EXHIBIT 10.135
Store Lease - International Gateway
OUTLET CENTER
AT
INTERNATIONAL GATEWAY
OF THE AMERICAS
A PROJECT BY
LANDGRANT DEVELOPMENT UNLIMITED
WITH
TOYS INTERNATIONAL, INC.
a California corporation
dba TOY CO.
TABLE OF CONTENTS
Article
1 Fundamental Lease Provisions
2 Premises; Site Plan
3 Term of Lease
4 Rental
5 Definition of "Net Sales"
6 Possession and Use; Utilities; Hazardous Materials
7 Taxes, Insurance and Title of Premises
8 Common Area
9 Mechanics' Liens
10 Tenant's Right to Make Improvements, Property, and Fixtures
11 Repairs, Maintenance
12 Indemnity and Insurance
13 Occupancy Transactions
14 Defaults by Tenant; Remedies
15 Defaults by Landlord; Remedies
16 Abandonment
17 Bankruptcy
18 Reconstruction
19 Condemnation
20 Sale or Mortgage by Landlord
21 Subordination; Attornment
22 Quiet Enjoyment
23 Holding Over
24 Limitation of Liability
25 Notices
26 General Provisions
27 Marketing
28 Conditions to Lease
Exhibits
General Site Plan of the Property A
Description and Use of the Premises B
Provisions Relating to the Design and Construction of Tenant's Store C
Guaranty of Lease D
Tenant's Estoppel Certificate E
Sign Criteria F
Subordination Agreement G
Confirmation of Term of Lease H
LEASE AGREEMENT
This Lease Agreement ("Lease"), effective as of ____July 13,
________________________, 19 99 ("Effective Date"), is executed by and between
the Landlord and Tenant identified below.
IN CONSIDERATION OF THE RENTS AND COVENANTS hereinafter set forth, the
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
Premises upon the following terms and conditions:
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
1.1 Parties
Landlord: The Landlord of the Premises is LANDGRANT DEVELOPMENT UNLIMITED,
a California corporation. All required notices and other communications shall be
sent to: LandGrant Development Unlimited, 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxx, Xxxxxxxxxx 00000. Telephone Number (000) 000-0000.
Tenant: The Tenant of the Premises is: TOYS INTERNATIONAL, INC., a
California corporation.
Tenant shall do business under the trade name of: TOY CO.
All required notices and other communications shall be sent to: Toys
International, Inc., c/o Play Co. Toys, Inc., 000 Xxxxxxxxx Xxxxx, Xxx Xxxxxx,
XX 00000, Attention: Xxxx Xxxxx.
Telephone Number: (000) 000-0000
1.2 Premises
The Premises made subject to this Lease shall be that certain space having
approximately 10,000 square feet of Floor Area, commonly addressed as "to be
determined," sometimes referred to as Store #172 and more particularly described
in Exhibit B to this Lease. The Premises is located in the commercial center
known as the INTERNATIONAL GATEWAY OF THE AMERICAS in the City of San Diego,
County of San Diego, State of California (the "Property"). The Premises and the
Property are illustrated on Exhibits A and A-1 to the Lease.
1.3 Term
Lease Term: Ten (10) years
Commencement Date: [Section 3.1]
Rent Start Date: [Section 4.1]
Expiration Date:
Other: Two (2) five (5) year options [Addendum]
1.4 Rent
Minimum Annual Rental: The Minimum Annual Rental is One Hundred Seventy
Five Thousand Dollars ($175,000.00), which is computed as $17.50 per square
foot. Minimum Annual Rental is payable as stated in Section 4.1.
Cost of Living Adjustments: Minimum Annual Rental shall be adjusted every
twenty four (24) months of the initial Lease Term on the anniversary of the
Commencement Date, and at the beginning of the first and third year of each
Option Term, as follows:
Initial Lease Term
Lease Year 3 $200,000.00 ($20.00 per square foot)
Lease Year 5 $210,000.00 ($21.00 per square foot)
Lease Year 7 $230,000.00 ($23.00 per square foot)
Lease Year 9 $240,000.00 ($24.00 per square foot)
First Option
Option Year 1 $250,000.00 ($25.00 per square foot)
Option Year 3 $280,000.00 ($28.00 per square foot)
Second Option
Option Year 1 $300,000.00 ($30.00 per square foot)
Option Year 3 $330,000.00 ($33.00 per square foot)
Percentage Rental: Tenant shall pay six percent (6%) of the amount by which
Tenant's Net Sales (as defined in Section 5.1) during a particular Lease Year
(as defined in Section 4.5) exceeds the amount listed below for such Lease Year:
Lease Years 1-2 $2,500,000.00
Lease Years 3-4 $2,900,000.00
Lease Years 5-6 $3,000,000.00
Lease Years 7-10 $3,335,000.00
Option Years 1-2 $3,833,333.00
Option Years 3-10 $4,333,333.00
Additional Rental: Any and all sums of money or charges required to be paid
by Tenant pursuant to the provisions of this Lease shall be paid as "Additional
Rent" (for example: taxes, insurance, sweeping, etc.)
1.5 Marketing Charge: $15,000.00 based on $1.50 per square foot per annum
(Section 27.2, subject to annual increases per Section 27.3)
Grand Opening Assessment: $10,000.00 based on $1.00 per square foot
(Section 27.3).
1.6 Security Deposit and First Month's Minimum Annual Rental
Security Deposit: None.
Prepaid Minimum Annual Rental: Tenant shall pay Fourteen Thousand Five
Hundred Eighty Three and 33/100 Dollars ($14,583.33) upon the date Landlord
delivers to Tenant the Notice of Substantial Completion (Section 3.2), and
Landlord shall apply such amount against the first month's payment of Minimum
Annual Rental due hereunder.
1.7 General Description of Tenant's Use of Premises
Tenant shall be authorized to use the Premises only for those purposes
stated in Exhibit B.
1.8 Exhibits To Lease. The following drawings and special provisions are
attached hereto as exhibits and made a part of this Lease:
EXHIBIT A - General site plan of the Property which Landlord and others intend to construct
or cause to be constructed in whole or in part on real property located in the City,
County and State described in Section 1.2 hereof.
EXHIBIT B - Description and Use of the Premises.
EXHIBIT C - Provisions Relating to the Design and Construction of Tenant's Store.
EXHIBIT D - Guaranty of Lease.
EXHIBIT E - Tenant's Estoppel Certificate
EXHIBIT F - Sign Criteria.
EXHIBIT G - Subordination Agreement
EXHIBIT H - Confirmation of Term of Lease
1.8 Construction of Lease Provisions. The foregoing provisions of this
Article 1 summarize for convenience only certain key terms of the Lease
delineated more fully in the Articles and Sections referenced therein. In the
event of a conflict between the provisions of this Article 1 and the balance of
the Lease, the latter shall control.
ARTICLE 2
PREMISES; SITE PLAN
2.1 Demise and Description. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, at the rental and upon the covenants and conditions
hereinafter set forth, the commercial space referred to herein as the "Premises"
and described in Exhibit B. The Premises shall be constructed in accordance with
Exhibit C. Within sixty (60) days after the Premises are substantially complete,
Landlord shall have the right but not the obligation to have Landlord's
architect at Landlord's expense recalculate the Floor Area of the Premises, and
if the calculation shows a deviation of more than one percent (1%) from the
square footage specified in Exhibit B, and if Landlord accepts the calculation,
the Lease shall be amended so as to reflect the actual Floor Area and
corresponding Minimum Annual Rental and other amounts specified per square foot
in Article 1, and other charges which are based on Floor Area. If Landlord
chooses not to recalculate the Floor Area, then Tenant's architect at Tenant's
expense may recalculate the Floor Area of the Premises, and if the calculation,
as reasonably approved by Landlord's architect, shows a deviation of more than
one percent (1%), from the square footage specified in Exhibit B, and if
Landlord accepts the calculation, the Lease shall be amended as set forth above
in this Section 2.1.
2.2 Floor Area. The term "Floor Area" as used throughout this Lease shall
mean and include the square footage of all areas for exclusive use and occupancy
by any tenant of Landlord, measured from the exterior surface of building walls
and extensions thereof, in the case of the perimeter of the Premises, and from
the center line of demising partitions between the Premises and those adjacent
tenants. In addition, in the case of a tenant operating a restaurant or other
food service facility and utilizing outdoor seating areas, "Floor Area" shall
include the square footage of such outdoor seating area. The Floor Area shall
include, without limitation, restrooms, mezzanines, warehousing or storage
areas, clerical or office areas and any employee areas.
2.3 Site Plan; Relocation or Termination. Tenant acknowledges that the site
plan of the Property illustrated on Exhibit A hereto is for purposes of
convenience only, and that Landlord reserves the right, (a) in connection with
the initial construction of improvements at the Property, or thereafter, to
expand, reduce, remove, demolish, change, renovate or construct any existing or
planned improvements at the Property, including the Premises; or (b) in
determining the most beneficial configuration of tenant mix in connection with
the initial development of the Property, to rearrange the location of various
tenants including Tenant. Tenant further acknowledges that the Property as shown
on Exhibit A hereto or any remodeling thereof may include a variety of uses as
determined by Landlord including without limitation, retail, outlet-retail,
office, government, hotel, convention, tourist, entertainment, service,
transportation, education, or residential uses.
If in connection with any of the above-described changes, Landlord
determines that it is necessary that Tenant vacate the Premises or that the
Premises be altered in connection therewith, Landlord may require that Tenant
surrender possession of the Premises, provided Landlord, in its sole and
absolute discretion but subject to the terms of any mortgage or any other
agreement affecting the Property, either (i) amends the Lease to lease Tenant
other comparable premises within the Property on the same terms and conditions
as those contained in the Lease for the balance of the remaining Lease Term, or
(ii) terminates the Lease and, if such termination occurs following Tenant's
initial occupancy of the Premises, pays Tenant an amount equal to the yet
unamortized net cost to Tenant of its Fixtures (as defined in Section 10.4)
installed in the Premises, calculated using a straight-line amortization
schedule and an amortization period equal to the Lease Term. The relocation of
the Premises in accordance with clause (i) hereof or the payment of the
consideration, if any, in accordance with clause (ii) hereof shall be Tenant's
sole remedy in the event Tenant is required to surrender possession of the
Premises as provided in this Section.
In the event the Lease is terminated without entering into a new lease for
comparable premises pursuant hereto, then Landlord shall return to Tenant any
security deposit not applied pursuant to the terms hereof, and if such
termination occurs prior to the Commencement Date of the Lease, shall return to
Tenant the first month's rent, if any, paid by Tenant to Landlord hereunder. In
the event of any such termination, neither party shall have any responsibility
for acts, events or circumstances occurring subsequent to the date of
termination unless such acts, events or circumstances are related to the
performance or non-performance of such party's duties or obligations while a
party to this Lease.
ARTICLE 3
TERM OF LEASE
3.1 Definitions. This Lease shall be effective as of the "Effective Date"
which is defined as the earlier of the date Landlord and Tenant execute the
Lease or the date Tenant enters onto the Premises with Landlord's consent. The
term of this Lease ("Lease Term") shall commence on the "Commencement Date"
defined herein and shall continue thereafter for the period specified in Article
1, unless sooner terminated as hereinafter provided in this Lease. The
"Commencement Date" means the first day of the month following the earlier of
(a) thirty (30) days after Landlord delivers to Tenant the Notice of Substantial
Completion described in Section 3.2 or (b) the date Tenant opens for business,
unless otherwise stipulated in Exhibit H. Except as otherwise specifically
stated in this Lease or in any subsequent amendments hereto, the terms and
conditions of this Lease shall remain in effect during any extension, renewal or
holdover of the original Lease Term.
3.2 Acceptance of the Premises. Landlord agrees to deliver to Tenant, and
Tenant agrees to accept from Landlord, possession of the Premises forthwith upon
substantial completion of the Premises as described in Exhibit C. The term
"substantial completion of the Premises" is defined as the date Landlord
notifies Tenant ("Notice of Substantial Completion") that the Premises are
substantially complete to the extent of Landlord's Work as specified in Exhibit
C to the point wherein Tenant's contractor may commence the construction of
Tenant's Work as specified in Exhibit C, it being understood and agreed that
Landlord may be unable to install or complete all items of Landlord's Work in
advance of Tenant's Work. In such instance Tenant shall cause its contractor to
cooperate with Landlord's contractor to complete Landlord's Work in a timely and
efficient manner. Certification by Landlord's architect ("Project Architect") of
the substantial completion of the Premises in accordance with said Exhibit C
shall be conclusive and binding upon the parties hereto. Tenant shall commence
the construction of Tenant's Work as described in Exhibit C promptly upon
substantial completion of the Premises and shall diligently prosecute such
construction to completion and shall open the Premises for business concurrently
with the date specified for commencement of Minimum Annual Rental. Tenant
acknowledges that the financial success of the Property depends, in part, on
Tenant's opening the Premises for business contemporaneously with the initial
opening of the Property and that Landlord's damages arising from Tenant's
failure to do so are extremely difficult and impracticable to fix. Therefore,
should Tenant fail to open the Premises for business upon the initial opening of
the Property Landlord may, at its option, either terminate this Lease or require
Tenant to pay to Landlord, upon receipt of invoice, the sum of Five Hundred
Dollars ($500.00) per day for each day Tenant delays its opening after and
including the initial opening date, which sum Tenant agrees is fair compensation
to Landlord for said damages.
Notwithstanding anything in this Lease to the contrary, Tenant shall not be
required to initially open for business in the Premises until 240,000 square
feet of Floor Area on the Property (including the Premises), or more, is leased
(or sold) and estimated to be ready to open within forty-five days after Tenant
opens for business. In the event less than 240,000 square feet of Floor Area of
stores in the Project (including the Premises) are open for business within
forty-five (45) days following the date Tenant opens for business in the
Premises fully stocked, staffed and fixturized, then from and after the date
which is 45 days following the date Tenant has so opened for business, the
Minimum Annual Rental set forth in Article 4, Section 4.1, and in Section 1.4
shall be abated until such time as there are open for business at least 240,000
square feet of Floor Area of stores in the Project (including the store occupied
by Tenant). Notwithstanding the abatement of Minimum Annual Rental as aforesaid,
Tenant shall pay all other charges called for in the manner provided for in this
Lease except Minimum Annual Rental. The foregoing abatement shall in no event
change or modify the Rent Start Date.
3.3 Confirmation of Term of Lease; Initial Estoppel Certificate; and
Certificate of Occupancy. Tenant will execute and deliver to Landlord within ten
(10) days after Tenant opens for business certificates substantially in the form
of Exhibits E ("Tenant's Estoppel Certificate") and H (the "Confirmation of Term
of Lease"). Tenant shall make such modifications to such certificates as may be
necessary to make such certificates true and accurate, it being intended that
any such statements may be relied upon by Landlord's mortgagee, prospective
purchaser or land lessor of the Property. If Tenant fails to provide either
certificate within ten (10) days after Landlord's request therefor, Tenant shall
be deemed to have approved the contents of any such certificate submitted to
Tenant by Landlord. Within the earlier of ten (10) days after completion of
construction of Tenant's Work, as described in Exhibit C, or ten (10) days after
Tenant's opening for business, Tenant shall deliver to Landlord the Certificate
of Occupancy for the Premises issued by the appropriate governmental agency.
3.4 Surrender of the Premises. Tenant will surrender possession of the
Premises to Landlord at the expiration of the Lease Term or the earlier
termination of this Lease.
ARTICLE 4
RENTAL
4.1 Minimum Annual Rental. Tenant agrees to pay as rental for the use and
occupancy of the Premises the Minimum Annual Rental specified in Article 1.
Tenant shall pay said rental in twelve (12) equal monthly installments during
each year, in advance, on the first day of each calendar month, without setoff,
deduction, prior notice or demand, commencing on a date ("Rent Start Date")
which shall be the earlier of (a) ninety (90) days after Landlord delivers to
Tenant the Notice of Substantial Completion described in Section 3.2 or (b) the
date Tenant opens for business, unless a different date is specified in Article
1 or Exhibit H. Should the rental period commence on a day other than the first
day of a calendar month, then the rental for such first fractional month shall
be computed on a daily basis for the period from the date of commencement to the
end of such calendar month and at an amount equal to one three-hundred sixtieth
(1/360th) of the said annual rental for each such day, and thereafter shall be
computed and paid as aforesaid.
4.2 Cost Of Living Adjustments to the Minimum Annual Rental. The Minimum
Annual Rental provided for in Section 4.1 shall be subject to adjustment as
stipulated in Section 1.4 as of each twelve month anniversary of the
Commencement Date ("Adjustment Date") during the Lease Term. The following
language shall be used only for adjustments referred to in Sections 13.6(a)(iii)
and 27.2 hereof or elsewhere where specific reference is made to the Consumer
Price Index.
The base for computing the adjustment is the Consumer Price Index, Subgroup
"Urban Consumers (CPI-U)," published by the United States Department of Labor,
Bureau of Labor Statistics for Xxx Xxxxx, Xxxxxxxxxx (0000-00 = 100) ("Index"),
published immediately prior to the Commencement Date ("Beginning Index"). If the
Index for the period immediately prior to the Adjustment Date ("Extension
Index") has increased over the Index published immediately prior to the
Commencement Date (in the case of the first adjustment) or immediately prior to
the last Adjustment Date (in the case of each succeeding adjustment)
("Comparison Index"), the Minimum Annual Rental for the following twelve month
period (until the next rent adjustment) shall be the higher of: (a) the Minimum
Annual Rental for the twelve-month period immediately preceding the Adjustment
Date; or (b) the number which results by multiplying the Minimum Annual Rental
in effect prior to the Adjustment Date by a fraction, the numerator of which is
the Extension Index and the denominator of which is the Comparison Index. In no
event shall the Minimum Annual Rental after any such adjustment be less than the
Minimum Annual Rental in effect immediately preceding such adjustment.
If the Index is changed so that the base year differs from that used as of
the date immediately preceding the Commencement Date, the Index shall be
converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics. If the Index is
discontinued or revised during the term, such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised.
4.3 Operating Expenses. In addition to the Minimum Annual Rental described
above, Tenant shall pay its pro rata share of Operating Expenses in the manner
hereinafter set forth. It is understood and agreed that the phrase "Operating
Expenses" as used herein shall mean all expenses in connection with the use,
ownership, operation and maintenance of the Common Area (defined in Section 8.1
hereof), including without limitation all general maintenance and repairs deemed
necessary by Landlord or as may be required by governmental authority; work
performed by Landlord in accordance with Section 11.2; resurfacing; painting;
restriping; cleaning; trash removal; snow and ice removal; sweeping and
janitorial services; repair, maintenance and replacement of public toilets,
music program equipment and loud speakers, floors, walls, ceilings, all roofs in
the Property, skylights, windows, sidewalks, curbs, Property signs, sprinkler
systems, planting and landscaping, directional signs, and other markers and
bumpers; any fire protection, lighting, storm drainage and other utility
services and systems including the maintenance of all HVAC systems serving the
Property; and including all costs, charges, and expenses incurred by Landlord in
connection with any change of company providing utility service; personnel to
implement any of the foregoing services including, if Landlord deems necessary,
the cost of security officers; all costs and expenses pertaining to security
alarm systems; rental payments for parking structures, if any; public transit or
carpooling facilities, if any; the operation of valet parking, if any; the
administration and operation of a parking validation or parking charge program,
including amounts paid to a third party contracted to operate the parking
facilities, if any; all costs and personnel expenses of Landlord incurred in
managing the Property; all taxes, assessments or fees imposed for any reason and
levied on the improvements and land comprising said Common Area; all personal
property taxes assessed for any reason and levied on any personalty for use of
the Common Area; depreciation on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
rented): public liability insurance for Landlord's operation at the Property;
All Risk insurance covering the Common Area with earthquake and flood damage
endorsements; all other insurance which Landlord is required or has the option
to maintain pursuant to Section 12.2. With respect to Landlord's replacement, in
accordance with this Section 4.3 of any capital item with a useful life in
excess of five (5) years whose replacement cost exceeds Ten Thousand Dollars
($10,000.00), the Operating Expenses for each calendar year shall include, in
lieu of the full amount of said replacement cost in any given year, at
Landlord's option, either (a) an annual amount sufficient, on the basis of
Landlord's experience or reasonable estimate, to establish in advance of the
time for such replacement a reserve to fund said cost, or (b) the total payments
of principal and interest owed for each year or partial year on any commercially
reasonable loan which is fully amortized over said useful life that Landlord may
obtain from a third party, or that Landlord may make itself, for the benefit of
Tenant and all other tenants at the Property to finance said cost; provided,
however, if Landlord shall make such a loan, Landlord shall charge interest on
the basis of actual days elapsed compared to a 360-day year, compounded monthly,
at a fixed rate which is the lesser of the maximum lawful rate or two percent
(2%) above the annual rate of yield available at the time of replacement on a
Treasury Note or Bond of the United States of America maturing at approximately
the end of said useful life. In addition, the Operating Expenses shall include
an amount payable to Landlord for accounting, bookkeeping and collection of the
Operating Expenses equal to fifteen percent (15%) of the total of the
aforementioned expenses for each calendar year. Landlord may cause any or all of
said services to be provided by an independent contractor or contractors.
4.4 Method of Payment of Operating Expenses. Portions of the Property are
or will be owned or leased by Major Tenants or Pad Tenants. As used in this
Lease, Major Tenants and Pad Tenants are the occupants of those certain
buildings indicated on Exhibit A as "Major Tenants" and "Pad Tenants" or which
may be consequently added, removed or redesignated by Landlord. The
contributions of the Major Tenants and Pad Tenants toward the Operating Expenses
shall be credited toward payment of the entirety of the Operating Expenses and
the balance of such expenses shall be prorated in the following manner:
(a) Commencing on a date which shall be the earlier of (a) thirty (30) days
after Landlord delivers to Tenant the Notice of Substantial Completion or (b)
the date Tenant opens for business, and continuing throughout the balance of the
Lease Term, Tenant shall pay Landlord, on the first day of each calendar month,
an amount estimated by Landlord to be Tenant's share of the Operating Expenses.
The foregoing estimated monthly charge may be adjusted by Landlord at the end of
any calendar quarter on the basis of Landlord's experience and reasonably
anticipated costs.
(b) Following the end of each calendar quarter or, at Landlord's option,
each calendar year, Landlord shall furnish Tenant a statement covering the
calendar quarter or year just expired, certified as correct by an authorized
representative of Landlord, showing the total of the Operating Expenses, the
amount of Tenant's share of the Operating Expenses for such calendar quarter or
year, less the estimated monthly charges, with respect to such period, as set
forth in subparagraph (a) above. If Tenant's share of the Operating Expenses
exceeds Tenant's payments so made, Tenant shall pay Landlord the deficiency
within ten (10) days after receipt of such statement. If said payments exceed
Tenant's share of the Operating Expenses, Tenant shall be entitled to offset the
excess against payments next thereafter due Landlord, as set forth in
subparagraph (a) above. Tenant's share of the Operating Expenses for the
previous calendar quarter or year shall be that portion of all such expenses
equal to the proportion thereof which the number of square feet of Floor Area in
the Premises bears to the total number of square feet of Floor Area of buildings
in the Property which are occupied and open for business as of the commencement
of such calendar quarter or year, exclusive of the Floor Area occupied by the
Major Tenants and Pad Tenants. Tenant's share of the Operating Expenses for its
first and/or last calendar quarter or year, as appropriate, shall be
proportionately reduced to account for the Rent Start Date and expiration of the
Lease Term occurring on other than the first and/or last day of the appropriate
calendar quarter or year. Notwithstanding anything to the contrary in this
Lease, beginning with the second full calendar year of the Lease Term and
continuing for each subsequent year thereafter, Tenant's share of Operating
Expenses, excluding insurance and taxes, shall not increase by more than five
percent (5%) over Tenant's share of Operating Expenses, excluding insurance and
taxes, in the immediately preceding calendar year.
Notwithstanding anything herein to the contrary, Landlord may, in its sole
and absolute discretion designate specific portions of the Property as "Special
Use Zones" in which Operating Expenses which are specific to a particular group
of tenants or occupants ("Special Zone Expenses") shall be excluded from
Operating Expenses for the Property and paid by the tenants or occupants within
said zone(s). By way of example, but without limitation, Landlord may, in its
sole and absolute discretion designate a specific portion of the Common Area as
a Special Use Zone to serve as facilities to accommodate the consumption of food
and beverages by customers of food use tenants in the Property ("food court").
If Tenant is a food tenant and Landlord determines that Tenant's business
reasonably benefits from the availability of the food court, Tenant shall pay,
in addition to its share of Operating Expenses as provided hereinabove, Tenant's
share of such Operating Expenses which are attributable solely to the operation
and use of the food court for the previous calendar quarter or year. Tenant
shall pay its proportionate share of Special Zone Expenses, if applicable, at
the same time and in the same manner as Tenant is required to pay its pro rata
share of Operating Expenses as provided hereinabove, and Tenant's proportionate
share of all Special Zone Expenses shall be that proportion which the Floor Area
of the Premises bears to the Floor Area of all tenants which have been
designated by Landlord, in Landlor s sole discretion, as tenants which benefit
from the expenses incurred with respect to that Special Use Zone, and which are
occupied and open for business as of the commencement of each calendar quarter
or, if reconciliations are only done annually, averaged for that calendar year.
4.5 Percentage Rental. In addition to the Minimum Annual Rental and other
sums hereinabove specified, Tenant shall pay as Percentage Rental the product of
the percentage set forth in Section 1.4 multiplied by the amount by which
Tenant's Net Sales (as the term "Net Sales" is defined in Section 5.1) made from
or upon the Premises during each Lease Year exceeds the amounts listed in
Section 1.4 (hereinafter "Breakpoint") for such Lease Year (hereinafter
"Percentage Rental"). "Lease Year" shall mean the twelve (12) consecutive
calendar months commencing on the first day of the first full calendar month of
the Lease Term, and thereafter with each succeeding anniversary thereof. If the
Commencement Date is other than the first day of a calendar month, the first
Lease Year shall include the period from the Commencement Date through the end
of the month in which the Commencement Date occurs. "Option Years" shall mean
Lease Years during the Option Term. Said Percentage Rental shall be computed
each calendar month and, on or before the twentieth (20th) day of the calendar
month immediately following the close of each calendar month, Tenant shall pay
to Landlord the product of the percentage set forth in Section 1.4 multiplied by
the amount by which Tenant's Net Sales made during such calendar month exceeds
1/12 of the Breakpoint listed in Section 1.4. Notwithstanding the foregoing, in
the event at any time during the original Lease Term or any Option Term then in
effect, Tenant is entitled to a full or partial abatement of Minimum Annual
Rental pursuant to any provisions of this Lease, then the dollar amount of the
Breakpoint shall be reduced in the same proportion that Minimum Annual Rental is
so abated.
On or before the first day of the first full calendar month following the
first anniversary of the Commencement Date, and on each anniversary thereof,
Tenant shall deliver to Landlord a statement certified by Tenant as accurate
indicating the total Net Sales of Tenant during the immediately preceding Lease
Year and the amounts paid to Landlord as Percentage Rental for such Lease Year;
and thereupon an adjustment shall be made with respect to said rental as
follows: If Tenant shall have paid to Landlord an amount greater than Tenant is
required to pay as Percentage Rental for such Lease Year under the terms hereof,
Tenant shall be entitled to a credit against Tenant's next payment of Percentage
Rental for the amount of such overpayment; or, if Tenant shall have paid an
amount less than the Percentage Rental required to be paid hereunder, then
Tenant shall pay such difference to Landlord concurrently with Tenant's delivery
of the annual statement.
Notwithstanding anything to the contrary contained in this Lease, in the
event that Tenant's Gross Sales during the fourth (4th) Lease Year do not equal
or exceed One Million Five Hundred Thousand Dollars ($1,500,000.00), Landlord or
Tenant may terminate this Lease by written notice to the other party which must
be given, if at all, within the first ninety (90) days after the end of the
fourth (4th) full Lease Year. Such termination shall be effective on the one
hundred twentieth (120th) day after such notice is given. Upon termination of
the Lease under the provisions of this Section 4.5, Tenant shall pay Landlord
the unamortized cost of the Construction Allowance as set forth in Addendum to
Exhibit C, amortized on a straight-line basis over the full Lease Term.
4.6 Statement of Net Sales. Tenant agrees to furnish or cause to be
furnished to Landlord a statement of Net Sales of Tenant within twenty (20) days
after the close of each calendar month, and an annual statement, including a
monthly breakdown of Net Sales within thirty (30) days after the close of each
calendar year. Such statements shall include, among other appropriate items,
Tenant's Gross Sales (as the term "Gross Sales" is defined in Section 5.1), and
all deductions or exclusions therefrom and Tenant's Net Sales; such statements
shall also include a statement of the number of transactions which generated the
Gross Sales, and the estimated number of potential customers that entered
Tenant's Premises during the time period(s) being reported, whether or not such
potential customers actually made purchases from the Premises. Further, if,
under "Use of Premises" in Exhibit B hereto, there is any limitation on the
percentage of Gross Sales which may be generated from any particular item listed
in said provision, Tenant shall specifically show the percentage of Tenant's
total Gross Sales which was derived from the sale of such item(s). Such
statements shall be signed by Tenant. Tenant shall record at the time of sale,
in the presence of the customer, all receipts from sales or other transactions,
whether cash or credit, in a cash register or registers having a sealed and
continuous tape which cumulates and consecutively numbers all purchases. Tenant
shall keep (a) full and accurate books of account and records in accordance with
Generally Accepted Accounting Principles consistently applied, including,
without limitation, a sales journal, general ledger, and all bank account
statements showing deposits of Gross Sales revenue, (b) all such cash register
receipts with regard to Gross Sales and Net Sales, credits, refunds and other
pertinent transactions made from or upon the Premises (including the Gross Sales
of any subtenant, licensee or concessionaire) and (c) detailed original records
of any exclusions or deductions from Gross Sales (including any exclusions or
deductions from Gross Sales of any subtenant, licensee or concessionaire). Such
books, receipts and records shall be kept for a period of three (3) years after
the close of each calendar year and shall be available for inspection and audit
by Landlord and its representatives at the Premises at all times during regular
business hours. In addition, upon request of Landlord, Tenant agrees to furnish
Landlord a copy of Tenant's State and Local Sales and Use Tax Returns, if
required in the State where the Property is situated. The receipt by Landlord of
any statement or any payment of Percentage Rental for any period shall not bind
it as to the correctness of the statement or the payment. Landlord shall, within
three (3) years after the receipt of any such statement, be entitled to an audit
of such Gross Sales and Net Sales (including the Gross Sales and Net Sales of
any subtenant, licensee or concessionaire). Such audit shall be conducted either
by Landlord or by a certified public accountant to be designated by Landlord
during normal business hours at the principal place of business of Tenant. If it
shall be determined as a result of such audit that there has been a deficiency
in the payment of Percentage Rental, then such deficiency shall become
immediately due and payable with interest at the rate specified in Section 14.7
from the date when said payment should have been made. In addition, if Tenant
understates Net Sales by more than two percent (2%) and if Landlord is entitled
to any additional Percentage Rental as a result of said understatement, or if
such audit shows that Tenant has failed to maintain the books of account and
records required by this Section so that Landlord is unable to verify the
accuracy of Tenant's statement then Tenant shall pay to Landlord all reasonable
costs and expenses (including all reasonable auditor and attorney fees) which
may be incurred by Landlord in conducting such audit and collecting such
underpayment, if any. If Tenant understates Net Sales by more than six percent
(6%), then, in addition to Landlord's aforesaid rights, Landlord may terminate
this Lease. Any information gained from such statements or inspection shall be
confidential and shall not be disclosed other than to carry out the purposes
hereof; provided, however, Landlord shall be permitted to divulge the contents
of any such statements in connection with any contemplated sales, transfers,
assignments, encumbrances or financing arrangements of Landlord's interest in
the Premises or in connection with any administrative or judicial proceedings in
which Landlord is involved where Landlord may be required to divulge such
information.
4.7 Additional Rent. Tenant shall pay, as Additional Rent, all sums of
money required to be paid pursuant to the terms of this Lease, including, but
not limited to those sums referenced in Articles 4, 6, 7, 8, 11 and 27, herein
collectively referred to as "Additional Rent". If such amounts or charges are
not paid at the time provided in this Lease, they shall nevertheless be
collectible as Additional Rent with the next installment of Minimum Annual
Rental thereafter falling due, but nothing herein contained shall be deemed to
suspend or delay the payment of any amount of money or charge at the time the
same becomes due and payable hereunder or to limit any other remedy of Landlord.
All amounts of Minimum Annual Rental and Additional Rent payable in a given
month shall be deemed to comprise a single rental obligation of Tenant to
Landlord.
4.8 Failure to Pay Items Required Under Article 4. If Tenant fails to pay,
when the same is due and payable, the Minimum Annual Rental or any Additional
Rent, such unpaid amounts shall bear interest at the rate specified in Section
14.7 from the date due to the date of payment and computed on the basis of
monthly compounding with actual days elapsed compared to a 360-day year. In
addition to such interest, Tenant acknowledges that the late payment by Tenant
of any monthly rental will cause Landlord to incur certain costs and expenses
not contemplated under this Lease, the exact amount of which costs being
extremely difficult or impracticable to fix. Such costs and expenses will
include, without limitation, administrative and collection costs, and processing
and accounting expenses. Therefore, if any such installment is not received by
Landlord from Tenant when due, Tenant shall immediately pay to Landlord a late
charge of Four Hundred Dollars ($400.00). Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for its loss caused by Tenant's nonpayment. Should
Tenant pay said late charge but fail to pay contemporaneously therewith all
unpaid amounts of Minimum Annual Rental and Additional Rent Landlord's
acceptance of this late charge shall not constitute a waiver of Tenant's default
with respect to such nonpayment by Tenant nor prevent Landlord from exercising
all other rights and remedies available to Landlord under this Lease or under
Law.
4.9 Security Deposit. On or before the Effective Date, Tenant shall deposit
with Landlord the sum specified in Article 1 as "Security Deposit". Said deposit
shall be held by Landlord without liability for interest as security for the
faithful performance by Tenant of all of its obligations under this Lease. The
Security Deposit shall not be mortgaged, assigned, transferred or encumbered by
Tenant without the prior written consent of Landlord and any such act on the
part of Tenant shall be without force and effect and shall not be binding upon
Landlord. If any of the rents herein reserved or any other sum payable by Tenant
to Landlord shall be overdue and unpaid or should Landlord make payments on
behalf of Tenant, or if Tenant shall fail to perform any of the terms of this
Lease, then Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, appropriate and apply said
entire Security Deposit or so much thereof as may be necessary to compensate
Landlord for Minimum Annual Rental or Additional Rent, loss or damage sustained
by Landlord as a result thereof, and Tenant shall forthwith upon demand restore
said Security Deposit to the original sum deposited. Should Tenant comply with
all of said obligations and promptly pay all of the rentals as they fall due and
all other sums payable by Tenant to Landlord, said Security Deposit shall be
refunded in full to Tenant within forty-five (45) days after the expiration or
earlier termination of the Lease Term. In the event of bankruptcy or other
debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed
to be applied first to the payment of rent and other charges due Landlord for
all periods prior to filing of such proceedings.
Landlord may deliver the funds deposited hereunder by Tenant to the
purchaser or assignee of Landlord's interest in the Premises in the event that
such interest is transferred and thereupon Landlord shall be discharged from any
further liability with respect to such Security Deposit, and this provision
shall also apply to any subsequent transfer of Landlord's interest in the
Premises.
ARTICLE 5
DEFINITION OF "NET SALES"
5.1 Net Sales. The term "Gross Sales" of Tenant, as used in this Lease, is
defined to be the gross selling price of all merchandise or services sold in or
from the Premises by Tenant, its subtenants, licensees and concessionaires,
whether for cash or on credit and whether made by store personnel or by approved
vending, video, pinball, or gaming machines or by electronic, telephonic, video,
computer, or other technology-based system, whether existing now or developed in
the future, located at the Premises or generating orders therefrom. The term
"Net Sales" of Tenant, as used in this Lease, is defined to be Gross Sales
excluding the following provided, however, that the below listed items shall
only be deducted from Gross Sales if they were previously included in Gross
Sales.
(a) The selling price of all merchandise purchased at the Premises and
returned by customers and accepted for full credit or the amount of discounts
and allowances made thereon;
(b) Goods returned to sources, or transferred to another store or warehouse
owned by or affiliated with Tenant;
(c) Sums and credits received in the settlement of claims for loss of or
damage to merchandise;
(d) The price allowed on all merchandise traded in by customers for credit
or the amount of credit for discounts and allowances made in lieu of acceptance
thereof;
(e) Alteration workroom charges and delivery charges at Tenant's cost and
collected separately from the selling price;
(f) Interest, service or sales carrying charges or other charges, however
denominated, paid by customers for extension of credit on sales and where not
included in the merchandise sales price;
(g) Receipts from public telephones, stamp machines, public toilet locks,
or vending machines installed solely for use by Tenant's employees;
(h) Sales taxes, so-called luxury taxes, consumers' excise taxes, gross
receipts taxes and other similar taxes now or hereafter imposed upon the sale of
merchandise or services, but only if collected separately from the selling price
of merchandise or services and collected from customers;
(i) Sales of fixture, equipment or property which are not stock in trade.
All sales originating at the Premises shall be considered as made and
completed therein, even though bookkeeping and payment of the account may be
transferred to another place for collection and even though actual filling of
the sale or service order and actual delivery of the merchandise may be made
from a place other than the Premises. Each sale upon installments or credit
shall be treated as a sale for the full cash price at the time of sale.
ARTICLE 6
POSSESSION AND USE; UTILITIES; HAZARDOUS MATERIALS
6.1 Permitted Uses. Tenant shall use the Premises solely for the purposes
and under the trade name specified in Exhibit B. Tenant shall at all times
operate an outlet store which shall mean a retail store selling brand name
merchandise sold in Tenant's full price retail stores, at least fifty percent
(50%) of which shall be sold at discount prices, which shall mean prices that
are at least twenty percent (20%) less than the prices charged by the majority
of the retailers in the San Diego metropolitan area who sell the same or
substantially similar merchandise at full retail markup. Tenant hereby
acknowledges that Tenant has represented to Landlord that it will operate its
business in the Leased Premises as one of the following (i) a factory direct
outlet; or (ii) a discounter; or (iii) an off-price operation, selling all its
merchandise at discount prices (as herein defined), and that such representation
was a material inducement for Landlord to enter into this Lease with Tenant on
the rental terms herein contained, which rental provisions are predicated on the
typically lower profit margins of such businesses, as compared to those selling
at full retail markup. Accordingly, in the event Tenant fails to sell its
merchandise at discount prices on a continuous basis, Landlord shall have the
right, upon ten (10) days written notice to Tenant to increase the Minimum
Annual Rent set forth in Article 1 hereof and as may have been increased
pursuant to other provisions of this Lease, by Two and 00/100ths Dollars ($2.00)
per square foot of the Floor Area of the Premises. Within forty-five (45) days
after the end of each calendar year (together with the annual statement of Net
Sales) Tenant shall provide reasonable information that Tenant has sold
substantially all of its merchandise at discount prices on a continuous basis.
Landlord may, at its option, at any time and from time to time, obtain an
independent study and review the prices charged by Tenant and the prices charged
by the majority of retailers in the San Diego metropolitan area who sell the
same or substantially similar merchandise as that sold in the Premises (herein
"Study"), and Tenant shall permit Landlord, or Landlord's consultant for
purposes of such study, access to the Premises and to Tenant's merchandise for
such purpose. If a Study reveals that Tenant is failing or failed to sell its
merchandise at discount prices on a continuous basis, Tenant shall pay
Landlord's costs and expenses incurred for such Study. In the event the "Use of
Premises" described in Exhibit B hereto permits the sale of merchandise that is
not manufactured by Tenant, Tenant must either purchase any such merchandise
directly from the manufacturer or obtain the express written authority, license,
and/or other approval to sell such merchandise from the manufacturer.
6.2 Duties and Prohibited Conduct. At Tenant's sole expense, Tenant shall
procure, maintain and hold available for Landlord's inspection any governmental
license or permit required for the proper and lawful conduct of Tenant's
business. Tenant shall not use, or permit any person or persons to use, the
Premises for the sale or display of pornography, drug-oriented paraphernalia,
nudity, graphic violence or any goods and/or services which, in the sole
discretion of Landlord, are inconsistent with the image of a community or
family-oriented retail project. Tenant shall not use or suffer or permit any
person or persons to use the Premises or any part thereof as a massage parlor,
adult bookstore or second-hand store or to conduct an auction, distress, fire,
bankruptcy or going-out-of business sale. Tenant shall not use the Premises for
any use or purpose in violation of the laws of the United States of America, or
the laws, ordinances, regulations and requirements of the State, County and City
where the Property is situated, or of other lawful authorities. Tenant shall
keep the Premises, and every part thereof, in a clean and wholesome condition,
free from any objectionable noises, odors or nuisances, and shall comply with
all health and police regulations in all respects. Tenant agrees that all trash
and rubbish of Tenant shall be deposited only within receptacles provided by
Landlord or those receptacles provided by Tenant and located in the areas
designated by Landlord. If Tenant's permitted use includes the sale of and/or
preparation of food: (a) Tenant shall at all times maintain a health department
rating of "A" (or such other highest health department or similar rating as is
available); and (b) in connection with Tenant's obligations under this Lease,
Tenant shall be responsible for any and all matters related to Tenant's grease
trap(s) including without limitation contracting with a qualified service
company for routine cleaning and maintenance of any trap(s) and/or grease lines
which serve Tenant. Tenant shall provide Landlord with a copy of any contract
required hereunder within ten (10) days after the Commencement Date, and shall
provide a copy of any subsequent contracts within ten (10) days after their
execution.
Tenant may not display or sell merchandise or place carts, portable signs,
devices or any other objects outside the defined exterior walls or roof and no
aerial or antenna shall be erected on the roof or exterior walls of the Premises
without first obtaining, in each instance, the written consent of Landlord which
consent Landlord may give, withhold, or condition, in Landlord's sole
discretion. Any aerial or antenna so installed without such written consent
shall be subject to removal without notice at any time, at Tenant's expense. In
addition, Tenant shall not solicit or distribute materials in any manner in the
Common Area of the Property.
6.3 Operating Covenants. Tenant covenants and agrees that it will
continuously and uninterruptedly from and after its initial opening for business
operate and conduct within the Premises the business which it is permitted to
operate and conduct under the provisions of this Lease, except while the
Premises are untenantable by reason of fire or other casualty. Tenant further
covenants to keep and maintain within and upon the Premises an adequate stock of
merchandise and trade fixtures to service and supply the usual and ordinary
demands and requirements of its customers. Tenant further agrees to have its
window displays, exterior signs and exterior advertising displays adequately
illuminated continuously during all hours on all days that Landlord in its sole
and absolute discretion, determines to open the Property for business to the
public.
6.4 New Locations. Tenant agrees that it will not, during the first five
(5) years after Tenant opens for business, directly or indirectly, operate or
own any similar type of business (not so operated and owned on the Effective
Date of this Lease) within a radius of three (3) miles from the location of the
Premises. Without limiting Landlord's remedies in the event Tenant should
violate this covenant, Landlord may, at its option and for so long as Tenant is
operating said other business, include the net sales of such other business in
the Net Sales made from the Premises for the purpose of computing the Percentage
Rental due hereunder. Tenant will provide Landlord with a statement of Tenant's
Net Sales, in accordance with the provisions of Section 4.6, for each such
prohibited business location operated by Tenant in violation of the foregoing
radius restriction. After the aforementioned period, Tenant may operate another
business with the aforementioned radius provided: (a) Tenant gives Landlord
written notice of its intention to operate such business and the location and
anticipated opening date of such business and (b) within thirty (30) days of the
date of said written notice, Landlord and Tenant shall enter into a written
amendment to this Lease adjusting the Minimum Annual Rental payable under
Section 4.1. Said Minimum Annual Rental shall be adjusted as follows: from the
statements of Net Sales as submitted by Tenant under Section 4.6, Landlord shall
compute an amount which represents the highest amount of annual Percentage
Rental paid or payable by Tenant under Section 4.5, during any consecutive
twelve (12) month period occurring within the sixty (60) months immediately
preceding said amendment, and this amount, if any, shall be added to the amount
specified in Article 1 as Minimum Annual Rental, and this resulting sum shall
thereafter be the Minimum Annual Rental payable hereunder. The effective date
for payment of the adjusted Minimum Annual Rental shall be the first day of the
calendar month following the opening of Tenant's other business.
6.5 Deliveries. Tenant shall use its best efforts to complete, or cause to
be completed, all deliveries, loading, unloading and services to the Premises
prior to 10:00 a.m. of each day. Tenant shall attempt to prevent any delivery
trucks or other vehicles servicing the Premises from parking or standing in
front of, or at the rear of, the Premises from 10:00 a.m. to 9:00 p.m. of each
day. Landlord reserves the right to regulate further the activities of Tenant
with regard to deliveries and servicing of the Premises, and Tenant agrees to
abide by such nondiscriminatory regulations of Landlord.
6.6 Use of Name of Property. Tenant shall use the name of the Property in
which the Premises are located in all Tenant's advertising in connection with
Tenant's business at the Premises and for no other purpose, except with
Landlord's consent. Tenant shall not have or acquire any property right or
interest in the name of the Property. Landlord reserves the right to change the
name, title, or address of the Property or the address of the Premises at any
time, and Tenant waives all claims for damages caused by any such change.
6.7 Utilities.
(a) Definitions: For purposes hereof, "Utilities" shall mean the services
of electricity, natural gas (if permitted by Landlord), sewage (including
removal and treatment), water (including treatment and delivery), telephone
service and other services such as satellite data transmission,
telecommunications cell sites or antennas, cable systems and security systems,
or technological successors thereto. Landlord shall make available for the
Premises only those Utilities facilities set forth as Landlord's Work in Exhibit
C hereto and shall have no obligation whatsoever to make any other Utilities
facilities or services available for the benefit of Tenant.
Tenant shall pay, as provided hereinafter, for any and all Utilities
furnished to the Premises or otherwise for the benefit of Tenant except that
Utilities in connection with the Common Area shall be paid by Tenant as a part
of Tenant's pro rata share of Operating Expenses as more fully described in
Article 4 hereto. Landlord shall have the right, either in connection with
Tenant's initial occupancy of the Premises, or from time to time throughout the
Lease Term, beginning as of a date specified in written notice from Landlord to
Tenant, to provide certain Utilities to the Premises, or to require Tenant to
contract for Utility services with specific alternative service providers
("ASP"), provided, however, that the cost to Tenant of such Landlord-designated
services shall not exceed the costs Tenant would have obtained directly from the
local public utility company or, for Utilities not provided by a public utility
company, the rate Tenant would be able to obtain on its own account. In either
such event, Tenant shall use the Utilities or the Utility services designated by
Landlord and shall not contract separately for the same without the prior
written consent of Landlord which Landlord may grant or withhold in its sole and
absolute discretion. Tenant shall install at its sole expense any separate meter
required by Landlord or Tenant for any Utilities.
In the event Landlord provides a Utility as provided hereinabove, Landlord
shall reasonably determine Tenant's share of the Utility so provided, and such
determination shall be used to calculate a "Utilities Charge" which Tenant shall
pay to Landlord as described hereafter. So long as Landlord is reasonable in its
determination of Tenant's share of the Utility, Tenant agrees that Landlord's
determination shall be binding upon Tenant. Tenant shall arrange, at Tenant's
sole cost and expense, for the local utility company to provide all Utilities
not otherwise provided or designated by Landlord as provided herein.
(b) Payment of the Utilities Charge. For any Landlord-provided Utilities,
Tenant shall pay the Utilities Charge described hereinabove, on the first day of
each month, in advance, as Additional Rent. Such charge shall include all
expenses for the repair, maintenance and replacement, as necessary, of all
meters, pipes, conduits, equipment, components and facilities used to deliver
such Utilities to the Premises. Landlord shall initially estimate the amount of
the Utilities Charge on the basis of a typical store layout comparable to
Tenant's proposed use of the Premises and shall thereafter adjust such estimate
from time to time as necessary, based on Landlord's experience and reasonably
anticipated costs.
At the end of each calendar or partial calendar year during the Lease Term,
Landlord shall compare the total of all monthly estimated Utilities Charges paid
by Tenant during said year with the total expenses incurred by Landlord in
supplying Utilities to the Premises during said year. If said total expenses
which shall constitute Tenant's actual Utilities Charge, exceed Tenant's total
estimated payments therefor, Tenant shall pay Landlord the deficiency within ten
(10) days after notice from Landlord. If Tenant's total estimated payments
exceed Tenant's actual Utilities Charge, Tenant shall offset such excess against
Tenant's Utilities Charge(s) next due.
(c) Access to the Premises. Tenant shall cooperate with Landlord, the local
public utility company, and any alternate service provider at all times and
shall allow Landlord, the local public utility company and any alternative
service provider access, as reasonably necessary, to the Property's electric
lines, feeders, risers, wiring, supply lines, transformers, pipes, conduits,
ducts, penetrations, components, appurtenances, systems, machinery, facilities,
installations, or other equipment used in or in connection with the Shopping
Center for the generation or supply of Utilities.
(d) Landlord Not Responsible for Interruption of Service. Landlord shall in
no way be liable or responsible for any loss, damage, or expense that Tenant may
sustain or incur by reason of any change, failure, interference, disruption, or
defect in the supply or character of the electric energy or other Utility
furnished to the Premises, or if the quantity or character of electric energy or
other Utility supplied by the utility service provider or any ASP is no longer
available or suitable for Tenant's requirements, and no such change, failure,
defect, unavailability, or unsuitability shall constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of rent, or relieve Tenant from any of its obligations under the
Lease.
6.8 Compliance with Exclusive License Agreements. Notwithstanding anything
in this Lease to the contrary, Tenant expressly understands and agrees that
Landlord intends to enter into various license agreements or other similar
agreements with third parties to allow exclusive use of certain products or
brand names that will be required to be sold within the Shopping Center (for
example, but without limitation, Landlord may enter into an agreement that only
specific brand name credit cards will be used throughout the Shopping Center).
Tenant expressly agrees and acknowledges that Tenant's use of the Premises shall
at all times be subject to any such third party agreements regardless of whether
or not such agreements were entered into as of the Effective Date hereof.
Landlord agrees that Landlord shall provide Tenant with at least thirty (30)
days written notice prior to the date Tenant use will be affected by any such
agreements.
6.9 Hazardous Materials.
(a) Definitions. As used herein, "Hazardous Materials Laws" means any and
all federal, state or local laws, ordinances, rules, decrees, orders,
regulations or court decisions relating to hazardous substances, hazardous
materials, hazardous waste, toxic substances, environmental conditions on, under
or about the Premises, or soil and ground water conditions, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended, Act, Cal. Water Code ss.13000, et. seq., any
amendments to and any regulations promulgated pursuant to the foregoing, and any
similar federal, state or local laws, ordinances, rules, decrees, orders or
regulations. As used herein, "Hazardous Materials" means any chemical, compound,
substance, pollutant, containment or other material that: (a) is defined as a
hazardous substance, hazardous material, hazardous waste or toxic substance
under any Hazardous Materials Law; or (b) is controlled or governed by any
Hazardous Materials Law or gives rise to any reporting, notice or publication
requirements thereunder.
(b) Use. Tenant shall not allow any Hazardous Material to be used,
generated, manufactured, released, stored or disposed of on, under or about, or
transported from, the Premises or the Property, unless such use is: (a)
specifically disclosed to and approved by Landlord in writing prior to such use;
(b) conducted in compliance with the provisions of this Section; and (c)
conducted in compliance with the requirements and recommendations of Landlord's
and Tenant's insurers based upon prudent industry practices regarding management
of Hazardous Materials. Landlord may approve such use subject to reasonable
conditions to protect the Premises and Landlord's interests. Notwithstanding the
foregoing, Landlord hereby consents to Tenant's use, storage or disposal of
products containing small quantities of Hazardous Materials, which products are
of a type customarily found in offices and households (such as aerosol cans
containing insecticides, toner for copies, paints, paint remover, and the like),
provided that Tenant shall handle, use, store and dispose of such Hazardous
Materials in a safe and lawful manner and shall not allow such Hazardous
Materials to contaminate the Premises. If Landlord's consent is required for an
assignment of the Lease or a sublease of the Premises, Landlord shall have the
right to refuse such consent if, in Landlord's reasonable judgment, the
possibility of a release of Hazardous Materials is materially increased as a
result of the assignment or sublease or if Landlord does not receive reasonable
assurances that the new tenant or subtenant has the experience and the financial
ability to remedy a violation of Hazardous Materials and fulfill its obligations
under this Section 6.9.
(c) Compliance With Laws. Tenant shall strictly comply with, and shall
maintain the Premises in compliance with, all Hazardous Materials Laws. Tenant
shall obtain and maintain in full force and effect all permits, licenses and
other governmental approvals required for Tenant's operations on the Premises
under any Hazardous Materials Laws and shall comply with all terms and
conditions thereof. At Landlord's request, Tenant shall deliver copies of, or
allow Landlord to inspect, all such permits, licenses and approvals. Tenant
shall, at Tenant's expense, perform any monitoring, investigation, clean-up,
removal, detoxification, preparation of closure or other required plans and any
other remedial work (collectively, "Remedial Work") required as a result of any
release or discharge of Hazardous Materials affecting the Premises or the
Property or any violation of Hazardous Materials Laws by Tenant or any assignee
or sublessee of Tenant or their respective agents, contractors, employees,
licensees or invitees. Landlord shall have the right to intervene in any
governmental action or proceeding involving any Remedial Work, and to approve
performance of the work, or, at Landlord's option, after reasonable notice to
Tenant, to remedy any violation by Tenant and require reimbursement from Tenant
for costs incurred by Landlord in connection with such remedy, in order to
protect Landlord's interests.
(d) Notice; Reporting. Tenant shall notify Landlord, in writing, within
five (5) days after any of the following: (i) Tenant has knowledge, or has
reasonable cause to believe that any Hazardous Material has been released,
discharged or is located on, under or about the Premises, whether or not the
Hazardous Material is in quantities that would otherwise be reportable to a
public agency; (ii) Tenant receives any order of a governmental agency requiring
any Remedial Work pursuant to any Hazardous Materials Laws; (iii) Tenant
receives any warning, notice of inspection, notice of violation or alleged
violation, or Tenant receives notice or knowledge of any proceeding,
investigation or enforcement action, pursuant to any Hazardous Materials Laws;
or (iv) Tenant receives notice or knowledge of any claims made or threatened by
any third party against Tenant or the Premises relating to any loss or injury
resulting from Hazardous Materials. Tenant shall deliver to Landlord copies of
all test results, reports, spill prevention plans, and business or management
plans required to be filed with any governmental agency pursuant to any
Hazardous Materials Laws; however, Landlord shall have no obligation to review
the same nor shall Landlord have any liability as to the adequacy of any actions
taken by Tenant.
(e) Termination/Expiration. Upon termination or expiration of this Lease,
Tenant shall, at its sole expense, remove any equipment, improvements or storage
facilities utilized in connection with any Hazardous Materials and shall clean
up, detoxify, repair and otherwise restore the Premises to a condition free of
Hazardous Materials.
(f) Indemnity. Tenant shall indemnify, protect, defend and hold Landlord
(and its partners and their respective officers, directors, employees and
agents) harmless from and against any and all claims, costs, expenses, suits,
judgments, actions, investigations, proceedings and liabilities arising out of
or in connection with any breach of any provisions of this Section or directly
or indirectly arising out of the use, generation, storage, release, disposal or
transportation of Hazardous Materials by Tenant, or any sublessee or assignee of
Tenant, or their respective agents, contractors, employees, licensees, or
invitees, on, under or about the Premises during the Lease Term, including, but
not limited to, all foreseeable and unforeseeable consequential damages and the
cost of any Remedial Work. Neither the consent by Landlord to the use,
generation, storage, release, disposal or transportation of Hazardous Materials
nor the strict compliance with all Hazardous Materials Laws shall excuse Tenant
from Tenant's indemnification obligations pursuant to this Section. The
foregoing indemnity shall be in addition to and not a limitation of the
indemnification provisions of Section 12.1 of the Lease. Tenant's obligations
pursuant to this Section shall survive the termination or expiration of the
Lease.
ARTICLE 7
TAXES, INSURANCE, AND TITLE OF PREMISES
7.1 Title of Premises. Tenant acknowledges that as of the Effective Date
the Premises are subject to the following: (a) covenants, conditions,
restrictions, easements, mortgages or deeds of trust, any ground lease of
record, any rights-of-ways of record, and any other matters or documents of
record, (hereinafter referred to collectively as "CC&R's"), provided, however,
that the CC&R's shall not prevent Tenant from using the Premises for the
purposes specifically described in Exhibit B: (b) any law, statute, ordinance,
regulation, rule, requirement and order, court decision, or procedural
requirement of any governmental authority; and (c) general and special taxes not
delinquent. As to its leasehold estate, Tenant and all persons in possession
thereof will conform to and will not violate the terms of the aforementioned
CC&R's or said matters of record. Except as permitted by this Lease, from and
after the Effective Date, Tenant and all persons in possession of the Premises,
shall not encumber the Premises, whether involuntarily or otherwise. Tenant
acknowledges that any first mortgagee or first deed of trust trustee or
beneficiary has the right to subordinate at any time its interest in this Lease
and the leasehold estate to that of Tenant, without Tenant's consent.
Tenant acknowledges that this Lease is subordinate to the CC&R's and any
amendments or modifications thereof. Notwithstanding the foregoing, if the
CC&R's are not of record as of the Effective Date, then this Lease shall
automatically become subordinate to the CC&R's upon recordation of said CC&R's,
and Tenant further agrees to execute and return to Landlord, within ten (10)
days after written demand therefor by Landlord, an agreement in recordable form
(substantially in the form of Exhibit G) subordinating this Lease to said
CC&R's.
7.2 Property Taxes and Insurance. Tenant agrees to pay, or cause to be paid
before delinquency, in the manner provided in Article 4, any and all (i)
insurance maintained by Landlord on the Premises under Article 12.2; (ii) taxes,
assessments, license fees, and public charges levied, assessed, or imposed, or
which may become payable during the term upon the Premises, the underlying
realty, and upon any fixtures, furniture, appliances, and personal property
installed or located on the Premises; (iii) transfer, transaction, sales,
rental, gross receipts, license or similar taxes or charges measured by rent
received by Landlord. Landlord shall, after receipt of any tax xxxx or other
notice of tax due on Premises, furnish Tenant with a copy of such xxxx or
notice. Tenant shall pay all of such taxes when due and, on demand, shall
furnish to Landlord receipts evidencing such payment. Alternatively, at
Landlord's option, Landlord may collect estimated monthly payments for insurance
and taxes payable by Tenant hereunder, concurrently with and in the manner
provided for Operating Expenses pursuant to Article 4. Taxes for first and last
years shall be prorated between Landlord and Tenant.
ARTICLE 8
COMMON AREA
8.1 Definition Of Common Area. The term "Common Area" shall include all
improved and unimproved areas within the boundary of the Property which are made
available from time to time for the general use, convenience, and benefit of
Landlord, other persons entitled to occupy any portion of the Property and/or
their customers, patrons, employees, and invitees, including, without
limitation, streets, driveways, all parking areas and structures, truckways,
delivery passages, loading doors, sidewalks, ramps, open and closed courts and
malls including food court seating areas, landscaped and planted areas, exterior
stairways, and retaining and decorative walls and planters. The Common Area
shall also include any public transportation facilities, and landscaped areas
and off-site areas which must be maintained by the Property owners pursuant to
governmental conditions of approval of subdivision and/or development of the
Property. Landlord reserves the right to install kiosks and other free-standing
structures within the Common Area, providing any such change does not materially
affect ingress, egress, parking or visibility of the Premises. Landlord also
reserves the right to make changes at any time and from time to time in the
size, shape, location, number and extent of the Common Area, or any of them, and
no such change shall entitle Tenant to any abatement of rent.
8.2 Operation and Maintenance of the Common Area. Landlord shall keep, or
cause to be kept, said Common Area in a neat, clean and orderly condition,
properly lighted and landscaped, and shall repair, maintain or replace all
equipment and facilities thereof as Landlord shall deem necessary. Landlord may
cause any or all of the services concerning the Common Area to be provided by an
independent contractor(s) or by an affiliate(s) of Landlord. In the event
Landlord does not maintain all of the areas in the Property because a Major
Tenant or Pad Tenant maintains its respective Common Area, then, for the length
of time such condition may exist, Landlord's responsibility shall be to maintain
and repair only those portions of the Common Area not maintained by the Major
Tenants or Pad Tenants, and Operating Expenses shall not include expenses paid
separately by such Major Tenants and Pad Tenants.
8.3 Control of Common Area. Landlord shall at all times have the right and
privilege of determining the nature and extent of the Common Area, whether the
same shall be surface, underground or multiple-deck, and of making such changes
therein and thereto from time to time which in its opinion are deemed to be
desirable and for the best interest of all persons using said Common Area,
including the location and relocation of driveways, entrances, exits, automobile
parking spaces, the direction and flow of traffic, installation of prohibited
areas, landscaped areas, utilities and all other facilities thereof.
Should Landlord acquire or obtain the use of additional land not shown as
part of the Property on Exhibit A and make the same available for parking or
other Common Area purposes, then the "Operating Expenses" shall also include all
costs and expenses referred to in Section 4.3 which are incurred and paid in
connection with said additional land.
Landlord shall at all times after the Effective Date have the sole and
exclusive control of the Common Area, including, without limitation, the right
to lease space within the Common Area to tenants for the sale of merchandise
and/or services and the right to permit advertising displays, educational
displays and entertainment in the Common Area. Landlord shall also have the
right at any time and from time to time to exclude and restrain any person from
use or occupancy thereof, excepting, however, bona fide customers, patrons and
service suppliers of Tenant and other tenants of Landlord who make use of said
areas in accordance with the rules and regulations established by Landlord from
time to time with respect thereto in accordance with Section 8.4. The rights of
Tenant with respect to the Common Area shall at all times be subject to the
rights of Landlord, the other tenants of Landlord and the other owners of the
Property to use the same in common with Tenant. It shall be the duty of Tenant
to keep all of the Common Area free and clear of any obstructions created or
permitted by Tenant or resulting from Tenant's operation and to permit the use
of any of the Common Area only for normal parking and ingress and egress by the
said customers, patrons and service suppliers to and from the building occupied
by Tenant.
If in the opinion of Landlord unauthorized persons are using any of the
Common Area by reason of the presence of Tenant in the Premises, Tenant, upon
demand of Landlord, shall enforce Landlord's right to exclude or restrain all
such unauthorized persons by appropriate proceedings. Nothing herein shall
affect the rights of Landlord at any time to remove any such unauthorized
persons from the Common Area or to restrain said persons from using any of said
areas.
8.4 Rules and Regulations. Tenant shall abide by the rules and regulations
governing the Property which Landlord, in its sole discretion, may establish
and/or amend from time to time for the proper and efficient operation and/or
maintenance of the Common Area (including any enclosed mall or parking
structure) or any portion thereof. Such rules and regulations may specify,
without limitation, when the Common Area (including any enclosed mall or parking
structure) shall be open for use and when and where Tenant and its employees may
park their vehicles in the Common Area.
8.5 Employee Parking. Employees of Tenant shall not park their automobiles
in those automobile parking areas of the Common Area which Landlord may from
time to time designate for use by patrons of the Property. At all times Landlord
shall have the right to designate, or change the designation of, the particular
parking area to be used by any or all of such employees. Tenant and its
employees shall park their cars only in those portions of the Common Area, if
any, designated for that purpose by Landlord. Tenant shall furnish Landlord with
the automobile license numbers of Tenant and Tenant's employees within fifteen
(15) days after taking possession of the Premises and shall thereafter notify
Landlord of any changes thereto within five (5) days after such change occurs.
If Tenant or its employees fail to park their cars in the designated parking
areas, Landlord may charge Tenant Ten Dollars ($10.00) per car per day for each
day or partial day that any car is parked in any area other than those
designated; provided, however, Landlord agrees to give Tenant written notice of
the first violation of this provision. Tenant shall have two (2) days thereafter
within which to correct the violation; if said violation is not corrected within
said two-day period, then the aforesaid fine shall be levied and Tenant shall
pay the same. After notice of such first violation, no prior notice of any
subsequent violation shall be required. All amounts due under provisions of this
paragraph shall be payable by Tenant within ten (10) days after demand by
Landlord.
8.6 Security Officers. Tenant acknowledges that if Landlord provides
security officers for the Common Area, Landlord does not represent, guarantee or
assume responsibility that Tenant will be secure from any claim, demand,
investigation, proceeding, action, suit, judgment, award, fine, lien, loss,
damage, expense, liability, charge or cost of any kind or character (including
attorney fees and court costs) relating to such security officers. Landlord
shall have no obligation to hire, maintain or provide such services, which may
be withdrawn or changed at any time with or without notice to Tenant or any
other person and without liability to Landlord.
8.7 Validated Parking. Tenant specifically acknowledges and agrees that
Landlord may, in Landlord's sole discretion. establish and amend from time to
time a parking validation program for the parking lot and any parking structures
on the Property (collectively "parking area"). Said parking validation program
may include such rules and regulations as established by Landlord. It is
expressly understood and agreed that the operator(s) of the parking areas shall,
in said operator's sole and absolute discretion, determine the amount of parking
fees and further shall have no obligation whatsoever to provide a special fee
structure for Tenant's employees or to provide parking for Tenant's employees.
ARTICLE 9
MECHANICS' LIENS
9.1 Mechanics' Liens. Tenant agrees that it will pay, or cause to be paid,
all costs for work done by it, or caused to be done by it, on the Premises, and
Tenant will keep the Premises free and clear of all mechanics' liens and other
such liens on account of work done for Tenant or persons claiming under Tenant.
Tenant agrees to and shall indemnify, defend and hold Landlord harmless from any
and all liability, loss, damage, costs, attorney fees and all other expenses on
account of claims of lien of laborers or materialmen or others for work
performed or materials or supplies furnished for Tenant or persons claiming
under Tenant.
9.2 Contest of Lien. If Tenant shall desire to contest any claim of such
mechanics' lien, it shall furnish Landlord adequate security for the value or in
the amount of the claim, plus estimated costs and interest, or a bond of a
responsible corporate surety in such amount, conditioned on the discharge of the
lien. If a final judgment establishing the validity or existence of a lien for
any amount is entered, Tenant shall immediately pay and satisfy the same.
9.3 Right to Cure. If Tenant shall be in default in paying any charge for
which a mechanics' lien claim and suit to foreclose the lien have been filed,
and shall not have given Landlord security to protect the property and Landlord
from liability for such claim of lien, Landlord may (but shall not be so
required to) pay said claim and any costs, and the amount so paid, together with
reasonable attorney fees incurred in connection therewith, shall be immediately
due and owing from Tenant to Landlord, and Tenant shall pay the same to Landlord
with interest at the rate specified in Section 14.7 from the dates of Landlord's
payments.
9.4 Notice of Lien. Should any claim of lien be filed against the Premises
or any action against the Premises or any action affecting the title to such
property be commenced, the party receiving notice of such lien or action shall
forthwith give the other party written notice thereof.
9.5 Notice of Nonresponsibility. Landlord or its representatives shall have
the right to go upon and inspect the Premises at all reasonable times and shall
have the right to post and keep posted thereon notices of nonresponsibility or
such other notices which Landlord may deem to be proper for the protection of
Landlord's interest in the Premises. Tenant shall, before the commencement of
any work which might result in any such lien, give to Landlord written notice of
its intention to do so in sufficient time to enable posting of such notices.
ARTICLE 10
TENANT'S RIGHT TO MAKE IMPROVEMENTS;
PERSONAL PROPERTY; AND FIXTURES
10.1 Improvements. At Tenant's own expense, after giving Landlord notice in
writing of its intentions to do so and without limiting Tenant's right to remove
and/or replace Personal Property in accordance with Article 10, Section 10.3,
Tenant may, from time to time after completion of all work in accordance with
Exhibit C, make such permanent and nonstructural alterations, replacements,
additions, changes, and/or improvements (collectively referred to in this Lease
as "Improvements") to Tenant's Work previously completed in accordance with
Exhibit C or to prior Improvements as Tenant may find necessary or convenient
for its purposes, provided that the value of the Premises is not thereby
diminished; provided, however, no Improvements costing in excess of Twenty-Five
Hundred Dollars ($2,500.00) may be made without obtaining the prior written
approval of Landlord. In addition, no Improvements shall be made to any
storefront, mechanical, electrical or plumbing systems, the exterior walls or
roof of the Premises, nor shall Tenant erect any mezzanine or increase the size
of same, if one be initially constructed, without obtaining the prior written
approval of Landlord. In no event shall Tenant make or cause to be made any
penetration into or through the roof or floor of the Premises without obtaining
the prior written approval of Landlord. Tenant agrees to reimburse Landlord for
all costs and expenses (including, without limitation, any architect and/or
engineer fees) incurred by Landlord in approving or disapproving Tenant's plans
for Improvements. Tenant shall be liable for and shall indemnify and defend
Landlord and other tenants at the Property from any claim, demand, lien, loss,
damage or expense, including reasonable attorney fees and costs, arising from
any Improvements permitted under this Article 10. Within thirty (30) days after
completing its Improvements, Tenant shall certify to Landlord in writing
Tenant's actual cost of constructing its Improvements.
10.2 Construction Requirements. All Improvements to be made to the Premises
which require the approval of Landlord shall be made under the supervision of a
competent architect or licensed structural engineer and made in accordance with
plans and specifications prepared in conformity with the structural, mechanical,
electrical, design and quality standards, requirements and/or criteria specified
in Exhibit C and approved in writing by Landlord before commencement of the
work. In the event that Tenant retains a contractor to construct its
Improvements, Tenant shall comply with the provisions of Exhibit C, "Tenant's
Use of a Contractor Other than Landlord's Contractor". All work with respect to
any Improvements must be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the Premises shall at all times be a
complete unit except during the period of work. Upon completion of such work,
Tenant shall have recorded in the office of the County Recorder where the
Property is located a Notice of Completion, as required or permitted by law, and
Tenant shall deliver to Landlord, within ten (10) days after completion of said
work, a copy of the building permit with respect thereto. Upon the expiration or
earlier termination of this Lease, such Improvements shall not be removed by
Tenant but shall become a part of the Premises. Any such Improvements shall be
performed and done strictly in accordance with the laws and ordinances relating
thereto. In performing the work of any such Improvements, Tenant shall have the
work performed in such a manner as not to obstruct access to the premises of any
other tenant in the Property.
10.3 Personal Property. All of Tenant's trade fixtures, furniture,
furnishings, signs and other personal property not permanently affixed to the
Premises (collectively referred to as "Personal Property" in this Lease) must be
new when installed in, or attached to, the Premises by Tenant. Subject to the
provisions of Section 10.5, any such Personal Property shall remain the property
of Tenant. Provided Tenant is not in default under the terms of this Lease,
Tenant shall have the right to remove any or all of its Personal Property which
it may have stored or installed in the Premises, including, without limitation,
counters, shelving, showcases, mirrors and other movable Personal Property, so
long as Tenant shall immediately replace the same with similar Personal Property
of comparable or better quality, except Tenant shall not be obligated to replace
such Personal Property at the expiration or earlier termination of this Lease.
Tenant shall, at its expense, immediately repair any damage occasioned to the
Premises by reason of the removal of any such Personal Property.
10.4 Fixtures. Tenant's Improvements (as described in Section 10.1) and
Tenant's Work (as described in Exhibit C) are collectively referred to in this
Lease as "Fixtures" and shall become the property of Landlord upon expiration or
earlier termination of this Lease; provided, however, that if Landlord so
requests, Tenant shall remove the same prior to the expiration or earlier
termination of the Lease and shall repair all damage to the Premises or the
Property caused by such removal. Tenant shall not, however, be required to
remove pipes and wires concealed in floors, walls or ceilings, provided that
Tenant properly cuts and caps the same, and seals them off in a safe, lawful and
workmanlike manner, in accordance with Landlord's reasonable requirements and
all applicable building codes. If Tenant does not remove any Fixtures when
requested by Landlord to do so, Landlord may remove the same and repair all
damage caused thereby, and Tenant shall pay to Landlord the cost of such removal
and repair immediately upon demand therefor by Landlord, plus fifteen percent
(15%) of the cost of such removal to reimburse Landlord for its administrative
expense. Tenant's obligation to observe or perform this covenant shall survive
the expiration or termination of this Lease.
10.5 Landlord's Security Interest. [Intentionally Deleted.]
10.6 Personal Property Taxes. Tenant shall pay before delinquency all taxes
(including sales and use taxes), assessments, license fees and public charges
levied, assessed or imposed upon its business operation as well as upon its
merchandise, Fixtures and Personal Property. In the event any such items of
property are assessed with property of Landlord, then, and in such event, such
assessment shall be divided between Landlord and Tenant to the extent that
Tenant shall pay only its equitable portion of such assessment.
10.7 Signs and Lighting. Tenant may, at its expense, erect on the Premises
such signs and provide such exterior lighting as shall be provided for in the
plans and specifications for the improvements mutually approved under and
contained in Exhibit F. The Tenant shall not thereafter erect or maintain any
other or additional signs or any other exterior lighting on the Premises without
the prior written approval and consent of Landlord. In the event that Landlord
develops new sign criteria in connection with a remodel of the Property , Tenant
shall, within sixty (60) days after receipt of written notice of new sign
criteria, at Tenant's expense, replace existing signs with new signs which
conform to the new criteria.
ARTICLE 11
REPAIRS; MAINTENANCE
11.1 Tenant's Obligations. Tenant agrees at all times from and after
delivery of the Premises, at its own cost and expense, to repair, maintain in
good and tenantable condition and replace, as necessary, the Premises and every
part thereof (except that portion of Premises to be maintained by Landlord under
Section 11.2), including, without limitation, the following: all meters, pipes,
conduits, equipment, components and facilities (whether or not within the
Premises) that supply the Premises exclusively with Utilities, specifically
including the repair and replacement of the HVAC system, but excluding the
maintenance of the HVAC system (except as the appropriate utility company has
assumed these duties) all Fixtures and other equipment installed in the
Premises; all exterior and interior glass installed in the Premises; all signs,
lock and closing devices; all interior window sashes, casements and frames;
doors and door frames (except for the painting of the exterior surfaces
thereof); floor coverings; and all such items of repair, maintenance,
alteration, improvement or reconstruction as may be required at any time or from
time to time by a governmental agency having jurisdiction thereof. All
replacements made by Tenant in accordance with this Section 11.1 shall be of
like size, kind and quality to the items replaced and shall be subject to
Landlord's approval. Upon surrender of the Premises, Tenant shall deliver the
Premises to Landlord in good order, condition and state of repair, but shall not
be responsible for damages resulting from ordinary wear and tear, insured
casualty losses covered by Section 18.4 of this Agreement, or any items of
repair covered by Section 11.2.
11.2 Landlord's Obligations. Subject to Sections 4.3 and 11.1, Landlord
shall repair, maintain in good and tenantable condition and replace, as
necessary, the roof, exterior walls, structural parts of the Premises (including
the structural floor) and all meters, pipes, conduits, equipment, components and
facilities that supply the Premises with Utilities on a nonexclusive basis
(except as the appropriate utility company has assumed these duties); in
addition, Landlord shall maintain (but shall not be required to repair or
replace) the HVAC system provided, however, that Landlord shall have the option,
but shall not be required, to make repairs necessitated by reason of the
negligence of Tenant or anyone claiming under Tenant, or by reason of
Improvements made by Tenant or anyone claiming under Tenant, or by reason of
breaking and entering of the Premises. In the event that Landlord makes such
repairs necessitated by the negligence of Tenant or anyone claiming under
Tenant, Tenant shall pay as Additional Rent Landlord's costs plus fifteen
percent (15%) of such costs for overhead, within fifteen (15) days after
presentation of a statement therefor. As used in this Article 11, "exterior
walls" shall include exterior surfaces of storefronts, window sashes, casements
and frames. Exterior walls shall specifically exclude exterior and interior
glass. It is understood and agreed that Landlord shall be under no obligation to
repair, replace or maintain the Premises or the mechanical equipment exclusively
serving the Premises at any time, except as this Lease expressly provides.
Notwithstanding anything to the contrary contained in this Lease, Landlord shall
not in any way be liable to Tenant for failure to make repairs as herein
specifically required of it unless Tenant has previously notified Landlord, in
writing, of the need for such repairs and Landlord has failed to commence and
complete said repairs within a reasonable period of time following receipt of
Tenant's written notification.
11.3 Tenant's Failure to Maintain. If Tenant refuses or neglects to repair,
replace, or maintain the Premises, or any part thereof, in a manner reasonably
satisfactory to Landlord, Landlord shall have the right, upon giving Tenant
reasonable written notice of its election to do so, to make such repairs or
perform such maintenance on behalf of and for the account of Tenant. In such
event, Tenant shall pay the cost of such work as Additional Rent promptly upon
receipt of an invoice therefor.
11.4 Right to Enter. Tenant agrees to permit Landlord, or its authorized
representatives, to enter the Premises at all times during usual business hours
to inspect the same, to perform its duties under Section 11.2, and to perform
any work therein (a) that may be necessary to comply with any laws, ordinances,
rules or regulations of any public authority, the Insurance Service Office or
any similar body, (b) that Landlord may deem necessary to prevent waste or
deterioration in connection with the Premises if Tenant does not make, or cause
to be made, such repairs or perform, or cause to be performed, such work
promptly after receipt of written demand from Landlord, and (c) that Landlord
may deem necessary in connection with the expansion, reduction, remodeling or
renovation of any portion of the Property. Nothing herein contained shall imply
any duty on the part of Landlord to do any such work which, under any provision
of this Lease, Tenant may be required to do, nor shall Landlord's performance of
any repairs on behalf of Tenant constitute a waiver of Tenant's default in
failing to do the same. No exercise by Landlord of any rights herein reserved
shall entitle Tenant to any compensation, damages or abatement of rent from
Landlord for any injury or inconvenience occasioned thereby. If Landlord makes
or causes any such repairs to be made or performed, as provided for herein,
Tenant shall pay the cost thereof to Landlord, as Additional Rent, promptly upon
receipt of an invoice therefor, except for that work as provided in subparagraph
(c) of this Section 11.4 which shall be at the sole cost and expense of
Landlord.
ARTICLE 12
INDEMNITY AND INSURANCE
12.1 Indemnity by Tenant. Landlord shall not be liable for, and Tenant
shall indemnify, hold harmless and defend Landlord from any claim, demand,
liability, judgment, award, fine, mechanics' lien or other lien, loss, damage,
expense, charge or cost of any kind or character (including actual attorney fees
and court costs) arising directly or indirectly from (a) any labor dispute
involving Tenant or its contractors and agents or (b) the construction, repair,
alteration, improvement, use, occupancy or enjoyment of the Premises or any
other portion of the Property by Tenant, Tenant's assignees and/or subtenants
and their respective contractors, agents, licensees or invitees (hereinafter
referred to as "Claims"), including without limitation, Claims caused by the
sole or concurrent negligent act or omission, whether active or passive, of
Landlord or its agents; provided, however, Tenant shall have no obligation to
defend or indemnify Landlord from Claims made by Tenant which are covered by the
public liability insurance Landlord is required to carry pursuant to Section
12.2, or caused by the willful or criminal act of Landlord or its agents.
12.2 Landlord's Insurance Obligation. At all times from and after the
Effective Date, Landlord shall maintain in effect a policy or policies of
insurance providing protection for the following liabilities and/or risks: (a)
public liability for bodily injury and property damage arising from Landlord's
ownership and/or operation of the Property with coverage limits at least equal
to those Tenant is required to maintain in accordance with Section 12.3 (a), and
(b) any peril, in Landlord's sole discretion, insurable under an All Risk policy
covering the building of which the Premises are a part, exclusive of any item
insured by Tenant pursuant to Section 12.3 (e), in an amount which is the
greater of eighty percent (80%) of its full replacement cost (exclusive of the
cost of excavations, foundations and footings) or such amount as Landlord's
mortgagee or beneficiary may require Landlord to maintain. Landlord's obligation
to carry the All Risk insurance provided for in this Section 12.2 may be
satisfied by inclusion of said building within the coverage of any so-called
blanket policy or policies of insurance carried and maintained by Landlord,
provided that the coverage afforded will not be reduced or diminished by reason
of the use of such blanket policies of insurance. Landlord may, at Landlord's
sole discretion, maintain during the Lease Term, at Tenant's expense, a policy
of rental income insurance covering a period of one year, with loss payable to
Landlord in an amount equal to one year's Minimum Annual Rental plus estimated
property taxes, insurance premiums, and Operating Expenses payable by Tenant.
12.3 Tenant's Insurance Obligation. Tenant further covenants and agrees
that from and after the earlier of substantial completion of the Premises or
Tenant's entry onto the Premises with Landlord's consent, Tenant will carry and
maintain, at its sole cost and expense, the following types of insurance, in the
amounts specified and in the form hereinafter provided for:
(a) PUBLIC LIABILITY. Comprehensive general liability insurance for bodily
injury and property damage with coverage limits of not less than Two Million
Dollars ($2,000,000) combined each occurrence and in the aggregate insuring
against any and all liability of the insured with respect to said Premises or
arising out of the maintenance, use or occupancy thereof; if Tenant is permitted
to sell alcoholic beverages pursuant to the provisions of this Lease, such
liability insurance shall specifically include liquor liability insurance
covering consumption of alcoholic beverages by customers of Tenant. All such
bodily injury liability insurance and property damage liability insurance shall
specifically insure Tenant's performance of the indemnity provisions of this
Lease, but the amount of such insurance shall not limit Tenant's liability nor
relieve Tenant of any obligation hereunder.
(b) WORKER'S COMPENSATION. Statutory amount of workers' compensation
insurance required by the State in which the Property is located for the benefit
of Tenant's employees.
(c) PLATE GLASS. Insurance covering full replacement cost of all plate
glass on the Premises. Tenant shall have the option either to insure
commercially or to self-insure the risk.
(d) EQUIPMENT. Machinery insurance on all air conditioning equipment and
systems exclusively serving the Premises. If said equipment and the damage it
may cause are not covered by Tenant's "All Risk" insurance (as specified in
subparagraph (e), below), then the insurance specified in this subparagraph (d)
shall be in an amount not less than One Hundred Thousand Dollars ($100,000). If
Tenant requires boilers or other pressure vessels to serve the Premises, they
shall also be insured in the amount required by this subparagraph (d).
(e) TENANT'S IMPROVEMENTS. Insurance covering Tenant's (1) merchandise, (2)
"Fixtures" as defined in Article 10, Section 10.4), including the items
specified as "Tenant's Work" in Exhibit C, (3) "Improvements" (as defined in
Article 10, Section 10.1), permitted under Article 10, and (4) "Personal
Property" (as defined in Article 10, Section 10.3) from time to time, in, on or
upon the Premises, in an amount not less than ninety percent (90%) of their full
replacement cost from time to time after the Effective Date, providing
protection against any peril included within the classification "All Risk,"
including, without limitation, coverage for sprinkler and flood damage and
theft. Any policy proceeds shall be used for the repair or replacement of the
property damaged or destroyed unless this Lease shall cease and terminate under
the provisions of Article 18.
All policies of insurance provided for herein shall be issued by insurance
companies with a general policyholder's rating of not less than A and a
financial rating of not less than Class X as rated in the most current available
"Best's" Insurance Reports, qualified to do business in the State where the
Property is located. All such policies shall be issued in the name of the
Landlord, Landlord's property manager, Tenant, and Landlord's mortgagees or
beneficiaries, which policies shall be for the mutual and joint benefit and
protection of Landlord, Landlord's property manager, Tenant and said mortgagees
or beneficiaries. Executed copies of such policies of insurance or certificates
thereof shall be delivered to Landlord within ten (10) days after the earlier of
delivery of the Premises, or Tenant's entry onto the Premises with Landlord's
consent, and thereafter copies of renewal policies or certificates thereof shall
be delivered to Landlord within thirty (30) days prior to the expiration of the
term of each such policy. As often as any such policy shall expire or terminate,
renewal or additional policies shall be procured and maintained by Tenant in
like manner and to like extent. All policies of insurance delivered to Landlord
must contain a provision that the company writing said policy will give to
Landlord twenty (20) days' notice in writing in advance of any cancellation,
lapse, reduction or other adverse change respecting such insurance. All public
liability, property damage and other casualty policies shall be written as
primary policies, not contributing with or secondary to coverage which Landlord
may carry.
Tenant's obligations to carry the insurance provided for above may be
satisfied by inclusion of the Premises within the coverage of a so-called
blanket policy or policies of insurance carried and maintained by Tenant;
provided, however, that Landlord and Landlord's mortgagees or beneficiaries
shall be named as additional insureds thereunder as their interests may appear
and that the coverage afforded Landlord will not be reduced or diminished by
reason of the use of such blanket policies of insurance, and provided further
that the requirements set forth herein are otherwise satisfied. Tenant agrees to
permit Landlord at all reasonable times to inspect any policies of insurance of
Tenant which Tenant has not delivered to Landlord.
12.4 Mutual Waivers of Rights. Landlord (for itself and its insurer, and to
the extent and on condition that Tenant carries and maintains the insurance at
all times required under Section 12.3) hereby waives any rights, including
rights of subrogation, and Tenant (for itself and its insurer, and to the extent
and on the condition that Landlord carries and maintains the insurance at all
times required under Section 12.2) hereby waives any rights, including rights of
subrogation, each may have against the other, and Tenant (for itself and its
insurer) hereby waives any rights, including rights of subrogation, it may have
against any of the parties to the CC&R's referred to in Article 7 and against
other tenants of the Property (provided such other tenants have waived such
rights against Tenant) for compensation of any loss or damage occasioned to
Landlord or Tenant, as the case may be, with regard to their respective
property, the Premises, its contents or portions of the Property, arising from
any risk generally covered by All Risk insurance Landlord and Tenant shall carry
and maintain under Section 12.2 and 12.3. Each party shall cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against the other party in connection with any damage
covered by such policy. The foregoing waivers shall be operative only so long as
available in the State where the Property is located and so long as no policy is
invalidated thereby.
12.5 Insurance Use Restrictions. Tenant agrees that it will not carry any
stock or goods or do anything in or about the Premises which will in any way
tend to increase the insurance rates upon the building of which the Premises are
a part. Tenant agrees to pay to Landlord forthwith upon demand the amount of any
increase in premiums charged to Landlord for insurance carried by Landlord
pursuant to Section 12.2, which increase results from Tenant's violation of the
foregoing restrictions, irrespective of whether Landlord shall have consented to
Tenant's act. If Tenant installs any electrical equipment which overloads the
electrical lines, Tenant shall at its own expense make all changes to its
Premises and install any fire extinguishing equipment and/or other safeguards
that Landlord's insurance underwriters or applicable fire, safety and building
codes and regulations may require. Nothing herein contained shall be deemed to
constitute Landlord's consent to such overloading.
ARTICLE 13
OCCUPANCY TRANSACTIONS
13.1 Definitions. As used in this Article 13, the following definitions
shall apply:
(a) "Transfer" means any voluntary, unconditional and present (i)
assignment of some or all of Tenant's interest, rights and duties in the Lease
and the Premises, including Tenant's right to use, occupy and possess the
Premises, or (ii) sublease of Tenant's right to use, occupy and possess the
Premises, in whole or in part;
(b) "Encumbrance" means any conditional, contingent or deferred assignment,
sublease or conveyance voluntarily made by Tenant of some or all of Tenant's
interest, rights or duties in the Lease or the Premises, including Tenant's
right to use, occupy or possess the Premises, in whole or in part, including,
without limitation, any mortgage, deed of trust, pledge, hypothecation, lien,
franchise, license, concession or other security arrangement;
(c) "Change of Control" means the transfer by sale, assignment, death,
incompetency, mortgage, deed of trust, trust, operation of law, or otherwise of
any shares, voting rights or ownership interests which will result in a change
in the identity of the person or persons exercising, or who may exercise,
effective control of Tenant, unless such change results from the trading of
shares listed on a recognized public stock exchange and such trading is not for
the purpose of acquiring effective control of Tenant. If Tenant is a private
corporation whose stock becomes publicly held, the transfers of such stock from
private to public ownership shall not be deemed a Change of Control;
(d) "Occupancy Transaction" means any Transfer, Encumbrance, Change of
Control, or other arrangement whereby the identity of the person or persons
using, occupying or possessing the Premises changes or may change, whether such
change be of an immediate, deferred, conditional, exclusive, nonexclusive,
permanent or temporary nature; and
(e) "Transferee" means the proposed assignee, sublessee, mortgagee,
beneficiary, pledgee or other recipient of Tenant's interest, rights or duties
in this Lease or the Premises in an Occupancy Transaction.
13.2 Restrictions.
(a) Tenant shall not make or consent to any Encumbrance without the prior
written consent of Landlord, which Landlord may grant or withhold in its sole
and absolute discretion.
(b) Tenant shall not enter into, or consent to, an Occupancy Transaction,
other than an Encumbrance, without first procuring Landlord's written consent,
which Landlord shall not withhold unreasonably; provided, however, that by way
of example and without limitation, the parties agree it shall be reasonable for
Landlord to withhold its consent if any of the following situations exist or may
exist:
(i) The Transferee's contemplated use of the Premises following the
proposed Occupancy Transaction conflicts with the "Use of Premises" portion of
Exhibit B;
(ii) In Landlord's reasonable business judgment, the Transferee lacks
sufficient business reputation or experience to operate a successful business of
the type and quality permitted under the Lease;
(iii) In Landlord's reasonable business judgment, the present net worth of
the Transferee is less than the greater of (i) the net worth of Tenant, plus the
net worth of the Guarantor, if any, at the Effective Date or (ii) the net worth
of Tenant, plus the net worth of the Guarantor, if any at the date of Tenant's
request for consent;
(iv) In Landlord's reasonable business judgment, the Percentage Rental
under Article 4, Section 4.5, that Landlord reasonably anticipates receiving
from the Transferee is less than that which Landlord has received from Tenant;
or
(v) The proposed Occupancy Transaction would breach any covenant of
Landlord respecting radius, location, use or exclusivity in any other lease,
financing agreement, or other agreement relating to the Property.
13.3 Condition Precedent. Tenant shall not have the right or power to
request or enter into an Occupancy Transaction if Tenant shall be in default of
Tenant's obligations under the provisions of any other lease of real property in
any property owned (in whole or in part) or managed by Landlord or any partner
of Landlord, including any parent, subsidiary, affiliate or
successor-in-interest thereof.
13.4 Procedures. Should Tenant desire to enter into an Occupancy
Transaction, Tenant shall give notice thereof to Landlord by requesting in
writing Landlord's consent to such transaction at least sixty (60) days before
the effective date of any such transaction and shall provide Landlord with the
following:
(a) The full particulars of the proposed transaction, including its nature,
effective date, terms and conditions, and copies of any offers, draft
agreements, subleases, letters of commitment or intent, and other documents
pertaining to such proposed transaction;
(b) A description of the identity, net worth and previous business
experience of the Transferee, including, without limitation, copies of
Transferee's latest income, balance sheet and change-of-financial-position
statements (with accompanying notes and disclosures of all material changes
thereto) in audited form, if available, and certified as accurate by the
Transferee;
(c) Any further information relevant to the transaction which Landlord
shall have requested within fifteen (15) days after receipt of Tenant's request
for consent; and
(d) A statement that Tenant intends to consummate the transaction if
Landlord consents thereto. Should Tenant fail to make said written request in
accordance with the requirements set forth in this Section 13.4, Tenant's
failure shall constitute a material breach of this Lease which Landlord, in its
sole discretion, may deem curable in the following manner. Within ten (10) days
of Landlord's written demand, Tenant shall make said written request in
accordance with subparagraphs (a), (b), (c), and (d) above and shall pay
Landlord the sum of three percent (3%) of the then Minimum Annual Rental as
liquidated damages for Tenant's breach. The parties agree that said sum
represents a reasonable estimate of Landlord's damages sustained by reason of
Tenant's breach, which damages are extremely difficult or impracticable to fix.
Landlord's acceptance of said sum together with Tenant's late notice shall cure
Tenant's breach of the notice requirement of this Section 13.4 but shall not
waive Tenant's default, if any, with respect to any other provision of this
Article 13. Notwithstanding the foregoing, any request for, or entry into, an
Occupancy Transaction which has not met with the notice provisions set forth in
this Section 13.4 shall be of no force or effect until Landlord's consent has
been obtained in accordance with this Article 13.
Within thirty (30) days after receipt of Tenant's request for consent,
Landlord may respond as follows:
(e) Consent to the Occupancy Transaction, subject to Section 13.6 below;
(f) Refuse to consent to the Occupancy Transaction; or
(g) Refuse to consent to the Occupancy Transaction and, at any time
thereafter, notify Tenant that Landlord shall terminate this Lease on ten (10)
days' written notice to Tenant unless Tenant has rescinded its request for
consent within five (5) days of receipt of Landlord's notice of termination.
13.5 Documentation and Expenses. Each Occupancy Transaction to which
Landlord has consented shall be evidenced by an instrument made in such written
form as is satisfactory to Landlord and executed by Tenant and Transferee. By
such instrument, Transferee shall assume and promise to perform the terms,
covenants and conditions of this Lease which are obligations of Tenant. Unless
expressly released in writing by Landlord, Tenant shall remain fully liable to
perform its duties under the Lease following the Occupancy Transaction. Tenant
shall, on demand of Landlord, reimburse Landlord for Landlord's reasonable
costs, including legal fees, incurred in obtaining advice and preparing
documentation for each Occupancy Transaction to which Landlord has consented.
13.6 Consideration to Landlord.
(a) In the event Landlord shall consent to an Occupancy Transaction, the
Minimum Annual Rental specified in Article 1 shall be increased on the effective
date of such transaction to the highest of:
(i) The minimum or base rental payable by the Transferee to the Tenant;
(ii) An amount equal to the total of the Minimum Annual Rental plus
Percentage Rental required to be paid by Tenant pursuant to this Lease during
the twelve (12) month period immediately preceding such transaction;
(iii) The Minimum Annual Rental specified in Article 1 for the first year
of the Lease Term increased in accordance with Section 4.2 hereof (with no
minimum or maximum increase as may be provided elsewhere) using the Rent Start
Date as the Commencement Date, and the effective date of the Occupancy
Transaction as the Adjustment Date; or
(iv) Such Minimum Annual Rental as Landlord shall determine (on a pro rata
square footage basis) is the prevailing "market rent" for the Premises by
averaging the Minimum Annual Rentals obtained by Landlord from the three (3)
most recent comparable tenants to lease space in the Property.
In no event shall the Minimum Annual Rental, as adjusted, be less than the
Minimum Annual Rental specified in Article 1.
(b) In the event Landlord consents to an Occupancy Transaction, Tenant
shall pay Landlord any and all consideration received by Tenant in such
transaction (other than for the purchase of Tenant's Personal Property as
defined in Article 10, Section 10.3) to the extent that such consideration
exceeds the unamortized book value of Tenant's Fixtures (as defined in Article
10, Section 10.4) which Tenant paid for and intends to convey to Transferee,
depreciated on a straight-line basis over the Lease Term.
(c) Landlord and Tenant agree that Tenant's payment of the adjusted Minimum
Annual Rental and the consideration set forth in Sections 13.6 (a) and (b) shall
result from the occurrence of a permitted Occupancy Transaction, which is a
condition subsequent to the execution of this Lease, and that said payment shall
not be a condition precedent to Landlord's agreement to consent to said
Occupancy Transaction.
13.7 Nullity. Any purported Occupancy Transaction consummated in violation
of the provisions of this Article 13 shall be null and void and of no force or
effect.
ARTICLE 14
DEFAULTS BY TENANT; REMEDIES
14.1 Events of Default. The occurrence of any of the following shall
constitute a default by Tenant and a breach of this Lease:
(a) Failing or refusing to pay any amount of Minimum Annual Rental or
Additional Rent when due in accordance with the provisions of this Lease;
(b) Failing or refusing to occupy and operate the Premises in accordance
with the provisions of this Lease;
(c) Failing or refusing to perform fully and promptly any covenant or
condition of this Lease, other than those specified in subparagraphs (a) and (b)
above, the breach of which Tenant is capable of curing after reasonable notice
from Landlord; or
(d) Maintaining, committing or permitting on the Premises waste, a
nuisance, or use of the Premises for an unlawful purpose; entering into an
Occupancy Transaction contrary to the provisions of Article 13; or understating
Gross Sales by more than six percent (6%), as set forth in Article 5, Section
5.1; failing to remain open for business on any occasion during a given year of
the Lease Term in which Tenant has received three (3) or more notices pursuant
to subparagraph (b) of Section 14.2; and committing any other breach of the
Lease which is not capable of cure.
14.2 Notices. Following the occurrence of any of the defaults specified in
subparagraphs (a), (b) and (c) of Section 14.1, Landlord shall give Tenant, and
any subtenant, a written notice specifying the nature of the default and the
provisions of this Lease breached and demanding that Tenant, and any subtenant,
either fully cure each such default within the time period specified in the
correspondingly lettered subparagraphs below or quit the Premises and surrender
the same to Landlord:
(a) For nonpayment of Minimum Annual Rental or Additional Rent, five (5)
days;
(b) For a curable default, a reasonable period not to exceed thirty (30)
days, provided, however, that if such default cannot be cured within said time
period, Tenant shall be deemed to have cured such default if Tenant so notifies
Landlord in writing, commences cure of the default within said time period, and
thereafter diligently and in good faith continues with and actually completes
said cure; and
(c) With regard to those noncurable defaults specified in subparagraph (d)
of Section 14.1, Landlord shall give Tenant, and any subtenant, a written notice
specifying the nature of the default and the provisions of this Lease breached
and Landlord shall have the right to demand in said notice that Tenant quit the
Premises within five (5) days.
To the extent permitted by applicable State law, the time periods provided
in this Section 14.2 for cure of Tenant's defaults under this Lease or for
surrender of the Premises shall be in lieu of, and not in addition to, any
similar time periods described by applicable State law as a condition precedent
to the commencement of legal action against Tenant for possession of the
Premises.
14.3 Landlord's Rights and Remedies. Should Tenant fail to cure within the
time periods specified in Section 14.2 any default specified in subparagraph
(a), (b) or (c) of Section 14.1, or fail to quit the Premises in accordance with
subparagraph (c) of Section 14.2 with respect to any default specified in
subparagraph (d) of Section 14.1, Landlord may exercise any of the following
rights without further notice or demand of any kind to Tenant or any other
person, except as required by applicable State law:
(a) The right of Landlord to terminate this Lease and Tenant's right to
possession of the Premises and to reenter the Premises, take possession thereof
and remove all persons therefrom, following which Tenant shall have no further
claim thereon or hereunder;
(b) The right of Landlord, without terminating this Lease and Tenant's
right to possession of the Premises, to reenter the Premises and occupy the
whole or any part thereof for and on account of Tenant and to collect any unpaid
rentals and other charges, which have become payable, or which may thereafter
become payable; or
(c) The right of Landlord, even though it may have reentered the Premises,
in accordance with subparagraph (b) of this Section 14.3, to elect thereafter to
terminate this Lease and Tenant's right to possession of the Premises.
Should Landlord have reentered the Premises under the provisions of
subparagraph (b) of this Section 14.3, Landlord shall not be deemed to have
terminated this Lease, the liability of Tenant to pay rental or other charges
thereafter accruing, or Tenant's liability for damages under any of the
provisions hereof, by any such reentry or by any action, in unlawful detainer or
otherwise, to obtain possession of the Premises, unless Landlord shall have
notified Tenant in writing that it has so elected to terminate this Lease and
Tenant's right to possession. Tenant further covenants that the service by
Landlord of any notice pursuant to the unlawful detainer statutes of the State
where the Property is located and the surrender of possession pursuant to such
notice shall not (unless Landlord elects to the contrary at the time of, or at
any time subsequent to, the serving of such notice and such election is
evidenced by a written notice to Tenant) be deemed to be a termination of this
Lease. In the event of any reentry or taking possession of the Premises as
aforesaid, Landlord shall have the right, but not the obligation, to remove
therefrom all or any part of the merchandise, Fixtures or Personal Property
located therein and to place the same in storage at a public warehouse at the
expense and risk of Tenant. The rights and remedies given to Landlord in this
Section 14.3 shall be additional and supplemental to all other rights or
remedies which Landlord may have under laws in force when the default occurs.
14.4 Landlord's Damages. Should Landlord terminate this Lease and Tenant's
right to possession of the Premises, pursuant to the provisions of subparagraph
(a) or (c) of Section 14.3 or the provisions of Article 17, Section 17.1,
Landlord may recover from Tenant as damages, all of the following:
(a) The worth at the time of award of any unpaid rental that had been
earned at the time of such termination;
(b) The worth at the time of award of the amount by which the unpaid rental
that would have been earned after termination until the time of award exceeds
the amount of such rental loss Tenant proves could have been reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid rental
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided;
(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including, without limitation, any costs or expense incurred by
Landlord in (i) retaking possession of the Premises, including reasonable
attorney fees therefor, (ii) maintaining or preserving the Premises after such
default, (iii) preparing the Premises for reletting to a new tenant, including
repairs or alterations to the Premises for such reletting, (iv) leasing
commissions, and (v) any other costs necessary or appropriate to relet the
Premises; and
(e) At Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by the laws of the State
where the Property is located.
As used in subparagraphs (a) and (b) of the Section 14.4, the "worth at the
time of award" is computed by allowing interest at the maximum rate allowed by
the usury or similar law, if any, of the State in which the Property is located.
As used in subparagraph (c) of this Section 14.4, "the worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
All rental, other than Minimum Annual Rental shall, for the purposes of
calculating any amount due under the provisions of subparagraph (c) of this
Section 14.4, be computed on the basis of the average monthly amount thereof
accruing during the immediately preceding sixty (60) month period, except that,
if it becomes necessary to compute such rental before such a sixty (60) month
period has occurred, then such rental shall be computed on the basis of the
average monthly amount hereof accruing during such shorter period.
14.5 Fixtures and Personal Property. Without limitation to Landlord's
rights under Article 10, in the event of Tenant's default, all of Tenant's
merchandise, Fixtures and Personal Property shall remain on the Premises and,
continuing during the length of said default, Landlord shall have the right to
take the exclusive possession of same and to use the same free of rent or charge
until all defaults have been cured or, at its option, to require Tenant to
remove same forthwith.
14.6 No Waiver. The waiver by Landlord of any breach of any term, covenant
or condition contained in this Lease shall not be deemed to be a waiver of such
term, covenant or condition of any subsequent breach thereof, or of any other
term, covenant or condition contained in this Lease. Landlord's subsequent
acceptance of partial rental or performance by Tenant shall not be deemed to be
an accord and satisfaction or a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease or of any right of Landlord to a
forfeiture of the Lease by reason of such breach, regardless of Landlord's
knowledge of such preceding breach at the time of Landlord's acceptance. No
term, covenant or condition of this Lease shall be deemed to have been waived by
Landlord unless such waiver be in writing and signed by Landlord.
Notwithstanding anything to the contrary contained in this Article 14,
Tenant waives (to the fullest extent permitted under law) any written notice
(other than such notice as this Article 14 specifically requires) which any
statute or law now or hereafter in force prescribes be given Tenant.
14.7 Interest. Any amounts due from Tenant under the provisions of this
Lease which are not paid when due shall bear interest at the rate of two percent
(2%) over the prime rate charged from time to time by Xxxxx Fargo Bank (San
Diego office), but not to exceed the maximum rate which Landlord is permitted by
law to charge.
ARTICLE 15
DEFAULTS BY LANDLORD; REMEDIES
15.1 Defaults by Landlord. If Landlord shall neglect or fail to perform or
observe any of the terms, covenants, or conditions contained in this Lease on
its part to be performed or observed within thirty (30) days after written
notice of default or, when more than thirty (30) days shall be required because
of the nature of the default, if Landlord shall fail to proceed diligently to
cure such default after written notice thereof, then Landlord shall be liable to
Tenant for any and all damages sustained by Tenant as a result of Landlord's
breach; provided, however, it is expressly understood and agreed that (a) any
money judgment resulting from any default or other claim arising under this
Lease shall be satisfied only out of the current rents, issues, profits and
other income Landlord receives from its operation of the Property, net of all
current operating expenses, liabilities, reserves and debt service associated
with said operation ("Net Income" for purposes of this Article 15 only), (b) no
other real, personal or mixed property of Landlord, wherever located, shall be
subject to levy on any such judgment obtained against Landlord, (c) if such Net
Income is insufficient to satisfy such judgment, Tenant will not institute any
further action, suit, claim or demand, in law or in equity, against Landlord for
or on the account of such deficiency, and (d) such neglect or failure shall not
constitute consent by Landlord for Tenant to perform or observe such terms,
covenants or conditions at Landlord's expense. Tenant hereby waives, to the
extent permitted under law, any right to satisfy said money judgment against
Landlord except from Net Income. The term "Landlord" for purposes of this
Article 15 only shall mean any and all partners, whether general or limited, if
any, which comprise Landlord.
15.2 Mortgagee Notice and Right to Cure. If the Premises or any part
thereof are at any time subject to any mortgage or deed of trust and this Lease
or the rentals due from Tenant hereunder are assigned to the mortgagee or trust
deed holder ("Mortgagee"), Tenant agrees to give each Mortgagee, by registered
mail, a copy of any notice of default served upon Landlord, provided that Tenant
has been previously notified in writing of the address of such Mortgagee. Tenant
further agrees that if Landlord fails to cure such default within the time
provided for in this Lease, then the Mortgagee shall have an additional thirty
(30) days within which to cure such default, or if such default cannot
reasonably be cured within that time, then such additional time as may be
necessary if, within said 30-day period, any Mortgagee has commenced and is
diligently pursuing the remedies necessary to cure the default (including but
not limited to commencement of foreclosure proceedings if necessary to affect
such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued. If and when the Mortgagee has made
performance on behalf of Landlord, such default shall be deemed cured.
ARTICLE 16
ABANDONMENT
16.1 Abandonment Prohibited. Tenant shall not vacate or abandon the
Premises at any time during the term of this Lease nor permit the Premises to
remain unoccupied for a period of longer than five (5) consecutive days during
the Term of this Lease. If Tenant shall abandon, vacate or surrender the
Premises, or be dispossessed by process of law, or otherwise, any Personal
Property or Fixtures belonging to Tenant and left on the Premises shall, at the
option of Landlord, be deemed abandoned. In such case, Landlord may dispose of
said Personal Property in any manner provided by the laws of the state in which
the Property is located and is hereby relieved of all liability for doing so.
Further, in the event Landlord desires that Fixtures installed by Tenant be
removed, Landlord shall have the right to remove said Fixtures and to charge
Tenant fifteen percent (15%) of the cost of such removal to reimburse Landlord
for its administrative expense. These provisions shall not apply if the Premises
should be closed and business temporarily discontinued therein on account of
strikes, lockouts, or similar causes beyond the reasonable control of Tenant.
ARTICLE 17
BANKRUPTCY; INVOLUNTARY TRANSFERS
17.1 Right of Termination. Should any of the following events occur,
Landlord may terminate this Lease and any interest of Tenant therein, effective
with the commencement of the event:
(a) Proceedings are instituted whereby all, or substantially all, of
Tenant's assets are placed in the hands of a receiver, trustee or assignee for
the benefit of Tenant's creditors, and such proceedings continue for at least
thirty (30) days;
(b) Any creditor of Tenant institutes judicial or administrative process to
execute on, attach or otherwise seize any of Tenant's merchandise, Fixtures or
Personal Property, located on the Premises and Tenant fails to discharge, set
aside, exonerate by posting a bond, or otherwise obtain a release of such
property within thirty (30) days;
(c) A petition is filed for an order of relief under the Federal Bankruptcy
Code or for an order or decree of insolvency or reorganization or rearrangement
under any state or federal law, and is not dismissed within thirty (30) days;
(d) Tenant makes a bulk sale of all, or substantially all, of Tenant's
merchandise, Fixtures or Personal Property located on the Premises, except in
accordance with Article 10, Section 10.1, or except in a permitted Occupancy
Transaction under Article 13, and fails to replace the same with similar items
of equal or greater value and utility within three (3) days; or
(e) Tenant's net worth, determined in accordance with generally accepted
accounting principles consistently applied, decreases, at any time during the
Lease Term, below Tenant's net worth as of the date of execution of this Lease;
or
(f) Any of the foregoing events occurs with respect to any Guarantor of
this Lease.
Landlord may require Tenant to deliver periodic financial statements and
other information reasonably required by Landlord in order to verify Tenant's
current net worth. If a court of competent jurisdiction determines that any of
the foregoing events is not a default under this Lease, and a trustee is
appointed to take possession (or if Tenant remains a debtor in possession), and
such trustee or Tenant transfers Tenant's interest hereunder, then Landlord
shall receive, as Additional Rent, the difference between the rent (or other
consideration) paid in connection with such transfer and the rent payable by
Tenant hereunder. Any assignee pursuant to the provisions of any bankruptcy law
shall be deemed without further act to have assumed all of the obligations of
the Tenant hereunder arising on or after the date of such assignment. Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption. This is a lease of real property in a shopping
center within the meaning of Section 365(b)(3) of the Bankruptcy Code, 11 U.S.C.
ss.101 et. seq.
17.2 Request for Information. Within ten (10) days after Landlord's request
therefor, Tenant or Guarantor of this Lease shall provide Landlord and
Landlord's mortgagee or proposed mortgagee, as Landlord shall specify, such
financial, legal and business information concerning any of the events described
in Section 17.1 as Landlord may request.
ARTICLE 18
RECONSTRUCTION
18.1 Insured Casualty. Should the Premises be damaged by fire, or other
perils covered by Landlord's insurance, Landlord shall undertake to make repairs
to the building and improvements and restore the same to substantially the same
condition as they were in immediately preceding such damage or destruction,
provided that Landlord receives sufficient insurance proceeds to pay the cost of
such repairs. If Landlord does not receive sufficient insurance proceeds, then
Landlord may, at its option, elect to make the repairs within a reasonable time.
Such work shall be done as rapidly as conditions permit. In the event such
damage is so slight as not to interfere substantially with Tenant's use of the
Premises, there shall be no abatement of rent. Should the Tenant's merchandise,
Fixtures, Improvements or Personal Property be damaged by fire, or other perils
covered by Tenant's insurance pursuant to Section 12.3, Tenant shall undertake
to restore such merchandise, Fixtures, Improvements or Personal Property to
substantially the same condition as they were in immediately preceding such
damage or destruction. In the event of a total destruction of the Premises so
that the Premises are rendered unusable, either party shall have the right to
terminate this Lease. If the parties to this Lease cannot agree upon the extent
and amount of such damage or destruction, Landlord shall promptly designate a
certified architect, registered engineer, or licensed building contractor who
shall determine such matters, and the determination of such architect, engineer,
or contractor shall be final and binding upon the parties to this Lease.
18.2 Construction Provisions. In the event of any Reconstruction of the
Premises under this Article 18, Landlord shall, to the extent of available
insurance proceeds, repair or rebuild such building and improvements to
substantially the same condition they were in immediately preceding such damage
or destruction. Tenant shall, within ten (10) days after receipt of written
notice from Landlord, pay the amount of any deductible under the insurance
policy on the Premises into a fund to be used to pay the cost of such repairs.
Where appropriate, Tenant shall pay only Tenant's pro rata share of such
deductible based on the square feet of the Premises (as identified in Section
1.2) compared to the total rentable square footage of the building(s) being
repaired. Tenant shall, to the extent of available insurance proceeds repair or
replace its Personal Property situated upon the Premises which may have been
damaged or destroyed by such cause as may in the opinion of Tenant be necessary
for the resumption by Tenant of its business upon the Premises.
18.3 Abatement of Rent. In the event of Reconstruction as herein provided,
the Minimum Annual Rental set forth in Article 1 shall be abated, to the extent
rental income insurance is received by Landlord, proportionately with the degree
to which Tenant's use of the Premises is impaired, commencing from the date of
destruction and continuing during the period of such Reconstruction and
replacement specified in Section 18.2. Tenant shall continue the operation of
its business on the Premises during any such period to the extent reasonably
practicable from the standpoint of prudent business management, and the
obligation of Tenant to pay Percentage Rental and Additional Rent shall remain
in full force and effect. Tenant shall not be entitled to any compensation or
damages from Landlord for loss of use of the whole or any part of the Premises,
the building of which the Premises are a part, Tenant's Personal Property, or
any inconvenience or annoyance occasioned by such damage, Reconstruction or
replacement. Tenant hereby waives any statutory rights of termination which may
arise by reason of any partial or total destruction of the Premises which
Landlord is obligated to restore or may restore under any of the provisions of
this Lease.
18.4 Release of Liability. Upon any termination of this Lease under any of
the provisions of this Article 18, the parties shall be released thereby without
further obligation to the other party coincident with the surrender of
possession of the Premises to Landlord, except for items which have theretofore
accrued and are then unpaid. In the event of termination, all proceeds for
Tenant's insurance, but excluding proceeds for Tenant's merchandise and Personal
Property, shall be disbursed and paid to Landlord.
18.5 Uninsured Casualty. In the event the Premises are damaged by any
flood, earthquake, act of war, nuclear reaction, nuclear radiation or
radioactive contamination, or any other casualty not covered by Landlord's
insurance, Landlord shall have the election, and shall within ninety (90) days
following the date of such damage give Tenant written notice of Landlord's
election either to commence Reconstruction of the Premises and prosecute the
same diligently to completion, in which event this Lease shall continue in full
force and effect or not to perform such Reconstruction of the Premises, in which
event this Lease shall cease and terminate not later than sixty (60) days after
Landlord's notice of its election to terminate.
18.6 Major Destruction. Notwithstanding any of the foregoing provisions of
this Article 18, should there be a partial or total destruction of the Property
at any time after the Effective Date, Landlord shall have the right to terminate
this Lease on written notice to Tenant within thirty (30) days after such
destruction.
ARTICLE 19
CONDEMNATION
19.1 Condemnation. If more than twenty-five percent (25%) of the Premises
is taken or sold under such threat, either Landlord or Tenant may terminate this
Lease as of the date that the condemning authority takes possession by delivery
of written notice of such election within twenty (20) days after such party has
been notified of the taking or, in the absence thereof, within twenty (20) days
after the condemning authority shall have taken possession.
19.2 Continuation of Lease After Condemnation. If this Lease is not
terminated by Landlord or Tenant, it shall remain in full force and effect as to
the portion of the Premises remaining; provided, however, that the Minimum
Annual Rental and Tenant's share of Operating Expenses shall be reduced in
proportion to the reduction of the Gross Floor Area of the Premises. In such
event, Landlord shall, at Landlord's expense, restore the Premises to a complete
unit of like quality and character, except as to size, as existed prior to the
date on which the condemning authority took possession; provided, however, that
Landlord's obligation to restore the Premises is limited to the extent of
condemnation proceeds received by Landlord.
19.3 Allocation of Condemnation Award. All awards for the taking of any
part of the Premises or proceeds from the sale made under the threat of the
exercise of the power of eminent domain shall be the property of Landlord,
whether made as compensation for diminution of value of the leasehold estate,
for the taking of the fee, or as severance damage; provided, however, that
Tenant shall be entitled to any award for loss of or damage to Tenant's trade
fixtures, and other removable personal property.
ARTICLE 20
SALE OR MORTGAGE BY LANDLORD
20.1 Sale or Mortgage. From and after the Effective Date, Landlord may at
any time, without the consent of Tenant, sell, purchase, exchange, transfer,
assign, lease or convey Landlord's interest in whole or in part, in the Lease,
the Premises, the realty underlying the Premises and/or any portion of or
interest in the realty or improvements in the Property (collectively referred to
in Article 20 and 21 as "Sale").
20.2 Release on Sale. From and after a Sale, Landlord shall be released
from all liability toward Tenant and Tenant's successors and assigns arising
from this Lease because of any act, occurrence or omission of Landlord occurring
after such Sale, provided Landlord's purchaser or assignee expressly assumes
Landlord's duties and covenants under this Lease.
20.3 Estoppel Certificate. Tenant shall at any time during the term of this
Lease, within five (5) days of written notice from Landlord, execute and deliver
to Landlord a statement in writing, substantially in the form attached hereto as
Exhibit E. Any such statement may be relied upon conclusively by any prospective
purchaser or encumbrancer of the Premises. If Tenant fails to provide such
estoppel certificate within five (5) days after Landlord's request, Tenant shall
be deemed to have approved the contents of any such certificate submitted to
Tenant by Landlord and Landlord is hereby authorized to so certify.
ARTICLE 21
SUBORDINATION; ATTORNMENT
21.1 Subordination. This lease is junior and subordinate to all ground
leases, mortgages, deeds of trust, and other security instruments now or
hereafter affecting the property of which the Premises are a part and to all
advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any mortgagee, first
trustee or ground lessor elects to have this Lease prior to the lien of its
mortgage, deed of trust or ground lease, and gives written notice thereof to
Tenant, this Lease shall be deemed prior thereto. Within ten (10) days after the
receipt of a written request from Landlord, from any first mortgagee or first
deed of trust trustee or beneficiary of Landlord, or from any lessor of
Landlord, Tenant will, in writing, subordinate its rights under this Lease to
the lien or security interest of the first mortgage, the first deed of trust
(including all future advances made thereunder, subsequent to the Effective Date
of this Lease), or the interest of any lease in which Landlord is the lessee, as
such may burden the Premises or any building hereafter placed upon the land of
which the Premises are a part.
21.2 Attornment. In the event any proceedings are brought for foreclosure,
or in the event of the exercise of the power of sale under any mortgage or deed
of trust made by Landlord covering the Premises or the expiration or earlier
termination of any ground lease or master lease in which Landlord is the lessee,
Tenant shall attorn to the purchaser upon any such foreclosure or sale or the
lessor of any such lease and recognize such purchaser or lessor as Landlord
under this Lease.
21.3 Subordination of Lease to Certain Agreements with Third Parties. Upon
the request of Landlord, Tenant will subordinate its rights hereunder to any
Declaration of Restrictions and Grant of Easements or any other operation and
reciprocal easement agreement for access and parking between Landlord and the
Owner(s) of any property located within or adjacent to the Property, or as may
be required by governmental authority in connection with development of the
Property, whenever, in the reasonable discretion of Landlord, it is determined
that any such agreement would be beneficial to the use and operation of the
Property.
21.4 Execution of Documents. Tenant, upon request of any party in interest,
shall execute promptly such instruments and certificates to carry out the intent
of this Article 21 as shall be requested by Landlord. Tenant hereby irrevocably
appoints Landlord as attorney-in-fact for Tenant with full power and authority
to execute and deliver in the name of Tenant any such instruments and/or
certificates. If, within ten (10) days after the date of a written request by
Landlord to execute such instruments, Tenant shall not have executed the same,
Landlord may execute the same pursuant to the power of attorney granted in the
preceding sentence.
ARTICLE 22
QUIET ENJOYMENT
22.1 Landlord's Covenant. If Tenant is not in breach under the covenants
made in this Lease, Landlord covenants that Tenant shall have peaceful and quiet
enjoyment of the Premises without hindrance on the part of Landlord. Landlord
will defend Tenant in the peaceful and quiet enjoyment of the Premises against
claims of all persons claiming through or under the Landlord.
ARTICLE 23
HOLDING OVER
23.1 Effect of Holding Over. If Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term of this Lease,
such holding over shall, in the absence of a written agreement to the contrary,
be construed as a tenancy from month to month, terminable on 30 days notice by
either party, subject to all the conditions, provisions and obligations of this
Lease insofar as they are applicable to a month-to-month tenancy. The Minimum
Annual Rental payable during any period of holding over shall be equal to one
hundred fifty percent (150%) of the Minimum Annual Rental payable during the
period immediately preceding Tenant's holding over, plus Additional Rent
(including Percentage Rental) at the same rates as would have otherwise been
applicable if this Lease had been formally extended on the same terms and
conditions contained herein. Nothing contained in this Article shall be
construed as consent to Tenant's holding over. If Tenant fails to surrender the
Premises upon the expiration or earlier termination of this Lease, Tenant shall
indemnify Landlord against and hold Landlord harmless from any loss of rent that
was payable by any succeeding tenant and any claims, demands, liability, damages
or expenses resulting from such failure, including any claims made by any
succeeding tenant.
ARTICLE 24
LIMITATION OF LIABILITY
24.1 Agreement by Tenant.
(a) In consideration of the execution of this Lease by Landlord, Tenant
agrees in the event of any actual or alleged failure, breach, or default
hereunder by Landlord:
(i) The sole and exclusive remedy shall be against the corporation and its
corporate assets;
(ii) No shareholder, officer or director of Landlord should be sued or
named as a party in any suit or action (except as may be necessary to secure
jurisdiction of the corporation);
(iii) No service of process shall be made against any shareholder, officer
or director of Landlord (except as may be necessary to secure jurisdiction of
the corporation);
(iv) No shareholder, officer or director of Landlord shall be required to
answer or otherwise plead to any service of process;
(v) No judgment will be taken against any shareholder, officer or director
of Landlord;
(vi) Any judgment taken against any shareholder, officer or director of
Landlord may be vacated and set aside at any time without hearing;
(vii) The covenants and agreements are enforceable both by Landlord and
also by any shareholder, officer or director of Landlord.
(b) Tenant agrees that each of the foregoing covenants and agreements shall
be applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or at common law.
ARTICLE 25
NOTICES
25.1 Notices. Whenever in this Lease it shall be required or permitted that
notice or demand be given or served by either party to this Lease to or on the
other, such notice or demand shall be in writing, mailed or delivered to the
other party at the addresses specified in Article 1. Mailed notices shall be
sent by United States Postal Service, certified or registered mail, postage
prepaid and shall be deemed to have been given on the date posted by the United
States Postal Service. Either party may, by written notice delivered pursuant to
this provision, at any time designate a different address to which notices shall
be sent.
ARTICLE 26
GENERAL PROVISIONS
26.1 Governing Law. The laws of the state in which the Property is located
shall govern the validity, performance and enforcement of this Lease.
26.2 Invalidity. If any provision of this Lease is determined to be void by
any court of competent jurisdiction, such determination shall not affect any
other provision of this Lease and such other provisions shall remain in full
force and effect. If any provisions of this Lease are capable of two
constructions, one which would render the provision void and one which would
render the provision valid, the provision shall be interpreted in the manner
which would render it valid.
26.3 Payments. Except as may otherwise be expressly stated, each payment
required to be made by Tenant shall be in addition to and not in substitution
for other payments to be made by Tenant.
26.4 Time of Essence. Time is of the essence of each and every provision of
this Lease.
26.5 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God; inability to obtain labor, materials or
reasonable substitutes therefor, governmental restrictions, regulations, or
controls, judicial orders, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, shall excuse the performance by such
party for a period equal to that resulting from such prevention, delay or
stoppage, except those obligations of Tenant to pay Minimum Annual Rental and
Additional Rent pursuant to the terms of this Lease.
26.6 Brokers. Tenant warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation and/or execution of
the Lease. In the event any broker other than the brokers acknowledged in
writing by Landlord make claim for monies owed, Tenant shall hold Landlord
harmless therefrom. Any such claims or demands or requests should be made
subject to the indemnity provision of Section 12.1.
26.7 Attorney's Fees. If either party commences any legal action or
proceeding to enforce, interpret or construe this Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees and
court costs, as determined by the court. "Legal action or proceeding" includes a
declaratory relief action and any bankruptcy or insolvency proceedings. If
Landlord is involuntarily made a party defendant to any litigation relating to
this Lease or the Premises by reason of any act or omission of Tenant, then
Tenant shall hold Landlord harmless from any loss, cost or expense, including
reasonable attorney's fees and expenses as a part of the judgment resulting
therefrom.
26.8 Entire Agreement. This Lease and its exhibits contain all of the
agreements and conditions made between the parties with respect to the hiring of
the Premises and may not be modified orally or in any other manner other than by
a written instrument signed by all the parties to this Lease.
26.9 Liability of Successors. The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto
and all of the parties hereto shall be jointly and severally liable for the
covenants contained herein.
26.10 Nondiscrimination and Nonsegregation. Tenant hereby covenants by and
for itself, its successors and assigns, and all persons claiming under or
through them, and this Lease is made and accepted upon and subject to the
following conditions:
That there shall be no discrimination against or segregation of any person
or group of persons, on account of sex, sexual orientation, marital status,
race, color, creed, religion, national origin or ancestry in the leasing,
subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the
property herein leased, nor shall Tenant itself, or any person claiming under or
through it, establish or permit such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublessees, subtenants, or vendees in the property herein
leased.
ARTICLE 27
MARKETING
27.1 Marketing. Tenant shall, at Landlord's option, either participate in a
marketing fund ("Marketing Fund") or a merchants' association ("Merchants'
Association") which shall be organized to market the Property. Landlord shall
control and administer the Marketing Fund, if established, with advice from an
advisory group comprised of representatives of various Property tenants. The
activities of the Marketing Fund or the Merchants' Association, as the case may
be, shall be financed by an annual budget based on an appropriate fiscal year.
The annual budget shall be the sum of the following: the annual marketing
charges of all tenants at the Property; plus the contributions of all Major
Tenants and Pad Tenants pursuant to their separate agreements with Landlord.
Fifteen percent (15%) of the budget shall be paid to Landlord as payment for
administrative costs and expenses in connection with the administration and
management of the Marketing Fund or Merchants' Association.
27.2 Tenant's Marketing Charge. Tenant shall pay the Marketing Charge set
forth in Section 1.5 hereof to Landlord if Landlord has established the
Marketing Fund, or as dues to the Merchants' Association if Landlord has not
established the Marketing Fund. Tenant shall pay the Marketing Charge in equal
monthly installments, payable in advance commencing on the Rent Start Date and
thereafter on the first day of each calendar month of each year. The amount of
Tenant's Marketing Charge shall be adjusted annually in accordance with the
provisions of Section 4.2, provided, however, that in no event shall the
Marketing Charge increase in any one calendar year by more than five percent
(5%) over the Marketing Charge for the previous calendar year, and provided,
further, that notwithstanding the foregoing the Marketing Charge due from Tenant
hereunder shall not increase during the first twenty-four (24) months of the
Lease Term over the $1.50 per square foot provided in Section 1.5 hereof. In
determining the annual increases for purposes of this Section 27.2, the
Commencement Date shall be October 1 of the calendar year immediately preceding
Tenant's initial opening for business in the Property and the Adjustment Date
shall be October 1 during each calendar year of the Lease Term thereafter. The
adjustment shall be effective as of the first day of the calendar year
immediately following the Adjustment Date.
27.3 Special Assessments. In addition to the Marketing Charge described in
Section 27.2 hereof, Tenant agrees to pay to Landlord, as Additional Rent, the
following special Marketing Assessments: (a) a Grand Opening Assessment in the
amount set forth in Section 1.5 hereof; and (ii) a special promotional
assessment, in an amount to be determined by Landlord, for the purpose of
staging special promotions of the Property for the benefit of Tenant and all
other tenants of the Property. Landlord shall notify Tenant and other tenants
and occupants of the Property in writing of the budget Landlord has established
for either such event, and such notice shall include both a description of the
marketing program for the event and the per square foot marketing charge to be
paid by Tenant therefor. The special promotion marketing assessments described
in this Section 27.3 shall be due and payable by Tenant to Landlord within
thirty (30) days of Tenant's receipt of written demand therefor from Landlord.
ARTICLE 28
CONDITIONS TO LEASE
28.1 Conditions to Lease. Notwithstanding anything herein to the contrary,
this Lease is contingent upon Landlord obtaining financing for construction of
the Property, and meeting all conditions and obtaining all approvals required by
governmental authorities, and all other approvals necessary to implement the
provisions of this Lease. If Landlord does not obtain such financing, meet all
such conditions and obtain all such approvals, this Lease shall be terminated
upon notice from Landlord to Tenant. In the event of any such termination,
Landlord and Tenant shall have no further rights or obligations hereunder except
those, if any, which accrued prior to the date of termination and except that
Landlord shall return any deposits previously delivered from Tenant to Landlord
pursuant hereto.
IN WITNESS WHEREOF, the Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
TENANT: LANDLORD:
TOYS INTERNATIONAL, INC., LANDGRANT DEVELOPMENT UNLIMITED,
a California corporation a California corporation
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxx Xxxxx
Signature
Title: Executive Vice President
Xxxxxxx Xxxxx
Name
By: /s/ C. Xxxxxx Xxxxxxx
President
Title Title: President
By: s/ Xxxxx X. Xxxxxx
Signature
Xxxxx X. Xxxxxx
Name
Secretary
Title
ADDENDUM
OPTION TO EXTEND TERM
THIS ADDENDUM is made a part of that certain Lease Agreement ("Lease") by
and between LandGrant Development Unlimited, a California corporation
("Landlord") and TOYS INTERNATIONAL, INC., a California corporation ("Tenant"),
dated as of ___July 13, 1999______. Unless otherwise defined or the context
otherwise indicates, the terms used herein have the meanings defined in the
Lease.
Landlord hereby grants to Tenant the option to extend the Term of the Lease
for two additional periods of five (5) years each (each an "Option Term"),
subject to the following conditions:
1. Method of Exercise of Option. Tenant shall exercise each option by
delivering to Landlord written notice of its intent to exercise the applicable
option not earlier than four (4) months, and not later than three (3) months,
prior to commencement of the applicable Option Term. Tenant shall have no right
to exercise its option during any time when Tenant is in default under the Lease
including without limitation during any period of time when any monetary
obligation due from Tenant to Landlord remains unpaid.
2. Commencement of Option Term. If the option is exercised pursuant to
Section 1 of this Addendum, the Option Term shall commence upon the expiration
of the preceding Term, whether it be the expiration of the initial Term or the
expiration of an extension of the Expiration Date pursuant to a previously
exercised Option Term.
3. Minimum Annual Rental. The Minimum Annual Rental during each Option Term
shall be the amounts specified for such Option Term in Section 1.4 of the Lease.
4. No Landlord's Work. In the event Tenant exercises the option, Tenant
agrees to take the Premises in an "as is" condition with no obligation on the
part of the Landlord to undertake any work with regard to the Premises.
5. No Assignment. The option granted herein shall be personal to the
original Tenant, may be exercised only by the original Tenant while it is
occupying the Premises, and may not be exercised by or assigned to any party
(including, but not limited to, any sublessee or lender) without the express
written consent of Landlord. Upon assignment or subletting of this Lease, the
option granted herein shall automatically become null and void.
6. Failure to Timely Exercise. Tenant's failure to timely exercise the
option for any Option Term shall nullify the option for all subsequent Option
Terms.
7. Insurance. Landlord shall have the right, as a condition to Tenant's
exercise of any option granted herein, to require Tenant to: (a) increase the
limit and coverage amount of any insurance Tenant is required to maintain
pursuant to Section 12.3 of the Lease to an amount that Landlord, any superior
mortgagee, or any superior landlord may, in its sole reasonable judgment, deem
sufficient, and/or (b) purchase other insurance and/or endorsements in such
amounts or types as Landlord, any superior mortgagee, or any superior landlord
may reasonably require, and/or (c) provide Landlord with a certificate
evidencing the increased coverage.
8. General. All terms and conditions of the Lease shall remain in full
force and effect during any Option Term, except that the provisions of this
Addendum shall control over any inconsistent provisions of the Lease.
Landlord /s/ CSM, CSS Tenant /s/ RB, JBF
EXHIBIT B
DESCRIPTION OF PREMISES
That certain space in the City of_______________, County of San Diego,
State of California, containing approximately 10,000 square feet of Floor Area
with a frontage of approximately feet and a depth of approximately feet. Said
space is labeled Space #172 and is shown in that approximate location
crosshatched on Exhibit A.
TENANT'S TRADE NAME
Tenant shall operate the Premises only under the trade name of TOY CO.
USE OF PREMISES
Tenant shall not be deemed a Food Court Tenant at the Property. Tenant
shall use the Premises solely for the operation of a toy store, and for no other
use or purpose without Landlord's prior written, reasonable approval. Tenant
shall sell a large variety of toys and agrees that Tenant shall not use the
Premises in violation of any of the Restricted Uses (hereinafter defined).
Without limiting the foregoing preclusions, Tenant specifically agrees that
Tenant shall not sell pets or charge the public for entertainment (machines or
activities or otherwise). Tenant agrees that its sale of bicycles shall be
generally children's and family quality bicycles (and shall therefore not
include high-end bicycles). Tenant further agrees that to the extent Tenant
sells consumer electronics which are consistent with the operation of a toy
store, the display of said electronics shall not exceed 400 square feet of the
Premises. Tenant further agrees that in the event Tenant sells computer
software, prerecorded audio and/or video records, discs, tapes and/or related
devices, Tenant's Gross Sales from such items shall be less than fifteen percent
(15%) of Tenant's total Gross Sales, and Tenant agrees that Tenant shall not
rent such items. Tenant also agrees that in the event Tenant sells children's
apparel, Tenant's Gross Sales from such items shall be less than ten percent
(10%) of Tenant's total Gross Sales.
Landlord shall give its reasonable approval to alternative or additional
uses if said uses are (i) consistent with a "first-class promotional retail
center", and (ii) not a Restricted Use at the time of request, and (iii) not the
primary use of another tenant on the Property at the time of request where
"primary use" shall mean that such other tenant operates fifty percent (50%) or
more of its floor area for such use, or derives fifty percent (50%) or more of
its Gross Sales from such use.
Restricted Uses are any exclusive or restricted or objectionable uses
("Restricted Uses") Landlord has agreed to preclude or restrict pursuant to
written agreement with another tenant or owner in the Property as of the
Effective Date hereof or at any time prior to Tenant's addition of said use or
Tenant's notice to Landlord of Tenant's proposed alternative use or which are
precluded or restricted by the CC&R's referenced in Section 7.1 hereof, and as
such preclusions or restrictions may be amended or expanded from time to time;
provided, however, that Landlord shall not create a Restricted Use after the
Effective Date that is inconsistent with Tenant's exclusive use described
hereinbelow.
Exclusive: So long as (i) Tenant's use of the Premises is for such purpose
and (ii) Tenant is at such time open and operating in the Premises, Landlord
shall not authorize the use of any space in the Shopping Center, other than the
Premises, for the operation of a Competing Business.
Competing business shall, for purposes hereof, mean: a toy store such as
Play Co. Toys is operating as of the Effective Date, or such as is operated as
of the Effective Date by stores like, but not limited to Toys R Us and Kabee
Toys. "Toy store" for purposes hereof means a store selling a wide variety of
toys and toy-type items but excludes (1) space leased to or owned by Major
Tenants or Anchor Tenants of the Shopping Center which, for purposes of this
Exhibit B, shall be defined as any space of 15,000 square feet or more; (2) any
business which specializes in selected items or categories of items sold in a
toy store such as, but not limited to: bicycle stores, game stores, hobby
stores, doll stores, records/tapes/CD stores, computer stores, electronics
stores (such as Radio Shack), or consumer electronics stores (such as Circuit
City), sports cards stores, crafts stores and teacher's supply stores; and (3)
any store with a floor area of 3,000 square feet or less.
EXHIBIT D
GUARANTY OF LEASE
WHEREAS, a certain Lease of even date herewith has been, or will be,
executed:
a. Name of Property: International Gateway of the Americas
b. Landlord: LandGrant Development Unlimited, a California corporation
c. Tenant: Toys International, Inc., a California corporation
d. Effective Date: _________________________
e. Space No.: Space #172
WHEREAS, the Landlord under said Lease requires as a condition to its
execution of said Lease that the undersigned (herein referred to as "Guarantor")
guarantee the full performance of the obligations of Tenant under said Lease,
and
WHEREAS, Guarantor is desirous that Landlord enter into said Lease with
Tenant,
NOW, THEREFORE, in consideration of the execution of said Lease by
Landlord, Guarantor hereby unconditionally guarantees the complete and timely
performance of each and all of the terms, covenants and conditions of said Lease
to be kept and performed by said Tenant, including the payment of all rentals
and other charges to accrue thereunder. Guarantor further agrees as follows:
1. That this Guaranty shall continue in favor of Landlord notwithstanding
any extension, modification, or alteration of said Lease entered into by and
between the parties thereto, or their successors or assigns, notwithstanding any
assignment of said Lease, with or without the consent of Landlord, and no
extension, modification, alteration or assignment of the above referred to Lease
shall in any manner release or discharge Guarantor and it does hereby consent
thereto.
2. This Guaranty will continue unchanged by any bankruptcy, reorganization
or insolvency of Tenant or any successor or assignee thereof or by any
disaffirmance or abandonment by a trustee of Tenant;
3. Landlord may, without notice, assign this Guaranty of Lease in whole or
in part and no assignment or transfer of the Lease shall operate to extinguish
or diminish the liability of Guarantor hereunder.
4. The liability of Guarantor under this Guaranty shall be primary and, in
any right of action which shall accrue to Landlord under the Lease, Landlord
may, at its option, proceed against Guarantor without having commenced any
action or obtained any judgment against Tenant.
5. Guarantor shall pay Landlord's reasonable attorney fees and all costs
and other expenses incurred in any negotiations, action or proceeding commenced
to enforce this Guaranty; and
6. Guarantor hereby waives notice of any demand by Landlord as well as any
notice of Tenant's default in the payment of rent or any other amounts contained
or reserved in the Lease.
The use of the singular shall include the plural. The obligation of two (2)
or more parties shall be joint and several. The terms and provisions of this
Guaranty shall be binding upon and inure to the benefit of the respective heirs,
legal representatives, successors and assigns of the parties herein named.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty of Lease to be
executed as of the Effective Date of the above-mentioned Lease.
GUARANTOR OF LEASE:
PLAY CO. TOYS & ENTERTAINMENT CORPORATION, a California corporation
By:_____________________________________ By:_____________________________________
Title:_____________________________________ Title:_____________________________________
NOTE: If Guarantor is a corporation, its authorized officers must sign on
behalf of the corporation and indicate the capacity in which they are signing.
This Guaranty must be executed by the president or vice president and the
secretary or assistant secretary, unless the bylaws or a resolution of the board
of directors shall otherwise provide, in which event, the bylaws or a certified
copy of the resolution, as the case may be, shall be attached to this Guaranty.
Also, the appropriate corporate seal should be affixed hereto.
EXHIBIT E
TENANT ESTOPPEL CERTIFICATE
RE: Premises:
Lease Dated:
Amendment(s) Dated:
Between (Landlord) and (Tenant)
Square Footage Leased:
Floor(s)/Suite #(s):
The undersigned, Tenant under the above-referenced lease ("Lease"),
certifies to the following:
1. The Lease constitutes the entire agreement between Tenant and Landlord
with respect to the Premises, has not been modified, changed, altered or amended
and is in full force and effect in the form attached as Exhibit A. There are no
other agreements, written or oral, which affect Tenant's occupancy of the
Premises.
2. We have taken possession of and accepted the Premises described above,
except as follows:
3. The lease terms as described below are true and accurate, and the Lease
is in full force and effect:
Minimum Annual Rental: ________________________________________ per year
Escalations: ________________________________________
Abated Rent: ________________________________________
Commencement Date: ________________________________________
Rent Start Date: ________________________________________
Operating Expense Start Date: ________________________________________
Expiration Date: ________________________________________
Renewals: ________________________________________
Except as specified in Section(s) ______________________ of the Lease (copy
attached), we have no option or right to cancel the Lease or to lease additional
space in the Premises or the Property.
We have made no agreement with Landlord or any agent, representative or
employee of Landlord concerning free rent, partial rent, rebate of rental
payments or any other similar rent concession except as specifically set forth
above.
We are not entitled to any credit against any rent or other charge under
the Lease except as set forth in the Lease. No rental payments have been made
more than one month in advance.
4. No part of the Premises has been subleased, and Tenant's interest in the
Lease has not been assigned or encumbered except as follows:
We have no option or preferential right to purchase all or any part of the
Premises (or the land of which the Premises are a part). We have no right or
interest which respect to the Premises or the Building other than as Tenant
under the Lease.
5. The rent has been paid through:
6. The security deposit is
7. All insurance required of Tenant under the Lease has been provided by
Tenant and all premiums have been paid.
8. We represent and warrant that we have not used, generated, released,
discharged, stored or disposed of any Hazardous Materials (as such term is
defined in the Lease) on, under, in or about the Premises or the Property. We
have no actual knowledge that any Hazardous Materials are present, or have been
used, generated, released, discharged, stored or disposed of by any party, on,
under, in or about the Premises or the Property.
9. We are not in default of our obligations under the Lease. Landlord, to
the best of our knowledge, is not in default of its obligations under the Lease.
There exists no defense or counterclaim to rent or other sums required to be
paid by us under or pursuant to the Lease.
If Tenant is a corporation, the undersigned is a duly appointed officer of
the corporation signing this certificate and is the incumbent in the office
indicated under his/her name. In any event, the undersigned individual is duly
authorized to execute this certificate.
Date:____________________, 199___ Signed: ______________________________________
(Signature)
(Print Name & Title)
EXHIBIT F
SIGN CRITERIA
To be Provided by Landlord
EXHIBIT G
WHEN RECORDED RETURN TO:
----------------------------------------
c/o LandGrant
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: __________________________________
SUBORDINATION AGREEMENT
, Tenant named in that certain Lease dated , 19 , wherein Tenant leases
from , as Landlord, certain premises which are part of a Property known as , the
location of said Property being more particularly described in Exhibit "A"
attached hereto and made a part hereof, hereby subordinates said Lease and its
interest in said premises to that certain
_____________________________________________________ dated _______________ , 19
, entered into by and between , , and recorded on , 19 , under File No. Page No.
in the Official Public Records of the County of , State of .
Dated this day of , 19 .
TENANT: _______________________________________
By: ___________________________________
Title: _________________________________
By: ___________________________________
Title: _________________________________
[NOTARIAL ACKNOWLEDGMENT]
EXHIBIT H
CONFIRMATION OF TERM OF LEASE
This Confirmation of Term of Lease is made ________________________, 19 ___,
between LandGrant Development Unlimited, a California corporation, ("Landlord"),
and TOYS INTERNATIONAL, INC., a California corporation ("Tenant"), who agree as
follows:
1. Landlord and Tenant entered into a lease dated ________________________,
19 ___, in which Landlord leased to Tenant and Tenant leased from Landlord the
premises described in Paragraph 1.2 of the Lease (the "Premises").
2. Pursuant to Paragraph 1.3 of the Lease, Landlord and Tenant agree to
confirm the Commencement Date and Expiration Date of the Term, and the Rent
Start Date, and Operating Expense start date as follows:
a. __________________________ 19 ___, is the Commencement Date of the Term
of the Lease;
b. __________________________ 19 ___, is the Expiration Date of the Term of
Lease;
c. __________________________ 19 ___, is the Rent Start Date under the
Lease; and
d. __________________________ 19,___, is the date for commencement of
payments for Operating Expenses.
TENANT: LANDLORD:
TOYS INTERNATIONAL, INC., LANDGRANT DEVELOPMENT UNLIMITED,
a California corporation a California corporation
By: _______________________________________ By:_________________________________
Signature
Title: _______________________________
----------------------------------------
Name By:_________________________________
_________________________________________ Title: _______________________________
Title
By: _______________________________________
Signature
----------------------------------------
Name
----------------------------------------
Title
EXHIBIT C
PROVISIONS RELATING TO CONSTRUCTION OF TENANT'S STORE
SECTION I - GENERAL REQUIREMENTS
1. As soon as practicable after the final drawings and specifications have
been approved by Landlord and by all applicable governmental agencies, Landlord
will, at its own cost and expense, commence the erection of a building covering
the Premises, unless prevented or delayed by conditions over which Landlord has
no control. It is expressly understood and agreed that the building upon the
Premises may constitute a portion of a larger building. In the event that prior
to commencement of construction of the building of which the Premises are a
part, Landlord elects not to proceed with such construction, Landlord may
terminate this Lease upon notice to Tenant, and both parties shall be forthwith
released.
2. When Landlord's architect (hereinafter "Project Architect") has
completed drawings of the basic shell of the building (or if such drawings have
already been completed, then concurrently with the execution of this Lease),
Landlord shall deliver a floor plan of the Premises ("Floor Plan") to Tenant
showing thereon the columns and other structural work in the Premises.
3. Landlord will construct for Tenant an improved shell, all in conformity
with and to the extent hereinafter set forth as "Landlord's Work". Tenant shall
be responsible, at its own cost and expense, to complete the work hereinafter
set forth as "Tenant's Work"; all Tenant's Work shall be completed to a good
workmanlike condition.
Tenant's plans shall be prepared with full knowledge of and in compliance
with the Floor Plan, this Exhibit C and all City, County, State and Federal
ordinances, rules and regulations relating thereto including, without
limitation, the energy conservation requirements, if applicable, of the State in
which the Property is located and the architectural and accessibility
regulations issued by the United States Attorney General's office pursuant to
Title III of the Americans with Disabilities Act of 1990 and the Minimum
Guidelines and Requirements for Accessible Design issued by the Architectural
and Transportation Barriers Compliance Board. All drawings for Tenant's Work, as
described below, are to be prepared at Tenant's expense by an interior designer
or space planner or, if required by governmental authorities, Tenant's architect
who shall be licensed in the State in which the Property is located.
Tenant agrees to submit to Landlord, within twenty (20) days after the
later of Tenant's receipt of the Floor Plan or the Effective Date of the Lease,
fully dimensioned and detailed 1/4" scale preliminary drawings showing general
store layout.
Within forty-five (45) days after the later of Tenant's receipt of the
Floor Plan or the Effective Date of the Lease, Tenant agrees to submit to
Landlord two (2) sets of fully detailed and dimensioned one-quarter inch (1/4")
scale construction drawings. These drawings shall indicate the specific
requirements of Tenant's space showing clearly, without limitation, the interior
partitions, trade fixture plans, lighting, electrical outlets, plumbing, signs,
size and locations of equipment to be installed on the roof, if any, state
energy compliance calculations, handicap access requirements, structural
calculations, samples, etc., and all other items set forth under "Tenant's
Work".
All drawings for Tenant's Work are subject to Landlord's and Project
Architect's approval and in the event said drawings are not approved, for any
reason whatsoever, within sixty (60) days after the later of Tenant's receipt of
the Floor Plan or the Effective Date of the Lease, this Lease shall, at the
option of Landlord, be null and void and of no further force or effect.
Tenant shall be responsible for submitting construction drawings to the
proper building authority (or health authority as applicable) to obtain a
building permit. Fees for plan checking, processing, permitting, and any other
fees relating to Tenant's Work shall be paid by Tenant. At Landlord's option the
Premises shall be constructed by Landlord or Tenant's contractor in accordance
with said drawings and both parties agree to pursue the construction work of
said building diligently to completion, complying with all governmental
ordinances, rules and regulations. Upon completion of all Tenant's Work, Tenant
shall file for record in the Office of the County Recorder where the Property is
located a Notice of Completion, as permitted by law.
5. In the event Landlord agrees in writing to perform any of Tenant's Work,
the following procedures and conditions apply:
a. The cost of all requirements shown on Tenant's construction drawings are
to be paid for by Tenant. Landlord shall submit a bid proposal to Tenant after
Landlord approval of Tenant's construction drawing and Landlord's agreement in
writing to perform Tenant's Work. Tenant shall have the right to approve all
costs to be borne by Tenant pursuant to the provisions of this paragraph 5.
Tenant shall notify Landlord in writing within ten (10) days after Tenant's
receipt of the bid proposal that Tenant approves or disapproves the bid
provided, however, that if Tenant does not so notify Landlord within such ten
(10) day period, Tenant shall be deemed to have approved such costs. The total
amount of such costs to be paid by Tenant shall be delivered to Landlord prior
to the commencement of construction of Tenant's Work.
b. Any additional charges, expenses, or costs arising by reason of any
subsequent change, modification, or alteration in said approved general plans
and specifications ("change to plan") made at the request of Tenant or required
by governmental authorities, including without limitation architect's fees or
consultant's fees, shall be at the sole cost and expense of Tenant, and Landlord
shall have the right to demand payment for such change to plan prior to
Landlord's performance thereof. No change to plan shall be made without the
written consent of Landlord. Landlord shall bear no costs in connection with the
plans or fees related to, or construction of, Tenant's Work.
6. The parties agree to cooperate with each other and to respond with
required approvals or disapprovals with reasonable diligence in order to
complete Landlord's Work and any Tenant's Work which Landlord agrees to perform
pursuant to Section 5 of this Exhibit C by the Commencement Date described in
Section 3.1 of the Lease. Prior to occupancy of the Premises, Tenant shall pay
Minimum Annual Rental at the rate specified in Section 1.4, prorated for the
number of days completion is delayed for any of the following reasons:
a. Tenant's failure to submit drawings within the time periods specified in
Section 3 of this Exhibit C. b. Tenant's request for changes in the plans and
specifications or in the construction of the work; and/or c. Tenant's failure to
pay any costs required of Tenant pursuant to this Exhibit C, within the time
periods specified herein.
7. Tenant may not require an exterior design, finish or construction other
than one that has been approved by Landlord; and Landlord shall be entitled to
erect and construct such exteriors in keeping with the overall plans and design
of the Property. Tenant shall not be permitted to maintain or place on the
building or upon the Premises any awnings or other exterior appendage except
with written consent of Landlord.
8. Tenant agrees that upon receipt of Landlord's Notice of Substantial
Completion, as defined in Section 3.2, Tenant will accept the Premises in the
condition which it may then be and waives any right or claim against Landlord
for any cause, directly or indirectly, arising out of the condition of the
Premises, appurtenances thereto, the improvements thereon and the equipment
thereof; and Tenant shall thereafter save and hold harmless Landlord from
liability as provided in Article 12 of this Lease. Landlord shall not be liable
for any latent or patent defects therein; provided, however, that Landlord
warrants the building against latent defects for a period of one year from
completion.
9. In the event Tenant enters into possession of the Premises for the
purpose of performing Tenant's Work prior to the Notice of Substantial
Completion and completion of Landlord's Work, such entry shall be deemed an
acceptance by Tenant of substantial completion of the Premises, and in such
event Tenant shall hold Landlord harmless and indemnify Landlord for any loss or
damage to Tenant's property, fixtures, equipment and merchandise and for injury
to any persons, unless same be caused by the gross negligence or willful
misconduct of Landlord or its agents, and Tenant shall repair any damage done by
Tenant or Tenant's agents, contractors, subcontractors, employees, vendors, or
representatives to Landlord's Work.
10. During the construction of Landlord's Work, Landlord agrees at
Landlord's expense to obtain and maintain public liability and worker's
compensation insurance adequate to fully protect Tenant as well as Landlord from
and against any and all liability for death of or injury to person or damage to
property caused in or about or by reason of the construction of Landlord's Work.
Tenant agrees at Tenant's expense to obtain or maintain public liability
insurance as set forth in Article 12.3 and worker's compensation insurance
adequate to fully protect Landlord as well as Tenant from and against any and
all liability for death of or injury to person caused in or about or by reason
of the construction of Tenant's Work.
11. Where final drawings are in conflict with this Exhibit C, the
provisions of Exhibit C shall prevail.
12. Upon actual completion of the building shell of which the Premises are
a part, Landlord agrees to file for record in the Office of the County Recorder
where the Property is situated a Notice of Completion, as permitted by law.
SECTION II - DESCRIPTION OF LANDLORD'S WORK
The following is a description of the construction, and limitations of
same, which will be provided by Landlord and herein referred to as "Landlord's
Work".
A. BASIC SHELL
1. Frame: The building shall be of steel or wood frame, reinforced
concrete, or bearing wall construction designed in accordance with governing
building codes.
2. Exterior Walls: The exterior walls shall be of masonry or such other
material or materials as selected by the Project Architect.
3. Floors: All floors on the ground floor area shall be a minimum three and
one-half inch (31/2") concrete with smooth finish. Floor to be flat and on a
single plane without visible depressions or raised areas.
4. Roof: The roof shall be built-up composition type, single ply, or other
commercial roofing material as selected by the Project Architect.
5. Exterior Doors/Frames: Rear/side exterior exit door frame(s) will be
hollow metal construction. Exterior service doors will be hollow metal with
panic hardware.
6. Exterior walls and roof will be insulated with Fiberglass batt
insulation in accordance with building code and state energy requirements.
7. Fire Service and Distribution: As required by building code, or
otherwise at Landlord's option.
8. Storefront: A standard store front shall be designed by Project
Architect and installed by Landlord at its sole cost and expense. One single
storefront door will be provided to each store unless otherwise shown on Floor
Plan.
B. INTERIOR FINISHES
1. Ceilings: Ceilings to be 2' x 4' lay-in acoustical tile with an exposed
T-bar suspension system. Clear height between floor slab and ceiling shall be
governed by structural design and specified in the Floor Plan delivered by
Landlord to Tenant.
2. Walls: Demising walls between suites shall be framed of wood stud, metal
stud, or masonry, and shall be unpainted drywall, finish taped and textured;
they shall extend from floor to roof structure with drywall only on one side
above the ceiling. Any interior partitions shall not be a part of Landlord's
Work. The interior portion of the exterior walls shall be unpainted drywall,
finish taped, and textured; drywall to extend 6" above ceiling height.
3. Interior Doors/Frames: Interior door frames shall be wood or metal at
the option of Landlord. Interior doors will be wood, hollow core, with lever
hardware.
C. SANITARY FACILITIES
1. Two Toilet Rooms, each containing: One (1) standard lavatory, one (1)
water closet, one (1) door with hardware, one (1) light fixture with fan, one
(1) electrical outlet, and sheet vinyl floor with topset base.
D. UTILITIES
1. Water and Sewer: Landlord will furnish water and sewer service lines for
one toilet facility for each store. All installation required beyond these
facilities shall not be a part of Landlord's Work. Cost of water used will be
paid by Tenant.
2. Electricity: Landlord shall furnish one (1) 100 amp subpanel within the
Premises which shall include breakers appropriate for the scope of Landlord's
Work and wiring stubbed to the subpanel and which shall be constructed to
provide for separate metering. The meter shall not be a part of Landlord's Work.
Landlord shall furnish seven (7) electrical convenience outlets, located as
shown on Landlord's floor plans (including the electrical outlet shown in the
toilet room). Two (2) additional interior ceiling outlets will be located above
the storefront, if required by code.
3. Telephone: Landlord shall furnish one (1) telephone conduit (without
wires) from main telephone room for the building stubbed to Tenant's Premises.
4. Lighting: Landlord shall furnish one two foot (2') by four foot (4')
long recess mounted fluorescent light fixture per 112 square feet of Floor Area
of the Premises arranged in accordance with Landlord's Floor Plan.
5. All Tenant Illuminated Storefront signs shall be under central control
of Landlord.
6. Sprinkler Drops: Landlord shall furnish sprinkler heads as required by
building code (excluding additional heads which may be required as a result of
Tenant's Work).
7. H.V.A.C.: Landlord will install a Landlord selected air conditioning
unit, located on the roof complete with air distribution ductwork, air
distribution outlets, fresh air supply, and thermostats as designed by the
Landlord to suit the standard lease space requirements. Air conditioning tonnage
shall be based on approximately one ton per 400 square feet, as dictated by
state energy requirements and calculations, based on the standard Landlord
improvement. One (1) ducted return vent shall be provided. Supply venting shall
be as follows:
2 supply diffusers for 4 tons or less; 3 supply diffusers for
5 tons; 4 supply diffusers for 7 1/2 tons; and 6 supply
diffusers for 10 tons.
In the event that Tenant's use of the Premises requires fresh air, make-up
air, and/or exhaust air for special equipment, cooking equipment, stock room
areas, or show windows, and the like, Tenant will provide same at its sole cost
and expense, subject to Landlord's prior approval.
SECTION III - DESCRIPTION OF TENANT'S WORK
The work to be done by Landlord in satisfying its obligations to construct
Tenant's store under the Lease shall be limited to that described in the
foregoing paragraphs. All other items of work not therein provided for to be
done by Landlord shall be provided by Tenant at Tenant's expense and are herein
referred to as "Tenant's Work". Tenant acknowledges and agrees that if required
by Landlord, Utility equipment and facilities included in Tenant's Work shall be
procured from Utility providers specified by Landlord. Tenant's Work shall
include, but not be limited to, the purchase and/or installation and/or
performance of the following:
1. Electric Fixtures and Equipment: All electrical work for the Premises
not specifically stated under Landlord's Work to be performed by Tenant
including without limitation any additional convenience outlets or circuit
breakers.
2. Utility Meters and Connections: All Utility meters, connections and
hookup fees, assessments, front footage charges and any other fees or charges
for Utilities serving the Premises shall be paid by Tenant. Tenant shall apply
for and arrange for installation of all meters.
3. Telephones: All wiring from the main telephone room to the Premises and
within the Premises. All conduits for Tenant's telephone system in the Premises.
Tenant shall make all arrangements for telephone service.
4. Walls: All interior partitions and curtain walls within the Premises,
except as provided by Landlord under Landlord's Work.
5. Coves and Ceilings: All special coves, ceilings, furring, etc.
6. Furniture and Fixtures: All store fixtures, cases, wood paneling,
cornices, etc.
7. Show Window Background, Floors, Etc.: All show window floors, show
window background, show window lighting fixtures, and show window doors.
8. Floor Coverings: All floor coverings and floor materials (including wall
base) other than concrete (except as Landlord is required to provide in the
toilet room as Landlord's Work).
9. Ornamental Stairs: All ornamental or other stairs not required by
governing building codes.
10. Alarm Systems, Etc.: All alarm systems or other protective devices.
11. Plumbing: All plumbing, either roughing in fixtures, or equipment
required for Tenant's needs.
12. Special Ventilation: All ventilation systems, hoods, ducts, shafts, and
chases, including show window's ventilation.
13. Special Equipment: All special equipment such as conveyors, elevators,
escalators, dumb waiters, etc., including installation and connection.
14. Interior Painting and wall coverings.
15. Tenant's exterior sign. All Tenant signs shall be designed,
constructed, and located in accordance with the approved sign plan, and shall be
subject to the approval of Landlord, and local governing agency, all as more
specifically described in Exhibit F to the Lease.
16. Concrete Floors: Any special reinforcing, raised areas, insulated
floor, or depressions.
17. Roof: Framing of all roof openings in accordance with structural
calculations as required by code. All flashing, counterflashing and roof repairs
caused by the installation of Tenant's equipment shall conform to the project's
roofing specifications and such work shall be paid for by Tenant, but shall be
performed by the project's original roofing contractor.
SECTION IV - CONDITIONS RELATED TO PERFORMANCE OF TENANT'S WORK
If Tenant's Work is performed by anyone other than Landlord's contractor,
the following items shall apply; said items shall be incorporated as "Special
Conditions" into the contract between Tenant and its contractor (with a copy of
the contract to be furnished Landlord for Landlord's reasonable approval prior
to the commencement by Tenant of Tenant's Work):
1. Prior to start of Tenant's Work, Tenant or Tenant "s contractor shall
provide Landlord with a construction schedule in "bar graph" form indicating the
completion dates of all phases of Tenant's Work.
2. Tenant or Tenant's contractor shall perform said work in a manner and at
times which do not impede or delay Landlord's contractor in the completion of
the Premises as provided in this Lease. Any delays in the completion of the
Premises impacting the commencement of the Minimum Annual Rental and any damage
caused by Tenant or Tenant's contractor shall be at the sole cost and expense of
Tenant.
3. Tenant or Tenant's contractor shall be responsible for the repair,
replacement or cleanup of any damage done by him to other contractors' work
which specifically includes Landlord's Work and accessways to the Tenant's
Premises which may be currently used by others.
4. Tenant shall accept the Premises prior to Tenant's contractor starting
any trenching operations. Any rework of subbase or compaction required after
Tenant initial acceptance of the Premises shall be done by Tenant's contractor,
which shall include the removal from the Property of any excess dirt or debris.
5. Tenant or Tenant's contractor shall contain his storage of materials and
his operations within the Premises and such other space as he may be assigned by
Landlord or Landlord's contractor. Should he be assigned space outside of the
Premises, he shall move to such other space as Landlord or Landlord's contractor
shall direct from time to time to avoid interference or delays with other work.
6. All trash and surplus construction materials shall be stored within the
Premises and shall be promptly removed from the Property at the sole cost of
Tenant or Tenant's contractor. Once the Property is open and operating, no
Common Area trash containers shall be used for construction debris.
7. Tenant or Tenant's contractor shall provide temporary utilities,
portable toilet facilities and potable drinking water as required for his work
within the Premises and shall pay to Landlord or Landlord's contractor the cost
of any temporary utilities and facilities provided by Landlord or Landlord's
contractor at Tenant or Tenant's contractor's request.
8. Tenant or Tenant's contractor shall notify Landlord or Landlord's
Project Manager of any planned work to be done on weekends, holidays or other
than normal job hours.
9. Tenant and Tenant's contractor are responsible for compliance with all
applicable codes and regulations of duly constituted authorities having
jurisdiction insofar as the performance of the work and completed improvements
are concerned for all work performed by Tenant or Tenant's contractor and all
applicable safety regulations established by the general contractor for the
Property, and Tenant further agrees to save and hold Landlord harmless for said
work as provided in Article 12 of the Lease. Prior to commencement of
construction, Tenant shall submit to Landlord evidence of insurance as required
in Article 12 of the Lease.
10. Tenant's contractor or subcontractors shall not post signs on any part
of the Property or on the Premises.
11. Notwithstanding the provisions herein, Tenant shall be responsible for
and shall obtain and record a Notice of Completion promptly following completion
of Tenant's Work.
12. Prior to the commencement of construction, Tenant shall obtain or cause
its contractor to obtain payment and performance bonds covering the faithful
performance of the contract for the construction of Tenant's Work and the
payment of all obligations arising thereunder. Such bonds shall be for the
mutual benefit of both Landlord and Tenant and shall be issued in the names of
both Landlord and Tenant as obligees and beneficiaries. Prior to the date Tenant
commences construction of Tenant's Work, Tenant shall submit evidence
satisfactory to Landlord that such bonds have been issued.
ADDENDUM to EXHIBIT C
CONSTRUCTION ALLOWANCE
Notwithstanding anything to the contrary contained in this Exhibit C,
Landlord agrees to contribute the sum of Eighty Thousand Dollars ($80,000.00)
("Construction Allowance") toward the cost of Tenant's Work ("Costs"), except
that said sum shall not in any event be applied toward costs of preparing the
space plans, the Final Plans and the working drawings; engineering and
architectural fees; costs of governmental permits and plan check fees; testing
and inspection costs; bonds.
As soon as reasonably possible after completion of working drawings, Tenant
shall prepare and deliver to Landlord a firm breakdown of Costs. Landlord shall
deliver its written approval or disapproval of the Costs to Tenant within three
(3) business days after receipt. If Landlord performs the Tenant Work, the Costs
payable by Tenant which exceed the Construction Allowance shall be delivered to
Landlord prior to the date specified by Landlord for commencement of
construction.
If Tenant performs the Tenant Work, upon written request, Landlord shall
pay Tenant the Construction Allowance within thirty (30) days after the latest
date on which any contractor, subcontractor, materialman or laborer of Tenant
may record a valid mechanics' lien against the Premises and/or Property with
respect to Tenant's Work and after the Tenant has opened for business and
delivered to Landlord the following:
1. An executed Tenant's Certificate substantially in the form of Exhibit H;
2. A copy of the "Certificate of Occupancy";
3. A copy of Tenant's recorded, valid "Notice of Completion," if
applicable;
4. A complete list of the names, addresses, telephone numbers and contract
amount for all contractors, subcontractors, vendors and/or suppliers providing
materials and/or labor for Tenant's Work;
5. Copies of all invoices from Tenant's contractor, subcontractors, vendors
and/or suppliers of labor and/or materials for Tenant's Work, which Tenant has
paid;
6. Copies of all mechanics' lien releases or other lien releases on account
of Tenant's Work, which are notarized, unconditional and in such form as
Landlord shall have approved;
7. Copies of all building permits, indicating inspection and approval by
the issuer of said permits; and
8. An architect's certification that the Premises have been constructed in
accordance with Tenant's Plans and are one hundred percent (100%) complete in
accordance with this Exhibit C.
The cost of any additional work performed by Landlord for the benefit of
Tenant shall be deducted from the Construction Allowance before said
Construction Allowance is paid to Tenant.
Should Tenant fail to open for business within the time limit set forth in
Article 3, Section 3.2 or otherwise be in default of its obligations under the
Lease, or should Tenant fail to request payment of the Construction Allowance
within one hundred twenty (120) days after its opening for business, then
Landlord shall not be obligated to pay Tenant this Construction Allowance. In
the event that the Lease is terminated as a result of Tenant's default pursuant
to the provisions of Article 14 of the Lease, then, in addition to all other
damages specified in Section 14.4 of the Lease, Landlord's damages shall include
the unamortized cost of the Construction Allowance, (amortized on a
straight-line basis over the initial Lease Term) with interest thereon at the
interest rate specified in Section 14.7, from the Commencement Date of the Lease
through the date of payment to Landlord.
