U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (D) OF THE
SECURITIES EXCHANGE ACT OF1934
For the quarterly period ended September 30,
1998 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (D) OF THE
SECURITIES EXCHANGE ACT COMMISSION OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number 0-9951
ADVANCED OXYGEN TECHNOLOGIES, INC.
(Exact name of small business issuer as
specified in its charter)
Delaware 91-1143622
(State of Incorporation) (I.R.S.
Employer Identification No.)
230 Park Avenue, Suite 1000
New York, NY 10169
(Address of principal executive offices)
(212)-808-3061
(Issuer's telephone number)
Check whether the issuer (1) has filed all
reports required to be filled
by Section 13 or 15(d) of the Exchange Act
during the past 12months (or for such shorter
period that the Registrant was required to file
such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of shares of common stock outstanding
as of September 30, 1998 was 29,640,252
Transitional Small Business Disclosure Format
(check one):
Yes No X
ADVANCED OXYGEN TECHNOLOGIES,INC.
INDEX
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheet as of September 30, 1998
Statement of Income for the three month period
ended September 30, 1998
Statement of cash flows for the three month
period ended September 30, 1998
Item 2. Management's discussion and analysis of
financial condition and results of operations
PART II- OTHER INFORMATION
Item 7. Exhibits
Exhibit I Property Lease of October 1, 1998
Item 27. Financial Data Schedules
SIGNATURE
Item I: FINANCIAL STATEMENTS
PART I
FINANCIAL INFORMATION ADVANCED OXYGEN
TECHNOLOGIES INC.
FOR THE 3 MONTHS ENDING September 30, 1998
(UNAUDITED)
BALANCE SHEET
[/TABLE]
[S] [C]
ASSETS
CASH (60,937)
RECEIVABLES 209,478
INVENTORY 7,684
TOTAL CURRENT ASSETS 156,228
PROPERTY AND EQUIPMENT 1,085,406
DEPRECIATION 92,925
TOTAL PROPERTY AND EQUIP 992,479
TOTAL ASSETS 1,148,707
LIABILITIES
CURRENT LIABILITIES 234,034
LONG TERM LIABILITIES 559,817
TOTAL LIABILITIES 793,851
CAPITAL
BEGINNING BALANCE 16,700
PREFERRED STOCK 10,050
COMMON STOCK 296,403
PAID IN CAPITAL 20,388,631
RETAINED EARNINGS (20,444,132)
NET INCOME 87,203
TOTAL CAPITAL 352,793
TOTAL LIABILITIES
AND CAPITAL 1,148,707
[/TABLE]
INCOME STATEMENT ADVANCED OXYGEN TECHNOLOGIES
INC.
FOR THE 3 MONTHS ENDING September 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
REVENUES
CONSULTING 100,000
CA REGISTRATIONS 215,516
CD SALES 65,116
DATBASE MANAGEMENT (249)
COMMISSIONS 69,099
REIMBURSED SHIPPING 1,661
TOTAL REVENUES 451,144
COST OF SALES 118,354
GROSS PROFIT 332,789
EXPENSES
REIMBURSABL EXPENSE 360
ADVERTISING (5,875)
ACCOUNTING 7,500
BANK CHARGES 12,090
CLOSING COSTS 774
COMMISSIONS 1,158
DEPRECIATION EXPENSE 8,489
DUES 590
EMPLOYEE BENEFITS 1,402
FREIGHT 2,077
INTEREST EXPENSE 8,072
CLEANING 750
LEGAL AND PROF 20
MAINTENANCE 718
MEALS AND ENT (47)
OFFICE EXPENSE 1,146
PAYROLL TAX 7,871
POSTAGE 4,583
REPRODUCTION 14,455
PROF. SALARIES, NON BILL 790
RENT 4,762
COMPUTER/EQUIP LEASES 14,398
REPAIRS 150
TRANSCRIBING 16,836
SALARIES 37,079
EMPLOYEE COMMISSIONS 5,190
SUBCONTRACTORS 21,740
SOFTWARE UPGRADES 556
SUPPLIES 3,050
TELEPHONE 23,149
TRAVEL 5,505
UTILITIES 4,319
WAGES 43,015
OVERTIME 146
OTHER 292
TOTAL EXPENSES 245,585
NET INCOME 87,203
</TABLE>
CASH FLOW STATEMENT ADVANCED OXYGEN TECHNOLOGIES
INC.
FOR THE 3 MONTHS ENDING September 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATIONS 87,203
OTHER ADJUSTMENTS (61,368)
NET CASH FROM OPERATIONS 25,835
CASH USED IN INVESTING 0
CASH FLOWS FROM FINANCING
NET CASH USED IN FINANCING (6,952)
NET INCREASE (DECREASE) IN CASH 18,882
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
On March 9, 1998, pursuant to an Agreement
for Purchase and Sale of
Specified Business Assets, a Promissory Note,
and a Security Agreement all dated March 9,
1998, Advanced Oxygen Technologies, Inc.(the
"Company") purchased certain tangible and
intangible assets (the "Assets") including
goodwill and rights under certain contracts,
from Integrated Marketing Agency, Inc., a
California Corporation ("IMA").
The Company used the Assets to generate
revenues through database
management, fax broadcasting, sales of Multi-
Media CD-ROMs containing speeches from the
database and commissions on the sales of
registrations associated with production of the
CD's.
Pursuant to an employment agreement dated
March 09, 1998 between the Company and John
Teuber, on September 04, 1998 the Company
terminated John Teuber for cause without
relinquishing any of its rights or remedies.
Pursuant to a promissory note of March 09,
1998 ("Note"), a purchase agreement of March 09,
1998 ("Purchase Agreement") and security
agreement of March 09, 1998 ("Security
Agreement") between the Company and Integrated
Marketing Agency, Inc. ("IMA"), the Company on
September 04, 1998 exercised its right of "Set
Off" of the Note, as defined therein due to
IMA's breach of numerous representations,
warranties and covenants contained in the Note
and certain ancillary documents. The Company
further reserved any and all rights and remedies
available to it under the Note, Purchase
Agreement and Security Agreement.
The Company entered into a two year
employment agreement ("NAG Agreement" as
contained in Exhibit I of the registrants SEC
Form 10-K for the period ending June 30, 1998)
with Nancy Gaylord on March 13, 1998. On
September 18, 1998, Nancy Gaylord terminated her
employment with the Company. The NAG Agreement
had no provision for this termination.
The Company entered into a lease agreement
("Lease Agreement" Exhibit I contained herein)
with America-United Enterprises Inc. on October
01, 1998 and took possession of the 4700 S.F. of
premises on November 06,1998 in Santa Clarita
for its CA location. Currently, this is the
only California location of the Company.
On September 09, 1998 the Company appeared
before the Santa Clarita County small claims
court to represent itself in a motion ("Motion")
filed by a plaintiff, Alpha Graphics, against
John Teuber for a judgement on July 06, 1998
from a case filed May 29,1998, to be amended to
the Company. The Motion was denied and the
judgement was not amended to reflect the Company
as a defendant.
PART II- OTHER INFORMATION
Item 7. Exhibits
Exhibit I: Property Lease of October 1, 1998
Item 27. Financial Data Source
(B) Article 5
SIGNATURE
In accordance with the requirements of the
Exchange Act, the Registrant
has caused this report to be signed on its
behalf by the undersigned, hereunto duly
authorized.
Date: November 12, 1998 /s/ Robert E. Wolfe
Robert E.Wolfe,
Chairman of the Board
Chief Executive Officer
Principal Financial Officer
EXHIBIT I
STANDARD INDUSTRIALICOMMERCIAL MULTI-TENANT
LEASE-MODIFIED NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. BASIC PROVISIONS ("Basic Provisions")
1.1 Parties: This lease ("Lease"), dated for
reference purposes only, September 23, 1998 is
made by and between America-United Enterprises,
Inc. a California Corporation ("Lessor"), and
Advanced Oxygen Technologies, Inc. - a Delaware
Corporation ("Lessee"), (collectively the
"Parties", or individually a "Party").
1.2(a) Premises: That certain portion Of the
Building including all Improvements therein or
to be provided by Lessor under the terms of this
Lease, commonly known by the street address of
26883 Ruether Avenue located in
the City of Santa Clarita. County of Los
Angeles, State of California with zip code
91351, as outlined on Exhibit A attached hereto
("Premises"). The "Building" is that certain
building containing the Premises and generally
described as (describe briefly the nature of the
building): a multi-tenant building of
approximately. 7,000 sq. ft. which is part of
an approximately 30,000 SF'. ft. multi-tenant
Industrial Center. The Premises**
In addition to Lessees rights to use and occupy
the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common
Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility
raceways of the Building or to any other
buildings in the Industrial Center. The
Premises, the Building, the Common Areas, the
land upon which they are located, along with all
other buildings and improvements thereon, are
herein collectively referred to as the
"Industrial Center." (Also see Paragraph 2.)
1.2(b) Parking: fourteen (14) unreserved vehicle
parking spaces ("Unreserved parking Spaces); and
- - - 0 -reserved vehicle parking spaces ("Reserved
Parking Spaces). (Also see Paragraph 2.6.)
1.3 Term: 5 years and 0 months
("Original Term") commencing October 1, 1998
("Commencement Date") and ending September 30,
2003 ("Expiration Date"). (Also see Paragraph
3.)
1.4 Early Possession: See paragraph 50
(Early Possession Date"). (Also see Paragraphs
3.2 and 3.3.)
1.5 Base rent: $4, 037.50 per month
("Base rent"), payable on the first day of each
month commencing
September 1, 1998 (Also see Paragraph 4.)
[x] If this box is checked, this
Lease provides for the Base Rent to be adjusted
per Addendum, attached hereto. ***$4, 037.50
1.6(a) Base Rent Paid Upon execution: $***
as Base Rent for the period 10-1-98 through 10-
31-98.
1.6fb) Lessees Share of Common Area
operating Expenses: 15.8% percent ( %)
("Lessee's Share") as determined by [x] prorata
square footage of the Premises as compared to
the total square footage of the Building or [
] other criteria as described In Addendum ____.
**** 1.7 Security Deposit: $4,037.50
("Security Deposit"). (Also see Paragraph 5.)
1.8 Permitted Use:_telesales, marketing,
manufacturing/production, fulfillment, general
office and related business uses
_________________________________________
('permitted Use') (Also see Paragraph 6.)
1.9 Insuring Party. Lessor is the "lnsuring
Party." (Also see Paragraph 8.)
1.l0(a) Real Estate Brokers. The following real
estate broker (s) (collectively, the "Brokers")
and brokerage relationships exist in this
transaction and are consented to by the Parties
(check applicable boxes):
[x] Crissman Commercial Services, Inc presents
Lessor exclusively ("Lessor's Broker");
[x] Lessee represented itself represents
Lessee exclusively ("Lessee's Broker"): or
[ ] __________________ represents both Lessor
end Lessee ("Dual Agency"). (Also see Paragraph
15.)
1.10(b) Payment to Brokers. Upon the execution
of this lease by both Parties, Lessor shall pay
to said Broker(s) jointly, or in such separate
shares as they may mutually designate in
writing, a fee as set forth in a separate
written agreement between Lessor and said
Broker(s) (or in the event there is no separate
written agreement between Lessor and said
Broker(s), the sum of $____) for brokerage
services rendered by said Broker(s) in
connection with this transaction.
1.11 (Guarantor. The obligations of the Lessee
under this Lease are to be guaranteed by
xxxxxxxxxxxxxxxxxxxxxx.
("Guarantor"). (Also see Paragraph 37.)
1.12 Addenda and Exhibits. Attached hereto is an
Addendum or Addenda consisting of Paragraphs 49
through 50, and Exhibits A through xxx, all of
which constitute a part of this Lease.
2. Premises, Parking and Common Areas. (See
addendum, paragraph 51)
2.1 Letting. Lessor hereby leases to Lessee, and
Lessee hereby leases from Lessor, the Premises,
for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in
this Lease. Unless otherwise provided herein,
any statement of square footage set forth in
this lease, or that may have been used in
calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and
Lessee agree is reasonable and the rental and
Lessees Share (as defined in Paragraph 1.6(b))
based thereon is not subject to revision whether
or not the actual square footage is more or
less.
2.2 Condition. Lessor shall deliver the
Premises to Lessee clean and free of debris on
the Commencement Date and warrants to Lessee
that the existing plumbing, electrical systems,
fire sprinkler system, lighting, air
conditioning and healing systems and loading
doors, if any, in the Premises, other than
those constructed by Lessee, shall be in good
operating condition on the Commencement Date. If
a non-compliance with said warranty exists as of
the Commencement Date, Lessor shall, except as
otherwise provided in this Lease, promptly after
receipt of written notice from Lessee setting
forth with specificity the nature and extent of
such non-compliance, rectify same at Lessor's
expense. If Lessee does not give Lessor written
notice of a non-compliance with this warranty
within thirty (30) days after the Commencement
Date, correction of that non-compliance shall be
the obligation of Lessee at Lessees sole cost
and expense
2.3 Compliance with Covenants Restrictions and
Building Code. Lessor warrants that any
improvements (other than those constructed by
Lessee or at Lessee's direction) on or in the
Premises which have been constructed or
installed by Lessor or with Lessor's consent or
at Lessor's direction shall comply with all
applicable covenants or restrictions of record
and applicable building codes, regulations and
ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor
has no knowledge of any claim having been made
by any governmental agency that a violation or
violations of applicable building codes,
regulations, or ordinances exist with regard to
the Premises as of the Commencement Date. Said
warranties shall not apply to any Alterations or
Utility Installations (defined in Paragraph
7.3(a)) made or to be made by Lessee. If the
Premises do not comply with said warranties,
Lessor shall, except as otherwise provided in
this lease, promptly after receipt of written
notice from Lessee given within six (6) months
following the Commencement Date and setting
forth with specificity the nature and extent of
such non-compliance, take such action, at
Lessor's expense, as may be reasonable or
appropriate to rectify the non-compliance.
Lessor makes no warranty that the Permitted Use
in Paragraph 1.8 is permitted for the Premises
under Applicable laws (as defined in Paragraph
2.4)
2.4 Acceptance of Premises. Lessee hereby
acknowledges: (a) that it has been advised by
the Broker(s) to satisfy itself with respect to
the condition of the Premises (including but not
limited to the electrical and fire sprinkler
systems, security, environmental aspects,
seismic and earthquake requirements, and
compliance with the Americans with Disabilities
Act and applicable zoning, municipal, county,
state and federal laws, ordinances and
regulations and any covenants or restrictions of
record (collectively, "Applicable Laws") and the
present and future suitability of the Premises
for Lessees intended use; b) that Lessee has
made such investigation as it deems necessary
with reference to such matters, is satisfied
with reference thereto, and assumes all
responsibility therefore as the same relate to
Lessee's occupancy of the Premises and/or the
terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made
any oral or written representations or
warranties with respect to said matters other
than as set forth in this Lease.
2 5 Lessee as Prior Owner/Occupant. The
warranties made by Lessor in this Paragraph 2
shall be of no force or elect if immediately
prior to the date set forth in Paragraph 1.1
Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at
Lessee's sole cost and expense, correct any non-
compliance of the Premises with said warranties.
***are approximately 4,750 sq. ft. of the
Building.
****See also Addendum, paragraph 50.
2.6 Vehicle Parking. Lessee shall be entitled
to use the number of Unreserved Parking Spaces
specified in Paragraph 1.2)b) on those portions
of the Common Areas designated from time to time
by Lessor for parking. Lessee shall not use more
parking spaces than said number. Said parking
spaces shall be used for parking by vehicles no
larger than full-size passenger automobiles or
pick-up trucks, herein called Permitted Size
Vehicles." Vehicles other than Permitted Size
Vehicles shall be parked and loaded or unloaded
as directed by Lessor in the Rules and
Regulations (as defined in Paragraph 40) Issued
by Lessor (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any
vehicles that belong to or are controlled by
Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to
be loaded, unloaded, or parked in areas other
than those designated by Lessor for such
activities
(b) If Lessee permits or allows any of the
prohibited activities described in this
Paragraph 2.6, then Lessor shall have the right,
without notice, in addition to such other rights
and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to
Lessee which cost shall be immediately payable
upon demand by Lessor.
(c) Lessor start at the Commencement Date of
this Lease, provide the parking facilities
required by Applicable law.
2 7 Common Area - Definition. The term "Common
Area" is defined as all areas and facilities
outside the Premises and within the exterior
boundary line of the Industrial Center and
interior utility raceways within the Premises
that are provided and designated by the Lessor
from time to time for the general non-exclusive
use of Lessor, Lessee and other lessees of the
Industrial Center and their respective
employees. suppliers, shippers, customers,
contractors and invitees, including parking
areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways,
driveways and landscaped areas
2.8 Common Areas - Lessee's Rights. Lessor
hereby grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers,
contractors, customers and invitees, during the
term of this lease, the non-exclusive right to
use, in common with others entitled to such use,
the Common Areas as they exist from time to
tune, subject to any rights, powers, and
privileges reserved by Lessor under the terms
hereof or under the terms of any rules and
regulations or restrictions governing the use of
the Industrial Center. Under no circumstances
shall the right herein granted to use the Common
Areas be deemed to include the right to store
any property, temporarily or permanently, in the
Common Areas. Any such storage shall be
permitted only by the prior written consent of
Lessor or Lessor's designated agent, which
consent may be revoked at any time. In the event
that any unauthorized storage shall occur then
Lessor shall have the right, without notice, in
addition to such other rights and remedies that
it may have, to remove the property and charge
the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9 Common Areas - Rules and Regulations.
Lessor or such other person(s) as Lessor may
appoint shall have the exclusive control and
management of the Common Areas and shall have
the right, from time to time, to establish,
modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance
with Paragraph 40. Lessee agrees to abide by and
conform to all such Rules and Regulations, and
to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to
Lessee for the non-compliance with said rules
and regulations by other Lessees of the
Industrial Center.
2.10 Common Areas - Changes. Lessor shall have
the right, In Lessor's sole discretion, from
time to time:
(a) To make changes to the Common Areas,
including, without limitation, changes in the
location, size, shape and number of driveways,
entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas, walkways
and utility raceways;
(b) To close temporarily any of the Common Areas
for maintenance purposes so long as reasonable
access to the Premises remains available;
(c) To designate other land outside the
boundaries of the Industrial Center to be a part
of the Common Areas.
(d) To add additional buildings and Improvements
to the Common Areas:
(e) To use the Common Areas while engaged in
making additional improvements, repairs or
alterations to the Industrial Center, or any
portion thereof; and
(f) To do and perform such other acts and make
such other changes in, to or with respect to the
Common Areas and Industrial Center as Lessor
may, in the exercise of sound business judgment,
deem to be appropriate.
3. Term. (See addendum, paragraph 50)
3 1 Term. The Commencement Date, Expiration
Date and Original Term of the Lease are as
specified in Paragraph 1.3.
3 2 Early Possession. If an Early Possession
Date is specified in Paragraph 1.4 and if Lessee
totally or partially occupies the Premises after
the Early Possession Date but prior to the
Commencement Date, the obligation to pay Base
Rent shall be abated for the period of such
early occupancy. All other terms of this lease,
however, including but riot limited to the
obligations to pay Lessee's Share of Common Area
Operating Expenses and to carry the insurance
required by Paragraph 8 shall be in effect
during such period. Any such early possession
shall not affect nor advance the Expiration Date
of the Original term
3.3 Delay in Possession. If for any reason
Lessor cannot deliver possession of the Premises
to Lessee by the Early Possession Date,
specified in Paragraph 1.4 , or if no Early
Possession Date is specified, by the
Commencement Date, Lessor shall not be subject
to any Liability therefor, nor shall such
failure affect the validity of this lease, or
the obligations of Lessee hereunder, or extend
the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be
obligated to pay rent or perform any other
obligation of Lessee under the terms of this
lease until Lessor delivers possession of the
Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty
(60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to
Lessor within ten (10) days after the end of
said sixty (60) day period, cancel this Lease,
in which event the parties shall be discharged
from all obligations hereunder; provided
further, however, that if such written notice of
Lessee is not received by Lessor within said ten
(10) day period. Lessees right to cancel this
lease hereunder shall terminate and be of no
further force or effect. Except as may be
otherwise provided, and regardless of when the
Original term actually commences, if possession
is not tendered to Lessee when required by this
lease and Lessee does not terminate this lease,
as aforesaid, the period free of the obligation
to pay Base Rent, if any, that Lessee would
otherwise have enjoyed shall run from the date
of delivery of possession and continue for a
period equal to the period during which the
Lessee would have otherwise enjoyed under the
terms hereof, but minus any days of delay caused
by the acts, changes or omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent and
other rent or charges, as the same may be
adjusted from time to time, to Lessor in lawful
money of the United States, without offset or
deduction, on or before the day on which it is
due under the terms of this lease Base Rent and
all other rent and charges for any period during
the term hereof which is for less than one full
month shall, be prorated based upon the actual
number of days of the month involved, Payment of
Base Rent and other charges shall be made to
Lessor at its address stated herein or to such
other persons or at such other addresses as
Lessor may from time to time designate in
writing to Lessee.
4 2 Common Area Operating Expenses. Lessee
shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee's Share (as
specified In Paragraph 1.6(b) of all Common Area
Operating Expenses, as hereinafter defined,
during each calendar year of the term of this
Lease, In accordance with the following
provisions: (See also Addendum, paragraph 58).
(a) "Common Area Operating Expenses" are
defined, for purposes of this lease, as all
costs incurred by Lessor relating to the
ownership and operation of the Industrial
Center, Including, but not limited to, the
following:
(i) The operation, repair and maintenance, in
neat, clean, good order and condition, of the
following:
(aa) The Common Areas, including parking areas,
loading and unloading areas, trash areas,
roadways. Sidewalks, walkways, park-ways,
driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area lighting
facilities, fences and gates, elevators and
roof.
(bb) Exterior signs and any tenant directories.
(cc) Fire detection and sprinkler
systems.
(ii) The cost of water, gas, electricity and
telephone to service the Common Areas.
(iii) Trash disposal, property management and
security services and the costs of any e
environmental Inspections.
(iv) Reserves set aside for maintenance and
repair of Common Areas.
(v) Real Property Taxes (as defined In Paragraph
10.2) to be paid by Lessor for the Building and
the Common Areas under Paragraph 10 hereof.
(vi) The cost of the premiums for the Insurance
policies maintained by Lessor under Paragraph 8
hereof.
(vii) Any deductible portion of an Insured
loss concerning the Building or the Common
Areas.
(viii) Any other services to be provided by
Lessor that are stated elsewhere in this lease
to be a Common Area Operating Expense
(b) Any Common Area Operating Expenses and Real
Property Taxes that are specifically
attributable to the Building or to any other
building in the Industrial Center or to the
operation, repair and maintenance thereof, shall
be allocated enthely to the Building or to such
other building. However, any Common Area
Operating Expenses and Real Property Taxes that
are not specifically attributable to the
Building or to any other building or to the
operation, repair and maintenance thereof,
shall be equitably allocated by Lessor to all
buildings in the Industrial Center.
(c) The inclusion of the improvements,
facilities and services set forth in
Subparagraph 4 2(a) shall not be deemed to
impose an obligation upon Lessor to either have
said improvements or facilities or to provide
those services unless the Industrial Center
already has the same, Lessor already provides
the services, or Lesser has agreed elsewhere in
this lease to provide the same or some of them.
(d) Lessee's Share of Common Area Operating
Expenses shall be payable by Lessee within ten
(10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by
Lessor At Lessor's option, however, an amount
may be estimated by Lessor from time to time of
Lessee's share of annual Common Area Operating
Expenses and the same shall be payable monthly
or quarterly, as Lessor shall designate, during
each 12 month period of the Lease term, on the
same day as the Base Rent is due hereunder
Lesser shall deliver to Lessee within sixty (60)
days after the expiration of each calendar year
a reasonably detailed statement showing Lessee's
Share of the actual Common Area Operating
Expenses incurred during the preceding year. If
Lessee's payments under this Paragraph 4 2(d)
during said preceding year exceed Lessee's Share
as indicated on said statement, Lessor shall be
credited the amount of such overpayment against
Lessees Share of Common Area Operating Expenses
next becoming due. If Lessees payments under
this Paragraph 4.2(d) during said preceding year
were less than Lessees Share as indicated on
said statement, Lessee shall pay to Lessor the
amount of the deficiency within ten (10) days
after delivery by Lessor to Lessee of said
statement.
5. Security Deposit. Lessee shall deposit with
Lessor upon Lessees execution hereof the
Security Deposit set forth in Paragraph 1 .7 as
security for Lessee's performance of Lessees
obligations under this lease. If Lessee fails to
pay Base Rent or other rent or charges due
hereunder, or otherwise defaults under this
lease (as defined in Paragraph 13.1, Lessor may
use, apply or retain all or any portion of said
Security Deposit for the payment of any amount
due Lessor or to reimburse or compensate Lessor
for any Liability, cost, expense, loss or damage
(including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor
uses or applies all or any portion of said
Security Deposit, Lessee shall within ten (1(1)
days after written request therefore deposit
monies with Lessor sufficient to restore said
Security Deposit to its full amount required by
the lease. Any time the Base Rent increases
during the term of this Lease, Lessee shall upon
written request from Lessor, deposit additional
monies with Lessor as an addition to its
Security Deposit so that the total amount of the
Security Deposit shall at all times bear the
same proportion to the then current Base Rent as
the initial Security Deposit bears to the
initial Base Rent set forth in Paragraph 1.5.
Lessor shall not be required to keep all or any
part of the Security Deposit separate from its
general accounts. Lessor shall, at the
expiration or earlier termination of the term
hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's
option, to the last assignee, if any, of Lessees
interest herein), that portion of the Security
Deposit not used or applied by Lessor. Unless
otherwise expressly agreed in writing by Lessor,
no part of the Security Deposit shall be
considered to be held in trust, to bear Interest
or other increment for its use, or to be
prepayment for any monies to be paid by Lessee
under this lease.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises
only for the Permitted Use set forth in
Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use
of the Premises in a manner that Is unlawful,
creates waste or a nuisance, or that disturbs
owners and or occupants of, or causes damage to
the Premises or neighboring premises or
properties.
(b) Lessor hereby agrees to not unreasonably
withhold or delay its consent to any written
request by Lessee, Lessee's assignees and
subtenants, and by prospective assignees and
subtenants of Lessee, its assignees and
subtenants, for a modification of said Permitted
Use, so long as the same will not impair the
structural integrity of the improvements on the
Premises, or in the Building, or in the
mechanical or electrical systems therein, does
not conflict with uses by other Lessees, is not
significantly more burdensome to the Premises or
the Building and the improvements thereon, and
is otherwise permissible pursuant to this
Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business
days after such request give a written
notification of same, which notice shall include
an explanation of Lessor's reasonable objections
to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term
"Hazardous Substance" 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) a basis for potential
Liability of Lessor to any governmental agency
or third party under any applicable statute or
common law theory. Hazardous Substances shall
Include, but not be limited to, hydrocarbons.
petroleum, gasoline, crude oil or any products
or by-products thereof. Lessee shall not engage
in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter
delined) of hazardous Substances without the
express prior written consent of Lessor and
compliance in a timely manner (at Lessee's sole
cost and expense) with all Applicable
requirements (as defined in Paragraph 6.3).
"Reportable Use" shall mean (i) the installation
or use of any above or below ground storage
tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a hazardous
Substance that requires a permit from, or with
respect to which a report, notice, registration
or business plan is required to be filed with,
any governmental authority, and (iii) the
presence in, on or about the Premises of a
hazardous substance with respect to which any
Applicable laws require that a notice be given
to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior
consent, but upon notice to Lessor and in
compliance with all Applicable Requirements, use
any ordinary and customary materials reasonably
required to be used by Lessee in the normal
course of the Permitted Use, so long as such use
is not a reportable use and does not expose the
Premises or neighboring properties to any
meaningful risk of contamination or damage or
expose Lessor to any Liability thereof. In
addition, Lessor may (but without any obligation
to do so) condition its consent to any
Reportable Use of any Hazardous Substance by
Lessee upon Lessee's giving Lessor such
additional assurances as Lessor, in its
reasonable discretion, deems necessary to
protect itself, the public, the Premises and the
environment against damage, contamination or
injury and/or Liability therefor, including but
not limited to the installation (and. at
Lessor's option. removal on or before Lease
expiration or earlier termination of reasonably
necessary protective modifications to the
Premises (such as concrete encasements) and/or
the deposit of an additional Security Deposit
under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or
has reasonable cause to believe, that a
hazardous Substance has come to be located in,
on, under or about the Premises or the Building,
other than as previously consented to by Lessor,
Lessee shall immediately give Lessor written
notice thereof, together with a copy of any
statement. Report, notice, registration,
application, permit, business plan, license,
claim, action, or proceeding given to or
received from, any governmental authority or
private party concerning the presence, spill,
release, discharge of, or exposure to, such
hazardous Substance including but not limited to
all such documents as may be involved in any
reportable use involving the Premises. Lessee
shall not cause or permit any hazardous
Substance to be spilled or released in, on,
under or about the Premises (including, without
limitation, through the plumbing or sanitary
sewer system).
(c) Indemnification. Lessee shall Indemnify,
protect, defend and hold Lessor, its agents,
employees, lenders and ground Lessor, if any,
and the Premises, harmless from and against any
and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of
permits and attorneys' and consultants' fees
arising out of or involving any Hazardous
Substance brought onto the Premises by or for
Lessee or by anyone under Lessee's control
Lessee's obligations under this Paragraph 6 2(c)
shall include, but not be limited to, the
effects of any contamination or injury to
person, properly or the environment created or
suffered by Lessee, and the cost of
investigation (Including consultants' and
attorneys' fees and testing), removal,
remediation, restoration, and/or abatement
thereof, or of any contamination therein
involved, and shall survive the expiration or
earlier termination of this lease. No
termination, cancellation or release agreement
entered into by Lessor and Lessee shall release
Lessee from its obligations under this lease
with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at
the time of such agreement.
6.3 Lessee's Compliance with Requirements.
Lessee shall, at Lessee's sole cost and expense,
fully, diligently and in a timely manner, comply
with all "Applicable Requirements," which term
is used in this lease to mean all laws, rules,
regulations, ordinances, directives, 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,
now in effect or which may hereafter come into
effect. Lessee shall, within five (5) days after
receipt of Lessor's written request, provide
Lessor with copies of all documents and
information, including but not limited to
permits, registrations, manifests,
applications, reports and certificates,
evidencing Lessee's compliance with any
Applicable requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor
in writing (with copies of any documents
involved) of any threatened or actual claim,
notice, citation, warning, complaint or report
pertaining to or involving failure by Lessee or
the Premises to comply with any Applicable
requirements.
6 4 Inspection; Compliance with Law. Lessor,
Lessor's agents, employees, contractors and
designated representatives. and the holders of
any mortgages, deeds of trust or ground leases
on the Premises ("Lenders") shall have the right
to enter the Premises at any time in the case of
an emergency, and otherwise at reasonable
times, for the purpose of inspecting the
condition of the Premises and for verifying
compliance by Lessee with this lease and all
Applicable requirements (as defined in Paragraph
6.3), and Lessor shall be entitled to employ
experts and/or consultants in connection
therewith to advise Lessor with respect to
Lessee's activities, including but not limited
to Lessee's installation, operation, use,
monitoring, maintenance, or removal of any
hazardous Substances on or from the Premises.
The costs and expenses of any such inspections
shall be paid by the party requesting same,
unless a Default or Breach of this lease by
Lessee or a violation of Applicable requirements
or a contamination, caused or materially
contributed to by Lessee, is found to exist or
to be imminent, or unless the inspection is
requested or ordered by a governmental authority
as the result of any such existing or imminent
violation or contamination. In such case, Lessee
shall upon request reimburse Lessor or Lessor's
lender, as the case may be, for the costs and
expenses of such inspections.
7. Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants,
Restrictions and Building Code). 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole
cost and expense and at all times keep the
Premises and every part thereof in good order,
condition and repair (whether or not such
portion of the Premises requiring repair, or the
means of repairing the same, are reasonably or
readily accessible to Lessee, and whether or not
the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including,
without limiting the generality of the
foregoing, all equipment or facilities
specifically serving the Premises, such as
plumbing, heatingm air conditioning,
ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire
hose connections if within the Premises,
fixtures, interior walls, interior surfaces of
exterior walls, ceilings, floors, windows,
doors, plate glass, and skylights, but excluding
any items which are the responsibility of Lessor
pursuant to Paragraph 7.2 below. Lessee, in
keeping the Premises in good order, condition
and repair, shall exercise and perform good
maintenance practices. Lessee's obligations
shall include restorations, replacements or
renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in
good order, condition and state of repair.
(b) Lessee shall, at Lessee's sole cost and
expense, procure and maintain a contract, with
copies to Lessor, in customary form and
substance for and with a contractor specializing
and experienced in the inspection, maintenance
and service of the heating, air conditioning and
ventilation system for the Premises. However,
Lessor reserves the right, upon notice to
Lessee, to procure and maintain the contract for
the heating, air conditioning and ventilating
systems, and if Lessor so elects, Lessee shall
reimburse Lessor, upon demand, for the cost
thereof.
(c) If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may
enter upon the Premises after ten (10) days
prior written notice to Lessee (except in the
case of an emergency, in which case no notice
shall be required), perform such obligations on
Lessee's behalf, and put the Premises in good
order, condition and repair, in accordance with
Paragraph 13.2 below.
7.2 Lessor's Obligations. Subject to the
provisions of Paragraphs 2.2 (Condition). 2.3
(Compliance with Covenants, Restrictions and
Building Code). 4 2 (Common Area Operating
Expenses), 6 (Use), 7.1 (Lessee's Obligations),
8 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order,
condition and repair the foundations, exterior
walls, structural condition of interior bearing
walls, exterior roof, fire sprinkler and/or
standpipe and hose (if located in the Common
Areas) or other automatic fire extinguishing
system including fire alarm and/or smoke
detection Systems and equipment, fire hydrants,
parking lots, walkways, parkways, driveways,
landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof,
as well as providing the services for which
there is a Common Area Operating Expense
pursuant to Paragraph 4.2 Lessor shall not be
obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace
windows, doors or plate glass of the Premises.
Lessee expressly waives the benefit of any
statute now or hereafter in effect which would
otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this
Lease because of Lessor's failure to keep the
Building, industrial Center or Common Areas in
good order, condition and repair.
7.3 Utility Installations, Trade Fixtures,
Alterations.
Definitions; Consent Required. The term "Utility
Installation" is used in this lease to refer to
all air lines, power panels, electrical
distribution, security, fire protection systems,
communications systems, lighting fixtures,
heating, ventilating and air conditioning
equipment, plumbing and fencing in on or about
the Premises. The term "Trade Fixtures" shall
mean Lessee's machinery and equipment which can
be removed without doing material damage to the
Premises. The term "Alterations" shall mean any
modifications of the improvements on the
Premises which are provided by Lessor under the
terms of this Lease other than Utility
Installations or Trade Fixtures. "Lessee-Owned
Alterations and/or Utility Installations" are
defined as Alterations and or Utility
Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a)
Lessee shall not make nor cause to be made any
Alterations or Utility Installations in, on,
under or about the premises without Lessor's
prior written consent. Lessee may, however,
make non structural Utility Installations to the
interior of the Premises (excluding the roof)
without Lessor's consent but upon notice to
Lessor, so long as they are not visible from the
outside of the Premises, do not involve
puncturing, relocating or removing the roof or
any existing walls, or changing or interfering
with the fire sprinkler or the fire detection
systems and the cumulative cost thereof during
the term of this Lease as extended does not
exceed $2,500.00.
(b) Consent. Any Alterations or Utility
Installations that Lessee shall desire to make
and which require the consent of the Lessor
shall be presented to Lessor in written form
with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3 (a)
or by subsequent specific consent, shall be
deemed conditioned upon (i) Lessee's acquiring
all applicable permits required by governmental
authorities; (ii) the compliance by Lessee with
all conditions of said permits in a prompt and
expeditious manner. Any Alterations or Utility
Installations by Lessee during the term of this
Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and
be in compliance with all Applicable
Requirements. Lessee shall promptly upon
completion thereof furnish Lessor with as-built
plans and specifications therefor. Lessor may,
(but without obligation to do so) condition its
consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon
Lessee's providing Lessor with a lien and
completion bond in an amount equal to one and
one half times the estimated cost of such
Alteration or Utility Installation.
(c) Lien Protection. Lessee shall pay when due
all claims for labor or materials furnished to
alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are
or may be secured by any mechanic's or
materialman's lien against the Premises or any
interest therein Lessor shall give lesser 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 judgement 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-hall times the
amount of such contested lien, claim or demand,
indemnifying Lessor against Liability for the
same, as required by law for the holding of the
Premises free from the effect of such lien or
claim. In addition, Lessor may require Lessee to
pay Lessor's attorneys' fees and costs in
participating in such action if Lessor shall
decide it is to its best interest to do so
7.4 Ownership, Removal, Surrender, and
Restoration.
(a) Ownership. Subject to Lessor's right to
require their removal and to cause Lessee to
become the owner thereof as provided in this
Paragraph 7.4, all Alterations and Utility
Installations made to the Premises by Lessee
shall be the property of and owned by Lessee,
but considered to be part of the Premises Lessor
may, at any time and at its option, elect in
writing to Lessee to be the owner of all or any
specified part of the Lessee Owned Alterations
and Utility Installations. Unless otherwise
instructed per Subparagraph 7.4(b) hereof, all
Lessee-Owned Alterations and Utility
Installations shall at the expiration or earlier
termination of this Lease, become the property
of Lessor and remain upon the Premises and be
surrendered with the Premises by Lessee
(b) Removal. Unless otherwise agreed in
writing, Lessor may require that any or all
Lessee-Owned Alterations or Utility
Installations be removed by the expiration or
earlier termination of this lease,
notwithstanding that their Installation may have
been consented to by Lessor. Lessor may require
the removal at any time of all or any part of
any Alterations or Utility Installations made
without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall
surrender the Premises by the end of the last
day of the lease term or any earlier termination
date, clean and free of debris and in good
operating order, condition and state of repair,
ordinary wear and tear excepted. Ordinary wear
and tear shall riot include any damage or
deterioration that would have been prevented by
good maintenance practice or by Lessee
performing all of its obligations under this
lease. Except as otherwise agreed or specified
herein, the Premises as surrendered, shall
include the Alterations and Utility
Installations. The obligation of Lessee shall
include the repair of any damage occasioned by
the installation, maintenance or removal of
Lessee's Trade Fixtures, furnishings, equipment
and Lessee Owned Alterations and Utility
Installations, as well as the removal of any
storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any
soil, material or ground water contaminated by
Lessee, all as may then be required by
Applicable requirements and/or good practice.
Lessee's Trade fixtures shall remain the
property of Lessee and shall be removed by
Lessee subject to its obligation to repair and
restore the Premises per this Lease.
8. Insurance; Indemnity.
8.1 Payment of Premiums. The cost of the
premiums for the insurance policies maintained
by Lessor under this Paragraph 8 shall be a
Common Area Operating Expense pursuant to
Paragraph 4.2 hereof. Premiums for policy
periods commencing prior to, or extending
beyond, the term of this lease shall be prorated
to coincide with the corresponding Commencement
Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and
keep in force during the term of this lease a
Commercial General Liability policy of insurance
protecting Lessee, Lessor and any lender(s)
whose names have been provided to Lessee in
writing (as additional insureds) against claims
for bodily injury, personal injury and property
damage based upon, involving or arising out of
the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto.
Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an
"Additional Insured Managers or Lessors of
Premises" endorsement and contain the "Amendment
of the Pollution Exclusion" endorsement for
damage caused by heat, smoke, or fumes from a
hostile fire. The policy shall not contain any
intra-insured exclusions as between insured
persons or organizations, but shall include
coverage for Liability assumed under this lease
as an "insured contract" for the performance of
Lessee's indemnity obligations under this Lease.
The limits of said insurance required by this
lease or as carried by Lessee shall not,
however, limit the Liability of Lessee nor
relieve Lessee of any obligation hereunder. All
insurance to be carried by Lessee shall be
primary to and not contributory with any similar
insurance carried by Lessor, whose insurance
shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall also
maintain Liability insurance described in
Paragraph 8.2(a) above, in addition to and not
in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named
as an additional insured therein.
8 3 Property lnsurance-Building, Improvements
and Rental Value.
(a) Building and Improvements. Lessor shall
obtain and keep in force during the term of this
lease a policy or policies in the name of
Lessor, with loss payable to Lesser and to any
lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full
replacement cost, as the same shall exist from
time to time, or the amount required by any
lender(s), but in no event more than the
commercially reasonable and available insurable
value there of 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
Installation. Trade fixtures and Lessee's
personal property shall be insured by Lessee
pursuant to Paragraph 8.4 If the coverage is
available and commercially appropriate, Lessee's
policy or policies shall insure against all
risks of direct physical loss or damage (except
the perils of flood and or earthquake unless
required by a lender, including coverage for any
additional costs resulting from debris removal
and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating
the reconstruction or replacement of any
undamaged sections of the Building required to
be demolished or removed by reason of the
enforcement of any building, zoning, safety, or
land use laws as the result of a covered loss,
but not including plate glass insurance Said
policy or policies shall also contain an agreed
valuation provision in lieu of any co-insurance
clause, waiver of subrogation, and inflation
guard protection causing an increase in the
annual property insurance coverage amount by a
factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All
Urban Consumer for the city nearest to where the
Premises are located.
(b) Rental Value. Lessor shall also obtain and
keep in force during the term of this lease a
policy or policies in the name of Lessor and any
Lender (s), insuring the loss of the full rental
and other charges payable by all Lessees of the
Building to Lessor for one year (including all
Real Properly Taxes, insurance costs, all
Common Area Operating Expenses and any scheduled
rental increases). Said insurance may provide
that in the event the lease is terminated by
reason of an insured loss, the period of
indemnity for such coverage shall be extended
beyond the date of the completion of repairs or
replacement of the Premises, to provide for one
full year's loss of rental revenues from the
date of any such loss. Said insurance shall
contain an agreed valuation provision in lieu of
any co-insurance clause, and the amount of
coverage shall be adjusted annually to reflect
the projected rental income. Real Properly
Taxes, insurance premium costs and other
expenses, if any, otherwise payable, for the
next 12-month period. Common Area Operating
Expenses shall include any deductible amount in
the event of such loss.
(c) Adjacent Premises. Lessee shall pay for
any increase in the premiums for the property
insurance of the Building and for the Common
Areas or other buildings in the Industrial
Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the
Premises.
(d) Lessee's Improvements. Since Lessor is the
Insuring Party, Lessor shall not be required to
insure Lessee-Owned Alterations and Utility
Installations unless the item in question has
become the property of Lessor under the terms of
this lease.
8.4 Lessee's Property 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 properly, trade
fixtures and Lessee Owned Alterations and
Utility Installations in, on, or about the
Premises similar in coverage to that carried by
Lessor as the insuring Party under Paragraph 8
3(a) Such insurance shall be full replacement
cost coverage with a deductible not to exceed
$1,000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the
replacement of personal property and the
restoration of Trade Fixtures and Lessee-Owned
Alterations and Utility Installations upon
request from Lessor, Lessee shall provide Lessor
with written evidence that such insurance is in
force.
8 5 Insurance Policies. Insurance required
hereunder shall be in companies duly licensed to
transact business in the state where the
Premises are located, and maintaining during the
policy term a 'General Policyholders Rating' of
at least a B+, V, or such other rating as may be
required by a Lender, as set forth in the most
current issue of 'Bests Insurance Guide.' Lessee
shall not do or permit to be done anything which
shall invalidate fire insurance policies
referred to in this Paragraph 8. Lessee shall
cause to be delivered to Lessor, prior to the
earlier of the Early Possession Date or the
Commencement Date, certified copies of, or
certificates evidencing the existence and the
amounts of, the insurance required under
Paragraph 8.2(a) and 8.4. No such policy shall
be cancellable 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 blinders" evidencing renewal thereof,
or Lessor may order such insurance and charge
the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting
any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and
waive their their entire right to recover
damages (whether in contract or in tort) against
the other, for loss or damage to their property
arising out of or incidental to the perils
required to be Insured against under Paragraph
8. The effect of such releases and waivers of
the right to recover damages shall not be
limited by the amount of Insurance carried or
required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property
damage insurance waive any right to subrogation
that such companies may have against Lessor or
Lessee, as the case may be, so long as the
insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence
and/or breach of express warranties, Lessee
shall Indemnify, protect. defend and hold
harmless the Premises, Lessor and its agents,
Lessor's master or ground Lessor, partners and
lenders, from and against any and all claims,
loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits,
attorneys' and consultants' fees, expenses
and/or liabilities arising out of, involving,
or in connection with the occupancy of the
Premises by Lessee, the conduct of Lessee's
business, any act, omission or neglect of
Lessee, its agents, contractors, employees, or
invitees, and out of any Default or Breach by
Lessee in the performance in a timely manner of
any obligation on Lessee's part to be performed
under this lease. The foregoing shall include,
but not be limited to, the defense or pursuit
of any claim or any action or proceeding
involved therein, and whether or not (in the
case of claims made against Lessor or) litigated
and/or reduced to judgment. In case any action
or proceeding be brought against Lessor by
reason of any of the foregoing matters, Lessee
upon notice from Lessor shall defend the same at
Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor
need not have first paid any such claim In order
to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor
shall not be liable for Injury or damage to the
person or goods, wares, merchandise or other
property of Lessee, Lessees employees,
contractors, invitees, customers, or any other
person in or about the Premises, whether such
damage or injury is caused by or results from
fire, steam, electricity, gas, water, or rain,
or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or
lighting fixtures, or from any other cause,
whether said Injury or damage results from
conditions arising upon the Premises or upon
other portions of the Building of which the
Premises are a part, from other sources or
places, and regardless of whether the cause of
such damage or injury or the means of repairing
the same is accessible or not. Lessor shall not
be liable for any damages arising from any act
or neglect of any other Lessee nor from the
failure by Lessor to enforce the provisions of
any other lease-in the Industrial Center.
Notwithstanding Lessor's negligence or breach of
this lease, Lessor shall under no circumstances
be liable for injury to Lessee's business or for
any loss of Income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean
damage or destruction to the Premises, other
than Lessee-Owned Alterations and Utility
Installations, the repair cost of which damage
or destruction is less than fifty percent (50%)
of the then replacement costs (as defined in
Paragraph 9.1(d)) of the Premises (excluding
Lessee-Owned Alterations and Utility
Installations and Trade Fixtures) Immediately
prior to such damage or destruction.
(b) 'Premises Total Destruction" shall mean
damage or destruction to the Premises, other
than Lessee-Owned Alterations and Utility
Installations, fire repair cost of which damage
or destruction is fifty percent (50%) or more of
the then replacement Cost of the Premises
(excluding Lessor-Owned Alterations and Utility
Installations and Trade Fixtures) Immediately
prior to such damage or destruction. In
addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility
Installations and Trade Fixtures of any Lessees
of the Building, the cost of which damage or
destruction is fifty percent (50% or more of the
then replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade
Fixtures of any Lessees of the Building) of the
Building shall, at the option of Lessor, be
deemed to be Premises Total Destruction.
(c) "Insured Loss" shall mean damage or
destruction to the Premises, other than Lessee-
Owned Alterations and Utility Installations and
trade Fixtures, which was caused by an event
required to be covered by the insurance
described In Paragraph 8.3(a) irrespective of
any deductible amounts of coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to
repair or rebuild the Improvements owned by
Lessor at the time of the occurrence to their
condition existing immediately prior thereto,
including demolition, debris removal and
upgrading required by the operation of
applicable building codes, ordinances or laws,
and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean
the occurrence or discovery of a condition
involving the presence of, or a contamination
by, a hazardous substance as defined in
Paragraph 6.2(a), in, on, or under the Premises.
9.2 Premises Partial Damage - Insured Loss. If
Premises Partial Damage that is an Insured loss
occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's trade
fixtures or Lessee-Owned Alterations and Utility
Installations) as soon as reasonably possible
and this Lease shall continue in full force and
effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage
is due in the fact that, by reason of the
unique nature of the improvements in the
Premises, full replacement cost Insurance
coverage was not commercially reasonable and
available. Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises
unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof,
within ten (10) days following receipt of
written notice of such shortage and request
therefore. If Lessor receives said funds or
adequate assurance thereof within said ten (10)
day period, Lessor shall complete them as soon
as reasonably possible and the Lease shall
remain in full force and effect. If Lessor does
not receive such -funds or assurance within said
period, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is
commercially reasonable with Lessor paying any
shortage in proceeds, in which case this lease
shall remain in full force and effect. If Lessor
does not receive such funds or assurance within
such ten (10) day period, and if Lessor does
not so elect to restore and repair, then this
lease shall terminate sixty (60) days following
the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no
event have any right to reimbursement from
Lessor for any funds contributed by Lessee to
repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than
Paragraph 9.2, notwithstanding that there may
be some insurance coverage, but the net proceeds
of any such insurance shall be made available
for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If
Premises Partial Damage that is not an Insured
loss occurs, unless caused by a negligent or
willful act of Lessee (in which event Lessee
shall make the repairs at Lessee's expense and
this lease shall continue in full force and
effect). Lessor may at Lessor's option, either
(i) repair such damage as soon as reasonably
possible at Lessor's expense, in which event
this lease shall continue in full force and
effect, or (ii) give written notice of Lessee
within thirty (30) days after receipt by Lessor
of knowledge of the occurrence of such damage of
Lessor's desire to terminate this lease as of
the date sixty (60) days following the date of
such notice. In the event Lessor elects to give
such notice of Lessor's intention to terminate
this Lease, Lessee shall have the right within
ten (10) days after the receipt of such notice
to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage
totally at Lessee's expense and without
reimbursement from Lessor. Lessee shall provide
Lessor with the required funds or satisfactory
assurance thereof within thirty (30) days
following such commitment from Lessee. In such
event this lease shall continue in full force
and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible
after the required funds are available. If
Lessee does not give such notice and provide the
funds or assurance thereof within the times
specified above, this lease shall terminate as
of the date specified in Lessor's notice of
termination.
9.4 Total Destruction. Notwithstanding any
other provision hereof, if Premises Total
Destruction occurs (including any destruction
required by any authorized public authority),
this lease shall terminate sixty (60) days
following the date of such Premises Total
Destruction, whether or not the damage or
destruction is an Insured loss or was caused by
a negligent or willful act of Lessee. In the
event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the
right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at 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 month's Base Rent whether or
not an Insured loss, Lessor may, at Lessor's
option, terminate this lease effective sixty
(60) days following the date of occurrence of
such damage by giving written notice to Lessee
of Lessor's election to do so within thirty (30)
days after the date of occurrence of such
damage. Provided, however, if Lessee at that
time has an exercisable option to extend this
lease or to purchase the Premises, then Lessee
may preserve this lease by (a) excercising such
option, and (b) providing Lessor with any
shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on
or before the earlier of (i) the date which is
ten (10) days after Lessee's receipt of Lessor's
written notice purporting to terminate this
lease, or (ii) the day prior to the date upon
which such option expires. If Lessee duly
exercises such option during such period and
provides Lessor with funds (or adequate
assurance hereof to cover any shortage in
insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably
possible and this lease shall continue in full
force and effect. If Lessee fails to exercise
such option and provide such funds or assurance
during such period, then this lease shall
terminate as of the date set forth in the first
sentence of this Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial
Damage or (ii) Hazardous Substance Condition for
which Lessee is not legally responsible. The
Base Rent, Common Area Operating Expenses and
other charges, if any, payable by Lessee
hereunder for the period during which such
damage or repair, remediation or restoration
continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is
impaired, but not in excess of proceeds from
Insurance required be carried under Paragraph
6.3(b). Except for abatement of Base Rent.
Common Area Operating Expenses and other
charges, if any, as aforesaid, all other
obligations of Lessee hereunder shall be
performed by Lessee, and Lessee shall have no
claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair,
remediation or restoration.
(b) It 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 this 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 to
Lessor 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 9.6 shall mean either the
unconditional authorization of the preparation
of the required plans, or the beginning of the
actual work on the Premises, whichever occurs
first.
Hazardous Substance Conditions. If a Hazardous
Substance Condition occurs, unless Lessee is
legally responsible therefor (in which case
Lessee shall make the investigation and
remediation thereof required by Applicable
Requirements and this lease shall continue in
full force and effect, but subject to Lessor's
rights under Paragraph 6.2(c) and Paragraph 13),
Lessor may at Lessor's option either (i)
Investigate and remediate such Hazardous
Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in
which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost
to investigate and remediate such condition
exceeds twelve (12) times the then monthly Base
Rent or $100,000 whichever is greater, give
written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the
occurrence of such Hardous Substance Condition
ot Lessor's desire to terminate this Lease as of
the date sixty (60) days following the date of
such notice. In the event Lessor elects to give
such notice of Lessor's intention to terminate
this Lease Lessee shall have the right within
ten (10) days after the receipt of such notice
to give writen notice to Lessor of Lessee's
committment to pay for excess costs of (a)
investigation and remediation of such Hazardous
Substance Condition to the extent required by
Applicable Requirements over (b) an amount
equal to twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater. Lessee
shall provide Lessor with the funds required to
Lessee of satisfactory assurance thereof within
thirty (30) days following said commitment by
Lessee. In such event this Lessee shall continue
in full force and effect, and Lessor shall
procceed to make such investigation and
remediation as soon as reasonably possible after
the required funds are available. If Lessee
does not give such notice and provide the
required funds or assurance thereof within the
time period specified above, this Lease shall
terminate as of the date specified in Lessor's
notice of termination.
9.8 Termination - Advance Payments. Upon
termination of this Lease pursuant to this
Paragraph 9, Lessor shall return to Lessee any
advanced payment made by Lessee to Lessor and so
much of Lessee's Security Deposit as has not
been, or is not then required to be, used by
Lessor under the terms of this Lease.
9.9 Waiver of Statutes. Lessor and Lessee
agree that the terms of this Lease shall govern
the effect of any damage to or destruction of
the Premisises and the Building with respect to
the termination of this Lease and hereby waive
the provisions of any present or future statue
to the extent it is inconsistent herewith.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the
Real Property Taxes, as defined in Paragraph
10.2 applicable to the Industrial Center, and
except as otherwise provided in Paragraph 10.3,
any such amounts shall be included in the
calculation of Common Area Operating Expenses in
accordance with the provisions of Paragraph 4.2.
10.2 Real Properly Tax Definition. As used
herein, the term "Real Properly Taxes" shall
include any form of real estate tax or
assessment, general. special, ordinary or
extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or
tax (other than inheritance personal income or
estate taxes) imposed upon the Industrial Center
by any authority having the direct or indirect
power to tax, including any city, state or
federal government, or any school, agricultural,
sanitary, fire, street, drainage or other
improvement district thereof, levied against any
legal or equitable interest of Lessor in the
Industrial Center or any portion thereof,
Lessor's right to rent or other income
therefrom, and/or Lessor's business of leasing
the Premises. The term "Real Property Taxes"
shall also include any tax, fee levy, assessment
or charge, or any increase therein, imposed by
reason of events occurring, or changes in
Applicable Law taking effect, during the term of
this Lease, including but not limited to a
change in ownership of the Industrial Center or
in the improvements thereon the execution of
this Lease, or any modification, amendment or
transfer thereof, and whether or not
contemplated by the Parties. In calculating
Real Property Taxes for any calendar year, the
Real Property Taxes for any real estate tax year
shall be included in the calculation of Real
Property Taxes for such calendar year based on
the number of days which such calendar year and
tax year have in common.
10.3 Additional tmprovements. Common Area
Operating Expenses shall not include Real
Property Taxes specified in the tax assessor's
records and work sheets as being caused by
additional improvements placed upon the
Industrial Center by other lessees or by Lessor
for the exclusive enjoyment of such other
Lessees. Notwithstanding Paragraph 10.1 hereof,
Lessee shall, however, pay to Lessor at the time
Common Area Operating Expenses are payable under
Paragraph 4.2, the entirely of any increase in
Real Property Taxes if assessed solely by reason
of Alterations, trade Fixtures or Utility
Installations placed upon the Premises by Lessee
or at Lessee's request.
10.4 Joint Assessment. If the Building is not
seperately assessed, Real Property Taxes
allocated to the Building shall be an equitable
proportion of the Real Property Taxes for all of
the land and improvements included within the
tax parcel assessed, such proportion to be
determined by Lessor from the respective
valuations assigned in the assessor's work
sheets or such other information as may be
reasonably available. Lessor's reasonaable
determination thereof, in good faith, shall be
conclusive.
10.5 Lessee's Properly Taxes. Lessee shall pay
prior to delinquency all taxes assessed against
and levied upon Lessee Owned Alterations and
Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property
of Lessee contained in the Premises or stored
within the Industrial Center. When possible,
Lessee shall cause its Lessee-Owned Alterations
and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal
property to be assessed and billed seperately
fron the real property of Lessor. If any of
Lessee's said property shall be assessed with
Lessor's real property, Lessee shall pay Lessor
the taxes attributable to Lessee's property
within ten (10) days after receipt of a written
statement setting forth the taxes applicable to
Lessee's property.
11. UtIlities. Lessee shall pay directly for
all utlities and services supplied to the
Premises, including but not limited to
electricity, telephone, security, gas, and
cleaning of Prmises, together with any taxes
thereon. If any such utilities or services are
not seperately metered to the Premises or
seperately billed to the Premises, Lessee shall
pay the Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly
metered or billed with other premises in the
Building in the manner and within the time
periods set forth in Paragraph 4.2(d).
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage or
otherwise transfer or encumber (collectively,
"assign") or sublet all or any part of Lessee's
interest in this Lease or in the Premises
without Lessor's prior written consent given
under and subject to the terms of Paragraph 36.
(b) A change in the control of Lessee shall
constitute an assignment requiring Lessor's
consent. The transfer on a cumulative basis, of
twenty five percent (25%) or more of the voting
control of Lessee shall constitute a change in
control for this purpose.
(c) The involvement of Lessee or its assets
in any transaction, or series of transactions
(by way of merger. sale, acquisition, financing,
refinancing, transfer, leveraged buy out or
otherwise) whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets
occurs. which results or will result in a
reduction of the Net Worth of Lessee, as
hereinafter defined, by an amount equal to or
greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represnted to
Lessor at the time of full execution and
delivery of this Lease or at the time of the
most recent assignement to which Lessor has
consented. or as it exists immediately prior to
said transaction or transactions constituting
such reduction, at whichever time said Net Worth
of Lessee was or is greater, shall be considered
an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent "Net
Worth of Lessee" for purposes of this Lease
shall be the net worth of Lessee (excluding any
Guarantors) established under generally accepted
accounting principles consistently.
(d) An assignment of subletting of Lessee's
interest in this Lease without Lessor's specific
prior written consent, at Lessor's option be a
Default curable after notice per Paragraph 13.1
or a non-curable Breach without the necessity of
any notice and grace period. IfLessor elects to
treat such unconsented to assignment or
subletting as a non-curable Breach, Lessor shall
have the right to either; (i) terminate this
Lease or (ii) upon thirty (30) days' written
notice ("Lessor's Notice"). increase the monthly
Base Rent for the Premises to the greater of the
then fair market rental value fo the Premises as
reasonably determined by Lessor, or one hundred
ten percent (110%) of the Base Rent then In
effect. Pending determination of the new fair
market rental value if disputed by Lessee,
Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited
against the next installment(s) of Base Rent
coming due and any underpayment for the period
retroactively to the effective date of the
adjustment being due and payable immediately
upon the determination thereof. Furhter, in the
event of such Breach and rental adjustment, (i)
the purchase price of any option to purchase the
Premises held by Lessee shall be subject to
similar adjustment to the then fair market value
as reasonably determined by Lessor (without the
Lease being considered an encumbrance of any
deduction for depreciation or obsolescence, and
considering the Premises at its highest and best
use and in good condition) or one hundred teni
percent (110%) of the price previuosly in effect
(ii) any index oriented rental or price
adjustment formulas contained in this Lease
shall be adjusted to require that the base index
be determined with reference tot he index
applicable tothe time of such adjustment, and
(iii) any fixed rental adjustments scheduled
during the remainder of the Lease term shall be
increased in the same ratio as the new rental
bears to the Base Rental in effect immediately
prior to the adjustment specified in Lessor's
Notice.
(e) Lessee's remedy for any breach of this
Paragraph 12.1 by Lessor shall be limited to
compensstory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to
Assignment and Subletting.
(a) Regardless of Lessor's consent, any
assignment or subletting shall not (i) be
effective without the express written assumption
by such assignee or sublessee of the obligations
of Lessee under this Lease, (ii) release Lessee
of any obligations hereunder, not (iii) after
the primary liability of Lessee for the payment
of BAse Rent and other sums due Lessor hereunder
or for the performance of any other obligations
to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance
of Lessee's obligations from any person other
than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval
or disapproval of such assignment nor the
acceptance of any rent for performance shall
consitute a waiver or estoppel 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 asignment or
subletting by the assignee or sublessee.
However, Lessor may consent to subsequent
sublettings and assignments of the sublease or
any amendments or modifications thereto without
notifying Lessee or anyone else liable under
this Lease or the sublease and without obtaining
their consent and such action shall not relieve
such persons from liability under this Lease or
the sublease.
(d) In the event of any Default or Breach of
Lessee's obligation under this Lease, Lessor may
proceed directly against Lessee, any Guarantors
or anyone else responsible for the performance
of the Lessee's obligations under this Lease,
including any sublessee, without first
exhausting Lessor's remedies against any other
person or entity responsible therefor to Lessor,
or any security held by Lessor.
(e) Each request for consent to an assignment
or subletting shall be in writing, accompanied
by information relevant to Lessor's
determination as to the financial and
operational responsibility and appropriateness
of the propsed assignee or sublessee, including
but not limited to the intended use and or
required modification of the Premises, if any
together with a non-refundable deposit of $1,000
or ten percent (10%) of the monthly Base Rent
applicable to the portion of the Premises which
is the subject of the proposed assignment or
sublease, whichever is greater, as reasonable
consideration for Lessor's considering and
processing the request for consent. Lessee
agrees to provide Lessor with such other or
additional information and/or documentation as
may be reasonably requested by Lessor.
Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment or
entering into such sublease be deemed for the
benefit of Lessor, to have assumed and agreed to
conform and comply with each and every term,
covenant, condition and obligation herein to be
observed or performed by Lessee during the term
of said assignment or sublease, other than such
obligations as are contrary to or inconsistent
with provisions of an assignment or sublease to
which Lessor has specifically consented in
writing.
13. Default; Breach; Remedies.
13.1 Default: Breach. lessor and lessee agree
that It an attorney Is consulted by lessor In
connection with a lessee Default or Breach (as
hereafter defined). $35O.00 is a reasonable
minimum sum per such occurrence for legal
services and costs In the preparation and
service of a notice of Default, and that lessor
may Include the cost of such services and costs
In said notice as rent due and payable 10 cure
said default A "default" by lessee is defined as
a failure by lessee to observe, comply with or
perform any of the terms, covenants, conditions
or rules applicable to lessee under this Lease A
"Breach' by Lessee is defined as the occurrence
of any one or more Of the foflowing Defaults,
and, where a grace period for cure alter notice
is specthed herein. the failure by lessee to
cure such Default prior to the expiration of the
applicable grace period, and shall entitle
lessor to pursue the remedies set forth in
Paragraphs t3~2 and/or t3~~:
(a) The vacating of the Premises without the
Intention to reoccupy same, or the abandonment
of the Premises.
(h) Except as expressly otherwise provided In
tins lease, the failure by lessee to make any
payment of Base Rent, lessees Share of Common
Area Operating Expenses. or any other monetary
payment required to be made by lessee hereunder
as and when due, the failure by lessee to
provide lessor with reasonable evidence of
insurance or surely bond required under tins
lease, or the failure of lessee to fulfill any
obligation under if us lease winch endangers or
threatens fife or property, where such failure
continues for a period of three (3) days
foflowing written notice thereof by or on behalf
of lessor to lessee.
(c) Except as expressly otherwise provided In
this Lease, the failure by lessee to provide
lessor with reasonable written evidence fin duly
executed original form. if applicable) of (I)
compliance with Applicable requirements per
Paragraph ~.3. (ii) The Inspection. maintenance
and service contracts required under Paragraph
7.1(b), (in) the rescission of an unauthorized
assignment or subletting per Paragraph 12.1,
(iv) a Tenancy Statement per Paragraphs 16 or
37. (v) the subordination or non-subordination
of this lease per Paragraph 3(1, (vi) the
guaranty of the performance of lessee 5
obligations under tins lease if required under
Paragraphs I - It and 37, (vii) the execution of
any document requested under Paragraph 42
(easements), or (vin) any other documentation or
interpofation which lessor may reasonably
require of lessee under the terms of tins tease,
where any such failure continues for a period of
ten (10) days foflowing written notice by or on
behalf of lessor to lessee.
(d) A Default by lessee as to the terms,
covenants, conditions or provisions of this
lease, or of the rules adopted under Paragraph
40 hereof that are to be observed. complied with
or performed by lessee. other than those
described in Subparagraphs 13.1(a). (b) or (c).
above. where such Default continues for a period
of thirty 130) days after written notice thereof
by or on behalf of lessor to Lessee: provided.
however. that if the nature of lessees Default
is such that more than If thirty (30) days are
reasonably required for Its cure, then It shall
not be deemed to be a Breach of this lease by
lessee if lessee commences such cure within said
thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) the occurrence of any of the foflowing
events: (I) the making by Lessee of any general
management or assignment for the benefit of
creditors; (ii) lessees becoming a "debtor" as
defined In It U.S. Code Section 101 or any
successor statute thereto (unless. in the case
of a petition filed against lessee, the same is
dismissed within sixty (60) days); (in) the
appointment of a trustee or receiver to lake
possession of substantially all of lessee 5
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 of her 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 riot
discharged within thirty (30) days: provided,
however, in the event that any provision of this
Subparagraph 13.1(e) Is contrary to any
applicable law. such provision shall be of no
force or effect. and shall not atfect the
validity of the remaining provisions.
(I) The discovery by Lessor that any financial
statement of Lessee or of any Guarantor, given
to lessor by lessee or any Guarantor, was
materially false.
(g) If the performance of lessee's obligations
under this Lease Is guaranteed: (I) the death of
a Guarantor, (ii) the termination of a
Guarantor's liability with respect of this lease
other than In accordance with the terms of such
guaranty. (in) a Guarantor's becoming insofvent
or the subject of a bankruptcy act. mg. (iv) a
Guarantor's refusal to honor the guaranty, or
(v) a Guarantor's breach of Its guaranty
obligation on an anticipatory breach basis. and
lessee's failure, within sixty (60) days
foflowing written notice by or on behalf of
Lessor to Lessee of any such event, to provide
lessor with written alternative assurances of
security. which, when crippled with the then
existing resources of Lessee, equals or exceeds
the combined financial resources of lessee and
the Guarantors that existed at the time of
execution of this lease.
13.2 Remedies. if lessee fails to perform any
affirmative duty or obligation of Lessee under
this lease. within ten (10) days after written
notice to lessee (or in case of an emergency.
without notice), lessor may at Its option (but
without obligation to do so), perform such duty
or obligation on lessee 5 behalf, including but
not limited 10 the obtaining of reasonably
required bodies, Insurance policies, or
governmental licenses. periods 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 be honored by the bank
upon which it is drawn, lessor, at if 5 other
option, may require all future payments to be
made under this lease by lessee 10 be made only
by cashier 5 check. in the event of a Breach of
tins lease by lessee (as defined in Paragraph
13.1), with or without further notice or demand.
and without limiting lessor in the exercise of
any right or remedy winch lessor may have by
reason of such Breach, Lessor may:
(a) in.' innate lessee's right to possession
of the Premises by any lawful means, in which
case tins lease and the term hereof shall
terminate and lessee shall immediately surrender
possession of the Premises 10 Lessor. In such
event lessor shall be entitled to recover horn
lessee- (i) the worth at the time of the award
of the unpaid term which had been earned at the
time of termination; (ii) the worth at the time
or award of the amount by which the unpaid rent
which would have been earned after termination
until the time of award exceeds the amount of
such rental loss that the lessee proves could
have been reasonably avoided: (in) the worth Ii
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 lire amount of such
rental toss that the lessee proves could be
reasonably avoided: and (Iv) any other amount
necessary to compensate lessor for all if re
determined approximately caused by the lessee 5
failure to perform ifs obligations under this
lease or which In the ordinary course of things
would be likely to result therefrom. including
but not limited 10 the cost of recovering
possession of the Premises. expenses of re-
letting. Including necessary renovation and
alteration of the Premises. reasonable
attorneys' fees, and that portion of any leasing
commission paid by lessor in connection with
this lease applicable to the unexpired term of
this lease The worth at The time of award of If
10 amount referred to in provision (in) of the
Immediately preceding sentence shall be compiled
by disconnecting such amount at the discount
rate of the Federal Reserve Bank of San
Francisco or the Federal Reserve Bank District
In which the Premises are located at the time of
award plus one count rate percent. Efforts by
lessor to mitigate damages caused by lessees
Default or Breach of this lease shall not waive
lessor's right 10 recover damages under title 5
Paragraph 13.2.11 termination of tins lease is
obtained through the provisional remedy of
unlawful defamer, lessor shall have the right to
recover in such proceeding flip unpaid rent and
damages as are recoverable herein, or lessor may
reserve the right to recover all or any part
thereof in a separate suit for such rent and or
damages if a notice and grace period required
under Subparagraph 13. f(b~. (c) or (dl was not
previously given. a notice to pay rent or quit.
or 10 perform or quit. as the case may be. given
to lessee under any statute authorizing the
forfeiture of teases for unlawful detainer shall
also correlate the applicable notice for grace
period purposes required by Subparagraph
13.f(b),(c) or (d). In such case, the applicable
grace period under the unlawful detainer statue
shall run concurrently at/or the one such
salutatory notice. and the failure of lessee 10
cure the Default within the greater of the two
(2) such grace periods shall constitute both an
unlawful defamer and a Breach of this lease
entitling lessor of the remedies provided for In
tins 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) alter
lessee's Breach and recover the rent as it
becomes due. provided Lessee has the right to
sublet or assign. subject only to reasonable
limitations lessor and lessee agree that The
limitations on assignment and sub-letting in
this Lease are reasonable. Acts of maintenance
or preservation. efforts to re-let the Premises.
or the appointment of a receiver to protect the
lessor's Interest under this Lease, shall not
constitute a termination of the lessee's right
to possession.
(c) Pursue any other remedy now or hereafter
available to Lessor under the laws or judicial
decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this
Lease and/or the termination of Lessee's right
to possession shall not relieve the leassee from
liability or any indemnity provisions of this
lease as to matters occurring or accruing during
the term hereof or by reason of Lessee's
occupancy of the Premises.
13 3 Inducement Recapture In Event of Breach.
Any agreement by, lessor for free or abated rent
or other charges applicable to the Premises in
the giving or paying by Lessor to or for lessee
of any cash or other bonus, inducement or
consideration for lessee's entering into this
lease, all of which concessions are hereinafter
referred to as "Inducement Provisions" shall be
deemed conditioned upon lessee's full and
faithful performance of all of terms and
covenants and conditions of this Lease to be
performed or observed by lessee during the terms
hereof as the same may be extended. Upon the
occurrence of a Breach, ( as defined in
Paragraph 13.1) of this Lease by Lessee, any
such Inducement Provision shall automatically be
deemed deleted from the Lease and of a further
force of effect, and any rent, other char4ge,
bonus, inducement or consideration theretofore
abated, given or paid by Lessor under such
Inducement Provision shall be immediately due
and payable by Lessee to Lessor, and recoverable
by Lessor, as additional rent due under this
Lease, notwithstanding any subsequent cure of
said Breach by Lessee. The acceptance by Lessor
of rent or the cure of the Breach which
initiated the operation of this Paragraph 13.3,
shall not be deemed a waiver by Lessor of the
provisions of this Paragraph 13.3 unless
specifically so stated in writing by Lessor at
the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges
that late payment by Lessee to Lessor of rent
and other sums due hereunder will cause Lessor
to incur costs not contemplated by this Lease,
the exact amount of which will be extremely
diffiuclt to ascertain. Such costs include, but
ar not limited to processing and accounting
charges, and late charges which may be imposed
upon Lessor by the terms of any ground lease,
mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other
sum due form Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days
after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six
percent (6%) of such overdue amount. The
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 coflected three (3)
consecutive installments of Base Rent, then
notwithshtanding Paragraph 4.1 or any other
provision of this Lease to the contrary. Base
Rent shall at Lessor's option become due and
payable quarterly in advance.
13.5 Breach by Lessee. Lessor shall not be
deemed in breach of this Lease unless lessor
fails within a reasonable time to perform an
obligation required to be performed by lessor.
For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than
thirty (301 days alter receipt by lessor. and by
any lender(s) whose name and address shall have
been informed to lessee in writing of 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 If
thirty (30) days alter 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 there after diligently pursued to
completion.
14. Condemnation, If the Premises or any
portion thereof are taken under the power of
eminent domain or sofd under the threat of the
exercise of said power fail of which are herein
called "Condemnation"), this lease shall
terminate as to the part so taken as of the date
the ordering authority fakes title or
possession. wherever first occurs if more than
ten percent (tO%1 of the floor area of the
Premises, or more than twenty live percent of
the portion of the Common Areas 4esie,riated for
lessee's parking, is taken by condemnation,
lessee at lessee's option, to be exercised in
writing within ten (10) days alter lessor shall
have given Lessee written notice of such fairing
(or in the absence of such notice, within ten
(10) days after the condemning authority shall
have taken possession) terminate Ibis lease as
of the date the condemning authority takes such
possession. it lessee does not terminate tins
lease in accordance with the foregoing. ft us
Lease shah remain in full force and effect as to
the portion of the Premises remaining, except
that the Base Rent shall be reduced to the pro
rata portion as the rentable floor area of the
Promises taken bears to the total rentable floor
area of the Premises No reduction of Base flout
shall occur it the condemnation does riot apply
to any portion of the Premises. Any award for
the taking of all or any part of the Premises
under the power of eminent domain be the penalty
of lessor, whether such award shall he made as
compensation for duration of value of the
leasehold or for the tariff of the fee, or as
severance damages: provided, however, that
lessee shall be entitled to any compensation.
satisfactorily awarded to lessee for lessee 5
relocation expenses and-or toss of lessee's
trade Fixtures In the event that tins lease is
not terminated by reason of such condemnation
1essor is to the extent of its not severance
damages received, over and above lessee's Share
of the legal and other expenses incurred by
Lessor of the condemnation matter, repair any
damage to the Premises caused by such
condemnation authority. Lessee shall be
responsible for the payment of any amount excess
of such net severance damages required to
complete such repair.
1~. Brokers' Fees.
15.1 Procuring Cause. the Broker(s) named in
Paragraph 1.10 is/are the procuring cause of
this lease,
15 2 Additional Terms ~f'riles5 lessor and
Broker(s), have otherwise agreed in writing,
lessor agrees that. (a) if lessor exercises any
Option (as defined in Paragraph 39. 1) granted
under this lease or any Option subsequently
granted, or (b) if Lessee acquires any rights to
the Premises or other premises in which Lessor
has an interest. or (c) if lessee remains in
possession of the Premises with the consent of
lessor alter the expiration of the term of this
lease after having failed to exercise an Option,
or (d) If said Brokers are the procuring cause
of any other tease or sate entered Into between
the Parties pertaining to the Premises and-or
any adjacent properly in which lessor has an
interest, or (e) If Base Rent Is increased,
whether by agreement or operation of an
escalation clause herein, then as to any of said
transactions, lessor shall pay said Broker(s) a
fee in accordance with the schedule of said
Broker(s) in effect at the time of the execution
of this lease.
15 3 Assumption of obligations. Any buyer or
transferee of lessor's Interest in this Lease,
whether such transfer is by agreement or by
operation of law shall be deemed to have assumed
lessor's obligation under Ibis Paragraph 15.
Each Broker shall be air intended third party
beneficiary of the provisions of Paragraph I -
10 and of this Paragraph 15 to the extent of its
Interest in any commission arising from this
lease and may enforce that right directly
against lessor and its successors.
15.4 Representations end Warranties, 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 as named in
Paragraph 1.10(a) in connection with the
negotiation of this lease and/or the
consummation of the transaction contemplated
hereby. and that no broker or other poison, firm
or entity other than said named Broker(s) 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 demanding or actions of the indemnifying
Party, including any costs, expenses, and/or
attorneys' fees reasonably incurred with respect
thereto.
111. Tenancy and Financial Statements.
16 1 Tenancy Statement Each Party (as
"Responding Party") shall within ten (10) days
after written notice from the other Party (the
"Requesting Party") exercise, acknowledge and
deliver 10 the Requesting Party a statement in
writing in a form similar to the then most
current "Tenancy Statement" but published by the
American industrial Real Estate Association,
plus such additional information, confirmation
and/or statements as may be reasonably requested
by the Requesting Party.
16 2 Financial Statement ii lessor desires to
finance, refinance, or sell the Premises or the
Building, or any part thereof, lessee and all
Guarantors shall deliver to any potential lender
or purchaser designated by lessor such financial
statements of lessee and such Guarantors as may
be reasonably required by such lender or
purchaser, including but not limited to lessee's
financial statements for the past three (3)
years All such financial statements shall be
received by lessor and such lender or purchaser
in confidence and shall be used only for the
purposes herein set forth.
17. lessor's liability. The term "Lessor" as
used herein shall mean the owner or owners at
the time in question of the fee title to the
Premises in the event of a transfer of Lessor's
title or interest in the Premises or/in this
lease, lessor shall deliver to the transferee or
assignee (in cash or by credit) any unused
Security Deposit held by lessor at the time of
such transfer or assignment. Except as provided
in Paragraph 15 3, upon such transfer or
assignment and delivery of the Security Deposit,
as aforesaid, the prior lessor shall be relieved
of all liability with respect to the obligations
and/or covenants under this Lease thereafter to
be performed by the lessor Subject to the
foregoing, the obligations and/or covenants in
this lease to be performed by the lessor shall
be binding only upon the lessor as hereinabove
defined.
16. Severability. lire invalidity of any
provision of this Lease, as determined by a
court of competent 5urisdiction, shall in no way
ailed the validity of any other provision hereof
19. Interest on Pest-Due Obligations. Any
monetary payment due lessor thereunder, other
than lab charges, not received by Lessor within
ten (10) days following the date on which it was
due, shall bear interest from the date due at
the prime rate charged by the largest state
chartered bank in the state in which the
Premises are located plus four percent (4%) per
annum, but not exceeding the maximum rate
allowed by law, in addition to the potential
late charge provided for in Paragraph 13.4
20, Time of Essence. Time is of the essence
with respect to the performance of alt
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 tins lease
are deemed lobe rent.
22. Prior or other Agreements; Broker
Disclaimer. This lease contains all agreements
between the Parties with respect to any matter
mentioned herein. and no other prior or
contemporaneous agreement or understanding shall
be effective. lessor and lessee each represents
and warrants to the Brokers that it has made,
and is relying solely upon. its own
Investigation as to the nature, quality,
character and financial responsibility of the
other Party to this Lease and as of the nature,
quality and character of the Premises. Brokers
have no responsibility with respect thereto or
with respect to any default or breach hereof by
either Party. Each Broker shall be an intended
third party beneficiary of the provisions of
this Paragraph 22.
23. Notices.
23 1 Notice Requirements All notices required
or permitted by this lease shrill be in writing
and may be delivered in person by hand or by
messenger or courier service) or may be sent by
regular. certthed or registered mail or U.S.
Postal Service Express Mail, with postage
prepaid, or by facsimile transmission during
normal business hours, and shall be deemed
sufficiently given if sent in a manner specthed
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 lessor's address for
the purpose of mailing or delivering of notices
to lessee. A copy of all notices required or
permitted to be given to lessor hereunder shall
be concurrently transmitted to such Party or
Parties at such addresses as lessor may from
time to time hereafter designate by written
notice to lessee
23 2 Date of Notice. Any notice sent by
registered or certthed mail, return receipt
requested. shrill be doomed given on the date of
delivery stamp on the receipt card, or if no
delivery date is shown. the postmark thereon. if
sent by regular mail, the notice shall be deemed
given forty eight (48) hours after the same is
addressed as required herein and mailed with
postage prepaid. Notices delivered by United
States Express Mail or overnight courier that
guarantees next day delivery shall be deemed
given twenty-four (24) hours after delivery of
the same to the Untied Slates Postal Service or
courier. If any notice is transmitted by
facsimile or similar means, the same shall be
deemed served or delivered upon telephone or
facsimile confirmation of receipt of the
facsimile of, provided copy is also delivered
via delivery or malt. If notice is received on a
Saturday or a Sunday or a legal holiday, it
shall be deemed received on that business day
24. Waivers. No waiver by Lessor of the
Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a
waiver of any other term. covenant or condition
hereof, or of any subsequent Default or Breach
by lessee of the same or any other term,
covenant or condition hereof. Lessor's consent
to. or approval of, any such act shall not be
deemed to render unnecessary the obtaining of
lessor's consent to, or approval of. any
subsequent or similar act by lessee. or be
construed as the basis of an estoppel to enforce
the provision or provisions of this lease
requiring such consent regardless of Lessor's
knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor
shall not be a waiver of any Default or Breach
by Lessee of any provision hereof. Any payment
given lessor by lessee may be accepted by Lessor
on account of moneys or damages the lessor,
notwithstanding any qualifying statements or
conditions made by Lessee in connection
therewith, which such statements and/or
conditions shall be of no force or effect
whatsoever unless specifically agreed to in
writing by Lessor at or before the time of
deposit of such payment.
25. Recording. Either lessor or lessee shall,
upon request of the other, execute, acknowledge
and deliver to the other a short form memorandum
of lease for recording purposes. The Party
requesting recording shall be responsible for
payment of any lees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right
to retain possession of the Premises or any part
thereof beyond the expiration or earlier
termination of this lease In the event that
lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the
time of the expiration or earlier termination of
this lease shall be increased to two hundred
percent (200%) of the Base Rent applicable
during the month immediately preceding such
expiration or earlier termination. Nothing
contained herein shall be construed as a consent
by Lessor to any holding over by lessee.
27. Cumulative Remedies.. No remedy or
election hereunder shall be deemed exclusive but
shall, wherever possible, be cumulative with all
other remedies at law or in equity.
2It. 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 Slate in
which the Premises are located. Any litigation
between the Parties hereto concerning this lease
shall be initiated in the county in which the
Premises are located.
30. Subordination: Attornment; Non-Distrubance.
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 alt renewals, modifications,
consolidations, replacements and extensions
thereof lessee agrees II rat 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 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
Lessee's default pursuant to Paragraph 13.5. If
any lender shall elect to have this lease and/or
any Option granted hereby superior to the lien
of its Security Device and shall give written
notice thereof to lessee, this lease and such
Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of
the documentation or recording 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 be liable for any act or omission of
any prior lessor or with respect to events
occurring prior of acquisition of ownership,
(ii) be subject to any offsets or defenses which
lessee might have against any prior lessor, or
(in) be bound by prepayment of more than one
month's rent.
30 3 Non-Disturbance. With respect to Security
Devices entered into by Lessor after the
execution of this lease, Lessee's subordination
of this Lease shall be subject to receiving
assurance (a "non-disturbance agreement") from
the Lender that lessee's possession and If us
lease, including any options to extend the term
therof, will 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
sate, financing or refinancing of Premises,
lessee and lessor shall execute shall further
writings as may be reliability 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 has hereafter defined for any
such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorneys' fees.
Such lees may be awarded in the same 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, will without a limitation, a Party or
Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by
compromise settlement, judgment. or the
abandonment by the other Party or Broker of its
claim or defense. The attorneys' fee award shall
not be computed in accordance with any court fee
schedule. but shall be such as to fully
reimburse all attorneys' less reasonably
incurred. Lessor shall be entitled of attorneys'
fees, costs and expenses incurred in preparation
and service of notices of Default and
consultations in connection therewith, whether
or not a legal action is subsequently commenced
in connection with such Default of resulting
Breach. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.
32. Lessor's Access; Showing Premises;
Repairs. Lessor and lessor's agents shall have
the right to enter the Premises at any time, in
the case of an emergency. and otherwise at
reasonable times for The purpose of showing The
same to prospective purchasers, lenders, or
lessees, and making such alterations repairs,
improvements or additions to The Premises or
the Building, as lessor may reasonably deem
necessary necessary at any future place or
about the Premises or Building any ordinary "For
Sate signs and lessor may at any time during the
last one hundred eighty (180) days of the term
hereof place 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
reasonableness in determining whether to grant
such consent.
34. Signs. Lessee shall not place any sign
upon the exterior of the Premises or the
Building, except that lessee may, with lessor's
prior written consent. install (but not on the
roof) such signs as are reasonably required to
advertise lessee's own business so tong as such
signs are in a location designated by lessor and
comply with Applicable requirements and the
signage criteria established for the industrial
Center by lessor the installation of any sign on
the Premises by or for Lessee shall be subject
to the provisions of Paragraph 7 (Maintenance,
repairs, Utility installations. Trade Fixtures)
Unless otherwise expressly agreed herein. Lessor
reserves all rights to the use of the roof of
the Building, and the right to install
advertising signs of the Building, including the
roof, which do not unreasonably inline with the
conduct of lessee's business,' Lessor shall be
entitled to all revenues from such advertising
signs.
35. Termination; Merger. Unless specifically
slated otherwise in writing by lessor, the
voluntary or other surrender of this lease. by
Lessee. the mutual termination or cancellation
hereof, or a termination hereof by Lessor for
Breach by lessee, shall automatically terminate
any sublease or lesser estate in The Premises:
provided. however, lessor shall. in The event of
any such surrender, termination or cancellation,
have the option to continue any one or all of
any existing sublenacies. Lessor's failure
within ten (10) days following any such event to
make a written election to the contrary by
written notice of 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' and other consultants'
fees) incurred in the consideration of, or
response to, a request by lessee for any lessor
consent pertaining to this lease or the
Premises, including but not limited to consents
to an assignment a subletting or the presence or
use of a Hazardous Substance, shall be paid by
lessee to lessor upon receipt of an invoice and
supporting documentation thereto. In addition to
the deposit described in Paragraph 12 2(e).
Lessor may as a condition of, considering any
such request by lessee, require that lessee
deposit with lessor an amount of money (in
addition to The Security Deposit held under
Paragraph 5) reasonably calculated by lessor to
represent the cost Lessor will incur in
considering and responding to lessee's request
Any unused portion of said deposit shall be
refunded to lessee without interest. Lessor's
consent to any act,. assignment of this lease or
subletting of The Premises by lessee shall not
constitute an acknowledgment that no Default or
Breach by lessee of this lease exists, nor shall
such consent be deemed a waiver of any then
existing Default or Breach. Except as may be
otherwise specifically stated in writing by
Lessor at the time of such consent.
(b) All conditions to lessor's consent
authorized by this lease are acknowledged by
lessee as being reasonable The failure to
specify herein any particular condition for
lessor's consent shall not preclude The
Impositions by lessor at the time of consent of
such further or other conditions as are then
reasonable with reference to the particular
matter for which consent is being given.
37. Guarantor.
37.1 Form of Guaranty. It there are to be any
Guarantors of this lease per Paragraph 1.11, the
form of the guaranty, be executed by each such
Guarantor shall be in the form most recently
published by the American industrial Real Estate
Association, and each such Guarantor shall have
the same obligations as lessee under this lease,
including but riot limited to the obligation to
provide the Tenancy Statement and information
required in Paragraph 16.
37.2 Additional Obligations of Guarantor. It
shall constitute a Default of The lessee under
this lease if any such Guarantor fails or
refuses upon reasonable request by Lessor to
give; (a) evidence of the due execution of the
guaranty called for by ibis lease, including the
authority of The Guarantor (and of the party
signing on Guarantor's behalf) to obligate such
Guarantor on said guaranty, and resolution of
its board of directors authorizing If re ri-
raking of such guaranty. together with a
certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf,
(b) current financial statements of Guarantor as
may from time to time be requested by lessor,
(c) a Tenancy Statement. or (d) written
confirmation that the guaranty is still in
effect.
38. Outlet Possession. Upon payment by lessee of
the rent of the Premises and the performance of
all of the convenants, 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 other term
hereof subject to all of the provisions of this
lease.
39. Options
39.1 Definition. As used in this Lease, the
word "Option" has the following meaning: (a) the
right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease
that Lessee has on other property of Lessor; (b)
the right of first refusal t lease the Premises
or the right of first offer to lease the
Premises or the right of first refusal to lease
other proerty of Lessor or the right of first
offer to lease other property of Lessor; (c) the
right to purchase the Premises or the right of
first refusal to purchase to Premises, or the
right to first offer to purchase the Premises,
or the right to purchase other property of
Lessor, or the right to first refusal to
purchase other proerty of Lessor, or the right
of first offer to purchase other property of
Lessor.
39.2 Options Personal to Original Lessee. Each
Option granted to Lessee in this Lease is
personal to the original Lessee named in
Paragraph 1.1 hereof and cannot be voluntarily
or involuntarily assigned or exercised by any
person or entity other than said original Lessee
is in full and actual possession of the Premises
and without the intention of thereafter
assigning or subletting. The Options, if any,
herein granted to Lessee are not assignable,
either as a part of an assignment of this Lease
or seperately or apart therfrom, and no Option
may be seperated from this Lease in any manner
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee
has any multiple Options to extend or renew this
Lease, a later option cannot be exercised unless
the prior Options to extend or renew this Lease
have been validly exercised.
39.4 Effect of Default on Options.
(a) Lesse shall have no right to exercise an
Option, notwithstanding any provision in the
grant of Option to the contrary; (i) during the
period commencing with the giving of any notice
of Default under Paragraph 13.1 and continuing
until the noticed Default is cured or (ii)
during the period of time any monetary
obligation due Lessor from Lessee is unpaid
(without regard to whether notice thereof is
given Lessee), or (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event
that Lessor has given to Lessee three (3) or
more notices of seperate Defaults under
Paragraph 13.1 during the twelve (12) month
period immediately preceding the exercise of the
Option, whether or not the Defaults are cured.
(b) The period of time within which an Option
may be exercised shall not be extended or
enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of
Paragraph 39.4(a)
(c) All rights of Lessee under the provisions
of an Option shall terminate and be of no
further force or effect, notwithstanding
Lessee's due and timely exercise of the Option,
if, after such exercise and during the term of
this Lease (i) Lessee fails to pay to Lessor a
monetary obligation of Lessee for a period of
thirty (30) days after such obligation becomes
due (without any necessity of Lessor to give
notice thereof to Lessee), or (ii) Lessor gives
to Lessee three (3) or more notices of seperate
Defaults under Paragraph 13.1 during any twelve
(12) month period, whether or not the Defaults
are cured or (iii) if Lessee commits a Breach of
this Lease.
40. Rules and Regulations. Lessee agrees that
if will abide by, and keep and observe all
reasonable rules and regulations ("Rules and
Regulations") which Lessor may make from time to
time for the management, safety, care, and
cleanliness of the grounds, the parking and
unloading of vehicles and the preservafion of
good order, as well as for the convenience of
other occupants or tenants of the Building and
the Industrial Center and their invitees
41. SecurIty Measures. Lessee hereby
acknowledges that the rental payable to Lessor
hereunder does not include the cost of guard
service or other security mesures, and that
Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility
for the protection of the Premises, Lessee its
agents and invitees and their property from the
acts of third parties.
42. Reservations. Lessor reserves the right
from time to time, to grant, without the consent
or joinder of Lesse, such easements, rights of
way, utility raceways and dedications that
Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so
long as such easements, right of ways, utility
raceways, dedications, maps and restrictions do
not reasonably interfere with the ise of the
Premises by lessee. Lessee agrees to sign any
document reasonably requested by Lessor to
effectuate any such easement tights, dedication,
map or restrictions.
43. Performance Under Protest. If at any time
a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under
the provision s 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 suchsum. If it shall be
adjudged that there was no legal obligation on
the part of said Party to pay such sum or any
part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was
not legally required to pay under the provisions
of this Lease.
44. Authority. If either Party hereto is a
coporation, trust, general or limited
partnership, each individual executing this
Lease on behalf os such entity represents and
warrants that he or she is duly authoirzed to
execute and deliver this Lease on its behalf.
If Lessee is coproation, trust or partnership.
Lessee shall, within thirty (30) days after
request by Lessee, deliver to Lessor evidence
satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed
provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by
the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either
Lessor or Lessee or Lessor's agent or Lessee's
agent and submission of same to Lessee or Lessor
shall not be deemed an offer to lease. This
Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified
only in writing, signed by the parties in
interest at the time of modification. The
Parties shall amend this lease from time to time
to reflect any adjsutments that are made to the
Base Rent or other rent payable under this
Lease. As long as they do not materially change
Lessee's obligations hereunder, Lessee agrees to
make such reasonable non-monetary modifications
to this lease as may be reasonably required by
an institutional Insurance company or pension
plan Lender in connection with the obtaining of
normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise
expressly provided herein, if more than one
person or entity is named herein as either
Lessor or Lessee, the obligations of such
multiple parties shall be the joint and several
responsibility of all persons or entities named
herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND
REVIEWED THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN, AND BY THE EXECUTINO OFT HIS
LEASE SHOW THEIR INFORMED AND VOFUDNTARY CONSNT
THEREOT. THE PARTIES HEREBY AGREE THAT , AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE
THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN
PREPARED FOR YOUR ATTORNEY'S REVIEW AND
APPROVAL. FURTIIER, EXPERTS SHOULD BE CONSULTED
TO EVALUATE THE CONDITION OF THE PROPERTY FOR
THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND
STORAGE TANKS Of HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL. REAL ESTATE ASSOCIATION OR
BY THE CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES
SHALL RELY SOFELY UPON THE ADVICE OF THER OWN
COUNSEL AS TO THE LEGAL AND TAXX CONSEQUENCES OF
THIS LEASE. IF THE SUBJECT PORPOERTY IS IN A
STATE OFTHER THAN COALIFORNIA, AN ATTORNEY FROM
THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
The parties hereto have executed this Lease at
the place and on the dates specthed above their
respective signatures.
Executed at: Northridge CA
On: 9-26-98
Executed at: Santa Clarita
On: 9-24-98
By Lessor:
America-United Engterprises, Inc.
A California Corporation
By: Arthur D'Egidio
Title: Vice President
944 Glade Avenue
Chatsworth, CA 91311
818-886-0812
f)818-882-8498
Federal Tax ID: 95-280-4557
By Lessee:
Advanced Oxygen Technofogies, Inc, A Delaware
Corporation
By : Robert Woffe
Chairman of the Board and CEO
230 Park Avenue, Suite 1000
New York, NY 10169
212-808-3061, 805-298-3333
f) 212-808-3020 805-298-4388
BROKER: Crissman Commercial Services, Inc.
John Erickson
VP Industrial/Office Properties
27674 Newhall Ranch Road, Unit 85 Valencia, CA
91355
805-295-9300
f) 805-295-0527
RENT ADJUSTMENT(S)
STANDARD LEASE ADDENDUM
Date September 23, 1998
By and Between (Lessor) America United
Enterprises, Inc. a California Corporation
(Lessee) Advanced Oxygen
Technofogies, Inc., a Delaware Corporation
Address of Premises: 26883 Ruether Avenue1
Santa Clarita, CA 91351
Paragraph 49
RENT ADJUSTMENT(S)
In
Fixed rental adjustment(s)
The Base Rent shall be increase to the foflowing
amounts on the dates set forth below:
On:
October 1, 1999 $4,275.00
October 1, 2000 $4,512.50
October 1, 2001 $4,750.00
October 1, 2002 $4,987.5
Unless specthed otherwise herein, notice of any
such adjustments, other than Fixed Rental
Adjustments, shall be made as specthed in
paragraph 23 of the Lease.
Broker's Fee
The Brokers specthed in paragraph 1.10
shall be paid a Brokerage Fee for each
adjustment specthed above in accordance with
paragraph 15 of the Lease.
ADDENDUM TO THE LEASE DATED SEPTEMBER 23,1998
BY AND BETWEEN
America-United Enterprises, Inc., a California
Corporation as "LESSOR"
AND
Advanced Oxygen Technofogies, Inc, a Delaware
Corporation as "LESSEE"
FOR THE PROPER~ LOCATED AT 26883 RUETIIER
AVENUE, SANTA CLARITA, CA 91351
The items below are incorporated as part of the
principle Lease Agreement, as previously
amended. In the event of an inconsistency, the
inconsistent term or condition set forth in this
Addendum shall govern the controf over the
inconsistent portion for the principle Lease
Agreement.
50. BASE RENT PAID UPON EXECUTION I Security
DEPOSIT I POSSESSION I EARLY
POSESSION:
50.1 Base Rent Paid Upon Execution and Security
Deposit. Upon full execution of this Lease
Agreement, Lessee shall pay Lessor, in the form
of a Cashier's Check, its Security Deposit
pursuant to paragraph 1.7. Upon completion of
the Improvements outlined in paragraph 51
hereof, Lessee shall pay Lessor, in the form of
a Cashier's Check, its Base Rent Paid Upon
Execution pursuant to paragraph 1.6(a) hereof
50.2 Possession. Lessee clearly understands and
agrees that under no circumstances shall Lessee
be granted Possession of the Premises until the
foflowing conditions have been met. 1) full
execution of this Lease by both Parties; 2)
Payment to Lessor, in the form of a Cashier's
Check, of Lessee's Base Rent Paid Upon Execution
pursuant to paragraph 1.6(a) hereof plus its
Security Deposit pursuant to paragraph 1.8; 3)
Lessee provides Lessor evidence of its required
insurance coverage pursuant to paragraph 8
hereof Lessee's failure to fulfill the
conditions of this provision 50.2 prior to the
Commencement Date shall not be considered a
Delay in Possession pursuant to paragraph 3.3
and any such delay shall not entitle Lessee to
any rent abatement 5 offsets or deductions and
shall not alter the Commencement Date and
Expiration Date herein.
50.3 Early Possession. In the event the
atorementioned conditions have been met by
Lessee prior to the Commencement Date and Lessor
has completed the Improvements outline in
paragraph 51 hereof, Lessor may, at Lessor's
discretion, grant Lessee Early Possession of the
Premises, flee of Base Rent and Common Area
Operating Expenses, subject to paragraphs 1.4,
3.2 and 3.3 hereof
Broker(s) are hereby authorized by Lessor to
provide Lessee a key to the Premises when all of
the conditions contained in this paragraph 50
have been met.
51. CONDITION OF PREMISES~1f~IlPROVEMENTS:
By taking possession of the Premises, Lessee
accepts the Premises in its then "as is"
condition and acknowledges that the Premises are
ill good and satisfactory condition as of the
time Lessee takes possession of the Premises,
subject to the provisions of Paragraphs 2.2, 2.3
herein.
Notwithstanding the foregoing, Lessor, at its
sofe cost, expense and effort shall perform the
foflowing improvements as soon as reasonably and
commercially possible foflowing full execution
of this Lease Agreement.'
1) Carpet the two (2) bullpen areas with
Building Standard Carpet Grade;
2) Clean the existing carpeting in the
balance of the office area;
3) Replace the missing interior doors and
frames with building standard doors and frames.
Lessee agrees to provide Lessor access to the
Premises and to co-operate with Lessor and its
contractor(s) in performance of the
atorementioned improvements should Lessee take
possession of the Premises prior to completion
of same.
52. SIGNS:
Lessee understands it is the intent of Lessor to
have uniform sign controf of the Building of
which the Premises are a part, and as such, all
signs shall be subject to Lessor's prior written
approval, which shall not be unreasonable
withheld or delayed, the CC&Rs (if any), and all
codes, ordinances and legislation of applicable
governmental agencies. All Signs shall be of a
size, cofor, configuration and placement
designated by Lessor and comparable to existing
signs, if any. Said signs shall be manufactured
and installed at Lessee's sofe cost, expense and
effort.
53. ASSIGNMENT OF PARKING BY LESSOR:
It is the intention of Lessor, for the benefit
of all tenants of the Building, that those
portions of the Common area designated by Lessor
for parking shall be utilized on an "unreserved"
and "incommon" basis. in the event Lessor finds,
in its sofe judgement, that it is necessary to
assign or reserve vehicle parking spaces in
order to prevent disputes between tenants,
Lessee hereby agrees to comply fully with
Lessor's parking space assignments, to park in
only in its assigned or then Reserved Parking
Spaces and to comply with the applicable
provisions of paragraphs 1.2(b) and 2.6 of this
Lease.
54. DRIVEWAY EASEMENT:
Lessee acknowledges that portions of the Common
Area designated by Lessor as driveways may be
subject to reciprocal driveway easements with
adjoining properties and usage agreements with
other tenants of the industrial Center. Lessee
further acknowledges that its right to use the
driveways is nonexclusive and other tenants of
the industrial Center and adjoining properties
have the same rights. Lessee agrees it may not
block, fence, or otherwise restrict the use of
the driveways of the industrial Center.
55. INTERRUPTION OF Service:
Lessor will not be liable for interruption to
the telephone, plumbing, heating, ventilating,
elevator, air conditioning, electrical or other
mechanical systems or cleaning services by
reason of accident, emergency, repairs,
alterations or improvements, and not resulting
from the intentional misconduct of Lessor or its
agents. At any time during this Lease, any
utilities or services may be conserved by Lessor
without abatetment of rent or other expenses if
undertaken by Lessor as required by any
governmental authority.
56. RULES AND REGULATIONS:
Lessee and its employees, agent and visitors
will observe faithfully the Project's rules and
regulations as promulgated by Lessor from time
to time. The Lessor may issue such rules and
regulations ill its reasonable discretion,
providing that such rules and regulations do not
unreasonable interfere with Lessee's Permitted
Use of the Premises and are similar in substance
to rules and regulations of comparable
industrial centers. Such rules and regulations,
if any, will be considered to be part of this
Lease, breach and default of which shall be
subject to the provisions of paragraph 13 hereof
Lessor will not be liable to Lessee for the
breach or default of any provision, in any
lease, by any other tenant or party in the
industrial Center.
57. USE:
Broker(s) make no representation or warranty as
to the suitability of the Premises for Lessee's
intended use, as stated in paragraph 1.8 hereof,
(i.e. compatibility of zoning) and Lessor and
Lessee agree to hofd harmless and indemnify
Broker(s), and its agents for any conflicts
which may occur. Furthermore, Broker(s) has
recommended Lessee and Lessor contact the
appropriate agency of the City of Santa Clarita
and seek its approval prior to executing this
document.
58. COMMON AREA OPERATING EXPENSES:
Lessee's Share of Common Area Operating Expenses
shall not exceed $237.50 per month at any time
during the initial Term of the Lease.
59. NO PRIOR AGREEMENTS:
This Lease supersede any and all written and
verbal agreements between the Parties including
the Lease dated August 26, 1998 which was
executed sofely by Lessee.
CONSULT YOUR M~IORNEY/ADVISORS - This document
has been prepared for approval by your attorney.
No representation or recommendation is made by
Crissman Commercial Services, Inc. or the
America industrial Real Estate Association
Q~.LR.) or the agents or employees of this
document of the transaction to which it relates.
These are questions (or your attorney.
On any real estate transaction, it is
recommended that you consult with a
professional, such as a civil engineer,
industrial hygienist or other person with
experience in evaluating the condition of the
property, including the possible presence of
asbestos, hazardous materials and underground
storage tanks.
111 addition, please be advised that an Owner or
Tenant of real property may be subject to the
America's with Disabilities Act (the ADA), a
Federal law codthed at 42 USC Section 12101 et
seq. Among other requirements of the ADA that
could apply to your property, Title m of the ADA
requires Owners and Tenants of "public
accommodations" to remove barriers to access by
disabled persons and provide auxiliary aids and
services for hearing, vision or speech impaired
persons by January 26, 1992. The regulations
under Title m of the ADA are codthed at 28 CFR
Part 36'.
Crissman Commercial Services, Inc. recommends
that you and your attorney, engineer and/or
architect review the ADA and the regulations,
and, if appropriate, your proposed lease
agreement, to determine if this law would apply
to you, and the nature of the requirement.
</TABLE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> (60,937)
<SECURITIES> 0
<RECEIVABLES> 209,478
<ALLOWANCES> 0
<INVENTORY> 7,684
<CURRENT-ASSETS> 156,228
<PP&E> 1,085,406
<DEPRECIATION> (92,925)
<TOTAL-ASSETS> 1,148,707
<CURRENT-LIABILITIES> 234,034
<BONDS> 559,817
0
10,050
<COMMON> 296,403
<OTHER-SE> 16,700
<TOTAL-LIABILITY-AND-EQUITY> 1,148,707
<SALES> 451,144
<TOTAL-REVENUES> 451,144
<CGS> 118,354
<TOTAL-COSTS> 118,354
<OTHER-EXPENSES> 237,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,072
<INCOME-PRETAX> 87,203
<INCOME-TAX> 000
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,203
<EPS-PRIMARY> 0.003
<EPS-DILUTED> 0.003
</TABLE>
