INDUSTRIAL LEASE AGREEMENT
LESSOR: CONTINENTAL, INC.
LESSEE: BIRTHDAY EXPRESS, INC.
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . II
BASIC LEASE PROVISIONS OF THE LEASE AGREEMENT. . . . . . . . . . . . . .
. . . . . IV
1. PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .1
2. PREMISES, PARKING AND COMMON AREAS. . . . . . . . . . . . . . . . .
. . . . . .1
3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .2
4. RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .3
5. SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .4
6. USE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .4
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREAS SERVICES . . . .
. . . . . .5
8. INSURANCE INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .7
9. DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .8
10. REAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 11
11. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 11
12. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . .
. . . . . 11
13. DEFAULT REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 14
14. CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 16
15. BROKER'S FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 16
16. ESTOPPEL CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 16
17. LESSOR'S LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 17
18. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 17
19. INTEREST ON PAST-DUE OBLIGATIONS. . . . . . . . . . . . . . . . . .
. . . . . 17
20. TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 17
21. ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 17
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS . . . . . . . . . . .
. . . . . 17
23. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 18
24. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 18
25. RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 18
26. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 18
27. CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 18
28. COVENANTS AND CONDITIONS. . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
29. BINDING EFFECT, CHOICE OF LAW . . . . . . . . . . . . . . . . . . .
. . . . . 19
30. ATTORNEY'S FEES . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
31. LESSOR'S ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
32. AUCTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
33. SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
34. MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
35. CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
36. GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
37. QUIET POSSESSION. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
38. SECURITY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
39. EASEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 20
40. PERFORMANCE UNDER PROTEST . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
41. AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
42. CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
43. OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
44. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
45. OPTION TO RENEW . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 21
PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 23
LEGAL DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 24
HAZARDOUS WASTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 25
RENT SCHEDULE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 26
ADDENDUM 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 27
ADDENDUM 1A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 28
BASIC LEASE PROVISIONS OF THE LEASE AGREEMENT
FOR
405 BUSINESS PARK
BETWEEN
405 BUSINESS PARK LIMITED PARTNERSHIP, AS LESSOR, AND
BIRTHDAY EXPRESS, INC., AS LESSEE
The following basic terms of the Lease (herein called the "Basic Lease
Provisions") between Lessor and Lessee are an integral part of and are
incorporated by reference into the within lease:
A. The Building: 405 Business Park Annex
B. The Premises: 11220 - 120th Avenue NE, Suite 101
1. The suite number of the premises and the floors of the
building in
which the premises are located are as follows:
Suite #101
1st Floor
2. The space within the premises is further described in the
Lease,
including the floor plan attached hereto as Exhibit A, and
consists of the following approximate number of rentable
square
feet: 16,734 (See Exhibit A)
C. The Term:
5 years and 1 months, beginning on December 1, 1995 (the
commencement
date) and ending on December 31, 2000 (the expiration date).
D. The Base Rent: See exhibit D
E. Lessee's Proportionate Share of the Operating Expenses and/or
increases
in Real Estate Taxes of the building, for purposes of determining
Lessee's annual rental adjustment, is hereby agreed to be forty
six and
57/100 percent (46.57%).
F. The Security Deposit: $16,986.76 (first months prepaid rent and
security
deposit)
G. The Space Plans Approval Date: N/A
H. Lessee's Contribution for Tenant Finish Improvements: N/A
I. Broker(s): Pacific Real Estate Partners
Employing Party: Continental Real Estate Management Services
J. Addresses for Notices and Payments: 601 Union Street, Suite
2000
Seattle, WA 98101
Lessor: 405 Business Park Limited Partnership
c/o Continental Real Estate Management Services
601 Union Street, Suite 2000
Seattle, WA 98101
Lessee: Birthday Express, Inc.
11220 - 120th Avenue NE, Suite 101
Kirkland, WA 98033
Checks Payable To: Continental Real Estate Management Services
Payment Address: 601 Union Street, Suite 2000
INDUSTRIAL LEASE
1. PARTIES.
This lease, dated ____________19___ for reference purposes only
is made
by and between 405 Business Park Limited Partnership (herein
called
Lessor) and Birthday Express, Inc. (herein called Lessee).
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES. Lessor hereby leases to Lessee and Lessee
leases from
Lessor for the term, at the rental, and upon all of the
conditions
set forth herein, real property situated in the County of
King,
State of Washington commonly known as 405 Business Park
Annex and
described as 11220-120th Avenue NE, Kirkland, WA 98033
herein
referred to as the "Premises", as outlined on Exhibit A
attached
hereto, including rights to the common areas as
hereinafter
specified but not including any rights to the roof of the
premises
or to any building in the industrial center. The premises
are a
portion of a building herein referred to as the
"Building". The
premises, the building, the common areas, the land upon
which the
same are located, along with all other buildings and
improvements
thereon, are herein collectively referred to as the
"Industrial
Center". See Exhibit E, Addendum 1A.
2.2 VEHICLE PARKING. Parking spaces in the common areas are
unreserved and unassigned. However, Lessee shall conform
to such
parking rules and regulations as Lessor, in its reasonable
discretion, dictates. Lessee shall have the right to
utilize its
pro-rata share of total designated parking stalls on the
Industrial Center site. At the time of lease execution,
the
Lessee's pro-rata share allows the Lessee to utilize
approximately
28 designated parking stalls. All of the above referenced
stalls
are on a first come, first serve, non reserved basis
except for
five (5) existing, reserved visitor parking stalls
adjacent to the
Lessee's premises.
2.3 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 industrial center that are
provided
and designated by the Lessor from time to time for the
general
non-exclusive use of Lessor, Lessee and of other Lessees
of the
industrial center and their respective employees,
suppliers,
shippers, customers and invitees, including parking areas,
loading
and unloading areas, trash areas, roadways, sidewalks,
walkways,
parkways, driveways and landscaped areas.
2.4 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to
Lessee,
for the benefit of Lessee and its employees, suppliers,
shippers,
customers and invitees, during the term of this lease, the
non-exclusive right to use, in connection 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
industrial
center. 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.
2.5 COMMON AREA - 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 establish, modify, amend and enforce
reasonable
rules and regulations with respect thereto. Lessee agrees
to
abide by and
1
conform to all such rules and regulations, and to cause
its
employees, suppliers, shippers, customers, and invitees to
so
abide and conform. Lessor shall not be responsible to
Lessee for
the noncompliance with said rules and regulations by other
Lessees
of the industrial center, other than the remedies provided
Lessee
in this lease. Lessor shall be responsible for enforcing
the
terms of its leases with other Lessees in the Industrial
Center
which use the same common areas, so that such use does not
interfere with this Lessees use of their demised premises
or
common areas provided under this lease. Lessee
acknowledges at
the time of lease execution, no Rules and Regulations
exist on the
property. Lessor may install any new Rules and
Regulations at its
discretion, subject to the provisions of this lease.
2.6 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
driveways, entrances, parking spaces, parking areas,
loading and
unloading areas, ingress, egress, direction of traffic,
landscaped
areas and walkways;
(b) To close temporarily any of the common areas for
maintenance purposes so long as reasonable access to the
premises
remains available;
(c)
(d) To add additional buildings and improvements to the
common
areas, but in no event shall Lessee's existing rights be
reduced.
(e) To use the common areas while engaged in making
additional
improvements, repairs or alterations to the industrial
center, or
any portion thereof;
(f) To do and perform such other acts and make such
other
changes in, to or with respect to the common areas and
industrial
center as Lessor may, in the exercise of sound business
judgment,
deem to be appropriate.
(g) Lessor shall not make changes which interfere with
Lessees
use of its premises, block visibility to Lessees premises,
or
prevent ingress or egress of lease or its customers.
3. TERM.
3.1 TERM. The term of this lease shall be for Five (5) Years
commencing on December 1, 1995 and ending on December 31,
2000,
unless sooner terminated pursuant to any provision hereof.
See Exhibit E, Addendum 1, Paragraph 2.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement
date, if
for any reason Lessor cannot deliver possession of the
premises to
Lessee on said date, Lessor shall not be subject to any
liability
therefor, nor shall such failure affect the validity of
this lease
or the obligations of Lessee hereunder or extend the term
hereof,
but in such case, Lessee shall not be obligated to pay
rent or
perform any other obligation of Lessee under the terms of
this
lease, except as may be otherwise provided in this lease,
until
possession of the premises is tendered to Lessee; provided
however, that if Lessor shall not have delivered
possession of the
premises within sixty (60), days from said commencement
date,
Lessee may at Lessee's option, by notice in writing to
Lessor,
cancel this lease, in which event the parties shall be
discharged
from all obligations hereunder, provided further, however,
that if
such written notice of Lessee is not received by Lessor,
Lessee's
right to cancel this lease hereunder shall terminate and
be of no
further force or effect.
2
3.3 EARLY POSSESSION. If Lessee occupies the premises prior
to said
commencement date, such occupancy shall be subject to all
provisions of this lease, such occupancy shall not advance
the
termination date.
4. RENT.
4.1 BASE RENT. See Exhibit D
4.2 OPERATING EXPENSES. In addition to base rent, Lessee
shall pay to
Lessor during the term hereof, as additional rental,
Lessee's
share as hereinafter defined, of all operating expenses
during
each calendar year of the term of this lease, in
accordance with
the following provisions:
(a) "Lessee's Share" is defined for purposes of this
lease, as
46.57 percent.
(b) "Operating Expenses" is defined, for purposes of
this
lease, as all costs incurred by Lessor, if any, for:
(I) The operation, repair and maintenance, in
neat,
clean, good order and condition of the following:
(aa) The common areas, including parking
areas,
loading and unloading areas, trash areas,
roadways,
sidewalks, walkways, parkways, driveways,
landscaped
areas, striping, bumpers, irrigation
systems.
Common areas lighting facilities and fences
and
gates.
(bb) Trash disposal services.
(cc) Tenant directories.
(dd) Fire detection systems including
sprinkler
system maintenance and repair.
(ee) Security Services.
(ff) Any other service to be provided by
Lessor
that is elsewhere in this lease stated to be
an
"Operating Expense".
(II) Any deductible portion of an insured loss
concerning
any of the items or matters described in this
paragraph
4.2.
(III) The cost of the premiums in the liability
and
property insurance policies to be maintained by
Lessor
under paragraph 8 hereof.
(IV) The amount of the real property tax to be
paid by
Lessor under paragraph 10.1 hereof.
(V) The cost of water, gas and electricity to
service
the common areas.
(c) The inclusion of the improvements, facilities and
service
set forth in paragraph 4.2(b)(I) of the definition of
operating
expenses shall not be deemed to impose an obligation upon
Lessor
to either have said improvements or facilities or to
provide those
services unless the industrial center already has the
same, Lessor
already provides the services or Lessor agreed elsewhere
in this
lease to provide the same or some of them.
(d) Lessor's obligation to provide the estimate and the
actual
costs is on a best-efforts basis. The determination of
the
estimated costs is solely within the discretion of the
Lessor.
Nonpayment of the estimated or actual direct costs will
provide
Lessor with the same legal rights with respect to such
nonpayment
that it has with respect to nonpayment of the base rent.
No
interest or earnings shall be payable by Lessor to Lessee
if any
sums accumulate pursuant to the operating costs paragraph;
Lessee
shall have no interest or ownership with respect to any
sums
accumulated by Lessor.
3
5. SECURITY DEPOSIT.
Lessee shall deposit with Lessor upon execution hereof Sixteen
Thousand,
Nine Hundred Eighty Six Dollars and 76/100 ($16,986.76); prepaid
rent for
month 1, Seven Thousand Four Hundred Forty Eight and 38/100
($7,448.38)
and Nine Thousand Five Hundred Thirty Eight and 38/100
($9,538.38) as a
security deposit for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other
charges due
hereunder, or otherwise defaults with respect to any provision of
this
lease, Lessor may use, apply or retain all or any portion of said
deposit
for the payment of any, rent or other charge in default or for
the
payment of any other sum to which Lessor may become obligated by
reason
of Lessee's default, or to compensate Lessor for any loss or
damage which
Lessor may suffer thereby. If Lessor so uses or applies all or
any
portion of said deposit, Lessee shall within ten (10) days after
written
demand therefor deposit cash with Lessor in an amount sufficient
to
restore said deposit to the full amount then required of Lessee.
If the
monthly rent shall from time to time, increase during the term of
this
lease, Lessee shall, at the time of such increase, deposit with
Lessor
additional money as a security deposit so that the total amount
of the
security deposit held by Lessor shall at all times bear the same
proportion to the then current base rent as the initial security
deposit
bears to the initial base rent. Lessor shall not be required to
keep
said security deposit separate from its general accounts. If
Lessee
performs all of Lessee's obligations hereunder, said deposit or
so much
thereof as has not theretofore been applied by Lessor, shall be
returned,
without payment of interest or other increment for its use, to
Lessee (or
at Lessor's option, to the last assignee, if any, of Lessee's
interest
hereunder) at the expiration of the term hereof, and after Lessee
has
vacated the premises. No trust relationship is created herein
between
Lessor and Lessee and Lessee with respect to said security
deposit.
6. USE.
6.1 USE. The premises shall be used and occupied only for the
warehousing, packaging and mailing of merchandise related
to the
Birthday Express, Children's Party Catalog and accessory
retail
operations as are legal within the City of Kirkland zoning
code or
any other use which is reasonably comparable and for no
other
purpose.
6.2 COMPLIANCE WITH LAW. Lessee shall at Lessee's expense,
promptly
comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants, and restrictions of
record, and
requirements of any life insurance underwriters or rating
bureaus,
now in effect or which may hereafter come into effect,
whether or
not they reflect a change in policy from that now
existing, during
the term or any part of the term hereof, relating in any
manner to
the premises and the occupation and use by Lessee of the
premises
and of the common areas. Lessee shall not use nor permit
the use
of the premises or the common areas in any manner that
will tend
to create waste or a nuisance or shall tend to disturb
other
occupants of the industrial center.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the premises to Lessee clean
and free
of debris on the lease commencement date (unless Lessee is
already
in possession) and Lessor warrants to Lessee that the
plumbing,
lighting, air conditioning, heating, and loading doors in
the
premises shall be in good operating condition on the lease
commencement date. In the event that it is determined
that the
warranty has been violated, then it shall be the
obligation of
Lessor, after receipt of written notice from Lessee
setting forth
with specificity the nature of the violation, to promptly,
at
Lessor's sole cost rectify such violation. Lessee's
failure to
give such written notice to Lessor within thirty (30) days
after
the lease commencement date shall cause the conclusive
presumption
that Lessor has complied with all of Lessor's obligations
hereunder. The warranty contained in this paragraph 6.3
(a) shall
be of no force or effect if prior to the date of this
lease,
Lessee was an owner or occupant of the premises.
(b) Except as otherwise provided in this lease, Lessee
hereby
accepts the premises in their condition existing as of the
lease
commencement date or the date that Lessee takes possession
of the
premises, whichever is earlier; subject to all applicable
zoning,
4
municipal county and state laws, ordinances and
regulations
governing and regulating the use of the premises, and any
covenants or restrictions of record, and accepts this
lease
subject thereto and to all matters disclosed thereby and
by any
exhibits attached hereto. Lessee acknowledges that
neither Lessor
nor Lessor's agent has made any representation or warranty
as to
the present or future suitability of the premises for the
conduct
of Lessee's business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREAS SERVICES.
7.1 LESSOR'S OBLIGATIONS. Subject to the provisions of
paragraph 4.2
(Operating Expenses), 6 (Use), 7.2 (lessee's Obligations)
and 9
(Damage or Destruction) and except for damage caused by
any
negligent or intentional act or omission of Lessee,
Lessee's
employees, suppliers, shippers, customers, or invitees, in
which
event Lessee shall repair the damage. Lessor, at Lessor's
expense, subject to reimbursement pursuant to paragraph
4.2, shall
keep in good condition and repair the foundations,
exterior walls,
structural condition of interior bearing walls, and roof
of the
premises, as well as the parking lots, walkways,
driveways,
landscaping, fences, signs and utility installations of
the common
areas and all parts thereof as well as providing the
services for
which there is an operating expense pursuant to paragraph
4.2.
Lessor shall not, however, be obligated to paint the
interior
surface of exterior walls, nor shall Lessor be required to
maintain, repair or replace windows, doors or plate glass
of the
premises. Lessor shall have no obligation to make repairs
under
this paragraph 7.1 until a reasonable time after receipt
of
written notice from Lessee of the need for such repairs.
Lessor
shall periodically, at its sole discretion, paint the
exterior
building walls. The cost of any such building maintenance
items
shall be in accordance with all provisions in paragraph
4.2
(Operating Expenses) of this lease. Lessor shall not be
liable
for damages or loss of any kind or nature by reason of
Lessor's
failure to furnish any common areas services when such
failure is
caused by accident, breakage, repairs, strikes, lockout or
other
labor disturbances or disputes of any character, or by any
other
cause beyond the reasonable control of Lessor.
7.2 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of paragraph 6 (Use), 7.1
(Lessor's Obligations), and 9 (Damage or Destruction)
Lessee, at
Lessee's expense shall keep in good condition and repair
the
premises and every part thereof (whether or not the
damaged
portion of the premises or the means of repairing the same
are
reasonably or readily accessible to Lessee) including,
without
limiting the generality of the foregoing, all plumbing,
heating,
ventilating and air conditioning systems, electrical and
lighting
facilities, and equipment within the premises, fixtures,
interior
walls and interior surfaces of exterior walls, ceilings,
windows,
doors, plate glass, and skylights located within the
premises.
Lessor reserves the right to procure and maintain the
ventilating
and air conditioning system maintenance contract and if
Lessor so
elects, Lessee shall reimburse Lessor upon demand, for the
cost
thereof.
(b) If Lessee fails to perform Lessee's obligations
under this
paragraph 7.2 or under any other paragraph of this Lease,
Lessor
may enter upon the premises after ten (10) days prior
written
notice to Lessee (except in the case of emergency, in
which no
notice shall be required), perform such obligations on
Lessee's
behalf and put the premises in good order, condition and
repair,
and the cost thereof together with interest thereon at the
maximum
rate then allowable by law shall be due and payable as
additional
rent to Lessor together with Lessee's next base rent
installment.
(c) On the last day of the term hereof, or on any
sooner
termination, Lessee shall surrender the premises to Lessor
in the
same condition as received, ordinary wear and tear
accepted, clean
and free of debris. Any damage or deterioration of the
premises
shall not be deemed ordinary wear and tear if the same
could have
been prevented by good maintenance practices. Lessee
shall repair
any damage to the premises
5
occasioned by the installation or removal of Lessee's
trade
fixtures, alterations, furnishings and equipment,
notwithstanding
anything to the contrary otherwise stated in this lease.
Lessee
shall leave the air lines, power panels, electrical
distribution
systems, lighting fixtures, space heaters, air
conditioning,
plumbing and fencing on the premises in good operating
condition.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not without Lessor's prior written
consent,
make any alterations, improvements, additions, or utility
installations on or about the premises, or the industrial
center,
except for nonstructural alterations to the premises not
exceeding
$2,500 in cumulative costs, during the term of this Lease.
In any
event, whether or not in excess of $2,500 in cumulative
cost,
Lessee shall make no change or alterations to the interior
of the
premises, the exterior of the building nor the industrial
center
without Lessor's prior written consent. As used in this
paragraph
7.3 the term "Utility Installation" shall mean carpeting,
window
coverings, air lines, power panels, electrical
distribution
systems, lighting fixtures, space heaters, air
conditioning,
plumbing and fencing. Lessor may require that Lessee
remove any
or all of said alterations, improvements, additions or
utility
installations at the expiration of the term, and restore
the
premises and the industrial center to their prior
condition.
Lessor may require Lessee to, provide Lessor, at Lessee's
sole
cost and expense, a lien and complete bond in an amount
equal to
one and one half times the estimated cost of such
improvements, to
insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work.
Should
Lessee make any alterations, improvements, additions,
utility
installations, without the prior approval of Lessor,
Lessor may,
at any time during the term of this Lease, require that
Lessee
remove any or all of the same.
(b) Any alterations, improvements, additions or utility
installations in or about the premises or the industrial
center
that Lessee shall desire to make and which requires the
consent of
the Lessor shall be presented to Lessor in written form,
with
proposed detailed plans. If Lessor shall give its
consent, the
consent shall be deemed conditioned upon Lessee acquiring
a permit
to do so from appropriate governmental agencies, the
furnishing of
a copy thereof to Lessor prior to the commencement of the
work and
the compliance by Lessee of all conditions of said permits
in a
prompt and expeditious manner.
(c) Lessee shall pay when due, all claims for labor or
materials furnished or alleged to have been furnished to
or for
Lessee at or for use in the premises, which claims are or
may be
secured by any mechanics or materialmen's lien against the
premises, or the industrial center, or any interest
therein.
Lessee shall give to Lessor not less than ten (10) days
notice
prior to the commencement of any work in the premises, and
Lessor
shall have the right to post notices of non-responsibility
in or
on the premises or the building as provided by law. If
Lessee
shall, in good faith, contest the validity of such lien,
claim or
demand, then Lessee shall, at its sole expense defend
itself and
Lessor against the same and shall pay and satisfy any such
adverse
judgment that may be rendered thereon before the
enforcement
thereof against the Lessor or the premises of the
industrial
center, upon the condition that if Lessor shall require,
Lessee
shall furnish to Lessor a surety bond satisfactory to
Lessor in an
amount equal to such contested lien claim or demand
indemnifying
Lessor against liability for the same and holding the
premises and
the industrial center free from the effect of such lien or
claim
in addition, Lessor may require Lessee to pay Lessor's
attorneys
fees and costs in participating in such action if Lessor
shall
decide it is to Lessor's best interest to do so.
(d) All alterations, improvements, additions, utility
installations (whether or not such utility installations
constitute trade fixtures of Lessee) , which may be made
on the
premises, shall be the property of Lessor and shall remain
upon
and be surrendered with the premises at the expiration of
the
lease term, unless Lessor requires their removal pursuant
to
paragraph 7.3(a) Notwithstanding the provisions of this
paragraph
7.3(d). Lessee's machinery and equipment other than that
which is
affixed to the premises so that it cannot be removed
without
material damage to the premises and
6
other than utility installations, shall remain the
property of
Lessee and may be removed by Lessee subject to the
provisions of
paragraph 7.2.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install
new or
additional utility facilities throughout the building and
the
common areas for the benefit of Lessor or Lessee, or any
other
Lessee of the industrial center, including, but not by way
of
limitation, such utilities as plumbing, electrical
systems,
security systems, communication systems, and fire
protection and
detector systems, so long as such installations do not
unreasonably interfere with Lessee's use of the premises.
8. INSURANCE INDEMNITY.
8.1 LIABILITY INSURANCE - LESSEE. Lessee shall at Lessee's
expense
obtain and keep in force during the term of this lease a
policy of
Combined Single Limit Bodily Injury and Property Damage
insurance
insuring Lessor against any liability arising out of the
use,
occupancy or maintenance of the premises and the
industrial
center. Such insurance shall be an amount not less than
$500,000.00 per occurrence. The policy shall insure
performance
by Lessee of the indemnity provisions of this paragraph 8.
The
limits of said Insurance shall not however limit the
liability of
Lessee hereunder.
8.2 LIABILITY INSURANCE - LESSOR. Lessor shall obtain and
keep in
force during the term of this lease a policy of Combined
Single
Limit Bodily injury and Property Damage Insurance insuring
Lessor
but not Lessee against any liability arising out of the
ownership,
use, occupancy or maintenance of the industrial center in
an
amount not less than $500,000.00 per occurrence.
8.3 PROPERTY INSURANCE. Lessor shall obtain and keep in force
during
the term of this lease a policy or policies of insurance,
covering
loss or damage to the industrial center improvements, but
not
Lessee's personal property, fixtures, equipment or tenant
improvements, in an amount not to exceed the full
replacement
value thereof, as the same may exist from time to time,
providing
protection against all perils included within the
classification
of fire, extended coverage, vandalism, malicious mischief,
flood
(in the event same is required by a lender having a lien
on the
premises) special extended perils ("all risk"' as such
term is
used in the insurance industry), plate glass insurance and
such
other insurance as Lessor deems advisable. In addition,
Lessor
shall obtain and keep in force, during the term of this
Lease, a
policy of rental value insurance covering a period of one
year,
with loss payable to Lessor, which insurance shall also
cover all
operating expenses for said period in the event that the
premises
shall suffer an insured loss as defined in paragraph 9.1
(g)
hereof, the pro rata deductible amounts under the casualty
insurance policies relating to the premises shall be paid
by
Lessee, subject to all provisions in paragraph 9.0 (Damage
and
Destruction) of this lease. Lessee shall have its rental
obligation abated in direct proportion to the timing and
amount of
funds received by the Lessor from the Insurance Policy
covering
rental value insurance.
8.4 PAYMENT OF PREMIUM INCREASE.
(a) After the term of this lease has commenced, Lessee
shall
not be responsible for paying Lessee's share of any
increase in
the property insurance premium for the industrial center
specified
by Lessor's insurance carrier as being caused by the use,
acts or
omissions, of any other Lessee of the industrial center,
or by the
nature of such other Lessee's occupancy which create an
extraordinary or unusual risk.
(b) Lessee however shall pay the entirety of any
increase in
the property insurance premium for the industrial center
over what
it was immediately prior to the commencement of the term
of this
lease, if the increase is specified by Lessor's insurance
carrier
as being caused by the nature of Lessee's occupancy or any
act or
omission of Lessee.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be
in
companies holding a "General Policyholders Rating of A-1
or AAA or
better or such other rating as may be
7
required by a lender having a lien on the premises, as set
forth
in the most current issue of "Best's Insurance Guide".
Lessee
shall not do or permit to be done anything which shall
invalidate
the insurance policies carried by Lessor. Lessee shall
deliver to
Lessor copies of liability insurance policies required
under
paragraph 8.1 or certificates evidencing the existence and
amounts
of such insurance within seven (7) days after the
commencement
date of this Lease. No such policy shall be cancelable or
subject
to reduction of coverage or other modifications except
after
thirty (30) days prior written notice to Lessor. Lessee
shall, at
least thirty (30) days prior to the expiration of such
policies,
furnish Lessor with renewals or "binders" thereof.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby
release and
relieve the other, and waive their entire right of
recovery
against the other for loss or damage arising out of or
incident to
the perils insured against which perils occur in, on or
about the
premises whether due to the negligence of Lessor or Lessee
or
their agents, employees contractors and/or invitees.
Lessee and
Lessor shall, upon obtaining the policies of insurance
required
give notice to the insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in
this Lease.
8.7 INDEMNITY. Lessee shall indemnify and hold harmless
Lessor from
and against any and all claims arising from Lessee's use
of the
industrial center, or from the conduct of Lessee's
business or
from any activity, work or things done, permitted or
suffered by
Lessee, in or about the premises or elsewhere and shall
further
indemnify and hold harmless Lessor from and against any
and all
claims arising from any breach or default in the
performance of
any obligation on Lessee's part to be performed under the
terms of
this Lease, or arising from any act or omission of Lessee,
or any
of Lessee's agents, contractors, or employees, and from
and
against all costs, attorney fees, expenses and liabilities
incurred in the defense of any such claim or any action or
proceeding brought thereon, and in case any action or
proceeding
be brought against Lessor by reason of any such claim,
Lessee upon
notice from Lessor shall defend the same at Lessee's
expense by
counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessee, as a
material part
of the consideration to Lessor, hereby assumes all risk of
damage
to property of Lessee or injury to persons, in, upon or
about the
industrial center arising from any cause and Lessee hereby
waives
all claims in respect thereof against Lessor.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees
that
Lessor shall not be liable for injury to Lessee's business
or any
loss of income therefrom or for damage to the goods,
wares,
merchandise or other property of Lessee, invitees,
customers, or
any other non employee persons of Lessee in or about the
premises
or the industrial center, nor shall Lessor be liable for
injury to
the person of Lessee, Lessee's employees, agents or
contractors,
whether such damage or injury is caused by or results from
fire,
steam, electricity, gas, water or rain, or from the
breakage,
leakage obstruction or other defects of pipes, sprinklers,
wires,
appliances, plumbing, air conditioning or lighting
fixtures, or
from any other cause, whether said damage or injury
results from
conditions, arising upon the premises or upon other
portions of
the industrial center, or from other sources or places and
regardless of whether the cause of such damage or injury
or the
means of repairing the same is inaccessible to Lessee.
Lessor
shall not be liable for any damages arising from any act
or
neglect of any other Lessee, occupant or user of the
industrial
center, nor from the failure of Lessor to enforce the
provisions
of any other lease of the industrial center.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises, Partial Damage" shall mean if the
premises are
damaged or destroyed to the extent that the cost of repair
is less
than fifty percent of the then replacement cost of the
premises.
8
(b) "Premises, Total Destruction" shall mean if the
premises
are damaged or destroyed to the extent that the cost of
repair is
fifty percent or more of the then replacement cost of the
premises.
(c) "Premises, Building Partial Damage" shall mean if
the
building of which the premises are a part is damaged or
destroyed
to the extent that the cost to repair is less than fifty
percent
of the then replacement cost of the building.
(d) "Premises, Building Total Destruction" shall mean
if the
building of which the premises are a part is damaged or
destroyed
to the extent that the cost to repair is fifty percent or
more of
the then replacement cost of the building.
(e) "Industrial Center Buildings" shall mean all of the
buildings on the industrial center site.
(f) "Industrial Center Buildings, Total Destruction"
shall mean
if the industrial center buildings are damaged or
destroyed to the
extent that the cost of repair is fifty percent or more of
the
then replacement cost of the industrial center buildings.
(g) "Insured Loss" shall mean damage or destruction
which was
covered by an event required to be covered by the
insurance
described in paragraph 8. The fact that an insured loss
has a
deductible amount shall not make the loss an uninsured
loss.
(h) "Replacement Cost" shall mean the amount of money
necessary
to be spent in order to repair or rebuild the damaged area
to the
condition that existed immediately prior to the damage
occurring
excluding all improvements made by Lessees.
9.2 PREMISES PARTIAL DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss. Subject to the provisions of
paragraph 9.4
and 9.5, if at any time during the term of this lease
there is
damage which is an insured loss and which falls into the
classification of either premises damage or premises
building
partial damage, then Lessor shall at Lessor's expense
repair such
damage to the premises, but not Lessee's fixtures,
equipment or
tenant improvements as soon as reasonably possible and
this lease
shall continue in full force and effect.
(b) Uninsured Loss. Subject to the provisions of
paragraph 9.4
and 9.5, if at any time during the term of this Lease,
there is
damage which is not an insured loss, and which falls
within the
classification of premises partial damage or premises
building
partial damage, unless caused by a negligent or willful
act of
Lessee (in which event Lessee shall make the repairs at
Lessee's
expense), which damage prevents Lessee from using the
premises,
Lessor may at Lessor's option either (1) repair such
damage as
soon as reasonably possible, at Lessor's expense, in which
event
this lease shall continue in full force and effect, or (2)
give
written notice to Lessee within thirty (30) days after the
date of
the occurrence of such damage of Lessor's intention to
cancel and
terminate this lease as of the date of the occurrence of
such
damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease,
Lessee
shall have the right within ten (10) days after the
receipt of
such notice to give written notice to Lessor of Lessee's
intention
to repair such damage at Lessee's expense, without
reimbursement
from Lessor in which event this lease shall continue in
full force
and effect and Lessee shall proceed to make such repairs
as soon
as reasonably possible. If Lessee does not give such
notice
within such Ten (10) day period this lease shall be
canceled and
terminated as of the date of the occurrence of such
damage.
9.3 PREMISES TOTAL DESTRUCTION; PREMISES BUILDING TOTAL
DESTRUCTION;
INDUSTRIAL CENTER BUILDINGS TOTAL DESTRUCTION.
(a) Subject to the provisions of paragraph 9.4 and 9.5
if at
any time during the term of this lease there is damage
whether or
not it is an insured loss, and which falls into the
classifications of either (1) premises total destruction,
or (2)
premises building total destruction or (3) industrial
center
buildings total destruction, then Lessor may at
9
Lessor's option either (1) repair such damage or
destruction, but
not Lessee's fixtures, equipment or tenant improvements,
as soon
as reasonably possible at Lessor's expense, and this lease
shall
continue in full force and effect, or (2) give written
notice to
Lessee within thirty (30) days after the date of
occurrence of
such damage of Lessor's intention to cancel and terminate
this
Lease, in which case this lease shall be canceled and
terminated
as of the date of the occurrence of such damage.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during
the last
six months of the term of this Lease, there is substantial
damage,
whether or not an insured loss; which falls within the
classification of premises partial damage, Lessor may at
Lessor's
option cancel and terminate this lease as of the date of
occurrence of such damage by giving written notice to
Lessee of
Lessor's election to do so within thirty (30) days after
the date
of occurrence of such damage.
(b) Notwithstanding paragraph 9.4 in the event that
Lessee has
an option to extend or renew this Lease, and the time
within which
said option may be exercised has not yet expired. Lessee
shall
exercise such option, if it is to be exercised at all, no
later
than twenty (20) days after the occurrence of an insured
Loss
failing without the classification of premises partial
damage
during the last six (6) months of the term of this Lease.
If
Lessee duly exercises such option during said twenty (20)
day
period, Lessor shall at Lessor's expense, repair such
damage, but
not Lessee's fixtures, equipment or tenant improvements;
as soon
as reasonably possible and this lease shall continue in
full force
and effect. If Lessee fails to exercise such option
during said
twenty (20) day period, then Lessor may at Lessor's option
terminate and cancel this lease as of the expiration of
said
twenty (20) day period by giving written notice to Lessee
of
Lessor's selection to do so within ten (10) days after the
expiration of said twenty (20) day period, notwithstanding
any
term or provision in the grant of option to the contrary.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the
premises
pursuant to the provisions of this paragraph 9, the rent
payable
hereunder for the period during which such damage, repair
or
restoration continues shall be abated in proportion to the
degree
to which Lessee's use of the premises is impaired. Except
for
abatement of rent, if any, Lessee shall have no claim
against
Lessor for any damage suffered by reason of any such
damage,
destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore
the
premises under the provisions of this paragraph 9 and
shall not
the such repair or restoration within ninety (90) days
after such
obligation shall accrue, Lessee may at Lessee's option
cancel and
terminate this lease by giving Lessor written notice of
Lessee's
election to do so at any time prior to the commencement of
such
repair or restoration. In such event this lease shall
terminate
as of the date of such notice.
9.6 TERMINATION - ADVANCE PAYMENTS. Upon termination of this
lease
pursuant to this paragraph 9, an equitable adjustment
shall be
made concerning advance rent and any advance payments made
by
Lessee to Lessor. Lessor shall, in addition, return to
Lessee so
much of Lessee's security deposit as has not theretofore
been
applied by Lessor.
9.7 WAIVER. Lessor and Lessee waive the provisions of any
statute
which relate to termination of leases when leased property
is
destroyed and agree that such event shall be governed by
the terms
of this Lease.
10
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax
as
defined in paragraph 10.3 applicable to the industrial
center
subject to reimbursement by Lessee of Lessee's share of
such taxes
in accordance with the provisions of paragraph 4.2, except
as
otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible
for
paying Lessee's share of any increase in real property tax
specified in the tax assessor's records and work sheets as
being
caused by additional improvements placed upon the
industrial
center by other Lessees or by Lessor for the exclusive
enjoyment
of such other Lessees. Lessee shall, however, pay to
Lessor at
the time that operating expenses are payable under
paragraph
4.2(c) the entirety of any increase in real property tax,
if
assessed solely by reason of additional improvements
placed upon
the premises by Lessee or at Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAX". As used herein, the
term "real
property tax" shall include any term of real estate tax or
assessment, general, special, ordinary or extraordinary,
and any
license fee, commercial rental tax, improvement bond or
bonds,
levy or tax (other than inheritance, personal income or
estate
taxes) imposed on the industrial center or any portion
thereof by
any authority having the direct or indirect power to tax,
including any city, county, state or federal government,
or any
school, agricultural, sanitary, fire, street, drainage or
other
improvement district, thereof, as against any legal or
equitable
interest of Lessor in the industrial center or in any
portion
thereof, as against Lessor's right to rent or other income
therefrom, and as against Lessor's business of leasing the
industrial center.
10.4 JOINT ASSESSMENT. If the industrial center is not
separately
assessed, Lessee's share of the real property tax
liability shall
be an equitable proportion of the real property taxes for
all of
the land and improvements included within the tax parcel
assessed,
such proportion to be determined by Lessor from the
respective
valuations assigned in the assessor's work sheets or such
other
information as may be reasonably available. Lessor's
reasonable
determination thereof in good faith, shall be conclusive.
Lessor
acknowledges that the Industrial Center consists of two
adjacent
tax parcels (#33-26-05-9031 1700 33 2605, 50 1700). The
two
Industrial Center parcels are separately assessed.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes
assessed
against and levied upon trade fixtures, furnishings,
equipment and
all other personal property of Lessee contained in the
premises or
elsewhere. When possible, Lessee shall cause said trade
fixtures,
furnishings, equipment and all other personal property to
be
assessed and billed separately from the real property of
Lessor.
(b) If any of Lessee's said personal property shall be
assessed
with Lessor's real property, Lessee shall, pay to Lessor
the taxes
attributable to Lessee within ten (10) days after receipt
of a
written statement setting forth the taxes applicable to
Lessee's
property.
11. UTILITIES.
Lessee shall pay for all water, gas, heat, light, power,
telephone and
other utilities and services supplied to the premises, together
with any
taxes thereon if any such services are not separately metered to
the
premises. Lessee shall pay at Lessor's option, either Lessee's
share of
a reasonable proportion to be determined by Lessor of all charges
jointly
metered with other premises in the building.
12. ASSIGNMENT AND SUBLETTING.
11
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily
or by
operation of law assign, transfer, mortgage, sublet, or
otherwise
transfer or encumber all or any part of Lessee's interest
in the
lease or in the premises, without Lessor's prior written
consent,
which Lessor shall not unreasonably withhold. Lessor
shall
respond to Lessee's request for consent hereunder in a
timely
manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be
void, and
shall constitute a breach of this lease without the need
for
notice to Lessee under paragraph 13.1.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of
paragraph
12.1 thereof, Lessee may assign or sublet the premises, or
any
portion thereof, without Lessor's consent, to any
corporation
which controls, is controlled by or is under common
control with
Lessee, or to any corporation resulting from the merger or
consolidation with Lessee, or to any person or entity
which
acquires all the assets of Lessee as a going concern of
the
business that is being conducted on the premises, all of
which are
referred to as "Lessee Affiliate" provided that before
such
assignment shall be effective said assignee shall assume,
in full;
the obligations of Lessee under this Lease. Any such
assignment
shall not in any way affect or limit the liability of
Lessee under
the terms of this lease even if after such assignment or
subletting the terms of this lease are materially changed
or
altered without the consent of Lessee, the consent of whom
shall
not be necessary.
12.3 TERMS AND CONDITIONS OF ASSIGNMENT. Regardless of
Lessor's
consent, no assignment shall release Lessee of Lessee's
obligations hereunder or after the primary liability of
Lessee to
pay the base rent and Lessee's share of operating
expenses, and to
perform all other obligations to be performed by Lessee
hereunder.
Lessor may accept rent from any person other than Lessee
pending
approval or disapproval of such assignment. Neither a
delay in
the approval or disapproval of such assignment nor the
acceptance
of rent shall constitute a waiver or estoppel of Lessor's
right to
exercise its remedies for the breach of any of the terms
or
conditions of this paragraph 12 or this Lease. Consent to
one
assignment shall not be deemed consent to any subsequent
assignment in the event of default by any assignee of
Lessee or
any successor of Lessee, in the performance of any of the
terms
hereof. Lessor may proceed directly against Lessee
without the
necessity of exhausting remedies against said assignee.
Lessor
may consent to subsequent assignments of this lease or
amendments
or modifications of this lease with assignees of Lessee,
without
notifying Lessee, or any successor of Lessee, and without
obtaining its or their consent thereto and such action
shall not
relieve Lessee of liability under this Lease.
12.4 TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless
of
Lessor's consent, the following terms and conditions shall
apply
to any subletting by Lessee of all or any part of the
premises and
shall be included in subleases.
(a) Lessee hereby assigns and transfers to Lessor all
of
Lessee's interest in all rentals and income arising from
any
sublease heretofore or hereafter m
