FOOTER B HAS BEEN ENTERED (DRAFT)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended January 31, 1997
---------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------------- to ------------------
Commission file number 1-6357
----------------------------------------------
ESTERLINE TECHNOLOGIES CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2595091
---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10800 NE 8th Street, Bellevue, Washington 98004
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 206/453-9400
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
As of March 13, 1997, 8,530,034 shares of the issuer's common
stock were outstanding.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of January 31, 1997 and October 31, 1996
(In thousands, except share amounts)
January 31, October 31,
1997 1996
------------ -----------
ASSETS (unaudited)
------
Current Assets
Cash and equivalents $ 47,706 $ 46,436
Accounts receivable, net of
allowances of $4,260 and
$4,084 for doubtful accounts 58,442 69,120
Inventories
Raw materials and purchased
parts 17,359 15,880
Work in process 22,998 23,195
Finished goods 8,374 6,324
-------- --------
48,731 45,399
-------- --------
Deferred income taxes 14,851 15,321
Prepaid expenses 2,404 2,504
-------- --------
Total Current Assets 172,134 178,780
-------- --------
Property, Plant and Equipment 168,166 160,303
Accumulated depreciation 114,263 106,813
-------- --------
53,903 53,490
-------- --------
Intangibles, net and Other Assets 41,149 44,376
-------- ---------
$267,186 $ 276,646
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 21,379 $ 20,836
Accrued liabilities 57,804 68,492
Credit facilities 6,433 5,242
Current maturities of long-term debt 6,040 6,660
Federal and foreign income taxes 1,534 4,105
-------- ---------
Total Current Liabilities 93,190 105,335
-------- ---------
Long-Term Debt 29,310 29,007
Shareholders' Equity
Common stock, par value $.20 per
share, authorized 30,000,000
shares, issued and outstanding
8,521,626 and 8,501,668 shares 1,704 1,700
Capital in excess of par value 48,393 48,417
Retained earnings 97,445 93,686
Cumulative translation adjustment (2,856) (1,499)
-------- ---------
Total Shareholders' Equity 144,686 142,304
-------- ---------
$267,186 $ 276,646
======== =========
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended January 31, 1997 and 1996
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
January 31,
------------------
1997 1996
---- ----
Net Sales $82,198 $83,997
Costs and Expenses
Cost of sales 50,109 50,695
Selling, general and administrative 26,191 27,032
Interest income (636) (263)
Interest expense 957 1,185
------ ------
Earnings Before Income Taxes 5,577 5,348
Income Tax Expense 1,818 1,999
------- -------
Net Earnings $ 3,759 $ 3,349
======= =======
Net Earnings Per Share $ .43 $ .48
======= =======
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended January 31, 1997 and 1996
(Unaudited)
(In thousands)
Three Months Ended
January 31,
------------------
1997 1996
------- --------
Cash Flows Provided (Used) by Operating
Activities
Net earnings $ 3,759 $ 3,349
Depreciation and amortization 4,126 3,711
Deferred income taxes 1,020 ---
Working capital changes
Accounts receivable 9,497 7,164
Inventories (4,047) (3,587)
Prepaid expenses 59 (555)
Accounts payable 1,128 (1,555)
Accrued liabilities (10,318) (3,245)
Federal and foreign income taxes (2,567) 1,511
Other, net 791 330
------- -------
3,448 7,123
------- -------
Cash Flows Provided (Used) by Investing
Activities
Capital expenditures (3,361) (4,391)
Capital dispositions 605 295
------- -------
(2,756) (4,096)
------- -------
Cash Flows Provided (Used) by Financing
Activities
Net change in credit facilities 1,549 1,185
Repayment of long-term debt (227) (842)
------- -------
1,322 343
------- -------
Effect of Exchange Rates (744) (718)
------- -------
Net Increase in Cash and Equivalents 1,270 2,652
Cash and Equivalents - Beginning of Period 46,436 22,097
------- -------
Cash and Equivalents - End of Period $47,706 $24,749
======= =======
Supplemental Cash Flow Information
Cash paid during the period for
Interest expense $ 1,651 $ 2,045
Income taxes 2,887 354
ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended January 31, 1997 and 1996
1. The consolidated balance sheet as of January 31, 1997
and the consolidated statements of operations and cash
flows for the three months ended January 31, 1997 and 1996
are unaudited, but in the opinion of management all
adjustments necessary to present fairly the financial
statements referred to above have been made. The results of
operations and cash flows for the interim periods presented
are not necessarily indicative of results for the full year.
2. The notes to the consolidated financial statements
in the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1996 provide a summary of significant
accounting policies and additional financial information
that should be read in conjunction with this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
------ OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------
Certain statements in this Form 10-Q contain forward-looking
statements within the meanings of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. Such statements involve
risks and uncertainties regarding matters that could
significantly affect expected results including information
about industry trends, growth, orders, capital expenditures
and backlog. Thus, actual results may vary materially from
these forward-looking statements depending on a variety of
factors which include but are not limited to changes in the
telecommunications, computer, aerospace and defense markets;
reductions, terminations or changes in U.S. Government defense
budget priorities; variability of capital equipment markets
and other risks which are detailed in other Company documents
filed with the Securities and Exchange Commission. The
Company does not undertake any obligation to publicly release
the results of any revisions that may be made to these
forward-looking statements to reflect any future events or
circumstances.
RESULTS OF OPERATIONS
Three Months Ended January 31, 1997 Compared to Three Months
Ended January 31, 1996
Net sales for the first three months of 1997 were $82.2 million
compared with $84 million in the same period in 1996.
Aerospace/Defense Group sales were up $8 million, or 38%, over
the same period in 1996. The increase in sales is attributed
to the improving aerospace markets along with sales associated
with the newly acquired Mason Electric Co. Instrumentation
Group sales also were up slightly over the same period in
1996. These two Groups combined to essentially offset the
decline in Automation Group sales of $10.3 million, or 25%,
when compared with the same period in 1996. The Automation
Group's sales for the first three months of 1996 were strong
with Excellon largely contributing to the performance. During
the latter part of 1996, however, Excellon experienced a
downturn in sales due to uncertainty among automated
manufacturing equipment users which delayed capital purchase
decisions. Although Excellon's sales for the first three
month of 1997 remained dampened, a significant rebound in new
orders since last spring's decline suggests improving market
conditions.
Net sales for the three months ended January 31, by Group,
were as follows:
(In thousands)
1997 1996
------- -------
Automation $30,936 $41,254
Aerospace and Defense 28,793 20,836
Instrumentation 22,469 21,907
------- -------
Total Sales $82,198 $83,997
======= =======
Total gross margin as a percent of sales declined by 1%, to
39%, in comparison with the same period in 1996. Group gross
margins ranged from 36% to 41% in the first three months of
1997 compared with 38% to 41% during the same period in 1996.
Selling, general and administrative expenses for the first
three months of 1997 totaled $26.2 million and were $841,000,
or 3%, lower than in the first three months of 1996.
The effective income tax rate for the first three months of
1997 decreased to 33% from 37% during the same period in 1996
as the result of management's decision to invest cash in tax-
exempt securities.
Orders for the first three months of 1997 were $85.2 million,
compared with $77.6 million in the same period in 1996.
Companywide backlog at January 31, 1997 was $130.2 million,
compared with $96.8 million at January 31, 1996. The increase
in backlog is primarily associated with the Aerospace/Defense
Group's improving aerospace markets and the Mason acquisition.
Approximately $29.2 million in backlog is scheduled to ship
after fiscal 1997. All orders in backlog are subject to
cancellation until delivery.
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents on hand at January 31, 1997 totaled
$47.7 million, an increase of $1.3 million from October 31, 1996.
Current assets decreased $6.6 million in the first three
months of 1997. This decrease was primarily due to a
$10.7 million decrease in accounts receivable offset by an
increase in cash and equivalents and inventory of $4.6 million.
Current liabilities decreased $12.1 million primarily due to
declines in accrued liabilities and income taxes payable of
$10.7 million and $2.6 million, respectively. Net working
capital increased $5.5 million from $73.4 million at
October 31, 1996 to $78.9 million at January 31, 1997.
Capital expenditures, consisting of buildings, machinery,
equipment and computers, are anticipated to be approximately
$27 million during fiscal 1997, compared with $17.2 million in
fiscal 1996. The planned increase in capital expenditures for
fiscal 1997 primarily relates to the need for new, expanded
manufacturing facilities. The construction of two new
Aerospace/Defense Group manufacturing facilities is scheduled
to begin in March and August 1997, respectively. Capital
expenditures for the three months ended January 31, 1997
totaled $3.4 million and were concentrated in the
Aerospace/Defense and Instrumentation Groups for building
improvements, computers, machinery and equipment.
Total debt at January 31, 1997 was $41.8 million, a slight
increase over the $40.9 million at October 31, 1996. Of the
total debt outstanding at January 31, 1997, $34.3 million was
outstanding under the Company's 8.75% Senior Notes, and
$7.5 million was outstanding under various foreign currency debt
agreements. The annual principal repayment of $5.7 million on
the 8.75% Senior Notes is scheduled to be made on July 30, 1997.
This repayment schedule will continue annually until maturity
on July 30, 2002.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
------ -----------------
In October 1995, the Company identified irregularities in the
allocation of certain labor charges at its Armtec Defense
Products subsidiary and is participating in the Department of
Defense Voluntary Disclosure Program. Management believes
that the eventual outcome of this issue will not have a
material adverse effect on the financial position or future
operating results of the Company.
In addition, the Company has various lawsuits and claims, both
offensive and defense, and contingent liabilities arising from
the conduct of business, including those associated with
Government contracting activities, none of which, in the
opinion of management, is expected to have a material effect
on the Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------ ---------------------------------------------------
At the Company's annual meeting of shareholders held on
March 5, 1997, shareholders approved the following proposals:
(a) The election of the following directors for three-
year terms expiring at the 2000 annual meeting:
Votes Cast
--------------------
Name For Withheld
---- --------- --------
Gilbert W. Anderson 6,886,910 29,864
Wendell P. Hurlbut 6,888,085 28,689
Malcolm T. Stamper 6,885,210 31,564
Current directors whose terms will continue after
the 1997 annual meeting are John F. Clearman, Edwin
I. Colodny, E. John Finn, Robert F. Goldhammer,
Jerome J. Meyer and Paul G. Schloemer.
(b) The approval of the Company's 1997 Stock Option
Plan. (6,328,159 votes for, 517,384 votes against
and 71,231 votes abstained).
(c) The selection of Deloitte & Touche LLP as
independent auditors for the fiscal year ending
October 31, 1997. (6,896,560 votes for, 5,867 votes
against and 14,347 votes abstained).
There were no broker non-votes on any of the above proposals.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- --------------------------------
(a) Exhibits.
Exhibit
Number Exhibit
------- --------
3.1 Composite Restated Certificate of Incorporation of
the Company as amended by Certificate of Amendment
dated March 14, 1990. (Incorporated by reference to
Exhibit 19 to the Company's Quarterly Report on Form
10-Q for the quarter ended July 31, 1990.)
3.2 By-laws of the Company, as amended and restated
December 15, 1988. (Incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1988.)
4.2 Form of Rights Agreement, dated as of December 9,
1992, between the Company and Chemical Bank, which
includes as Exhibit A thereto the form of
Certificate of Designation, Preferences and Rights
of Series A Serial Preferred Stock and as Exhibit B
thereto the form of Rights Certificate (Incorporated
by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A filed
December 17, 1992.)
10.1 Amendment of Lease and Agreement, dated
March 11, 1959, between the City of Torrance,
California, and Longren Aircraft Company, Inc., as
original lessee; Lease, dated July 1, 1959, between
the City of Torrance and Aeronca Manufacturing
Corporation, as original lessee; and Assignment of
Ground Lease, dated September 26, 1985, from Robert
G. Harris, as successor lessee under the foregoing
leases, to Excellon Industries, Inc., relating to
principal manufacturing facility of Excellon at 24751
Crenshaw Boulevard, Torrance, California. (Incorporated
by reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 31, 1986.)
10.4 Industrial Lease dated July 17, 1984 between
901 Dexter Associates and Korry Electronics Co.,
First Amendment to Lease dated May 10, 1985, Second
Amendment to Lease dated June 20, 1986, Third
Amendment to Lease dated September 1, 1987, and
Notification of Option Exercise dated January 7, 1991,
relating to the manufacturing facility of Korry
Electronics at 901 Dexter Avenue N., Seattle,
Washington. (Incorporated by reference to Exhibit
10.4 to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991.)
10.4a Fourth Amendment dated July 27, 1994 to
Industrial Lease dated July 17, 1984 between Houg
Family Partnership, as successor to 901 Dexter
Associates, and Korry Electronics Co. (Incorporated
by reference to Exhibit 10.4a to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1994.)
10.5 Industrial Lease dated July 17, 1984 between
801 Dexter Associates and Korry Electronics Co.,
First Amendment to Lease dated May 10, 1985, Second
Amendment to Lease dated June 20, 1986, Third
Amendment to Lease dated September 1, 1987, and
Notification of Option Exercise dated
January 7, 1991, relating to the manufacturing
facility of Korry Electronics at 801 Dexter Avenue N.,
Seattle Washington. (Incorporated by reference to
Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1991.)
10.5a Fourth Amendment dated March 28, 1994 to
Industrial Lease dated July 17, 1984 between Michael
Maloney and the Bancroft & Maloney general
partnership, as successor to 801 Dexter Associates,
and Korry Electronics Co. (Incorporated by reference
to Exhibit 10.5a to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1994.)
10.9 Note Agreement, dated as of July 15, 1992, among
Esterline Technologies Corporation, certain of its
subsidiaries, The Northwestern Mutual Life Insurance
Company and New England Mutual Life Insurance
Company relating to 8.75% Senior Notes due
July 30, 2002 of Esterline Technologies Corporation
and certain of its subsidiaries. (Incorporated by
reference to Exhibit 10.9 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
July 31, 1992.)
10.9a Amendment to Note Agreement, executed as
of October 31, 1993, to that certain Note Agreement,
dated and effective as of July 15, 1992 , among
Esterline Technologies Corporation, certain of its
subsidiaries, The Northwestern Mutual Life Insurance
Company and New England Mutual Life Insurance
Company relating to 8.75% Senior Notes due
July 30, 2002 of Esterline Technologies Corporation
and certain of its subsidiaries. (Incorporated by
reference to Exhibit 10.9a to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 31, 1993.)
10.10 Compensation of Directors. (Incorporated
by reference to first paragraph under "Other
Information as to Directors" in the definitive form
of the Company's Proxy Statement, relating to its
1997 Annual Meeting of Shareholders held on
March 5, 1997, filed with the Securities and
Exchange Commission and the New York Stock Exchange
on January 17, 1997.)
10.21 Credit Agreement executed and effective as
of October 31, 1996 among Esterline Technologies
Corporation and certain of its subsidiaries, various
financial institutions and Bank of America, National
Trust and Savings Association, as Agent.
(Incorporated by reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1996.)
10.22 Real Property Lease and Sublease, dated June 28, 1996,
between 810 Dexter L.L.C. and Korry Electronics Co.
(Incorporated by reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1996.)
10.23 Single Tenant Industrial Lease, dated
April 1, 1994, between G&G 8th Street Partners,
Ltd., James and Loralee Cassidy and Mason Electric
Company.
10.23a Single Tenant Industrial Sublease, dated
August 1, 1996, between Mason Electric Company, Inc.
and ME Acquisition Co.
10.23b Amendment of Lease, Estoppel, and Consent
to Sublease, dated August 6, 1996, between G&G 8th
Street Partners, Ltd., Mason Electric Company, Inc.
and ME Acquisition Co.
11. Schedule setting forth computation of earnings per
common share for the three months ended
January 31, 1997 and 1996.
Management Contracts or Compensatory
Plans or Arrangements
------------------------------------
10.13 Amended and Restated 1987 Stock Option
Plan. (Incorporated by reference to Exhibit 10.13
to the Company's Quarterly Report on Form 10-Q for
the quarter ended January 31, 1992.)
10.15 Esterline Corporation Supplemental Retirement
Income Plan for Key Executives. (Incorporated by
reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 31, 1989.)
10.16c Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1993 through 1996.
(Incorporated by reference to Exhibit 10.16c to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1993.)
10.16d Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1994 through 1997.
(Incorporated by reference to Exhibit 10.16d to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1994.)
10.16e Esterline Technologies Corporation Long-
Term Incentive Compensation Plan, Fiscal Years 1995
through 1998. (Incorporated by reference to Exhibit
10.20c to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1996.)
10.16f Esterline Technologies Corporation Long-
Term Incentive Compensation Plan, Fiscal Years 1996
through 1999. (Incorporated by reference to Exhibit
10.20c to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1996.)
10.19 Executive Officer Termination Protection
Agreement. (Incorporated by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1992.)
10.20c Esterline Technologies Corporation Corporate
Management Incentive Compensation Plan for
Fiscal Year 1997. (Incorporated by reference to
Exhibit 10.20c to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1996.)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report is filed.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Esterline Technologies Corporation
(Registrant)
Date: March 17, 1997 By: /s/ Robert W. Stevenson
--------------------------------
Robert W. Stevenson
Executive Vice President and
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and Accounting Officer)
ESTERLINE TECHNOLOGIES CORPORATION
Form 10-Q Report for the Three Months Ended
January 31, 1997
INDEX TO EXHIBITS
-----------------
Exhibit Page
Number Exhibit Number
------- ------- ------
3.1 Composite Restated Certificate of
Incorporation of the Company as amended
by Certificate of Amendment dated
March 14, 1990. (Incorporated by reference
to Exhibit 19 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
July 31, 1990.)
3.2 By-laws of the Company, as amended and
restated December 15, 1988. (Incorporated
by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1988.)
4.2 Form of Rights Agreement, dated as of
December 9, 1992, between the Company and
Chemical Bank, which includes as Exhibit A
thereto the form of Certificate of
Designation, Preferences and Rights of
Series A Serial Preferred Stock and as
Exhibit B thereto the form of Rights
Certificate (Incorporated by reference to
Exhibit 1 to the Company's Registration
Statement on Form 8-A filed
December 17, 1992.)
10.1 Amendment of Lease and Agreement, dated
March 11, 1959, between the City of
Torrance, California, and Longren Aircraft
Company, Inc., as original lessee; Lease,
dated July 1, 1959, between the City of
Torrance and Aeronca Manufacturing
Corporation, as original lessee; and
Assignment of Ground Lease, dated
September 26, 1985, from Robert G. Harris,
as successor lessee under the foregoing
leases, to Excellon Industries, Inc.,
relating to principal manufacturing
facility of Excellon at 24751 Crenshaw
Boulevard, Torrance, California.
(Incorporated by reference to Exhibit 10.1
to the Company's Annual Report on Form 10-K
for the fiscal year ended
October 31, 1986.)
10.4 Industrial Lease dated July 17, 1984
between 901 Dexter Associates and Korry
Electronics Co., First Amendment to Lease
dated May 10, 1985, Second Amendment to
Lease dated June 20, 1986, Third Amendment
to Lease dated September 1, 1987, and
Notification of Option Exercise dated
January 7, 1991, relating to the
manufacturing facility of Korry Electronics
at 901 Dexter Avenue N., Seattle,
Washington. (Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended
October 31, 1991.)
10.4a Fourth Amendment dated July 27, 1994 to
Industrial Lease dated July 17, 1984
between Houg Family Partnership, as
successor to 901 Dexter Associates, and
Korry Electronics Co. (Incorporated by
reference to Exhibit 10.4a to the Company's
Annual Report on Form 10-K for the fiscal
year ended October 31, 1994.)
10.5 Industrial Lease dated July 17, 1984
between 801 Dexter Associates and Korry
Electronics Co., First Amendment to Lease
dated May 10, 1985, Second Amendment to
Lease dated June 20, 1986, Third Amendment
to Lease dated September 1, 1987, and
Notification of Option Exercise dated
January 7, 1991, relating to the
manufacturing facility of Korry Electronics
at 801 Dexter Avenue N., Seattle
Washington. (Incorporated by reference to
Exhibit 10.5 to the Company's Annual Report
on Form 10-K for the fiscal year ended
October 31, 1991.)
10.5a Fourth Amendment dated March 28, 1994 to
Industrial Lease dated July 17, 1984
between Michael Maloney and the Bancroft &
Maloney general partnership, as successor
to 801 Dexter Associates, and Korry
Electronics Co. (Incorporated by reference
to Exhibit 10.5a to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1994.)
10.9 Note Agreement, dated as of July 15, 1992,
among Esterline Technologies Corporation,
certain of its subsidiaries, The
Northwestern Mutual Life Insurance Company
and New England Mutual Life Insurance
Company relating to 8.75% Senior Notes due
July 30, 2002 of Esterline Technologies
Corporation and certain of its
subsidiaries. (Incorporated by reference
to Exhibit 10.9 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
July 31, 1992.)
10.9a Amendment to Note Agreement, executed as of
October 31, 1993, to that certain Note
Agreement, dated and effective as of
July 15, 1992, among Esterline Technologies
Corporation, certain of its subsidiaries,
The Northwestern Mutual Life Insurance
Company and New England Mutual Life
Insurance Company relating to 8.75% Senior
Notes due July 30, 2002 of Esterline
Technologies Corporation and certain of its
subsidiaries. (Incorporated by reference to
Exhibit 10.9a to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1993.)
10.10 Compensation of Directors. (Incorporated
by reference to first paragraph under
"Other Information as to Directors" in the
definitive form of the Company's Proxy
Statement, relating to its 1997 Annual
Meeting of Shareholders to be held on March
5, 1997, filed with the Securities and
Exchange Commission and the New York Stock
Exchange on January 17, 1997.)
10.21 Credit Agreement executed and effective as
of October 31, 1996 among Esterline
Technologies Corporation and certain of its
subsidiaries, various financial
institutions and Bank of America, National
Trust and Savings Association, as Agent.
(Incorporated by reference to Exhibit
10.20c to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1996.)
10.22 Real Property Lease and Sublease, dated
June 28, 1996, between 810 Dexter L.L.C.
and Korry Electronics Co. (Incorporated
by reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1996.)
10.23 Single Tenant Industrial Lease, dated April 1,
1994, between G&G 8th Street Partners, Ltd.,
James and Loralee Cassidy and Mason Electric
Company. 19
10.23a Single Tenant Industrial Sublease, dated
August 1, 1996, between Mason Electric Company,
Inc. and ME Acquisition Co. 62
10.23b Amendment of Lease, Estoppel, and Consent to
Sublease, dated August 6, 1996, between G&G
8th Street Partners, Ltd., Mason Electric
Company, Inc. and ME Acquisition Co. 71
11. Schedule setting forth computation of earnings
per common share for the three months ended
January 31, 1997 and 1996. 79
10.13 Amended and Restated 1987 Stock Option
Plan. (Incorporated by reference to
Exhibit 10.13 to the Company's Quarterly
Report on Form 10-Q for the quarter ended
January 31, 1992.)
10.15 Esterline Corporation Supplemental
Retirement Income Plan for Key Executives.
(Incorporated by reference to Exhibit 10.15
to the Company's Annual Report on Form 10-K
for the fiscal year ended
October 31, 1989.)
10.16c Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1993
through 1996. (Incorporated by reference
to Exhibit 10.16c to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1993.)
10.16d Esterline Corporation Long-Term Incentive
Compensation Plan, Fiscal Years 1994
through 1997. (Incorporated by reference
to Exhibit 10.16d to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1994.)
10.16e Esterline Technologies Corporation Long-
Term Incentive Compensation Plan, Fiscal
Years 1995 through 1998. (Incorporated by
reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1996.)
10.16f Esterline Technologies Corporation Long-
Term Incentive Compensation Plan, Fiscal
Years 1996 through 1999. (Incorporated by
reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1996.)
10.19 Executive Officer Termination Protection
Agreement. (Incorporated by reference to
Exhibit 10.19 to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1992.)
10.20c Esterline Technologies Corporation
Corporate Management Incentive Compensation
Plan for Fiscal Year 1997. (Incorporated by
reference to Exhibit 10.20c to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1996.)
EXHIBIT 10.23
SINGLE TENANT INDUSTRIAL LEASE
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease (THIS "LEASE"), dated for
reference purposes only, April 1, 1994, is made by and between
G & G 8th Street Partners, Ltd., a California limited
partnership, James Cassidy and Loralee Cassidy (COLLECTIVELY,
"LESSOR") and Mason Electric Company ("LESSEE"),
(COLLECTIVELY, THE "PARTIES," OR INDIVIDUALLY A "PARTY").
1.2 PREMISES: That certain real property described on
Schedule A hereto, including all improvements thereon or to be
provided by Lessor under the terms of this Lease, and commonly
known by the street address of 605 8th Street, San Fernando,
California 91340, consisting of approximately of 52,440
rentable square feet on the ground, 14,800 rentable square
feet of mezzanine, together with all parking and other
exterior areas associated therewith ("PREMISES").
1.3 TERM: The term of this Lease shall be for 10 years
("ORIGINAL TERM") commencing April 1, 1994 ("COMMENCEMENT
DATE") and ending March 31, 2004, ("EXPIRATION DATE"). (See
paragraph 3 for further provisions.)
1.4 EARLY POSSESSION: Lessee may occupy and utilize the
Premises prior to the Commencement Date.
1.5 BASE RENT: Base monthly rent ("BASE RENT") shall be
payable as follows (all rental adjustments shall occur on the
first day of April of each year):
RENTAL RATE: MONTHS RENT
------ ----
1 $0
2-12 $18,000
13-24 $19,000
25-36 $20,000
37-48 $21,000
49-60 $22,000
61-72 $23,000
73-84 $24,000
85-96 $25,000
97-108 $26,000
109-120 $27,000
As used herein, each "YEAR" shall mean that period
commencing on April 1st and ending on March 31st of the
succeeding calendar year.
1.6 SECURITY DEPOSIT: There shall be no initial
Security Deposit.
1.7 PERMITTED USE: General offices, manufacturing,
research and development (See Paragraph 6 for further
provisions.)
1.8 INSURING PARTY: Lessee is the "INSURING PARTY."
(See Paragraph 8 for further provisions.)
1.9 REAL ESTATE BROKERS: The following real estate
brokers (COLLECTIVELY, THE "BROKERS") and brokerage
relationships exist in this transaction and are consented to
by the Parties:
TRAVERS REALTY CORPORATION - 550 S. Hope Street,
#2600 Los Angeles, California represents Lessor pursuant
to a pre-existing agreement with Lessor.
C.I.C. PROPERTIES - 6380 Variel, Woodland Hills,
California represents Lessor.
GLEICHER REALTY - 9970 Glenoaks Boulevard, Suite C, Sun
Valley, California represents Lessor.
2. PREMISES.
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 which
may have been used in calculating the amount of rent is an
approximation which Lessor and Lessee agree is reasonable and
the rental based thereon is not subject to revision whether or
not the actual square footage is more or less.
2.2 CONDITION. (a) Lessor shall deliver the Premises
to Lessee clean and free of debris on the Commencement Date
and warrants to Lessee that the existing electrical, plumbing,
fire sprinkler and/or standpipe and hose or other automatic
fire extinguishing system, including fire alarm and/or smoke
detection systems and equipment and fire hydrants, lighting,
air conditioning, heating and ventilating systems, and loading
doors, if any, in the Premises, other than any construction or
additions which may be hereinafter made by Lessee, which shall
be the responsibility of Lessee, shall be in good operating
condition on the Commencement Date. If Lessee does not give
Lessor written notice of a non-compliance with this warranty
within 180 days after the Commencement Date, correction of
that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.
(b) Lessor further warrants that, as of the Commencement
Date, each of the foundations, walls (interior and exterior),
ceilings, roofs, floors, driveways, parking lots, retaining
walls, sidewalks, parkways and other structural components
constituting a part of the Premises or any of the improvements
located thereon, have been constructed in a good and
workmanlike manner and are in good condition and repair. If a
non-compliance with said warranty exists, Lessor shall
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.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING
CODE. Lessor warrants to Lessee that the improvements on the
Premises comply with all Applicable Laws in effect on the
Commencement Date. Said warranty does not apply to any
Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. If the Premises do not
comply with said warranty, 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 the same at
Lessor's expense.
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges:
(i) that it has satisfied itself with the present and future
suitability of the Premises for Lessee's intended use, (ii)
that Lessee has made such investigation as it deems necessary
with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the
Premises and/or the terms of this Lease, and (iii) that
neither Lessor, nor any of Lessor's agents, has made any oral
or written representations or warranties with respect to the
said matters other than as set forth in this Lease.
(b) Upon execution of this Lease by both Parties hereto,
Lessee shall pre-pay rent in the amount of $204,000. Such
$204,000 payment shall be credited to Lessee as follows:
(i) $108,000 of such payment shall be credited as a pre-
payment in full of the first six (6) installments (excluding
the first installment) of monthly Base Rent due under this
Lease; and (ii) $96,000 of such payment shall be credited as
partial pre-payments (each in the amount of $8,000) of the
next twelve (12) installments of monthly Base Rent due under
this Lease. To the extent of the amount required to pay in
full the 1992-1993 and 1993-1994 Real Property Taxes
(including all interest, penalties and late charges and
including all amounts not delinquent until April 10, 1994)
with respect to the Premises, such $204,000 pre-payment shall
be made directly to the Los Angeles County Tax Collector's
office, and any remaining sums shall be paid to Lessor.
(c) Lessor hereby assigns to Lessee or, to the extent
not assignable, agrees to enforce on behalf of Lessee Lessor's
rights under, each warranty and guaranty applicable to the
Premises, including the warranty or guaranty applicable to any
elevator whenever installed.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and
Original Term of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. Subject to the last sentence of
Paragraph 2.4(b), if Lessee totally or partially occupies the
Premises prior to the Commencement Date, Lessee shall not be
obligated to pay Base Rent for the period of such early
possession. All other terms of this Lease, however, 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 as agreed
herein by the Commencement Date, Lessor shall not be subject
to any liability therefore, nor shall such failure affect the
validity of the Lease, or the obligations of Lessee hereunder,
or extend term hereof, but in such case, Lessee shall not 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 one hundred twenty
(120) days after the Commencement Date, Lessee may, at its
option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided,
however, that if such written notice by Lessee is not received
by Lessor within said ten (10) day period, Lessee's right to
cancel this Lease shall terminate and be of no further force
or effect.
4. RENT.
4.1 BASE RENT. (a) Lessee shall cause payment of Base
Rent and other rent or charges, as the same may be adjusted
from time to time, to be received by Lessor in lawful money of
the United States, without offset or deduction except as
otherwise provided in this Lease, 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 (1) full calendar month
shall be prorated based upon the actual number of days of the
calendar 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.
(b) Notwithstanding anything to the contrary set forth
elsewhere in this Lease and except as otherwise provided in
Paragraph 2.4(b), all payments of monthly Base Rent due
hereunder shall be paid by Lessee to Lessor monthly in advance
on the first day of each calendar month. It is expressly
agreed, however, that each such monthly payment shall be made
net of (i.e., after a deduction for) the obligations of Lessor
to pay to Lessee interest and/or principal under the Note (as
hereinafter defined) on the last day of the immediately
preceding calendar month. As used herein, "NOTE" shall mean
the Promissory Note, dated May 18, 1992 and amended and
restated as of April 1, 1994, from Lessor in favor of Lessee,
which Note is secured by the Deed of Trust, dated as of May
18, 1992 (THE "DEED OF TRUST"), from Lessor in favor of
Lessee.
5. SECURITY DEPOSIT. There shall be no Security Deposit.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only
for the purposes set forth in Paragraph 1.7, or any other use
which is comparable thereto, and for no other purpose. Lessee
shall not use or permit the use of the Premises in a manner
that creates waste or a nuisance, or that disturbs the owners
and/or occupants of, or causes damage to, neighboring premises
or properties. 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 the Lessee, its assignees and
subtenants, for a modification of said permitted purpose for
which the premises may be used or occupied, so long as the
same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical
systems therein, and is not significantly more burdensome to
the Premises and the improvements thereon. If Lessor elects
to withhold such consent, Lessor shall within ten (10)
business days give a written notification of same, which
notice shall include an explanation of Lessor's reasonable
objections to the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) ACUTELY HAZARDOUS SUBSTANCES PROHIBITED.
Notwithstanding anything to the contrary contained elsewhere
in this Lease, Lessee shall not under any circumstances, and
whether or not a governmental permit is obtainable in
connection therewith, have, suffer, permit or create on, in,
under or about the Premises any "Acutely Hazardous Substance,"
which term is defined as any asbestos, cyanide,
Polychlorinated Biphenyl ("PCB"), Diphenyl Trichloromethane
("DDT"), dioxin, radioactive, poisonous or explosive product,
substance, chemical material or waste, or any other product,
substance, chemical, material or waste that, either alone or
in combination with other material or materials, constitutes a
similarly acute hazard to the Premises, the property of which
the Premises are a part, other tenants thereof, or to the
environment.
(b) HAZARDOUS SUBSTANCE DEFINED. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product,
substance, chemical, material or waste whose presence, nature,
quantity and/or intensity of existence, use, manufacture,
disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the
public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any governmental
authority, or (iii) under applicable statutory or common law
theory, such as nuisance (pubic or private), waste, trespass,
negligence, strict liability or tort, a basis for Lessor's or
Lessee's liability to third parties, including Acutely
Hazardous Substances described above.
(c) REPORTABLE INSTANCES -- CONSENT REQUIRED. Lessee
shall not engage in any activities on the Premises involving,
nor bring, dispose of or create in, on, about or from the
Premises, any Hazardous Substance the generation, possession,
storage, use, transportation or disposal of which (in the
quantity contemplated by Lessee to be on the Premises)
requires a permit from, or with respect to which a report,
notice, registration or business plan would be required to be
filed with, any governmental authority having jurisdiction
over Hazardous Substances, or with respect to which any
Applicable Law requires that notice of its presence in the
Premises be given to persons entering, occupying or
neighboring same (each of which instance is hereinafter
referred to as a "REPORTABLE INSTANCE"), without, in each such
Reportable Instance, Lessee obtaining Lessor's consents and
recommendations of Lessor's experts or consultants and/or the
board of fire underwriters. Lessee may, except as to Acutely
Hazardous Substances, without Lessor's specific consent, use
in or transport to or from the Premises, ordinary and
customary quantities of business, household and/or consumer
products or materials that constitute or contain a Hazardous
Substance (including such fuels and lubricants as are normally
present in standard passenger or truck type vehicles present
on or about the Premises and are required for their own fuel
or lubrication purpose), to the extent reasonably needed for
the normal conduct of the permitted business lawfully
conducted by Lessee on the Premises, so long as its presence,
use or transport is not a Reportable Instance and does not
expose the Premises or Lessor to meaningful risk or liability.
(d) STORAGE TANKS. Notwithstanding anything to the
contrary in Paragraph 7.3 hereof, Lessee shall not install
storage tanks of any size or shape in or about the Premises,
above or below ground, without the specific prior written
consent of Lessor. Lessee shall, prior to the expiration or
earlier termination of the Lease, at its sole cost and
expense, remove any storage tank from the Premises that was
installed by or for Lessee, and remove and replace any
contaminated soil or materials (and compact or treat the same)
and repair any damage or change to the Premises caused by said
installation, use and/or removal, all as required by law.
(e) CONSENT MAY BE CONDITIONAL. Lessor may (but without
any obligation to do so) condition its consent to the use or
presence of any Hazardous Substance, storage tank or activity
of Lessee upon Lessee's giving Lessor such assurances as
Lessor, in its reasonable discretion, deems necessary to
protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability
therefrom or therefor, including, but not limited to, the
installation (and removal at Lease expiration or earlier
termination) of reasonably necessary protective modifications
to the Premises (such as concrete encasement) and/or the
deposit of security deposit sufficient to protect the
Premises. Lessor shall not be required to consent to the
presence or use by Lessee of any product, substance chemical,
material or practice that materially increases the risk of
damage to or contamination of any property or the environment,
of injury to persons, or of exposure to liability therefor, or
that requires an inordinately expensive or impractical
modification of the Premises. Unless otherwise previously
approved in writing by Lessor, Lessee shall give Lessor at
least thirty (30) days prior written notice of Lessee's
intention to use a Hazardous Substance, Storage Tank, practice
precaution or location which requires Lessor's prior consent
under this Lease. Lessor's failure to disapprove in writing
to Lessee within said thirty (30) day period shall constitute
Lessor's consent to the permissions requested.
(f) SPILLS; COMPLIANCE WITH LAW. Lessee shall not cause
or permit any Hazardous Substance to be spilled or released
in, on or under the Premises (including through the plumbing
or sanitary sewer system) and shall at all times comply with
any and all Applicable Laws pertaining to: (a) Hazardous
Substances and/or industrial hygiene, (b) the environmental
conditions on, under or about the premises, including but not
limited to, soil and groundwater conditions,(c) the use,
generation, manufacture, production, storage or disposal,
under or about the Premises, or the transfer to or from the
Premises, of any Hazardous Substance or Storage Tank. Lessee
shall promptly, at Lessee's expense, take all investigatory
and/or remedial action reasonably recommended, whether or not
formally required, for the clean-up of any contamination of,
and for the maintenance, security and/or monitoring of, the
Premises, the elements surrounding same, or neighboring
properties, that was caused or materially contributed to by
Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee
or under its control.
(g) DUTY TO INFORM LESSOR. If Lessee knows, or has
reasonable cause to believe, that a Hazardous Substance or
Hazardous Substance Condition has come to be located on, in,
under or about the Premises other than as previously consented
to by Lessor, or otherwise permitted in this Lease, or if
Lessee receives any notice or claim with respect thereto,
Lessee shall immediately upon discovery or receipt thereof
give written notice of such condition, notice or claim to
Lessor. Lessee shall also immediately serve Lessor with a
copy of any statement, report, notice, registration, permit,
business plan, license, claim, action or proceeding given or
received from any governmental authority or private party, or
persons entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any
Hazardous Substance on, in, under or about the Premises,
including but not limited to all such documents as may be
involved in any Reportable Instance involving the Premises.
Lessee shall, within fifteen (15) days following request by
Lessor (made not more than once per year or in connection with
alterations or improvements being made or proposed by Lessee),
provide Lessor with copies of all permits and registrations
applicable to, and a description of the precautions being
taken with reference to, any storage tanks and/or Reportable
Instances Lessee is then using or maintaining on, or disposing
of from, the Premises.
(h) COSTS. The costs and expenses incurred by Lessor in
connection with reviewing requests or proposals made by Lessee
involving the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage
tank on or from the Premises shall be paid by Lessee, subject
to Lessee's having previously approved of the consultant
selected and of an estimate of the cost involved. Lessee's
such approval shall not be unreasonably withheld or delayed,
and Lessor may withhold or condition its consent to any
proposal or request made by Lessee until and upon Lessee's
approval of the consultant selected by Lessor and the
estimated cost thereof.
(i) INDEMNIFICATION BY LESSEE. Lessee shall indemnify,
protect defend and hold Lessor, its agents, employees, and
lenders and the Premises, harmless from and against any and
all loss of rents and/or damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving
any Hazardous Substance or storage tank brought onto the
Premises by or for Lessee or under Lessee's control. Lessee's
obligations under this Paragraph 6.2(i) shall include, but
shall not be limited to, the effects of any contamination or
injury to person, property or the environment, created or
suffered by Lessee in or about the Premises, and the cost of
the investigation (including consultant's and attorney's fees
and testing), removal, remediation, restoration and/or
abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from
its obligations under this Lease with respect to Hazardous
Substances or storage tanks, unless specifically so agreed by
Lessor in writing at the time of such agreement.
(j) ENVIRONMENTAL ASSESSMENT -- SUBSEQUENT USE. Lessor
hereby represents and warrants that since May 4, 1992 (the
date of the updated "Phase I" environmental report for the
Premises and the improvements thereon prepared by Ralph Stone
& Company, Inc.), the Premises has been used solely for the
storage of various consumer goods and appliances containing no
Hazardous Substances.
(k) ENVIRONMENTAL REPRESENTATION. Lessor hereby
represents and warrants to Lessee that, to the knowledge of
Lessor after due investigation, there are not currently, nor
have there been at any time in the past, any Hazardous
Substances, Hazardous Substance Condition or underground
storage tanks in, on, under or about the Premises or the
improvements located thereon.
(l) INDEMNIFICATION BY LESSOR. Lessor shall indemnify,
protect, defend and hold Lessee, its agents, shareholders and
employees and the Premises, harmless from and against any and
all loss of rents and/or damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving
any Hazardous Substance, Hazardous Substance Condition or
storage tank located in, on, under or about the Premises or
the improvements located thereon and brought onto the Premises
other than by or for Lessee or under Lessee's control.
Lessor's obligations under this Paragraph 6.2(l) shall
include, but shall not be limited to, the effects of any
contamination or injury to person, property or the
environment, and the cost of the investigation (including
consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the
expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessor from its obligations
under this Lease with respect to Hazardous Substances or
storage tanks, unless specifically so agreed by Lessee in
writing at the time of such agreement.
6.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise
provided in this Lease, Lessee, shall, at Lessee's sole cost
and expense, fully, diligently and in a timely manner, comply
with all "APPLICABLE LAWS" which term is used in this Lease to
include 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 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 or storage tank), now in effect or which may
hereafter come into effect, and whether or not reflecting a
change in policy from any previously existing policy. 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 Law 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 Law.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's
Lender(s) (as defined in Paragraph 8.3(a)) 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 Laws
(as defined in Paragraph 6.3), and to employ experts and/or
consultants in connection therewith and/or to advise Lessor
with respect to Lessee's activities, including but not limited
to the installation, operation, use, monitoring, maintenance,
or removal of any Hazardous Substance or storage tank 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, violation of Applicable
Law, or a contamination, caused or materially contributed to
by Lessee is found to exist or be imminent, or unless the
inspection is required or ordered by a governmental authority
as the result of any such existing or imminent violation or
contamination. In any 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) Except as otherwise provided herein and subject to
the provisions of Paragraph 2.2 (Lessor's warranty as to
condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc.), 7.2(b) (Lessor's obligations to repair),
9 (damage 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, structural and non-structural (whether or not such
portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as
a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including without
limiting the generality of the foregoing all equipment or
facilities serving the premises, such as plumbing, heating,
air conditioning, ventilating, electrical, lighting
facilities, fire sprinkler and/or standpipe and hose or other
automatic fire extinguishing system, including fire alarm
and/or smoke detection systems and equipment, fire hydrants,
fixtures, walls (interior and exterior), foundations,
ceilings, elevator(s), roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots,
fences, retaining walls, signs, sidewalks and parkways located
in, on, or about, or adjacent to the Premises. 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. If Lessee occupies the
Premises for seven (7) years or more, Lessor may require
Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than
once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense,
procure and maintain contracts, with copies to Lessor, in
customary form and substance for, and with contractors
specializing and experienced in, the inspection, maintenance
and service of the following equipment and improvements, if
any, located on the Premises: (i) heating, air conditioning
and ventilation equipment, (ii) fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing
systems, including fire alarm and/or smoke detection, (iii)
landscaping and irrigation systems, (iv) roof covering and
drain maintenance, (v) asphalt and parking lot maintenance and
(vi) elevator.
(c) In the event Lessee is required pursuant to the
provisions of this Paragraph 7 to replace the roof or the
heating, air conditioning or ventilating system of the
Premises or to make any repairs to the same, the cost of which
are considered capital improvements, as that term is
understood using generally accepted accounting principles
("GAAP"), and the cost of which exceeds $10,000, during the
final three (3) years of the Original Term or during any
Option Period, Lessee's obligation to pay for such
replacements or repairs shall be limited to that portion of
the cost of such replacements or repairs attributable to the
then current term of this Lease, calculated by prorating said
cost over a period of five (5) years; provided, however, that
if Lessor pays for any replacements or repairs in accordance
with Paragraph 7.2(b) the useful life of which is subsequently
exceeded during an Option Period, then Lessee shall reimburse
Lessor for such payment upon Lessee's exercise of an Option
with respect to such Option Period.
7.2 LESSOR'S OBLIGATIONS.
(a) Except as specifically set forth in paragraph 7.2(b)
below and except for the warranties and agreements of Lessor
contained in Paragraphs 2.2 (relating to condition of the
Premises), 2.3 (relating to compliance with covenants,
restrictions and building code), 9 (relating to destruction of
the Premises) and 14 (relating to condemnation of the
Premises), it is intended by the Parties hereto that Lessor
have no obligation, in any manner whatsoever, to repair and
maintain the Premises, the improvements located thereon, or
the equipment therein, whether structural or non structural,
all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the
Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the
Premises. Lessee and Lessor expressly waive the benefit of
any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to, or
which affords Lessee the right to make repairs at the expense
of Lessor or to terminate this Lease by reason of any needed
repairs.
(b) Notwithstanding anything to the contrary set forth
in this Lease, Lessor shall be responsible for (i) all
maintenance and repair of the roof for the first two (2) years
subsequent to the Commencement Date except if damage is caused
by the negligence of Lessee or its agents and (ii) all capital
improvement expenditures that are expressly not the
responsibility of Lessee pursuant to Paragraph 7.1(c) above.
Further, Lessor shall be responsible for any and all
additions, alterations, repairs, removals or replacements
necessary to bring the Premises and the improvements located
thereon (in each case as they exist on the Commencement Date)
in compliance with the Americans with Disabilities Act.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all
carpeting, window coverings, air lines, power panels,
electrical distribution, security, fire protection systems,
communication 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 that can
be removed without doing material damage to the Premises. The
term "ALTERATIONS" shall mean any modification of the
improvements on the Premises from that which are provided by
Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or
deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY
INSTALLATIONS" are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor
as defined in Paragraph 7.4(a). Lessee shall not make any
Alterations or Utility Installations in, on, under or about
the Premises without Lessor's prior written consent, which
consent shall not be unreasonably withheld or delayed. Lessee
may, however, make non-structural Utility Installations (not
including, however, any Alterations) to the interior of the
Premises (excluding the roof), as long as they are not visible
from the outside, and the cumulative cost thereof during the
term of this Lease as extended does not exceed $250,000.00.
(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 proposed 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 in compliance with all Applicable
Laws. Lessee shall promptly upon completion thereof furnish
Lessor with as-built plans and specifications therefor and
certificate of occupancy. Lessor may (but without obligation
to do so) condition its consent to any requested Alteration or
Utility Installation that costs $50,000.00 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) INDEMNIFICATION. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have
been furnished to or for Lessee at or for use on the Premises,
which claims are or may be secured by any mechanic's or
materialman's liens against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days
notice prior to the commencement of any work in, on or about
the Premises, and Lessor shall have the right to post notices
of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of
any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises
against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to one and one-half
times the amount of such contested lien claim or demand
indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the
effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's attorney's 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 or become the owner thereof as hereinafter
provided in this Paragraph 7.4, all Alterations and Utility
Additions 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 and be surrendered by
Lessee with the Premises.
(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
Lessee Owned 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, with all of the improvements, parts
and surfaces thereof 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 in writing by Lessor, the Premises, as surrendered,
shall include the 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 Alterations and/or
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 Law and/or good service 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 FOR INSURANCE. Regardless of whether the
Lessor or Lessee is the Insuring Party, Lessee shall pay for
all insurance required under this Paragraph 8, except to the
extent of the cost attributable to liability insurance carried
by Lessor in excess of $5,000,000 per occurrence. Premiums
for policy periods commencing prior to or extending beyond the
Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within ten (10) days
following receipt of an invoice for any amount due.
8.2 LIABILITY INSURANCE. Lessee shall obtain and keep
in force during the term of this Lease a Commercial General
Liability policy of insurance protecting Lessee and Lessor
(naming Lessor as an additional insured) against claims for
bodily injury, personal injury and property damage based upon,
involving or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto.
Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $5,000,000
per occurrence with an "Additional Insured-Managers or Lessor
Premises" Endorsement and contain the "Amendment of the
Pollution Exclusion" for damage caused by heat, smoke or fumes
from a hostile fire. The policy shall not contain any intra-
insured exclusions as between insured persons or
organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the
performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or
as carried by Lessee shall not, however, limit the liability
of Lessee nor relieve Lessee of any obligation hereunder.
All insurance to be carried by Lessee shall be primary to and
not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND
RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. Lessee shall obtain and
keep in force during the term of this Lease a policy or
policies in the name of Lessor, with loss payable to Lessor
and to the holders of any mortgages, deeds of trust or ground
leases on the Premises ("LENDER(S)"), insuring loss or damage
to the Premises. The amount of such insurance shall be equal
to the full replacement cost of the Premises, as the same
shall exist from time to time, or the amount required by
Lenders, whichever is greater, but in no event more than the
commercially reasonable and available insurable value thereof
if, by reason of the unique nature or age of the improvements
involved, such latter amount is less than full replacement
cost. Lessee Owned Alterations and Utility Installations
shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of
flood and earthquake), including coverage for any additional
costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any undamaged
sections of the Premises required to be demolished or removed
by reason of the enforcement of any building, zoning, safety
or land use laws as the result of a covered cause of loss.
Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor
Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance
coverage has a deductible clause, the deductible amount shall
not exceed $5,000 per occurrence, and Lessee shall be liable
for such deductible amount in the event of an Insured Loss, as
defined in Paragraph 9.1(c).
(b) RENTAL VALUE. Lessee shall, in addition to the
foregoing, obtain and keep in force during the term of this
Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under
this Lease for one (1) year (including all real estate taxes,
insurance costs, and any scheduled rental increases). Said
insurance shall provide that in the event the Lease is
terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date
of the completion of repairs or replacement of the Premises,
to provide for one (1) full years loss of rental revenues from
the date of any such loss. Said insurance shall contain
income, property taxes, insurance premium costs and other
expenses, if any, otherwise payable by Lessee, for the next
twelve (12) month period. Lessee shall be liable for any
deductible amount in the event of such loss.
(c) TENANT'S IMPROVEMENTS. Lessor shall not be required
to insure Lessee Owned Alterations and Utility Installations
unless the item in question has become the property of Lessor
under the terms of this Lease. The policy carried by Lessee
under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the
requirements of Paragraph 8.5, Lessee at its cost shall either
by separate policy or, at Lessor's option, by endorsement to a
policy already carried, maintain insurance coverage on all of
Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in
coverage to that carried by the Insuring Party under Paragraph
8.3. Such insurance shall be full replacement cost coverage
with a deductible not to exceed $5,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for
the replacement of personal property or the restoration of
Lessee Owned Alterations and Utility Installations. Lessee
shall be the Insuring Party with respect to the insurance
required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force
8.5 INSURANCE POLICIES. Insurance required hereunder
shall be in companies duly licensed to transact business in
the state of California, and maintaining during the policy
term a "General Policyholders Rating" of at least B+, V, or
such other higher rating as may be required by a Lender having
a lien on the Premises, as set 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 "certified" copies of policies of such
insurance or certificates evidencing the existence and amounts
of such insurance with the insured and loss payable clauses as
required by this Lease. 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. If Lessee shall fail to procure
and maintain the insurance required to be carried under this
Paragraph 8, Lessor, but shall not be required to, procure and
maintain the same at Lessee's expense.
8.6 WAIVER OF SUBROGATION. Without affecting any other
rights or remedies, Lessee and Lessor ("Waiving Party") each
hereby release and relieve the other, and waive their entire
right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving
Party's property arising out of or incident to the perils
required to be insured against under Paragraph 8. The effect
of such releases and waivers of the right to recover damages
shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.
8.7 INDEMNITY. (a) Except for Lessor's negligence
and/or breach of express warranties, Lessee shall indemnify,
protect, defend and hold harmless the Premises, Lessor and its
agents, partners and Lenders, from and against any and all
claims, loss of rents and/or damages, costs, liens, judgments,
penalties, permits, attorney's and consultant's fees, expenses
and/or liabilities arising out of, involving, or in dealing
with, the occupancy of the Premises by Lessee, the conduct of
Lessee's business, any act, omission or neglect of Lessee, its
agents, contractors, employees or invitees, and out of any
Default or Breach by Lessee in the performance in a timely
manner of any obligation on Lessee's part to be performed
under this Lease. The foregoing shall include, but not be
limited to, the defense or pursuit of any claim or any action
or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced
to judgment, and whether well founded or not. In case any
action or proceeding be brought against Lessor by reason of
any of the foregoing matters, Lessee upon written 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.
(b) Lessor shall indemnify, protect, defend and hold
harmless the Premises, Lessee and its agents, shareholders and
employees, from and against any and all claims, loss of rents
and/or damages, costs, liens, judgments, penalties, permits,
attorneys' and consultants' fees, expenses and/or liabilities
arising out of, involving, or in dealing with, any act,
omission or neglect of Lessor, its agents, contractors,
employees or invitees, out of any breach of express
warranties of Lessor contained herein and out of any default
or breach by Lessor in the performance in a timely manner of
any obligation on Lessor'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 Lessee) litigated and/or reduced to
judgment, and whether well founded or not. In case any action
or proceeding be brought against Lessee by reason of any of
the foregoing matters, Lessor upon written notice from Lessee
shall defend the same at Lessor's expense by counsel
reasonably satisfactory to Lessee and Lessee shall cooperate
with Lessor in such defense. Lessee need not have first paid
any such claim in order to be so indemnified.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, other than
Lessee Owned Alterations and Utility Installations, the repair
cost of which damage or destruction is less than 50% of the
then Replacement Cost of the Premises immediately prior to
such damage or destruction, excluding from such calculation
the value of the land and Lessee Owned Alterations and Utility
Installations.
(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 50% or more of the then Replacement
Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the
land and Lessee Owned Alterations and Utility Installations.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations, which was caused by an
event required to be covered by the insurance described in
Paragraph 8.3(a), irrespective or 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
or, or contamination by, a Hazardous Substance in, on, or
under the Premises.
9.2 PARTIAL DAMAGE-INSURED LOSS. Subject at all times
to the terms of the Deed of Trust, if a Premises Partial
Damage that is an Insured Loss occurs, the Lessor shall, at
Lessor's expense, repair such damage (but not Lessee's Trade
Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease
shall continue in full force and effect; provided, however,
that Lessee shall, at Lessor's election, make the repair of
any damage or destruction the total cost to repair of which is
$10,000 or less, and, in such event, Lessor shall make the
insurance proceeds available to Lessee on a reasonable basis
for that purpose. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, Lessee shall
promptly contribute the shortage in proceeds (except as to the
deductible which is Lessee's responsibility) as and when
required to complete said repairs. In the event, however, the
shortage in proceeds was due to the fact that, by reason of
the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the
funds to cover same, or adequate assurance thereof, within 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,
the party responsible for making the repairs shall complete
them as soon as reasonably possible and this Lease shall
remain in full force and effect. If 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 in such case Lessor does not so elect, 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.
9.3 PARTIAL DAMAGE-UNINSURED LOSS. Subject at all times
to the terms of the Deed of Trust, if a Premises Partial
Damage that is not an Insured Loss occurs, unless caused by a
negligent or willful act of Lessee (in which event Lessee
shall make the repairs at Lessee's expense and this Lease
shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 13), 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 giving 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 Lessee's said commitment. In such event this
Lease shall continue in full force and effect, and Lessor
shall proceed to make such repairs as soon as reasonably
possible and 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; provided, however, that this Lease shall not so
terminate unless and until Lessor shall have paid in full the
outstanding principal balance of, together with all accrued
and unpaid interest on, the Note. In the event that this
Lease so terminates, Lessor shall not thereafter lease the
Premises or any replacement improvements constructed thereon
unless (i) Lessor shall have first (x) received from a third
party (AN "OFFEROR") a bona fide offer in writing to lease the
Premises and any such replacement improvements in their
entirety (AN "OFFER"), signed by the Offeror and setting forth
all the material terms of the proposed lease and (y) forwarded
a true copy of such Offer to Lessee, together with reasonable
information as to the identity of the Offeror and (ii) Lessee
shall have failed, within thirty (30) days after receiving a
copy of such Offer from Lessor, to notify Lessor of Lessee's
intent to lease the Premises and such replacement improvements
upon the same terms and conditions contained in such Offer.
If Lessee so elects to lease the Premises and any such
replacement improvements, then Lessor shall be obligated to
lease the Premises and such replacement improvements to Lessee
in accordance with the terms and conditions of such Offer. If
Lessee does not exercise the aforesaid right to lease the
Premises and any such replacement improvements, within the
required 30-day period, then Lessor shall have the right and
option to enter into a lease with the Offeror upon the terms
submitted in such Offer.
9.4 TOTAL DESTRUCTION. Notwithstanding any other
provision hereof, if a 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; provided,
however, that this Lease shall not so terminate unless and
until Lessor shall have paid in full the outstanding principal
balance of, together with all accrued and unpaid interest on,
the Note. In the event, however, that the damage or
destruction was caused by Lessee, Lessor shall have the right
to recover Lessor's damages from Lessee except as released and
waived in Paragraph 8.6. In the event that this Lease
terminates pursuant to this Paragraph 9.4, Lessor shall not
thereafter lease the Premises or any replacement improvements
constructed thereon unless (i) Lessor shall have first (x)
received from an Offeror an Offer signed by the Offeror and
setting forth all the material terms of the proposed lease and
(y) forwarded a true copy of such Offer to Lessee, together
with reasonable information as to the identity of the Offeror
and (ii) Lessee shall have failed, within thirty (30) days
after receiving a copy of such Offer from Lessor, to notify
Lessor of Lessee's intent to lease the Premises and such
replacement improvements upon the same terms and conditions
contained in such Offer. If Lessee so elects to lease the
Premises and any such replacement improvements, then Lessor
shall be obligated to lease the Premises and such replacement
improvements to Lessee in accordance with the terms and
conditions of such Offer. If Lessee does not exercise the
aforesaid right to lease the Premises and any such replacement
improvements, within the required 30-day period, then Lessor
shall have the right and option to enter into a lease with the
Offeror upon the terms submitted in such Offer.
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
for which the cost to repair exceeds one (1) month's Base
Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within
thirty (30) days after the date of occurrence of such damage.
Provided, however, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, within twenty (20) days
following the occurrence of the damage, or before the
expiration of the time provided in such option for its
exercise, whichever is earlier ("EXERCISE PERIOD"),
(i) exercising such option and (ii) providing Lessor with any
shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs. If Lessee duly exercises such
option during said Exercise Period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in
insurance proceeds, Lessor shall, at Lessor's expense repair
such damage as soon as reasonably possible and this Lease
shall continue in full force and effect. If Lessee fails to
exercise such option and provide such funds or assurance
during said Exercise Period, then Lessor may at Lessor's
option terminate this Lease as of the expiration of said sixty
(60) day period following the occurrence of such damage by
giving written notice to Lessee of Lessor's election to do so
within ten (10) days after the expiration of the Exercise
Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in Paragraph 9.2
(Partial Damage-Insured Loss) or Section 9.3 (Partial Damage -
Uninsured Loss), whether or not Lessor or Lessee repairs or
restores the Premises, the Base Rent, Real Property Taxes,
insurance premiums, and other charges, if any, payable by
Lessee hereunder for the period during which such damage, its
repair or the restoration continues, shall be abated in
proportion to the degree to which Lessee's use of the Premises
is impaired. Except for abatement of Base Rent, Real Property
Taxes, insurance premiums, 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 repair 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 receipt of such
notice, this Lease shall continue in full force and effect.
"COMMENCE" as used in this Paragraph shall mean either the
unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises,
whichever first occurs.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous
Substance Condition occurs, unless such Hazardous Substance
Condition arises out of or involves any Hazardous Substance or
storage tank brought onto the Premises by or for Lessee or
under Lessee's control (in which case Lessee shall make the
investigation and remediation thereof required by Applicable
Law and this Lease shall continue in full force and effect,
but subject to Lessor's rights under 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 $100,000, give written notice to Lessee within thirty
(30) days after receipt by Lessor of knowledge of the
occurrence of such Hazardous Substance Condition of Lessor's
desire to terminate this Lease as of the date sixty (60) days
following the giving 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 investigation and
remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except
to the extent of $100,000. Lessee shall provide Lessor with
the funds required of Lessee or satisfactory assurance thereof
within thirty (30) days following Lessee's said commitment.
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 and the
required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate
as of the date specified in Lessor's notice of termination.
If a Hazardous Substance Condition occurs which does not arise
out of or involve any Hazardous Substance or storage tank
brought onto the Premises by or for Lessee or under Lessee's
control there shall be abatement of Lessee's obligations under
this Lease to the same extent as provided in Paragraph 9.6(a).
9.8 TERMINATION-ADVANCE PAYMENTS. Upon termination of
this Lease pursuant to this Paragraph 9, an equitable
adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lessor.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the
terms of this Lease shall govern the effect of any damage to
or destruction of the Premises with respect to the termination
of this Lease and hereby waive the provisions of any present
or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real
Property Taxes, as defined in Paragraph 10.2, applicable to
the Premises during the term of this Lease. All such payments
shall be made at least ten (10) days prior to the delinquency
date of the applicable installment. Lessee shall promptly
furnish Lessor with satisfactory evidence that such taxes have
been paid. If any such taxes to be paid by Lessee shall cover
any period of time prior to or after the expiration or earlier
termination of the term hereof, Lessee's share of such taxes
shall be equitably prorated to cover only the period of time
within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property
Taxes required by this Lease to be paid by Lessee, Lessor
shall have the right to pay the same, and Lessee shall
reimburse Lessor therefor upon demand.
(b) CONTEST. The amount of property tax currently
assessed is being challenged for the Premises by Lessor.
Lessee hereby agrees to reimburse Lessor for Lessor's
reasonable out-of-pocket costs incurred in the course of
conducting said protest; provided, however, that (i) no costs
shall be reimbursed unless and until Lessor shall provide to
Lessee (a) evidence that such protest has been successfully
concluded and (b) a bill for such out-of-pocket expenses and
(ii) such reimbursement shall be limited to $6,000. Lessor
shall pay to Lessee that portion of any refund received by
Lessor as a result of such protest which is allocable to the
period of time during which this Lease is in effect.
10.2 DEFINITION OF "REAL PROPERTY TAXES." 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
Premises 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 Premises or in the real
property of which the Premises are a part, 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 the execution of this
Lease, or any modification, amendment or transfer thereof, and
whether or not contemplated by the Parties. Notwithstanding
any provision herein to the contrary, in the event Lessor (or
any successor in interest to Lessor) sells, exchanges,
transfers, or otherwise conveys the Premises (or any portion
thereof or any improvements thereon) at any time during the
term of this Lease (including additional terms), any increases
in taxes, assessments, fees or levies resulting from such
sale, exchange, transfer or other conveyance shall be the
responsibility of Lessor and not deemed to be included in Real
Estate Taxes. Lessor hereby agrees to pay any such increase
at least ten (10) days prior to the delinquency date of each
applicable installment. Lessor further hereby represents and
warrants that a separate tax parcel has been created with
respect to the Premises which includes the building footprint,
landscaping, and all parking associated with the Premises.
10.3 PERSONAL PROPERTY TAXES. Lessee shall pay prior to
delinquency all taxes assessed against and levied upon Lessee
Owned Alterations, Lessee Owned Utility Installations, Trade
Fixtures, furnishings, equipment and all personal property of
Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause its 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 personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a
written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option as provided in
Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities
and services supplied to the Premises, together with any taxes
thereon.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall have the conditional right to assign or
transfer (COLLECTIVELY, "ASSIGNMENT") or sublet all or any
part of Lessee's interest in this Lease provided it receives
Lessor's prior written consent given under and subject to the
terms of Paragraph 36 which shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, Lessor shall not
disapprove and shall be deemed to have approved any proposed
subletting (as opposed to an assignment) to a person or
corporation which is (i) engaged in a business permitted under
this Lease, (ii) engaged in a business that does not require
the generation or disposal at the Premises of any Acutely
Hazardous Substance and (iii) does not have a reputation for
dishonesty, criminal conduct or unethical business practices.
Notwithstanding the foregoing, Lessor shall be obligated to
approve or disapprove of any proposed assignment or subletting
within fifteen (15) days of receipt of notice. Failure to
approve or disapprove within fifteen (15) days of receipt
shall be deemed an approval.
(b) An assignment or subletting of Lessee's interest in
this Lease without Lessor's specific prior written consent
shall, at Lessor's option, be a Default curable after notice
per Paragraph 13.1(c), or a noncurable breach without the
necessity of any notice and grace period.
(c) Lessee's remedy for any breach of this Paragraph
12.1 by Lessor shall be limited to compensatory damages and
injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND
SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) release Lessee of any obligations
hereunder, or (ii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder
or for the performance of any other obligations to be
performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of
Lessee's obligations from any person other than Lessee pending
approval or disapproval of an assignment. Neither a delay in
the approval or disapproval of such assignment nor the
acceptance of any rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies
for the Default or Breach by Lessee of any of the terms,
covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or
subletting shall not constitute a consent to any subsequent
assignment or subletting by Lessee or to any subsequent or
successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications
thereto without notifying Lessee or anyone else liable on the
Lease or sublease and without obtaining their consent, and
such action shall not relieve such persons from liability
under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly
against Lessee or any one else responsible for the performance
of the Lessee's obligations under this Lease, including the
sublessee, without first exhausting Lessor's remedies against
any other person or entity responsible therefor to Lessor, or
any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information
relevant to Lessor's determination as to the financial and
operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the
intended use and/or required modification of the Premises, if
any. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be
reasonably requested by Lessor.
(f) Any assignee of this Lease shall, by reason of
accepting such assignment, be deemed for the benefit of
Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein
to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are
contrary to or inconsistent with provisions of an assignment
to which Lessor has specifically consented in writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO
SUBLETTING. The following terms and conditions shall apply to
any subletting by Lessee of all or any part of the Premises
and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:
(a) In the event of a Breach by Lessee in the
performance of its obligations under this Lease and the
election by Lessor to terminate this Lease in accordance with
Paragraph 13.2(a) hereof, Lessor, at its option and without
any obligation to do so, may require any sublessee to attorn
to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time
of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for
any prepaid rents or security deposit paid by such sublessee
to such sublessor or for any other prior Defaults or Breaches
of such sublessor under such sublease.
(b) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor's prior written
consent given under and subject to all of the terms of
Paragraph 12.1(a).
(c) Lessor shall deliver a copy of any notice of Default
or Breach by Lessee to the sublessee, who shall have the right
to cure the Default of Lessee within the grace period, if any
specified in such notice. The sublessee shall have a right of
reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a
failure by the Lessee to observe, comply with or perform any
of the terms, covenants, conditions or rules applicable to
Lessee under this Lease. A "BREACH" 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, shall entitle
Lessor to pursue its available remedies at law or in equity,
including, without limitation, the remedies set forth in
Paragraphs 13.2 and/or 13.3:
(a) Except as expressly otherwise provided in this
Lease, the failure by Lessee to make any payment of Base Rent
or any other monetary payment required to be made by Lessee
hereunder, whether to Lessor or to a third party, as and when
due, the failure by Lessee to provide Lessor with reasonable
evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation
under this Lease which endangers or threatens life or
property, where such failure continues for a period of ten
(10) days following written notice thereof by or on behalf of
Lessor to Lessee.
(b) 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 Law 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(b), (iv) a Tenancy Statement per Paragraphs 16
or 37, (v) the subordination or non-subordination of this
Lease per Paragraph 30 or (vi) 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.
(c) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, that are to be
observed, complied with or performed by Lessee, other than
those described in subparagraphs (a) or (b), above, where such
Default continues for a period of forty-five (45) 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 forty-five (45) 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.
(d) 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.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days);
(iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within thirty (30) days;
or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is
not discharged within thirty (30) days; provided, however, in
the event that any provision of this subparagraph (e) is
contrary to any applicable law, such provisions shall be of no
force or effect, and not affect the validity of the remaining
provisions.
(e) The discovery by Lessor that any financial statement
given to Lessor by Lessee was materially false.
13.2 REMEDIES. If Lessee fails to perform any
affirmative duty or obligation of Lessee under this Lease,
within thirty (30) days (or within ten (10) days in the case
of Lessee's non-payment of Real Property Taxes or insurance
premiums) 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 option, may
require all future payments to be made under this Lease by
Lessee to be made only by cashier's check. In the event of a
Breach of this Lease by Lessee, as defined in Paragraph 13.1,
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 could have been
reasonably avoided (and Lessor shall be obligated to use all
reasonable efforts to re-let the Premises following any such
termination); (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 could be reasonably avoided (and Lessor shall be
obligated to use all reasonable efforts to re-let the Premises
following any such termination); and (iv) any other amount
necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, including but
not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of the leasing commission
paid by Lessor 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 prior sentence shall be computed by
discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco 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. If
termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to
recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Lessor may reserve therein 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(a), (b) or (c) 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 subparagraphs 13.1(a), (b) or (c). In such case,
the applicable grace period under subparagraphs 13.1 (a), (b)
or (c) and 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 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. See
Paragraphs 12 and 36 for the limitations on assignment and
subletting which limitations Lessee and Lessor agree 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 the Lease, shall not
constitute a termination of 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 of
California.
(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 LATE CHARGES. Lessee hereby acknowledges that late
payment by Lessee to Lessor of rent and other sums due
hereunder will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of which will be extremely
difficult to ascertain Such costs include, but are not
limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by the terms of any
ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due
from Lessee shall not be received by Lessor or Lessor's
designee within five (5) days after notice from Lessor that
such amount shall be due and unpaid, then, Lessee shall pay to
Lessor a late charge equal to ten percent (10%) 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 to the
provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.
13.4 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 13.4, a reasonable
time shall in no event be less than thirty (30) days after
receipt by Lessor, and by the holders of any ground lease,
mortgage or deed of trust covering the Premises whose name
and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor's obligation is such
that more than 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 land area not occupied by any
building, 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 (i) 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 building located on the Premises and (ii) Base Rent shall
further be reduced by an amount equal to $75.00 per month for
each parking space that is eliminated or adversely affected as
a result of the taking. Except as provided in the preceding
sentence, no reduction of Base Rent shall occur if the only
portion of the Premises taken is land on which there is no
building. Subject at all times to the terms of the Deed of
Trust, 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 in 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 the legal and other expenses incurred
by Lessor in the condemnation matter, repair any damage to the
Premises caused by such condemnation, except to the extent
that Lessee has been reimbursed therefor by the condemning
authority.
15. BROKER'S FEE.
15.1 The Brokers named in Paragraph 1.10 are the
procuring causes of this Lease.
15.2 Upon execution of this Lease by both Parties,
Lessor shall pay to said Brokers jointly, or in such separate
shares as they may mutually designate in writing, a fee as set
forth in separate written agreements between Lessor and said
Brokers for brokerage services rendered by said Brokers to
Lessor in this transaction. Lessor acknowledges and agrees
that none of the Brokers named in Paragraph 1.10 were retained
by Lessee and that Lessee has no obligations whatsoever with
respect to commissions owing to said Brokers.
15.3 Lessee and Lessor each represent and warrant to the
other that it has had no dealings with any person, firm,
broker or finder (other than the Brokers named in Paragraph
1.10) in connection with the negotiation of this Lease and/or
the consummation of the transaction contemplated hereby, and
that no broker or other person, firm or entity other than said
named Brokers is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker,
finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect
thereto.
15.4 Lessor and Lessee hereby consent to and approve all
agency relationships, indicated in Paragraph 1.10.
16. TENANCY STATEMENT.
16.1 Each Party (AS "RESPONDING PARTY") shall within ten
(10) days after written notice from the other Party (THE
"REQUESTING PARTY") execute, acknowledge and deliver to the
Requesting Party a statement in writing in form similar to the
then most current "TENANCY STATEMENT" form published by the
American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may
be reasonably requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell
the Premises, any part thereof, or the building of which the
Premises are a part, Lessee shall deliver to any potential
lender or purchaser designated by Lessor such financial
statements of Lessee (or, if Lessee does not prepare separate
financial statements, financial statements of the direct or
indirect parent corporation of Lessee which does prepare
separate financial statements) as may be reasonably required
by such lender or purchaser, including but not limited to
Lessee's financial statements (or financial statements of such
parent corporation) for the past three (3) years. All such
financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for
the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein
shall mean the owner or owners at the time in question of the
fee title to the Premises. Except as provided in paragraph
15, upon such transfer or assignment, the prior Lessor shall
be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed
by the Lessor. Subject to the foregoing, the obligations
and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision
hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment
due Lessor hereunder, other than late charges, not received by
Lessor within thirty (30) days following the date on which it
was due, shall bear interest from the thirty-first (31st) day
after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the
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.
23. NOTICES.
23.1 All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or
by messenger or courier service) or may be sent by regular,
certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, 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 purposes 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 Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is
shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage
prepaid. Notices delivered by United Sates 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. If any notice
is transmitted by facsimile transmission or similar means, the
same shall be deemed served or delivered upon telephone
confirmation of receipt of the transmission thereof, provided
a copy is also delivered via delivery or mail. If notice is
received on a Sunday or 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 Lessees, shall be
deemed a waiver of any other term, covenant or condition
hereof, or of any subsequent Default or Breach by Lessee of
the same or of any other term, covenant or condition hereof.
Lessor's consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of Lessor's consent
to, or approval of, any subsequent or similar act by Lessee,
or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent.
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 preceding Default or Breach by Lessee
of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted.
25. RECORDING. Either Lessor or Lessee shall, upon request
of the other, execute, acknowledge and deliver to the other a
short form memorandum of this Lease for recording purposes.
The Party requesting recordation shall be responsible for
payment of any fees or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain
possession of the Premises or any part thereof beyond the
expiration or earlier termination of this Lease.
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 of California. Any litigation between the Parties
hereto concerning this Lease shall be initiated in the County
of Los Angeles.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted
hereby shall be subject and subordinate to any ground lease,
mortgage, deed of trust, or other hypothecation or security
device (COLLECTIVELY, "SECURITY DEVICE"), now or hereafter
placed by Lessor upon the real property of which the Premises
are a part, to any and all advances made on the security
thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the
Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of
Lessor under this Lease, but that in the event of Lessor's
default with respect to any such obligation, Lessee will give
any Lender whose name and address have been furnished Lessee
in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such
notice for the cure of said default before invoking any
remedies Lessee may have by reason thereof. If any Lender
shall elect to have this Lease and/or any Option granted
hereby superior to the lien of its Security Device and shall
give written notice thereof to Lessee, this Lease and such
Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance
provisions of Paragraph 30.3, Lessee agrees to attorn to a
Lender or any other party who acquires ownership of the
Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall
not: (i) be liable for any act or omission of any prior lessor
or with respect to events occurring prior to acquisition of
ownership, (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor or (iii) be bound
by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices
entered into by Lessor after the execution of this Lease,
Lessee's subordination of this Lease shall be subject to
receiving assurance (A "NON-DISTURBANCE AGREEMENT") from the
Lender that Lessee's possession of 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 the 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. ATTORNEY'S FEES. If any Party or Broker brings an action
or proceeding to enforce the terms hereof or declare rights
hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled
to reasonable attorneys' fees. Such fees may be awarded in
the same suit or recovered in a separate suit, whether or not
such action or proceeding is pursued to decision or judgment.
The term "PREVAILING PARTY" shall include, without limitation,
a Party 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 of its claim
or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such
as to fully reimburse all attorneys' fees reasonably incurred.
Lessor shall be entitled to attorneys' fees, costs and
expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or
not a legal action is subsequently commenced in connection
with such Default or resulting Breach.
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 of which they are a part, as
Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For
Sale" signs and Lessor may at any time during the last one
hundred twenty (120) days of the term hereof place on or about
the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or
liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction
upon the Premises without first having obtained Lessor's prior
written consent. Notwithstanding anything to the contrary in
this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant
such consent.
34. SIGNS. Lessee may place any sign upon the exterior of
the Premises and install such signs as are reasonably required
to advertise Lessee's business. The installation of any sign
on the Premises by or for Lessee shall be subject to the
provisions of Paragraph 7 (Maintenance, Repairs, Utility
Installations, Trade Fixtures and Alterations).
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 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 even to make a written election to the
contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as
otherwise provided herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party,
such consent shall not be unreasonably withheld or delayed.
Lessor's actual reasonable costs and expenses (including but
not limited to architects', attorneys', engineers' or other
consultants' fees) incurred in the consideration of, or
response to, a request by Lessee for any Lessor consent
pertaining to the presence or use of a Hazardous Substance,
practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation
therefor. Lessor may, as a condition to considering any such
request by Lessee, require the Lessee deposit with Lessor an
amount of money reasonably calculated by Lessor to represent
the cost Lessor will incur in considering and responding to
Lessee's request. Except as otherwise provided, any unused
portion of said deposit shall be refunded to Lessee without
interest. Lessor's consent to any act, assignment of this
Lease or subletting of the Premises by Lessee shall not
constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed
a waiver of any then existing Default or Breach, except as may
be otherwise specifically stated in writing by Lessor at the
time of such consent.
(b) All conditions to Lessor's consent authorized by
this Lease are acknowledged by Lessee as being reasonable.
The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor
at the time of consent of such further or other conditions as
are then reasonable with reference to the particular matter
for which consent is being given.
37. QUIET POSSESSION. Upon payment by Lessee of the rent for
the Premises and the observance and performance of all of the
covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have
quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
38. OPTIONS.
38.1 OPTIONS. (a) Lessor hereby grants to Lessee two
successive options (EACH, AN "OPTION") to extend the term of
this Lease for an additional sixty (60) month period (EACH, AN
"OPTION PERIOD") commencing when the prior term expires upon
each and all of the following terms and conditions: (i)
Lessee gives to Lessor and Lessor actually receives, on the
date which is at least six (6) months prior to the date upon
which the Option Period would commence, a written notice of
the exercise of the Options (and if said notification of the
exercise of said Options are not so given and received, the
Options shall automatically expire and said Options may only
be exercised consecutively); (ii) the provisions of this
Paragraph, including the provisions relating to Default of
Lessee are conditions of each Option; and (iii) all of the
terms and conditions of this Lease, except where specifically
modified by this Paragraph, shall apply to each Option Period.
The monthly rent for each month during either Option Period
shall be ninety-five percent (95%) of the Fair Market Value
for the Premises and the improvements located thereon,
determined in each case prior to the commencement of the
applicable Option Period pursuant to Paragraph 38.1(b) below.
The term "FAIR MARKET RENTAL VALUE" shall mean the monthly
amount per rentable square foot that a willing tenant would
pay and a willing landlord would accept at arm's length, for a
new five (5) year Lease (for non-renewal and non-expansion
space, unless renewals or expansions are pursuant to a
comparable definition of Fair Market Rental Value) for
delivery on or about the date upon which the applicable Option
Period commences, for comparable non-sublease, non-encumbered,
non-renewal space in other buildings in the area, giving
appropriate consideration to annual rental rates per rentable
square foot, the type of escalation clauses (including,
without limitation, operating expense, real estate tax
allowance or base year and CPI rental adjustments), rental
abatement or free rent concessions, if any, brokerage
commissions, the length of the lease term, size and location
of the premises being leased (including the floor level),
quality of the project, building standard work letter and/or
tenant improvement allowances, if any, the extent of services
to be provided to the leased premises, the date as of which
the Fair Market Rental Rate is to become effective, and other
generally applicable terms and conditions of tenancy for
comparable space.
(b) If Lessee has exercised any Option, four (4) months
prior to the commencement of the Option Period described
above, Lessor and Lessee shall meet to establish an agreed-
upon Fair Market Rental Value for such Option Period. If
agreement cannot be reached on or prior to three (3) months
prior to the commencement of the Option Period, then
(i) Lessor and Lessee shall immediately jointly appoint a
mutually-acceptable appraiser or broker to establish the Fair
Market Rental Value within the next thirty (30) days and any
associated costs will be split equally between the Parties or
(ii) both Lessor and Lessee shall each immediately select and
pay the appraiser or broker of their choice to establish a
Fair Market Rental Value within the next thirty (30) days.
If, for any reason, either one of the appraisals is not
completed within the next thirty (30) days, as stipulated,
then the appraisal that is completed at that time shall
automatically become the Fair Market Rental Value. If both
appraisals are completed and the two appraisers/brokers cannot
agree on a Fair Market Rental Value, then they shall
immediately select a third mutually acceptable
appraiser/broker (or if the two appraisers/brokers cannot
agree on a third mutually acceptable appraiser/broker, then
the Parties shall jointly petition the American Arbitration
Association for the appointment of a third broker/appraiser)
to establish a third Fair Market Rental Value within the next
thirty (30) days. The average of the two appraisals closest
in value shall then become the Fair Market Rental Value. The
costs of the third appraisal will be split equally between the
Parties.
38.2 MULTIPLE OPTIONS. A later Option cannot be
exercised unless the prior Option to extend or renew this
Lease have been validly exercised.
38.3 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the
contrary: (i) during the period commencing with the giving of
any notice of Default under Paragraph 13.1 and continuing
until the notice Default is cured, or (ii) during the period
of time any monetary obligation due Lessor from Lessee is
unpaid (without regard to whether notice thereof is given
Lessee), or (iii) during the time Lessee is in Breach of this
Lease, or (iv) in the event that Lessor has rightfully given
to Lessee three (3) or more notices of Default under Paragraph
13.1, whether or not the Defaults are cured, during the twelve
(12) month period immediately preceding the exercise of the
Option.
(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of
Lessee's inability to exercise an Option because of the
provisions of Paragraph 38.3(a).
39. 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.
40. RESERVATIONS. Lessor reserves to itself the right, from
time to time, to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor
deems necessary, and to cause the recordation of parcel maps
and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably
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.
41. PERFORMANCE UNDER PROTEST. If at any time a dispute
shall arise as to any amount or sum of money to be paid by one
Party to the other under the provisions hereof, the Party
against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there
shall survive the right on the part of said Party to institute
suit for recovery of such sum. If it shall be adjudged that
there was no legal obligation on the part of said Party to pay
such sum or any part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
42. 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.
43. AMENDMENTS. This Lease may be modified only in writing,
signed by the Parties in interest at the time of the
modification. The parties shall amend this Lease from time to
time to reflect any adjustments that are made to the Base Rent
or other rent payable under this Lease. As long as they do
not materially change Lessee's obligations hereunder, Lessee
agrees to make such reasonable non-monetary modifications to
this Lease as may be reasonably required by an institutional,
insurance company, or pension plan Lender in connection with
the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
44. 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.
45. COUNTERPARTS. This Lease may be executed in any number
of counterparts and by the different Parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which counterparts
together shall constitute one and the same instrument.
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. WHENEVER
IN THIS LEASE, LESSOR OR LESSEE IS GRANTED A RIGHT TO TAKE
ACTION, EXERCISE DISCRETION, OR MAKE AN ALLOCATION, JUDGMENT
OR OTHER DETERMINATION, LESSOR AND LESSEE SHALL ACT IN GOOD
FAITH AND IN A REASONABLE AND PRUDENT MANNER. EACH PARTY
AGREES THAT THIS LEASE SHALL BE CONSTRUED TO STIPULATE THE
NORMAL AND REASONABLE EXPECTATIONS OF A SOPHISTICATED LESSOR
AND LESSEE, WHERE ONE TAKES NO ACTION THAT MIGHT RESULT IN THE
FRUSTRATION OF THE OTHER'S REASONABLE EXPECTATIONS CONCERNING
THE BENEFITS TO BE ENJOYED UNDER THIS LEASE.
The parties hereto have executed this Lease at the place
on the dates specified above their respective signatures.
EXECUTED at Canyon Country, CA EXECUTED at Los Angeles, CA
------------------ ---------------
on 4 April, 94 on April 1, 1994
----------- -------------
by LESSEE: by LESSOR:
MASON ELECTRIC COMPANY G&G 8TH STREET PARTNERS, LTD.,
a California limited
partnership
By: /s/William E. Southern By: G's Properties, Inc.
----------------------
William E. Southern
Title: President
By: /s/ Rodney L. Gleicher
-----------------------
Rodney L. Gleicher
Title: President
By: /s/ Robert A. Chappell
----------------------
Robert A. Chappell
Title: General Partner
By: /s/ Paul Saylors
----------------------
Paul Saylors
Title: General Partner
By: /s/ John M. Spar
----------------------
John M. Spar
Title: General Partner
JAMES W. CASSIDY
/s/ James W. Cassidy
--------------------------
LORALEE CASSIDY
/s/ Loralee Cassidy
--------------------------
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On April 4, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
William E. Southern, proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same in
his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE: /s/Marlyn Lee Irvin (This area for official
------------------- notarial seal)
Notary Public
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On April 1, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
Rodney L. Gleicher, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument,
and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE: /s/ Sheree Ann Bradford (This area for official
----------------------- notarial seal)
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On April 1, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
Robert A. Chappell, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument,
and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE: /s/ Lois E. Kelsey (This area for official
------------------ notarial seal)
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On April 1, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
Paul Saylors, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE: /s/ Sheree Ann Bradford (This area for official
----------------------- notarial seal)
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On April 1, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
John M. Spar, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal
SIGNATURE: /s/ Sheree Ann Bradford (This area for official
----------------------- notarial seal)
STATE OF CALIFORNIA )
) ss:
COUNTY OF Riverside )
On April 2, 1994 before me, the undersigned, a
Notary Public in and for said State, personally appeared
James W. Cassidy, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same.
WITNESS my hand and official seal
SIGNATURE: /s/ Sharon K. Atwell (This area for official
-------------------- notarial seal)
Notary Public
SCHEDULE A
----------
PARCEL 1:
PARCELS "C" AND "D", AS SHOWN ON PARCEL MAP NO. L.A. NO.
6660, PARTLY IN THE CITY OF LOS ANGELES AND PARTLY IN THE
CITY OF SAN FERNANDO, IN THE COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, AS PER MAP FILED IN BOOK 243, PAGES 25 TO
27, INCLUSIVE, OF PARCEL MAPS IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
PARCEL 2:
AN EASEMENT FOR INGRESS AND EGRESS AND INCIDENTAL
PURPOSES OVER THOSE PORTIONS OF PARCELS "A" AND "B", AS
SHOWN ON PARCEL MAP L.A. NO. 6660, PARTLY IN THE CITY OF
LOS ANGELES AND PARTLY IN THE CITY OF SAN FERNANDO, IN
THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER
MAP FILED IN BOOK 243, PAGES 25 TO 27, INCLUSIVE, OF
PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SHOWN AND DELINEATED ON SAID MAP AS "PRIVATE
STREET."
EXHIBIT 10.23a
SINGLE TENANT INDUSTRIAL SUBLEASE
This Sublease (this "Sublease"), dated as of August 1,
1996, is made by and between Mason Electric Company, Inc., a
California corporation ("Sublessor") and ME Acquisition Co., a
Delaware corporation ("Sublessee"), (collectively, the
"Parties," or individually a "Party"), is made with respect to
the Premises as defined in that certain Single Tenant
Industrial Lease dated April 1, 1994 (the "Lease") by and
between Sublessor (referred to therein, and where appropriate
herein, as "Lessee") and G&G 8th Street Partners, Ltd., a
California limited partnership, James Cassidy and Loralee
Cassidy (collectively, "Lessor"). The Premises are
specifically described in Schedule A attached hereto and made
a part hereof.
This Sublease is subject and subordinate to the Lease,
and Sublessee agrees to be bound by the obligations of the
Lessee set forth in the Lease, the provisions of which are
expressly incorporated herein by this reference except as such
provisions are modified or replaced herein. For provisions
that are incorporated herein by reference and not otherwise
modified by this Sublease, the term "Lessor" in such
provisions shall mean "Sublessor" in this Sublease, the term
"Lessee" in such provisions shall mean "Sublessee" in this
Sublease, and the term "Lease" in such provisions shall mean
"Sublease" in this Sublease. For purposes of comparison to
the Lease, the provisions below substitute for or modify as
indicated the provisions of the Lease bearing the same
Paragraph, subparagraph and clause numbers. The following
provisions are agreed for this Sublease:
1.3 TERM: The term of this Sublease shall be for 7
years 8 months ("Original Term") commencing August 1, 1996
("Commencement Date") and ending March 31, 2004, ("Expiration
Date"). (See paragraph 3 for further provisions.)
1.5 BASE RENT: Base monthly rent ("Base Rent") shall be
payable as follows (all rental adjustments shall occur on the
first day of April of each year):
RENTAL RATE: MONTHS RENT
------ ----
1- 8 $20,000
9- 20 $21,000
21-32 $22,000
33-44 $23,000
45-56 $24,000
57-68 $25,000
69-80 $26,000
81-92 $27,000
As used herein, each "year" shall mean that period
commencing on April 1st and ending on March 31st of the
succeeding calendar year.
2.3 CONDITION. Sublessor warrants that, as of the date
of this Sublease, the roof and other structural components
constituting the roof have been constructed in a good and
workmanlike manner and are in good condition and repair. If a
noncompliance with said warranty exists during a one (1) year
period after the date of this Sublease, Sublessor shall
promptly after receipt of written notice from Sublessee
setting forth with specificity the nature and extent of such
non-compliance, rectify same at Sublessor's expense.
4. RENT.
4.1 BASE RENT. (a) Sublessee shall cause payment of
Base Rent and other rent or charges, as the same may be
adjusted from time to time, to Sublessor at: Stamford Harbor
Park, 333 Ludlow Street, Stamford, Connecticut 06902, all in
lawful money of the United States, without offset or deduction
except as otherwise provided in this Sublease, on or before
the day on which it is due under the terms of the Lease and
this Sublease as applicable. Base Rent and all other rent and
charges for any period during the term hereof which is for
less than one (1) full calendar month shall be prorated based
upon the actual number of days of the calendar month involved.
Payment of Base Rent and other charges shall be made to Lessor
at its address in the Lease and to Sublessor at its address
stated herein or to such other persons or at such other
addresses as may from time to time be designated in writing to
Sublessee.
(b) Notwithstanding anything to the contrary set
forth elsewhere in this Sublease, all payments of monthly Base
Rent due hereunder shall be paid by Sublessee monthly in
advance on the first day of each calendar month.
(c) Sublessor shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to
Lessor in the manner provided in the Lease. In the event
Sublessor fails to timely pay Lessor Base Rent and such other
rent or charges, Sublessee shall have the right to advance
such delinquent amounts, together with any late charge or
interest, and to deduct the amount of such advance from the
next monthly installment(s) of Base Rent and other rent or
charges due and owing to Sublessor under this Sublease.
6. USE.
6.2 HAZARDOUS SUBSTANCES.
(c) WHEN CONSENT IS REQUIRED. The obligations of
Lessee in Paragraph 6.2 of the Lease, and as amended by the
Amendment of Lease, Estoppel, and Consent to Sublease of even
date, regarding the consent of Lessor to a Reportable Instance
shall flow solely to Lessor under the Lease and not to
Sublessor under this Sublease.
(g) DUTY TO INFORM SUBLESSOR. If Sublessee knows,
or has reasonable cause to believe, that a Hazardous Substance
or Hazardous Substance Condition has come to be located on,
in, under or about the Premises other than as previously
consented to by Sublessor, or otherwise permitted in this
Sublease, or if Sublessee receives any notice or claim with
respect thereto, Sublessee shall immediately upon discovery or
receipt thereof give written notice of such condition, notice
or claim to Sublessor. Sublessee shall also immediately serve
Sublessor with a copy of any statement, report, notice,
registration, permit, business plan, license, claim, action or
proceeding given or received from any governmental authority
or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge
of, or exposure to, any Hazardous Substance on, in, under or
about the Premises. Sublessee shall, within thirty (30) days
following request by Sublessor (made not more than once per
year or in connection with alterations or improvements being
made or proposed by Sublessee), provide Sublessor with copies
of all permits and registrations applicable to, and a
description of the precautions being taken with reference to,
any storage tanks and/or Hazardous Substances Sublessee is
then using or maintaining on, or disposing of from, the
Premises.
(k) ENVIRONMENTAL REPRESENTATION. Sublessor hereby
represents and warrants to Sublessee that, to the knowledge of
Sublessor after due investigation, there are not currently,
nor have there been at any time in the past, any Acutely
Hazardous Substances, Hazardous Substance Condition or
underground storage tanks in, on, under or about the Premises
or the improvements located thereon.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE
FIXTURES AND ALTERATIONS.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION. The
rights granted to Lessor in Paragraph 7.4 of the Lease shall
flow to Lessor under the Lease and not to Sublessor under this
Sublease.
8. INSURANCE; INDEMNITY.
8.2 LIABILITY INSURANCE. Sublessee shall obtain and
keep in force during the term of this Sublease a Commercial
General Liability policy of insurance protecting Sublessee and
Sublessor (naming Lessor as an additional insured) against
claims for bodily injury, personal injury and property damage
based upon, involving or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on in a form
consistent with that carried by Sublessee's parent company,
Esterline Technologies Corporation in an amount not less than
$5,000,000.00. Except to the extent an Insured Loss is caused
by Lessor, its employees, agents or contractor's negligence,
all insurance to be carried by Sublessee shall be primary to
and not contributory with any similar insurance carried by
Lessor or Sublessor, so that their insurance shall be
considered excess insurance only.
8.3 PROPERTY INSURANCE-BUILDING, SUBLESSEE OWNED
ALTERATIONS AND UTILITY INSTALLATIONS. Sublessee shall obtain
and keep in force during the term of this Sublease a policy or
policies with loss payable to Lessor, Sublessor and to the
holders of any mortgages, deeds of trust or ground leases on
the Premises ("Lender(s)"), insuring loss or damage to the
Premises, Alterations and Utility Installations. The amount
of such insurance shall be equal to the full replacement cost
of the Premises and the Alterations and Utility Installations,
as determined by Sublessee's insurance carrier, but in no
event more than the commercially reasonable and available
insurable value thereof if, by reason of the unique nature or
age of the improvements involved, such latter amount is less
than full replacement cost. Such insurance shall be on in a
form consistent with that carried by Sublessee's parent
company, Esterline Technologies Corporation. Sublessee shall
be liable for such deductible amount in the event of an
Insured Loss, as defined in Paragraph 9.1(c).
8.4 SUBLESSEE'S IMPROVEMENTS. Sublessor shall not be
required to insure Alterations and Utility Installations.
8.5 INSURANCE POLICIES. Sublessee shall cause to be
delivered to Lessor and Sublessor copies of policies of such
insurance or certificates evidencing the existence of such
insurance with the insured and loss payable clauses as
required by this Sublease. No such policy shall be cancelable
or subject to modification except after thirty (30) days prior
written notice to Lessor and Sublessor. Sublessee shall at
least thirty (30) days prior to the expiration of such
policies, furnish Lessor and Sublessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or
Sublessor may order such insurance and charge the cost thereof
to Sublessee, which amount shall be payable by Sublessee to
Sublessor upon demand. If Sublessee shall fail to procure and
maintain the insurance required to be carried under this
Paragraph 8, Sublessor may, but shall not be required to,
procure and maintain the same at Sublessee's expense.
9. DAMAGE OR DESTRUCTION.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. In Paragraph 9.3
of the Lease, the following expression is deleted: ";
provided, however, that this Lease shall not so terminate
unless and until Lessor shall have paid in full the
outstanding principal balance of, together with all accrued
and unpaid interest on, the Note".
9.4 TOTAL DESTRUCTION. In Paragraph 9.4 of the Lease,
the following expression is deleted: "; provided, however,
that this Lease shall not so terminate unless and until Lessor
shall have paid in full the outstanding principal balance of,
together with all accrued and unpaid interest on, the Note".
13. DEFAULT; BREACH; REMEDIES.
13.4 BREACH BY SUBLESSOR.
(a) Sublessor shall be deemed in breach of this
Sublease if Sublessor is in Default or Breach under the Lease,
except if such breach is due to Sublessee's Default or Breach
under this Sublease. Sublessor shall promptly deliver to
Sublessee any notice Sublessor receives of a Default or Breach
under the Lease. Sublessee shall have the right to cure such
Sublessor's Default or Breach under the Lease and shall
promptly be reimbursed for any monetary sums expended in
remedying such Default or Breach, including interest at the
rate of 12% per annum, but not exceeding the maximum rate
allowed by law.
(b) As to any other breach of Sublessor under this
Sublease, Sublessor shall not be deemed in breach unless
Sublessor fails within a reasonable time to perform an
obligation required to be performed by Sublessor. For
purposes of this Paragraph 13.4, a reasonable time shall in no
event be less than thirty (30) days after receipt by
Sublessor, and by the holders of any ground lease, mortgage or
deed of trust covering the Premises whose name and address
shall have been furnished Sublessee in writing for such
purpose, of written notice specifying wherein such obligation
of Sublessor has not been performed; provided, however, that
if the nature of Sublessor's obligation is such that more than
thirty (30) days after such notice are reasonably required for
its performance, then Sublessor shall not be in breach of this
Sublease if performance is commenced within such thirty (30)
day period and thereafter diligently pursued to completion.
15. BROKER'S FEE. Sublessee and Sublessor each represent and
warrant to the other that it has had no dealings with any
person, firm, broker or finder in connection with the
negotiation of this Sublease and/or the consummation of the
transaction contemplated hereby, and that no broker or other
person, firm or entity other than said named Brokers is
entitled to any commission or finder's fee in connection with
said transaction. Sublessee and Sublessor do each hereby
agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker,
finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect
thereto.
38. OPTIONS.
38.1 OPTIONS. (a) Sublessor hereby grants to Sublessee
two successive options (each, an "Option") to extend the term
of this Sublease for an additional sixty (60) month period
(each, an "Option Period") commencing when the prior term
expires upon each and all of the following terms and
conditions: (i) Sublessee gives to Sublessor and Sublessor
actually receives, on the date which is at least six (6)
months prior to the date upon which the Option Period would
commence, a written notice of the exercise of the Options (and
if said notification of the exercise of said Options are not
so given and received, the Options shall automatically expire
and said Options may only be exercised consecutively);
(ii) the provisions of this Paragraph, including the
provisions relating to Sublessee's actions are conditions of
each Option; and (iii) all of the terms and conditions of this
Sublease, except where specifically modified by this
Paragraph, shall apply to each Option Period. The monthly
rent for each month during either Option Period shall be the
amount payable by Sublessor to Lessor pursuant to Section 38.1
of the Lease.
(b) If Sublessee has exercised any Option, four (4)
months prior to the commencement of the Option Period
described above, Sublessor shall give immediate notice of such
notice to Lessor, and Sublessee as the representative of
Sublessor and Lessor shall meet to establish an agreed-upon
Fair Market Rental Value for such Option Period. If agreement
cannot be reached on or prior to three (3) months prior to the
commencement of the Option Period, then (i) Lessor and
Sublessee on the behalf of Sublessor, shall immediately
jointly appoint a mutually-acceptable appraiser or broker to
establish the Fair Market Rental Value within the next thirty
(30) days and any associated costs will be split equally
between Lessor and Sublessee or (ii) both Lessor and Sublessee
shall each immediately select and pay the appraiser or broker
of their choice to establish a Fair Market Rental Value within
the next thirty (30) days. If, for any reason, either one of
the appraisals is not completed within the next thirty (30)
days, as stipulated, then the appraisal that is completed at
that time shall automatically become the Fair Market Rental
Value. If both appraisals are completed and the two
appraisers/brokers cannot agree on a Fair Market Rental Value,
then they shall immediately select a third mutually acceptable
appraiser/broker (or if the two appraisers/brokers cannot
agree on a third mutually acceptable appraiser/broker, then
Lessor and Sublessee shall jointly petition the American
Arbitration Association for the appointment of a third
broker/appraiser) to establish a third Fair Market Rental
Value within the next thirty (30) days. The average of the
two appraisals closest in value shall then become the Fair
Market Rental Value. The costs of the third appraisal will be
split equally between Lessor and Sublessee.
45. COUNTERPARTS. This Sublease may be executed in any
number of counterparts and by the different Parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which counterparts
together shall constitute one and the same instrument.
SUBLESSOR AND SUBLESSEE HAVE CAREFULLY READ AND REVIEWED THIS
Sublease AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY
THE EXECUTION OF THIS SUBLEASE SHOW THEIR INFORMED AND
VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS Sublease IS EXECUTED, THE TERMS OF THIS SUBLEASE
ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND
PURPOSE OF SUBLESSOR AND SUBLESSEE WITH RESPECT TO THE
PREMISES. WHENEVER IN THIS SUBLEASE, SUBLESSOR OR SUBLESSEE
IS GRANTED A RIGHT TO TAKE ACTION, EXERCISE DISCRETION, OR
MAKE AN ALLOCATION, JUDGMENT OR OTHER DETERMINATION, SUBLESSOR
AND SUBLESSEE SHALL ACT IN GOOD FAITH AND IN A REASONABLE AND
PRUDENT MANNER. EACH PARTY AGREES THAT THIS SUBLEASE SHALL BE
CONSTRUED TO STIPULATE THE NORMAL AND REASONABLE EXPECTATIONS
OF A SOPHISTICATED SUBLESSOR AND SUBLESSEE, WHERE ONE TAKES NO
ACTION THAT MIGHT RESULT IN THE FRUSTRATION OF THE OTHER'S
REASONABLE EXPECTATIONS CONCERNING THE BENEFITS TO BE ENJOYED
UNDER THIS SUBLEASE.
The parties hereto have executed this Sublease at the
place on the dates specified above their respective
signatures.
EXECUTED at San Fernando, CA EXECUTED at Bellevue, WA
------------------- ------------------------
on August 07, 1996 on August 6, 1996
--------------- --------------
by SUBLESSOR: by SUBLESSEE:
MASON ELECTRIC COMPANY, Inc. ME Acquisition Company,
a Delaware corporation
By: /s/ William E. Southern By /s/ Robert W. Stevenson
----------------------- -----------------------
William E. Southern Robert W. Stevenson
Title: President Title: Vice-President
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On July 07, 1996 before me, the undersigned, a
Notary Public in and said State, personally appeared William
E. Southern, (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on
the instrument the person, or the entity upon behalf of which
the person acted, executed the installment.
WITNESS my hand and official seal
SIGNATURE: /s/ Inez T. Morin (This area for official
----------------- notarial seal)
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that
Robert W. Stevenson is the person who appeared before me, and
said person acknowledged that he signed this instrument, on
oath stated that he was authorized to execute the instrument
and acknowledged it as the Vice-President of ME Acquisition
Co., a Delaware corporation to be the free and voluntary act
of such party for the uses and purposes mentioned in the
instrument.
Dated: August 6, 1996
--------------
/s/ Maria L. Rice
-----------------
(Signature)
Maria L. Rice
-----------------
(Name legibly printed or stamped)
(Seal or stamp) Notary Public in and for the
State of Washington, residing at
Seattle.
My appointment expires 7-30-00.
SCHEDULE A
----------
PARCEL 1:
PARCELS "C" AND "D", AS SHOWN ON PARCEL MAP NO. L.A. NO. 6660,
PARTLY IN THE CITY OF LOS ANGELES AND PARTLY IN THE CITY OF
SAN FERNANDO, IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 243, PAGES 25 TO 27,
INCLUSIVE, OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.
PARCEL 2:
AN EASEMENT FOR INGRESS AND EGRESS AND INCIDENTAL PURPOSES
OVER THOSE PORTIONS OF PARCELS "All AND 11311, AS SHOWN ON
PARCEL MAP L.A. NO. 6660, PARTLY IN THE CITY OF LOS ANGELES
AND PARTLY IN THE CITY OF SAN FERNANDO, IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 243,
PAGES 25 TO 27, INCLUSIVE, OF PARCEL MAPS IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, SHOWN AND DELINEATED ON SAID
MAP AS "PRIVATE STREET."
EXHIBIT 10.23b
AMENDMENT OF LEASE, ESTOPPEL, AND CONSENT TO SUBLEASE
This Amendment of Lease, Estoppel, and Consent to
Sublease (this "CONSENT") is made as of August 6, 1996, by G &
G 8th Street Partners, Ltd., a California limited partnership,
James Cassidy and Loralee Cassidy (collectively, "LANDLORD"),
to Mason Electric Company, Inc., a California corporation
("TENANT"), and ME Acquisition Co., a Delaware corporation
("SUBLESSEE") with reference to the following Recitals.
RECITALS
A. Landlord and Tenant have entered into that certain
Single Tenant Industrial Lease (the "ORIGINAL LEASE") dated
April 1, 1994, wherein Landlord leased to Tenant certain real
property (the "PREMISES"), located at 605 8th Street, San
Fernando, California 91340, and more particularly described in
the Lease. (The Original Lease as amended by this Consent in
paragraphs 4 and 14 below, is hereinafter referred to as the
"LEASE.")
B. Landlord and Tenant wish to amend the Lease in the
manner set forth below.
C. Tenant desires to sublease to Sublessee the Premises
(the "SUBLEASED PREMISES") more particularly described in and
pursuant to the provisions of that certain Sublease dated
August 1, 1996 (the "SUBLEASE"), a copy of which is attached
hereto.
D. Tenant desires to obtain Landlord's consent to the
Sublease.
E. Tenant is the holder of an Amended and Restated
Promissory Note in the original principal amount of
$4,000,000, dated April 1, 1994 executed by Landlord (the
"NOTE"), secured by a Deed of Trust, Assignment of Rents and
Lease, Security Agreement, Financing Statement and Fixture
Filing (the "TRUST DEED") which encumbers the Premises.
F. Landlord wishes to obtain Tenant's acknowledgment
that Landlord's consent to the Sublease is permitted by and
not in breach of the Note and Deed of Trust.
NOW, THEREFORE, Landlord hereby consents to the Sublease,
such consent being subject to and upon the following terms and
conditions to which Tenant and Sublessee hereby agree:
1. DEFINITIONS. All initial capitalized terms not otherwise
defined in this Consent shall have the meanings set forth in
the Lease unless the context clearly indicates otherwise.
2. EFFECTIVENESS OF CONSENT. The Consent shall not be
effective and the Sublease shall not be valid nor shall
Sublessee take possession of the Subleased Premises unless and
until: (a) a fully executed counterpart of the Sublease in the
form attached hereto, (b) a fully executed counterpart of this
Consent, and (c) Tenant has paid to Landlord, the sum of
$18,078.00, less the sum of $7,500.00 paid on account on or
about July 15, 1996, for Landlord's accounting and legal fees
in connection with this Consent, which amount is payable upon
execution of this Consent by Tenant, and is in addition to all
other amounts due from Tenant under the Lease.
3. SUBORDINATION OF SUBLEASE. The Sublease is and shall be
at all times subject and subordinate to (a) all of the
covenants, agreements, terms, provisions and conditions
contained in the Lease, (b) the Trust Deed, and (c) all
matters of records affecting the Premises and all laws,
ordinances and regulations now or thereafter affecting the
Premises.
4. ASSUMPTION OF LEASE BY SUBLESSEE. Sublessee does hereby
expressly assume and agree to be bound by and to perform and
comply with, for the benefit of Landlord, each and every
obligation of Tenant under the Lease, except for the Note and
Trust Deed, and except that so long as the Sublease remains in
effect and Sublessee is the sole sublessee or assignee of the
Premises, then the provisions of Article 8 and 38 of the
Sublease shall be deemed to amend and replace the counterpart
provisions in Articles 8 and 38 of the Lease, which Articles 8
and 38 of the Sublease may not be amended without the written
consent of Landlord provided however, if the Sublessee
exercises the options contained in Article 38, the term of the
Note shall be extended as provided in the Note. Additionally,
except as stated in the preceding sentence, notwithstanding
any conflict between the terms of the Sublease and the terms
of the Lease, or Landlord's consent to the Sublease, Tenant
shall remain fully and primarily liable for the payment of
Rents and all other amounts required to be paid by Tenant
under the Lease and for the performance of all other
obligations of Tenant under the Lease. As between Landlord
and Tenant and as between Landlord and Sublessee, the terms of
the Lease shall prevail in any conflict between the terms of
the Lease and the terms of the Sublease except as provided in
this paragraph.
5. NO WAIVER BY LANDLORD. The acceptance of Rents or other
amounts by Landlord from Sublessee or anyone else liable under
the Lease shall not be deemed a waiver by Landlord of any
provisions of the Lease.
6. FUTURE SUBLEASING.
(a) This Consent shall not constitute a consent to any
subsequent subletting or assignment and shall not relieve
Tenant or any person claiming under or through Tenant of the
obligation to obtain the consent of Landlord, pursuant to
Article 12 of the Lease, to any future assignment or sublease
(including, without limitation any future assignment or
sublease of the Sublease).
(b) Landlord may consent to subsequent sublettings and
assignments of the Lease or the Sublease or any amendments or
modifications thereto without notifying Tenant or anyone else
liable under the Lease and without obtaining their consent and
such action shall not relieve such persons from liability,
provided however, Landlord agrees to give copies to Sublessee
at the Premises of any notices of default or breach by Tenant
or any other written notice given to Tenant by landlord as and
when such notice is furnished to Tenant.
7. ACTS OF SUBLESSEE. Any act or omission of Sublessee or
anyone claiming under or through Sublessee that violates any
of the provisions of the Lease shall be deemed a violation of
the Lease by Tenant.
8. LANDLORD'S RIGHT TO PROCEED DIRECTLY. In the event of
any Default or Breach of Tenant under the Lease, Landlord may
proceed directly against Tenant, Sublessee, any guarantors or
anyone else liable under the Lease or the Sublease without
first exhausting Landlord's remedies against any other person
or entity liable thereon to Landlord.
9. USE OF PREMISES. The Subleased Premises shall (subject
to all of the convenants and agreements of the Lease) be used
solely for the purposes set forth in the Lease and for no
other use.
10. ATTORNMENT BY SUBLESSEE.
(a) In the event of any default of Tenant in the
performance of its obligations under the Lease and termination
of the Lease or lawful re-entry or repossession of the
Premises by Landlord, then Sublessee shall attorn to Landlord
and Landlord shall accept such attornment of Sublessee subject
to the provisions of Section 10(b) hereof. If Landlord
accepts the attornment of Sublessee (as Landlord is required,
or elects to do pursuant to Section 10(b)), then Landlord
shall undertake the obligations of Tenant under the Sublease
from the time of such acceptance of attornment to the date of
termination of the Sublease, but Landlord shall not (i) be
liable for any prepayment of more than one month's rent or any
security deposit paid by Sublessee, (ii) be liable for any
previous act or omission of Tenant under the Lease or for any
other defaults of Tenant under the Sublease, (iii) be subject
to any defenses or offsets previously accrued which Sublessee
may have against Tenant or (iv) be bound by any changes or
modifications made to the Sublease without the written consent
of Landlord.
(b) If (i) there is a default in the Lease by Tenant,
and if (ii) after any required notices by landlord to Tenant
to cure such default have been given, Tenant has not cured
such default, then Landlord shall give Sublessee fourteen days
written notice and opportunity to cure such default. If
Sublessee cures such default within such fourteen day period,
then Landlord shall be required to accept the attornment of
Sublessee as described in Section 10 (a), but if Sublessee
fails to cure such default within such period, time being of
the essence, then Landlord shall not be required to accept the
attornment of Sublessee. If such default is not a monetary
default and cannot be reasonably cured within such fourteen
day period, Sublessee may have such additional time as may be
necessary up to a maximum of sixty days to cure the default so
long as Sublessee diligently pursues such cure to its
completion.
11. TENANT'S ASSIGNMENT OF RENTS. Tenant hereby assigns and
transfers to Landlord all of Tenant's right, title and
interest in the Sublease and all rentals and income arising
therefrom, subject however to the following terms of this
Section 11:
(a) Landlord, by executing this Consent, agrees that
until a default shall occur in the performance of Tenant s
obligations under the Lease, Tenant may receive, collect and
enjoy the rents accruing under the Sublease. However, if
Tenant shall default in the performance of any of its
obligations under the Lease and the Lease is terminated or
Landlord re-enters the Premises, then Landlord may, at its
option, receive and collect, directly from Sublessee, all rent
then owing and thereafter becoming due and payable under the
Sublease as such rent shall become due and payable under the
Sublease. All such rent payable under the Sublease so
collected by Landlord shall be applied against any Base Rent
and other charges payable by Tenant to Landlord under the
Lease. So long as the Lease remains in effect, any excess
amounts collected under the Sublease, after discharge of all
of Tenant's obligations under the Lease, shall be refunded
promptly by Landlord to Tenant. Landlord shall not, by reason
of this assignment of the Sublease nor by reason of the
collection of rents from Sublessee, be deemed liable to
Sublessee for any failure of Tenant to perform and comply with
Tenant's obligations under the Lease or the Sublease. Nothing
contained herein shall be deemed to create any right of Tenant
to the refund of any rents or other amounts paid or payable to
Landlord by Sublessee arising or accruing after the expiration
or earlier termination for any reason of the Lease.
(b) Tenant hereby irrevocably authorizes and directs
Sublessee, subject to the provisions of Section 11(a) hereof,
upon receipt of any written notice from landlord stating that
a default exists in the performance of Tenant's obligations
under the Lease and that Landlord has terminated the Lease or
has re-entered the Premises, to pay to Landlord the rents and
other amounts due and to become due under the Sublease as such
rents and other amounts shall become due and payable under the
Sublease. Tenant agrees that Sublessee shall have the right
to rely upon any such statement and request from Landlord, and
that Sublessee shall pay such rents and other amounts to
Landlord without any obligation or right to inquire as to
whether such default exists and notwithstanding any notice
from or claim from Tenant to the contrary and Tenant shall
have no right or claim hereunder against Sublessee for any
such rents or other amounts so paid by Sublessee. Such
payments to Landlord shall satisfy and discharge Sublessee s
obligation for the payment of rent and other amounts under the
Sublease to the full extent of such payments made to Landlord.
12. TERMINATION OF SUBLEASE ON TERMINATION OF LEASE. Upon
the expiration or any earlier termination of the Lease, in the
event Landlord is not required by Section 10 (b) to accept
Sublessee's attornment, and Landlord does not exercise its
option pursuant to Section 10 and 11 above, the Sublease and
the term and estate granted thereby shall terminate as of the
effective date of such expiration or termination, and
Sublessee shall vacate the Subleased Premises on such date.
13. TENANT WARRANTIES RE NOTE AND TRUST DEED. Tenant
warrants and represents that Tenant is the holder of the Note
and Trust Deed, and has not assigned, sold, hypothecated or
otherwise transferred to any person or entity, any interest in
either the Note or the Trust Deed. As the holder of the Note
and Trust Deed, Tenant acknowledges that the execution of this
Consent by Landlord is permitted by, and not a breach by
Landlord in any manner of any provision of the Note, the Trust
Deed, or the Settlement Agreement (as defined in the Note).
Tenant acknowledges that to the best of Tenant's knowledge,
there is no current breach or default of the Note or Trust
Deed either by Landlord or Tenant. Landlord acknowledges that
to the best of Landlord's knowledge, there is no current
breach or default of the Note or Trust Deed either by Landlord
or Tenant.
14. AMENDMENT OF LEASE. The Original Lease is hereby amended
as follows:
(a) Tenant acknowledges that Landlord has satisfied in
full Landlord's obligations under Sections 2.2 (b) and 3 of
the Original Lease or that any non-compliance by Landlord with
any of its obligations under said Sections 2.2 (b) and 3 has
been waived by Tenant.
(b) In the fourteenth line of Section 6.2(c) of the
Original Lease, the words prior written shall be inserted
before the words consents and recommendations.
(c) The second sentence of Section 6.2 (f) of the
Original Lease shall be amended to read as follows:
Lessee shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably
recommended by Lessor, Lessor's environmental
consultant, or any governmental agency, whether or not
formally required, for the clean-up or prevention of any
actual or potential contamination of, and for the
maintenance, security and/or monitoring of, the
Premises, the elements surrounding same, or neighboring
properties, that was caused by, contributed to, or
exacerbated by Lessee Persons, or pertaining to or
involving any Hazardous Substance and/or storage tank
brought onto the Premises by or for Lessee Persons.
( LESSEE PERSONS shall mean Lessee or Lessee s
partners, trustees, officers, directors, shareholders,
members, beneficiaries, licensees, invitees, or any of
Lessee's assignees, subtenants or assignees or
subtenants agents, employees, contractors, servants,
guests, or independent contractors ).
(d) The following shall be added at the end of Section
6.2 (h) of the Original Lease:
Notwithstanding the preceding provisions of this Section
6.2 (h), the requirement herein for Lessee's approval of
costs and expenses to be incurred by Lessor shall apply
only to proposed new installations, operations, or uses
by Lessee of Hazardous Substances or storage tanks, and
shall not apply to the removal, monitoring,
investigation or remediation of Hazardous Substances or
storage tanks already existing (or suspected to exist)
on the Premises as of the date Lessor incurs such cost
or expense.
(e) The first sentence of Section 6.2 (i) of the
Original Lease is hereby replaced by the following:
Lessee shall indemnify, protect, defend and hold Lessor,
its agents, employees, and lenders and the Premises,
harmless from and against any and all loss of rents,
and/or damages, liabilities, judgments, costs, claims,
liens, expenses, penalties, permits and attorney's and
consultant's fees arising out of or involving, either
directly or indirectly, in whole or in part, the
presence of any storage tank on the Premises or any
Hazardous Substance Condition, except to the extent that
the presence of such storage tank or Hazardous Substance
Condition existed prior to the first use of the Premises
by Lessee Persons. If a storage tank or Hazardous
Substance Condition existed prior to the first use of
the Premises by Lessee Persons, then Lessee's indemnity
shall apply to such storage tank or Hazardous Substance
Condition only to the extent that any act or omission of
the Lessee Persons contributed to or exacerbated such
Hazardous Substance Condition.
(f) The first sentence of Section 6.2 (l) of the
Original Lease shall be replaced by the following:
Lessor shall indemnify, protect, defend and hold Lessee,
its agents, employees, and lenders and the Premises,
harmless from and against any and all loss of rents,
and/or damages, liabilities, judgments, costs, claims,
liens, expenses, penalties, permits and attorney's and
consultant's fees arising solely out of, or solely
involving the presence on the Premises, prior to the
first use of the Premises by Lessee Persons, of any
storage tank or any Hazardous Substance Condition,
except to the extent that any Lessee Persons contributed
to or exacerbated any Hazardous Substance Condition.
(g) Notwithstanding the provisions of Section 1.7, 6, or
any other provision of the Original Lease, Tenant agrees that
the only use of the Premises involving Hazardous Substances
which shall be permitted shall be the use described in Exhibit
A attached hereto and incorporated herein by reference.
Tenant warrants and represents that: (i) Tenant has obtained
all governmental permits or approvals required for such use of
Hazardous Substances; and (ii) neither Tenant nor Sublessee is
currently the subject of any regulatory investigation,
inquiry, order or proceeding regarding Tenant's or Sublessee s
use of Hazardous Substances with respect to any operations of
Tenant or Sublessee or their affiliates.
15. NO WAIVER OF LEASE. Except as expressly provided herein,
nothing contained herein or in the Sublease shall be deemed or
construed to modify, waive, impair or affect any of the
covenants, agreements, terms, provisions or conditions
contained in the Lease or to waive any breach or default by
Tenant in the due keeping, performance or observance thereof.
16. INTEGRATION; MODIFICATION. This Consent, together with
the Note, Deed of Trust, Settlement Agreement, the Lease and
agreements referenced therein constitute the entire agreement
of the parties and supersede any and all prior or
contemporaneous written or oral negotiations, correspondence,
understandings and agreements between the parties respecting
the subject matter hereof. No supplement, modification or
amendment to this Consent shall be binding unless executed in
writing by both parties. No waiver of any of the provisions
of this Consent shall be deemed, or shall constitute, a waiver
of any other provisions, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
17. ESTOPPELS.
(a) Landlord certifies that the Lease is valid and in
full force and effect on the date hereof. Landlord does not
have any agreements with Tenant other than the Lease, the
Settlement Agreement, the Note, the Trust Deed and agreements
referenced therein. Landlord certifies that the Lease has not
been modified, changed, altered, supplemented or amended in
any respect, nor have any obligations of Landlord thereunder
been waived by Tenant. Landlord certifies that to Landlord s
present actual knowledge (without any inspection or
investigation of Landlord's records or the Premises) no event
has occurred or condition exists that constitutes or that with
the giving of notice or the lapse of time, or both, would
constitute a default or breach of the Lease by Landlord or
Tenant. Landlord warrants and represents that Landlord has
the full right, legal power and actual authority to enter into
this Consent. Landlord acknowledges receipt of Base Rent for
periods through August, 1996.
(b) Tenant certifies that the Lease is valid and in full
force and effect on the date hereof. Tenant does not have any
agreements with Landlord other than the Lease, the Settlement
Agreement, the Note, the Trust Deed and agreements referenced
therein. Tenant certifies that the Lease has not been
modified, changed, altered, supplemented or amended in any
respect, nor have any obligations of Tenant thereunder been
waived by Landlord. Tenant certifies that to Tenant's present
knowledge, no event has occurred or condition exists that
constitutes or that with the giving of notice or the lapse of
time, or both, would constitute a default or breach of the
Lease by Landlord or Tenant. Tenant warrants and represents
as follows: (i) except for the Sublease, Tenant has not
assigned or sublet all or any portion of its interest in the
Premises or the Lease; (ii) Tenant has not made any Utility
Installations or Alterations, nor installed any Trade Fixtures
except for those (if any) identified in Exhibit B attached
hereto and incorporated herein by reference; and (iii) Tenant
has the full right, legal power and actual authority to enter
into this Consent.
18. COUNTERPARTS. This Consent may be executed in any number
of counterparts, each of which shall be deemed an original,
but all of which when taken together shall constitute but one
and the same instrument.
19. ATTORNEY'S FEES. Should any dispute arise between the
parties hereto or their legal representatives, successors and
assigns concerning any provision of this Agreement or the
rights and duties of any person in relation thereto, the party
prevailing in such dispute shall be entitled, in addition to
such other relief that may be granted, to recover reasonable
attorneys fees and legal costs in connection with such
dispute.
IN WITNESS WHEREOF, Landlord, Tenant and Sublessee have
caused their duly authorized representatives to execute this
Consent as of the date first above written.
SUBLESSEE: ME ACQUISITION CO.,
a Delaware corporation
By: /s/ Robert W. Stevenson
-------------------------
Its: Vice President
MASON ELECTRIC COMPANY, INC.
a California corporation,
as Tenant and as holder of the
Note and Trust Deed
By: William E. Southern
-------------------
Its: President
LANDLORD: G & G 8TH STREET PARTNERS, LTD.,
a California limited partnership
By: G's Properties, Inc.,
a California corporation
By: /s/ Rodney L. Gleicher
-----------------------------
Rodney L. Gleicher, President
/s/ James W. Cassidy
--------------------
JAMES W. CASSIDY
/s/ Loralee Cassidy
--------------------
LORALEE CASSIDY
EXHIBIT 11
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Earnings Per Common Share
For the Three Months Ended January 31, 1997 and 1996
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
January 31,
------------------
1997 1996
---- ----
Primary Basis
-------------
Net Earnings $ 3,759 $ 3,349
======= =======
Average Number of Common Shares
Outstanding 8,514 6,654
Net Shares Assumed to be Issued
for Stock Options 242 267
------- -------
Total 8,756 6,921
======= =======
Net Earnings per Common Share -
Primary Basis $ .43 $ 0.48
======= =======
Fully Diluted Basis
-------------------
Net Earnings $ 3,759 $ 3,349
======= =======
Average Number of Common Shares
Outstanding 8,514 6,654
Net Shares Assumed to be Issued
for Stock Options 251 267
------- -------
Total 8,765 6,921
======= =======
Net Earnings per Common Share -
Fully Diluted Basis $ .43 $ 0.48
======= =======
Net Earnings per Common Share -
Primary Basis $ .43 $ 0.48
======= =======
Dilutive Effect per Common Share $ None $ None
======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule Contains Summary Financial
Information Extracted From the Esterline
Technologies Corporation Consolidated
Balance Sheets at January 31, 1997 and the
Related Consolidated Statements of
Operations for the Three Months then Ended
and is Qualified in its Entirety by Reference
to Such Financial Statements.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JAN-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 47,706
<SECURITIES> 0
<RECEIVABLES> 62,702
<ALLOWANCES> 4,260
<INVENTORY> 48,731
<CURRENT-ASSETS> 172,134
<PP&E> 168,166
<DEPRECIATION> 114,263
<TOTAL-ASSETS> 267,186
<CURRENT-LIABILITIES> 93,190
<BONDS> 29,310
0
0
<COMMON> 1,704
<OTHER-SE> 142,982
<TOTAL-LIABILITY-AND-EQUITY> 267,186
<SALES> 82,198
<TOTAL-REVENUES> 82,198
<CGS> 50,109
<TOTAL-COSTS> 50,109
<OTHER-EXPENSES> 26,191
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 321
<INCOME-PRETAX> 5,577
<INCOME-TAX> 1,818
<INCOME-CONTINUING> 3,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,759
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
