UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ____________
Commission File Number 0-22709
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
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(Exact name of small business issuer as specified in its charter)
California 13-3391820
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
or organization)
22700 Savi Ranch Parkway, Yorba Linda CA 92657
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (714) 974-7676
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per share.
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes: _X_ No: ___
The aggregate market value of the voting common stock held by non-affiliates of
the registrant, computed by reference to the average of bid and asked price of
the stock as of September 22, 1997 was $460,988.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $2,206,000
The number of shares of common stock, $.01 par value, outstanding as of
September 22, 1997 was 598,734.
Transitional small business disclosure format Yes ____ No _X_
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ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all Directors and Executive Officers of the Company,
their positions with the Company, their term of office and their business
background are set forth below.
Director of
Name Age TACTech Since Position
- ---- --- ------------- --------
Robert E. Schrader 53 1987 President and Chief Executive Officer
Martin S. Fawer 63 1987 Chief Financial Officer and Treasurer
Deborah J. Schrader 50 1987 Secretary
Malcolm Baca 55 ---- Executive Vice President and Chief
Operating Officer
Jeff Hanser 39 ---- Senior Vice President
Bruce L. Blackford 49 ---- Senior Vice President
Robert E. Schrader, has been President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its incorporation in
1987. He is the husband of Deborah J. Schrader. He is the founder of Zing
Technologies, Inc. ("Zing"), and has been its President, Chief Executive Officer
and Chairman of the Board of Directors since its incorporation in 1969. He
expects to devote approximately 25% of his business time to the affairs and
operations of the Company.
Martin S. Fawer, has been the Chief Financial Officer and Treasurer of the
Company since March 1995; and from June 1, 1987 to March 1995 he was Vice
President and Assistant Treasurer of the Company. He is also the Chief Financial
Officer, Treasurer and a director of Zing. For more than five years, Mr. Fawer
has been a principal of The Fawer Group, P.C., and its predecessors, certified
public accountants. He expects to devote approximately 10% of his business time
to the affairs and operations of the Company.
Deborah J. Schrader, has been Secretary of the Company since its
incorporation in 1987. She has also been the Secretary and a director of Zing
since its incorporation in 1969. She is the wife of Robert E. Schrader.
Malcolm Baca, has been Vice President and Treasurer from 1987 to March
1995; and Executive Vice President and Chief Operating Officer since March 1995.
Jeff Hanser, has been Senior Vice President of the Company since September
1997. He has also served as Executive Vice President and Chief Financial Officer
of Research Analysis Corporation ("RAC"), a recently acquired wholly owned
subsidiary of the Company, from 1992 to 1994 and has been its President and
Chief Executive Officer since 1994 up to the time of the RAC acquisition by the
Company. Mr. Hanser has over 15 years of experience in the design and
implementation of major Configuration and Systems Management for the United
States Navy and Air Force.
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Bruce Blackford, has been Senior Vice President of the Company since
September 1997. He has also served as President and Chief Executive Officer of
RAC from 1992 to 1994, and has been its Executive Vice President and Chief
Financial Officer since 1994 up to the time of the RAC acquisition by the
Company. Mr. Blackford has been a director of RAC since its inception in 1983.
Martin S. Fawer, Robert E. Schrader and Deborah J. Schrader are directors
of Zing. As of September 17, 1997, except for the foregoing, no director of the
Company is a director of any other company with a class of securities registered
pursuant to Section 12 of the Exchange Act, or any company registered as an
Investment Company under the Investment Company Act of 1940. Other than Robert
E. Schrader and Deborah J. Schrader, who are married to each other, there is no
family relationship among any members of the Board of Directors or the officers
of the Company.
ITEM 10 - EXECUTIVE COMPENSATION
The following table shows, for the three most recent fiscal years ended
June 30, the cash compensation paid or accrued for those years to the Chief
Executive Officer and to the one executive officer (other than the Chief
Executive Officer) whose aggregate annual salary and bonus paid in compensation
for services rendered in all the capacities in which he served exceeded $100,000
for the Company's last fiscal year:
All Other
Name and Principal Position Fiscal Year Salary Bonus Compensation(1)
- --------------------------- ----------- ------ ----- ---------------
Robert E. Schrader (2) 1997 $ 80,000 --- ---
Chief Executive Officer 1996 --- --- ---
and President 1995 --- --- ---
Malcolm A. Baca 1997 $188,713 --- $1,374
Executive Vice President and 1996 $178,269 --- $1,374
Chief Operating Officer 1995 $168,818 --- $1,374
- ----------
(1) Other compensation represents annual life insurance premiums paid on
behalf of the officer listed.
(2) Although no compensation was directly paid by the Company to Mr. Schrader
during the fiscal years ending June 30, 1995 and 1996, (1) effective
July 1, 1996 Robert E. Schrader became entitled to and received an annual
salary of $80,000 pursuant to an employment agreement discussed below
under "Employment Contracts, Termination of Employment and
Change-In-Control Arrangements" and (2) prior to June 30, 1997, Mr.
Schrader was compensated by Zing which was receiving management fees from
the Company for services rendered by Mr. Schrader to the Company.
Management fees in the amount of $75,000 were paid by the Company to Zing
in the fiscal years ended June 30, 1996 and June 30, 1997.
Grant of Options
----------------
As of the date of this report, although 60,000 shares of Company Stock
have been reserved for issuance pursuant to the Company's 1997 Option Plan,
there were no outstanding options to
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purchase or securities convertible into Company Common Stock or stock
appreciation rights related to Company Common Stock other than the options to
purchase 44,904 shares of Company Common Stock in the aggregate issued in the
Company acquisition of RAC to Messrs. Hanser and Blackford.
Compensation of Directors
-------------------------
The Company does not pay directors for their services as directors. The
Company may, in the future, pay directors who are not officers or employees for
their services as directors plus a fee for committee meetings attended.
Employment Contracts, Termination of Employment
and Change-in-Control Arrangements
Mr. Robert E. Schrader has an employment agreement with the Company, the
term of which expires on June 30, 2000. Mr. Schrader's agreement entitles him to
a salary of $80,000 per annum. Mr. Schrader has no contractual entitlement to
any bonus. Pursuant to the employment agreement, Mr. Schrader has agreed to
serve as the Company's Chief Executive Officer, President and Chairman of the
Board of Directors on a part-time basis. In the event that a Change in Control
(as defined in the employment agreement) of the Company occurs, Mr. Schrader may
terminate his employment. In such event, Mr. Schrader is required to extend the
duration of the non-competition agreements set forth in the employment agreement
to the third anniversary of such Change of Control. In consideration for the
extension of his agreement not to compete with the Company after such Change of
Control which results in the termination of the term of his employment
agreement, Mr. Schrader will be entitled to receive a lump sum payment equal to
the amount of the remaining base salary he would be entitled to under his
employment agreement had it not been so terminated, plus $250,000. Pursuant to
such employment agreement, Mr. Schrader is required only to provide part time
services to the Company, but not less than 10 business hours per week.
Mr. Malcolm A. Baca has an employment agreement with the Company under
which he will devote full-time efforts on behalf of the Company. The term of Mr.
Baca's employment expires April 30, 1999. Mr. Baca's agreement entitles him to a
base salary of $120,000 per annum, plus five percent (5%) of the Company's
collected revenues, except that on revenues attributable to another commissioned
member of the Company's management, Mr. Baca's commission is two and one half
percent (2 1/2%). In all events, Mr. Baca's compensation cannot exceed $350,000
per anum subject to increase based upon the National Consumer Price Index. All
commissions to Mr. Baca are subject to his required contribution of one-half of
one percent (1/2%) of the Company's collected revenues to a bonus pool fund for
the benefit of non-commissioned members of management, which contribution is
matched by the Company. In the event Mr. Baca is terminated without good cause,
the Company is obligated to continue to pay compensation to Mr. Baca through
April 30, 1999. Mr. Baca's agreement also prohibits Mr. Baca from selling any of
his shares of Common Stock during the one year period after the June 30,1997.
After the expiration of such one year period, Mr. Baca is not permitted to sell
in excess of 25% of his shares of Company Stock until the expiration of two
years after June 30, 1997.
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The Company has engaged Mr. Martin S. Fawer on a part-time basis to
perform supervisory financial and strategic analysis services. See "Certain
Relationships and Related Transactions" below.
Each of Mr. Blackford and Mr. Hanser have entered into an employment
agreement on identical terms and conditions with the Company for a term of three
years. Under their respective employment agreements, each has agreed to serve as
a Senior Vice President of the Company. Pursuant to the agreements, each of Mr.
Blackford and Mr. Hanser is entitled to a salary of $193,000 per annum, and is
eligible to receive an incentive bonus of up to$100,000 annually. The annual
bonus is based on the Company achieving certain targeted sales goals.
Each of Messrs. Blackford's and Hanser's employment agreement provides
that if his employment is terminated without cause (or, as a result of death or
disability), he will be entitled to receive base salary up to the date of such
termination (and, subject to the Company's option, salary for up to one year
following termination without cause in exchange for which the term of the
non-competition agreement in his employment agreement shall continue for such
one year period), and a pro rata portion of his annual bonus (if any) based on
the number of days of employment in the then current contract year.
Additionally, the vesting of options granted to each of Messrs. Blackford and
Hanser by the Company in connection with the RAC transaction will accelerate
under certain circumstances including, without limitation, if his employment is
terminated without cause or, if his employment is terminated as a result of
death or disability, and if a change of control (as described in such option
agreements) occurs.
1997 Option Plan
The Company's Board of Directors has adopted and the Company's
stockholders have approved the Transition Analysis Component Technology, Inc.
1997 Stock Option Plan (the "Option Plan"). The Board believes that the Option
Plan is desirable to attract and retain executives, other key employees and
consultants of outstanding ability. Under the Option Plan, options to purchase
an aggregate of not more than 60,000 shares of Company common stock ("Company
Stock") are available for grants from time to time to key employees of and
consultants to the Company. No options have been granted under the Option Plan,
and there are no current plans for the granting of options to specific employees
or consultants.
The Option Plan is administered by a committee appointed by the Board of
Directors. The committee may exercise all of the powers of the Board of
Directors in relation to the Option Plan. The committee is generally empowered
to interpret the Stock Option Plan, to prescribe rules and regulations relating
thereto, to determine the terms of the option agreements, to determine the
employees or consultants to whom options are to be granted, and to determine the
number of shares subject to each option and the exercise price thereof. Options
granted to employees, including directors and officers may be designated as
incentive stock options ("ISOs"). The per share exercise price of ISOs may not
be less than 100% of the fair market value on the date the option is granted (or
110% of the fair market value on the date of grant of an ISO if the optionee
owns more than 10%
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of the outstanding Company Stock). The per share exercise price for
non-qualified stock options may not be less than 75% of fair market value on the
date the option is granted.
An option agreement may provide for the surrender of the right to purchase
shares under the option in return for a payment in cash or shares of Company
Stock or a combination of cash and shares of Company Stock equal in value to the
excess of the fair market value of the shares with respect to which the right to
purchase is surrendered over the option price therefor. Moreover, an option
agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Company Stock (plus cash if necessary)
having a fair market value equal to such option price.
Each option and all rights granted thereunder shall not be transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during the optionee's lifetime only by the
optionee or the optionee's guardian or legal representative.
In the event of certain basic structural or capital changes in the
Company, the Committee, acting in its sole discretion, may make such adjustments
to options then outstanding as the Committee deems appropriate to reflect such
change, or provide that the number of shares of Company Stock covered by an
option theretofore granted shall be adjusted so that such option shall
thereafter cover the number and of shares of stock or other securities or
property to which the optionee would have been entitled pursuant to the terms of
the agreement relating to such change if, immediately prior to such change, the
optionee had been the holder of record of the number of shares of Company Stock
then covered by such option.
Options designated as ISOs are intended to have the attendant tax benefits
provided under Sections 421 and 422 of the Code. Accordingly, the Option Plan
provides that the aggregate fair market value (determined at the time an ISO is
granted) of the Company Stock subject to ISOs exercisable for the first time by
an employee during any calendar year (under all plans of the Company) may not
exceed $100,000.
The Board may modify, suspend or terminate the Option Plan; provided,
however, that certain material modifications affecting the Option Plan must be
approved by the stockholders and any change in the Option Plan that may
adversely affect an optionee's rights under an option previously granted under
the Option Plan requires the consent of the optionee.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of September 22, 1997, information
concerning beneficial ownership of voting securities of the Company by any
executive officers of the Company and each
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person who is known by management to own beneficially more than 5% of any class
of such securities:
Amount of
Common Stock Percent
Name Title Beneficially Owned Of Class
---- ----- ------------------ --------
Stacy J. Schrader Shareholder 109,169 18.23%
Robert M. Schrader Shareholder 109,168 18.23%
Malcolm Baca Executive Vice 55,383 9.25%
President
Robert E. Schrader President and C.E.O. 12,094 2.00%
Martin S. Fawer Chief Financial 5,968 1.00%
Officer
Bruce L. Blackford Senior Vice President 22,452 3.75%
Jeff Hanser Senior Vice President 22,452 3.75%
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Interest in Certain Transactions of Directors, Officers
and Principal Holders of Voting Securities
As of October 27, 1997, Mr. Schrader owned 1,152,711 shares of Zing Common
Stock constituting approximately 43.34% of the issued and outstanding shares of
Zing Common Stock (assuming the issuance of shares issuable (and not yet issued)
as of June 30, 1997 in connection with the purchase of the minority ownership in
Zing's Omnirel subsidiary); and Mr. Martin Fawer owned 14,856 shares of Zing
Common Stock, constituting less than one percent (1%) of the issued and
outstanding shares of Zing Stock. Mr. Schrader, Deborah J. Schrader (Mr.
Schrader's wife) and Mr. Fawer are directors of the Company and thus have an
indirect interest in the various agreements and arrangements between Zing and
the Company including the Zing guaranty of the Company's credit facility, the
Indemnification Agreement with Zing and the management services to be provided
to the Company by certain employees of Zing.
Zing guaranteed repayment by the Company of its obligations under the
Company's $1.5 million credit facility with a commercial bank. Pursuant to the
Indemnification Agreement, among other things, the Company and Zing have entered
into certain agreements with respect to the indemnification of certain
liabilities arising from the operation of their respective businesses. The
Company will engage certain Zing employees (with the permission of Zing) who
will provide management services to the Company. Management of the Company
anticipates that the aggregate cost of such services will not exceed $100,000
per year.
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On December 17, 1996, Zing advanced $100,000 to Mr. Baca for personal uses
unrelated to the Company in exchange for Mr. Baca's secured promissory note. The
promissory note, which matured on June 29, 1997, was secured by a first priority
security interest in all of his shares of Company Stock. $46,000 was repaid on
such note and a principal balance of $54,000 remains outstanding as an advance
to Mr. Baca from Zing.
ITEM 13 - EXHIBITS LIST AND REPORTS ON FORM 8-K
The following exhibits are filed with this registration statement, and
this list constitutes the exhibit index.
(a) Exhibits List.
Exhibit No. Description
- ----------- -----------
3.1 Form of Certificate of Incorporation (amended/restated -
Delaware)*
3.2 Form of By-laws (amended/restated)*
4 Common Stock Certificate*
10.1 Malcolm Baca Employment Contract*
10.2 Robert E. Schrader Employment Contract*
10.4 Indemnification Agreement*
10.6 Option Plan*
10.7 Escrow and Distribution Agreement*
10.8 Merger Agreement and Plan of Reorganization among the
Company, Research Analysis Corporation, Research
Technology Analysis Corp., Bruce L. Blackford and Jeff
Hanser, dated as of September 1, 1997.**
10.9 Option Agreement dated September 22, 1997 between the
Company and Jeff Hanser.**
10.10 Option Agreement dated September 22, 1997 between the
Company and Bruce L. Blackford.**
10.11 Employment Agreement dated as of September 1, 1997
between the Company and Jeff Hanser.**
10.12 Employment Agreement between the Company and Bruce L.
Blackford dated as of September 1, 1997.**
10.13 Credit Agreement between the Company and Fleet
Bank dated August 28, 1997.**
10.14 Commercial Purpose Master Note from the Company in favor
of Fleet Bank dated August 28, 1997.**
10.15 Security Agreement between Fleet Bank and the
Company dated August 28, 1997.**
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10.16 Standard Industrial/Commercial Multi-Tenant Lease
between Pacific Gulf Properties, Inc. and the
Company dated August 11, 1997. (Filed herewith.)
11 Statement Re: Computation of Per Share Earnings. (See
Note 1 to Financial Statements on Page 20 of this
Report).**
27 Financial data schedule**
99.1 Letter Agreement, dated July 7, 1995 between Transition
Analysis Component Technology, Inc. and Arrow Electronics,
Inc.*
99.2 Form of License Agreement and Rider to Agreement, dated
May 19, 1993 between Transition Analysis Component
Technology, Inc. and Arrow Electronics, Inc.*
(b) Reports on Form 8-K - Not Applicable
- ----------
* Incorporated by reference from the Company's Registration Statement on Form
SB-1 (No. 333- 20709).
** Previously filed as an exhibit to Registrant's annual report on Form 10-KSB
for the fiscal year ending June 30, 1997.
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SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized on the __th day of October,
1997.
Transition Analysis Component Technology, Inc.
By: /s/ Martin S. Fawer
------------------------------------------
Martin S. Fawer
Chief Financial Officer and Treasurer
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STANDARD INDUSTRIAL COMMERCIAL MULTI-TENANT LEASE - MODIFIED NET
AMERICAN INDUSTRIAL REAL ASSOCIATION
--
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
August 11, 1997 is made by and between Pacific Gulf Properties, Inc., a Maryland
corporation ("Lessor") and Transition Analysis of Component Technology, Inc.
(TACTech, Inc.) a Delaware corporation ("Lessee"), (collectively the "Parties,"
or individually a "Party").
1.2(a) Premises: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 22681/22687 Old Canal Road located in
the City of Yorba Linda County of Orange State of California with zip code
92887-4608, as outlined on Exhibit E attached hereto ("Premises"). The
"Building" is that certain building containing the Premises and generally
described as (describe briefly the nature of the Building): an approximately
11,566 square foot portion of a larger building of approximately 27,077 square
feet which is part of a larger 4 building, 105,516 square foot business park.
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility raceways of the Building or to any
other buildings in the Industrial Center. 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 "lndustrial
Center" (Also see Paragraph 2.)
1.2(b) Parking: thirty-five (35) unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and none reserved vehicle parking spaces
('Reserved Parking Spaces"). (Also see Paragraph 2.6.)
1.3 Term: 5 years and 0 months ("Original Terms") commencing October 1,
1997 ("Commencement Date") and ending September 30, 2002 ("Expiration Date").
(Also see Paragraph 3.)
1.4 Early Possession: September 1, 1997 ("Early Possession Date"). (Also
see Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $6,593.00 per month ("Base Rent"), payable on the first
(1st) day of each month commencing October 1, 1997 (Also see Paragraph 4.)
|X| If this box is checked, this Lease provides for the Base Rent to be
adjusted par Addendum PP 51 attached hereto.
1.6(a) Base Rent Paid Upon Execution: $6,593.00 as Base Rent for the period
October 1 - October 31, 1997.
|X| 1.6(b) Lessee's Share of Common Area Operating Expenses: eleven percent
(10.96%) (Lessee's Share") as determined by prorata square footage of the
Premises as compared to the total square footage of the Building or |_|
other criteria as described in Addendum ____________________.
1.7 Security Deposit: $79,116.00 ("Security Deposit"). (Also see Paragraph
5.)
1.8 Permitted Use: Administrative, executive and engineering offices for a
semi-conductor information services company ("Permitted Use"). (Also see
Paragraph 6.)
1.9 Insuring Party. Lessor is the "lnsuring Party." (Also see Paragraph 8.)
1.10 (a) Real Estate Brokers. The following real estate broker(s)
(collectively, the Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
|X| Voit Commercial Brokerage represents Lessor exclusively {"Lessor's
Broker");
|X| Grubb & Ellis Company represents Lessee exclusively ("Lessee's Broker"); or
|_| _________________________________ represents both Lessor and Lessee ("Dual
Agency"). (Also sea Paragraph 15 )
1.10(b) Payment to Brokers. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is no
separate written agreement between Lessor and said Broker(s), the sum of $ per
agreement ) for brokerage services rendered by said Broker(s) in connection with
this transaction.
1.11 ______________________________________________________________________
(Guarantor"). (Also see Paragraph 37.)
1.12 Addenda and Exhibits Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 64, and Exhibits A through E , all of which
constitute a part of this Lease.
2. Premises, Parking and Common Arena.
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 square footage set forth in this Lease, or that may
have been used in calculating rental and/or Common Area Operating Expanses, is
an approximation which Lessor and Lessee agree is reasonable and the rental and
Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises. other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, 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, rectify same at Lessors expense. It Lessee does
not give Lessor written notice of a non-compliance with this warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having bean made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be
made by Lessee. It the Premises do not comply with said warranties. Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition of
the Premises only (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, and compliance with the
Americans with Disabilities Act and applicable zoning, municipal, county, state
and federal laws, ordinances and regulations and any covenants or restrictions
of record (collectively, "Applicable Laws") and the present and future
suitability of the Premises for Lessee's intended use; (b) that Lessee has made
such investigation as it deems necessary with reference to such matters, is
satisfied with reference thereto, and assumes all responsibility therefore as
the same relate to Lessee's occupancy of the Premises and/or the terms of this
Lease; and (c) that neither Lessor, nor any of Lessor's agents, has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease.
2.5 Lessee as Prior Owner/Occupant/1. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect it immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense correct any
non-compliance of the Premises with said warranties.
1/Subject to Lessor's receipt of Lessee's executed leases in a form and
content acceptable to Lessor on or before August 15, 1997 and receipt of
Lessee's flooring choices from Lessor's standard materials. Any delays by Lessee
will not change or delay any of the dates agreed upon in this lease.
MULTI-TENANT - MODIFIED NET
(c) American Industrial Real Estate Association
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2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
#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." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.).
(a) Lessee shall not permit or allow Any vehicles that belong to or
are controlled by Lessee or Lessee's employees, supplier, shippers,
customers contractors, or invitees to be loaded, unloaded, or parked in
areas other than chose designated by Lessor for such activities.
(b) 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.
(c) Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law.
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 Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.
2.8 Common Areas - Lessee's Rights. Lessor hereby 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 Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights And
remedies that it may have to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.
2.9 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 with respect thereto in accordance
with Paragraph 40. Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors And invitees to so abide and conform. Lessor shall not be
responsible to Lessor for the non-compliance with said rules and regulations by
other lessees of the Industrial Center.
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 Industrial
Center 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 Industrial Center, 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 Industrial Center as Lessor may
in the exercise of sound business judgement, deem to be appropriate,
provided said acts or changes do not reduce Lessee's parking or negatively
effects its ability to enter the Premises and do business.
3. Term.
3.1 Term. The Commencement Data, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If an Early Possession Date is specified in Paragraph
1.4 and if Lessee totally or partially occupies the Premises after the Early
Possession Date but prior to the Commencement Date, the obligation to pay Base
Rent shall be abated for the period of such early occupancy. All other terms of
this Lease, however, (including but not limited to the obligation to carry the
insurance required by Paragraph 8) shall be in effect during such period. Any
such early possession shall not affect nor advance the Expiration Date of the
Original Term.
3.3 Delay In Possession. If for any reason Lessor beyond its control,
cannot deliver possession of the Premises to Lessee by the Early Possession
Date, if one is specified in Paragraph 1.4, or if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease, or
the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to pay
rent or perform any other obligation of Lessee under the terms of this Lease
until Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date Lessee may, at its option, by notice in writing to Lessor
within ten (10) days after the end of said sixty (60) day period, cancel this
Lease, in which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of Lessee is
not received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease hereunder shall terminate and be of no further force or affect.
Except as may be otherwise provided, and regardless of when the Original Term
actually commences, it possession is not tendered to Lessee when required by
this Lease And Lessee does not terminate this Lease. as aforesaid, the period
free of the obligation to pay Base Rent, it any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to the period during which the Lessee would have otherwise
enjoyed under the terms hereof, but minus any days of delay caused by the acts,
changes or omissions of Lessee.
4. Rent
4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges, as the
same may be adjusted from time to time, to Lessor in lawful money of the United
States, without offset or deduction, on or before the day on which it is due
under the terms of this Lease. Base Rent and all other rent and charges for any
period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.
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(b)) 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 Industrial Center, including, but not
limited to, the following:
(i) The operation, repair and maintenance, in neat, clean,
good order and condition, of the following:
(aa) The Common Areas, including parking areas, loading
and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways, landscaped areas, striping,
bumpers, irrigation systems, Common Area lighting
facilities, fences and gates and roof.
(bb) Exterior signs and any tenant directories.
(cc) Fire detection and sprinkler systems.
(ii) The cost of water, gas, electricity and telephone to
service the Common Areas
(iii) Trash disposal, property management and security
services and the cost of any environmental inspections.
(iv) Reserves set aside for maintenance and repair of
Common Areas (provided said property management service fees do
not exceed fees typical charged by third party property manager
for similar services.
(v) Real Property Taxes (as defined in Paragraph 10.2) to be
paid by Lessor for the Building and the Common Areas under
paragraph 10 hereof.
(vi) The cost of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.
(vii) Any deductible portion of an insured loss concerning
the Building or the Common Areas.
(viii) 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 Building or to any other
building in the Industrial Center or to the operation, repair. and
maintenance thereof, shall be allocated entirely to the Building or to
such 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 Industrial Center.
(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 Industrial Canter already has
the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lessee to provide the same or some of them.
(d) Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within ten (10) days after a reasonably detailed
statement of actual expenses is presented to Lessee by Lessor. At
Lessors option, however, an amount may be estimated by Lessor from
time to time of Lessee's Share of annual Common Area Operating
Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each 12-month period of the Lease term, on the
same day as the Base Rent is due hereunder. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses incurred during the preceding
year. it Lessee's payments under this Paragraph 4.2(d) during said
preceding year exceed Lessees Share as indicated on said statement,
Lessor shall be credited the amount of such overpayment against
Lessee's Share of Common Area Operating Expenses next becoming due. If
Lessee's payments under this Paragraph 4.2(d) during said preceding
year were less than Lessee's share as indicated on said statement,
Lessee shall pay to Lessor the amount of the deficiency within ten
(10) days after delivery by Lessor to Lessee of said statement. Lessee
shall have the right to audit Lessor's expense statements Lessor's
expense statements are in error by more than five percent (5%), the
Lessor shall pay for the costs of Lessee's audit. Notwithstanding the
provisions of Paragraph 4.2, Lessee's share of Common Area Operating
Expenses will not increase by more than six percent (6%) over the
previous year's Common Area Operating Expenses.
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5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise defaults
under this Lease (as defined in Paragraph 13.1), 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, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall upon written request from Lessor, deposit
additional monies with Lessor as an addition to the Security Deposit so that the
total amount of the Security Deposit shall at all times bear the same proportion
to the then current Base Rent as the initial Security Deposit bears to the
initial Bass Rent set forth in Paragraph 1.5. Lessor shall be required to keep
all or any part of the Security Deposit separate from its general accounts.
Lessor shall, at the expiration or earlier termination of the term hereof and
after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease. Notwithstanding
the foregoing, the security deposit shall be deposited in an interest bearing
passbook account with a federally chartered commercial bank. Interest shall
accrue in favor of the Lessee. If the Lessee is not in material default of the
Lease, the Lessor shall return to Lessee $15,823.20 of the security deposit
within fifteen (15) days following each anniversary of the lease commencement
until the Lease expires. Lessor, within fifteen (15) days following the
expiration of the Lease, shall return to the Lessee all security deposit funds,
including all accrued interest.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises only for the Permitted Use set
forth in Paragraph 1.8, 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 waste or a nuisance, or that
disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its consent
to any written request by Lessee, Lessee's assignees or subtenants, and by
prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" used in
this Lease shall mean any product, substance, chemical, material or waste whose
presence, nature, quantity and/or intensity of existence, use, manufacture,
disposal, transportation, spill, release or effect, 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
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products or by-products thereof. Lessee shall not
engage in any activity in or about the Premises which constitutes a Reportable
Use (as hereinafter defined) of Hazardous Substances without the express prior
written consent of Lessor and compliance in a timely manner (at Lessee's sole
cost and expense) with all Applicable Requirements (as defined in Paragraph
6.3). "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 response, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use is not a Reportable Use and does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may (but
without any obligation to do so) condition its consent to any Reportable Use of
any Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor's option, removal on or before Lease expiration
or earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(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 or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action, or proceeding given to, or received from,
any governmental authority or private party concerning the presence, spill,
release, discharge of, or exposure to, such Hazardous Substance including, but
not limited to all such documents as may be involved in any Reportable Use
involving the Premises. Lessee shall not cause or permit any Hazardous Substance
to be spilled or released in, on, under or about the Premises (including,
without limitation, through the plumbing or sanitary sewer system).
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and, the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) 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
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier 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.
6.3 Lessee's Compliance with Requirements. Lessee shall, at Lessee's sole
cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements", which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenant, easements and restrictions
of record, permits, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor's engineers
and/or consultants, relating in any manner to the Premises (including but not
limited to matters pertaining to (i) industrial hygiene, (ii) environmental
conditions on, in, under or about the Premises, including soil and groundwater
conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall within five (5) days after receipt of Lessors written
request, provide Lessor with copies of all documents and information, including
but not limited to permits registrations, manifests, applications, report and
certificates, 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
failure by Lessee or the Premises to comply with any Applicable Requirements.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders"), shall have the
right to enter the Premises at any time in the case of an emergency, and
otherwise at reasonable times, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. The costs and expenses of any
such inspections shall be paid by the party requesting same, unless a Default or
Breach of this Lease by Lessee or a violation of Applicable Requirements or a
contamination, caused or materially contributed to by Lessee, is found to exist
or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections. Lessee shall not be responsible for pre-existing conditions or
violations caused by others.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repair occurs as a result of Lessee's use, the elements or the age of such
portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities specifically serving the Premises, such
as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and sky1ights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessens 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) Lessee shall, at Lessee's sole cost and expense, procure and maintain a
contract, with copies to Lessor, in customary form and substance for and with a
contractor specializing and experienced in the inspection, maintenance and
service of the heating, air conditioning and ventilation system for the
Premises. However, Lessor reserves the right, upon notice to Lessee, to procure
and maintain the contract for the heating, air conditioning and ventilating
systems, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
for the cost thereof. Lessor will bill Lessee as part of CAM charge.
(c) If Lessee fails to perform Lessee's obligations under this Paragraph
7.1, Lessor may enter upon the Premises after ten (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, in accordance with Paragraph 13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
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 and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
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and/or smoke detection systems and equipment, 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 which would otherwise
afford Lessee the right to make repairs at Lessor's expense or to terminate this
Lease because of Lessor's failure to keep the Building, Industrial Center or
Common Areas in good order, condition and repair.
7.3 Utility Installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is used
in this Lease to refer to all air lines, power panels, electrical distribution,
security, fire protection systems, communications systems, lighting fixtures,
heating, ventilating and air conditioning equipment, plumbing, and fencing in,
on or about the Premises. The term "Trade Fixtures" shall mean Lessee's
machinery and equipment which can be removed without doing material damage to
the Premises. The term "Alterations" shall mean any modification of the
improvements on the Premises which are provided by Lessor under the terms of
this Lease, other than Utility Installations or Trade Fixtures. "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). Lessee shall not make nor cause to be made any Alterations
or Utility Installations in, on, under or about the Premises without Lessor's
prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without
Lessor's consent but upon notice to Lessor, so long as they are not visible from
the outside of the Premises, do not involve puncturing, relocating or removing
the roof or any existing walls, or changing or interfering with the fire
sprinkler or fire detection systems and the cumulative cost thereof during the
term of this Lease as extended does not exceed $2,500.00
(b) Consent. 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. All consents given by Lessor,
whether by virtue of Paragraph 7.3(a) or by subsequent specific consent shall be
deemed conditioned upon: (i) Lessee's acquiring all applicable permits required
by governmental authorities; (ii) the furnishing of copies of such permits
together with a copy of the plans and specifications for the Alteration or
Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.
(c) Lien Protection. 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
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (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 in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one
and one-half times the amount of such contested lien claim or demand
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal and to
cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) Removal. Unless otherwise agreed in writing, Lessor may require that
any or all Lessee-Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, unless that their installation
has been consented to by Lessor. Lessor may require the removal at any time of
all or any part of any Alterations or Utility Installations made without the
required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the end
of the last day of the Lease term or any earlier termination date, 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 or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.
8. Insurance; Indemnity.
8.1 Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee, Lessor and any Lender(s) whose names have been provided to Lessee in
writing (as additional insureds) against claims for bodily injury, personal
injury and property damage based upon, involving 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 "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for 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 required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee 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 also maintain liability insurance
described in Paragraph 8.2(a) above, 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-Buliding, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor with loss
payable to Lessor and to any Lender(s), insuring against loss or damage to the
Premises. Such insurance shall be for full replacement cost, as the same shall
exist from time to time, or the amount required by any Lender(s), but in no
event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's 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 any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Building required to be demolished or removed
by reason of the enforcement of any building zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance 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.
(b) Rental Value. Lessor shall also obtain and keep in force during the
term of this Lease a policy or policies in the name of Lessor, with loss payable
to Lessor and any Lender(s), insuring the loss of the full rental and other
charges payable by all lessees of the Building to Lessor for one year (including
all Real Property Taxes, insurance costs, all Common Area Operating Expenses and
any scheduled rental increases). Said insurance may provide that in the event
the Lease is terminated by reason of an insured loss, the period of indemnity
for such coverage shall be extended beyond the date of the completion of repairs
or replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any co-insurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income, Real
Property Taxes, insurance premium costs and other expenses, if any, otherwise
payable, for the next 12-month period. Common Area Operating Expenses shall
include any deductible amount in the event of such loss.
(c) Adjacent Premises. 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 Industrial Center if said increase is caused by Lessees 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 Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B +, V, or such other rating as may be required by a Lender, as set
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forth in the most current issue of "Best's Insurance Guide." Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(h) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) 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.
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 (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance 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 unless there is gross negligence or
intentional destruction by either party.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, 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,
costs, liens, judgments, penalties, loss of permits, attorneys' end consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall 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 so 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, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center. 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.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1 (d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction.
(c) "Insured Loss" shall mean damage or destruction to 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 building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Conditions" 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.
9.2 Premises Partial Damage - Insured Loss. If 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. In the event, however, that there is a shortage of
insurance proceeds and such shortage is due to the fact that, by reason of the
unique nature of the improvements in the Premises, 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 ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, Lessor shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. If Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter to 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. If
Lessor does not receive such funds or assurance within such ten (10) day period,
and if Lessor does not so elect to restore and repair, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for 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 rather than Paragraph 9.2, 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 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 and this Lease
shall continue in full force and effect), Lessor may at Lessor's option, either
(i) repair such damage as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage of Lessor's desire to terminate this
Lease as of the date sixty (60) days following the date of such notice. In the
event Lessor elects to give such notice of Lessor's intention to terminate this
Lease, Lessee shall have the right within ten (10) days after the receipt of
such notice to give written notice to Lessor of Lessee's commitment to pay for
the repair of such damage totally at Lessee's expense and without reimbursement
from Lessor. Lessee shall provide Lessor with the required funds or satisfactory
assurance thereof within thirty (30) days following such commitment from Lessee.
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 give such notice and provide
the funds or assurance thereof within the times specified above, this Lease
shall terminate as of the date specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at anytime during the last six (6) months
of the term 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, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, 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 ten (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 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 as of the date set forth in the first sentence of this
Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous Substance
Condition for which Lessee is not legally responsible, the Base Rent, Common
Area Operating Expenses and other charges, if any, payable by Lessee hereunder
for the period during which such damage or condition, its repair, remediation or
restoration continues, shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired, but not in excess of proceeds from
insurance required to be carried under Paragraph 8.3(b). Except for abatement of
Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence, in a substantial and
meaningful way, the repair or restoration of the Premises within ninety (90)
days after such obligation shall accrue, Lessee may, at any time 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 sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such repair
or restoration is not commenced within thirty (30) days after receipt of such
notice, this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Premises within
thirty (30) days after the receipt of such notice, this Lease shall continue in
full force and effect. "Commence" as used in this Paragraph 9.6 shall mean
either the unconditional authorization of the preparation of the required plans,
or the beginning of the actual work on the Premises, whichever occurs first.
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9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(c) 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 investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Lessee within thirty (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 sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
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 period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.8 Termination - Advance Payments. Upon termination of this Lease pursuant
to this Paragraph 9, Lessor shall return to Lessee any advance payment made by
Lessee to Lessor and so much of Lessee's Security Deposit as has not been, or is
not then required to be, used by Lessor under the terms of this Lease.
9.9 Waiver of Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.
10.2 Real Property Tax Definition. As used herein, the term "Real Property
Taxes" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "Real Property Taxes" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. 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.
10.3 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 Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 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.
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 Lessee's 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 or stored within the Industrial Center. 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 properly shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. Utilities. Lessee shall pay directly for all utilities and services supplied
to the Premises, including but not limited to electricity, telephone, security,
gas and cleaning of the Premises, together with any taxes thereon. If any such
utilities or services are not separately metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly metered or billed with other
premises in the Building, in the manner and within the time periods set forth in
Paragraph 4.2(d).
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or otherwise transfer or encumber (collectively, "assign") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent given under and subject to the terms of Paragraph
36.
See attached PP 12.1 (b)
(c) The involvement of Lessee or its assets in any transaction, or series
of transactions (by way of merger, sale, acquisition, financing, refinancing,
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, as hereinafter defined, by an
amount equal to or greater than twenty-five percent (25%) of such Net Worth of
Lessee as it was represented to Lessor at the time of full execution and
delivery 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, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "Net Worth of
Lessee" for purposes of this Lease shall be the net worth of Lessee (excluding
any Guarantors) established under generally accepted accounting principles
consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease without
Lessor's specific prior written consent shall, at Lessor's option, be a Default
curable after notice per Paragraph 13.1, or a non-curable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a non-curable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days' written notice ("Lessor's Notice"), increase the monthly Base Rent for the
Premises to the greater of the then fair market rental value of the Premises, as
reasonably determined by Lessor, or one hundred ten percent (110%) of the Base
Rent then in effect. Pending determination of the new fair market rental value,
if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's Notice,
with any overpayment credited against the next installment(s) of Base Rent
coming due, and any underpayment for the period retroactively to the effective
date of the adjustment being due and payable immediately upon the
determination thereof. 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 the then fair market value
as reasonably determined by Lessor (without the Lease being considered an
encumbrance or any deduction for depreciation or obsolescence, and considering
the Premises at its highest and best use and in good condition) or one hundred
ten percent (110%) of the price previously in effect, (ii) any index-oriented
rental or price adjustment formulas contained in this Lease shall be adjusted to
require that the base index be determined with reference to the index applicable
to the time of such adjustment, and (iii)any fixed rental adjustments scheduled
during the remainder of the Lease term shall be increased in the same ratio as
the new rental bears to the Base Rent in effect immediately prior to the
adjustment specified in Lessor's Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall not
(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, nor (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any 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 any rent for performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for the Default or Breach by Lessee of
any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.
(d) In the event of any Default or Breach of Lessee's obligation under this
Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone else
responsible for the performance of the Lessee's obligations under this Lease,
including any sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefor 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 non-refundable
deposit of ten percent (10%) of the monthly Base Rent applicable to the portion
of the Premises which is the subject of the proposed assignment or sublease, as
reasonable consideration for Lessor's considering and processing the request for
consent. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, 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 in writing.
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12.1(b) Related Entity. Lessee may, without Lessor's consent but subject to the
conditions hereinafter provided, so long as the use of the related entity is the
same or is legal for the subject premises and acceptable to Lessor, assign this
Lease or sublet the Premises to any corporations or other business entities
which control, are controlled by, or are under common control with Lessee
(herein referred to as "related entity"), provided and upon the condition that
Lessee has given Lessor not less than thirty (30) days prior written notice
thereof. Any such subletting or assignment shall not be deemed to relieve,
release, impair or discharge any of Lessee's obligations hereunder. Furthermore,
any such assignment or subletting shall be subject to Lessee furnishing to
Lessor (i) adequate proof that such related entity is duly organized (or formed,
as the case may be) and (ii) if the related entity is a corporation, resolutions
of its Board of Directors certified by an appropriate corporate officer,
authorizing such assignment or sublease. For the purposes hereof, "control"
shall be deemed to mean ownership of not less than fifty percent (50%) of all
the voting stock of such corporation or not less than fifty percent (50%) of all
the legal and equitable interest in any other business entities. For so long as
the stock of Lessee is publicly traded, the purchase or other transfer of
Lessee's shares shall not be deemed to be an assignment or sublet for the
purposes of this Lease.
<PAGE>
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 rentals and income arising from any sublease of all or a portion of the
Premises heretofore or hereafter made by Lessee, and Lessor may collect such
rent and income and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach (as defined in Paragraph 13.1) shall
occur in the performance of Lessee's obligations under this Lease, Lessee may,
except as otherwise provided in this Lease, receive, collect and enjoy the rents
accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of 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 other prior defaults
or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.
(d) No sublessee under a sublease approved by Lessor 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. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "Default" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"Breach" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:
(a) The failure to pay rent or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure by
Lessee to make any payment of Base Rent, Lessee's Share of Common Area Operating
Expenses, or any other monetary payment required to be made by Lessee hereunder
as and when due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this Lease, or the failure
of Lessee to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of ten
(10) days following written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure by
Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1 (b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37,
(v) the subordination or non-subordination of this Lease per Paragraph 30, (vi)
the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) 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 thirty (30) days
following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1 (a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by Lessee
of any general arrangement or assignment for the benefit of creditors; (ii)
Lessee's becoming a "debtor' as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement of Lessee or of
any Guarantor, given to Lessor by Lessee or any Guarantor, was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in Paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease and the term hereof shall terminate and Lessee
shall immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee: (i) the worth at the time of
the award of the unpaid rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorneys' fees, and that portion of 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 San Francisco or the Federal Reserve Bank District in which the Premises
are located at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee's Default or Breach of this Lease shall not
waive Lessors right to recover damages under this Paragraph 13.2. If termination
of this Lease is obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding the unpaid rent and
damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit for such rent and/or damages. If a
notice and grace period required under Subparagraph 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case maybe, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by Subparagraph 13.1 (b), (c) or (d). In such
case, the applicable grace period under the unlawful detainer statue shall run
concurrently after the one such statutory notice, and the failure of Lessee to
cure the Default within the greater of the two (2) 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 in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
recover the rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations. Lessor and Lessee agree that the
limitations on assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessees right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the state wherein the Premises are located.
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(d) The expiration or termination of this Lease and/or the termination 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 in Event of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, 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 to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1 ) 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,
and recoverable by Lessor, as additional rent due under this Lease,
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 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 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
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 Breach by Lessor. 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 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to 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 thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion. Notwithstanding, in the
event of an emergency, Lessor shall perform its obligation within twenty-four
(24) hours.
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
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. Brokers' Fees.
16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each Party (as "Responding Party") shall within ten
(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 a form similar to the then most current "Tenancy Statement" form published by
the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.
16.2 Financial Statement. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser, including but not limited to Lessee's financial
statements for the past three (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. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises. In the event of
a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, 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. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within ten (10) days following
the date on which it was due, shall bear interest from the date due at the prime
rate charged by the largest state chartered bank in the state in which the
Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.
20. 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.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
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 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. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, 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 notice purposes. Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessees taking
possession of the Premises, the Premises shall constitute Lessee's address for
the purpose of mailing or delivering notices to Lessee. A copy of all notices
required or permitted to be given to Lessor hereunder shall be concurrently
transmitted to such party or parties at such addresses as Lessor may from time
to time hereafter designate by written notice to Lessee.
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 forty-eight (48) 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
guarantees next day
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delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone or facsimile confirmation of receipt of the
transmission thereof, provided a copy is also delivered via delivery or mail. If
notice is received on a Saturday or a Sunday or a legal holiday, it shall be
deemed received on the next business day.
24. Waivers. No waiver by Lessee or Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessor or Lessee, shall be deemed a waiver of
any other term, covenant or condition hereof, or of any subsequent Default or
Breach of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of the other 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.
Regardless of Lessor's knowledge of a Default or Breach at the time of accepting
rent, the acceptance of rent by Lessor shall not be a waiver of any Default or
Breach by Lessee of any provision hereof. Any payment given Lessor 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. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty (150%)
of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a 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. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
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 by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, 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. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
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 assurance (a ("non-disturbance agreement") from
the Lender that Lessee's possession and this Lease, including any options to
extend the term hereof, will not be disturbed so long as Lessee is not in Breach
hereof and attorns to the record owner of the Premises.
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 Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or 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' fee 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. Lessor shall be entitled to attorneys' fees, costs and expenses
incurred in 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.
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 during normal business hours for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the
Premises or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the exterior of the Premises or
the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof of the Building, and the right to install advertising signs on the
Building, including the roof, which do not unreasonably interfere with the
conductor Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.
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, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election 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.
(a) Except for Paragraph 33 hereof (Auctions) or 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' end other consultants" fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, 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 to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee 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.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions 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.
37. Guarantor.
37.1 Form of Guaranty. If there are to be any Guarantors of this Lease per
Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor
shall be in the form most recently published by the American Industrial Real
Estate Association, and each such Guarantor shall have the same obligations as
Lessee under this lease, including but not limited to the obligation to provide
the Tenancy Statement and information required in Paragraph 16.
37.2 Additional Obligations of Guarantor. It shall constitute a Default of
the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the 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 of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
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39. Options.
39.1 Definition. As used in this Lease, the word "Option" has the following
meaning (a) the right to extend the term of this Lease or to renew this Lease or
to extend or renew any lease that Lessee has on other property of Lessor; (b)
the right of first refusal to lease the Premises or the right of first offer to
lease the Premises or the right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor, (c) the
right to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the right to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other property
of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.
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 to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Defaults under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.
(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) All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or effect, notwithstanding Lessee's due and timely
exercise of the Option, if, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time 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 Industrial Center and their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental 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.
42. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. It Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. 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.
46. Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. 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 an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
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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.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED
TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF
ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR
CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH
IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM
THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Executed at:
on: on:
By LESSOR By LESSEE:
Pacific Gulf Properties, Inc. Transition Analysis of Component
a Maryland Corporation Technology, Inc. (TACTech. Inc.)
a Delaware Corporation
By: /s/ Jon S. Sprott By:
Name Printed: Name Printed: Transition Analysis of
Component Tec
Title: Regional Manager Title: Chief Financial Officer
By: /s/ Robert A. Dewey By: /s/ Martin Fawer
---------------------------------- ----------------------------------
Name Printed: Robert A. Dewey Name Printed: Martin Fawer
Title: Vice President Title:
Address: 4220 Von Karman Ave., Address:
2nd Floor
Newport Beach. CA 92660
Telephone: (714)223-5000 Telephone: (914)747-7474
Facsimile: ( ) Facsimile: (914)747-2316
BROKER BROKER
Executed at: Executed at:
on: on:
By: By:
Name Printed: Name Printed:
Title: Title:
Address: Address:
Telephone: ( ) Telephone: ( )
Facsimile: ( ) Facsimile: ( )
NOTE:These forms are often modified to meet changing requirements and needs of
the industry. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So. Figueroa
St., M-1, Los Angeles, CA 90071. (213) 687-8777.
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<PAGE>
ADDENDUM TO STANDARD INDUSTRIAL -
MULTI-TENANT LEASE - MODIFIED NET
THIS ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - MODIFIED
NET ("Addendum") is made and entered into by and between PACIFIC GULF PROPERTIES
INC., A MARYLAND CORPORATION, as "Lessor", and TRANSITION ANALYSIS OF COMPONENT
TECHNOLOGY, INC. (TACTECH, INC.) A DELAWARE CORPORATION, as "Lessee", as of the
date set forth on the first page of that certain Standard Industrial Lease -
Multi-Tenant (the "Lease") between Lessor and Lessee to which this Addendum is
attached and incorporated. The terms, covenants and conditions set forth herein
are intended to and shall have the same force and effect as if set forth at
length in the body of the Lease. To the extent that the provisions of this
Addendum are inconsistent with any provisions of the Lease, the provisions of
this Addendum shall supersede and control.
The above referenced Lease is hereby amended as follows:
49. UNAVOIDABLE DELAYS: If the performance of Lessor of any act required herein,
including, without limitation, the design, planning, permitting, construction
and completion of Lessor's Work (if any) as defined in Exhibit B, is directly
prevented or delayed by reason of strikes, lockouts, labor disputes,
governmental delays, acts of God, fire, floods, epidemics, freight embargoes,
unavailability of materials and supplies, development moratoriums imposed by any
governmental authority, Lessee-caused delays, or other causes beyond the
reasonable control of Lessor, Lessor shall be excused from performing that act
for the period equal to the period of the prevention or delay.
50. ESTOPPEL CERTIFICATES: Within ten (10) days following a request in writing
by Lessor, Lessee shall execute and deliver to Lessor an estoppel certificate,
which, as submitted by Lessor, shall be in any form as may be required by any
prospective mortgagee or purchaser of the Building or the Project, or any
portion thereof, indicating therein any exceptions thereto that may exist at
that time, and shall also contain any other LEASE information reasonably
requested by Lessor or Lessor's mortgagee or prospective mortgagee or
purchasers. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. In connection therewith, Lessor may
require Lessee to provide Lessor with a current financial statement and
financial statements of the two (2) years prior to the current financial
statement year. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Lessee,
shall be audited by an independent certified public accountant. Failure of
Lessee to execute and deliver such estoppel certificate or other instruments, in
a timely manner, shall constitute an acceptance of the Premises and an
acknowledgment by Lessee that statements included in the estoppel certificate
are true and correct, without exception.
51. MONTHLY RENT: The monthly rent during the Lease term shall be adjusted and
payable as follows:
10/1/1997 - 9/30/1998 $6,593/Month
10/1/1998 - 9/30/1999 $6,940/Month
10/1/1999 - 9/30/2000 $7,287/Month
10/1/2000 - 9/30/2001 $7,749/Month
10/1/2001 - 9/30/2002 $8,096/Month
52. TRASH DISPOSAL: Lessee agrees that all trash and debris is to be deposited
in receptacles provided within the complex and all receptacles shall remain
inside enclosures as provided by Lessor. If it is determined that Lessee is
regularly disposing of an unusually large amount of refuse Lessee shall, within
ten (10) days receipt of written notice from Lessor and at Lessee's sole
expense, provide for an additional trash bin and pickup service at his or her
leased premises. Lessor reserves the right to stipulate location of storage for
Lessee's additional receptacle. Lessee agrees not to store any items or leave
any debris outside premises in any of the common area, including the parking lot
and in the event Lessor must remove items or debris, Lessor shall charge the
cost of removing said items or debris to Lessee, and Lessee shall pay same upon
removal or be in default of this Lease as defined in Paragraph 13 of this Lease.
53. GOVERNMENTAL AUTHORITY COMPLIANCE: Lessee shall, at Lessee's expense,
comply promptly with all governmental authorities and all applicable statutes,
ordinances, rules, regulations, orders, covenants and restrictions of record,
and requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises, including compliance with the
Uniform Fire Code.
54. EFFECT OF DEFAULT ON FREE OR ABATED RENT: In the event of Lessee's default
under Paragraph 13 of this Lease, any previously free or abated rent shall be
due and payable to Lessor immediately.
55. WAIVER OF JURY TRIAL: The parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other on any matters whatsoever arising out of or in
any way related to this Lease, the relationship of Lessor and Lessee, Lessee's
use or occupancy of the Premises, the Building or the Park, and/or any claim of
injury, loss or damage.
56. COUNTERCLAIMS: In the event Lessor commences any proceedings for nonpayment
of Rent, or any other sums or amounts due hereunder, Lessee shall not interpose
any counterclaim of whatever nature or
1
<PAGE>
description in any such proceedings, provided, however, nothing contained herein
shall be deemed or construed as a waiver of the Lessee's right to assert such
claims in any separate action brought by Lessee or the right to offset the
amount of any final judgment owed by Lessor to Lessee.
57. WARRANTY OF AUTHORITY: Each person executing this agreement on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder.
58. LESSOR'S PERSONAL LIABILITY: The liability of Lessor (which, for purposes of
this Lease, shall include Lessor and the owner of the Building if other than
Lessor) to Lessee for any default by Lessor under the terms of this Lease shall
be limited to the actual interest of Lessor and its present or future partners
in the Premises or the Building and Lessee agrees to look solely to the Premises
for satisfaction of any liability and shall not look to other assets of Lessor
nor seek any recourse against the assets of the individual partners, directors,
officers, shareholders, agents or employees of Lessor; it being intended that
Lessor and the individual partners, directors, officers, shareholders, agents or
employees of Lessor shall not be personally liable in any manner whatsoever for
any judgment or deficiency. The liability of Lessor under this Lease is limited
to its actual period of ownership of title to the Building, and Lessor shall be
automatically released from further performance under this Lease and from all
further liabilities and expenses hereunder upon transfer of Lessor's interest in
the Premises or the Building. Lessee agrees to attorn to any entity purchasing
or otherwise acquiring the Premises.
59. RECORDATION: Lessee shall not record this Lease or a short form memorandum
hereof without the prior written consent of the Lessor.
60. WARRANTIES OF LESSEE: Lessee hereby warrants and represents to Lessor, for
the express benefit of Lessor, that Lessee has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Lessee has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Lessee hereby further warrants
and represents to Lessor, for the express benefit of Lessor, that in entering
into this Lease, Lessee has not relied upon any statement, fact, promise or
representation (whether express or implied, written oral) not specifically set
forth herein in writing and that any statement, fact, promise or representation
(whether express or implied, written or oral) made at any time to Lessee, which
is not expressly incorporated herein in writing is hereby waived by Lessee.
61. MODIFICATIONS FOR LENDER: If, in connection with obtaining financing for the
Premises or any portion thereof, Lessor's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Lessee shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Lessee's rights hereunder or
the use, occupancy or quiet enjoyment of Lessee hereunder.
62. LESSOR AS REAL ESTATE INVESTMENT TRUST: Pacific Gulf Properties, Inc.
("PGP"), is a real estate investment trust, and all rental income received by
Lessor must therefore qualify as "rents from real property" within the meaning
of Section 856(d) of the Internal Revenue Code of 1954, as amended. In order to
insure such qualification, Lessee agrees that in the event Lessee shall assign
its interest in this Lease or sublet the Premises in accordance with the
provisions of Paragraph 21, no amount received or accrued, directly or
indirectly, with respect to such assignment or sublease shall depend in whole or
part on the income or profits of the assignee or sublessee, or any other person
deriving income from the Premises. If PGP notifies Lessee that PGP has in good
faith determined that its status as a real estate investment trust under the
provisions of the Internal Revenue Code of 1954, as heretofore or hereafter
amended, will be jeopardized because of any provision of this Lease, Lessor may
request reasonable amendments to this Lease and Lessee will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not (i) increase the monetary obligations of Lessee pursuant to this Lease,
or (ii) in any other manner adversely affect its interest in OR USE OF the
Premises.
63. WINDOW COVERINGS: Lessee agrees there are to be no window coverings except
mini-blinds, which may be at Lessee's option. Lessee shall pay the cost to
repair/replace said blinds after initial occupancy.
64. EXTENSION OPTION.
64.1 Extension Option: Method of Exercise. Lessor hereby grants to the
original Lessee executing this Lease one (1) option (the "Extension Option") to
extend the Original Term for two (2) additional periods of THREE (3) years (the
"Option Term"). The Extension Option may be exercised by Lessee, if at all, only
in the following manner: (a) Lessee shall deliver written notice to Lessor not
more than TEN (10) months nor less than FOUR (I) months prior to the expiration
of the Original Term, stating that Lessee may be interested in exercising its
Extension Option; (b) Lessor, after receipt of Lessee's notice, shall deliver
notice (the "Option Rent Notice") to Lessee not less than THREE (3) months prior
to the expiration of the Original Term, setting forth the "Fair Market Rental
Rate" (as that term is defined below), which shall be applicable to the Premises
during the Option Term; and (c) if Lessee wishes to exercise such Extension
Option, Lessee shall, on or before the date occurring TWO (2) months prior to
the expiration of the Original Term, exercise the Extension Option by
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delivering written notice thereof (the "Lessee's Exercise Notice") to Lessor.
The Extension Option and exercise thereof is subject to the provisions of
Paragraph 39 of the Lease.
64.2 Fair Market Rental Rate. If Lessee properly and timely exercises the
Extension Option, the Original Term shall be extended by the Option Term, and,
except as otherwise expressly provided herein to the contrary, all of the terms,
covenants and conditions of this Lease shall remain unmodified and in full force
and effect during the Option Term, except that the Base Rent payable during the
Option Term shall be equal to the "Fair Market Rental Rate" (as defined below)
for the Premises as of the commencement date of the Option Term, as determined
by Lessor and specified in Lessor's Rent Option Notice. As used herein, the
"Fair Market Rental Rate" for the Premises shall mean the monthly basic rent
rate being quoted by Lessor and other landlords of "Comparable Buildings" (as
defined below) on a gross basis for the lease of non-equity, non-sublease,
unencumbered industrial/warehouse space comparable to the Premises, which
comparable space is located in the Industrial Center and Comparable Buildings,
taking into consideration the size, location and floor level of such space, and
the commencement date and length of term of the Option Term, but disregarding
free rent, moving allowances, tenant improvement allowances and any other tenant
concessions. As used herein, "Comparable Buildings" shall mean other industrial
buildings of comparable quality as the Building and located in the NORTH ORANGE
COUNTY area.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Addendum
concurrently with the Lease of even date herewith.
"LESSOR" PACIFIC GULF PROPERTIES. INC., A MARYLAND CORPORATION
By: /s/ Jon S. Sprott
-----------------------------
Name: JON S. SPROTT
Title: REGIONAL MANAGER
By: /s/ Robert A. Dewey
-----------------------------
Name: ROBERT A. DEWEY
Title: VICE PRESIDENT
"LESSEE" TRANSITION ANALYSIS OF COMPONENT TECHNOLOGY, INC.
(TACTECH, INC.) A DELAWARE CORPORATION
By: /s/ Martin Fawer
Name: MARTIN FAWER
Title: CHIEF FINANCIAL OFFICER
By: _______________________________________
Name:______________________________________
Title: ____________________________________
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EXHIBIT A
PREMISES
FLOOR PLAN
EXHIBIT A
<PAGE>
Alternative No. 2
("Lessor's Work")
EXHIBIT B
CONDITION OF PREMISES/LESSOR'S WORK
1. Condition. Except as expressly provided in Paragraph 2.2 of the Lease
and except for any "Lessor's Work" set forth in Paragraph 2 below in this
Exhibit B, Lessee hereby acknowledges and agrees that (a) Lessee shall accept
the Premises in its "AS-IS" condition as of the Commencement Date and (b) Lessor
shall not be obligated to construct or pay for any improvements, additions or
refurbishment in, to or of the Premises. In the event that Lessor consents to
Lessee's construction and completion of any improvements in the Premises
(including, but not limited to, any alterations, improvements, additions, or
Utility Installations, as set forth in Paragraph 7.3 of the Lease), such
construction shall be subject to the terms of Paragraph 7.3 of the Lease and all
other relevant provisions of the Lease and Lessee hereby agrees to indemnify and
defend Lessor and hold Lessor harmless from and against any and all claims,
costs, expenses or liability, arising from Lessee's design, construction and
operation of any improvements in, on or about the Premises (including, without
limitation, Lessee's failure to obtain any necessary permits, approvals or
certificates from the applicable governmental authorities and/or actual
attorneys' costs and fees, and court costs).
2. Lessor's Work. The parties acknowledge and agree that pursuant to
Paragraph 1 above, Lessee shall accept the Premises "AS IS," except that Lessor
shall, at Lessor's expense, perform the following additions and improvements in
the Premises ("Lessor's Work") prior to Lessor's delivery of the Premises to
Lessee:
A. Carpet and paint the entire Premises, including new 4" RUBBER base and VCT
in areas to be specified. Tenant shall have the right to select a glue-down
loop carpet in the open and common areas and a cut-pile carpet and pad in
the private offices and conference room(s). The quality and weight of the
carpet shall be sufficient to sustain normal wear and tear for a period of
at least five (5) years.
B. Re-key all doors.
C. Clean all windows, mini-blinds, windowsills, counter tops, cabinets, doors,
HVAC registers.
D. Replace all damaged or stained ceiling tiles, florescent lighting fixture
lens covers, malfunctioning florescent light fixtures and tubes.
E. Balance the HVAC and add new refrigerant as needed.
F. Remove counter in reception area (See Item I on Exhibit B-l)
G. Remove wall between offices - push out corner walls as far as code will
allow (See Item 2 on Exhibit B-l)
H. Build an office with end wall as close to entrance as building code will
allow and front wall as close to door to General Office as possible (See
Item 3 on Exhibit B-l)
I. Move wall out to line up with the two offices next to it - put glass in the
wall to match the other two offices next to it (See Item 4 on Exhibit B-l)
J. Remove door from storage area next to work room and move to have access to
General Office next to computer room off of warehouse (See Item 5 on
Exhibit B-l)
K. Run plumbing from janitorial sink into General Office off of warehouse,
install a sink and counter big enough to hold microwave, coffee pot, etc.
with cabinets above and below similar to what exists in the break room (See
Item 6 on on Exhibit B-1)
L. If Lessee requests, Lessor shall complete additional tenant improvements,
cost and expense of said improvements shall be amortized over the term at
ten percent (10%) and added to the monthly payment.
M. Lessee may install additional office space at its sole direction and cost
subject to all applicable codes and laws and subject to Lessor's approval,
approval not to be unreasonably withheld. Lessee must restore the building
to its original condition, normal wear and tear excepted, upon expiration
of the lease, unless otherwise notified by Lessor.
N. Lessor will provide Lessee an additional tenant improvement allowance in
the form of a check in the amount of $6,593 paid to Lessee no later than
thirty (30) days after lease execution by Lessor plus the equivalent of one
(1) month Common Area Maintenance charge assessed to the Lessee and
estimated to be approximately $1,735.00.
3. Commencement Date. Notwithstanding Paragraph 1.3 of the Lease to the
contrary, if for any reason Lessor cannot deliver possession of the Premises to
Lessee with Lessor's Work described in Paragraph 2 above, substantially
completed by the fixed Commencement Date set forth in Paragraph 1.3 of the
Lease, then Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease, or the obligations of Lessee
hereunder, but in such case, the fixed Commencement Date as set forth in
Paragraph 1.3 of the Lease shall be extended until the date Lessor delivers
possession of the Premises to Lessee with Lessor's Work substantially completed
(minor punch list items excepted); provided, however, there shall be no such
extension of the Commencement Date to the extent of delays caused by the acts,
changes or omissions of Lessee or Lessee's agents, architects, engineers,
contractors or employees or any improvements, fixtures, furniture or equipment
constructed or installed by Lessee.
EXHIBIT B
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EXHIBIT B-1
PREMISES
FLOOR PLAN
EXHIBIT B-1
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. Definitions. Except as otherwise indicated, the terms used herein shall
have the meanings specified for such terms in the body of the Lease of which
this Exhibit is a part. The term "Building" shall mean the building or buildings
of which the Premises are a part.
2. Rubbish. All garbage, rubbish and other waste shall be removed from the
Premises regularly, kept in a container or containers of the type specified by
Lessor and outside the Premises at a place designated by Lessor, and collected
and removed from the area of the Building regularly in the manner and the times
specified by Lessor. No garbage, rubbish or other waste shall be burned in or
about the Premises or the Building.
3. Outside Maintenance and Storage. The outside area immediately adjoining
the Premises shall be kept by Lessee clean and free from all dirt, garbage,
rubbish and other waste to the satisfaction of Lessor. No object whatsoever,
including, but not limited to, equipment or materials used in Lessee's business,
storage sheds or containers, and rubbish, shall be placed or permitted to be
placed, temporarily or permanently, in the area outside the Building.
4. Sound-Producing Devises. Loudspeakers, televisions, phonographs, radios,
musical instruments, or other sound-producing devices shall be used only in such
a manner as not to be heard or seen outside the Premises.
5. Signs. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the Building without the prior written consent of Lessor. Lessor shall
have the right to remove any sign, placard, picture, advertisement, name or
notice not consented to by Lessor without notice to and at the expense of
Lessee. All approved signs or lettering on doors shall be printed, painted,
affixed or inscribed at the expense of Lessee by a person approved by Lessor.
6. Common Areas and Roof. All sidewalks, passageways, driveways, entrances
and exits in or about the Building shall be used only for the purpose of ingress
to and egress from the Premises and shall not otherwise be obstructed in any way
whatsoever. Parking areas shall be used only for vehicle parking in the ordinary
course of business and not for vehicle storage. Lessor shall have the right to
control and to impose rules and regulations from time to time concerning all
vehicle parking, landscaping, sidewalks, and other areas outside the Building
and to prevent access thereto by all persons whose presence, in the judgment of
Lessor, is prejudicial to the safety, character, reputation, or interests of the
Building or any of its occupants. Nothing herein contained, however, shall be
construed to prevent such access and parking to persons with whom Lessee
normally deals in the ordinary course of Lessee's business unless such persons
are engaged in illegal activities or are violating any of these Rules and
Regulations. No person shall be allowed upon the roof of the Building without
the prior written consent of Lessor.
7. Keys and Locks. Upon the expiration or other termination of the Lease,
all keys in Lessee's possession to doors of the Premises or of the Building
shall be delivered to Lessor. No lock on any door of the Premises shall be
altered without the prior written consent of Lessor, and no new or additional
locks or bolts shall be installed on any door of the Premises without the prior
written consent of Lessor.
8. Toilet Facilities. Toilet rooms, toilets, urinals, washbowls, and other
similar apparatus shall not be used for any purpose other than that, for which
they were constructed, and no rubbish, newspaper, magazines, or other
inappropriate substances of any kind whatsoever shall be deposited therein.
9. Nuisances. No foul or noxious gas substance shall be used or kept at the
Premises. The Premises shall not be occupied or used in any manner that is
offensive or objectionable to Lessor or other occupants of the Building by
reason of noise, odor, or vibration, or interferes in any way with other tenants
or occupants of or those having business at the Building. No animals or birds of
any kind whatsoever shall be brought to or kept, temporarily or permanently, in
or about the Premises or the Building. The Premises shall not be occupied or
used for any immoral purposes.
10. Flammable Substances. No kerosene, gasoline, or flammable, explosive or
combustible fluid or material shall be used or kept, temporarily or permanently,
at the Premises.
11. Operating Equipment. If heating, ventilating, or air-conditioning
systems supply the entire Building, the efficient operation of those systems
shall not be obstructed or impaired in any way, nor shall any person other than
Lessor tamper with or change the setting of any thermostats or temperature
control valves, and no method for heating or air-conditioning the Premises shall
be used other than those systems.
12. Advertising. Lessor shall have the right to prohibit any advertising by
Lessee that, in Lessor's opinion, tends to impair the reputation of the Building
or its desirability as a location for industrial tenants. Upon receipt of
written notice from Lessor, Lessee shall immediately refrain from or discontinue
such advertising.
13. Glass and Glazing. No material or covering shall be placed upon the
glass or glazing, if any, at the Premises without the prior written consent of
Lessor.
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14. Aerials. No aerial shall be erected on the roof or exterior walls of
the Premises or the Building or on the grounds surrounding the Building without
the prior written consent of Lessor. Any aerial so installed without such
written consent may be removed by Lessor without notice to and at the expense of
Lessee, and Lessor shall not be liable for damages, if any, caused by such
removal.
15. Floor Covering. Lessee shall not affix linoleum, tile, carpet or other
similar floor covering to the floor of the Premises in any manner without
Lessor's prior written approval. The expenses of repairing any damage resulting
from a violation of this rule or removal of any floor covering shall be borne by
Lessee.
16. Telephone Services. Lessor will determine where and how telephone and
telegraph wires are to be installed in the Premises. No boring or cutting for
wires will be allowed without the prior written consent of Lessor. The location
of telephones, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Lessor.
17. Security. Lessee shall see that the doors of the Premises are closed
and securely locked before leaving the Building and shall observe strict care
and caution that all water faucets or water apparatus are entirely shut off
before Lessee or Lessee's employees leave the Building, and that all electricity
shall likewise be carefully shut off, so as to prevent waste or damage. Lessee
shall make good all injuries sustained by Lessor or by other tenants or
occupants of the Building arising out of Lessee's failure to comply with this
Rule.
18. Residential Use. No cooking, lodging, sleeping or other residential use
shall be permitted at the Premises.
19. Non-Liability. Lessor shall have no liability to Lessee by reason of
any noncompliance with or violation of these Rules and Regulations by any tenant
or occupant to the Building or other person.
20. Modification. Lessor shall have the right to make such other and
further rules and regulations, and to eliminate, augment, or modify those herein
set forth as, in Lessor's judgment, may from time to time be necessary or
desirable with respect to the Premises, the Building or the Industrial Center.
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EXHIBIT "D"
HAZARDOUS MATERIALS DISCLOSURE
This Hazardous Materials Disclosure is incorporated by reference into the lease
dated AUGUST 11, 1997, by and between PACIFIC GULF PROPERTIES INC., A MARYLAND
CORPORATION, as Lessor, and TRANSITION ANALYSIS OF COMPONENT TECHNOLOGY, INC.,
(TACTECH, INC.) A DELAWARE CORPORATION, as Lessee, for the premises located at
22681/22687 OLD CANAL ROAD, YORBA LINDA, CALIFORNIA 92887-4608
TRANSITION ANALYSIS OF COMPONENT TECHNOLOGY, INC., (TACTECH, INC.) A DELAWARE
CORPORATION represents that the following disclosure accurately reflects the
usage or nonusage of hazardous materials on the leased Premises.
Description of Lessee's usage and business operations:
Petroleum products, chemicals, container sizes, and amounts to be utilized by
Lessee at any time during tenancy:
Method and storage locations of hazardous materials:
List any operations discharges in or on Premises:
TRANSITION ANALYSIS OF COMPONENT TECHNOLOGY, INC., (TACTECH, INC.) A DELAWARE
CORPORATION will comply fully with all applicable environmental laws governing
hazardous materials and their usage in our operations.
Lessee: TRANSITION ANALYSIS OF COMPONENT TECHNOLOGY, INC., (TACTECH, INC.) A
DELAWARE CORPORATION
By: /s/ Martin Fawer
-----------------------------
Name Printed: MARTIN FAWER
-------------------
Its: CHIEF FINANCIAL OFFICER
----------------------------
By:
-----------------------------
Name Printed:
--------------------
Its:
----------------------------
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Exhibit E
[FLOORPLAN]
Corporate Neighbors Include:
Carnation, American Greetings,
Infinity, Sensor Medics, Pacific
Scientific, Kaufman Broad
