Exhibit No. 10.29
EXECUTION COPY
AIR COMMERCIAL REAL ESTATE
ASSOCIATION
STANDARD
INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE –
NET
1. Basic Provisions (“Basic
Provisions”).
1.1 Parties . This
Lease (“ Lease ”), dated for reference purposes
only December 31, 2004, is made by and between H & M
PROPERTIES, a business name for VHEM, LLC, a California limited
liability company (“ Lessor ”) and Skurka
Aerospace Inc., a Delaware corporation (“ Lessee
”), (collectively the “ Parties ,” or
individually a “ Party ”).
1.2 Premises . Lessor
does hereby rent and lease to Lessee and Lessee does hereby rent
and lease from Lessor (i) that certain vacant lot consisting
of approximately 109,000 square feet (the “ Vacant Lot
”), and (ii) that certain real property, including all
improvements located thereon, commonly known as 4600 Calle Bolero,
Camarillo, California (the “ Business Premises ”
and together with the Vacant Lot, the “ Premises
”), as more particularly described on Exhibit A
attached hereto (See also Paragraph 2 ).
1.3 Term :
a. Unless sooner terminated or
extended as provided herein, the term of the Lease with respect to
the Business Premises shall be for five (5) years commencing
on the 1st day of January, 2005 (the “ Commencement
Date ”), and ending on the 31st day of December, 2009
(“ Expiration Date ”). Lessee shall have the
right to terminate its tenancy with respect to all, but not less
than all, of the Premises at any time after Howard Skurka (“
Skurka ”) (i) voluntarily terminates his
employment with Skurka Engineering Co., a California corporation
(“ Skurka Engineering ”) without Good Reason (as
such term is defined in that certain Severance Agreement, dated as
of December 31, 2004 (the “ Severance Agreement
”), by and between Skurka and Skurka Engineering), or
(ii) is terminated from his employment for Cause (as defined
in the Severance Agreement) by Skurka Engineering; provided
, however , that Lessee shall terminate its tenancy for the
Premises on not less than thirty (30) days prior written
notice to Lessor; provided further , that Lessee may
not terminate its tenancy for the Business Premises without also
terminating its tenancy for the Vacant Lot.
b. Subject to the provisions of
Paragraph 39 , Lessee is hereby granted and shall have an
option to renew its tenancy for the Business Premises for an
additional five (5) years (the “ Option ”),
but otherwise on the same terms, covenants and conditions set forth
in the Lease; provided however , the Base Rent (as
defined below) for such additional five-year period shall be as
provided in Exhibit B . Lessee shall exercise the Option, if
at all, by written notice delivered to Lessor not later than six
(6) months prior to the Expiration Date.
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c. The term of the Lease with
respect to the Vacant Lot shall be for one (1) year,
commencing on the 1st day of January 2005 and, subject to the
provisions of Paragraph 1.3(a) , shall be automatically
renewed for successive, additional one (1) year periods (as
may be extended, the “ Vacant Lot Lease Term ”);
provided however , that Lessee or Lessor may
terminate Lessee’s tenancy for the Vacant Lot, if at all, by
written notice delivered to the other party not later than thirty
(30) days prior to the expiration of the Vacant Lot Lease
Term.
1.4 Early Possession :
None. (“ Early Possession Date ”).
1.5 Base Rent : See
Paragraph 1.6 .
x If this box is checked, there are provisions in
this Lease for the Base Rent to be adjusted.
1.6 Base Rent and Other Monies
Paid Upon Execution :
(a) Base Rent: Lessee shall
pay Lessor at the following address: H & M Properties, a
business name for VHEM, LLC, a California limited liability
company, P.O. Box 8420, Northridge, CA 91327-8420, or at such other
place as Lessor shall designate from time to time in writing, as
rent for the Premises (the “ Base Rent ”) the
amounts set forth in Exhibit B attached hereto. Lessee shall
pay all Base Rents without demand and without setoff or deduction
(except as otherwise expressly set forth in the Lease), in advance
on the 1st day of the month during the term of the Lease. The Base
Rent for any period during the term hereof which is for less than
one full calendar month shall be prorated based upon the actual
number of days of said month. (See also Paragraph 4
).
(b) Security Deposit: $50,500
(“ Security Deposit ”). (See also Paragraph
5 ).
1.7 Agreed Use :
Lessor and Lessee hereby agree and acknowledge the
following:
a. Lessee shall only use the
Business Premises for manufacturing, assembling, warehouse, office
and/or distribution of industrial products (the “ Agreed
Use for the Business Premises ”).
b. A certain surface parking lot
(the “ Parking Lot ”) is located on a portion of
the Vacant Lot, as more particularly described in the diagram
attached hereto as Exhibit C , and the portion of the Vacant
Lot that is not the Parking Lot has been landscaped with shrubbery,
trees, flowers, lawns and similar landscaping (the “ Lawn
Area ”). Lessee shall only use (i) the Parking Lot,
and no other portion of the Vacant Lot, for parking by
Lessee’s customers, employees, guests and invitees
(collectively, “ Lessee’s Invitees ”) and
for the storage of trailers containing only materials, supplies
and/or equipment used by Lessee in connection with its on-going
operation at the Premises (to the extent that such storage complies
with Applicable Requirements (as defined below)), and (ii) the
Lawn Area for pedestrian access to and from the Business Premises,
maintenance of the Lawn Area, and recreational use by
Lessee’s Invitees (as defined below) (collectively, the
“ Agreed Use for the Vacant Lot ” and together
with the Agreed Use for the Business Premises, the “
Agreed Use ”).
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c. Lessee shall use the Premises for
the Agreed Use set forth in this Paragraph 1.7 , and for no
other purposes, without the prior written consent of Lessor, which
consent shall not be unreasonably withheld so long as such use is
consistent with, or reasonably comparable to, the Agreed Use.
Lessee shall not use or permit the use of the Premises in a manner
that is unlawful, creates damage, waste or a nuisance, or that
causes damage to or unreasonably disturbs occupants of neighboring
premises or properties. (See also Paragraph 6 ).
1.8 Insuring Party .
Lessor is the “ Insuring Party ”. (See also
Paragraph 8 ).
1.9 Real Estate Brokers
: N/A.
1.10 Guarantor . The
obligations of the Lessee to pay all Rents and all other sums
payable by Lessee under this Lease are to be guaranteed by
TRANSDIGM, INC., a Delaware corporation (“
Guarantor ”). (See also Paragraph 37
).
1.11 Attachments .
Attached hereto are the following, all of which constitute a part
of this Lease: Exhibits A through C.
2. Premises.
2.1 Letting . Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or
that may have been used in calculating Rent, is an approximation
which the Parties agree is reasonable and any payments based
thereon are not subject to revision whether or not the actual size
is more or less. Note: Lessee is advised to verify the actual
size prior to executing this Lease.
2.2 Condition . Lessor
shall deliver the Premises to Lessee broom clean and free of debris
on the Commencement Date (“ Start Date ”), and,
so long as the required service contracts described in Paragraph
7.1(b) below are obtained by Lessee and in effect within thirty
days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating,
ventilating and air conditioning systems (“ HVAC
”), loading doors, sump pumps, if any, and all other such
elements in the Premises, other than those constructed by Lessee,
shall be in good operating condition on said date and that the
structural elements of the roof, bearing walls and foundation of
any buildings on the Premises (the “ Building ”)
shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, or if one of such systems or
elements should malfunction or fail within the appropriate warranty
period, Lessor shall, as Lessor’s sole obligation with
respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The
warranty periods shall be as follows: (i) 6 months as to the
HVAC systems, and (ii) ninety (90) days as to the
remaining systems and other elements of the Building. If Lessee
does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction
or failure shall be the obligation of Lessee at Lessee’s sole
cost and expense.
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2.3 Compliance .
Lessor hereby warrants to Lessee as follows:
a. Applicable Requirements .
For the last five (5) years, the improvements on the Premises
have complied, in all material respects, with and are currently in
compliance, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of
federal, state and local governments (and all agencies thereof),
including Environmental Health & Safety Requirements as
hereinafter defined (collectively, “ Applicable
Requirements ”), and no claim, demand, litigation,
action, suit investigation, proceeding, hearing, complaint,
assessment, interference, opposition, reexamination, inquiry or
judgment and injunctions, judgments, orders, decrees and rulings of
any nature has been filed or, to Lessor’s knowledge,
commenced or threatened, against it alleging any failure to so
comply. The warranty under this Paragraph 2.3(a) does not
cover matters relating to Environmental, Health and Safety
Requirements, which matters are covered exclusively by Paragraph
2.3(b) .
b. Environmental, Health and
Safety Matters .
(i) Lessor is in compliance in all
material respects with all Environmental, Health, and Safety
Requirements. As used herein, “ Environmental, Health, and
Safety Requirements ” means all federal, state, and local
statutes, regulations, ordinances and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public heath and
safety, worker health and safety, and pollution or protection of
the environment, including all those relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended.
(ii) Without limiting the generality
of the foregoing, to Lessor’s knowledge, Skurka Engineering
has obtained and is in compliance with, all Permits (as such term
is defined in that certain Asset Purchase Agreement dated as of
December 11, 2004 (the “ APA ”), by and
among Skurka Engineering, Guarantor and certain shareholders listed
on the signature pages thereof) that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation
of its facilities and the operation of its business, except where
such non-compliance is not reasonably expected to have a Material
Adverse Effect (as defined in the APA).
(iii) Lessor has not received any
written notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety
Requirements, or of any liabilities or potential liabilities,
including any investigatory, remedial, or corrective obligations,
relating to it or its facilities arising under Environmental,
Health, and Safety Requirements, in each instance, other than
violations, alleged violations or liabilities that have previously
been resolved.
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(iv) To Lessor’s knowledge,
Lessor has not had at any time in service any underground storage
tanks and there has been no release, use or storage of
polychlorinated biphenyls on, at, in, under or from any premises
used by Lessor.
(v) To Lessor’s knowledge,
Lessor has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any
substance that (a) requires removal or remediation under any
Environmental, Health and Safety Requirement including petroleum
and petroleum by-products, and is defined, listed or identified as
“hazardous waste,” “hazardous material,”
“toxic substance,” “contaminant,”
“pollutant,” “oil,” or “hazardous
substance” under such Environmental, Health and Safety
Requirement, or (b) is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated as such under any Environmental, Health
and Safety Requirement; except in material compliance with
Environmental Health and Safety Requirements and does not own or
operate any property or facility in a manner that has given or
would be reasonably expected to give rise to liabilities, including
any Liability (as defined in the APA) for response costs,
corrective action costs, personal injury, property damage, natural
resources damages or attorneys’ fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (CERCLA), the Solid Waste Disposal Act, or
any other Environmental, Health, and Safety
Requirements.
(vi) Neither Lessor nor any
predecessor of Lessor has expressly assumed or undertaken any
Liability, including any obligation for corrective or remedial
action, of any other Person (as defined in the APA) relating to
Environmental, Health and Safety Requirements.
c. As used in this Paragraph
2.3 , “Lessor’s knowledge” means the
knowledge of Skurka and those officers, directors, and key
employees listed on Schedule 1 of the APA, after reasonable
investigation. For purposes of this definition, “reasonable
investigation” will be satisfied by due inquiry regarding the
fact or other matter in question as a prudent businessperson would
be reasonably expected to make in the management of his or her
business affairs, including due inquiry of those officers,
directors, key employees who would be reasonably expected to have
actual knowledge and professional advisors (including attorneys,
accountants and consultants who had a professional role with
respect to the fact or other matter in question) of Lessor who
would reasonably be expected to have knowledge.
d. The warranties in Paragraph
2.3 do not apply to the use to which Lessee will put the
Premises, modifications which may be required by the American with
Disabilities Act with respect to a change in Lessee’s use of
the Premises or any similar laws as a result of Lessee’s use
(see Paragraph 50 ), or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a) ) made or to
be made by Lessee. If the Premises do not comply with the
warranties in Paragraph 2.3 , Lessor shall, except as
otherwise provided, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with
the warranties within one (1) year following the Start Date,
correction of that non-compliance shall be the obligation of Lessee
at Lessee’s sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require, during the
term of the Lease, the
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construction of an addition to or an
alteration of the Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical
modification of the Premises (“ Capital
Expenditure” ), Lessor and Lessee shall allocate the cost
of such work in accordance with Paragraph 2.3(d) through
(g) .
e. Subject to Paragraph
2.3(g) below, if such Capital Expenditures are required as a
result of the specific and unique use of the Premises by Lessee as
compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this
Lease and the cost thereof exceeds 6 months’ Base Rent,
Lessee may instead terminate this Lease unless Lessor notifies
Lessee, in writing, within 10 days after receipt of Lessee’s
termination notice that Lessor has elected to pay the difference
between the actual cost thereof and an amount equal to 6
months’ Base Rent. If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such
Capital Expenditure and deliver to Lessor written notice specifying
a termination date at least 90 days thereafter. Such termination
date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such
Capital Expenditure.
f. If such Capital Expenditure is
not the result of the specific and unique use of the Premises by
Lessee (such as, governmentally mandated seismic modifications),
then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(d) ;
provided , however , that if such Capital Expenditure
is required during the last year of this Lease, Lessor shall have
the option to terminate this Lease upon ninety (90) days prior
written notice to Lessee. If Lessor does not elect to terminate,
Lessor shall pay for 100% of the costs of such Capital Expenditure.
Lessee shall not, however, have any right to terminate this Lease
if a Capital Expenditure is required during the last year of this
Lease unless such Capital Expenditure unreasonably interferes with
Lessee’s on-going operation at the Premises.
g. Notwithstanding the above, the
provisions concerning Capital Expenditures are intended to apply
only to non-voluntary, unexpected, and new Applicable Requirements.
If the Capital Expenditures are instead triggered by Lessee as a
result of an actual change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of
use and/or take such other steps as may be necessary to eliminate
the requirement for such Capital Expenditure, or (ii) complete
such Capital Expenditure at its own expense. Lessee shall not,
however, have any right to terminate this Lease.
2.4 Acknowledgements .
Lessee hereby acknowledges that, other than as set forth in the
Lease, none of Lessor, Lessor’s representatives, agents,
employees, or any party acting on behalf of Lessor or under
contract with Lessor have made any oral or written representations
or warranties with respect to the condition of the Premises
(including, but not limited to, the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, compliance with
Applicable Requirements and American with Disabilities Act), and
their suitability for Lessee’s intended use. By execution of
the Lease, Lessee acknowledges that no representations or
warranties have been made by Lessor or Lessor’s Agents (as
defined below) upon which Lessee
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has relied in executing the Lease, other than
such representations or warranties that are expressly set forth in
the Lease.
2.5 Lessee as Prior
Owner/Occupant . N/A
3. Term.
3.1 Term . The
Commencement Date and Term of this Lease are as specified in
Paragraph 1.3 .
3.2 Early Possession .
N/A
3.3 Delay In Possession
. Lessor agrees to use its best commercially reasonable efforts
to deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of
this Lease. Lessee shall not, however, be obligated to pay Rent or
perform its other obligations until Lessor delivers possession of
the Premises and any period of rent abatement that Lessee would
otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days
of delay caused by the acts or omissions of Lessee. If possession
is not delivered within 60 days after the Commencement Date, Lessee
may, at its option, by notice in writing within thirty
(30) days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all
obligations hereunder. If such written notice is not received by
Lessor within said thirty (30) day period, Lessee’s
right to cancel shall terminate. If possession of the Premises is
not delivered within 120 days after the Commencement Date, this
Lease shall terminate unless other agreements are reached between
Lessor and Lessee, in writing.
3.4 Lessee Compliance
. Lessor shall not be required to deliver possession of the
Premises to Lessee until Lessee complies with its obligation to
provide evidence of insurance ( Paragraph 8.5 ). Pending
delivery of such evidence, Lessee shall be required to perform all
of its obligations under this Lease from and after the Start Date,
including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until
such conditions are satisfied.
4. Rent.
4.1 Rent Defined . All
monetary obligations of Lessee to Lessor under the terms of this
Lease (except for the Security Deposit) are deemed to be rent
(“ Rent ”).
4.2 Payment . Lessee
shall cause payment of Rent to be received by Lessor in lawful
money of the United States on or before the day on which it is due,
without offset or deduction (except as specifically permitted in
this Lease). Rent for any period during the term hereof which is
for less than one full calendar month shall be prorated based upon
the actual number of days of said month. Payment of Rent shall be
made to Lessor at its address stated herein or to such other
persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment
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which is less than the amount then due shall not
be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating.
In the event that any check, draft, or other instrument of payment
given by Lessee to Lessor is dishonored for any reason, Lessee
agrees to pay to Lessor the sum of $25 in addition to any Late
Charge and Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. Payments will
be applied first to accrued late charges and reasonable
attorney’s fees, second to accrued interest, then to Base
Rent and operating expenses, and any remaining amount to any other
outstanding charges or costs.
4.3 Association Fees .
N/A
5. Security Deposit. Lessee shall deposit
with Lessor upon execution hereof the Security Deposit as security
for Lessee’s faithful performance of its obligations under
the Lease. If Lessee fails to pay Rent after the expiration of any
applicable notice and/or cure period, or otherwise Breaches under
the Lease, Lessor may use, apply or retain all or any portion of
said Security Deposit for the payment of any amount due Lessor or
to reimburse or compensate Lessor for any liability, expense, loss
or damage which Lessor may suffer or incur by reason thereof. If
Lessor uses or applies all or any portion of said Security Deposit,
Lessee shall within thirty (30) days after written request
therefor to deposit moneys with Lessor sufficient to restore said
Security Deposit to the full amount required by the Lease.
Lessee’s failure to deposit the monies in accordance with
this Paragraph 5 shall constitute a Breach under the Lease.
Lessor shall not be required to keep the Security Deposit separate
from its general accounts, but shall be required to keep it in an
interest bearing account. Within fourteen (14) days after the
expiration or termination of the Lease, if Lessor elects to apply
the Security Deposit only to unpaid Rent, and otherwise within
thirty (30) days after the Premises have been vacated pursuant
to Paragraph 7.4 , Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the
Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee
under the Lease. Nothing in this paragraph shall be deemed to limit
the amount of any claim, demand or cause of action of Lessor
against Lessee under the provisions of the Lease or require Lessor
to apply the Security Deposit in any way.
6. Use.
6.1 Use . Lessee shall
use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or
that unreasonably disturbs occupants of or causes damage to
neighboring premises or properties. Lessor shall not unreasonably
withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or the
mechanical or electrical systems therein, and/or is not
significantly more burdensome to the Premises. If Lessor elects to
withhold consent, Lessor shall within 7 days after such request
give written notification of same, which notice shall include an
explanation of Lessor’s objections to the change in the
Agreed Use.
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6.2 Hazardous Substances
.
a. Reportable Uses Require
Consent. The term “ Hazardous Substance ” as
used in the Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to
be on the Premises, is either: (i) potentially injurious to
the public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor
to any governmental agency or third party under any Applicable
Requirements. Hazardous Substances shall include, but not be
limited to hydrocarbons, petroleum, gasoline, and/or crude oil or
any products, by-products or fractions thereof. Lessee shall not
engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances (but only to the extent such
Reportable Use was not conducted on the Premises prior to the Start
Date) without the express or written consent of Lessor (which
consent shall not be unreasonably withheld so long as such
Reportable Use (i) is consistent with, or reasonably
comparable to, the Agreed Use, and (ii) complies with all
Applicable Requirements);. “ Reportable Use ”
shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that
requires a permit from or with respect to which a report, notice,
registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the
Premises of a Hazardous Substance with respect to which any
Applicable Requirement requires that a notice be given to persons
entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal
course of the Agreed Use, ordinary office supplies (copier toner,
liquid paper, glue, etc.) and common household cleaning materials,
so long as such use is in compliance with all Applicable
Requirements. In addition, Lessor may condition its consent to any
Reportable Use by Lessee (to the extent such Reportable Use was not
conducted on the Premises prior to the Start Date) upon receiving
such additional assurances as Lessor reasonably deems necessary to
protect itself, the public, the Premises and/or the environment
against damage, contamination, injury and/or liability, including,
but not limited to, the installation (and removal on or before
Lease expiration or termination) of protective modifications (such
as concrete encasements) and/or increasing the Security
Deposit.
b. Duty to Inform Lessor. If
Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee
shall promptly give written notice of such fact to Lessor, and
provide Lessor with a copy of any report, notice, claim or other
documentation which Lessee has concerning the presence of such
Hazardous Substance.
c. Lessee Remediation. Lessee
shall not cause or permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including through
the plumbing or sanitary sewer system) in violation of any
Applicable Requirement, and shall promptly, at Lessee’s
expense, comply with all Applicable Requirements for the cleanup of
any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was
caused by Lessee, its agents, representatives, employees, or any
party acting on behalf of Lessee or under contract with Lessee
(collectively, “ Lessee’s Agents ”), or
pertaining to or involving any Hazardous Substance brought onto the
Premises during the term of the Lease by Lessee or Lessee’s
Agents.
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d. Lessor Investigations and
Remediation . Lessor shall retain the responsibility and pay
for any investigations or remediation measures with respect to
(i) the existence of Hazardous Substances on the Premises
prior to Lessee’s occupancy, and (ii) any Hazardous
Substance brought onto the Premises during the term of the Lease by
or for Lessor, its agents, representatives, employees, or any party
acting on behalf of Lessor or under contract with Lessor
(collectively, “ Lessor’s Agents ”) or any
third party (other than Lessee and Lessee’s Agents). Lessor
shall comply with all Applicable Requirements for the cleanup of
any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was
caused by Lessor, Lessor’s Agents or any third party (other
than Lessee and Lessee’s Agents), or pertaining to or
involving any Hazardous Substance brought onto the Premises
(i) prior to Lessee’ occupancy, or (ii) during the
term of the Lease by Lessor, Lessor’s Agents or any third
party (other than Lessee and Lessee’s Agents). Lessor shall
conduct all such investigatory and/or remedial action in a manner
that will minimize disruption to Lessee’s on-going operation
at the Premises.
e.
Indemnification.
(i) Lessee shall indemnify, defend
and hold harmless Lessor and Lessor’s Agents from and against
any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and reasonable attorneys’ and
consultants’ fees arising out of any Hazardous Substance
brought onto the Premises by Lessee or Lessee’s Agents
(provided, however, that Lessee shall have no liability under the
Lease with respect to (i) underground migration of any
Hazardous Substance under the Premises from adjacent properties not
caused or contributed to by Lessee or Lessee’s Agents, and
(ii) any Hazardous Substance brought onto the Premises by
Lessor, Lessor’s Agents or any third party (other than Lessee
and Lessee’s Agents) during the term of the Lease).
Lessee’s obligation shall include, but not be limited to, the
effects of any contamination or injury to person, property or the
environment created or suffered by Lessee or Lessee’s Agents,
and the cost of investigation, removal, remediation, restoration
and/or abatement, and shall survive the expiration or termination
of the Lease for a period of five (5) years.
(ii) Lessor shall indemnify, defend
and hold harmless Lessee and Lessee’s Agents from and against
any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and reasonable attorneys’ and
consultants’ fees arising out of (i) the existence of
Hazardous Substances on the Premises prior to Lessee’s
occupancy, and (ii) any Hazardous Substance brought onto the
Premises during the term of the Lease by or for Lessor,
Lessor’s Agents or any third party (other than by or for
Lessee or Lessee’s Agents); provided , however
, that Lessor shall have no liability under the Lease with respect
to (i) underground migration of any Hazardous Substance under
the Premises from adjacent properties caused or contributed to by
Lessee or Lessee’s Agents, and (ii) any Hazardous
Substance brought onto the Premises by Lessee or Lessee’s
Agents during the term of the Lease). Lessor’s obligation
shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment
created or suffered by Lessor or Lessor’s Agents, and the
cost of
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investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or
termination of the Lease for a period of five
(5) years.
f. Lessor Termination Option.
If a Hazardous Substance Condition (see Paragraph 9.1(e) )
occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable
Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under
Paragraph 6.2(e) and Paragraph 13 ), Lessor may,
at Lessor’s option, either (i) investigate and remediate
such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor’s expense, in which event this
Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the
then monthly Base Rent or $100,000, whichever is greater, give
written notice to Lessee, within 30 days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition,
of Lessor’s desire to terminate this Lease as of the date 90
days following the date of such notice. In the event Lessor elects
to give a termination notice, Lessee may, within twenty
(20) days thereafter give written notice to Lessor of
Lessee’s commitment to pay the amount by which the cost of
the remediation of such Hazardous Substance Condition exceeds an
amount equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds
or satisfactory assurance thereof within 30 days following such
commitment. In such event, this Lease shall continue in full force
and effect, and Lessor shall proceed to make such remediation as
soon as reasonably possible after the required funds are available.
If Lessee does not give such notice and provide the required funds
or assurance thereof within the time provided, this Lease shall
terminate as of the date specified in Lessor’s notice of
termination.
6.3 Lessee’s Compliance
with Applicable Requirements . Except as otherwise provided
in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all
Applicable Requirements, the requirements of any applicable fire
insurance underwriter or rating bureau, and the reasonable
recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the such Applicable Requirements,
without regard to whether such Applicable Requirements are now in
effect or become effective after the Start Date. Lessee shall,
within 10 business days after receipt of Lessor’s written
request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee’s
compliance with any Applicable Requirements specified by Lessor,
and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to
or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.
6.4 Inspection; Compliance
. Lessor and Lessor’s “ Lender ” (as
defined in Paragraph 30 ) and consultants shall have the
right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable
notice, accompanied by Lessee’s Agent, for the purpose of
inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable
Requirements; provided , however , such inspection
shall not unreasonably disrupt or disturb Lessee’s on-going
operation of the Premises. The cost of any such inspections shall
be paid by Lessor, unless a violation of Applicable Requirements or
a Hazardous Substance Condition (see Paragraph 9.1 ) is
found to exist, or the
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inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.
In addition, Lessee shall provide copies of all relevant material
safety data sheets (“ MSDS ”) to Lessor within
fifteen (15) days of receipt of a written request
therefore.
7. Maintenance; Repairs, Utility
Installations; Trade Fixtures and Alterations.
7.1 Lessee’s
Obligations .
a. In General. Subject to the
provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9
(Damage or Destruction), and 14 (Condemnation) or
Lessor’s or Lessor’s Agents’ gross negligence or
willful misconduct, Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations (intended for
Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the
portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee,
and whether or not the need for such repairs occurs as a result of
Lessee’s use, any prior use, the elements or the age of such
portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fire
protection system, fixtures, walls (interior and exterior),
foundations, ceilings, roofs, roof drainage systems, floors,
windows, doors, plate glass, skylights, landscaping, driveways,
parking lots, fences, retaining walls, signs, sidewalks and
parkways located in, on, or adjacent to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices, specifically
including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s
obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or
a part thereof in good order, condition and state of repair. Lessee
shall, during the term of this Lease, keep the exterior appearance
of the Building (including, e.g., graffiti removal) consistent with
the exterior appearance of other similar facilities of comparable
age and size in the vicinity.
b. Service Contracts. Lessee
shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if
and when installed on the Premises: (i) HVAC equipment,
(ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection,
(iv) landscaping and irrigation systems, (v) roof
covering and drains, (vi) clarifiers, (vii) basic utility
feed to the perimeter of the Building, and (viii) any other
equipment, if reasonably required by Lessor. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain
any or all of such service contracts, and if Lessor so elects,
Lessee shall reimburse Lessor for the cost thereof within thirty
(30) days after receipt from Lessor.
c. Failure to Perform. If
Lessee fails to perform Lessee’s obligations under this
Paragraph 7.1 , Lessor may enter upon the Premises
(i) after thirty (30) days’ prior written notice to
Lessee, and (ii) Lessee has not commenced performance within
such thirty (30) day period (except in the case of any
emergency, in which case no notice shall be required),
perform
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such obligations on Lessee’s
behalf, and put the Premises in good order, condition and repair,
and Lessee shall pay to Lessor an amount equal to one hundred
percent (100%) of the actual costs and expenses reasonably
incurred by Lessor in such performance upon receipt by Lessee of an
invoice thereafter from Lessor.
d. Replacement. Subject to
the indemnification as set forth in Paragraph 8.7 , and
without relieving Lessee or Lessor of its liability resulting from
such Party’s negligence in performing its respective repair
and maintenance obligations under the Lease, if an item described
in Paragraph 7.1(b) cannot be repaired other than at a cost
which is in excess of fifty percent (50%) of the cost of
replacing such item, then such item shall be replaced by Lessor.
The cost of such replacement shall be prorated between the Parties,
and Lessee shall only be obligated to pay, each month during the
remainder of the term of the Lease, on the date on which Base Rent
is due, an amount equal to the product of multiplying the cost of
such replacement by a fraction, the numerator of which is one, the
denominator of which is the number of months representing the
reasonable life of such item, with such reasonable life being
determined in accordance with generally accepted accounting
principles. By way of illustration only, in the event that the cost
of replacing the HVAC equipment is $100,000, and the useful life of
such HVAC equipment is 100 months, Lessee shall pay Lessor, for the
remainder of the term of the Lease, a monthly amount equal to
$1,000 ($100,000 x 1/100) for the cost of such replacement. Lessee
shall pay interest on the unamortized balance at a rate that is
commercially reasonable. Lessee may, however, prepay its obligation
at any time. Notwithstanding the foregoing, if such Capital
Expenditure is required during the last year of this Lease, Lessor
shall have the option to terminate this Lease upon ninety
(90) days prior written notice to Lessee. If Lessor does not
elect to terminate, Lessor shall pay for 100% of the costs of such
Capital Expenditure. Lessee shall not, however, have any right to
terminate this Lease if a Capital Expenditure is required during
the last year of this Lease unless such Capital Expenditure
unreasonably interferes with Lessee’s on-going operation at
the Premises.
7.2 Lessor’s
Obligations . Subject to the provisions of
Paragraphs 2.2 (Condition), 2.3 (Compliance),
9 (Damage or Destruction) and 14 (Condemnation), it
is intended by the Parties hereto that Lessor have no obligation,
in any manner whatsoever, to repair and maintain the Premises
(other than as provided under this Lease), or the equipment
therein, all of which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive
the benefit of any statute now or hereafter in effect to the extent
it is inconsistent with the terms of this Lease.
7.3 Utility Installations;
Trade Fixtures; Alterations .
a. Definitions. The term
“ Utility Installations ” shall refer to all
floor and window coverings, air and/or vacuum lines, power panels,
electrical distribution, security and fire protection systems,
communication cabling, lighting fixtures, HVAC equipment, plumbing,
and fencing in, on or about the Premises. The term “ Trade
Fixtures ” shall mean Lessee’s machinery and
equipment that can be removed without doing material damage to the
Premises. The term “ Alterations ” shall mean
any modification of the improvements (other than Utility
Installations or Trade Fixtures, whether by addition or deletion)
at Lessee’s request, or otherwise required pursuant to
Applicable Requirements, by governmental authority or by reason of
Lessee’s use of the Premises.
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b. Consent. Lessee shall not
make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent (which consent shall
not be unreasonably withheld, so long as such Alteration or Utility
Installation is consistent with, or reasonably comparable to, the
Agreed Use). Lessee may, however, make non-structural Utility
Installations or Alterations to the interior of the Premises
(excluding the roof), without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing
walls, will not affect the electrical, plumbing, HVAC, and/or life
safety systems, and the cumulative cost thereof during the Lease as
extended does not exceed a sum equal to three
(3) months’ Base Rent in any one (1) year.
Notwithstanding the foregoing, Lessee shall not make or permit any
roof penetrations and/or install anything on the roof without the
prior written approval of Lessor, which approval shall not be
unreasonably withheld so long as such Alterations are consistent
with, or reasonably comparable to, the Agreed Use. Lessor may, as a
precondition to granting such approval, require Lessee to utilize a
contractor chosen and/or reasonably approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of Lessor shall be presented to
Lessor in written form with proposed detailed plans. Consent shall
be deemed conditioned upon Lessee’s (i) acquiring all
applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior
to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a
prompt and expeditious manner. Any Alterations or Utility
Installations shall be done in a good and workmanlike manner with
good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications.
For work which costs an amount in excess of six
(6) months’ Base Rent, Lessor may condition its consent
upon Lessee providing a lien and completion bond in an amount equal
to one hundred fifty percent (150%) of the estimated cost of
such Alteration or Utility Installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.
c. Liens; Bonds. Lessee shall
pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use on
the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises
or any interest therein. Lessee shall give Lessor not less than
10 days notice prior to the commencement of any work in, on or
about the Premises, and Lessor shall have the right to post notices
of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense
defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof. If Lessor shall
require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay
Lessor’s reasonable attorneys’ fees and
costs.
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7.4 Ownership; Removal;
Surrender; and Restoration .
a. Ownership. Subject to
Lessor’s right to require removal, all Alterations and
Utility Installations made by Lessee shall be the property of
Lessor, and considered a part of the Premises.
b. Removal. N/A.
c. Surrender; Restoration.
Lessee shall surrender the Business Premises or the Vacant Lot, as
applicable, by the end of the last day of the applicable lease term
or any earlier termination date (as applicable, the “
Surrendered Premises ”), with all of the improvements,
parts and surfaces thereof broom clean and free of debris and in
good operating order, condition and state of repair, except for
(i) ordinary wear and tear, or (ii) such other
improvements, parts and surfaces that are Lessor’s
obligations to repair under the Lease, including Lessor’s
obligations to repair, if any, as a result of the Premises Partial
Damage or Condemnation. “ Ordinary wear and tear
” shall not include any damage or deterioration that would
have been prevented by good maintenance practice. Lessee shall
surrender to Lessor all keys and other such items pertaining to the
Surrendered Premises, and shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Alterations
and/or Utility Installations, furnishings, and equipment as well as
the removal of any storage tank installed by or for Lessee. Lessee
shall completely remove from the Surrendered Premises any and all
Hazardous Substances brought onto the Surrendered Premises by or
for Lessee and Lessee’s Agents during the term of the Lease
(except Hazardous Substances which were deposited via underground
migration from adjacent prop
