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Exhibit 10.33
STANDARD MULTI-TENANT OFFICE LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1.
Basic Provisions ("Basic Provisions").
1.1.
PARTIES: This Lease ("LEASE"), dated for reference purposes
only July 17, 2002, is made by and between
I.S. CAPITAL, LLC, an Arizona
limited liability corporation ("LESSOR")
and MOBILITY ELECTRONICS, INC., a
Delaware corporation ("LESSEE"),
(collectively the "PARTIES", or individually a
"PARTY").
1.2.(a) PREMISES: That
certain portion of the Project (as defined
below), known as Suite Numbers(s) 200, 201
on the 2nd floor(s) and 1,500 square
feet located on the 1st Floor, known as
Suite, consisting of a total of
approximately 20,182 rentable square feet
("PREMISES"). The Premises are located
at: 17800 N. Perimeter Drive, in the City
of Scottsdale, County of Maricopa,
State of Arizona, with zip code 85254. In
addition to Lessee's rights to use and
occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive
rights to the Common Areas (as defined in
Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to
the roof, the exterior walls, the
area above the dropped ceilings, or the
utility raceways of the building
containing the Premises ("BUILDING") or to
any other buildings in the Project.
The Premises, the Building, the Common
Areas, the land upon which they are
located, along with all other buildings and
improvements thereon, are herein
collectively referred to as the "PROJECT."
The Project consists of approximately
50,000 rentable square feet. (See also
Paragraph 2)
1.2(b) PARKING:
Sixty-five (65) unreserved and fifteen (15) reserved
and covered vehicle parking spaces at a
monthly cost of $0.0 per unreserved
space and $O.O per reserved space. (See
Paragraph 2.6)
1.3.
TERM: Five (5) years and eight (8) months ("ORIGINAL TERM")
commencing February 1, 2003 ("Commencement
Date") and ending September 30, 2008
("EXPIRATION DATE"). (See also Paragraph
3)
1.4.
EARLY POSSESSION: Upon completion of tenant improvements
("Early Possession Date" which the Parties
shall use best efforts to establish
as November 1, 2002). (See also Paragraphs
3.2 and 3.3)
1.5.
BASE RENT: $31 ,642.33 per month ("BASE RENT)", with the first
payment prorated in the amount of
$13,423.30 (plus 1.9% rental tax) due on
November 15, 2003, and each monthly payment
payable on the first (1st) day of
each month thereafter. (See also "Paragraph
2, "Tenant Work Letter and Free
Rent" of the Addendum.)
[X] If this box is checked, there are
provisions in this Lease for the Base Rent
to be adjusted.
1.6.
LESSEE'S SHARE OF OPERATING EXPENSE INCREASE: Forty and three
tenths percent (40.3%) ("LESSEE'S SHARE").
Lessee's Share has been calculated by
dividing the approximate rentable square
footage of the Premises by the total
approximate square footage of the rentable
space contained in the Project and
shall not be subject to revision except in
connection with an actual change in
the size of the Premises or a change in the
space available for lease in the
Project.
1.7.
BASE RENT AND OTHER MONIES PAID NOVEMBER 15, 2003:
(a) BASE RENT:
$13,423.30 (pro-rated for November, 2003,
plus 1.9% rental tax) then $31,642.33 base
rent (plus 1.9% rental tax), payable
beginning December 1, 2003.
(b) SECURITY
DEPOSIT: $31,642.33 ("SECURITY DEPOSIT").
(See also Paragraph 5)
(c) PARKING:
FREE.
(d) OTHER:
N/A
(e) TOTAL DUE
NOVEMBER 15, 2003: $45,065.63.
1.8.
AGREED USE: General office use, including laboratory and
Tenant's design group use, including
milling and painting use (See also
Paragraph 6).
1.9.
BASE YEAR; Insuring Party. The Base Year is 2003. Lessor is
the "INSURING PARTY". (See also Paragraphs
4.2 and 8)
1.10. REAL
ESTATE BROKERS: (See also Paragraph 15)
(a)
REPRESENTATION: The following real estate brokers
(the "BROKERS") and brokerage relationships
exist in this transaction (check
applicable boxes):
[X] Colliers Classic (Joe Welchert)
represents Lessor exclusively
("LESSOR'S
BROKER");
[X] CB Richard Ellis (Chuck Nixon),
represents Lessee exclusively
("LESSEE'S
BROKER"); or
[ ] ,
represents both Lessor and Lessee ("DUAL AGENCY").
(b) PAYMENT TO
BROKERS: Upon execution and delivery of
this Lease by both Parties, Lessor shall
pay to the Brokers the brokerage fee
agreed to in a separate written agreement
(or if there is no such agreement, the
sum of -- or --o% of the total Base Rent
for the brokerage services rendered by
the Brokers).
1.11.
GUARANTOR. The obligations of the Lessee under this Lease
shall be guaranteed by N/A ("GUARANTOR").
(See also Paragraph 37)
1.12.
BUSINESS HOURS (AS USED HEREIN) FOR THE BUILDING:: 7:00 a.m.
to 6:00 p.m., Mondays through Fridays
(except Building Holidays) and 7:00 a.m.
to 1:00 p.m. on Saturdays (except Building
Holidays). "BUILDING HOLIDAYS" shall
mean the dates of observation of New Year's
Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving
Day, Christmas Day, and tenant shall
have access, services and utilities
supplied twenty-four (24) hours per day,
seven (7) days per week.
1.13.
LESSOR SUPPLIED SERVICES. This shall be a full-service lease.
1.14.
ATTACHMENTS. Attached hereto are the following, all of which
constitute a part of this Lease:
[X] an Addendum consisting of
Paragraphs 1 through 8;
[X] a plot plan depicting the
Premises;
[X] a current set of the Rules and
Regulations;
[ ] a Work Letter;
[ ] a janitorial schedule;
[ ] other (specify):
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 in a
clean condition on the Commencement Date or
the Early Possession Date, whichever
first occurs ("START DATE"), and warrants
that the existing electrical,
plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning
systems ("HVAC"), and all other items which
the Lessor is obligated to construct
pursuant to the Work Letter attached
hereto, if any, other than those
constructed by Lessee, shall be in good
operating condition on said date.
2.3.
COMPLIANCE. Lessor warrants that the Improvements comprising
the Premises and the Common Areas comply
with, the building codes that were in
effect at the time that each such
improvement, or portion thereof, was
constructed, and also with all applicable
laws, covenants or restrictions of
record, regulations, and ordinances
("APPLICABLE REQUIREMENTS") in effect on the
Start Date. Said warranty does not apply to
the use to which Lessee will put the
Premises, modifications which may be
required by the Americans with Disabilities
Act 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. NOTE: LESSEE IS
RESPONSIBLE FOR DETERMINING WHETHER OR NOT
THE ZONING AND OTHER APPLICABLE
REQUIREMENTS ARE APPROPRIATE FOR LESSEE'S
INTENDED USE, AND ACKNOWLEDGES THAT PAST
USES OF THE PREMISES MAY NO LONGER
ALLOWED. If the Premises do not comply with
said warranty, Lessor shall,
except as otherwise
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provided, promptly after receipt of written
notice from Lessee setting forth
with specificity the nature and extent of
such non-compliance, rectify the same.
If the Applicable Requirements are
hereafter changed so as to require during the
term of this Lease the construction of an
addition to or an alteration of the
Premises, 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
as follows:
(a) Subject to
Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of
the specific and unique use of the
Premises by Lessee as compared with uses by
tenants in general, Lessee shall be
fully responsible for the cost thereof,
provided, however that if such Capital
Expenditure is required during the last 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 the
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.
(b) If such
Capital Expenditure is not the result of the
specific and unique use of the Premises by
Lessee (such as, governmentally
mandated seismic modifications), then
Lessor and Lessee shall allocate the cost
of such Capital Expenditure as follows:
Lessor shall advance the funds necessary
for such Capital Expenditure but Lessee
shall be obligated to pay, each month
during the remainder of the term of this
Lease, on the date on which Base Rent
is due, an amount equal to the product of
multiplying Lessee's share of the cost
of such Capital Expenditure (the percentage
specified in Paragraph 1.6 by a
fraction, the numerator of which is one,
and the denominator of which is 144
(i.e. 1/144th of the cost per month).
Lessee shall pay interest on the
unamortized balance of Lessee's share at a
rate that is commercially reasonable
in the judgment of Lessor's accountants.
Lessee may, however, prepay its
obligation at any time. Provided, however,
that if such Capital Expenditure is
required during the last 2 years of this
Lease or if Lessor reasonably
determines that it is not economically
feasible to pay its share thereof, Lessor
shall have the option to terminate this
Lease upon 90 days prior written notice
to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after
receipt of Lessor's termination notice that
Lessee will pay for such Capital
Expenditure. If Lessor does not elect to
terminate, and fails to tender its
share of any such Capital Expenditure,
Lessee may advance such funds and deduct
same, with Interest, from Rent until
Lessor's share of such costs have been
fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of
the Rent due and payable for the remainder
of this Lease is not sufficient to
fully reimburse Lessee on an offset basis,
Lessee shall have the right to
terminate this Lease upon 30 days written
notice to Lessor
(c)
Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply
only to nonvoluntary, unexpected, and
new Applicable Requirements. If the Capital
Expenditures are instead triggered
by Lessee as a result of an actual or
proposed change in use, change in
intensity of use, or modification to the
Premises then, and in that event,
Lessee shall be fully responsible for the
cost thereof, and Lessee shall not
have any right to terminate this Lease.
2.4.
ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) Lessee has
been advised by Lessor and/or Brokers to
satisfy itself with respect to the
condition of the Premises (including but
not limited to the electrical, HVAC and
fire sprinkler systems, security,
environmental aspects, and compliance with
Applicable Requirements), and their
suitability for Lessee's Intended use, (b)
Lessee has made such investigation as it
deems necessary with reference to such
matters and assumes all responsibility
therefore as the same relate to Its
occupancy of the Premises, and (c) neither
Lessor, Lessor's agents, nor Brokers
have made any oral or written
representations or warranties with respect to said
matters other than as set forth in this
Lease. In addition, Lessor acknowledges
that: (i) Brokers have made no
representations, promises or warranties
concerning Lessee's ability to honor the
Lease or suitability to occupy the
Premises, and (ii) It Is Lessor's sole
responsibility to investigate the
financial capability and/or suitability of
all proposed tenants.
2.5.
LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor
in Paragraph 2 shall be of no force or
effect if immediately prior to the Start
Date, Lessee was the owner or occupant of
the Premises, in such event, Lessee
shall be responsible for any necessary
corrective work.
2.6.
VEHICLE PARKING. So long as Lessee is not in default, and
subject to the Rules and Regulations
attached hereto, and as established by
Lessor from time to time, Lessee shall be
entitled to the rentfree use of the
number of parking spaces specified in
Paragraph 1.2(b).
(a) If Lessee
commits, permits or allows any of the
prohibited activities described in the
Lease or the rules then in effect, then
Lessor shall have the right, without
notice, in addition to such other rights
and remedies that it may have, to remove or
tow away the vehicle involved and
charge the cost to Lessee, which cost shall
be immediately payable upon demand
by Lessor.
2.7.
COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined
as all areas and facilities outside the
Premises and within the exterior
boundary line of the Project and interior
utility raceways and installations
within the Premises that are provided and
designated by the Lessor from time to
time for the general nonexclusive use of
Lessor, Lessee and other tenants of the
Project and their respective employees,
suppliers, shippers, customers,
contractors and, including, but not limited
to, common entrances,
lobbies, corridors, stairwells, public
restrooms, elevators, parking areas,
loading and unloading areas, trash areas,
roadways, walkways, driveways and
landscaped areas.
2.8.
COMMON AREAS - LESSEE'S RIGHTS. Lessor grants to Lessee, for
the benefit of Lessee and its employees,
suppliers, shippers, contractors,
customers and invitees, during the term of
this Lease, the nonexclusive right to
use, in common with others entitled to such
use, the Common Areas as they exist
from time to time, subject to any rights,
powers, and privileges reserved by
Lessor under the terms hereof or under the
terms of any rules and regulations or
restrictions governing the use of the
Project, Under no circumstances shall the
right herein granted to use the Common
Areas be deemed to include the right to
store any property, temporarily or
permanently, in the Common Areas. Any such
storage shall be permitted only by the
prior written consent of Lessor or
Lessor's designated agent, which consent
may be revoked at any time. In the
event that any unauthorized storage shall
occur then Lessor shall have the
right, without notice, in addition to such
other rights and remedies that it may
have, to remove the property and charge the
cost to Lessee, which cost shall be
immediately payable upon demand by
Lessor.
2.9.
COMMON AREAS - RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have
the exclusive control and management
of the Common Areas and shall have the
right, from time to time, to adopt,
modify, amend and enforce reasonable rules
and regulations ("RULES AND
REGULATIONS") for the management, safety,
care, and cleanliness of the grounds,
the parking and unloading of vehicles and
the preservation of good order, as
well as for the convenience of other
occupants or tenants of the Building and
the Project and their invitees. The Lessee
agrees to abide by and conform to all
such Rules and Regulations, and to cause
its employees, suppliers, shippers,
customers, contractors and invitees to so
abide and conform. Lessor shall not be
responsible to Lessee for the noncompliance
with said Rules and Regulations by
other tenants of the Project.
2.10.
COMMON AREAS - CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to
time:
(a) To make
changes to the Common Areas, including,
without limitation, changes in the
location, size, shape and number of the
lobbies, windows, stairways, air shafts,
elevators, escalators, restrooms,
driveways, entrances, parking spaces,
parking areas, loading and unloading
areas, ingress, egress, direction of
traffic, landscaped areas, walkways and
utility raceways;
(b) To close
temporarily any of the Common Areas for
maintenance purposes so long as reasonable
access to the Premises remains
available;
(c) To
designate other land outside the boundaries of the
Project to be a part of the Common
Areas;
(d) To add
additional buildings and improvements to the
Common Areas;
(e) To use the
Common Areas while engaged in making
additional improvements, repairs or
alterations to the Project, or any portion
thereof; and (f) To do and perform such
other acts and make such other changes
in, to or with respect to the Common Areas
and Project as Lessor may, in the
exercise of sound business judgment, deem
to be appropriate.
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Notwithstanding the Provisions affecting Paragraph 2.10, Lessor
shall
not make changes or alterations to the
Common Area or Premises which alter the
Tenant Improvements constructed by Lessee
pursuant to the Tenant Improvement
Contract, or otherwise Interfere with
Lessee's reasonable use and enjoyment of
the Premises.
3.
Term.
3.1.
TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph
1.3.
3.2.
EARLY POSSESSION. The Lessor shall use reasonable commercial
efforts to permit the Lessee to complete
the Tenant Improvements and allow Early
Possession on or before November 1, 2002.
If Lessee totally or partially
occupies the Premises prior to the
Commencement Date, the obligation to pay Base
Rent shall be abated for the period of such
early possession. All other terms of
this Lease shall, however, be in effect
during such period. Any such early
possession shall not affect the Expiration
Date.
3.3.
DELAY IN POSSESSION. Lessor agrees to use its best
commercially reasonable efforts to deliver
possession of the Premises to Lessee
by the Early Possession Date. If, despite
said efforts, Lessor is unable to
deliver possession by such date, Lessor
shall not be subject to any liability
therefore, 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 by
the Commencement Date, as the same may be
extended under the terms of any Work
Letter executed by Parties, Lessee may, at
its option, by notice in writing
within 10 days after the Commencement Date,
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 10 day period, Lessee's right to
cancel shall terminate.
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.
OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during
the term hereof, in addition to the Base
Rent, Lessee's Share of the amount by
which all Operating Expenses for each
Comparison Year exceeds the amount of all
Operating Expenses for the Base Year, such
excess being hereinafter referred to
as the "OPERATING EXPENSE INCREASE", in
accordance with the following
provisions:
(a) "BASE
YEAR" is as specified in Paragraph 1.9.
(b)
"COMPARISON YEAR" is defined as each calendar year
during the term of this Lease subsequent to
the Base Year; provided, however,
Lessee shall have no obligation to pay a
share of any operating expense or the
Operating Expense Increase applicable to
the early occupancy period or the base
year. Lessee's Share of the Operating
Expense Increase for the first and last
Comparison Years of the Lease Term shall be
prorated according to that portion
of such Comparison Year as to which Lessee
is responsible for a share of such
increase.
(c) "OPERATING
EXPENSES" include all costs incurred by
Lessor relating to the ownership and
operation of the Project, calculated as if
the Project was at least 95% occupied (with
the Tenant improvements completed),
including, but not limited to, the
following:
(i) The
operation, repair, and maintenance in
neat, clean, safe, good order and
condition, but not the replacement (see
subparagraph (g)), of the following:
()
The Common Areas, including their
surfaces, coverings, decorative items,
carpets, drapes and window coverings, and
including parking areas, loading and
unloading areas, trash areas, roadways,
sidewalks, walkways, stairways, parkways,
driveways, landscaped areas, striping,
bumpers, irrigation systems, Common Area
lighting facilities, building exteriors
and roofs, fences and gates;
(bb)
All heating, air conditioning,
plumbing, electrical systems, life safety
equipment, communication systems and
other equipment used in common by, or for
the benefit of, lessees or occupants
of the Project, including elevators and
escalators, tenant directories, fire
detection systems including sprinkler
system maintenance and repair.
(ii)
Trash disposal, janitorial and security
services, pest control services, and the
costs of any environmental inspections;
(iii) Any
other service to be provided by Lessor
that is elsewhere In this Lease stated to
be an "Operating Expense";
(iv)
The cost of the premiums for the insurance
policies maintained by Lessor pursuant to
paragraph 8 and any deductible
portion of an insured loss concerning the
Building or the Common Areas;
(v) The amount
of the Real Property Taxes
payable by Lessor pursuant to paragraph
10;
(vi)
The cost of water, sewer, gas, electricity,
and other publicly mandated services not
separately metered;
(vii)
Labor, salaries, and applicable fringe
benefits and costs, materials, supplies and
tools, used in maintaining and/or
cleaning the Project and accounting and
management fees attributable to the
operation of the Project;
(viii) The cost
of any Capital Expenditure to the
Building or the Project not covered under
the provisions of Paragraph 2,3
provided; however, that Lessor shall
allocate the cost of any such Capital
Expenditure over a 12 year period and
Lessee shall not be required to pay more
than Lessee's Share of 1/144th of the cost
of such Capital Expenditure in any
given month;.
(ix)
Replacement of equipment or improvements
that have a useful life for accounting
purposes of 5 years or less.
(d) Any item
of Operating Expense that is specifically
attributable to the Premises, the Building
or to any other building in the
Project or to the operation, repair and
maintenance thereof, shall be allocated
entirely to such Premises, Building, or
other building. However, any such item
that is not specifically attributable to
the Building or to any other building
or to the operation, repair and maintenance
thereof, shall be equitably
allocated by Lessor to all buildings in the
Project.
(e) The
inclusion of the improvements, facilities and
services set forth in Subparagraph 4.2(c)
shall not be deemed to impose an
obligation upon Lessor to either have said
improvements or facilities or to
provide those services unless the Project
already has the same, Lessor already
provides the services, or Lessor has agreed
elsewhere in this Lease to provide
the same or some of them.
(f) Lessee's
Share of Operating Expense Increase shall be
payable by Lessee within 10 days after a
reasonably detailed statement of actual
expenses is presented to Lessee by Lessor.
At Lessor's option, however, an
amount may be estimated by Lessor from time
to time in advance of Lessee's Share
of the Operating Expense Increase for any
Comparison Year, and the same shall be
payable monthly during each Comparison Year
of the Lease term, on the same day
as the Base Rent is due hereunder. In the
event that Lessee pays Lessor's
estimate of Lessee's Share of Operating
Expense Increase as aforesaid, Lessor
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shall deliver to Lessee within 60 days
after the expiration of each Comparison
Year a reasonably detailed statement
showing Lessee's Share of the actual
Operating Expense Increase incurred during
such year. If Lessee's payments under
this paragraph (f) during said Comparison
Year exceed Lessee's Share as
indicated on said statement, Lessee shall
be entitled to credit the amount of
such overpayment against Lessee's Share of
Operating Expense Increase next
falling due. If Lessee's payments under
this paragraph during said Comparison
Year were less than Lessee's Share as
indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency
within 10 days after delivery by
Lessor to Lessee of said statement. Lessor
and Lessee shall forthwith adjust
between them by cash payment any balance
determined to exist with respect to
that portion of the last Comparison Year
for which Lessee is responsible as to
Operating Expense Increases,
notwithstanding that the Lease term may have
terminated before the end of such
Comparison Year.
(g) Operating
Expenses shall not include the costs of
replacement for equipment or capital
components such as the roof, foundations,
exterior walls or a Common Area capital
improvement, such as the parking lot
paying, elevators, fences that have a
useful life for accounting purposes of 5
years or more unless it is of the type
described in paragraph 4.2(c) (viii), in
which case their cost shall be included as
above provided.
(h) Operating
Expenses shall not include any expenses
paid by any tenant directly to third
parties, or as to which Lessor is otherwise
reimbursed by any third party, other
tenant, or by insurance proceeds.
4.3.
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 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. Payments will be applied first
to accrued late charges and
attorney's fees, second to accrued
interest, then to Base Rent and Operating
Expense Increase, and any remaining amount
to any other outstanding charges or
costs.
5.
SECURITY DEPOSIT. Lessee shall deposit with Lessor the Security
Deposit
as security for Lessee's faithful
performance of its obligations under this
Lease. If Lessee fails to pay Rent, or
otherwise Defaults under this Lease,
Lessor may use, apply or retain all or any
portion of said Security Deposit for
the payment of any amount due Lessor or to
reimburse or compensate Lessor for
any liability, expense, loss or damage
which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies
all or any portion of the Security
Deposit, Lessee shall within 10 days after
written request therefore, deposit
monies with Lessor sufficient to restore
said Security Deposit to the full
amount required by this Lease. Should the
Agreed Use be amended to accommodate a
material change in the business of Lessee
or to accommodate a sublessee or
assignee, Lessor shall have the right to
increase the Security Deposit to the
extent necessary, in Lessor's reasonable
judgment, to account for any increased
wear and tear that the Premises may suffer
as a result thereof. Lessor shall
not be required to keep the Security
Deposit separate from its general accounts.
Within 14 days after the expiration or
termination of this Lease, if Lessor
elects to apply the Security Deposit only
to unpaid Rent, and otherwise within
30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c) below,
Lessor shall return that portion of the
Security Deposit not used or applied by
Lessor. No part of the Security Deposit
shall be considered to be held in trust,
to bear interest or to be prepayment for
any monies to be paid by Lessee under
this Lease.
6.
USE.
6.1.
USE. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is
reasonably comparable thereto, and
for no other purpose. Lessee shall not use
or permit the use of the Premises in
a manner that is unlawful, creates damage,
waste or a nuisance, or that disturbs
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 of
the Building, will not adversely
affect the mechanical, electrical, HVAC,
and other systems of the Building,
and/or will not affect the exterior
appearance of the Building. 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.
6.2.
HAZARDOUS SUBSTANCES.
(a) REPORTABLE
USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean
any product, substance, or waste
whose presence, use, manufacture, disposal,
transportation, or release, either
by itself or in combination with other
materials expected to be on the Premises,
is either: (i) potentially injurious to the
public health, safety or welfare,
the environment or the Premises, (ii)
regulated or monitored by any governmental
authority, or (iii) a basis for potential
liability of Lessor to any
governmental agency or third party under
any applicable statute or common law
theory. Hazardous Substances shall include,
but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or
any products, byproducts or fractions
thereof. Lessee shall not engage in any
activity in or on the Premises which
constitutes a Reportable Use of Hazardous
Substances without the express prior
written consent of Lessor and timely
compliance (at Lessee's expense) with all
Applicable Requirements. "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 Requirements requires
that a notice be given to persons
entering or occupying the Premises or
neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary
and customary materials reasonably
required to be used in the normal course of
the Agreed Use such as 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, is not a Reportable Use, and
does not expose the Premises or
neighboring property to any meaningful risk
of contamination or damage or expose
Lessor to any Liability therefore. In
addition, Lessor may condition its
consent to any Reportable Use upon
receiving such additional assurances as
Lessor reasonably deems necessary to
protect itself, the public, the Premises
and/or the environment against damage,
contamination, injury and/or liability,
including, but not limited to, the
installation (and removal on or before Lease
expiration or termination) of protective
modifications (such as concrete
encasements) and/or increasing the Security
Deposit.
(b) DUTY TO
INFORM LESSOR. If Lessee knows, or has
reasonable cause to believe, that a
Hazardous Substance has come to be located
in, on, under or about the Premises, other
than as previously consented to by
Lessor, Lessee shall immediately give
written notice of such fact to Lessor, and
provide Lessor with a copy of any report,
notice, claim or other documentation
which it 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) and shall
promptly, at Lessee's expense, comply with
all Applicable Requirements and take
all Investigatory and/or remedial action
reasonably recommended, whether or not
formally ordered or required, for the
cleanup of any contamination of, and for
the maintenance, security and/or monitoring
of the Premises or neighboring
properties, that was caused or materially
contributed to by Lessee, or
pertaining to or involving any Hazardous
Substance brought onto the Premises
during the term of this Lease, by or for
Lessee, or by any third party as agent
for Lessee.
(d) LESSEE
INDEMNIFICATION. Lessee shall indemnify,
defend and hold Lessor, its agents,
employees, lenders and ground lessor, if
any, harmless from and against any and all
loss of rents and/or damages,
liabilities, judgments, claims, expenses,
penalties, and attorneys' and
consultants' fees arising out of or
involving any Hazardous Substance brought
onto the Premises by or for Lessee, or any
third party (provided, however, that
Lessee shall have no liability under this
Lease with respect to underground
migration of any Hazardous Substance under
the Premises from areas outside of
the Project not caused or contributed to by
Lessee). Lessee's obligations shall
include, but not be limited to, the effects
of any contamination or injury to
person, property or the environment
created
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<PAGE>
or suffered by Lessee, and the cost of
investigation, removal, remediation,
restoration and/or abatement, and shall
survive the expiration or termination of
this Lease. No termination, cancellation or
release agreement entered into by
Lessor and Lessee shall release Lessee from
its obligations under this Lease
with respect to Hazardous Substances,
unless specifically so agreed by Lessor in
writing at the time of such agreement.
(e) LESSOR
INDEMNIFICATION. Lessor and its successors and
assigns shall indemnify, defend, reimburse
and hold Lessee, its employees and
lenders, harmless from and against any and
all environmental damages, including
the cost of remediation, which result from
Hazardous Substances which existed on
the Premises prior to Lessee's occupancy or
which are caused by the gross
negligence or willful misconduct of Lessor,
Its agents or employees. Lessor's
obligations, as and when required by the
Applicable Requirements, shall
include, but not be limited to, the cost of
investigation, removal, remediation,
restoration and/or abatement, and shall
survive the expiration or termination of
this Lease.
(f)
INVESTIGATIONS AND REMEDIATION. Lessor shell retain
the responsibility and pay for any
investigations or remediation measures
required by governmental entities having
jurisdiction with respect to the
existence of Hazardous Substances on the
Premises prior to Lessee's occupancy,
unless such remediation measure is required
as a result of Lessee's use
(including "Alterations", as defined In
paragraph 7.3(a) below) of the Premises,
in which event Lessee shall be responsible
for such payment. Lessee shall
cooperate fully in any such activities at
the request of Lessor, including
allowing Lessor and Lessor's agents to have
reasonable access to the Premises at
reasonable times in order to carry out
Lessor's investigative and remedial
responsibilities.
(g) LESSOR
TERMINATION OPTION. If a Hazardous Substance
Condition (see Paragraph 9.1 (e)) occurs
during the term of this Lease, unless
Lessee is legally responsible therefore (in
which case Lessee shall make the
investigation and remediation thereof
required by the Applicable Requirements
and this Lease shall continue in full force
and effect, but subject to Lessor's
rights under Paragraph 6.2(d) and Paragraph
13), Lessor may, at Lessor's option,
either (i) investigate and remediate such
Hazardous 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
60 days following the date of such notice.
In the event Lessor elects to give a
termination notice, Lessee may, within 10
days thereafter, give written notice
to Lessor of Lessee's commitment to pay the
amount by which the cost of the
remediation of such Hazardous 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 recommendations of
Lessor's engineers and/or consultants
which relate in any manner to the Premises,
without regard to whether said
requirements are now in effect or become
effective after the Start Date. Lessee
shall, within 10 days after receipt of
Lessor's written request, provide Lessor
with copies of all permits and other
documents, and other information evidencing
Lessee's compliance with any Applicable
Requirements specified by Lessor, and
shall immediately upon receipt, notify
Lessor in writing (with copies of 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 into
Premises at any time, in the case of an
emergency, and otherwise at reasonable
times, for the purpose of inspecting the
condition of the Premises and for
verifying compliance by Lessee with this
Lease. The cost of any such Inspections
shall be paid by Lessor, unless a violation
of Applicable Requirements, or a
Hazardous Substance Condition (see
paragraph 9.1 e) is found to exist or be
imminent, or the inspection is requested or
ordered by a governmental authority.
In such case, Lessee shall upon request
reimburse Lessor for the cost of such
inspection, so long as such inspection is
reasonably related to the violation or
contamination.
7.
MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1.
LESSEE'S OBLIGATIONS. Notwithstanding Lessor's obligation to
keep the Premises In good condition and
repair, Lessee shall be responsible for
payment of the cost thereof to Lessor as
additional rent for that portion of the
cost of any maintenance and repair of the
Premises, or any equipment (wherever
located) that serves only Lessee or the
Premises, to the extent such cost is
attributable to causes beyond normal wear
and tear. Lessee shall be responsible
for the cost of painting, repairing or
replacing wall coverings, and to repair
or replace any improvements with the
Premises. Lessor may, at its option, upon
reasonable notice, elect to have Lessee
perform any particular such maintenance
or repairs the cost of which is otherwise
Lessee's responsibility hereunder.
7.2.
LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 4.2
(Operating Expenses), 6 (Use), 7.1
(Lessee's Obligations), 9 (Damage or
Destruction) and 14 (Condemnation), Lessor,
subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order,
condition and repair the foundations,
exterior walls, structural condition of
interior bearing walls, exterior roof, fire
sprinkler system, fire alarm and/or
smoke detection systems, fire hydrants, and
the Common Areas. Lessee expressly
waives 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" refers
to all floor and window coverings, air
lines, vacuum lines,' power panels,
electrical distribution, security and fire
protection systems, communication
cabling, lighting fixtures, HVAC equipment,
and plumbing in or on 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. "LESSEE OWNED
ALTERATIONS AND/OR UTILITY INSTALLATIONS"
are defined as Alterations and/or
Utility Installations made by Lessee that
are not yet owned by Lessor pursuant
to Paragraph 7,4(a).
(b)
CONSENT.
Lessee shall not make any Alterations or
Utility Installations to the Premises
without Lessor's prior written consent.
Lessee may, however, make non-structural
Utility Installations to the interior
of the Premises (excluding the roof)
without 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, ceilings, floors or any existing
walls, will not affect the electrical,
plumbing, HVAC, and/or life safety
systems, and the cumulative cost thereof
during this Lease as extended does not
exceed $10,000. 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, Lessor may, as
a precondition to granting such
approval, require Lessee to utilize a
contractor chosen and/or approved by
Lessor. Any Alterations or Utility
Installations that Lessee shall desire to
make and which require the consent of the
Lessor shall be presented to Lessor in
written form with detailed plans. Consent
shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable
governmental permits, (ii) furnishing
Lessor with copies of both the permits and
the plans and specifications prior to
commencement of the work, and (iii)
compliance with all conditions of said
permits and other Applicable Requirements
in a prompt and expeditious manner.
Any Alterations or Utility Installations
shall be performed in a workmanlike
manner with good and sufficient materials.
Lessee shall promptly upon completion
furnish Lessor with asbullt plans and
specifications. For work which costs an
amount in excess of one month's Base Rent,
Lessor may condition its consent upon
Lessee providing a lien and completion bond
in an amount equal to 150% of the
estimated cost of such Alteration or
Utility Installation.
(c) LIENS;
BONDS. Lessee shall pay, when due, all claims
for labor or materials 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
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<PAGE>
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,
Lessor and Lessee shall cooperate in the
selection of attorneys.
7.4.
OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP.
Subject to Lessor's right to require
removal or elect ownership as hereinafter
provided, all Alterations and Utility
Installations made by Lessee shall be the
property of Lessee, but considered a
part of the Premises. Lessor may, at the
commencement date or within ten (10)
days of written notice from Lessee of the
installation of other improvements,
elect in writing to be the owner of all or
any specified part of the Lessee
Owned Alterations and Utility
Installations. Unless otherwise instructed per
paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility
Installations(except the telephone system,
which shall remain Lessee's property)
shall, at the expiration or termination of
this Lease, become the property of
Lessor and be surrendered by Lessee with
the Premises.
(b) REMOVAL.
By delivery to Lessee of written notice from
Lessor not earlier than 90 and not later
than 30 days prior to the end of the
term of this Lease, Lessor may require that
any or all Lessee Owned Alterations
or Utility Installations be removed by the
expiration or termination of this
Lease. Lessor may require the removal at
any time of all or any part of any
Lessee Owned Alterations or Utility
Installations made without the required
consent.
(c) SURRENDER;
RESTORATION. Lessee shall surrender the
Premises by the Expiration Date or any
earlier termination date, with all of the
improvements, parts and surfaces thereof
clean and free of debris, and in good
operating order, condition and state of
repair, ordinary wear and tear excepted.
"Ordinary wear and tear" shall not include
any damage or deterioration that
would have been prevented by good
maintenance practice. Notwithstanding the
foregoing, if this Lease is for 12 months
or less, then Lessee shall surrender
the Premises in the same condition as
delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear.
Lessee shall repair any damage
occasioned by the installation, maintenance
or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility
Installations, furnishings, and equipment as
well as the removal of any storage tank
installed by or for Lessee. Lessee shall
also completely remove from the Premises
any and all Hazardous Substances
brought onto the Premises by or for Lessee,
or any third party (except Hazardous
Substances which were deposited via
underground migration from areas outside of
the Project) even if such removal would
require Lessee to perform or pay for
work that exceeds statutory requirements.
Trade Fixtures shall remain the
property of Lessee and shall be removed by
Lessee. The failure by Lessee to
timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express
written consent of Lessor shall constitute
a holdover under the provisions of
Paragraph 26 below.
8.
INSURANCE; INDEMNITY.
8.1.
INSURANCE PREMIUMS. The cost of the premiums for the
insurance policies maintained by Lessor
pursuant to paragraph 8 are included as
Operating Expenses (see paragraph 4.2
(c)(iv)). Said costs shall include
increases in the premiums resulting from
additional coverage related to
requirements of the holder of a mortgage or
deed of trust covering the Premises,
Building and/or Project, increased
valuation of the Premises, Building and/or
Project, and/or a general premium rate
increase. Said costs shall not, however,
Include any premium increases resulting
from the nature of the occupancy of any
other tenant of the Building. If the
Project was not insured for the entirety of
the Base Year, then the base premium shall
be the lowest annual premium
reasonably obtainable for the required
insurance as of the Start Date, assuming
the most nominal use possible of the
Building and/or Project. In no event,
however, shall Lessee be responsible for
any portion of the premium cost
attributable to liability insurance
coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).
8.2.
LIABILITY INSURANCE.
(a) CARRIED BY
LESSEE. Lessee shall obtain and keep in
force a Commercial General Liability policy
of insurance protecting Lessee and
Lessor as an additional insured against
claims for bodily injury, personal
injury and property damage based upon or
arising out of the ownership, use,
occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis
providing single limit coverage in an
amount not less than $1,000,000 per
occurrence with an annual aggregate of not
less than $2,000,000, an "Additional
Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of
the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes
from a hostile fire. The policy shall
not contain any intra-insured exclusions as
between insured persons or
organizations, but shall include coverage
for liability assumed under this Lease
as an "insured contract" for the
performance of Lessee's indemnity obligations
under this Lease. The limits of said
insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of
any obligation hereunder. All
insurance carried by Lessee shall be
primary to and not contributory with any
similar insurance carried by Lessor, whose
insurance shall be considered excess
insurance only.
(b) CARRIED BY
LESSOR. Lessor shall maintain liability
insurance as described in Paragraph 8.2(a),
in addition to, and not in lieu of,
the insurance required to be maintained by
Lessee. Lessee shall not be named as
an additional insured therein.
8.3.
PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING
AND IMPROVEMENTS. Lessor shall obtain and
keep in force a policy or policies of
insurance in the name of Lessor, with loss
payable to Lessor, any ground-lessor, and
to any Lender insuring loss or damage
to the Building and/or Project. The amount
of such insurance shall be equal to
the full replacement cost of the Building
and/or Project, as the same shall
exist from time to time, or the amount
required by any Lender, but in no event
more than the commercially reasonable and
available insurable value thereof.
Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's
personal property shall be insured by
Lessee under Paragraph 8.4. If the
coverage is available and commercially
appropriate, such policy or policies
shall insure against all risks of direct
physical loss or damage (except the
perils of flood and/or earthquake unless
required by a Lender), including
coverage for debris removal and the
enforcement of any Applicable Requirements
requiring the upgrading, demolition,
reconstruction or replacement of any
portion of the Premises as the result of a
covered loss. Said policy or policies
shall also contain an agreed valuation
provision in lieu of any coinsurance
clause, waiver of subrogation, and
inflation guard protection causing an
increase in the annual property insurance
coverage amount by a factor of not
less than the adjusted U.S. Department of
Labor Consumer Price Index for All
Urban Consumers for the city nearest to
where the Premises are located. If such
insurance coverage has a deductible clause,
the deductible amount shall not
exceed $1,000 per occurrence.
(b) RENTAL
VALUE. Lessor shall also obtain and keep in
force a policy or policies in the name of
Lessor with loss payable to Lessor and
any Lender, insuring the loss of the full
Rent for one year with an extended
period of indemnity for an additional 180
days ("RENTAL VALUE INSURANCE"). Said
insurance shall contain an agreed valuation
provision in lieu of any coinsurance
clause, and the amount of coverage shall be
adjusted annually to reflect the
projected Rent otherwise payable by Lessee,
for the next 12 month period.
(c) ADJACENT
PROMISES. Lessee shall pay for any increase
in the premiums for the property insurance
of the Building and for the Common
Areas or other buildings in the Project if
said increase is caused by Lessee's
acts, omissions, use or occupancy of the
Premises.
(d) LESSEE'S
IMPROVEMENTS. Since Lessor is the insuring
Party, Lessor shall not be required to
insure Lessee Owned Alterations and
Utility Installations unless the Item in
question has become the property of
Lessor under the terms of this Lease.
8.4.
LESSEE'S PROPERTY; BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY
DAMAGE. Lessee shall obtain and maintain
insurance coverage on all of Lessee's
personal property. Trade Fixtures, and
Lessee Owned Alterations and Utility
Installations. Such insurance shall be full
replacement cost
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coverage with a deductible of not to exceed
$1,000 per occurrence. The proceeds
from any such insurance shall be used by
Lessee for the replacement of personal
property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations.
Lessee shall provide Lessor with written
evidence that such insurance is in
force.
(b) Business
Interruption. Lessee shall obtain and
maintain loss of income and extra expense
insurance in amounts as will reimburse
Lessee for direct or Indirect loss of
earnings attributable to all perils
commonly insured against by prudent lessees
in the business of Lessee or
attributable to prevention of access to the
Premises as a result of such perils.
(c) No
Representation of Adequate Coverage. Lessor makes
no representation that the limits or forms
of coverage of Insurance specified
herein are adequate to cover Lessee's
property, business operations or
obligations under this Lease.
8.5.
INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to
transact business in the state where the
Premises are located, and maintaining
during the policy term a "General
Policyholders Rating" of at least B+, V, as
set forth in the most current issue
of "Best's Insurance Guide", or such other
rating as may be required by a
Lender. Lessee shall not do or permit to be
done anything which invalidates the
required insurance policies. Lessee shall,
prior to the Start Date, deliver to
Lessor certified copies of policies of such
insurance or certificates evidencing
the existence and amounts of the required
insurance. No such policy shall be
cancelable or subject to modification
except after 30 days prior written notice
to Lessor. Lessee shall, at least 30 days
prior to the expiration of such
policies, furnish Lessor with evidence of
renewals or "insurance binders"
evidencing renewal thereof, or Lessor may
order such insurance and charge the
cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon
demand. Such policies shall be for a term
of at least one year, or the length of
the remaining term of this Lease, whichever
is less. If either Party shall fail
to procure and maintain the insurance
required to be carried by it, the other
Party may, but shall not be required to,
procure and maintain the same.
8.6.
WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby
release and relieve the other, and waive
their entire right lo recover damages
against the other, for loss of or damage
to its property arising out of or incident
to the perils required to be insured
against herein. The effect of such releases
and waivers is not limited by the
amount of insurance carried or required, or
by any deductibles applicable
hereto. The Parties agree to have their
respective property damage insurance
carriers waive any right to subrogation
that such companies may have against
Lessor or Lessee, as the case may be, so
long as the insurance is not
invalidated thereby.
8.7.
INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify,
protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's
master or ground lessor, partners and
Lenders, from and against any and' all
claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and
consultants' fees, expenses and/or
liabilities arising out of, Involving, or
in connection with, the use and/or
occupancy of the Premises by Lessee. If any
action or proceeding is brought
against Lessor by reason of any of the
foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense
by counsel reasonably satisfactory to
Lessor and Lessor shall coope
