EXHIBIT 10.2
STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Provisions ("Basic Provisions").
1.1. Parties. This Lease ("Lease"), dated for reference purposes only
March 8, 2000, is made by and between Principal Life Insurance Company, an Iowa
Corporation, c/o Principal Capital Management, LLC, a Delaware Limited Liability
Company ("Lessor"), and Atlantis Plastics Films, Inc., a Delaware Corporation
("Lessee"), (collectively the "Parties", or individually a "Party").
1.2.(a) Premises. That certain portion of the Project (as defined
below), including all improvements therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address of 13170 Marlay
Avenue, located in the City of Fontana, County of San Bernardino, State of
California, with zip code 92337, as outlined on Exhibit ___ attached hereto
("Premises") and generally described as (describe briefly the nature of the
Premises): Approximately 94,803 square feet located at the southern portion of a
153,104 square foot industrial building, and the exclusive right to use the
railroad spur track and certain outdoor installations, such as silos and silo
pad. In addition to Lessee's rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to the Common
Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall
not have any rights to the roof, exterior walls or utility raceways of the
building containing the Premises ("Building") or to any other buildings in the
Project. The Premises ("Building") or to any other buildings in the Project. The
Premises, the Building, the Common Areas, the land upon which they are located,
along with all other buildings and improvements thereon, are herein collectively
referred to as the "Project". (See also Paragraph 2).
1.2(b) Parking: 8.4 unreserved vehicle parking spaces ("Unreserved
Parking Spaces") and N/A reserved vehicle parking spaces ("Reserved Parking
Spaces"). (See also Paragraph 2.6).
1.3. Term: 10 years and -0- months ("Original Term") commencing
November 1, 2000 ("Commencement Date") and ending October 31, 2010 ("Expiration
Date"). (See also Paragraph 3).
1.4. Early Possession: August 1, 2000 ("Early Possession Date"). (See
also Paragraphs 3.2 and 3.3)
1.5. Base Rent: $35,077.11 per month ("Base Rent"), payable on the 1st
day of each month commencing Refer to Exhibit "B" - Paragraph 7. (See also
paragraph 4).
[X] If this box is checked, there are provisions in this Lease for the
Base Rent to be adjusted.
1.6 Lessee's Share of Common Area Operating Expenses: Sixty-one point
nine percent (61.9%) ("Lessee's Share").
1.7. Base Rent and Other Monies Paid Upon Execution:
(a) Base Rent: $35,077.11 for the period November 1, 2000 -
November 30, 2000.
(b) Common Area Operating Expenses: $______________ for the
period ___________________.
(c) Security Deposit: $35,077.11 ("Security Deposit"). (See
also Paragraph 5.)
(d) Other: $_____________________ for _______________________.
(e) Total Due Upon Execution of this Lease: $70,154.22.
1.8. Agreed Use: Manufacturing/warehousing and distribution of plastic
stretch film and plastic products including general offices and related uses.
(See also Paragraph 5).
1.9. Insuring Party. Lessor is the "Insuring Party". (See also
Paragraph 8).
1.10. Real Estate Brokers: (See also Paragraph 15).
(a) Representation: The following real estate brokers (the
"Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
[X] Grubb & Ellis Company represents Lessor exclusively ("Lessor's
Broker");
[X] Commercial Realty Advisors represents Lessee exclusively ("Lessee's
Broker"); or
(b) Payment to Brokers: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed
to in a separate written agreement (or if there is no such
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agreement the sum of per separate agreement or __% of the total Base Rent for
the brokerage services rendered by the Brokers).
1.11. Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by N/A ("Guarantor"). (See also Paragraph 37).
1.12. Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49.1 through 49.4 and Exhibits "A" through "D", all of
which constitute a part of this Lease.
2. Premises.
2.1. Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants, and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less.
2.2. Condition. Lessor shall deliver that portion of the Premises
contained within the Building ("Unit") to Lessee broom clean and free of debris
on the Commencement Date or the Early Possession Date, whichever first occurs,
Commencement Date and, so long s the required service contracts described in
paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days
following the Commencement Date warrants that the existing electrical, plumbing,
fire sprinkler, lighting, heating, ventilating and air conditioning systems
("HVAC"), loading doors, if any and all other such elements in the Unit, other
than those constructed by Lessee, shall be in good operating condition on said
date and that the structural elements of the roof, bearing walls and foundation
of the Unit shall be free of material defects. If a non-compliance with such
warranty exists as of the Commencement Date, or if one of such systems or
elements should malfunction or fail within the appropriate warranty period,
Lessor shall, as Lessor's sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction of failure, rectify same at Lessor's expense. The
warranty periods shown as follows: (i) 5 months as to the HVAC systems, and (ii)
6 months as to the remaining systems and other elements of the Unit, and (iii)
one ____ as to the Tenant improvements installed by Lessor as part of the Work
Letter Agreement attached hereto as Exhibit "B". If Lessee does not give Lessor
the required notice within the appropriate warranty period, correction of any
such non-compliance, malfunction or failure shall be the obligation of Lessee at
Lessor's sole cost and expense (except for the repairs to the fire sprinkler
systems, roof, foundations, and/or bearing walls - see Paragraph 7). As stated
in Paragraph 7.2 it is Lessor's obligation to keep the roof and roof membrane in
good order, condition and repair.
2.3. Compliance. Lessor warrants that the improvements on the Premises
and the Common Areas comply with the building codes that were in effect at the
time that each such Improvement, or portion thereof, was constructed, and also
With all applicable laws, Covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date ("Applicable Requirements"). Said
warranty does not apply to the use to which Lessee will put the Premises or to
any Alterations or Utility Installations (as defined in Paragraph 7.3(a).) made
or to be mate by Lessee. NOTE: Lessee is responsible for determining whether or
not the zoning is appropriate for Lessee's Intended use, and acknowledges that
past uses of the Premises may no longer be allowed, If the Premises do not
comply with said warranty, Lessor shall, except as otherwise provided, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessors expense.
If the Applicable Requirements are hereafter changed so as to require during the
term of this Lease the construction of an addition to or an alteration of the
Unit, Premises and/or Building, the remediation of `any Hazardous Substance, or
the reinforcement or otter physical modification of the Unit, Premises and/or
Building ("Capital Expenditure'), Lessor and Lessee shall allocate the cost of
such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however, that it such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee's termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months' Base Rent If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the lest day that
lessee could legally utilize the Premises without commencing such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however,
that if such Capital Expenditure is required during lire last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay Its share (hereof, Lessor shall have the option to terminate this Lease upon
90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor's termination notice that Lessee
will pay for such Capital Expenditure. if Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may
advance Such funds and deduct same, with Interest, from Rent until Lessor's
share of such costs have been fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon 30 days written notice
to Lessor.
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(c) Notwithstanding the above, the provisions concerning
Capital Expenditures are Intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. if the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.
(d) Lessor must give Lessee the opportunity to contest the
applicability of the change in the Applicable Requirements after making a
Capital Expenditure in which Lessee is allocated part or all of the costs of
such work. Notwithstanding anything in 2.3, Lessor shall be responsible for the
cost of the remediation of any Hazardous Substance that existed at the Premises
on the Start Date.
2.4. Acknowledgements. Lessee acknowledges that: (a) It has been
advised by Lessor and/or Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (b) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, and (c) neither
Lessor. Lessor's agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this lease In addition, Lessor acknowledges that: (i) Brokers have made
no representations, promises or warranties concerning Lessee's ability to honor
the Lease or suitability to occupy the Premises, and (ii) It is Lessor's sole
responsibility to investigate the financial capability and/or suitability of all
proposed tenants.
2.6. Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles." Lessor may regulate the loading and unloading of vehicles by adopting
Rules and Regulations as provided in Paragraph 2.9. No vehicles other than
Permitted Size Vehicles may be parked in the Common Area without the prior
written permission of Lessor.
(a) Lessee shall not permit or allow any vehicles that belong
to or are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
(b) Lessee shall not service or store any vehicles in the
Common Areas.
(c) If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
2.7. Common Areas - Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Project and interior utility raceweys and installations within the
Unit that are provided and designated by the Lessor from time to liens for the
general non-exclusive. use of Lessor, Lessee and other tenants of the Project
and their respective employees, suppliers, shippers, customers. Contractors and
invitees. including parking areas, loading and unloading amass, trash areas,
roadways, walkways, driveways and landscaped areas. Notwithstanding the
foregoing, `the definition of "Common Areas" shall not include the rail spur
track, the Silo Fad and the area designated on the Site Plan attached thereto as
Exhibit "C", for the exclusive use of the Lessee.
2.8. Common Areas - Lessee's Rights. Lessor grants to Lessee, for the
benefit of Lessee and its employees, suppliers, shippers, contractors, customers
and invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lesser
under the terms hereunder or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the might 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, hen Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9. Common Areas - Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations "Rules and
Regulations") for the management, safety, care, and cleanliness of the grounds,
the parking and unloading of vehicles and the preservation of good order, as
well as for the convenience of other occupants or tenants of the Building and
the Project and their lnvitees. 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 tenants of the Project.
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2.10. Common Areas - Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:"
(d) 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;
(e) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(f) To designate other land outside the boundaries of the
Project to be a part of the Common Areas:
(g) To add additional buildings and improvements to the Common
Areas;
(h) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Project, or any portion thereof:
(i) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Project as Lessor may, in
the exercise of sound business judgment, deem to be appropriate.
Provided the use of the Premises lay Lessee including ingress, egress
and parking are not adversely affected or interfered with, and upon reasonable
written notice from Lessor, not to unreasonably interfere with Lessee's
business, and in no event more than two times in any lease year.
3. Term.
3.1. Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2. Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
excluding the obligations to pay Lessee's Share of Common Area Operating
Expenses, Real Property Taxes and insurance premiums and to maintain the
Premises) shall, however, be in effect during such period. Any such early
possession shall not affect the Expiration Date.
3.3. Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Remit or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within 60 days after
the Commencement Date, Leases may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If Such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease,
as aforesaid, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof,
but minus any days of delay caused by the acts or omissions of Lessee. If
possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.
3.4. Lessee Compliance. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.6). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
Conditions prior to or concurrent with the Start Date, the Start Data shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.
4. Rent.
4.1. Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2. Common Area Operating Expenses. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
(a) "Common Area Operating Expenses" are defined, for purposes
of this Lease, as the costs incurred by Lessor relating to the ownership and
operation of the Project, including, but not limited to, the following:
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(i) The operation, repair and maintenance, in neat,
clean, good order and condition, but not the replacement (see
subparagraph (e)), of the following:
(aa) The Common Areas and Common Area
improvements, including parking areas, loading and
unloading areas, trash areas, roadways, parkways,
walkways, driveways, landscaped areas, bumpers,
irrigation systems. Common Area lighting facilities,
fences and gates elevators, roofs, and roof drainage
systems.
(bb) Exterior signs and any tenant
directories,
(cc) Any fire sprinkler systems.
(ii) The Cost of water, gas, electricity and
telephone to service the Common Areas and any utilities sot
separately metered.
(iii) Trash disposal, pest control services, property
management, security services, and the costs of any
environmental inspections.
(iv) Reserves set aside for maintenance and repair of
Common Areas,
(v) Any increase above the Base Real Property Taxes
(as defined in Paragraph 10).
(vi) Any "Insurance Cost Increase" (as defined in
Paragraph 8).
(vii) Any deductible portion of en insured loss
concerning the Building on the Common Areas,
(viii) The cost of any Capital Expenditure to the
Building or the Project not covered under the provisions of
Paragraph 2.3 provided; however, that Lessor shall allocate
the cost of any such Capital Expenditure over 5 12 year period
and Lessee shall not be required to pay more than Lessee's
Share of 1/144th of the cost of such Capital Expenditure in
any given month.
(ix) Any other services to be provided by
Lessor that are stated elsewhere in this Lease to be a Common
Area Operating Expanse.
(b) Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Unit, the Building or to any other
building in the Project or the operation, repair and maintenance thereof, shall
be allocated entirely to such Unit, Building, or other building. However, any
Common Area Operating Expenses and Rest Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation.
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Project.
(c) The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation
noon Lessor to either have said improvements or facilities or to provide those
services unless the Project already has the same, Lessor already provides the
services, or Lessor has agreed elsewhere in this Lease to provide the same or
some of them.
(d) Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within 10 days after a reasonably detailed statement of actual
expenses is presented to Lessee. At Lessor's option, however, an amount may be
estimated by Lessor from time to time of Lessee's Share of annual Common Area
Operating Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each 12 month period of the Lease term, on the same day
as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60
clays 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 the preceding year exceed Lessee's Share as indicated on such statement,
Lessor shall be credited the amount of such over-payment against Lessee's Share
of Common Area Operating Expenses next becoming due. If Lessee's payments under
this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as
indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after deliver by Lessor to Lessee of the statement.
(e) When a capital component such as the roof, foundations,
exterior walls or a Common Area capital improvement, such as the parking ml
paving. elevators, fences, etc. requires replacement, rather than repair or
maintenance, Lessor shall at Lessor's expense, be responsible for such
replacement, Such expenses and/or costs are not Common Area Operating Expenses.
4.3. Payment. Lessee shall cause payment of Rent lobe received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which ills
due. Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address staled herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating. In the event that any check,
draft,
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or other instrument of payment given by Lessee to Lessor is dishonored for any
reason, Lessee agrees to pay to Lessor the sum of $25.
5. Security Deposit.
Lessee shall deposit with Lessor upon execution hereof the Security
Deposit as security for Lessee's faithful performance of its obligations under
this Lease. if Lessee falls to pay Rent, or otherwise Defaults under this Lease,
Lessor may use, apply or retain all or any portion of said Security Deposit for
the payment of any amount due Lessor or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security
Deposit, Lessee shall within 10 days after written request therefor deposit
monies with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease, If the Base Rent increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional
monies with Lessor so that the total amount of the Security Deposit shall at alt
times bear the same proportion to the increased Base Rent as the initial
Security Deposit bore to the Initial Base Rent Should the Agreed Use be amended
to accommodate s material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase he Security
Deposit to the extent necessary, in Lessor's reasonable judgment, to account for
any increased wear and tear that the Premises may suffer as a result thereof. If
a change in control of Lessee occurs during this Lease and following such change
the financial condition of Lessee is, in Lessor's reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from is general accounts.
Within 14 days after the expiration or termination of this Lease, if Lessor
elects to apply the Security Deposit only to unpaid Rent, and otherwise within
30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below,
Lessor shall return that portion of the Security Deposit not used or applied by
Lessor, No part of the Security Deposit shall be considered to be held in trust,
to bear Interest or to be prepayment for any monies to be paid by Lessee under
this Lease.
6. Use.
6.1. Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable therein, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall Include an
explanation of Lessor's objections to the change in the Agreed Use.
6.2. Hazardous Substances. Refer to Paragraph 49.1
7. Maintenance; Repairs; Utility installations; Trade Fixtures and
Alterations.
7.1. Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights but excluding any items which are the responsibility of
Lessor pursuant to Paragraph 7.2 Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform 1300.1 maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements. if any. If and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers., and (iv) any other equipment, if reasonably required by
Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure
and maintain any or all of such service contracts, and if Lessor so elects,
Lessee shall reimburse Lessor, upon demand, for the cost thereof.
(c) Failure to Perform. If Lessee falls to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of en emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly reimburse Lessor for the cost thereof.
(d) Replacement. Subject to Lessee's indemnification of Lessor
as set forth in Paragraph 8.7 below, and without relieving Lessee 01 liability
resulting from Lessee's failure to exercise and
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perform good maintenance practices, If an Item described in Paragraph 7.1 (b)
cannot be repaired other than at a cost witch is in excess of 50% of the cost of
replacing such item, then such item shall be replaced by Lessor, and the cost
thereof shall be prorated between the Parties and Lessee shall only be obligated
to pay, each month daring the remainder of the term of this Lease, on the date
on which Ease Rent is due. an amount squat to the product of multiplying the
cost of such replacement by a traction, the numerator of which is one, and the
denominator of which is 144 (i.e. 1/144th of the cost per month). Lessee shall
pay Interest on the unamortized balance at a rate that is commercially
reasonable in the Judgment of Lessor's accountants, Lessee may, however, prepay
its obligation at any time.
7.2. Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, the 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
5ervicea 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 wells nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of army statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease. Notwithstanding any provision set
forth in the Lease to the contrary, if Lessee provides written notice to Lessor
of an event or circumstance which requires the action of Lessor with respect to
repair and/or maintenance, and Lessor fails to provide such action within the
period of time set forth in subparagraph 7.2 of the Lease, then Lessee may
proceed to take the required action upon delivery of an additional ten (10)
business days' written notice to Lessor specifying that Lessee is taking such
required action, and if such action is required under the terms of the Lease to
be taken by Lessor and is not taken by Lessor within such ten (10) business day
period following service of the additional ten (10) business day notice, then
Lessee shall be entitled to prompt reimbursement by Lessor of Lessee's
reasonable cost and expenses in taking such action. If Lessor does not deliver a
detailed written objection to Lessee within thirty (30) days after receipt of an
invoice by Lessee of its costs of taking action which Lessee claims should have
been taken by Lessor, and if such invoice from Lessee sets forth a reasonable
particularized breakdown of its costs and expenses in connection with taking
such action on behalf of Lessor, then Lessee shall be entitled to deduct from
Basic Monthly Rent payable by Lessee under the Lease the amount set forth in
such invoice. If, however, Lessor delivers to Lessee, within thirty (30) days
after receipt of Lessee's invoice, a written objection to the payment of such
invoice, setting forth with reasonable particularity Lessor's reasons for its
claim that such action did not have to be taken by Lessor pursuant to the terms
of the lease or that the charges are excessive (in which case Lessor shall pay
the amount it contends would not have been excessive), then Lessee shall not
then be entitled to such deduction from Basic Monthly Rent, but as Lessee's sole
remedy, Lessee may proceed to claim a default by Lessor.
7.3. Utility Installations; Trade Fixtures; Alterations.
(a) Definitions. The term "Utility Installations" refers to
all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtres, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility
Installations to the Promises without Lessor's prior written consent. Lessor has
consented to the Tenant Improvements to be installed at the Premises by Lessor
as stated in the Work Letter Agreement attached hereto as Exhibit "B". Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month's
Base Remit in the aggregate or a sum equal to one month's Pass Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner wilt good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of as. six (6) month's Base Rent, Lessor may condition its
consent upon Lessee providing a lien and completion bond in an amount equal in
150% of the estimated cost of such Alteration or Utility Installation and/or
upon Lessee's posting an additional Security Deposit with Lessor.
(c) Indemnification. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right to
post notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim
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to demand, than Lessee shall, at its sole expanse defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim on demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor's attorneys' fees and costs.
7.4. Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or
elect ownership an. hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to the owner of
all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise Instructed pan paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at The expiration or
termination of Ibis Lease, become the property of Lessor and be surrendered by
Lessee with the Premises,
(b) Removal. By delivery to Lessee of written notice from
Lessor at the time consent for the Alteration or Utility Installation is given
by Lessor, Lessor may require that any or all Lessee Owned Alterations or
Utility Installations be removed by the expiration or termination of this Lease.
Lessor may require the removal at any time of all or any part of any Lessee
Owned Alterations or Utility Installations made without the required consent.
Lessee shall not be required to remove the roof extension, silo pad or spur
track.
(c) Surrender; Restoration. Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and slate of repair, ordinary wear and tear
excepted, and damage due to fire or other casualty excepted, unless caused by
Lessee. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Notwithstanding the
foregoing, if this Lease is for (12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee. Leases shall
also completely remove from the Premises any and all Hazardous Substances
brought onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Project) even if such removal would require Lessee to perform or pay for
work that exceeds statutory requirements. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.
8. Insurance; Indemnity.
8.1. Payment of Premium Increases.
(a) As used herein, the term "Insurance Cost Increase" is
defined as any increase in the actual cost of the insurance applicable to the
Building and/or the Project and required to be carried by Lessor, pursuant to
Paragraphs 8.2(b), 8.3(a) and 8.3(b), ("Required Insurance"), over and above the
Base Premium, as hereinafter defined, calculated on an annual basis, Insurance
Cost Increase shall include, but not be limited to, requirements of the holder
of a mortgage or deed of trust covering the Premises, Building and/or Project,
Increased valuation of the Premises, Building and/or Project, end/on a general
premium rate increase. The term Insurance Cost Increase shall not, however,
include any premium increases resulting from the nature of the occupancy of any
other tenant of the Building. If the parties inserts dollar amount in Paragraph
1.9, such amount shall be considered the "Base Premium," The Base Premium shall
be the annual premium applicable to the 12 month period immediately preceding
the Commencement Date. If, however, the Project was not insured for the entirety
of such 12 month period, then the Base Premium shall be the lowest annual
premium reasonably obtainable for the Required Insurance as of the Commencement
Date, assuming the most nominal use possible of the Building. In no event,
however, shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).
(b) Lessee shall pay any Insurance Cost Increase to Lessor
pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Start Date or Expiration Date.
8.2. Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000, 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 shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance 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.
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(b) Carried by Lessor. Lessor shall maintain liability
insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3. Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in
force a policy or policies of insurance in the name of Lessor, with loss payable
to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's personal property shall be insured
by Lessee under Paragraph 8.4. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
thee Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.
(b) Rental Value. Lessor shall also obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 180 days ("Rental Value Insurance"). Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period.
(c) Adjacent 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 Project if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(d) Lessee's Improvements. Since Lessor is the Insuring Party,
Lessor shall not be required to Insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease, The following Tenant Improvements to be installed
under the Work Letter Agreement are the property of the Lessor and will be
covered by the Lessor Property Insurance: the roof extension, the silo pad and
the spur track.
8.4. Lessee's Property; Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $50,000.00 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations., Lessee shall provide Lessor with written evidence
that such insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5. Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies or such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 30 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.
8.6. Waiver of Subrogation. Without affecting any other rights or
remedies. Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive
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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 or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out of, involving, or in connection with the rise and/or occupancy of the
Premises by Lessee. If any action or proceeding to brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense, Lessor need not have first paid any
such claim in order to be defended or indemnified.
8.8. Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee. Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building, or from other sources on
places. Lessor shall not be liable for any damages arising from any act en
neglect of any other tenant of Lessor nor from the failure of Lessor to enforce
the provisions of any other lease in the Project. Notwithstanding Lessor's
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee's business or for any loss of income or profit
therefrom.
8.9. Except for claims for which Lessee is required to obtain insurance
("Lessee Insured Claims"), Lessor shall indemnify, defend, and hold Lessee and
its officers, directors, shareholders, agents, employees, and contractors
(collectively, "Lessee Parties") harmless from all Claims arising from the
conduct of Lessor's business or from activity, work or thing done, permitted or
suffered by Lessor in or about the Building, the Common Areas, or any other part
of the Project. Except for Lessee Insured Claims, Lessor shall further
indemnify, defend, and hold the Lessee Parties harmless from all Claims or
omission of Lessor or of its agents , employees, or contractors, and from and
against all Claims incurred in, or arising out of, such claim or any action or
proceeding brought thereon. In case any action or proceeding shall be brought
against the Lessee Parties or any of them by reason of any such Claim, Lessor,
upon notice from Lessee, shall defend the same at Lessor's expense by counsel
approved in writing by Lessee.
9. Damage or Destruction.
9.1. Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations, other
than the initial tenant improvements installed by Lessor at the commencement of
the Term, and Utility Installations, which can reasonably be repaired in 6
months or less from the date of the damage or destruction, and the cost thereof
does not exceed a sum equal to 6 months Base Rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations, other than the Initial Tenant Improvements installed by Lessor at
the commencement of the Term, and Utility Installations and Trade Fixtures,
which cannot reasonably be repaired in 6 months or less from the date of the
damage or destruction and/or the cost thereof exceeds a sum equal to 6 months
Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, other than the Initial Tenant Improvements installed by Lessor at
the commencement of the Term, and Trade Fixtures, which was caused by an event
required to be covered by the insurance described in Paragraph 8.3(s),
Irrespective of any deductible amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence
or discovery of a condition involving the. presence of, or a contamination by. a
Hazardous Substance as defined in Paragraph 6,2(a), in, on, or under the
Premises.
9.2. Partial Damage - Insured Loss. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect: provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee one reasonable basis for that purpose.
Notwithstanding the foregoing, if the required Insurance, was not in force or
the insurance proceeds are not sufficient to effect such repair, the Insuring
Party shall promptly contribute the shortage in proceeds as and when required to
complete said repairs. In the event,
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however, such shortage was due to the fact that, by reason of tile unique nature
of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor, If Lessor receives said funds or adequate
assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (Ii) have this Lease terminate 30 days
thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of arty such insurance shall be made available for the repairs it made by either
Party.
9.3. Partial Damage Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either (i) repair such damage as soon as reasonably possible at
Lessor's expense. in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.,
in the event the cost exceeds $200,000.00. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within 10 days after receipt
of the termination notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage without reimbursement from sewn
Lessee shall provide Lesser with said fund, or satisfactory assurance thereof
within 30 days after making such commitment. In such event this Lease shall
continue in full force and effect, and Lessor shall proceed to make such repairs
as soon as reasonably possible after the required funds are available, If Lessee
does not make the required commitment, this Less. shall terminate as of the date
specified in the termination notice.
9.4. Total Destruction. Notwithstanding any other provision hereof, If
a Premises Total Destruction occurs, this Lease shall terminate 60 days
following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5. Damage Near End of Term. If at any time during the last 6 months
of this Lease there is damage for which the cost to repair exceeds one month's
Base Rent, but does not constitute a premises total destruction, whether or not
art Insured Loss, Lessor may terminate this Lease effective 60 days following
the date of occurrence of such damage by giving a written termination notice, to
Lessee within 60 days after the date of occurrence of such damage
Notwithstanding the foregoing, if Lessee at that time has an exercisable option
to extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is 10 days after Lessee's receipt
of Lessor', written notice purporting to terminate this lease, or (ii) the day
prior to the date upon which such option expires. If Lessee duly exercises such
option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, if it is an uninsured
loss, Lessor shall, at Lessor's commercially reasonable expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect, If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.
9.6. Abatement of Rent; Lessee' Remedies.
(a) Abatement in the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
Impaired. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation. repair or restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within 90 days after such obligation shall accrue,
Lessee may, at any time prior to this commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration, is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within such 30 days, this Lease shall
continue in full force and effect. "Commence" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs. If Lessor
shall be obligated to repair or restore the Premises and does not complete such
repair or restoration within 365 days after such obligation shall accrue, Lessee
may, at any time prior to the completion of such repair or restoration, give
written notice to Lessor and to any lenders to which Lessee has actual notice,
of Lessee's election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such repair
and or restoration is not completed within 30 days thereafter and Lessor's
failure to repair or restore is not the result of cause. beyond tile Lessor's
control, this Lease shall terminate as of the date specified in said notice, If
the repair `at restoration is completed within such 30 day period or if Lessor's
failure to repair or restore ix the result of causes beyond the Lessor's
control, this Lease shall continue in full force and effect.
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9.7. Termination; Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall. In addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
9.8. Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1. Definitions.
(a) "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Project. Lessor's right to other Income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Project address and where
the Proceeds so generated are to be applied by the city, county or ether local
taxing authority of a jurisdiction within which the Project located. 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 during
the term of this Lease, including, but not limited to, a change in the ownership
Property Texas" shall also include any tax, fee, levy, assessment or charge, or
any increase therein . imposed by reason of events occurring during the term of
this Lease, including but not limited to, a change in the ownership of the
Project or any portion thereof or a change in the improvements thereon.
(b) "Base Real Property Taxes." As used herein, the term "Base
Real Property Taxes" shall be the amount of Real Property Taxes, which era
assessed against the Premises, Building, Project or Common Areas in the calendar
year during which the Lease is executed. In calculating Real Property Taxes for
any calendar year, the Real Property Taxes for any real estate tax year shall he
included in the circulation of Real Property Taxes for such calendar year based
upon the number of days which such calendar year and tax year have in common.
10.2. Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Project, and except as otherwise provided in Paragraph 10.3,
any increases in such amounts over the Base Real Property Taxes shall be
included in the calculation of Common Area Operating Expenses in accordance with
the provisions of Paragraph 4.2.
10.3. Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment oh such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the Common Area Operating Expenses are payable under Paragraph 4.2, the entirety
of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises by
Lessee or at Lessee's request.
10.4. Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor' a work sheets or such other
information as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.
10.5. Personal Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Leases contained in the Premises. When possible, Lessee shall cause Its
Leases Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the reel property of Lessor. If any of Lessee's said property shall be
assessed with Lessor's rest property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. Utilities.
Lessee shall pay for all water, gas, heat, light, power, telephone,
trash disposal and other utilities and services supplied to the Premises.
together with any taxes thereon. Notwithstanding the provisions of Paragraph
4.2, if at any time in Lessor's sole judgment, Lessor determines that Lessee is
using a disproportionate amount of water, electricity or other commonly metered
utilities, or that Lessee is generating such a large volume of trash as to
require an increase in the size of the dumpster and/or an Increase in the number
of times per month that the dumpster is emptied, then Lessor may increase
Lessee's Base Rent by an amount equal to such increased costs.
12. Assignment and Subletting.
12.1. Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of Lessee's Interest in this Lessee or in the
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Premises without Lessor's prior written consent, except for Permitted Transferee
described in 121(f), Lessor's consent shall not unreasonably withhold its
consent.
(b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose, except for Permitted Transfers described in 121(f).
(c) The involvement of Lessee or Its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than 25% of such Net Worth as it was represented at the time of the
execution of this Lease or at the time of the moat recent assignment to which
Lessor has consented, or as It exists Irremediably prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold Its consent.
"Net Worth of Lessee" shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.
(d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph l3.l.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
(f) Notwithstanding anything in this Paragraph 12.1 to the
contrary, Lessee may assign this Lease, or sublet the Premises or any portion
thereof, without Lessor's consent (a "Permitted Transfer") to any parent,
subsidiary, or affiliate corporation or other business entity which controls, is
controlled my or is under common control with Lessee, or to any corporation or
other business entity resulting from a merger or consolidation with Lessee, or
to any person or entity which acquires all the assets of Lessee's business as a
going concern, provided that: (i) at least thirty (30) days prior to such
assignment or sublease, or as soon thereafter as practicable, Lessee delivers to
Lessor the financial statements and other financial and background information
of the assignee or sublessee as is required for their transfers; (ii) if the
transfer is an assignment, the assignee assumed, in full, the obligations of
Lessee under this Lease (or if a sublease, the subleased of a portion of the
Premises or term assumes, in full, the obligations of Lessee with respect to
such portion); (iii) the financial net worth of the assignees or sublessee's as
of the time of the proposed transfer is not reduced by an amount greater than
25% of such net worth as it was represented at the time of the execution of this
Lease, or at the time of the most recent assignment to which Lessor consented to
as it exists immediately prior to said transaction constituting the transfer;
(iv) Lessee remains fully liable under this Lease; and (v) unless Lessor
consents to same, the use of the Premises set forth herein remain unchanged. In
considering the financial ability of the proposed transferee under this
paragraph 12.1 (f). Lessor shall consider the financial condition of any
guarantor of the Lease who remains liable, and as a condition to such transfer
being a permitted Transfer, such guarantor shall reaffirm its guarantee
obligations in light of the transfer.
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, or (Iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor
may proceed directly against Leases, any Guarantors or anyone else responsible
for the performance of Lessee's obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefore to Lessor, or any security field by
Lessor.
(e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended nine and/or required modification of the Premises, if any,
together with a fee of $1,000 as consideration for Lessor's considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional Information and/or documentation as may be reasonably requested.
Lessor shall respond to each request within twenty (20) days after a written
request that is accompanied by the information required under this subparagraph
12.2(e).
(f) Any assignee of, or sublessee under, this Lease shaft, by
reason of accepting such assignment or entering into such sublease, be deemed 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 on sublease to
which Lessor has specifcally consented to in writing.
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(g) Lessor may refuse to consent on any commercially
reasonable grounds, including, without limitation, the potential inability of
the proposed assignee to fulfill the Lease terms, the financial responsibility
or instability of the proposed assignee or sublessee, the lack of suitability of
the Premises for the intended use by the proposed assignee or sublessee, the
potential for unlawful or undesirable use on' the Premises try the proposed
assignee or sublessee, or the character or business reputation of the proposed
assignee or sublessee, in any dispute which arise under this paragraph, Lessee
shall pay to Lessor all of Lessor's costs and expenses, subject to limitations
in 12.2(e) above, reasonably incurred by Lessor in making the investigation and
factual findings provided for in this paragraph. However, in the event that sit
the time of seeking Lessor's consent to a sublease or all or any part of the
Premises the financial condition of Lessee and Guarantor are substantially the
same, or are better, than they are at the time of executing this Lease. Lessor
shall not be entitled to consider the financial condition of the proposed
sublessee in determining whether to grant its consent, other than to determine,
it its reasonable judgment that, according to GAAP, the proposed sublessee is
solvent, in making the determination provided for in this subpart. Lessor shall
not be required to take any action with respect to the proposed sublease unless
and until Lessor receives the most Currently available financial statements of
Lessee. Guarantor, and the proposed sublessee, which statements shall be
certified if certified statements are then in existence, or if not, shall be
presented with the affidavit under penalty of perjury of the chief financial
officer of any affected entity affirming the truth and accuracy and completeness
of such financial statements.
12.3. Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed Included in all subleases under
this Lease whether or not expressly Incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's Interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the condition of
Rent, be deemed liable to the sublesses for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublease. Lessee hereby
irrevocably authorizes and directs any such sublease., upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor Rent due and to become due under
the sublease. Sublessee shall rely upon any such notice from lessor and shall
pay all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Leases to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Leases to the sublease., who shall have the night to cure the Default
of lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1. Default; Breach. A "Default" is defined ass failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property Insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of 5
business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of 10 days following Written notice to Leassee.
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(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof,
other than those described in subparagraphs 13.1(s), (b) or (c). above, where
such Default continues for a period 30 days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than 30 days
are reasonably required for Its cure, then it shall not be deemed to be a Breach
if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "debtor" as defined in 11 U.S.C. ss. 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same us dismissed within 60 days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not discharged
within 30 days, provided, however, in the event that any provision of this
subparagraph (e) is contrary to any applicable law, such provision shaft be of
no force or effect, and not affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in, accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within 60 days following written
notice, of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease. However, if Lessee provides a
new guarantor with the same or greater Net Worth and financial strength as the
defaulting guarantor within sixty (60) days after written notice, there shall be
no Breach.
13.2. Remedies. If Lease, falls to perform any of its affirmative
duties or obligations, within 10 days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, Including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned it
the lime of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Leases proves
could have been reasonably avoided: (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided: and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of (he Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease, The worth at the time of award
of the amount referred to in provision (v) of the immediately preceding sentence
shall be computed by discounting such amount at the discount mate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's Breach of this Lease shall not waive Lessor's right to recover damages
under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit, Ifs notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful defamer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to islet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of
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this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee's occupancy of the Premises.
13.4. Late Charges. Lessee hereby acknowledges that the payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
Include, but are not limited to. processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
not be received by Lessor within 5 days after such amount shall be due, than,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a
mine-time late charge equal to 6% of each such overdue amount or $100, whichever
is greater. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will Incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that twice during any 12 month period, a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base
Rent, except as otherwise permitted under this Lease or at law, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.
13.5. Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be equal to tile prime rate
reported in the Wall Street Journal as published closest prior to the date when
due plus 4%, but shall not exceed the maximum rate allowed by law, Interest is
payable In addition to the potential late charge provided for in Paragraph 13.4.
13.6. Breach by Lessor.
(d) Notice of Breach. Lessor shall not be deemed In breach of
this Lease unless Lessor falls within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall In no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished. Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lesser has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that mane than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day
period and thereafter diligently pursued to completion. In the event of an
emergency resulting in property damage to Lessee. Lessor shall act reasonably
ant respond sooner.
(e) Performance by Lessee on Behalf of Lessor. In the event
that neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or `if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said broach at Lessee's expense and
offset from Rent an amount equal to the greater of one month's Bass Rent or the
Security Deposit, and to pay an excess of such expense under protest, reserving
Lessee's right to reimbursement from Lessor. Lessee shall document the cost of
said cure and supply Said documentation to Lessor.
14. Condemnation.
If the Premises or any portion thereof are taken under the power of
eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever,
first occurs. if more than 10% of the floor area of the Unit, or more than 25%
of Lessee's Reserved Parking Spaces, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within 30 days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice within 30 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to tins provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Brokerage Fees.
15.1. Additional Commission. In addition to the payments owed pursuant
to Paragraph l,i0 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (c) if Lessee remains in possession of
the premises, with the consent of Lessor. after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then. Lessor shall pay Brokers a fee in accordance
with tile schedule of the Brokers in effect at the time of the execution of this
Lease.
15.2. Assumption of Obligations. Any buyer or transferee of Lessor's
Interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Brokers shall be third party beneficiaries of the
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provisions of Paragraphs 1.10. 15 22 and 31. If Lessor fail, to pay to Brokers
any amounts due as and for brokerage fees pertaining to this Lease when due,
then such amounts shall accrue interest. In addition, if Lessor fails to pay any
amounts to Lessee's Broker when due, Lessee's Broker may send written notice to
Lessor and Lessee of such failure and if Lessor falls to pay such amounts within
10 days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/on
between Lessor and Lessor's Broker for the limited purpose of collecting any
brokerage fee owed.
15.3. Representations and Indemnities of Broker Relationships. Lessee
and Lessor each represent and warrant to The other that it has had no dealings
with any person. firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which maybe
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of line indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificate.
(a) Each Party (as "Responding Party") shall within 10 days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to The Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fall to execute or deliver
the Estoppel Certificate within such 10 day period, the Requesting Party may
execute an Estoppel Certificate slating that (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's rent has
been paid in advance. Prospective purchasers and encumbrances may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
(c) if Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser, including but not
limited to Lessee's financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor.
The term "Lessor" as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or if this is a sublease, of
the Lessee's interest in the prior lease. In the event of a transfer of Lessor's
title or interest in the Premises on this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
this obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined. Notwithstanding
the above, and subject to the provisions of Paragraph 20 below, the original
Lessor under this Lease, and all subsequent holders of the Lessor's interest in
this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as outlined
in Paragraph 6.2 above.
18. Severability.
The invalidity of any provision of this Lease, as determined by a court
of competent jurisdiction, shall in no way affect the validity of any other
provision hereof.
19. Days.
Unless otherwise specifically indicated to the contrary, the word
"days' as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability.
Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the
individual partners of Lessor or its or their individual partners, directors,
officers or shareholders, and Lessee shall look to the Premises, including any
Insurance or condemnation proceeds or other amounts owing to Lessor from the
Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
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21. Time of Essence.
Time is of the essence with respect to the performance of all
obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer.
This Lease contains all agreements between the Parties with respect to
any matter mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and warrants
to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the use, nature, quality and
character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability
(including court costs and attorneys' fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee under
this Lease or any amendment or modification hereto shall be limited to an amount
up to the fee received by such Broker pursuant to this Lease; provided, however,
that the foregoing limitation on each Broker's liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.
23. Notices.
23.1. Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party on parties at such
addressee as Lessor may from time to time hereafter designate in writing.
23.2. Date of Notice. Any notice sent by registered or certified mall,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail on overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from a fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.
24. Waivers.
No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default or Breach by Lessee of the
same or of any other term, covenant or condition hereof. Lessor's consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or
be construed as the basis of an estoppel to enforce the provision or provisions
of this Lease requiring such consent. The acceptance of Rent by Lessor shall not
be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be
accepted by Lessor on account of monies or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Disclosures Regarding The Nature of a Real Estate Agency
Relationship.
(a) When entering into a discussion with a real estate agent
regarding a real estate transaction, a Lessor or Lessee should from the outset
understand what type of agency relationship or representation it has with the
agent or agents in the transaction. Lessor and Lessee acknowledge being advised
by the Brokers in this transaction, as follows:
(i) Lessor's Agent. A Lessor's agent under a listing
agreement with the Lessor acts as the agent for the Lessor
only. A Lessor's agent or subagent has the following
affirmative obligations: To the Lessor: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with
the Lessor. To the Lessee and the Lessor: a. Diligent exercise
of reasonable skills and care in performance of the agent's
duties, b. A duty of honest and fair dealing and good faith.
c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation
of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth
above.
(ii) Lessee's Agent. An agent can agree to act as
agent for the Lessee only. In these situations, the agent is
not the Lessor's agent, even if by agreement the agent may
receive compensation for services rendered, either in full or
in part from the Lessor. An agent acting only for a lessee has
the following affirmative obligations. To the Lessee: A
fiduciary duty of utmost
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core, integrity, honesty, and loyalty in dealings with the
Lessee. To the Lessee and the Lessor: a. Diligent exercise of
reasonable skills and care in performance of the agent's
duties. B. A duty of honest and fair dealing and good faith.
C. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation
of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth
above.
(iii) Agent Representing Both Lessor and Lessee. A
real estate agent, either acting directly or through one or
more associate licenses, can legally be the agent of both the
Lessor and the Lessee in a transaction, but only with the
knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative
obligations to both the Lessor and the Lessee: a. A fiduciary
duty of utmost care, integrity, honesty and loyalty in the
dealings with either Lessor or the Lessee. b. Other duties to
the Lessor and the Lessee as stated above in subparagraphs (i)
or (ii). In representing both Lessor and Lessee, the agent may
not without the express permission of the respective Party,
disclose to the other Party that the Lessor will accept rent
in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered.
The above duties of the agent in a real estate transaction do
not relieve a Lessor or Lessee from the responsibility to
protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately
express their understanding of the transaction. A real estate
agent is a person qualified to advise about real estate. If
legal or tax advice is desired, consult a competent
professional.
(b) Brokers have no responsibility with respect to any default
or breach hereof by either Party. The liability (including court costs and
attorneys' fees of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker's liability shall not be applicable to any gross negligence or willful
misconduct of such Broker.
(c) Buyer and Seller agree to identify to Brokers as
"Confidential" any communication on information given Brokers that is considered
by such Party to be confidential.
26. No Right To Holdover.
Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that
Lessee holds over, then the Base Rent shall be increased to 125% of the Base
Rent applicable immediately preceding the expiration or termination. Nothing
contained herein shall be construed as consent by Lessor to any holding over by
Lessee.
27. Cumulative Remedies.
No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or it, equity.
28. Covenants and Conditions; Construction of Agreement.
All provisions of this Lease to be observed or performed by Leases are
both covenants and conditions. In construing this Lease, all headings and titles
are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if [illegible] by
one of the Parties, but rather according to its fair meaning as a whole, as if
both Parties had prepared it.
29. Binding Effect; Choice of Law.
This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the State
in which the Premises are located. Any litigation between the Parties hereto
concerning this Lease shall be initiated in the county in which the Premises are
located.
30. Subordination; Attornment; Non-Disturbance.
30.1. Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation on recordation thereof.
30.2. Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not (a)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (b) be subject to
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any offsets or defenses which Lessee might have against any prior lessor, (c) be
bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior lessor.
30.3. Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.
30.4. Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing on refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees.
If any Party on Broker brings an action or proceeding involving the
Premises whether founded in tort, contract or equity, or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker if its claim or defense. The attorneys' fees award shall not be computed
in accordance with any count fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach ($200 is a reasonable minimum per occurrence for such
services and consultation).
32. Lessor's Access; Showing Premises; Repairs.
Lessor and Lessor's agents shall have the right to enter the Premises
at any time, after reasonable notice, in the case of an emergency, and otherwise
at reasonable times for the purpose of showing the same to prospective
purchasers, lenders, or tenants, and making such alterations, repairs,
improvements or additions to the Premises as Lessor may deem necessary. All such
activities shall be without abatement of rent or liability to Lessee. Lessor may
at any time place on the Premises any ordinary "For Sale" signs and Lessor may
during the last 6 months of the term hereof place on the Premises any ordinary
"For Lease" signs. Lessee may at any time place on the Premises any ordinary
"For Sublease" sign.
33. Auctions.
Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
34. Signs.
Except for ordinary "For Sublease" signs which may be placed only on
the Premises, Lessee shall not place any sign upon the Project without Lessors
prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger.
Unless specifically stated otherwise in writing by Lessor, the
voluntary or other surrender of this Lease by Lessee, the mutual termination, or
cancellation hereof, or a termination hereof by Lessor for Breach by Lessee,
shall automatically terminate any sublease or lesser estate in the Premises;
provided, however, that Lessor may elect to continue any one or all existing
subtenancies. Lessor's failure within 10 days following any such event to elect
to the contrary by written notice 10 the holder of any such lesser Interest,
shall constitute Lessor's election to have such event constitute the termination
of such interest.
36. Consents.
Except as otherwise provided herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party, such consent shall
not be unreasonably withheld or delayed. Lessor's actual reasonable costs and
expenses (including but not limited to architects', attorneys', engineers' and
other consultants' fees) incurred in the consideration of, or response to, a
request by Lease, for any Lessor consent, including but not limited to consents
to an assignment, a subletting on the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Leases of this Lease
exists, nor
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shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent being given in the event
that either Party disagrees with any determination made by the other hereunder
and reasonably requests the reasons for such determination, the determining
party shall furnish its reasons in writing and in reasonable detail within 10
business days following such request.
37. Guarantor.
37.1. Execution. The Guarantors, if any, shall each execute a guaranty
in the form, most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
37.2. Default. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is still
in effect.
38. Quiet Possession.
Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee's part to be observed and
performed under this Lease, Lessee shall have quiet possession and quiet
enjoyment of the Premises during the term hereof.
39. Options.
If Lessee is granted an option, as defined below, then the following
provisions shall apply.
39.1. Definition. "Option" shall mean: (a) The right to extend the term
of or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2. Options Personal To Original Lessee. Any Option granted to Lessee
in this Lease is personal to the original Lessee, or a Permitted Transfer under
12.1(f), and cannot be assigned or exercised by anyone other than said original
Lessee and only while the original Lessee is in full possession of the Premises
and, if requested by Lessor, with Lessee certifying that Lessee has no intention
of thereafter assigning or subletting.
39.3. Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
39.4 Effect of Default on Options.
a) Lessee shall have no right to exercise an Option: (i)
during the period commencing with the giving of any notice of Default
and continuing until said Default is cured, (ii) during the period of
time any Rent is unpaid (without regard to whether notice thereof is
given Lessee), (iii) during the time Lessee is in Breach of this Lease,
or (iv) in the event that Lessee has been given 3 or more notices of
separate Default, whether or not the Defaults are cured during the 12
month period immediately preceding the exercise of the Option.
b) The period of time within an Option may be executed shall
not be extended or enlarges by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4 (a)
(c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option,
if, after such exercise and prior to the commencement of the extended
term, (i) Lessee fails to pay Rent for a period of 30 days after such
Rent becomes due (without any necessity of Lessor to give notice
thereof), (ii) Lessor gives to Lessee 3 or more notices of separate
Default during any 12 month period, whether or not the Defaults are
cured.
40. Security Measures. Lessee hereby acknowledges that the Rent payable
to Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
41. Reservations. Lessor reserves the right: (i) to grant, without the
consent or joinder of Lessee, such easements, rights and dedications that Lessor
deems necessary, (ii) to cause the recordation of parcel maps and restrictions,
and (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.
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42. Performance Under Protest. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay.
43. Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.
44. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
45. Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
46. Amendments. This Lease may be modified only in writing, signed by
the Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
47. Multiple Parties. If more than one person or entity is named herein
as either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
48. Waiver of Jury Trial. The Parties hereby waive their respective
rights to trial by jury in any action or proceeding involving the Property or
arising out of this Agreement.
49. Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease is not attached to this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE
AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S
INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED. The parties hereto have executed this
Lease at the place and on the dates specified above their respective signatures.
Executed at: Executed at:
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on: on:
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By LESSOR: By LESSEE:
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By: By:
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By: By:
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Name Printed: Name Printed:
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Title: Title:
-------------------------------- --------------------------------
By: By:
----------------------------------- -----------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
Address: Address:
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Telephone: (515) 362-0532 Telephone: (770) 953-4567
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Facsimile: (515) 248-8090 Facsimile: (770) 618-7080
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Federal ID No. Federal ID No.
------------------------ ------------------------
These forms are often modified to meet changing requirements of law and needs of
the Industry. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 700 South Flower
Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.
(C)Copyright 1998 By American Industrial Real Estate Association.
All rights reserved.
No part of these works may be reproduced in any form without
permission in writing.
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ADDENDUM TO THE STANDARD INDUSTRIAL/COMMERCIAL
MULTI TENANT LEASE-GROSS
BY AND BETWEEN
PRINCIPAL LIFE INSURANCE CORPORATION, AN IOWA CORPORATION
C/O PRINCIPAL CAPITAL MANAGEMENT, LLC ("LESSOR")
AND
ATLANTIS PLASTICS FILMS, INC.
DATED MARCH 8, 2000
49.1 HAZARDOUS MATERIALS (Refer to Paragraph 6.2)
I. DEFINITIONS.
A. "Hazardous Material" means any substance, whether
solid, liquid or gaseous in nature:
(i) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law, or
(ii) which is or becomes defined as a
"hazardous waste", "hazardous substance", pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. section 1801 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.), the Clean
Air Act (42 U.S.C. section 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. section 2601 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. section 651 et seq.), as these laws have been amended or
supplemented; or
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous or is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
the State of California or any political subdivision thereof; or
(iv) the presence of which on the Property
causes or threatens to cause a nuisance upon the Property or to adjacent
properties or poses or threatens to pose a hazard to the health or safety of
persons on or about the Property; or
(v) the presence of which on adjacent
properties could constitute a trespass by Tenant; or
(vi) without limitation which contains
gasoline, diesel fuel or other petroleum hydrocarbons; or
(vii) without limitation which contains
polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation;
or
(viii) without limitation which contains
radon gas.
B. "Environmental Requirements" means all applicable
present and future:
(i) statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items (including, but not limited to those
pertaining to reporting, licensing, permitting, investigations and remediation),
of all Governmental Agencies; and
(ii) all applicable judicial,
administrative, and regulatory decrees, judgments, and orders relating to the
protection of human health or the environment, including, without limitation,
all requirements pertaining to emissions, discharges, releases, or threatened
releases of Hazardous Materials or chemical substances into the air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials or chemical substances.
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<PAGE>
C. "Environmental Damages" means all claims,
judgments, damages, losses, penalties, fines, liabilities (including strict
liability), encumbrances, liens, costs, and expenses (including the expense of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, or the amount of any good faith settlement or judgment arising from
any such claim) of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable (including without limitation reasonable
attorneys' fees and disbursements and consultants' fees) any of which are
incurred at any time as a result of the existence of Hazardous Material upon,
about, or beneath the Property or migrating or threatening to migrate to or from
the Property, or the existence of a violation of Environmental Requirements
pertaining to the Property and the activities thereon, regardless of whether the
existence of such Hazardous Material or the violation of Environmental
Requirements arose prior to the present ownership or operation of the Property.
Environmental Damages include, without limitation:
(i) damages for personal injury or injury to
property or natural resources occurring upon or off of the Property, including,
without limitation, lost profits, consequential damages, the cost of demolition
and rebuilding of any improvements on real property, interest, penalties and
damages arising from claims brought by or on behalf of employees of Tenant (with
respect to which Tenant waives any right to raise as a defense against Landlord
any immunity to which it may be entitled under any industrial or worker's
compensation laws);
(ii) fees, costs or expenses incurred for
the services of attorneys, consultants, contractors, experts, laboratories and
all other costs incurred in connection with the investigation or remediation of
such Hazardous Materials or violation of any feasibility studies or reports or
the performance of any cleanup, remediation, removal, response, abatement,
containment, closure, restoration or monitoring work required by any
Governmental Agency or reasonably necessary to make full economic use of the
Property or any other property in a manner consistent with its current use or
otherwise expended in connection with such conditions, and including without
limitation any attorneys' fees, costs and expenses incurred in enforcing the
provisions of this Lease or collecting any sums due hereunder;
(iii) liability to any third person or
Governmental Agency to indemnify such person or Governmental Agency for costs
expended in connection with the items referenced in subparagraph (ii) above; and
(iv) diminution in the fair market value of
the Property, including, without limitation, any reduction in fair market rental
value or life expectancy of the Property or the improvements located thereon or
the restriction on the use of or adverse impact on the marketing of the Property
or any portion thereof.
D. "Governmental Agency" means all governmental
agencies, departments, commissions, hoards, bureaus or instrumentalities of the
United States, states, counties, cities and political subdivisions thereof.
E. The "Tenant Group" means Tenant, Tenant's
successors, assignees, guarantors, officers, directors, agents, employees,
invitees, permitees or other parties under the supervision or control of Tenant
or entering the Property during the term of this Lease with the permission or
knowledge of Tenant other than Landlord or its agents or employees.
II. PROHIBITIONS.
A. Other than commercially reasonable quantities of
general office supplies and except as specified on Exhibit "D" attached hereto
provided Tenant's use complies with all Environmental Requirements and is
incidental to Tenant's operation of its business, Tenant shall not cause, permit
or suffer any Hazardous Material to be brought upon, treated, kept, stored,
disposed of, discharged, released, produced, manufactured, generated, refined or
used upon, about or beneath the Property by the Tenant Group, without the prior
written consent of Landlord. From time to time during the term of this Lease,
Tenant may request Landlord's approval of Tenant's use of other Hazardous
Materials, which approval may be withheld in Landlord's sole discretion. Tenant
shall, prior to the Commencement Date, provide to Landlord for those Hazardous
Materials described on Exhibit "B" (a) a description of handling, storage, use
and disposal procedures, and (b) all "community right to know" plans or
disclosures and/or
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<PAGE>
emergency response plans which Tenant is required to supply to local
governmental agencies pursuant to any Environmental Requirements.
B. Tenant shall not cause or permit the commission by
the Tenant Group, of a violation of any Environmental Requirements upon, about
or beneath the Property.
C. Tenant shall neither create, cause to be created,
allow nor permit the Tenant Group to create any lien, security interest or other
charge or encumbrance of any kind with respect to the Property, including
without limitation, any lien imposed pursuant to section 107(f) of the Superfund
Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1) or any
similar state statute.
D. Tenant shall not install, operate or maintain any
above or below grade tank, sump, pit, pond, lagoon or other storage or treatment
vessel or devise on the Property, without Landlord's prior written consent,
which consent may be withheld in Landlord's sole discretion.
III. INDEMNITY.
A. Tenant, its successors, assigns and guarantors,
agree to indemnify, defend, reimburse and hold harmless:
(i) Landlord; and
(ii) any other person who acquires title to
all or a portion of the Premises in any manner (including purchase at a
foreclosure sale) or who becomes entitled to exercise the rights and remedies of
Landlord under this Lease; and
(iii) the directors, officers, shareholders,
employees, partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors, assigns
and invitees of such persons, from and against any and all Environmental Damages
which exist as a result of the activities and negligence of the Tenant Group
during Tenant's occupancy of the Property or which exist as a result of the
breach of any warranty or covenant or the inaccuracy of any representation of
Tenant contained in this Lease, or by Tenant's remediation of the Property or
failure to meet its remediation obligations contained in this Lease.
B. The obligations contained in this Section III
shall include, but not be limited to, the burden and expense of defending all
claims, suits and administrative proceedings, even if such claims, suits or
proceedings are groundless, false or fraudulent, and conducting all negotiations
of any description, and paying and discharging, when and as the same become due,
any and all judgments, penalties, consequential damages or other sums due
against such indemnified persons. Landlord, at its sole expense, may employ
additional counsel of its choice to associate with Tenant's counsel.
C. Landlord shall have the right, but not the
obligation, to join and participate in, and control, if it so elects, any legal
proceedings or actions initiated in connection with Tenant's activities.
Landlord may also negotiate, defend, approve and appeal any action taken or
issued by any applicable governmental authority with regard to contamination of
the Property by a Hazardous Material.
D. The obligations of Tenant under this paragraph
shall not be affected by any investigation by or on behalf of Landlord, or by
any information which Landlord may have or obtain with respect thereto.
IV. OBLIGATION TO REMEDIATE.
In addition to the obligation of Tenant to indemnify Landlord
pursuant to this Lease, Tenant shall, upon approval and demand of Landlord, at
its sole cost and expense and using contractors approved by Landlord, promptly
take all actions to remediate the Property which are required by any
Governmental Agency, or which are reasonably necessary to mitigate Environmental
Damages or to allow full economic use of the Property, which remediation is
necessitated from the presence upon, about or beneath the Property, at any time
during or upon termination of this Lease, of a Hazardous Material or a violation
of Environmental
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<PAGE>
Requirements, existing as a result of the activities or negligence of the Tenant
Group. Such actions shall include, but not be limited to, the investigation of
the environmental condition of the Property, the preparation of any feasibility
studies, reports or remedial plans, and the performance of any cleanup,
remediation, containment, operation, maintenance, monitoring or restoration
work, whether on or off the Property, which shall be performed in a manner
approved by Landlord. Tenant shall take all actions necessary to restore the
Property to the condition existing prior to the introduction of Hazardous
Material upon, about or beneath the Property, notwithstanding any lesser
standard of remediation allowable under applicable law or governmental policies.
V. RIGHT TO INSPECT.
Landlord shall have the right in its sole and absolute
discretion, but not the duty, to enter and conduct an inspection of the
Property, including invasive tests, at any reasonable time to determine whether
Tenant is complying with the terms of the Lease, including but not limited to
the compliance of the Property and the activities thereon with Environmental
Requirements and the existence of Environmental Damages as a result of the
condition of the Property or surrounding properties and activities thereon.
Landlord shall have the right, but not the duty, to retain any independent
professional consultant (the "Consultant") to enter the Property to conduct such
an inspection or to review any report prepared by or for Tenant concerning such
compliance. The cost of the Consultant shall be paid by Landlord unless such
investigation discloses a violation of any Environmental Requirement by the
Tenant Group or the existence of a Hazardous Material on the Property or any
other property caused by the activities or negligence of the Tenant Group (other
than Hazardous Materials used in compliance with all Environmental Requirements
and previously approved by Landlord), in which case Tenant shall pay the cost of
the Consultant. Tenant hereby grants to Landlord, and the agents, employees,
consultants and contractors of Landlord the right to enter the Property and to
perform such tests on the Property as are reasonably necessary to conduct such
reviews and investigations. Landlord shall use its best efforts to minimize
interference with the business of Tenant.
VI. NOTIFICATION.
If Tenant shall become aware of or receive notice or other
communication concerning any actual, alleged, suspected or threatened violation
of Environmental Requirements, or liability of Tenant for Environmental Damages
in connection with the Property or past or present activities of any person
thereon, including, but not limited to, notice or other communication concerning
any actual or threatened investigation, inquiry, lawsuit, claim, citation,
directive, summons, proceeding, complaint, notice, order, writ, or injunction,
relating to same, then Tenant shall deliver to Landlord within ten (10) days of
the receipt of such notice or communication by Tenant, a written description of
said violation, liability, or actual or threatened event or condition, together
with copies of any documents evidencing same. Receipt of such notice shall not
be deemed to create any obligation on the part of Landlord to defend or
otherwise respond to any such notification.
If requested by Landlord, Tenant shall disclose to Landlord
the names and amounts of all Hazardous Materials other than general office
supplies referred to in Section 49.4 of this Lease, which were used, generated,
treated, handled, stored or disposed of on the Property or which Tenant intends
to use, generate, treat, handle, store or dispose of on the Property. The
foregoing in no way shall limit the necessity for Tenant obtaining Landlord's
consent pursuant to Section the provisions of this Lease.
VII. SURRENDER OF PREMISES.
In the ninety (90) days prior to the expiration or termination
of the Lease Term, and for up to ninety (90) days after Tenant fully surrenders
possession of the Property, Landlord may have an environmental assessment of the
Property performed in accordance with Section the provisions of this Lease.
Tenant shall perform, at its sole cost and expense, any clean-up or remedial
work recommended by the Consultant which is necessary to remove, mitigate or
remediate any Hazardous Materials and/or contaminations of the Property caused
by the activities or negligence of the Tenant Group.
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<PAGE>
VIII. ASSIGNMENT AND SUBLETTING.
In the event the Lease provides that Tenant may assign the
Lease or sublet the Property subject to Landlord's consent and/or certain other
conditions, and if the proposed assignee's or sublessee's activities in or about
the Property involve the use, handling, storage or disposal of any Hazardous
Materials other than those used by Tenant and in quantities and processes
similar to Tenant's uses in compliance with the Lease, (i) it shall be
reasonable for Landlord to withhold its consent to such assignment or sublease
in light of the risk of contamination posed by such activities and/or (ii)
Landlord may impose an additional condition to such assignment or sublease which
requires Tenant to reasonably establish that such assignee's or sublessees
activities pose no materially greater risk of contamination to the Property than
do Tenant's permitted activities in view of the (a) quantities, toxicity and
other properties of the Hazardous Materials to be used by such assignee or
sublessee, (b) the precautions against a release of Hazardous Materials such
assignee or sublessee agrees to implement, (c) such assignee's or sublessee's
financial condition as it relates to its ability to fund a major clean-up and
(d) such assignee's or sublessee's policy and historical record respecting its
willingness to respond to the clean up of a release of Hazardous Materials.
Landlord shall also have its approval rights as set forth in Section this Lease.
IX. SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.
Tenant's breach of any of its covenants or obligations under
this Lease shall constitute a material default under the Lease. The obligations
of Tenant under this Lease shall survive the expiration or earlier termination
of the Lease without any limitation, and shall constitute obligations that are
independent and severable from Tenant's covenants and obligations to pay rent
under the Lease.
49.2 RIGHT OF FIRST OFFER:
Lessee shall have the right of First Offer on any adjacent, non-leased
vacant space within the same building throughout the lease term.
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Lessor:
PRINCIPAL LIFE INSURANCE COMPANY, AN IOWA CORPORATION
BY: PRINCIPAL CAPITAL MANAGEMENT, LLC, A DELAWARE, LLC,
ITS AUTHORIZED SIGNATORY
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
Lessee:
ATLANTIS PLASTICS FILMS, INC.
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
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EXHIBIT "A"
OPTION TO PURCHASE
By and Between (Lessor) PRINCIPAL LIFE INSURANCE COMPANY,
an Iowa Corporation c/o
Principal Capital Management, Inc.
(Lessee) Atlantis Plastics Films, Inc.
Address of Premises: 13170 Marlay Avenue, Fontana,
California 92337
(a) Lessor hereby grants to Lessee an option to purchase the Building
in which the Premises are located containing approximately 153,104 square feet,
including the mezzanine structures, upon the terms and conditions herein set
forth.
(b) In order to exercise this option to purchase, Lessee must give
written notice of the exercise of this option on or before September 1, 2000
(the "Option Period"), time being of the essence. At the same time the option is
exercised, Lessee must deliver to Lessor a cashier's check the amount of
$150,000.00 ("Deposit"), payable to Lessor to be part of the purchase price. If
such notice is not so given and the Deposit is not made at the same time the
option is exercised, this option shall automatically expire.
(c) The provisions of paragraph 39, including those related to Lessee's
Default set forth in paragraph 39.4 of this Lease are conditions of this option.
(d) If Lessee elects to exercise this option to purchase as provided
above, the transfer of title to Lessee shall occur on the close of escrow on or
before December 1, 2000, and until that time the terms of this Lease shall
remain in full force and effect.
(e) If Lessee elects to exercise this option to purchase, the purchase
price to be paid by Lessee shall be Six Million Forty Seven Thousand Six Hundred
and Eight Dollars ($6,047,608.00).
(f) Within ten days after this option to purchase is exercised, Lessor
and Lessee shall give instructions to consummate the sale to First American
Title Co. who shall act of escrow holder, on the normal and usual escrow forms
then used by such escrow holder, as follows:
(i) Escrow shall close on the date set forth in paragraph (d)
above;
(ii) Lessor shall deposit the check referred to in paragraph
(b) into escrow upon opening thereof, with the balance of the purchase price to
be deposited into escrow no later than 11:00 a.m. on the business day prior to
the closing date;
(iii) The parties agree to execute any additional instructions
as are normal and usual;
(iv) The purchase shall be on an AS-IS basis, without
representation or warranty from Lessor. The purchase price shall be paid in cash
at the close of escrow. Lessor shall pay the costs of a CLTA Owner's Policy of
Title Insurance, any documentary transfer tax, one-half of any escrow fee and
any other incidental costs incurred directly by Lessor. Lessee shall pay
one-half of the escrow fees, the cost of any survey, the cost of any
endorsements to the title policy requested by Lessee, the additional costs of
obtaining an ALTA Policy of Title Insurance, any title policy obtained by
Lessee's lender (if any) and any other incidental costs incurred by Lessee. At
the closing, (i) Lessor will deliver the Grant Deed, a Bill of Sale with respect
to all personal property of the Lessor on the Premises, and an assignment of all
warranties and contract rights with respect to the Building, (ii) Lessee will
pay the purchase price to Lessor, and (iii) the escrow holder will prorate taxes
to the extent Lessee has prepaid to Lessor any amount for taxes due after the
closing date. All other costs shall be paid, and all other prorations shall be
made, in the manner customary for purchase and sales of property in San
Bernardino County, California. In the event the parties do not consummate the
sale of the property after exercise of this option to purchase by Lessee or any
reason, the parties agree that $75,000.00 of the Deposit is nonrefundable and
will be retained by Lessor.
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<PAGE>
(g) Extended Option to Purchase.
(i) Lessor hereby grants to Lessee a right to extend the time
to exercise the option to purchase upon the terms and conditions herein set
forth.
(ii) In order to exercise this extended option to purchase,
Lessee must give written notice of the Lessees desire to extend the time period
to exercise of the option on or before September 1, 2000, time being of the
essence. At the same time Lessee notifies Lessor of this election, Lessee must
deliver Lessor a cashier's check the amount of $150,000.00 ("Deposit"), payable
to Lessor to be part of the purchase price, if the option is exercised and if
the closing date is on or before May 1, 2001. If such notice is not so given and
the Deposit is not made at the same time the election to extend the option is
made, this option shall automatically expire. In the event Lessee makes this
election to extend, all terms and conditions of the above option shall apply
except that (1) the time period to exercise the option shall be extended until
March 1, 2001, (2) the Deposit must be increased to $300,000.00 on or before
March 1, 2001 by delivering to Lessor an additional cashier's check in the
amount of $150,000.00, (3) the purchase price shall increase to Six Million Four
Hundred Seventy Two Thousand One Hundred and Four Dollars ($6,472,104.00), (4)
the closing date shall be extended to on or before May 1, 2001 and (5) $150,000
of the Deposit shall be nonrefundable instead of only $75,000.00.
(h) Lessee shall have the Right of First Offer to Purchase the building
throughout the lease term.
Lessor:
PRINCIPAL LIFE INSURANCE COMPANY, AN IOWA CORPORATION
BY: PRINCIPAL CAPITAL MANAGEMENT, LLC, A DELAWARE, LLC,
ITS AUTHORIZED SIGNATORY
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
Lessee:
ATLANTIS PLASTICS FILMS, INC.
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
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EXHIBIT B
WORK LETTER AGREEMENT
In connection with the lease to which this Work Letter Agreement is
attached (the "Lease"), and in consideration of the mutual covenants hereinafter
contained, Lessor and Lessee agree as follows:
1. COMPLETION SCHEDULE. A Preliminary Work Schedule (the "Work
Schedule") is attached hereto as Exhibit B1. The Work Schedule shall set forth a
timetable for the planning and completion of the installation of the Tenant
Improvements (as defined in Paragraph 2 below). The Work Schedule shall set
forth each of the various items of work to be done by Lessor in connection with
the completion of the Tenant Improvements. The Work Schedule shall be submitted
to Lessee for its approval and, upon approval by both Lessor and Lessee, Lessor
and Lessee agree to comply with that Schedule, and it shall become the basis for
the parties' performance under this Agreement. If Lessee shall fail to deliver
to Lessor Lessee's written disapproval of the Work Schedule, as it may be
modified after discussions between Lessor and Lessee, within seven (7) days
after the date the Work Schedule is first received by Lessee, the Work Schedule
shall be final and binding on all parties.
2. TENANT IMPROVEMENTS. "Tenant Improvements" shall include the
following:
a. Extending the roof by thirty (30) feet on a 48'x 40' bay on
the west side of the building facing the rail site to accommodate the extruder.
b. Providing a reinforced concrete slab on the south side of
the building to accommodate ten (10) sixty (60) foot tall resin storage silos.
c. Providing two (2) four thousand (4,000) KVA, 277/480 volt,
3 phase panels to the Premises.
d. Delivery of rail service to the Building.
e. Painting and carpeting the office on the first floor.
f. Replacing the roof.
g. Painting the exterior of the Building.
h. Slurry coating and re-striping the parking lot.
3. TENANT IMPROVEMENT PLANS. Within five (5) business days after
execution of the Lease or as soon a reasonably practical, Lessee agrees to meet
with Lessor's architect for the purpose of promptly preparing plans for the
Tenant Improvements ("Plans"). If Lessee fails to deliver to Lessor Lessee's
written disapproval of the Plans within five (5) business days after the date
the Plans, or any revised Plans, are first received by Lessee, the Plans shall
be deemed approved by Lessee. If the Plans, or any revised Plans, are timely
disapproved by Lessee pursuant to this Paragraph, Lessee shall provide to Lessor
a written explanation of the reason(s) for such disapproval concurrently with
that disapproval, and the Plans, as appropriate, shall be promptly revised and
resubmitted to Lessee for approval. If Lessee fails to provide a written
explanation as and when required by this Paragraph, the Plans shall be deemed
approved by Lessee. After Plans are approved by Lessee pursuant to this
Paragraph, Lessor's architect or space planner shall promptly prepare final
working drawings and specifications for the Tenant Improvements. Those working
drawings and specifications are referred to herein as the "Tenant Improvement
Plans" and shall be approved by Lessor and Lessee pursuant to Paragraph 4 below.
4. FINAL PRICING AND DRAWING SCHEDULE. Lessee shall have the right to
approve the architect and engineer, such approval shall not be unreasonably
withheld or delayed. If Lessee does not approve Lessor's architect or engineer,
then Tenant must submit an alternative within five (5) business days after
notice of Lessor's selection. If Lessor does not approve Lessee's proposed
architect or engineer, then Lessor must submit an alternative within five (5)
business days after notice of Lessee's selection. If the parties are unable to
agree after proposing
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<PAGE>
two architects or engineers, Lessor shall make the selection. However, any
proposed architect or engineer must render a work product that is the same or
better in quality as the architect or engineer initially proposed by Lessor.
After preparation by Lessor's architect, the Tenant Improvement Plans shall be
submitted to Lessee for approval, which shall not be unreasonably withheld. If
Lessee fails to deliver to Lessor Lessee's written disapproval of the Tenant
Improvement Plans, or any revised Tenant Improvements Plans, within five (5)
business days after the date the Tenant Improvement Plans, or any revised Tenant
Improvement Plans, are received by Lessee, the Tenant Improvement Plans shall be
deemed approved by Lessee. If the Tenant Improvement Plans, or any revised
Tenant Improvement Plans, are timely disapproved by Lessee pursuant to this
Paragraph, Lessee shall provide to Lessor a written explanation of the reason(s)
for such disapproval concurrently with that disapproval, and the Tenant
Improvement Plans shall be revised and resubmitted to Lessee for approval. If
Lessee fails to provide a written explanation as and when required by this
Paragraph, the Tenant Improvement Plans shall be deemed approved by Lessee.
After the Tenant Improvement Plans are so approved by Lessee, the Tenant
Improvement Plans shall be submitted to the appropriate governmental body by
Lessor for plan checking and the issuance of a building permit. Lessor, with
Lessee's cooperation, shall cause to be made to the Tenant Improvement Plans any
changes necessary to obtain the building permit and to comply with the
requirements of local agencies. Concurrently with the plan checking, Lessor
shall bid out the Tenant Improvement work to qualified contractors to be
reasonably approved by Lessee and Lessor shall have prepared a final pricing for
Lessee's approval in accordance with the Work Schedule, taking into account any
modifications which may be required to reflect changes in the Tenant Improvement
Plans required by the City of Fontana or other agencies. Lessor shall have the
option to increase or decrease the final pricing, before or after Lessee
approves the final pricing, to reflect changes in the cost of performing the
Tenant Improvements caused by plan modifications required by the county or
municipality in which the Project is located or other agencies. After final
approval of the Tenant Improvement Plans no further changes may be made thereto
without the prior written approval from both Lessor and Lessee, and then only
after agreement by Lessee to pay any excess costs resulting from the design or
construction of such changes. Lessee acknowledges that any such changes shall be
subject to the terms of Paragraph 7 below.
5. CONSTRUCTION OF TENANT IMPROVEMENTS. After a building permit for the
Tenant Improvements has been issued, Lessor shall cause its contractor to begin
installation of the Tenant Improvements in accordance with the Tenant
Improvement Plans. Lessor shall supervise the completion of such work and shall
use its best efforts to secure substantial completion of the work in accordance
with the Work Schedule. The cost of such work shall be paid as provided in
Paragraph 6 below. Lessor shall not be liable for any direct or indirect damages
as a result of delays in construction beyond Lessor's control, including, but
not limited to, acts of God, inability to secure governmental approvals or
permits, governmental restrictions, strikes, lack of availability of materials
or labor, or delays by Lessee (or its architect or anyone performing services on
behalf of Lessee).
6. PAYMENT FOR THE TENANT IMPROVEMENTS.
(a) Lessor grants to Lessee a "Tenant Improvement Allowance"
as follows:
(i) An amount not to exceed Two Hundred Seventy Five
Thousand ($275,000) for the completion of the Tenant Improvements identified in
Paragraph 2(a) through (c) only. Tenant acknowledges that the cost for these
improvements may exceed the Tenant Improvement Allowance provided for in this
Paragraph 6(a)(i) and Lessee agrees to pay the excess upon demand and prior to
the commencement of construction of the Tenant Improvements.
(ii) An amount not to exceed One Hundred Twenty Five
Thousand ($125,000) for the completion of the Tenant Improvements identified in
Paragraph 2(d) only. Tenant acknowledges that the cost for these improvement
will exceed the Tenant Improvement Allowance provided for in this Paragraph
6(a)(ii) and Lessee agrees to pay the excess upon demand and prior to the
commencement of construction of the Tenant Improvements.
(iii) The cost for completion of the Tenant
Improvements identified in Paragraph 2(e) through (h) shall be at Lessor's sole
cost and expense.
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(b) If the actual costs of purchasing and installing the
Tenant Improvements exceed the Tenant Improvement Allowance, or if any of the
Tenant Improvements are not to be paid out of the Tenant Improvement Allowance
as provided in Paragraph 6(a) above, the excess shall be paid by Lessee to
Lessor prior to the commencement of construction of the Tenant Improvements.
However, if there is a remaining balance in the Tenant Improvement Allowance
described in Paragraph 6(a)(i), Tenant may apply such balance to pay part of the
excess due under Paragraph 6(a)(ii), and if there is any remaining balance it
shall be used to reimburse Lessee for the cost of alterations and utility
installations made to the Premises by Lessee in connection with preparation for
occupancy.
(c) If, after the Tenant Improvement Plans have been prepared
and a price therefor has been established by Lessor, Lessee shall require any
changes or substitutions to the Tenant Improvement Plans, any additional costs
related thereto shall be paid by Lessee to Lessor prior to the commencement of
construction of the Tenant Improvements. Lessor shall have the right to decline
Lessee's request for a change to the Tenant Improvement Plans if such change
would, in Lessor's subjective good faith opinion, unreasonably delay
construction of the Tenant Improvements.
(d) If increases in the cost of the Tenant Improvements as set
forth in Lessor's final pricing are due to the requirements of any governmental
agency, Lessee shall pay Lessor the amount of such increase within five (5)
business days of Lessor's written notice; provided, however, that Lessor shall
first apply toward such increase any remaining balance in the applicable Tenant
Improvement Allowance, if any.
(e) The Tenant Improvements described in Paragraph 2, above
shall remain the property of the Lessor at the end of the Term.
7. COMPLETION AND RENTAL COMMENCEMENT DATE.
Notwithstanding anything to the contrary of the Lease, the Commencement
Date of the Term, and Lessee's obligation for the payment of rent under the
Lease, shall commence on the later of: (i) forty-five (45) days from the date on
which the Tenant Improvements identified in Subparagraphs 2(a) through (c) and
subparagraphs 2(e) through (h) have been substantially completed as determined
by a certificate from Lessor's architect; or (ii) November 1, 2000. However, if
the Tenant Improvement identified in Subparagraph 2(d) has not been completed by
the Commencement Date, then Base Rent owed under the Lease shall be reduced by
50% until substantial completion of the Tenant Improvement identified in
Subparagraph 2(d). If there shall be a delay in substantial completion of the
Tenant Improvements as a result of:
(a) Lessee's failure to approve any item or perform any other
obligation in accordance with and by the date specified in the Work Schedule;
(b) Lessee's request for materials, finishes or installations
other than those readily available;
(c) Lessee's changes in the Tenant Improvement Plans after
Lessee approves the Tenant Improvement Plans;
(d) Lessee's failure to timely make any payment due from
Lessee under this Work Letter Agreement or the Lease; then, as provided for in
the Lease, the commencement of the Term shall be accelerated by the number of
days of such delay. The Tenant Improvements shall be deemed substantially
complete notwithstanding the fact that minor items of the Tenant Improvements
which do not materially interfere with Lessee's use of the Premises remain to be
performed, which items Lessor shall promptly complete or correct. However, the
Tenant Improvements shall not be considered substantially complete unless
governmental permits required for their use and occupancy have been obtained by
Lessor. The Tenant Improvement referenced in this section shall not include
improvements to be made by Lessee.
8. RIGHT TO CANCEL.
If it is determined that any of the Tenant Improvements specified in
Paragraph 2 above can not be constructed at the Premises, either party may
terminate this Lease by written notice to other within twenty (20) days after
notice of the inability of Landlord to construct any of the Tenant Improvements.
If either party gives such notice, this Lease shall terminate in which event
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the parties shall be discharged from all further obligations hereunder and the
Lease shall be of no further force and effect. If substantial completion of the
Tenant Improvement specified in Paragraph 2(d) (Rail Service) has not occurred
by April 2001, either party may terminate the Lease by giving notice to the
other prior to the delivery of rail service. If Tenant gives such notice and the
rail service is not delivered within thirty (30) days thereafter, this Lease
shall terminate in which event the parties shall be discharged from all further
obligations hereunder and the Lease shall be of no further force and effect.
Lessor:
PRINCIPAL LIFE INSURANCE COMPANY, AN IOWA CORPORATION
BY: PRINCIPAL CAPITAL MANAGEMENT, LLC, A DELAWARE, LLC,
ITS AUTHORIZED SIGNATORY
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
Lessee:
ATLANTIS PLASTICS FILMS, INC.
By: By:
----------------------------------- -----------------------------------
Name Typed:
--------------------------- -----------------------------------
Title:
-------------------------------- -----------------------------------
Date:
--------------------------------- -----------------------------------
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<PAGE>
RENT ADJUSTMENT(S)
STANDARD LEASE ADDENDUM
Dated March 08, 2000
By and Between (Lessor) Principal Life Insurance Company,
an Iowa Corporation
c/o Principal Capital Management, LLC
A Delaware Corporation
(Lessee) Atlantis Plastics Films, Inc.
A Delaware Corporation
Address of Premises: 13170 Marlay Avenue, Fontana, California
Paragraph 49.3
A. RENT ADJUSTMENTS:
The monthly rent for each month of the adjustment period(s) specified below
shall be increased using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
[X] III. Fixed Rental Adjustment(s) (FRA)
The Base Rent shall be increased to the following amounts on the dates set forth
below:
On (Fill in FRA, Adjustment Date(s)): The New Base Rent shall be:
May 1, 2003 $37,447.19
November 1, 2005 $39,343.25
May 1, 2008 $42,187.34
B. NOTICE:
Unless specified otherwise herein, notice of any such adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.
C. BROKER'S FEE:
The Brokers specified in paragraph 1.10 shall be paid a Brokerage Fee for each
adjustment specified above in accordance with paragraph 15 of the Lease.
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<PAGE>
OPTION(S) TO EXTEND
STANDARD LEASE ADDENDUM
Dated March 08, 2000
By and Between (Lessor) Principal Life Insurance Company,
an Iowa Corporation
c/o Principal Capital Management, LLC
A Delaware Limited Liability Company
(Lessee) Atlantis Plastics Films, Inc.
A Delaware Corporation
Address of Premises: 13170 Marlay Avenue, Fontana, California
Paragraph 49.4
A. OPTION(S) TO EXTEND:
Lessor hereby grants to Lessee the option to extend the term of this Lease for
two (2) additional sixty (60) month period(s) commencing when the prior term
expires upon each and all of the following terms and conditions:
(i) In order to exercise an option to extend, Lessee must give written notice of
such election to Lessor and Lessor must receive the same at least 6 but not more
than 9 months prior to the date that the option period would commence, time
being of the essence. If proper notification of the exercise of an option is not
given and/or received, such option shall automatically expire. Options (if there
are more than one) may only be exercised consecutively.
(ii) The provisions of paragraph 39, including those relating to Lessee's
Default set forth in paragraph 39.4 of this Lease, are conditions of this
Option.
(iii) Except for the provisions of this Lease granting an option or options to
extend the term, all of the terms and conditions of this Lease except where
specifically modified by this option shall apply.
(iv) This Option is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and without the intention of
thereafter assigning or subletting.
(v) The monthly rent for each month of the option period shall be calculated as
follows, using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)
[ ] I. Cost of Living Adjustment(s) (COLA)
c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, then, the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.
[X] II. Market Rental Value Adjustment(s) (MRV)
a. On (Fill in MRV Adjustment Date(s)) November 01, 2010 and November 01, 2015.
The Base Rent shall be adjusted to 95% of "Market Rental Value" of the property
as follows:
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the Base Rent shall be adjusted to the "Market Rental Values of the property as
follows:
1) Six months prior to each Market Rental Value Adjustment Date described above,
the Parties shall attempt to agree upon what the new MRV will be on the
adjustment date. If agreement cannot be reached, within thirty days, then:
(a) Lessor and Lessee shall immediately appoint a mutually acceptable
appraiser or broker to establish the new MRV within the next thirty days. Any
associated costs will be split equally between the Parties, or
(b) Both Lessor and Lessee shall each immediately make a reasonable
determination of the MRV and submit such determination, in writing, to
arbitrator, in accordance with the following provisions:
(i) Within fifteen days thereafter, Lessor and Lessee shall
each select an [ ] appraiser or [ ] broker ("Consultant" - check one)
of their choice to act as an arbitrator. The two arbitrators so
appointed shall immediately select a third mutually acceptable
Consultant to act as a third arbitrator.
(ii) The three arbitrators shall within thirty days of the
appointment of the third arbitrator reach a decision as to what the
actual MRV for the Premises is, and whether Lessor's or Lessee's
submitted MRV is the closest thereto. The decision of a majority of the
arbitrators shall be binding on the Parties. The submitted MRV which is
determined to be the closest to the actual MRV shall thereafter be used
by the Parties.
(iii) If either of the Parties falls to appoint an arbitrator
within the specified fifteen days, the arbitrator timely appointed by
one of them shall reach, a decision, on his or her own, and said
decision shall be binding on the Parties.
(iv) The entire cost of such arbitration shall be paid by the
party whose submitted MRV is not selected, i.e., the one that is NOT
the closest to the actual MRV.
2) Notwithstanding the foregoing, the new MRV shall not be less than the rent
payable for the month immediately preceding the rent adjustment.
b. Upon the establishment of each New Market Rental Value:
1) the new MRV will become the new "Base Rent" for the purpose
of calculating any further Adjustments, and
2) the first month of each Market Rental Value term shall
become the new "Base Month" for the purpose of calculating any further
Adjustments.
[ ] III. Fixed Rental Adjustment(s) (FRA)
The Base Rent shall be increased to the following amounts on the dates set forth
below:
On (Fill in FRA Adjustment Date(s)): The New Base Rent shall be:
------------------------------------ $--------------------------
------------------------------------ $--------------------------
------------------------------------ $--------------------------
------------------------------------ $--------------------------
B. NOTICE:
Unless specified otherwise herein, notice of any rents, adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.
C. BROKER'S FEE:
The Brokers specified in paragraph 1.10 shall be paid a Brokerage Fee for each
adjustment specified above in accordance with paragraph 15 of the Lease.
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