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AGREEMENT OF LEASE

Lease Agreement

AGREEMENT OF LEASE | Document Parties: STARTEK INC You are currently viewing:
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STARTEK INC

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Title: AGREEMENT OF LEASE
Governing Law: Virginia     Date: 10/11/2005
Industry: Business Services     Sector: Services

AGREEMENT OF LEASE, Parties: startek inc
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Exhibit 10.62

 

                               AGREEMENT OF LEASE

 

This Lease Agreement made on October 5, 2005 by and between South Crater Square

Associates, LLC ("Landlord"), and Star Tek USA, Inc. ("Tenant").

 

                                   WITNESSETH:

 

That in consideration of the mutual covenants and agreements herein contained,

it is agreed by and between Landlord and Tenant as follows:

 

BASIC LEASE               SECTION 1. This Section 1 is an integral part of this

PROVISIONS                 lease and all of the terms hereof incorporated into

                         this lease in all respects. In addition to the other

                         provisions which are elsewhere defined in this lease,

                         the following, whenever used in this lease shall have

                         the meaning set forth in this Section, and only such

                         meaning unless such meanings are expressly

                         contradicted, limited or expanded elsewhere herein:

 

                         (a)     DATE OF LEASE: October 5, 2005

 

                         (b)(1) Landlord's Overnight    (2)    Landlord's Address

                                Delivery Address:             For Rental Payment:

 

South Crater Square Associates, LLC          South Crater Square Associates, LLC

c/o Weinstein Management Co., Inc.           c/o Weinstein Management Co., Inc.

3951-A Stillman Parkway                      P.O. Box 31335

Glen Allen, VA   23060                        Richmond, VA   23294

 

                          (c)     Tenant's Mailing Address:

                                Star Tek

                                44 Cook Street

                                Denver, CO 80206

                                Attention: Mr. Grant Lomas

 

                         (d)     Security Deposit (Sec. 53): None.

 

                         (e)     Tenant's Trade Name: Star Tek USA

 

                         (f)     Leased Premises (Sec. 2): Unit number 5-A as

                                shown on Exhibit A, with approximately 39,600

                                square feet.

 

                         (g)     Lease Term ("term" or "term of this lease")

                                (Sec. 4): Seven (7) years and nine (9)

                                 months.

 

                         (h)     Fixed Rent (Sec. 6): $5.25 per square foot,

                                which is $207,900 per annum, payable in equal

                                monthly installments, in advance at the rate

                                 of $17,325 per month.

 

                         (i)     Annual rent escalation: None.

 

                         (j)     Permitted Use (Sec. 22): General office, call

                                center and any other legally permitted use.

 

                                Exclusive use:   See Section 22.

 

                         (k)     Estimated Tax Charge (Sec. 12): $13,188.00

                                per annum, payable in equal installments, in

                                advance, at the rate of $1,099.00 per month,

                                subject to annual adjustments. This charge is

                                based on 39,600 square feet or approximately

                                46.59% of the total Taxes, as defined in

                                Section 12, computed and payable monthly, in

                                advance.

 

                         (l)     Estimated Insurance Charge (Sec. 12):

                                $5,688.00 per annum, payable in equal

                                installments, in advance, at the rate of

                                $474.00 per month, subject to annual

                                adjustments. This charge is based on 39,600

 

                                       

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                                square feet or approximately 46.59% of the

                                total insurance charge, as defined in Section

                                12, computed and payable monthly, in advance.

 

                         (m)     Estimated Common Area Charge (Sec. 34):

                                $16,800.00 per annum payable in equal

                                installments, in advance, at the rate of

                                $1,400.00 per month, subject to annual

                                adjustment. This charge is based on 39,600

                                square feet or approximately 46.59% of the

                                total Operating Costs, as defined in Section

                                34, computed and payable monthly, in advance.

 

                         (n)     Estimate Water/Sewer charge (Sec. 47):

                                $1,032.00 per annum payable in equal

                                installments, in advance, at the rate of

                                $86.00 per month, subject to annual

                                adjustment. This charge is based on 39,600

                                square feet or approximately 46.59% of the

                                total operating costs for such utilities for

                                the Shopping Center, computed and payable

                                monthly, in advance.

 

                         (o)     Exhibits: The Exhibits attached to this lease

                                are hereby incorporated in and made a part of

                                this lease.

 

                                EXHIBIT A:   Leased Premises

                                EXHIBIT B:   Shopping Center Plan

                                EXHIBIT C: Landlord's Work - Vanilla Shell

                                EXHIBIT D:   Form of Subordination Attornment and

                                Non-Disturbance Agreement

 

                                 Fixed Rent, Common Area charge, taxes and

                                insurance will abate in full for the first

                                nine (9) full months of the term.

 

PREMISES AND              SECTION 2.   That in consideration of the rents and

IMPROVEMENTS              covenants herein set forth, Landlord hereby leases to

                         Tenant, and Tenant rents from Landlord, the premises

                         containing approximately 39,600 square feet,

                          (hereinafter called the "Leased Premises"), as shown as

                         unit number 5-A outlined on a drawing identified by the

                         parties as "Exhibit A", a copy of which is attached

                         hereto and made a part hereof, and located in the

                         Shopping Center known as Pinehill Plaza Shopping Center

                         (hereinafter called the "Shopping Center"), a diagram

                         of which is shown as "Exhibit B" attached hereto and

                         made a part hereof. The exact dimensions of the Leased

                         Premises are subject to final measurement and

                         verification by an architect acceptable to Landlord and

                         Tenant. If the area of the Premises is different from

                         39,600 square feet or if the Shopping Center is ever

                         enlarged, the amounts based on their areas will be

                          changed. Landlord represents and warrants to Tenant

                         that the Premises may lawfully be used by Tenant for

                         the Permitted Use described in Section 1, and if there

                         is no agreement affecting Landlord or the Shopping

                         Center or any part of it, that limits or affects that

                         use, Landlord represents and warrants that on the date

                         on which it completes its improvement of the Premises,

                         the Premises will comply fully with all federal, state,

                         and local laws, including without limitation laws

                         related to Hazardous Materials described in Section 58

                          and ADA described in Section 59.

 

TITLE; SUBORDINATION      SECTION 3. Landlord hereby warrants that Landlord and

                         no other person or corporation has the right to lease

                         the premises demised. During the term hereof and as

                         long as Tenant is not in default hereunder, Tenant

                         shall have peaceful and quiet use and possession of the

                         Leased Premises without hindrance on the part of

                         Landlord or anyone claiming by, through or under

                         Landlord, and Landlord shall warrant and defend Tenant

                         in such peaceful and quiet use and possession against

                          the claims of all persons, claiming by, through or

                         under Landlord. However, Tenant's rights under this

                         Lease Agreement may at the sole option of the Landlord

                         be subordinated to the operation and effect of any

                         mortgage, deed of trust or other similar security

                         instrument now or hereafter placed upon the Shopping

                         Center, or any part or parts thereof, by Landlord, so

                         long as Tenant and the holder of such instrument enter

                         into a subordination, non-disturbance and attornment

                         agreement in form and substance acceptable to Tenant

                          (an "SNDA").

 

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                         Tenant agrees that upon the request of Landlord it will

                         subordinate this lease to the lien of any present or

                          future mortgage, deed of trust or similar security

                         instrument upon the demised premises or the Shopping

                         Center, irrespective of the time of execution or time

                         of recording of any such security instrument and agrees

                         to execute, acknowledge and deliver all instruments

                         deemed by Landlord necessary or desirable to give

                         effect to or notice of such subordination, so long as

                         Tenant and the holder of such instrument enter into a

                         subordination, non-disturbance and attornment agreement

                         in form and substance acceptable to Tenant (an "SNDA").

                         Tenant also agrees that if it shall fail at any time to

                         execute, acknowledge or deliver any such instrument

                         requested by Landlord, Landlord may, in addition to any

                          other remedies available to it, execute, acknowledge

                         and deliver such instrument as the attorney in fact of

                         Tenant, in Tenant's name. The word "mortgage" as used

                         herein includes mortgages, deed of trust, other similar

                         security instruments and modifications, consolidations,

                         extensions, renewals, replacements and substitutes

                         thereof. Tenant agrees that the form of SNDA attached

                         hereto as Exhibit D is an SNDA acceptable in form and

                         substance to Tenant.

 

                         Within thirty (30) days of execution of the Lease

                          Agreement, Landlord shall deliver to Tenant a

                         reasonably acceptable non-disturbance agreement

                         executed by its mortgagee.

 

TERM                      SECTION 4. The term of this lease shall commence on the

                          earlier of (a) the date on which Tenant's improvements

                         to the Leased Premises are substantially complete or

                         (b) one-hundred and twenty (120) days after the date of

                          execution of this lease. The lease term shall be for a

                         period of seven (7) years and nine (9) months plus the

                         part of a month, if any, from the date of commencement

                         of the term to the first day of the first full calendar

                         month in the term. Each of the parties hereto agrees,

                         upon demand of the other, to execute a declaration in

                         recordable form expressing the commencement and

                         termination dates of the term as soon as the

                         commencement date has been determined.

 

                         Renewal Option. Provided Tenant is not in default under

                          any of the terms and provisions of this Lease after the

                         giving of notice and the passage of any required cure

                         periods or the Tenant is otherwise endeavoring in good

                         faith to cure such default, Tenant shall have one (1)

                         renewal option period of five (5) years. All terms and

                         conditions of this Lease shall remain in full force and

                         effect during the renewal option period, except for the

                         payment of Fixed Rent, which shall be $6.00 per square

                         foot per year. To exercise the option period, Tenant

                         shall deliver to Landlord written notice one hundred

                         eighty (180) days prior to the expiration of the term

                         of its intent to exercise its option to renew this

                         Lease. Absent such timely delivery of notice to

                          exercise an option period, this Lease shall terminate

                         automatically without further notice or action upon the

                         expiration of the then current term.

 

TERMINATION               SECTION 5. This lease and the tenancy hereby created

                         shall cease and terminate at the end of the original

                         term hereof, or any extension or renewal thereof,

                         without the necessity of any notice from either

                          Landlord or Tenant to terminate the same, and Tenant

                         hereby waives notice to vacate the premises and agrees

                         that Landlord shall be entitled to the benefit of all

                          provisions of law respecting the summary recovery of

                         possession of premises from a tenant holding over to

                         the same extent as if statutory notice had been given.

                         For the period of six (6) months prior to the

                         expiration of the original term of this lease or any

                         renewal or extension thereof, Landlord shall have the

                         right to display on the exterior of the premises (but

                         not in any window or doorway thereof) the customary

                         sign "For Rent," and during such period Landlord may

                         show the premises and all parts thereof to prospective

                          tenants between the hours of 9:00 A.M. and 5:00 P.M. on

                         any day during which Tenant shall be open for business,

                         with the consent of the tenant as long as consent is

                         not unreasonably withheld.

 

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RENTALS PAYABLE           SECTION 6. Tenant covenants and agrees to pay Landlord,

                         as Fixed Rent for the Leased Premises, the sum of $5.25

                          per square foot per year. Fixed Rent, Common Area

                         charge, taxes and insurance will abate in full for the

                         first nine (9) full months of the term.

 

Fixed Rent                SECTION 7. The Fixed Rent shall be payable, without

                         previous demand and without any setoffs or deductions

                         whatsoever except as provided in this lease, in equal

                         monthly installments in advance on the first day of

                         each calendar month during the term, the first such

                         payment to include any prorated Fixed Rent for the

                         period from the date of the commencement of the term to

                          the first day of the first full calendar month in the

                         term.

 

                         SECTION 8.   INTENTIONALLY OMITTED.

 

"RENTAL YEAR" DEFINED     SECTION 9. The first "rental year" shall commence on

                         the first day of the term and shall end at the close of

                         the last day of the twelfth full calendar month

                         following thereafter; thereafter the rental year shall

                         consist of periods of twelve full calendar months or,

                         at the end of the term, the portion of such twelve

                         calendar months included in the term.

 

                         SECTION 10.   INTENTIONALLY OMITTED.

 

                          SECTION 11.   INTENTIONALLY OMITTED.

 

TAXES AND INSURANCE       SECTION 12. Throughout the term of this lease, Tenant

                         agrees to pay to Landlord, as additional rental each

                         Rental Year, a pro rata share of the following

                         expenses, which pro rate shall be computed by

                         multiplying such expenses by a fraction having as its

                         numerator the Floor Area of the Demised Premises and as

                          its denominator the Floor Area of all the enclosed

                         areas of the Shopping Center available for exclusive

                         use and occupancy by Tenants of the Shopping Center,

                         whether or not open for business.

 

                         (i) All real estate taxes and assessments of every kind

                         or nature which are now or may hereafter be imposed or

                         assessed upon the Demised Premises or the Shopping

                         Center provided, however, that nothing contained in

                         this Section shall be construed to obligate Tenant to

                         pay any inheritance, estate, succession, transfer,

                          gift, or corporation tax that is or may be imposed upon

                         Landlord.

 

                         (ii) All taxes or excises on rent or any other tax,

                         levy or charge however described levied against the

                          Landlord by the Federal Government, the State of

                         Virginia or any political subdivision of the State of

                         Virginia on account of rentals or other charges payable

                         to Landlord hereunder or based upon the parking

                         facilities and/or the number of parking spaces provided

                         by the Landlord hereunder or based upon the parking

                         facilities and/or the number of parking spaces provided

                         by the Landlord in the Shopping Center.

 

                         (iii) The cost to Landlord of insurance obtained by

                         Landlord pursuant to Sections 34 and 38 hereof;

                          provided, however, that in no event shall the Tenant be

                         required to pay any portion of such taxes or insurance

                         covering a taxable or insured period ending prior to

                         the delivery of the Demised Premises to the Tenant and

                         such payment is further abated according to Section 1.

 

                         Such additional rent for the partial Rental Year of the

                         term hereby shall be prorated per diem. Landlord shall

                         submit to Tenant annually a written statement setting

                         forth the amount of such expenses and showing in

                         reasonable detail the manner in which they have been

                         computed.

 

                         The charges to Tenant under this Section shall be

                         computed on a basis of twelve (12) consecutive calendar

                         months commencing and ending on such dates as may be

                         designated by Landlord and shall be paid by Tenant in

                         monthly installments on the first day of each calendar

                         month in an amount as

 

                                        4

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                         set forth in Section 1, as adjusted to actual expenses

                         per the terms of this Lease. Landlord shall make

                         available for Tenant's inspection during normal

                          business hours at the office of the Landlord,

                         Landlord's records relating to the taxes and insurance

                         for such preceding period. On Tenant's request,

                         Landlord shall provide Tenant with supporting

                         documentation for any element of taxes or insurance

                         passed through to Tenant under this Section.

 

                         Within sixty (60) days after the end of each Rental

                         Year, or such other twelve (12) month period designated

                         by Landlord, Landlord shall submit to Tenant a written

                         statement setting forth the amount of such expenses and

                          showing in reasonable detail the manner in which they

                         have been computed and the calculation of Tenant's

                         prorata share. Within thirty (30) days after receipt of

                         such statement, there shall be an adjustment between

                         Landlord and Tenant with payment to or repayment by

                         Landlord as the case may require. In the event any

                         repayment is due to Tenant, then Tenant may take a

                         credit on Tenant's next succeeding monthly installment.

                         At the time the aforementioned annual adjustment is

                         made, Tenant's subsequent monthly tax or insurance

                         contributions shall be adjusted so that each monthly

                         installment equals one-twelfth of Tenant's adjusted

                         annualized contribution.

 

                         SECTION 13.   INTENTIONALLY OMITTED.

 

ADDITIONAL RENTALS        SECTION 14. Tenant will promptly pay all rentals herein

                         prescribed when and as the same shall become due and

                         payable. If Landlord shall pay any monies, or incur any

                          expenses in correction of the violation of covenants

                         herein set forth, the amount so paid or incurred shall,

                         at Landlord's option, and on notice to Tenant, be

                         considered additional rentals payable by Tenant with

                         the first installment of rental thereafter to become

                         due and payable, and may be collected or enforced as

                         provided by law in respect of rentals.

 

PAYMENTS AT OFFICE OF     SECTION 15. All rentals payable and all statements

LANDLORD                  delivered by Tenant to Landlord under this Agreement

                         shall be paid and delivered to South Crater Square

                          Associates, LLC, c/o Weinstein Management Co., Inc.,

                         P.O. Box 31335, Richmond, VA 23294, or to such other

                         address as Landlord may direct by written notice.

 

NOT A JOINT VENTURE       SECTION 16. Any intention to create a joint venture or

                         partnership relationship between the parties hereto is

                         hereby expressly disclaimed.

 

IMPROVEMENTS              SECTION 17. Prior to commencement of the term, Landlord

                         agrees to provide, at its expense, the Improvements to

                         the Leased Premises substantially in accordance with

                         the general description of the improvements to be

                          provided by Landlord as set forth in "Exhibit C"

                         hereto. Any other improvements to the Leased Premises

                         shall be provided by Tenant at its sole expense.

 

                         Landlord and Tenant are each responsible for obtaining

                         plans and bids for the work for which each is

                         responsible for performing. Landlord and Tenant shall

                         agree on one contractor to perform both Landlord's and

                         Tenant's work. Landlord and Tenant shall establish a

                         mutually agreeable construction schedule and completion

                         date for all improvements to the Leased Premises.

                          Tenant shall execute a contract with the contractor,

                         monitor the construction progress, maintain a log of

                         changes and execute change orders approved by Landlord

                         (if the change order relates to Landlord's work) and

                         prepare a punchlist a substantial completion.

 

DRIVEWAYS AND PARKING     SECTION 18. Landlord agrees to provide hard surfaced

AREAS                     parking areas with adequate drainage and lighting

                         facilities, including footways and necessary access

                         roads within the Shopping Center. Landlord represents

                         that there are at least 320 non-reserved parking spaces

                          in the parking lot for the Shopping Center that are

                         available for use.

 

                         SECTION 19. On or before the commencement of the Term,

                         Tenant will

 

                                        5

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                         substantially complete and fixture the Leased Premises.

                         Tenant shall obtain the prior written approval of

                         Landlord to all plans and specifications for work upon

                         the Leased Premises whether interior, exterior,

                         structural, mechanical, electrical or otherwise. Once

                         construction plans and specifications shall have been

                          submitted to and approved in writing by Landlord,

                         Tenant must construct its improvements in strict

                         conformity therewith. If, during the course of

                         construction, Tenant desires any changes in the

                         approved plans or specifications, such changes must

                         also first be submitted to and approved by Landlord.

                         All Tenant's work, as herein provided, shall be done at

                         the sole cost and expense of Tenant, in accordance with

                         all applicable laws and governmental regulations.

 

                         Furthermore, Tenant shall obtain and furnish

                         satisfactory evidence of such builder's risk, and other

                         usual and customary insurance policies, or such

                         policies as Landlord or Landlord's mortgage lender may

                         require throughout the period of Tenant's construction,

                         which policies shall be in form, content, and with such

                         limits as Landlord and/or Landlord's mortgage lender

                         may require. Said policies shall name Landlord,

                         Landlord's mortgage lender, and Landlord's Agent as

                         additional named insureds, as their respective

                         interests may appear.

 

                         Tenant hereby indemnifies and saves Landlord, its

                         Partners and agent harmless from and against any and

                         all manner of claims for liens, wages, or materials, or

                         for damages to persons or property caused during the

                         making of or in connection with said building

                         construction, including but not by way of limitation,

                         mechanics' liens claims, which latter claims Tenant

                          shall bond off within ten (10) business days.

 

UNAVOIDABLE DELAYS        SECTION 20. The obligations of the Landlord and of

                         Tenant, respectively, under Sections 4, 17, 18, and 19

                         hereof, are subject to unavoidable delays due to labor

                         disputes, acts of God or the public enemy, governmental

                         regulations or controls, fire or other casualties or

                         other conditions or causes beyond the reasonable

                         control of the parties.

 

TRADE FIXTURES            SECTION 21. All trade fixtures and apparatus installed

                         by Tenant in the Leased Premises except such as may be

                         the property of Landlord shall remain the property of

                         the Tenant and shall be removable from time to time and

                         also at the expiration of the term of this lease or any

                         renewal or extension thereof, or other termination

                         thereof, provided Tenant shall not at such time be in

                         default under any covenant or agreement contained in

                         this Agreement; otherwise Landlord shall have a lien on

                         said fixtures or apparatus as security against loss and

                         damage resulting from defaults by Tenant. Tenant shall

                         repair and restore the Leased Premises following the

                          removal or replacement of its trade fixtures whether

                         during or at the termination of this lease.

 

USE OF PREMISES           SECTION 22. The Leased Premises shall be used by tenant

                         solely for the purpose of conducting therein the

                         business as set forth in Section 1.

 

                         Exclusive use: During the initial lease term and any

                         extensions, Landlord agrees not to allow any space at

                          the Shopping Center to be used or occupied by another

                         call center company.

 

PROMPT OCCUPANCY AND      SECTION 23. Tenant will not use, or permit or suffer

USE                       the use of, the Leased Premises for any other business

                         or for residential purposes, and will conduct business

                         on the premises in its own name unless and until the

                         use of some other name is approved in writing by

                          Landlord. Tenant will not permit, allow, or cause any

                         public or private auction sales to be conducted on or

                         from the Leased Premises.

 

OPERATION BY TENANT       SECTION 24. Tenant will keep the inside and outside of

                         all glass in the doors and windows of the Leased

                         Premises clean; will keep all exterior surfaces clean;

                         will replace promptly at its own expense with glass of

                         like kind and quality any plate glass or window glass

                         of the Leased Premises

 

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                         which may become cracked or broken, unless by fire;

                         will not, without the consent in writing of Landlord,

                         place or maintain any merchandise or other articles in

                         any vestibule or entry of the premises, on the front

                          walks adjacent thereto, or elsewhere on the exterior

                         thereof; will maintain the premises and the sidewalks

                         abutting the premises at its own expense in a clean,

                         orderly and sanitary condition and free of insects,

                         rodents, vermin and other pests; will not permit undue

                         accumulations of garbage, trash, rubbish and other

                         refuse in the Premises, but will remove the same at its

                         own expense, and will keep such refuse in rat-proof

                         containers within the interior of the premises until

                         called for to be removed; will not use or permit the

                         use of any pool table, foosball, air hockey, video,

                         pinball or similar arcade type games; will not use or

                         permit the use of any television or apparatus or

                          musical instruments for sound reproduction or

                         transmission in such manner that the sounds so

                         reproduced, transmitted or produced shall be audible

                         beyond the interior of the Leased Premises or disturb

                         the other tenants of the Shopping Center; will not

                         commit any acts which will increase Landlord's rate of

                         insurance; will keep all mechanical apparatus free of

                         vibration and noise which may be transmitted beyond the

                         confines of the premises; will not cause or permit

                         objectionable odors to emanate or be dispelled from the

                          premises; will comply with all laws and ordinances and

                         valid rules and regulations of governmental

                         authorities, and all recommendations of the applicable

                         Fire Insurance Rating Bureau, with respect to the use

                         or occupancy of the premises by Tenant.

 

EXTERIOR REPAIRS          SECTION 25. Landlord will keep the exterior of the

                         Shopping Center, including without limitation the

                          exterior walls, roofs, common areas, driveways, parking

                         areas, and sidewalks, except any doors, windows and

                         glass in the Premises, in repair, provided that Tenant

                          shall give Landlord written notice of the necessity for

                         such repairs, and provided that the damage thereto

                         shall not have been caused by negligence of Tenant, in

                         which event Tenant shall be responsible therefor.

                         Except as set forth in Sections 26 and 27 of this

                         Lease, Landlord shall be under no other liability for

                         repair, maintenance, alteration or any other action

                         with reference to the Leased Premises or any part

                         thereof, or plumbing, heating, electrical, air

                         conditioning or other mechanical installation therein.

                          Landlord is expressly exculpated from any damage caused

                         to Tenant's fixtures, inventory, and/or decor caused by

                         leakage from any pipe, or from leakage in the roof.

 

INTERIOR REPAIRS; END     SECTION 26. Tenant will keep the interior of the

OF THE LEASE TERM         premises, together with all electrical, plumbing, and

                         other mechanical installations, therein in good order

                         and repair at its own expense; and will surrender the

                         Leased Premises at the expiration of the term or at

                         such other time as it may vacate the premises in as

                         good condition as when received, excepting depreciation

                          caused by ordinary wear and tear. Tenant will not

                         overload the electrical wiring serving the premises or

                         within the premises, and will install at its own

                         expense, but only after obtaining Landlord's written

                         approval, any additional electrical wiring which may be

                         required in connection with Tenant's apparatus.

 

                         Notwithstanding the foregoing, however, Landlord

                         guarantees that the electrical and plumbing systems and

                         equipment serving the Leased Premises (except any

                         electrical and plumbing systems installed by Tenant as

                         part of its improvements to the Leased Premises) are in

                         good working condition on the Lease Commencement Date.

                         Landlord shall be responsible for all capital repairs

                          or replacements related to those systems, unless such

                         are repairs or replacements are necessitated by

                         Tenant's negligence or willful acts. If Landlord fails

                         to perform any of its obligations in this Section and

                         Landlord fails to initiate efforts within ten (10) days

                         after Landlord's receipt of written notice from Tenant

                         to promptly cure such failure, Tenant may, but will not

                         be obligated to, perform Landlord's obligations on

                         Tenant's behalf and Tenant may invoice Landlord for the

                         cost of such repairs plus interest at the rate of ten

                         percent (10%) per annum.

 

                                       7

<PAGE>

 

HEATING VENTILATING       SECTION 27.   Tenant, at its sole cost and expense,

AND AIR CONDITIONING      shall operate, maintain and repair the heating,

                         ventilating and air conditioning (HVAC) system

                         including the making of all necessary replacements

                         thereto throughout the term of this lease and any

                         renewal thereof. Tenant shall pay for all fuel, water,

                         gas and electricity consumed in such operation. During

                         the entire term hereof, Tenant agrees to contract for

                         the regular maintenance and repair of the heating,

                         ventilating and air conditioning equipment with a

                         reputable service contractor acceptable to Landlord and

                         to provide an executed copy of such agreement to

                         Landlord.

 

                         Notwithstanding the foregoing, however, Landlord

                         guarantees that the HVAC systems and equipment serving

                         the Leased Premises (except any HVAC systems installed

                         by Tenant as part of its improvements to the Leased

                         Premises) are in good working condition on the Lease

                         Commencement Date. Landlord shall be responsible for

                          all capital repairs or replacements related to those

                         systems, unless such repairs or replacements are

                         necessitated by Tenant's negligence or willful acts. If

                         Landlord fails to perform any of its obligations in

                         this Section and Landlord fails to initiate efforts

                         within ten (10) days after Landlord's receipt of

                         written notice from Tenant to promptly cure such

                         failure, Tenant may, but will not be obligated to,

                         perform Landlord's obligations on Tenant's behalf and

                         may invoice Landlord for the cost of such repairs or

                          replacement plus interest at the rate of ten percent

                         (10%) per annum.

 

                         If utilities to the Premises are interrupted for more

                         than three (3) consecutive business days as a result of

                         the negligent act or omission of Landlord, its agents,

                         employees, or contractors, Tenant will have the right

                         to abate rent from the beginning of the interruption of

                         such services until full resumption of them. If such

                         interruption continues for thirty (30) consecutive

                         days, Tenant will have the right to terminate this

                         lease without liability upon ten (10) days' notice, so

                         long as such interruption has not been cured before

                         such termination date.

 

DAMAGES TO PREMISES       SECTION 28. Tenant will repair promptly at its own

                         expense any damage, including that from forced entry,

                         to the Leased Premises caused by the bringing into or

                         taking out of the premises any property for Tenant's

                          use, or by the installation or removal of such

                         property, regardless of fault or by whom such damage

                         shall be caused, unless caused by Landlord, its agents,

                         employees, or contractors and in default of such

                         repairs by Tenant, Landlord may make the same and

                         Tenant agrees to pay the cost thereof to Landlord

                         promptly upon Landlord's demand therefor.

 

ALTERATIONS BY TENANT     SECTION 29. Tenant will not alter the storefront of the

                         leased premises and will not make any structural or

                         non-structural alteration or addition to the Leased

                         Premises or any part thereof, or the Shopping Center

                         without first obtaining Landlord's written approval,

                         which will not be unreasonably denied, conditioned or

                         delayed; and Tenant agrees that any improvements made

                         by it shall immediately become the property of the

                         Landlord and shall remain upon the premises in the

                         absence of agreement to the contrary. Tenant further

                         may install fixtures, apparatus and equipment of any

                         kind to any part of the premises without first

                         obtaining Landlord's written consent. In the event

                         Tenant performs any initial improvements or subsequent

                         alterations or repairs to the Leased Premises, Tenant

                         shall do all things reasonably necessary to prevent the

                         filing of any mechanics' or other liens against the

                         Leased Premises. If any such lien shall at any time be

                         filed, Tenant shall either cause the same to be vacated

                         and canceled within ten (10) days after the date of

                         filing thereof, or, Tenant shall furnish such security

                         by surety bond or otherwise as may be necessary to

                         release the same as a lien against the real property.

                          At the expiration of the Lease, Tenant shall remove at

                         its expense, all alterations and additions which were

                         made in the demised premises or the Shopping Center by

                          the Tenant after the initial preparation of the

                         Premises and which are designated by the Landlord for

                         removal at the time Lessee requests Lessor's consent to

                         them. Tenant shall repair, at its expense, any damage

                         caused by removal of the alterations and additions.

 

                                       8

<PAGE>

 

PAINTING AND DECORATION   SECTION 30. Tenant will not paint or decorate any part

                          of the exterior of the Leased Premises without first

                         obtaining Landlord's written approval of such painting

                         or decoration.

 

                         SECTION 31.   INTENTIONALLY OMITTED

 

ROOF AND WALLS            SECTION 32. So long as Landlord does not unreasonably

                         interfere with the operation of Tenant's business,

                         Landlord shall have the exclusive right to use all or

                         any part of the roof of the premises for any purpose;

                         to erect on the roof to the Leased Premises other

                         structures; and to erect in connection with the

                         construction thereof of temporary scaffolds and other

                         aids to construction on the exterior of the premises,

                         provided that access to the premises shall not be

                         denied. Tenant further agrees that Landlord may make

                          any use it desires of the side or rear walls of the

                         premises, provided that there shall be no encroachment

                         upon the interior of the Leased Premises.

 

COMMON FACILITIES         SECTION 33. Landlord grants to Tenant during the term

                         the right of non-exclusive use, in connection with

                         others, of all automobile parking areas within the

                         Shopping Center for the accommodation and parking of

                         passenger


 
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