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EXHIBIT 10.19
SUBLEASE
Sublease made this 14th day of May, 1996 by and between
▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Sublessor")
and
Innovative Gaming Corporation of America
clo ▇▇. ▇▇▇▇▇ Quick
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("Sublessee")
WHEREAS, Sublessor, as lessee, and ▇▇▇▇▇▇▇ Properties, Inc., as lessor
("Lessor"), are parties to a lease ("Master Lease") dated as of May 9, 1988 (a
copy of which Master Lease is attached as Exhibit A hereto) of premises
consisting of a building with approximately 53,109 square feet of floor space on
real estate located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ("Subleased Premises");
and
WHEREAS, subject to obtaining Lessor's written consent to this
Sublease, Sublessor shall sublease to Sublessee, and Sublessee shall sublease
from Sublessor, the Subleased Premises pursuant to the terms and conditions set
forth hereinbelow.
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. The term of this Sublease shall commence as of the date first
written above and end on October 31, 1998 subject to termination prior
to October 31, 1998 in accordance with the terms of this Sublease.
2. Rent. The monthly base rent payable by Sublessee to Sublessor for each
month of the term of the Sublease shall be $19,119.24 per month,
prorated for any portion of a calendar month. All such monthly
installments shall be due and payable on the first day of each month in
advance, except that base rent for the period from the date of this
Lease through May 31, 1996 shall be due and payable upon execution of
this Lease. Also, during the term of this Sublease, Sublessee shall pay
and be responsible for all additional rent and other payments payable
by Sublessor under the Master Lease including, without limitation, as
set forth in Paragraph 4 of the Master Lease payment of real estate
taxes with respect to the Subleased Premises (including land and
building), payment of the cost of facilities and all services necessary
to comply with all applicable statutes, regulations, and ordinances
relating to the maintenance, use, and operation of the Subleased
Premises, and payment of insurance premiums (except as otherwise
expressly provided in this Sublease). Sublessee for itself and for the
benefit of Sublessor and Lessor (as additional insureds) shall procure
and maintain insurance (issued by reputable insurers reasonably
acceptable to Sublessor) of the types and in the amounts required to be
maintained
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pursuant to Paragraph 4(c)(l) of the Master Lease as well as insurance
providing contractual indemnity coverage with respect to the
indemnification obligations of Sublessee hereunder, and Sublessee shall
with respect to each such insurance policy (and any other insurance
policy required to be maintained by Sublessee hereunder) have Sublessor
and Lessor named as additional insureds and furnish certificates of
insurance issued by such insurers to Sublessor and Lessor evidencing
such insurance and evidencing the fact that such insurance may not be
terminated or materially modified without each insurer providing at
least twenty (20) days' notice to each certificate holder. Sublessor
shall procure and pay the premiums for the policy or policies of
insurance of the types referred to in Paragraph 4(c) (2) of the Master
Lease, and any such insurance policy shall provide for a waiver of
subrogation by the insurer against Sublessee and its directors,
shareholders, officers, and employees, and Sublessee shall reimburse
Sublessor as additional rent for the reasonable costs incurred by
Sublessor to obtain and maintain such insurance during the term of this
Sublease. Sublessee shall at its sole expense insure its tangible
personal property at the Subleased Premises against loss or damage by
fire or other casualty (including extended coverage), and any such
insurance policy or policies maintained by Sublessee for such purpose
shall provide for a waiver of subrogation by the insurer against the
Sublessor and the Lessor and their respective directors, shareholders,
officers, and employees.
3. Letter of Credit. As security for the performance by Sublessee of its
obligations under the Sublease, Sublessee, at its sole expense, shall
upon execution of this Sublease deliver to Sublessor, and maintain in
effect at all times during the term of the Sublease, an irrevocable
standby letter of credit ("Letter of Credit") in the amount of One
Hundred Thousand Dollars ($100,000.00) issued by a reputable banking
institution ("Issuer") satisfactory to Sublessor in favor of Sublessor,
as beneficiary. The Letter of Credit shall contain terms and conditions
satisfactory to Sublessor, and, without limiting the generality of the
foregoing, shall provide that Sublessor shall have the right to draw on
the Letter of Credit any number of times and in any amounts (but the
total of the amounts so drawn shall not be more than One Hundred
Thousand Dollars ($100,000.00) in the aggregate). Any and all such
drawings may be made after the date of execution of this Sublease and
prior to the expiration date of the Letter of Credit (a) at any time
within thirty (30) days prior to the expiration date of the Letter of
Credit if Sublessor has not prior to the thirtieth (30th) day before
the expiration date of the Letter of Credit received notice in writing
from the Issuer of the Issuer's renewal of the Letter of Credit for a
period of at least one year or (b) at any time if:
(i) Sublessee has at any time failed to perform any of its
obligations undar the Sublease; and
(ii) Sublessor has given Sublessee notice of Sublessee's such
failure to perform specifying the nature of such default and
Sublessee has failed to remedy such default within twenty (20)
days after such notice by Sublessor to Sublessee.
Nothing contained in this Paragraph 3 shall limit or restrict
Sublessor's rights to recover additional damages from Sublessee in
excess of the amount of the Letter of Credit or shall limit or restrict
Sublessor's rights or remedies otherwise available under this Sublease
or under applicable law in the event of Sublessee's default. The
provisions of this Paragraph 3 are cumulative and additional to any
other rights or remedies which Sublessor may have under this Sublease
or by law for damages or otherwise.
4. Utilities.
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a. Sublessee shall pay for all utility service at the Subleased
Premises including, without limitation, any utility service
for electricity, gas, water, sewer, or telephone.
b. To the maximum extent permitted under applicable law,
Sublessee shall not have any right to recover damages from
Sublessor or the Lessor, and Sublessee shall not be entitled
to any abatement or reduction of rent or other relief, on
account of any interruption or discontinuance or inadequacy of
any utility service to or at the Subleased Premises for any
reason whatsoever. In the event that Sublessee requires
additional utility service at the Subleased Premises during
the term of the Lease, the installation and maintenance
thereof shall be Sublessee's sole obligation and at
Sublessee's sole cost and expense; provided that no such
utility service may be installed at the Subleased Premises
unless Sublessee shall in each instance have first obtained
the prior written consent of the Sublessor and of the Lessor.
Sublessor agrees that it shall not unreasonably withhold its
consent to the installation by Sublessee at the Subleased
Premises and at Sublessee's expense of additional utility
service; provided that Sublessor shall not be responsible for
any failure (whether or not reasonable) of the Lessor to
consent to any such installation of utility service proposed
by Sublessee. Without limiting the right of Sublessor to
withhold consent when it is reasonable to do so, Sublessor and
Sublessee agree that it shall not be deemed to be unreasonable
for Sublessor to withhold its consent to any such installation
of utility service at the Subleased Premises proposed by
Sublessee in the event that the Lessor does not consent to
same.
5. Condition of Premises at Commencement of Sublease. Sublessee agrees to
accept the Subleased Premises "AS IS", with no warranties of any kind,
expressed or implied, as of the date of execution of the Sublease.
6. Use of Subleased Premises. Subject to Sublessee complying with the
obligations imposed by Paragraph 8 of the Master Lease on the Sublessor
as lessee under the Master Lease and subject to compliance by Sublessee
with the requirements of all applicable laws and regulations including,
without limitation, laws and regulations relating to zoning, health and
safety, and environmental protection, Sublessee shall have the right to
use the Subleased Premises only for the purpose of light assembly of
gaming machines and storage of same and for offices related to the
foregoing use ("Intended Use") . The parties acknowledge and agree that
Sublessor makes no warranty that the area in which the Subleased
Premises are located is zoned so as to permit said Intended Use or as
to the suitability of the Subleased Premises for said use.
7. Hazardous Substances. "Hazardous Substances" as used in this Lease
shall mean pollutants, contaminants, toxic or hazardous substances or
wastes, or any other substances, the removal of which is required by,
or the use of which is regulated, restricted, or prohibited by, any
"Environmental Law", which as used in this Lease shall mean any
federal, state, or local law, regulation, or ordinance relating to
pollutants, contaminants, or toxic or hazardous substances or wastes or
protection of the environment. Sublessee hereby agrees as follows:
a. No activity will be conducted at the Subleased Premises that
will use, generate, or produce any Hazardous Substances,
except for such activities that are part of the ordinary
course of Sublessee's business, that are conducted in
accordance with all Environmental Laws, and that have been
approved in advance in writing by Sublessor
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("Permitted Activities");
b. The Subleased Premises will not be used in any manner for the
storage or treatment of any Hazardous Substances except for
the temporary storage of such materials that are used in the
ordinary course of Sublessee's business, that are properly and
legally stored in a manner and location meeting all
Environmental Laws, and that are approved in advance in
writing by Sublessor ("Permitted Materials");
c. In the event that there is a spill or leakage of any of the
Permitted Materials or other Hazardous Substances at or
affecting the Subleased Premises or the property of which the
Subleased Premises are a part or in the event that there is
any contamination or environmental damage to the Subleased
Premises or other property caused directly or indirectly by
any actions or omissions of the Sublessee or the Sublessee's
agents, employees, subtenants, business invitees, or other
persons for whose conduct Sublessee is legally responsible,
Sublessee shall immediately notify Sublessor of the foregoing
and shall immediately begin and diligently complete at
Sublessee's sole cost and expense cleanup procedures to remove
all such contamination and shall remedy such damage pursuant
to all Environmental Laws;
d. No portion of the Subleased Premises shall be used as a
landfill or a dump or otherwise for the disposal of Hazardous
Substances;
e. Sublessee shall not at the Subleased Premises install any
underground or aboveground tanks of any type; and
f. Sublessee agrees to comply in all respects with all applicable
Environmental Laws. Sublessee agrees to indemnify and hold
Sublessor and Lessor harmless from and against all claims,
demands, actions, liabilities (including, without limitation,
any liability under the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601 at seq. or the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 at
sea.), reasonable fees, costs, and expenses (including,
without limitation, reasonable legal expenses and reasonable
fees payable to environmental consultants), damages (including
losses attributable to diminution of the value of real
estate), and obligations of any nature directly or indirectly
incurred or sustained by either or both of them arising as a
result of any breach by Sublessee of any of the foregoing
covenants, it being understood that the foregoing obligations
of Sublessee shall survive the termination or expiration of
this Sublease.
8. No Option to Extend. etc. Notwithstanding any other provisions herein
or any provisions in the Master Lease, Sublessee shall not have any
right to extend the term of the Sublease beyond October 31, 1998, or to
purchase the Subleased Premises, or to expand the Subleased Premises,
and Sublessee shall not have any right of first refusal to lease,
sublease, or purchase the Subleased Premises or any other adjacent
premises. Sublessor agrees that during the term of the Sublease
Sublessor will not exercise any rights which Sublessor may have as
lessee under the Master Lease to extend the term of the Master Lease
beyond October 31, 1998, to purchase the Subleased Premises, to expand
the Subleased Premises, or to assert any right of first refusal to
lease, sublease, or purchase the Subleased Premises or other adjacent
premises .
9. No Assignment and No Further Subletting Without Consent. Sublessee
shall not have the right to
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assign this Sublease or further sublet the Subleased Premises without
in each instance first obtaining the prior written consent of the
Sublessor and of the Lessor under the Master Lease. The consent of the
Lessor under the Master Lease to any proposed assignment of this
Sublease or further subletting of the Subleased Premises may be granted
or withheld in the sole discretion of the Lessor under the Master
Lease. The consent of Sublessor to any proposed assignment of this
Sublease or further subletting of the Subleased Premises shall not be
unreasonably withheld. Without limiting the right of Sublessor to
withhold its consent to a proposed assignment or further subletting
when it is reasonable to do so, Sublessor and Sublessee agree that it
shall not be deemed unreasonable for Sublessor to withhold its consent
to any such assignment or further subletting in the event that the
Lessor does not consent to same.
10. Modifications or Improvements of the Subleased Premises. Sublessee
shall not make any modifications or improvements of the Subleased
Premises at any time without first obtaining the prior written consent
of Sublessor and of the Lessor under the Master Lease. Sublessor agrees
that it shall not unreasonably withhold its consent to any
modifications or improvements proposed by Sublessee; provided that
Sublessor shall not be required to consent to any modifications or
improvements which affect the structural integrity of the Subleased
Premises; and further provided that Sublessor shall not be responsible
for any failure (whether or not reasonable) of the Lessor to consent to
any modifications or improvements proposed by Sublessee. Without
limiting the right of Sublessor to withhold consent when it is
reasonable to do so, Sublessor and Sublessee agree that it shall not be
deemed to be unreasonable for Sublessor to withhold its consent to any
modifications or improvements of the Subleased Premises proposed by
Sublessee in the event that the Lessor does not consent to same. The
parties hereto further agree that if and only if Sublessee obtains the
written consent of the Lessor under the Master Lease to the making of
all of the modifications or improvements of the Subleased Premises set
forth on Exhibit B hereto and the Lessor's agreement is writing that
such modifications or improvements need not be removed from the
Subleased Premises at the end of the term of this Sublease, Sublessor
shall consent to the making at the Subleased Premises by Sublessee, at
Sublessee's sole expense, of such modifications or improvements set
forth on Exhibit B hereto, it being understood that, in such case,
Sublessee shall have the right (but not the obligation) to make such
modifications or improvements set forth on Exhibit B hereto. The
written consent of the Lessor under the Master Lease to the making of
such modifications and improvements set forth on Exhibit B hereto shall
be requested by Sublessee contemporaneously with Sublessor's request
for the Lessor's written consent to this Sublease itself, and, unless
otherwise specified in writing by the Lessor, the Lessor's written
consent to the Sublease shall be deemed to constitute the Lesssor's
consent that Sublessee shall have the right (but not the obligation) to
make the said modifications and improvements set forth on Exhibit B
hereto and agreement that the same need not be removed from the
Subleased Premises at the end of the term of the Sublease. Without
limiting the generality of the foregoing, the Sublessee may not affix
any sign or lettering on or visible from the exterior of the Subleased
Premises without first obtaining the written consent of the Lessor and
Sublessor. Sublessor agrees that it shall not unreasonably withhold its
consent to Sublessee at its expense affixing signs or lettering on or
visible from the exterior of the Subleased Premises; provided that
Sublessor shall not be responsible for any failure (whether or not
reasonable) of the Lessor to consent to the Sublessee's affixing of any
signs or lettering on or visible from the exterior of the Subleased
Premises. Without limiting the right of Sublessor to withhold its
consent when it is reasonable to do so, Sublessor and Sublessee agree
that it shall not be deemed to be unreasonable for Sublessor to
withhold its consent to any affixing by Sublessee of any signs or
lettering on or visible from the exterior of the Subleased Premises in
the event that Lessor does not consent to same. Furthermore, without
limiting the
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right of Sublessor to withhold its consent when it is reasonable to do
so to any modifications, improvements, signs, or lettering proposed by
Sublessee, Sublessee agrees that no modifications, improvements, signs,
or lettering may be constructed or erected or affixed at or to the
Subleased Premises unless the same comply in all respects with all
applicable laws, regulations, and codes and are constructed in a good
and workmanlike manner with first class craftsmanship and materials.
Sublesee shall indemnify, defend, and hold harmless Sublessor and the
Lessor from all claims and expenses arising on account of any liens on
the Subleased Premises resulting from any modifications or improvements
or any other activities of Sublessee at the Subleased Premises.
11. Surrender of Subleased Premises. At the end of the term of the
Sublease, Sublessee shall remove all of its tangible personal property
from the Subleased Premises and shall return the Subleased Premises to
Sublessor in the same condition as they were in as of the date of
execution of this Sublease, ordinary wear and tear only excepted;
provided, however, if the Sublessee at any time obtains the consent in
writing of the Lessor and Sublessor to any modifications or
improvements of the Subleased Premises proposed by Sublessee, Sublessor
and Sublessee may agree that such modifications or improvements may
remain as part of the Subleased Premises at the end of the term of the
Sublease if and only if the Lessor's consent when granted had expressly
authorized in writing such modifications or improvements to remain as
part of the Subleased Premises at the end of the term of this Sublease.
Sublessee shall have no right to holdover at the Subleased Premises at
the end of the term of the Sublease, and, if any such holdover shall
occur, Sublessee shall be responsible for any and all damages incurred
or sustained by Sublessor and/or the Lessor as a result of such holding
over. Any damage caused to the Subleased Premises by the removal of any
property of Sublessee therefrom at the end of the term of Sublease or
any other time shall be promptly repaired by the Sublessee. The
Sublessee shall have the right to continue to occupy the Subleased
Premises at the end of the term of the Sublease if, any only if, the
Sublessee has obtained such right to occupy the Subleased Premises
pursuant to the terms of a written lease by and between Sublessee, as
tenant, and Lessor, as landlord, and if Sublessee has complied with all
of Sublessee's obligations under this Sublease as of the date of
termination of this Sublease.
12. Waiver of Claims and Hold Harmless. To the maximum extent permitted
under applicable law, Sublessee (a) agrees to waive and release any and
all claims against Sublessor and/or Lessor for any loss, damage, or
expense incurred by Sublessee directly or indirectly on account of any
personal injuries to Sublessee's employees or any losses of Sublessee's
property or other losses sustained by Sublessee or Sublessee's business
at the Subleased Premises; and (b) shall indemnify and save the Lessor
and Sublessor harmless from all losses, damages, and fees, costs, and
expenses (including, without limitation, reasonable legal fees)
incurred or sustained by either or both of them resulting from any
third party claims against the Lessor and/or Sublessor on account of
any injuries, property damage, or other loss sustained by (i) any third
party (including, without limitation, employees of the Sublessee) in,
at, upon, or near the Subleased Premises, the sidewalks or streets
bordering the Subleased Premises, or the property of which the
Subleased Premises are a part; and (ii) any third party at any location
on account of any acts or omissions of Sublessee or Sublessee's agents,
employees, subtenants, business invitees, or other persons for whose
conduct Sublessee is legally responsible. Notwithstanding anything
contained hereinabove or otherwise in this Sublease, Sublessor and
Sublessee each hereby waives any and all rights of recovery which
either may have against the other party or against such other party's
directors, shareholders, officers, or employees with respect to loss or
damage caused by fire or other causes to the extent that such loss or
damage is insured against under any fire or extended coverage insurance
maintained by such party with respect to the Subleased Premises or any
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improvements thereto or any personal property therein and is caused by
the negligence of such other party or such other party's directors,
shareholders, officers, or employees.
13. Brokers. The parties acknowledge and agree that Lessor (which has acted
as a real estate broker for Sublessee in connection with this Sublease)
and ▇▇▇▇▇▇▇ Realty Co., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇▇") will be entitled to a commission in an amount and upon
terms agreed upon by Sublessor and Lessor in connection with this
Sublease if and only if this Sublease is executed by both parties and
consented to in writing by the Lessor, it being further understood that
Sublessor shall have no direct liability to ▇▇▇▇▇▇▇ for any such
commission. Sublessee warrants to Sublessor that Sublessee has not
dealt with any broker except Lessor or ▇▇▇▇▇▇▇ in this transaction, and
Sublessee agrees to hold Sublessor harmless from any and all claims by
any broker or other person except for Lessor or ▇▇▇▇▇▇▇ which claims to
be entitled to a commission or fee based upon alleged dealings with the
Sublessee in connection with this transaction.
14. Effect of Termination of Master Lease. The termination of the Master
Lease at any time prior to the end of the term of this Sublease shall
automatically result in the termination of this Sublease and all
obligations of Sublessor set forth herein, and, unless the termination
of the Master Lease is based on Sublessor's failure to pay rent due to
the Lessor or other default of Sublessor, as lessee, under the Master
Lease, the Sublessee shall have no right or claim against Sublessor on
account of any such termination of this Sublease at any time prior to
the end of the term hereof.
15. Consent of Lessor to this Sublease. This Sublease shall not become
effective unless and until the Lessor under the Master Lease has
consented in writing to this Sublease (and to Sublessee having the
right (but not the obligation) to make, at Sublessee's expense, the
modifications or improvements of the Subleased Premises set forth on
Exhibit B hereto and to the fact that such modifications or
improvements need not be removed from the Subleased Premises at the end
of the term of this Sublease) by having its duly authorized agent
execute and deliver to Sublessor anoriginal counterpart of this
Sublease acknowledging such consent .
16. Notices. Any notices by either party to the other permitted or required
under this Sublease shall be in writing to be effective. Notices to
Sublessee shall be deemed duly given and effective upon delivery in
hand to the Subleased Premises addressed to Sublessee, or delivery by
reputable overnight courier service to the Subleased Premises addressed
to Sublessee, or upon receipt of electronic facsimile transmission at
the Subleased Premises addressed to Sublessee, or upon mailing by
certified mail, return receipt requested, postage prepaid, addressed to
Sublessee at the Subleased Premises. Also, Sublessee may at any time
during the term of this Sublease after notice by Sublessee to Sublessor
in the manner provided for hereinbelow require Sublessee to furnish to
Sublessee's attorney (in the manner hereinabove specified) a copy of
any notice given by Sublessor to Sublessee provided that Sublessee has
previously given Sublessor notice specifying such attorney's name,
address, and fax number and requesting that copies of such notices be
given to such attorney. Notices to Sublessor shall be deemed duly given
and effective upon mailing to Sublessor by certified mail, return
receipt requested, postage prepaid, or upon delivery to Sublessor by
reputable overnight courier service, or upon receipt by Sublessor of
electronic facsimile transmission, in any case addressed to Sublessor
as follows:
▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Vice President - Purchasing
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Sublessor may change the address to which notices to it shall be sent
by giving notice to Sublessee in the aforesaid manner.
17. Incorporation of Master Lease Provisions. Except to the extent
inconsistent with the provisions of this Sublease, the below-listed
provisions of the Master Lease are hereby incorporated into this
Sublease by reference and shall bebinding upon the parties hereto;
provided that all references in said provisions of the Master Lease to
"Lessor" shall be deemed to be references to "Sublessor" and all
references in said provisions of the Master Lease to "Lessee" shall be
deemed to be references to "Sublessee", and, with respect to
below-listed Master Lease provisions, Sublessor shall have the rights
and obligations of the "Lessor" and Sublessee shall have the rights and
obligations of the "Lessee", as stated in the Master Lease; and further
provided that references in the Master Lease to the "Lease Term" shall
be deemed to refer to the term of the Sublease and references in the
Master Lease to the "Commencement Date" shall be deemed to refer to the
initial day of the term of this Sublease: 4, Additional Payments and
Covenants (provided that Sublessor does not certify or warrant that the
Subleased Premises comply with any existing statutes, regulations, or
ordinances and provided that the provisions of Paragraph 4(c) (2) of
the Master Lease shall be inapplicable to this Sublease); 8,
Improvements and Use of Leased Premises; 9, Maintenance and Repairs;
11, Default and Remedy (except that the words "thirty (30) days"
therein shall be replaced by the words "twenty (20) days"); 12,
Alterations (except as modified by Paragraphs 5 and 10 hereinabove of
this Sublease); 13, Inspection; 14, Lessor's Right to Mortgage (except
that the last sentence of said Paragraph 14 of the Master Lease shall
be deemed deleted); 15, Fire and Other Casualty (except that Sublessor
shall not be required to repair any damage to, or restore, the
Subleased Premises); 16, Eminent Domain (except that Sublessor shall
not be required to restore, alter, or repair the Subleased Premises or
to place the same in good and usable condition for Lessee's use and
purposes); 17, Lessor's and Lessee's Non-Liability (except that
Sublessor shall not be responsible for any damage resulting from an
error, omission, faulty workmanship, or negligence in the construction
of the Subleased Premises and the exemption from liability contained in
said provision shall be applicable to the Lessor as well as to
Sublessor); 18, Utilities; 19, Surrender (except as modified by
Paragraph 11 hereinabove of this Sublease); 20, Waiver; 21, Covenant of
Quiet Enjoyment; 27, Benefit of Lessor and Lessee (except that the
second sentence thereof shall be deemed deleted); and 28, Governing
Law.
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18. Rights of Lessor. Notwithstanding anything contained or implied in this
Sublease, the Lessor shall have the right at any reasonable time to
enter the Subleased Premises (a) to inspect the general condition and
state of repair thereof; and (b) to make repairs required or permitted
to be made by the Lessor under the Master Lease. In addition to the
foregoing, the Lessor may at any time affix to the exterior of the
Subleased Premises a notice for leasing or selling the Subleased
Premises or any part thereof during the lastsix (6) months of the term
of this Sublease or at any other time permitted pursuant to the Master
Lease.
19. Entire Agreement. This Sublease constitutes the sole and exclusive
agreement of the parties hereto with respect to the subject matter
hereof and supersedes and cancels any and all prior or contemporaneous
understandings or agreements, written or oral, between Sublessor and
Sublessee with respect to the subject matter hereof.
20. Attorneys' Fees. Costs, and Interest. In the event that any legal
proceeding is brought by Sublessor or Sublessee against the other party
hereto with respect to any breach by such other party of its
obligations under this Sublease, the prevailing party in such legal
proceeding shall be entitled to recover reasonable costs and attorneys'
fees incurred by it with respect to such proceeding in addition to
damages and other relief available at law and/or in equity. If
Sublessee shall fail to perform any of the obligations to be performed
by Sublessee under the Sublease, Sublessor, without being under any
obligation to do so and without thereby waiving such default, may
remedy such default for the account and at the expense of Sublessee,
and, if Sublessor makes any expenditures or incurs any obligations for
the payment of money in connection therewith, such sums paid or
obligations incurred, with interest at the rate of twelve percent (12%)
per annum, shall be paid to Sublessor by Sublessee as additional rent.
Sublessor agrees with Sublessee that Sublessor shall during the term of
the Sublease pay all rent and additional rent due by Sublessor to the
Lessor under the Master Lease, and, if Sublessor shall fail to make any
such payments to the Lessor, Sublessee, without being under any
obligation to do so and without thereby waiving such default, may
remedy such default for the account of Sublessor, unless such default
by Sublessor is cured by Sublessor within twenty (20) days after notice
thereof by Sublessee to Sublessor, by paying such amounts of rent or
additional rent as are due by Sublessor to the Lessor under the Master
Lease, and, if Sublessee makes any such payments which it is authorized
to make as aforesaid, Sublessee shall then have the right to deduct a
corresponding amount from base monthly rent thereafter due by Sublessee
to Sublessor pursuant to this Sublease .
21. Miscellaneous. In any instance or circumstance in which the consent of
Sublessor is required as a condition precedent to or to authorize any
action by Sublessee, Sublessor agrees that it shall within a reasonable
time after receipt by it from Sublessee of written request for such
consent notify the Sublessee as to whether such consent will be given
or denied. Unless otherwise agreed in writing by Lessor, Sublessor, and
Sublessee, any machinery, equipment, and other tangible personal
property installed by Sublessee at the Subleased Premises shall remain
the sole property or Sublessee and shall be removed from the Subleased
Premises at the end of the term of the Sublease pursuant to the
provisions contained hereinabove in Section 11 of this Sublease .
IN WITNESS WHEREOF, this Sublease has been executed and delivered by
duly authorized agents respectively of the Sublessor and Sublessee, in each case
under seal in multiple original counterparts as of the date first written above.
10
▇▇▇▇▇▇ & ▇▇▇▇▇ CORPORATION
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President - Purchasing
INNOVATIVE GAMING CORPORATION OF AMERICA
By:_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
The above Sublease is consented to by ▇▇▇▇▇▇▇ Properties, Inc. and ▇▇▇▇▇▇▇
Properties, Inc. hereby consents that Sublessee shall have the right (but not
the obligation) to make the modifications and/or improvements listed on Exhibit
B hereto (and agrees that such modifications and/or improvements may remain at
the Subleased Premises at the end of the term of the Sublease except only as
otherwise provided in that certain letter agreement or even date herewith by and
among Lessor, Sublessor, and Sublessee), as of the date first written above.
▇▇▇▇▇▇▇ PROPERTIES, INC.
BY:________________________
Dated:______________________
11
Exhibit A
LEASE AGREEMENT
THIS LEASE executed this 9th day of May 1988, by and between ▇▇▇▇▇▇▇
Properties Inc., a Nevada corporation having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ("Lessor"), and ▇▇▇▇▇▇ & ▇▇▇▇▇
Corporation, a New Jersey corporation, having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee") .
WITNESSETH:
1. The Leased Premises. The Lessor hereby 1eases and demises
to the Lessee and the Lessee agrees to lease from the Lessor certain real estate
located in Reno, Nevada, more particularly described in Exhibit "A" attached
hereto (the "Real Estate"), together with the improvements to be constructed by
Lessor on the Real Estate, more particularly described in paragraph 6. For ease
of reference the Real Estate and improvements are hereinafter collectively
referred to as the "Leased Premises."
2. Term & Option to Renew. The term of the Lease shall be
for a period of ten (10) years beginning on the first day of the month fol1owing
the Commencement Date as hereinafter defined in paragraph 6.
If the Lessee is not in default hereunder the Lessee shall have the
option to renew and extend the term of this Lease for two (2) additional terms
of five (5) years each. Each such
12
extension shall be upon the same terms and conditions contained in the Lease for
the original term subject to an adjustment of the minimum rental as provided in
paragraph 5 hereof. Each such option shal1 be exercised by Lessee giving written
notice to Lessor of its intention to extend the term of the Lease not later than
twelve (12) months prior to the expiration of the original Lease Term of, if
applicable, the extended term. Lessee's failure to exercise any option to renew
shall extinguish its right and option for any subsequent extension.
For ease of reference, the original and any extended term of
this Lease is herein referred to as the "Lease Term."
3. Rent. Lessee agrees to pay as base rent for the Leased
Premises the sum of $199,200.00 per year, payable in equa1 monthly installments
of $16,600.00, such monthly insta1lment to be paid on the first day of each
month in advance, to begin on the month following the Commencement Date and the
first day of each month thereafter during the Lease Term.
If the Commencement Date is not the first day of the month,
Lessee shall pay prorated month1y rent from the Commencement Date to the first
day of the next month.
4. Additional Payments and Covenants. During the Lease Term
Lessee agrees to pay the fol1owing amounts as additional rent:
(a) An amount equa1 to real estate taxes levied against the
Leased Premises are charged to the owner thereof and
prorated as of the Commencement Date. Such taxes are
not to include any income or franchise taxes.
(b) The costs of facilities and all services
13
necessary to comply with all app1icable statutes,
regulations and ordinances relating to maintenance, use
and operation of the Leased Premises, including, but
not 1imited to, the construction or use of
anti-pollution or safety devices, provided, however,
that nothing in this subparagraph 4(b) shall limit
Lessor's duty to deliver the premises in accordance
with the plans and specifications approved by Lessee.
Lessor certifies and warrants as of the Commencement
Date that the Leased Premises comply with such existing
statutes, regu1ations and ordinances.
(c) Lessee shall procure and pay the premiums for a policy
or policies of insurance in companies reasonably
satisfactory to Lessor and its mortgagee, and shall
keep the same in force during the Lease Term and, upon
request, furnish a certificate thereof to its mortgagee
covering the following risks:
(1) Public liability and property damage insurance
in standard form, with limits of bodily injury and
death liability not less than Two Million Dollars
($2,0OO,O0O)for an accident affecting any one
person, and five Million Dollars ($5,000,000) for an
accident affecting more than one person and
providing property damage coverage of at least Five
Million Dollars ($5,000,000) aggregate.
(2) Fire insurance with extended coverage, vandalism
and malicious mischief, riot and civil commotion,
and sprinkler leakage endorsement covering all
improvements located on the demised premises in an
amount equal to the full replacement cost thereof.
Such policies shall provide for any loss payable to
Lessor and at the request of Lessor to any first
mortgagee, as their respective interests may appear.
14
With respect to the payment of any taxes or the cost of compliance with
any statute, regulation or ordinance, Lessee shall have the right at its own
expense to contest the amount of such taxes or the necessity or manner of
comp1iance with such regulation, statute, or ordinance in any administrative or
court proceeding, saving Lessor harmless from any tax, interest penalties or
costs connected therewith by appropriate surety bond or other assurance
reasonably satisfactory to Lessor and its Mortgagee. Lessor agrees to cooperate
with Lessee in such contest by executing petitions or other documents necessary
to proceed with such contest if requested by Lessee and to furnish such relevant
information to Lessee pertinent to such contest if available to Lessor.
5. Adjustment for Cost of Living. The minimum monthly rate shall be
subject to adjustment at the commencement of the sixth (6th) year of the term
and at the commencement of each sixth (6th) year, thereafter so long as this
lease is in effect ("the adjustment date") as follows: The base for computing
the adjustment is the San Francisco/Oakland-All Urban Consumers Index, published
by the United States Department of Labor, Bureau of Labor Statistics ("Index"),
which is published for the month nearest the data of the commencement of the
term ("Beginning Index"). If the Index published nearest the adjustment date
("Extension Index") has increased over the Beginning Index, the minimum month1y
rent shall be set (until the next rent adjustment) by multiplying the minimum
monthly rent by a fraction, the numerator of which is the Extension Index and
the denominator of which is the Beginning Index. Such increase shall not exceed
four percent (4) per year (2O% per adjustment) and in
15
no case sha1l the minimum monthly rent be less than the minimum monthly rent set
forth in paragraph 3.
If the index is discontinued or revised during the term, such other
government index or computation with which it is replaced shall be used in order
to obtain substantially the same result as would be obtained if the Index had
not been discontinued or revised.
6. Construction of Improvements. Lessor agrees to construct a building,
parking lot and other improvements on the Leased Premises in accordance with
plans and specifications described in Exhibit "B" attached hereto and
incorporated into this Lease Agreement by reference. Such plans and
specifications sha1l be in general accordance with preliminary plans and
specifications described in Exhibit "B-1" attached hereto and incorporated
herein by reference.
Lessor and Lessee agree that time is of the essence in the construction
of the improvements.
Lessor agrees to commence construction of the improvements as soon as
practicable, to proceed diligently and expeditiously and to complete the
construction thereof on or before November 1, 1988. In the event the
construction has not been substantially comp1eted in accordance with the
foregoing plans and specifications and in full compliance with all applicable
local, state and federal laws, statutes, regu1ations codes and ordinances, and
the Leased Premises ready for occupancy as evidenced by a temporary certificates
of occupancy issued by competent authority, on or before November 1, 1988, than
the Lessee may at its option upon thirty (30) days prior written notice to
Lessor, terminate this Lease without further obligation
16
and shall be reimbursed by Lessor for all out of pocket expenses incurred by
Lessee up to the date of such prior written notice and the parties shall be
discharged from all obligations hereunder.
Lessee's option to terminate sha1l be in addition to any other legal or
equitable remedy otherwise available to Lessee, provided, however, that in the
event construction of the improvements is delayed due to acts of God, fire or
other casua1ty, 1abor disputes or other causes beyond the control of Lessor,
than the date for fina1 comp1etion shall be adjusted for a period equal to such
de1ay or delays, but in no event shall the date for final comp1etion be
postponed beyond December 1, l988.
When the construction of the improvements has been substantially
completed, Lessor agrees to furnish to Lessee a certificate of Lessor's
architect or engineer stating that the improvements have been constructed
substantia11y in accordance with the plans and specifications. Upon receipt of
such certificate Lessee sha1l have the right of inspection, and upon
verification by Lessee that such plan and specification have been comp1ied with
agrees to provide Lessor within a reasonable time with a written acknow1edgement
of the acceptance of the improvements.
The Commencement Date of this Lease sha11 be the date of Lessee's receipt
and verification of such architect's or engineer's certificate, unless Lessor
and Lessee agree otherwise in writing.
If any disagreement occurs between Lessor and Lessee as to whether the
improvements have been substantia1ly
17
completed in accordance with the plans and specifications, the parties sha1l
select an independent architect to inspect the construction and certify as to
such completion thereof. The independent architect's certificate shall be
binding on the parties, and in the event any alteration or correction is
required Lessor sha11 promptly cause such to be made. In the event of such
disagreement, the Commencement Date sha1l become the first day of the ca1endar
month fo1lowing the decision of the independent architect, or the comp1etion of
the required a1terations or corrections, whichever comes later.
Lessor, in connection with the construction of the improvements
guarantees and warrants:
(a) That the materials, equipment and fixtures sha1l be as specified
in the plans and specifications, and will comply with all
applicable codes, standards, rules, ordinances, regulations, laws,
and statutes pertaining thereto. Lessor shall also transfer to
Lessee all warranties and guarantees included with all such
materials, equipment and fixtures, together with all builder
warranties furnished in connection with the Leased Premises.
(b) That the work will be done in a workmanlike manner, and
(c) That the Lessor will correct any defect or breach of all such
Warranties provided Lessee gives Lessor written notice within the
warranty period, or in the event no warranty period is specified,
then within two (2) years after the Commencement Date.
(d) Notwithstanding (a), (b) or (c) above, the Lessor agrees to be
responsible, for the term of this Lease for a1l structural
defects.
18
7. Partial Occupancy. Lessee sha11 have the right for no renta1, during
the course of construction of the improvements on the Leased Premises and prior
to comp1etion thereof, to install its fixtures necessary or desirab1e for its
use of the Leased Premises, provided that the exercise of such right does not
unreasonably interfere with or impair Lessor's construction of the improvements.
In the event Lessee has occupied and is using the Leased Premises for its
benefit other than for preparatory work for the doing of business during any
period of disagreement as to substantia1 completion specifical1y referred to in
paragraph 6, if such has occurred, Lessee sha1l be liable for the rent from the
commencement date of such use.
8. Improvements and Use of Leased Premises. The leased Premises are to be
used by the Lessee for any legal purpose. Lessee shall not use Leased Premises
or fail to maintain them in any manner constituting a violation of any
ordinance, statute, regulation or order of any governmental authority,
including, but not limited to, those governing zoning, health, safety and
occupational hazards, and pollution and environmenta1 control, nor will the
Lessee knowingly maintain or permit any nuisance to occur on the Leased
Premises. Lessee may use the premises for warehouse, related office and other
selected uses and Lessor warrants that such uses will not constitute a violation
of any existing ordinance, statute, regulation, code, or order of any
governmental authority.
19
9. Maintenance and Repairs. During the term of this Lease the Lessee
sha11, except as provided in Section 6 above, maintain in good condition and
repair the entire Leased Premises including the roof, wa11s and floors, normal
wear and tear excluded.
10. Assignments and Sublease. The Lessee sha11 not assign this Lease in
who1e or in part or sublet the Leased Premises in whole or in part without the
prior written consent of the Lessor. Lessor express1y covenants not to
unreasonably withhold such consent. Lessee shall, however, have the right to
freely assign the Lease to another affiliate of Lessee without the prior written
consent of Lessor. No consent shall be required in the event of a transfer
incident to an acquisition of substantial1y a1l the assets of Lessee or its
merger or consolidation, where the acquirer or resulting entity assumes Lessee's
obligations under this Lease.
11. Default and Remedy. Each of the fo1lowing shall be deemed a defau1t
by the Lessee:
(a) Failure to pay the rent as herein provided when due.
(b) Fai1ure to make additional payments provided in this Lease when
due.
(c) Failure to perform or to commence performance of any act to be
performed by the Lessee hereunder and to di1igently pursue such
performance or failure to comply with any condition or covenant
contained herein.
(d) The abandonment of the Leased Premises by the
20
Lessee or its adjudication as a bankrupt, the making by the Lessee
of a general assignment for the benefit of creditors; the Lessee's
taking the benefit of any insolvency action or law; the
appointment of a permanent receiver or trustee in bankruptcy for
the Lessee or its assets, the appointment of a temporary receiver
for the Lessee or its assets if such temporary receivership has
not been vacated or set aside within a reasonable period not to
exceed ninety (90) days from the date of such appointment, the
initiation of an arrangement or similar proceedings for the
benefit of creditors by or against Lessee, dissolution or other
termination of Lessee's corporate charter.
In the event of any default provided above and the continuance of such a
defau1t after thirty (30) days prior written notice is given by Lessor to Lessee
in the case of paragraphs (a), (b) and (d) above and sixty (60) days prior
written notice is given by Lessor to Lessee in the case of paragraph (c) above,
this Lease sha1l terminate at the option of the Lessor. In the event of
termination of this Lease, after such default and such notice, the Lessor may
re-enter the Leased Premises, take possession of all or any part thereof, and
remove a1l property and persons therefrom and shall not be liable for any damage
therefor or for trespass unless such damage is due to the willful or neg1igent
act or omissions of Lessor, its agents, representatives or employees. No such
re-entry shall be deemed an acceptance of the surrender of this Lease or a
satisfaction of the Lessee's obligation to pay the rent as provided herein or
any other obligations of Lessee hereunder.
The fai1ure of the Lessor to exercise any option
21
herein provided on account of any default sha11 not constitute a waiver of the
same or any subsequent default and no waiver of any condition or covenant of
this Lease by either party sha11 be deemed to constitute a waiver by either
party of any default for the same or any other condition or covenant.
12. A1terations. Lessee shall not permit alterations or upon any part of
the Leased Premises without first obtaining the written consent of the Lessor.
Lessor expressly covenants not to withhold his consent unreasonably. Lessor and
Lessee shall agree in writing prior to Lessor's consent to any such addition or
alteration as to whether such addition and alteration may be removed at the
expiration of the Leased Term or may remain as a part of the Leased Premises
provided, however, that the Lessee sha1l indemnify and save harmless the Lessor
from all cost, loss or expense in connection with any construction or
installation done or requested by Lessee for its use or benefit, and provided
such cost, 1oss or expense is not due to any willful or negligent act or
omission of Lessor, its agents, representatives or employees. No person sha11 be
entitled to any lien directly or indirectly derived through or under the Lessee
or through or by virtue of any act or omission of the Lessee upon the Leased
Premises for any improvements or fixtures made thereon or installed therein or
for or on account of any labor or material furnished to the Leaned Premises or
for or an account of any matter or thing whatsoever; and nothing in this Lease
contained shal1 be construed to constitute a consent by the Lessor to the
creation of any lien.
Lessee shall have the right, prior to the expiration of the Lease Term,
to remove all of Lessee's trade fixtures,
22
equipment and such additions and improvements as required pursuant to the first
paragraph of this paragraph 12; provided that at such time all rents stipulated
herein are paid in full and any resulting damage to the Leased Premises prompt1y
repaired, reasonable wear and tear excepted.
13. Inspection. Lessor or Lessor's agent shall be permitted to inspect or
examine the Leased Premises at any reasonable time after prior written notice to
Lessee. Lessor sha1l have the right to make any repairs to the Leased Premises
which are reasonably necessary for its preservation. In the event that any such
repairs are the obligation of the Lessee, Lessor agrees to give thirty (30)
days' prior written notice to Lessee that such repairs are required (except in
the case of an emergency where immediate repairs are necessary to prevent
immediate damage to the Leased Premises), and in the event Lessee fails to make
such repair within a reasonable time, but in no event shorter than such thirty
(30) day period, Lessor may, but sha11 not be obligated to, make such repairs at
Lessee's expense.
14. Lessor's Right to Mortgage. Lessee agrees at any time, and from time
to time, upon prior written request by Lessor, or the holder of any mortgage or
other instrument of security given by Lessor, to execute, acknow1edge and
de1iver to Lessor or to the holder of such instrument, a statement in writing
certifying that this Lease has not been modified and is in full force and effect
(or if there have been modifications, that the same are in full force and effect
and state such modifications), that there are no defaults hereunder by Lessor,
if such is the fact, and the dates to which the fixed rents and other charges
have been paid, it being intended that
23
any such statement delivered pursuant to this paragraph may be re1ied upon by
the holder or any such mortgage or other instrument of security or any
authorized assignee of Lessor.
Lessee's right shall be subject to any bona fide mortgage now existing
upon or hereafter placed upon the Leased Premises by Lessor, provided the
Mortgagee has notice of Lessee's rights and privileges under this lease. If,
however, the mortgagee or its successor in interest sha11 take title of the
Leased Premises through forec1osure or other legal proceedings, or deed in lieu
of foreclosure or such proceedings:
(1)Lessee sha1l be allowed to continue in possession of the Leased
Premises and shall be entitled to all rights and privileges as provided
for in this Lease so long as Lessee shall not be in default, and (2) the
mortgagee of such successor, after transfer of title, execute an
attornment agreement whereby the Lessee becomes the lessee of the
mortgagee or such successor in accordance with and subject to the terms
and conditions of this Lease, excepting paragraph 6 thereof. Nothing
provided in the immediately foregoing provision shall, however, diminish
the right of Lessee to terminate this Lease and its obligations hereunder
in accordance with paragraph 6 upon a failure of Lessor to complete
construction of the improvements nor relieve any liability or obligation
of Lessor or Lessee.
15. Fire and Other Casualty. If the Leased Premises are partially damaged
by fire or other casualty to the extent that the Leased Premises can be repaired
within ninety (90) days from the date of such damage, Lessor sha1l notify
24
Lessee of such fact by written notice within ten (10) days of such damage and
Lessor agrees to promptly repair and restore the Leased Premises, and the rent
shall proportionately ▇▇▇▇▇ during the period of such restoration.
If the Leased Premises are substantially damaged by fire or other
casualty to the extent that the Leased Premises cannot be repaired within ninety
(90) days from the date of such damage, Lessor shall notify Lessee of such fact
by written notice within ten (10) days of such damage, and then
(a) Lessee shall have the right to terminate this Lease as of the date
of the fire or casualty by notice to Lessor within thirty (30)
days after such notice, or
(b) If the Lease is not terminated by Lessee then the Lessor shall
repair, restore, or rehabilitate the building or the premises at
the Lessor's expense within one hundred twenty (120) days after
such casua1ty. The Lease shall not terminate but rent shall be
abated on a per diem basis while the Premises are untenantable. If
the Lessor so proceeds to repair, restore or rehabilitate the
building or the Leased Premises and does not substantially
complete the work within the one hundred twenty (120) day period,
either party can terminate this Lease of the data of the fire or
casua1ty by notice to the other party not later than one hundred
twenty (120) days after such casua1ty. In the event Lessee does
not terminate the Lease after the said one hundred twenty (l20)
day period, Lessor sha1l pay to Lessee the difference between the
Lease rent and the rental amount Lessee must pay for substitute
quarters beyond the one hundred twenty (l20) day reconstruction
period.
In the event of termination of the Lease, rent
25
shall be apportioned on a par diem basis and be paid to the date of the fire or
casua1ty.
16. Eminent Domain. If all or any part of the Leased Premises shall be
acquired by the exercise of eminent domain by any public or quasi public body in
such a manner that the Leased Premises shall become unusable by the Lessee for
the purpose it is than using the Leased Premises, even if they would be
restored, repaired or altered as provided in the last sentence of this paragraph
l6, then in such event this lease may be terminated by the Lessee on the date
that 1egal possession thereof is taken by the applicable governmental authority.
The Lessor shall be entitled to all of the damages awarded by the condemning
authority for the value of the Leased Premises, provided that the Lessee shall
be entitled to any award for the cost of or the removal of its stock equipment
and fixtures and cost of remova1 of any alterations and improvements which
Lessee is permitted to remove as provided in paragraph 12, and relocation
expenses and, any other part of the award attributab1e to damage suffered by
Lessee to the extent that any of these items are allowed as reimbursement or
compensation for such acquisition in addition to the fair market va1ue of the
property acquired and to the cost of repairing the remainder of any improvements
not acquired, as such fair market va1ue and cost is reasonab1y estab1ished by
the condemning authority.
In the event of condemnation that does not result in termination of this
Lease, the Lessor agrees, at its expense to restore, a1ter and repair the
remaining portion of the Leased Premises and place the same in good and usable
condition for Lessee's use and purposes as promptly as reasonab1y
26
possible, and with the rent to be equitab1y abated as of the date Lessee's use
of the Leased Premises is diminished.
17. Lessor's and Lessee's Non-Liability. The Lessor shall not be liable
for damage either to any person or property due to the condition of the Leased
Premises or to the occurrence of any accident in or about the Leased Premises or
due to any act or neglect of the Lessee or any other occupant of the Leased
Premises or of any person, unless such damage is a result of any error,
omission, faulty workmanship or negligence in the original construction of the
Leased Premises or any act or neglect of Lessor, its agents, representatives, or
employees.
18.Utilities. Lessee shall pay for the use of all utilities serving the
Leased Premises and which are for the benefit of the Lessee.
19. Surrender. Upon the expiration or other termination of this Lease,
Lessee shall quit and surrender to the Lessor the Leased Premises, together with
all other property affixed to the Leased Premises (with the exception of trade
fixtures, alterations, additions and improvements which Lessee has the right to
remove), in good order and condition, ordinary wear and tear, fire and other
casualties excepted. Any damage caused to the Leased Premises by removal of any
property shall be promptly repaired by the Lessee.
If the Lessee shall remain in possession of all or any part of the Leased
Premises after the expiration of the Lease Term, then the Lessee shall be deemed
Lessee of the Leased Premises from month to month at the same rental and subject
to all the terms and conditions hereof.
27
20. Waiver. No waiver of any covenant or condition or the breach of any
covenant or condition of this Lease shall be taken to constitute a waiver of any
subsequent breach of such Covenant or condition nor justify or authorize a
nonobservance on any other occasion of such covenant or condition or any other
covenant or condition.
21. Covenant of Quiet Enjoyment. Lessor agrees that if the Lessee shall
perform all of the covenants and agreements herein provided to be performed on
the Lessee's part, the Lessee shall, at all times during the Lease Term, have
the peaceable and quiet enjoyment Of possession of the Leased Premises without
any manner of hindrance from the Lessor or any persons lawfully claiming under
the Lessor, and Lessor shall defend Lessee's interest in the Leased Premises
against all persons claiming, lawfu11y or otherwise, under the Lessor.
22. Notice. Any notice required or permitted to be given or served by
either party to this Lease sha11 be deemed to have been given or served when
made in writing, by certified or registered mail, addressed as follows:
Lessor: ▇▇▇▇▇▇▇ Properties, Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Lessee: ▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Copy to: Legal Department
All rental payments shall be made to the Lessor at the above
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address. The addresses may be changed from time to time by either party by
serving notice as above provided.
23. Option to Purchase. Lessee shall have the option to purchase the
Leased Premises as follows:
(a) At any time during the ninety (90) day period beginning with the
date of execution of this agreement Lessee sha11 have the option
("First Option") to purchase the Leased Premises for the amount of
$2,500,000. which First Option may be exercised by lessee giving
written notice to Lessor at any time during such ninety (90) day
period;
(b) At any time during the ninety (90) day period beginning at the
expiration of the initia1 ten (10) year lease term, Lessee shall
have the option ("Second Option") to purchase the Leased Premises
for Four Million Dollars ($4,000,000). Such Second Option may be
exercised by Lessee giving written notice to Lessor at any time
during such ninety (90) day period.
(c) With respect to any additions or expansions to the original Leased
Premises, Lessee shall have the option to purchase that addition
or expansion together with the original Leased Premises at any
time during the ninety (90) day period commencing ten (10) years
after commencement of the Lease payments covering the costs of
such addition or expansion at the then appraised Fair Market
Value.
24. Option to Cancel. In the event Lessee exercises its option to renew
this Lease after the original term, Lessee shall have the right to cancel this
Lease at any time during such extended lease term by giving Lessor at least
twelve
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(12) month's prior written notice. Lessor agrees that, in consideration of the
right of Lessee to such early termination, it will accept the equivalent of six
(6) month's base rent as liquidation damages therefor, in addition to the twelve
(12) month's rent due Lessor after such notice.
25. Expansion & Right of First Refusal. Landlord agrees that upon written
notice by Tenant (such request to be in accordance with the provisions of
paragraph 22 hereof pertaining to notices) de1ivered to Landlord, and subject to
Tenant's exercise of its Right of First Refusal, as set forth below, Landlord
sha11, at its so1e cost and expense, cause to be erected on land adjacent to the
demised premises ("Expansion Land") an expansion ("Expansion") of the original
building which is part of the premises 1eased to Tenant hereunder, (such
Expansion Land and Expansion being out lined in green and designated Future
Expansion on Exhibit "A-1" attached hereto). Landlord agrees to complete the
Expansion within eight (8) months from the date of approval of p1ans and
specifications and cost of such Expansion as hereinafter provided .
Landlord shal1 within thirty (30) days after such written notice prepare
and furnish to Tenant for Tenants approval, plans and specifications for such
Expansion together with Landlord's estimate of the cost (including profit and
overhead) of such Expansion. The Tenant shall approve the p1ans and
specifications and Landlord's estimate for costs for such expansion within
thirty (30) days of the receipt of such p1ans and specifications and estimate of
costs. Failure of the Tenant to disapprove the same within such time shall
constitute approval. Upon approval of such p1ans and
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specifications by Tenant, Landlord shal1 promptly cause such Expansion to be
made with due diligence and in a good workmanlike manner.
Shou1d Tenant disapprove of the Landlord' s estimate of the cost of such
Expansion and if the Landlord and Tenant cannot agree upon a fixed cost to be
used as a base for computing the additional renta1 due hereunder for such
Expansion, then Tenant shal1 have the right and privi1ege of securing bids for
the construction of such Expansion from other competent and qua1ified
contractors ready, willing and able to construct such Expansion according to the
p1ans and specifications approved by Tenant. No bid from such other contractors
will be considered for the purposes of this paragraph unless such contractor is
qualified to furnish a payment and performance bond from a corporate surety
licensed to do business in the State of Nevada. If any of the bids received from
such other contractors are 1ess than Landlord's estimate of the cost of the
construction of such Expansion , Landlord may, if Land1ord so elects, proceed
with the construction of such Expansion without employing the other contractor
submitting the lowest bid, or if Landlord elects not to so proceed with the
construction of such Expansion, Landlord shall be required and obligated at
Landlord's so1e cost and expense to employ the other contractor submitting the
lowest bid, provided such contractor is qualified under the terms of this
paragraph. Tenant agrees that the rental under said Lease shall be increased by
reason of such Expansion and shal1 be determined on the basis of the cost of
such Expansion as above provided.
Once the Expansion is substantia1ly complete and
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ready for occupancy by Tenant, the expanded space sha11 be deemed a part of the
original demised premises as defined in this Lease and all of the terms and
provisions of this Lease shal1 be applicable to same, except that rental shal1
be adjusted as herein specified.
In the event Land1ord should receive a bona fide offer to purchase or
develop the Expansion Land at any time during the original term of this Lease or
any extension thereof, Land1ord shall notify Tenant, in writing, of such offer
and of Landlord's intention to accept same. Tenant shall then have the right,
within sixty (60) days of receipt of Land1ord' s notice, to lease the unimproved
Expansion Land from Landlord at an annual rental rate calculated by multiplying
the appraised va1ue of the Expansion Land, as hereafter determined ( "Appraised
Value" ) by a figure which will result in a return to Landlord of l2% per year.
For example , if the Expansion Land comprises 1.00 acre, and the annua1 return
is 12%, and the Expansion Land is appraised at $2.00 per square foot the annual
renta1 would be 2.00 x 43,560 x 0.12 = $10,454.00. The Appraised Value shall be
the value determined by two appraisers, each chosen by one of the parties. If
the appraisers cannot agree on a sing1e value, good the two appraisers shall
choose a third appraiser, all of whose fees shall be split equally between
Landlord and Tenant. The Appraised Value would then be the average of the two
va1ues which are closest to each other, but if one value (the "Appraisal") is
equidistant from the other two appraisals both of which are farther from each
other than from the Appraisal, then Appraised Value shall be such Appraisal.
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26. Toxic and Hazardous Materials. Lessor warrants and represents that,
to the best of its knowledge, at the Commencement Data the Leased Premises
comply with all ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and state 1aws, requirements, rules and
orders re1ating to health, safety, environmental protection, storage, discharge,
waste disposa1, and water and air quality, and that there has been no unlawful
discharge, leakage, spillage commission or pollution of any hazardous or toxic
materials or substances on the Leased Premises.
Lessee agrees to use its best efforts to avoid any unlawful discharge,
treatment process, work leakage, spillage commission or pollution of any
hazardous toxic or noxious materials or substances on the Leased Premises during
the Lease Term or any extensions thereof. Lessee agrees to indemnify and hold
harmless Lessor from and against and to reimburse Lessor with respect to any and
all claims demands, fees, fines, penalties, settlement, judgments, obligations,
suits, losses, liabilities, damages, injuries, costs or expenses arising from or
on account of Lessee's unlawful discharge, treatment process, work, leakage,
spillage, commission or pollution of any hazardous, toxic or noxious materials
or substances on the Leased Premises.
The representations and warranties set forth in this paragraph 26 shal1
be deemed to be relied upon as being true and correct as of the date or the
execution and delivery of this Lease, regardless of any investigation.
The representations and warranties set forth in this paragraph 26 shall
be deemed to be relied upon as being true and correct as of the date of any
extension of this Lease.
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* Exhibit D is a list of changes to be made at no cost to Lessee and is
attached hereto and made a part hereof.
Lessor agrees to indemnify and hold Lessee and the premises free and
harmless from and against and to reimburse Lessee with respect to any and all
claims, demands, fees, fines, penalties, settlement, judgments, obligations,
suits, losses, liabilities, damages, injuries, costs or expenses (including
costs of investigation, settlement and defenses of such claims, plus interest,
penalties and attorneys' fees) arising from or on account of the inaccuracy or
breach of any of Lessor's representatives or warranties contained in this Lease.
27. Benefit of Lessor and Lessee. This Lease and all of the terms and
provisions hereof shal1 inure to the benefit of and be binding upon the Lessor
and Lessee, and their respective heirs , successors , assignees and 1egal
representatives. Notwithstanding such assignment, transfer or conveyance, Lessor
shall remain primarily liable to Lessee for all obligations under paragraph 6 of
this Lease.
28. Governing Law. This Lease shall be governed in accordance with the
laws of the State of Nevada .
29. Short Form of Lease. The parties agree at any time, upon the request
of the other party, to execute a short form of this Lease permitting its
recording to provide recorded notice of Lessee's leasehold estate and setting
forth the Commencement Date of the Lease.
IN WITNESS WHEREOF the parties hereto have executed this Lease Agreement
the day and year first above written.
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ATTEST:
__________________________________ By:____________________________________
"Lessor"
ATTEST: ▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
___________________________________ By:____________________________________
"Lessee
Exhibit B
Certain Modifications and Improvements Which May
Be Constructed by Sublessee at the Subleased
premises After Obtaining Consent of
▇▇▇▇▇▇▇ properties. Inc.
1. Modifications to the existing office build-out to:
a. Divide conference room at SE end into two separate office
(drywall construction); and
b. Divide employee break room/cafeteria into two separate
offices, thereby creating hallways to the
production/warehouse and patio (drywall construction and
split heat/air system line to accommodate both offices) .
2. Additional build-out into warehouse/production area, contiguous with the
North wall of the current office area utilizing approximately 2,000 sq.
feet of warehouse area. Build-out to consist of two stories to obtain a
total of 4,000 sq. feet for:
a. Additional offices;
b. Product showroom;
c. Employee break room/cafeteria; and
d. Employee lavatories and locker rooms.
3. Additional improvements to the production/warehouse area for:
a. Evaporative cooling of entire area;
b. Power line drops to assembly lines; and
c. Compressor (Caged, covered outside enclosure to code) with
air line drops to assembly line for air tools.
4. Demising wall from floor to ceiling (from East to West) to create 24,400
sq. feet of separate area for a possible sub-sublease to an approved
sub-subtenant (which sub-subtenant and sub-sublease shall be subject to
prior approval by Sublessor and Lessor as provided in the Sublease) and
the build-out of the existing drywall millwright enclosure at the North
East corner, to create approximately 800 sq. feet of office space
(drywall construction, heating/air conditioning and plumbing) .
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5. Security truck enclosure inside drive-in ramp, with adjoining man trap,
count room, and vault. Man trap, count room, and vault would be
modifications to the existing two-story build-out extending into the
warehouse, adjacent to the drive in ramp door.
6. Installation of a central station monitored alarm system and card key
access (or laser retina eye scanner) for selected high security offices
and work areas in the existing and additional build-out.
All of the above modifications or improvements, if constructed by Sublessee,
shall be constructed, at Sublessee's sole expense, in accordance with applicable
government regulations, codes, and construction requirements. Construction will
be performed by qualified contractors in a good and workmanlike mamner with
first-class materials and workmanship.