<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
X Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934 for the fiscal year ended JUNE 30, 1996 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
COMMISSION FILE NUMBER 1-10981
SBS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
New Mexico 85-0359415
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
2400 Louisiana Blvd. NE
AFC Building 5, Suite 600
Albuquerque, New Mexico 87110
(505) 875-0600
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, no par value NASD National Market System
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
This item is amended to incorporate by reference the sections of "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SBS
TECHNOLOGIES, INC." relating to the fiscal year ended June 30, 1996, and the
acquisition of Bit 3 Computer Corporation included in the Registrant's
Registration Statement on Form S-2, Amendment No. 1, dated October 22, 1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This item is amended to incorporate by reference the Registrant's consolidated
balance sheets as of June 30, 1996 and 1995 and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended June 30, 1996, included in the
Registrant's Registration Statement on Form S-2, Amendment No. 1, dated
October 22, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SBS TECHNOLOGIES, INC.
By: /s/ Christopher J. Amenson
Christopher J. Amenson
Chief Executive Officer
Date: November 11, 1996
<PAGE>
SBS Technologies, Inc.
Annual Report on Form 10-K/A
Fiscal Year Ended June 30, 1996
Index to Exhibits
<TABLE>
Exhibit
No. Description Page
- ------- ----------- ----
<S> <C> <C>
10.j Amendment to lease dated September 21, 1996 between
Registrant and PARS Asset Management Company Filed herewith electronically
10.k Lease dated July 18, 1995 between Logical Design, Inc.
and Carolantic Realty. Filed herewith electronically
10.l Lease dated January 18, 1994 between Berg Systems
International, Inc. a subsidiary of the Registrant and
Equity Growth Investments Filed herewith electronically
23.2(1) Consent of KPMG Peat Marwick LLP. Filed herewith electronically
- --------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-2, Amendment No. 1, dated October 22, 1996, exhibit 10.18 Stock
Purchase Agreement dated October 8, 1996 between the Registrant and
Philip M. Vukovic and Larry L. Larsen.
</TABLE>
<PAGE>
AMENDMENT TO LEASE AGREEMENT
DATED MAY 25, 1995
THIS IS AN AMENDMENT to that Lease Agreement dated May 25, 1995 by and
between Firouz D. Memarzadeh and Farah R. Memarzadeh, husband and wife dba
PARS Asset Management Company and SBS Engineering, Inc. ("Tenant").
WITNESSETH:
WHEREAS, PARS Asset Management Company and SBS Engineering, Inc. entered
into a Lease Agreement dated May 25, 1995 ("Agreement").
WHEREAS, PARS Sorrento Valley Science Park I LLC, a California limited
liability company ("Landlord") is the current owner of American Financial
Center-5 and has been assigned all rights, title and interest in the Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is agreed that the Agreement is hereby modified, amplified, and
amended in the following respects, effective September 1, 1996.
The parties agree as follows:
1. Tenant hereby expands its lease to occupy a portion of Suite 300
("Expansion Space") comprising 3,484 Rentable Square Feet ("RSF") as
shown on attachment "A" for a one-year term.
2. Commencement date of the Expansion Space shall be September 1, 1996.
3. Termination date of the Expansion Space shall be August 31, 1997.
4. The rental rate for the Expansion Space shall be as follows:
9/1/96 - 8/31/97 $20/sf 3,484 sf $5,806.67/mo. $69,680 annual
5. Landlord will provide Tenant with $7,839 allowance ("Allowance"). This
Allowance shall be used for Tenant move-in and Tenant improvements.
All Tenant improvements shall be approved by Landlord. Any unused
portion of this Allowance will be paid to Tenant upon Tenant move in.
6. The Expansion Space shall not be subject to any operating expense
pass-through during the term of this Amendment to Lease.
7. The Tenant understands and hereby agrees that Landlord is not
responsible for payment of any commission to any real estate broker
or agent in connection with this Amendment to Lease Agreement and the
Lease Expansion.
Initials [illegible] 1
<PAGE>
8.
9. All other terms and conditions of the Agreement shall apply to the
Expansion Space.
10. Tenant has the option of extending the Amendment to Lease Agreement
for a period of one year at a rate of 5% above the rental rate for
Expansion Space as shown in Item 4 of this Amendment by giving six
months written notice.
IN WITNESS WHEREOF, the parties have executed this Amendment on the 21st
day of September, 1996.
TENANT LANDLORD
SBS ENGINEERING, INC. PARS SORRENTO VALLEY SCIENCE
PARK I LLC
By: [illegible] By: [illegible]
--------------------------- ---------------------------
Its: VICE PRESIDENT Its: MANAGER LLC
-------------------------- --------------------------
FINANCE & ADMINISTRATION
Initials [illegible] 2
<PAGE>
[Floorplan]
The Usable Square Feet of the Premises has been established using the current
Building Owners and Managers Association international ANSI 2 65.1 method of
measurement. Copyright 1990 (the "BOMA" Method). The Rentable Square Feet of
the Premises has been established using a Building efficiency factor of
Eighty-Five Percent (85%). The indicated square footage is approximate and is
not the governing factor in monetary consideration of the lease.
NOTES
- -----
1. AREA CALCULATIONS INDICATE "RENTABLE" A AS PER "BOMA" STANDARDS.
2. ALL FIXTURES INDICATED ARE BUILT-IN.
3. ALL FLOOR COVERINGS ARE CARPET (UNLESS NOTED).
4. ALL EXTERIOR WINDOWS ARE FURNISHED WITH BLINDS.
AREA CALCULATION
----------------
SUITE 300 3184.41 SQ. FT.
[LOGO]
<PAGE>
[Letterhead]
July 18, 1995
Mr. Ken Boyette
Logical Design Group
6301 Chapel Hill Road
Raleigh, NC 27607
Dear Ken:
The purpose of this letter is to document landlord and tenant's agreement
to change your lease as follows:
1. The tenant's space shall be decreased by the 1,815 square feet at the end
of the building closest to Kenny Hawkins Automotive as shown on Exhibit A.
The rent for this space, $1,250 a month, shall be deducted from the tenant's
current rent of $6,837.89 for a rent of $5,587.89 per month for the 7,086
square feet leased. This change will occur upon tenant's occupancy of space
in number 2 below, expected to be by August 1, 1995. The landlord grants the
tenant the option to lease the 1,815 square foot space beginning on
September 1, 1996, by giving the landlord written notice by June 1, 1996. The
gross rental rate for the space if this option is exercised shall be
$1,300.00 per month for the first year leased.
2. The tenant shall add to its space above, the space now occupied by
Cintee, as shown on Exhibit A, consisting of approximately 2,142 square feet
at the same price per foot as the tenant is currently paying, $9.46 per
square foot, for a total of $1,689.14 per month additional rent. The total
square footage for the reduced original space plus this additional space is
9,228 square feet. The rental rate for this space is $7,277.03. This change
will occur upon vacancy of existing tenant, Cintee, expected to be by August
1, 1995.
3. In additional to the above space, the tenant's space shall be increased
by a portion of the former ASI Sign Systems warehouse space consisting of
2,404 square feet as shown on Exhibit A. The rental rate for this square
footage shall be $4.50 per square foot plus the $1 per square foot TICAM
charge for a total of $5.50 per square foot, or $1,101.83 per month. Thus,
the total square footage in the tenant's entire space is 11,632 square feet
with a monthly payment of $8,378.86. This change will occur upon vacancy by
current tenant, ASI Sign, and completion of improvements required to demise
the space as shown on Exhibit A. Landlord shall separate and put in good
working order the electrical, plumbing, and air conditioning systems. The
expected date for this change to occur is November 1, 1995.
[LOGO]
<PAGE>
CAROLANTIC REALTY
Mr. Ken Boyette
July 18,1995
Page Two
4. As with the tenant's previous agreement, the base rent charged to the
tenant shall not increase for the remainder of the term of this lease.
However, the tenant's rent may be adjusted to reflect changes in the
operating cost of the building for taxes, insurance, water, trash removal,
cardboard recycling, and common area maintenance.
5. The term of the tenant's lease shall be extended to coincide with the
lease on the remainder of the former ASI Sign Systems space, November 30, 2002.
6. The tenant shall have the right to lease the remaining 3,500 square feet
of the former ASI Sign Systems space at any time after May 31, 2000, by
notifying the landlord and the adjacent tenant in writing 12 months prior to
the tenant's intended occupancy date. The rent for the additional space, if
this option is exercised, shall be the same as the existing tenant has
contracted to pay the Landlord for the 3,500 square foot remainder space, for
the remainder of its term.
The attached Exhibit A shows the space to be leased by the tenant. If the
above changes are acceptable to you, please signify by signing below on the
blanks that I have provided. Thank you for working with Carolantic Realty on
your real estate needs.
Sincerely,
/s/ Richard Hibbits
Richard Hibbits
/s/ Jacob E. Williamson /s/ Ken Boyette
- ------------------------- ------------------------
Teal Properties, Jacob Williamson Logical Design Group, Ken Boyette
Landlord Tenant
<PAGE>
6303 CHAPEL HILL ROAD NC -54-
EXHIBIT A
[FLOORPLAN]
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LEASE RESUME
------------
BUILDING: TEAL BUILDING S-480
-------------------------------
TENANT & ADDRESS: LOGICAL DESIGN GROUP, INC. CONTACT:
4301 Chapel Hill Road
Raleigh, NC 27607
PHONE: 851-1101
BUILDING SQ. FT.:_______________________
SQ. FT. LEASES: 4,550 % OF BUILDINGS: _________
------------------------
COMMENCEMENT DATE OF LEASE: 4/1/87 Execution dates of Lease:
------- Tenant:__________________
Landlord:________________
TERM: 5 YEARS BEGINNING: 4/1/87 ENDING: 12/31/91
------------ ------------ ------------------
RENT: $36,172.44/year MONTHLY: $3,014.37 P/S/F: $8.00
----------------- -------------- -------------------
PRORATIONS: TAXES: LandLord's Responsibility
INSURANCE: " "
CAM: " "
MECHANICAL MAINTENANCE & INSPECTION COSTS: LandLord's Responsibility
INCREASES: Annual C.P.I.
OPTION TO EXTEND: 1/5 year option
----------------
TERMS: 180 day advance written notice - 7/1/91
INCREASE: Annual C.P.I. - 7.5% CAP
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECURITY DEPOSIT: None COMMISSION: 6% monthly - RICHARD HIBBITS
---------- ---------------
COMMENTS: 1) Tenant has right of first refusal on 4/1/88 - $3094.71
adjacent space 3/1/89 - $3855.49
4/1/90 - $4142.90
11/1/90 - $5232.90
LEASE AMENDMENT DATED MAY 23, 1988
- ----------------------------------
NEW RENTAL RATE: $3,659.08
NEW SQUARE FOOTAGE: 5,840 square feet (1,290 square feet added) 9/1/91 $430.22 Inst.
1040.00 add'l
-------
$5470.22
LEASE AMENDMENT DATED FEBRUARY 10, 1989 LEASE AMENDMENT - JULY 13, 1990 & NOV 15, 1990
- ----------------------------------------- ----------------------------------------------
EFFECTIVE MARCH 1, 1989 Additional of - 1,246 sf
NEW RENTAL RATE: $3,855.49 Additional rent - $1,040.00
Commencement - Nov. 5, 1990
Expiration - June 30, 1993
LEASE EXTENSION - APRIL 13, 1993
- --------------------------------
- -Exercises first 5-year option period: 7/1/93 - 6/30/98.
- -Current rental rate remains unchanged throughout
the entire term of option period. Cost of Living
adjustments called for in lease shall not be in
affect during the option period.
- -All other terms and conditions of lease remain
unchanged.
LEASE AMENDMENT LETTER - DECEMBER 21, 1994
- ------------------------------------------
- -Tenant space increased by 1,815 sf (former IEP unit). Total - 8,901 sf.
- -Leases space as-is except for Landlord getting HVAC system operational and
closing demising wall.
- -Rent to increase by $1,250.00/month: Total of $6,837.89 per month.
- -Increase in space and rent shall be affective 1/1/95.
- -All other terms and conditions remain the same.
</TABLE>
<PAGE>
[logo]
[letterhead]
December 21, 1994
Mr. Ken Boyette
Logical Design Company, Inc.
6301 Chapel Hill Road
Raleigh, NC 27607
Dear Ken:
The purpose of this letter is to document the landlord's agreement to add
additional space to your lease in the following manner:
1. The size of the Tenant's space shall be increased by 1,815 square feet
consisting of the unit formerly occupied by IEP, Inc. at the end of the
building closest to Kenny Hawkins Automotive.
2. The tenant shall take the space as-is except for the landlord getting
all of the heating systems operational, and closing demising wall.
3. The tenant agrees to increase its rent by $1,250 per month to a total
of $6,837.89 per month.
4. The increase in space and rent shall commence January 1, 1995.
All other terms and conditions of the lease shall remain unchanged. If
these changes are acceptable to you, please acknowledge below on the blank
that I have provided. Thank you for working with Carolantic Realty on your
real estate needs.
Sincerely
/S/ RICHARD HIBBITS
Richard Hibbits
/s/ JAMES KENNETH BOYETTE /S/ RICHARD HIBBITS
- ---------------------------- -------------------------
Logical Design, Inc., Tenant Teal Properties, Landlord
[LOGO]
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LEASE RESUME
------------
BUILDING: TEAL BUILDING S-480
-------------------------------
TENANT & ADDRESS: LOGICAL DESIGN GROUP, INC. CONTACT:
4301 Chapel Hill Road
Raleigh, NC 27607
PHONE: 851-1101
BUILDING SQ. FT.:_______________________
SQ. FT. LEASES: 4,550 % OF BUILDINGS: _________
------------------------
COMMENCEMENT DATE OF LEASE: 4/1/87 Execution dates of Lease:
------- Tenant:__________________
Landlord:________________
TERM: 5 YEARS BEGINNING: 4/1/87 ENDING: 12/31/91
------------ ------------ ------------------
RENT: $36,172.44/year MONTHLY: $3,014.37 P/S/F: $8.00
----------------- -------------- -------------------
PRORATIONS: TAXES: LandLord's Responsibility
INSURANCE: " "
CAM: " "
MECHANICAL MAINTENANCE & INSPECTION COSTS: LandLord's Responsibility
INCREASES: Annual C.P.I.
OPTION TO EXTEND: 1/5 year option
----------------
TERMS: 180 day advance written notice - 7/1/91
INCREASE: Annual C.P.I. - 7.5% CAP
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECURITY DEPOSIT: None COMMISSION: 6% monthly - RICHARD HIBBITS
---------- ---------------
COMMENTS: 1) Tenant has right of first refusal on 4/1/88 - $3094.71
adjacent space 3/1/89 - $3855.49
4/1/90 - $4142.90
11/1/90 - $5232.90
LEASE AMENDMENT DATED MAY 23, 1988
- ----------------------------------
NEW RENTAL RATE: $3,659.08
NEW SQUARE FOOTAGE: 5,840 square feet (1,290 square feet added) 9/1/91 $430.22 Inst.
1040.00 add'l
-------
$5470.22
LEASE AMENDMENT DATED FEBRUARY 10, 1989 LEASE AMENDMENT - JULY 13, 1990 & NOV 15, 1990
- ----------------------------------------- ----------------------------------------------
EFFECTIVE MARCH 1, 1989 Additional of - 1,246 sf
NEW RENTAL RATE: $3,855.49 Additional rent - $1,040.00
Commencement - Nov. 5, 1990
Expiration - June 30, 1993
LEASE EXTENSION - APRIL 13, 1993
- --------------------------------
- -Excercises first 5-year option period: 7/1/93 - 6/30/98.
- -Current rental rate remains unchanged throughout
the entire term of option period. Cost of Living
adjustments called for in lease shall not be in
affect during the option period.
- -All other terms and conditions of lease remain
unchanged.
LEASE AMENDMENT LETTER - DECEMBER 21, 1994
- ------------------------------------------
- -Tenant space increased by 1,815 sf (former IEP unit). Total - 8,901 sf.
- -Leases space as-is except for Landlord getting HVAC system operational and
closing demising wall.
- -Rent to increase by $1,250.00/month: Total of $6,837.89 per month.
- -Increase in space and rent shall be affective 1/1/95.
- -All other terms and conditions remain the same.
</TABLE>
<PAGE>
TEAL PROPERTIES
517 Pylon Drive
Raleigh, N.C. 27606
March 13, 1992
Logical Design Group
Attention: Accounts Payable
6301 Chapel Hill Road
Raleigh, N.C. 27607
Dear Sir,
Per the terms of your lease, I would like to advise you of a rent increase
for the space occupied at 6301 Chapel Hill Road. The increase is based upon
the Consumer Price Index and has been calculated as follows:
CPI January 1992 413.8 = 1.17958951 x $3,855.49 = $4,547.89
- ------------------------------
CPI April 1988 350.8
1992 Base Rate . . . . . . . . . $4,547.89
Rent for additional space. . . . $1,040.00
---------
New Rent . . . . . . . . . . . . $5,587.89
Please make your April and future rent payments for the sum of $5,587.89.
Your next rent adjustment will be April 1993.
Please do not hesitate to give me a call at 828-5147 should you have any
questions pertaining to the calculations. Thank you for your assistance is
this matter.
Sincerely,
George R. Cox
<PAGE>
TEAL PROPERTIES
517 Pylon Drive
Raleigh, NC 27606
March 17, 1992
Quality Sign Systems, Inc.
D/B/A ASI Sign Systems
Attn: Donald Bever
6307 Chapel Hill Road
Raleigh, NC 27607
Dear Sir,
Per the terms of your lease, we are providing you with totals of year end
expenses (more specifically expenses such as taxes, insurance, and common
area maintenance) for your referenced location. Below please find a
breakdown of these expenses:
Water/sewer $1,180.26 TAXES: $5,443.78
Electricity 1,065.18 -----
Trash removal 2,495.92
Grounds Maintenance 2,442.50
--------- INSURANCE: $ 977.00
---------
TOTAL CAM $7,203.86
---------
ASI's occupancy is 5,400 square feet, or 28.9% of the total building
(18,700 square feet = 100%). Total expenses for taxes, insurance, and CAM
were $13,624.64. Your Pro Rata share is calculated as follows:
$13,624.66 x 28.9% = $3,937.52 = $328.12
-----------
12 months
(Please note that this is the first Pro Rata increase in several years.
Actually, the previous two years the Pro Rata costs decreased.)
<PAGE>
Because you have optioned to make a lump sum payment of your Pro Rata share
at the end of the calendar year, monthly installments need not be made. Your
December rent check needs to include a payment of $3,818.01 (3 months at
$288.31 and 9 months at $328.12) for your Pro Rata share.
Your base rent is next due for revision/review on May 1, 1992 and you will be
advised of the new rate in April.
A review of your lease file revealed that we do not have a current copy of
your certificate of insurance. Please ask your insurance agent to forward
one to us at the above address.
If you have any questions please give me a call at 828-5147.
Sincerely,
George R. Cox
<PAGE>
[LETTERHEAD]
July 13, 1990
Mr. Ken Boyette
Logical Design Group, Inc.
6301 Chapel Hill Road
Raleigh, North Carolina 27607
Re: Lease Addendum
Dear Ken:
This letter shall serve as an addendum to your lease on 6301 Chapel Hill
Road commencing April 1, 1987. The undersigned hereby agree to make the
following changes to the lease:
1. The demised premises shall increase by a net square footage of
1,246 feet, as shown on Exhibit "A." (The Tenant shall delete from
its demised premises 504 square feet of warehouse area and add
1,750 square feet of area.)
2. The rent for the demised premises shall increase by $1,040.00 per
month upon completion of the improvements shown on Exhibit "A."
3. The Landlord shall pay for the construction of the improvements
shown on Exhibit "A."
4. The lease term shall be extended by one and one-half years with a
new termination of the lease being June 30, 1993.
All other terms and conditions of the lease shall remain the same. If
these terms are acceptable to you, please acknowledge so on the blank
provided below.
ACKNOWLEDGED AND AGREED TO:
Logical Design Teal Properties
Tenant Landlord
By: By:
/S/ JAMES KENNETH BOYETTE /S/ RICHARD HIBBITS
- ------------------------------ -------------------------------
P.O. Drawer 1580 Raleigh, N.C. 27602 (919)832-0594
E. Stephen Stroud, Individual Membership in the Society of Industrial
and Office Realtors
[LOGO]
<PAGE>
[LOGO]
July 13, 1990
Mr. Ken Boyette
Logical Design Group, Inc.
6301 Chapel Hill Road
Raleigh, North Carolina 27607
Re: Lease Addendum
Dear Ken:
This letter shall serve as an addendum to your lease on 6301 Chapel Hill
Road commencing April 1, 1987. The undersigned hereby agree to make the
following changes to the lease:
1. The demised premises shall increase by a net square footage of 1,246
feet, as shown on Exhibit "A." (The Tenant shall delete from its
demised premises 504 square feet of warehouse area and add 1,750
square feet of area.)
2. The rent for the demised premises shall increase by $1,040.00 per
month upon completion of the improvements shown on Exhibit "A."
3. The Landlord shall pay for the construction of the improvements
shown on Exhibit "A."
4. The lease term shall be extended by one and one-half years with a
new termination of the lease being June 30, 1993.
All other terms and conditions of the lease shall remain the same. If
these terms are acceptable to you, please acknowledge so on the blank
provided below.
ACKNOWLEDGED AND AGREED TO:
Logical Design Teal Properties
Tenant Landlord
By: By:
/S/ JAMES KENNETH BOYETTE /S/ RICHARD L. HIBBITS
---------------------------- ----------------------------
P.O. Drawer 1550 Raleigh, N.C. 27602 (919) 832-0594
E. Stephen Stroud, Individual Membership
in the Society of Industrial
and Office Realtors
[LOGO]
<PAGE>
[LOGO]
April 25, 1989
Ms. M. G. Hardy
Mr. Ken Boyette
Logical Design Company
6301 Chapel Hill Road
Raleigh, North Carolina 27607
Dear M. G. and Mr. Boyette:
On February 10, 1989, Richard Hibbits sent you a letter informing you that
the office work was complete and that your rental payments were to increase
by $196.41 per month. However, the new total monthly rental figure of
$3,291.12 was incorrect. (A copy of this letter is enclosed for your
convenience.)
Your correct monthly rental figure is $3,855.49 and became effective March 1,
1989. We have received $3,291.12 per month for the months of March and April.
Please remit an additional $1,128.74 for these months.
We apologize for any inconvenience our miscalculations may have caused. Thank
you for your assistance in this matter and please feel free to call should
you have any questions.
Sincerely,
/S/ NORMA FRENCH
Norma French
Enclosure
P.O. Drawer 1550 Raleigh, N.C. 27602 (919) 832-0594
E. Stephen Stroud, Individual Membership in the Society of Industrial
and Office Realtors
[LOGO]
<PAGE>
[LOGO]
February 10, 1989
M. G. Hardy
Ken Boyette
Logical Design Company
6301 Chapel Hill Road
Raleigh, North Carolina
Dear Ken and M.G.:
Bobbit & Associates finally sent us the bill for the office work to your
space. Based on the cost of the work that Bobbit performed, your rent will
increase by $196.41 per month beginning March 1, 1989. Your total monthly
rent at that time will be $3,291.12.
Please call me if you have any questions about these figures.
Sincerely,
Richard Hibbits
<PAGE>
[letterhead]
[Logo]
March 22, 1988
Logical Design Group, Inc.
ATTENTION: Accounts Payable
6301 Chapel Hill Road
Raleigh, North Carolina 27607
Dear Madam or Sir:
Per the terms of your lease, I would like to advise you of a rent increase
for the space occupied at 6301 Chapel Hill Road effective April 1, 1988. This
increase is based upon the Consumer Price Index and has been calculated as
follows:
CPI January, 1988 - 346.7
- -------------------------
CPI April, 1987 - 337.7 = 1.026651 x $3,014.37 (commencement rent) =
$3,094.71 NEW MONTHLY RENT
Please do not hesitate to call me should you have any questions pertaining to
the calculations. Thank you for your assistance in this matter.
Sincerely,
/S/ NORMA FRENCH
Norma French
CC: Teal Properties
P.O. Drawer 1550 Raleigh, N.C. 27602 (919) 632-0894
E. Stephen Stroud, Individual Membership in the
Society of Industrial and Office Realtors
[Logo]
<PAGE>
<TABLE>
<CAPTION>
LEASE RESUME
----- ------
<S> <C>
BUILDING: Teal Building
-------------------------------------------------- S-480
TENANT & ADDRESS: LOGICAL DESIGN GROUP, INC. CONTACT:
6301 Chapel Hill Road
Raleigh, NC 27607 PHONE: 851-1101
BUILDING SQ. FT.: ------------------------
SQ. FT. LEASED: 4,550 # OF BUILDING: ---------
-------------------------
COMMENCEMENT DATE OF LEASE: 4/1/87 Execution Dates of Lease:
---------------------
Tenant: ----------------
Landlord: --------------
TERM: 5 YEARS BEGINNING: 4/1/87 ENDING: 12/31/91
--------------- --------------- ----------------
RENT: $36,172.44/year MONTHLY: $3,014.37 P/S/F: $8.00
------------------ ----------------- -----------------
PRORATIONS: TAXES: Landlord's Responsibility
INSURANCE: " "
CAM: " "
MECHANICAL MAINTENANCE & INSPECTION COSTS: Landlord's Responsibility
INCREASES: Annual C.F.I.
OPTION TO EXTEND: 1/5 year option
-------------------------------------
TERMS: 180 day advance written notice - 7/1/91
------
INCREASES: Annual C.F.I. = 7.5% CAP
SECURITY DEPOSIT: None COMMISSION: 6% monthly - RICHARD HIBBITS
---- ---------------
COMMENTS: 1) Tenant has right of first refusal on 4/1/88 $3,094.71
adjacent space 7/1/88 $3,659.08
3/1/89 $3,855.49
4/1/90 $4,142.40
11/4/90 $5,232.90
LEASE AMENDMENT DATED MAY 23, 1988 4/1/91 $4,430.22 Init
- -------------------------------------- $1,040.00 Add'l 4/1/92 - $5,587.36
NEW RENTAL RATE: $3,659.08 ---------
NEW SQUARE FOOTAGE: 5,840 square feet (1,290 square feet added) $5,470.22
LEASE AMENDMENT DATED FEBRUARY 10, 1989
- --------------------------------------- LEASE AMENDMENT - July 13, 1990 & Nov. 15, 1990
EFFECTIVE MARCH 1, 1989 ------------------------------------------------
NEW RENTAL RATE: $3,855.49 Additional sf - 1,246 sf
Additional rent - $1,040.00
Commencement - Nov. 5, 1990
Expiration - June 30, 1993
LEASE EXTENSION - APRIL 13, 1993
- --------------------------------------
- -Exercises first 5-year option period: 7/1/93 - 6/30/98.
- -Current rental rate remains unchanged throughout
the entire term of option period. Cost of Living
adjustments called for in Lease shall not be in
effect during the option period.
- -All other terms and conditions of lease remain
unchanged.
LEASE AMENDMENT LETTER - DECEMBER 21, 1994
- ------------------------------------------
- -Tenant space increased by 1,815 sf (former IEP unit). Total - 8,901 sf.
- -Leases space as-is except for Landlord getting HVAC system operational and
closing demising wall.
- -Rent to increase by $1,250.00/month: Total of $6,837.89 per month.
- -Increase in space and rent shall be effective 1/1/95.
- -All other terms and conditions remain same.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEASE RESUME
----- ------
<S> <C>
BUILDING: Teal Building
-------------------------------------------------- S-480
TENANT & ADDRESS: LOGICAL DESIGN GROUP, INC. CONTACT:
6301 Chapel Hill Road
Raleigh, NC 27607 PHONE: 851-1101
BUILDING SQ. FT.: ------------------------
SQ. FT. LEASED: 4,550 # OF BUILDING: ---------
-------------------------
COMMENCEMENT DATE OF LEASE: 4/1/87 Execution Date of Lease:
---------------------
Tenant: ----------------
Landlord: --------------
TERM: 5 YEARS BEGINNING: 4/1/87 ENDING: 12/31/91
--------------- --------------- ----------------
RENT: $36,172.44/year MONTHLY: $3,014.37 P/S/F: $8.00
------------------ ----------------- -----------------
PRORATIONS: TAXES: Landlord's Responsibility
INSURANCE: " "
CAM: " "
MECHANICAL MAINTENANCE & INSPECTION COSTS: Landlord's Responsibility
INCREASES: Annual C.F.I.
OPTION TO EXTEND: 1/5 year option
-------------------------------------
TERMS: 180 day advance written notice - 7/1/91
------
INCREASES: Annual C.F.I. = 7.5% CAP
SECURITY DEPOSIT: None COMMISSION: 6% monthly - RICHARD HIBBITS
---- ---------------
COMMENTS: 1) Tenant has right of first refusal on 4/1/88 $3,094.71
adjacent space 7/1/88 $3,659.08
3/1/89 $3,855.49
4/1/90 $4,142.40
11/4/90 $5,232.90
LEASE AMENDMENT DATED MAY 23, 1988 4/1/91 $4,430.22 Init
- -------------------------------------- $1,040.00 Add'l 4/1/92 - $5,587.36
NEW RENTAL RATE: $3,659.08 ---------
NEW SQUARE FOOTAGE: 5,840 square feet (1,290 square feet added) $5,470.22
LEASE AMENDMENT DATED FEBRUARY 10, 1989
- --------------------------------------- LEASE AMENDMENT - July 13, 1990 & Nov. 15, 1990
EFFECTIVE MARCH 1, 1989 ------------------------------------------------
NEW RENTAL RATE: $3,855.49 Additional sf - 1,246 sf
Additional rent - $1,040.00
Commencement - Nov. 5, 1990
Expiration - June 30, 1993
LEASE EXTENSION - APRIL 13, 1993
- --------------------------------------
- -Exercises first 5-year option period: 7/1/93 - 6/30/98.
- -Current rental rate remains unchanged throughout
the entire term of option period. Cost of Living
adjustments called for in lease shall not be in
effect during the option period.
- -All other terms and conditions of lease remain
unchanged.
</TABLE>
<PAGE>
[LOGO]
April 13, 1993
Mr. Ken Boyette
Logical Design Group
6301 Chapel Hill Road
Raleigh, North Carolina
Re: Lease Extension
Dear Ken:
Thanks for your time on the phone today. The purpose of this letter is
to document the following modifications in the lease between Logical Design
Group and Teal Properties at 6301 Chapel Hill Road, Raleigh, N.C.
1. The current rental rate for the building shall remain unchanged
throughout the entire term of the tenant's first five (5) year option
period. The cost of living adjustments called for in the lease shall not
take effect during the tenant's option period.
2. Logical Design Group hereby exercises its first five (5) year
extension on the lease.
All other terms and conditions of this lease shall remain unchanged. If
these changes are acceptable to you, please acknowledge by signing on the blank
provided below. Thank you for working Carolantic Realty.
Sincerely,
/S/ RICHARD HIBBITS
Richard Hibbits
Tenant: Landlord:
Logical Design Group Teal Properties
/S/ JAMES KENNETH BOYETTE /S/ RICHARD HIBBITS
- ------------------------- -------------------------
P.O. DRAWER 1550 RALEIGH, N.C. 27602 (919) 832-0594
Individual Membership in the Society of Industrial and Office Realtors
[LOGO]
<PAGE>
LEASE RESUME
------------
BUILDING: TEAL BUILDING S-480
-------------------------------------
TENANT & ADDRESS: LOGICAL DESIGN GROUP, INC. CONTACT:
6301 Chapel Hill Road
Raleigh, NC 27607
PHONE #: 851-1101
BUILDING SQ. FT.:
--------------
SQ. FT. LEASED: 4,550 % OF BUILDING:
---------------- -------
COMMENCEMENT DATE OF LEASE: 4/1/87 Executive dates of lease:
--------------
Tenant:
------------------
Landlord:
----------------
TERM: 5 years BEGINNING: 4/1/87 ENDING: 12/31/91
-------------- -------------- ------------------
RENT: $36,172.44/year MONTHLY: $3,014.37 P/S/F: $8.00
-------------- ---------------- -------------------
PRORATIONS: TAXES: Landlord's Responsibility
INSURANCE: " "
CAM: " "
MECHANICAL MAINTENANCE & INSPECTION COSTS: Landlord's Responsibility
INCREASES: Annual C.P.I.
OPTION TO EXTEND: 1 / 5 year option
------------------------------------------
TERMS: 180 day advance written notice - 7/1/91
------
INCREASES: Annual C.P.I. - 7.5% CAP
SECURITY DEPOSIT: None COMMISSION: 6% monthly - RICHARD HIBBITS
-------------- ----------------
COMMENTS: 1) Tenant has right of first refusal on 4/1/88 $ 3094.71
adjacent space 3/1/89 $ 3855.49
4/1/90 $ 4142.90
LEASE AMENDMENT DATED MAY 23, 1988: 11/1/90 $ 5232.90
- ----------------------------------
NEW RENTAL RATE: $3,659.08
NEW SQUARE FOOTAGE: 5,840 square feet 4/1/91 4430.22 Init
(1,290 square feet added) 1040.00 Add'l
-------------
$ 5470.22
<TABLE>
<S> <C>
LEASE AMENDMENT DATED FEBRUARY 10, 1989: LEASE AMENDMENT - July 13, 1990 & Nov. 15, 1990:
- ---------------------------------------- -------------------------------------------------
EFFECTIVE MARCH 1, 1989 Additional sf - 1,246 sf
NEW RENTAL RATE: $3,855.49 Additional rent - $1,040.00 4/1/92 $ 5587.86
Commencement - Nov. 5, 1990
Expiration - June 30, 1993
</TABLE>
<PAGE>
TEAL PROPERTIES
517 Pylon Drive
Raleigh, N.C. 27606
March 20, 1991
Logical Design Group
Attention: Accounts Payable
6301 Chapel Hill Road
Raleigh, N.C. 27606
Dear Sir,
Per the terms of your lease, I would like to advise you of a rent increase for
the space occupied at 6301 Chapel Hill Road. The increase is based upon the
Consumer Price Index and has been calculated as follows:
CPI January 1991 403.1 = 1.1490578 x $3,855.49 = $4,430.22
- --------------------------
CPI April 1988 350.6
1991 Base Rate...................$4,430.22
Rent for additional space........$1,040.00
---------
New Rent.........................$5,470.22
Please make your April and future rent payments for the sum of $5,470.22.
Your next rent adjustment will be April 1992.
Please do not hesitate to give me a call at 828-5147 should you have any
questions pertaining to the calculations. Thank you for your assistance in
this matter.
Sincerely,
George R. Cox
<PAGE>
November 15, 1990
M.G. Hardy
Logical Design Group
6301 Chapel Hill Road
Raleigh, North Carolina 27607
Re: Commencement of Lease Addendum
Dear M.G.:
Thank you for your time on the phone today. This letter shall document
the commencement of the expansion space called for in the July 13, 1990 lease
addendum. Logical Design was able to get power to the new space November 5,
1990. The pro rated additional rental for the balance of November is $867.00
(25 days divided by 30 days x $1040 - $867). Beginning December 1, your
regular lease payment for the new space is $4,895.49 ($3,855.49 current rent
plus $1,283 additional rent for new space minus $243 rent on ASI space).
Thank you for working with Jake and I on your expansion needs.
Sincerely,
Richard Hibbits
RH:st
<PAGE>
MAY 23, 1988
AMENDMENT TO LEASE
LOGICAL DESIGN COMPANY, TENANT
TEAL PROPERTIES, LANDLORD
6301 Chapel Hill Road, Raleigh, North Carolina Property
The undersigned Landlord and Tenant agree to amend the above lease as follows:
1) The premises shall be enlarged according to the attached Exhibit C,
which shall add 1,290 square feet to the space.
2) The Landlord, at its sole expense, shall install a 3'0'' wide personal
door prior to July 1, 1988, in a location specified by the Tenant. The
Landlord shall be responsible for installing a demising wall as shown on
Exhibit C, as well as warehouse lighting in the Tenant's new space.
3) The base rent under the lease shall increase by $564.37 per month,
effective July 1, 1988.
All other terms and conditions of the lease shall remain the same.
LANDLORD: TENANT:
TEAL PROPERTIES LOGICAL DESIGN
BY: /S/ RICHARD HIBBITS BY: /S/ JOHN KENNETH BOYETTE
----------------------- ------------------------------
<PAGE>
[FLOORPLAN]
<PAGE>
LEASE [LOGO]
NORTH CAROLINA:
WAKE COUNTY:
THIS LEASE, made this the first day of August, 1986, by and between Teal
Properties, a North Carolina General Partnership, hereinafter "Landlord", and
Logical Design Group, Inc., a N.C. Corporation hereinafter (whether one or
more) "Tenant";
WITNESSETH:
Upon the terms and conditions hereinafter set forth, the Landlord leases
to Tenant and Tenant leases from Landlord property referred to as the Demised
Premises, all as follows:
1. DEMISED PREMISES. The property hereby leased to Tenant is that area
shown on Exhibit A hereto attached, which consists of approximately 4550
square feet, which is located in what is sometimes called the Logical Design
Building, located at Chapel Hill Road, Raleigh, Wake County, North Carolina,
together with such common spaces in the building and on the lot where the
building is located as are hereinafter specified (but none other), which
leased property is herein referred to as the Demised Premises.
2. TERM. This lease shall commence on the earlier of the date that
Tenant takes possession of any part of the Demised Premises or December 23,
1986, whichever first occurs, and shall terminate (unless extended as herein
provided) at midnight on December 31, 1991. Providing that Tenant not be in
default under any of the provisions hereof, and provided further that Tenant
give Landlord one hundred eighty (180) days advance written notice of intent
to do so. Tenant shall have the right to extend this lease for an additional
period of five years, at a rental rate determined as provided under
Paragraphs 4 and 5.
3. USE. Tenant may use the Demised Premises for Electronic design &
assembly purposes, but for none other without Landlord's prior written
consent, but in no event shall Tenant make any use of the property which is
in violation of any lawful governmental laws, rules or regulation insofar as
they might relate to Tenant's use and occupancy of the premises, nor may
Tenant make any use of the premises not permitted by any restrictive
covenants which apply to the Demised Premises, or which is or might
constitute a nuisance, or which increases the fire insurance premiums (or
makes such insurance unavailable to Landlord) on the building. Tenant shall
not permit its agents, employees, or invitee's to place excessive loads on
the parking lots and drives, the maximum load for any vehicle shall not
exceed eight (8) KIPS per axle for vehicles parking in the customer parking
area, and twelve (12) KIPS per axle for vehicles in the truck loading areas.
4. RENT. All rent payable by Tenant shall be without previous demand
therefor by Landlord, and without setoff or deduction. The Minimum Rent for
the term shall be the sum of $36,172.44 per year which rent shall be payable
in equal monthly installments of $3014.37 per month payable on or before the
first day of each calendar month during the term of this lease, unless the
term commences other than on the first day of the month, in which event rent
at the above rate until the end of that month shall be due and payable on the
commencement date. In addition to such remedies as may by provided under the
Default provisions of this lease, Landlord shall be entitled to a late charge
of two (2%) per cent of the amount of the monthly rent if not received when
due, and a charge of five (5%) per cent of the rent for any check given by
Tenant not paid when first presented by Landlord.
5. ADDITIONAL RENT. For each twelve month period following the preceding
twelve full months of the lease, Tenant shall pay as Additional Rent any such
amounts as may be necessary to bring the purchasing power of the Minimum Rent
to a level equivalent to that of the first twelve months of the Term ("Cost
of Living Increase"). The Cost of Living Increase shall be determined by
multiplying the Minimum Annual Rent by a fraction, the denominator of which
is the Consumer Price Index for All Urban Consumers-U.S. City Average
(1967=100), all Items, as published by the Bureau of Labor Statistics, U.S.
Department of Labor, for the month of commencement of the Term, and the
numerator of which is said Price Index for the third month immediately
preceding the twelve month term just concluding. Landlord shall notify Tenant
in writing, giving calculations of the amount of Additional Rent, which
Additional Rent shall be payable at the same time as, and in addition to
Minimum Rent, with Minimum Rent at no time to be less than stated in
Paragraph 4. Tenant shall further pay as Additional Rent any sales or use tax
imposed on rents collected by Landlord (other than City, State or Federal
Income Tax), or any tax or rents in lieu of ad valorem taxes on the building,
even though laws imposing such taxes attempt to require the Landlord to pay
the same. Increases under this clause shall be limited to a maximum 7.5% in
any one year.
6. SERVICES BY LANDLORD. Landlord shall cause to be furnished to the
premises in common with other Tenants, during reasonable business hours,
Monday through Friday (excluding national or state holidays), the following
services: Common area maintenance, roof & exterior maintenance, cold water
for dome uses, Real Estate taxes, Real Estate Insurance, and Mechanical
maintenance.
<PAGE>
7. UTILITIES. Tenant shall pay promptly and before any delinquency for
non-payment occurs all charges for utilities serving the demised premises,
including without limitation, electricity, gas, sewer, and/or oil bills, and
in the event that any utilities are not separately metered for Tenant, Tenant
shall pay its proper pro-rata portion of such utilities in common with others
using off the same meter, provided that on request of Landlord or Tenant,
Tenant's use of any particular utility shall be determined by appropriate
survey of Tenant's equipment, by monitoring of submeters, or other method
fairly evaluating Tenant's use, and after such determination Tenant's charges
for utilities uses surveyed shall be adjusted in accordance with such
determinations. Tenant shall in such case have the option as to future
charges to have installed at its expense separate meters for the utilities in
questions.
8. TENANT'S ACCEPTANCE AND MAINTENANCE OF PREMISES. Tenant or occupancy
of the Demised Premises represents to the Landlord that it has examined and
inspected the same, finds them to be as represented by the Landlord and
satisfactory for Tenant's intended use, and evidences Tenant's acceptance "as
is". Landlord makes no representation or warranty as to the condition of said
Demised Premises. Tenant shall maintain (and so deliver at the end of the
Lease) each and every part of the Demised Premises (excluding exterior
drives, walks and parking areas and common areas in the building to be
maintained by Landlord) in good repair and condition, and shall make at
Tenant's sole cost and expense such replacements, restorations, renewals or
repairs, in quality equivalent or better than the original work replaced, as
may be required to so maintain the same ordinary wear and tear only excepted.
Tenant, however, shall make no structural or interior alterations of the
Demised Premises without Landlord's prior written consent, and any work
performed by Tenant shall be done in a good and workmanlike manner, and so as
not to disturb or inconvenience other Tenants in the building. Tenant shall
not at any time permit any work to be performed on the Demised Premises
except by duly licensed contractors or artisans, each of whom must carry
general public liability insurance, certificates of which shall be furnished
by Landlord. At no time may Tenant do any work that results in a claim of
lien against Landlord, and if requested by Landlord on termination of the
lease or vacation of the Premise by Tenant. Tenant shall restore at Tenant's
sole expense the premises to the same condition as existed at the
commencement of the term, ordinary wear and tear only excepted. Landlord,
however, may elect to require Tenant to leave alterations performed by it.
9. DESTRUCTION OF PREMISES. If the Demised Premises are destroyed by fire
or other casualty not resulting from the wrongful or negligent act of Tenant,
either Landlord or Tenant may by written notice given not later than thirty
(30) days after the date of such destruction, terminate this lease, in which
event rent paid for period beyond the date of destruction shall be refunded
to Tenant. If there is not total destruction and Tenant reasonably is
required to close its operations during repairs, rent shall abate while so
closed, but if Tenant is able to continue its operations during repairs, rent
shall be adjusted and prorated in the proportion which the area of unusable
leased space bears to the total Demised Premises, providing that Landlord
shall not in such case have any liability for losses claimed by Tenant.
However, if the damages are such that Landlord concludes that restoration
cannot be completed within one hundred fifty (150) days, Landlord may at its
option terminate this lease. If the premises are damaged by cause due to
fault or neglect of Tenant, its agents, employees, invitees, or licensees,
Landlord may repair such damage without prejudice to subrogation rights of
Landlord's insurer, and there shall be no apportionment or abatement of rent.
10. ASSIGNMENT - SUBLEASE. Tenant may not assign or encumber this lease,
and may not sublet any part or all of the Demised Premises without the
written consent of Landlord first had and obtained, which Landlord shall not
unreasonably withhold. Any assignment or sublease to which Landlord may
consent (one consent not being any basis to contend that Landlord should
consent to a further change) shall not relieve Tenant of all of its
obligations hereunder. In no event shall this lease be assignable by
operation of any law, and Tenant's rights hereunder may not become, and shall
not be listed by Tenant, as an asset under any bankruptcy, insolvency or
reorganization proceedings. Tenant is not, may not become, and shall never
represent itself to be an agent of Landlord, and Tenant expressly recognizes
that Landlord's title is paramount, and that it can do nothing to affect or
impair Landlord's title.
11. TENANT'S COMPLIANCE - PROPERTY. Tenant shall comply with all
applicable laws, ordinances and regulations affecting the Demised Premises,
including general rules for Tenants as may be developed from time to time by
Landlord and delivered to Tenant or posted on the premises, and shall hold
Landlord harmless from loss, cost or expense resulting from or occasioned by
Tenant's use of the Demised Premises, whether caused by Tenant or by its
agents, servants, employees, independent contractors or licensees. Tenant
shall maintain and care for its personal property on the premises, insure the
same to such extent as it deems appropriate, and shall neither have nor make
any claim against Landlord for any loss or damage to the same, regardless of
the cause therefor, Tenant shall maintain throughout the term of this lease
general public liability insurance in amounts acceptable to Landlord and naming
Landlord as an insured party, and shall furnish Landlord copies of such
policies and evidence of payment of premiums prior to the date such policies
would be in default of nonpayment.
12. SUBORDINATION - ATTORNMENT. This lease shall be deemed subject and
subordinate to any mortgage which may heretofore or hereafter be executed by
Landlord covering the building and land upon which the building is located,
unless the mortgagee request that this lease be superior to its mortgage. In
the event any proceedings are brought for foreclosure of any mortgage on the
premises, Tenant will attorn to the purchaser at a foreclosure sale and
recognize such purchaser as Landlord, providing purchaser agrees not to
disturb Tenant's possession so long as it is not in default under the terms
of this lease. Tenant shall execute at Landlord's request, and within five
(5) days thereof instruments evidencing the subordinate position of this
Lease, and as often as requested shall sign estoppel certificates setting
forth the date it accepted possession, that it occupies the premises, the
termination date of its lease, and date of which rent has been paid and the
amount of monthly rent in effect as of such certification, whether or not it
has any defense or offset to the enforcement of the lease, any knowledge it
has of any default or breach by Landlord, and that the lease is in full force
and effect except as to modifications, agreements or amendments thereto,
copies of each of which shall be attached to the certificate. If Landlord
seeks a loan on the demised premises, and the proposed mortgagee requires as
a condition of making the loan that his lease be modified Tenant agrees to
enter into such modification agreement providing that the same does not
increase the charges to Tenant, does not vary the area demised, and does not
change the term of Tenant's lease.
13. SIGNS. Tenant may not erect, install or display any sign or
advertising material upon the demised premises, the walls thereof, or in any
window therein, without the prior written consent of Landlord.
14. ACCESS TO PREMISES. Landlord shall have the right, either itself or
through its authorized agents, to enter the Demised Premises at all
reasonable times to examine the same, to show them to prospective Tenants for
other spaces in the building, or for the Demised space if within one hundred
eighty (180) days of the termination date hereof (notice to extend not having
been given), to allow inspection by mortgagees, and to make such repairs,
alterations or changes as Landlord deems necessary. Tenant, its agents,
employees, invitees and guests,
2
<PAGE>
shall have the right of ingress and egress to common and public areas of the
building, provided Landlord by reasonable regulation may control such access
for the comfort, convenience and protection of all Tenants in the building.
15. DEFAULT. If Tenant fails to pay all Rent as provided in this lease
within ten (10) days of its due date, breaches any other agreement or
obligation herein set forth, files (or has filed against it) any petition or
action for relief under any creditor's law (including bankruptcy,
reorganization, or similar actions), either in state or federal court, then
in addition to any other lawful right or remedy which it may have, Landlord
may do the following: (a) declare the rent for the balance of the term
immediately due and payable, and collect the same by distress or otherwise;
(b) seize and hold any personal property of Tenant located on the Demised
Premises and assert against the same a lien for monies due Landlord; (c)
without obtaining any court authorization, lock up the Demised Premises and
deny Tenant access thereto; (d) terminate this lease, or repossess the
Demised Premises, and with or without terminating, relet the same at such
amount as Landlord deems reasonable, and if the amount is less than Tenant's
rent, Tenant shall immediately pay the difference on demand to Landlord, but
if in excess of Tenant's rent, the entire amount shall belong to Landlord
free of any claim of Tenant thereto. All expenses of Landlord in repairing,
restoring or altering the premises for reletting, together with expenses in
seeking and obtaining a new Tenant, shall be charged to and a liability of
Tenant.
16. QUIET ENJOYMENT. If Tenant promptly and punctually complies with
each of its obligations hereunder, it shall peacefully have and enjoy the
possession of the Demised Premises during the term herein providing that no
action of Landlord in work in other space in the building, or in repairing or
restoring the leased space, shall be deemed a breach of this covenant, or
give Tenant any right to modify this lease either as to term, rent payable,
or other obligations to perform. However, Landlord shall not be responsible
or liable to Tenant for injury or damage resulting from acts or omissions of
persons occupying property adjacent to the demised premises or any part of
the building in which the demised premises are a part, or for injury or
damage resulting to Tenant or its property from bursting, stoppage or leaking
of water, gas, sewer or steam pipes, except where such loss or damage arises
from the wilful or negligent misconduct of Landlord, or from failure of
Landlord to make repairs it is obligated hereunder to make.
17. SECURITY DEPOSIT. Landlord acknowledges receipt from Tenant of the
sum of NONE, which sum Landlord shall retain as security for the performance
by Tenant of each of its obligations hereunder. If Tenant fails at any time
to perform its obligations Landlord may at its option apply said deposit, or
so much thereof as is required, to cure Tenant's default, but if prior to the
termination of this lease Landlord depletes said deposit in whole or in part,
Tenant shall immediately restore the amount so used by Landlord. This deposit
shall not bear interest, and unless the Landlord uses the same to cure a
default of Tenant, or to restore the premises to the condition that Tenant is
required to leave them at the conclusion of the term, Landlord shall within
thirty (30) days of the termination of the lease refund so much of the
deposit as it continues to hold to Tenant.
18. NOTICES. Any notices which Landlord or Tenant is required or desires
to give to other shall be deemed sufficiently given or rendered if, in
writing, is delivered personally, or sent by certified or registered mail,
postage prepaid, to the address listed after the respective signatures on the
last page of this lease. Any notice given herein shall be deemed delivered
when the return receipt therefor is signed, or refusal to accept the mailing
by the addressee is noted thereon by the postal authorities.
19. COMMISSION. The Landlord agrees to pay Carolantic Realty, Inc. a
commission for securing this lease of percent ( %) of the monthly rent as
it is collected. Carolantic Realty, Inc. shall be responsible for collecting
rent and forwarding to Landlord the portion of the rent due him within five
work days after receiving the rent.
21. CONDEMNATION. If the whole or as much as twenty (20%) per cent of
the demised premises is taken by any governmental agency or corporation
vested with the right of exercise of eminent domain, whether such taking be
effected by Court action or by settlement with the agency exercising or
threatening to exercise such power and if the property so taken renders the
remainder of said property unfit for the use thereof by Tenant, then Tenant
shall have the option to terminate this lease, which option must be exercised
within sixty (60) days of such taking. If the Tenant shall not so elect to
terminate, or if the taking does not interfere with Tenant's use of the
premises to the extent Tenant does not have an option to terminate, there
shall be an adjustment of the annual rental reflecting on a pro-rata basis
any reduction in Tenant's leased space. All of the condemnation award except
for damage to or the taking of Tenant's personal property and Tenant's
relocation award, if any, shall be the Landlord's.
<PAGE>
22. OTHER CONDITIONS:
1. The tenant shall have fifteen days after receipt of written notice by
Landlord to rent adjacent space in the building at the same terms and
conditions as it is being offered to other parties. This is a right of first
refusal on the adjacent space, which the tenants shall waive on each
occurrence if vacant space if it does not notify the Landlord in writing
within the fifteen day period stipulated above.
2. The Landlord agrees to construct a commercial building at the southwest
corner of Germanntown Road on NC-54 according to the plans called Exhibit A
and to construct interior improvements having 36% office space, 44%
production space, and 20% open office space within the area of the building
shown by Exhibit B and being the same quality and finish as the tenants Pylon
Park facility for each area.
23. MISCELLANEOUS. Headings of paragraphs are for convenience only and shall
not be considered in construing the meaning of the contents of such
paragraph. The invalidity of any portion of this lease shall not have any
effect on the balance hereof. Should Landlord institute any legal proceedings
against Tenant for breach of any provision herein contained, and prevail in
such action, Tenant shall in addition be liable for the costs and expenses of
Landlord, including its reasonable attorney's fees. This agreement shall be
binding upon the respective parties hereto, and upon their heirs, executors,
successors and assigns. This agreement supersedes and cancels all prior
negotiations between the parties, and changes shall be in writing signed by
the party affected by such change. Linings on drapes visible from the
exterior shall be of a color approved by Landlord. Landlord reserves the
right to promulgate (and change from time to time) regulations it deems
appropriate for the common use and benefit of all tenants, with which
regulations Tenant shall comply. Landlord may sell the premises without
affecting the obligations of Tenant hereunder. This lease may not by recorded
without Landlord's prior consent, but Tenant agrees on request of Landlord to
execute a memorandum hereof for recording purposes. The singular shall
include the plural, and the masculine or neuter includes the other.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
duplicate originals, all as of the day and year first above written.
TENANT: LANDLORD:
Logical Design Group, Inc. Teal Properties
- ---------------------------------- -----------------------------------
by: /s/ James Kenneth Boyett By: /s/ Jack A. Williamson
- ---------------------------------- -----------------------------------
- ----------------------------(SEAL) -----------------------------(SEAL)
- ----------------------------(SEAL) -----------------------------(SEAL)
ADDRESS: ADDRESS:
P O BOX 33812 P.O. Box 1550
RALEIGH, NC Raleigh, NC 27602
27606
ATTEST: ATTEST:
- ---------------------------------- -----------------------------------
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I, __________________________, a notary public of ______________________ County
<PAGE>
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I, __________________________, a notary public of ______________________ County
North Carolina hereby certify that ___________________________________ appeared
personally before me this ______ day of ______________________ and acknowledges
the due execution of the foregoing agreement.
My commission expires _________________________________________________________
Notary
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I, __________________________, a notary public of ______________________ County
North Carolina hereby certify that ___________________________________ appeared
personally before me this ______ day of ______________________ and acknowledges
the due execution of the foregoing agreement.
My commission expires _________________________________________________________
Notary
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<PAGE>
Exhibit 10.L
[LOGO]
March 13, 1996
Mr. Bob Harris
Equity Growth Investments
P.O. Box 1730
LaMesa, CA 91944
RE: OPTION TO EXTEND LEASE FOR BERG SYSTEMS INTERNATIONAL
Dear Bob:
On behalf on Berg Systems International, I have been authorized to submit to
you this Letter of Notification that Berg Systems is overriding their option
to renew their lease at 2365 Camino Vida Roble for a period of one year
commencing August 1, 1996. The monthly rental payment during this period, in
accordance with the lease options, will be $6,521.00.
Also, your attention to the parking and truck traffic situation in the
complex is greatly appreciated. Please let us know when you come up with an
equitable solution that will benefit all the tenants in the complex.
If you have any questions, please feel free to contact me.
Sincerely,
LEE & ASSOCIATES
COMMERCIAL REAL ESTATE SERVICES
/s/ Kent A. Moore
- ---------------------
Kent A. Moore
Vice President
AGREED TO AND ACCEPTED BY:
/s/ John W. Berg 3/13/96
- -------------------------------------------- -------------------
Berg Systems International Date
/s/ Bob Harris 3/26/96
- -------------------------------------------- -------------------
Equity Growth Investments Date
<PAGE>
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
JANUARY 18, 1994, is made by and between EQUITY GROWTH INVESTMENTS, A
CALIFORNIA GENERAL PARTNERSHIP ("LESSOR") and BERG SYSTEMS INTERNATIONAL,
INC., A SUBSIDIARY OF S.B.S. ENGINEERING, INC. A NEW MEXICO CORPORATION
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").
1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this
Lease, commonly known by the street address of 2265 CAMINO VIDA ROBLE,
located in the City of CARLSBAD, County of SAN DIEGO, State of CALIFORNIA,
with zip code 92009, as outlined on Exhibit "A" attached hereto ("PREMISES").
The "Building" is that certain building containing the Premises and generally
described as (describe briefly the nature of the Building): THE NORTHERLY
PORTION OF THE BUILDING, APPROXIMATELY 12,303 SQUARE FEET (SEE EXHIBIT "A").
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have
any rights to the roof, exterior walls or utility raceways of the Building or
to any other buildings in the Industrial Center. The Premises, the Building,
the Common Areas, the land upon which they are located, along with all other
buildings and improvements thereon, are herein collectively referred to as
the "INDUSTRIAL CENTER." (Also see paragraph 2.)
1.2(b) PARKING: THIRTY-SIX (36) unreserved vehicle parking spaces
("UNRESERVED PARKING SPACES"); and ZERO (0) reserved vehicle parking spaces
("RESERVED PARKING SPACES"). (Also see Paragraph 2.6)
1.3 Term: 2 years and 3 months ("ORIGINAL TERM") commencing UPON
COMPLETION OF TENANT IMPROVEMENTS BUT NOT LATER THAN MARCH 15, 1994.
("COMMENCEMENT DATE") and ending TWO (2) YRS & THREE (3) MONTHS THEREAFTER
("EXPIRATION DATE"). (Also see Paragraph 3.)
1.4 EARLY POSSESSION: ("EARLY POSSESSION DATE"). (Also see
Paragraphs 3.2 and 3.3.)
1.5 BASE RENT: $6,773.00 per month ("BASE RENT"), payable on the FIRST
(1ST) day of each month commencing (Also see Paragraph 4.)
/X/ If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum 49-A attached hereto.
1.6(a) BASE RENT PAID UPON EXECUTION: $6773.00 as Base Rent for the
period OF THE FIRST (1ST) MONTH OF THE LEASE.
1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: SEVENTEEN &
3/10th PERCENT (17. 3/10ths%) ("LESSEE'S SHARE") as determined by /X/
prorata square footage of the Premises as compared to the total square
footage of the Building or / / other criteria as described in Addendum .
1.7 SECURITY DEPOSIT: $6,890.00 ("SECURITY DEPOSIT"). (Also see
Paragraph 5).
1.8 PERMITTED USE: DESIGNING, WAREHOUSING AND DISTRIBUTION OF PRINTED
CIRCUIT BOARDS. ("PERMITTED USE") (Also see Paragraph 8.)
1.9 INSURING PARTY. Lessor is the "INSURING PARTY." (Also see Paragraph
8.)
1.10(a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
/X/ VOIT COMMERCIAL BROKERAGE represents Lessor exclusively ("LESSOR'S
BROKER");
/X/ GRUBB & ELLIS BROKERAGE COMPANY represents Lessee exclusively
("LESSEER'S BROKER"); or
/ / _________________________________ represents both Lessor and Lessee ("DUAL
AGENCY"). (Also see Paragraph 15.)
1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate
shares as they may mutually designate in writing, a fee as set forth in a
separate written agreement between Lessor and said Broker(s) (or in the event
there is no separate written agreement between Lessor and said Broker(s), the
sum of $______) for brokerage services rendered by said Broker(s) in connection
with this transaction.
1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by S.B.S. ENGINEERING, INC. A NEW MEXICO CORPORATION
("GUARANTOR"). (Also see Paragraph 37.)
1.12 ADDENDA AND EXHIBITS. Attached Thereto is an Addendum or Addenda
consisting of Paragraphs A through C, and Exhibits A through C, all of which
constitute a part of this Lease.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.5(b)) based thereon
is not subject to revision whether or not the actual square footage is more
or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, electrical systems, fire sprinkler system, lighting, air
conditioning and heating systems and loading doors, if any, in the Premises,
other than those instructed by Lessee, shall be in good operating condition
on the Commencement Date. If a non-compliance with said warranty exists as of
the Commencement Date, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify same
at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within (30) days after the Commencement
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement
Date. Lessor further warrants to Lessee that Lessor has no knowledge of any
claim having been made by any governmental agency that a violation or
violations of applicable building codes, regulations, or ordinances exist
with regard to the Premises as of the Commencement Date. Said warranties
shall not apply to any Alterations or Utility Installations (defined in
Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not comply
with said warranties, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee given within six
(6) months following the Commencement Date and setting forth with specificity
the nature and extent of such non-compliance, take such action, at Lessor's
expense) as may be reasonable or appropriate to rectify the non-compliance.
Lessor makes no warranty that the Permitted Use in Paragraph 1.8 is permitted
for the Premises under Applicable Laws (as defined in Paragraph 2.4)
2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances, and
regulations and any covenants or restrictions of record (collectively.
"APPLICABLE LAWS") and the present and future suitability of the Premises
for Lessee's intended use; (b) that Lessee has made such investigation as it
deems necessary with reference to such matters, is satisfied with reference
thereto, and assumes all responsibility therefore as the same relate to
Lessee's occupancy of the Premises and/or the terms of this Lessee; and (c)
that neither Lessor, nor any of Lessor's agents, has make any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the
date forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises.
In such event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
* Lessor shall warranty the air conditioning and heating system against
major repairs for the XXXXXXXXXXXXXXXXXXXX of the lease.
<PAGE>
2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in
Paragraph 1.2(b) on those portions of the Common Areas designated from time
to time by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by vehicles no
larger than full-size passenger automobiles or pick-up trucks, herein called
"Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles shall
be parked and loaded or unloaded as directed by Lessor in the Rules and
Regulations (as defined in Paragraph 40) issued by Lessor. (Also see
Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
(c) Lessor shall at the Commencement Date of this Lease, provide
the parking facilities required by Applicable Law.
2.7 COMMON AREAS--DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary
line of the Industrial Center and interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.8 COMMON AREAS--LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive
right to use, in common with others entitled to such use, the Common Areas as
they exist from time to time, subject to any rights, powers, and privileges
reserved by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or
permanently, in the Common Areas. Any such storage shall be permitted only by
the prior written consent of Lessor or Lessor's designated agent, which
consent may be revoked at any time. In the event that any unauthorized
storage shall occur then Lessor shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Lessee, which cost shall be immediately
payable upon demand by Lessor.
2.9 COMMON AREAS--RULES AND REGULATIONS. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable Rules and Regulations with respect
thereto in accordance with Paragraph 40. Lessee agrees to abide by and
conform to all such Rules and Regulations, and to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.
2.10 COMMON AREAS--CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and
(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as Lessor
may, in the exercise of sound business judgment, deem to be appropriate.
3. TERM.
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 an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation
to pay Base Rent shall be shall be abated for the period of such early
occupancy. All other terms of this Lease, however, (including but not limited
to the obligations to pay Lessee's Share of Common Area Operating Expenses
and to carry the insurance required by Paragraph 8) shall be in effect during
such period. Any such early possession shall not affect nor advance the
Expiration Date of the Original Term.
3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by
the Commencement Date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease, or the obligations
of Lessee hereunder, or extend the term hereof, but in such case, Lessor shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of the Lease until Lessor
delivers possession of the Premises to Lessee. If possession of the Premises
is not delivered to Lessee within sixty (60) days after the Commencement
Date, Lessee may, at its option, by notice in writing to Lessor within ten
(10) days after the end of said sixty (60) day period, cancel this Lease, in
which event the parties shall be discharged from all obligations hereunder;
provided further, however, that if such written notice of Lessee is not
received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease hereunder shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the Original Term
actually commences, if possession is not rendered to Lessee when required by
this Lease and Lessee does not terminate this Lease, as aforesaid, the period
free of the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue
for a period equal to the period during which the Lessee would have otherwise
enjoyed under the terms hereof, but minus any days of delay caused by the
acts, changes or omissions of Lessee.
4. RENT.
4.1 BASE RENT. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of
the United States, without offset or deduction, on or before the day on which
it is due under the terms of this Lease. Base Rent and all other rent and
charges for any period during the term hereof which is for less than one full
month shall be prorated based upon the actual number of days of the month
involved. Payment of Base Rent and other charges shall be made to Lessor at
its address stated herein or to such other persons or at such other addresses
as Lessor may from time to time designate in writing to Lessee.
-2-
<PAGE>
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security
for Lessee's faithful performance of Lessee's obligations under this Lease.
If Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor
may use, apply or retain all or any portion of said Security Deposit for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
liability, cost, expense, loss or damage (including attorney's fees) which
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all
or any portion of said Security Deposit, Lessee shall within ten (10) days
after written request therefore deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease. Any
time the Base Rent increases during the term of this Lease, Lessee shall, upon
written request from Lessor, deposit additional monies with Lessor as an
addition to the Security Deposit so that the total amount of the Security
Deposit shall at all times bear the same proportion to the then current Base
Rent as the initial Security Deposit bears to the initial Base Rent set forth
in Paragraph 1.5. Lessor shall not be required to keep all or any part of the
Security Deposit separate from its general accounts. Lessor shall, at the
expiration or earlier termination of the term hereof and after Lessee has
vacated the Premises, return to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest herein), that portion of the Security
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in
writing by Lessor, no part of the Security Deposit shall be considered to be
held in trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease. In the event
that Lessor loses its interest in the property through foreclosure, the
security deposit shall be applied to the last month of rent.
6. USE.
6.1 PERMITTED USE.
(a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants,
and by prospective assignees and subtenants of Lessee, its assignees and
subtenants, for a modification of said Permitted Use, so long as the same
will not impair the structural integrity of the improvements on the Premises
or in the Building or the mechanical or electrical systems therein, does not
conflict with uses by other lessees, is not significantly more burdensome to
the Premises or the Building and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business days after such request give a
written notification of same, which notice shall include an explanation of
Lessor's reasonable objections to the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material
or waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
Substances without the express prior written consent of Lessor and compliance
in a timely manner (at Lessee's sole cost and expense) with all Applicable
Requirements (as defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i)
the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with,
any governmental authority, and (iii) the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Laws
require that a notice be given to persons entering or occupying the Premises
or neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but upon notice to Lessor and in compliance with all
Applicable Requirements, use any ordinary and customary materials reasonably
required to be used by Lessee in the normal course of the Permitted Use, so
long as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may (but without
any obligation to do so) condition its consent to any Reportable Use of any
Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to
protect itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited
to the installation (and, at Lessor's option, removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the
deposit of an additional Security Deposit under Paragraph 5 hereof.
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under
or about the Premises or the Building, other than as previously consented to
by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding
given to, or received from, any governmental authority or private party
concerning the presence, spill, release, discharge of, or exposure to, such
Hazardous Substance including but not limited to all such documents as may be
involved in any Reportable Use involving the Premises. Lessee shall not cause
or permit any Hazardous Substance to be spilled or released in, on, under or
about the Premises (including, without limitation, through the plumbing or
sanitary sewer system).
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, and
the Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or statement thereof, or of
any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.
6.3 LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with
all "APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all
laws, rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene,
(ii) environmental conditions on, in, under or about the Premises, including
soil and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage,
spill, or release of any Hazardous Substance), now in effect or which may
hereafter come into effect. Lessee shall, within five (5) days after receipt
of Lessor's written request, provide Lessor with copies of all documents and
information, including but not limited to permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with
any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or
report pertaining to or involving failure by Lessee or the Premises to comply
with any Applicable Requirements.
6.4 INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("LENDERS") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this
Lease and all Applicable Requirements (as defined in Paragraph 6.3), and
Lessor shall be entitled to employ experts and/or consultants in connection
therewith to advise Lessor with respect to Lessee's activities, including but
not limited to Lessee's installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance on or from the Premises.
The costs and expenses of any such inspections shall be paid by the party
requesting same, unless a Default or Breach of this Lease by Lessee or a
violation of Applicable Requirements or a contamination, caused or materially
contributed to by Lessee, is found to exist or to be imminent, or unless the
inspection is requested or ordered by a governmental authority as the result
of any such existing or imminent violation or contamination. In such case,
Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case
may be, for the costs and expenses of such inspections.
7. MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation). Lessee shall,
at Lessee's sole cost and expense and at all times, keep the Premises and
every part thereof in good order, condition and repair (whether or not such
portion of the Premises requiring repair, or the means of repairing the same,
are reasonably or readily accessible to Lessee, and whether or not the need
for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, without
limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air
conditioning, ventilating, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire hose connections if within the Premises,
fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights, but excluding any items
which are the responsibility of Lessor pursuant to Paragraph 7.2 below.
Lessee, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices. Lessee's obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance
for and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation
system for the Premises. However, Lessor reserves the right, upon notice to
Lessee, to procure and maintain the contract for the heating, air
conditioning and ventilating systems, and if Lessor so elects, Lessee shall
reimburse Lessor, upon demand, for the cost thereof.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case
no notice shall be required), perform such obligations on Lessee's behalf,
and put the Premises in good order, condition and repair, in accordance with
Paragraph 13.2 below.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation). Lessor, subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if
located in the Common Areas) or other automatic fire extinguishing system
including fire alarm and/or smoke detection
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systems and equipment, fire hydrants, parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common
Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor
shall not be obligated to paint the exterior or interior surfaces of exterior
walls nor shall Lessor be obligated to maintain, repair or replace windows,
doors or plate glass of the Premises. Lessee expressly waives the benefit of
any statute now or hereafter in effect which would otherwise afford Lessee
the right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the Building, Industrial Center or Common
Areas in good order, condition and repair.
7.3 UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without
doing material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about
the Premises without Lessor's prior written consent. Lessee may, however,
make non-structural Utility Installations to the Interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or
changing or interfering with the fire sprinkler or fire detection systems and
the cumulative cost thereof during the term of this Lease as extended does
not exceed $2,500.00.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given
by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all
applicable permits required by governmental authorities; (ii) the furnishing
of copies of such permits together with a copy of the plans and
specifications for the Alteration or Utility Installation to Lessor prior
to commencement of the work thereon; and (iii) the compliance by Lessee with
all conditions of said permits in a prompt and expeditious manner. Any
Alterations or Utility Installations by Lessee during the term of this Lease
shall be done in a good and workmanlike manner, with good and sufficient
materials, and be in compliance with all Applicable Requirements. Lessee
shall promptly upon completion thereof furnish Lessor with as-built plans and
specifications therefor. Lessor may, (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation
that costs $2,500.00 or more upon Lessee's providing Lessor with a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such Alteration or Utility Installation.
(c) LIEN PROTECTION. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in, on, or about the Premises, and Lessor
shall have the right to post notices of non-responsibility in or on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense, defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof against the Lessor or the Premises. If
Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to one and one-half times the
amount of such contested lien claim or demand, indemnifying Lessor against
liability for the same, as required by law for the holding of the Premises
free from the effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's attorneys' fees and costs in participating in such
action if Lessor shall decide it is to its best interest to do so.
7.4 OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in
this Paragraph 7.4, all Alterations and Utility Installations made to the
Premises by Lessee shall be the property of and owned by Lessee, but
considered a part of the Premises. Lessor may, at any time and at its option,
elect in writing to Lessee to be the owner of all or any specified part of
the Lessee-Owned Alterations and Utility Installations. Unless otherwise
instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and
Utility Installations shall, at the expiration or earlier termination of this
Lease, become the property of Lessor and remain upon the Premises and be
surrendered with the Premises by Lessee.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed
by the expiration or earlier termination of this Lease, notwithstanding that
their installation may have been consented to by Lessor. Lessor may require
the removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under
this Lease. Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
Installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water
contaminated by Lessee, all as may then be required by Applicable
Requirements and/or good practice. Lessee's Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee subject to its obligation
to repair and restore the Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF 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 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, increased valuation of the
Premises, and/or 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 lessee of the Building. If the
parties insert a dollar amount in Paragraph 1.9, such amount shall be
considered the "BASE PREMIUM." If a dollar amount has not been inserted in
Paragraph 1.9 and if the Building has been previously occupied during the
twelve (12) month period immediately preceding the Commencement Date, the
"Base Premium" shall be the annual premium applicable to such twelve (12)
month period. If the Building was not fully occupied during such twelve (12)
month period, 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 $1,000,000 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 Commencement Date or Expiration Date.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of
the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence
with an "Additional Insured-Managers or Lessors of Premises" endorsement and
contain the "Amendment of the Pollution Exclusion" endorsement for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an "INSURED CONTRACT" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.
8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and to any Lender(s), insuring against loss or
damage to the Premises. Such insurance shall be for full replacement cost, as
the same shall exist from time to time, or the amount required by any
Lender(s), but in no event more than the commercially reasonable and
available insurable value thereof if, by reason of the unique nature or age
of the improvements involved, such latter amount is less than full
replacement cost. Lessee-Owned Alterations and Utility Installations, Trade
Fixtures and Lessee's personal property shall be insured by Lessee pursuant
to Paragraph 8.4. If the coverage is available and commercially appropriate,
Lessor's policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required
by a Lender or included in the Base Premium), including coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Building
required to be demolished or removed by reason of the enforcement of any
building, zoning, safety or land use laws as the result of a covered loss,
but not including plate glass insurance. Said policy or policies shall also
contain an agreed valuation provision in lieu of any co-insurance clause,
waiver of subrogation, and inflation guard protection causing an increase in
the annual property insurance coverage amount by a factor of not less than
the adjusted U.S. Department of Labor Consumer Price Index for All Urban
Consumers for the city nearest to where the Premises are located.
(b) RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s), insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area
Operating Expenses and any scheduled rental increases). Said insurance may
provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide
for one full year's loss of rental revenues from the date of any such loss.
Said insurance shall contain an agreed valuation provision in lieu of any
co-insurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected rental income, Real Property Taxes, insurance premium
costs and other expenses, if any, otherwise payable, for the next 12-month
period. Common Area Operating Expenses shall include any deductible amount in
the event of such loss. The cost of such insurance shall be paid solely by
Lessor.
(c) ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by
Lessee's acts, omissions, use or occupancy of the Premises.
Initials: /s/ SSD
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MULTI-TENANT-GROSS
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(d) LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party, Lessor
shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's
option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures and
Lessee-Owned Alterations and Utility Installations in, on, or about the
Premises similar in coverage to that carried by Lessor as the Insuring Party
under Paragraph 8.3(a). Such insurance shall be full replacement cost
coverage with a deductible not to exceed $1,000 per occurrence. The proceeds
from any such insurance shall be used by Lessee for the replacement of
personal property and the restoration of Trade Fixtures and Lessee-Owned
Alterations and Utility Installations. Upon request from Lessor, Lessee shall
provide Lessor with written evidence that such insurance is in force.
8.5. INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required by a
Lender, as set forth in the most current issue of "Best's Insurance Guide."
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in this Paragraph 8. Lessee shall cause to be
delivered to Lessor, within seven (7) days after the earlier of the Early
Possession Date or the Commencement Date, certified copies of, or
certificates evidencing the existence and amounts of, the Insurance required
under Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or subject
to modification except after thirty (30) days' prior written notice to
Lessor. Lessee shall at least thirty (30) days prior to the expiration of
such policies, furnish Lessor with evidence of renewals or "insurance
binders" evidencing renewal thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by
the amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance
companies issuing property damage insurance waive any right to subrogation
that such companies may have against Lessor or Lessee, as the case may be, so
long as the insurance is not invalidated thereby.
8.7 INDEMNITY. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or
damages, costs, liens, judgments, penalties, loss of permits, attorneys' and
consultants' fees, expenses and/or liabilities arising out of, involving, or
in connection with, the occupancy of the Premises by Lessee, the conduct of
Lessee's business, any act, omission or neglect of Lessee, its agents,
contractors, employees or invitees, and out of any Default or Breach by
Lessee in the performance in a timely manner of any obligation on Lessee's
part to be performed under this Lease. The foregoing shall include, but not
be limited to, the defense or pursuit of any claim or any action or
proceeding involved therein, and whether or not (in the case of claims made
against Lessor) litigated and/or reduced to judgment. In case any action or
proceeding be brought against Lessor by reason of any of the foregoing
matters, Lessee upon notice from Lessor shall defend the same at Lessee's
expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. Lessor shall indemnify Lessee for
Lessor's negligence.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from
any other cause, whether said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building of which the
Premises are a part, from other sources or places, and regardless of whether
the cause of such damage or injury or the means of repairing the same is
accessible or not. Lessor shall not be liable for any damages arising from
any act or neglect of any other lessee of Lessor nor from the failure by
Lessor to enforce the provisions of any other lease in the Industrial Center.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall
under no circumstances be liable for injury to Lessee's business or for any
loss of income or profit therefrom, except situations caused by Lessor's
gross negligence.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior
to such damage or destruction. In addition, damage or destruction to the
Building, other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.
(c) "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a) irrespective of any deductible
amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances
or laws, and without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PREMISES PARTIAL DAMAGE--INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned
Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect. In the event, however,
that there is a shortage of insurance proceeds and such shortage is due to
the fact that, by reason of the unique nature of the improvements in the
Premises, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds
or adequate assurance thereof within said ten (10) day period, Lessor shall
complete them as soon as reasonably possible and this Lease shall remain in
full force and effect, if Lessor does not receive such funds or assurance
within said period. Lessor may nevertheless elect by written notice to Lessee
within ten (10) days thereafter to make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect. If Lessor does not
receive such funds or assurance within such ten (10) day period, and if
Lessor does not so elect to restore and repair, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right
to reimbursement from Lessor for any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be some insurance coverage, but the net
proceeds of any such insurance shall be made available for the repairs if
made by either Party.
9.3 PARTIAL DAMAGE--UNINSURED LOSS. If Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's expense and this
Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written notice
to Lessor of Lessee's commitment to pay for the repair of such damage totally
at Lessee's expense and without reimbursement from Lessor. Lessee shall
provide Lessor with the required funds or satisfactory assurance thereof
within thirty (30) days following such commitment from Lessee. In such event
this Lease shall continue in full force and effect, and Lessor shall proceed
to make such repairs as soon as reasonably possible after the required funds
are available. If Lessee does not give such notice and provide the funds or
assurance thereof within the times specified above, this Lease shall terminate
as of the date specified in Lessor's notice of termination.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 8.7.
9.5. DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage. Provided, however, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by (a) exercising such option, and (b)
providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten (10) days after Lessee's receipt of Lessor's written
notice purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option expires. If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense
repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect, if Lessee fails to exercise such option
and provide such funds or assurance during such period, then this Lease shall
terminate as of the date set forth in the first sentence of this Paragraph
9.5.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base
Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repair, remediation or restoration continues, shall be abated in proportion
to the degree to which Lessee's use of the Premises is impaired, but not in
excess of proceeds from insurance required to be carried under Paragraph
8.3(b). Except for abatement of Base Rent, Common Area Operating Expenses and
other charges, if any, as aforesaid, all other obligations of Lessee
hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such damage,
destruction, repair, remediation or restoration.
<PAGE>
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence, in a substantial
and meaningful way, the repair or restoration of the Premises within ninety
(90) days after such obligation shall accrue, Lessee may, at any time prior
to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notion of Lessee's
election to terminate this Lease on a date not less than sixty (60) days
following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within
thirty (30) days after receipt of such notice, this Lease shall terminate as
of the date specified in said notice. If Lessor or a Lender commences the
repair or restoration of the Premises within thirty (30) days after the
receipt of such notice, this Lease shall continue in full force and effect.
"Commence" as used in this Paragraph 9.6 shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of
the actual work on the Premises, whichever occurs first.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the Investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 6.2(c) and Paragraph 13). Lessor
may at Lessor's option either (i) investigate and remediate such Hazardous
Substance Condition. If required, as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect,
or (ii) if the estimated cost to investigate and remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000 whichever is
greater, give written notice to Lessee within thirty (30) days after receipt
by Lessor of knowledge of the occurrence of such Hazardous Substance Condition
of Lessor's desire to terminate this Lease as of the date sixty (60) days
following the date of such notice. In the event Lessor elects to give such
notice of Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor or Lessee's commitment to pay for the excess costs of (a)
Investigation and remediation of such Hazardous Substance Condition to the
extent required by Applicable Requirements, over (b) an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater. Lessee shall provide Lessor with the funds required of Lessee or
satisfactory assurance thereof within thirty (30) days following said
commitment by Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such Investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds
or assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.8 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Paragraph 9, Lessor shall return to Lessee any advance payment made
by Lessee to Lessor and so much of Lessee's Security Deposit as has not been,
or is not then required to be, used by Lessor under the terms of this Lease.
9.9 WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby
waive the provisions of any present or future statute to the extent it is
inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2(a), applicable to the Industrial Center, 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.
10.2 REAL PROPERTY TAX DEFINITIONS.
(a) As used herein, the term "REAL PROPERTY TAXES" shall include any
form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond
or bonds, levy or tax (other than inheritance, personal income or estate
taxes) imposed upon the Industrial Center by any authority having the direct
or indirect power to tax, including any city, state or federal government, or
any school, agricultural, sanitary, fire, street, drainage, or other
improvement district thereof, levied against any legal or equitable interest
of Lessor in the Industrial Center or any portion thereof, Lessor's right to
rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee,
levy, assessment or charge, or any increase therein, imposed by reason of
events occurring, or changes in Applicable Law taking effect, during the term
of this Lease, including but not limited to a change in the ownership of the
Industrial Center or in the improvements thereon, the execution of this
Lease, or any mediation, amendment or transfer thereof, and whether or not
contemplated by the Parties.
(b) As used herein, the term "BASE REAL PROPERTY TAXES" shall be the
amount of Real Property Taxes, which are assessed against the Premises,
Building 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 be included in the
calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.
10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such
other lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however,
pay to Lessor at the time Common Area Operating Expenses are payable under
Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed
solely by reason of Alterations, Trade Fixtures or Utility Installations
placed upon the Premises by Lessee or at Lessee's request.
10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.
10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the the Premises or stored within the
Industrial Center. When possible, Lessee shall cause its Lessee-Owned
Alterations and Utility Installations, Trade Fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from the
real property of Lessor. If any of Lessee's said property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable
to Lessee's property within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity,
telephone, security, gas and cleaning of the Premises, together with any
taxes thereon. If any such utilities or services are not separately metered
to the Premises or separately billed to the Premises, Lessee shall pay to
Lessor a reasonable proportion to be determined by Lessor of all such charges
jointly metered or billed with other premises in the Building, in the manner
and within the time periods set forth in Paragraph 4.2(d).
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign")
or sublet all or any part of Lessee's interest in this Lease or in the
Premises without Lessor's prior written consent given under and subject to
the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, or a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Lessee's assets occurs,
which results or will result in a reduction of the Net Worth of Lessee, as
hereinafter defined, by an amount equal to or greater than twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at
the time of full execution and delivery of this Lease or at the time of the
most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transactions constituting such
reduction, at whichever time said Net Worth of Lessee was or is greater,
shall be considered an assignment of this Lease by Lessee to which Lessor may
reasonably withhold its consent. "NET WORTH OF LESSEE" for purposes of this
Lease shall be the net worth of Lessee (excluding any Guarantors) established
under generally accepted accounting principles consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be
a Default curable after notice per Paragraph 13.1, or a non-curable Breach
without the necessity of any notice and grace period. If Lessor elects to
treat such unconsented to assignment or subletting as a non-curable Breach,
Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon
thirty (30) days' written notice ("LESSOR'S NOTICE"), increase the monthly
Base Rent for the Premises to the greater of the then fair market rental
value of the Premises, as reasonably determined by Lessor, or one hundred ten
percent (110%) of the Base Rent then in effect. Pending determination of the
new fair market rental value, if disputed by Lessee, Lessee shall pay the
amount set forth in Lessor's Notice, with any overpayment credited against
the next installment(s) of Base Rent coming due, and any underpayment for the
period retroactively to the effective date of the adjustment being due and
payable immediately upon the determination thereof. Further, in the event of
such Breach and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment
to the then fair market value as reasonably determined by Lessor (without the
Lease being considered an encumbrance or any deduction for depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition) or one hundred ten percent (110%) of the price previously in
effect, (ii) any index-oriented rental or price adjustment formulas contained
in this Lease shall be adjusted to require that the base index be determined
with reference to the index applicable to the time of such adjustment, and
(iii) any fixed rental adjustment scheduled during the remainder of the Lease
term shall be increased in the same ratio as next rental bears to the Base
Rent in effect immediately prior to the adjustment specified in Lessor's
Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting shall
not (i) be effective without the express written assumption by such assignee
or sublessee of the obligations of Lessee under this Lease, (ii) release
Lessee of any obligations hereunder, not (iii) alter the primary liability of
Lessee or the payment of Base Rent and other sums due Lessor hereunder or for
the performance of any other obligations to be performed by Lessee under this
Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach
by Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto
without notifying Lessee or anyone else liable under this Lease or the
sublease and without obtaining their consent, and such action shall not
relieve such persons from liability under this Lease or the sublease.
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<PAGE>
(d) In the event of any Default or Breach of Lessee's obligation under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations
under this Lease, including any sublessee, without first exhausting Lessor's
remedies against any other person or entity responsible therefor to Lessor,
or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the Intended use
and/or required modification of the Premises, if any, together with a
non-refundable deposit of $1,000 or ten percent (10%) of the monthly Base
Rent applicable to the portion of the Premises which is the subject of the
proposed assignment or sublease, whichever is greater, as reasonable
consideration for Lessor's considering and processing the request for
consent. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other
than such obligations as are contrary to or inconsistent with provisions of
an assignment or sublease to which Lessor has specifically consented in
writing.
(g) The occurrence of a transaction described in Paragraph 12.2(c) shall
give Lessor the right (but not the obligation) to require that the Security
Deposit be increased by an amount equal to six (6) times the then monthly
Base Rent, and Lessor may make the actual receipt by Lessor of the Security
Deposit Increase a condition to Lessor's consent to such transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment schedule of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment schedule for property similar to the Premises as then constituted,
as determined by Lessor.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a
portion of the Premises heretofore or hereafter made by Lessee, and Lessor
may collect such rent and income and apply same toward Lessee's obligations
under this Lease: provided, however, that until a Breach (as defined in
Paragraph 13.1) shall occur in the performance of Lessee's obligations under
this Lease, Lessee may, except as otherwise provided in this Lease, receive,
collect and enjoy the rents accruing under such sublease. Lessor shall not,
by reason of the foregoing provision or any other assignment of such sublease
to Lessor, nor by reason of the collection of the rents from a sublessee, be
deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee under such
Sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and
shall pay such rents and other charges to Lessor without any obligation or
right to inquire as to whether such Breach exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right
or claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any
obligations to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of
such sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to such sublessor or for any
other prior defaults or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee under a sublease approved by Lessor shall further
assign or sublet all or any part of the Premises without Lessor's prior
written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in
said notice as rent due and payable to cure said default. A "Default" by
Lessee is defined as a failure by Lessee to observe, comply with or perform
any of the terms, covenants, conditions or rules applicable to Lessee under
this Lease. A "Breach" by Lessee is defined as the occurrence of any one or
more of the following Defaults, and, where a grace period for cure after
notice is specified herein, the failure by Lessee to cure such Default prior
to the expiration of the applicable grace period, and shall entitle Lessor to
pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:
(a)
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent, Lessee's Share of Common
Area Operating Expenses, or any other monetary payment required to be made by
Lessee hereunder as and when due, the failure by Lessee to provide Lessor
with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues
for a period of three (10) days following written notice thereon by or on
behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3 (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and
37, (vii) the execution of any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor
may reasonably require of Lessee under the terms of this lease, where any
such failure continues for a period of ten (30) days following written notice
by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof
that are to be observed, complied with or performed by Lessee, other than
those described in Subparagraphs 13.1(a),(b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice
thereof by or on behalf of Lessor to Lessee; provided, however, that if the
nature of Lessee's Default is such that more than thirty (30) days are
reasonably required for its cure, then it shall not be deemed to be a Breach
of this Lease by Lessee if Lessee commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or
any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or at Lessee's interest in this
Lease, where possession is not restored to Lessee within thirty (30) days; or
(iv) the attachment, execution or other judicial seizure of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days;
provided, however, in the event that any provision of this Subparagraph
13.1(e) is contrary to any applicable law, such provision shall be of no
force or effect, and shall not affect the validity of the remaining
provisions.
(f) The discovery by Lessor that any financial statement of Lessee
or of any Guarantor, given to Lessor by Lessee or any Guarantor, was
materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance
with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or
the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory broach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such
event, to provide Lessor with written alternative assurances of security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor, if any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments to be made under
this Lease by Lessee to be made only by cashier's check. In the event of a
Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or
without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach, Lessor
may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the form hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover from Lessee (i) the worth
at the time of the award of the unpaid rent which had been earned at the time
of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee proves could
have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including but not limited to the cost of
recovering possession of the Premises, expenses of relotting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees, and that portion of any leasing commission paid by Lessor in connection
with this Lease applicable to the unexpired term of this Lease. The worth at
the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount
at the discount rate of the Federal Reserve Bank of San Francisco or the
Federal Reserve Bank District in which the Premises are located at the time
of award plus one percent (1%). Efforts by Lessor to mitigate damages caused
by Lessee's Default or Breach of this Lease shall not waive Lessor's right to
recover damages under this Paragraph 13.2. If termination of this Lease is
obtained through the provisional remedy of unlawful detainer, Lessor shall
have the right to recover in such pro-
Initials _____________
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ceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay
rent or quit or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
Subparagraph 13.1 (b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statutes.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach
and recover the rent as it becomes due, provided Lessee has the right to
sublet or assign, subject only to reasonable limitations. Lessor and Lessee
agree that the orientations on assignment and subletting in this Lease are
reasonable. Acts of maintenance or preservations efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein wherever the Premises are
located.
(d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of
which concessions are hereinafter referred to as "Inducement Provisions"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease to be performed or
observed by Lessee during the term hereof as the same may be extended. Upon
the occurrence of a Breach (as defined in Paragraph 13.1) of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other
charge, bonus, inducement or consideration theretofore abated, given or paid
by Lessor under such an Inducement Provision shall be immediately due and
payable by Lessee to Lessor, and recoverable by Lessor, as additional rent
due under this Lease, notwithstanding any subsequent cure of said Breach by
Lessee. The acceptance by Lessor of rent or the cure of the Breach which
initiated the operation of this Paragraph 13.3 shall not be deemed a waiver
by Lessor of the provisions of this Paragraph 13.3 unless specifically so
stated in writing by Lessor at the time of such acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering
the Premises. Accordingly, if any installment of rent or other sum due from
Lessee shall not be received by Lessor or Lessor's designate within ten (10)
days after such amount shall be due, then, without any requirements for notice
to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%)
of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contract. Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 BREACH OF LESSOR. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after
receipt by Lessor, and by any Lender(s) whose name and address shall have
been furnished to Lessee in writing for such purpose, of written notice
specifying wherein such obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor's obligation is such that more than
thirty (30) days after such notice are reasonably required for its
performance, then Lessor shall not be in breach of this Lease if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than ten percent
(10%) of the floor area of the Premises, or more than twenty-five percent
(25%) of the portion of the Common Areas Designated for Lessee's parking, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing within ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within (10) days
after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If Lessee
does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in the same proportion
as the rentable floor area of the Premises taken bears to the total rentable
floor area of the Premises. No reduction of Base Rent shall occur if the
condemnation does not apply to any portion of the Premises. Any award for the
taking of all or any part of the Premises under the power of eminent domain
or any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution of value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
compensation, separately awarded to Lessee for Lessee's relocation expenses
and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal
and other expenses incurred by Lessor in the condemnation matter, repair any
damage to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. BROKERS' FEES.
15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.2 ADDITIONAL TERMS. Unless Lessor and Broker(s) have otherwise agreed
in writing. Lessor agrees that (a) if Lessee exercises any Option (as defined
in Paragraph 39.1) granted under this Lease or any Option subsequently
granted, or (b) if Lessee acquires any rights to the Premises or other
premises in which Lessor has an interest, or (c) if Lessee remains in
possession of the Premises with the consent of Lessor after the expiration of
the term of this Lease after having failed to exercise an Option, or (d) if
said Brokers are the procuring cause of any other lease or sale entered into
between the Parties, pertaining to the Premises and/or any adjacent property
in which Lessor has an interest, or (e) if the Base Rent is increased,
whether by agreement or operations of an condemnation clause herein, then as
to any of said transactions. Lessor shall pay said Broker(s) a fee in
accordance with the schedule of said Broker(s) in effect the time of the
execution of this Lease.
15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation
of law, shall be deemed to have assumed Lessor's obligation under this
Paragraph 15. Each Broker shall be an intended third party beneficiary of the
provisions of Paragraph 1.10 and of this Paragraph 15 to the extent of its
interest in any commission arising from this Lease and may enforce that
right directly against Lessor and its successors.
15.4 REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with
the negotiation of this Lease and/or the condemnation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs, expenses, and/or
attorneys' fees reasonably incurred with respect thereto.
16. TENANCY AND FINANCIAL STATEMENTS.
16.1 TENANCY STATEMENT. Each Party (as "Responding Party") shall within ten
(30) days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in
writing in a term similar to the then most current "Tenancy Statement" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor at the time of such
transfer or assignment. Except as provided in Paragraph 15.3, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in
this Lease to be performed by the Lessor shall be binding only upon the
Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a cast of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10)
days following the date on which it was due, shall bear interest from the
date due at the prime rate charged by the largest state chartered bank in the
state in which its Premises are located plus four percent (4%) per annum, but
not exceeding the maximum rate allowed by law, in addition to the potential
late charge provided for Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this
Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers
that it has made, and is relying solely upon its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party. Each Broker shall be an intended
third party beneficiary of the provisions of this Paragraph 22.
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23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices, required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or
registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission during normal business hours, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may
by written notice to the other specify a different address for notice
purposes, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to
be given to Lessor hereunder shall be concurrently transmitted to such party
or parties at such addresses as Lessor may from time to time hereafter
designate by written notice to Lessee.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon.
If sent by regular mail, the notice shall be deemed given forty-eight (48)
hours after the same is addressed as required herein and mailed with postage
prepaid. Notices delivered by United States Express Mail or overnight courier
that guarantees next day delivery shall be deemed given twenty-four (24)
hours after delivery of the same in the United States Postal Service or
courier. If any notice is transmitted by facsimile transmission or other
similar means, the same shall be deemed served or delivered upon telephone or
facsimile confirmation of receipt of the transmission thereof, provided a
copy is also delivered via delivery or mail. If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time
of accepting rent, the acceptance of rent by Lessor shall not be a waiver of
any Default or Breach by Lessee of any provision hereof. Any payment given
Lessor by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by
Lessee in connection therewith, which such statements and/or conditions shall
be of no force or effect whatsoever unless specifically agreed to in writing
by Lessor at or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any loss or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this
Paragraph 26 then the Base Rent payable from and after the time of the
expiration or earlier termination of this Lease shall be increased to one
hundred twenty-five percent (125%) of the Base Rent applicable during the
month immediately preceding such expiration or earlier termination. Nothing
contained herein shall be construed as a consent by Lessor to any holding
over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "SECURITY DEVICE"), now
or hereafter placed by Lessor upon the real property of which the Premises
are a part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor
under this Lease, but that in the event of Lessor's default with respect to
any such obligation, Lessee will give any Lender whose name and address have
been furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device
and shall give written notice thereof to Lessee, this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device,
and that in the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets
or defenses which Lessee might have against any prior lessor, or (iii) be
bound by prepayment of more than one month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this
Lease shall be subject to receiving assurance (a "non-disturbance agreement")
from the Lender that Lessee's possession and this Lease, including any
options to extend the term hereof, will not be disturbed so long as Lessee is
not in Breach hereof and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorneys' fees. Such fees may be awarded in
the same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term "PREVAILING PARTY"
shall include, without limitation, a Party or Broker who substantially
obtains or defeats the relief sought, as the case may be, whether by
compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fee award shall not be
computed in accordance with any court fee schedule, but shall be such as to
fully reimburse all attorneys' fees reasonably incurred. Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in preparation and
service of notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with
such Default or resulting Breach. Broker(s) shall be intended third party
beneficiaries of this Paragraph 31.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time. In the case of any
emergency, and otherwise at reasonable times for the purposes of showing the
same to prospective purchasers, lenders or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs.
All such activities of Lessor shall be without abatement of rent or liability
to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to
the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions
of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures
and Alterations). Unless otherwise expressly agreed herein, Lessor reserves
all rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one
or all of the existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by
written notice to the holder of any such lesser interest, shall constitute
Lessor's election to have such event constitute the termination of such
interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent pertaining to this Lease or the Premises, including
but not limited to consents to an assignment a subletting or the presence or
use of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt
of an invoice and supporting documentation therefor. In addition to the
deposit described in Paragraph 12.2(e). Lessor may, as a condition to
considering any such request by Lessee, require that Lessee deposit with
Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor
will incur in considering and responding to Lessee's request. Any unused
portion of said deposit shall be refunded to Lessee without interest.
Lessor's consent to any act, assignment of this Lease or subletting of the
Premises by Lessee shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions
by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for such consent is
being given.
37. GUARANTOR.
37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the
same obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 15.
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37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor talks or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of
the guaranty called for by this Lease, including the authority of the
Guarantor (and of the party signing on Guarantor's behalf) to obligate such
Guarantor on said guaranty, and resolution of its board of directors
authorizing the making of such guaranty, together with a certificate of
incumbency showing the signatures of the persons authorized to sign on its
behalf, (b) current financial statements of Guarantor as may from time to
time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to
all of the provisions of this Lease.
39. OPTIONS.
39.1 DEFINITION. As used in this Lease, the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property
of Lessor: (b) the right of first refusal to lease the Premises or the right
of first offer to lease the Premises or the right of first refusal to lease
other property of Lessor or the right of first offer to lease other property
of Lessor; (c) the right to purchase the Premises, or the right of first
refusal to purchase the Premises, or the right of first offer to purchase the
Premises, or the right to purchase other property of Lessor, or the right of
first refusal to purchase other property of Lessor, or the right of first
offer to purchase other property of Lessee.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee
in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by
any person or entity other than said original Lessee while the original
Lessee is in full and actual possession of the Premises and without the
intention of thereafter assigning or subletting. The Options, if any, herein
granted to Lessee are not assignable, either as a part of an assignment of
this Lease or separately or apart therefrom, and no Option may be separated
from this Lessee in any manner, by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options
to extend or renew this Lease, a better option cannot be exercised unless the
prior Options to extend or renew this Lease have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the period of time any monetary obligation due Lessor from Lessee is
unpaid (without regard to whether notion thereof is given Lessee), or (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessor has given to Lessee three (3) or more notions of separate Defaults
under Paragraph 13.1 during the twelve (12) month period immediately
preceding the exercise of the Option, whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation
of Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessor gives to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.
40. RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care and
cleanliness of the grounds, the parking and unloading of vehicles and the
presentation of good order, as well as for the convenience of other occupants
or tenants of the Building and the Industrial Center and their invitees.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide
same. Lessee assumes all responsibility for the protection of the Premises,
Lessee, its agents and invitees and their property from the acts of third
parties.
42. RESERVATIONS. Lessor reserves the right, from time to time, to grant
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause
the recordation of partial maps and restrictions, so long as such easements,
rights of way, utility raceways, dedications, maps and restrictions do not
reasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such
sum. If it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said Party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by either Lessor or Lessee of Lessor's
agent or Lessee's agent and submission of grantor to Lessee or Lessor shall not
be deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties herein.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder. Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
49. See attached addendum to lease.
<PAGE>
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND
STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN
ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
<TABLE>
<S> <C>
Executed at: Carlsbad, California Executed at: Carlsbad, California
------------------------------- -------------------------------
on: on: February 4, 1994
---------------------------------------- ----------------------------------------
BY LESSOR: BY LESSEE:
Equity Growth Investments, Berg Systems International, Inc.,
- -------------------------------------------- --------------------------------------------
a subsidiary of S.B.S. Engineering, Inc.,
A California General Partnership a New Mexico Corporation
- -------------------------------------------- --------------------------------------------
By: /s/ Bob Harris By: /s/ Stephen S. Dragg
---------------------------------------- ----------------------------------------
Name Printed: Bob Harris Name Printed: Stephen S. Dragg
------------------------------- ------------------------------
Title: Title: Chief Financial Officer
-------------------------------------- -------------------------------------
By: By:
---------------------------------------- ----------------------------------------
Name Printed: Name Printed:
------------------------------- -------------------------------
Title: Title:
-------------------------------------- --------------------------------------
Address: P.O. Box 1780 Address: 5550 Midway Park Pl NE
------------------------------------ ------------------------------------
La Mesa, California 91944 Albuquerque, NM 87109
- -------------------------------------------- --------------------------------------------
Telephone: (619) 589-7575 Telephone: (505) 345-5353
---------------------------- ----------------------------
Facsimile: (619) 462-8637 Facsimile: (505) 345-9429
---------------------------- ----------------------------
BROKER: VOIT COMMERCIAL BROKERAGE BROKER: GRUBB & ELLIS BROKERAGE COMPANY
Executed at: Executed at:
-------------------------------- --------------------------------
on: on:
---------------------------------------- ----------------------------------------
By: By:
---------------------------------------- ----------------------------------------
Name Printed: John R. McGrath, Jr. Name Printed: Kent A. Moore
------------------------------- -------------------------------
Title: Vice President Title: Vice President
-------------------------------------- --------------------------------------
Address: 2103 Camino Vida Roble, Suite A Address: 1921 Palomar Oaks Way, Suite 200
------------------------------------ ------------------------------------
Carlsbad, California 92009 Carlsbad, California 92008
- -------------------------------------------- --------------------------------------------
Telephone: (619) 431-4800 Telephone: (619) 438-7233
---------------------------- ----------------------------
Facsimile: (619) 431-4818 Facsimile: (619) 931-9181
---------------------------- ----------------------------
</TABLE>
NOTE: 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, 345 SO. FIGUEROA ST., M-1, LOS ANGELES, CA 90071,
(213) 597-6777.
<PAGE>
ADDENDUM
DATE ________________
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS "LESSOR", AND BERG
SYSTEMS INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING INC., A NEW
MEXICO CORPORATION, AS "LESSEE", FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA
ROBLE, CARLSBAD, CALIFORNIA.
- -------------------------------------------------------------------------------
49-A. RENT SCHEDULE: The rent schedule shall be as follows:
Months 1-12: The rent shall be $6,773.00 per month;
Months 13-27: The rent shall be $6,896.00 per month.
B. OPTION TO EXTEND LEASE TERM:
(i) Provided that the Lease is still in full force and effect and that
Lessee is not in default in the payment of rent or of any of the
other terms and conditions of the Lease, Lessor grants to Lessee
the option to extend the term of the Lease for two (2) additional
periods of one (1) year each, commencing on the following dates:
a). The first day following the termination date of the original
term for the first one (1) year option to extend lease term
("First Extended Term").
b). The first day following the termination date of the First
Extended Term for the second one (1) year option to extend
lease term ("Second Extended Term").
Lessee shall give Lessor notice of exercise of the option for
the First Extended Term at least ninety (90) days prior to
the expiration date of the original term of the Lease. Lessee
shall give Lessor notice of exercise of the option for each
successive Extended Term at least ninety (90) days prior to
the expiration date of the immediately preceding Extended Term.
The failure of Lessee to exercise the option for any one
Extended Term of the lease shall terminate all the successive
options to extend the lease term. Except for the rental
adjustment as hereinafter set forth, all other terms and
conditions of the Lease shall apply to each Extended Term.
c). Lessee agrees to pay to Lessor as rent for the Premises the
sums set forth below:
(a) Six Thousand Five Hundred Twenty One & 00/100ths
($6,521.00) Dollars per month for the First Extended Term.
(b) Six Thousand Six Hundred Forty-Four & 00/100ths
($6,644.00) Dollars per month for the Second Extended Term.
d). All rent shall be payable to Lessor in advance on or before
the first day of each and every calendar month during the
applicable Extended Term of the Lease, without deduction,
offset, prior notice or demand.
C. TENANT IMPROVEMENTS: Lessor, at Lessor's cost, shall construct
tenant improvements in accordance with the floor plan submit by
Lessee with its original offer dated January 6, 1994 plus revisions
(see attached Exhibit "B"). The cost of said tenant improvements,
which Lessor is responsible to construct and pay for, shall not
exceed Forty-Seven Thousand Five Hundred Dollars ($47,500.00).
Building plans specifying the floor plan and materials to be used
shall be prepared and agreed upon by both parties in writing prior
to construction of the improvements and within fifteen (15) days of
full execution of the Lease.
<PAGE>
ADDENDUM
DATE __________
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS "LESSOR", AND BERG SYSTEMS
INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING INC., A NEW MEXICO
CORPORATION, AS "LESSEE", FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA ROBLE,
CARLSBAD, CALIFORNIA.
________________________________________________________________________________
(Continued)
The Lease shall be contingent upon mutual agreement, in writing, of the
tenant improvement plans. Upon such agreement, Lessor shall eliminate the
dollar limit from this provision and shall complete the tenant improvements
per the agreed upon plans. Any changes to the agreed upon plans shall be
made at Lessee's expense. Lessee hereby removes the conductive floor tile
from the list of improvements to be made by Lessor.
D. CONTINGENCIES OF LEASE: This lease shall be contingent upon the
following for a period of thirty (30) days from the date of full execution:
1. Lessor obtaining a building permit for said tenant improvements:
2. Lessee obtaining a business license and/or occupancy permit from
the City of Carlsbad to occupy the premises with its intended use.
Lessee agrees that Lessor shall not be obligated to begin the tenant
improvement process until Lessee waives this contingency in writing.
Further, Lessee acknowledges this contingency may affect Lessor's
ability to deliver the premises with completed tenant improvements
by the stated commencement date.
E. REPRESENTATION AND COVENANTS REGARDING HAZARDOUS WASTES:
(i) COVENANTS. Lessee and Lessor shall at all times comply with
applicable local, state and Federal laws, ordinances and regulations
relating to Hazardous Substances. Lessee shall, at its own expense,
maintain in effect any permits, licenses, or other governmental
approvals, if any, required for Lessee's use of the Premises. Lessee
shall make all disclosures required of Lessee by any such laws,
ordinances, and regulations, and shall comply with all orders with
respect to Lessee's use of the Premises issued by any governmental
authority having jurisdiction over the Premises and take all action
required of such governmental authorities to bring the Lessee's
activities on the Premises into compliance with all laws, rules,
regulations, and ordinances relating to Hazardous Substances and
affecting the Premises.
(ii) INSPECTIONS: Lessor, or its authorized agent, upon reasonable
notice to Lessee, shall have continuing access to the property and
all portions thereof, to inspect and test the premises to ensure
that the appropriate procedures are being observed in compliance
with all Hazardous Waste Law.
(iii) NOTICES. If at any time Lessee or Lessor shall become aware, or
have reasonable cause to believe, that any Hazardous Substance has
been released or has otherwise come to be located on or beneath the
Building, such party shall immediately upon discovering the release
or the presence or suspected presence of the Hazardous Substance,
give written notice of that condition to the other party. In
addition, the party first learning of the release or presence of a
Hazardous Substance on or beneath the Building, shall immediately
notify the other party in writing of (i) any enforcement, cleanup,
removal, or other governmental or regulatory action instituted,
completed, or threatened pursuant to any Hazardous Substance laws;
(ii) any claim made or threatened by any person against Lessor,
Lessee, the Premises, or the Building, arising out of or resulting
from any Hazardous Substances; and (iii) any reports made to any
local, state, or Federal environmental agency arising out of or in
connection with any Hazardous Substance.
<PAGE>
ADDENDUM
DATE __________
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS "LESSOR", AND BERG SYSTEMS
INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING INC., A NEW MEXICO
CORPORATION, AS "LESSEE", FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA ROBLE,
CARLSBAD, CALIFORNIA.
________________________________________________________________________________
(Continued)
(iv) INDEMNITY. Lessee shall indemnify, defend (by counsel acceptable to
Lessor), protect, and hold harmless Lessor, and each of Lessor's
partners, directors, officers, employees, agents, attorneys,
successors, and assigns, from and against any and all claims,
liabilities, penalties, fines, judgments, forfeitures, losses, costs,
or expenses (including attorneys' fees, consultants' fees, and expert
fees) for the death of or injury to any person or damage to any
property whatsoever, arising from or caused in whole or in part,
directly or indirectly, by (i) the presence in, on, under, or about
the Premises, or the Building, or any discharge or release in or
from the Premises, or the Building, of any Hazardous Substance but
only to the extent that any such presence, discharge, or release is
caused by Lessee's activities on the Premises; or (ii) Lessee's
failure to comply with any Hazardous Substance law to the extent
that compliance is required on account of Lessee's activities on
the Premises and not the extent that compliance is required solely
because Lessee, as the occupant of the Premises, is held
accountable for
Hazardous Substances on or about the Premises or
that are released by actions wholly independent of Lessee. The
indemnity obligation created hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, any and all
costs incurred in connection with any site investigation, and any
and all costs for repair cleanup, detoxification, decontamination,
or other remedial action of the Premises, or the Building.
(v) HAZARDOUS SUBSTANCES: As used in this Paragraph 53 the term
"Hazardous Substances" means any hazardous or toxic substances,
materials or wastes, including, without limitation, those
substances, materials, and wastes listed in the United States
Department of Transportation Hazardous Materials Table (49 CFR
172.101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Part 302) and amendments thereto, or such
substances, materials, and wastes that are or become regulated
under any applicable local, state, or Federal law including,
without limitation, any material, waste, or substance that is
(i) petroleum; (ii) asbestos; (iii) polychlorinated biphenyl;
(iv) defined as "hazardous waste", "extremely hazardous waste", or
"restricted hazardous waste" under Sections 25115, 25117, or 25122.7,
or listed pursuant to Section 25140 of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);
(v) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act);
(vi) defined as a "hazardous material", "hazardous substance", or
"hazardous waste" under Section 25501 of the California Health and
Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory); (vii) defined as a "hazardous
substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances); (viii) designated as a "hazardous substance" pursuant
to Section 311 of the Clean Water Act, 33 U.S.C. 1251 ET, SEQ.
(33 U.S.C. 1321), or listed pursuant to Section 307 of the Clean
Water Act (33 U.S.C. 1317); (ix) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery
Act, 42 U.S.C. 6901, ET SEQ. (42 U.S.C. 6903); or (x) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response Compensation, and Liability Act,
42 U.S.C. 9601, ET SEQ. (42 U.S.C. 6201).
<PAGE>
ADDENDUM
DATE __________
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS "LESSOR", AND BERG SYSTEMS
INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING INC., A NEW MEXICO
CORPORATION, AS "LESSEE", FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA ROBLE,
CARLSBAD, CALIFORNIA.
________________________________________________________________________________
F. NOTICE TO OWNERS, BUYERS AND TENANTS REGARDING HAZARDOUS WASTES,
SUBSTANCES OR MATERIALS AND UNDERGROUND STORAGE TANKS:
In recent years, numerous federal and state environmental laws and
regulations have been enacted to address problems caused by hazardous
wastes, substances and materials. Among other things, such laws and
regulations (1) require and regulate the clean-up of hazardous
substances releases; (2) establish requirements for the use, modification,
abandonment and closure of underground storage tanks; (3) regulate the use,
storage, handling, treatment and disposal of a wide variety of hazardous
wastes, substances and materials; and (4) establish reporting requirements
triggered by hazardous materials releases.
Some of these laws and regulations establish broad liability schemes. For
example, under the federal "Superfund Act", owners, tenants and other
users of property may in some circumstances be held liable, regardless of
fault, for clean-up costs and damages resulting from a release of
hazardous substances to that property. The definitions of hazardous
wastes, substance and materials under these laws are broad as well:
petroleum-based products, paint and solvents, lead, cyanide, DDT,
printing inks, acids, pesticides, ammonium compounds, asbestos, and PCBs
are among the many substances that may be subject to regulation.
Hazardous wastes, substances and materials and underground storage tanks
may be present at any type of real property, whether improved or
unimproved. Therefore, Scher-Voit Commercial Brokerage Company, Inc.,
("Broker") urges prospective property owners, buyers and tenants to consult
experienced legal counsel and technical advisors to determine the
potential impact of these environmental laws and regulations with respect
to any proposed real estate transaction. If hazardous wastes, substances
or material have been or will be used, stored, handled, treated or
disposed of on the property, legal advice is essential to identify any
required permits and approvals to determine whether clean-up or removal
activities are needed, to evaluate the applicability of reporting
requirements, and to draft and negotiate contract provisions to minimize
potential liability and maximize potential rights liability and maximize
potential rights under environmental and other laws. The services of
technical consultants will also be needed to estimate the costs of
compliance with applicable laws and regulations, to conduct site
investigations and building inspections, and perhaps to research past
uses of the property. A complete site history may indicate whether it is
likely that hazardous wastes, substances or materials or underground
storage tanks are present at the property.
Broker makes no representations regarding the existence or nonexistence
of hazardous wastes, substances or materials or underground storage
tanks at any property that is the subject of any proposed real estate
transaction. Although Broker will disclose all information in its
actual possession regarding the existence of hazardous wastes, substances
or materials or underground storage tanks at the property, it has not
conducted investigation or obtained reports on these matters, except as
may be stated in a separate written document signed by Broker. Broker
bears no responsibility for conducting any such investigations or providing
any such reports other than to disclose information in its possession.
As discussed above, prospective owners, buyers and tenants are urged to
contact experienced technical and legal professionals for advice
regarding these matters.
<PAGE>
ADDENDUM
DATE_____________
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS "LESSOR", AND BERG SYSTEMS
INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING INC., A NEW MEXICO
CORPORATION, AS "LESSEE", FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA ROBLE,
CARLSBAD, CALIFORNIA.
- --------------------------------------------------------------------------------
G. NOTICE TO OWNERS AND PROSPECTIVE TENANTS AND BUYERS OF REAL PROPERTY
REGARDING THE AMERICANS WITH DISABILITIES ACT:
Please be advised that an Owner or Tenant of real property may be subject
to the Americans with Disabilities Act (the ADA), a Federal Law codified at
42 USC Section 12101 et seq. Among other requirements of the ADA that could
apply to your property, Title III of the ADA requires Owners and Tenants of
"public accommodations" to remove barriers to access by disabled persons or
provide auxiliary aids and services for hearing, vision or speech impaired
persons by January 26, 1992. The regulations under Title III of the ADA are
codified at 28 CFT Part 36.
We recommend that you and your attorney review the ADA and the
regulations, and, if appropriate, your proposed lease or purchase agreement,
to determine if this law would apply to you, and the nature of the
requirements. These are legal issues. YOU ARE RESPONSIBLE FOR CONDUCTING
YOUR OWN INDEPENDENT INVESTIGATION OF THESE ISSUES. SCHER-VOIT COMMERCIAL
BROKERAGE COMPANY, INC. CANNOT GIVE YOU LEGAL ADVICE ON THESE ISSUES. Lessor
shall be responsible for any improvements required by the appropriate
governmental authority necessary to conform with the provisions of the
A.D.A.
Please acknowledge your receipt of those notices by signing and dating
below.
LESSOR: EQUITY GROWTH INVESTMENTS,
A CALIFORNIA GENERAL PARTNERSHIP
By: /s/Bob Harris 2/8/94
------------------- ---------------
Bob Harris Date
LESSEE: BERG SYSTEMS INTERNATIONAL, INC.,
A SUBSIDIARY OF S.B.S. ENGINEERING, INC.,
A NEW MEXICO CORPORATION
By: /s/Stephen S. Dragg February 4, 1994
---------------------- ------------------
Stephen S. Dragg Date
By:
---------------------- -------------------
Date
<PAGE>
EXHIBIT "C"
GRUBB & ELLIS COMPANY
COMMERCIAL REAL ESTATE SERVICES
STATE OF CALIFORNIA
SALE/LEASE AMERICANS WITH DISABILITIES ACT
AND HAZARDOUS MATERIALS DISCLOSURE
The United States Congress has enacted the Americans With Disabilities
Act. Among other things, this act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not
qualified to advise you as to what, if any, changes may be required now, or
in the future. Owners and tenants should consult the attorneys and qualified
design professionals of their choice for information regarding these matters.
Real estate brokers cannot determine which attorneys or design professionals
have the appropriate expertise in this area.
Various construction materials may contain items that have been or may
be in the future be determined to be hazardous (toxic) or undesirable and may
need to be specifically treated/handled or removed. For example, some
transformers and other electrical components contain PCB's, and asbestos has
been used in components such as fire-proofing, heating and cooling systems,
air duct insulation, spray-on and tile acoustical materials, linoleum, floor
tiles, roofing, dry wall and plaster. Due to prior or current uses of the
Property or in the area, the Property may have hazardous or undesirable
metals, minerals, chemicals, hydrocarbons, or biological or radioactive items
(including electric and magnetic fields) in soils, water, building
components, above or belowground containers or elsewhere in areas that may or
may not be accessible or noticeable. Such items may leak or otherwise be
released. Real estate agents have no expertise in the detection or correction
of hazardous or undesirable items. Expert inspections are necessary. Current
or future laws may require clean up by past, present and/or future owners and
/or operators. It is the responsibility of the Seller/Lessor and Buyer/Tenant
to retain qualified experts to detect an correct such matters and to consult
with legal counsel of their choice to determine what provisions, if any, they
may wish to include in transaction documents regarding the Property.
To the best of Seller/Lessor's knowledge, Seller/Lessor has attached to
this Disclosure copies of all existing surveys and reports known to
Seller/Lessor regarding asbestos and other hazardous materials and
undesirable substances related to the Property. Sellers/Lessors are required
under California Health and Safety Code Section 25915 et seq. to disclose
reports and surveys regarding asbestos to certain persons, including their
employees, contractors, co-owners, purchasers and tenants. Buyers/Tenants
have similar disclosure obligations. Sellers/Lessors and Buyers/Tenants have
additional hazardous materials disclosure responsibilities to each other
under California Health and Safety Code Section 25359.7 and other California
laws. Consult your attorney regarding this matter. Grubb & Ellis Company is
not qualified to assist you in this matter or provide you with other legal or
tax advice.
SELLER/LESSOR BUYER/TENANT
By: /s/Bob Harris By: /s/Stephen S. Dragg
------------------------ ----------------------------
Stephen S. Dragg
Title: Property manager Title: Chief Financial Officer
--------------------- -------------------------
Date: 2/8/94 Date: February 4, 1994
--------------------- -------------------------
<PAGE>
EXHIBIT "B"
[FLOORPLAN]
<PAGE>
ADDENDUM TO LEASE DATED JANUARY 18, 1994 BY AND BETWEEN EQUITY GROWTH
INVESTMENTS, A CALIFORNIA GENERAL PARTNERSHIP, AS LESSOR, AND BERG SYSTEMS
INTERNATIONAL, INC., A SUBSIDIARY OF S.B.S. ENGINEERING, INC., A NEW MEXICO
CORPORATION, AS LESSEE, FOR THE PREMISES KNOWN AS 2265 CAMINO VIDA ROBLE,
CARLSBAD, CALIFORNIA.
- --------------------------------------------------------------------------------
Lessor and Lessee agree to modify the above referenced lease as follows:
(1) TERM:
The term of the Lease shall be two (2) years and three (3) months
("Original Term") commencing May 1, 1994 ("Commencement Date") and ending
July 31, 1996 ("Expiration Date").
AGREED AND ACCEPTED:
Lessor: /s/ [illegible] Date: 6/8/94
-------------------------------- ---------------
Equity Growth Investments,
A California General Partnership
Lessee: /s/ [illegible] Date: 6/10/94
--------------------------------- ---------------
Berg Systems International, Inc.,
A Subsidiary of S.B.S. Engineering, Inc.,
A New Mexico Corporation
<PAGE>
Exhibit 23.2
KPMG Peat Marwick LLP
6565 Americas Parkway, NE Suite 700
Post Office Box 3939
Albuquerque, New Mexico 87190
The Board of Directors
SBS Technologies, Inc.
We consent to incorporation by reference in the registration statement
(No. 333-58) on Form S-3 and registration statement (No. 33-98558) on
Form S-8/S-3 of SBS Technologies, Inc. of our report dated July 30, 1996,
relating to the consolidated balance sheets of SBS Technologies, Inc. and
subsidiaries as of June 30, 1996 and 1995 and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended June 30, 1996, which report
appears in the June 30, 1996 annual report on Form 10K of SBS Technologies,
Inc.
KPMG Peat Marwick LLP
Albuquerque, New Mexico
November 5, 1996
