California-El Segundo-200 Center Street Lease - Time Realty Investments Inc. and Briazz Inc.
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions").
1.1 Parties. This Lease ("Lease"), dated for reference purposes only,
December 15, 1997, is made by and between TIME REALTY INVESTMENTS, INC. - a
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California corporation, Fred W. Plotke - Pres./CEO Business Address: 1511 -
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18/th/ Street, Santa Monica, California 90404 ("Lessor") and BRIAZZ, INC. - a
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Washington corporation, James A. McDermet is President/CEO (on 12/15/97) Main
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Address: 1011 SW Klickitat Way - Suite 202, Seattle, Washington 98134 Phone:
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206/467-0994 FAX: 206/467-1970 Fed. Tax ID #91-1672311 ("Lessee"),
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(collectively the "Parties," or individually a "Party").
1.2. Premises. That certain property, including all improvements therein
or to be provided by Lessor under the terms of this Lease, and commonly known as
200 Center Street, El Segundo, California 90245 (APN #4139-005-034 & APN #4139-
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005-035) located in the County of Los Angeles, State of California, and
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generally described as (describe briefly the nature of the property and, if
applicable, the "Project", if the property is located within a Project). A
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single-story concrete tilt-up type office/industrial building of approximately
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14,500 sq. ft. located on 30,000+ sq. ft. industrially zoned lot in the City
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of El Segundo, CA 90245. The dimensions of the parcel are approx. 215 ft.
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(NS) X 149 (EW). The building has a fire sprinkler system and has approx. 3000
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sq. ft. of office space including three (3) bathrooms. Description is in its
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present configuration. It is anticipated that the Lessee will make
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modifications, as set forth on Exhibit II. ("Premises"). (See also Paragraph 2)
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1.3 Term. Four Years (48 mos) years and --- months ("Original Term")
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commencing 3/1/1998 ("Commencement Date") and ending 2/28/2002 ("Expiration
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Date"). (See also Paragraph 3).
1.4 Early Possession. On or about 3/1/98 ("Early Possession Date") (See
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also Paragraph 3.2)
Base Rent. $9500.00 per month ("Base Rent"), payable on the First day of
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each month commencing May 1, 1998 (5/1/98) (See also Paragraph 4)
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[_] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted. A special one-time rate of $4,750 shall apply for any occupancy
prior to May 1, 1998.
1.6 Base Rent Paid Upon Execution. $4,750.00 for the period prior to
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5/1/98 (See Para. #50 of ADDENDUM)
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1.7 Security Deposit. $15,000.00 ("Security Deposit"). (See also
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Paragraph 5)
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1.8 Agreed Use. Commissary facility for a group of sandwich shops and
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fast-food kiosks operated by BRIAZZ, INC. and its permitted transferees, and
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related business activities. (See also Paragraph 6)
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1.9 Insuring Party. Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8). By mutual agreement, the parties may
change the Insuring Party.
1.10 Real Estate Brokers. (See also Paragraph 15)
(a) Representation. The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
[_] ___________________ represents Lessor exclusively ("Lessor's Broker");
[_] ___________________ represents Lessee exclusively ("Lessee's Broker"); or
[X] Richard Kato - ALCOM, Inc., 268 N. Lincoln Ave. 278, Corona, CA 91720
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represents both Lessor and Lessee ("Dual Agency"). Lessor will pay all
commissions owing to said party.
(b) Payment to Brokers. Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of ---% of the
total Base Rent for the brokerage services rendered by said Broker). Separate
Agreement with Lessor.
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N.A. ("Guarantor"). (See also Paragraph 37)
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1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs #50 through #57 and Exhibits EXHIBIT I - Intentionally
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Deleted. EXHIBIT II - DIAGRAM OF PREMISES. EXHIBIT III - Intentionally
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Deleted, ALL OF WHICH CONSTITUTE A PART OF THIS LEASE.
2. Premises
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
ninety (90) days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date and that the structural elements on the
roof, bearing walls and foundation of any buildings on the Premises (the
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"Building") shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, Lessor shall, as Lessor's sole obligation
with respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If, after the Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within: (i) one year as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, (ii) six (6) months as to the HVAC systems, (iii) thirty (30 days
as to the remaining systems and other elements of the Building, correction of
such non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. See Addendum Paragraph 52 for modifications to the foregoing.
2.3 Compliance. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances ("Applicable Requirements") in effect on the
Start Date. Said warranty does not apply to the use to which Lessee will put
the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible
for determining whether or not the zoning is appropriate for Lessee's intended
use, and acknowledges that past uses of the Premises may no longer be allowed.
If the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of such non-compliance, rectify the
same at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within nine (9) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in (Paragraph 6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of any Hazardous Substance, or the reinforcement or other physical modification
of the building ("Capital Expenditure"), Lessor and Lessee shall allocate the
cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure. In addition, Lessee's responsibility for any and all
capital costs shall be capped at $60,000 (for the purpose of this Section 2.3(a)
only, in any four-year period. Lessor will be responsible for the cost of
correcting any noncompliance that exceeds said amount.
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(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), the Lessor and lessee shall allocate the obligation to pay for
such costs by using the proration formula set forth in Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the last
two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon ninety (90) days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor. In addition, Lessee's
responsibility for any and all such capital costs shall be capped at $50,000 in
any four-year period. Lessor will be responsible for the cost of correcting any
noncompliance that exceeds said amount, if Lessor elects pay such difference in
order to maintain the tenancy hereunder.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended only to apply to non-voluntary, unexpected, and new
Applicable Requirements. If Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use from the use described
in Section 1.8, a change in intensity of use from the level initially
contemplated hereunder, or modification to the Premises occurring after Lessee's
initial improvements are completed, then Lessee shall be fully responsible for
the cost thereof, and Lessee shall not have any right to terminate this Lease.
(d) INTENTIONALLY DELETED.
2.4 Acknowledgments. Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
(except as otherwise provided in Lease) assumes all responsibility therefor as
the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor's agents, nor any Broker has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (a) Broker has made no representations,
promises or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (b) it is Lessor's sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
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3. Term. Also see Para. #50 of ADDENDUM
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent, Real
Property Taxes, and insurance premiums shall be abated for the period of such
early possession. All other terms of this Lease (excluding the obligations to
pay Real Property Taxes and insurance premiums and to maintain the Premises)
shall, however, be in effect during such period. Any such early possession
shall not affect the Expiration Date. Lessee's responsibility to pay real
estate taxes and insurance shall commence on 4/15/98.
3.3 Delay in Possession: INTENTIONALLY DELETED
3.4 Lessee Compliance. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.
4. Rent
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due. Rent for any period during the term hereof which is
for less than one (1) full calendar month shall be prorated based upon the
actual number of days of said month. Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor's rights to the balance of
such Rent, regardless of Lessor's endorsement of any check so stating.
5. Security Deposit
Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee's faithful performance of its obligations under this
Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease,
Lessor may use, apply or retain all or any portion of said Security Deposit for
the payment of any amount due Lessor or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit monies with
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Lessor sufficient to restore said Security Deposit to the full amount required
by this Lease. Should the Agreed Use be amended to accommodate a material
change in the business of Lessee or to accommodate a sublessee or assignee,
Lessor shall have the right to increase the Security Deposit to the extent
necessary, in Lessor's reasonable judgment, to account for any increased wear
and tear that the Premises may suffer as a result thereof. If a change in
control of Lessee occurs during this Lease and following such change the
financial condition of Lessee is, in Lessor's reasonable judgment, significantly
reduced, Lessee shall deposit such additional monies with Lessor as shall be
sufficient to cause the Security Deposit to be at a commercially reasonable
level based on said change in financial condition. Lessor shall not be required
to keep the Security Deposit separate from its general accounts. Within
fourteen (14) days after the expiration or termination of this Lease, if Lessor
elects to apply the Security Deposit only to unpaid Rent, and otherwise within
thirty (30) days after the Premises have been vacated pursuant to Paragraph
7.4(c) below, Lessor shall return that portion of the Security Deposit not used
or applied by Lessor. No part of the Security Deposit shall be considered to be
held in trust, or to be prepayment for any monies to be paid by Lessee under
this Lease. Lessor agrees to pay interest of 4% per annum on the Security
Deposit payable on March 1st of each successive year commencing 3/1/99.
6. Use
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use. Also
see Para.#51 of ADDENDUM.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself of in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health. safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements.
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"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 disposable 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/or (iii) the
presence at the Premises of a Hazardous Substances with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements, is not a Reportable Use, and
does not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In
addition. Lessor may condition its consent to any Reportable Use upon receiving
such additional assurances as Lessor reasonably deems necessary to protect
itself, the public, the Premises and/or the environment against damage.
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substances has come to be located in, on, or under
or about the Premises after the Commencement Date, other than as previously
consented to by Lessor, Lessee shall immediately give written notice of such
fact to Lessor, and to provide Lessor with a copy of any report, notice, claim
or other documentation which it has concerning the presence of such Hazardous
Substances.
(c) Lessee Remediation. Lessee shall not cause or intentionally
permit any Hazardous Substances to be spilled or released in, on, under, or
about the Premises (including through the plumbing or sanitary sewer system) and
shall promptly, at Lessee's expense, take all investigatory and/or remedial
action reasonably recommended, whether or not formally ordered or required, for
the cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substances brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substances brought onto the Premises by or for
Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to any contamination occurring prior to
the Commencement Date, nor for any underground migration of any Hazardous
Substances under the Premises from adjacent properties). Lessee's obligations
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, removal, remediation, restoration and/or abatement, and
shall survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its
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obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages which existed as a
result of Hazardous Substances on the Premises prior to the Commencement Date or
which are caused by the negligence, or intentional acts of Lessor, its agents or
employees. Lessor's obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date. Lessee shall
cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor's agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) Lessor Termination Option. If a Hazardous Substances Condition
occurs during, the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substances 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 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
Substances 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 a termination notice, Lessee may, within ten (10) days thereafter, give
written notice to Lessor of Lessee's commitment to pay the amount by which the
cost of the remediation of such Hazardous Substances Condition exceeds an amount
equal to twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within thirty (30) days following such commitment. In such event, this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such 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 provided, this Lease shall terminate as of
the date specified in Lessor's notice of termination. If neither party elects
to complete such remediation. then Lessor shall pay Lessee $300,000, less a sum
equal to $37,500, multiplied by the number of full or partial lease years
(rounded to the nearest full month) elapsed between the Commencement Date and
the date of Lessor's notice of termination.
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6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee, shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all (a) Applicable
Requirements and the reasonable safety-related requirements of any applicable
fire insurance underwriter or rating bureau, and (b) the reasonable safety-
related recommendations of Lessor's engineers and/or consultants which relate in
any manner to the Premises, without regard to whether said requirements are now
in effect or become effective after the Start Date. Lessee shall, within ten
(10) days after receipt of Lessor's written request, provide Lessor with copies
of all permits and other documents, and other information evidencing Lessee's
compliance with any Applicable Requirements specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of all permits
and other documents, and the information evidencing Lessee's compliance with any
Applicable Requirements specified by Lessors) 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 the failure of Lessee or the Premises to comply with
any Applicable Requirements. Regardless of the other terms of this paragraph,
Lessee's liability for costs relating to the above requirements shall be limited
to a maximum of $50,000 in any four-year period.
6.4 Inspection; Compliance. Lessor and Lessor's Lender and consultants
shall have the right to enter into 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. The cost of any such inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination for which Lessee is
responsible under the terms of this Lease is found to exist or be imminent, or
the inspection is requested or ordered by a governmental authority. In such
case, Lessee shall upon request reimburse Lessor for the reasonable and
competitive cost of such inspections, to the extent such inspection is
reasonably related to the violation or contamination.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations
7.1 Lessee's Obligations. See Para.#52 of ADDENDUM for modifications.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, of the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, HVAC, electrical,
lighting facilities, fire protection system, fixtures, interior walls, ceilings,
floors, windows, doors, plate glass, skylights, landscaping, fences, and signs
located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in
good order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee's obligations
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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. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition consistent with
the exterior appearance of other similar facilities of comparable age and size
in the vicinity, including, when necessary, the exterior repainting of the
Building. Regardless of the foregoing language, Lessor shall, during the first
8 years of the Term, repair, maintain, and replace as necessary all water and
sewer pipes serving the Premises, to the extent outside of the building or under
the concrete slab of the building. Lessor shall not, however, be required to
clean out the drains or pipes, which shall be Lessee's responsibility. After
the first 8 years of the Term, Lessee shall bear such costs.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements. ("Basic Elements"), if
any, as and when installed on the Premises: (i) HVAC equipment, (ii)
Intentionally Deleted, (iii) fire protection systems, (iv) Intentionally
Deleted, (v) Intentionally Deleted, (vi) Intentionally Deleted, (vii) clarifiers
and/or grease traps (as applicable), and (viii) any other equipment, as
reasonably required by Lessor. In addition, Lessee shall maintain the
landscaping in clean and orderly condition. Lessee shall keep the roof, roof
drains, and downspouts free of debris.
(c) Replacement. Subject to Lessee's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor, and
the cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is the number of months of the useful life
of such replacement as such useful life is specified pursuant to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with lessee reserving the right to prepay its obligation
at any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation)
and to any other contrary provision of this Lease and the Addendum attached to
it, it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease. See Paragraph 52 of
ADDENDUM for modifications.
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7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "'Trade Fixtures" shall mean Lessee's machinery and equipment installed
in the Premises by or for Lessee and which is used primarily for the purpose of
conducting Lessee's Permitted Use. Lessee shall pay all costs to restore any
damage caused to the Premises by such removal. The term "Alterations" shall
mean any modification of the improvements, other than Utility installations or
Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations
and/or Utility Installations" are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent, which
shall not be unreasonably withheld. Lessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding the roof)
without such consent but upon notice to Lessor, as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during this Lease as
extended does not exceed $50,000 in the aggregate or $10,000 in any one year.
Lessee may remove all of its Trade Fixtures, so long as it repairs any damage
done to the Premises as a result of such removal. If the Lease expires or is
terminated prior to the end of the eighth anniversary of the Commencement Date,
then Lessee shall reimburse Lessor for a fraction of the reasonable costs of
removing any improvements to the Premises as necessary to restore the Premises
to a condition readily usable for warehousing and/or general purpose light
manufacturing. The numerator of said fraction shall be the number of full
calendar months remaining prior to the eighth anniversary of the Commencement
Date, and the denominator of said fraction shall be 96. If the eighth
anniversary of the Commencement Date shall have passed at the time the Lease
expires or otherwise terminates, then Lessee shall not be required to incur any
expense with respect to the removal of said items. Regardless of the above,
Lessee shall in all events return the slab inside the Premises to a smooth,
level condition.
(b) Consent. Lessor hereby approves* Lessee's plans for its initial
improvements to the Premises. As to any subsequent Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee's (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits and
the plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said permits and other Applicable Requirements
in a prompt and expeditious manner. Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient materials.
Lessee shall promptly upon completion furnish Lessor with redlined plans and
specifications. For work which costs an amount equal to the greater of one
month's Base Rent, or $10,000, Lessee shall give Lessor at least ten (10) days
written notice prior to commencing such work, so that Lessor may post notices of
nonresponsibility on the Premises. If any lien is asserted against the Premises
because of any
*As of 3/10/98 plans have not yet been submitted to Lessor. Lessor will approve
plans when submitted if they do not affect structural integrity of building.
J.W.P [Handwritten on bottom of page in original.]
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work contracted for by Lessee, Lessee will immediately post a lien bond in an
amount equal to one and one-half times the estimated cost of such work.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 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. If Lessee shall 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. If Lessor shall require, Lessee shall furnish a surety bond 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. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
7.4. Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided and as modified under Section 7.3(a), all
Alterations and Utility Installations made by Lessee shall be the property of
Lessee, but considered a part of the Premises. Lessor may, at any time, elect
in writing to be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed per
Paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations
shall, at the expiration or termination of this Lease, become the property of
Lessor and be surrendered by Lessee with the Premises.
(b) Removal. Except as stated in Section 7.3(a), by delivery to
Lessee of written notice from Lessor not later than ninety (90) days prior to
the end of the term of this Lease, Lessor may require that any or all Lessee
Owned Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations made without
the required consent.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
Expiration date or any earlier termination date, with all of the improvements
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear and damage from
casualty and condemnation excepted. "Ordinary wear and tear" shall not include
any damage or deterioration that would have been prevented by good maintenance
practice. Lessee shall repair and damage occasioned by the installation,
maintenance or removal of Trade Fixtures, furnishings, and equipment 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 groundwater contaminated by
Lessee. Trade Fixtures shall remain the property of Lessee and shall be removed
by Lessee. The failure by Lessee to timely vacate the Premises
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pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity (See also Paragraph 55)
8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b), which shall be paid for by
Lessor. Premiums for policy periods commencing prior to or extending beyond the
Lease term shall be prorated to correspond to the Lease term. It is anticipated
that Lessee will pay applicable insurance premiums directly. However, if Lessor
contracts for basic fire/liability coverage, Lessee shall reimburse Lessor for
this expense on a monthly basis, at the same time as Lessee reimburses Lessor
for its share of Real Estate Taxes.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 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 shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Lessee shall obtain and keep in
force a policy or policies in the name of Lessor, with loss payable to Lessor
and to any Lender insuring loss or damage to the Premises. The amount of such
insurance shall be equal to the full replacement cost of the Premises, as the
same shall exist from time to time, or the amount required by any Lenders, but
in no event more than the commercially reasonable and available insurable value
thereof. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage and
flood (except
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earthquake), including coverage for debris removal and the enforcement of any
Applicable Requirements requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Premises as the result of a covered loss.
Said policy or policies shall also contain an agreed valuation provision in lieu
of any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $25,000 per occurrence (unless Lessee delivers a letter of credit in
favor of Lessor for the difference between the actual deductible and $25,000,
which shall be kept in force for so long as such higher deductible applies), and
Lessee shall be liable for such deductible amount in the event of an Insured
Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount up to $10,000 in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
8.4. Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property. Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $25,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force. If Lessee desires a higher deductible than those
required above, Lessee shall deliver a letter of credit in favor of Lessor for
the difference between the actual deductibles and the deductibles required
above, which shall be kept in force for so long as such higher deductibles
apply.
(b) Business Interruption. If reasonably available, and if Lessor
requests Lessee to do so in writing, Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable
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to all perils commonly insured against by prudent lessees in the business of
Lessee or attributable to prevention of access to the Premises as a result of
such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or intentionally permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates
evidencing, the existence and amounts of the required insurance. No such policy
shall be cancelable or subject to modification except after 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. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence or intentional misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid
any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor from Liability. Except to the extent caused by
Lessor's negligence, intentional misconduct, or breach of this Lease (for which
Lessor will remain liable) Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise or
[Initialed]
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other property of Lessee, Lessee's employees, contractors, invitees, customers,
or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
9. Damage or Destruction
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alternations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations,
which cannot reasonably be repaired in six (6) months or less from the date of
the damage or destruction. Lessor shall notify Lessee in writing within thirty
(30) days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations 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 Requirements, and without
deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds
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available to Lessee on a reasonable basis for that purpose. Notwithstanding the
foregoing, if the required insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds (except as to the deductible which is
Lessee's responsibility) as and when required to complete said repairs. In the
event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to: (i) make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain in full force and effect, or have this Lease
terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee
shall have the right within ten (10) days after receipt of the termination
notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage without reimbursement from Lessor. Lessee shall provide
Lessor with said funds or satisfactory assurance thereof within thirty (30) days
after making such commitment. In such event this Lease shall continue in full
force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available. If Lessee does not
make the required commitment, this Lease shall terminate as of the date
specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of this Lease, or any extension thereof, the Premises is damaged by
casualty, for which the cost to repair
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exceeds one (1) month's Base Rent, whether or not an Insured Loss, either party
may terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving a written termination notice to the other
within thirty (30) days after the date of occurrence of such damage.
Notwithstanding the foregoing: (i) a party shall not be entitled to terminate
the lease if such damage was caused by that party's intentional or reckless act,
and (ii) 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 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
commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee fails
to exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate on the date specified in the termination notice
and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein. Notwithstanding the foregoing, if such
activities are not completed before Lessee's right to a rent abatement expires,
Lessee may terminate this Lease upon written notice to Lessor, effective as of
the date such abatement right expires.
(b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not actually commence such repair or restoration within ninety
(90) days after such obligation shall accrue, Lessee may, at any time prior to
the commencement of such repair or restoration, give written notice to Lessor
and to any Lenders of which Lessee has actual notice, of Lessee's election to
terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice and such repair or
restoration is not commenced within thirty (30) days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within said thirty (30) days, this Lease shall continue
in full force and effect. If Lessor's delay is caused by delay in obtaining
permits, inspections, or other land use permits and approvals that is not
reasonably avoidable by Lessor, then the deadline for Lessor's performance
stated above shall be extended day for day for the period of such unavoidable
delay.
9.7 Termination-Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance
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Base Rent and any other advance payments made by Lessee to Lessor. Lessor
shall, in addition, return to Lessee so much of Lessee's Security Deposit as has
not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes See Para. #54 and Para. 955 of ADDENDUM for
modifications.
10.1 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of improvement bond or assessment (but
only in the same proportion that the benefit corresponding to such bond or
assessment accrues during the Term); real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); and/or license fee imposed upon or levied against any legal or
equitable interest of Lessor in the Premises. Lessor's right to other income
therefrom, and/or Lessor's business of leasing, by any authority having the
direct or indirect power to tax and where the funds are generated with reference
to the Building address and where the proceeds so generated are to be applied by
the city, county or other local taxing authority of a jurisdiction within which
the Premises are located. The term "Real Property Taxes" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Premises. Lessor will seek to pay any
assessments or bonds in installments, to the greatest extent possible, and
Lessee shall only be responsible for that portion of installments accruing
during the term of the Lease.
10.2
(a) Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes. Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.
(b) Advance Payment. In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
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estimated Rent. If Lessor elects to require payment monthly in advance, the
monthly payment shall be an amount equal to the amount of the estimated
installment of taxes divided by the number of months remaining before the month
in which said installment becomes delinquent. When the actual amount of the
applicable tax bill is known, the amount of such equal monthly advance payments
shall be adjusted as required to provide the funds needed to pay the applicable
taxes. If the amount collected by Lessor is insufficient to pay such Real
Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional
sums as are necessary to pay such obligations. All monies paid to Lessor under
this Paragraph may be intermingled with other monies of Lessor and shall not
bear interest. In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may at the option of Lessor, be treated as an
additional Security Deposit.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability 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 conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent, which shall not be unreasonably withheld or
delayed.
(b) No merger, conversion, or consolidation of Lessee into or with
another entity, nor any sale, issuance, or transfer of stock of Lessee shall be
considered a prohibited or regulated assignment, sublet, or other transfer
requiring consent of the Lessor, so long as the
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same is not done as a means of accomplishing a transfer of the Lease otherwise
prohibited hereunder.
(c) An assignment or subletting without consent shall, at Lessor's
opinion, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach
and rental adjustment, (i) the purchase price previously in effect, and (ii) all
fixed and non-fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased to One Hundred Ten Percent (110%) of the scheduled
adjusted rent.
(d) Lessee's remedy for any breach of 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, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security 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. Lessee shall, upon receipt of
actual paid invoices therefor, reimburse Lessor for Lessor's reasonable attorney
fees incurred in connection with Lessor's review of such request, not to exceed
the
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greater of $500 or 5% of the then-current monthly installment of Base Rent due
hereunder. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or
any assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee's obligations to such sublessee. 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 all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay
all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent, which shall not be unreasonably
withheld or delayed.
(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
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any, specified in such notice. The sublessee shall have a right of reimbursement
and offset from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises (provided that Lessee shall not
be deemed to have abandoned the Premises so long as it continues to pay rent and
other charges due hereunder); or the vacating of the Premises without providing
a commercially reasonable level of security, or where the coverage of the
property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.
(b) The failure of Lessee to make any payment of Rent or any other
monetary payment required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the recession of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) 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 (10) days following written notice to Lessee.
(d) Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
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;
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 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
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. (S) 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days;
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or (iv) the attachment, execution or other judicial seizure of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to
any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty; (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the time of
execution of this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or after such longer
period of notice and opportunity to cure that may be provided for elsewhere in
this Lease), or in case of an emergency, without notice, Lessor may, at its
option, perform such duty or obligation on Lessee's behalf, including but not
limited to the obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. The commercially reasonable costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made by Lessee to be by cashier's check.
In the event of a Breach, Lessor may, with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned 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) except as limited by the other terms of this
Section, any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including such renovation and
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alteration of the Premises as may be necessary to return it to the condition in
which Lessee was obligated to leave it upon expiration or sooner termination of
the Lease, reasonable attorneys' fees required to regain possession of the
Premises and to collect any amounts owed by Lessee to Lessor hereunder, 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 the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 11 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of 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. Any agreement for free or abated rent or other
charges, 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. Upon a termination of
this Lease by Lessor following a Breach 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 a portion of 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, in the same proportion that the then-expired term of the Lease bears to
the initial four-year term. The foregoing paragraph shall not apply to, and
there shall be no recapture of, the $10,000 contribution by Lessor toward the
cost of certain electrical work on the Premises.
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13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each 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 such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor within thirty (30) days following the date on
which it was due, shall bear interest from the thirty-first (31st) day after
it was due. The interest ("Interest") charged shall be equal to the prime rate
charged by the largest state chartered bank in the state in which the Premises
are located plus 4%, but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charges provided for in
Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. 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, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, of if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the entire Premises or reasonable access to it are
taken under the power of eminent domain or sold under the threat of the exercise
of said power (collectively "Condemnation"), this Lease shall terminate as to
the part taken as of the date a condemning
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authority takes title or possession, whichever first occurs. If more than ten
percent (10%) of any building, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
Commissions have been handled with a separate agreement between Lessor and
Broker. J.W.P. [Handwritten on original.]
15. Broker's Fee.
15.1 Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project, if any, within which the Premises is located,
(c) if Lessee remains in possession of the Premises, with the consent of Lessor,
after the expiration of this Lease, or (d) if Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then Lessor shall pay
Brokers a fee in accordance with the schedule of said Brokers in effect at the
time of the execution of this Lease.
15.2 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Each Broker shall be a third party beneficiary of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions pertaining to this Lease when due, then such amounts
shall accrue interest. In addition, if Lessor fails to pay any amounts to
Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor fails to pay such amounts within ten (10)
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker.
15.3 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than
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said named Brokers is entitled to any commission or finder's fee in connection
herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying party, including
any costs, expenses, attorneys' fees reasonably incurred with respect thereto.
16. Tenancy Statement/Estoppel Certificate.
16.1 Each Party (as "Responding Party"') shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party an estoppel certificate in
writing, in form similar to the then most current "Tenancy Statement" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee's
financial statements for the past 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. Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Except as provided in Paragraph 15,
upon such transfer or assignment and delivery of the Security Deposit, as
aforesaid, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, the original Lessor under this
Lease, and all subsequent holders of the Lessor's interest in this Lease shall
remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Except with respect to Lessor's fraud, gross
negligence or willful misconduct, the obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor, the individual partners of
Lessor or its or their individual partners,
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directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or
shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior, or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including, court costs and attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. Notices
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may upon
written notice to the other specify a different address for notice, except that
upon Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
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
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
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24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce he provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of monies or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. No Right To Holdover. Lessee has not right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee. (See
Paragraph 56 of Addendum for modifications.)
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; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the parties, but rather
according to its fair meaning as a whole, as if both parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and
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all advances made on the security thereof, and to all renewals, modifications,
and extensions thereof. Lessee agrees that the holders of any such Security
Devices shall have no liability or obligation to perform any of the obligations
of Lessor under this Lease, unless and until such party acquires title to the
Premises. Any Lender may elect to have this Lease and/or any Option granted
hereby superior to the lien of its Security Device by giving written notice
thereof to Lessee. This Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the Non-
Disturbance Agreement within said sixty (60) days, then Lessee may, at Lessee's
option, directly contact Lessor's lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises. Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. 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' fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees
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reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees,
costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.
32. Lessor's Access' Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such repairs to the
Premises as Lessor may be required to do under this Lease. All such activities
shall be without abatement of rent or liability to Lessee, so long as Lessor
uses reasonable care to avoid disrupting Lessee's business on the Premises.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign. Landlord may make other
general purpose improvements to Premises that do not disrupt Tenant's operations
on the Premises.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
34. Signs. Except for reasonable Signage identifying Lessee's business upon the
Premises and ordinary "For Sublease" signs, Lessee shall not place any sign upon
the Premises without Lessor's prior written consent, which shall not be
unreasonably withheld or delayed. All signs must comply with all Applicable
Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days' following any
such event to elect 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. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Except as expressly limited
elsewhere in this Lease, 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, 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 upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by 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. In the event that
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either Party disagrees with any determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and in reasonable detail within ten (10)
business days following such request.
37. Guarantor.
37.1 Execution. The Guarantors if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
37.2 Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d)
written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
39. Options See Addendum Paragraph 53 for Options to Extend Term of Lease.
39.1 Definition. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other Property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. INTENTIONALLY DELETED.
39.3 Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given to Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given three (3) or more notices of Default, whether or not the Defaults are
cured, during the twelve (12) month period immediately preceding the exercise of
the Option.
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(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) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.
40. Multiple Buildings. INTENTIONALLY DELETED.
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 agent and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easement, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
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.
44. Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence 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.
[Initial]
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<PAGE>
46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's rights or obligations hereunder or those of Lessor,
Lessee agrees to make such reasonable non-monetary modifications to this Lease
as may be reasonably required by a Lender in connection with the obtaining of
normal financing or refinancing of the Premises.
48. Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease [ ] is, [X] is not attached to this Lease.
See ADDENDUM and EXHIBITS attached to this Lease which are an integral part of
this Agreement.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
---------
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS AND
THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
-------
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
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ADDENDUM (Paragraphs 50 - 57 on Pages 37-41) and EXHIBIT 11 is attached hereto
and is part of this Lease Agreement.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Santa Monica, California Executed at: Seattle, Washington
------------------------ -------------------
on: March 10, 1998 on: March, 1998
-------------- -------------
By LESSOR: By LESSEE:
CENTER/NEVADA ASSOCIATES BRIAZZ, INC.
------------------------------------------- -------------------------------------------
A California General Partnership A Washington State Corporation
------------------------------------------- -------------------------------------------
Fred W. Plotke - Managing Partner Federal ID# 91-1672311
------------------------------------------- -------------------------------------------
By: /s/ Fred W. Plotke By: _______________________________________
----------------------------------------
Name Printed: Fred W. Plotke Name Printed: Bruce D. Boxer
----------------------------- -----------------------------
Title: Managing Partner Title: Vice-President
------------------------------------ ------------------------------------
CENTER/NEVADA ASSOCIATES Real Estate and Development
Principal/President
TIME REALTY INVESTMENTS, INC.
xx: Business Address By: /s/ James A .McDermet
---------------------------------------- ---------------------------------------
Name Printed: TIME REALTY INVESTMENTS, INC. Name Printed: James A .McDermet
----------------------------- ------------------------------
Title: 1511 - 18/th/ Street Title: President
------------------------------------- ------------------------------------
Address: Santa Monica, CA 90404 Address: 1011 Klickitat Way - Suite 202
----------------------------------- ----------------------------------
Telephone: 310/828-4481 Telephone: 206/467-0994
--------------------------------- --------------------------------
Facsimile: 310/453-2216 Facsimile: 206/467-1970
--------------------------------- --------------------------------
Federal ID No.: 95-4083570 (TRI, INC.) Federal ID No.: 91-1672311
---------------------------- ---------------------------
95-4223148 (CENTER/NEVADA)
(ASSOCIATES)
BROKER: BROKER:
Executed at:___________________ Executed at:________________________
on:____________________________ on:_________________________________
By:____________________________ By:_________________________________
Name Printed:__________________ Name Printed:_______________________
Title:_________________________ Title:______________________________
Address:_______________________ Address:____________________________
Telephone:_____________________ Telephone:__________________________
Facsimile:_____________________ Facsimile:__________________________
Federal ID No.:________________ Federal ID No.:_____________________
NOTE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the
most current form:
[Initial]
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AMERICAN REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los
Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616.
[Initial]
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ADDENDUM TO THE LEASE DATED DECEMBER 15, 1997
50. Rental Payments During Initial Term of Lease and First Option Period (First
96 Months). The base rental rate for the first 12 months of the lease term shall
be $9500/month payable in advance on the first day of each successive month.
The rent shall be increased 3%/year, compounded annually, on the anniversary
date (March 1st) of each successive year. More specifically, the base rental
rates during the initial term of the lease and first option period (96 months)
of the lease term, rounded to the nearest $50 are as follows:
1) 3/1/98 - 2/28/99 Base Rental Rate = $9500/month (except for
3/1/98-4/30/98, for which $4,750 shall be paid)
2) 3/1/99 - 2/28/00 Base Rental Rate = 9800/month
3) 3/1/00 - 2/29/01 Base Rental Rate = 10100/month
4) 3/1/01 - 2/28/02 Base Rental Rate = 10400/month
5) Year 1 - 1st Option
3/1/02 - 2/28/03 Base Rental Rate = 10700/month
6) Year 2 - 1st Option
3/1/03 - 2/29/04 Base Rental Rate = 11000/month
7) Year 3 - 1st Option
3/1/04 - 2/28/05 Base Rental Rate = 11350/month
8) Year 4 - 1st Option
3/1/05 - 2/28/06 Base Rental Rate = 11700/month
Lessor acknowledges that Lessee has previously deposited $15,000 with Lessor.
Upon execution of the Lease, such funds shall be held as a Security Deposit.
Lessee shall also then pay $4,750 advance rent for the period through 4/30/98
(total of $19,750). Lessor agrees to pay interest on the Security Deposit at
the rate of 4% annum payable on March 1st of each successive year with the first
interest payment of $600 to be paid on 3/1/98, and with payments thereafter at
the rate of $600 per year on each March 1st.
51. Use of the Premises. This paragraph modifies Para. 6 of the Lease
Agreement. The subject premises shall be used by Lessee for the following lawful
purpose: commissary facility for a group of sandwich shops and fast-food kiosks
operated by BRIAZZ, INC., and/or its permitted transferees. The intended
activities to be conducted within the subject premises shall include food
storage and preparation, delivery and catering, office support activities and
other related uses. The subject premises may be also used for other legally
permitted business activities, unless such activities create significant
additional physical and/or legal hazards beyond
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those associated with the intended initial use (food preparation commissary),
(e.g., uses such as manufacturing of inflammable spray paints, manufacture or
distribution of lacquers or insecticides, warehousing and distribution of
fireworks, or use as an automotive body shop --even though such uses may be
technically legal in this area of the City of El Segundo).
52. Condition of Premises. This paragraph modifies Paragraphs 2.2 and 7.1(b)
and 7.1(c) of the Lease Agreement. Lessee shall accept the subject premises in
their current existing condition as of the date of Lease commencement, except
that Lessor shall deliver the subject premises broom-swept clean and with all
currently existing plumbing, electrical and HVAC systems and equipment in good
operating condition. Lessor shall meet all obligations as generally described in
Para. 2.2 of the Lease Agreement. Lessor will also accept responsibility for
maintenance of the roof (including the roof membrane), exterior walls,
foundation, and parking lot areas over the lease term (presuming normal use by
Lessee).
53. Options to Extend the Term of Lease. Lessee shall have certain Options to
Extend the Term of Lease for three additional 48 month periods as follows:
--First Option Period: 3/l/2002 - 2/28/2006
--Second Option Period: 3/l/2006 - 2/28/2010
--Third Option Period: 3/1/2010 - 2/28/2014
Rent for the first option period shall be as set forth in the schedule in
Paragraph 50 above. The base rental rates for the second option period shall be
determined by establishing a new "fair market rent" on 3/l/2006 and then using
consumer price index adjustments for the next three years of the second option
period. The new "fair market rent" (FMRI) on 3/l/2006 shall be determined by
the following procedure:
Four months prior to the first day of the second option term (the "Market
Rental Value (MRV) Adjustment Date"), Lessor and Lessee shall meet to establish
an agreed upon new MRV for the specified term. If agreement cannot be reached,
then:
i) Lessor and Lessee shall immediately appoint a mutually acceptable
appraiser or broker to establish the new MRV within the next 30 days. Any
associated costs will be split equally between the parties, or
ii) Both Lessor and Lessee shall each immediately select and pay the
appraiser or broker of their choice to establish a MRV within the next 30 days.
If, for any reason, either one of the appraisals is not completed within the
next 30 days, as stipulated, then the appraisal that is completed at that time
shall automatically become the new MRV. If both appraisals are completed and
the two appraisers/brokers cannot agree on a reasonable average MRV then they
shall immediately select a third mutually acceptable appraiser/broker to
establish a third MRV within the next 30 days. The average of the two
appraisals closest in value shall then become the new MRV. The costs of the
third appraisal will be split equally between the parties.
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iii) In any event, the new MRV shall not be less than the rent payable
for the month immediately preceding the date for rent adjustment.
The base rental rates for the second option period shall be determined as
follows:
Base Rental Rate FMR1 determined on 3/l/06
3/l/06 - 2/28/07 by procedure indicated above
Base Rental Rate CPI on 3/l/07 X FMRI Minimum Rent = 3% more than
-------------
3/l/07 - 2/28/08 CPI on 3/l/06 previous rate
Maximum Rent = 6% more than
previous rate
Base Rental Rate CPI on 3/l/09 X FMR1 Minimum Rent = 3% increase
-------------
3/l/09 - 2/28/10 CPI on 3/l/06 Maximum Rent = 6% increase
Base Rental Rate CPI on 3/1/11 X FMR1 Minimum Rent = 3% increase
-------------
3/1/11 - 2/28/12 CPI on 3/l/06 Maximum Rent = 6% increase
The base rental rates for the third option period shall be determined by the
establishment of a new "fair market rent" on 3/1/10 and then using CPI
adjustments for the next three years of the third option period. The CPI Index
to be used shall be the CONSUMER PRICE INDEX FOR URBAN WAGE EARNERS AND CLERICAL
WORKERS - ALL U.S. CITIES (National CPI Index) which is published by the U.S.
Bureau of Labor Statistics and is updated monthly. The new "fair market rent"
(FMR2) on 3/1/10 shall be determined by the same procedure as indicated above
for FMR1. The rental rate adjustments for the 2nd, 3rd and 4th years of the
third option period shall be computed by reference to the Consumer Price Index
(CPI) using 3/l/10 as the base period and FMR2 as the base rent. The rental
rate computations for the second option period are as follows:
Base Rental Rate FMR1 determined on 3/l/10
3/l/01 - 2/28/11 by procedure indicated above
Base Rental Rate CPI on 3/l/2011 X FMR2 Minimum Rent = 3% more than
---------------
previous rate
3/l/11 - 2/28/12 CPI on 3/l/2010 Maximum Rent = 6% more than
previous rate
Base Rental Rate CPI on 3/l/2012 X FMR2 Minimum Rent = 3% increase
---------------
3/l/12 - 2/28/13 CPI on 3/l/2010 Maximum Rent = 6% increase
Base Rental Rate CPI on 3/1/2013 X FMR2 Minimum Rent = 3% increase
---------------
[Initial]
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<PAGE>
3/1/13 - 2/28/14 CPI on 3/1/2010 Maximum Rent = 6% increase
To exercise the Option(s) to Extend the Term of Lease (first, second or third
Options to Extend), Lessee must not be in violation of any of the general terms
and conditions of the Lease, rental payments must be current, and Lessee must
give Lessor a minimum of ninety (90) days advance written Notice of its intent
to exercise the Option(s) to Extend which Notice shall be delivered to Lessor's
address as set forth on the first page of this Lease. However, Lessor shall be
obligated to give a written Notice to Lessee at least 100 days prior to the
expiration date of the Lease (or extended term of Lease), indicating that the
Lease will be terminating which Notice shall be sent to Lessee's address set
forth on the first page of this Lease. Either party may change its address for
notice by written notice to the other party, given in accordance with the terms
of this Lease. Lessee shall have at least 10 days advance notice of the
necessity to respond to Lessor, if Lessee wishes to extend the Lease term.
If Lessor does not receive timely Notice of Lessee's intent to extend the Lease,
Lessor shall have no further obligation to Lessee to extend the Lease and shall
be free to make alternative leasing commitments for the Subject Premises.
54. Limitation on Lessee's Obligation for R.E. Taxes during Initial Lease Term.
This paragraph modifies Para. 10 of this Lease Agreement. During the initial
term of the Lease (first 48 months) Lessee's responsibility for R.E. Taxes shall
be limited to those based on valuation assessments which would be normally be
imposed on the ownership of the property in the absence of a sale or transfer of
the property (which could result in a valuation re-assessment). However, this
limitation shall not be applicable if the term of the Lease is extended (i.e.,
after 3/1/2002).
55. Payment of Real Estate Property Taxes and Insurance Premiums. This
Paragraph modifies Para. 10 of the Lease Agreement. Lessee shall pay Lessor
1/12 of the estimated annual R.E. Taxes applicable to the subject leased
premises each month. The monthly R.E. Tax Payments shall be due and payable on
the first day of each successive calendar month together with the Net Monthly
Rental Payment also due on the first day of each month. Any required adjustment
in the total R.E. Taxes due and/or paid shall be made annually on the
anniversary date of this Lease (March 1st of each successive year) upon
presentation of the documented R.E. Tax billing to Lessee. This arrangement for
estimated monthly R.E. Tax payments shall be applicable during the entire term
of the Lease including the initial 48 month period as well as extended periods.
The monthly allocation for R.E. Taxes shall be deemed additional rent payable.
The terms and conditions indicated in this paragraph are subject to the
limitation on Lessee's total R.E. Tax obligations during the first 48 months of
the Lease terms as indicated in Para. 54 above.
For the initial twelve (12) month period of this Lease (3/1198 - 2/28/2002) the
estimated monthly R.E. Tax allocation shall be $800/Month (except that there
shall be no real estate taxes paid by Lessee for the period from 3/1/98 to
4/14/98). This initial estimate of the monthly R.E. Tax allocation is based on
the anticipated assessment of the subject property as of 3/1/98. If Lessee
[Initial]
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<PAGE>
elects to have Lessor insure the Premises in the manner provided in the Lease,
Lessee shall reimburse Lessor for 1/12 the cost of such premiums at the time
Lessee pays its monthly installment of Real Estate Taxes. By December 1 of each
year, Lessor will forward to Lessee a reconciliation of amounts impounded versus
amounts actually paid by Lessee. If Lessee has overpaid or underpaid any of the
above amounts, future impounds due for the then-coming calendar year will be
adjusted up or down to compensate for such overpayment or underpayment, or if a
full year does not remain in the term of the lease, then the adjustment will be
made over the remaining months of the lease.
56. Holding Over by Lessee. In the event that Lessee shall hold the premises
after the expiration of the term of the Lease hereof or any extension thereof,
such holding over shall, in the absence of a superseding written agreement, be
deemed to have created a tenancy on a month-to-month basis terminable upon
thirty (30) days written Notice by either party to the other. In the event that
Lessee shall hold possession of the subject premises after the expiration of the
initial lease term (i.e., after 2/28/2002), Lessee shall pay Lessor a monthly
rental rate of $12,000/month commencing 3/l/2002. In the event that Lessee
shall hold the premises upon expiration of the first, second, or third Option
Extension Terms (after 2/28/2006, 2/28/2010 or 2/28/2014), Lessee shall pay
Lessor the established prevailing monthly base rent for the previous month plus
$2500/Month on a month-to-month basis until such arrangement is superseded with
a written agreement or until Lessee terminates tenancy of the subject premises.
57. Lessor's Contribution to Costs of Electrical Work. Lessor will pay
$10,000 of the cost of modifying the electrical system serving the Premises in
connection with Lessee's initial improvements. Such payment will be made upon
presentation to Lessor by Lessee of invoices equal to or exceeding such amount.
END OF ADDENDUM TO THE LEASE
[Initial]
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<PAGE>
200 CENTER STREET BRIAZZ, INC. - A WASHINGTON STATE CORPORATION
EL SEGUNDO, CA 90245
EXHIBIT I - DIAGRAM OF THE SUBJECT PREMISES
-------------------------------------------
NOTE: This diagram indicates the initial configuration - prior to Lessee's
planned Tenant Improvement (TI) modifications.
[Graphics showing layout and floor design]
[Initial]
<PAGE>
200 CENTER STREET BRIAZZ, INC. - A WASHINGTON STATE CORPORATION
EL SEGUNDO, CA 90245
EXHIBIT II -- SAMPLE CPI SCHEDULE
---------------------------------
\PFS\CPI Revised 1/22/98
CONSUMER PRICE INDEX, ALL ITEMS
U.S. CITY AVERAGE
This Consumer Price Index (CPI) is published by the U.S. Department of Labor
Bureau of Labor Statistics. Statistics are updated monthly. For national and
local CPI information you may contact the local office of the Bureau of Labor
Statistics at (213) 252-7528 or (213) 252-7521.
Data prior to January 1978 is used with the CPI for all Urban Wage Earners and
Clerical Workers (CPI-W).
CONSUMER PRICE INDEX
FOR URBAN WAGE EARNERS AND CLERICAL WORKERS (CPI-W)
Annual
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average
1978 187.1 188.4 189.7 191.4 193.3 195.3 196.7 197.7 199.1 200.7 201.8 202.9 195.3
1979 204.7 207.1 209.3 211.8 214.3 216.9 219.4 221.5 223.7 225.6 227.6 230.0 217.7
1980 233.1 236.5 239.9 242.6 245.1 247.8 248.0 249.6 251.9 254.1 256.4 258.7 247.0
1981 260.7 263.5 265.2 266.8 269.1 271.4 274.6 276.5 279.1 279.7 280.4 281.1 272.8
1982 282.1 282.9 282.5 283.7 280.5 290.1 291.8 292.4 292.8 293.6 293.2 292.0 288.6
1983 292.1 292.3 293.0 294.9 296.3 297.2 298.2 299.5 300.8 301.3 301.4 301.5 297.4
1984 302.7 303.3 303.3 304.1 305.4 306.2 307.5 310.3 312.1 312.2 311.9 312.2 307.0
1985 312.6 313.9 315.3 316.7 317.8 318.7 319.1 319.6 320.5 321.3 322.6 323.4 318.5
1986 324.3 321.2 321.4 320.4 321.4 323.0 322.9 323.4 324.9 325.0 325.4 325.7 323.4
1987 327.7 329.0 330.5 332.2 333.4 334.9 335.6 337.4 339.1 340.0 340.4 340.2 334.3
1988 341.0 341.6 343.0 344.7 346.1 347.6 349.1 350.7 343.0 354.2 354.6 355.0 348.4
1989 356.7 358.0 360.0 362.9 364.9 365.9 366.8 367.0 368.3 369.8 370.6 371.1 365.2
1990 375.0 376.6 378.5 379.2 379.9 382.1 383.4 386.9 390.5 393.0 393.8 393.8 384.4
1991 395.4 395.7 396.1 397.1 398.5 399.6 400.0 401.0 402.8 403.2 404.5 404.7 399.9
1992 405.2 406.2 408.1 408.9 490.9 411.4 412.1 413.3 414.5 415.8 416.5 416.3 411.5
[Initial]
<PAGE>
Annual
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average
1993 417.8 419.2 420.4 421.6 422.6 423.1 423.2 424.2 424.9 426.7 427.1 426.9 423.1
1994 427.7 428.8 430.2 430.9 431.7 433.2 434.3 436.4 437.5 437.8 438.6 438.6 433.8
1995 440.2 441.7 443.0 444.6 445.6 446.5 446.5 447.4 448.5 449.6 449.5 449.5 446.1
1996 451.9 453.2 455.6 457.6 458.7 459.1 459.7 460.2 451.9 463.2 464.2 464.3 459.1
1997 465.7 467.0 467.8 468.3 468.3 468.8 470.0 470.0 471.5 472.3 472.2 471.3 469.4
1998 471.9 472.5 473.1 473.7
Note: Boldface figures are estimated figures based on the latest available
----
figures. In the chart above, the latest available figures are for
December 1997. To project the estimated figures for January through
April 1998, we have added the average monthly increase over the
previous year, i.e. the CPI in December 1997 = 471.3 less the CPI in
December 1996 of 464.3 = 7.0 Index Points per year and when divided by
12 months = an average increase of 0.6 Index Points per month. So, 0.6
Index Points have been added to each of the estimated months above
beginning with January 1998 (i.e., December figure of 471.3 + 0.6 =
471.9).