<PAGE>
As filed with the Securities and Exchange Commission on January 10, 2000
Registration No. 333-93015
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
Amendment No. 1
To
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOMEGROCER.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
---------------
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 5411 91-1863408
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
10230 N.E. Points Drive
Kirkland, Washington 98033
(425) 201-7500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------
Mary Alice Taylor
HomeGrocer.com, Inc.
Chief Executive Officer
10230 N.E. Points Drive
Kirkland, Washington 98033
(425) 201-7500
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
---------------
COPIES TO:
<TABLE>
<S> <C>
William W. Ericson, Esq. Daniel G. Kelly, Jr., Esq.
Sonya F. Erickson, Esq. DAVIS POLK & WARDWELL
VENTURE LAW GROUP 1600 El Camino Real
A Professional Corporation Menlo Park, CA 94025
4750 Carillon Point
Kirkland, WA 98033
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
---------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Explanatory Note
This registration statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States and Canada of an
aggregate of shares of common stock. The second prospectus relates
to a concurrent offering outside the United States and Canada of an aggregate
of shares of common stock. The prospectuses for each of the U.S.
offering and the international offering will be identical with the exception
of an alternate front cover page for the international offering. This
alternate page appears in this registration statement immediately following
the complete prospectus for the U.S. offering.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by HomeGrocer.com in
connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee and the NASD filing fee and the
Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
Amount
to be Paid
----------
<S> <C>
SEC registration fee............................................ *
NASD filing fee................................................. *
Nasdaq National Market listing fee.............................. *
Printing and engraving expenses................................. *
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... *
Blue Sky qualification fees and expenses........................ *
Transfer Agent and Registrar fees............................... *
Miscellaneous fees and expenses................................. *
Total....................................................... *
</TABLE>
- --------
* to be filed by amendment
Item 14. Indemnification of Directors and Officers
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on
terms sufficiently broad to permit indemnification under certain circumstances
for liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). The registrant's Amended and Restated Bylaws (Exhibit 3.4
hereto) provide for indemnification of the registrant's directors, officers,
employees and agents to the maximum extent permitted by Washington law. The
directors and officers of the registrant also may be indemnified against
liability they may incur for serving in that capacity pursuant to a liability
insurance policy maintained by the registrant for such purpose.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary
damages for acts or omissions as a director, except in certain circumstances
involving intentional misconduct, knowing violations of law or illegal
corporate loans or distributions, or any transaction from which the director
personally receives a benefit in money, property or services to which the
director is not legally entitled. The Registrant's Amended and Restated
Articles of Incorporation (Exhibit 3.2 hereto) contains provisions
implementing, to the fullest extent permitted by Washington law, such
limitations on a director's liability to the registrant and its shareholders.
The registrant has entered into indemnification agreements with its
officers and directors, the form of which is attached as Exhibit 10.21 to this
Registration Statement and incorporated herein by reference. The
indemnification agreements provide the registrant's officers and directors
with indemnification to the maximum extent permitted by the WBCA.
Item 15. Recent Sales of Unregistered Securities
Since inception, HomeGrocer.com has sold and issued the following
securities:
1. From inception to November 30, 1999, HomeGrocer.com issued 14,528,800
options to purchase common stock of HomeGrocer.com with a weighted average
price of $0.83 to a number of employees and directors of and consultants to
HomeGrocer.com.
II-1
<PAGE>
2. On February 11, 1998, April 3, 1998, June 2, 1998 and July 16, 1998,
HomeGrocer.com issued 8,000,000 shares of its Series A preferred stock to
investors for aggregate cash consideration of $4,000,000.
3. On September 1, 1998, HomeGrocer.com issued 16,857,142 shares of its
Series B preferred stock to investors for aggregate cash consideration of
approximately $5,900,000.
4. On April 13, 1999 and May 13, 1999, HomeGrocer.com issued 29,942,050
shares of its Series C preferred stock to investors for aggregate cash
consideration of approximately $52,399,000.
5. On September 30, 1999, October 13, 1999, October 29, 1999, November
12, 1999 and November 18, 1999, HomeGrocer.com issued 18,407,546 shares of
its Series D preferred stock to investors for aggregate cash consideration
of approximately $106,764,000.
6. On September 9, 1999, the Company granted two officers options to
purchase an aggregate of 6,150,000 shares of common stock and the two
officers exercised the options to purchase the shares on that date. The
options were exercised for aggregate consideration of $5,535,000 in the
form of cash and promissory notes from the officers. Additionally, on
September 9, 1999, the Company sold the two officers an aggregate of
2,050,000 shares of common stock for aggregate consideration of $1,845,000
in the form of cash and promissory notes from the officers.
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) or
Regulation D, or other applicable exemption of such Securities Act as
transactions by an issuer not involving any public offering. In addition,
certain issuances described in Item 1 were deemed exempt from registration
under the Securities Act in reliance upon Rule 701 promulgated under the
Securities Act. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and warrants issued
in such transactions. All recipients had adequate access, through their
relationships with HomeGrocer.com, to information about HomeGrocer.com.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Restated Certificate of Incorporation of HomeGrocer.com.
3.2* Articles of Incorporation of HomeGrocer.com.
3.3* Amended and Restated Articles of Incorporation of HomeGrocer.com
(proposed).
3.4** Bylaws of HomeGrocer.com (Delaware).
3.5* Bylaws of HomeGrocer.com (Washington).
3.6* Amended and Restated Bylaws of HomeGrocer.com (proposed).
4.1* Specimen Stock Certificate.
4.2** Third Amended and Restated Investors Rights Agreement dated September
30, 1999, as amended.
4.3** Warrant Agreement to purchase Series C Preferred Stock dated November
9, 1998 issued by HomeGrocer.com in favor of Comdisco, Inc.
4.4** Warrant Agreement to purchase Series D Preferred Stock dated September
15, 1999 issued by HomeGrocer.com in favor of Comdisco, Inc.
4.5** Form of Common Stock Purchase Warrant issued by HomeGrocer.com to
certain lenders.
4.6** Form of Common Stock Warrant Certificate issued by HomeGrocer.com in
connection with its preferred stock financings.
5.1* Opinion of Venture Law Group regarding the legality of the common stock
being registered.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.1+ Advertising Agreement dated November 18, 1999 between HomeGrocer.com
and Amazon.com, LLC.
10.2** Lease Agreement dated August 16, 1999 between HomeGrocer.com and
Valley Freightliner, Inc.
10.3** Revolving Line of Credit Commitment Letter dated June 11, 1999 by
Mercedes-Benz Credit Corporation in favor of HomeGrocer.com, Inc.
10.4** Master Lease Agreement dated November 9, 1998 between HomeGrocer.com
and Comdisco, Inc.
10.5** Addendum to Master Lease Agreement dated as of November 9, 1999
between HomeGrocer.com and Comdisco, Inc.
10.6** Subordinated Loan and Security Agreement dated September 15, 1999
between HomeGrocer.com and Comdisco, Inc.
10.7** Form of Promissory Note dated September 9, 1999 issued by Mary Alice
Taylor in favor of HomeGrocer.com.
10.8** Form of Promissory Note dated September 9, 1999 issued by J. Terrence
Drayton in favor of HomeGrocer.com.
10.9* Employment Agreement dated September 2, 1999 between HomeGrocer.com
and Mary Alice Taylor.
10.10* Employment Agreement dated June 1, 1999 between HomeGrocer.com and J.
Terrence Drayton.
10.11* Employment Agreement dated November 3, 1999 between HomeGrocer.com and
Daniel R. Lee.
10.12* Employment Agreement dated August 31, 1999 between HomeGrocer.com and
David A. Pace.
10.13** Facility Lease dated May 19, 1999 between HomeGrocer.com, as
sublessee, and The Plaza at Yarrow Bay, LLC.
10.14** Facility Sublease dated July 22, 1999 between HomeGrocer.com, as
sublessor, and AT&T Wireless Services of Washington, Inc.
10.15** Facility Sublease dated April 8, 1999 between HomeGrocer.com, as
sublessee, and Delta Engineering and Manufacturing.
10.16** Facility Lease dated July 23, 1999 between HomeGrocer.com, as lessee,
and Exposition Property Associates (interest transferred from The
Ezralow Company, LLC).
10.17** Facility Lease dated November 4, 1996 between HomeGrocer.com, as
successor in interest to the lessee, and Benaroya Capital Company,
LLC.
10.18** Facility Sublease dated June 24, 1999 between HomeGrocer.com, as
sublessor, and A&M Warehouses, Incorporated.
10.19** Facility Lease dated July 8, 1999 between HomeGrocer.com, as lessee,
and Lincoln-RECP Fullerton OPCO, LLC.
10.20** Facility Lease dated August 10, 1999 between HomeGrocer.com, as
lessee, and Realty Associates Iowa Corporation.
10.21 Facility Lease dated May 24, 1999 between HomeGrocer.com, as
sublessee, and The Concourse Joint Venture.
10.22** Amendment No. 1 dated June 21, 1999 to the Facility Lease dated May
24, 1999 between HomeGrocer.com, as sublessee, and The Concourse Joint
Venture.
10.23** Facility Sublease dated November 15, 1999 between HomeGrocer.com, as
sublessee, and Thyssen Dover Elevator.
10.24** Facility Lease dated November 15, 1999 between HomeGrocer.com, as
lessee, and Watson Partners, L.P.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.25 Commercial Lease Agreement dated December 17, 1999 between
HomeGrocer.com as Lessee, and CB Luna Industrial No. 3, Ltd.
10.26** Form of Indemnification Agreement between HomeGrocer.com and each of
its Officers and Directors.
10.27* 1997 Stock Incentive Compensation Plan dated April 1997.
10.28* 1999 Stock Incentive Plan dated December 1999.
10.29* 1999 Employee Stock Purchase Plan dated December 1999.
10.30* 1999 Directors' Stock Option Plan dated December 1999.
21.1** List of Subsidiaries.
23.1** Consent of Ernst & Young, LLP.
23.2* Consent of Venture Law Group (included in Exhibit 5.1).
24.1** Power of Attorney (included in signature page to Registration
Statement).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of the copy of the
exhibit filed with the Securities and Exchange Commission. The omitted
information has been filed separately with the Securities and Exchange
Commission under our application for confidential treatment.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Kirkland,
State of Washington on January 10, 2000.
HomeGrocer.com, Inc.
/s/ Mary Alice Taylor
By: _________________________________
Mary Alice Taylor
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Mary Alice Taylor Chairman of the Board and January 10, 2000
______________________________________ Chief Executive Officer
Mary Alice Taylor
* Chief Financial Officer January 10, 2000
______________________________________
Daniel R. Lee
* President and Director January 10, 2000
______________________________________
J. Terrence Drayton
* Director January 10, 2000
______________________________________
Tom A. Alberg
* Director January 10, 2000
______________________________________
Charles K. Barbo
* Director January 10, 2000
______________________________________
James L. Barksdale
* Director January 10, 2000
______________________________________
Mark P. Gorenberg
* Director January 10, 2000
______________________________________
Jonathan D. Lazarus
* Director January 10, 2000
______________________________________
Douglas Mackenzie
* Director January 10, 2000
______________________________________
David Risher
* Director January 10, 2000
______________________________________
Philip S. Schlein
/s/ Mary Alice Taylor January 10, 2000
*By: _________________________________
Mary Alice Taylor
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Restated Certificate of Incorporation of HomeGrocer.com.
3.2* Articles of Incorporation of HomeGrocer.com.
3.3* Amended and Restated Articles of Incorporation of HomeGrocer.com
(proposed).
3.4** Bylaws of HomeGrocer.com (Delaware).
3.5* Bylaws of HomeGrocer.com (Washington).
3.6* Amended and Restated Bylaws of HomeGrocer.com (proposed).
4.1* Specimen Stock Certificate.
4.2** Third Amended and Restated Investors Rights Agreement dated September
30, 1999, as amended.
4.3** Warrant Agreement to purchase Series C Preferred Stock dated November
9, 1998 issued by HomeGrocer.com in favor of Comdisco, Inc.
4.4** Warrant Agreement to purchase Series D Preferred Stock dated September
15, 1999 issued by HomeGrocer.com in favor of Comdisco, Inc.
4.5** Form of Common Stock Purchase Warrant issued by HomeGrocer.com to
certain lenders.
4.6** Form of Common Stock Warrant Certificate issued by HomeGrocer.com in
connection with its preferred stock financings.
5.1* Opinion of Venture Law Group regarding the legality of the common
stock being registered.
10.1+ Advertising Agreement dated November 18, 1999 between HomeGrocer.com
and Amazon.com, LLC.
10.2** Lease Agreement dated August 16, 1999 between HomeGrocer.com and
Valley Freightliner, Inc.
10.3** Revolving Line of Credit Commitment Letter dated June 11, 1999 by
Mercedes-Benz Credit Corporation in favor of HomeGrocer.com, Inc.
10.4** Master Lease Agreement dated November 9, 1998 between HomeGrocer.com
and Comdisco, Inc.
10.5** Addendum to Master Lease Agreement dated as of November 9, 1999
between HomeGrocer.com and Comdisco, Inc.
10.6** Subordinated Loan and Security Agreement dated September 15, 1999
between HomeGrocer.com and Comdisco, Inc.
10.7** Form of Promissory Note dated September 9, 1999 issued by Mary Alice
Taylor in favor of HomeGrocer.com.
10.8** Form of Promissory Note dated September 9, 1999 issued by J. Terrence
Drayton in favor of HomeGrocer.com.
10.9* Employment Agreement dated September 2, 1999 between HomeGrocer.com
and Mary Alice Taylor.
10.10* Employment Agreement dated June 1, 1999 between HomeGrocer.com and J.
Terrence Drayton.
10.11* Employment Agreement dated November 3, 1999 between HomeGrocer.com and
Daniel R. Lee.
10.12* Employment Agreement dated August 31, 1999 between HomeGrocer.com and
David A. Pace.
10.13** Facility Lease dated May 19, 1999 between HomeGrocer.com, as
sublessee, and The Plaza at Yarrow Bay, LLC.
10.14** Facility Sublease dated July 22, 1999 between HomeGrocer.com, as
sublessor, and AT&T Wireless Services of Washington, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.15** Facility Sublease dated April 8, 1999 between HomeGrocer.com, as
sublessee, and Delta Engineering and Manufacturing.
10.16** Facility Lease dated July 23, 1999 between HomeGrocer.com, as lessee,
and Exposition Property Associates (interest transferred from The
Ezralow Company, LLC).
10.17** Facility Lease dated November 4, 1996 between HomeGrocer.com, as
successor in interest to the lessee, and Benaroya Capital Company,
LLC.
10.18** Facility Sublease dated June 24, 1999 between HomeGrocer.com, as
sublessor, and A&M Warehouses, Incorporated.
10.19** Facility Lease dated July 8, 1999 between HomeGrocer.com, as lessee,
and Lincoln-RECP Fullerton OPCO, LLC.
10.20** Facility Lease dated August 10, 1999 between HomeGrocer.com, as
lessee, and Realty Associates Iowa Corporation.
10.21 Facility Lease dated May 24, 1999 between HomeGrocer.com, as
sublessee, and The Concourse Joint Venture.
10.22** Amendment No. 1 dated June 21, 1999 to the Facility Lease dated May
24, 1999 between HomeGrocer.com, as sublessee, and The Concourse Joint
Venture.
10.23** Facility Sublease dated November 15, 1999 between HomeGrocer.com, as
sublessee, and Thyssen Dover Elevator.
10.24** Facility Lease dated November 15, 1999 between HomeGrocer.com, as
lessee, and Watson Partners, L.P.
10.25 Commercial Lease Agreement dated December 17, 1999 between
HomeGrocer.com as Lessee, and CB Luna Industrial No. 3, Ltd.
10.26** Form of Indemnification Agreement between HomeGrocer.com and each of
its Officers and Directors.
10.27* 1997 Stock Incentive Compensation Plan dated April 1997.
10.28* 1999 Stock Incentive Plan dated December 1999.
10.29* 1999 Employee Stock Purchase Plan dated December 1999.
10.30* 1999 Directors' Stock Option Plan dated December 1999.
21.1** List of Subsidiaries.
23.1** Consent of Ernst & Young, LLP.
23.2* Consent of Venture Law Group (included in Exhibit 5.1).
24.1** Power of Attorney (included in signature page to Registration
Statement).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of the copy of the
exhibit filed with the Securities and Exchange Commission. The omitted
information has been filed separately with the Securities and Exchange
Commission under our application for confidential treatment.
<PAGE>
EXHIBIT 10.1
Confidential treatment requested
ADVERTISING AGREEMENT
This Advertising Agreement (this "Agreement"), dated as of ________ 1999,
is made by and between HomeGrocer.com. Inc., a Delaware corporation
("HomeGrocer") and Amazon.com LLC ("Amazon.com"), a Delaware limited liability
company. In consideration of the mutual promises contained in this Agreement,
HomeGrocer and Amazon.com hereby agree as follows:
1. Advertising Activities. During the Term, in consideration of
HomeGrocer's making the payments specified in Section 2 below, Amazon.com will
conduct the advertising activities specified on Exhibit A.
2. Payments. HomeGrocer will pay Amazon.com an aggregate sum of [*] (the
"Aggregate Payment"), as follows: As of the last day of each of the eight (8)
calendar quarters following December 31, 1999 (i.e., each of March 31, 2000;
June 30, 2000; September 30, 2000; December 31, 2000; March 31, 2001; June 30,
2001; September 30, 2001; and December 31, 2001), HomeGrocer will pay Amazon.com
the sum of [*]; provided, however, that notwithstanding the foregoing, if at any
time prior to September 30, 2001, Amazon.com has delivered [*] Advertising
Mailings (as defined on Exhibit A) to existing Amazon.com customers, and
Amazon.com so notifies HomeGrocer, HomeGrocer will pay Amazon.com the entire
outstanding balance of the Aggregate Payment as of the last day of the calendar
quarter in which Amazon.com has delivered the [*] Advertising Mailing, and
thereafter HomeGrocer shall have no obligation to make any further payments
pursuant to this Agreement.
3. License. HomeGrocer hereby grants Amazon.com a non-exclusive,
worldwide license to use, reproduce, publish, publicly perform and publicly
display HomeGrocer's trademarks, tradenames, other proprietary marks and
copyrighted materials supplied by HomeGrocer, during the term of this agreement
solely in connection with the performance of the advertising activities
specified on Exhibit A. All goodwill arising out of any use of any trademarks,
tradenames or proprietary marks of HomeGrocer by Amazon.com will inure solely to
the benefit of HomeGrocer.
4. HomeGrocer Records and Reporting. During the Term and for a period of
six (6) months thereafter: (a) HomeGrocer will use commercially reasonable
efforts to [*]; and (b) HomeGrocer will use commercially reasonable efforts to
[*]. Beginning January 1, 2000, within 30 days after the end of each quarter of
the Term, HomeGrocer will deliver to Amazon.com a written statement setting
forth: [*]. Amazon.com may, at its expense, examine or audit HomeGrocer's
records related to Amazon.com-Delivered Users no more than once every twelve
months. Any such audit will be conducted, to the extent possible, in a manner
that does not unreasonably interfere with HomeGrocer's business operations.
[*] Confidential treatment requested
<PAGE>
5. Term and Termination. The term of this Agreement (the "Term") shall
commence as of date set forth above and shall continue until January 1, 2002.
Either party may terminate this Agreement upon not less than thirty (30) days'
prior written notice to the other party of any breach by such other party which
is not cured within such thirty (30) day period. Upon any termination or
expiration of this Agreement, only the rights and obligations of the parties
under Sections 6, 7, 8, 9, 10, 11, 12 and 13 will survive such termination or
expiration.
6. Indemnification. HomeGrocer or Amazon.com, as applicable (in either
case, the "Indemnifying Party") will defend and indemnify the other party and
its affiliates against any third party claim, to the extent arising out of or in
connection with (a) the operation of the web site located at the URL
http://www.amazon.com (in the case of Amazon.com as the Indemnifying Party) or
the HomeGrocer Site (in the case of HomeGrocer as the Indemnifying Party), or
(b) any breach of this Agreement by the Indemnifying Party. The Indemnifying
Party will pay any award against the other party and any costs and attorneys'
fees reasonably incurred by the other party and its affiliates resulting from
any such claim; provided, that the party seeking indemnification (a) gives the
Indemnifying Party prompt written notice of the claim, (b) cooperates with the
Indemnifying Party (at the Indemnifying Party's expense) in connection with the
defense and settlement of the claim, and (c) permits the Indemnifying Party to
control the defense and settlement of the claim, provided that the Indemnifying
Party may not settle the claim without the indemnified party's prior written
consent (which will not be unreasonably withheld). The indemnified party (at
its cost) may participate in the defense and settlement of the claim.
7. Warranty Exc1usion; Limitation of Liability. NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES IN RELATION TO THIS AGREEMENT, ANY WEB SITES OWNED
OR OPERATED BY IT OR ITS PERFORMANCE HEREUNDER, INCLUDING (WITHOUT LIMITATION)
IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A
PARTICULAR PURPOSE, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AMAZON.COM
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE AMOUNT OF
REVENUES OR OTHER ECONOM1C OR NON-ECONOMIC BENEFITS THAT HOMEGROCER MAY OBTAIN
THROUGH ITS PARTICIPATION IN THIS AGREEMENT. NEITHER PARTY WILL BE LIABLE TO THE
OTHER FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT.
8. Independent Contractors. The parties are independent contractors, and
this Agreement will not be construed to create a partnership, joint venture or
other relationship. Neither party will have, or hold itself out to third parties
as having, any authority to bind or enter into any agreement on the other
party's behalf.
9. Compliance with Laws. In performing this Agreement, each party will
comply with all applicable laws, regulations, orders and other requirements of
any governmental authority, now or hereafter in effect. Without limiting the
generality of the foregoing, each party will be responsible for collection and
payment of such taxes as may be imposed upon such party
-2-
<PAGE>
in the first instance with respect to any compensation paid or received or
transactions under this Agreement.
10. Notices. Any notice or other communication under this Agreement given
by a party to the other party must, in order to be effective, be in writing and
be sent to the intended recipient by registered letter, receipted commercial
courier, or electronically receipted facsimile transmission (acknowledged in
like manner by the intended recipient) at its address specified below, and with
a copy to the same address addressed Attn: General Counsel. Either party may
change its address for notices by delivery of written notice in accordance with
this Section 10.
11. Assignment. Except as provided in the next sentence, neither party
may assign this Agreement or its rights hereunder, in whole or in part, or
delegate any of its obligations under this Agreement, without the other party's
prior written consent, except that either party may assign this Agreement to any
of its corporate affiliates or in connection with any merger, consolidation,
reorganization, sale of all or substantially all of its assets or similar
transaction, provided that the assignee agrees in writing to be bound by all the
terms and conditions of this Agreement. Notwithstanding the foregoing,
Amazon.com may assign its rights to receive payments hereunder to any person or
entity without restriction. No assignment or delegation of this Agreement or
any rights or obligations hereunder shall relieve the assigning or delegating
party of its obligations under this Agreement in the event of non-performance by
its assignee or delegate. Subject to the foregoing, this Agreement will be
binding on and enforceable by the parties and their respective successors and
permitted assigns.
12. Confidentiality. The terms of this Agreement are the confidential and
proprietary information of Amazon.com, and HomeGrocer will maintain the same in
strict confidence and not disclose the same to any third party (except as
required in filings with the Securities and Exchange Commission, provided that
HomeGrocer, in consultation with Amazon.com, uses reasonable efforts to seek
confidential treatment of the material terms and conditions of this Agreement).
The HomeGrocer Customer Information is confidential and proprietary information
of HomeGrocer.com, and Amazon.com will maintain the same in strict confidence
and not disclose the same to any third party other than Amazon.com's 100% owned
subsidiaries (except as required by applicable law or regulation, provided that
Amazon.com, in consultation with HomeGrocer, uses reasonable efforts to seek
confidential treatment of the same), unless such information enters the public
domain through no fault of Amazon.com. Neither party will issue any press
releases, make any other public disclosures regarding this Agreement or the
relationship of the parties, or, except as permitted by Section 3, use any of
the other party's trademarks, tradenames, other proprietary marks or copyrighted
materials without such other party's prior written consent.
13. Miscellaneous. This Agreement (a) represents the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
previous or contemporaneous oral or written agreements regarding such subject
matter, (b) may be amended or modified only by a written instrument signed by a
duly authorized agent of each party, and. (c) will, be governed by the laws of
the State of Washington, without reference to its choice of law rules. No
failure or forbearance by either party to insist upon or enforce performance by
the other party of
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any of the provisions of this Agreement or to exercise any rights or remedies
under this Agreement or otherwise available at law or equity shall be construed
as a waiver or relinquishment to any extent of such party's right to assert or
rely upon any such provision, right, or remedy in that or any other instance;
rather the same shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
later date set forth below.
AMAZON.COM: HOMEGROCER:
---------- ----------
Amazon.com LLC HomeGrocer.com, Inc.
By: /s/ Randy Tinsley By: /s/ Mary Alice Taylor
------------------------------- ------------------------------
Title: VP of Business Development Title: Chairman and CEO
---------------------------- ---------------------------
Date: 11/18/99 Date: 11/18/99
----------------------------- ---------------------------
Address: Address:
1200 12th Avenue South 10230 NE Points Drive
Seattle, WA 98144 Kirkland, WA 98033
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EXHIBIT 10.21
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE
MODIFIED NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
May 24, 1999, is made by and between THE CONCOURSE JOINT VENTURE, a California
general partnership ("Lessor") and HOMEGROCER.COM, 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 10 Whatney, located in the City of
Irvine, County of Orange, State of California, with zip code 92618, as outlined
on Exhibit attached hereto ("Premises"). The "Building" is that certain building
containing the Premises and generally described as (describe briefly the nature
of the Building): approximately 105,297 square feet of a 171,893 square foot
building having the address set forth above. 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 "Industrial Center," (Also see Paragraph 2.)
1.2(b) Parking: 120 automobiles; and 80 delivery truck reserved vehicle
parking spaces ("Reserved Parking Spaces"). (Also see Paragraph 2.6.)
1.3 Term: ten (l0) years and -0- months ("Original Term") commencing
upon completion of Lessor Improvements, but in no event later than July 1, 1999
("Commencement Date") and ending ten (10) years thereafter ("Expiration Date").
(Also see Paragraph 3.)
1.4 Early Possession: upon Lease execution ("Early Possession Date").
(Also see Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $58,439.84 per month ("Base Rent"), payable on the first
(1st) day of each month commencing on the Commencement Date (Also see Paragraph
4.)
[X] if this box is checked, this Lease provides for the Base Rent to
be adjusted per Addendum ________, attached hereto.
1.6(a) Base Rent Paid Upon Execution: $58,439.84 as Base Rent for the
first month of the Lease Term.
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1.6(b) Lessee's Share of Common Area Operating Expenses: sixty-one and
26/100 percent (61.26%) ("Lessee's Share") as determined by prorata square
footage of the Premises as compared to the total square footage of the Building.
1.7 Security Deposit: $73,049.80 ("Security Deposit"). (Also see
Paragraph 5.)
1.8 Permitted Use: Warehouse and distribution of grocery products and
related office uses and all other lawfully permitted uses _______________
("Permitted Use") (Also see Paragraph 6.) See also Paragraphs 51.1 through 51.4
of Lease Addendum.
1.9 Insuring Party. Lessor is the "Insuring 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] CB Richard Ellis represents Lessee exclusively ("Lessee's
Broker"); or
[_] _____________________________ represents both Lessor and Lessee
("Dual Agency"). (Also see 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) for brokerage services
rendered by said Broker(s) in connection with this transaction.***
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by __________________________________________________ ("Guarantor").
(Also see Paragraph 37.) 1.12 Addenda and Exhibits. Attached hereto is an
Addendum or Addenda consisting of Paragraphs 49 through 85, and Exhibits "A"
through "C", all of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
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
Expenses, 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.
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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
Lessor's expense. If Lessee does not give Lessor written notice of a non-
compliance with this warranty within thirty (30) days after the Commencement
Date as to patent defects, and one hundred eighty (180) days after the
Commencement Date as to latent defects, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense. Upon the
Commencement Date, the roof shall be in good condition and water tight.
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 been 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. If 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 (including, but not limited to, the electrical and fire sprinkler
systems, security, environmental aspects, seismic and earthquake requirements,
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. Lessor shall have
no obligation after the Commencement Date to comply with applicable requirements
of the American with Disabilities Act or similar state or federal requirements,
or other building codes and regulations, all of which after the Commencement
Date shall be the obligation of Lessee.
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2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if 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.
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than full-
size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed as may be permitted in writing by Lessor and
subject to such conditions, rules, and regulations Lessor may impose (Also see
Paragraph 2.9.) Delivery trucks may be parked in the area described on Exhibit
"B-4". (a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities. (b) 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
nonexclusive 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 upon reasonable 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.
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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 Lessee 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; (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 judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease area 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 obligations 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 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
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to cancel this Lease hereunder shall terminate and be of no further force or
effect. Except as may be otherwise provided, and regardless of when the Original
Term actually commences, if 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, if 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 renter 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 reasonably 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, elevators 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 fees (which
fees shall not exceed 4% of annual gross rents from the Industrial Center) and
security services and the costs of any environmental inspections. (iv) Reserves
set aside for maintenance and repair of Common Areas. (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 costs 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
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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 Center already has the same, Lessor
already provides the services, or Lessor has agreed elsewhere in this Lease to
provide the same or some of them. (d) Lessee's Share of Common Area Operating
Expenses shall be payable by Lessee within twenty (20) days after a reasonably
detailed statement of actual expenses is presented to Lessee by Lessor. At
Lessor's option, however, an amount may be estimated by Lessor from time to time
of Lessee's Share of annual 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 one hundred twenty (120) 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. If Lessee's payments under this Paragraph 4.2(d) during said
preceding year exceed Lessee's Share as indicated on said statement, Lessee
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) twenty (20) days after delivery by Lessor to Lessee
of said statement.
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. Lessor shall not 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
Leases has vacated the Premises, return to Lessee (or, at Lessors 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, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Permitted Use. (a) Subject to all of the covenants and restrictions
set forth in this Lease, 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
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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. See Paragraphs 55, 56, and 57 of Lease Addendum.
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, covenants, 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 created by Lessee, its agents and/or invitees, 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
by Lessee, its agents and/or invitees), now in effect or which may hereafter
come into effect. Lessee shall, within five (5) days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including, but not limited to, permits, registrations, manifests, applications,
reports 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
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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.
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 repairs occurs as a result of Lessee's use, any prior 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, roof membrane, floors, windows,
doors, plate glass, and skylights, 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. Lessee's obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair. (b) Lessee Lessor 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 shell reimburse Lessor,
upon demand, for the cost thereof. (c) If Lessee fails to perform breaches
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
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
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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 and
Alterations 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 $10,000.00 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
$10,000.00 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
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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, notwithstanding that their installation may have 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. See Paragraph 69 of Lease Addendum.
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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 sat
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(a) 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. Notwithstanding anything to the contrary in
this Lease, Lessee and Lessor each hereby release end relieve the other, end
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 Paragraphs 69 (a)
and 69 (b) 8. The effect of such releases and waivers of the right to recover
damages shall not be limited by the amount of insurance carded 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.
8.7 Indemnity. Except for Lessors gross negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessors 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' and consultants'
fees, expenses and/or liabilities to the extent 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 Leases, its agents,
contractors, employees 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,
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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 Condition" shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 56 of the Lease Addendum 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
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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, 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.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage to the Premises 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
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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 as would otherwise be required
by Paragraphs 9.2 and 9.3) 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 end 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.
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
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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
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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 property 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. See Paragraphs 52.1 through 52.7 of Lease
Addendum.
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
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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 hosts 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) 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 five (5) 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 twenty (20) 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, compiled with or performed by Lessee, other than those
described in Subparagraph 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 ether 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
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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 time period set forth above 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 during the subsequent
12-month period 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 applicable
to the unexpired term of the Lease, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, and that portion of any
leasing commission and tenant improvement construction costs 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 Lessor's right to recover
damages under this Paragraph 13.2. If termination of this Lease is obtained
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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 Subparagraphs 13.1(b), (c) or (d) was not previously given, a
notice to pay rent or quit, or to perform or quit, as the case may be, given to
Lessee under any statute authorizing the forfeiture of leases for unlawful
detainer shall also constitute the applicable notice for grace period purposes
required by Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace
period under the unlawful detainer statute shall run concurrently after the one
such statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (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
Lessee's 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. (d) The expiration or termination of this Lease
and/or the termination of Lessee's right to possession shall not relieve Lessee
from liability under any indemnity provisions of this Lease as to matters
occurring or accruing during the term hereof or by reason of Lessee's occupancy
of the Premises.
13.3 Inducement Recapture 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
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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.
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
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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. 15.1 Procuring Cause. The Broker(s) named In Paragraph 1.10
is/are the procuring cause of this Lease.
16. Tenancy and Financial Statements. See Paragraphs 53, 72, and 73 of Lease
Addendum
16.1 [Struck through]
16.2 [Struck through]
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 its under the 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
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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, [struck through] 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 Lessee's 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 malt, the notice shall be deemed given [struck through] three (3)
business days after the sane is addressed as required herein and mailed with
postage prepaid. Notices delivered by United States Express Mail or overnight
courier that guarantees next day delivery shall be deemed given twenty-four (24)
hours after delivery of the same to the United States Postal Service or courier.
{struck through] 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 Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or 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 Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. 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 monies 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
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purposes. The Party requesting recordation shed be responsible for payment of
any fees or tortes 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
2B then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to [struck through] one
hundred and fifty percent ([struck through]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 wry 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, aid 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
303, 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 (1) month's rent.
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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 attorney's 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 legal action is subsequently commenced in
connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times 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 [struck through] and/or "For
Lease" signs at any time during the last one hundred eighty (180) days of the
term hereof [struck through]. 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, accept 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
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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 conduct of 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 constitutes the termination of such Interest.
36. Consents. (a) Except to 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'' and 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 any assignment, a subletting, [struck through] shall be
paid by Lessee to Lessor upon receipt of an invoice and supporting documentation
therefor, but not in excess of $500.00 per each such consent request. [Struck
through] 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 shell 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 Reel
Estate Association, and each such Guarantor shall have the sane 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
-26-
<PAGE>
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 nay from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is stilt 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.
39. Options. See Paragraph 61 of lease Addendum. [Entire section struck
through]
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 any part
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. If 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.
-27-
<PAGE>
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 tong as they do net
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 norms 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.
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.
-28-
<PAGE>
The Parties hereto have executed the Lease at the place and on the dates
specified over their respective signatures.
<TABLE>
<S> <C>
Executed at: Newport Beach, California Executed at: Bellevue, Washington
--------------------------------- ---------------------------
On:__________________________________________ On: June 11, 1999
-----------------------------------
By LESSOR: By LESSEE:
THE CONCOURSE JOINT VENTURE, a California HOMEGROCER.COM, a Delaware corporation
- ----------------------------------------- --------------------------------------
Join Venture
- ------------
By: The Northwestern Mutual Life Insurance By: /s/ Terry Drayton
-----------------------------------
Company, a Wisconsin corporation, its
general partner Name Printed: Terry Drayton
-------------------------
Title: President
--------------------------------
By: Northwestern Investment Management By: /s/ Daryl L. Stromswold
----------------------------------
Company, a Wisconsin corporation, its
wholly owned subsidiary and authorized Name Printed: Daryl L. Stromswold
------------------------
agent
Title: Controller/Assistant Secretary
-------------------------------
By: /s/ O'Dell
------------------------------------------
By: Olive Inc., a Delaware corporation, its Address: 1445 120/th/ Avenue NE
general partner Bellevue, Washington 98005
By: /s/ James G. Loduda Telephone: (425) 943-2000
--------------------------------------
Facsimile: (425) 1451
</TABLE>
-29-
<PAGE>
EXHIBIT 10.25
BILLINGSLEY COMPANY
COMMERCIAL LEASE AGREEMENT
CB Luna Industrial No. 3, Ltd., a Texas limited partnership Landlord
AND
HomeGrocer.com, Inc., a Delaware corporation
Tenant
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
1. PREMISES, TERM, AND INITIAL IMPROVEMENTS................................................. 1
----------------------------------------
2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT.......................................... 1
-----------------------------------------------
3. TAXES.................................................................................... 2
-----
4. LANDLORD'S MAINTENANCE................................................................... 3
----------------------
5. TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS.............................................. 3
-------------------------------------------
6. ALTERATIONS.............................................................................. 3
-----------
7. SIGNS.................................................................................... 4
-----
8. UTILITIES................................................................................ 4
---------
9. INSURANCE................................................................................ 4
---------
10. CASUALTY DAMAGE.......................................................................... 5
---------------
11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND NEGLIGENCE......................... 5
----------------------------------------------------------------
12. USE...................................................................................... 5
---
13. INSPECTION............................................................................... 6
----------
14. ASSIGNMENT AND SUBLETTING................................................................ 6
-------------------------
15. CONDEMNATION............................................................................. 7
------------
16. SURRENDER OF PREMISES; HOLDING OVER...................................................... 7
-----------------------------------
17. QUIET ENJOYMENT.......................................................................... 8
---------------
18. EVENTS OF DEFAULT........................................................................ 8
-----------------
19. REMEDIES................................................................................. 8
--------
20. LANDLORD'S DEFAULT....................................................................... 9
------------------
21. MORTGAGES................................................................................ 9
---------
22. ENCUMBRANCES............................................................................. 10
------------
23. MISCELLANEOUS............................................................................ 10
-------------
24. NOTICES.................................................................................. 11
-------
25. HAZARDOUS WASTE.......................................................................... 11
---------------
26. LANDLORD'S LIEN.......................................................................... 12
---------------
27. SUBMISSION OF LEASE TO TENANT............................................................ 12
-----------------------------
</TABLE>
i
<PAGE>
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
Page No.
<S> <C>
30-day Appraisal Period.......................................... A-2
Affiliate........................................................ 10
Annual Operating Expense Statement............................... 2
Base Rent........................................................ 1
Building......................................................... 1
Building's Structure............................................. 3
Claimant......................................................... 9
Commencement Date................................................ 1
Determination.................................................... A-1
Determinations................................................... A-1
Effective Date................................................... B-1
Environmental Law................................................ 11
Event of Default................................................. 8
Fair Market Base Rent............................................ A-1
Final Plans...................................................... B-1
HVAC System...................................................... 3
Hazardous Substances............................................. 12
Indemnified Parties.............................................. 5
Initial Allowance................................................ B-2
Initial Improvements............................................. 1
Issuer........................................................... A-3
L.C.............................................................. A-3
Land............................................................. 1
Landlord......................................................... 1
Landlord's Determination......................................... A-1
Landlord's Mortgagee............................................. 9
Law.............................................................. 10
Laws............................................................. 10
Lease............................................................ 1
Loss............................................................. 5
Mortgage......................................................... 9
Occupancy Date................................................... A-1
Operating Expenses............................................... 2
Permitted Activities............................................. 11
Permitted Materials.............................................. 11
Permitted Transfer............................................... 6
Preliminary Plans................................................ B-1
Premises......................................................... 1
Primary Lease.................................................... 9
Project.......................................................... 1
Proportionate Share.............................................. 1
Punch List....................................................... 7
Renewal Request Notice........................................... A-1
Rent............................................................. 2
Rent Notice...................................................... A-1
Repair Period.................................................... 5
Roof Improvements................................................ A-2
Security Deposit................................................. 1
Substantial Completion........................................... B-2
Taking........................................................... 7
Taxes............................................................ 2
Tenant........................................................... 1
Tenant Parking Improvements...................................... B-1
Tenant's Determination........................................... A-1
Tenant's Notice.................................................. A-1
Tenant Party..................................................... 10
Term............................................................. 1
Termination Fee.................................................. A-3
Termination Option............................................... A-3
Third Appraiser.................................................. A-2
Transfer......................................................... 6
Truck Park....................................................... 2
UCC.............................................................. 12
Vacation Date.................................................... 7
</TABLE>
ii
<PAGE>
124,950 Square Feet
2100 Luna Road
Carrollton, Texas 75006
LEASE AGREEMENT
---------------
This Lease Agreement (this "Lease") is entered into by CB Luna Industrial
-----
No. 3, Ltd., a Texas limited partnership ("Landlord"), and HomeGrocer.com, Inc.,
--------
a Delaware corporation ("Tenant").
------
1. PREMISES, TERM, AND INITIAL IMPROVEMENTS.
----------------------------------------
(a) Landlord leases to Tenant, and Tenant leases from Landlord, the
space depicted on the floor plan attached as Exhibit A-1 (the "Premises"), which
----------- --------
is part of the approximately 249,900 rentable square foot (as defined by
-------
Landlord's architect) building (the "Building") located on the real property
--------
described on Exhibit A (the "Land"), subject to the terms and conditions in this
--------- ----
Lease. If more than one building is now or hereafter on the Land, then all
references to "Building" shall collectively refer to all such buildings unless
the context otherwise requires. The Building and Land together comprise the
"Project". Landlord and Tenant stipulate that, as of the date of this Lease,
- --------
the size of the Premises is deemed to be 124,950 rentable square feet, as
-------
defined by Landlord's architect and the size of the Building is 249,900 rentable
-------
square feet as defined by Landlord's architect, and Tenant's "Proportionate
-------------
Share" is 50.00%. The Proportionate Share shall be adjusted if the size of the
- ----- ------
Premises or the Building (including the addition of new buildings on the Land)
changes.
(b) The Lease term shall be one hundred and twenty (120) months,
----------------------------
beginning on April 1, 2000 (the "Commencement Date"), and ending one hundred and
----------------- ---------------
twenty (120) months thereafter (the "Term", which defined term shall include all
- ------------ ----
renewals and extensions of the Term); however, if the Commencement Date is not
the first day of a calendar month, then the Term shall end one hundred and
---------------
twenty (120) months after the first day of the first full calendar month of the
- ------------
Term.
(c) Tenant shall construct in the Premises and Truck Park the
improvements (the "Initial Improvements") described on the plans and
--------------------
specifications referenced on Exhibit B, and, by occupying the Premises, Tenant
---------
shall have accepted the Premises in its condition. Landlord agrees that as of
the Occupancy Date, the Building Structure is in good condition and repair and
conforms to and is in compliance with all applicable codes, and Tenant is not
liable for any latent defects or structural components, including but not
limited to the walls, roof, or foundation of the Building Structure, the
Premises (excluding any Initial Improvements to be performed by Tenant) or the
paving of the Truck Park.
2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT.
-----------------------------------------------
(a) Tenant shall pay to Landlord "Base Rent", in advance, without
---------
demand, deduction or set off, equal to the following amounts for the following
periods of time:
<TABLE>
<CAPTION>
Time Period Monthly Base Rent
----------- -----------------
<S> <C>
Months 1 - 60 $44,877.88
Months 61 - 120 $49,563.50
</TABLE>
The first monthly installment, plus the other monthly charges set forth in
Section 2.(c), shall be due on the date hereof; thereafter, monthly installments
of Base Rent shall be due on the first day of each calendar month following the
Commencement Date. If the Term begins on a day other than the first day of a
month or ends on a day other than the last day of a month, the Base Rent and
additional rent for such partial month shall be prorated.
(b) Beginning in month sixty-one (61) of the Lease, Tenant shall
deposit with Landlord on the date hereof $59,309.61 (the "Security Deposit"),
----------------
which shall be held by Landlord to secure Tenant's obligations under this Lease;
however, the Security Deposit is not an advance rental deposit or a measure of
Landlord's damages for an Event of Default (defined below). Landlord may use
any portion of the Security Deposit to satisfy Tenant's unperformed obligations
hereunder where such obligations are unperformed beyond any applicable cure
period, and after written notice to Tenant, without prejudice to any of
Landlord's other remedies. If so used, Tenant shall pay Landlord an amount that
will restore the Security Deposit to its original amount upon receipt of written
request. In connection with any waiver of a Tenant default or modification of
this Lease, Landlord may require that Tenant provide Landlord with an additional
amount to be held as part of the Security Deposit, in no event greater than
twice the then current total monthly rental amount. The Security Deposit shall
be Landlord's property. The unused portion of the Security Deposit will be
returned to Tenant within thirty (30) days after the end of the Term, provided
that Tenant has fully and timely performed its obligations hereunder throughout
the Term.
(c) Tenant shall pay, as additional rent its Proportionate Share of
all costs incurred in owning, operating and maintaining the Land and Building
and the facilities and services provided for the common use of Tenant and any
other tenants of the Building (collectively, "Operating Expenses"), including
------------------
the following items: (1) Taxes (defined
1
<PAGE>
below) and the cost of any tax consultant employed to assist Landlord in
determining the fair tax valuation of the Building and Land; (2) the cost of all
utilities used in the Building which are not billed separately to a tenant of
the Building for above-Building-standard utility consumption; (3) the cost of
"all risk" property and casualty insurance for the Building (including but not
limited to the Premises) with commercially reasonable premiums; (4) the cost of
repairs, replacement, management fees and expenses, landscape maintenance and
replacement, security service (if provided), sewer service (if provided), trash
service (if provided),; (5) the cost of dues, assessments, and other charges
applicable to the Land payable to any property or community owner association
under restrictive covenants or deed restrictions to which the Premises and Truck
Park are subject; and (6) alterations, additions, and improvements made by
Landlord to comply with Law (defined in Section 23(a)). On the same day that
Base Rent is due, Tenant shall pay to Landlord an amount equal to 1/12 of
Landlord's estimate of Tenant's Proportionate Share of annual Operating
Expenses. The initial monthly payments are based upon Landlord's estimate of the
Operating Expenses for the year in question. Within ninety (90) days after the
end of each calendar year, Landlord shall furnish to Tenant a written statement
in reasonable detail reflecting the actual Operating Expenses for the calendar
year (as may be adjusted as provided herein) and calculating the amount due from
Tenant to Landlord or the amount of excess paid by Tenant (the "Annual Operating
----------------
Expense Statement"). If Tenant's total payments in respect of Operating
- -----------------
Expenses for any year are less than Tenant's Proportionate Share of Operating
Expenses, Tenant shall pay the difference to Landlord within thirty (30) days
after Landlord's written request therefor; if such payments are more than
Tenant's Proportionate Share of Operating Expenses and Tenant is not in default
of this Lease, Landlord shall refund such amount to Tenant within thirty (30)
days after Landlord prepares such statement. In December of each year of the
Term, Landlord shall estimate the Operating Expenses for the following year and
shall provide coupons to Tenant for each month of the following year which
reflect monthly payments in the amount of 1/12 of the current Base Rent plus
1/12 of the estimated Operating Expenses for the following year. However,
notwithstanding Tenant's obligation to pay its proportionate share of the actual
Operating Expenses for any given calendar year or portion thereof and regardless
of Landlord's estimate of the following year's Operating Expenses, Tenant shall
not be required to escrow on a monthly basis an amount greater than 110% of the
prior year's actual Operating Expenses divided by 12. Operating Expenses shall
not include and no management fee is payable in respect of the following: (A)
any costs for interest, amortization, or other payments on loans to Landlord;
(B) expenses incurred in leasing or procuring tenants; (C) legal expenses other
than those incurred for the general benefit of the Building's tenants; (D)
allowances, concessions, and other costs of renovating or otherwise improving
space for occupants of the Building or vacant space in the Building; (E) federal
income taxes imposed on or measured by the income of Landlord from the operation
of the Building; (F) rents under ground leases; (G) costs incurred in selling,
syndicating, financing, mortgaging, or hypothecating any of Landlord's interests
in the Building; (H) costs recoverable from other tenants or third parties; (I)
capital costs not related to the Building; and (J) all costs paid directly by
Tenant to any third party. There shall be no duplication of costs for
reimbursements in calculating Operating Expenses. The amounts of the initial
monthly Base Rent and Tenant's Proportionate Share of Operating Expenses (and
the part thereof attributable to Taxes) are as follows:
<TABLE>
<S> <C>
Base Rent (Section 2.(a))............................ $44,877.88
Operating Expenses, excluding Taxes (Section 2.(c)).. $ 2,769.73
Ins. $.026 & OPE's $.24
Taxes (Sections 2.(c) and 3.(a))..................... $ 6,976.38
----------
Total initial monthly payment........................ $54,623.99
==========
</TABLE>
(d) Tenant shall also pay, as additional rent billed on an annual
basis, all costs incurred for Taxes and maintenance on the truck parking lot on
the real property described in Exhibit A-2 (the "Truck Park").
----------
(e) If any payment required of Tenant under this Lease is not paid
within five (5) days of when due, Landlord may charge Tenant a fee equal to 5%
of the delinquent payment to reimburse Landlord for its cost and inconvenience
incurred as a consequence of Tenant's delinquency.
(f) All payments and reimbursements required to be made by Tenant
under this Lease shall constitute "Rent" (herein so called).
----
(g) Tenant has the right to audit the Annual Operating Expense
Statement, by written request to Landlord. Not later than thirty (30) days
after Landlord's receipt of such request, Landlord shall make available to
Tenant at Landlord's place of business during normal business hours all relevant
records and documentation substantiating Landlord's calculation. Such audit must
be completed within twelve (12) months following the year being audited. In the
event of a discrepancy between amounts payable and paid, the party owing the
amount shall make payment within thirty (30) days of such determination, and in
the event the amount paid by Tenant exceeds the amount actually payable by five
(5%) or more, Landlord shall pay Tenant's reasonable costs of conducting the
audit, not to exceed $1,000 per occurrence.
3. TAXES.
-----
(a) Landlord shall pay all taxes, assessments and governmental charges
whether federal, state, county, or municipal and whether they are imposed by
taxing or management districts or authorities presently existing or hereafter
created (collectively, "Taxes") that accrue against the Premises and Truck Park,
-----
the Land and the Building. If, during the Term, there is levied, assessed or
imposed on Landlord a capital levy or other tax directly on the rent or a
franchise tax, assessment, levy or charge measured by or based, in whole or in
part, upon rent, then all such taxes, assessments, levies or charges, or the
part thereof so measured or based, shall be included within the term "Taxes".
If the Building is occupied by more than one tenant and the cost of any
improvements constructed in the Premises is disproportionately higher than the
cost of improvements constructed in the premises of other tenants of the
Building, then
2
<PAGE>
Landlord may require that Tenant pay the amount of Taxes attributable to such
improvements in addition to its Proportionate Share of other Taxes and shall
provide Tenant with copies of all relevant records and documentation
substantiating Landlord's calculation.
(b) Tenant shall (1) before delinquency pay all taxes levied or
assessed against any personal property, fixtures or alterations placed in the
Premises and Truck Park and (2) upon the written request of Landlord, deliver to
Landlord receipts from the applicable taxing authority or other evidence
acceptable to Landlord to verify that such taxes have been paid. If any such
taxes are levied or assessed against Landlord or Landlord's property and (A)
Landlord pays them or (B) the assessed value of Landlord's property is increased
thereby and Landlord pays the increased taxes, then Tenant shall pay to Landlord
such taxes within ten (10) business days after Landlord's written request
therefor. However, if Tenant informs Landlord in writing that Tenant has a bona
fide dispute with the applicable taxing authority concerning the taxes levied or
assessed Landlord shall not pay the taxes, provided Tenant diligently pursues
such dispute to resolution. In the event that the dispute is preventing the
closing of a sale and purchase or a refinance of the Building and/or Land then
upon written notice form Landlord, Tenant shall immediately place in escrow
funds sufficient to satisfy the taxes payable by Tenant.
4. LANDLORD'S MAINTENANCE.
----------------------
(a) This Lease is intended to be a net lease; accordingly, Landlord's
maintenance obligations are limited to the replacement of the Building's roof
and roof membrane and maintenance and if necessary, the replacement of the
foundation and structural members of the exterior walls (collectively, the
"Building's Structure") and the foundation of the Truck Park; however, Landlord
- ---------------------
shall not be responsible (1) for any such work until Tenant delivers to Landlord
written notice or Landlord has been otherwise notified of the need therefor or
(2) for alterations to the Building's Structure required by Law after the
Occupancy Date because of Tenant's use of the Premises and Truck Park (which
alterations shall be performed by Tenant). The Building's Structure does not
include skylights, windows, glass or plate glass, doors, special store fronts or
office entries, all of which shall be maintained by Tenant. Landlord's
liability for any defects, repairs, replacement or maintenance for which
Landlord is responsible hereunder shall be limited to the cost (including labor
and materials) of performing such work or replacement.
(b) Additionally, Landlord shall, at Tenant's expense, maintain the
parking areas, driveways, alleys and grounds surrounding the Premises and Truck
Park in a clean and sanitary condition, consistent with the current condition of
the grounds and the Building, normal wear and tear excepted, and consistent with
the operation of a first-class office/warehouse building, including prompt
maintenance, repairs and replacements of (1) any drill or spur tract servicing
the Premises and Truck Park, (2) the exterior of the Building (including
painting as may be reasonably required), (3) sprinkler systems and sewage lines
servicing the Building, and (4) any other items reasonably associated with the
foregoing. Tenant shall promptly notify Landlord of any work required to be
performed under this Section 4.(b), and Landlord shall not be responsible for
performing such work until Tenant delivers to Landlord such notice or Landlord
has been otherwise notified. All costs in performing the work described in this
Section 4.(b) shall be included in Operating Expenses.
5. TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS.
-------------------------------------------
(a) Tenant shall maintain all parts of the Premises and Truck Park
(except for maintenance work which Landlord is expressly responsible for under
Section 4.(a)) in good condition and promptly make all necessary repairs and
replacements to the Premises and Truck Park. Tenant shall repair and pay for
any damage caused by a Tenant Party (defined below) or caused by Tenant's
default hereunder.
(b) Tenant shall maintain the hot water equipment and the heating, air
conditioning, and ventilation equipment and system (the "HVAC System") in good
-----------
repair and condition and in accordance with Law and with such equipment
manufacturers' suggested operation/maintenance service program; such obligation
shall include replacement of all equipment necessary to maintain such equipment
and system in good working order. Within thirty (30) days after the
Commencement Date, Tenant shall enter into regularly scheduled preventive
maintenance/service contracts for such equipment, each in compliance with
Landlord's reasonable specifications and otherwise in form and substance and
with a contractor reasonably acceptable to Landlord, and deliver copies thereof
to Landlord. At least fourteen (14) days before the end of the Term, Tenant
shall deliver to Landlord a certificate from an engineer reasonably acceptable
to Landlord certifying that the hot water equipment and the HVAC System are then
in good repair and working order.
6. ALTERATIONS.
-----------
(a) Tenant may, at any time during the term of this Lease, make any
modification within the Premises, including but not limited to construction of
office space, at Tenant's sole cost and expense, provided such modifications are
non-structural in nature, and each such modification project does not cost in
excess of $50,000.00.
(b) Tenant may not make any modifications other than those described
above, without the prior written approval of Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed. The process for obtaining
Landlord approval of such modifications is the same as that set forth in Exhibit
B for the Initial Improvements. Tenant may erect shelves, bins, machinery and
trade fixtures provided that such items (1) do not alter the basic character of
the Premises and Truck Park or the Building; (2) do not overload or damage the
same; and (3) may be removed without damage to the Premises and Truck Park. In
connection with any such alteration, addition, or improvement, Tenant shall pay
to Landlord an administration fee, with such administration fee excluded from
the work outlined in Exhibit B pertaining to the Initial Improvements, on a
sliding scale as a percentage of all costs incurred for such work according to
the table below:
3
<PAGE>
<TABLE>
<CAPTION>
Cost of Work Fee Percentage
------------ --------------
<S> <C>
$50,000 less than $100,000 5.0%
$100,000 less than $150,000 4.5%
$150,000 less than $200,000 4.0%
$200,000 less than $250,000 3.5%
$250,000 less than $300,000 3.0%
Greater than $300,000 2.5%
</TABLE>
(c) In no event shall any modifications result in any increase in
base rent, so long as such modifications are at the sole cost and expense of
Tenant.
(d) All work performed for or on behalf of Tenant in the Premises or
Truck Park (including that relating to the installations, repair, replacement,
or removal of any item) shall be performed in accordance with Law and with
Landlord's specifications and requirements, in a good and workmanlike manner, as
so as not to damage or alter the Building's Structure, the Premises or Truck
Park.
(e) Tenant shall restore the Premises and Truck Park pursuant to and
in accordance with Section 16 of this Lease.
7. SIGNS. Tenant shall not place, install or attach any signage,
-----
decorations, advertising media, blinds, draperies, window treatments, bars, or
security installations to the Premises and Truck Park or the Building which
would be visible from the exterior of the Premises without Landlord's prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed. Landlord shall provide Tenant with a copy of Landlord's signage
requirements and criteria on or before the Effective Date hereof and Tenant
shall have the right to its pro-rata share of exterior signage on the Premises.
Tenant shall repair, paint, and/or replace any portion of the Premises and Truck
Park or the Building damaged or altered as a result of its signage when it is
removed. Other than changes or modifications included in the Initial
Improvements and reflected on the Final Plans, Tenant shall not (a) make any
changes to the exterior of the Premises and Truck Park or the Building, (b)
install any exterior lights, decorations, balloons, flags, pennants, banners or
paintings, or (c) erect or install any signs, windows or door lettering, decals,
window or storefront stickers, placards, decorations or advertising media of any
type that is visible from the exterior of the Premises and Truck Park without
Landlord's prior written consent which consent shall not be unreasonably
withheld, conditioned or delayed. Landlord shall notify Tenant of whether it
consents to any sign within ten (10) business days after Tenant has provided
detailed, to-scale drawings thereof specifying design, material composition,
color scheme, and method of installation,. If Landlord fails to respond within
said ten (10) business days, the proposed signage shall be deemed approved by
Landlord.
8. UTILITIES. Tenant shall obtain and pay for all water, gas,
----------
electricity, heat, telephone, sewer, sprinkler charges and other utilities and
services used at the Premises and Truck Park, together with any taxes,
penalties, surcharges, maintenance charges, and the like pertaining to the
Tenant's use of the Premises and Truck Park. Landlord may, at Tenant's expense,
separately meter and bill Tenant directly for its use of any such utility
service, in which case, the amount separately billed to Tenant for Building-
standard utility service shall not be duplicated in Tenant's obligation to pay
additional rent under Section 2.(c) however, Tenant shall be required as part of
its performing the Initial Improvements to obtain and pay all costs to
separately meter any and all electricity and gas utility service required to
service the Premises and Truck Park. Landlord shall not be liable for any
interruption or failure of utility service to the Premises and Truck Park. All
amounts due from Tenant under this Section 8 shall be payable within thirty (30)
days after Landlord's written request therefor.
9. INSURANCE. Tenant shall maintain (a) workers' compensation
---------
insurance (with a waiver of subrogation endorsement reasonably acceptable to
Landlord) and commercial general liability insurance (with contractual liability
endorsement), including personal injury and property damage in the amount of
$1,000,000 per occurrence combined single limit for personal injuries and death
of persons and property damage occurring in or about the Premises and Truck
Park, plus umbrella coverage of at least $2,000,000 per occurrence, (b) fire and
extended coverage insurance covering (1) the replacement cost of all
alterations, additions, partitions and improvements installed in the Premises
and Truck Park by or on behalf of a Tenant Party, (2) the replacement cost of
all of Tenant's personal property in the Premises and Truck Park, and (3)
business interruption in the event of an insured peril damaging the Premises and
Truck Park, and (c) such other insurance as Landlord may reasonably require
after written notice. Such policies shall (A) name Landlord, Landlord's agents,
and their respective Affiliates (defined below), as additional insureds (and as
loss payees on the fire and extended coverage insurance), (B) be issued by an
insurance company with a minimum rating of A10, (C) provide that such insurance
may not be cancelled unless 30-days' prior written notice is first given to
Landlord, (D) certificates in relation thereto be delivered to Landlord by
Tenant before the Commencement Date and at least 15 days before each renewal
thereof, and (E) provide primary coverage to Landlord when any policy issued to
Landlord is similar or duplicate in coverage, in which case Landlord's policy
shall be excess over Tenant's policies.
Landlord shall maintain fire and extended coverage insurance covering the
Building and the Land for the then current full replacement cost of thereof,
with a maximum deductible of $25,000.00, and shall provide Tenant with evidence
of such insurance coverage.
10. CASUALTY DAMAGE. Tenant immediately shall give written notice to
---------------
Landlord of any reasonably visible damage to the Premises and Truck Park or the
Building.
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(a) If the Premises, the Truck Park or the Building are totally
destroyed by an insured peril, or so damaged by an insured peril that, in
Landlord's reasonable estimation, such estimation to be made and communicated to
Tenant in writing within thirty (30) days of such damage, rebuilding or repairs
cannot be substantially completed within 180 days after the date of Landlord's
actual knowledge of such damage, then either Landlord or (if a Tenant Party did
not cause such damage) Tenant may terminate this Lease by delivering to the
other written notice thereof within 30 days after such damage, in which case,
the rent shall be prorated for the unexpired portion of this Lease, effective
upon the date such damage occurred and any unearned rent refunded to Tenant
within thirty (30) days of Tenant's notice of intent to terminate the Lease.
Time is of the essence with respect to the delivery of such notices.
(b) Subject to Section 10.(c), if this Lease is not terminated under
Section 10.(a), then Landlord shall restore the Premises and Truck Park to
substantially its previous condition, except that Landlord shall not be required
to rebuild, repair or replace any part of the partitions, fixtures, additions
and other improvements or personal property required to be covered by Tenant's
insurance under Section 9. If the Premises and Truck Park are untenantable, in
whole or in part, during the period beginning on the date such damage occurred
and ending on the date of substantial completion of Landlord's repair or
restoration work (the "Repair Period"), then the rent for such period shall be
-------------
reduced to such extent as may be fair and reasonable under the circumstances and
the Term shall be extended by the number of days in the Repair Period.
(c) If the Premises and Truck Park are destroyed or substantially
damaged by any peril not covered by the insurance maintained by Landlord or any
Landlord's Mortgagee (defined below) requires that insurance proceeds be applied
to the indebtedness secured by its Mortgage (defined below) or to the Primary
Lease (defined below) obligations and in either case Landlord elects not to
rebuild or repair, Landlord may terminate this Lease by delivering written
notice of termination to Tenant within 30 days after such destruction or damage
or such requirement is made known by any such Landlord's Mortgagee, Landlord
shall give Tenant written notice immediately upon Landlord becoming aware that
the peril is not covered by Landlord's insurance or that Landlord's Mortgagee
has made such requirement, as applicable, whereupon all rights and obligations
hereunder shall cease and terminate, except for (i) any liabilities of Tenant
which accrued before this Lease is terminated and (ii) Landlord's obligation to
return to Tenant any unearned rent and any Security Deposit.
11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND NEGLIGENCE.
----------------------------------------------------------------
(a) Subject to Section 11.(b), Tenant shall indemnify, defend, and
hold harmless Landlord, its successors, assigns, agents, employees, contractors,
partners, directors, officers and affiliates (collectively, the "Indemnified
-----------
Parties") from and against all fines, suits, losses, costs, liabilities, claims,
- -------
demands, actions and judgments of every kind or character (1) arising from
Tenant's failure to perform its covenants hereunder, (2) recovered from or
asserted against any of the Indemnified Parties on account of any Loss (defined
below) to the extent that any such Loss may be incident to, arise out of, or be
caused, either proximately or remotely, wholly or in part, by a Tenant Party or
any other person entering upon the Premises and Truck Park under or with a
Tenant Party's express or implied invitation or permission, (3) arising from or
out of the occupancy or use by a Tenant Party or arising from or out of any
occurrence in the Premises and Truck Park, or (4) suffered by, recovered from or
asserted against any of the Indemnified Parties by the employees, agents,
contractors, or invitees of Tenant or its subtenants or assignees. However,
such indemnification of the Indemnified Parties by Tenant shall not be
applicable if such loss, damage, or injury is caused by the gross negligence or
willful misconduct of Landlord or any Indemnified Party.
(b) Landlord shall not be liable to Tenant or those claiming by,
through, or under Tenant for any injury to or death of any person or persons or
the damage to or theft, destruction, loss, or loss of use of any property or
inconvenience (a "Loss") caused by casualty, theft, fire, third parties, or any
----
other matter (including Losses arising through repair or alteration of any part
of the Building, or failure to make repairs, or from any other cause),
regardless of whether the negligence of either party caused such Loss in whole
or in part. Landlord and Tenant each waives any claim it might have against the
other for any damage to or theft, destruction, loss, or loss of use of any
property, to the extent the same is insured against under any insurance policy
maintained by it that covers the Building, the Premises and Truck Park,
Landlord's or Tenant's fixtures, personal property, leasehold improvements, or
business, or is required to be insured against by the waiving party under the
terms hereof, regardless of whether the negligence or fault of the other party
caused such loss and regardless of whether the party elected to self-insure;
however, Landlord's waiver shall not apply to any deductible amounts maintained
by Landlord under its insurance. Each party shall cause its insurance carrier
to endorse all applicable policies waiving the carrier's rights of recovery
under subrogation or otherwise against the other party.
12 USE.
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(a) The Premises and Truck Park shall be used only for receiving,
storing, shipping and selling products, materials and merchandise made or
distributed by Tenant and for such other lawful purposes as may be incidental
thereto, any such other lawful purpose being subject to Landlord's approval
which shall not be unreasonably withheld or delayed ; however, no retail sales
may be made directly from the Premises to the general public. Tenant shall not
use the Premises and Truck Park to receive, store or handle any product,
material or merchandise that is explosive or highly inflammable or hazardous
excluding Permitted Materials hereinafter defined below. Outside storage is
prohibited. Tenant shall be solely responsible for complying with all Laws
applicable to the use, occupancy, and condition of the Premises and Truck Park.
Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas,
light, noise or vibrations to emanate from the Premises and Truck Park; nor take
any other action that would constitute a nuisance or would disturb, unreasonably
interfere with, or endanger Landlord or any other person; nor permit the
Premises and Truck Park to be used for any purpose or in any manner that would
(1) void the insurance thereon, (2) unreasonably increase the insurance risk,
5
<PAGE>
or (3) cause the disallowance of any sprinkler credits, however, Landlord agrees
that Tenant's planned use is not a breach of this provision. Tenant shall pay to
Landlord on demand any increase in the cost of any insurance on the Premises and
Truck Park or the Building incurred by Landlord, which is caused by Tenant's use
of the Premises and Truck Park or because Tenant vacates the Premises and Truck
Park prior to the expiration of this Lease.
(b) Tenant and its employees and invitees shall have the non-exclusive
right to use, in common with others, any parking areas associated with the
Premises and Truck Park which Landlord has designated for such use, subject to
(1) such reasonable rules and regulations as Landlord may promulgate from time
to time and (2) rights of ingress and egress of other tenants and their
employees, agents and invitees. Landlord shall not be responsible for enforcing
Tenant's parking rights against third parties but shall use reasonable efforts
to coordinate and/or mitigate parking disputes with other tenants that may arise
from time to time. Notwithstanding the foregoing, Landlord agrees not to
enforce rules and regulations, as to this Tenant, in a manner that is more
restrictive than to other tenants in the Building.
13 INSPECTION. Landlord and Landlord's agents and representatives may,
----------
upon twenty-four (24) hour prior notice, enter the Premises and Truck Park
during business hours to inspect the Premises and Truck Park; to make such
repairs as may be required or permitted under this Lease; to perform any
unperformed obligations of Tenant hereunder; and to show the Premises and Truck
Park to prospective purchasers, mortgagees, ground lessors, and (during the last
12 months of the Term) tenants. During the last 12 months of the Term, Landlord
may erect a sign on the Premises and Truck Park indicating that the Premises and
Truck Park are available.
14 ASSIGNMENT AND SUBLETTING.
-------------------------
(a) Tenant shall not, without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed, (1)
advertise that any portion of the Premises and Truck Park is available for lease
or cause or allow any such advertisement, (2) assign, transfer, or encumber this
Lease or any estate or interest herein, whether directly or by operation of law,
(3) permit any other entity to become Tenant hereunder by merger, consolidation,
or other reorganization, (4) if Tenant is an entity other than a corporation
whose stock is publicly traded, permit the transfer of an ownership interest in
Tenant so as to result in a change in the current control of Tenant, (5) sublet
any portion of the Premises and Truck Park, (6) grant any license, concession,
or other right of occupancy of any portion of the Premises and Truck Park, or
(7) permit the use of the Premises and Truck Park by any parties other than
Tenant (any of the events listed in Sections 14.(a)(2) through 14.(a)(7) being a
"Transfer"). If Tenant requests Landlord's consent to a Transfer, then Tenant
--------
shall provide Landlord with a written description of all terms and conditions of
the proposed Transfer, copies of the proposed documentation, and the following
information about the proposed transferee: name and address; reasonably
satisfactory information about its business and business history; its proposed
use of the Premises and Truck Park; banking, financial, and other credit
information; and general references sufficient to enable Landlord to determine
the proposed transferee's creditworthiness and character. Landlord shall reply
to Tenant within ten (10) business days of such receipt by Landlord of such
submission, otherwise Landlord is deemed to have approved the proposed Transfer.
Tenant shall reimburse Landlord for its reasonable attorneys' fees and other
expenses incurred in connection with considering any request for its consent to
a Transfer to a maximum of one thousand and 00/100 ($1,000.00). If Landlord
consents to a proposed Transfer, then the proposed transferee shall deliver to
Landlord a written agreement whereby it expressly assumes the Tenant's
obligations hereunder (however, any transferee of less than all of the space in
the Premises and Truck Park shall be liable only for obligations under this
Lease that are properly allocable to the space subject to the Transfer, and only
to the extent of the rent it has agreed to pay Tenant therefor) and, in the case
of an assignment and subletting, Landlord's consent to a Transfer shall not
release Tenant from performing its obligations under this Lease, but rather
Tenant and its transferee shall be jointly and severally liable therefor.
Landlord's consent to any Transfer shall not waive Landlord's rights as to any
subsequent Transfers. If an Event of Default remains uncured beyond any
applicable cure periods while the Premises and Truck Park or any part thereof
are subject to a Transfer, then Landlord, in addition to its other remedies, may
collect directly from such transferee all rents becoming due to Tenant and apply
such rents against Tenant's rent obligations after written notice from Landlord
to Tenant. Tenant authorizes its transferees to make payments of rent directly
to Landlord upon receipt of notice from Landlord to do so.
(b) Permitted Transfers. Notwithstanding anything to the contrary
herein, Tenant shall be permitted, subject to the limitations concerning the
continuing use of the Premises and Truck Park as provided below, to assign its
rights or sublet portions of the Premises and Truck Park as follows, so long as
any assignee or sublessee shall have a minimum net worth of $500 million and
(the following being deemed a "Permitted Transfer"): (a) any entity resulting
------------------
from a merger or consolidation with Tenant; (b) any subsidiary or affiliate of
Tenant; (c) any sale of common stock through an Initial Public Offering or
subsequent offer or (d) any entity acquiring all or substantially all of the
assets of Tenant. Tenant shall provide Landlord with prior notice of its intent
of any such assignment or sublease. A Permitted Transfer of all or any portion
of the Premises and Truck Park or this Lease shall not release Tenant from
performing its obligations under this Lease, but rather Tenant and its
transferee shall be jointly and severally liable therefor.
(c) In the event any such assignment or subletting represents fifty
percent (50%) or more of the Premises or Truck Park and is for the remaining
Term of the Lease, Landlord may, within 30 days after submission of Tenant's
written request for Landlord's consent to a Transfer, cancel this Lease (or, as
to a subletting or assignment, cancel as to the portion of the Premises and
Truck Park proposed to be sublet or assigned) as of the date the proposed
Transfer was to be effective. If Landlord cancels this Lease as to any portion
of the Premises and Truck Park, then this Lease shall cease for such portion of
the Premises and Truck Park and Tenant shall pay to Landlord all rent accrued
through the cancellation date relating to the portion of the Premises and Truck
Park covered by the proposed Transfer. Thereafter, Landlord may lease such
portion of the Premises and Truck Park to the prospective transferee (or to any
other person) without liability to Tenant.
6
<PAGE>
(d) Tenant hereby assigns, transfers and conveys seventy-five percent
(75%) of the total consideration received by Tenant under any Transfer, which
are in excess of the rents payable by Tenant under this Lease, less reasonable
costs associated with any tenant improvements, market commissions and reasonable
attorney's fees, and Tenant shall hold such amounts in trust for Landlord and
pay them to Landlord within ten days after receipt.
15 CONDEMNATION. If the Premises and Truck Park are subject to a taking
------------
for any public or quasi-public use by right of eminent domain or private
purchase in lieu thereof (a "Taking"), and the Taking renders the remainder of
------
the Premises and Truck Park untenantable for the purpose for which they were
leased to Tenant, either party may terminate this Lease by delivering to the
other written notice thereof within 30 days after the Taking, in which case rent
shall be prorated for the unexpired portion of the Term, effective on the date
of such Taking and Landlord shall return any unearned rent within thirty (30)
days of termination. If the Premises and Truck Park are subject to a Taking but
the Taking does not render the remainder of the Premises and Truck Park
untenantable for the purpose for which they were leased to Tenant, then neither
party may terminate this Lease, but the rent payable during the unexpired
portion of the Term shall be reduced to such extent as may be fair and
reasonable under the circumstances. If a Taking occurs, all proceeds shall
belong to and be paid to Landlord, and Tenant shall not be entitled to any
portion thereof except that Tenant shall have all rights permitted under the
laws of the State of Texas to appear, claim and prove in proceedings relative to
such Taking (i) the value of any fixtures, furnishings, and other personal
property which are taken but which under the terms of this Lease, Tenant is
permitted to remove at the end of the Term, (ii) the unamortized cost (such
costs having been amortized on a straight line basis over the Term excluding any
renewal terms) of Tenant's leasehold improvements which are taken that Tenant is
not permitted to remove at the end of the Term and which were installed solely
at Tenant's expense (i.e., not made or paid for by Landlord from the
Construction Allowance or otherwise), and (iii) relocation and moving expenses,
but not the value of Tenant's leasehold estate created by this Lease and only so
long as such claims in no way diminish the award Landlord is entitled to from
the condemning authority as provided hereunder.
16 SURRENDER OF PREMISES; HOLDING OVER.
-----------------------------------
(a) No act by Landlord shall be an acceptance of a surrender of the
Premises and Truck Park, and no agreement to accept a surrender of the Premises
and Truck Park shall be valid unless it is in writing and signed by Landlord.
(b) Prior to the date of the expiration of this Lease or when Tenant
notifies Landlord in writing of its intention to vacate the Premises and Truck
Park at lease sixty (60) days before Tenant will vacate the Premises and Truck
Park; such notice shall specify the date on which Tenant intends to vacate the
Premises and Truck Park (such date, the "Vacation Date"), the parties shall
-------------
follow the following process for the surrender of the Premises and Truck Park:
(i) at least thirty (30) days prior to the Vacation Date, Tenant shall arrange
to meet with Landlord for a joint inspection of the Premises and Truck Park;
(ii) during or immediately after such inspection, Landlord and Tenant shall
prepare a list of items of work (the "Punch List") that Tenant must perform on
----------
or before the Vacation Date, such work to be consistent with the parties'
respective maintenance and repair obligations set forth in this Lease, including
but not limited to (1) Tenant delivering to Landlord the Premises and Truck Park
with all improvements located thereon in good repair and condition, reasonable
wear and tear (subject however to Tenant's maintenance obligations) excepted,
and with the HVAC System and hot water equipment, light and light fixtures
(including ballasts), and overhead doors and related equipment in good working
order, (2) deliver to Landlord all keys to the Premises and Truck Park, and (3)
remove all signage placed on the Premises and Truck Park, the Building, or the
Land by or at Tenant's request, and consistent with the provisions of this Lease
concerning the ownership of alterations, modifications, fixtures, trade
fixtures, furniture and; (iii) on or before the Vacation Date, Tenant shall
perform the work set forth in the Punch List; (iv) if Tenant fails to arrange
for such inspection, then Landlord may conduct such inspection in accordance
with the provisions of this Lease, and Landlord's determination of the work
Tenant is required to perform before the Vacation Date shall be conclusive; (v)
if Tenant fails to perform such work by the expiration of the Vacation Date,
then Landlord may perform such work at Tenant's cost, and Tenant shall pay all
costs incurred by Landlord in performing such work within ten (10) days after
Landlord's request therefor.
(c) All work required of Tenant under this Section 16 shall be
coordinated with Landlord and be performed in a good and workmanlike manner, in
accordance with all Laws, and so as not to damage the Building or unreasonably
interfere with other tenants' use of their premises. Tenant shall, at its sole
cost and expense, repair all damage caused by work performed by Tenant pursuant
to the Section 16.
(d) Subject to any specific agreement between the parties to the
contrary, or as otherwise set forth in this Lease, Tenant shall be required to
remove any alterations, additions, or other improvements, including but not
limited to cabling and wiring, from the Premises and Truck Park.
(e) If Tenant fails to vacate the Premises and Truck Park at the end
of the Term, then Tenant shall be a tenant at will and Tenant shall pay, in
addition to the other rent due hereunder, a daily base rental equal to one
hundred and fifty percent (150%) of the daily Base Rent payable during the last
month of the Term. Additionally, Tenant shall defend, indemnify, and hold
harmless Landlord from any damage, liability and expense (including attorneys'
fees and expenses) incurred because of such holding over. No payments of money
by Tenant to Landlord after the Term shall reinstate, continue or extend the
Term, and no extension of this Term shall be valid unless it is in writing and
signed by Landlord and Tenant.
7
<PAGE>
17 QUIET ENJOYMENT. Provided an Event of Default has not occurred under
---------------
this Lease, Tenant shall peaceably and quietly hold and enjoy the Premises and
Truck Park for the Term, without hindrance from Landlord or any party claiming
by, through, or under Landlord, but not otherwise.
18 EVENTS OF DEFAULT. Each of the following events shall constitute an
------------------
"Event of Default" under this Lease:
----------------
(a) Tenant fails to pay any rent when due or any payment or
reimbursement required under any other lease with Landlord when due, and in
either case such failure continues for a period of five (5) days after written
notice that such payment was due.
(b) The filing of a petition by or against Tenant or any guarantor of
Tenant's obligations hereunder (1) in any bankruptcy or other insolvency
proceeding; (2) seeking any relief under any debtor relief Law; (3) for the
appointment of a liquidator, receiver, trustee, custodian, or similar official
for all or substantially all of Tenant's property or for Tenant's interest in
this Lease; or (4) for reorganization or modification of Tenant's capital
structure (however, if any such petition is filed against Tenant, then the
filing of such petition shall not constitute an Event of Default, unless it is
not dismissed within 45 days after the filing thereof).
(c) Tenant fails to discharge or bond over any lien placed upon the
Premises and Truck Park in violation of Section 22 within five (5) days after
written notice of any such lien or encumbrance is filed against the Premises
and Truck Park.
(d) Tenant fails to comply with any term, provision or covenant of
this Lease (other than those listed in this Section 18), and such failure
continues for twenty (20) days after written notice thereof to Tenant. With
respect to a failure of a non-monetary term, provision, or covenant, if such
failure cannot be cured with such twenty (20) day period and Tenant begins to
cure such failure within such twenty (20) day period and thereafter diligently
pursues such cure to completion, such failure shall not be an Event of Default.
19 REMEDIES.
--------
(a) Upon any Event of Default, Landlord may, at the expiration of all
applicable cure periods and written notice to Tenant, in addition to all other
rights and remedies afforded Landlord hereunder or by Law, take any of the
following actions:
(1) Terminate this Lease by giving Tenant written notice thereof,
in which event, Tenant shall pay to Landlord the sum of (A) all rent
accrued hereunder through the date of termination, (B) all amounts due
under Section 19.(b), and (C) an amount equal to (i) the total rent that
Tenant would have been required to pay for the remainder of the Term
discounted to present value at a per annum rate equal to the "Prime Rate"
as published on the date this Lease is terminated by The Wall Street
Journal, Southwest Edition, in its listing of "Money Rates", minus (ii) the
then present fair rental value of the Premises and Truck Park for such
period, similarly discounted; or
(2) Terminate Tenant's right to possess the Premises and Truck
Park without terminating this Lease by giving written notice thereof to
Tenant, in which event Tenant shall pay to Landlord (A) all rent and other
amounts accrued hereunder to the date of termination of possession, (B) all
amounts due from time to time under Section 19.(b), and (C) all rent and
other sums required hereunder to be paid by Tenant during the remainder of
the Term, diminished by any net sums thereafter received by Landlord
through reletting the Premises and Truck Park during such period; however,
Landlord shall not be obligated to relet the Premises and Truck Park and
shall not be liable for, nor shall Tenant's obligations hereunder be
diminished because of, Landlord's failure to relet the Premises and Truck
Park or to collect rent due for a reletting. Tenant shall not be entitled
to the excess of any consideration obtained by reletting over the rent due
hereunder. Reentry by Landlord in the Premises and Truck Park shall not
affect Tenant's obligations hereunder for the unexpired Term; rather,
Landlord may, from time to time, bring action against Tenant to collect
amounts due by Tenant, without the necessity of Landlord's waiting until
the expiration of the Term. Unless Landlord delivers written notice to
Tenant expressly stating that it has elected to terminate this Lease, all
actions taken by Landlord to exclude or dispossess Tenant of the Premises
and Truck Park shall be deemed to be taken under this Section 19.(a)(2).
If Landlord elects to proceed under this Section 19.(a)(2), it may at any
time elect to terminate this Lease under Section 19.(a)(1).
Additionally, without notice, Landlord may alter locks or other security devices
at the Premises and Truck Park to deprive Tenant of access thereto, and Landlord
shall not be required to provide a new key or right of access to Tenant.
(b) Tenant shall pay to Landlord all costs incurred by Landlord
(including court costs and reasonable attorneys' fees and expenses) in (1)
obtaining possession of the Premises and Truck Park, (2) removing and storing
Tenant's or any other occupant's property, (3) repairing, restoring, altering,
remodeling, or otherwise putting the Premises and Truck Park into condition
acceptable to a new tenant, (4) if Tenant is dispossessed of the Premises and
Truck Park and this Lease is not terminated, reletting all or any part of the
Premises and Truck Park (including brokerage commissions, cost of tenant finish
work, and other costs incidental to such reletting), (5) performing Tenant's
obligations which Tenant failed to perform, and (6) enforcing, or advising
Landlord of, its rights, remedies, and recourses. Landlord's acceptance of rent
following an Event of Default shall not waive Landlord's rights regarding such
Event of Default. Landlord's receipt of rent with knowledge of any default by
Tenant hereunder shall not be a waiver of such default, and no
8
<PAGE>
waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless set forth in writing and signed by Landlord. No waiver by Landlord
of any violation or breach of any of the terms contained herein shall waive
Landlord's rights regarding any future violation of such term or violation of
any other term. If Landlord repossesses the Premises and Truck Park pursuant to
the authority herein granted, then Landlord shall have the right to (A) keep in
place and use or (B) remove and store, at Tenant's expense, all of the
furniture, fixtures, equipment and other property in the Premises and Truck
Park, including that which is owned by or leased to Tenant at all times before
any foreclosure thereon by Landlord or repossession thereof by any lessor
thereof or third party having a lien thereon. Landlord may relinquish possession
of all or any portion of such furniture, fixtures, equipment and other property
to any person (a "Claimant") who presents to Landlord a copy of any
--------
instrument represented by Claimant to have been executed by Tenant (or any
predecessor of Tenant) granting Claimant the right under various circumstances
to take possession of such furniture, fixtures, equipment or other property,
without the necessity on the part of Landlord to inquire into the authenticity
or legality of the instrument. Landlord may, at its option and without
prejudice to or waiver of any rights it may have, (i) escort Tenant to the
Premises and Truck Park to retrieve any personal belongings of Tenant and/or its
employees not covered by the Landlord's statutory lien or the security interest
described in Section 26 or (ii) obtain a list from Tenant of the personal
property of Tenant and/or its employees that is not covered by the Landlord's
statutory lien or the security interest described in Section 26, and make such
property available to Tenant and/or Tenant's employees; however, Tenant first
shall pay in cash all costs and estimated expenses to be incurred in connection
with the removal of such property and making it available. The rights of
Landlord herein stated are in addition to any and all other rights that Landlord
has or may hereafter have at law or in equity, and Tenant agrees that the rights
herein granted Landlord are commercially reasonable.
(c) Notwithstanding any provision of this Section 19 to the contrary,
Landlord shall take reasonable steps to mitigate its damages.
20 LANDLORD'S DEFAULT.
------------------
(a) Notice and Cure. If Landlord should fail to perform or observe
----------------
any covenant, term, provision or condition of this Lease and such default should
continue beyond a period of ten (10) days as to a monetary default or thirty
(30) days (or such longer period as is reasonably necessary to remedy such
default, provided Landlord shall diligently pursue such remedy until such
default is cured) as to a non-monetary default, after in each instance written
notice thereof is given by Tenant to Landlord and Landlord's Mortgagee, then, in
any such event Tenant shall have the right (but no obligation) to cure the
default, and Landlord shall reimburse Tenant for all reasonable sums expended in
so curing said default. Tenant specifically agrees that Landlord's Mortgagee
may enter the Premises upon reasonable notice to Tenant to cure any such default
and that the cure of any default by Landlord's Mortgagee shall be deemed a cure
by Landlord under this Lease.
(b) Set-off. If Tenant obtains a judgment against Landlord or any
--------
assignee for any default by Landlord under this Lease and (i) Tenant provided
Landlord's Mortgagee notice and opportunity to cure as described in Section
20(a) above, (ii) said judgment is final and all rights of appeal have been
exercised or have expired, and (iii) such judgment remains unsatisfied upon
thirty (30) days written notice thereof to Landlord's Mortgagee, Tenant may set
off such judgment against Rent.
21 MORTGAGES.
---------
(a) This Lease shall be subordinate to any deed of trust, mortgage or
other security instrument (a "Mortgage"), and any ground lease, master lease, or
--------
primary lease (a "Primary Lease") that now or hereafter covers any portion of
-------------
the Premises and Truck Park (the mortgagee under any Mortgage or the lessor
under any Primary Lease is referred to herein as "Landlord's Mortgagee"), and to
--------------------
increases, renewals, modifications, consolidations, replacements, and extensions
thereof. However, any Landlord's Mortgagee may elect to subordinate its
Mortgage or Primary Lease (as the case may be) to this Lease by delivering
written notice thereof to Tenant. The provisions of this Section 21 shall be
self-operative, and no further instrument shall be required to effect such
subordination; however, Tenant shall from time to time within ten days after
request therefor, execute any instruments that may be required by any Landlord's
Mortgagee to evidence the subordination of this Lease to any such Mortgage or
Primary Lease. If Tenant fails to execute the same within such ten-day period,
Tenant is deemed to have agreed to the terms therein.
(b) Tenant shall attorn to any party succeeding to Landlord's interest
in the Premises and Truck Park, whether by purchase, foreclosure, deed in lieu
of foreclosure, power of sale, termination of lease, or otherwise, upon such
party's request, and shall execute such agreements confirming such attornment as
such party may reasonably request. Tenant shall not seek to enforce any remedy
it may have for any default on the part of Landlord without first giving written
notice by certified mail, return receipt requested, specifying the default in
reasonable detail to any Landlord's Mortgagee whose address has been given to
Tenant, pursuant to the Notice provisions, and affording such Landlord's
Mortgagee a reasonable opportunity to perform Landlord's obligations hereunder,
as provided in Section 20 (a) above.
(c) Notwithstanding any such attornment or subordination of a Mortgage
or Primary Lease to this Lease, the Landlord's Mortgagee shall not be liable for
any acts of any previous landlord, shall not be obligated to install the Initial
Improvements, and shall not be bound by any amendment, dated and effective after
the date Tenant received notice of such Landlord's Mortgagee, to which it did
not consent in writing nor any payment of rent made more than one month in
advance.
(d) Tenant's obligations hereunder are conditional upon all parties
hereto entering into a Subordination, Attornment, and Non-Disturbance Agreement,
substantially in the form attached herewith as Exhibit "C".
9
<PAGE>
22 ENCUMBRANCES. Tenant has no authority, express or implied, to create
------------
or place any lien or encumbrance of any kind or nature whatsoever upon, or in
any manner to bind Landlord's property or the interest of Landlord or Tenant in
the Premises and Truck Park or to charge the rent for any claim in favor of any
person dealing with Tenant, including those who may furnish materials or perform
labor for any construction or repairs. Tenant shall pay or cause to be paid all
sums due for any labor performed or materials furnished in connection with any
work performed on the Premises and Truck Park by or at the request of Tenant. If
Tenant becomes aware, Tenant shall give Landlord immediate written notice of the
placing of any lien or encumbrance against the Premises and Truck Park.
23 MISCELLANEOUS.
-------------
(a) Words of any gender used in this Lease shall include any other
gender, and words in the singular shall include the plural, unless the context
otherwise requires. The captions inserted in this Lease are for convenience
only and in no way affect the interpretation of this Lease. The following terms
shall have the following meanings: "Laws" shall mean all federal, state, and
----
local laws, rules, and regulations; all court orders, governmental directives,
and governmental orders; and all restrictive covenants affecting the Property,
and "Law" shall mean any of the foregoing; "Affiliate" shall mean any person or
--- ---------
entity which, directly or indirectly, controls, is controlled by, or is under
common control with the party in question; and "Tenant Party" shall include
------------
Tenant, any assignees claiming by, through, or under Tenant, any subtenants
claiming by, through, or under Tenant, and any of their respective agents,
contractors, employees, and invitees.
(b) Landlord may transfer and assign, in whole or in part, its rights
and obligations in the Building and property that are the subject to this Lease
and in the case of a transfer of all of Landlord's rights and obligations
Landlord shall have no further liability hereunder.
(c) Whenever a period of time is herein prescribed for action to be
taken by either party, that party shall not be liable or responsible for, and
there shall be excluded from the computation for any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations, or restrictions, or any other causes of any kind
whatsoever which are beyond the control of that party.
(d) Tenant shall, from time to time (but not more often than
annually), within ten days after request of Landlord, deliver to Landlord, or
Landlord's designee, a certificate of occupancy for the Premises and Truck Park,
the most recently produced financial statements customarily prepared for public
companies for itself and, evidence reasonably satisfactory to Landlord that
Tenant has performed its obligations under this Lease (including evidence of the
payment of the Security Deposit), and an estoppel certificate stating that this
Lease is in full effect, the date to which rent has been paid, the unexpired
Term and such other factual matters pertaining to this Lease as may be requested
by Landlord. Tenant's obligation to furnish the above-described items in a
timely fashion is a material inducement for Landlord's execution of this Lease.
If Tenant fails to execute any such estoppel certificate within such ten-day
period, Tenant will have deemed to have agreed to the statements therein.
(e) This Lease constitutes the entire agreement of the Landlord and
Tenant with respect to the subject matter of this Lease, and contains all of the
covenants and agreements of Landlord and Tenant with respect thereto. Landlord
and Tenant each acknowledge that no representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein, and any
prior agreements, promises, negotiations, or representations not expressly set
forth in this Lease are of no effect. This Lease may not be altered, changed or
amended except by an instrument in writing signed by both parties hereto.
(f) All obligations of Tenant hereunder not fully performed by the end
of the Term shall survive, including, without limitation, all payment
obligations with respect to Taxes and insurance and all obligations concerning
the condition and repair of the Premises and Truck Park. Upon the end of the
Term and before Tenant vacates the Premises and Truck Park, Tenant shall pay to
Landlord any amount reasonably estimated by Landlord as necessary to put the
Premises and Truck Park in good condition and repair, reasonable wear and tear
excluded. Tenant shall also, prior to vacating the Premises and Truck Park, pay
to Landlord the pro rated amount, as estimated by Landlord, of Tenant's
obligation hereunder for Operating Expenses for the year in which the Term ends.
All such amounts shall be used and held by Landlord for payment of such
obligations of Tenant hereunder, with Tenant being liable for any additional
costs therefor upon demand by Landlord or with any excess to be returned to
Tenant after all such obligations have been determined and satisfied as the case
may be. Any Security Deposit held by Landlord may be credited against the
amount due by Tenant under this Section 23.(f).
(g) If any provision of this Lease is illegal, invalid or
unenforceable, then the remainder of this Lease shall not be affected thereby,
and in lieu of each such provision, there shall be added, as reasonably and
mutually determined by Landlord and Tenant, as a part of this Lease, a provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.
(h) All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on which
all parties hereto have executed this Lease.
(i) Landlord and Tenant each warrant to the other that it has not
dealt with any broker or agent in connection with this Lease. Tenant and
Landlord shall each indemnify the other against all costs, attorneys' fees, and
other liabilities for commissions or other compensation claimed by any broker or
agent claiming the same by, through, or under the indemnifying party.
10
<PAGE>
(j) If and when included within the term "Tenant," as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying an individual at a specific address within the continental United
States for the receipt of notices and payments to Tenant. All parties included
within the terms "Landlord" and "Tenant," respectively, shall be bound by
notices given in accordance with the provisions of Section 24 to the same effect
as if each had received such notice.
(k) The terms and conditions of this Lease are confidential and either
party shall not disclose the terms of this Lease to any third party except as
may be required by law, lender or purchaser requirements, or to enforce its
rights hereunder.
(l) Tenant shall pay interest on all past-due rent from the date due
until paid at the maximum lawful rate. In no event, however, shall the charges
permitted under this Section 23.(l) or elsewhere in this Lease, to the extent
they are considered to be interest under applicable Law, exceed the maximum
lawful rate of interest.
(m) All addenda, exhibits, memoranda and schedules attached hereto and
referred to herein are incorporated herein by reference. Any addendum, exhibit,
memorandum or schedule to this Lease not attached hereto at the time of
signature, may be attached at a later time, however any such addendum, exhibit,
memorandum or schedule must be agreed to in form and content and in writing by
Landlord and Tenant prior to attachment.
(n) Attorneys' Fees. In the event of the filing of any legal action
---------------
or proceeding brought by either party against the other arising out of this
Lease, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs incurred in such action (including, without limitation, all costs
of appeal) and such amount shall be included in any judgment rendered in such
proceeding.
24 NOTICES. Each provision of this instrument or of any applicable Laws
-------
and other requirements with reference to the sending, mailing or delivering of
notice or the making of any payment hereunder shall be deemed to be complied
with when and if the following steps are taken:
(a) All rent shall be payable to Landlord at the address for Landlord
set forth below or at such other address as Landlord may specify from time to
time by written notice delivered in accordance herewith. Tenant's obligation to
pay rent shall not be deemed satisfied until such rent has been actually
received by Landlord, provided Tenant has received written notice of Landlord's
then present location.
(b) All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address set forth below, or at such other
address within the continental United States as Tenant may specify from time to
time by written notice delivered in accordance herewith. Landlord's obligation
to pay Tenant any amount owing hereunder shall not be deemed satisfied until
such payment is actually received by Tenant.
(c) Any written notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered upon the earlier to occur of
(1) tender of delivery (in the case of a hand-delivered notice), (2) deposit in
the United States Mail, postage prepaid, Certified Mail, or (3) receipt by
facsimile transmission, in each case, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith. If
Landlord has attempted to deliver notice to Tenant at Tenant's address reflected
on Landlord's books but such notice was returned or acceptance thereof was
refused, then Landlord may deliver such notice to the Tenant's office at the
Premises and Truck Park, which notice shall be deemed delivered to Tenant upon
the posting thereof.
25 HAZARDOUS WASTE. The term "Hazardous Substances," as used in this
--------------- --------------------
Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the removal of which is required or the use of which is
restricted, prohibited or penalized by any "Environmental Law," which term shall
-----------------
mean any Law relating to health, pollution, or protection of the environment.
Tenant hereby agrees that (a) no activity will be conducted on the Premises and
Truck Park that will produce any Hazardous Substances, except for such
activities that are part of the ordinary course of Tenant's business activities
(the "Permitted Activities") provided such Permitted Activities are conducted
--------------------
in accordance with all Environmental Laws and have been approved in advance in
writing by Landlord; (b) the Premises and Truck Park will not be used in any
manner for the storage of any Hazardous Substances except for any temporary
storage of such materials that are used in the ordinary course of Tenant's
business (the "Permitted Materials") provided such Permitted Materials are
-------------------
properly stored in a manner and location satisfying all Environmental Laws and
approved in advance in writing by Landlord; (c) no portion of the Premises and
Truck Park will be used as a landfill or a dump; (d) Tenant will not install any
underground tanks of any type; (e) Tenant will not allow any surface or
subsurface conditions to exist or come into existence that constitute, or with
the passage of time may constitute a public or private nuisance; and (f) Tenant
will not permit any Hazardous Substances to be brought onto the Premises and
Truck Park, except for the Permitted Materials, and if so brought or found
located thereon, the same shall be immediately removed by Tenant, with proper
disposal, and all required cleanup procedures shall be diligently undertaken
pursuant to all Environmental Laws. If at any time during or after the Term, the
Premises and Truck Park are found to be so contaminated or subject to such
conditions, Tenant shall defend, indemnify and hold Landlord harmless from all
claims, demands, actions, liabilities, costs, expenses, damages and obligations
of any nature arising from or as a result of the use of the Premises and Truck
Park by Tenant and Tenant, or a Tenant Party, caused such conditions. Unless
expressly identified on an addendum to this Lease, as of the date hereof there
are no "Permitted Activities" or "Permitted Materials" for purposes of the
foregoing provision and none shall exist unless and until
approved in writing by the Landlord. Landlord may enter the Premises and Truck
Park and conduct environmental inspections and tests therein as it may require
from time to time, provided that Landlord shall use reasonable efforts to
11
<PAGE>
minimize the interference with Tenant's business. Such inspections and tests
shall be conducted at Landlord's expense, unless they reveal the presence of
Hazardous Substances (other than Permitted Materials) or that Tenant has not
complied with the requirements set forth in this Section 25, in which case
Tenant shall reimburse Landlord for the cost thereof within ten days after
Landlord's request therefor.
26. LANDLORD'S LIEN. Landlord agrees to delete Paragraph 26, Landlord's
---------------
Lien, but reserves any statutory lien for rent in Landlord's favor as well as
remedies provided by law and all rights and remedies under the Uniform
Commercial Code of the State in which the Building is located (the "UCC"),
---
provided Landlord timely and fully complies with the UCC and Landlord will only
exercise its remedies when an Event of Default has occurred.
27. SUBMISSION OF LEASE TO TENANT. Submission of this instrument for
-----------------------------
examination or signature by Tenant does not constitute an offer by Landlord nor
a reservation of or an option for lease, and it is not effective as a lease or
otherwise until it has been fully executed and delivered by both Landlord and
Tenant.
TENANT ACKNOWLEDGES THAT (1) IT HAS INSPECTED AND ACCEPTS THE PREMISES IN
AN "AS IS, WHERE IS" CONDITION, (2) THE BUILDINGS AND IMPROVEMENTS COMPRISING
THE SAME ARE SUITABLE FOR THE PURPOSE FOR WHICH THE PREMISES ARE LEASED AND
LANDLORD HAS MADE NO WARRANTY, REPRESENTATION, COVENANT, OR AGREEMENT WITH
RESPECT TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE
PREMISES, (3) THE PREMISES ARE IN GOOD AND SATISFACTORY CONDITION, (4) NO
REPRESENTATIONS AS TO THE REPAIR OF THE PREMISES, NOR PROMISES TO ALTER, REMODEL
OR IMPROVE THE PREMISES HAVE BEEN MADE BY LANDLORD (UNLESS AND EXCEPT AS MAY BE
SET FORTH IN EXHIBIT B ATTACHED TO THIS LEASE, IF ONE SHALL BE ATTACHED, OR AS
---------
IS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE), AND (5) THERE ARE NO
REPRESENTATIONS OR WARRANTIES, EXPRESSED, IMPLIED OR STATUTORY, THAT EXTEND
BEYOND THE DESCRIPTION OF THE PREMISES.
<TABLE>
<CAPTION>
<S> <C>
Executed by Tenant on December 15, 1999.
TENANT:
HomeGrocer.com, Inc., a Delaware corporation
--------------------------------------------
By: /s/ Corwin J. Karaffa
--------------------------------------------
Name: Corwin J. Karaffa
---------------------------------------
Title: V.P. Operations
--------------------------------------
Address: Attn: Legal Department
10230 NE Points Drive
Kirkland, WA 98033
Telephone: 425-201-7500
Fax: 425-201-7575
------------
And a copy to: HomeGrocer.com
Attn: Operations Department
10230 NE Points Drive
Kirkland, WA 98033
Telephone: 425-201-7500
Fax: 425-201-7875
Executed by Landlord on December 17, 1999.
LANDLORD:
CB Luna Industrial No. 3, Ltd., a Texas limited partnership
-----------------------------------------------------------
By: 1BCO, Inc., sole general partner
By: /s/ Mack W. Dennis
-------------------------------------------------
Name: Mr. Mack W. Dennis
-----------------------------------------------
Title: Senior Vice President
-----------------------------------------------
Address: Billingsley Property Services, Inc.
-------------------------------------
2200 Ross Avenue, Suite 4800 West
-------------------------------------
Dallas, TX 75201
----------------
Telephone: 214/754-1715
----------------
Fax: 214/754-1754
----------------
</TABLE>
12
<PAGE>
Additional Provisions
28. EARLY OCCUPANCY. Landlord shall cooperate with Tenant in providing Tenant
----------------
access to the Premises no later than two (2) business days following the
Effective Date (the "Occupancy Date") for the purpose of allowing Tenant to
--------------
install Initial Improvements, trade fixtures, refrigeration, conveyor and
racking systems. However, Tenant's access to the Premises shall not impede
Landlord's ability to complete any improvements required of Landlord
hereunder. In the event Landlord's ability to complete Landlord's
improvement obligations are impeded, Landlord has the right, but not the
obligation, to deny Tenant further access to the Premises until Landlord's
improvements are completed. In the event Tenant begins utilizing the
Premises and/or Truck Park for the purposes of operating its business from
the Premises and/or Truck Park, the Tenant shall begin paying its
proportionate share of the operating expenses as outlined in
paragraph 2 (c).
29. OPTION TO RENEW.
----------------
(a) Provided that an Event of Default has not occurred, and Tenant's
right to possession of the Premises is not terminated and Tenant has not
assigned any of its interest in this Lease or Sublet more than fifty
percent (50%) of the Premises for the remaining Term of the Lease (other
than Permitted Transfers), then Tenant shall have the right and option to
extend the original term of this Lease for two (2) further terms of sixty
---
(60) months. Such extension of the original term shall be on the same
terms, covenants and conditions as provided for in the original term except
for this Paragraph and except that the Base Rent during the extended term
shall be at the fair market base rent then in effect on equivalent
properties, of equivalent size, in equivalent areas, with the length of the
extended term, applicable base years (expenses stops) for purposes of
determining additional rent, the value of rent concessions, build-out
allowances and the credit standing of tenant to be taken into account, (the
"Fair Market Base Rent"). Tenant shall deliver written notice to Landlord
---------------------
of Tenant's intent to exercise the Renewal Option granted herein (each, a
"Renewal Request Notice") no later than twelve (12) months prior to the
----------------------
expiration of the original term of this Lease. Tenant shall have no further
renewal options unless expressly granted by Landlord in writing.
(b) In the event Tenant fails to deliver the Renewal Request Notice
within the time period set forth above, time being of the essence with
respect to Tenant's exercise thereof, Tenant's right to extend the term
hereof shall automatically terminate, be null and void, and be of no
further force and effect.
(c) Promptly after delivery to Landlord of Tenant's Renewal Request
Notice, Landlord and Tenant shall endeavor to agree upon the Fair Market
Base Rent applicable to the Renewal Term. If Landlord and Tenant mutually
agree in writing upon the Fair Market Base Rent within thirty (30) days
after written exercise by Tenant of this renewal option, Landlord shall
lease the Premises to Tenant during the Renewal Term in their then-current,
as-is condition, and Landlord shall not provide to Tenant any allowances
(e.g. Moving Allowance, Construction Allowance, and the like) or other
tenant inducements. If Landlord and Tenant do not agree upon the Fair
Market Base Rent applicable to the Renewal Term within thirty (30) days
after Landlord's receipt of the Renewal Request Notice, then Landlord shall
deliver written notice to Tenant with thirty (30) days thereafter (the
"Rent Notice") of Landlord's Determination of the Fair Market Base Rent
-----------
applicable to the Renewal Term ("Landlord's Determination"), which
------------------------
determination shall be binding on Landlord in the event such Fair Market
Base Rent is determined by appraisal pursuant to Subsection (d) herein.
Tenant shall deliver written notice to Landlord ("Tenant's Notice"), within
---------------
thirty (30) days after Tenant's receipt of the Rent Notice, whether Tenant
accepts or disputes Landlord's Determination, and if Tenant disputes
Landlord's Determination, Tenant's Notice shall set forth Tenant's
determination of the renewal term Fair Market Base Rent in question
("Tenant's Determination"), which determination shall be binding on Tenant
------------------------
in the event such renewal term Fair Market Base Rent is determined by
appraisal pursuant to Subsection (d) herein. Landlord's Determination and
Tenant's Determination are each hereinafter referred to as a
("Determination") and are collectively hereinafter referred to as the
--------------
("Determinations"). If Tenant fails to give Tenant's Notice within such
----------------
thirty (30) day period, then Tenant shall be deemed to have accepted
Landlord's Determination.
If Tenant timely disputes Landlord's Determination, then the renewal term
Fair Market Base Rent in question shall be established by Appraisal in
accordance with the procedures set forth in Subsection (d) herein. If, for
any reason, the Fair Market Base Rent applicable to the Renewal Term is not
finally determined on or prior to the commencement of such renewal term,
then (i) pending such final determination, Tenant shall be entitled to
continue its occupancy of the Premises and shall pay initially base rent
for the Renewal Term at the Base Rent Rate in effect during the last month
of the original term as specified in Paragraph 2.a., (ii) upon such final
determination, the Base Rent for the Renewal Term shall be as provided
above, and (iii) in the event that such final determination results in a
Base Rent rate different higher than the rate paid by Tenant during such
Renewal Term, a retroactive adjustment in Base Rent shall be made and
Tenant shall pay Landlord the appropriate payment within ten (ten) days of
Landlord's demand.
To the extent that the appraisers determine Fair Market Base Rent for any
Renewal Term by reference to other transactions, they shall consider the
terms and conditions of such other transactions and if such other
transactions have different terms and conditions (e.g., shorter or longer
term, free rent, different escalation formulae or renewal options), the
Fair Market Base Rent at issue shall be determined by the appraisers by
making appropriate adjustment to the base rent of such other transactions.
A-1
<PAGE>
(d) In the event that renewal term Fair Market Base Rent is to be
determined by appraisal, said appraisal shall be conducted in accordance
with the following procedures:
(1) Within twenty (20) days after Landlord delivers written notice to
appraise to Tenant, Landlord and Tenant shall each select a Real
Estate Appraiser, who shall be a member of the American Institute
of Real Estate Appraisers, and who shall have at least five (5)
years appraisal experience with respect to commercial and
industrial rental properties in Dallas, Texas. If one of the
parties hereto fails to appoint an appraiser within the time
period prescribed, then the single appraiser appointed shall be
the sole appraiser and shall determine the Fair Market Base Rent
at issue. If two appraisers are appointed, they shall have
thirty (30) days from the date the second appraiser is appointed
(the "30-Day Appraisal Period") within which to agree upon the
-----------------------
Fair Market Base Rent at issue. The appraiser(s) shall be
advised that the determination of the Fair Market Base Rent at
issue shall be governed by the definitions of same set forth in
this Lease and the requirement that each appraiser select the
determination (as between Landlord's Determination and Tenant's
Determination), which, in his/her opinion, more accurately
reflects the Fair Market Base Rent. The Determination selected
by the two appraisers as the Fair Market Base Rent at issue shall
be binding on Landlord and Tenant.
(2) If the two appraisers appointed by the parties hereto do not
concur in such selection as aforesaid within the 30-day Appraisal
Period, then said appraisers shall, within ten (10) days after
the expiration of the 30-day Appraisal Period, select a third
appraiser (the "Third Appraiser"). The Third Appraiser must meet
---------------
the qualifications set forth in subparagraph (1) above, and shall
be a person who has not previously acted in any capacity for
either Landlord or Tenant.
(3) The Third Appraiser shall subscribe and swear to an oath to
fairly and impartially choose the Determination which more
accurately reflects the Fair Market Base Rent, in accordance
herewith. The Third Appraiser shall conduct such hearings as he
deems appropriate (or such hearings as either Landlord or Tenant
shall reasonably request). Within fifteen (15) days after the
Third Appraiser has been appointed, the Third Appraiser shall
select the Determination (as between Landlord's Determination and
Tenant's Determination) which, in his/her opinion, more
accurately reflects the Fair Market Base Rent, and shall notify
Landlord, Tenant and each of the initial Appraisers of such
selection in writing. With respect to Tenant's Renewal Option as
provided in this paragraph, the Fair Market Base Rent set forth
in the final determination selected by the Third Appraiser shall
be the Final Determination of such amounts, which determination
shall be conclusive and binding upon both Landlord and Tenant.
Except as otherwise provided in the Lease, each party hereto shall pay the
fees and expenses of the appraiser selected by such party, and the fees and
expenses of the Third Appraiser shall be borne equally by Landlord and
Tenant.
30. ADDITIONAL ALLOWANCE. Landlord agrees to provide Tenant with an additional
--------------------
allowance of $121,170.26 to be paid to Tenant upon the Commencement Date of
the Lease. Provided that no Event of Default has occurred under this Lease
and Tenant does not exercise its right to terminate set forth in Section 36
below, Landlord agrees to provide Tenant with an additional allowance of
$66,910.73 to be paid to Tenant on the first day of the sixty-first (61)
month of the Lease. Tenant warrants that Landlord shall not be obligated to
pay commissions to any broker or consultant acting on behalf of Tenant for
this Lease, including any renewal terms or expansions related in any way to
this Lease. Tenant shall indemnify Landlord against all costs, attorneys'
fees, and other liabilities for commissions or other compensation claimed
by any broker or agent claiming the same by, through, or under the Tenant.
Landlord shall be responsible for payment of any listing broker's
commission pursuant to a separate agreement.
31. ROOF INSTALLATIONS. Subject to all requirements within Section 6 in the
------------------
Lease, to any applicable governmental ordinances, permits, fees or other
applicable requirements or limitations and subject to any interference
provisions of other leases in the Building, Tenant may utilize a portion of
the roof of the Building immediately over the Premises for the placement of
telecommunications, additional air conditioning and/or similar equipment
(the "Roof Improvements") for use in connection with Tenant's business and
-----------------
use of the Premises and Truck Park such Roof Improvements to be in addition
to the Building Structure modifications detailed in Exhibit B to the Lease.
Prior to the installation Tenant shall submit for Landlord's reasonable
approval detailed plans and specifications for any Roof Improvements.
Landlord shall have the right to reasonably control and/or limit the size
(not to exceed 200 sq.ft. of roof area), location, color, design and
screening (all equipment shall be screened; no equipment shall be higher
than the screen) of the Roof Improvements, the contractor selected by
Tenant to manufacture and install the Roof Improvements, and the method of
installation. Subject to such control by Landlord, Tenant shall be
responsible for all aspects of the Roof Improvements including not by
limitation the cost, design, fabrication, permitting, installation (subject
to Landlord's supervision), operation, maintenance, repair, replacement and
removal thereof, running electrical or other wiring, and providing
electricity to the Roof Improvements.
Tenant shall keep all Roof Improvements operational and in good condition
and repair. Tenant shall, at its expense, remove all Roof Improvements
prior to expiration of the Term (as may be extended) and shall make all
necessary
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<PAGE>
repairs to the Building upon such removal. Landlord may require such
removal and repair upon thirty (30) days notice to Tenant in the event of
an Event of Default which is not cured within said thirty day period. If
Tenant fails to remove any Roof Improvements and make all necessary repairs
as required herein, Landlord may do so at Tenant's expense. In such event,
Landlord shall not be liable for any damage to any Roof Improvements, and
may retain, sell, or otherwise dispose of such items without obligation or
liability to Tenant.
Tenant shall indemnify and hold Landlord harmless from and against all
claims, costs, and liabilities of whatever kind or nature relating to the
installation, existence, operation, maintenance, repair, replacement and
removal of any Roof Improvements.
32. PARKING. Landlord grants to Tenant 134 employee parking spaces in the
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surface parking area and 90 truck spaces, exclusive of any building loading
areas, as shown on Exhibit AA-1", attached hereto and incorporated herein
by reference.
33. LOADING AREA. Landlord agrees to relocate the existing fire lane, subject
------------
to city approval, to the southern edge of the property line.
34. ELECTRICAL SERVICE. Tenant, at Tenant's sole cost and expense, shall have
------------------
the right to equip the building with 3000 amp, 480 volt, 3 phase electrical
service to the Premises and Truck Park. Tenant, at Tenant's sole cost and
expense, shall have the ability to equip each truck parking space with
208V, 3 phase, 60 Hz @ 30 amp power connection for refrigeration equipment.
35. LOADING DOCKS. Landlord shall provide a minimum of twenty-two (22)
-------------
shipping doors and Tenant shall have the ability to install levelers to the
shipping doors.
36. RIGHT TO TERMINATE. Tenant may, at its option, terminate this Lease in its
------------------
entirety effective as of the last day of the first sixty (60) months of the
Lease Term by delivering written notice of Tenant's intent to terminate to
Landlord no later than one hundred and eighty (180) days prior to the end
of the first sixty (60) months of the Lease Term ("Termination Option").
------------------
Such written notice shall be accompanied by a payment in the amount of
$630,000("Termination Fee"). If Tenant fails to timely deliver its notice
---------------
and if such notice is not accompanied by the Termination Fee, Tenant will
be deemed to have waived such Termination Option and the Lease shall remain
in full force and effect. If there are any uncured defaults by Tenant as of
the date Tenant delivers the written notice and Termination Fee, the
Termination Option shall be void, and the Lease shall remain in full force
and effect. In the event Tenant property exercises its Termination Option
this Lease shall terminate on the last day of the first sixty (60) months
of the lease.
37. LETTER OF CREDIT.
----------------
A. Upon execution of the Lease Agreement by Landlord and Tenant,
Tenant shall deliver to Landlord and executed original irrevocable standby
letter of credit (AL.C.) in the amounts shown below in favor of Landlord,
-----
such L.C. to have a term based on the number of months shown below
beginning with the Effective Date of the Lease.
<TABLE>
<CAPTION>
Amount Months
------ ------
<S> <C>
$655,488 1-12
$524,390 13-24
$393,293 25-36
$262,195 37-48
</TABLE> $131,098 49-60
Landlord may drawn upon all or part of the L.C., where an Event of Default
has occurred, and such default remains uncured by Tenant beyond any
applicable cure period, to pay past due rent or other payments due Landlord
under this Lease, and the cost of any other damage, injury, expense or
liability caused by such event of default without prejudice to any other
remedy provided herein or provided by law. Such L.C. shall be issued in a
form and by a National Banking Association (located with the continental
United States of America) (hereinafter the "Issuer"), acceptable to
------
Landlord. With respect to any default occurring during the term of the
Lease, Landlord shall have the right to proceed against the total L.C. at
the sole discretion of Landlord regarding the items and the amounts to be
drawn upon relating to any default by Tenant.
B. Such L.C. shall contain the following terms and conditions:
1. The L.C. shall be deemed to be automatically extended without
amendment from year to year, with renewal occurring annually,
from the date of its issuance or any future expiration date
unless at least 30 days prior to any future expiration date the
bank notifies Landlord, in writing, by certified mail, return
receipt requested, that the issuer intends not to renew the L.C.
for an additional year.
2. In the event the L.C. will not be extended and has or will expire
by its terms and the Lease, by and between Tenant and Landlord,
including any or all extensions or renewals, has not expired,
then Landlord shall be allowed to draft upon Issuer for the full
amount of the L.C.
A-3
<PAGE>
3. The L.C. shall be subject to the Uniform Customs and Practices
for Documentary Credits (1983 Revision), International Chamber of
Commerce Publication No. 400".
4. The amount of the L.C. shall be payable at sight to Landlord
within three (3) days of the presentation of the sight draft, in
whole or partial drawings, upon presentation to the Issuer of the
following documents:
a. Landlord's written demand for payment making reference to
the date and number of the L.C.;
b. Landlord's signed certificate that the amount drawn is to
meet any Event of Default, where such default remains
uncured beyond any applicable cure period, as set for in the
Lease by and between Tenant and Landlord; and
c. The original L.C. for endorsement of the amount paid and if
the draft is for the full amount of the L.C. is to be
surrendered to the Issuer.
5. The Issuer shall not have the right to assign the L.C. to any
other person, entity, National Banking Association, or financial
institution without Landlord's prior consent which shall not be
unreasonably withheld.
6. Any presentment by Landlord of the L.C. for the payment shall be
made at a National Banking Association located within the
continental United States of America.
7. The Issuer shall not modify the L.C. without the prior written
consent of the Landlord.
8. Landlord shall have the right to assign and transfer its rights
and interests in the L.C. to any other beneficiary/party
acceptable to Landlord and Landlord will notify Tenant in doing
so.
38. OWNERSHIP AND REMOVAL OF FIXTURES, TRADE FIXTURES, FURNITURE AND PERSONAL
-------------------------------------------------------------------------
PROPERTY.
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(i) Tenant retains ownership of, and, so long as monetary default does not
exist, may remove at any time during the term of this Lease (provided
such removal does not result in a final vacation of the Property),
and, subject to any specific agreement between the Landlord and Tenant
to the contrary concerning any particular item, shall remove by the
Vacation Date, all fixtures, trade fixtures, furniture, and personal
property placed in the Premises and Truck Park by Tenant, irrespective
of the extent of the attachment of such fixtures, trade fixtures,
furniture, and personal property to the Premises and Truck Park.
Nothing herein shall be deemed to alter or reduce Tenant's restoration
obligations as set forth in Section 16 of this Lease;
(ii) All items not so removed by the Vacation Date or at such time as
Tenant's right to possession of the Premises or Truck Park is
terminated, shall, at the option of Landlord, be deemed abandoned by
Tenant and may be appropriated, sold, stored, destroyed, or otherwise
disposed of by Landlord without notice to Tenant and without any
obligation to account for such items and Tenant shall pay for the
costs incurred by Landlord in connection therewith. Any such
disposition shall not be considered a strict foreclosure or other
exercise of Landlord's rights in respect of the security interest
granted under Section 26.
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