California-Chatsworth-21411 Prairie Street Lease [Amendment No. 1] - Lincoln-Whitehall Pacific LLC and Natrol Inc.
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement ("First Amendment") is made and entered
as of November 22, 1996 between Lincoln-Whitehall Pacific, L.L.C., a Delaware
limited liability company ("Landlord"), and Natrol, Inc. A California
corporation ("Tenant") with reference to the following facts:
RECITALS
A. The parties entered into a Lease Agreement dated August 12, 1996 (the
"Original Lease").
B. The parties desire to amend certain provisions of the Original Lease.
Accordingly, the parties have agreed as follows:
AGREEMENT
1. The next to the last sentence of Section 15.1 is deleted and replaced with
the following:
For purposes hereof, in the event Tenant is a corporation, partnership, joint
venture, trust or other entity other than a natural person, any change in the
direct or indirect ownership of Tenant (whether pursuant to one or more
transfers) which results in a change of more than fifty percent (50%) in the
direct or indirect ownership of Tenant shall be deemed to be an assignment
within the meaning of this Section 15 and shall be subject to all provisions
hereof; provided, however, that any change in the direct or indirect ownership
of Tenant because of any of the following transactions shall not be deemed an
assignment within the meaning of Section 15: (a) any equity changes in Tenant
resulting from the public sale of Tenant's stock by Tenant or any of its
stockholders; (b) any equity changes in Tenant resulting from the sale of Tenant
or substantially all of its assets, whether pursuant to a sale of assets, a
merger or otherwise; (c) any equity changes in Tenant resulting from the
acquisition by Tenant of any business and the issuance of stock by Tenant in
connection therewith; or (d) any reorganization or restructuring of Tenant,
including without limitation a reincorporation of Tenant. Any successor to
Tenant resulting from the transactions described in the preceding sentence
shall be deemed the Tenant under this Lease.
2. The Original Lease, as amended by this First Amendment, shall continue in
full force and effect.
3. In any conflict between the Original Lease and this First Amendment, this
First Amendment shall control.
Executed as of the date stated above.
LANDLORD:
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
BY: Lincoln Property Company Management Services, Inc.
As Agent and Manager for Landlord
By: /s/ Terry Thompson
------------------------------
Terry Thompson, Vice President
TENANT:
NATROL, INC.
A California Corporation
By: /s/ Elliott Balbert
---------------------------
Elliott Balbert, President
<PAGE>
LEASE AGREEMENT
(Net)
Basic Lease Information
Lease Date: August 12, 1996
Landlord: Lincoln-Whitehall Pacific, L.L.C., a Delaware limited
liability company
Landlord's Address: c/o Lincoln Property Company Management Services, Inc.
30 Executive Park, Suite 100
Irvine, California 92713
Tenant: Natrol, Inc., a California Corporation
Tenant's Address: 21411 Prairie Street Chatsworth, California
Premises: Approximately 80,012 rentable square feet as shown on
Exhibit A
Premises Address: Same as Tenant's address
Building: 80,012 square feet
Lot (Building's
tax parcel): 212,573 square feet
Term: One Hundred Twenty (122) months
8/27, 1996 ("Commencement Date"), through
(October) 10/26, 2006 ("Expiration Date")
Base Rent (P3): Thirty-Seven Thousand Two Hundred Five and 00/100 Dollars
($37,205.00) per month.
Advanced Rent: Twenty-Three Thousand Three Hundred Fifty and 00/100
Dollars ($23,350.00) shall be paid upon Lessee's signature
and delivery of Lease to Landlord.
Adjustments to
Base Rent: Months 1 - 2: Free Base Rent and Operating
Expense Period.
Months 3 - 14: $23,350 per month
Months 15 - 38: $37,205 per month
Months 39 - 122: CPI adjustment every 24 months (see
addendum)
Security Deposit
(P4.1): Thirty-Seven Thousand Two Hundred Five and
00/l00 Dollars ($37,205.00)
Tenant's Share of Operating Expenses (P6.1): 100% of the Building
Tenant's Share of Tax Expenses (P6.2): 100% of the Lot
Tenant's Share of Common Area Utility Costs (P7): 100% of the Building
Permitted Uses: General office, manufacturing, assembly and warehousing of
lawful products pertaining to the Tenant's business.
Unreserved
Parking Spaces: 223 nonexclusive and undesignated spaces
Broker (P38): Capital Commercial Real Estate (listing)
CB Commercial (procuring)
Exhibits: Exhibit A - Premises, Building, Lot and/or Park
Exhibit B - Tenant Improvements
Exhibit C - Rules and Regulations
Exhibit D - Intentionally omitted
Exhibit E - Hazardous Materials Disclosure Certificate
Exhibit F - Intentionally omitted
Exhibit G - Change of Commencement Date - Example
Exhibit H - Sign Criteria
Exhibit I - Intentionally omitted
Addenda: Addendum I: Option to Extend
Addendum II: CPI Increase
Addendum III: First Right of Offer to Purchase
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
1. PREMISES ...................................................... 3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES .... 3
3. RENT .......................................................... 3
4. SECURITY DEPOSIT .............................................. 4
5. TENANT IMPROVEMENTS ........................................... 4
6. ADDITIONAL RENT ............................................... 4
7. UTILITIES ..................................................... 6
8. LATE CHARGES .................................................. 7
9. USE OF PREMISES ............................................... 7
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES .......... 8
11. REPAIRS AND MAINTENANCE ....................................... 8
12. INSURANCE ..................................................... 9
13. WAIVER OF SUBROGATION ......................................... 10
14. LIMITATION OF LIABILITY AND INDEMNITY ......................... 10
15. ASSIGNMENT AND SUBLEASING ..................................... 11
16. AD VALOREM TAXES .............................................. 12
17. SUBORDINATION ................................................. 12
18. RIGHT OF ENTRY ................................................ 13
19. ESTOPPEL CERTIFICATE .......................................... 13
20. TENANT'S DEFAULT .............................................. 13
21. REMEDIES FOR TENANT'S DEFAULT ................................. 14
22. HOLDING OVER .................................................. 15
23. LANDLORD'S DEFAULT ............................................ 15
24. PARKING ....................................................... 15
25. SALE OF PREMISES .............................................. 15
26. WAIVER ........................................................ 15
27. CASUALTY DAMAGE ............................................... 15
28. CONDEMNATION .................................................. 16
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS ..................... 16
30. FINANCIAL STATEMENTS .......................................... 19
31. GENERAL PROVISIONS ............................................ 19
32. SIGNS ......................................................... 20
33. MORTGAGEE PROTECTION .......................................... 21
34. QUITCLAIM ..................................................... 21
35. MODIFICATIONS FOR LENDER ...................................... 21
36. WARRANTIES OF TENANT .......................................... 21
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT ............... 21
38. BROKERAGE COMMISSION .......................................... 22
39. QUIET ENJOYMENT ............................................... 22
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS 22
</TABLE>
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set forth on
Page 1. The Basic Lease Information set forth on Page 1 and this Lease
are and shall be construed as a single instrument.
1. Premises: Landlord hereby leases the Premises to Tenant upon the terms and
conditions contained herein. Landlord hereby grants to Tenant a revocable
license for the right to use, on a non-exclusive basis, parking areas and
ancillary facilities located within the Common Area of the Building, subject to
the terms of this Lease. Landlord and Tenant hereby agree that for purposes of
this Lease, as of the Lease Date, the rentable square footage area of the
Premises, the Building and Lot shall be deemed to be the number of rentable
square feet set forth in the Basic Lease Information on Page 1. Landlord shall
confirm and revise if necessary the square footage of the Building by
contracting with a qualified space planner who will remeasure the Building using
BOMA standards.
2. Adjustment of Commencement Date; Condition of the Premises: The Term of this
Lease shall commence on the date specified on the basic lease information page
hereof and the commencement of the Term. After delivery of the Premises to
Tenant, Tenant shall execute a written acknowledgment in the form attached
hereto as Exhibit F and by this reference it shall be incorporated herein. If
Landlord cannot deliver possession of the Premises on the Commencement Date,
Landlord shall not be subject to any liability nor shall the validity of the
Lease be affected; provided the Lease term and the obligation to pay Rent shall
commence on the date possession is tendered and the Expiration Date shall be
extended by a period of time equal to the period computed from the Commencement
Date to the date possession is tendered by Landlord to Tenant. In the event the
commencement date and/or the expiration date of this Lease is other than the
Commencement Date and/or Expiration Date provided on Page 1, as the case may be,
Landlord and Tenant shall execute a written amendment to this Lease,
substantially in the form of Exhibit G hereto, wherein the parties shall specify
the actual commencement date, expiration date and the date on which Tenant is to
commence paying Rent.
Except as provided in Exhibit B of this Lease, taking possession of the
Premises, Tenant shall be deemed to have accepted the Premises in a good, clean
and completed condition and state of repair, in compliance with all applicable
laws, codes, regulations, administrative orders and ordinances, and subject to
all matters of record. Tenant hereby acknowledges and agrees that neither
Landlord has nor Landlord's agents or representatives have made any
representations or warranties as to the suitability, safety or fitness of the
Premises for Tenant's business, Tenant's intended use of the Premises or for any
other purpose, and that neither Landlord nor Landlord's agents or
representatives have agreed to undertake any alterations or construct any Tenant
Improvements to the Premises except as expressly provided in this Lease.
3. Rent: On the date that Tenant executes this Lease, Tenant shall deliver to
Landlord the original executed Lease, the Base Rent, the Security Deposit, and
all insurance certificates evidencing the insurance required to be obtained by
Tenant under Section 12 of this Lease. Tenant agrees to pay Landlord, without
prior notice or demand, or abatement, offset, deduction or claim, the Base Rent
described on Basic Lease Information Page, payable in advance at Landlord's
address shown on Page 1 on the first day of each month throughout the term of
the Lease. In addition to the Base Rent set forth on Page 1, Tenant shall pay
Landlord in advance and on the first (1st) day of each month throughout the term
of this Lease (including any extensions of such term), as Additional Rent
Tenant's share, as set forth on Page 1, of Operating Expenses, Tax Expenses,
Common Area Utility Costs, and Utility Expenses, and Administrative Expenses all
in the manner as specified in Sections 6.1, 6.2, 6.3, 6.4 and 7 of this Lease,
respectively. Additionally, Tenant shall pay to Landlord as Additional Rent
hereunder, immediately on Landlord's demand therefor, any and all costs and
expenses incurred by Landlord to enforce the provisions of this Lease,
including, but not limited to, costs associated with any proposed assignment or
subletting of all or any portion of the Premises by Tenant, costs associated
with the delivery of notices, delivery and recordation of notice(s) of default,
attorneys' fees, expert fees, court costs and filing fees (collectively, the
"Enforcement Expenses"). The term "Rent" whenever used herein refers to the
aggregate of all these amounts. If Landlord permits Tenant to occupy the
Premises without requiring Tenant to pay rental payments for a period of time,
the waiver of the requirement to pay rental payments shall only apply to waiver
of the Base Rent and Tenant shall otherwise perform all other obligations of
Tenant hereunder, including, but not limited to paying to Landlord any and all
amounts considered additional rent, such as Tenant's share of Operating
Expenses, Tax Expenses, Common Area Utility Costs, and Utility Expenses, and
Administrative Expenses. If, at any time, Tenant is in default of or otherwise
breaches any term, condition or provision of this Lease, any such waiver by
Landlord of Tenant's requirement to pay rental payments shall be null and void
and Tenant shall immediately pay to Landlord all rental payments waived by
Landlord. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon a thirty (30) day month. The prorated
Rent shall be paid on the Commencement Date. The Termination Date of the Lease
shall always be the last day of the calendar month in which the Lease Term
commenced.
4. Security Deposit:
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
4.1 Security Deposit: Upon Tenant's execution of this Lease, Tenant shall
deliver to Landlord, as a Security Deposit for the performance by Tenant of its
obligations under this Lease, the amount described on Page 1. If Tenant is in
default, Landlord may, but without obligation to do so, use the Security
Deposit, or any portion thereof, to cure the default or to compensate Landlord
for all damages sustained by Landlord resulting from Tenant's default,
including, but not limited to the Enforcement Expenses. Tenant shall,
immediately on demand, pay to Landlord a sum equal to the portion of the
Security Deposit so applied or used so as to replenish the amount of the
Security Deposit held to increase such deposit to the amount initially deposited
with Landlord if Tenant is late three times in one 12 month period. At any time
after Tenant has defaulted hereunder and the default has not been cured within
applicable cure periods as defined in this Lease, then, Landlord may require an
increase in the amount of the Security Deposit required hereunder for the then
balance of the Lease term and Tenant shall, immediately on demand, pay to
Landlord additional sums in the amount of such increase. Within 120 days after
the termination of this Lease, Landlord shall return the Security Deposit to
Tenant, less such amounts as are reasonably necessary, as determined by
Landlord, to remedy Tenant's default(s) hereunder or to otherwise restore the
Premises to a clean and safe condition, reasonable wear and tear excepted. If
the cost to restore the Premises exceeds the amount of the Security Deposit,
Tenant shall promptly deliver to Landlord any and all of such excess sums as
reasonably determined by Landlord. Landlord shall not be required to keep the
Security Deposit separate from other funds, and, unless otherwise required by
law, Tenant shall not be entitled to interest on the Security Deposit. In no
event or circumstance shall Tenant have the right to any use of the Security
Deposit and, specifically, Tenant may not use the Security Deposit as a credit
or to otherwise offset any payments required hereunder, including, but not
limited to, Rent or any portion thereof.
4.2 Cleaning Deposit: Intentionally omitted
5. Tenant Improvements: Tenant hereby accepts the Premises in its current "as
is" condition unless otherwise specified in Exhibit B, attached hereto and
incorporated herein by this reference. If so specified in Exhibit B hereto,
Landlord or Tenant, as the case may be, shall install the improvements ("Tenant
Improvements") on the Premises as described and in accordance with the terms,
conditions, criteria and provisions set forth in Exhibit B, attached and
incorporated herein by this reference. Tenant acknowledges that neither Landlord
has nor any of Landlord's agents, representatives or employees have made any
representations as to the suitability or fitness of the Premises for Tenant's
business, including, without limitation, any storage incidental thereto, or for
any other purpose, and that neither Landlord nor any of Landlord's agents,
representatives or employees has agreed to undertake any alterations or
construct any Tenant Improvements to the Premises except as expressly provided
in Exhibit B to this Lease.
6. Additional Rent: The costs and expenses described in this Section 6 and all
other sums, charges, costs and expenses specified in this Lease other than Base
Rent, including, but not limited to, Operating Expenses, Utility Expenses,
Tenant's share of Common Area Utility Costs, Tax Expenses, Administrative
Expenses and Late Charges are to be paid by Tenant to Landlord as additional
rent (collectively, "Additional Rent"). All Operating Expenses, Tax Expenses and
Administrative Expenses/Management fees shall not exceed $0.06 per square foot
per month of the Premises during the first calendar year of the Lease with
subsequent annual increases not to exceed four percent (4%) per year. This cap
specifically excludes any increase in property taxes as a result of a sale of
the Premises, Building or Park.
6.1 Operating Expenses: In addition to the Base Rent set forth in Section
3, Tenant shall pay Tenant's share, which is defined on Page 1, of all Operating
Expenses. The term "Operating Expenses" as used herein shall mean the total
amounts paid or payable by Landlord in connection with the ownership,
maintenance, repair and operation of the Premises, the Building and the Lot, and
where applicable, of the Park referred to on Page 1. The amount of Tenant's
share of Operating Expenses shall be reviewed from time to time by Landlord and
shall be subject to modification by Landlord as reasonably determined by
Landlord based upon the size of the Park or Building. These Operating Expenses
may include, but are not limited to:
6.1.1 Landlord's cost of repairs to, and maintenance of, the roof,
the roof membrane and the exterior walls of the Building;
6.1.2 Landlord's cost of maintaining the outside paved area,
landscaping and other common areas for the Building. The term "Common
Area" shall mean all areas and facilities outside of the Building
exclusive of the Premises. The Common Area includes, but is not limited
to, parking areas, access and perimeter roads, sidewalks, landscaped areas
and similar areas and facilities;
6.1.3 Landlord's annual cost of insurance insuring against fire and
extended coverage (including, if Landlord elects, "all risk" coverage) and
all other insurance, including, but not limited to, earthquake, flood
and/or surface water endorsements for the Building, the Lot and the Park
(including the Common Area), rental value insurance against loss of Rent
in an amount equal to the amount of Rent for a period of at least six (6)
months commencing on the date of loss, and subject to the provisions of
Section 27 below, any deductible on said policies;
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
6.1.4 Landlord's cost of modifications to the Building, the Common
Area occasioned by any rules, laws or regulations effective subsequent to
the date on which the Building was originally constructed;
6.1.5 Landlord's cost of modifications to the Building, the Common
Area and/or the Park occasioned by any rules, laws or regulations arising
from Tenant's use of the Premises regardless of when such rules, laws or
regulations became effective, provided, however, that any such costs of
modifications to the Building, the Common Area, and/or the Park shall not
be deemed Operating Expenses where such modifications would have been
required prior to Tenant's possession of the Premises;
6.1.6 If Landlord elects to so procure, Landlord's cost of
preventative maintenance, and repair contracts including, but not limited
to, contracts for elevator systems and heating, ventilation and air
conditioning systems, lifts for disabled persons, and trash or refuse
collection;
6.1.7 Landlord's cost of security and fire protection services for
the Building and/or the Park, as the case may be, if in Landlord's sole
discretion such services are provided;
6.1.8 Landlord's establishment of reasonable reserves for
replacements and/or repairs of Common Area improvements, equipment and
supplies;
6.1.9 Intentionally omitted.
6.1.10 Landlord's cost of supplies, equipment, rental equipment and
other similar items used in the operation and/or maintenance of the Park;
and
6.1.11 Landlord's cost for the repairs and maintenance items set
forth in Section 11.2 below.
Operating Expenses shall not include the following:
(a) Capital improvements related to: (i) replacement of the roof;
(ii) complete replacement of the HVAC system not necessitated
by the intentional or negligent acts or omissions of Tenant
(this does not include partial replacement or repairs); or
(iii) the foundations and exterior walls of the Building to
the extent not necessitated by the intentional or negligent
acts or omissions of Tenant or any third party during the
period of Tenant's possession of the Premises and/or the term
of this Lease, inclusive of options to extend;
(b) Amounts paid (including interest and penalties) in order to
comply with or cure violations of statutes, laws, or
ordinances by Landlord of any part of the Building, the Common
Area and/or the Park;
(c) Repairs or other work occasioned by fire, windstorm, or other
casualty to the extend covered by insurance proceeds;
(d) Except as set forth in paragraph 6.3 below, salaries and
fringe benefits paid to Landlord's officers and partners and
its executive and administrative personnel;
(e) Any charge for depreciation of the Building, the Common Area
and/or the Park;
(f) Leasing commissions, accountants', consultants' or attorneys'
fees.
6.2 Tax Expenses: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is defined on Page 1, of all real property
taxes applicable to the land and improvements included within the Lot on which
the Premises are situated and one hundred percent (100%) of all personal
property taxes now or hereafter assessed or levied against the Premises or
Tenant's personal property. The amount of Tenant's share of Tax Expenses shall
be reviewed from time to time by Landlord and shall be subject to modification
by Landlord as reasonably determined by Landlord. Tenant shall also pay one
hundred percent (100%) of any increase in real property taxes attributable, in
Landlord's reasonable discretion, to any and all alterations, Tenant
Improvements or other improvements of any kind, which are above standard
improvements customarily installed for similar buildings located within the
Building or the Park (as applicable), whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. The term "Tax
Expenses" shall mean and include, without limitation, any form of tax and
assessment (general, special, supplemental, ordinary or extraordinary),
commercial rental tax, payments under any improvement bond or bonds, license,
rental tax, transaction tax, levy, or penalty imposed by authority having the
direct or indirect power of tax (including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof) as against any legal or equitable interest of Landlord in the
Premises, the Building, the Lot or the Park, as against Landlord's right to rent
or other income therefrom, or as against Landlord's business of leasing the
Premises or the occupancy of Tenant or any other tax, fee, or excise, however
described, including, but not limited to, any value added tax, or any tax
imposed in substitution (partially or totally) of any tax previously included
within the
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
definition of real property taxes, or any additional tax the nature of which was
previously included within the definition of real property taxes. The term "Tax
Expenses" shall not include any franchise, transfer, estate, inheritance, net
income, or excess profits tax imposed upon Landlord.
6.3 Administrative Expenses: In addition to the Base Rent set forth in
Section 3 hereof, Tenant shall pay Landlord, without prior notice or demand, on
the first (1st) day of each month throughout the term of this Lease (including
any extensions of such term), as compensation to Landlord for accounting and
management services rendered on behalf of the Building, one-twelfth (1/12th) of
an amount equal to ten percent (10%) of the estimated amount of the aggregate of
the Tenant's share of (i) the total Operating Expenses and Tax Expenses as
described in Sections 6.1 and 6.2 above, respectively, and (ii) all Common Area
Utility Costs for the Park and the Premises as described in Section 7 below; as
such amounts are estimated by Landlord in accordance with the provisions of
Section 6.4 below (collectively, the "Administrative Expenses"). Tenant's
obligations to pay such Administrative Expenses and/or Management Fee shall
survive the expiration or earlier termination of this Lease.
6.4 Payment of Expenses: Landlord shall estimate Tenant's share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, on the
first (1st) day of each month and throughout the remaining months of such
calendar year. Thereafter, Landlord may estimate such expenses as of the
beginning of each calendar year and Tenant shall pay one-twelfth (1/12th) of
such estimated amount as Additional Rent hereunder on the first day of each
month during such calendar year and for each ensuing calendar year throughout
the term of this Lease (including any extensions of the term). By April 30th of
each of the following calendar years, or as soon thereafter as reasonably
possible, including the calendar year after the calendar year in which this
Lease terminates or the term expires, Landlord shall endeavor to furnish Tenant
with an accounting of actual Operating Expenses and Tax Expenses. Within thirty
(30) days of Landlord's delivery of such accounting, Tenant shall pay to
Landlord the amount of any underpayment. Notwithstanding the foregoing, failure
by Landlord to give such accounting by such date shall not constitute a waiver
by Landlord of its right to collect any of Tenant's underpayment at any time.
Landlord shall credit the amount of any overpayment by Tenant toward the next
estimated monthly installment(s) falling due, or where the term of the Lease has
expired, refund the amount of overpayment to Tenant. Tenant, at its sole cost
and expense through any certified public accountant designated by it, shall have
the right to examine and/or audit the books and records evidencing such costs
and expenses for the previous two (2) calendar years, beginning from the date in
which Landlord purchased the Building, during Landlord's reasonable business
hours and not more frequently than once during any calendar year. Tenant's
obligations to pay its share of Operating Expenses and Tax Expenses shall
survive the expiration or earlier termination of this Lease.
6.5 Annual Reconciliation: If the term of the Lease expires prior to the
annual reconciliation of expenses, if any, Landlord shall have the right to
reasonably estimate Tenant's share of such expenses, and if Landlord determines
that an underpayment is due, Tenant hereby agrees that Landlord shall be
entitled to deduct such underpayment from Tenant's Security Deposit. If Landlord
reasonably determines that an overpayment has been made by Tenant, Landlord
shall refund said overpayment to Tenant as soon as practicable thereafter.
Notwithstanding the foregoing, failure of Landlord to accurately estimate
Tenant's share of such expenses or to otherwise perform such reconciliation of
expenses, including, without limitation, Landlord's failure to deduct any
portion of any underpayment from Tenant's Security Deposit, shall not constitute
a waiver of Landlord's right to collect any of Tenant's underpayment at any time
during the term of the Lease or at any time after the expiration or earlier
termination of this Lease.
7. Utilities: Utility Expenses, Common Area Utility Costs and all other sums or
charges set forth in this Section 7 are considered part of Additional Rent.
Tenant shall pay the cost of all water, sewer use, sewer discharge fees and
sewer connection fees, gas, heat, electricity, refuse pickup, janitorial
service, telephone and other utilities billed or metered separately to the
Premises and/or Tenant. Tenant shall also pay its share of any assessments or
charges for utility or similar purposes included within any tax bill for the Lot
on which the Premises are situated, including, without limitation, entitlement
fees, allocation unit fees, and/or any similar fees or charges, and any
penalties related thereto. For any such utility fees or use charges that are not
billed or metered separately to Tenant, Tenant shall pay to Landlord, as
Additional Rent, without prior notice or demand, on the first (1st) day of each
month throughout the term of this Lease the amount which is attributable to
Tenant's use of the utilities or similar services, as reasonably estimated and
determined by Landlord based upon factors such as size of the Premises and
intensity of use of such utilities by Tenant such that Tenant shall pay the
portion of such charges reasonably consistent with Tenant's use of such
utilities and similar services ("Utility Expenses"). If Tenant disputes any such
estimate or determination, then Tenant shall either pay the estimated amount or
cause the Premises to be separately metered at Tenant's sole expense. In
addition, Tenant shall pay to Landlord its share, which is described on Page 1,
as Additional Rent, without prior notice or demand, on the first (1st) day of
each month throughout the term of this Lease, of any Common Area utility costs,
fees, charges or expenses ("Common Area Utility Costs"). Tenant shall pay to
Landlord one-twelfth (1/12th) of the estimated amount of Tenant's share of the
Common Area Utility Costs in the same manner and time periods as specified in
Section 6.4 above and any reconciliation thereof shall also be in the same
manner as specified in Sections 6.4 and 6.5 above. The amount of Tenant's share
of Common Area Utility Costs shall be reviewed from time to time by Landlord and
shall be subject to modification by Landlord as reasonably determined by
Landlord. Tenant acknowledges that the Premises may become subject to the
rationing of utility services or restrictions on utility use as required by a
public utility company,
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
governmental agency or other similar entity having jurisdiction thereof.
Notwithstanding any such rationing or restrictions on use of any such utility
services, Tenant acknowledges and agrees that its tenancy and occupancy
hereunder shall be subject to such rationing restrictions as may be imposed upon
Landlord, Tenant, the Premises, the Building or the Park, and Tenant shall in no
event be excused or relieved from any covenant or obligation to be kept or
performed by Tenant by reason of any such rationing or restrictions. Tenant
further agrees to timely and faithfully pay, prior to delinquency, any amount,
tax, charge, surcharge, assessment or imposition levied, assessed or imposed
upon the Premises, or Tenant's use and occupancy thereof, or as a result
directly or indirectly of any such rationing or restrictions.
8. Late Charges: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
tenth day of each month or anytime thereafter, with notice given to Tenant if
payment is not received by the fifth of the month) by Tenant to Landlord of Base
Rent, Tenant's share of Operating Expenses, Tax Expenses, Common Area Utility
Costs, Utility Expenses, Administrative Expenses, Management Fee or other sums
due hereunder, will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord by the
terms of any note secured by any encumbrance against the Premises, and late
charges and penalties due to the late payment of real property taxes on the
Premises. Therefore, if any installment of Rent or any other sum due from Tenant
is not received by Landlord when due, Tenant shall promptly pay to Landlord all
of the following, as applicable: (a) an additional sum equal to ten percent
(10%) of such delinquent amount (b) the amount of seventy-five dollars ($75) for
each three-day notice prepared for, or served on, Tenant, (c) the amount of
fifty dollars ($50) relating to checks for which there are not sufficient funds.
If Tenant delivers to Landlord a check for which there are not sufficient funds,
Landlord may, at its sole option, require Tenant to replace such check with a
cashier's check for the amount of such check and all other charges payable
hereunder. The parties agree that this late charge and the other charges
referenced above represent a fair and reasonable estimate of the costs that
Landlord will incur by reason of late payment by Tenant. Acceptance of any !ate
charge or other charges shall not constitute a waiver by Landlord of Tenant's
default with respect to the delinquent amount, nor prevent Landlord from
exercising any of the other rights and remedies available to Landlord for any
other breach of Tenant under this Lease. If a late charge or other charge
becomes payable for any three (3) installments of Rent within any twelve (12)
month period, then Landlord, at Landlord's sole option, can either require the
Rent be paid quarterly in advance, or be paid monthly in advance by cashier's
check or by electronic funds transfer.
9. Use of Premises:
9.1 Compliance with Laws, Recorded Matters, and Rules and Regulations: The
Premises are to be used solely for the uses stated on Page 1 and for no other
uses or purposes without Landlord's prior written consent, which consent may be
given or withheld in Landlord's reasonable discretion. The use of the Premises
by Tenant and its employees, representatives, agents, invitees, licensees,
subtenants, customers or contractors (collectively, "Tenant's Representatives")
shall be subject to, and at all times in compliance with, (a) any and all
applicable laws, ordinances, statutes, orders and regulations as same exist from
time to time (collectively, the "Laws"), (b) any and all documents, matters or
instruments, including without limitation, any declarations of covenants,
conditions and restrictions, and any supplements thereto, each of which has been
or hereafter is recorded in any official or public records with respect to the
Premises, the Building, the Lot and/or the Park, or any portion thereof
(collectively, the "Recorded Matters"), and (c) any and all rules and
regulations set forth in Exhibit C, attached to and made a part of this Lease,
and any other reasonable rules and regulations promulgated by Landlord now or
hereafter enacted relating to parking and the operation of the Premises, the
Building and the Park (collectively, the "Rules and Regulations"). Tenant agrees
to, and does hereby, assume full and complete responsibility to ensure that the
Premises are adequate to fully meet the needs and requirements of Tenant's
intended operations of its business within the Premises, and Tenant's use of the
Premises and that same are in compliance with all applicable Laws.
9.2 Prohibition on Use: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon the
Building or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises, the Building the Lot without Landlord's written consent thereto, which
consent may be given or withheld in Landlord's sole discretion. Tenant shall not
do or permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of Landlord, other tenants or occupants of
the Building, other buildings in the Park, or other persons or businesses in the
area, or injure or annoy other tenants or use or allow the Premises to be used
for any unlawful or objectionable purpose, as determined by Landlord, in its
reasonable discretion, for the benefit, quiet enjoyment and use by Landlord and
all other tenants or occupants of the Building or other buildings in the Park;
nor shall Tenant cause, maintain or permit any private or public nuisance in, on
or about the Premises, Building, Park and/or the Common Area, including, but not
limited to, any offensive odors, noises, fumes or vibrations. Tenant shall not
damage or deface or otherwise commit or suffer to be committed any waste in,
upon or about the Premises. Tenant shall not place or store, nor permit any
other person or entity to place or store, any property, equipment, materials,
supplies, personal property or any other items or goods outside of the Premises
for any period of time. Tenant shall not permit any animals, including, but not
limited to,
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
any household pets, to be brought or kept in or about the Premises. Tenant shall
place no loads upon the floors, walls, or ceilings in excess of the maximum
designed load permitted by the applicable Uniform Building Code or which may
damage the Building or outside areas; nor place any harmful liquids in the
drainage systems; nor dump or store waste materials, refuse or other such
materials, or allow such to remain outside the Building area, except in refuse
dumpsters or in any enclosed trash areas provided. Tenant shall honor the terms
of all Recorded Matters relating to the Premises, the Building, the Lot and/or
the Park. Tenant shall honor the Rules and Regulations.
10. Alterations and Additions; and Surrender of Premises:
10.1 Alterations and Additions: Tenant shall not install any signs,
fixtures, improvements, nor make or permit any other alterations or additions to
the Premises without the prior written consent of Landlord, provided that
Landlord's prior written consent shall not be required for alterations and
additions that are less then $2,000 per event, up to an aggregate of $15,000
through the first sixty (60) months of the lease, and $2,000 per event, up to an
aggregate of $15,000 from months sixty one (61) through the end of the Lease
term, exclusive of the option to extend. If any such alteration or addition is
expressly permitted by Landlord, or even if no Landlord consent is required,
Tenant shall deliver at least twenty (20) days prior notice to Landlord, from
the date Tenant intends to commence construction, sufficient to enable Landlord
to post a Notice of Non-Responsibility. In all events, Tenant shall obtain all
permits or other governmental approvals prior to commencing any of such work and
deliver a copy of same to Landlord. All alterations and additions shall be
installed by a licensed contractor approved by Landlord, at Tenant's sole
expense in compliance with all applicable laws (including, but not limited to,
the ADA as defined herein), Recorded Matters, and Rules and Regulations. Tenant
shall keep the Premises and the property on which the Premises are situated free
from any liens arising out of any work performed, materials furnished or
obligations incurred by or on behalf of Tenant. In addition, Tenant shall be
required to furnish Landlord with suitable plans (as determined by Landlord),
permits and a detailed scope of work.
10.2 Surrender of Premises: Upon the termination of this Lease, whether by
forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises, together with the fixtures, additions and improvements which
Landlord has notified Tenant, in writing, that Landlord will require Tenant not
to remove, to Landlord in good condition and repair including, but not limited
to, replacing all light bulbs and ballasts not in good working condition,
excepting for reasonable wear and tear. Reasonable wear and tear shall not
include any damage or deterioration that would have been prevented by proper
maintenance by Tenant or Tenant otherwise performing all of its obligations
under this Lease. Exclusive of the Tenant Improvements agreed to in Exhibit B of
this Lease, upon such termination of this Lease, Tenant shall remove all tenant
signage, trade fixtures, furniture, furnishings, personal property, additions,
and other improvements unless Landlord requests, in writing, that Tenant not
remove some or all of such trade fixtures, furniture, furnishings, additions or
improvements installed by, or on behalf of Tenant or situated in or about the
Premises. By the date which is one hundred eighty (180) days prior to such
termination of this Lease or upon construction of any such improvements,
Landlord shall notify Tenant in writing of those fixtures, alterations,
furniture, furnishings, trade fixtures, additions and other improvements which
Landlord shall require Tenant not to remove from the Premises. Tenant shall
repair any damage caused by the installation or removal of such signs, trade
fixtures, furniture, furnishings, fixtures, additions and improvements which are
to be removed from the Premises by Tenant hereunder. If Landlord fails to so
notify Tenant at least one hundred eighty (180) days prior to such termination
of this Lease, then Tenant shall not be required to remove any tenant signage,
fixtures, alterations, furniture, furnishings, trade fixtures, additions and
other improvements installed in or about the Premises by, or on behalf of
Tenant. Tenant shall ensure that the removal of such items and the repair of the
Premises will be completed prior to such termination of this Lease.
11. Repairs and Maintenance:
11.1 Tenant's Repairs and Maintenance Obligations: Except for those
portions of the Building to be maintained by Landlord, as provided in Section
11.2 below, Tenant shall, at Tenant's sole cost and expense, keep and maintain
the Premises and the adjacent areas (including, without limitation, any portion
of the Common Area used by Tenant or Tenant's Representatives) in good, clean
and safe condition and repair to the satisfaction of Landlord including, but not
limited to, repairing any damage caused by Tenant or Tenant's Representatives
and replacing any property so damaged by Tenant or Tenant's Representatives.
Without limiting the generality of the foregoing, Tenant shall be solely
responsible for maintaining, repairing and replacing (a) all plumbing,
electrical wiring and equipment serving the Premises, (b) all interior lighting
(including, without limitation, light bulbs and/or ballasts), (c) all glass,
windows, window frames, window casements, skylights, interior and exterior
doors, door frames and door closets, (d) all roll-up doors, ramps and dock
equipment including without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights, (e) all tenant signage, (f) lifts for disabled
persons serving the Premises, (g) all partitions, fixtures, equipment, interior
painting, and interior walls and floors of the Premises and every part thereof
(including, without limitation, any demising walls contiguous to any portion of
the Premises). Tenant's obligation to keep, maintain, preserve and repair the
Premises and the adjacent area shall specifically extend to the cleanup and
removal of any and all Hazardous Materials (hereafter defined) occurring in, on
or about the Premises as provided in Article 29 of this Lease.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
11.2 Reimbursable Repairs and Maintenance Obligations: Subject to the
provisions of Sections 6 and 9 of this Lease and except for (i) the obligations
of Tenant set forth in Section 11.1 above, and (ii) the repairs rendered
necessary by the intentional or negligent acts or omissions of Tenant or
Tenant's Representatives, Landlord agrees, at Landlord's expense, subject to
reimbursement pursuant to Section 6 above, to keep in good repair the plumbing
and mechanical systems (including HVAC) exterior to the Premises, fire sprinkler
systems and fire protection systems, any [strikeout]rail-spur[end strikeout] and
rail crossing, the roof, roof membranes, exterior walls of the Building, signage
(exclusive of tenant signage), and exterior electrical wiring and equipment,
exterior lighting, exterior glass, exterior doors and entrances, exterior window
casements, door closers, exterior painting of the Building (exclusive of the
Premises), and underground utility and sewer pipes outside the exterior walls of
the Building. For purposes of this Section 11.2, the term "exterior" shall mean
exterior to, and not serving the Premises. Unless otherwise notified by
Landlord, in writing, that Landlord has elected to procure and maintain the
following described contract(s), Tenant shall procure and maintain (a) the
heating, ventilation and air conditioning systems preventative maintenance and
repair contract(s); such contract(s) to be on a bi-monthly or quarterly basis,
as reasonably determined by Landlord, and (b) the fire and sprinkler protection
services and preventative maintenance and repair contract(s) (including, without
limitation, monitoring services); such contract(s) to be on a bi-monthly or
quarterly basis, as reasonably determined by Landlord. Landlord reserves the
right, but without the obligation to do so, to procure and maintain (i) the
heating, ventilation and air conditioning systems preventative maintenance and
repair contract(s), and/or (ii) the fire and sprinkler protection services and
preventative maintenance and repair contract(s) (including, without limitation,
monitoring services). If Landlord so elects to procure and maintain any such
contract(s), Tenant will reimburse Landlord for the cost thereof in accordance
with the provisions of Section 6 above. If Tenant procures and maintains any of
such contract(s), Tenant will promptly deliver to Landlord a true and complete
copy of each such contract and any and all renewals or extensions thereof, and
each service report or other summary received by Tenant pursuant to or in
connection with such contract(s).
11.3 Landlord's Repairs and Maintenance Obligations: Except for repairs
rendered necessary by the intentional or negligent acts or omissions of Tenant
or Tenant's Representatives, Landlord agrees, to (a) keep in good repair the
structural portions of the floors, foundations and exterior perimeter walls of
the Building (exclusive of glass and exterior doors), and (b) replace the
structural portions of the roof of the Building (excluding the roof membrane)
as, and when, Landlord determines such replacement to be necessary in Landlord's
sole discretion. Tenant's pro rata share of these costs may be passed through by
Landlord and amortized over the useful life, as determined by Landlord, and paid
by Tenant to Landlord as Additional Rent.
11.4 Tenant's Failure to Perform Repairs and Maintenance Obligations:
Tenant shall have no right of access to or right to install any device on the
roof of the Building nor make any penetrations of the roof of the Building
without the express prior written consent of Landlord. If Tenant refuses or
neglects to repair and maintain the Premises and the adjacent areas properly as
required herein and to the reasonable satisfaction of Landlord, Landlord may,
but without obligation to do so, at any time make such repairs and/or
maintenance without Landlord having any liability to Tenant for any loss or
damage that may accrue to Tenant's merchandise, fixtures or other property, or
to Tenant's business by reason thereof, except to the extent any damage is
caused by the willful misconduct or gross negligence of Landlord or its
authorized agents and representatives. In the event Landlord makes such repairs
and/or maintenance, upon completion thereof Tenant shall pay to Landlord, as
additional rent, the Landlord's costs for making such repairs and/or
maintenance, plus ten percent (10%) for overhead, upon presentation of a bill
therefor, plus any Enforcement Expenses. The obligations of Tenant hereunder
shall survive the expiration of the term of this Lease or the earlier
termination thereof. Tenant hereby waives any right to repair at the expense of
Landlord under any applicable Laws now or hereafter in effect respecting the
Premises.
12. Insurance:
12.1 Types of Insurance: Tenant shall maintain in full force and effect at
all times during the term of this Lease, at Tenant's sole cost and expense, for
the protection of Tenant and Landlord, as their interests may appear, policies
of insurance issued by a carrier or carriers acceptable to Landlord and its
lender(s) which afford the following coverages: (i) worker's compensation:
statutory limits; (ii) employer's liability, as required by law, with a minimum
limit of $100,000 per employee and $500,000 per occurrence; (iii) commercial
general liability insurance (occurrence form) providing coverage against any and
all claims for bodily injury and property damage occurring in, on or about the
Premises arising out of Tenant's and Tenant's Representatives' use and/or
occupancy of the Premises. Such insurance shall include coverage for blanket
contractual liability, fire damage, premises, personal injury, completed
operations, products liability, personal and advertising, and a plate-glass
rider to provide coverage for all glass in, on or about the Premises including,
without limitation, skylights, with deletion of the exclusion for operations
within fifty (50) feet of a railroad track (railroad protective liability), if
applicable. Such insurance shall have a combined single limit of not less than
One Million Dollars ($1,000,000) per occurrence with a Two Million Dollar
($2,000,000) aggregate limit that includes excess umbrella insurance. If Tenant
has other locations which it owns or leases, the policy shall include an
aggregate limit per location endorsement. If necessary, as reasonably determined
by Landlord, Tenant shall provide for restoration of the aggregate limit; (iv)
comprehensive automobile liability insurance: a combined single limit of not
less than $2,000,000 per occurrence and insuring Tenant against liability for
claims arising out of the ownership, maintenance, or use of any owned, hired or
non-owned automobiles; (v) "all risk" property insurance, including without
limitation, sprinkler leakage, boiler and machinery comprehensive form, if
applicable, covering damage to or loss of any
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
personal property, trade fixtures, inventory, fixtures and equipment located in,
on or about the Premises, and in addition, coverage for flood, and business
interruption of Tenant, together with, if the property of Tenant's invitees is
to be kept in the Premises, warehouser's legal liability or bailee customers
insurance for the full replacement cost of the property belonging to invitees
and located in the Premises. Such insurance shall be written on a replacement
cost basis (without deduction for depreciation) in an amount equal to one
hundred percent (100%) of the full replacement value of the aggregate of the
items referred to in this subparagraph (v); and (vi) such other insurance as
Landlord deems necessary and prudent or as may otherwise be required by any of
Landlord's lenders or joint venture partners.
12.2 Insurance Policies: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A:X (or such higher rating as may be
required by a lender having a lien on the Premises) as set forth in the most
current issue of "Best's Insurance Reports." Any deductible amounts under any of
the insurance policies required hereunder shall not exceed One Thousand Dollars
($1,000). Tenant shall deliver to Landlord certificates of insurance and true
and complete copies of any and all endorsements required herein for all
insurance required to be maintained by Tenant hereunder at the time of execution
of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to
expiration of each policy, furnish Landlord with certificates of renewal or
"binders" thereof. Each certificate shall expressly provide that such policies
shall not be cancelable or otherwise subject to modification except after thirty
(30) days prior written notice to the parties named as additional insureds as
required in this Lease (except for cancellation for nonpayment of premium, in
which event cancellation shall not take effect until at least ten (10) days'
notice has been given to Landlord). Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms of this
Lease under a blanket insurance policy, provided such blanket policy expressly
affords coverage for the Premises and for Landlord as required by this Lease.
12.3 Additional Insureds and Coverage: Landlord, any property management
company and/or agent of Landlord for the Premises, the Building, the Lot or the
Park, any lender(s) of Landlord having a lien against the Premises, the
Building, the Lot or the Park, and any joint venture partners of Landlord shall
be specifically named as additional insureds under all of the policies required
in Section 12.1(iii) above. Additionally, such policies shall provide for
severability of interest. All insurance to be maintained by Tenant shall, except
for workers' compensation and employer's liability insurance, be primary,
without right of contribution from insurance maintained by Landlord. Any
umbrella liability policy or excess liability policy (which shall be in
"following form") shall provide that if the underlying aggregate is exhausted,
the excess coverage will drop down as primary insurance. The limits of insurance
maintained by Tenant shall not limit Tenant's liability under this Lease. It is
the parties' intention that the insurance to be procured and maintained by
Tenant as required herein shall provide coverage for any and all damage or
injury arising from or related to Tenant's operations of its business and/or
Tenant's or Tenant's Representatives' use of the Premises and/or any of the
areas within the Park, whether such events occur within the Premises (as
described in Exhibit A hereto) or in any other areas of the Park. It is not
contemplated or anticipated by the parties that the aforementioned risks of loss
be borne by Landlord's insurance carriers, rather it is contemplated and
anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's
insurance carriers pursuant to the insurance policies procured and maintained by
Tenant as required herein. In the event Landlord makes a claim against Tenant's
insurance as an additional insured, Tenant shall reimburse Landlord for the
amount of any deductible portion not paid to Landlord by the insurer.
12.4 Failure of Tenant to Purchase and Maintain Insurance: In the event
Tenant does not purchase the insurance required in this Lease or keep the same
in full force and effect throughout the term of this Lease (including any
renewals or extensions), Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall pay promptly to Landlord, as Additional
Rent, the amount so paid by Landlord, upon Landlord's demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all Enforcement Expenses and damages which Landlord may
sustain by reason of Tenant's failure to obtain and maintain such insurance. If
Tenant fails to maintain any insurance required in this Lease, Tenant shall be
liable for all losses, damages, costs resulting from such failure and be in
default of the Lease.
13. Waiver of Subrogation: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation against the other party.
This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by Tenant pursuant to
Section 12 of this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance. The provisions
of this Section 13 shall not apply in those instances in which such waiver of
subrogation would invalidate such insurance coverage or would cause either
party's insurance coverage to be voided or otherwise uncollectible.
14. Limitation of Liability and Indemnity: Except for damage resulting from the
[strikeout]sole[endstrikeout] active gross negligence or willful misconduct of
Landlord or its authorized representatives, Tenant agrees to protect, defend
(with counsel
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
acceptable to Landlord) and hold Landlord and Landlord's lender(s), partners,
employees, representatives, legal representatives, successors and assigns
(collectively, the "Indemnitees") harmless and indemnify the Indemnitees from
and against all liabilities, damages, claims, losses, judgments, charges and
expenses (including reasonable attorneys' fees, costs of court and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, Tenant's or Tenant's Representatives' use of the Premises,
Building and/or the Park, or the conduct of Tenant's business, or from any
activity, work or thing done, permitted or suffered by Tenant in or about the
Premises, or in any way connected with the Premises or with the improvements or
personal property therein, including, but not limited to, any liability for
injury to person or property of Tenant, Tenant's Representatives, or third party
persons. Tenant agrees that the obligations of Tenant herein shall survive the
expiration or earlier termination of this Lease.
Except for damage resulting from the [strikeout]sole[endstrikeout] active
gross negligence or willful misconduct of Landlord or its authorized
representatives, Landlord shall not be liable to Tenant for any loss or damage
to Tenant or Tenant's property, for any injury to or loss of Tenant's business
or for any damage or injury to any person from any cause whatsoever, including,
but not limited to, any acts, errors or omissions by or on behalf of any other
tenants or occupants of the Building and/or the Park. Tenant shall not, in any
event or circumstance, be permitted to offset or otherwise credit against any
payments of Rent required herein for matters for which Landlord may be liable
hereunder. Landlord and its authorized representatives shall not be liable for
any interference with light or air, or for any latent defect in the Premises or
the Building. To the fullest extent permitted by law, Tenant agrees that neither
Landlord nor any of Landlord's lender(s), partners, employees, representatives,
legal representatives, successors and assigns shall at any time or to any extent
whatsoever be liable, responsible or in any way accountable for any loss,
liability, injury, death or damage to persons or property which at any time may
be suffered or sustained by Tenant or by any person(s) whomsoever who may at any
time be using, occupying or visiting the Premises, the Building or the Park.
15. Assignment and Subleasing:
15.1 Prohibition: Tenant shall not assign, mortgage, hypothecate,
encumber, grant any license or concession, pledge or otherwise transfer this
Lease (collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) beyond those requirements which are applicable to
Tenant, unless the proposed sublessee or assignee shall (a) first deliver plans
and specifications for complying with such additional requirements and obtain
Landlord's written consent thereto, and (b) comply with all Landlord's
conditions for or contained in such consent, including without limitation,
requirements for security to assure the lien-free completion of such
improvements. If Tenant seeks to sublet or assign all or any portion of the
Premises, Tenant shall deliver to Landlord the following: (i) the name of the
proposed assignee or sublessee; (ii) such information as to such assignee's or
sublessee's financial responsibility and standing as Landlord may reasonably
require; and (iii) the aforementioned plans and specifications, if any or (iv)
any other pertinent information regarding the proposed subtenant that is
reasonably requested by Landlord. Within ten (10) days after Landlord's receipt
of a written request from Tenant that Tenant seeks to sublet or assign all or
any portion of the Premises, Landlord shall deliver to Tenant a copy of
Landlord's consent to sublease or assignment form (as applicable), which
instrument shall be utilized for each proposed sublease or assignment (as
applicable), and such instrument shall include a provision whereby the assignee
or sublessee assumes all of Tenant's obligations hereunder and agrees to be
bound by the terms hereof. As Additional Rent hereunder, Tenant shall pay to
Landlord a fee in the amount of five hundred dollars ($500) plus Tenant shall
reimburse Landlord for actual legal and other expenses incurred by Landlord in
connection with any actual or proposed assignment or subletting. Upon Landlord's
approval of the proposed subtenant or assignee, which shall not be unreasonably
delayed or withheld, Tenant shall provide Landlord with a minimum of a thirty
(30) day notice indicating the proposed effective date of the sublease or
assignment ("Proposed Effective Date"). In the event the sublease (1) by itself
or taken together with prior sublease(s) covers or totals, as the case may be,
more than twenty-five percent (25%) of the rentable square feet of the Premises
or (2) is for a term which by itself or taken together with prior or other
subleases is greater than fifty percent (50%) of the period remaining in the
term of this Lease as of the time of the Proposed Effective Date, then Landlord
shall have the right, to be exercised by giving written notice to Tenant, to
recapture the space described in the sublease. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
sublease space, or, if the proposed sublease space covers all the Premises, it
shall serve to terminate the entire term of this Lease in either case, as of the
Proposed Effective Date. However, no termination of this Lease with respect to
part or all of the Premises shall become effective without the prior written
consent, where necessary, of the holder of each deed of trust encumbering the
Premises or any part thereof. If this Lease is terminated pursuant to the
foregoing with respect to less than the entire Premises, the Rent shall be
adjusted on the basis of the proportion of square feet retained by Tenant to the
square feet originally demised and this Lease as so amended shall continue
thereafter in full force and effect. No termination will be considered by
Landlord unless Tenant is current in all of its Lease obligations and not in
default. Each permitted and approved assignee shall be 100% responsible for the
obligations defined in this Lease. Each permitted assignee shall assume and be
deemed to assume this Lease and shall be and remain liable jointly and severally
with Tenant for payment of Rent and for the due performance of, and compliance
with all the terms, covenants, conditions and agreements herein contained on
Tenant's
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
part to be performed or complied with, for the term of this Lease. Landlord
shall have a right to approve the form of any sublease, which approval shall not
be unreasonably withheld. No assignment or subletting shall affect the
continuing primary liability of Tenant (which, following assignment, shall be
joint and several with the assignee), and Tenant shall not be released from
performing any of the terms, covenants and conditions of this Lease. Tenant
hereby acknowledges and agrees that it understands that Landlord's accounting
department may process and accept Rent payments without verifying that such
payments are being made by Tenant, a permitted sublessee or a permitted assignee
in accordance with the provisions of this Lease. Although such payments may be
processed and accepted by such accounting department personnel, any and all
actions or omissions by the personnel of Landlord's accounting department shall
not be considered as acceptance by Landlord of any proposed assignee or
sublessee nor shall such actions or omissions be deemed to be a substitute for
the requirement that Tenant obtain Landlord's prior written consent to any such
subletting or assignment, and any such actions or omissions by the personnel of
Landlord's accounting department shall not be considered as a voluntary
relinquishment by Landlord of any of its rights hereunder nor shall any
voluntary relinquishment of such rights be inferred therefrom. For purposes
hereof, in the event Tenant is a corporation, partnership, joint venture, trust
or other entity other than a natural person, any change in the direct or
indirect ownership of Tenant (whether pursuant to one or more transfers) which
results in a change of more than fifty percent (50%) in the direct or indirect
ownership of Tenant shall be deemed to be an assignment within the meaning of
this Section 15 and shall be subject to all the provisions hereof. Any and all
options, first rights of refusal, tenant improvement allowances and other
similar rights granted to Tenant in this Lease, if any, shall not be assignable
by Tenant unless expressly authorized in writing by Landlord.
15.2 Excess Sublease Rental or Assignment Consideration: In the event of
any sublease or assignment of all or any portion of the Premises where the rent
or other consideration provided for in the sublease or assignment either
initially or over the term of the sublease or assignment exceeds the Rent or pro
rata portion of the Rent, as the case may be, for such space reserved in the
Lease, Tenant shall pay the Landlord monthly, as additional rent, at the same
time as the monthly installments of Rent are payable hereunder, one hundred
percent (100%) of the excess of each such payment of rent or other consideration
in excess of the Rent called for hereunder.
15.3 Waiver: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.
16. Ad Valorem Taxes: Tenant shall pay all taxes and assessments levied upon
trade fixtures, alterations, additions, improvements, inventories and personal
property located and/or installed on or in the Premises by, or on behalf of,
Tenant, prior to delinquency; and if requested by Landlord, Tenant shall
promptly deliver to Landlord copies of receipts for payment of all such taxes
and assessments. To the extent any such taxes are not separately assessed or
billed to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. Subordination: Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Building or the land upon which the Building is situated
or both, and (ii) the lien of any mortgage or deed of trust which may now exist
or hereafter be executed in any amount for which the Building, the Lot, ground
leases or underlying leases, or Landlord's interest or estate in any of said
items is specified as security. Notwithstanding the foregoing, Landlord or any
such ground lessor, mortgagee, or any beneficiary shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord. Such successor in interest
[strikeout]will[endstrikeout] shall not disturb Tenant's use, occupancy or quiet
enjoyment of the Premises so long as Tenant is not in default of the terms and
provisions of this Lease beyond any applicable cure periods. The successor in
interest to Landlord following foreclosure, sale or deed in lieu thereof shall
not be (a) liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) subject to any offsets
or defenses which Tenant might have against any prior lessor; (c) bound by
prepayment of more than one (1) month's Rent; or (d) liable to Tenant for any
Security Deposit not actually received by such successor in interest to the
extent any portion or all of such Security Deposit has not already been
forfeited by, or refunded to, Tenant. Landlord shall be liable to Tenant for all
or any portion of the Security Deposit not forfeited by, or refunded to Tenant,
until and unless Landlord transfers such Security Deposit to the successor in
interest. Tenant covenants and agrees to execute (and acknowledge if required by
Landlord, any lender or ground lessor) and deliver, within ten (10) days of a
demand or request by Landlord and in the form reasonably requested by Landlord,
ground lessor, mortgagee or beneficiary, any additional reasonable documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust, provided that such documents contain non-disturbance provisions
reasonably acceptable to Tenant. Tenant's failure to timely execute and deliver
such additional documents shall, at Landlord's
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
option, constitute a default hereunder. It is further agreed that Tenant shall
be liable to Landlord, and shall indemnify Landlord from and against any loss,
cost, damage or expense, incidental, consequential, or otherwise, arising or
accruing directly or indirectly, from any failure of Tenant to execute or
deliver to Landlord any such additional documents, together with any and all
Enforcement Expenses.
18. Right of Entry: Tenant grants Landlord or its agents the right to enter the
Premises at all reasonable times for purposes of inspection, exhibition, posting
of notices, repair or alteration. It is further agreed that Landlord shall have
the right to use any and all means Landlord deems necessary to enter the
Premises in an emergency. Landlord shall also have the right to place "for rent"
and/or "available" signs on the outside of the Premises. Tenant hereby waives
any claim from damages or for any injury or inconvenience to or interference
with Tenant's business, or any other loss occasioned thereby except for any
claim for any of the foregoing arising out of the [strikeout]sole[endstrikeout]
active gross negligence or willful misconduct of Landlord or its authorized
representatives.
19. Estoppel Certificate: Tenant shall execute (and acknowledge if required by
any lender or ground lessor) and deliver to Landlord, within not less than five
(5) days after Landlord provides such to Tenant, a statement in writing
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification), the date to which the Rent
and other charges are paid in advance, if any, acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or
specifying such defaults as are claimed, and such other matters as Landlord may
reasonably require. Any such statement may be conclusively relied upon by
Landlord and any prospective purchaser or encumbrancer of the Premises. Tenant's
failure to deliver such statement within such time shall be conclusive upon the
Tenant that (a) this Lease is in full force and effect, without modification
except as may be represented by Landlord; (b) there are no uncured defaults in
Landlord's performance; and (c) not more than one month's Rent has been paid in
advance, except in those instances when Tenant pays Rent quarterly in advance
pursuant to Section 8 hereof, then not more than three month's Rent has been
paid in advance. Failure by Tenant to so deliver such certified estoppel
certificate shall be a default of the provisions of this Lease. Tenant shall be
liable to Landlord, and shall indemnify Landlord from and against any loss,
cost, damage or expense, incidental, consequential, or otherwise, arising or
accruing directly or indirectly, from any failure of Tenant to execute or
deliver to Landlord any such certified estoppel certificate, together with any
and all Enforcement Expenses.
20. Tenant's Default: The occurrence of any one or more of the following events
shall, at Landlord's option, constitute a default and breach of this Lease by
Tenant:
20.1 The vacation or abandonment of the Premises by Tenant for a period
of ten (10) consecutive days or the vacation of the Premises by Tenant which
would cause any insurance policy to be invalidated or otherwise lapse;
20.2 The failure by Tenant to make any payment of Rent, Additional Rent or
any other payment required hereunder on the date said payment is due;
20.3 The failure by Tenant to observe, perform or comply with any of the
conditions, covenants or provisions of this Lease (except failure to make any
payment of Rent and/or Additional Rent) and such failure is not cured within the
time period required under the provisions of this Lease. Tenant agrees: if such
failure is susceptible of cure but cannot reasonably be cured within the
aforementioned time period (if any), as determined reasonably by Landlord,
Tenant shall promptly commence the cure of such failure and thereafter
diligently prosecute such cure to completion within the time period specified by
Landlord in any written notice regarding such failure as may be delivered to
Tenant by Landlord. In no event or circumstance shall Tenant have more than
thirty (30) days to complete any such cure, unless otherwise expressly agreed to
in writing by Landlord;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 The making of any material misrepresentation or omission included but
not limited to any financial information by Tenant in any materials delivered by
or on behalf of Tenant to Landlord pursuant to this Lease; or
20.6 A material adverse change in the financial condition of Tenant or an
affiliated entity of Tenant which may adversely affect Tenant's ability to
perform all or any portion of its obligations under this Lease.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
21. Remedies for Tenant's Default:
21.1 Landlord's Rights: In the event of Tenant's default or breach of the
Lease, Landlord may terminate Tenant's right to possession of the Premises by
any lawful means in which case upon delivery of written notice by Landlord this
Lease shall terminate on the date specified by Landlord in such notice and
Tenant shall immediately surrender possession of the Premises to Landlord. In
addition, the Landlord shall have the immediate right of re-entry whether or not
this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any personal
property belonging to Tenant and left on the Premises to also have been
abandoned. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 21 shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant. If Landlord relets
the Premises or any portion thereof, (i) Tenant shall be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, broker's commissions, expenses of
cleaning, redecorating, and further improving the Premises and other similar
costs (collectively, the "Reletting Costs"), and (ii) the rent received by
Landlord from such reletting shall be applied to the payment of, first, any
indebtedness from Tenant to Landlord other than Base Rent, Operating Expenses,
Tax Expenses, Administrative Expenses, Common Area Utility Costs, and Utility
Expenses; second, all costs including maintenance, incurred by Landlord in
reletting; and, third, Base Rent, Operating Expenses, Tax Expenses,
Administrative Expenses, Common Area Utility Costs, Utility Expenses, and all
other sums due under this Lease. Any and all of the Reletting Costs shall be
fully chargeable to Tenant and shall not be prorated or otherwise amortized in
relation to any new lease for the Premises or any portion thereof. After
deducting the payments referred to above, any sum remaining from the rental
Landlord receives from reletting shall be held by Landlord and applied in
payment of future Rent as Rent becomes due under this Lease. In no event shall
Tenant be entitled to any excess rent received by Landlord. Reletting may be for
a period shorter or longer than the remaining term of this Lease. No act by
Landlord other than giving written notice to Tenant shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. So
long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises, to cause a receiver
to be appointed to administer the Premises and new or existing subleases and to
add to the Rent payable hereunder all of Landlord's reasonable costs in so
doing, with interest at the maximum rate permitted by law from the date of such
expenditure.
21.2 Damages Recoverable: If Tenant breaches this Lease and abandons the
Premises before the end of the term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default of the Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the cost of any tenant improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto, the portion of any
broker's or leasing agent's commission incurred with respect to the leasing of
the Premises to Tenant for the balance of the term of the Lease remaining after
the date on which Tenant is in default of its obligations hereunder, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant's failure to perform its obligations
hereunder; provided, however, that even though Tenant has abandoned the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord shall have the remedy described in Section
1951.4 of the California Civil Code (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations) and may enforce all its rights and remedies under this Lease,
including the right to recover the Rent from Tenant as it becomes due hereunder.
The "worth at the time of the award" within the meaning of Subparagraphs (a)(1)
and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by
allowing interest at the rate of ten percent (10%) per annum. Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.
21.3 Rights and Remedies Cumulative: The foregoing rights and remedies of
Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally. In
addition to all remedies set forth above, if Tenant defaults or otherwise
breaches this Lease, any and all Base Rent waived by Landlord under Section 3
above shall be immediately due and payable to Landlord and all options granted
to Tenant hereunder shall automatically terminate, unless otherwise expressly
agreed to in writing by Landlord.
21.4 Waiver of a Default: The waiver by Landlord of any default or breach
of any provision of this Lease shall not be deemed or construed a waiver of any
other breach or default by Tenant hereunder or of any subsequent breach or
default of this Lease, except for the default specified in the waiver.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
22. Holding Over: If Tenant holds possession of the Premises after the
expiration of the term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease
provided the monthly Base Rent during such hold over period shall be 150% of the
Base Rent due on the last month of the Lease term, payable in advance on or
before the first day of each month. Acceptance by Landlord of the monthly Base
Rent without the additional fifty percent (50%) increase of Base Rent shall not
be deemed or construed as a waiver by Landlord of any of its rights to collect
the increased amount of the Base Rent as provided herein at any time. Such
month-to-month tenancy shall not constitute a renewal or extension for any
further term. All options, if any, granted under the terms of this Lease shall
be deemed automatically terminated and be of no force or effect during said
month-to-month tenancy. Tenant shall continue in possession until such tenancy
shall be terminated by either Landlord or Tenant giving written notice of
termination to the other party at least thirty (30) days prior to the effective
date of termination. This paragraph shall not be construed as Landlord's
permission for Tenant to hold over. Acceptance of Base Rent by Landlord
following expiration or termination of this Lease shall not constitute a renewal
of this Lease.
23. Landlord's Default: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall at a minimum be thirty (30) days after
receipt by Landlord of written notice specifying the nature of the obligation
Landlord has not performed; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days, after receipt of written
notice, is reasonably necessary for its performance, then Landlord shall not be
in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. Parking: Tenant shall have a license to use the number of undesignated and
nonexclusive parking spaces set forth on Page 1. Landlord shall not be obligated
or required to enforce Tenant's right to use the same.
25. Sale of Premises: In the event of any sale of the Premises by Landlord or
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its under this lease arising
thereafter, and the purchaser shall be deemed, at such sale or any subsequent
sale of the Premises shall be deemed, without any further agreement between the
parties or their successors in interest or between the parties and any such
purchaser, to have assumed and agreed to carry out any and all of the covenants
and obligations of the Landlord under this Lease. For purposes of this Section
25, the term "Landlord" means only the owner and/or agent of the owner as such
parties exist as of the date on which Tenant executes this Lease. A ground lease
or similar long term lease by Landlord of the entire Building, of which the
Premises is a part, shall be deemed a sale within the meaning of this Section
25. Tenant agrees to attorn to such new owner. The provisions of this Section 25
shall not release Landlord from any of its obligations under this Lease arising
prior to such sale or cessation of Landlord's interest
26. Waiver: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
breach by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such breach, other than a waiver of timely payment for the particular
Rent payment (or portion thereof) involved, and shall not prevent Landlord from
maintaining an unlawful detainer or other action based on such breach. No
payment by Tenant or receipt by Landlord of a lesser amount than the monthly
Rent and other sums due hereunder shall be deemed to be other than on account of
the earliest Rent or other sums due, nor shall any endorsement or statement on
any check or accompanying any check or payment be deemed an accord and
satisfaction; and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or other sum or pursue any
other remedy provided in this Lease. No failure, partial exercise or delay on
the part of the Landlord in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
27. Casualty Damage: If the Premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged by fire or other casualty
that substantial alteration or reconstruction of the Building shall, in
Landlord's sole opinion, be required (whether or not the Premises shall have
been damaged by such fire or other casualty), Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination within
forty-five (45) days after the date of such damage, in which event the Rent
shall be abated as of the date of such damage. If Landlord does not elect to
terminate this Lease, and provided insurance proceeds and any contributions from
Tenant, if necessary, are available to fully repair the damage, Landlord shall
within ninety (90) days after the date of such damage commence to repair and
restore the Building and shall proceed with reasonable diligence to restore the
Building (except that Landlord shall not be responsible for delays outside its
control) to substantially the same condition in which it was immediately prior
to the happening of the casualty; provided, Landlord shall not be required to
rebuild, repair, or replace any part of Tenant's furniture, furnishings or
fixtures and equipment removable by Tenant or any improvements, alterations or
additions installed by or for the benefit of Tenant under the provisions of this
Lease. Landlord shall not in any event be required to spend for such work an
amount in excess of the insurance proceeds (excluding any deductible) and any
contributions from Tenant, if necessary,
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
actually received by Landlord as a result of the fire or other casualty.
Landlord shall not be liable for any inconvenience or annoyance to Tenant,
injury to the business of Tenant, loss of use of any part of the Premises by the
Tenant or loss of Tenant's personal property resulting in any way from such
damage or the repair thereof, except that, subject to the provisions of the next
sentence, Landlord shall allow Tenant a fair diminution of Rent during the time
and to the extent the Premises are unfit for occupancy. If the Premises or any
other portion of the Building be damaged by fire or other casualty resulting
from the intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives, the Rent shall not be diminished during the repair of such
damage and Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of all or any portion of the Building caused thereby
(including, without limitation, any deductible) to the extent such cost and
expense is not covered by insurance proceeds. In the event the holder of any
indebtedness secured by the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within thirty
(30) days after the date of notice to Tenant of any such event, whereupon all
rights and obligations shall cease and terminate hereunder. Except as otherwise
provided in this Section 27, Tenant hereby waives the provisions of Sections
1932(2.), 1933(4.), 1941 and 1942 of the California Civil Code.
28. Condemnation: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title is vested in such condemning authority, and Rent
shall be adjusted to the date of termination. Tenant shall not, because of such
condemnation, assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant. If a substantial portion of the Premises,
Building or the Lot is so Condemned, Landlord at its option may terminate this
Lease. If Landlord does not elect to terminate this Lease, Landlord shall, if
necessary, promptly proceed to restore the Premises or the Building to
substantially its same condition prior to such partial condemnation, allowing
for the reasonable effects of such partial condemnation, and a proportionate
allowance shall be made to Tenant, as solely determined by Landlord, for the
Rent corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of such partial condemnation and
restoration. Landlord shall not be required to spend funds for restoration in
excess of the amount received by Landlord as compensation awarded.
29. Environmental Matters/Hazardous Materials:
29.1 Hazardous Materials Disclosure Certificate: Prior to executing this
Lease, Tenant has completed, executed and delivered to Landlord the Hazardous
Materials Disclosure Certificate (the "HazMat Certificate"), a copy of which is
attached hereto as Exhibit E and incorporated herein by this reference. Tenant
covenants, represents and warrants to Landlord that the information on the
HazMat Certificate is true and correct and accurately describes the use(s) of
Hazardous Materials which will be made and/or used on the Premises by Tenant.
Tenant shall, commencing with the date which is one year from the Commencement
Date and continuing every year thereafter, complete, execute, and deliver to
Landlord, a HazMat Certificate describing Tenant's present use of Hazardous
Materials on the Premises, and any other reasonably necessary documents as
requested by Landlord. The HazMat Certificate required hereunder shall be in the
form as that which is attached hereto as Exhibit E.
29.2 Definition of Hazardous Materials: As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Building,
the Lot, the Park or any surrounding property; or pose or threaten to pose a
hazard to the health and safety of persons on the Premises the Building, the
Lot, the Park or any surrounding property.
29.3 Prohibition; Environmental Laws: Tenant shall not be entitled to use
nor store any Hazardous Materials on, in, or about the Premises, the Building,
the Lot and the Park, or any portion of the foregoing, without, in each
instance, obtaining Landlord's prior written consent thereto. If Landlord
consents to any such usage or storage, then Tenant shall be permitted to use
and/or store only those Hazardous Materials that are necessary for Tenant's
business and to the extent disclosed in the HazMat Certificate and as expressly
approved by Landlord in writing, provided that such usage and storage is only to
the extent of the quantities of Hazardous Materials as specified in the then
applicable HazMat Certificate, as expressly approved by Landlord, and provided
further that such usage and storage is in full compliance with any and all
local, state and federal environmental, health and/or safety-related laws,
statutes, orders, standards, courts' decisions, ordinances, rules and
regulations (as interpreted by judicial and administrative decisions), decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant to all or any portion of the Premises (collectively, the
"Environmental Laws"). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
may be given or withheld in Landlord's sole discretion. Tenant shall not be
entitled nor permitted to install any tanks under, on or about the Premises for
the storage of Hazardous Materials without the express written consent of
Landlord, which may be given or withheld in Landlord's sole discretion. Landlord
shall have the right at all times during the term of this Lease to (i) inspect
the Premises, (ii) conduct tests and investigations to determine whether Tenant
is in compliance with the provisions of this Section 29, and (iii) request lists
of all Hazardous Materials used, stored or otherwise located on, under or about
the Premises, the Common Areas and/or the parking lots (to the extent the Common
Areas and/or the parking lots are not considered part of the Premises). The cost
of all such inspections, tests and investigations shall be borne solely by
Tenant, if Landlord reasonably believes they are necessary and such inspections,
tests, and investigations indicate that Tenant has contaminated the Premises.
The aforementioned rights granted herein to Landlord and its representatives
shall not create (a) a duty on Landlord's part to inspect, test, investigate,
monitor or otherwise observe the Premises or the activities of Tenant and
Tenant's Representatives with respect to Hazardous Materials, including without
limitation, Tenant's operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant's use,
storage, disposal or remediation of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.
29.4 Tenant's Environmental Obligations: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials on, under or about the Premises, or in any Common Areas or
parking lots (to the extent such areas are not considered part of the Premises).
Tenant, at its sole cost and expense, covenants and warrants to promptly
investigate, clean up, remove, restore and otherwise remediate (including,
without limitation, preparation of any feasibility studies or reports and the
performance of any and all closures) any spill, release, discharge, disposal,
emission, migration or transportation of Hazardous Materials arising from or
related to the intentional or negligent acts or omissions of Tenant or Tenant's
Representatives such that the affected portions of the Park and any adjacent
property are returned to the condition existing prior to the appearance of such
Hazardous Materials. Any such investigation, clean up, removal, restoration and
other remediation shall only be performed after Tenant has obtained Landlord's
prior written consent, which consent shall not be unreasonably withheld so long
as such actions would not potentially have a material, adverse long-term or
short-term effect on the Premises, the Building, the Lot or the Park, or any
portion of any of the foregoing. Notwithstanding the foregoing, Tenant shall be
entitled to respond immediately to an emergency without first obtaining
Landlord's prior written consent. If Tenant is required under this Lease to
perform any remediation, Tenant, at its sole cost and expense, shall conduct and
perform, or cause to be conducted and performed, all closures as required by any
Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof. If Tenant fails to so promptly investigate, clean up,
remove, restore, provide closure or otherwise so remediate, Landlord may, but
without obligation to do so, take any and all steps necessary to rectify the
same and Tenant shall promptly reimburse Landlord, upon demand, for all costs
and expenses to Landlord of performing investigation, clean up, removal,
restoration, closure and remediation work. All such work undertaken by Tenant,
as required herein, shall be performed in such a manner so as to enable Landlord
to make full economic use of the Premises, the Building, the Lot and the Park
after the satisfactory completion of such work.
29.5 Environmental Indemnity: In addition to Tenant's obligations as set
forth hereinabove, Tenant and agrees to, and shall, protect, indemnify, defend
(with counsel reasonably acceptable to Landlord) and hold Landlord and
Landlord's lenders, partners, property management company (if other than
Landlord), agents, directors, officers, employees, representatives, contractors,
shareholders, successors and assigns and each of their respective partners,
directors, employees, representatives, agents, contractors, shareholders,
successors and assigns harmless from and against any and all claims, judgments,
damages, penalties, fines, liabilities, losses (including, without limitation,
diminution in value of the Premises, the Building, the Lot, the Park, or any
portion of any of the foregoing, damages for the loss of or restriction on the
use of rentable or usable space, and from any adverse impact of Landlord's
marketing of any space within the Building and/or Park), suits, administrative
proceedings and costs (including, but not limited to, attorneys' and consultant
fees and court costs) arising at any time during or after the term of this Lease
in connection with or related to, the use, presence, transportation, storage,
disposal, migration, removal, spill, release or discharge of Hazardous Materials
on, in or about the Premises, or in any Common Areas or parking lots (to the
extent such areas are not considered part of the Premises) as a result of the
intentional or negligent acts or omissions of Tenant or Tenant's
Representatives. Neither the written consent of Landlord to the presence, use or
storage of Hazardous Materials in, on, under or about any portion of the
Premises, the Building, the Lot and the Park, nor the strict compliance by
Tenant with all Environmental Laws shall excuse Tenant and Tenant's officers and
directors from its obligations of indemnification pursuant hereto. To the extent
Landlord is strictly liable under any Environmental Laws, Tenant's obligations
to Landlord under this Section 29 and the indemnity contained herein shall
likewise be without regard to fault on Tenant's part with respect to the
violation of any Environmental Law which results in liability to Landlord.
29.6 Survival: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or early termination
of this Lease. If it is determined by Landlord that the condition of all or any
portion of the Premises, the Building, the Lot and/or the Park is not in
compliance with the provisions of this Lease with respect to Hazardous
Materials, including without limitation all Environmental Laws at the expiration
or earlier termination of this Lease, then at Landlord's sole option, Landlord
may require Tenant to hold over possession of the Premises until Tenant can
surrender the Premises to Landlord in the condition in which the Premises
existed as of the Commencement Date and prior to the appearance of such
Hazardous Materials except for reasonable wear and tear, including without
limitation, the conduct or performance of any closures as required by any
Environmental Laws. The burden of proof
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
hereunder shall be upon Tenant. For purposes hereof, the term "reasonable wear
and tear" shall not include any deterioration in the condition or diminution of
the value of any portion of the Premises, the Building, the Lot and/or the Park
in any manner whatsoever related to directly, or indirectly, Hazardous
Materials. Any such holdover by Tenant will be with Landlord's consent, will not
be terminable by Tenant in any event or circumstance and will otherwise be
subject to the provisions of Section 22 of this Lease.
29.7 Landlord's Obligations:
29.7.1 Landlord has delivered to Tenant a copy of a Phase I Environmental
Site Assessment Report, dated May 1, 1996, prepared by Camp Dresser & McKee Inc.
(the "Phase I Report"). Tenant has reviewed the Phase I Report prior to
executing the Lease. Such review shall not constitute a waiver by Tenant of, or
otherwise affect or impair, any rights or remedies of Tenant under this Lease,
at law or in equity.
29.7.2 Landlord shall protect, indemnify, defend (with counsel reasonably
acceptable to Tenant) and hold harmless Tenant and Tenant's directors, officers,
employees, shareholders, successors and assigns from and against only those
costs, expenses, penalties, fines and reasonable attorney's and consultants'
fees incurred in connection with the investigation of site conditions or
cleanup, remediation or removal work (as required by law or by any governmental
entity) that is directly related to the Discharge of any Hazardous Materials at
the Premises, Building or Lot existing prior to the Commencement Date of the
Lease. ("Discharge" shall be defined as use, presence, transportation, storage,
disposal, migration, removal, spill, release or discharge.) For environmental
conditions covered by this Section 29.7.2, Landlord shall have the right to
retain, at Landlord's expense, any necessary consultants and contractors and
otherwise
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
control any legally required investigation and cleanup or other remediation and
Landlord shall also, at Landlord's expense, cause to be performed necessary
restoration work to the Premises, Building and/or Lot.
29.7.3 The Provisions of Section 29.7.2 are not intended to be an
exclusive remedy for Tenant, but instead are cumulative as to any other rights
and remedies Tenant may have at law or in equity with respect to environmental
matters. Notwithstanding any terms to the contrary in this Lease, nothing in
this Lease shall constitute a waiver, release or relinquishment of any such
rights and remedies.
29.7.4 At no cost or expense to Tenant, Landlord shall utilize its best
efforts to obtain, as soon as reasonably possible, an environmental closure and
standard form closure letter from the County of Los Angeles Fire Department (or
other relevant environmental agency) with respect to the conditions discussed in
the Phase I Report (the "Closure").
29.7.5 Landlord represents and warrants to Tenant that, as of the
Commencement Date, there will be no asbestos or asbestos containing materials in
the Premises.
29.7.6 Excluding any costs, expenses and liabilities for which Tenant is
responsible pursuant to Section 29, no cost, expense or liability related to any
past, present of future Discharge of Hazardous Materials on, in or about the
Premises, the Building, the Lot or the Park shall be charged to Tenant pursuant
to Section 6 (entitled "Additional Rent") or any other provisions of this Lease.
29.7.7 Notwithstanding any terms to the contrary in the Lease, the
provisions of Section 31.4 (entitled "Landlord's Personal Liability") shall
apply as follows to Landlord's obligations and liabilities under this Section
29: (1) Prior to Landlord obtaining a Closure, Landlord's personal liabilities
shall be limited to the greater of (i) the purchase price paid by Landlord for
the Building or (ii) the fair market value of the Building at the time of a
breach by Landlord, irrespective of liens and encumbrances; (2) Upon and
following Landlord obtaining a Closure, Landlord's personal liability for its
obligations and liabilities under this Section 29 shall be limited to the
greater of (i) One Million Dollars ($1,000,000.00) or (ii) Landlord's "actual
interest" in the Premises and Building as set forth in Section 31.4; and (3) To
the extent that Landlord's "actual interest" in the Premises and Building is
insufficient to satisfy a judgment for Tenant related to Landlord's obligations
and liabilities under this Section 29, Tenant shall have a right to seek
recourse against other assets of Landlord.
29.7.8 Landlord's obligations and liabilities under this Section 29.7
shall survive the expiration or early termination of this Lease.
30. Financial Statements: Tenant, for the reliance of Landlord, any lender
holding or anticipated to acquire a lien upon the Premises, the Building or the
Park or any portion thereof, or any prospective purchaser of the Building or the
Park or any portion thereof, within ten (10) days after Landlord's request
therefor, but not more often than once annually so long as Tenant is not in
default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. If an audited financial statement has not been prepared, Tenant shall
provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Any and all financial statements and
credit applications shall be confidential for Landlord's and Landlord's
authorized representative's use. Any and all options granted to Tenant hereunder
shall be subject to and conditioned upon Landlord's reasonable approval of
Tenant's financial condition at the time of Tenant's exercise of any such
option. Any and all Financial statements and credit applications shall be
confidential for Landlord's and Landlord's authorized representative's use.
31. General Provisions:
31.1 Time. Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.
31.2 Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 Recordation. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 Landlord's Personal Liability. The liability of Landlord (which, for
purposes of this Lease, shall include Landlord and the owner of the Building if
other than Landlord) to Tenant for any default by Landlord under the terms of
this Lease shall be limited to the actual interest of Landlord and its present
or future partners in the Premises or
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
the Building, and Tenant agrees to look solely to the Premises for satisfaction
of any liability and shall not look to other assets of Landlord nor seek any
recourse against the assets of the individual partners, directors, officers,
shareholders, agents or employees of Landlord; it being intended that Landlord
and the individual partners, directors, officers, shareholders, agents or
employees of Landlord shall not be personally liable in any manner whatsoever
for any judgment or deficiency. The liability of Landlord under this Lease is
limited to its actual period of ownership of title to the Building, and Landlord
shall be automatically released from further performance under this Lease and
from all further liabilities and expenses hereunder upon transfer of Landlord's
interest in the Premises or the Building.
31.5 Separability. Any provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provision shall remain in full force and
effect.
31.6 Choice of Law. This Lease shall be governed by the laws of the State
of California.
31.7 Attorneys' Fees. In the event any dispute between the parties results
in litigation or other proceeding, the prevailing party shall be reimbursed by
the party not prevailing for all reasonable costs and expenses, including,
without limitation, reasonable attorneys' and experts' fees and costs incurred
by the prevailing party in connection with such litigation or other proceeding,
and any appeal thereof. Such costs, expenses and fees shall be included in and
made a part of the judgment recovered by the prevailing party, if any.
31.8 Entire Agreement. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
31.9 Warranty of Authority. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder.
31.10 Notices. Any and all notices and demands required or permitted to be
given hereunder to Landlord shall be in writing and shall be sent: (a) by United
States mail, certified and postage prepaid; or (b) by personal delivery; (c) by
overnight courier: (d) by facsimile, addressed to Landlord at 30 Executive Park,
Suite 100, Irvine, California 92614. Any and all notices and demands required or
permitted to be given hereunder to Tenant shall be in writing and shall be sent:
(i) by United States mail, certified and postage prepaid; or (ii) by personal
delivery to any employee or agent of Tenant over the age of eighteen (18) years
of age; or (iii) by overnight courier, all of which shall be addressed to Tenant
at the Premises; or (iv) by facsimile at the facsimile number at the Premises,
if any, as provided by Tenant on Page 1 of this Lease or otherwise provided to
Landlord. Notice and/or demand shall be deemed given upon the earlier of actual
receipt or the third day following deposit in the United States mail. Notice
and/or demand by facsimile shall be complete upon transmission over the
telephone line.
31.11 Joint and Several. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 Covenants and Conditions. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
31.13 Waiver of Jury Trial. The parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way related to this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises, the Building or the Park, and/or any
claim of injury, loss or damage.
31.14 Counterclaims. Intentionally omitted.
31.15 Underlining. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
32. Signs: All signs and graphics of every kind visible in or from public view
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's Sign Criteria as
set forth in Exhibit H hereto and made a part hereof. Tenant shall remove all
such signs and graphics prior to the termination of this Lease. Such
installations and removals shall be made in a manner as to avoid damage or
defacement of the Premises; and Tenant shall repair any damage or defacement,
including without limitation, discoloration caused by such installation or
removal. Landlord shall have the right, at its option, to deduct from the
Security Deposit such sums as are reasonably necessary to remove such
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
signs, including; but not limited to, the costs and expenses associated with any
repairs necessitated by such removal. Notwithstanding the foregoing, in no event
shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall
interfere with the visibility of any sign, awning, canopy, advertising matter,
or decoration of any kind of any other business or occupant of the Building or
the Park be permitted hereunder. Tenant further agrees to maintain any such
sign, awning, canopy, advertising matter, lettering, decoration or other thing
as may be approved in good condition and repair at all times.
33. Mortgagee Protection: Upon any breach or default on the part of Landlord,
Tenant will give written notice b registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises
who has provided Tenant with notice of their interest together with a thirty
(30) day Tenant agrees that each lender to whom this Lease has been assigned by
Landlord is an express third party beneficiary hereof. Tenant shall not make any
prepayment of Rent more than one (1) month in advance without the prior written
consent of each such lender, except if Tenant is required to make quarterly
payments of Rent in advance pursuant to the provisions of Section 8 above.
Tenant waives the collection of any deposit from such lender(s) or any purchaser
at a foreclosure sale of such lender(s)' deed of trust unless the lender(s) or
such purchaser shall have actually received and not refunded the deposit. Tenant
agrees to make all payments under this Lease to the lender with the most senior
encumbrance upon receiving a direction, in writing, to pay said amounts to such
lender. Tenant shall comply with such written direction to pay without
determining whether an event of default exists under such lender's loan to
Landlord.
34. Quitclaim: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises. If Tenant fails to so deliver to
Landlord such a quitclaim deed, Tenant hereby agrees that Landlord shall have
the full authority and right to record such a quitclaim deed signed only by
Landlord and such quitclaim deed shall be deemed conclusive and binding upon
Tenant.
35. Modifications for Lender: If, in connection with obtaining financing for the
Premises or any portion thereof, Landlord's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Tenant's rights hereunder or
the use, occupancy or quiet enjoyment of Tenant hereunder.
36. Warranties of Tenant: Tenant hereby warrants and represents to Landlord, for
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Tenant hereby further warrants
and represents to Landlord, for the express benefit of Landlord, that in
entering into this Lease, Tenant has not relied upon any statement, fact,
promise or representation (whether express or implied, written or oral) not
specifically set forth herein in writing and that any statement, fact, promise
or representation (whether express or implied, written or oral) made at any time
to Tenant, which is not expressly incorporated herein in writing, is hereby
waived by Tenant.
37. Compliance with Americans with Disabilities Act: Landlord and Tenant hereby
agree and acknowledge that the Premises, the Building and/or the Park may be
subject to the requirements of the Americans with Disabilities Act, a federal
law codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III
thereof, all regulations and guidelines related thereto, together with any and
all laws, rules, regulations, ordinances, codes and statutes now or hereafter
enacted by local or state agencies having jurisdiction thereof, including all
requirements of Title 24 of the State of California, as the same may be in
effect on the date of this Lease and may be hereafter modified, amended or
supplemented (collectively, the "ADA"). Any Tenant Improvements to be
constructed hereunder shall be in compliance with the requirements of the ADA,
and all costs incurred for purposes of compliance therewith shall be a part of
and included in the costs of the Tenant Improvements. Tenant shall be solely
responsible for conducting its own independent investigation of this matter and
for ensuring that the design of all Tenant Improvements strictly comply with all
requirements of the ADA. Subject to reimbursement pursuant to Section 6 of the
Lease, if any barrier removal work or other work is required to the Building,
the Common Area or the Park under the ADA, then such work shall be the
responsibility of Landlord; provided, if such work is required under the ADA as
a result of Tenant's use of the Premises or any work or alteration made to the
Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Building; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Building; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Building. Tenant shall and hereby
agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord's lender(s), partners, employees, representatives, legal
representatives, successors and assigns (collectively, the "Indemnitees")
harmless and indemnify the Indemnitees from and against all liabilities,
damages, claims, losses, penalties, judgments, charges and expenses (including
reasonable attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related, Tenant's or
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
Tenant's Representatives' violation or alleged violation of the ADA. Tenant
agrees that the obligations of Tenant herein shall survive the expiration or
earlier termination of this Lease.
38. Brokerage Commission: Landlord and Tenant each represents and warrants for
the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made for a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than Broker(s), if any, resulting from the actions
of the indemnifying party. Any real estate brokerage commission or finder's fee
payable to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease.
39. Quiet Enjoyment: Landlord covenants with Tenant, that (i) Tenant shall and
may peaceably and quietly hold, occupy and enjoy the Premises and the Common
Areas during the term of this Lease, and (ii) neither Landlord, nor any
successor or assign of Landlord, shall disturb Tenant's occupancy or enjoyment
of the Premises and the Common Areas.
40. Landlord's Ability to Perform Tenant's Unperformed Obligations:
Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option without any obligation to do so, and in its sole discretion as
to the necessity therefor, perform any such term, provision, covenant, or
condition, or make any such payment and Landlord by reason of so doing shall not
be liable or responsible for any loss or damage thereby sustained by Tenant or
anyone holding under or through Tenant. If Landlord so performs any of Tenant's
obligations hereunder, the full amount of the cost and expense entailed or the
payment so made or the amount of the loss so sustained shall immediately be
owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon
demand, as Additional Rent, the full amount thereof with interest thereon from
the date of payment at the greater of (i) ten percent (10%) per annum, or (ii)
the highest rate permitted by applicable law and Enforcement Expenses.
IN WITNESS WHEREOF, this Lease is executed on the date and year first
written above.
LANDLORD:
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln Property Company Management Services, Inc.,
as Agent and Manager for Landlord
By: /s/ Terry Thompson,
-------------------------------------------------
Terry Thompson, Vice President
Date: 8/27/96
-------------------------------------------------
TENANT:
NATROL, INC.,
a California Corporation
By: /s/ Elliott Balbert
-------------------------------------------------
Title: President
-------------------------------------------------
Date: August 26, 1996
-------------------------------------------------
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
EXHIBIT A
[GRAPHIC OMITTED]
SITE PLAN
CHATSWORTH INDUSTRIAL PARK
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
EXHIBIT B
A. TENANT IMPROVEMENTS
1. Tenant Improvements. Landlord agrees to allow Tenant to construct certain
improvements ("Tenant Improvements") in the Building of which the Premises
are a part pursuant to the terms of the Lease, including but not limited
to Article 10 and this Exhibit B.
2. Definition. "Tenant Improvements" as used in this Lease shall include only
those interior portions of the Building which are described herein below.
"Tenant Improvements" shall specifically not include any of Lessee's
personal property or trade fixtures. The Tenant Improvements shall include
any and all interior improvements to be made to the Premises as specified
and agreed to in this Exhibit B and as set forth in the Floor Plan ("Floor
Plan"), to be attached as Exhibit B1, and the Tenant Improvement scope of
work and specifications ("Specifications"), to be attached as Exhibit B2.
3. Tenant to Construct. Tenant shall complete construction of the Tenant
Improvements, in a good and workmanlike manner, and in accordance with all
applicable codes, regulations and ordinances, subject to the Lease.
Landlord reserves the right to approve of the Floor Plan and
Specifications which approval shall not be unreasonably withheld or
delayed.
Within ten (10) days of the Lease being executed and delivered, Tenant
shall provide Landlord with a draft floor plan and specifications for the
Landlord's review and approval. Landlord shall respond to Tenant's draft
floor plan and specifications within five (5) business days with any
questions and/or comments. If Landlord has no comments or Landlord's
comments are not made within the five (5) business day period, then the
draft floor plan and specifications shall become the final floor plan and
specifications. Any of Landlord's comments and/or questions shall be
responded to by Tenant and resolved by Landlord and Tenant within five (5)
business days. Landlord also reserves the right to approve of the Tenant's
designated contractor and review all bids received for the Tenant
Improvement work. The contractor must provide Landlord with an insurance
certificate with a minimum general liability coverage of $1,000,000 that
specifically names the Landlord and the Landlord's designated management
company as additional insureds. The designated contractor must also show
verified proof that they are properly licensed as a general contractor in
the State of California and provide a list of any and all subcontractors
that the Tenant's general contractor plans to hire.
4. Tenant Improvement Allowance.
a. Landlord shall provide an allowance for the construction of the
Tenant Improvements in an amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) ("Tenant Improvement Allowance"). The
Tenant Improvement Allowance shall only be used for Tenant
Improvements defined in this Exhibit B. The Tenant Improvement
Allowance shall be the maximum contribution by Landlord to Tenant
for the Tenant Improvement Cost, as defined in Paragraph 5, below.
This Tenant Improvement Allowance must be used within six (6)
months of the Lease Commencement Date. This time frame excludes any
delays caused by weather, acts of God, strikes and government
(collectively "force majeure"). Any or all of the remaining Tenant
Improvement Allowance shall be null and void on the 1st day of the
7th month of the Lease Term.
b. The Landlord shall provide Tenant with progress payments of the
Tenant Improvement Allowance upon receiving the appropriate
conditional lien releases and certification from a licensed
architect that a progress payment can be released. Landlord shall
hold a ten percent (10%) retention until receiving verification that
the agreed upon Tenant Improvements have been 100% completed which
shall include the Tenant providing the following information to the
Landlord:
1. An original of the signed-off final permit card from the city.
2. All lien releases from the general contractor and any
subcontractors.
3. A plan size copy of the final as built drawings.
4. Written documentation from the Tenant's general contractor
that the Tenant Improvements have been substantially
completed.
Upon receiving this information, Landlord shall remit a check for
the total actual Tenant Improvement Cost not to exceed the Tenant
Improvement Allowance. The final retention check shall be remitted
to Tenant within ten (10) days of receiving all required
information.
5. Tenant Improvement Cost. The Tenant Improvement Cost ("Tenant Improvement
Cost") shall include the scope of work as reflected in the Floor Plan and
Specifications to be attached hereto and, to the extent not set forth
therein, shall also include:
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
a. All costs of preliminary and final architectural and engineering
plans and specifications for the Tenant Improvements, and
engineering costs associated with completion of the State of
California energy utilization calculations under Title 24
legislation;
b. All costs of obtaining building permits and other necessary
authorizations from the city or other jurisdictions;
c All costs of design and finish schedule plans and specifications,
including as-built drawings;
d All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but
not limited to, the construction fee for overhead and profit and the
cost of all on-site supervisory and administrative staff, office,
equipment and temporary services rendered by Tenant's contractor in
connection with construction of the Tenant Improvements.
In no event shall the Tenant Improvement Cost include any costs of
procuring, constructing or installing in the Premises any of
Lessee's personal property or any trade fixtures.
6. Excess Tenant Improvement Cost. If the Tenant Improvement Cost exceeds the
maximum amount of the Tenant Improvement Allowance, then the difference
between the Tenant Improvement Cost and the Tenant Improvement Allowance
("Excess Tenant Improvement Cost") shall be paid directly by Tenant to the
Tenant's contractor.
7. Change Request. No revisions to the Tenant Improvements shall be made by
either Landlord or Tenant unless approved in writing by both parties. Tenant
agrees to make all changes (i) required by any public agency to conform with
governmental regulations, or (ii) requested in writing by Tenant and approved in
writing by Landlord, which approval shall not be unreasonably withheld. The
extension of the Commencement Date because of any change order that changes the
scope of Exhibit B shall not in any way deemed to be a forgiveness of Rent due
from Tenant beginning on the original Commencement Date of 8/27, 1996, pursuant
to Paragraph 3 of the Lease. Any costs related to such changes shall be added to
the Tenant Improvement Cost as set forth in Paragraph 5, above. Costs related to
changes shall include, without limitation, any architectural or design fees, and
the general contractor's price for effecting the change. Costs due to changes
pursuant to this Paragraph 7 will be paid out of the Tenant Improvement
Allowance only to the extent that the total Tenant Improvement Cost (exclusive
of changes) is less than the maximum amount of the Tenant Improvement Allowance;
any costs for said changes over and above the maximum amount of the Tenant
Improvement Allowance shall be deemed Excess Tenant Improvement Costs and
governed by Paragraph 6, above.
8. Termination.
a. If the Lease is terminated prior to the Commencement Date or prior
to the completion of the Tenant Improvements, for any reason other
than the default of Landlord under the Lease, in addition to any
other damages available to Landlord, Tenant shall be solely
responsible to pay its contractor, within five (5) days of receipt
of a statement thereof, all costs incurred by the contractor for the
Tenant Improvements through the date of termination in connection
with the Tenant Improvements.
b. In the event the Lease is terminated, by Landlord or by mutual
agreement of the parties, at any time subsequent to the Commencement
Date, but before the Expiration Date, the entire unpaid amount of
principal and interest calculated at twelve percent (12%) compounded
annually up to the time of the termination for the Tenant
Improvement Allowance expended pursuant to Paragraph 4, above, shall
become immediately due and payable to Landlord.
B. REPAIRS TO THE BUILDING
Separate from the Tenant Improvements as defined herein, the Landlord
hereby agrees to make, at Landlord's expense, within sixty (60) days after
Lease Commencement Date, those repairs to the Building as follows:
(i) Paint the entire interior and exterior of the Building using
Landlord's standard building paint;
(ii) Repair the existing roof using industry standard guidelines;
(iii) Remove existing interior non-structural walls and debris;
(iv) Repair base Building electrical service;
(v) Landlord shall upgrade the main entrance access to the Building to
meet existing ADA compliance guidelines.
LESSOR'S INITIALS: /s/ TT LESSEE'S INITIALS: EB
--- ---
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation, or property of the
Project and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or interfere
with other lessees or persons having business within the Project.
4. Lessee shall not keep animals or birds within the Project, and shall not
bring bicycles, motorcycles or other vehicles into areas not designated as
authorized for the same.
5. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Intentionally omitted.
7. Lessee shall be responsible for the inappropriate use of any toilet rooms,
plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.
8. Lessee shall not deface the walls, partitions or other surfaces of the
premises of the Project.
9. Lessee shall not suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of
the Project.
10. Lessee shall return all keys at the termination of its tenancy and shall
be responsible for the cost of replacing any keys that are lost.
11. No window coverings, shades or awnings shall be installed or used by
Lessee, without Lessor's written prior consent.
12. No Lessee, employee or Invitee shall go upon the roof of the Building
without Lessor's written prior consent.
13. Lessee shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.
14. Lessee shall not use any method of heating or air conditioning other than
as provided by Lessor.
15. Intentionally omitted.
16. The Premises shall not be used for lodging, cooking or food preparation.
17. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
18. Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lessee, and any such waiver shall not
constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Lessee.
19. Lessee assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.
20. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Project and its occupants. Lessee agrees to
abide by these and such rules and regulations.
PARKING RULES
1. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, or invitees to be loaded, unloaded, or parked in areas other
than those designated by Lessor for such activities.
2. Users of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.
3. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible
for any damage to vehicles, injury to persons or loss of property, all of
which risks are assumed by the party using the parking area.
4. The maintenance, washing, waxing or cleaning of vehicles in the Common
Area is prohibited.
5. Lessee shall be responsible for seeing that all of its employees, agents
and invitees comply with the applicable parking rules, regulations, laws
and agreements.
6. Lessor reserves the right to modify these rules and/or adopt such other
reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
EXHIBIT E
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Lessor (identified below) to evaluate and finalize a lease agreement
with you as lessee. After a lease agreement is signed by you and the Lessor (the
"Lease Agreement"), on an annual basis in accordance with the provisions of
Paragraph 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Lessor subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Lessor to defend itself or its lenders, partners or
representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Lessor: Lincoln-Whitehall Realty, L.L.C.,
a Delaware limited liability company
c/o Lincoln Property Company Management Services, Inc.
P.O. Box 19693
30 Executive Park, Suite 100
Irvine, California 92713-9693
Phone: (714) 261-2100
Name of Lessee: Natrol, Inc.,
a California Corporation
Mailing Address: 21411 Prairie Street
Chatsworth, California
Contact Person, Title and Telephone Number(s): Gary de Mello, Vice President
---------------------------------
818-701-9966
--------------------------------------------------------------------------------
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s): Gary de Mello, Vice President 818-701-9966
-----------------------------------------------------------
Address of Premises: 21411 Prairie Street
Chatsworth, California
Length of Initial Term: One Hundred Twenty (120) months.
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products processed,
manufactured or assembled services and activities to be provided or
otherwise conducted. Existing lessees should describe any proposed changes
to on-going operations.
Nutritional Supplement Manufacturing
----------------------------------------------------------------
Packaging, Distribution
----------------------------------------------------------------
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or disposed
of in, on or about the Premises? Existing lessees should describe
any Hazardous Materials which continue to be used, generated, stored
or disposed of in, on or about the Premises.
Wastes Yes |_| No |X|
Chemical Products Yes |_| No |X|
Other Yes |_| No |X|
If Yes is marked, please explain:
----------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2.2 If Yes is marked in Section 2.1, attach a list of any Hazardous
Materials to be used, generated, stored or disposed of in, on or
about the Premises, including the applicable hazard class and an
estimate of the quantities of such Hazardous Materials at any given
time; estimated annual throughput; the proposed location(s) and
method of storage (excluding nominal amounts of ordinary household
cleaners and janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s)
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
and method of disposal for each Hazardous Material, including, the
estimated frequency, and the proposed contractors or subcontractors.
Existing lessees should attach a list setting forth the information
requested above and such list should include actual data from
on-going operations and the identification of any variations in such
information from the prior year's certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel, petroleum,
or other Hazardous Materials in tanks or sumps proposed in, on or
about the Premises? Existing lessees should describe any such actual
or proposed activities.
Yes |_| No |X|
If Yes is marked, please explain:
----------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing lessees should describe any additional
identification numbers issued since the previous certificate.
Yes |_| No |X|
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing lessees should describe any new
reports filed.
Yes |_| No |X|
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
storm drain? sewer?
---- ----
surface water? X no wastewater or other wastes discharged.
---- ----
Existing lessees should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
--------------------------------------------------------------------
--------------------------------------------------------------------
5.2 Will any such wastewater or waste be treated before discharge?
Yes |_| No |X|
If yes, describe the type of treatment proposed to be conducted.
Existing lessees should describe the actual treatment conducted.
--------------------------------------------------------------------
--------------------------------------------------------------------
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will
discharge into the air; and will such air emissions be monitored?
Existing lessees should indicate whether or not there are any such
air filtration systems or stacks in use in, on or about the Premises
which discharge into the air and whether such air emissions are
being monitored.
Yes |_| No |X|
If yes, please describe:
--------------------------------------------------------------------
--------------------------------------------------------------------
6.2 Do you propose to operate any of the following types of equipment,
or any other equipment requiring an air emissions permit? Existing
lessees should specify any such equipment being operated in, on or
about the Premises.
Spray booth(s) Incinerator(s)
--- ---
Dip tank(s) Other (Please describe)
--- ---
Drying oven(s) X No Equipment Requiring Air Permits
--- ---
If yes, please describe:
--------------------------------------------------------------------
--------------------------------------------------------------------
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan") pursuant to
Fire Department or other governmental or regulatory agencies'
requirements? Existing lessees should indicate whether or not a
Management Plan is required and has been prepared.
Yes |_| No |X|
If yes, attach a copy of the Management Plan. Existing lessees
should attach a copy of any required updates to the Management Plan.
7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the Premises
regulated under Proposition 65? Existing lessees should indicate
whether or not there are any new Hazardous Materials being so used
which are regulated under Proposition 65.
Yes |_| No |X|
If yes, please explain:
--------------------------------------------------------------------
--------------------------------------------------------------------
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has
your company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees or has your company
received requests for information, notice or demand letters, or any
other inquiries regarding its operations? Existing lessees should
indicate whether or not any such actions, orders or decrees have
been, or are in the process of being, undertaken or if any such
requests have been received.
Yes |_| No |X|
If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions, orders
or decrees and also describe any requests, notices or demands, and
attach a copy of all such documents. Existing lessees should
describe and attach a copy of any new actions, orders, decrees,
requests, notices or demands not already delivered to Lessor
pursuant to the provisions of Paragraph 29 of the signed Lease
Agreement.
--------------------------------------------------------------------
--------------------------------------------------------------------
8.2 Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety
concerns?
Yes |_| No |X|
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other documents
related thereto as requested by Lessor. Existing lessees should
describe and
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
attach a copy of any new complaint(s), cross-complaint(s), pleadings
and other related documents not already delivered to Lessor pursuant
to the provisions of Paragraph 29 of the signed Lease Agreement.
--------------------------------------------------------------------
--------------------------------------------------------------------
8.3 Have there been any problems or complaints from adjacent tenants,
owners or other neighbors at your company's current facility with
regard to environmental or health and safety concerns? Existing
lessees should indicate whether or not there have been any such
problems or complaints from adjacent tenants, owners or other
neighbors at, about or near the Premises.
Yes |_| No |X|
If yes, please describe. Existing lessees should describe any such
problems or complaints not already disclosed to Lessor under the
provisions of the signed Lease Agreement.
--------------------------------------------------------------------
--------------------------------------------------------------------
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses issued
to your company with respect to its proposed operations in, on or
about the Premises, including, without limitation, any wastewater
discharge permits, air emissions permits, and use permits or
approvals. Existing lessees should attach copies of any new permits
and licenses as well as any renewals of permits or licenses
previously issued.
The undersigned hereby acknowledges and agrees that this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Lessor in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that this Hazardous Materials Disclosure Certificate is
being delivered in accordance with, and as required by, the provisions of
Paragraph 29 of the Lease Agreement. The undersigned further acknowledges and
agrees that the Lessor and its partners, lenders and representatives may, and
will, rely upon the statements, representations, warranties, and certifications
made herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance thereof throughout the term, and any renewals thereof, of
the Lease Agreement. I (print name) __________________________, acting with full
authority to bind the (proposed) Lessee and on behalf of the (proposed) Lessee,
certify, represent and warrant that the information contained in this
certificate is true and correct.
LESSEE:
NATROL, INC.
a California Corporation
By: /s/ Elliott Balbert
---------------------------------------
ELLIOTT BALBERT
Its: PRESIDENT
--------------------------------------
Date: August 26, 1996
-------------------------------------
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
ADDENDUM I
OPTION TO EXTEND THE LEASE
Reference is made to that certain Lease Agreement dated for reference purposes
as of August 12, 1996 (the "Lease") by and between Lincoln-Whitehall Realty,
L.L.C., a Delaware limited liability company ("Landlord"), and Natrol, Inc., a
California corporation ("Tenant"), of approximately 80,012 rentable square feet
of space located at 21411 Prairie Street, Chatsworth, California (the
"Premises"). Any capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms as set forth in the Lease.
1. Grant of Option; Exercise. If Tenant has not been, during the initial term of
this Lease, or is not in default in the performance of any of its obligations
under this Lease at the time of delivery to Landlord of the Option Notice and
contingent upon review and approval of Tenant's then current financial condition
by Landlord, Tenant shall have the right as its option to extend the term of the
Lease for one (1) consecutive term of sixty (60) months (the "Extended Term").
The Lease of the Premises during the Extended Term shall be upon the same terms,
covenants and conditions as are set forth in this Lease, other than the monthly
Base Rent, the amount of the Security Deposit, this extension option and the
term of the Lease. If Landlord does not receive from Tenant written notice of
Tenant's exercise of this option by 5:00 p.m. Pacific Time on a date which is
not more than nine (9) months nor less than six (6) months prior to the end of
the term immediately preceding each option period (the "Option Notice"), all
rights under this option shall automatically lapse and terminate and shall be of
no further force and effect. Time is of the essence herein.
2. Initial Base Rent During Extended Term. In the event Tenant duly exercises
its rights under this option, the monthly Base Rent commencing on the first day
of the Extended Term shall be an amount which is the greater of (i) an amount
equal to 95% of the then current market rent for similar space (the "Fair Rental
Value") agreed upon solely by and between Landlord and Tenant and their agents
appointed for this purpose, or (ii) the monthly Base Rent in effect on the last
day of the initial term of the Lease. Neither Landlord nor Tenant shall have the
right to have a court establish the Fair Rental Value. If Landlord and Tenant
are unable to agree on the Fair Rental Value for the Extended Term within ten
(10) business days after receipt by Landlord of the Option Notice, Landlord and
Tenant being obligated only to act in good faith, then Landlord and Tenant shall
follow the procedures set forth in Section 3, below.
3. Determination of Fair Rental Value. The "Fair Rental Value" of the Premises
shall be defined to mean the fair market rental value of the Premises as of the
commencement of the Extended Term, taking into consideration all relevant
factors, including length of term, the uses permitted under the Lease, the
quality, size, design and location of the Premises, including the condition and
value of existing tenant improvements, and the monthly base rent paid by tenants
for premises comparable to the Premises, and located in the same market area as
the Premises. If the parties are unable to agree on the Fair Rental Value for
the Extended Term within ten (10) business days after receipt by Landlord of the
Option Notice, Landlord and Tenant each, at its cost and by giving notice to the
other party, shall appoint a competent and disinterested real estate appraiser
with at least five (5) years' full-time commercial appraisal experience in the
geographical area of the Premises to appraise and set the Fair Rental Value for
the Extended Term. If either Landlord or Tenant does not appoint an appraiser
within ten (10) days after the other party has given notice of the name of its
appraiser, the single appraiser appointed shall be the sole appraiser and shall
set the Fair Rental Value for the Extended Term. If two (2) appraisers are
appointed by Landlord and Tenant as stated in this paragraph, they shall meet
promptly and attempt to set the Fair Rental Value. If the two (2) appraisers are
unable to agree within ten (10) days after the second appraiser has been
appointed, they shall attempt to select a third appraiser meeting the
qualifications stated in this paragraph within ten (10) days after the last day
the two (2) appraisers are given to set the Fair Rental Value. If they are
unable to agree on the third appraiser, either Landlord or Tenant by giving ten
(10) days' notice to the other party, can apply to the Presiding Judge of the
Superior Court of the county in which the Premises is located for the selection
of a third appraiser who meets the qualifications stated in this paragraph.
Landlord and Tenant each shall bear one-half (1/2) of the cost of appointing the
third appraiser and of paying the third appraiser's fee. The third appraiser,
however selected, shall be a person who has not previously acted in any capacity
for either Landlord or Tenant. Within fifteen (15) days after the selection of
the third appraiser, the third appraiser shall select one of the two Fair Rental
Values submitted by the first two appraisers as the Fair Rental Value for the
Extended Term. If either of the first two appraisers fails to submit their
opinion of the Fair Rental Value, then the single Fair Rental Value submitted
shall automatically be the monthly Base Rent for the Extended Term.
4. Notwithstanding any provision to the contrary contained herein, in no event
shall the minimum monthly Base Rent for the Extended Term as determined pursuant
to this Addendum I, be less than the highest monthly Base Rent charged during
the initial term of the Lease. Upon determination of the monthly Base Rent for
the Extended Term, pursuant to the terms outlined above, Landlord and Tenant
shall promptly execute an amendment to the Lease stating the minimum monthly
Base Rent for the Extended Term, the amount of the Security Deposit for the
Extended Term, and confirming the expiration date of the Extended Term. Tenant
shall have no other right to extend the term of the Lease under this Addendum I
unless Landlord and Tenant otherwise agree in writing.
5. If Tenant duly and timely exercises this option in accordance with the terms
contained herein, the following shall apply: (a) Tenant shall accept the
Premises in its then "As-Is" condition and accordingly, Landlord shall not be
required to perform any additional improvements to the Premises; (b) Tenant
hereby agrees that it will solely be responsible for any and all brokerage
commissions and finder's fees payable to any broker in connection with the
option described herein, and Tenant hereby further agrees that Landlord shall in
no event or circumstance be responsible for the payment of any such commissions
and fees; and (c) Tenant shall deliver to Landlord, concurrently with the
delivery of the Option Notice, a non-refundable deposit in the amount of the
monthly Base Rent in effect as of the last month of the initial term of the
Lease (the "Option Deposit"). If, after the delivery to Landlord of the Option
Notice, Tenant fails to actually lease the Premises during the Extended Term,
then Landlord shall retain the Option Deposit. If, after the delivery to
Landlord of the Option Notice, Tenant does actually lease the Premises during
the Extended Term, then Landlord shall apply the Option Deposit against any
increase in the amount of the Security Deposit required during the Extended Term
and the
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
balance of the Option Deposit shall be applied against the monthly Base Rent
payable by Tenant during the first month of the Extended Term.
6. At Landlord's option, all rights of Tenant under this option shall terminate
and be of no force and effect if any of the following individual events occur or
any combination thereof occur: (1) Tenant has been at any time during the
initial term of the Lease, or is in default of any provision of the Lease beyond
any notice and cure period at the time of delivery to Landlord of the Option
Notice; and/or (2) Tenant's or Tenant's Affiliate's (as the case may be)
financial condition is unacceptable to Landlord at the time the Option Notice is
delivered to Landlord; and/or (3) Tenant has failed to exercise this option in a
timely manner in strict accordance with the provisions of this Addendum I;
and/or (4) Tenant or an Affiliate of Tenant no longer has possession of all or
any part of the Premises under the Lease, or if the Lease has been terminated
earlier, pursuant to the terms of the Lease.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
ADDENDUM II
CPI Calculation and Adjustments
This Addendum II to Lease Agreement (the "Addendum") is made by and between
Lincoln-Whitehall Realty, L.L.C. ("Landlord"), and Natrol, Inc. for reference
purposes as of August 12, 1996, by and between Landlord and Tenant for the
leasing of certain premises (the "Premises") located at 21411 Prairie Street,
Chatsworth, California.
The terms and provisions of his Addendum shall be added to and incorporated in
the above-referenced Lease. Any capitalized terms used herein, and not otherwise
defined herein, shall have the meaning ascribed to such terms as set forth in
the Lease. In the event of any inconsistencies between the terms and provisions
of this Addendum II and the Lease, the terms and provisions of this Addendum
shall control.
The monthly Base Rent payable by Tenant to Landlord, as set forth in
Section 3 of this Lease, shall be adjusted on OCT. 27, 1999, OCT. 27, 2001, OCT.
27, 2003 and OCT. 27, 2005, compounded annually (the "Adjustment Dates") in
accordance with the percentage increase, if any, in the "Consumer Price Index
for All Urban Wage Consumers for Los Angeles-Anaheim-Riverside, California"
(Base: 1982-l984=100), as published by the United States Department of Labor,
Bureau of Labor Statistics ("Index").
The monthly Base Rent payable on the Adjustment Date shall be the product of the
monthly Base Rent in effect on the last day preceding the Adjustment Date of the
fraction described below. The denominator of such fraction shall be the Index in
effect on the first day of the initial term of the Lease ("Beginning Index").
The numerator of such fraction shall be the Index in effect on the last day of
the month preceding the Adjustment Date ("Adjustment Index").
In no event, however, shall the monthly Base Rent calculated as aforesaid be
more than 106% of the monthly Base Rent expressed on an annualized basis in
effect for the immediately preceding twenty-four (24) month period of the term
of the Lease.
Should said Bureau discontinue the publication of the above Index, or if the
compilation of the Index is materially altered or published less frequently, or
if the Bureau should vary the method of calculation of same or alter the same in
some other manner, then Landlord shall adopt, at its sole discretion, a
substitute index which is most nearly the same or substitute procedure which
reasonably reflects and monitors consumer prices, and such substitute shall be
used to make such calculation. If the Index is changed so that the base year
differs from that in effect when the term commences, the Index shall be
converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics, or, if said Bureau shall
not publish the same, then with the use of such conversion factor formula or
table as may be published by Prentice Hall, Inc. or by any other nationally
recognized publisher of similar statistical information. In the event the
compilation and/or publication of the Index shall be discontinued or materially
altered, then the index most nearly the same as the Index shall be used to make
such calculation. In the event Landlord and Tenant cannot agree on such
alternative Index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of the said
Association and a decision of the arbitrators as to the applicable Index shall
be binding upon the parties. The cost of said arbitrator shall be paid equally
by the Landlord and Tenant.
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---
<PAGE>
ADDENDUM III TO LEASE
LEASE DATED: August 12, 1996
TENANT: NATROL, INC.,
a California Corporation
LANDLORD: LINCOLN-WHITEHALL REALTY, L.L.C.
FIRST RIGHT OF OFFER TO PURCHASE
"Offer to Purchase"
During the initial term of this Lease (exclusive of the option to extend),
Landlord shall, before entering into a contract to sell the Premises with anyone
else, notify Tenant of any bona-fide prospective buyer to which Landlord is
willing to sell the Premises. This Offer to Purchase only applies to new
prospective buyers. Provided Tenant gives written notice of its desire to
purchase the Premises within seven (7) after being notified by Landlord ("Notice
Period"), Tenant shall thereafter, for a period of five (5) days ("Acceptance
Period"), have the right to purchase the Premises, and Landlord and Tenant agree
to negotiate in good faith for such a purchase contract under similar terms and
conditions. If Tenant fails to respond to said notice within the Notice Period,
or after giving written notice of its exercise of its right of acceptance, if
Landlord and Tenant do not enter into a purchase and sale agreement within the
Acceptance Period, Tenant's opportunity under this Paragraph shall be deemed to
have been waived, and Landlord shall be free to sell the building to anyone "at
market". This Offer to Purchase shall be terminated during any period in which
Tenant is in default under any provision of this Lease that has not been cured
within the applicable cure period. The period of time within which the Offer to
Purchase may be exercised shall not be extended or enlarged by reason of
Tenant's inability to exercise such rights because of such default. If Tenant
fails to give written notice to exercise its Offer to Purchase in any instance
when such opportunity may arise prior to the expiration of the applicable time
period for the exercise of such Offer to Purchase, then Tenant's Offer to
Purchase in the instance in question shall be thereafter be deemed null and void
and of no further force or effect. Tenant's Offer to Purchase shall be a one
time offer to purchase the premises.
This Offer to Purchase is personal to Tenant and may not be assigned,
voluntarily or involuntarily, separate from or as a part of the Lease without
the prior written consent of Landlord.
Landlord's Initials: Tenant's Initials:
/s/ TT /s/ EB
------------------- ------------------
LANDLORD'S INITIALS: /s/ TT
---
TENANT'S INITIALS: /s/ EB
---