EXHIBIT 10.31
EIGHTH AMENDMENT TO LEASE
This instrument (the "Amendment") is dated as of May 1, 1997 and is
effective as of that date.
RECITALS
A. By a lease dated July 31, 1984 (the "Original Lease"), 625 Polk
Investment Company, a California limited partnership ("Landlord"), leased to
the predecessor in interest of California Culinary Academy, Inc., a
California corporation ("Tenant") certain premises (the "Premises") located
in the building whose address is 000 Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx.
B. The Original Lease has previously been amended seven times by that
certain Amendment to Lease dated June 2, 1987, Second Amendment to Lease
dated December 29, 1989, Third Amendment to Lease dated December 19, 0000,
Xxxxxx Xxxxxxxxx to Lease dated April 13, 1992, Fifth Amendment to Lease
dated November 17, 1992, Sixth Amendment to Lease dated May 11, 1993 and
Seventh Amendment to Lease dated May 14, 1997. The Original Lease was also
modified by that certain letter agreement dated December 19, 1990. The
Original Lease and all amendments and modifications are collectively referred
to as the "Lease".
C. Since commencement of the Original Lease, the portions of the
Building included within the Premises has increased. On some occasions when
the Premises has been expanded, Tenant has performed alterations that were
required by its new uses for the added space, including the performance of
work required by local building code requirements. In executing this
Amendment, Landlord and Tenant anticipate further expansion by Tenant in the
Building and that Tenant will assume more control over the operation and
management of the Building. Among other purposes, this Amendment is intended
to reflect an appropriate allocation of certain rights and obligations based
on Tenant's expanded occupancy in the Building.
D. The parties now wish to amend the Lease so as to redefine the
Premises, extend the term, modify the rental obligations of Tenant and amend
various other provisions of the Lease.
NOW THEREFORE, the parties hereto in consideration of the mutual
covenants set forth herein and intending to be legally bound hereby agree as
follows:
1.1 DEFINITIONS. Unless otherwise specified in this Amendment, the
terms as used herein have the meanings given them by the Lease. In the event
of any conflict or inconsistency between the provisions of this Amendment and
provisions of the balance of the Lease, the provisions of this Amendment
control. However, in the event any term or condition is held invalid or
unenforceable, the remainder of this Amendment and the Lease will not be
affected thereby, and each of the other terms and conditions of this
Amendment and the Lease will be valid and enforceable.
1.2 PREMISES. Effective as of the date of this Amendment, the Premises
includes space located in the Basement and on the Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxx Xxxxx, Xxxxx Xxxxx and Fourth Floor of the Building all as shown on
Exhibit A attached hereto and by this reference incorporated herein. Landlord
and Tenant agree and stipulate that the Premises are deemed to contain 66,992
rentable square feet and that the total rentable square footage of the
Building, including the Premises, is 78,116. Tenant's
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Proportionate Share is 85.76%. All portions of the Premises as depicted on
Exhibit A are leased by Landlord to Tenant for the entire Term, as extended
by this Amendment including any options hereunder that are exercised by
Tenant.
1.3 RIGHT OF FIRST REFUSAL.
(a) If, at any time during the Term including any extensions
thereof, the fifth floor of the Building (containing 7,200 rentable square
feet) ("Expansion Space "A") or the south side of the fourth floor of the
Building (that portion containing 3,924 rentable square feet not already part
of the Premises) ("Expansion Space "B") becomes available for lease, then
Landlord must offer Tenant in writing the opportunity to lease the space
prior to making any other efforts to lease the space to any other party,
including any other tenants of the Building. The locations of Expansion Space
A and Expansion Space B are shown on Exhibit A. Landlord represents and
warrants that as of the date of this Amendment, Expansion Space A and
Expansion Space B are each leased under a single lease agreement. When a
space becomes available, Landlord must notify Tenant which space is available
and the date on which Landlord is able to deliver possession to Tenant.
Tenant has thirty days after receipt of Landlord's notice to accept or reject
the available space by written notice to Landlord. If Tenant accepts the
additional space, then on the date Landlord delivers the space to Tenant it
will be deemed part of the Premises leased under this Lease in its "as is"
condition, subject to all the terms and conditions of this Lease, including
that "Base Rent", as defined in Section 1.7, will be increased by an amount
equal to the number of rentable square feet in the expansion space multiplied
by the applicable rate per square foot then applicable under Section 1.7 of
this Amendment and Tenant's Proportionate Share will increase accordingly. If
Tenant fails to timely exercise its right to lease expansion space under this
Section 1.3(a), then for a period of one year (the "Window Period"), Landlord
has the right to lease the expansion space that Tenant did not accept to any
third party on economic terms and conditions that are less favorable than
those applicable under this Lease. If, after the expiration of the Window
Period, the space has not been leased, then Landlord must offer the space to
Tenant again under this Section 1.3(a). Without limitation on the foregoing,
Landlord agrees that it will not execute a new lease with any existing tenant
in the Building or amend the lease of an existing tenant to extend its term
without first offering the existing tenant's space to Tenant under this
section upon the expiration of the existing tenant's lease agreement.
(b) If, at any time during the Term including any extensions
thereof, Landlord makes or receives an offer to lease Expansion Space A or
Expansion Space B on economic terms and conditions that are more favorable
than those that apply under this Lease, or if, at any time during the Term,
including any extensions thereof, outside of a Window Period, Landlord makes
or receives an offer to lease Expansion Space A or Expansion Space B
regardless of the economic terms and conditions, then in either such event
Landlord must give Tenant a copy of the offer and Tenant has the right, by
written notice to Landlord within 30 days after Tenant's receipt of the
offer, to lease the space on the same terms and conditions as set forth in
the offer, provided that any terms of the offer that are impractical or
impossible for Tenant to perform will be modified to permit performance by
Tenant, if reasonably possible, or otherwise be deemed waived. Any additional
space leased by Tenant under this Section 1.3(b) will be added to the
Premises leased under this Lease as of the date Landlord delivers possession
of the space to Tenant. Tenant's lease of any additional space pursuant to
this Section 1.3(b) will be on all the terms and conditions set forth in this
Lease except for those terms set forth in the offer and not waived under the
terms of this section.
(c) If Tenant leases additional space in the Building under either
Section 1.3(a) or Section 1.3(b), then Landlord shall prepare an amendment
that correctly sets forth the addition of the new space to the Premises, the
adjustment to Tenant's rental obligations and all other terms and conditions
as appropriate in accordance with the provisions of Section 1.3(a) or Section
1.3(b) as applicable. Landlord and Tenant each agree to promptly execute such
an amendment prepared by Landlord. If there is a dispute regarding the
drafting of the amendment that Landlord prepares and the parties do not agree
upon language for the amendment within sixty days of Landlord's submission of
its
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initial draft, then either party can submit the dispute to arbitration under
the provisions of Article 17, provided that the failure of either party to
promptly execute an amendment will not limit or impair the rights and
obligations of the parties with respect to additional space leased by Tenant
under Section 1.3(a) or Section 1.3(b).
1.4 LANDLORD'S RESERVED RIGHTS. Section 1.3 of the Lease is hereby
amended by the addition of the following provision at the end thereof:
"Notwithstanding anything to the contrary in the
Lease, from June 1, 1997 through the expiration of the
Term, as extended, Landlord may not make any
alterations, improvements, additions or changes
(collectively "Alterations") to the Premises or the
Building without Tenant's consent unless Landlord is
obligated to perform the Alterations under the terms of
this Lease or under applicable legal requirements. If
Landlord is obligated to perform Alterations under the
terms of this Lease, then Landlord may perform them
without Tenant's consent, but subject to all other
terms and conditions of this Lease. With respect to
proposed Alterations to the Premises or common areas
located on floors that include portions of the Premises
that require Tenant's consent, Tenant may withhold its
consent in its sole discretion. With respect to other
proposed Alterations that require Tenant consent,
Tenant may not unreasonably withhold its consent. If
Landlord performs Alterations, then Landlord must use
its best efforts to minimize the effect of the
performance of the Alterations on Tenant's business. If
the performance of Alterations by Landlord materially
interferes with Tenant's business, then Tenant's
payment obligations under the lease will equitably
xxxxx."
1.5 TERM. The Term of the Lease is extended to March 31, 2013.
1.6 OPTIONS. Tenant may extend the Term of the Lease for three,
consecutive additional periods of five years each on the terms and conditions
set forth in the Lease as amended by this Amendment, except that the number
of option periods remaining to be exercised will, in each case, be reduced by
one, by notifying the Landlord, in writing, not less than 360 days prior to
the expiration of the Term, or each option period, as the case may be. If
Tenant neglects to exercise any option by the required date specified above,
then Tenant will have no further options to extend the term of this Lease
1.7 BASE RENT. From the date of this Amendment through March 31, 1998,
Base Rent for the entire Premises is $96,956 per month. Thereafter Base Rent
for the Premises is as follows:
STIPULATED ANNUAL RATE
----------------------
PAYMENT PERIOD MONTHLY RENT PER RENTABLE SQUARE
--------------- ------------ -------------------
FOOT
----
April 1, 1998 through March 31, 1999 $94,905 per month $17.00
April 1, 1999 through March 31, 2000 $90,718 per month $16.25
April 1, 2000 through March 31, 2001 $85,136 per month $15.25
April 1, 2001 through March 31, 2003 $77,320 per month $13.85
From April 1, 2003 through March 31, 2013 and during the options
periods, if any, Base Rent will be $77,320 per month ($13.85 per Rentable
Square Foot), but subject to the following adjustments:
On April 1, 2003, April 1, 2008 and on the first day of each option
period (each date being a "CPI Adjustment Date"), Base Rent will adjusted to
an amount equal to the lesser of (a) the Base Rent in effect during the
period immediately prior to the CPI Adjustment Date multiplied by a fraction
the numerator of which is the Extension Index, as defined below and the
denominator of which is the Beginning Index, as defined below, and (b) the
Base Rent in effect during the period immediately prior to the CPI Adjustment
Date multiplied by 1.15, provided that Base Rent after a CPI Adjustment Date
will not be less than the
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Base Rent in effect immediately prior to the CPI Adjustment Date. The base
for computing the adjustment is the Consumer Price Index, all urban
consumers, all items, San Francisco-Oakland-San Jose, CA, published by the
United States Department of Labor, Bureau of Labor Statistics, in which
1982-1984 equals one hundred (100) ("Index"). The Index most recently
published as of an CPI Adjustment Date is the "Extension Index". The Index
which was most recently published as of the date sixty months prior to the
date the Extension Index was published is the "Beginning Index".
If the Index is changed so that the base year is altered, the Index
shall be converted in accordance with the conversion factor published by the
United States Department of Labor, Bureau of Labor Statistics. If the Index
is discontinued or revised during the term, such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index has not been
discontinued or revised.
From and after the date of this Amendment, Sections 3.2(c) and 3.2(d) of
the Lease are null and void and without further effect. From and after the
date of this Amendment, "Base Rent" as provided in this Section 1.7 is
Tenant's sole fixed rent obligation for the entire Premises. Tenant's only
other regularly scheduled payment obligations to Landlord are Tenant's
Proportionate Share of Real Property Taxes under Article 4 of the Lease and
Tenant's Proportionate Share of Operating Expenses under Article 5 of the
Lease.
1.8 Intentionally omitted.
1.9 REAL ESTATE TAXES. The following provision is added to the end of
Section 4.2(a):
"Notwithstanding anything to the contrary in this Section 4.2(a),
except as specified below, if there is a change of ownership of the
Building or the Property or any portion thereof that results in an
increase in Real Property Taxes, then for purposes of calculating
Tenant's payment obligations under Section 4.2, the increase in Real
Property Taxes subsequent to and caused by a change of ownership in the
Building or Property or any portion thereof will be deemed to include
only the portion of the increase in Real Property Taxes caused by the
change in ownership as set forth in the table below:
PERIOD
First 12 Months
following change 14% of increase
Second 12 Months
following change 28% of increase
Third 12 Months
following change 42% of increase
Fourth 12 Months
following change 56% of increase
Fifth 12 Months
following change 70% of increase
Sixth 12 Months
following change 84% of increase
Seventh 12 Months
following change 100% of increase
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The foregoing limitation on the increase in Real Property Taxes
resulting from a change in ownership does not apply to changes of
ownership that result from foreclosure proceedings, exercises of a
power of sale under a deed of trust and transfers by deed in lieu of
foreclosure."
1.10 OPERATING EXPENSES. Section 5.3(i) is hereby amended by (i)
deleting the phrase "or which may be required by applicable laws, ordinances,
rules or regulations in force with respect to the Premises from and after the
Rent Commencement Date" and (ii) adding the following provisions at the end
thereof: "For purposes of this Lease, capital improvements that are included
in Operating Expenses, if any, must be amortized in accordance with generally
accepted accounting principles and Tenant's Proportionate Share of Operating
Expenses each year will only include the portion of the cost of such capital
improvements that are amortized that year. Tenant has no responsibility for
portions of the cost of capital improvements that are amortized after the
expiration or earlier termination of the Lease. Notwithstanding anything to
the contrary in this Lease, Operating Expenses do not include the cost to
repair damage to the Building or any portion thereof caused by a casualty."
1.11 OPERATING EXPENSE BUDGET. Section 5.4 is hereby amended by
substituting "five percent (5%)" in place of "ten percent (10%)" in both
sentences where such phrase appears.
1.12 TENANT AUDIT. Section 5.6 is hereby amended by the addition of the
following provisions at the end thereof:
"Tenant may once per calendar year audit all of Landlord's (or
Landlord's agents') records pertaining to Operating Expenses and Real
Property Taxes. Any net overbilling discovered in the course of an
audit must be refunded to Tenant within thirty days of Landlord's
receipt of a full and complete copy of the auditor's report including
all supporting documentation, data and calculations related to the
amounts overbilled. If Landlord has issued its annual reconciliation
for a particular year and an audit of that year determines that Tenant
was overbilled by five percent or more of the total sum which properly
should have been billed by Landlord to Tenant in respect of Operating
Expenses and Real Property Taxes, then Landlord must reimburse Tenant
for all expenses of its audit. Landlord must retain its records
regarding Operating Expenses and Real Property Taxes for a period of at
least three years following the final billing for the calendar year,
tax or fiscal year in question. At any time during that three year
period upon notice to Landlord, Tenant may conduct its audit. Tenant's
audit is binding upon Landlord unless within 30 days following
notification to Landlord of audit result, Landlord gives Tenant notice
("dispute notice") specifying reasonable grounds for disputing such
result. In the event of such a dispute, the dispute shall be resolved
by a second audit accomplished by an neutral, experienced, qualified
and independent auditor (who may not have performed work for either
Landlord or Tenant during the preceding five year period), named by
Tenant and approved by Landlord which approval may not be unreasonably
withheld. Notwithstanding the foregoing, if Landlord does not estimate
any portion of Operating Expenses for a calendar year and instead bills
Tenant for Operating Expenses by submitting copies of paid invoices and
other reasonable documentation of the amounts actually expended by
Landlord, then with respect to such year Tenant will not be entitled to
audit Landlord's records."
1.13 ALTERATIONS.
(a) Section 7.2(a) is hereby amended and restated in its entirety
as follows:
"(a) "Minor Work" means repairs, reconstruction, alterations or
additions to the Premises and the placement of HVAC equipment and
communication facilities on the
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roof of the Building so long as such work does not affect the
structural integrity of the Building or the integrity of the roof and
does not materially alter demising or structural walls, the exterior
appearance of the Building or any significant architectural feature of
the Building."
(b) The last three sentences of Section 7.3(a)(1) are hereby
deleted.
(c) Section 7.3(a)(7) is hereby amended by inserting the following
phrase at the beginning of the Section: "For any work costing in excess of
$500,000.00,".
(d) Section 7.3(b)is amended by substituting "ten (10)" for
"twenty-one (21) in the first sentence of the section.
(e) Section 7.4 is hereby amended and restated in its entirety as
follows:
"7.4 PERFORMANCE OF MINOR WORK. Tenant may without Landlord's
consent perform Minor Work. The provisions of Section 7.3(b) apply
to all Minor Work. Tenant will supply Landlord with "as built"
plans and specifications for all Minor Work."
1.14 LEASED FIXTURES. Section 7.6 is hereby amended and restated in its
entirety as follows:
"7.6 LEASED FIXTURES. Except as provided in the last sentence of
this Section 7.6, Landlord waives all liens, if any, to which it may
have a right with respect to the merchandise, furniture, Trade Fixtures
and other personal property of Tenant located on or about the Premises
and will from time to time within 15 days following Tenant's request
execute and deliver to Tenant those documents as Tenant may reasonably
request (i) to acknowledge that waiver and/or (ii) to subordinate, the
liens, if any, which Landlord may have in that personal property to the
interest of any lender of Tenant or Tenant's parent corporation (if
any) which has taken or (is taking) a security interest in that
personal property as security for loan. At Tenant option those
instruments may provide that if the lender undertakes to enforce its
security interest in the personal property, Landlord must cooperate
with the Lender, or its designated representative, in its efforts to
assemble the personal property located at the Premises and may not
hinder the lender's actions in enforcing its liens on the personal
property. In the event that the Premises is abandoned, or Landlord
recovers possession by any means, lender may remove the personal
property from the Premises within thirty (30) days after written notice
by Landlord. Landlord does not waive or agree to subordinate any lien
to which it becomes entitled as a result of a judgment entered against
Tenant in connection with a default of Tenant under this Lease."
1.15 LANDLORD REPAIRS. Section 9.1 is hereby amended by adding the
following provision at the end thereof:
"Tenant may give Landlord notice of maintenance, repairs or other
work as may be required under the terms of this section, and Landlord
must proceed forthwith to perform that work with reasonable diligence,
but in no event later than 60 days after receipt of Tenant's notice. In
the event of an emergency Tenant may immediately perform work that is
Landlord's responsibility, and notify the Landlord promptly after the
work has been undertaken. If Landlord fails to repair or perform its
obligations within the 60 day period stated above, or in case of
emergency, Tenant may perform the Landlord work and Landlord must
reimburse Tenant for the reasonable cost of the work performed by
Tenant within thirty days after the date Tenant requests such
reimbursement and supplies reasonable supporting documentation for
those costs. With respect to repairs performed due to an emergency,
Tenant may only perform those
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repairs that are necessary, in Tenant's reasonable, good faith
judgment, to minimize damage to Tenant's property and its business
operations."
1.16 CONDITION UPON SURRENDER. Section 9.2(c) is hereby amended and
restated in its entirety as follows:
"(c) CONDITION UPON SURRENDER. At the expiration or earlier
termination of this Lease, Tenant will surrender the Premises,
including any leasehold improvements constructed by Tenant, in good
condition, ordinary wear and tear and casualty damage excepted. If
Tenant is not in default under this Lease after notice and expiration
of applicable cure period, then Tenant may remove all property that
belongs to Tenant, including Tenant's Trade Fixtures so long as Tenant
repairs any damage caused by that removal."
1.17 USE. Section 10.1 is hereby amended and restated in its entirety as
follows:
"PERMITTED USE. The Premises may be used for any lawful use.
Tenant may occupy the Premises under any name and trade names as
Tenant, in its sole discretion, elects."
1.18 USES PROHIBITED. Section 10.3(a) is hereby amended by deleting the
phrase "in any way increase the premiums on any insurance or".
1.19 COMPLIANCE WITH LAWS. Section 10.4 is hereby amended by the
addition of the following provision at the end thereof:
"Tenant's continuing remodeling, reconfiguring and growing will be
based on business decisions as to cost/benefit, including the costs of
meeting code compliance in each instance. Landlord cannot be
responsible for compliance costs in any way triggered by Tenant's new
uses or cumulative uses, or by Tenant's improvements or modifications.
Landlord's sole responsibility for compliance with code and other legal
requirements is related to generic enforcement of matters not triggered
by any use or action of Tenant."
1.20 SIGNS. Section 10.6 is hereby amended and restated in its entirety
as follows:
"10.6 SIGNS. Tenant may erect and maintain within the Premises,
upon the exterior of the Building (including each elevation of the
Building if there is more than one) and in the building common areas
such signs as Tenant deems appropriate to the conduct of its business
subject only to any applicable legal requirements. Tenant may attach
its signs to the Building exterior and common areas in a commercially
reasonable fashion. Except for signs, if any, that are legally
required, and as otherwise expressly permitted in this Section, no
signs may be placed on the exterior of the Building or in common areas
without Tenant's consent, which consent Tenant may withhold in its sole
discretion. If signs are placed without Tenant's consent, then, within
three days after notice to Landlord, Landlord must remove such signs
and if Landlord fails to do so, then Tenant may remove such signs and
deduct all reasonable costs and expenses incurred in connection with
such removal from rent. If during the Term there are third party
tenants in the Building, then Landlord may maintain directory signage
for those tenants, and those tenants will be permitted to place
reasonable identity signage on the entrance to their premises. During
the last nine months of the Term, Landlord may place "For Rent" or "For
Lease" signs on the exterior of the Building in reasonable locations
that do not in any manner affect the visibility of Tenant's signs."
1.21 CASUALTY INSURANCE. Section 11.1 is hereby amended and restated in
its entirety as follows:
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"11.1 CASUALTY INSURANCE. Landlord must maintain at all times
during the Term an all risk property insurance policy insuring against
damage to any portion of the Building, except any leasehold
improvements installed by tenants in their premises or to personal
property, including Trade Fixtures, placed by tenant in their
premises. That insurance must be Replacement Cost Coverage. The term
all risk policy as used in this lease means a policy of fire and other
property insurance in the form commonly referred to in the insurance
industry as "Special Form". Landlord's property policies required
under this Section 11.1 may not provide for any deductible or self
insured retention in excess of $25,000, unless approved by Tenant.
Landlord may maintain any of its required insurance under blanket
policies of insurance covering the Building and any other properties
owned by Landlord or companies affiliated with the Landlord, provided
that the coverage afforded will not be reduced or diminished by reason
of the use of such blanket policy of insurance. In addition, Landlord
may from time to time carry earthquake insurance, based upon price,
availability and common practice.
Tenant must at all times during the Term maintain in full
force and effect a policy(s) of all risk property insurance covering
all of Tenant's alterations, improvements and betterments to the
Premises now existing or to be added, to the extent of their full
replacement costs as updated from time to time during the Term of this
lease. Tenant must maintain in full force and effect at all times
during the Term a policy(s) of boiler and machinery breakdown
insurance covering all of its boilers, fired or unfired pressure
vessels, heating, ventilating and air-conditioning units or any other
mechanical equipment which may malfunction or cause damage to property
or injury to persons that may be caused by or results from any
equipment which equipment is used exclusively by the Tenant, and if
said coverage is not included within the policy(s) providing coverage
for the Tenant's alterations, improvements and betterments required
under this Lease, then said insurance shall be by separate policy in
an amount not less than $100,000.00."
1.22 LIABILITY INSURANCE. Section 11.2 is hereby amended by the addition
of the following provision at the end thereof:
"Landlord must at all times during the Term keep in force a
policy or policies of lessor liability insurance or an endorsement on
a blanket liability insurance policy or policies against any and all
damages and liability on account of, or arising out of injuries to
persons or property or the death of any person or for property damage
resulting from acts or omissions of Landlord, its agents or
representatives in the minimum amount of $5,000,000.00 combined single
limit in any one accident. That policy or policies must include
Contractual Liability Insurance recognizing the liability assumed by
Landlord under Section 11.7. Tenant's liability insurance will be
deemed primary to the liability insurance that Landlord carries."
1.23 WAIVER OF SUBROGATION. Section 11.5 is hereby amended by the
insertion of the phrase "or required to be carried" in the tenth line of the
section between the words "carried" and "by"
1.24 INDEMNIFICATION. Section 11.7 is hereby amended and restated in its
entirety as follows:
"11.7 INDEMNIFICATION.
(a) BY TENANT. Except for Landlord's gross negligence
or wilful misconduct, Tenant hereby agrees to and shall indemnify,
defend, protect and hold Landlord and its general and limited
partners, employees, agents and representatives free and harmless from
and against all injury, loss, damage, liability and costs or expenses
(including, without limitation, reasonable attorneys' fees, costs of
suit, expert witness fees, investigative fees and discovery costs) of
whatever nature, to any person or property
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resulting from Tenant's use and occupancy of the Building or any negligent
act or omission of Tenant or its officers, directors, shareholders,
employees, agents, guests, invitees and representatives.
(b) BY LANDLORD. Landlord hereby agrees to and shall
indemnify, defend, protect and hold Tenant and its officers,
directors, shareholders, employees, agents and representatives free
and harmless from and against all injury, loss, damage, liability and
costs or expenses (including, without limitation, reasonable
attorneys' fees, costs of suit, expert witness fees, investigative
fees and discovery costs) of whatever nature, to any person or
property resulting from any grossly negligent act or wilful omission
of Landlord.
The provisions of this Section 11.7 are subject and subordinate to
the provisions of Section 11.5."
1.25 ASSIGNMENT AND SUBLETTING.
(a) Section 12.1 is hereby amended and restated in its entirety as
follows:
"12.1 ASSIGNMENT AND SUBLEASE OF PREMISES. Except as
expressly provided below, Tenant may not assign this Lease or sublet
the Premises, or any part thereof, without Landlord's consent, which
consent Landlord may not unreasonably withhold. Any assignment or
sublease that requires Landlord consent that is made without such
consent will be void. Tenant may without Landlord's consent assign
this Lease or sublet the Premises to a corporation with which it may
merge or consolidate or in connection with the sale of at least a
majority of its assets, or an operating division, or to any parent or
subsidiary of Tenant or a subsidiary of Tenant's parent. For purposes
of this Section 12.1, a parent-subsidiary relationship is deemed to
exist between two corporations if one corporation owns a majority of
the voting stock of the other corporation. No assignment of this Lease
or sublease of the Premises will serve to release Tenant from
liability under this Lease unless Landlord expressly does so at the
time of such assignment or sublease."
(b) Section 12.2 is hereby amended by inserting the phrase "Except
as expressly provided in Section 12.1," at the beginning of the second
sentence of the section.
(c) Section 12.3 is hereby amended and restated in its entirety as
follows:
"12.3 ASSIGNMENT DEFINED. As used in this Article 12, the term
"assignment" includes any sale, transfer or other disposition of all or
any portion of Tenant's estate under this Lease (including any transfer
for security), whether voluntary or involuntary, and whether by
operation of law of otherwise."
1.26 RIGHTS OF ENTRY. Section 13.1 is hereby amended and restated in its
entirety as follows:
"13.1 RIGHTS OF ENTRY. Upon 24 hours prior notice, Landlord and
its authorized representatives may enter the Premises during regular
business hours for the purpose of showing the Premises to prospective
lenders and purchasers, and inspecting and determining the condition of
the Premises, provided that in the event of emergency Landlord may
immediately enter the Premises without notice. In addition, upon notice
to Tenant during hours reasonably designated by Tenant, Landlord may
enter the Premises to perform repairs, reconstruction, alterations and
improvements that Landlord is obligated or entitled to perform under
the other provisions of this Lease. During the last nine months of the
Term, as extended, upon 24 hours prior notice, Landlord and its
authorized representatives may enter the Premises during regular
business hours for the
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purpose of showing the Premises to prospective tenants. Landlord must
use best efforts when exercising its rights of Premises entry not to
interfere with the access to or visibility of the Premises, or the
conduct of business within. Landlord must reimburse Tenant for costs in
good faith incurred to protect Tenant property and improvements from
theft or damage in respect of Landlord entry; and must repair, to
Tenant's satisfaction all damage caused by its work within the
Premises. If Landlord entry continues for 24 hours or more and has an
adverse effect upon Tenant business operations, then Tenant rent will
xxxxx proportionate to the percentage of the Premises usable floor area
adversely affected by Landlord entry unless basis for Landlord entry
was cure of Tenant default after notice and expiration of applicable
cure period."
1.27 CASUALTY AND TAKING. Article 14 is hereby amended and restated in
its entirety as follows:
"14.1 After any casualty event, Landlord must, within 30 days
after the casualty, notify Tenant of Landlord's reasonable, good faith
estimate of how long from the date of the casualty it will take
Landlord to repair and restore the damaged portions of the Premises. If
the Premises or its appurtenances are damaged or destroyed by a
casualty to the extent that Landlord cannot reasonably complete its
restoration and repair obligations within twelve months from the date
of the casualty, then Tenant may terminate this Lease as of the date of
the casualty by notice to Landlord within 45 days after the date that
Landlord notifies Tenant of the time period required to repair and
restore the damaged portions of the Premises. If neither party elects
to terminate the Lease under the terms of this Article, then Landlord
must commence its repair and restoration of the damage caused by the
casualty as soon as possible after the date of the casualty. Landlord
must repair and restore the all portions of the Premises and its
appurtenances that are damaged by the casualty to substantially their
condition immediately prior to the casualty except for the leasehold
improvements constructed by Tenant. Landlord must diligently pursue its
repairs and restoration to completion. If Landlord does not complete
its repairs and restoration within eighteen months from the date of the
casualty (subject to extension for force majeure events), Tenant may
terminate this Lease by written notice to Landlord at any time prior to
completion. Once Landlord has completed its repair and restoration
obligations, Tenant must commence the repair and restoration of the
leasehold improvements constructed by Tenant that were damaged by the
casualty. All rent payable under this Lease will xxxxx from the date of
the casualty to the earlier of (i) 180 days following the date Landlord
completes its repair and restoration obligations and (ii) the date on
which Tenant completes its repairs and restoration, provided that if
Tenant continues to conduct business in the Premises during the period
that Landlord and Tenant are repairing and restoring the Premises, then
Tenant's rent obligations during the period of repairs and restoration
will xxxxx in proportion to the percentage of the Premises usable floor
area damaged by the casualty.
If the Premises are substantially damaged by a casualty that is
covered by neither (i) the insurance actually carried by Landlord nor
(ii) the insurance Landlord is required to carry under the terms of
this Lease, then Landlord may elect to terminate this Lease by giving
notice of its election to terminate within ninety days after the
casualty event. If Landlord elects to terminate the Lease, then the
rights and obligations of the parties will cease as of the date of
Landlord's notice, and rent and additional charges will be adjusted as
of the date of such termination. Damage to the Premises is substantial
if the cost to repair the damage is equal to or greater than 15% of the
full replacement cost of the Premises.
14.2 Intentionally omitted.
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14.3 Tenant is not entitled to any compensation or damages, other
than stated in this Lease, from Landlord for the loss of the use of the
whole or any part of the Premises or damage to tenant's personal
property or any inconvenience or annoyance occasioned by the casualty
event.
14.4 If Landlord is obligated to repair and restore under the
terms of this Article, but does not commence those repairs and
restoration within 90 days of the casualty, and continue its repairs
and restoration thereafter with reasonable dispatch, then Tenant may,
upon notice to Landlord, perform Landlord's repair and restoration
obligations at Landlord's sole cost and expense. If Tenant elects to do
so, then Landlord must promptly pay to Tenant any insurance proceeds
received by Landlord in connection with the casualty. Landlord must pay
Tenant on demand for any cost or expense incurred by Tenant in
connection with its performance of Landlord's repair and restoration
obligations (not including any amount by which the cost and expense of
restoration is increased by any change or changes made by Tenant).
14.5 The parties waive those rights of Lease termination as are
granted to them under the laws of the state where the Premises are
located, it being their agreement that the rights of termination in the
event of casualty, as set forth in this Article, are exclusive.
14.6 EFFECT OF TAKING.
(a) In the event the whole or any part of the Premises is taken
for public or quasi-public use or condemnation under eminent domain,
this Lease will terminate as to the part so taken on the date
possession is yielded to the condemning authority.
(b) In the event a portion of the Premises, Building or Property
is taken and such taking substantially impairs the usefulness of the
Premises for the purposes hereinbefore granted to the Tenant, then
Tenant may terminate the Lease by written notice within thirty days
after to the actual physical taking.
(c) For the purposes of this Article, a sale or conveyance in
lieu of condemnation that is made because of the threat of condemnation
will be deemed an appropriation or taking under the power of eminent
domain.
(d) If this Lease is not terminated as above provided following a
taking, then Landlord must, at its expense, make all necessary repairs
or alterations to the basic building and exterior work so as to
constitute the remaining Premises a complete architectural unit and a
proportionate reduction will be made in the Base Rent and additional
charges based on the proportion of the Premises taken.
14.7 COMPENSATION AND AWARDS. All compensation awarded for any
taking of the fee and the leasehold, or any part thereof, will belong
to and be the property of Landlord. Tenant hereby assigns to the
Landlord all right, title and interest of Tenant in and to any award
made for leasehold damages and/or diminution in the value of Tenant's
leasehold estate. Tenant may claim all compensation as may be
separately awarded or allocated including without limitation relocation
costs and the value of Tenant's leasehold improvements. Compensation as
used in this section means any award given to the Landlord for such
taking in excess of, and free and clear of, all prior claims of the
holders of any mortgages or other security interests.
1.28 LATE PAYMENTS. Section 15.4 is hereby amended and restated in its
entirety as follows:
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"15.4 LATE CHARGES. If Tenant fails for any reason to pay Base
Rent, Tenant's Proportionate Share of Real Property Taxes or Operating
Expenses, additional Rent or any other amount fee, or charge due
hereunder within five (5) days of the date when due, then Landlord may
impose a late charge equal to 10% of the amount overdue. If Landlord
fails for any reason to pay any amount payable to Tenant under this
Lease within five (5) days of the date when due, then Tenant may impose
a late charge equal to 10% of the amount overdue. In addition, any sum
accruing to Landlord or Tenant under the provisions of this Lease that
is not paid within 10 days following written notice that it is overdue
("Notice Period") bears interest from the expiration of the Notice
Period, at the rate of the lesser of (i) the maximum rate legally
permitted and (ii) 12% per annum, until paid."
1.29 LANDLORD DEFAULT. The following Section 15.6 is hereby added to the
Lease:
"15.6 LANDLORD DEFAULT. If Landlord fails to perform any of its
obligations under this Lease and that failure continues for a period of
more than 30 days after receipt of written notice from Tenant
specifying that failure, or if the failure is of a nature to require
more than 30 days for remedy and continues beyond the time reasonably
necessary to cure (provided Landlord must have undertaken procedures to
cure the default within 30 days of Tenant's notice and diligently
pursue such efforts to cure to completion), then Tenant may, upon
written notice, incur any reasonable expense necessary to perform the
obligation of Landlord specified in such notice and Landlord must
reimburse Tenant for the reasonable expense incurred by Tenant within
thirty days after the date Tenant requests such reimbursement and
supplies reasonable supporting documentation for those expenses."
1.30 NON-DISTURBANCE. Section 16.1 is hereby amended and restated in its
entirety as follows:
"16.1 NONDISTURBANCE AND SUBORDINATION TO MORTGAGE.
(a) Landlord must obtain from every lender, ground lessor or
other party whose interest is superior to Tenant's leasehold interest,
a fully executed nondisturbance agreement assuring Tenant that
notwithstanding any default by Landlord, or any foreclosure or deed in
lieu thereof or lease termination proceedings, or the exercise of any
other right or remedy, Tenant's rights under the Lease will continue in
full force and effect and its possession of the Premises will remain
undisturbed except in accordance with the provisions of this Lease so
long as Tenant is not in default hereunder after notice and expiration
of applicable cure period. Those agreements must be in a form
reasonably satisfactory to Tenant.
(b) Upon Landlord's request, Tenant's interest under this lease
will be subordinated to any mortgage, deed of trust, sale/leaseback
transaction or any other hypothecation for security hereafter placed
upon the Building, the Property or both by the execution, delivery and
recordation of a subordination, non-disturbance and attornment
agreement that is reasonably acceptable to Tenant."
1.31 ARBITRATION. Section 5.10 of the Lease is hereby deleted in its
entirety. The first sentence of Article 17 is hereby deleted and the
following provisions substituted in its place: "Either Landlord or Tenant may
at any time require that any non-monetary dispute regarding a matter that
cannot result in Lease termination be submitted to arbitration. Upon the
mutual agreement of the parties, monetary disputes and disputes that could
result in Lease termination may also be submitted to arbitration."
1.32 Lease Status. Landlord and Tenant each represent that to its best,
current knowledge as of the date of this Amendment (i) neither Landlord nor
Tenant is in default under the terms of the Lease, (ii)
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no event exists that with the passage of time or the giving of notice or both
would constitute a default by either party to the Lease, and (iii) each party
has fully performed its obligations under the Lease that have accrued under
the Lease through the date of this Amendment and no claims are outstanding
for any unperformed obligations except as to the items listed on an attached
Exhibit B containing obligations of Landlord and Tenant.
1.34 FORCE MAJEURE. The following Section 18.14 is hereby added to the
Lease:
"18.14 Force Majeure. As used herein the term force majeure event
means any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain labor, materials, or merchandise,
governmental restrictions, governmental regulations, governmental controls,
judicial orders, enemy or hostile governmental actions, civil commotion,
fire, or other casualty, and other causes beyond a party's reasonable control
(but not financial inability). If a party's performance of a non-monetary
obligation is delayed by a force majeure event, then the period for
performing that non-monetary obligation will be extended for a period equal
to the period of delay caused by the force majeure event. A party whose
performance of a non-monetary obligation is delayed by a force majeure event
must give prompt notice of that delay to the other party."
1.35 AUTHORITY. The individuals executing this Amendment on behalf of
each party hereto warrant that they have been duly authorized to execute and
deliver this instrument on behalf of and by the party for whom they are
signing, and by delivery hereof each individual warrants that execution by no
other signatory is necessary to bind the part for whom they sign. A certified
copy of the board of directors' resolution authorizing the execution of this
Amendment by Tenant is attached hereto as Exhibit C.
1.36 RATIFICATION. The parties ratify and affirm the Lease as amended
hereby.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first recited above.
TENANT LANDLORD
CALIFORNIA CULINARY ACADEMY, INC. 625 POLK INVESTMENT COMPANY
A CALIFORNIA CORPORATION A CALIFORNIA LIMITED PARTNERSHIP
By: By:
------------------------------ ----------------------------
Its: Its: General Partner
------------------------------
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EXHIBIT B
TO
EIGHTH AMENDMENT TO LEASE
REPAIR OBLIGATIONS OF LANDLORD:
1. Roof on flat section of third floor to be replaced within the next five
years
2. Cosmetic restoration of ceiling plaster molds in Careme utilizing
lightweight materials reasonably replicating the same architectural style
3. Elevator safety edge sensors to be completed
4. Sump backup pump to be repaired or replaced if not already completed and
Landlord to provide periodic training to maintenance staff of Tenant in
proper sump pump maintenance procedures
5. Building exterior painting of lower casements
6. Restoration and repair of exterior terra cotta element near front entrance
REPAIR OBLIGATIONS OF TENANT:
1. Perform project work as necessary to finalize Permit #9318061 (currently
being bid for Tenant by Xxxxxx Electric, Fine Line and PAFA), and finalize
any other open permits or related code "correction" items currently cited
in the Premises by the City of San Francisco.
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