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Exhibit 10.1
LEASE
by and between
MERCHANDISING DEVELOPMENT U.S.A., INC., a California corporation
("Lessor")
and
BEST BUY CO., INC., a Minnesota corporation
("Tenant")
for improved real property at
Pacific Coast Highway and
Hawthorne Blvd., Torrance, CA
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TABLE OF CONTENTS
ARTICLE PAGE
A. FUNDAMENTAL LEASE TERMS .............................................
1. THE PREMISES .................................................... 2
2. TITLE AND QUIET POSSESSION ...................................... 2
3. LEASE TERM AND RENT COMMENCEMENT DATE ........................... 3
4. OPTION TO EXTEND ................................................ 4
5. LESSOR'S WORK ................................................... 4
6. RIGHT OF PRIOR INSTALLATION ..................................... 6
7. RENT ............................................................ 6
8. USE ............................................................. 6
9. UTILITIES ....................................................... 8
10. REPAIR OF THE PREMISES .......................................... 8
11. ACCESS BY LESSOR ................................................ 9
12. TENANT'S FIXTURES AND SIGNS ..................................... 9
13. ALTERATIONS TO THE PREMISES ..................................... 9
14. SURRENDER OF THE PREMISES ....................................... 10
15. HOLDING OVER; RIGHT OF FIRST NEGOTIATION ........................ 10
16. REMEDIES UPON DEFAULT ........................................... 10
17. NONWAIVER OF DEFAULT ............................................ 12
18. QUIET ENJOYMENT ................................................. 12
19. DAMAGE BY FIRE OR CASUALTY ...................................... 12
20. WAIVER OF SUBROGATION ........................................... 13
21. EMINENT DOMAIN .................................................. 13
22. INSURANCE ....................................................... 13
23. SUBORDINATION OF LEASE .......................................... 14
24. TRANSFER OF INTEREST ............................................ 14
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25. REAL ESTATE TAXES................................................. 15
26. NOTICES........................................................... 16
27. SEVERABILITY OF PROVISIONS........................................ 16
28. MEMORANDUM OF LEASE............................................... 17
29. PARKING REQUIREMENTS.............................................. 17
30. ENTIRE AGREEMENT.................................................. 17
31. RELATIONSHIP OF THE PARTIES....................................... 17
32. RIGHT OF PROTEST.................................................. 17
33. IMPORTANCE OF EACH COVENANT....................................... 17
34. HEADINGS.......................................................... 17
35. PARTIES IN INTEREST............................................... 18
36. COUNTERPARTS...................................................... 18
37. NUMBER AND GENDER................................................. 18
38. COMMON AREAS...................................................... 18
39. OBSTRUCTIONS AND CONSTRUCTION..................................... 19
40. RIGHT OF FIRST REFUSAL ON ADJOINING SPACE......................... 19
41. EXCLUSIVITY....................................................... 19
42. HAZARDOUS SUBSTANCES.............................................. 19
43. BROKERAGE......................................................... 20
44. ATTORNEY'S FEES................................................... 21
B. EXHIBITS AND RIDERS................................................... 21
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EXHIBITS
A. LEGAL DESCRIPTION OF SHOPPING CENTER
B. SITE PLAN
C. PERMITTED TITLE EXCEPTIONS
D. FINAL PLANS
E. CONSTRUCTION SCHEDULE CHART
RIDERS
RECIPROCAL EASEMENT RIDER
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Store No.
--------
L E A S E
THIS LEASE is made and entered into as of the 14th day of June, 1994, by and
between MERCHANDISING DEVELOPMENT U.S.A., INC., a California corporation
("Lessor") and BEST BUY CO., INC., a Minnesota corporation ("Tenant").
WITNESSETH:
In consideration of the rents reserved and the covenants and conditions set
forth herein, Lessor and Tenant agree as follows:
A. FUNDAMENTAL LEASE TERMS.
i. Parties.
Lessor: Merchandising Development U.S.A., Inc., a California
corporation
Tenant: Best Buy Co., Inc.
ii. Premises (Article 1).
See Article 1
iii. Term (Articles 3 and 4).
Ten (10) Lease Years, with one five (5) year renewal.
Estimated Term Commencement Date of November 11, 1994 or open for
business.
iv. Fixed Rent (Article 7).
Lease Year Monthly Annual Per Sq. Ft. Based upon 102,470 sq. ft.
---------- ------- ---------------------------------------------
1-5 $145,165.83 $1,741,990.00 $17.00
6-10 $162,244.17 $1,946,930.00 $19.00
Option (11-16) $179,322.50 $2,151,870.00 $21.00
v. Construction (Article 5).
See Article 5
vi. Addresses (Article 26).
Lessor:
Mr. Kiyoshi Imba
Merchandising Development U.S.A., Inc.
00000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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with copy to:
Xxxxx X. Xxxxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx, 00xx. FL
Xxx Xxxxxxx, XX 00000
Tenant:
Best Buy Co., Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Legal Department-Real Estate
With a copy to:
Robins, Kaplan, Xxxxxx & Xxxxxx
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
1. THE PREMISES.
Subject to the terms and conditions of this Lease, Lessor leases to Tenant and
Tenant rents from Lessor the premises situated in the City of Torrance, County
of Los Angeles and State of California, described as follows:
The approximately one hundred three thousand six hundred eighty six
(103,686) gross sq. ft. building located at Pacific Coast Highway and
Hawthorne Blvd., Torrance, California and shown in approximate location and
crosshatched on Exhibit B attached hereto and made part hereof (sometimes
referred to in this Lease as the ("Site Plan"), as same shall be remodeled
and renovated as described in this Lease and including all easement rights,
improvements and appurtenances thereto including but not limited to
easement rights under the REA (as defined in the Reciprocal Easement
Rider), truck dock facilities, loading facilities and trash facilities
exclusively serving such building ("Premises"). The Premises will be
physically divided by Lessor as provided in this Lease into two portions
shown on the Site Plan (and so defined for purposes of this Lease) as
"Premises A" and "Premises B". Premises A consists of approximately sixty
two thousand five hundred eighteen (62,518) square feet of "floor area" (as
defined in Section 7 below). Premises B consists of approximately thirty
nine thousand nine hundred fifty two (39,952) square feet of floor area.
Whenever the term "Premises" is used in this Lease it shall be deemed to
mean both Premises A and Premises B, unless specifically indicated
otherwise. The Premises is located in the Shopping Center shown on the Site
Plan (the "Shopping Center"). The legal description of the Shopping Center
is attached hereto as Exhibit A and made a part hereof. In the event of any
conflict between Exhibit A and the Site Plan, the Site Plan shall control.
2. TITLE AND QUIET POSSESSION.
Lessor hereby warrants that it has full right and authority to enter into this
Lease in accordance with the terms hereof and that, to the best of Lessor's
knowledge (but without investigation), as of the date of this Lease and upon
recordation of the Memorandum of Lease there will be no liens or encumbrances
against the Premises which would affect Tenant's rights under this Lease or its
easement rights in the Shopping Center except as stated in Exhibit C attached
hereto and made a part hereof (the "Permitted Exceptions"). Lessor further
warrants that, to the best of its knowledge, the Permitted
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Exceptions (other than the REA as to which Tenant shall satisfy itself) do not
contravene, hinder or impair any right or privileges granted Tenant in this
Lease.
3. LEASE TERM AND RENT COMMENCEMENT DATE.
3.1 Term and Term Commencement Date. The initial term of this Lease (the
"Initial Term") shall be for a period of ten (10) "Lease Years," as that term is
hereinafter defined and shall expire on the last day of the tenth (10th)
consecutive Lease Year. If the Delivery Date (as defined in Section 5.2) is on
or before October 21, 1994, and Lessor's Work (as defined in Section 5.1) for
Premises A is complete on or before November 11, 1994 then the Initial Term
shall commence on the first to occur of (i) November 11, 1994 and (ii) the date
Tenant opens for business to the public in Premises A. If the Delivery Date is
after October 21, 1994, and/or Lessor's Work is not complete by November 11,
1994, then the Initial Term shall commence on the first to occur of (A) the date
of completion of Lessor's Work and (B) the date Tenant opens for business to the
public in Premises A. The date of commencement of the Initial Term shall be
referred to in this Lease as the "Term Commencement Date".
3.2 Premises A Rent Commencement Date.
(a) If the Delivery Date (as defined in Article 5) is on or before October
21, 1994 and the Lessor's Work is completed on or before November 11, 1994 then
the "Premises A Rent Commencement Date" as used in this Lease shall mean the
earlier of (i) November 11, 1994 and (ii) the date Tenant opens for business to
the public in Premises A.
(b) If the Delivery Date is after October 21, 1994, or the Lessor's Work
is not completed on or before November 11, 1994, then the Premises A Rent
Commencement Date shall be the earlier of (i) three (3) weeks from the date of
completion of Lessor's Work and (ii) the date Tenant opens for business to the
public in Premises A; provided Tenant, as its option, may elect not to accept
delivery of the Premises and to extend the Deliver Date until January 26, 1995.
(c) In the event Tenant elects to extend the Delivery Date until January
26, 1995 as provided in subparagraph (b) above, the Premises A Rent Commencement
Date shall be the earlier of (i) three (3) weeks from the date of completion of
Lessor's Work for Premises A (but in no event prior to February 16, 1995 and
(ii) the date Tenant opens for business to the public in Premises A.
3.3 Premises B Rent Commencement Date.
(a) If Lessor has not received the Premises B Plans (as defined in Section
5.3 below) by January 1, 1995, the "Premises B Rent Commencement Date" as used
herein shall mean March 1, 1995; provided, as to Premises B Plans received after
January 1, 1995, Lessor shall diligently pursue the permits for such work and
further provided that if the Premises B Improvement Work is not completed in a
reasonably expeditious manner then the Premises B Rent Commencement Date shall
be extended by the amount of days of any delay caused by the lack of due
diligence in the completion of such work.
(b) If Lessor has received the Premises B Plans by January 1, 1995, then
the "Premises B Rent Commencement Date" shall be sixty (60) days after Lessor
receives the Premises B Plans and all governmental permits necessary for
commencement of the Premises B Tenant Improvement Work; provided, Lessor shall
diligently pursue the permits for such work and further provided that if the
Premises B Improvement Work is not completed by March 1, 1995 due to Lessor's
failure to diligently and in good faith pursued completion of such work by such
date then the Premises B Rent Commencement Date shall be extended by the amount
of days of such delay in the completion of such work.
3.4 Lease Year. The term "Lease Year" as used herein shall mean a
period of twelve (12) consecutive full calendar months (except for the first
Lease Year, which may be longer). The first Lease Year shall commence on the
Term Commencement Date. The first Lease Year shall expire at midnight on the
second January 31 following the Term Commencement Date. Succeeding Lease Years
shall each commence on the first (1st) day following the end of the preceding
Lease Year. After the Term Commencement Date and within ten (10) days after
request from the other party,
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each party shall execute ??? liver to the other a supplement ?? agreement
stipulating the Term and ???? Commencement Dates.
3.5 Permits. The Term Commencement Date and Premises A Rent Date shall be
extended until such time as Tenant receives all governmental construction
approvals and permits which may be necessary for Tenant to open for business in
Premises A, unless the delay was occasioned by Tenant's act or omission or a
Tenant Change Order (as defined in Section 3.6).
3.6 Change Orders. In the event of a delay in (i) the Delivery Date, (ii)
the Premises A Rent Commencement Date or (iii) the Premises B Rent Commencement
Date which is caused by a change order requested by Tenant, and not necessary
to meet the requirements of any governmental entity or public utility, then
such date shall be deemed to be the date which would have been met but for such
change order; provided such change order shall indicate on its face the extra
costs therefore, if any and the amount of anticipated delay, if any, caused by
such change order and provided such change order shall be executed by Tenant
("Tenant Change Order").
3.7 Tenancy Certificate. Upon the Term Commencement Date, and following
request of Lessor, Tenant agrees to execute a mutually agreeable "Tenancy
Certificate" which sets forth such facts as the Term Commencement Date, the
rent commencement dates, the dates of rent adjustments, the expiration of the
Lease Term and such other matters as Lessor may reasonably require. The
provisions of the Lease shall control, however, with regard to any omissions
from, or provisions of the Lease which may be in conflict with the Tenancy
Certificate.
4. OPTION TO EXTEND.
Provided Tenant is not in monetary default beyond any applicable cure period
(Tenant shall not be deemed in default if it is contesting any provision of
this Lease through judicial procedure or arbitration as same may be allowed by
this Lease), Tenant is hereby given the right to extend the Initial Term for
one (1) additional period of five (5) years (herein, the "Renewal Term") upon
the same terms and conditions as provided in the Initial Term, with the fixed
rent to be as set forth in subsection (iv) of the Fundamental Lease Terms.
Tenant shall exercise the right granted in the foregoing sentence by notifying
Lessor in writing of its intention to extend at least one hundred twenty (120)
days prior to the expiration of the Initial Term, whereupon this Lease shall be
so extended without any further document or act. The phrase "Lease Term" as
used in this Lease shall be deemed to mean the Initial Term and any such
Renewal Term upon Tenant's proper exercise of such option.
5. LESSOR'S WORK.
5.1 Lessor's Work.
(a) Lessor, at its sole cost and expense (except as otherwise provided
herein), including but not limited to all hard costs, soft costs and all permit
fees, development fees and pre-development fees, shall construct and complete,
in the manner provided herein, the work ("Lessor's Work") in accordance with
the Site Plan and the plans and specifications ("Final Plans") referenced on
Exhibit D attached hereto and made a part hereof and all governmental
requirements.
(b) Lessor shall use best efforts to complete the Lessor's Work in
accordance with the Construction Schedule Chart attached hereto as Exhibit E
("Construction Schedule Chart"). Tenant shall be entitled to attend all
progress meetings regarding the Lessor's Work. Lessor acknowledges that the
timely performance of the Lessor's Work so as to enable Tenant to able to open
for business in the Premises on or before November 11, 1994 is a material
inducement to Tenant in executing this Lease. Therefore, Lessor agrees that, if
for any reason whatsoever, including but not limited to Unavoidable Delays (as
defined in Section 5.5(b) below), any work is not substantially completed by
the date set forth on the Construction Schedule Chart (with Tenant being
reasonably satisfied that final completion of Premises A occurring on or before
November 11, 1994), then Tenant shall have the right, upon 72 hours written
notice to Lessor to complete Lessor's Work or correct deficiencies therein, at
Lessor's expense, provided Lessor shall not be liable for any amount expended
by Tenant over the line item budget as agreed to by Lessor and Tenant, plus
twenty-five percent (25%). Following 30 days of written demand for
reimbursement and submission of proof of expenditure, Tenant shall be permitted
to offset against fixed rent or other sums to be paid by Tenant under this
Lease an amount equal to the costs incurred
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by Tenant to so complete Lessor's Work (not to exceed the amounts set forth
above) plus a 5% administration fee. The taking of possession of the Premises by
Tenant or its subtenant or assign and/or Tenant's exercise of any self help
rights and/or the opening for business to the public in Premises A shall not
constitute a waiver of any construction defects. Any work undertaken by Tenant
shall be done lien free and consistent with the Final Plans and the standards of
construction imposed on Lessor.
5.2 DELIVERY DATE.
(a) The term "Delivery Date", as used in this Lease, shall mean the date
that all of the following have occurred: (i) Lessor shall have delivered
Premises A to Tenant with the portion of the Lessor's Work which relates to
Premises A completed to the extent that Tenant can commence fixturing and
merchandising Premises A with Lessor's employees, contractors, subcontractors
and agents having only controlled or monitored access to the interior of
Premises A and (ii) Lessor's architect shall have certified to Tenant that the
interior of Premises is substantially complete pursuant to the Final Plans and
(iii) Tenant shall be legally able to commence fixturing and merchandising
Premises A. The taking possession of the Premises by Tenant or its subtenant or
assign and/or the opening for business to the public in the Premises shall not
constitute a waiver of any construction defects.
5.3 PREMISES B IMPROVEMENT WORK.
(a) Lessor agrees to construct and complete in a diligent and expeditious
manner certain tenant improvement work for Premises B (as provided below) for
any subtenant of Premises B to which Tenant subleases; provided such sublease
is executed within twelve (12) months of the date of this Lease ("Premises B
Tenant Improvement Work"). The Premises B Tenant Improvement Work shall be
performed at a reasonable cost in accordance with plans and specifications
submitted to Lessor by Tenant, which plans shall be reasonably acceptable to
Lessor with response within fifteen (15) days of submittal and shall
contemplate construction customarily requiring no more than 60 days time to
complete ("Premises B Plans"); provided Tenant shall also submit two (2) bids
to Lessor together with the Premises B Plans. Lessor and Tenant shall work
together in good faith to, within fifteen (15) days of submittal of the
Premises B Plans, arrive at a reasonable cost for such work, using such bids as
evidence thereof. If, using good faith and due diligence, Lessor and Tenant
cannot agree on such cost figure by such date, then, at the option of Lessor
either (i) this Lease may be terminated as to Premises B and the rent and other
provisions adjusted accordingly or (ii) Lessor shall agree to use the higher of
the two submitted bids as the cost for such work. If the reasonable cost of
such work, as so determined, shall exceed Three Hundred Forty-Two Thousand,
Seven Hundred Seventy-Nine Dollars ($342,779.00) ("Premises B Funds"), then
Tenant, at its option, shall either modify the Premises B Plans or pay such
difference upon the earlier of substantial completion of the Premises B Tenant
Improvement Work or the date the Premises B tenant opens for business. If the
cost of final completion of the work set forth in the Premises B Plans shall be
less than the Premises B Funds, Tenant may require other work to be performed
by Lessor for the Premises for a period of twelve (12) months from the date of
submission of the Premises B Plans, provided the reasonable cost of such work
shall not exceed the remaining Premises B Funds.
(b) If Tenant has not entered into a sublease or assignment for Premises B
within twelve (12) months of the date of this Lease then Tenant may offset
against fixed monthly rent the Premises B Funds in twelve (12) equal monthly
installments.
5.4 REIMBURSEMENT. Notwithstanding the above, within ninety (90) days of
the later of (i) completion of Lessor's Work in a lien free condition and
Tenant being legally able to open for business in Premises A and (ii) the
Premises A Rent Commencement Date, and upon receipt of billing by Lessor for
same, Tenant shall pay to Lessor as Tenant's contribution toward the Lessor
Work, the sum of (A) Four Hundred Ninety-Six Thousand Dollars ($496,000.00)
plus (B) the cost of any Tenant Change Order. Any sums due Lessor shall be
deemed additional rent hereunder.
5.5 GENERAL REQUIREMENTS.
(a) Lessor shall provide or cause to be provided all materials, and
perform or cause to be performed all work, necessary to deliver the Premises to
Tenant in "broom-clean" condition. All heating, ventilating and
air-conditioning equipment servicing the Premises will be new. Lessor hereby
warrants and represents that at such time as it delivers
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possession of the Premises ????????, Tenant and, as to Lessor's Work, for the
later of (i) one (1) year thereafter or (ii) the warranty period for same,
Lessor's Work, including but not limited to the structure, roof, heating,
air-conditioning, lighting, electrical, plumbing, sewer and other systems and
fixtures serving the Premises will be in good condition and working order, and
there will be sufficient utilities available (including without limitation gas,
water and electricity) to heat, illuminate, ventilate, air-condition and
provide power to the Premises in the quantities or at the capacities required by
Tenant pursuant to the Final Plans, and the roof will be free of leaks.
(b) Unless otherwise provided in this Lease, if either party hereto shall
be delayed or prevented from the performance of any act required hereunder by
reason of acts of God, strikes, lockouts, labor troubles, inability to procure
materials, restrictive governmental laws or regulations or other cause without
fault and beyond the control of the party obligated (financial inability
excepted) ("Unavoidable Delay") performance of such act shall be excused for
the period of the delay and the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay;
provided, however, notice of such delay shall be delivered to the other party
within three (3) days of the occurrence of the delay which notice shall specify
the exact nature of the delay.
6. RIGHT OF PRIOR INSTALLATION.
At any time prior to the Delivery Date, Tenant shall have the right to enter
Premises A for the purposes of measuring the Premises and installing therein
Tenant's fixtures, equipment and merchandise, provided that such operations do
not interfere unreasonably with Lessor's completion of the Premises. Any entry
by Tenant for the purpose of measuring the Premises or of installing its
fixtures and equipment shall not be deemed acceptance of the Premises by Tenant.
7. RENT.
Tenant hereby covenants and agrees to pay Lessor as monthly fixed rent for the
Premises during the Lease Term the sums as set forth in Article A(iv). All
monies payable by Tenant to Lessor hereunder shall be deemed additional rent.
Monthly fixed rent for Premises A shall be payable in advance and without
demand on the first day of every calendar month during the Lease Term from and
after the Premises A Rent Commencement Date. Monthly fixed rent for Premises B
shall be payable in advance and without demand on the first day of every
calendar month during the Lease Term from and after the Premises B Rent
Commencement Date. Rent shall be prorated for any partial month at the
beginning or end of the Lease Term. Tenant shall pay rent to Lessor at the
address provided for Lessor in Article A(vi) hereof, unless otherwise notified
in writing by Lessor.
In determining floor area, measurements shall be from the center of all common
walls and the outside of all exterior walls, excluding mezzanines and
mechanical equipment areas ("floor area"). Lessor and Tenant agree that the
initial floor area of the Premises for purposes of determining fixed monthly
rent and prorata share of Lessor's Operating Costs (as defined in Section 38)
shall be deemed to be one hundred two thousand four hundred seventy
(102,470.00) sq. ft.
8. USE and OPENING.
Tenant shall open on its first day of business as a Best Buy Store and
thereafter shall use the Premises for the sale at retail (including,
incidentally thereto, the display, rental, servicing and installation) of
consumer electronic products and other merchandise incidental thereto in
substantially the same manner as the majority of The Best Buy stores in Los
Angeles County; and for no other purpose except as hereinafter provided. In the
event Tenant (including any permitted assignee or sublessee) elects to change
the principal use of the Premises to a use which is other than the use of a
majority of Tenant's stores in Los Angeles County, Tenant shall notify Lessor of
such election. Lessor, within thirty (30) days thereafter, shall either (i)
consent to such use change, which consent shall not unreasonably be withheld, or
(ii) notify Tenant that it does not consent to such use change with the reason
for Lessor's refusal. Lessor's refusal to consent to the proposed use change
shall be deemed reasonable if the contemplated use of the Premises is not
compatible with a shopping center of this type, is not compatible with the then
current tenant mix at the Shopping Center or would violate a restrictive
covenant covering the Shopping Center or an exclusive which has been granted by
Lessor to any tenant occupying the location identified on the Site Plan as
"existing T.B.A." or to any other tenant in the Shopping Center, which tenant is
open and operating in at least thirty thousand (30,000) square feet of floor
area. Lessor hereby warrants that,
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at the time of substantial completion of Lessor's Work, and thereafter during
the term of this Lease, the Premises will be in conformance with all applicable
building, health, safety, fire, environmental and zoning codes and other laws,
ordinances and regulations of all public authorities having jurisdiction over
the Premises, and will have been completed as provided in Article 5 hereof.
Tenant shall have no obligation, either express or implied, to open or operate
for business in the Premises, and Tenant shall have sole authority over its
hours of operation and merchandising.
Tenant will use and occupy the Premises and appurtenances in a careful, safe
and proper manner, and shall comply with the lawful requirements of the proper
public authorities regarding the conduct of Tenant's business. Tenant will not
permit the Premises to be used for any unlawful purpose. Tenant shall not
permit the Premises and Lessor shall not permit the remainder of the Shopping
Center to be used for (i) any offensive, noisy or dangerous trade, business or
manufacturing activity or occupation, (ii) any activity which constitutes a
nuisance; (iii) any activity which physically interferes with the business of
any other occupant; or (iv) in violation of any law, ordinance, rule or
regulation of any governmental authority with jurisdiction over any portion of
the Shopping Center.
The Premises shall not be used for the following uses and Lessor shall not
permit the following uses in the Shopping Center: entertainment or recreational
uses (such as but not limited to bowling alleys, billiard parlors, bars, health
spas, game arcades, theaters, off-track betting parlors etc.), "adult" uses
(i.e., "adult" bookstores or "adult" theaters, or massage parlors) training or
educational use (i.e. beauty schools, reading rooms, churches), gas station
use, restaurant or food outlet uses except in areas designated therefor on the
Site Plan (and except as incidental to a retail store of over 40,000 square
feet of floor area and located within such store), the sale, rental or storage
of automobiles, recreational vehicles or boats, flea markets, or offices except
incidental to permitted uses (provided however, that offices providing service
to the general public such as banks, real estate brokerages or insurance
brokers shall be permitted provided the same do not exceed 15% of the floor
area of the Shopping Center).
If Tenant is closed for business to the public in substantially all of Premises
A for a period of one hundred eighty (180) days or more (the "Go Dark Period")
for any reason other than an Exempted Discontinuance and, Tenant fails within
the Go Dark Period to deliver to Lessor a letter of intent from a proposed
assignee or sublessee who proposes to open for business to the public in
Premises A within ninety (90) days after the end of the Go Dark Period (a
"Letter of Intent"), or if the proposed assignee or sublessee fails (subject to
Unavoidable Delay events) to open for business in the Premises within one
ninety (90) days after the end of the Go Dark Period, then Lessor shall have
the right and option to terminate this Lease by giving notice (the
"Cancellation Notice") to Tenant within one hundred eighty (180) days following
the cessation of business in the Premises or the Go Dark Period (the "Initial
Termination Period"); provided cure has not been made prior to the Cancellation
Notice being given and further provided, if the Premises remains closed
following the expiration of the Initial Termination Period, Lessor shall have
the right to terminate the Lease for a period of sixty (60) days (the "Notice
Period") following the expiration of the next succeeding one hundred eighty
(180) day period, and once again following each successive one hundred eighty
(180) day period that the Premises remains closed following the expiration of
each Notice Period; provided cure has not been made prior to the Cancellation
Notice being given. If Lessor, pursuant to the requirements of this Lease, does
not approve the proposed assignee or sublessee, and Tenant does not within
ninety (90) days after Lessor's notice of disapproval deliver another bona fide
letter of intent from an assignee or sublessee which is reasonably acceptable
to Lessor and Tenant cure has not been made, Lessor shall also have the right
to terminate this Lease, by giving a Cancellation Notice to Tenant within the
same time frame as referenced above unless cure has been made prior to the
Cancellation Notice being given. If Lessor exercises its right to terminate
this Lease, Tenant shall vacate the Premises within sixty (60) days after
receipt of the Cancellation Notice and this Lease shall terminate on the date
which is sixty (60) days after the date on which the Cancellation Notice shall
have been served on Tenant (the "Cancellation Date"). Effective as of the
Cancellation date, Tenant shall have no further obligations with respect to
this Lease except for those accruing prior to the Cancellation Date.
In the event of Lease termination pursuant to this Article, Lessor shall pay
Tenant the unamortized amount of all out of pocket costs paid by Tenant (and
not in excess of any cap herein contemplated or not previously reimbursed by
Lessor hereunder) directly or indirectly to contractors or subcontractors or
material suppliers for Tenant's improvements to the Premises or for Tenant's
leasehold improvements not removed by Tenant as determined in accordance with
generally accepted accounting practices.
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The following shall be considered Exempted Discontinuances; any temporary
discontinuance occasioned by strikes, remodeling, walkouts, 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,
or other cause beyond Tenant's reasonable control (other than lack of or
inability to procure funds to fulfill its commitments and obligations under this
Lease).
9. UTILITIES.
Tenant shall pay when due all bills for gas, water, electricity and other
utilities used on the Premises on and after the Delivery Date and through and
including the date of expiration of this Lease or the earlier termination
hereof. Lessor, at its own expense, shall install separate meters for the
utilities used in the Premises, if same is specified in the Final Plans.
10. REPAIR OF THE PREMISES.
Lessor shall warrant the Lessor's work for the greater of (i) one (1) year from
the Delivery Date or (ii) the period of time that such work is covered by
warranty. Tenant agrees that, thereafter as to Lessor's Work and during the
Lease Term as to items not part of Lessor's Work, except as otherwise provided
in this Article 10, it will perform all necessary non-structural interior
repairs to the Premises, including repair or replacement of damaged or broken
doors and windows and routine maintenance of the heating, ventilating,
air-conditioning, plumbing, gas, electrical and similar systems which are
located in and exclusively the Premises. Tenant further agrees that it will keep
and maintain the interior of the Premises in a clean and sanitary condition.
Tenant shall not be required to make any repairs which are the responsibility of
Lessor pursuant to this Article 10 or elsewhere under this Lease.
As and to the extent specified herein and to the extent not caused by Tenant's
negligent or willful act or omission, Lessor shall (i) make all structural
repairs to the Premises, whether interior or exterior, keep the Premises
watertight, and shall repair, replace and maintain in good condition the
exterior of the Premises including without limitation the slab, roof, walls,
foundations, gutters, utility lines from the point of connection to the Premises
to the main line, and downspouts; (ii) make all necessary replacements of
obsolete or unrepairable heating, ventilation, air conditioning, plumbing, gas,
electrical and other systems and components thereof which service all or any
part of the Premises; (iii) make all repairs to the Premises necessitated by
fire, casualty or the elements as provided in Article 19; and (iv) make any
repairs to the Premises necessitated by any neglect, fault or default of Lessor,
its agents, employees or contractors.
In performing its obligations under this Article 10, Lessor shall not
unreasonably interfere with Tenant's normal business operations. If Lessor fails
to undertake and complete the repairs required under this Article 10 or
elsewhere under this Lease within a reasonable time after written notice from
Tenant, Tenant shall have the right to make such repairs on behalf of Lessor
and, if the reasonable cost thereof, plus five percent 5% of such cost to cover
its overhead and administrative costs is not paid by Lessor within thirty (30)
days of billing thereof (together with invoice(s) for same), Tenant may deduct
same from the fixed rent and other charges otherwise payable hereunder.
Anything in this Lease to the contrary notwithstanding, Lessor agrees that in
the event of an emergency which necessitates prompt maintenance, repair or
replacement of items which are otherwise required by this Lease to be
maintained, repaired to replaced by Lessor, and Tenant is unable to contact
Lessor and advise it of such emergency condition, Tenant may at its option
proceed forthwith to make such repairs and pay the cost thereof. Lessor agrees
to reimburse Tenant for the cost of such repairs, plus five percent (5%) of such
cost for Tenant's overhead and administrative costs, on demand. If Lessor does
not reimburse Tenant within 60 days of written demand and submission of proof of
expenditure, then Tenant may deduct such amount from the fixed rent and other
charges otherwise payable hereunder.
If at any time during the term of this Lease or any extension thereof any
governmental agency or other authority with jurisdiction over the Premises
requires structural modification or repairs of the Premises which are
necessitated by reasons other than Tenant's peculiar use of the Premises, all
such repairs, alterations, and additions or remodeling shall be at Lessor's sole
cost and expense; provided however, if (i) the repair, alteration or remodelling
is so required during the last twenty four (24) months of the Lease Term; or
(ii) if at any time during the Lease Term, the cost of same would exceed one
hundred twenty percent (120%) of one month's fixed rent, at the time or (iii) if
same occurs during the Initial Term and
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the costs exceed such cap and despite Lessor's request, Tenant does not
thereupon elect to exercise its right to extend the Initial Term, then Lessor
may notify Tenant that it elects not to perform such work and, in such event,
Tenant may elect to either perform such work, and pay the excess cost thereof,
or terminate the Lease. If Lessor is required to make such changes and does not
so make such changes, then Tenant may make such repairs and following 60 days
written demand for reimbursement and submission of proof of expenditure, deduct
the amount expended therefor, plus five percent (5%) of such amount for its
overhead and administrative costs, from the fixed rent and other charges
otherwise payable hereunder.
11. ACCESS BY LESSOR.
Lessor shall have free access to the Premises at all reasonable times upon 24
hours' notice for the purpose of examining or making any repairs thereto which
Lessor is required to make under this Lease or which are necessary for safety
or maintenance purposes. In the event of an emergency, Lessor shall not be
required to give Tenant 24 hours' notice, but shall use reasonable efforts to
notify Tenant and its security company prior to entry.
12. TENANT'S FIXTURES AND SIGNS.
Tenant at its sole cost and expense may install and operate prototype interior
and exterior electric and other signs, in and on the Premises of any occupant of
the Premises as same may exist from time to time (including but not limited to,
signs on poles erected by Lessor or Tenant, machinery and any other mechanical
equipment, and, if Tenant is the signatory hereunder, a yellow and black ticket
sign tilted 15 degrees, with dimensions not less than 15' x 26' mounted on the
storefront per the Final Plans), provided that in so doing Tenant complies with
all laws and ordinances of any governmental authority with jurisdiction over the
Premises. Tenant may also install and maintain in the Premises such pipes,
conduits and ventilating ducts as are required or desirable for the business
conducted by Tenant therein. Tenant shall at all times have the right to remove
all signs, fixtures, machinery, equipment, appurtenances or other property
heretofore or hereafter furnished or installed by Tenant, provided it repairs
any damage caused thereby, it being expressly understood and agreed by the
parties that said property shall not become part of the Premises but shall at
all times be and remain the property of Tenant and as such shall not be subject
to any landlord's lien or other creditor's remedy otherwise available to Lessor.
Subject to compliance with all local laws and ordinances, the Premises A Tenant
shall be entitled to the space on any existing pylon or free standing sign, or
which Tenant or Lessor may construct, with space on all such pylons equal to the
largest space allowable by municipal ordinances. At any time that the Shopping
Center contains no usable pylon sign, Tenant, at its sole cost and expense, may
construct one pylon sign in the Common Area of the Shopping Center in a place to
be designated by Tenant, subject to compliance with all local laws and
ordinances. Tenant may place on the interior and exterior of the Premises any
sign which conforms to applicable legal requirements.
Tenant may install, maintain, repair and replace, and at all times have access
to, a satellite dish and supporting equipment or replacement technology on the
roof of the Premises, using sound construction practices. Tenant shall use the
roofing contractor required by Lessor to perform such work; provided Lessor
shall require such contractor to perform such work at commercially reasonable
rates.
13. ALTERATIONS TO THE PREMISES.
At any time after delivery of the Premises to Tenant, Tenant at its own cost
and expense and without Lessor's consent may make changes, alterations,
additions and improvements to the interior of the Premises, provided such work
does not impair the structural integrity of the building in which the Premises
is located. All such work shall be performed in accordance with all applicable
governmental requirements. If so requested by Tenant, Lessor shall cooperate in
securing necessary permits and other government authorizations for Tenant's
changes and alterations, at no cost to Lessor.
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14. SURRENDER OF THE PREMISES.
Tenant will deliver and surrender possession of the Premises to Lessor upon the
expiration of this Lease or its earlier termination, in good condition, loss by
fire, ordinary wear and tear and decay, casualty, neglect or fault or default
of Lessor, and taking by eminent domain excepted, but without obligation to
deliver the Premises in better condition than the Premises were in at the
commencement of the term. Lessor expressly waives any statutory or other lien
or security interest in Tenant's property. Tenant shall repair any damage
occasioned by the removal of its property or inventory.
15. HOLDING OVER; RIGHT OF FIRST NEGOTIATION.
15.1 Holding Over. If Tenant continues its occupancy of the Premises after
the expiration of the Lease Term (or any earlier termination provided or
permitted by this Lease) either with or without the consent of Lessor, such
tenancy shall be month-to-month only, and not year-to-year or based on any other
interval of time. Such continued occupancy shall not defeat Lessor's right to
possession of the Premises, and the month-to-month tenancy provided for herein
may be canceled at the end of any calendar month upon not less than thirty (30)
days' prior written notice from Lessor to Tenant. Except for provisions relating
to Lease term, all covenants, provisions, obligations and conditions of this
Lease shall remain in full force and effect during such month-to-month tenancy.
Notwithstanding the above, if Tenant continues its occupancy of the Premises
after the expiration of the Lease Term (or any earlier termination provided or
permitted by this Lease) without the consent of Lessor then fixed rent during
such holdover period shall be 125% of the fixed rent in effect prior to such
holdover period.
15.2 Right of First Negotiation. Lessor agrees to negotiate with Best Buy
in good faith (i) at the end of the Renewal Term and prior to the expiration of
the Lease Term for the new lease of the Premises then occupied by Best Buy, at
a fair market lease rate for a national retailing, credit worthy tenant such as
Best Buy, or (ii) at the end of the Lease Term and provided Lessor has elected
to raze and redevelop the Shopping Center for retail purposes within six (6)
months following the expiration of the Lease Term, for a lease of space at fair
market rates chargeable to a national retailing, credit worthy tenant such as
Best Buy.
16. REMEDIES UPON DEFAULT.
16.1 Tenant Default. The occurrence of either of the following shall
constitute a default by Tenant pursuant to this Lease: (i) a failure by Tenant
to pay rent on the day the same is due, which failure is not remedied by Tenant
within ten (10) days of Tenant's receipt of written notice from Lessor
specifying such failure; or (ii) a failure by Tenant to perform obligations
pursuant to this Lease other than as specified in (i) above, within thirty (30)
days of Tenant's receipt of written notice from Lessor specifying such failure
or, if it reasonably would require more than thirty (30) days to cure such
failure, within a time reasonably necessary to cure such failure after Tenant's
receipt of such written notice provided Tenant commences to cure such default
within thirty (30) days and thereafter prosecutes such cure diligently to
completion. It is understood that the "default" shall not arise until the
expiration of any applicable cure period therefor, Lessor shall have the right
to exercise any of the following remedies:
(a) Lessor may re-enter and take possession of the Premises on the terms
set forth in subparagraph (b) below, without such re-entry being deemed an
acceptance by Lessor of a surrender of this Lease or an impairment of Tenant's
rights of assignment and subletting as permitted under this Lease. Lessor shall
also have the right, at its option, from time to time, without terminating this
Lease, to relet the Premises, or any part thereof, as the agent and for the
account of Tenant, upon such terms and conditions as Lessor may deem advisable
or satisfactory, in which event the rents received for such reletting shall be
applied first to the reasonable and actual expenses of such reletting and
collection, including but not limited to necessary renovation and alterations
of the Premises, reasonable attorneys' fees, any reasonable brokerage
commissions paid, and thereafter toward payment of all sums due or to become
due Lessor under this Lease; and if a sufficient sum shall not be thus realized
or secured to pay such sums and other charges, at Lessor's option, Tenant shall
pay Lessor any deficiency monthly or at greater intervals as Lessor sees fit,
or Lessor may institute action to exact payment of said deficiency from time to
time, or at Lessor's option, the entire deficiency which is subject to
ascertainment for the remaining Term shall be immediately due and payable by
Tenant. All rights of Lessor to collect from or charge to Tenant any amount
described in this subsection
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(a) shall be based on or subject to determination of the worth at the time
of the award as defined in (b) below. Nothing herein, however, shall be
construed to require Lessor to re-enter and relet in any event. Lessor
shall not, in any event, be required to pay Tenant any sums received by
Lessor on a reletting of the Premises in excess of the rent provided in
this Lease, but such excess will reduce any accrued present or future
obligations of Tenant hereunder. Lessor's re-entry and reletting of the
Premises without termination of this Lease shall not preclude Lessor from
subsequently terminating this Lease as set forth below.
(b) Termination. Lessor may terminate this Lease by written notice to
Tenant specifying a date therefor, which shall be no sooner than thirty
(30) days following receipt of such notice by Tenant, and this Lease shall
then terminate on the date so specified as if such date had been originally
fixed as the expiration date of the Term. In the event of such termination,
Lessor shall be entitled to recover from Tenant:
(i) The worth at the time of award of the amount of any obligation which
has accrued prior to the date of termination reduced by the amount of any
credit or setoff to which Tenant is entitled under the Lease;
(ii) The worth at the time of award of the amount by which the unpaid rent
and any additional charges which could have been earned after termination
until the time of award reduced by the amount of any credit or setoff to
which Tenant is entitled under the Lease exceeds the amount of such rental
loss which Tenant proves could have been reasonably avoided; and
(iii) The worth at the time of award of the amount by which the unpaid rent
and additional charges for the balance of the Term after the time of award
reduced by the amount of any credit or setoff to which Tenant is entitled
under the Lease exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided.
As used in clauses (i) and (ii) of this subparagraph b), the term "worth at
the time of the award" shall be computed by following interest (at the
"Interest Rate", which shall mean the prime lending rate announced from
time to time by Bank of America, N.A. for its preferred commercial
borrowers per annum plus two percent (2%)) on the amount of the obligation
set forth therein, and as used in clause (iii) of this subparagraph (b),
the term "worth at the time of the award" shall be computed by discounting
such amount at the rate of the charge on loans to depository institutions
by the San Francisco Federal Reserve Bank, as such rate is reported in the
Wall Street Journal bearing the date of the award and identified therein as
the Discount Rate, plus 1%."
In the event this Lease is terminated as provided above or by summary
proceedings or otherwise, Lessor or its agents, servants or representatives
may immediately or at any time hereafter peaceably re-enter and resume
possession of the Premises and remove all persons and property therefrom,
either by summary proceedings or other suitable action or proceeding at
law, without liability for damage.
(c) Lessor may recover from Tenant, and Tenant shall pay to Lessor upon
demand, such reasonable expenses as Lessor may incur in recovering
possession of the Premises, placing the same in good order and condition
and repairing the same for reletting, all other reasonable expenses,
commissions and charges incurred by Lessor in exercising any remedy
provided herein, or as a result of or incurring any default by Tenant
hereunder (including without limitation attorneys' fees).
(d) The various rights and remedies reserved to Lessor herein, and any and
all other remedies available at law or in equity, including those not
specifically described herein, in force and effect at the time of the
execution hereof, are cumulative, and Lessor may pursue any and all of such
rights and remedies, whether at the same time or otherwise.
16.2 Lessor Default. If Lessor should be in default in the performance of
any of its obligations under this Lease, which default continues for a period of
more than thirty (30) days (or such longer period as may be otherwise specified
in this Lease) after receipt of written notice from Tenant specifying such
default, or if such default is of a nature to require more than thirty (30) days
for remedy and continues beyond the time reasonably necessary to cure (provided
Lessor must have undertaken procedures to cure the default within such thirty
(30) day or other applicable cure period and diligently pursue
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apply and Lessor shall pay the first One Hundred Thousand Dollars ($100,000) (or
portion thereof) and Tenant shall pay the second One Hundred Thousand Dollars
($100,000) (or portion thereof). If the cost to repair the Premises is over Two
Hundred Thousand Dollars ($200,000) then, in such event Lessor shall notify
Tenant in writing within twenty (20) days of the date of such casualty if it
elects not to pay any costs to repair in excess of its One Hundred Thousand
Dollars ($100,000). Within twenty (20) days thereafter Tenant shall notify
Lessor in writing of its election of either of the following two alternatives:
(i) To terminate this Lease effective as of the date of the casualty; or (ii) To
agree to bear all costs of the repair of the Premises in excess of the Two
Hundred Thousand Dollars ($200,000). Such election by Tenant shall be made in
writing to the Lessor. In event the Tenant elects to terminate, the Lease shall
be deemed terminated effective as of the date of the casualty.
Section 19.5 If this Lease is terminated for any reason pursuant to this
Article, Lessor shall promptly refund to Tenant any rent paid in advance and any
unearned charges.
20. WAIVER OF SUBROGATION.
Lessor and Tenant hereby waive all rights of subrogation which either has or
which may arise hereafter against the other for any damage to the Premises or
any other real or personal property or any business caused by perils required to
be insured hereunder; provided, however, that the foregoing waivers do not
invalidate any policy of insurance of the parties hereto now or hereafter
issued, it being stipulated by the parties hereto that such waiver shall not
apply in any case which would result in the invalidation of any such policy of
insurance. Each party shall notify the other if such party's insurance would be
so invalidated.
21. EMINENT DOMAIN.
If the entire Premises are at any time after execution of this Lease taken by
public or quasi-public use or condemned under eminent domain, then this Lease
shall terminate and expire effective the date of such taking and any rent paid
in advance and any unearned charges shall be refunded to Tenant by Lessor on
such date.
Tenant shall have the right to terminate this Lease and to receive from Lessor
an appropriate refund of rent paid in advance and unearned charges if, as a
result of eminent domain proceeding or other governmental or quasi-public
action, any portion of the Premises or a material portion of the parking or
access area serving the Premises is taken. Should Tenant elect to remain in the
Premises after any partial taking, then rent and other charges shall be reduced
for the remainder of the term thereafter in proportion to the floor area of the
Premises taken, and/or reduced by a mutually agreeable equitable amount for any
non-building area taken and Lessor shall promptly repair and restore the
Premises as nearly as possible to their prior condition. Tenant shall not be
entitled to damages for the taking of its leasehold estate or the diminution of
the value thereof, provided, if Tenant has made any leasehold improvements to
the Premises or material alterations, structural changes or repairs thereto at
its own expenses, regardless of when made, Tenant shall be entitled to claim an
award for the unamortized balance of Tenant's cost thereof provided the
condemning authority makes a separate award therefor. In addition, Tenant shall
be entitled to claim an award for loss of business, damage to merchandise and
fixtures, removal and reinstallation costs and moving expenses.
22. INSURANCE.
22.1 Tenant's Insurance. Tenant shall obtain and keep in force at Tenant's
expense for the term of this Lease (i) commercial general liability insurance
with a combined single limit of Two Million Dollars ($2,000,000.00) for each
occurrence, with said insurance naming Lessor as additional insured, and (ii)
all risk property insurance (except earthquake coverage shall not be required)
written at replacement cost value insuring Tenant's merchandise, trade fixtures,
furnishings, equipment and all items of personal property of Tenant and
including property of Tenant's customers located on or in the Premises. The
insurance required under this Article shall be issued by an insurance company
authorized to do business in the state in which the Premises are located; and
shall provide for at least thirty (30) days' notice, by certified mail return
receipt requested, to Lessor before cancellation, termination or nonrenewal of
such insurance. A certificate evidencing such coverage shall be delivered to
Lessor upon request. Provided, however,
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notwithstanding the foregoing, provided it maintains a net worth of at least
$100 Million Dollars, Tenant may self-insure all or any part of the insurance
it is required to carry hereunder and/or carry such insurance under a "blanket"
policy.
22.2 Lessor's Insurance. Lessor shall procure and maintain throughout the
entire term of this Lease all risk insurance in an amount not less than the full
insurable value of the Shopping Center (including the Premises), on a
replacement cost basis, insuring Lessor and Tenant (as their respective
interests may appear) against loss or damage thereto by fire and other
casualties covered by the standard form of all risk insurance available in the
State in which the Premises are located. Lessor shall also procure and maintain
throughout the entire term of this Lease, public liability insurance coverage
for casualties occurring on the Common Area, having limits of liability of not
less than Two Million Dollars ($2,000,000.00) combined single limit and naming
Tenant as an additional insured. Lessor may carry business interruption or
rental insurance equal to one year's rent hereunder and other insurance as its
lenders may reasonably and customarily require. Lessor's coverage shall be
primary and noncontributory with respect to the Common Areas. Tenant shall pay
its proportionate shares of Lessor's cost of insurance, calculated in the manner
described in Article 38 hereof. In no event shall Tenant pay for Lessor's
earthquake coverage. The insurance required under this Article shall be issued
by an insurance company authorized to do business in the state in which the
Shopping Center is located; and shall provide for at least thirty (30) days'
notice, by certified mail return receipt requested, to Tenant before
cancellation, termination or nonrenewal of such insurance. A certificate
evidencing such coverage shall be delivered to Tenant upon request.
23. SUBORDINATION OF LEASE.
23.1 Existing Liens. Lessor covenants to obtain from each lender the
security for whose loan as of the date hereof encumbers the Shopping Center
("Lender") and each lessor whose interest in the Shopping Center is paramount
to Lessor's ("Overlessor"), to the extent such entity or entities require that
their interests be superior to this Lease, an executed nondisturbance agreement
in form reasonably approved by Tenant ("Nondisturbance Agreement"). If Lessor
breaches its obligation(s) hereunder, Tenant may terminate this Lease by written
notice to Lessor at any time prior to Tenant's receipt of all required
Nondisturbance Agreements.
23.2 Future Liens. Tenant shall, upon Lessor's request, subordinate this
Lease in the future to any mortgage or deed of trust placed by Lessor upon the
Premises in favor of any Lender, provided that such Lender executes a
Nondisturbance Agreement providing that (a) if Tenant is not then in default
under this Lease, this Lease shall not terminate as a result of the foreclosure
of such lien, or conveyance in lieu thereof, Tenant's rights under this Lease
shall continue in full force and effect and its possession be undisturbed except
in accordance with the provisions of this Lease, and (b) the proceeds of any
insurance recovery or condemnation award shall be used for the purposes stated
in this Lease. Tenant will, upon request of the Lender, be a party to a
subordination and attornment agreement, and will agree that if such Lender
succeeds to the interest of Lessor, Tenant will recognize said Lender (or
successor in interest of the Lender) as its Lessor under the terms of this
Lease. Such agreement must be reasonably satisfactory in form and content to all
parties. Notwithstanding the foregoing, Tenant will acknowledge the inferior
interest of a future Lender in the payment of rent without implying that such
future Lender's interest is superior to Tenant's leasehold interest and will
agree to attorn to such future Lender provided such future Lender assume the
performance of the affirmative covenants of Lessor occurring under the Lease
from and after the time such Lender becomes Lessor.
24. TRANSFER OF INTEREST.
Section 24.1. Lessor may, at any time after it shall complete Lessor's Work
in accordance with Article 5 above but not before, transfer its interest in this
Lease and underlying fee. Lessor's transferee shall assume all of Lessor's
obligations under this Lease. Lessor agrees to give Tenant notice of such
transfer.
Section 24.2. Except as otherwise provided below, Tenant shall not assign
this Lease, or sublet the Premises, or any portion thereof, without the prior
written consent of the Lessor, or the waiver thereof as hereinafter stated,
which consent shall not be unreasonably withheld. If Lessor fails to respond to
Tenant's request for consent within thirty (30) days following receipt of a
written request and a description of the assignment or sublease transaction
("Transfer Request"), with a written specification of the precise reasons for
Lessor's refusal to consent, such failure to so respond shall
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constitute a waiver of Lessor's right to deny consent hereunder. Tenant's
description of the assignment or sublet which accompanies its request shall
include the following written information: (a) the name and business experience
of the transferee; (b) the specific use proposed to be conducted by the
transferee in the Premises if such use is other than Tenant's; and (c) the
transferee's most recently available financial statement. The parties
acknowledge and agree that each of the following constitute reasonable grounds
for Lessor to refuse consent to an assignment or sublease: (i) the transferee's
contemplated use of the Premises, if different than Tenant's, is not compatible
with a retail shopping center of this type or compatible with the then current
tenant mix at the Shopping Center; or (ii) the contemplated use of the Premises,
if different than Tenant's, would violate an exclusive which has been granted by
Lessor to any tenant in the "existing T.B.A." space shown on the Site Plan or
any other tenant in the Shopping Center occupying at least 30,000 square feet of
space. Notwithstanding anything to the contrary contained in this Lease, Tenant
shall have the right, without Lessor's consent, to assign this Lease, or sublet
the Premises, to a corporation with which it may merge or consolidate, or in
connection with the sale of all or a portion of its assets, or to any parent or
subsidiary of Tenant, or a subsidiary of Tenant's parent ("Affiliate"). The sale
of stock by Tenant or by any shareholder of it shall not constitute an
assignment under the terms of this Lease. Any provisions of this Lease which
purports to grant to Lessor certain rights to take effect precedent to, or in
event of assignment or subletting shall not apply to an assignment or sublet
within the scope of this Section. Notwithstanding anything herein to the
contrary, Tenant shall have the right to operate departments within the Premises
without Lessor's consent by means of subleases, licenses or concession
agreements provided that such departments shall not be separated by demising
walls from the balance of Tenant's operations in the Premises.
Section 24.3.
(a) Notwithstanding the above, Tenant shall notify Lessor ("Initial
Transferee Notice") of the following information as to its first proposed
subtenant or assignee of Premises B (unless same is an Affiliate): (a) the
proposed date of occupancy, (b) the proposed rent, (d) the name and address of
the proposed transferee, (e) a copy of the deal letter, if any, pertaining to
the proposed transfer, and (f) whatever current financial statements of the
proposed transferee Tenant has obtained.
(b) Notwithstanding anything to the contrary herein contained, Lessor shall
have the right, exercisable by written notice to Tenant within fifteen (15) days
of the date of its receipt of the Initial Transferee Notice, to notify Tenant
("Lessor Notice") that either (i) it desires to have a direct lease of Premises
B between Lessor and the transferee ("Direct Lease") or (ii) that it does not
desire to negotiate a Direct Lease but does not approve the proposed transferee.
If the Lessor Notice indicates disapproval such proposed transferee, such notice
shall state, with particularity, the precise reasons for Lessor's disapproval of
such proposed transferee.
(c) If the Lessor Notice is so given and Lessor indicates therein that it
desires to have a Direct Lease, Tenant shall, working with Lessor, negotiate a
Direct Lease with such proposed transferee. Upon execution of such lease by
such proposed transferee, Tenant shall deliver four (4) execution drafts (with
Lessor being the lessor thereunder) of such lease to Lessor. Lessor shall have
fifteen (15) days after the delivery of same to notify Tenant that it accepts
such Direct Lease. If Lessor so notifies Tenant that it accepts the Direct
Lease, then this Lease shall be amended within 30 days thereafter so as to
eliminate Premises B from the definition of "Premises" and to reduce the fixed
rent accordingly and to modify any other provisions of this Lease which must be
modified to reflect such change in the Premises.
(d) If the Lessor Notice is not given as provided above or if Lessor does
not object to the new transferee or Lessor has not notified Tenant as provided
above that it accepts the Direct Lease, then Lessor shall be deemed to have
consented to such proposed transferee and Tenant, at its option, may sublease
or assign Premises B to such proposed transferee without further approval of
Lessor and this Section 24.3 shall no longer be of force and effect. Such
sublease or assignment shall not be a novation of this Lease nor shall Tenant
be relieved or released from its other obligations hereunder.
25. REAL ESTATE TAXES.
Tenant shall pay its proportionate share of all real estate taxes and all
installments of assessment (collectively, the "Taxes") payable with respect to
the Premises during the Lease Term promptly as the same shall become due and
before interest
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application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby.
28. MEMORANDUM OF LEASE.
Neither party may record this Lease. However, upon the request of either party
hereto, the other party, within thirty (30) days of such request, shall join in
the execution of a Memorandum or so-called "Short Form" of this Lease for the
purposes of recordation. Said Memorandum or Short Form of this Lease shall
describe the parties, the Premises, the term of this Lease and any special
provisions hereof, and shall incorporate this Lease by reference. Any fees
required to be paid in order to prepare or record such Memorandum or Short Form
of this Lease shall be paid by the party which initiated its preparation.
29. PARKING REQUIREMENTS.
Lessor covenants and agrees that the number of parking spaces in the Shopping
Center shall at all times remain the same as shown on the Site Plan. All such
parking shall be made available at no charge to Tenant and its customers and
employees. The parking areas are for the non-exclusive benefit of the Shopping
Center occupants, and the parties under the REA and their employees, licensees,
customers, and permittees. Accordingly, subject to the REA, Lessor shall not
grant rights to use such parking areas to parties other than those permitted
under this Section 29. Subject to Section 39 below, the layout of the parking
areas and access drives and curb cuts shall at all times be located as shown on
the Site Plan.
30. ENTIRE AGREEMENT.
This instrument shall merge all undertakings between the parties hereto with
respect to the Premises and upon execution by both parties shall constitute the
entire lease agreement, unless thereafter modified by both parties in writing.
31. RELATIONSHIP OF THE PARTIES.
Nothing contained in this Lease shall be deemed or construed by the parties
hereto or by a third party to create the relationship of principal and agent or
of partnership or of joint venture of any association whatsoever between Lessor
and Tenant, it being expressly understood and agreed that neither the method
or computation of rent nor any other provision contained herein, nor any act or
acts of the parties hereto, shall be deemed to create any relationship between
Lessor and Tenant other than the relationship of lessor and tenant.
32. RIGHT OF PROTEST.
Each party shall keep the Premises, Shopping Center and all portions thereof
free from any liens arising out of any work performed, materials furnished or
obligations incurred by it or on behalf of it. Each party may contest any
mechanics' or other liens imposed against the Premises or the Shopping Center
arising out of such party's performance hereunder, provided that the contesting
party believes in good faith that such liens are not proper, and further
provided that the contesting party furnishes the other party reasonable
security to ensure payment and to prevent any sale, foreclosure or forfeiture
of the Premises or the Shopping Center by reason of such nonpayment. The
contesting party shall furnish to other party such security as such other party
may reasonably request pursuant to the foregoing sentence within thirty (30)
days of receiving a written request therefor. Upon a final determination of the
validity of such lien or claim, the contesting party shall promptly pay any
judgment or decree rendered against the contesting party, including without
limitation all proper costs and charges, and shall cause such lien to be
released of record, all without cost to the other party.
33. IMPORTANCE OF EACH COVENANT.
Each covenant and agreement on the part of one party hereto is understood and
agreed to constitute an essential part of the consideration for each covenant
and agreement on the part of the other party.
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34. HEADINGS.
The headings of the Articles of this Lease are for convenience of reference only
and do not form a part hereof, and they shall not be interpreted or construed to
modify, limit, or amplify the intent of such Articles.
35. PARTIES IN INTEREST.
Subject to the provisions of this Lease relating to assignment, subleasing and
other transfers of the parties' interests, this Lease shall inure to the benefit
of and be binding upon the successors in interest and assigns of the parties
hereto.
36. COUNTERPARTS.
This Lease may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same
instrument.
37. NUMBER AND GENDER.
Words in the singular, plural, masculine, feminine and neuter as used herein
shall have the meanings and be construed as required by the context in which
they are used herein.
38. COMMON AREAS.
Lessor will maintain in good order, condition and repair all parking areas and
other areas used in common by tenants of the Shopping Center (the "Common
Area"), and Lessor hereby grants to Tenant, its agents, employees and invitees,
the nonexclusive right to use the Common Area in common with other tenants of
the Shopping Center. Tenant's rights to use the Common Area shall be subject to
reasonable rules and regulations, provided same are enforced against all other
occupants of the Shopping Center and same do not diminish, change or alter any
of the rights or benefits of Tenant or benefiting the Premises as provided in
this Lease and not impose additional obligations or burdens upon Tenant or the
Premises. In each Lease Year Tenant shall pay Lessor, as additional rent, its
proportionate share of Lessor's Operating Costs (as hereinafter defined).
Tenant's proportionate share of Lessor's Operating Costs will be computed by
multiplying Lessor's Operating Costs by a fraction, the numerator of which shall
be the floor area of the Premises and the denominator of which shall be the
total floor area in the Shopping Center. Lessor covenants throughout the Lease
term to engage for the services to be performed hereunder to be performed at
commercially reasonable rates. Lessor shall keep the parking areas lit from dusk
until one hour after Tenant closes for business, and Lessor shall provide
security lighting during all other hours of darkness.
As used herein, the term "Lessor's Operating Costs" shall mean actual expenses
reasonably incurred by Lessor for maintaining the Common Areas in the manner
required of Lessor hereunder including, but not limited to all costs and
expenses of repairing, lighting and cleaning; landscaping; removal of snow, ice
and debris. The following shall be excluded from Lessor's Operating Costs: costs
related to Lessor's Work during the period same is covered by warranty;
depreciation, principal, interest and other charges on debt; the cost of capital
improvements (as defined by generally accepted accounting principles),
management, administrative and overhead fees, including but not limited to wages
and salaries (other than a sum equal to five percent (5%) of Lessor's Operating
Costs, excluding insurance and Taxes), any sums paid for accounting, bookkeeping
and expense collection services, promotional and other similar fees; expenses
that are not paid for by every tenant or occupant of the Shopping Center; costs
of repaving or replacing all or a substantial part of the parking area
(provided, however, that re-coating, re-sealing, installation of a Petro-mat
fabric with asphalt overlay of up to 1" and/or re-striping the parking areas or
minor patchwork such as pot hole repairs may be included in Lessor's Operating
Costs), costs to remove hazardous or toxic substances and costs of maintaining,
repairing and replacing the foundation, exterior walls and roof of the Shopping
Center, including the Premises (provided a one time cost to paint the exterior
of the building of which the Premises is contained may be included, provided
Tenant's share of same shall be the product obtained when the cost of same is
multiplied by a fraction the numerator of which is the remaining Initial Lease
Term, if same occurs during the Initial Term, and the denominator of which is
the normal life
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expectancy of such improvements upon commencement of any renewal term Tenant
shall commence paying the amortized sum related to the portion of such life
expectancy for the item accruing within said renewal term.)
The portion of Lessor's Operating Costs to be paid by Tenant hereunder shall be
due and payable thirty (30) days following receipt of a statement from Lessor
that such expenses have been incurred. Lessor shall maintain complete and
accurate records of Lessor's Operating Costs. Tenant shall have the right to
inspect and audit Lessor's records with respect thereto. If such inspection and
audit reveals overstatements of Lessor's Operating Costs, Lessor shall remit
Tenant's share of the overstated amount (plus interest at the Interest Rate
running from the date of Tenant's overpayment). In addition, if such
overstatement of Lessor's Operating Costs is three percent (3%) or more of the
actual Lessor's Operating Costs, then Lessor shall also reimburse Tenant for its
reasonable costs of such inspection and audit.
39. OBSTRUCTIONS AND CONSTRUCTION.
Lessor will not place or permit to be placed any building, wall, landscaping,
fence or other improvement in the Shopping Center other than improvements shown
as existing or planned on the Site Plan, if same would adversely affect the
access, visibility or parking for the Premises. Lessor agrees that no
construction shall be permitted in the Shopping Center, except for emergency
repairs diligently pursued, during the period from October 1st to December 31st
of any year without the prior written consent of Tenant, which consent may
include conditions designed to eliminate interference with Tenant's business. In
addition to the above, Lessor shall not make any changes to the Shopping Center
buildings or Common Area which may adversely affect access, visibility or
parking for the Premises without the consent of Tenant which may be withheld in
Tenant's sole discretion if such change may have a material adverse effect on
same.
40. RIGHT OF FIRST REFUSAL ON ADJOINING SPACE.
Intentionally Deleted by the Parties.
41. EXCLUSIVITY.
Lessor warrants, covenants and agrees that it shall operate the Shopping Center
as a first-class retail shopping center and that it will not permit any person
or entity (other than Tenant) in space leased directly or indirectly (by way of
sublease or assignment) from Lessor within the Shopping Center or within a
radius of one (1) mile of the Shopping Center, to sell or rent electronic
equipment or appliances (including, without limitation, televisions, stereos,
video recorders, major household appliances (including, without limitation,
refrigerators, freezers, stoves, microwave ovens, dishwashers, washers and
dryers), personal computers and peripherals, computer software, car radios or
phones, entertainment software including compact discs, music videos and
prerecorded tapes, telephones, telecopy, fax and photocopy machines, or
photographic cameras or equipment without Tenant's prior written consent which
may be granted or withheld in Tenant's sole and absolute discretion. Lessor, for
purposes of this Article, shall be defined to include Lessor and (i) if Lessor
is a corporation, its principal shareholders; or (ii) if Lessor is a
partnership, its partners and any principal shareholders or partners of any
partner which is a corporation or shareholders; or (iii) if Lessor is a trust,
the beneficiaries of any such trust including the principal shareholders or
partners of any beneficiary which is a corporation or trust, all of whom shall
execute an agreement to be bound to this Rider. In the event of any breach of
the foregoing covenant, Tenant shall have all remedies given to it at law and in
equity, including the right to injunctive relief and damages and, in addition
thereto, Tenant's fixed rent shall not be due and payable during the period of
such breach.
42. HAZARDOUS SUBSTANCES.
A. Lessor represents and warrants that, except as provided below, to the best of
its knowledge as of the date of this Lease any handling, transportation,
storage, treatment or usage of hazardous or toxic substances in quantities
and/or concentrations which are at or above actionable levels (as defined by any
applicable government authority and hereinafter being referred to as "Hazardous
Materials") that has occurred on the Shopping Center are in compliance with all
applicable federal, state and local laws, regulations and ordinances, and, to
the best of its knowledge, as of the Delivery Date no leak, spill, discharge,
emission or disposal of Hazardous Materials shall have occurred on or onto the
Shopping Center and that the soil and soil vapor on or under the Shopping Center
shall be free of Hazardous Materials as of the date of
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Tenant's opening. Notwithstanding the above, Lessor and Tenant acknowledge that
Lessor is currently performing certain soil remediation on the Shopping Center
and that Lessor shall indemnify Tenant for same as provided below. Lessor agrees
to indemnify, defend and hold Tenant and its officers, partners, directors,
shareholders, employees and agents harmless from any claims, judgments, damages
(other than consequential damages), fines, penalties, costs, liabilities
(including sums paid in settlement of claims) or loss including attorneys' fees,
consultants fees, and expert fees which arise during or after the Term of this
Lease or any renewal term, or in connection with the presence or suspected
presence of Hazardous Materials in the soil, groundwater, or soil vapor on or
under the Shopping Center, unless such Hazardous Materials are present as the
result of the acts of Tenant, its officers, employees or agents. Without
limiting the generality of the foregoing, this indemnification shall survive the
expiration of this Lease and does specifically cover costs incurred in
connection with any investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state or local governmental
agency or political subdivision because of the presence or suspected presence of
Hazardous Materials in the soil, groundwater or soil vapor on or under the
Shopping Center, unless the Hazardous Materials are present solely as the result
of the acts of Tenant, its officers, agents or employees. Without limiting the
generality of the foregoing, this indemnification shall also specifically cover
costs in connection with:
1. Hazardous Materials present or suspected to be present in the soil,
groundwater or soil vapor on or under the Shopping Center before the
date hereof; or
2. Hazardous Materials that migrate, flow, percolate, diffuse or in any
way move onto or under the Shopping Center after date hereof; or
3. Hazardous Materials present on or under the Shopping Center as a
result of any discharge, dumping, spilling (accidental or otherwise)
onto the Shopping Center during or after the Term of this Lease by
any person or entity.
Tenant agrees not to bring onto the Demised Premises Hazardous Materials
above actionable levels and to indemnify, defend and hold Lessor and its
officers, employees and agents harmless from any claims, judgments, damages
(other than consequential damages), fines, penalties, costs, liabilities
(including sums paid in settlement of claims) or loss including attorneys' fees,
consultants fees, and expert fees which arise during or after the Term of this
Lease in connection with the presence of toxic or Hazardous Materials in the
soil, groundwater, or soil vapor on or under the Shopping Center if and to the
extent the presence of such Hazardous Materials is caused by Tenant, its
officers, employees or agents. Without limiting the generality of the foregoing,
this indemnification does specifically cover costs incurred in connection with
any investigation of site conditions or any cleanup, remedial removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of the presence of Hazardous Materials in the
soil, groundwater or soil vapor on or under the Shopping Center, which Hazardous
Materials are caused by Tenant, its officers, agents or employees.
B. If during the Term of this Lease any governmental authority requires
the remediation of Hazardous Materials from the Demised Premises or the
Shopping Center and such remediation materially affects Tenant's business
operations, then Tenant shall be entitled to an equitable abatement of fixed
rent from the date such interference or safety hazard occurs to the date such
interference and safety hazard are not longer present.
C. In the event Hazardous Materials are present at the Premises or the
Shopping Center due to the acts of any party other than Tenant, its agents,
employees, or officers and/or future remediation work is required to remove
and/or monitor the Hazardous Materials caused to be present by any party other
than Tenant, its agents, employees or officers and the presence, remediation and
monitoring of such Hazardous Materials materially and adversely affects the
operation of Tenant's business, Tenant, upon written notice to Lessor, shall
have the right to terminate this Lease upon written notice to Lessor within one
(1) year after the initial known presence of such Hazardous Materials by Tenant,
in which event this Lease will be of no further force and effect or at its
option, receive a full abatement of Base Annual Rent and other payment
obligations hereunder until such Hazardous Materials are removed or remediated
to the satisfaction of applicable governmental authorities, as documented by
such authorities. If Tenant has not terminated the Lease pursuant to this
paragraph D within one (1) year following the initial known presence by Tenant
of such Hazardous Materials, then Tenant shall resume the full payment of
minimum rent and shall thereafter be deemed conclusively to have waived its
right to terminate this Lease under this Article.
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43. BROKERAGE.
Lessor agrees to pay the brokerage fees, commissions, finder's fees or other
similar charge in connection with this Lease, including a fee in the amount of
$2.00 per square foot of floor area to Retail Brokerage Inc., c/o Xxxx Xxxxxxx,
Xxxxxxx Retail Services. Tenant warrants that, other for the aforementioned
broker, it has not had any dealings with any realtor, broker or agent, in
connection with the negotiation of this Lease. Lessor is responsible for any
other broker's commission due to brokers with whom Lessor has dealt in
connection with this Lease.
44. ATTORNEY'S FEES.
In the event Tenant or Lessor defaults in the performance of any of the terms,
covenants, agreements or conditions contained in this Lease and the other party
places in the hands of an attorney the enforcement of all or any part of this
Lease, the defaulting party agrees to pay on demand the other party's
reasonable attorneys' fees for the services of the attorney, whether suit is
actually filed or not.
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B. EXHIBITS AND RIDERS.
Attached hereto and made a part of this Lease are Exhibits A-E and Rider
relating to the Reciprocal Easement Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first above written.
LESSOR:
MERCHANDISING DEVELOPMENT U.S.A., INC.
By: [illegible signature]
----------------------------------
Its: President
-----------------------------
TENANT:
BEST BUY CO., INC.
By: [illegible signature]
----------------------------------
Its: President
---------------------------------
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RECIPROCAL EASEMENT R?????
Lessor agrees that Lessor shall not, as owner of the Lessor's Parcel,
execute any documents terminating or modifying any reciprocal easement
agreement granting Tenant easements, rights or restrictions as to the Shopping
Center ("REA") which would adversely affect ingress or egress to or from the
Premises, visibility of the Premises or parking for the Premises. Lessor agrees
that performance by the other parties to the REA, in accordance with the terms
of the REA, may be material to this Lease; therefore Lessor agrees to use
reasonable business efforts to enforce the terms of the REA which are material
to Tenant's rights under this Lease. So long as Lessor uses reasonable business
efforts to enforce such terms of the REA, Lessor shall not have financial
liability to Tenant by reason of nonperformance of REA provisions by any other
parties thereto. The Premises and the rights of Tenant under this Lease are
necessarily subject to the REA. The parties hereto agree that, as between the
parties hereto, all provisions of the REA shall be superior and paramount to
the Lease. Tenant agrees that it shall not violate the terms, covenants,
conditions and agreements set forth in the REA which are of a prohibitory
nature; the obligations imposed by the REA which are of an affirmative nature
in respect of the Premises shall be performed by Lessor unless Tenant is
obligated to perform such under a provision of this Lease.
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EXHIBIT A
LEGAL DESCRIPTION OF SHOPPING CENTER
PARCEL 1:
PARCEL 4, OF PARCEL MAP NO. 3958, IN THE CITY OF TORRANCE, IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 49 PAGE 4 OF PARCEL
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM ONE-HALF OF ALL OIL, ORES, MINERALS AND GAS IN AND UNDER SAID
LAND, AS RESERVED BY TAKA NAKANO, XXXXXX XXXXXX, XXXXX XXXXXX XXXXXXXXX, XXX
XXXXXX, XXXX XXXXXX AND XXXXX XXXXXX, IN DEED RECORDED IN BOOK 37984 PAGE 113
OFFICIAL RECORDS.
THE SURFACE RIGHTS UNDER THE ABOVE RESERVATION WERE RELEASED BY A QUITCLAIM
DEED RECORDED MAY 14, 1954 IN BOOK 44575 PAGE 160, OFFICIAL RECORDS.
BY DOCUMENT RECORDED JULY 12, 1968 AS INSTRUMENT NO. 352, IN BOOK D4063 PAGE
298, OFFICIAL RECORDS, EXECUTED BY TAKA NAKANO, XXXXXX XXXXXX, XXX XXXXXX, XXXX
XXXXXX, XXXXX XXXXXX, AND XXXXX XXXXXX XXXXXXXXX, ALL RIGHT, TITLE INTEREST IN
AND TO THE SURFACE AND SUBSURFACE OF SAID LAND TO A DEPTH OF 500 FEET OF THE
PRESENT SURFACE THEREOF, WERE QUIT CLAIMED TO THE RECORD OWNERS OF THE SURFACE
OF SAID LAND.
ALSO EXCEPT ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS, BY HERETOFORE
RESERVED AND WATER NOR OR AT ANY TIME HEREAFTER SITUATED THEREIN AND THEREUNDER
OR PRODUCIBLE THEREFROM, TOGETHER WITH THE FREE AND UNLIMITED RIGHT TO MINE,
DRILL, BORE, OPERATE, STORE, AND REMOVE FROM BENEATH THE SURFACE OF THE LAND
AT ANY LEVEL OR LEVELS 100 FEET OR MORE BELOW THE SURFACE FOR THE PURPOSE OR
DEVELOPMENT OR REMOVAL OF SAID SUBSTANCES. SELLER WAIVES THE RIGHT TO USE AND
OCCUPANCY OF THE SURFACE AND SUBSURFACE AREA OF THE ABOVE DESCRIBED REAL
PROPERTY TO A DEPTH OF 100 FEET, BUT SUBJECT TO THE LIMITATIONS ABOVE SET FORTH,
RESERVES ALL SUBSURFACE RIGHTS, EASEMENTS, RIGHT OF WAY AND SERVITUDES IN AND
UNDER SAID LAND NECESSARY OR CONVENIENT IN CONNECTION WITH THE FOREGOING
MINERAL RESERVATION AS RESERVED BY CAPITAL COMPANY, A CORPORATION, IN DEED
RECORDED APRIL 7, 1959 AS INSTRUMENT NO. 1893, IN BOOK D423 PAGE 701, OFFICIAL
RECORDS.
ALSO EXCEPT ALL OIL, GAS, MINERALS, AND OTHER HYDROCARBON SUBSTANCES LYING IN
AND UNDER SAID LAND BELOW A DEPTH OF 500 FEET FROM THE SURFACE THEREOF, WITHOUT
RIGHT OF SURFACE ENTRY EXCEPT BELOW SAID DEPTH OF 500 FEET BELOW THE SURFACE
OF SAID LAND FOR THE EXTRACTION OR DEVELOPMENT THEREOF, AS RESERVED BY THE
REDEVELOPMENT AGENCY OF THE CITY OF TORRANCE, CALIFORNIA, A PUBLIC BODY
CORPORATE AND POLITIC, IN DEED RECORDED JUNE 26, 1973 AS INSTRUMENT XX. 000,
XXXXXXXX XXXXXXX.
00
XXXXXXX X
[EXISTING SITE PLAN & PROPOSED LANDSCAPE]
28
EXHIBIT C ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
PERMITTED TITLE EXCEPTIONS
ALTA OWNER'S POLICY (4-6-90)
OWNERS POLICY
SCHEDULE B
EXCEPTIONS FROM COVERAGE
THIS POLICY DOES NOT INSURE AGAINST LOSS OR DAMAGE (AND THE COMPANY WILL NOT
PAY COSTS, ATTORNEYS' FEES OR EXPENSES) WHICH ARISE BY REASON OF:
A. PROPERTY TAXES, INCLUDING ANY ASSESSMENTS COLLECTED WITH TAXES, TO BE
LEVIED FOR THE FISCAL YEAR 1991 - 1992 WHICH ARE A LIEN NOT YET PAYABLE.
B. SUPPLEMENTAL ASSESSMENTS OF PROPERTY TAXES, IF ANY, MADE PURSUANT TO THE
PROVISIONS OF PART 0.5, CHAPTER 3.5 (COMMENCING WITH SECTION 75) OF THE
CALIFORNIA REVENUE AND TAXATION CODE AS A RESULT OF THE TRANSFER OF TITLE
TO THE VESTEE NAMED IN SCHEDULE A.
C. SUPPLEMENTAL OR ESCAPED ASSESSMENTS OF PROPERTY TAXES, IF ANY, MADE
PURSUANT TO PART 0.5, CHAPTER 3.5 OR PART 2, CHAPTER 3, ARTICLES 3 AND 4,
RESPECTIVELY, OF THE CALIFORNIA REVENUE AND TAXATION CODE AS A RESULT OF
CHANGES IN OWNERSHIP OR NEW CONSTRUCTION OCCURRING PRIOR TO DATE OF POLICY.
1. RIGHT AND PRIVILEGE TO EXTEND AND MAINTAIN DRAINAGE STRUCTURES AND
EXCAVATION AND EMBANKMENT SLOPES BEYOND THE LIMITS OF THE PARCEL OF LAND
DESCRIBED IN THE DEED, AFFECTING THE SOUTHWESTERLY LINE OF SAID LAND, TO
THE STATE OF CALIFORNIA, RECORDED APRIL 13, 1934 IN BOOK 12693 PAGE 231,
OFFICIAL RECORDS.
2. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
PURPOSE: PUBLIC HIGHWAYS SLOPES
RECORDED: JULY 23, 1953 AS INSTRUMENT NO. 2313, IN
BOOK 42283 PAGE 244, OFFICIAL RECORDS
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
3. A WAIVER OF ANY CLAIMS FOR DAMAGE TO SAID LAND AS CONTAINED IN A
DOCUMENT
RECORDED: JULY 23, 1953 AS INSTRUMENT NO. 2313 IN
BOOK 42283 PAGE 244, OFFICIAL RECORDS
PAGE 3
29
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
4. THE PRIVILEGE AND RIGHT TO EXTEND AND MAINTAIN DRAINAGE STRUCTURES,
EXCAVATION SLOPES, IMBANKMENT SLOPES ON SAID LAND, ADJACENT TO SAID PUBLIC
HIGHWAY, AS GRANTED TO THE STATE OF CALIFORNIA, BY THE ABOVE MENTIONED
DEED.
5. THE FACT THAT SAID LAND IS INCLUDED WITHIN A PROJECT AREA OF THE
REDEVELOPMENT AGENCY SHOWN BELOW, AND THAT PROCEEDINGS FOR THE
REDEVELOPMENT OF SAID PROJECT HAVE BEEN INSTITUTED UNDER THE REDEVELOPMENT
LAW (SUCH REDEVELOPMENT TO PROCEED ONLY AFTER THE ADOPTION OF THE
REDEVELOPMENT PLAN) AS DISCLOSED BY A DOCUMENT
REDEVELOPMENT AGENCY: MEADOW PARK REDEVELOPMENT PROJECT
REDEVELOPMENT AREA
RECORDED: MAY 12, 1967 IN BOOK M2553 PAGE 174,
OFFICIAL RECORDS AS INSTRUMENT NO. 2108,
AND RECORDED JUNE 22, 1972 IN BOOK M4095
PAGE 389 AS INSTRUMENT NO. 3963, OFFICIAL
RECORDS
6. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY
RESTRICTIONS BASED ON RACE, COLOR, OR CREED) AS SET FORTH IN THE
DOCUMENT REFERRED TO IN THE NUMBERED ITEM LAST ABOVE SHOWN.
7. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: CITY OF TORRANCE, A MUNICIPAL CORPORATION
PURPOSE: AVIGATION
RECORDED: JANUARY 8, 1971 AS INSTRUMENT NO. 2396, IN
BOOK D4938 PAGE 387, OFFICIAL RECORDS
AFFECTS: A PORTION OF SAID LAND
8. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: CITY OF TORRANCE
PURPOSE: AVIGATION
RECORDED: JUNE 4, 1973 AS INSTRUMENT NO. 3724
AFFECTS: A PORTION OF SAID LAND
9. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY RESTRICTIONS
BASED ON RACE, COLOR OR CREED) AS SET FORTH IN THE DOCUMENT
RECORDED: JUNE 26, 1973 AS INSTRUMENT NO. 208
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: JULY 9, 1974 AS INSTRUMENT NO. 765
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: SEPTEMBER 2, 1975 AS INSTRUMENT NO. 626
PAGE 4
30
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
10. COVENANTS, CONDITIONS AND RESTRICTIONS (DELETING THEREFROM ANY RESTRICTIONS
BASED ON RACE, COLOR OR CREED) AS SET FORTH IN THE DOCUMENT
RECORDED: JUNE 26, 1973 AS INSTRUMENT NO. 2075 AND
IN BOOK D5922 PAGE 433, OFFICIAL RECORDS
SAID DECLARATION ALSO PROVIDES FOR CERTAIN EASEMENTS.
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2125
MODIFICATION(S) OF SAID COVENANTS, CONDITIONS AND RESTRICTIONS
RECORDED: SEPTEMBER 30, 1987 AS INSTRUMENT NO.
00-0000000, OFFICIAL RECORDS
11. AN UNRECORDED LEASE WITH CERTAIN TERMS, COVENANTS, CONDITIONS AND
PROVISIONS SET FORTH THEREIN
LESSOR: HAWTHORNE-PACIFIC CO., A CALIFORNIA
GENERAL PARTNERSHIP
LESSEE: LUCKY STORES, INC., A CALIFORNIA
CORPORATION
DISCLOSED BY: SHORT FORM LEASE
RECORDED: JUNE 26, 1973 IN BOOK M4405 PAGE 224, AS
INSTRUMENT NO. 2076, OFFICIAL RECORDS
SAID LEASE, AMONG OTHER THINGS, PROVIDES FOR AN OPTION TO RENEW FOR A
PERIOD OF: OPTION TO EXTEND THE TERM THEREOF FOR
FOUR (4) CONSECUTIVE TERMS OF FIVE (5)
YEARS EACH, UPON NOTICE FROM TENANT TO
LANDLORD AS THEREIN PROVIDED
SAID INSTRUMENT, AMONG OTHER THINGS, PROVIDES: SAID LEASE ALSO GRANTS TO
TENANT, ITS CUSTOMERS AND INVITEES CERTAIN PARKING PRIVILEGES AND CONTAINS
RESTRICTIONS AFFECTING THE PATIO BETWEEN THE PARKING AREA AND THE BUILDING
AREA, AND ESTABLISHES REQUIREMENTS CONCERNING THE NATURE OF CONSTRUCTION OF
BUILDINGS, ON THE REAL PROPERTY DESCRIBED IN EXHIBIT A THERETO, AND MADE A
PART THEREOF.
AN AGREEMENT TO AMEND OR MODIFY CERTAIN PROVISIONS OF SAID LEASE, AS SET
FORTH IN THE DOCUMENT EXECUTED BY:
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2126
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: LUCKY STORES, INC., A DELAWARE CORPORATION
(AS SUCCESSOR BY MERGER TO LUCKY STORES,
INC. A CALIFORNIA CORPORATION)
ASSIGNEE: XXXXXX XXXXXX CORPORATION, A MINNESOTA
CORPORATION
RECORDED: DECEMBER 23, 1986 AS INSTRUMENT NO.
00-0000000, OFFICIAL RECORDS
PAGE 5
31
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: XXXXXX XXXXXX CORPORATION, A MINNESOTA
CORPORATION
ASSIGNEE: HAAGEN GDH PARTNERSHIP, A CALIFORNIA GENERAL
PARTNERSHIP
RECORDED: JUNE 26, 1987 AS INSTRUMENT NO. 00-0000000,
OFFICIAL RECORDS
ASSIGNMENT OF THE LESSEE'S INTEREST UNDER SAID LEASE,
ASSIGNOR: HAAGEN GDH PARTNERSHIP, A CALIFORNIA GENERAL
PARTNERSHIP
ASSIGNEE: MERCHANDISING DEVELOPMENT U.S.A., INC., A
CALIFORNIA CORPORATION
RECORDED: JUNE 26, 1987 AS INSTRUMENT NO. 00-0000000,
OFFICIAL RECORDS
AN ASSIGNMENT OF ASSIGNMENT OF LEASE UPON THE TERMS AND CONDITIONS THEREIN
PROVIDED
DATED: APRIL 18, 1974
EXECUTED BY: UNIONAMERICA INC., WESTERN MORTGAGE
CORPORATION DIVISION, A DELAWARE CORPORATION
IN FAVOR OF: STATE OF CALIFORNIA PUBLIC EMPLOYEES
RETIREMENT SYSTEMS
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2130
AN AGREEMENT TO AMEND OR MODIFY CERTAIN PROVISIONS OF SAID LEASE, AS SET
FORTH IN THE DOCUMENT EXECUTED BY:
AS LESSOR: THE BANK OF TOKYO OF CALIFORNIA, A STATE
BANKING INSTITUTION
AS LESSEE: UNIONAMERICA, INC., WESTERN MORTGAGE
CORPROATION DIVISION, A DELAWARE CORPORATION
RECORDED: APRIL 23, 1974 AS INSTRUMENT NO. 2128
12. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS
SET FORTH IN A DOCUMENT
GRANTED TO: SOUTHERN CALIFORNIA EDISON COMPANY, A
CORPORATION
PURPOSE: PUBLIC UTILITIES
RECORDED: NOVEMBER 14, 1973 AS INSTRUMENT NO. 3253
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
PAGE 6
32
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
13. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS SET
FORTH IN A DOCUMENT
PURPOSE: INGRESS AND EGRESS
RECORDED: DECEMBER 17, 1973 AS INSTRUMENT NO. 230
AFFECTS: A PORTION OF PARCEL B AS MORE PARTICULARLY
DESCRIBED IN SAID DOCUMENT
14. AN EASEMENT FOR THE PURPOSE SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS SET
FORTH IN A DOCUMENT
GRANTED TO: SOUTHERN CALIFORNIA EDISON COMPANY, A
CORPORATION, ITS SUCCESSORS AND ASSIGNS
PURPOSE: PUBLIC UTILITIES
RECORDED: JANUARY 30, 1975 AS INSTRUMENT NO. 2422
AFFECTS: A PORTION OF PARCEL B
15. ANY RIGHTS, INTERESTS OR CLAIMS WHICH MAY EXIST OR ARISE BY REASON OF THE
FOLLOWING MATTERS DISCLOSED BY AN INSPECTION OR SURVEY:
A. THE FACT THAT A CONCRETE RETAINING WALL ON THE SOUTHERLY PORTION OF THE
WESTERLY LINE OF SAID LAND ENCROACHES 0.50 FEET ONTO PARCEL 1 OF SAID
PARCEL MAP.
B. THE FACT THAT 2 LIGHT STANDARDS EXIST INSIDE THE NORTHERLY PORTION OF THE
WESTERLY LINE OF SAID LAND.
C. THE FACT THAT A FIRE HYDRANT EXISTS INSIDE THE WESTERLY LINE OF SAID
LAND.
D. THE FACT THAT A CATCH BASIN EXISTS INSIDE THE NORTHEASTERLY CORNER OF
SAID LAND.
E. THE FACT THAT A GAS LINE EXISTS INSIDE THE NORTHEASTERLY CORNER OF SAID
LAND.
F. THE FACT THAT A MANHOLE EXISTS INSIDE THE NORTHWESTERLY CORNER OF SAID
LAND.
G. THE FACT THAT A FIRE HYDRANT EXISTS INSIDE THE NORTHWESTERLY PORTION OF
SAID LAND.
H. THE FACT THAT A CONCRETE RETAINING WALL ON PARCELS 5 AND 6 OF SAID PARCEL
MAP ENCROACHES ON THE SOUTH EASTERLY PORTION OF SAID LAND.
PAGE 7
33
ORDER NO. 4086574-67
POLICY NO. 113-00-471-268
I. AN UNRECORDED LEASE WITH CERTAIN TERMS, COVENANTS, CONDITIONS, AND
PROVISIONS SET FORTH THEREIN, AS DISCLOSED BY INSPECTION AND
INVESTIGATION.
LESSOR: UNKNOWN
LESSEE: XXXXXXX XXXXX
THE PRESENT OWNERSHIP OF THE LEASEHOLD CREATED BY SAID LEASE AND
OTHER MATTERS AFFECTING THE INTEREST OF THE LESSEE ARE NOT SHOWN
HEREIN.
J. THE FACT THAT UNDERGROUND GASOLINE STORAGE TANKS EXIST IN THE
SOUTHEAST PORTION OF SAID LAND.
16. WATER RIGHTS, CLAIMS OR TITLE TO WATER.
ENDORSEMENTS:
THE FOLLOWING ENDORSEMENTS ARE ATTACHED TO AND MADE A PART OF THIS POLICY:
NONE
PAGE 8
34
[PARCEL ESTATE INFORMATION MAP]
35
CLTA FORM 107.9 (10-26-72)
ALTA OR CLTA - OWNER OR LENDER
ENDORSEMENT
ATTACHED TO POLICY NO. 113-00-471-268
ISSUED BY
LAWYERS TITLE INSURANCE CORPORATION
SAID POLICY IS HEREBY AMENDED BY ADDING AS A NAMED INSURED THEREIN
MERCHANDISING DEVELOPMENT U.S.A., INC., A CALIFORNIA CORPORATION,
SUCCESSOR BY MERGER TO MERCHANDISING DEVELOPMENT, INC., A CALIFORNIA
CORPORATION
THIS ENDORSEMENT DOES NOT EXTEND THE COVERAGE OF SAID POLICY TO ANY LATER DATE
THAN THE DATE OF SAID POLICY, NOR DOES IT IMPOSE ANY LIABILITY ON THE COMPANY
FOR LOSS OR DAMAGE RESULTING FROM (1) FAILURE OF SUCH ADDED INSURED TO ACQUIRE
AN INSURABLE ESTATE OR INTEREST IN SAID LAND, OR (2) ANY DEFECT, LIEN OR
ENCUMBRANCE ATTACHING BY REASON OF THE ACQUISITION OF AN ESTATE OR INTEREST IN
THE LAND BY SUCH ADDED INSURED.
THE TOTAL LIABILITY OF THE COMPANY UNDER SAID POLICY AND ANY ENDORSEMENTS
THEREIN SHALL NOT EXCEED, IN THE AGGREGATE, THE FACE AMOUNT OF SAID POLICY AND
COSTS WHICH THE COMPANY IS OBLIGATED UNDER THE CONDITIONS AND STIPULATIONS
THEREOF TO PAY.
THIS ENDORSEMENT IS MADE A PART OF SAID POLICY AND IS SUBJECT TO THE SCHEDULES,
CONDITIONS AND STIPULATIONS THEREIN, EXCEPT AS MODIFIED BY THE PROVISIONS
HEREOF.
DATED: JANUARY 13, 1994
Lawyers Title Insurance Corporation
COUNTERSIGNED BY: By: [Illegible Signature]
[Corporate President
[Illegible Signature] Seal] Attest: [Illegible Signature]
--------------------------- Secretary
AUTHORIZED OFFICER OR AGENT Countersigned By:
[Illegible Signature]
Authorized Officer or Agent
