiums for all policies of the type
actually maintained by Landlord under Section 4.04(b) as of the
date of this Lease have increased over the Base Premiums if such
increases result from the nature of Tenant's occupancy, any act
or omission of Tenant, the increased value of the Property,
general rate increases, increases in the amount of insurance
carried or increases in the percentage of insured value after the
period during which the Base Premiums were calculated. Tenant
shall not pay any portion of any premiums for any type of
insurance not in effect as of the date of this Lease unless such
other type of insurance is then customarily required by
institutional first mortgage lenders financing similar buildings
in the general vicinity of the Project. Notwithstanding any
contrary provision of this Lease, Tenant shall not be obligated
to pay any portion of any premium or any deductible amount for or
under any flood or earthquake insurance covering the Project or
the Property.
4.05(d) MAINTENANCE OF COMMON AREAS.
The following language is hereby added to Section 4.05(d):
Notwithstanding the foregoing provisions of this Section 4.05(d),
which state that Common Area costs will be inclusive but not
limited to the foregoing specified items, the parties acknowledge
that, generally, Tenant's obligation to pay its prorate share of
costs attributable to Landlord's operation and maintenance costs
under this Section is for those items spelled out specifically in
this section. No additional items will be added unless and until
such items have become customary maintenance items for
institutionally owned multi-tenant buildings of similar age, size
and location and quality of construction in the vicinity of the
Project. Further, nothing in this Section 4.05(d) shall obligate
Tenant to pay for (i) all or any portion of a capital replacement
or acquisition, except as otherwise specifically provided in
Section 6.04(a) below; (ii) interest or principal payments on
mortgages or other debt costs, if any; (iii) legal fees, leasing
commissions or advertising expenses; (iv) costs reimbursable by
other tenant(s) or any other party(ies) including, without
limitation, insurance carriers; (v) earthquake or flood
insurance; (vi) fees for licenses or permits; (vii) cost incurred
by Landlord due to a violation by Landlord or by any other tenant
of the terms of any lease of space in the Project; (viii) any bad
debt loss, rent loss or reserves for bad debts or rent loss; (ix)
cost associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the cost of operation of the Project; (x)
costs associated with any condemnation proceeding; (xi) amounts
paid as ground rental by Landlord; or (xii) fines, penalties or
interest.
4.05(f) COMMON AREAS, MAINTENANCE AND COSTS.
(f) In the event of any dispute as to the amount of Tenant's
pro rata share of Common Area costs, Tenant shall have the right,
after reasonable notice and at reasonable times, to audit
Landlord's accounting records at Landlord's office in the county
in which the Project is situated. If such audit reveals that
▇▇▇▇▇▇▇▇ has overcharged Tenant, then within ten (10) days after
▇▇▇▇▇▇'s demand therefor, Landlord shall reimburse Tenant for the
amount of such overcharge. ▇▇▇▇▇▇ agrees to pay the cost of such
audit; provided, however, if the audit reveals that ▇▇▇▇▇▇▇▇'s
determination of ▇▇▇▇▇▇'s pro rata share of Common Area costs as
set forth in the statement sent to Tenant was in error in
landlord's favor by more than five percent (5%), Landlord shall
pay the cost of such audit. The payment by Tenant of any amounts
of Common Area costs shall not preclude Tenant from questioning
the correctness of any statement provided by Landlord. Landlord
shall keep at the address set forth in Section 1.02 full,
accurate, and separate books of account covering Landlord's
Common Area costs, and the statement to Tenant shall accurately
reflect the total Common Area costs and Tenant's proportionate
share. The books of account shall be retained by ▇▇▇▇▇▇▇▇ at the
address set forth in Section 1.02 for a period of at least
thirty-six (36) months after the expiration of each calendar
year.
SECTION 5.03 HAZARDOUS MATERIALS:
5.03.1 DEFINITIONS.
A. "Hazardous Material" means any substance, whether
solid, liquid or gaseous in nature:
(i) the presence of which requires investigation or
remediation under any federal, state or local regulation,
ordinance, order, action, policy or common law; or
(ii) which is or becomes defined as a "hazardous
waste", "hazardous substance," pollutant or contaminant under
any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. section 9601 et
seq.) and/or the Resource Conservation and Recovery Act (42
U.S.C. section 6901 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. section 1801 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. section 1251
et seq.), the Clean Air Act (42 U.S.C. section 7401 et
seq.), the Toxic Substances Control Act, as amended (15
U.S.C. section 2601 et seq.), as these laws have been
amended or supplemented; or
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic,
or otherwise hazardous or is or becomes regulated by any
governmental authority, agency, department, commission,
board, agency or instrumentality of the Unites States, the
State of California or any political subdivision thereof; or
(iv) the presence of which on the Property causes or
threatens to cause a nuisance upon the Property or to
adjacent properties or poses or threatens to pose a hazard
to the health or safety of persons on or about the Property;
or
(v) the presence of which on adjacent properties
could constitute a trespass by Tenant; or
(vi) without limitation which contains gasoline,
diesel fuel or other petroleum hydrocarbons; or
(vii) without limitation which contains
polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation; or
(viii) without limitation which contains radon gas.
B. "Environmental Requirements" means all present and
future:
(i) statues, regulations, rules, ordinances, codes,
licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items (including, but
limited to those pertaining to reporting, licensing,
permitting, investigation and remediation), of all
Governmental Agencies; and
(ii) all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the
protection of human health or the environment including,
without limitation, all requirements pertaining to
emissions, discharges, releases, or threatened releases of
Hazardous Materials or chemical substances into the air,
surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous
Materials or chemical substances.
C. "Environmental Damages" means all claims, judgments,
damages, losses penalties, fines, liabilities (including strict
liability), encumbrances, liens, costs, and expenses (including
the expense of investigation and defense of any claim, whether or
not such claim is ultimately defeated, or the amount of any good
faith settlement or judgment arising from any such claim) of
whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable (including without
limitation reasonable attorneys' fees and disbursements and
consultants' fees) any of which are incurred at any time as a
result of the existence of Hazardous Material upon, about, or
beneath the property or migrating or threatening to migrate to or
from the Property, or the existence of a violation of
Environmental Requirements pertaining to the Property and the
activities thereon, regardless of whether the existence of such
Hazardous Material or the violation of Environment Requirements
arose prior to the present ownership or operation of the
Property. Environmental Damages include, without limitation:
(i) damages for personal injury, or injury to
property or natural resources occurring upon or off of the Property,
including, without limitation, lost profits, consequential damages,
the cost of demolition and rebuilding of any improvements on real
property, interest, penalties and damages arising from claims brought
by or on behalf of employees of Tenant (with respect to which Tenant
waives any right to raise as a defense against Landlord any immunity
to which it may be entitled under any industrial or worker's
compensation law);
(ii) fees, costs or expenses incurred for the services
of attorneys, consultants, contractors, experts, laboratories and all
other costs incurred in connection with the investigation or
remediation of such Hazardous Materials or violation of such
Environmental Requirements, including, but not limited to, the
preparation of any feasibility studies or reports or the performance
of any cleanup, remediation, removal, response, abatement,
containment, closure, restoration or monitoring work required by any
Governmental Agency or reasonably necessary to make full
economic use of the Property or any other property in a
manner consistent with its current use or otherwise expended
in connection with such conditions, and including without
limitation any attorney's fees, costs and expenses incurred
in enforcing the provisions of this Lease or collecting any
sums due hereunder;
(iii) liability to any third person or Governmental
Agency to indemnify such person or Governmental Agency for
costs expended in connection with the items referenced in
subparagraph (ii) above; and
(iv) diminution in the fair market value of the
Property including without limitation any reduction in fair
market rental value or life expectancy of the Property or
the improvements located thereon or the restriction on the
use of or adverse impact on the marketing of the Property or
any portion thereof.
D. "Governmental Agency" means all governmental
agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states, counties, cities
and political subdivisions thereof.
E. The "Tenant Group" means Tenant, ▇▇▇▇▇▇'s
successors, assignees, guarantors, officers, directors, agents,
employees, invitees, permitees or other parties under the
supervision or control of Tenant or entering the Property during
the term of this Lease with the permission or knowledge of Tenant
other than Landlord or its agents or employees.
F. "Property" as used in this Section 5.03 shall mean
and refer to the 18835 Premises, as defined in Section 6.01 of
this Lease.
5.03.2 PROHIBITIONS
A. Other than normal quantities of general office
supplies and except as specified on Exhibit "D" attached hereto,
Tenant shall not cause, or knowingly permit or suffer any
Hazardous Material to be brought upon, treated, kept, stored,
disposed of, discharged, released, produced, manufactured,
generated, refined or used upon, about or beneath the Property by
The Tenant Group, or any other person without the prior written
consent of Landlord. From time to time during the term or this
Lease, Tenant may request Landlord's approval of Tenant's use of
other Hazardous Materials, which approval may be withheld in
Landlord's sole discretion Tenant shall, prior to the
Commencement Date, provide to Landlord for those Hazardous
Materials described on Exhibit "D" (a) a description of handling,
storage, use and disposal procedures, and (b) all "community
right to know" plans or disclosures and/or emergency response
plans which Tenant is required to supply to local governmental
agencies pursuant to any Environmental Requirements.
B. Tenant shall not cause, or knowingly permit or
suffer the existence or the commission by The Tenant Group, or by
any other person, of a violation of any Environmental
Requirements upon, about or beneath the Property with respect to
Hazardous materials introduced by the Tenant Group or introduced
by others with the acquiescence of the Tenant Group.
C. Tenant shall neither create or knowingly suffer to
exist, nor knowingly permit The Tenant Group to create or suffer
to exist any lien, security interest or other charge or
encumbrance of any kind with respect to the Property, including
without limitation, any lien imposed pursuant to section 107(f)
of the Superfund Amendments and Reauthorization Act of 1986 (42
U.S.C. section 9607(l)) or any similar state statute.
D. Tenant shall not install, operate or maintain any
above or below grade tank, sump, pit, pond, lagoon or other
storage or treatment vessel or device on the Property without
Landlord's prior written consent.
5.03.3.1 INDEMNITY BY TENANT.
▇. ▇▇▇▇▇▇, its successors, assigns and guarantors,
agree to indemnify, defend, reimburse and hold harmless:
(i) Landlord; and
(ii) any other person who acquires all or a portion of
the Property in any manner (including purchase at a
foreclosure sale) or who becomes entitled to exercise the
rights and remedies of Landlord under this Lease; and
(iii) the directors, officers, shareholders,
employees, partners, agents, contractors, subcontractors,
experts, licensees, affiliates, lessees, mortgagees,
trustees, heirs, devisees, successors, assigns and invitees
of such persons, from and against any and all Environmental
Damages which exist as a result of the introduction of
Hazardous Materials at the Property by the Tenant Group (or
by others with the acquiescence of The Tenant Group) or
which exist as a result of the breach of any warranty or
covenant or the inaccuracy of any representation of Tenant
contained in this Lease, or by ▇▇▇▇▇▇'s remediation of the
Property or failure to meet its remediation obligations
contained in this Lease.
B. The obligations contained in this Section 5.03.3.1
shall include, but not be limited to, the burden and expense of
defending all claims, suits and administrative proceedings, even
if such claims, suits or proceedings are groundless, false or
fraudulent, and conducting all negotiations of any description,
and paying and discharging, when and as the same become due, any
and all judgments, penalties or other sums due against such
indemnified persons. Landlord, at its sole expense, may employ
additional counsel of its choice to associate with counsel
representing Tenant.
C. Landlord shall have the right but not the obligation
to join and participate in, and control, if it so elects, any
legal proceedings or actions initiated in connection with
▇▇▇▇▇▇'s activities. Landlord may also negotiate, defend, approve
and appeal any action taken or issued by any applicable
governmental authority with regard to contamination of the
Property by a Hazardous Material.
D. The obligations of Tenant in this paragraph shall
survive the expiration or termination of this Lease.
E. The obligations of Tenant under this paragraph shall
not be affected by any investigation by or on behalf of Landlord,
or by any information which Landlord may have or obtain with
respect thereto.
5.03.3.2 INDEMNITY BY LANDLORD
▇. ▇▇▇▇▇▇▇▇, its successors and assigns, agree to
indemnify, defend, reimburse and hold harmless:
(i) Tenant; and
(ii) any other person who becomes entitled to exercise
the rights and remedies of Tenant under this Lease; and
(iii) the directors, officers, shareholders,
employees, partners, agents, contractors, subcontractors,
experts, licensees, affiliates, sublessees, mortgagees,
trustees, heirs, devisees, successors, assigns and invitees
of such persons, from and against any and all Environmental
Damages which exist as a result of Hazardous Materials on
the Property as of the date Tenant takes possession of the
Property or which exist as a result of activities or
negligence of Landlord, its agents or employees, or the
breach of any warranty or covenant or the inaccuracy of any
representation of Landlord contained in this Lease or by
▇▇▇▇▇▇▇▇'s remediation of the Property.
B. The obligations contained in this Section 5.03.3.2
shall include, but not be limited to, the burden and expense of
defending all claims suits and administrative proceedings, even
if such claims, suits or proceedings are groundless, false or
fraudulent, and conducting all negotiations of any description,
and paying and discharging, when and as the same become due, any
and all judgments, penalties or other sums due against such
indemnified persons. Tenant, at its sole expense, may employ
additional counsel of its choice to associate with counsel
representing Landlord.
▇. ▇▇▇▇▇▇ shall have the right but not the obligation
to join and participate in, if it so elects, any legal
proceedings or actions initiated in connection with ▇▇▇▇▇▇▇▇'s
activities.
D. The obligations of Landlord in this paragraph shall
survive the expiration or termination of this Lease.
E. The obligations of Landlord under this paragraph
shall not be affected by any investigation by or on behalf of
Tenant, or by any information which Tenant may have or obtain
with respect thereto.
5.03.4 OBLIGATION REMEDIATE
In addition to the obligation of Tenant to indemnify
Landlord pursuant to this Lease, Tenant shall, upon approval and
demand of Landlord, at its sole cost and expense and using
contractors approved by Landlord, promptly take all actions to
remediate the Property which are required by any Governmental
Agency, or which are reasonably necessary to mitigate
Environmental Damages or to allow full economic use of the
Property, which remediation is necessitated from the presence
upon, about or beneath the Property, at any time during or upon
termination of this Lease, of a Hazardous Material introduced by
the Tenant Group or a violation of Environmental Requirements by
the Tenant Group or the use of Hazardous Materials by others with
the acquiescence of the Tenant Group. Such actions shall include,
but not be limited to, the investigation of the environmental
condition of the Property, the preparation of any feasibility
studies, reports or remedial plans, and the performance of any
cleanup, remediation, containment, operation, maintenance,
monitoring or restoration work, whether on or off the Property,
which shall be performed in a manner approved by Landlord. Tenant
shall take all actions necessary to restore the Property to the
condition existing prior to the introduction of Hazardous
Material upon, about or beneath the Property, notwithstanding any
lesser standard of remediation allowable under applicable law or
governmental policies.
5.03.5 RIGHT TO INSPECT.
Landlord shall have the right in its sole and absolute
discretion, but not the duty, to enter and conduct an inspection
of the Property, including invasive tests, at any reasonable time
to determine whether Tenant is complying with the terms of the
Lease, including but not limited to the compliance of the
Property and the activities thereon with Environmental
Requirements and the existence of Environmental Damages as a
result of the condition of the Property or surrounding properties
and activities thereon. Landlord shall have the right, but not
the duty, to retain any independent professional consultant (the
"Consultant") to enter the Property to conduct such an inspection
or to review any report prepared by or for Tenant concerning such
compliance. The cost of the Consultant shall be paid by Landlord
unless such investigation discloses a violation of any
Environmental Requirement by The Tenant Group or the existence of
a Hazardous Material used in compliance with all Environmental
Requirements and previously approved by Landlord), in which case
Tenant shall pay the cost of the Consultant. Tenant hereby grants
to Landlord, and the agents, employees, consultants and
contractors of Landlord the right to enter the Property and to
perform such tests on the Property as are reasonably necessary to
conduct such reviews and investigations. Landlord shall use its
best efforts to minimize interference with the business of
Tenant.
5.03.6 NOTIFICATION.
If Tenant shall become aware of or receive notice or other
communication concerning any actual, alleged, suspected or
threatened violation of Environmental Requirements, or liability
of Tenant for Environmental Damages in connection with the
Property or past or present activities of any person thereon,
including but not limited to notice or other communication
concerning any actual or threatened investigation, inquiry,
lawsuits, claim, citation, directive, summons, proceeding,
complaint, notice, order, writ, or injunction, relating to same,
then Tenant shall deliver to Landlord within ten (10) days of the
receipt of such notice or communication by ▇▇▇▇▇▇, a written
description of said violation, liability, or actual or threatened
event or condition, together with copies of any documents
evidencing same. Receipt of such notice shall not be deemed to
create any obligation on the part of Landlord to defend or
otherwise respond to any such notification.
If requested by ▇▇▇▇▇▇▇▇, Tenant shall disclose to Landlord
the names and amounts of all Hazardous Materials other than
general office supplies referred to in Section 5.03.2 of this
rider, which were used, generated, treated, handled, stored or
disposed of on the Property, for or which Tenant intends to use,
generate, treat, handle, store or dispose of on the Property, for
the year prior to and after such Disclosure Date. The foregoing
in no way shall limit the necessity for Tenant obtaining
Landlord's consent pursuant to Section 5.03.2 of this Rider.
5.03.7 SURRENDER OF PREMISES.
In the ninety (90) days prior to the expiration or
termination of the Lease Term, and for up to ninety (90) days
after ▇▇▇▇▇▇ fully surrenders possession of the Property,
Landlord may have an environmental assessment of the Property
performed in accordance with Section 5.03.5 of this Rider. Tenant
shall perform, at its sole cost and expense, any clean-up or
remedial work recommended by the Consultant and required by any
Governmental Agency which is necessary to remove, mitigate or
remediate any Hazardous Materials and/or contamination of the
Property introduced by The Tenant Group.
5.03.8 ASSIGNMENT AND SUBLETTING
In the event the Lease provides that Tenant may assign the
Lease or sublet the Property subject to Landlord's consent and/or
certain other conditions, and if the proposed assignee's or
sublessee's activities in or about the Property involve the use,
handling, storage or disposal of any Hazardous Materials other
than those used by Tenant and in quantities and processes greater
than Tenant's uses in compliance with the Rider, (i) it shall be
reasonable for Landlord to withhold its consent to such
assignment or sublease in light of the risk of contamination
posed by such activities and/or (ii) Landlord may impose an
additional condition to such assignment or sublease which
requires Tenant to reasonably establish that such assignee's or
sublessee's activities pose no materially greater risk of
contamination to the Property than do Tenant's permitted
activities in view of the (a) quantities, toxicity and other
properties of the Hazardous Materials to be used by such
assignee's or sublessee's, (b) the precautions against a release
of Hazardous Materials such assignee or sublessee agrees to
implement, (c) such assignee's or sublessee's financial condition
as it relates to its ability to fund a major clean-up and (d)
such assignee's or sublessee's policy and historical record
respecting its willingness to respond to the clean up of a
release of Hazardous Materials.
5.03.9 SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.
Tenant's breach of any of its covenants or obligations under
this Section 5.03 shall constitute a material default under the
Lease. The obligations of Tenant under this Section 5.03 shall
survive the expiration or earlier termination of the Lease
without any limitation, and shall constitute obligations that are
independent and severable from Tenant's covenants and obligations
to pay rent under the Lease.
5.05 INDEMNITY.
Notwithstanding the provisions of Section 5.05 or Section
6.02 of the Lease, Tenant shall not be required to indemnify
Landlord against and hold Landlord harmless from, or exempt
Landlord from liability with respect to any such costs, claims or
liability referenced in said Sections 5.05 and 6.02 resulting
from or arising out of (a) the presence or use of Hazardous
Materials other than as agreed in the Hazardous Materials Rider
to this Lease, or (b) the negligent or willful acts or omissions
of Landlord or those of its agents, contractors, employees or
licensees in connection with Landlord's activities on the
Property, and Landlord hereby indemnifies and saves Tenant
harmless from any such costs, claims or liability arising from or
growing out of such negligent or willful acts or omissions set
forth in this Subsection (b) or arising from or growing out of
any breach or default in the performance of Landlord's
obligations under this Lease or any misrepresentation by Landlord
under this Lease. Further, Tenant's agreement to indemnify
Landlord against and hold Landlord harmless from, or exempt
Landlord from liability with respect to, the matters set forth in
Sections 5.05 and Sections 6.02, respectively, and the exclusion
from Tenant's indemnity and the agreement by Landlord to
indemnify and hold Tenant harmless pursuant to this Rider
paragraph are not intended to and shall not relieve any insurance
carrier of its obligations under policies required to be carried
by Landlord or Tenant, respectively, pursuant to the provisions
of this Lease to the extent that such policies cover, or if
carried as required, would have covered the results of such
negligence or willful acts or omissions. If either party breaches
this agreement by its failure to carry required insurance, such
failure shall automatically be deemed to be the covenant and
agreement by the failing party to self-insure such required
coverage, with full waiver of subrogation in favor of the other
party.
6.01 EXISTING CONDITIONS
The following language is hereby added to Section 6.01:
(a) Compliance with law
Landlord represents and warrants to Tenant that the property
together with the portion of the Common Area outlined in red on
Exhibit "A" (the "18835 Premises"), independent of any work of
improvement of Tenant, in its state existing on the date of full
execution and delivery hereof, does not violate any statutes,
laws, building codes, regulations, ordinances, covenants, or
restrictions of record in effect on such Commencement Date,
including, without limitation, the Americans With Disabilities
Act. In the event it is determined that this representation and
warranty has been violated, then it shall be the obligation of
the Landlord, after notice from Tenant, to promptly, at
Landlord's sole cost and expense, rectify any such violation.
(b) Condition of Property
Landlord shall deliver the 18835 Premises to Tenant clean
and free of debris promptly following the date of full execution
and delivery hereof, and Landlord further represents and warrants
to Tenant that the heating, ventilating, air conditioning,
plumbing, lighting, lifesafety, mechanical and electrical systems
at the Property and the roof, windows and sewer shall be in good
operating condition on the Commencement Date. In the event that
it is determined that this representation and warranty has been
violated, then it shall be the obligation of Landlord, after
notice from Tenant, delivered not later than one year from the
Commencement Date to promptly, at ▇▇▇▇▇▇▇▇'s sole cost and
expense, rectify any such violation.
(c) Hazardous Materials
Landlord represents and warrants to Tenant that, as of the
date of full execution and delivery of this Lease (i) the
Property, and the Project are in compliance with all
Environmental Requirements, and (ii) neither Landlord nor, to the
best of Landlord's knowledge, any third party, has stored, used,
generated, released, or disposed of any Hazardous Materials, in,
on, under or about the Property, and/or the Project.
6.05 ALTERATIONS, ADDITIONS, AND IMPROVEMENTS
6.05(a) The following language is hereby added to Section
6.05(a):
Landlord hereby consents to the installation by Tenant of
the tenant improvements (including the signs) described in
Article 20 of the Rider attached to this Lease and Landlord
approves the contractor(s) named in Article 20 of the Rider.
7.01(a) PARTIAL DAMAGE TO PROPERTY
either (i) the damage was caused by an event required to be
insured against by Landlord pursuant to Section 4.04(b) or (ii)
in the case of an event not required to be insured against by
Landlord pursuant to Section 4.04(b), the insurance proceeds
received by Landlord under any applicable policy(ies) maintained
by Landlord which are described in Section 4.04(b), and all or
any portion of the premium of which is paid for by Tenant.
SECTION 7.02 SUBSTANTIAL OR TOTAL DESTRUCTION.
Notwithstanding anything to the contrary contained in this
Lease, if there is any damage or destruction to the property the
repair of which actually takes a period in excess of six (6)
months from the date of the occurrence of such damage (the
"Outside Date"), then Tenant may, at Tenant's option, terminate
this Lease, if there is any damage or destruction to the Property
Tenant shall have the right, at any time and from time to time to
require Landlord to deliver to Tenant a written certificate from
Landlord's contractor (the "Contractor Certificate") certifying
to both Landlord and Tenant the reasonable opinion of ▇▇▇▇▇▇▇▇'s
contractor as to the amount of time required to repair or
complete the repair of the Property. If in the Contractor
Certificate the contractor certifies that the repair of the
property will take a period in excess of six (6) months from
receipt of Tenant's request, then within fifteen (15) days after
the delivery of the Contractor Certificate to Tenant, Tenant may,
at Tenant's option, terminate this Lease by delivering written
notice of such termination to Landlord within such fifteen 915)-day
period.
SECTION 8 CONDEMNATION
If any of the vehicle parking spaces allocated to Tenant in
Section 1.11 of this Lease are taken, Tenant may terminate this
Lease as of the date the condemning authority takes title or
possession; provided, however, that such termination right shall
be suspended for such period of time as Landlord provides to
Tenant alternative vehicle parking spaces in amount and in a
location which is reasonably approved by Tenant; provided,
further, that Tenant shall not be required to give such approval
if Tenant determines that such arrangement shall be materially
inconvenient to Tenant or its employees. Any termination of this
Lease pursuant to either of the preceding two sentences shall be
made by the terminating party.
SECTION 11.01
Notwithstanding anything to the contrary contained in this
Lease, this Lease shall not be subordinate to any ground lease or
other encumbrance now of record or recorded after the date of
this Lease unless Landlord shall have provided Tenant with a
commercially reasonable non-disturbance agreement in favor of
Tenant from the holder of any such encumbrance now existing or
hereafter placed upon the real property of which the Property is
a part. Concurrently with the execution of this Lease, Landlord
shall deliver to Tenant a recordable non-disturbance agreement
from the holder of any encumbrance affecting the Property in the
form of Exhibit "B" (which Exhibit "B" is hereby deemed to be
commercially reasonable as of the date of execution of this
Lease) or such other form as is agreed to by Tenant and
Landlord's lender.
13.02(d) The following language is hereby added to Section
13.02:
(d) Landlord hereby represents and warrants to Tenant that
Landlord is the sole fee owner of the Project and has the right
to enter into this Lease without the approval or consent of any
party except Principal Mutual Life Insurance Company. Each person
signing this Lease on behalf of Landlord represents and warrants
that he/she has full authority to do so as an authorized
signatory of Majestic Realty Co., and Patrician Associates, Inc.,
as applicable.
ARTICLE FIFTEEN: REVENUE AND EXPENSE ACCOUNTING:
Landlord and Tenant agree that, for all purposes (including
any determination under Section 467 of the Internal Revenue
Code), rental income will accrue to the Landlord and rental
expenses will accrue to the Tenant in the amounts and as of the
dates rent is payable under the Lease.
ARTICLE SIXTEEN: LANDSCAPE MAINTENANCE:
Notwithstanding the provisions of Sections 6.03 and 6.04,
Landlord shall maintain, at Tenant's expense, the landscaping of
the Property and, if applicable, the common areas. Such
maintenance shall include gardening, tree trimming, replacement
or repair of landscaping, landscape irrigation systems and
similar items. such maintenance shall also include sweeping and
cleaning of asphalt, concrete or other surfaces on the driveway,
parking areas, yard areas, loading areas or other paved or
covered surfaces. In connection with Landlord's obligations under
this Article, Landlord may enter into a contract with a landscape
contractor of Landlord's choice to provide some (but not
necessarily all) of the maintenance services listed above.
▇▇▇▇▇▇'s pro-rata share of the monthly cost of such contract,
hereinafter referred to as the "Landscape Fee" is currently TWO
HUNDRED FIFTY AND NO/100 DOLLARS ($250.00). Landlord shall use
its best efforts to maintain competitive contracts and shall
promptly notify Tenant of any increase in the Landscape Fee.
▇▇▇▇▇▇ agrees to pay monthly to Landlord, as additional rent, the
Landscape Fee. Tenant shall make such payment together with
Tenant's monthly rental payment, without the necessity of notice
from Landlord. It is the understanding of the parties that the
Landscape Fee only pertains to routine landscape maintenance on
the Property and that Landlord may incur expenses in addition to
the Landscape Fee in meeting its obligations set forth above.
Tenant shall pay to Landlord, as additional rent, within ten (10)
days after demand therefore, the cost of such additional
expenses.
ARTICLE SEVENTEEN: RIGHT OF FIRST OFFER
17.1 During the Lease Term (and any extension or renewal
thereof), Landlord hereby grants to the Original Tenant a right
of first offer with respect to the adjacent 50,000 square feet
space, cross hatched in EXHIBIT A attached hereto or any portion
thereof (the "First Offer Space") each time that any such First
Offer Space becomes available. Notwithstanding the foregoing,
such first offer right of Tenant shall commence only following
the expiration or earlier termination of the existing lease of
the First Offer Space, which was entered into by Landlord and
third party prior the date of this Lease (including any renewal
of such lease, whether or not such renewal is pursuant to an
express written provision in such lease, and regardless of
whether any such renewal is consummated pursuant to a lease
amendment or a new lease) (the "Superior Right Holder") with
respect to such First Offer Space. Tenant's right of first offer
shall be on the terms and conditions set forth in this Article
17.
17.1 Procedure for Offer. Landlord shall notify Tenant (the
"First Offer Notice") each time the First Offer Space becomes
available for lease to third parties, provided that no Superior
Right Holder wishes to lease such space. Pursuant to such First
Offer Notice, Landlord shall offer to lease to Tenant the then
available First Offer Space. The First Offer Notice shall
describe the space including the parking rights so offered to
Tenant and shall set forth the "First Offer Rent," as that term
is defined in Article 17.3 below, and the other economic terms
upon which Landlord is willing to lease such space to Tenant.
17.2 Procedure for Acceptance. If Tenant wishes to exercise
▇▇▇▇▇▇'s right of first offer with respect to the space described
in the First Offer Notice, then within ten (10) business days of
delivery of the First Offer Notice to Tenant, Tenant shall
deliver notice to Landlord of Tenant's intention to exercise its
right of first offer with respect to the entire space described
in the First Offer Notice on the terms contained in such notice.
If Tenant does not so notify Landlord within the ten (10)
business day period, then Landlord shall be free to lease the
space described in the First Offer Notice to anyone to whom
Landlord desires on terms that are not less favorable to Landlord
than the terms set forth in the First Offer Notice.
Notwithstanding anything to the contrary contained herein, Tenant
must elect to exercise its right of first offer, if at all, with
respect to all of the space offered by Landlord to Tenant at any
particular time, and Tenant may not elect to lease only a portion
thereof.
17.3 First Offer Space Rent. The rent set forth in the First
Offer Notice for the First Offer Space (the "First Offer Rent")
shall be equal to the rent, including all escalations, at which
tenants, as of the commencement of leasing the First Offer Space,
are leasing non-sublease space comparable in size, location and
quality to the Project for the term as stated in the First Offer
Notice.
17.4 Amendment to Lease. If Tenant timely exercises Tenant's
right to lease the First Offer Space as set forth herein, the
First Offer Space shall be included in the Property and leased to
Tenant pursuant to the provisions of this Lease, including,
without limitation, the provisions relating to the rights and
obligations of the parties with respect to alterations; provided,
however that the rent applicable to the First Offer Space shall
be the rent set forth in the First Offer Notice; and provide
further that Tenant shall commence payment upon the date of
delivery of the First Offer Space to Tenant (the "First Offer
Commencement Date") and terminate on the date set forth in the
First Offer Notice. Landlord and Tenant shall execute an
amendment to this Lease effectuating the foregoing within fifteen
(15) days after Tenant exercises its right to lease the First
Offer Space.
17.5 Termination of Right of First Offer. The rights
contained in this Article 17 shall be personal to the Original
Tenant, and may only be exercised by ▇▇▇▇▇▇ (and not any
assignee, sublessee or other transferee of Tenant's interest in
this Lease) if Tenant occupies the entire Property. The right of
first offer granted herein shall not terminate upon the failure
by Tenant to exercise its right of first offer with respect to
such First Offer Space as offered by Landlord. Tenant shall not
have the right to lease First Offer Space, as provided in this
Article 17, if, as of the date of the attempted exercise of any
right of first offer by ▇▇▇▇▇▇, or as of the scheduled date of
delivery of such First Offer Space to Tenant, Tenant is in
material default under this Lease or Tenant has previously been
in material default under this Lease more than three (3) times.
ARTICLE 18 SIGNS
Tenant, at its sole cost and expense, may install
identification signage on the exterior of the Property; provided
that (i) the size, color, materials and design of such sign shall
be subject to Landlord's prior written consent, which consent
shall not be unreasonably withheld; (ii) such sign shall comply
with all applicable governmental rules and regulations; (iii)
such sign shall be in keeping with the quality, design and style
of the Project; and (iv) Tenant's sign shall contain information
(i.e., name, log, etc.) relating to only one occupant of the
Property. Tenant shall be responsible for all costs incurred in
connection with the design, construction, installation, repair
and maintenance of Tenant's sign(s). Upon the expiration or
earlier termination of this Lease, Tenant shall cause Tenant's
sign(s) to be removed and shall repair any damage caused by the
removal of Tenant's sign(s). Any signs, notices, logos, pictures,
names or advertisements which are installed and that have not
been separately approved by Landlord may be removed by Landlord
without notice by Landlord to Tenant at the sole expense of
Tenant. Tenant may not install any signs on the exterior or roof
of the Project. Tenant may put up signs within the interior of
the Property, provided, however, that any signs, window
coverings, or blinds, or other items visible from the exterior of
the Property, shall be subject to the prior approval of Landlord,
in its sole discretion.
ARTICLE 19 LANDLORD ▇▇▇▇ ▇▇▇▇▇▇
Subject to the last sentence hereof, Landlord hereby waives
in favor of any lender providing financing to Tenant secured in
whole or in part by Tenant's accounts receivable, inventory,
machinery, equipment, furniture, furnishings and/or trade
fixtures, whether now or hereafter acquired, and the proceeds and
products thereof (collectively "Tenant's Personal Property") any
and all rights of Landlord to assert any lien, claim or right of
levy or distraint for rent with respect to ▇▇▇▇▇▇'s Personal
Property. At the request of Tenant, ▇▇▇▇▇▇▇▇ will execute such
waiver documentation as may be reasonably requested by any such
lender, which documentation may include, without limitation, that
▇▇▇▇▇▇'s lender shall have the right, upon prior written notice
to Landlord, to enter upon the Property to inspect or remove
▇▇▇▇▇▇'s Personal Property in the event Tenant defaults on its
obligations in favor of Tenant's lender. Notwithstanding the
foregoing provisions of this Article 19, Landlord shall not be
obligated to execute a lien waiver or generally waive Landlord's
lien rights unless and until such waiver is evidenced by the
written agreement contemplated above, which written agreement
specifies that the lender must remove the financed or
conditionally sold property from the premises not later than
fifteen(15) days following receipt by such lender or vendor of
written notice that the term of this Lease has ended and that any
necessary repairs resulting from such removal have been completed
by such lender or vendor within said fifteen (15) day period.
OPTION TO EXTEND TERM
LEASE RIDER
This Rider is attached to and made part of that certain
Lease (the "Lease") dated March , 1997 between MAJESTIC REALTY
CO. AND PATRICIAN ASSOCIATES, INC., both California corporations,
as Landlord, and SOUTHERN ELECTRONICS DISTRIBUTORS, INC., a
Georgia corporation, as Tenant, covering the Property commonly
known as ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
(the "Property"). The terms used herein shall have the same
definitions as set forth in the Lease. The provisions of this
Rider shall supersede any inconsistent or conflicting provisions
of the Lease.
A. Option(s) to Extend Term.
1. Landlord hereby grants to Tenant one (1) option(s) (the
"Option(s)") to extend the Lease Term for additional term(s) of
five (5) years each (the "Extension(s)"), on the same terms and
conditions as set forth in the Lease, but at an increased rent as
set forth below. Each Option shall be exercised only by written
notice delivered to Landlord at least one hundred eighty (180)
days before the expiration of the Lease Term or the preceding
Extension of the Lease term, respectively. If Tenant fails to
deliver Landlord written notice of the exercise of an Option
within the prescribed time period, such Option and any succeeding
Options shall lapse, and there shall be no further right to
extend the Lease Term. Each Option shall be exercisable by Tenant
on the express conditions that (a) at the time of the exercise,
and at all times prior to the commencement of such Extension,
Tenant shall not be in material default under any of the
provisions of this Lease and (b) Tenant has not been ten (10) or
more days late in the payment of rent more than a total of three
(3) times during the Lease Term and all preceding Extensions.
2. Personal Options.
The Option(s) are personal to the Tenant named in Section
1.03 of the Lease or any Tenant's Affiliate described in Section
9.02 of the Lease. If Tenant subleases any portion of the
Property or assigns or otherwise transfers any interest under the
Lease to an entity other than a Tenant Affiliate prior to the
exercise of an Option (whether with or without Landlord's
consent), such Option and any succeeding Options shall lapse. If
Tenant subleases any portion of the Property or assigns or
otherwise transfers any interest of Tenant under the Lease to an
entity other than a Tenant Affiliate after the exercise of an
Option but prior to the commencement of the respective Extension
(whether with or without Landlord's consent), such Option and any
succeeding Options shall lapse and the Lease Term shall expire as
if such Option were not exercised. If Tenant subleases any
portion of the Property or assigns or otherwise transfers any
interest of Tenant under the Lease to an entity other than a
Tenant Affiliate after the exercise of an Option but prior to the
commencement of the respective Extension (whether with or without
Landlord's consent), such Option and any succeeding Options shall
lapse and the Lease Term shall expire as if such Option were not
exercised. If Tenant subleases any portion of the Property or
assigns or otherwise transfers any interest of Tenant under the
Lease in accordance with Article 9 of the Lease after the
exercise of an Option and after the commencement of the Extension
related to such Option, then the term of the Lease shall expire
upon the expiration of the Extension during which such sublease
or transfer occurred and only the succeeding Options shall lapse.
B. Calculation of Rent.
The Base Rent during the Extension(s) shall be determined by
one or a combination of the following methods (INDICATE YOUR
CHOICE UPON EXECUTION OF THE LEASE):
2. Fair Rental Value Adjustment (Section B(2), below) [X]
1. Cost of Living Adjustment.
Intentionally deleted.
2. Fair Rental Value Adjustment.
The Base Rent shall be adjusted on the first day of the
first month(s) of the Lease Extension(s) of the Lease term (the
"Rental Adjustment Date(s)") to the "fair rental value" of the
Property, determined in the following manner:
(a) Not later than one hundred (100) days prior to any
applicable Rental Adjustment Date, Landlord and Tenant shall meet
in an effort to negotiate, in good faith, the fair rental value
of the Property as of such Rental Adjustment Date. If Landlord
and Tenant have not agreed upon the fair rental value of the
Property at least ninety (90) days prior to the applicable Rental
Adjustment Date, the fair rental value shall be determined by
appraisal, as follows (INDICATE YOUR CHOICE UPON EXECUTION OF THE
LEASE):
Appraisal by Appraisers. [ ] Appraisal by Brokers. [X]
(b) If Landlord and Tenant are not able upon the fair rental
value of the Property within the prescribed time period, then
Landlord and Tenant shall attempt to agree in good faith upon a
single appraiser or broker, as indicated above, not later than
seventy-five (75) days prior the applicable Rental Adjustment
Date. If Landlord and ▇▇▇▇▇▇ are unable to agree upon a single
appraiser/broker within such time period, then Landlord and
Tenant shall each appoint one appraiser or broker, as indicated
above, not later than sixty-five (65) days prior to the
applicable Rental Adjustment Date. Within (10) days thereafter,
the two appointed appraisers/brokers shall appoint a third
appraiser or broker, as indicated above. If either Landlord or
Tenant fails to appoint its appraiser/broker within the
prescribed time period, the single appraiser/broker appointed
shall determine the fair rental value of the Property. If both
parties fail to appoint appraisers/brokers within the prescribed
time periods, then the first appraiser/broker thereafter selected
by a party shall determine the fair rental value of the Property.
Each party shall bear the cost of its own appraiser or broker and
the parties shall share equally the cost of the single or third
appraiser or broker, if applicable. If appraisers are used, such
appraisers shall have at least five (5) years' experience in the
appraisal of commercial/industrial real property in the area in
which the Property is located and shall be members of
professional organizations such as MAI or equivalent. If brokers
are used, such brokers shall have at least five (5) years'
experience in the sales and leasing of commercial/industrial real
property in the area in which the Property is located and shall
be members of professional organizations such as the Society of
Industrial Realtors or equivalent.
(c) For the purposes of such appraisal, the term "fair
market value" shall mean the price that a ready and willing
tenant would pay, as of the applicable Rental Adjustment Date, as
monthly rent to a ready and willing landlord or property
comparable to the Property if such property were exposed for
lease on the open market for a reasonable period of time and
taking into account all of the purposes for which such property
may be used. If a single appraiser/broker is chosen, then such
appraiser/broker shall determine the fair rental value of the
Property. Otherwise, the fair rental value of the Property shall
be the arithmetic average of the two (2) of the three (3)
appraisals which are closest in amount, and the third appraisal
shall be disregarded. In no event, however, shall the Base Rent
be reduced by reason of such computation. Landlord and Tenant
shall instruct the appraiser(s)/broker(s) to complete their
determination of the fair rental value not later than thirty (30)
days prior to the applicable Rental Adjustment Date. If the fair
rental value is not determined prior to the applicable Rental
Adjustment Date, then Tenant shall continue to pay to Landlord
the Base Rent applicable to the Property immediately prior to
such Extension, until the fair rental value is determined. When
the fair rental value of the Property is determined, Landlord
shall deliver notice thereof to Tenant, and Tenant shall pay to
Landlord (or Landlord shall pay to Tenant, as applicable,) within
(10) days after receipt of such notice, the difference between
the Base Rent actually paid by Tenant to Landlord and the new
Base Rent determined hereunder.
3. Fixed Adjustment.
Intentionally deleted.