STANDARD
INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET
AIR
COMMERCIAL REAL ESTATE ASSOCIATION
1.
Basic
Provisions (“ Basic Provisions”).
1.1
Parties: This Lease (“Lease”), dated for reference purposes only July 1, 2005,
is made by and between Berkshire Holdings, LLC (“Lessor”) and Waat Corp., a
California corporation (“Lessee”), (collectively the “Parties”, or individually
a “Party”).
1.2
(a)
Premises: That certain portion of the Project (as defined below), including
all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 14242 Ventura Boulevard, Suite 300
located in the City of Sherman Oaks, County of Los Angeles, State of California,
with zip code 91423, as outlined on Exhibit A attached hereto (“Premises”) and
generally described as (describe briefly the nature of the Premises): Office
space
In
addition to Lessee’s rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the any utility raceways
of
the building containing the Premises (“Building”) and to the common Areas (as
defined in Paragraph 2.7 below), but shall not have any rights to the roof
or
exterior walls of the Building or to any other buildings in the Project. The
Premises, the Building, the Common Areas, the land upon which they are located,
along with all other buildings and improvements thereon, are herein collectively
referred to as the “Project.” (See also Paragraph 2)
1.2
(b)
Parking: 200 unreserved vehicle parking spaces (“Unreserved Parking Spaces”) and
30 reserved vehicle parking spaces (“Reserved Parking Spaces”). (See also
Paragraph 2.6)
1.3
Term:
five years and zero months (“Original Term”) commencing July 15, 2005
(“Commencement Date”) and ending July 15, 2010 (“Expiration Date”). (See also
Paragraph 3)
1.4
Early
Possession: N/A (“Early Possession Date”).
(See
also
Paragraphs 3.2 and 3.3)
1.5
Base
Rent: $21,000.00 per month (“Base Rent”), payable on the first day of each month
commencing July 15, 2005 (See also Paragraph 4)
¨
If this
box is checked, there are provisions in this Lease for the Base Rent to be
adjusted.
1.6
Lessee’s Share of Common Area Operating Expenses: Thirty-two percent (32%)
(“Lessee’s Share”). Lessee’s Share has been calculated by dividing the
approximate square footage of the Premises by the approximate square footage
of
the Project. In the event that the size of the Premises and/or the Project
are
modified during the term of this Lease, Lessor shall recalculate Lessee’s Share
to reflect such modification.
1.7
Base
Rent and Other Monies Paid Upon Execution:
(a) Base
Rent: $10, 500.00 for the period July 15, 2005 - August 15, 2005
(b) Common
Area Operating Expenses: $N/A for the period ___________
(c)
Security
Deposit: $21,000.00 (“Security Deposit”). (See also Paragraph 5)
(d)
Other:
$N/A for_______________________________________
(e) Total
Due
Upon Execution of this Lease: $31,500.00
1.8
Agreed Use: Office use and no other purpose (See also Paragraph 6)
1.9
Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph
8)
1.10
Real
Estate Brokers: (See also Paragraph 15) N/A
(a)
Representation: The following real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction
(check
applicable boxes):
þ
N/A
represents Lessor exclusively (“Lessor’s Broker”);
þ
N/A
represents Lessee exclusively (“Lessee’s Broker”); or
¨
_________________ represents both Lessor and Lessee (“Dual
Agency”).
(b)
Payment to Brokers: Upon execution and delivery of this Lease by both Parties,
Lessor shall pay to the Brokers the brokerage fee agreed to in a separate
written agreement (or if there is no such agreement, the sum of N/A or ___
% of
the total Base Rent for the brokerage services rendered by the
Brokers).
1.11
Guarantor. The obligations of the Lessee under this Lease are to be guaranteed
by N/A (“Guarantor”). (See also Paragraph 37)
1.12
Attachments. Attached hereto are the following, all of which constitute a part
of this Lease:
þ
an
Addendum consisting of Paragraphs 1 through 1;
þ
a site
plan depicting the Premises;
¨
a site
plan depicting the Project;
¨
a
current set of the Rules and Regulations for the Project:
¨
a
current set of the Rules and Regulations adopted by the owners’
association;
¨
a Work
Letter;
¨
other
(specify)
2.
Promises.
2.1
Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Premises, for the term, at the rental, and upon all of the terms, covenants
and conditions set forth in this Lease. Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in
calculating Rent, is an approximation which the Parties agree is reasonable
and
any payments based thereon are not subject to revision whether or not the actual
size is more or less. NOTE: Lessee is advised to verify the actual size prior
to
executing this Lease.
2.2
Condition. Lessor shall deliver that portion of the Premises contained within
the Building (“Unit”) to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), and, so long as the required service contracts described in Paragraph
7.1(b) below are obtained by Lessee and in effect within thirty days following
the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading
doors, sump pumps, if any, and all other such elements in the Unit, other than
those constructed by Lessee, shall be in good operating condition on said date,
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects, and that the Unit does not contain
hazardous levels of any mold or fungi defined as toxic under applicable state
or
federal law. If a non-compliance with such warranty exists as of the Start
Date,
or if one of such systems or elements should malfunction or fail within the
appropriate warranty period, Lessor shall, as Lessor’s sole obligation with
respect to such matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with specificity
the
nature and extent of such non-compliance, malfunction or failure, rectify same
at Lessor’s expense. The warranty periods shall be as follows: (i) 6 months as
to the HVAC systems, and (ii) 30 days as to the remaining systems and other
elements of the Unit. If Lessee does not give Lessor the required notice within
the appropriate warranty period, correction of any such non-compliance,
malfunction or failure shall be the obligation of Lessee at Lessee’s sole cost
and expense (except for the repairs to the fire sprinkler systems, roof,
foundations, and/or bearing walls - see Paragraph 7).
2.3
Compliance. Lessor warrants that to the best of its knowledge the improvements
on the Premises and the Common Areas comply with the building codes that were
in
effect at the time that each such improvement, or portion thereof, was
constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable
Requirements”). Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee’s use (see Paragraph
49), or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements and especially the zoning
are appropriate for Lessee’s intended use, and acknowledges that past uses of
the Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt
of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6
months following the Start Date, correction of that non-compliance shall be
the
obligation of Lessee at Lessee’s sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Unit, Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of
such work as follows:
(a)
Subject to Paragraph 23(c) below, if such Capital Expenditures are required
as a
result of the specific and unique use of the Premises by Lessee as compared
with
uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however that if such Capital Expenditure is required during
the last 2 years of this Lease and the cost thereof exceeds 6 months’ Base Rent,
Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor
has elected to pay the difference between the actual cost thereof and the amount
equal to 6 months’ Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such Capital
Expenditure and deliver to Lessor written notice specifying a termination date
at least 90 days thereafter. Such termination date shall however, in no event
be
earlier than the last day that Lessee could legally utilize the Premises without
commencing such Capital Expenditure.
(b)
If
such Capital Expenditure is not the result of the specific and unique use of
the
Premises by Lessee (such as, governmentally mandated seismic modifications),
then Lessor and Lessee shall allocate the obligation to pay for the portion
of
such costs reasonably attributable to the Premises pursuant to the formula
set
out in Paragraph 7.1(d); provided, however, that if such Capital Expenditure
is
required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor
shall have the option to terminate this Lease upon 90 days prior written notice
to Lessee unless Lessee notifies Lessor, in writing, within 10 days after
receipt of Lessor’s termination notice that Lessee will pay for such Capital
Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct
same, with Interest, from Rent until Lessor’s share of such costs have been
fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of
the Rent due and payable for the remainder of this Lease is not sufficient
to
fully reimburse Lessee on an offset basis, Lessee shall have the right to
terminate this Lease upon 30 days written notice to Lessor.
(c)
Notwithstanding the above, the provisions concerning Capital Expenditures are
intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as
a
result of an actual or proposed change in use, change in intensity of use,
or
modification to the Premises then, and in that event, Lessee shall either:
(i)
immediately cease such changed use or intensity of use and/or take such other
steps as may be necessary to eliminate the requirement for such Capital
Expenditure, or (ii) complete such Capital Expenditure at its own expense.
Lessee shall not have any right to terminate this Lease.
2.4
Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor
and/or Brokers to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable Requirements
and
the Americans with Disabilities Act), and their suitability for Lessee’s
intended use, (b) Lessee has made such investigation as it deems necessary
with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In addition,
Lessor acknowledges that: (i) Brokers have made no representations, promises
or
warranties concerning Lessee’s ability to honor the Lease or suitability to
occupy the Premises, and (ii) it is Lessor’s sole responsibility to investigate
the financial capability and/or suitability of all proposed
tenants.
2.5
Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph
2
shall be of no force or effect if immediately prior to the Start Date Lessee
was
the owner or occupant of the Premises. In such event, Lessee shall be
responsible for any necessary corrective work.
2.6
Vehicle Parking. Lessee shall be entitled to use the number of parking spaces
specified in Paragraph 1.2(b) on those portions of the Common Areas designated
from time to time by Lessor for parking. Lessee shall not use more parking
spaces than said number. Said parking spaces shall be used for parking by
vehicles no larger than full-size passenger automobiles or pick-up trucks,
herein called “Permitted Size Vehicles.” Lessor may regulate the loading and
unloading of vehicles by adopting Rules and Regulations as provided in Paragraph
2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common
Area without the prior written permission of Lessor. In addition:
(a)
Lessee shall not permit or allow any vehicles that belong to or are controlled
by Lessee or Lessee’s employees, suppliers, shippers, customers, contractors or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.
(b)
Lessee shall not service or store any vehicles in the Common Areas.
(c)
If
Lessee permits or allows any of the prohibited activities described in this
Paragraph 2.6, then Lessor shall have the right, without notice, in addition
to
such other rights and remedies that it may have, to remove or tow away the
vehicle involved and charge the cost to Lessee, which cost shall be immediately
payable upon demand by Lessor.
2.7
Common Areas - Definition. The term “Common Areas” is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the
Project and interior utility raceways and installations within the Unit that
are
provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas, roadways,
walkways, driveways and landscaped areas
2.8
Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers, contractors, customers and
invitees. during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall
the
right herein granted to use the Common Areas be deemed to include the right
to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may
have, to remove the property and charge the cost to Lessee, which cost shall
be
immediately payable upon demand by Lessor.
2.9
Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor
may appoint shall have the exclusive control and management of the Common Areas
and shall have the right, from time to time, to establish, modify, amend and
enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project.
2.10
Common Areas - Changes. Lessor shall have the right, in Lessor’s sole
discretion, from time to time:
(a)
To
make changes to the Common Areas, including, without limitation, changes in
the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways;
(b)
To
close temporarily any of the Common Areas for maintenance purposes so long
as
reasonable access to the Premises remains available;
(c)
To
designate other land outside the boundaries of the Project to be a part of
the
Common Areas;
(d)
To
add additional buildings and improvements to the Common Areas;
(e)
To
use the Common Areas while engaged in making additional improvements, repairs
or
alterations to the Project, or any portion thereof; and
(f)
To do
and perform such other acts and make such other changes in, to or with respect
to the Common Areas and Project as Lessor may, in the exercise of sound business
judgment, deem to be appropriate.
3.
Term.
3.1
Term.
The Commencement Date, Expiration Date and Original Term of this Lease are
as
specified in Paragraph 1.3.
3.2
Early
Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the
period of such early possession. All other terms of this Lease (including but
not limited to the obligations to pay Lessee’s Share of Common Area Operating
Expenses, Real Property Taxes and insurance premiums and to maintain the
Premises) shall be in effect during such period. Any such early possession
shall
not affect the Expiration Date.
3.3
Delay
In Possession. Lessor agrees to use its best commercially reasonable efforts
to
deliver possession of the Premises to Lessee by the Commencement Date. If,
despite said efforts, Lessor is unable to deliver possession as agreed, Lessor
shall not be subject to any liability therefor, nor shall such failure affect
the validity of this Lease or change the Expiration Date. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until Lessor
delivers possession of the Premises and any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of the delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed, but minus any days of delay caused by the acts or omissions of Lessee.
If possession is not delivered within 60 days after the Commencement Date,
Lessee may, at its option, by notice in writing within 10 days after the end
of
such 60 day period, cancel this Lease, in which event the Parties shall be
discharged from all obligations hereunder. If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. Except as otherwise provided, if possession is not tendered to Lessee
by the Start Date and Lessee does not terminate this Lease, as aforesaid, any
period of rent abatement that Lessee would otherwise have enjoyed shall run
from
the date of delivery of possession and continue for a period equal to what
Lessee would otherwise have enjoyed under the terms hereof, but minus any days
of delay caused by the acts or omissions of Lessee. If possession of the
Premises is not delivered within 4 months after the Commencement Date, this
Lease shall terminate unless other agreements are reached between Lessor and
Lessee, in writing.
3.4
Lessee Compliance. Lessor shall not be required to tender possession of the
Premises to Lessee until Lessee complies with its obligation to provide evidence
of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall
be
required to perform all of its obligations under this Lease from and after
the
Start Date, including the payment of Rent, notwithstanding Lessor’s election to
withhold possession pending receipt of such evidence of insurance. Further,
if
Lessee is required to perform any other conditions prior to or concurrent with
the Start Date, the Start Date shall occur but Lessor may elect to withhold
possession until such conditions are satisfied.
4.1
Rent
Defined. All monetary obligations of Lessee to Lessor under the terms of this
Lease (except for the Security Deposit) are deemed to be rent
(“Rent”).
4.2
Common Area Operating Expenses. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee’s Share (as specified in Paragraph
1.6) of all Common Area Operating Expenses, as hereinafter defined, during
each
calendar year of the term of this Lease, in accordance with the following
provisions.
(a)
“Common Area Operating Expenses” are defined, for purposes of this Lease, as all
costs incurred by Lessor relating to the ownership .and operation of the
Project, including, but not limited to, the following:
(i) The
operation, repair and maintenance, in neat, clean, good order and condition,
and
if necessary the replacement, of the following.
(aa)
The
Common Areas and Common Area improvements, including parking areas, loading
and
unloading areas, trash areas, roadways, parkways, walkways, driveways,
landscaped areas, bumpers, irrigation systems, Common Area lighting facilities,
fences and gates, elevators, roofs, and roof drainage systems
(bb)
Exterior signs and any tenant directories.
(cc)
Any
fire sprinkler systems.
(ii) The
cost
of water, gas, electricity and telephone to service the Common Areas and any
utilities not separately metered
(iii) Trash
disposal, pest control services, property management, security services, owners’
association dues and fees, the cost to repaint the exterior of any structures
and the cost of any environmental inspections.
(iv) Reserves
set aside for maintenance, repair and/or replacement of Common Area improvements
and equipment.
(v) Real
Property Taxes (as defined in Paragraph 10).
(vi) The
cost
of the premiums for the insurance maintained by Lessor pursuant to Paragraph
8.
(vii) Any
deductible portion of an insured loss concerning the Building or the Common
Areas.
(viii) Auditors,
accountants’ and attorneys’ fees and costs related to the operation,
maintenance, repair and replacement of the Project.
(ix) The
cost
of any capital improvement to the Building or the Project not covered under
the
provisions of Paragraph 2.3 provided, however, that Lessor shall allocate the
cost of any such capital improvement over a 12 year period and Lessee shall
not
be required to pay more than Lessee’s Share of 1/144th of the cost of such
capital improvement in any given month.
(x) Any
other
services to be provided by Lessor that are stated elsewhere in this Lease to
be
a Common Area Operating Expense.
(b)
Any
Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project
or to the operation, repair and maintenance thereof, shall be allocated entirely
to such Unit, Building, or other building. However, any Common Area Operating
Expenses and Real Property Taxes that are not specifically attributable to
the
Building or to any other building or to the operation, repair and maintenance
thereof, shall be equitably allocated by Lessor to all buildings in the
Project.
(c)
The
inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have
said improvements or facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.
(d)
Lessee’s Share of Common Area Operating Expenses is payable monthly on the same
day as the Base Rent is due hereunder. The amount of such payments shall be
based on Lessor’s estimate of the annual Common Area Operating Expenses. Within
60 days after written request (but not more than once each year) Lessor shall
deliver to Lessee a reasonably detailed statement showing Lessee’s Share of the
actual Common Area Operating Expenses incurred during the preceding year. If
Lessee’s payments during such year exceed Lessee’s Share, Lessor shall credit
the amount of such over-payment against Lessee’s future payments. If Lessee’s
payments during such year were less than Lessee’s Share, Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery by Lessor
to
Lessee of the statement.
(e)
Common Area Operating Expenses shall not include any expenses paid by any tenant
directly to third parties, or as to which Lessor is otherwise reimbursed by
any
third party, other tenant, or insurance proceeds.
4.3
Payment Lessee shall cause payment of Rent to be received by Lessor in lawful
money of the United States, without offset or deduction (except as specifically
permitted in this Lease), on or before the day on which it is due. All monetary
amounts shall be rounded to the nearest whole dollar. In the event that any
invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute
a
waiver and Lessee shall be obligated to pay the amount set forth in this Lease.
Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein
or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to
any
Late Charge and Lessor, at its option, may require all future Rent be paid
by
cashier’s check. Payments will be applied first to accrued late charges and
attorney’s fees, second to accrued interest, then to Base Rent and Common Area
Operating Expenses, and any remaining amount to any other outstanding charges
or
costs.
5.
Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during
the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use
be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the
Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor’s reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent,
and
otherwise within 30 days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.
6
Use
6.1
Use.
Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other purpose.
Lessee shall not use or permit the use of the Premises in a manner that is
unlawful, creates damage, waste or a nuisance, or that disturbs occupants of
or
causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or
delay its consent to any written
request for a modification of the Agreed Use, so long as the sane will not
impair the structural integrity of the Building or the mechanical or electrical
systems therein, and/or is not significantly more burdensome to the Project.
If
Lessor elects to withhold consent, Lessor shall within 7 days after such request
give written notification of same, which notice shall include an explanation
of
Lessor’s objections to the change in the Agreed Use.
6.2
Hazardous Substances.
(a)
Reportable Uses Require Consent. The term “Hazardous Substance” as used in this
Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either:
(i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority,
or
(iii) a basis for potential liability of Lessor to any governmental agency
or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.
(b)
Duty
to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that
a
Hazardous Substance has come to be located in, on under or about the Premises,
other than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor, and provide Lessor with a copy of any
report, notice, claim or other documentation which it has concerning the
presence of such Hazardous Substance.
(c)
Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance
to
be spilled or released in, on, under, or about the Premises (including through
the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense,
comply with all Applicable Requirements and take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of and for the maintenance,
security and/or monitoring of the Premises or neighboring properties, that
was
caused or materially contributed to by Lessee, or pertaining to or involving
any
Hazardous Substance brought onto the Premises during the term of this Lease,
by
or for Lessee or any third party.
(d)
Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee,
or
any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project not caused or contributed
to by Lessee). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration
or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically
so
agreed by Lessor in writing at the time of such agreement.
(e)
Lessor Indemnification. Lessor and its successors and assigns shall indemnify,
defend, reimburse and hold Lessee. its employees and lenders, harmless from
and
against any and all environmental damages, including the cost of remediation,
which are suffered as a direct result of Hazardous Substances on the Premises
prior to Lessee taking possession or which are caused by the gross negligence
or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this
Lease.
(f)
Investigations and Remediations. Lessor shall retain the responsibility and
pay
for any investigations or remediation measures required by governmental entities
having jurisdiction with respect to the existence of Hazardous Substances on
the
Premises prior to the Lessee taking possession, unless such remediation measure
is required as a result of Lessee’s use (including “Alterations”, as defined in
paragraph 7. 3(a) below) of the Premises, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor’s
agents to have reasonable access to the Premises at reasonable times in order
to
carry out Lessor’s investigative and remedial responsibilities.
(g)
Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph
9.1(e)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease
shall
continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required,
as
soon as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor’s desire to terminate this Lease as of the date 60 days
following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
12
times the then monthly Base Rent or $100,000, whichever is greater Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30
days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon
as
reasonably possible after the required funds are available. If Lessee does
not
give such notice and provide the required funds or assurance thereof within
the
time provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.
6.3
Lessee’s Compliance with Applicable Requirements. Except as otherwise provided
in this Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in
a timely manner, materially comply with all Applicable Requirements, the
requirements of any applicable fire insurance underwriter or rating bureau,
and
the recommendations of Lessor’s engineers and/or consultants which relate in any
manner to such Requirements, without regard to whether said Requirements are
now
in effect or become effective after the Start Date. Lessee shall, within 10
days
after receipt of Lessor’s written request, provide Lessor with copies of all
permits and other documents, and other information evidencing Lessee’s
compliance with any Applicable Requirements specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving the failure of Lessee or the
Premises
to comply with any Applicable Requirements Likewise, Lessee shall immediately
give written notice to Lessor of: (i) any water damage to the Premises and
any
suspected seepage, pooling, dampness or other condition conducive to the
production of mold, or (ii) any mustiness or other odors that might indicate
the
presence of mold in the Premises.
6.4
Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph
30) and consultants shall have the right to enter into Premises at any time,
in
the case of an emergency, and otherwise at reasonable times after reasonable
notice, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease. The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or
a
Hazardous Substance condition (see Paragraph 9.1) is found to exist or be
imminent, or the inspection is requested or ordered by a governmental authority.
In such case, Lessee shall upon request reimburse Lessor for the cost of such
inspection, so long as such inspection is reasonably related to the violation
or
contamination. In addition, Lessee shall provide copies of all relevant material
safety data sheets (MSDS) to Lessor within 10 days of the receipt of written
request therefor.
7.
Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.
7.1
Lessee’s Obligations
(a)
In
General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2
(Lessor’s Obligations). 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee’s sole expense, keep the Premises, Utility Installations
(intended for Lessee’s exclusive use, no matter where located), and Alterations
in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as
a
result of Lessee’s use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
pressure vessels, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights but excluding
any
items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee,
in keeping the Premises in good order, condition and repair, shall exercise
and
perform good maintenance practices, specifically including the procurement
and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee’s obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof
in
good order. condition and state of repair.
(b)
Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for, and
with
contractors specializing and experienced in the maintenance of the following
equipment and improvements, if any, if and when installed on the Premises:
(i)
HVAC equipment, (ii) boiler and pressure vessels, (iii) clarifiers, and (iv)
any
other equipment, if reasonably required by Lessor. However, Lessor reserves
the
right, upon notice to Lessee, to procure and maintain any or all of such service
contracts and Lessee shall reimburse Lessor, upon demand, for the cost
thereof.
(c)
Failure to Perform. If Lessee fails to perform Lessee’s obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written
notice to Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee’s behalf, and put the
Premises in good order, condition and repair, and Lessee shall promptly pay
to
Lessor a sum equal to 115% of the cost thereof.
(d)
Replacement Subject to Lessee’s indemnification of Lessor as set forth in
Paragraph 8.7 below, and without relieving Lessee of liability resulting from
Lessee’s failure to exercise and perform good maintenance practices, if an item
described in Paragraph 7.1(b) cannot be repaired other than at a cost which
is
in excess of 50% of the cost of replacing such item, then such item shall be
replaced by Lessor, and the cost thereof shall be prorated between the Parties
and Lessee shall only be obligated to pay, each month during the remainder
of
the term of this Lease, on the date on which Base Rent is due, an amount equal
to the product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (i.e. 1/144th
of
the cost per month). Lessee shall pay Interest on the unamortized balance but
may prepay its obligation at any time.
7.2
Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition),
2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject
to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common
Areas and all parts thereof, as well as providing the services for which there
is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall
not
be obligated to paint the exterior or interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate
glass of the Premises. Lessee expressly waives the benefit of any statute now
or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease.
7.3
Utility Installations; Trade Fixtures; Alterations.
(a)
Definitions. The term “Utility Installations” refers to all floor and window
coverings, air and/or vacuum lines, power panels, electrical distribution,
security and fire protection systems, communication cabling, lighting fixtures,
HVAC equipment, plumbing, and fencing in or on the Premises. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be removed
without doing material damage to the Premises. The term “Alterations” shall mean
any modification of the improvements, other than Utility Installations or Trade
Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or
Utility Installations” are defined as Alterations and/or Utility Installations
made by Lessee that are not yet owned by Lessor pursuant to Paragraph
7.4(a).
(b)
Consent. Lessee shall not make any Alterations or Utility Installations to
the
Promises without Lessor’s prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as long as they are
not visible from the outside, do not involve puncturing, relocating or removing
the roof or any existing walls, will not affect the electrical, plumbing, HVAC,
and/or life safety systems, and the cumulative cost thereof during this Lease
as
extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or
a sum equal to one month’s Base Rent in any one year. Notwithstanding the
foregoing, Lessee shall not make or permit any roof penetrations and/or install
anything on the roof without the prior written approval of Lessor. Lessor may,
as a precondition to granting such approval, require Lessee to utilize a
contractor chosen and/or approved by Lessor. Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent
of
the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits
and
the plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said permits and other Applicable Requirements
in a prompt and expeditious manner. Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient materials.
Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount in excess of one month’s Base
Rent, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to 150% of the estimated cost of such
Alteration or Utility Installation and/or upon Lessee’s posting an additional
Security Deposit with Lessor.
(c)
Liens; Bonds Lessee shall pay, when due all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use
on
the Premises, which claims are or may be secured by any mechanic’s or
materialman’s lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices
of
non-responsibility. If Lessee shall contest the validity of any such lien,
claim
or demand, then Lessee shall
at
its sole expense defend and protect itself, Lessor and the Promises against
the
same and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof. If Lessor shall require, Lessee shall
furnish a surety bond in an amount equal to 150% of the amount of such contested
lien, claim or demand, indemnifying Lessor against liability for the same.
If
Lessor elects to participate in any such action, Lessee shall pay Lessors
attorneys’ fees and costs.
7.4
Ownership; Removal; Surrender; and Restoration.
(a)
Ownership Subject to Lessor’s right to require removal or elect ownership as
hereinafter provided, all Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part of the Premises. Lessor
may, at any time, elect in writing to be the owner of all or any specified
part
of the Lessee Owned Alterations and Utility Installations. Unless otherwise
instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become
the
property of Lessor and be surrendered by Lessee with the Premises.
(b)
Removal. By delivery to Lessee of written notice from Lessor not earlier than
90
and not later than 30 days prior to the end of the term of this Lease, Lessor
may require that any or all Lessee Owned Alterations or Utility Installations
be
removed by the expiration or termination of this Lease. Lessor may require
the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent
(c)
Surrender; Restoration. Lessee shall surrender the Premises by the Expiration
Date or any earlier termination date, with all of the improvements, parts and
surfaces thereof broom clean and free of debris, and in good operating order,
condition and state of repair, ordinary wear and tear excepted. “Ordinary wear
and tear” shall not include any damage or deterioration that would have been
prevented by good maintenance practice. Notwithstanding the foregoing, if this
Lease is for 12 months or less, then Lessee shall surrender the Premises in
the
same condition as delivered to Lessee on the Start Date with NO allowance for
ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall also completely
remove from the Premises any and all Hazardous Substances brought onto the
Premises by or for Lessee, or any third party (except Hazardous Substances
which
were deposited via underground migration from areas outside of the Project)
even
if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee
and
shall be removed by Lessee. Any personal property of Lessee not removed on
or
before the Expiration Date or any earlier termination date shall be deemed
to
have been abandoned by Lessee and may be disposed of or retained by Lessor
as
Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8.
Insurance; Indemnity.
8.1
Payment of Premiums. The cost of the premiums for the insurance policies
required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods
commencing prior to, or extending beyond. the term of this Lease shall be
prorated to coincide with the corresponding Start Date or Expiration
Date.
8.2
Liability Insurance.
(a)
Carried by Lessee. Lessee shall obtain and keep in force a Commercial General
Liability policy of insurance protecting Lessee and Lessor as an additional
insured against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of
the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$1,000,000 per occurrence with an annual aggregate of not less than $2,000,000.
Lessee shall add Lessor as an additional insured by means of an endorsement
at
least as broad as the Insurance Service Organization’s “Additional
Insured-Managers or Lessors of Premises” Endorsement and coverage shall also be
extended to include damage caused by heat, smoke or fumes from a hostile fire.
The policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed
under
this Lease as an “insured contract” for the performance of Lessee’s indemnity
obligations under this Lease. The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
Lessee shall provide an endorsement on its liability policy(ies) which provides
that its insurance shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b)
Carried by Lessor. Lessor shall maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required
to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.
8.3
Property Insurance - Building, Improvements and Rental Value.
(a)
Building and Improvements. Lessor shall obtain and keep in force a policy or
policies of insurance in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full insurable replacement cost
of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured
by Lessee under Paragraph 8.4. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result
of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to
where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.
(b)
Rental Value. Lessor shall also obtain and keep in force a policy or policies
in
the name of Lessor with loss payable to Lessor and any Lender, insuring the
loss
of the full Rent for one year with an extended period of indemnity for an
additional 180 days (“Rental
Value Insurance”).
Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month
period.
(c)
Adjacent Promises. Lessee shall pay for any increase in the premiums for the
property insurance of the Building and for the Common Areas or other buildings
in the Project if said increase is caused by Lessee’s acts, omissions, use or
occupancy of the Premises.
(d)
Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be
required to insure Lessee Owned Alterations and Utility installations unless
the
item in question has become the property of Lessor under the terms of this
Lease.
8.4
Lessee’s Property; Business Interruption Insurance.
(a)
Property Damage. Lessee shall obtain and maintain insurance coverage on all
of
Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $1,000 per occurrence. The proceeds from
any
such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in
force.
(b)
Business Interruption. Lessee shall obtain and maintain loss of income and
extra
expense insurance in amounts as will reimburse Lessee for direct or indirect
loss of earnings attributable to all perils commonly insured against by prudent
lessees in the business of Lessee or
attributable to prevention of access to the Premises as a result of such
perils.
(c)
No
Representation of Adequate Coverage. Lessor makes no representation that the
limits or forms of coverage of insurance specified herein are adequate to cover
Lessee’s property, business operations or obligations under this
Lease.
8.5
Insurance Policies. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are
located and maintaining during the policy term a “General Policyholders Rating”
of at least A-, VI, as set forth in the most current issue of “Best’s Insurance
Guide”, or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancelable or subject to
modification except after 30 days prior written notice to Lessor. Lessee shall,
at least 10 days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or “insurance binders” evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. Such policies shall
be
for a term of at least one year, or the length of the remaining term of this
Lease, whichever is less. If either Party shall fail to procure and maintain
the
insurance required to be carried by it, the other Party may, but shall not
be
required to procure and maintain the same.
8.6
Waiver of Subrogation. Without affecting any other rights or remedies, Lessee
and Lessor each hereby release and relieve the other, and waive their entire
right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount
of
insurance, carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated
thereby.
8.7
Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee
shall indemnify, protect, defend and hold harmless the Premises, Lessor and
its
agents, Lessor’s master or ground lessor, partners and Lenders, from and against
any and all claims, loss of rents and/or damages, liens, judgments, penalties,
attorneys’ and consultants’ fees, expenses and/or liabilities arising out of,
involving, or in connection with, the use and/or occupancy of the Premises
by
Lessee. If any action or proceeding is brought against Lessor by reason of
any
of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s
expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate
with Lessee in such defense. Lessor need not have first paid any such claim
in
order to be defended or indemnified.
8.8
Exemption of Lessor from Liability. Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other property of Lessee,
Lessee’s employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, indoor air quality, the presence
of mold or from the breakage, leakage, obstruction or other defects of pipes,
fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or
from
any other cause, whether the said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building, or from other
sources or places. Lessor shall not be liable for any damages arising from
any
act or neglect of any other tenant of Lessor nor from the failure of Lessor
to
enforce the provisions of any other lease in the Project. Notwithstanding
Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee’s business or for any loss of income or profit
therefrom.
8.9
Failure to Provide Insurance. Lessee acknowledges that any failure on its part
to obtain or maintain the insurance required herein will expose Lessor to risks
and potentially cause Lessor to incur costs not contemplated by this Lease,
the
extent of which will be extremely difficult to ascertain Accordingly, for any
month or portion thereof that Lessee does not maintain the required insurance
and/or does not provide Lessor with the required binders or certificates
evidencing the existence of the required insurance, the Base Rent shall be
automatically increased, without any requirement for notice to Lessee, by an
amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair
and
reasonable compensation for the additional risk/costs that Lessor will incur
by
reason of Lessee’s failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise
of
any of the other rights and remedies granted hereunder, nor relieve Lessee
of
its obligation to maintain the insurance specified in this Lease.
9.
Damage
or Destruction.
9.1
Definitions.
(a)
“Premises Partial Damage” shall mean damage or destruction to the improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which can reasonably be repaired in 3
months
or less from the date of the damage or destruction, and the cost thereof does
not exceed a sum equal to 6
month’s
Base Rent. Lessor shall notify Lessee in writing within 30 days from the date
of
the damage or destruction as to whether or not the damage is Partial or Total.
Notwithstanding the foregoing, Premises Partial Damage shall not include damage
to windows, doors, and/or other similar items which Lessee has the
responsibility to repair or replace pursuant to the provisions of Paragraph
7.1
(b)
“Premises Total Destruction” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in 3
months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(c)
“Insured Loss” shall mean damage or destruction to improvements on the Premises,
other than Lessee Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a), irrespective of any deductible amounts or
coverage limits involved.
(d)
“Replacement Cost” shall mean the cost to repair or rebuild the improvements
owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading
required by the operation of Applicable Requirements, and without deduction
for
depreciation.
(e)
“Hazardous Substance Condition” shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), in, on, or under the Premises which
requires repair, remediation, or restoration.
9.2
Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured
Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not
Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations)
as soon as reasonably possible and this Lease shall continue in full force
and
effect, provided, however, that Lessee shall, at Lessor’s election, make the
repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds
available to Lessee on a reasonable basis for that purpose. Notwithstanding
the
foregoing, if the required insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs. In the event, however, such shortage was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore
the
unique aspects of the Premises unless Lessee provides Lessor with the funds
to
cover same, or adequate assurance thereof, within 10 days following receipt
of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said 10 day period,
the party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage
or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage,
but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.
9.3
Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an
Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(in
which event Lessee shall make the repairs at Lessee’s expense), Lessor may
either. (i) repair such damage as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect,
or
(ii) terminate this Lease by giving written notice to Lessee within 30 days
after receipt by Lessor of knowledge of the occurrence of such damage. Such
termination shall be effective 60 days following the date of such notice. In
the
event Lessor elects to terminate this Lease, Lessee shall have the right within
10 days after receipt of the termination notice to give written notice to Lessor
of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment.
In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this
Lease
shall terminate as of the date specified in the termination notice.
9.4
Total
Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such
Destruction. If the damage or destruction was caused by the gross negligence
or
willful misconduct of Lessee, Lessor shall have the right to recover Lessor’s
damages from Lessee, except as provided in Paragraph 8.6.
9.5
Damage Near End of Term. If at any time during the last 6 months of this Lease
there is damage for which the cost to repair exceeds one month’s Base Rent,
whether or not an Insured Loss, Lessor may terminate this Lease effective 60
days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of
such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor
with
any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days
after
Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor’s commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in
the
termination notice and Lessee’s option shall be extinguished.
9.6
Abatement of Rent; Lessee’s Remedies.
(a)
Abatement. In the event of Premises Partial Damage or Premises Total Destruction
or a Hazardous Substance Condition for which Lessee is not responsible under
this Lease, the Rent payable by Lessee for the period required for the repair,
remediation or restoration of such damage shall be abated in proportion to
the
degree to which Lessee’s use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.
(b)
Remedies. If Lessor shall be obligated to repair or restore the Premises and
does not commence, in a substantial and meaningful way, such repair or
restoration within 90 days after such obligation shall accrue, Lessee may,
at
any lime prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
9.7
Termination; Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee
to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security
Deposit as has not been, or is not then required to be, used by
Lessor.
9.8
Waive
Statutes. Lessor and Lessee agree that the terms of this Lease shall govern
the
effect of any damage to or destruction of the Premises with respect to the
termination of this Lease and hereby waive the provisions of any present or
future statute to the extent inconsistent herewith.
10.
Real
Property Taxes.
10.1
Definition. As used herein, the term “Real Property Taxes” shall include any
form of assessment; real estate, general, special, ordinary or extraordinary,
or
rental levy or tax (other than inheritance, personal income or estate taxes);
improvement bond; and/or license fee imposed upon or levied against any legal
or
equitable interest of Lessor in the Project, Lessor’s right to other income
therefrom, and/or Lessor’s business of leasing, by any authority having the
direct or indirect power to tax and where the funds are generated with reference
to the Project address and where the proceeds so generated are to be applied
by
the city, county or other local taxing authority of a jurisdiction within which
the Project is located. The term “Real Property Taxes” shall also include any
tax, fee, levy, assessment or charge, or any increase therein: (i) imposed
by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Project, (ii) a change in the
improvements thereon, and/or (iii) levied or assessed on machinery or equipment
provided by Lessor to Lessee pursuant to this Lease. In calculating Real
Property Taxes for any calendar year, the Real Property Taxes for any real
estate tax year shall be included in the calculation of Real Property Taxes
for
such calendar year based upon the number of days which such calendar year and
tax year have in common.
10.2
Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall
pay the Real Property Taxes applicable to the Project, and said payments shall
be included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.
10.3
Additional Improvements. Common Area Operating Expenses shall not include Real
Property Taxes specified in the tax assessor’s records and work sheets as being
caused by additional improvements placed upon the Project by other lessees
or by
Lessor for the exclusive enjoyment of such other lessees. Notwithstanding
Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common
Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Lessee
or at
Lessee’s request or by reason of any alterations or improvements to the Premises
made by Lessor subsequent to the execution of this Lease by the
Parties.
10.4
Joint Assessment. If the Building is not separately assessed, Real Property
Taxes allocated to the Building shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.
10.5
Personal Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed
against and levied upon Lessee Owned Alterations
and Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee contained in the
Premises. When
possible, Lessee shall cause its Lessee Owned Alterations
and Utility Installations, Trade Fixtures,
furnishings. equipment and all other personal property
to be assessed and billed separately from the real
property of Lessor. If
any of
Lessee’s said property shall be assessed with Lessor’s
real property,
Lessee shall pay Lessor the taxes attributable to
Lessee’s property within 10 days after receipt of a written statement
setting forth the taxes applicable
to Lessee’s property.
11.
Utilities
and Services. Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and
services supplied
to the Premises, together with any taxes thereon. Notwithstanding
the provisions of Paragraph 4.2, it
at any
time in Lessor’s sole judgment. Lessor determines that Lessee is using a
disproportionate amount
of
water, electricity or other commonly metered utilities, or
that
Lessee is generating such
a
large volume of trash as to require an increase in
the
size
of the trash receptacle and/or an increase in the
number of times per month that it is emptied,
then Lessor may increase Lessee’s Base Rent by an amount
equal to such increased costs. There
shall be no abatement of Rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of
any
utility or service
due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s
reasonable control or in cooperation with governmental request
or directions.
12.
Assignment
and Subletting.
12.1
Lessor’s
Consent Required.
(a)
Lessee
shall not voluntarily or by operation of law assign, transfer, mortgage or
encumber (collectively, “assign
or assignment”)
or sublet all or any part of Lessee’s interest in
this
Lease or in the Premises without Lessor’s prior written consent.
(b)
Unless
Lessee is a corporation and its stock is publicly traded on
a
national stock exchange, a change in the control of Lessee
shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting
control of Lessee shall constitute
a change in control for this purpose.
(c)
The
involvement of Lessee or its assets in any transaction, or
series
of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether
or not a formal assignment or hypothecation of
this
Lease or Lessee’s assets occurs, which
results or will result in a reduction of the Net Worth of
Lessee
by an amount greater than 25% of such Net Worth as
it was
represented at the time
of
the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately
prior to said transaction
or transactions constituting such reduction, whichever
was or is greater, shall be considered an assignment of this Lease to which
Lessor may
withhold its consent. “Net Worth of Lessee” shall mean the
net
worth of Lessee (excluding any guarantors) established under generally accepted
accounting principles.
(d)
An
assignment or subletting without consent shall, at
Lessor’s option, be a Default curable after notice per Paragraph 13.1(c),
or a noncurable Breach without the necessity
of any notice and grace period. If
Lessor
elects to treat such unapproved assignment or
subletting
as a noncurable Breach, Lessor may either: (i)
terminate this Lease, or (ii) upon 30 days written notice,
increase the monthly Base Rent to 110%
of
the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment, (i)
the
purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental
adjustments scheduled during the remainder of the Lease term shall
be
increased to 110% of the scheduled adjusted rent.
(e)
Lessee’s
remedy for any breach of Paragraph 12.1 by
Lessor
shall be limited to compensatory damages and/or injunctive relief.
(f)
Lessor
may reasonably withhold consent to a proposed assignment or subletting if Lessee
is in Default at
the
time consent
is requested.
(g)
Notwithstanding
the foregoing, allowing a diminimus portion of
the
Premises, i.e. 20 square feet or less, to be used by a
third
party vendor in connection with the installation of a vending
machine or payphone shall not constitute a subletting.
12.2
Terms
and
Conditions Applicable to Assignment and Subletting.
(a)
Regardless
of Lessor’s consent, no assignment or subletting shall:
(i) be effective without the express written assumption by
such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder,
or (iii) alter the primary liability
of Lessee for the payment of Rent or for the performance of
any
other obligations to be performed by Lessee.
(b)
Lessor
may accept Rent or performance of Lessee’s obligations from
any
person other than Lessee pending approval or disapproval
of an assignment. Neither
a
delay in the approval or disapproval of such assignment nor the acceptance
of
Rent or performance shall constitute
a waiver or estoppel of Lessor’s right to exercise its
remedies for Lessee’s Default or Breach.
(c)
Lessor’s
consent to any assignment or subletting shall not constitute consent to any
subsequent assignment or subletting.
(d)
In
the
event of any Default or Breach by Lessee. Lessor may proceed directly against
Lessee, any Guarantors or anyone else
responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee,
without
first exhausting Lessor’s remedies against any other person or entity
responsible therefore to
Lessor, or any security held by Lessor.
(e)
Each
request for consent to an assignment or subletting shall
be
in writing, accompanied by information relevant
to Lessor’s
determination as to the financial and operational responsibility
and appropriateness of the proposed assignee
or sublessee, including but not limited
to the intended use and/or required modification of
the
Premises, if any, together with a fee of $500 as consideration for Lessors
considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information
and/or documentation as may be reasonably requested. (See also Paragraph
36)
(f)
Any
assignee of, or sublessee under, this Lease shall,
by
reason of accepting such assignment, entering into such sublease,
or entering into possession of the Premises or any portion thereof, be deemed
to
have assumed and agreed
to
conform and comply with each
and
every terms, covenant, condition and obligation herein
to
be observed or performed by Lessee during the term of said assignment or
sublease, other
than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented to
in
writing.
(g)
Lessor’s
consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to
the
original Lessee by this Lease unless such transfer is specifically consented
to
by Lessor in writing. (See Paragraph 39.2)
12.3
Additional
Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by
Lessee
of
all or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated
therein:
(a)
Lessee
hereby assigns and transfers to Lessor all of Lessee’s interest
in all Rent payable on any sublease, and Lessor may
collect such Rent and apply same toward Lessee’s
obligations under this Lease; provided,
however, that until a Breach shall occur
in
the performance
of Lessee’s obligations, Lessee may collect said Rent. In the event that the
amount collected by Lessor exceeds Lessee’s
then outstanding
obligations any such excess shall be refunded to
Lessee
Lessor shall not, by reason of the foregoing or any assignment
of such sublease, nor
by
reason of the collection of Rent, be deemed liable
to
the sublessee for any failure of Lessee to
perform and comply with any of Lessee’s obligations
to such sublessee. Lessee
hereby irrevocably authorizes and directs any
such
sublessee, upon receipt of a written notice from
Lessor stating
that a Breach exists in the performance of Lessee’s obligations
under this Lease, to pay to Lessor all Rent due and
to
become due under the sublease
Sublessee
shall rely
upon
any
such
notice from Lessor and shall pay all Rents to Lessor without any obligation
or
right to inquire as
to
whether
such Breach exists, notwithstanding any claim from Lessee to the
contrary.
(b)
In
the
event of a Breach by Lessee, Lessor may, at
its
option, require sublessee to attorn to Lessor, in
which
event Lessor
shall undertake the obligations of the sublessor under
such sublease from the time of the exercise of said
option to the expiration of such sublease:
provided, however, Lessor shall not be liable for
any
prepaid rents or security deposit paid by such sublessee
to such sublessor or for any prior
Defaults or Breaches of such sublessor.
(c)
Any
matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor.
(d)
No
sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.
(e)
Lessor
shall deliver a copy of any notice of Default or Breach by
Lessee
to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of
reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee
13.
Default;
Breach; Remedies.
13.1
Default;
Breach. A
“Default” is defined as a failure by the Lessee to
comply
with or perform any of the terms, covenants, conditions
or Rules and Regulations under this Lease. A
“Breach” is defined as the occurrence of one or more of
the
following Defaults, and the failure
of Lessee to cure such Default within any applicable grace period:
(a)
The
abandonment of the Premises, or the vacating of the Premises without
providing a commercially reasonable level of security,
or where the coverage of the property insurance described in
Paragraph 8.3 is jeopardized as a result thereof, or without providing
reasonable assurances to minimize potential vandalism.
(b)
The
failure of Lessee to make any payment of Rent or any Security Deposit
required to be made by Lessee hereunder, whether
to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any
obligation under this Lease which endangers or threatens life or property,
where
such failure continues
for a period of 3 business days following written notice to Lessee.
(c)
The
commission of waste, act or acts constituting public or private
nuisance, and/or an illegal activity on the Premises by
Lessee,
where such actions continue for a period of 3 business days following written
notice to Lessee.
(d)
The
failure by Lessee to provide (i) reasonable written evidence of compliance
with
Applicable Requirements, (ii)
the
service
contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv)
an
Estoppel Certificate, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 41, (viii)
material data safety sheets (MSDS), or (ix)
any
other documentation or information which Lessor
may reasonably require of Lessee under the terms
of
this Lease, where any such failure continues
for a period of 10 days following written notice to Lessee.
(e)
A
Default
by Lessee as to the terms, covenants, conditions or provisions of this Lease,
or
of the rules adopted
under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a),
(b),
(c)
or
(d),
above,
where such Default continues for a period of 30 days after
written notice; provided, however, that if the nature
of
Lessee’s Default is such that more than 30 days are reasonably
required for its cure, then it shall
not
be deemed to be a Breach if Lessee commences such
cure
within said 30 day period and thereafter diligently prosecutes
such cure to completion.
(f)
The
occurrence of any of the following events: (i)
the
making of any general arrangement or assignment for the benefit of creditors;
(ii)
becoming
a “debtor” as defined in 11 U.S.C. §
101
or
any successor statute thereto (unless, in the
case
of a petition filed against Lessee,
the same is dismissed within 60 days); (iii) the
appointment of a trustee or receiver to take possession of substantially all
of
Lessee’s assets located
at the Premises or of Lessee’s interest in
this
Lease, where possession is not restored to
Lessee
within 30 days, or (iv) the attachment, execution
or other judicial seizure of substantially all
of
Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure
is not discharged within 30 days; provided, however, in
the
event that any provision of this subparagraph is contrary to any applicable
law,
such provision
shall be of no force or effect, and not affect the validity of
the
remaining provisions.
(g)
The
discovery that any financial statement of Lessee or of any Guarantor
given to Lessor was materially false.
(h)
If
the
performance of Lessee’s obligations under
this Lease is guaranteed: (i)
the
death of a Guarantor, (ii) the termination
of a Guarantor’s liability with respect to this
Lease other than in accordance with the terms of such guaranty,
(iii) a Guarantor’s becoming insolvent
or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the
guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an
anticipatory basis, and Lessee’s failure, within 60 days following written
notice of any such event, to provide written alternative
assurance or security, which,
when coupled with the then existing resources of
Lessee, equals or exceeds the combined financial resources of
Lessee
and the Guarantors that
existed at the time of execution of this Lease.
13.2
Remedies.
If Lessee fails to perform any of its affirmative duties
or
obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform
such duty or obligation on Lessee’s behalf, including
but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount
equal to 115% of the
costs
and expenses incurred by Lessor in such performance upon
receipt of an invoice therefor. In
the
event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor
in
the exercise of any right or remedy which Lessor may have
by
reason of such Breach:
(a)
Terminate
Lessee’s right to possession of the Premises by
any
lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor. In such event Lessor
shall be entitled to recover from Lessee: (i)
the
unpaid Rent which had
been
earned at the time of termination; (ii) the worth at
the
time of award of the amount by which the unpaid rent which would
have been earned after
termination until the time of award exceeds the amount
of
such rental loss that the Lessee proves could have
been
reasonably avoided; (iii) the worth
at
the time of award of the amount by which the unpaid rent
for
the balance of the term after the time of award exceeds the
amount of such rental loss
that
the Lessee proves could be reasonably avoided, and (iv) any other amount
necessary to compensate Lessor for all the
detriment proximately caused
by
the Lessee’s failure to perform its obligations under
this Lease or which in the ordinary course of things would be
likely
to result therefrom, including
but not limited to the cost of recovering possession
of the Premises, expenses of reletting, including
necessary renovation and alteration of the
Premises, reasonable attorneys’ fees, and that portion of
any
leasing commission paid by Lessor in connection with
this
Lease applicable to the unexpired
term of this Lease. The worth at the time of award of
the
amount referred to in provision (iii) of the immediately preceding
sentence shall be computed
by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are
located at the time of
award
plus one percent. Efforts
by Lessor to mitigate damages caused by Lessee’s Breach
of
this Lease shall not waive Lessor’s right to recover damages under Paragraph 12.
If termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to
recover in such proceeding any unpaid Rent and damages
as are recoverable therein, or Lessor may reserve the
right
to recover all or any part thereof
in a separate suit. If
a
notice and grace period required under Paragraph 13.1
was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute
shall also constitute the notice required by
Paragraph 13.1. In
such
case, the applicable grace period required by Paragraph 13.1 and the unlawful
detainer statute shall run
concurrently, and the failure of Lessee to cure the
Default
within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach
of
this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.
(b)
Continue
the Lease and Lessee’s right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor’s interests shall not
constitute a termination of the Lessee’s right to possession.
(c)
Pursue any other remedy now or hereafter available under the laws or judicial
decisions of the state wherein the Premises are located. The expiration or
termination of this Lease and/or the termination of Lessee’s right to possession
shall not relieve Lessee from liability under any indemnity provisions of this
Lease as to matters occurring or accruing during the term hereof or by reason
of
Lessee’s occupancy of the Premises.
13.3
Inducement Recapture. Any agreement for free or abated rent or other charges,
or
for the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee’s entering into this Lease, all of which
concessions are hereinafter referred to as “Inducement Provisions”, shall be
deemed conditioned upon Lessee’s full and faithful performance of all of the
terms, covenants and conditions of this Lease. Upon Breach of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted
from
this Lease and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Lessor under
such an Inducement Provision shall be immediately due and payable by Lessee
to
Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.
13.4
Late
Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will
cause Lessor to incur costs not contemplated by this Lease, the exact amount
of
which will be extremely difficult to ascertain. Such costs include, but are
not
limited to processing and accounting charges, and late charges which may be
imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be
received by Lessor within 5 days after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee shall immediately pay to Lessor
a
one-time late charge equal to 10% of each such overdue amount or $100, whichever
is greater. The parties hereby agree that such late charge represents a fair
and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute
a
waiver of Lessee’s Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for 3 consecutive installments of Base Rent, then notwithstanding any provision
of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due
and payable quarterly in advance.
13.5
Interest. Any monetary payment due Lessor hereunder, other than late charges,
not received by Lessor, when due as to scheduled payments (such as Base Rent)
or
within 30 days following the date on which it was due for non-scheduled payment,
shall bear interest from the date when due, as to scheduled payments, or the
31st day after it was due as to non-scheduled payments. The interest
(“Interest”) charged shall be computed at the rate of 10% per annum but shall
not exceed the maximum rate allowed by law. Interest is payable in addition
to
the potential late charge provided for in Paragraph 13.4.
13.6
Breach by Lessor.
(a)
Notice of Breach. Lessor shall not be deemed in breach of this Lease unless
Lessor fails within a reasonable time to perform an obligation required to
be
performed by Lessor. For purposes of this Paragraph, a reasonable time shall
in
no event be less than 30 days after receipt by Lessor, and any Lender whose
name
and address shall have been furnished Lessee in writing for such purpose, of
written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor’s obligation is such
that more than 30 days are reasonably required for its performance, then Lessor
shall not be in breach if performance is commenced within such 30 day period
and
thereafter diligently pursued to completion
(b)
Performance by Lessee on Behalf of Lessor. In the event that neither Lessor
nor
Lender cures said breach within 30 days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion,
then
Lessee may elect to cure said breach at Lessee’s expense and offset from Rent
the actual and reasonable cost to perform such cure, provided however, that
such
offset shall not exceed an amount equal to the greater of one month’s Base Rent
or the Security Deposit, reserving Lessee’s right to reimbursement from Lessor
for any such expense in excess of such offset, Lessee shall document the cost
of
said cure and supply said documentation to Lessor.
14.
Condemnation. If the Premises or any portion thereof are taken under the power
of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”), this
Lease
shall terminate as to the part taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than 10% of the
floor
area of the Unit, or more than 25% of Lessee’s Reserved Parking Spaces, is taken
by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing
within 10 days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within 10 days after the condemning
authority shall have taken possession) terminate this Lease as of the date
the
condemning authority takes such possession. If Lessee does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in proportion to the reduction in utility of the Premises
caused by such Condemnation. Condemnation awards and/or payments shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken, or for
severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and Utility
Installations made to the Premises by Lessee, for purposes of Condemnation
only,
shall be considered the property of the Lessee and Lessee shall be entitled
to
any and all compensation which is payable therefore. In the event that this
Lease is not terminated by reason of the Condemnation, Lessor shall repair
any
damage to the Premises caused by such Condemnation.
15.
Brokerage Fees.
15.1
Additional Commission. In addition to the payments owed pursuant to Paragraph
1.10 above, and unless Lessor and the Brokers otherwise agree in writing, Lessor
agrees that (a) if Lessee exercises any Option, (b) it Lessee acquires from
Lessor any rights to the Premises or other premises owned by Lessor and located
within the Project, (c) if Lessee remains in possession of the Premises, with
the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent
is increased, whether by agreement or operation of an escalation clause herein,
then, Lessor shall pay Brokers a fee in accordance with the schedule of the
Brokers in effect at the time of the execution of this Lease.
15.2
Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this
Lease shall be deemed to have assumed Lessor’s obligation hereunder. Brokers
shall be third party beneficiaries of the provisions of Paragraphs 1.10, 15,
22
and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage
fees pertaining to this Lease when due, then such amounts shall accrue Interest.
In addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure and
if Lessor fails to pay such amounts within 10 days after said notice, Lessee
shall pay said monies to its Broker and offset such amounts against Rent. In
addition, Lessee’s Broker shall be deemed to be a third party beneficiary of any
commission agreement entered into by and/or between Lessor and Lessor’s Broker
for the limited purpose of collecting any brokerage fee owed.
15.3
Representations and Indemnities of Broker Relationships. Lessee and Lessor
each
represent and warrant to the other that it has had no dealings with any person,
firm, broker or finder (other than the Brokers, if any) in connection with
this
Lease, and that no one other than said named Brokers is entitled to any
commission or finder’s fee in connection herewith. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless from
and
against liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs, expenses, attorneys’
fees reasonably incurred with respect thereto.
16.
Estoppel Certificates.
(a)
Each
Party (as “Responding Party”) shall within 10 days after written notice from the
other Party (the “Requesting Party”) execute, acknowledge and deliver to the
Requesting Party a statement in writing in form similar to the then most current
“Estoppel Certificate” form published by the AIR Commercial Real Estate
Association, plus such additional information, confirmation and/or statements
as
may be reasonably requested by the Requesting Party.
(b)
If
the Responding Party shall fail to execute or deliver the Estoppel Certificate
within such 10 day period, the Requesting Party may execute an Estoppel
Certificate stating that (i) the Lease is in full force and effect without
modification except as may be represented by the Requesting Party, (ii) there
are no uncured defaults in the Requesting Party’s performance, and (iii) if
Lessor is the Requesting Party, not more than one month’s rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting
Party’s Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.
(c)
If
Lessor desires to finance, refinance, or sell the Premises, or any part thereof,
Lessee and all Guarantors shall deliver to any potential lender or purchaser
designated by Lessor such financial statements as may be reasonably required
by
such lender or purchaser, including but not limited to Lessee’s financial
statements for the past 3 years. All such financial statements shall be received
by Lessor and such lender or purchaser in confidence and shall be used only
for
the purposes herein set forth.
17.
Definition of Lessor. The term “Lessor” as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this
is
a sublease, of the Lessee’s interest in the prior lease. In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid,
the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to
be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18.
Severability. The invalidity of any provision of this Lease, as determined
by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19.
Days.
Unless otherwise specifically indicated to the contrary, the word “days” as used
in this Lease shall mean and refer to calendar days.
20.
Limitation on Liability. The obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor, or its partners, members, directors,
officers or shareholders, and Lessee shall look to the Premises, and to no
other
assets of Lessor, for the satisfaction of any liability of Lessor with respect
to this Lease, and shall not seek recourse against Lessor’s partners, members,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
21.
Time
of Essence. Time is of the essence with respect to the performance of all
obligations to be performed or observed by the Parties under this
Lease.
22.
No
Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective. Lessor
and Lessee each represents and warrants to the Brokers that it has made, and
is
relying solely upon, its own investigation as to the nature, quality, character
and financial responsibility of the other Party to this Lease and as to the
use,
nature, quality and character of the Premises. Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker
with respect to negotiation, execution, delivery or performance by either Lessor
or Lessee under this Lease or any amendment or modification hereto shall be
limited to an amount up to the fee received by such Broker pursuant to this
Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.
23.
Notices
23.1
Notice Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by hand
or by
courier) or may be sent by regular, certified or registered mail or U. S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease
shall be that Party’s address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice,
except that upon Lessee’s taking possession of the Premises. the Premises shall
constitute Lessee’s address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2
Date
of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given 72 hours after the same is addressed
as
required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantee next day delivery shall
be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall
be
deemed delivered upon telephone confirmation of receipt (confirmation report
from fax machine is sufficient), provided a copy is also delivered via delivery
or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall
he deemed received on the next business day.
24.
Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default or Breach by Lessee of the
same or of any other term, covenant or condition hereof. Lessor’s consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining
of
Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or
be construed as the basis of an estoppel to enforce the provision or provisions
of this Lease requiring such consent. The acceptance of Rent by Lessor shall
not
be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before
the
time of deposit of such payment.
25.
Disclosures Regarding The Nature of a Real Estate Agency
Relationship.
(a)
When
entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type
of
agency relationship or representation it has with the agent or agents in the
transaction. Lessor and Lessee acknowledge being advised by the Brokers in
this
transaction, as follows:
(i)
Lessor’s Agent. A Lessor’s agent under a listing agreement with the
Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has
the following affirmative obligations: To
the
Lessor:
A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings
with
the Lessor. To
the
Lessee and the Lessor:
(a)
Diligent exercise of reasonable skills and care in performance of the agent’s
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party
which
does not involve the affirmative duties set forth above.
(ii)
Lessee’s Agent. An agent can agree to act as agent for the Lessee only.
In these situations, the agent is not the Lessor’s
agent, even if by agreement the agent may receive compensation for services
rendered, either in full or in part from the Lessor. An agent acting only for
a
Lessee has the following affirmative obligations. To the
Lessee:
A
fiduciary duly of utmost care, integrity, honesty, and loyalty in dealings
with
the Lessee. To
the
Lessee and the Lessor:
(a)
Diligent exercise of reasonable skills and care in performance of the agent’s
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party
which
does not involve the affirmative duties set forth above.
(iii)
Agent
Representing Both Lessor and Lessee.
A real
estate agent, either acting directly or through one or more associate licenses,
can legally be the agent of both the Lessor and the Lessee in a transaction,
but
only with the knowledge and consent of both the Lessor and the Lessee. In a
dual
agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that
the
Lessor will accept rent in an amount less than that indicated in the listing
or
that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve a Lessor or
Lessee from the responsibility to protect their own interests. Lessor and Lessee
should carefully read all agreements to assure that they adequately express
their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.
(b)
Brokers have no responsibility with respect to any Default or Breach hereof
by
either Party. The Parties agree that no lawsuit or other legal proceeding
involving any breach of duty, error or omission relating to this Lease may
be
brought against Broker more than one year after the Start Date and that the
liability (including court costs and attorneys’ fees), of any Broker with
respect to any such lawsuit and/or legal proceeding shall not exceed the fee
received by such Broker pursuant to this Lease, provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.
(c)
Buyer
and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be
confidential.
26.
No
Right To Holdover. Lessee has no right to retain possession of the Premises
or
any part thereof beyond the expiration or termination of this Lease. In the
event that Lessee holds over, then the Base Rent shall be increased to 150%
of
the Base Rent applicable immediately preceding the expiration or termination.
Nothing contained herein shall be construed as consent by Lessor to any holding
over by Lessee.
27.
Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive
but shall, wherever possible, be cumulative with all other remedies at law
or in
equity.
28.
Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of
the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This
Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole,
as
if both Parties had prepared it.
29.
Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between
the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30.
Subordination; Attornment; Non-Disturbance.
30.1
Subordination. This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or security device (collectively, “Security Device”), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and
to
all renewals, modifications, and extensions thereof. Lessee agrees that the
holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Any Lender may elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device
by
giving written notice thereof to Lessee, whereupon this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.
30.2
Attornment. In the event that Lessor transfers title to the Premises, or the
Premises are acquired by another upon the foreclosure or termination of a
Security Device to which this Lease is subordinated (i) Lessee shall, subject
to
the non-disturbance provisions of Paragraph 30.3, attorn to such new owner,
and
upon request, enter into a new lease, containing all of the terms and provisions
of this Lease, with such new owner for the remainder of the term hereof, or,
at
the election of the new owner, this Lease will automatically become a new lease
between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved
of any further obligations hereunder and such new owner shall assume all of
Lessor’s obligations, except that such new owner shall not: (a) be liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor, (c) be bound by prepayment
of
more than one month’s rent, or (d) be liable for the return of any security
deposit paid to any prior lessor.
30.3
Non-Disturbance. With respect to Security Devices entered into by Lessor after
the execution of this Lease, Lessee’s subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement (a
“Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement
provides that Lessee’s possession of the Premises, and this Lease, including any
options to extend the terns hereof, will not be disturbed so long as Lessee
is
not in Breach hereof and attorns to the record owner of the Premises. Further,
within 60 days after the execution of this Lease, Lessor shall use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement from
the
holder of any pre-existing Security Device which is secured by the Premises.
In
the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and
attempt to negotiate for the execution and delivery of a Non-Disturbance
Agreement.
30.4
Self-Executing. The agreements contained in this Paragraph 30 shall be effective
without the execution of any further documents; provided, however, that, upon
written request from Lessor or a Lender in connection with a sale, financing
or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any subordination,
attornment and/or Non-Disturbance Agreement provided for herein.
31.
Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving
the Premises whether founded in tort, contract or equity, or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether
or
not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party
or
Broker of its claim or defense. The attorneys’ fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys’ fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach ($200 is a reasonable minimum per occurrence for such
services and consultation).
32.
Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall
have the right to enter the Premises at any time, in the
case
of an emergency, and otherwise at reasonable times after reasonable prior notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to
the
Premises as Lessor may deem necessary or desirable and the erecting, using
and
maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee’s
use of the Premises. All such activities shall be without abatement of rent
or
liability to Lessee.
33.
Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon
the Premises without Lessor’s prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether
to
permit an auction.
34.
Signs. Lessor may place on the Premises ordinary “For Sale” signs at any time
and ordinary “For Lease” signs during the last 6 months of the term hereof.
Except for ordinary “For Sublease” signs which may be placed only on the
Premises, Lessee shall not place any sign upon the Project without Lessor’s
prior written consent. All signs must comply with all Applicable
Requirements.
35.
Termination; Merger. Unless specifically stated otherwise in writing by Lessor,
the voluntary or other surrender of this Lease by Lessee, the mutual termination
or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee,
shall automatically terminate any sublease or lesser estate in the Premises;
provided, however, that Lessor may elect to continue any one or all existing
subtenancies. Lessor’s failure within 10 days following any such event to elect
to the contrary by written notice to the holder of any such lesser interest,
shall constitute Lessor’s election to have such event constitute the termination
of such interest.
36.
Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed Lessor’s actual reasonable costs
and expenses (including but not limited to architects’, attorneys’, engineers’
and other consultants’ fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor’s consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable
with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.
37.
Guarantor.
37.1
Execution. The Guarantors, if any, shall each execute a guaranty in the form
most recently published by the AIR Commercial Real Estate
Association.
37.2
Default. It shall constitute a Default of the Lessee if any Guarantor fails
or
refuses, upon request to provide: (a) evidence of the execution of the guaranty,
including the authority of the party signing on Guarantor’s behalf to obligate
Guarantor, and in the case of a corporate Guarantor, a certified copy of a
resolution of its board of directors authorizing the making of such guaranty,
(b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.
38.
Quiet
Possession. Subject to payment by Lessee of the Rent and performance of all
of
the covenants, conditions and provisions on Lessee’s part to be observed and
performed under this Lease, Lessee shall have quiet possession and quiet
enjoyment of the Premises during the term hereof.
39.
Options. If Lessee is granted an option, as defined below, then the following
provisions shall apply.
39.1
Definition. “Option” shall mean: (a) the right to extend the term of or renew
this Lease or to extend or renew any lease that Lessee has on other property
of
Lessor; (b) the right of first refusal or first offer to lease either the
Premises or other property of Lessor; (c) the right to purchase or the right
of
first refusal to purchase the Premises or other property of Lessor.
39.2
Options Personal To Original Lessee. Any Option granted to Lessee in this Lease
is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is
in
full possession of the Premises and, if requested by Lessor, with Lessee
certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3
Multiple Options. In the event that Lessee has any multiple Options to extend
or
renew this Lease, a later Option cannot be exercised unless the prior Options
have been validly exercised.
39.4
Effect of Default on Options.
(a)
Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the
Option.
(b)
The
period of time within which an Option may be exercised shall not be extended
or
enlarged by reason of Lessee’s inability to exercise an Option because of the
provisions of Paragraph 39.4(a).
(c)
An
Option shall terminate and be of no further force or effect, notwithstanding
Lessee’s due and timely exercise of the Option, if, after such exercise and
prior to the commencement of the extended term or completion of the purchase,
(i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes
due
(without any necessity of Lessor to give notice thereof), or (ii) if Lessee
commits a Breach of this Lease.
40.
Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor
hereunder does not include the cost of guard service or other security measures,
and that Lessor shall have no obligation whatsoever to provide same. Lessee
assumes all responsibility for the protection of the Premises, Lessee, its
agents and invitees and their property from the acts of third
parties.
41.
Reservations. Lessor reserves the right: (i) to grant, without the consent
or
joinder of Lessee, such easements, rights and dedications that Lessor deems
necessary, (ii) to cause the recordation of parcel maps and restrictions, and
(iii) to create and/or install new utility raceways, so long as such easements,
rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees
to
sign any documents reasonably requested by Lessor to effectuate such
rights.
42.
Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted
shall
have the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part
of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum
or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. A Party who does not initiate
suit for the recovery of sums paid “under protest” within 6 months shall be
deemed to have waived its right to protest such payment.
43.
Authority; Multiple Parties; Execution.
(a)
If
either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. Each Party shall, within 30 days
after request, deliver to the other Party satisfactory evidence of such
authority.
(b)
If
this Lease is executed by more than one person or entity as “Lessee”, each such
person or entity shall be jointly
and severally liable hereunder. It is agreed that any one of the named Lessees
shall be empowered to execute any amendment to this Lease, or other document
ancillary thereto and bind all of the named Lessees, and Lessor may rely on
the
same as if all of the named Lessees had executed such
document.
(c)
This
Lease may be executed by the Parties in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
44.
Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten
or
handwritten provisions.
45
Offer.
Preparation of this Lease by either party or their agent and submission of
same
to the other Party shall not be deemed an offer to lease to the other Party.
This Lease is not intended to be binding until executed and delivered by all
Parties hereto.
46.
Amendments. This Lease may be modified only in writing, signed by the Parties
in
interest at the time of the modification. As long as they do not materially
change Lessee’s obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing
of
the Premises.
47.
Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF
THIS AGREEMENT.
48.
Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease o
is o
is
not
attached to this Lease.
49.
Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee’s use of
the Premises requires modifications or additions to the Premises in order to
be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee’s expense.
LESSOR
AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE
PREMISES.
ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR
TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES
ARE URGED TO.
1
SEEK
ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2
RETAIN
APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.
SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE
OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY,
THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS
WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED
USE.
WARNING:
IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS
OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN
WHICH THE PREMISES ARE LOCATED.
The
parties hereto have executed this Lease at the place and on the dates specified
above their respective signatures.
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Executed
at:
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Executed
at:
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On:
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On:
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By
LESSOR:
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By
LESSEE:
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Berkshire
Holdings, LLC
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Waat
Corp.,
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a
California corporation
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By:
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/s/
LENA BARSEGHIAN
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By:
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/s/
TAL McAbian
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Name
Printed:
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LENA
BARSEGHIAN
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Name
Printed:
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TAL
McAbian
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Title:
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OFFICE
MANAGER
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Title:
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Partner
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By:
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By:
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Name
Printed:
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Name
Printed:
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Title:
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Title:
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Address:
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Address:
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Telephone:
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(
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Telephone:
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(
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Facsimile:
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(
)
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Facsimile:
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(
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Federal
ID No.
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Federal
ID No |
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BROKER:
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BROKER:
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Attn:
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Attn:
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Title:
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Title:
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Address:
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Address:
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Telephone:
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(
)
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Telephone:
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(
)
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Facsimile:
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(
)
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Facsimile:
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(
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Email:
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Email:
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FederalI
D No.
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Federal
ID No. |
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These
forms are often modified to meet changing requirements of law and needs of
the
industry. Always write or call to make sure you are utilizing the most current
form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 South Flower Street, Suite
600, Los Angeles, CA 90017. (213) 687-8777.
©Copyright
1999 By AIR Commercial Real Estate Association.
All
rights reserved.
No
part
of these works may be reproduced in any form without permission in
writing.
Date:
July 15, 2005
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By
and Between
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(Lessor) |
Berkshire
Holdings, LLC
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| |
(Lessee)
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Waat
Corp.
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Address
of Premises:
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14242
Ventura Boulevard, Suite 300
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Sherman
Oaks, California 91423
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Addendum
A
This
Addendum is to the Standard Industrial Commercial Multi-Tenant Lease - Net
dated
July 1, 2005, between Berkshire Holdings, LLC and Waat Corp. of 18226 Ventura
Boulevard, Suite # 102 Tarzana, CA 91356 USA. As a material consideration for
Lessee’s agreement to lease the Premises from Lessor, Lessor hereby agrees to
construct the following improvements pursuant to Lessee’s
specifications.
|
·
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Tempered
glass/dividers/doors
|
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·
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Tenant
improvement line/DSL line
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·
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Air
conditioning (additional)
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·
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Internal
Windows, Frames and Blinds
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Lessor
and Lessee hereby agree that the total value and cost of these Improvements
is
$150,000.00, which shall be reimbursed to Lessor by Lessee upon commencement
of
the Lease.
Date:
July 15, 2005
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By
and Between
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(Lessor) |
Berkshire
Holdings, LLC
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| |
(Lessee)
|
Waat
Corp.
|
|
Address
of Premises:
|
14242
Ventura Boulevard, Suite 300
|
| |
Sherman
Oaks, California 91423
|
Addendum
A
This
Addendum is to the Standard Industrial Commercial Multi-Tenant Lease - Net
dated
July 1, 2005, between Berkshire Holdings, LLC and Waat Corp. of 18226 Ventura
Boulevard, Suite # 102 Tarzana, CA 91356 USA. As a material consideration for
Lessee’s agreement to lease the Premises from Lessor, Lessor hereby agrees to
construct the following improvements pursuant to Lessee’s
specifications.
|
·
|
Tempered
glass/dividers/doors
|
|
·
|
Tenant
improvement line/DSL line
|
|
·
|
Air
conditioning (additional)
|
|
·
|
Internal
Windows, Frames and Blinds
|
Lessor
and Lessee hereby agree that the total value and cost of these Improvements
is
$150,000.00, which shall be reimbursed to Lessor by Lessee upon commencement
of
the Lease.
