1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON
A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.13
IRVINE RETAIL PROPERTIES COMPANY
RETAIL SPACE LEASE
LBE TECHNOLOGIES, INC., a California corporation,
dba "NASCAR Silicon Motor Speedway"
TENANT
IRVINE SPECTRUM CENTER
2
RETAIL SPACE LEASE
THIS LEASE ("Lease") is entered into as of the date set forth in Section
1.1 by and between Landlord and Tenant.
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 Date of April 22, 1998
Lease:
1.2 Landlord: IRVINE RETAIL PROPERTIES COMPANY,
a division of The Irvine Company,
a Delaware corporation
1.3 Tenant: LBE TECHNOLOGIES, INC., a California corporation
1.4 Tenant's NASCAR Silicon Motor Speedway (Article 11)
Trade
Name:
1.5 Shopping Irvine Spectrum Center; located in the City of Irvine, County (Article 2)
Center: of Orange, State of California.
Premises: Address: 00 Xxxxxxx Xxxxx, Space 31, Irvine Spectrum (Article 3)
Xxxxxx, Xxxxx XX, Xxxxxx, XX 00000, the approximate location
of which is shown on Exhibit B.
1.7 Floor Area: Approximately five thousand two hundred eighteen (5,218) (Article 3)
square feet.
1.8 Term: eighty four (84) months. (Article 4)
1.9 Opening N/A (Article 4)
Date:
OR
1.10 Time to [***] days following Substantial Completion of the (Article 4)
Complete Premises and delivery of possession of the Premises to
Tenant's Tenant; provided, however, in the event that Tenant is
Work: delayed in submitting plans, or receiving from the City of
Irvine its use permit as a result of Landlord's failure
to comply with the terms of this Lease, then the Time To
Complete Tenant's Work shall be extended one (1) day for
each day of delay caused by Landlord's failure to comply with
the terms of this Lease.
1.11 Delayed If Tenant fails to open for business within the Premises within (Article 6)
Opening [***] days following the Commencement Date as set forth
Rental: forth in Section 4.1, Tenant shall pay to Landlord, as
Additional Rental, and in addition to Minimum Annual Rental,
the sum of [***] per month for each month Tenant is not open for
business. Tenant shall pay such amount to Landlord as of the
thirty-first (31st) day that Tenant is not open for business.
1.12 Minimum (Article 7)
Annual
Rental:
Dollars Per Square Foot Months Following
Per Annum Dollars Per Annum Dollars Per Month Commencement Date
[***] [***] [***] 1-24
[***] [***] [***] 25-60
[***] [***] [***] 61-84
*** Confidential treatment requested.
3
3 Percentage [***] on automobile racing simulators; (Article 7)
Rate: [***] on sale of all merchandise and other items.
1.14 Use of The Premises shall be used for the primary (Article 11)
Premises: purpose of conducting a simulated interactive
automobile entertainment center, including,
the operation of automobile racing simulators
(operated by the use of coins, tokens or
otherwise), and the incidental retail sale
of high quality auto racing and entertainment
accessories. In addition, Tenant shall have the
right to sell, on an incidental basis (from not
more than five percent (5%) of the Floor Area of
the Premises) non-alcoholic beverages and the
snack items shown on the menu attached hereto
as Exhibit I.
The Premises shall be used solely for the use
stated above and for no other use or purpose.
1.15 Initial [***] per square foot of Floor Area within the (Article 15)
Promotional Premises (one time charge).
Assessment:
1.16 Promotional [***] per square foot of Floor Area within (Article 15)
Charge: the Premises per annum.
1.17 Insurance [***]. (Article 16)
Limits:
1.18 Architectural [***] (one time charge). (Exhibit C)
Review Fee:
1.19 Security [***] (Article 22)
Deposit:
1.20 Guarantor(s): None. (Exhibit E)
1.21 Broker(s): Xxxxx-Xxxxxxxxx Partnership, Inc. (Article 27)
1.22 Addresses for Notices and Payments: (Article 24)
LANDLORD TENANT
Notices To: Notices To:
Irvine Retail Properties Company LBE Technologies, Inc.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000 00 Xxxxxxx Xxxxx, Xxxxxx 00 and 31
Xxxxxx, Xxxxxxxxxx 00000 Irvine Spectrum Center, Phase II
Xxxxxx, Xxxxxxxxxx 00000
with copy to: In the event of default:
Irvine Retail Properties Company Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxx Xxxxxx Xxxxx 400 Xxxxxxxx Avenue
X.X. Xxx 0000 Xxxx Xxxx, Xxxxxxxxxx 00000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 Attention: Xxxxx Xxxxxxxx
Attn: General Counsel
Landlord's Address for Payment and Reports: with copy to:
Irvine Retail Properties Company LBE Technologies, Inc.
x/x Xxxxxx & Xxxxxxxxxx 00000 Xxxx Xxxx
Department #65044-280 Xxxxxxxxx, Xxxxxxxxxx 00000
Xx Xxxxx, Xxxxxxxxxx 00000 Attn: Xx. Xxxxx Xxxxxxxxx Xxxxx
Tenant's Address for Statements and Xxxxxxxx:
LBE Technologies, Inc.
00000 Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxxxxx Xxxxx
1.23 Electrical [***] per square foot of Floor Area of the (Article 10)
Facility Premises per annum.
Contribution
Rate:
*** Confidential treatment requested.
4
4 Electrical Meter [***] (one-time charge).
Reimbursement: (Article 10)
1.25 VAC Equipment [***] per square foot of the (Article H)
Contribution Rate: Floor Area of the Premises per annum.
This Article I is intended to supplement and/or summarize the provisions set
forth in the balance of this Lease. If there is any conflict between any
provisions contained in this Article I and the balance of this Lease, the
balance of this Lease shall control.
ARTICLE 2
EXHIBITS
The following Exhibits are attached to this Lease and, by this
reference, made a part of this Lease:
EXHIBIT A - Site plan of a retail shopping center and/or commercial
development constructed or to be constructed on real property located in the
city, county and state specified in Article I ("Shopping Center"). For all
purposes of this Lease (i) the term "Irvine Center" shall mean the area bounded
by Fortune Drive, the Santa Xxx (1-5) Freeway, and the San Diego (1-405)
Freeway, and (ii) the term "Shopping Center" shall mean only the "Entertainment
Center" portion (as designated on Exhibit A) of Irvine Center. Landlord, at any
time, may change the shape, size, location, number and extent of the
improvements shown on Exhibit A and eliminate, add or relocate any improvements
to any portion of the Shopping Center including, without limitation, buildings,
parking areas (including parking structures), roadways, curb cuts, temporary or
permanent kiosks, displays or stands, and may add land to and/or withdraw land
from the Shopping Center. Tenant acknowledges that (i) Landlord intends to
develop the remainder of Irvine Center (excluding the Shopping Center) as a
regional retail shopping center (the "Adjacent Center") which will be contiguous
with the Shopping Center, and which will enjoy mutual reciprocal access and
parking rights with the Shopping Center, and (ii) Landlord, at any time may
cause one or more separate legal parcels to be created on the land constituting
the Shopping Center and the Adjacent Center. The notations and designations
found on Exhibit A are intended only for the convenience of Landlord and are not
intended to define, limit or otherwise alter the intent or scope of this Lease
or of any other lease to which Landlord may be a party, nor as a representation
or warranty as to current occupancy or future occupancy of any particular tenant
in the Shopping Center.
EXHIBIT B - Premises.
EXHIBIT C - Construction Provisions.
EXHIBIT D - Tenant's Statement of Gross Sales.
EXHIBIT E - Intentionally Omitted.
EXHIBIT F - Tenant's Certificate
EXHIBIT G - Tenant's Estoppel
EXHIBIT H - Tenant Ventilating and Air-Conditioning Exhibit
EXHIBIT I - Menu
ADDENDUM TO LEASE - The terms and conditions set forth in the Addendum
to Lease attached hereto are, by this reference, made a part of this Lease.
Where, and to the extent that, any provision contained in the Addendum to Lease
is contrary to or inconsistent with any provision contained in the printed
portion of this Lease, the provision contained in the Addendum to Lease shall
control.
ARTICLE 3
PREMISES
3.1 PREMISES. Landlord leases to Tenant and Tenant leases from
Landlord, for the "Term" (as defined in Article 4) and upon the covenants and
conditions set forth in this Lease, the premises described in Section 1.6
("Premises").
3.2 RESERVATION. Landlord reserves the right to use the exterior
walls, floor, roof and plenum in, above and below the Premises for the
installation, maintenance, use and replacement of pipes, ducts, utility lines
and systems, structural elements serving the Shopping Center and for such other
purposes as Landlord deems necessary. In exercising its rights reserved herein,
Landlord shall not materially and unreasonably interfere with the operation of
Tenant's business on the Premises.
3.3 FLOOR AREA. The term "Floor Area", as used in this Lease, shall
mean all areas designated by Landlord for the exclusive use of a tenant measured
from the exterior surface of exterior walls (and extensions,
*** Confidential treatment requested.
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in the case of openings) and from the center of interior demising walls, and
shall include, but not be limited to, restrooms, mezzanines, patios, Warehouse
or storage areas, clerical or office areas and employee areas. The Premises
contain approximately the number of square feet of Floor Area specified in
Section 1.7. Landlord shall have the right during the Term to remeasure the
Floor Area of the Premises for accuracy. If an error is found, Landlord shall so
certify to Tenant and this Lease shall be amended so as to reflect the actual
Floor Area and corresponding "Minimum Annual Rental" (as defined in Section 7.2)
and "Additional Rental" (as defined in Section 7.4) based on such actual Floor
Area.
3.4 RELOCATION. Landlord shall have the right, at any time and from
time to time upon ninety (90) days' prior written notice to Tenant, to relocate
Tenant to other premises ("New Premises") within the Shopping Center; subject,
however, to the following terms and conditions: (a) The New Premises shall have
approximately the same Floor Area as is contained in the Premises, (b) the New
Premises shall be leased to Tenant on the same terms and conditions as provided
in this Lease, except that there shall be a proportionate adjustment of Minimum
Annual Rental and Additional Rental based upon the Floor Area in the New
Premises, (c) Landlord shall pay to Tenant, within thirty (30) days following
the date Tenant initially opens for business in the New Premises, those expenses
reasonably incurred by Tenant in connection with the relocation of Tenant's
personal property; provided. however, Tenant has first provided Landlord with an
itemized list of these expenses (accompanied with copies of invoices and proofs
of payment of same), and (d) Landlord shall pay all costs of the leasehold
improvements to be constructed at the New Premises and such leasehold
improvements shall be substantially similar to the leasehold improvements in the
Premises. In its notice to Tenant, Landlord shall set forth a timetable for
completion of the leasehold improvements in the New Premises. If the New
Premises is unacceptable to Tenant for any reason, Tenant shall have the right
as its sole remedy hereunder, upon written notice to Landlord to be given within
thirty (30) days after Landlord's notice of relocation to Tenant, to terminate
this Lease on thirty (30) days' written notice to Landlord. Landlord shall pay
to Tenant, within sixty (60) days after said notice is given and upon vacation
of the Premises by Tenant, the unamortized book value of Tenant's leasehold
improvements, excluding items removable by Tenant at the expiration of the Term
pursuant to Section 27.24 (to the extent said leasehold improvements were paid
for by Tenant, as evidenced by invoices and proofs of payment of same),
depreciated on a straight-line basis over the Term, and Tenant shall provide
Landlord with a xxxx of sale for said leasehold improvements.
ARTICLE 4
TERM
4.1 TERM. This Lease shall be effective from and after the date
specified in Section 1. I ("Date of Lease"). The term of this Lease ("Term")
shall commence on that date (the "Commencement Date") which is the earliest of:
(a) the date Tenant initially opens for business to the public in the Premises,
(b) the date set forth in Section 1.9 as the "Opening Date", or (c) the date
immediately following the expiration of the period set forth in Section 1.10 as
the "Time to Complete Tenant's Work". The Term shall continue, unless sooner
terminated in accordance with the provisions of this Lease, for the number of
months specified in Section 1.8 from the first day of the month following the
Commencement Date.
ARTICLE 5
POSSESSION
5.1 SUBSTANTIAL COMPLETION. The term "Substantial Completion of the
Premises", as used in this Lease, shall mean the date Landlord notifies Tenant
in writing that "Landlord's Work" (as specified in Exhibit C) is substantially
complete to the point that Tenant's contractor may commence the construction of
"Tenant's Work" (as specified in Exhibit C.
5.2 DELIVERY OF POSSESSION. Tenant shall accept possession of the
Premises from Landlord upon Substantial Completion of the Premises. Tenant shall
deliver each of the following to Landlord prior to Substantial Completion of the
Premises: (a) "Security Deposit", "Architectural Review Fee", "Initial
Promotional Assessment", the first monthly installment of the "Promotional
Charge", the first monthly installment of Tenant's estimated share of "Common
Area Expenses" and the first monthly installment of "Minimum Annual Rental" (as
each is defined in this Lease); (b) executed copies of policies of insurance or
certificates thereof (as required under Article 16); (c) copies of governmental
permits and authorizations (as required under this Lease); (d) "Final Plans" (as
defined in Exhibit C) and (e) a copy of Tenant's building permit. Tenant shall
pay to Landlord, upon its execution of this Lease, the sums specified in
subparagraph (a) above. Landlord shall not be obligated to deliver possession of
the Premises to Tenant until such items are delivered, but the date of
Substantial Completion of the Premises shall not be affected by Tenant's failure
to deliver any of such items.
ARTICLE 6
CONSTRUCTION AND DELAYED OPENING
6.1 CONSTRUCTION. Tenant shall commence construction of Tenant's
Work upon Substantial Completion of the Premises and delivery of possession of
the Premises to Tenant, and shall diligently prosecute same to completion.
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6.2 DELAYED OPENING RENTAL. If Tenant fails to open for business to
the public in the Premises on or before the Commencement Date, Tenant shall pay
to Landlord, as Additional Rental, and in addition to Minimum Annual Rental
specified in Section 7.2, the amount set forth in Section 1.11, in arrears, on
the last day of the month for each month or partial month Tenant is not open for
business in the Premises following the Commencement Date ("Delayed Opening
Rental"). Delayed Opening Rental for any partial month shall be prorated on the
basis of thirty (30) days.
6.3 CERTIFICATES. Within ten (10) days after Tenant initially opens
for business to the public in the Premises, Tenant shall (a) execute and deliver
to Landlord a certificate substantially in accordance with the criteria set
forth in Section 21.3 of this Lease ("Tenant's Certificate"), and (b) deliver to
Landlord the certificate of occupancy for the Premises issued by the appropriate
governmental agency.
ARTICLE 7
RENTAL
7.1 MINIMUM ANNUAL RENTAL. Tenant shall pay the sum specified in
Section 1. 12 ("Minimum Annual Rental") in the monthly installments specified,
in advance, on or before the first (1st) day of each month, without prior demand
and without offset or deduction, commencing on the Commencement Date. Should the
Commencement Date be a day other than the first (1st) day of a calendar month,
then the monthly installment of Minimum Annual Rental for the first partial
month shall be equal to one-thirtieth (1/30th) of the monthly installment of
Minimum Annual Rental for each day from the Commencement Date to the end of the
partial month.
7.2 ADJUSTMENT TO MINIMUM ANNUAL RENTAL. The Minimum Annual Rental
payable under Section 1.12 and this Article 7 shall be adjusted on each
anniversary date of the Commencement Date of this Lease ("Adjustment Date") to
reflect any increases in the cost of living in accordance with the "Index" (as
defined in Section 27.21 of this Lease), using as the base month ("Base Month")
the month ninety (90) days prior to the Commencement Date, and using as the
comparison month ("Comparison Month") the month ninety (90) days prior to the
Adjustment Date.
7.3 PERCENTAGE RENTAL.
(a) During the Term, Tenant shall pay to Landlord, as
provided below, the dollar amount by which the percent specified in Section
1.13 ("Percentage Rate") of Tenant's "Gross Sales" (as defined in subparagraph
(b) below) exceeds the Minimum Annual Rental paid by Tenant to Landlord during
each calendar year, or at Landlord's option, its fiscal year, of the Term
("Percentage Rental"). On or before the tenth (10th) day of each month during
the Term following the Commencement Date, Tenant shall pay to Landlord the
amount by which the Percentage Rate of Gross Sales during the preceding month
exceeds the installment of Minimum Annual Rental paid by Tenant for that month.
For the purpose of computing Percentage Rental, Gross Sales made during the
first partial month, if any, following the Commencement Date shall be added to
the Gross Sales made during tile first full calendar month (provided the first
partial month is within the same calendar (or fiscal) year as the first full
month) and Tenant shall pay to Landlord the amount by which the Percentage Rate
of Gross Sales during this entire period exceeds the monthly installments of
Minimum Annual Rental which were paid by Tenant during this period. Tenant shall
furnish to Landlord a certified statement of Gross Sales within ten (10) days
after the close of each calendar month and a certified annual statement,
including a monthly breakdown of Gross Sales, on or before the twentieth (20th)
day after the end of each year. Statements shall be in the form and certified in
the manner shown in Exhibit D attached to this Lease, which form Landlord may
revise from time to time. Statements shall include the Gross Sales of all
subtenants, licensees and concessionaires of Tenant. Following receipt by
Landlord of Tenant's certified annual statement, Landlord shall determine the
Gross Sales of Tenant for the preceding year and the amounts paid to Landlord as
Minimum Annual Rental and Percentage Rental and shall make an adjustment as
follows: If Tenant paid to Landlord an amount greater than the Percentage Rental
required to be paid for said year, Tenant shall be entitled to a credit against
Tenant's next payment(s) of Percentage Rental for the amount of the overpayment.
If Tenant paid an amount less than the Percentage Rental required to be paid,
the difference shall be paid to Landlord with the submission of said certified
annual statement. Percentage Rental shall be computed separately with respect to
each year. For the purpose of computing Percentage Rental, Tenant's Gross Sales
for any period during which Tenant does not continuously and uninterruptedly
conduct its business, as required by Article 11, shall be deemed to be Tenant's
Gross Sales for the corresponding period during the last year in which Tenant
operated continuously and uninterruptedly.
(b) The term "Gross Sales", as used in this Lease, shall
mean the gross selling price of all merchandise or services sold or rented 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 machine
as well as any business interruption or loss of income insurance proceeds
attributable to lost sales revenue receive by Tenant with respect to the
Premises, excluding therefrom the following: (i) The selling price of all
merchandise returned by customers and accepted for full credit; (ii) interest or
other charges paid by customers for extension of credit; (iii) receipts from
vending machines used solely by Tenant's employees; (iv) sales taxes, excise
taxes or gross receipts taxes imposed by governmental entities upon the sale of
merchandise or services, but only if collected from customers separately from
tile selling price and paid directly to the respective governmental entities;
and (v) proceeds from the sale of fixtures, equipment or property which are not
stock in trade. The exclusions listed in this subparagraph (b) shall be referred
to as "Exclusions from Gross Sales". All sales originating at the Premises shall
be deemed made and completed from the Premises even though bookkeeping or
payment of the account is
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transferred to another location for collection or filling of the sale or service
order and actual delivery of the merchandise is made from a location other than
the Premises. Each installment sale, credit sale or layaway sale shall be
treated as a sale for the full cash price at the time of such sale or deposit.
7.4 ADDITIONAL RENTAL. Tenant shall pay, as "Additional Rental",
all sums required to be paid by Tenant to Landlord pursuant to this Lease in
addition to Minimum Annual Rental and Percentage Rental (including, without
limitation, interest, late charges, Service Charges, reimbursement for
attorneys' fees and expenses and auditing costs). Landlord shall have the same
rights and remedies for the nonpayment of Additional Rental as it has with
respect to the nonpayment of Minimum Annual Rental. It is the intention of
Landlord and Tenant that the Minimum Annual Rental, Percentage Rental and
Additional Rental to be paid hereunder shall be paid to Landlord absolutely net
without deduction of any amount of any nature whatsoever, except as otherwise
expressly provided in this Lease.
7.5 PLACE OF PAYMENT. Tenant shall pay Minimum Annual Rental,
Percentage Rental and Additional Rental to Landlord at Landlord's Address for
Payments and Reports specified in Section 1.22, or to such other address and/or
person as Landlord may from time to time designate in writing to Tenant.
7.6 LATE PAYMENTS. If Tenant fails to pay when the same is due any
Minimum Annual Rental, Percentage Rental or Additional Rental, the unpaid
amounts shall bear interest at the maximum lawful rate from the date due to and
including the date of payment. In addition, Tenant acknowledges that the late
payment of any installment of Minimum Annual Rental, Percentage Rental or
Additional Rental will cause Landlord to incur certain costs and expenses, the
exact amount of which are extremely difficult or impractical to fix. These costs
and expenses may include, without limitation, administrative and collection
costs and processing and accounting expenses. Therefore, if any installment of
Minimum Annual Rental, Percentage Rental or Additional Rental is not received by
Landlord from Tenant within five (5) days after such installment is due, Tenant
shall immediately pay to Landlord a late charge equal to [***] for any
installment of Minimum Annual Rental due, and [***] for any installment of
Percentage Rental or Additional Rental due. Landlord and Tenant agree that this
late charge represents a reasonable estimate of the costs and expenses Landlord
will incur and is fair compensation to Landlord for its loss suffered by reason
of late payment by Tenant. Upon accrual, all such late charges shall be deemed
Additional Rental.
ARTICLE 8
TENANT FINANCIAL DATA
8.1 RECORDATION OF SALES. At the time of a sale or other
transaction, Tenant shall record the sale or other transaction either in a cash
register or computer with sealed continuous tape or by using any other method of
recording sequentially numbered purchases and keeping a cumulative total.
8.2 BOOKS AND RECORDS. For a period of three (3) years following the
submittal of its certified annual statement for each calendar or fiscal year,
Tenant shall keep and maintain full and accurate books of account and records
relative to transactions from the Premises in accordance with generally accepted
accounting principles consistently applied. The books of account and records
kept and maintained by Tenant for audit purposes shall include all records,
receipts, journals, ledgers and documents reasonably necessary to enable
Landlord or its auditors to perform a complete and accurate audit of Tenant's
Gross Sales and Exclusions from Gross Sales in accordance with generally
accepted accounting principles.
8.3 AUDITS. Landlord, at any time within three (3) years after
receipt of any certified annual statement and upon not less than fifteen (15)
days' prior written notice to Tenant, may cause an audit to be made of Tenant's
Gross Sales and Exclusions from Gross Sales and all of Tenant's records and
books necessary to audit such items. Tenant shall make all such books and
records available for the audit at the Premises or at Tenant's offices in the
state in which the Premises are situated. If the audit discloses an underpayment
of Percentage Rental, Tenant shall immediately pay to Landlord the amount of the
underpayment, with interest at the "Interest Rate", as defined in Section 27.18,
from the date the payment should have been made through and including the date
of payment. If the audit discloses an underreporting of Gross Sales in excess of
two percent (2%) of the reported Gross Sales, whether or not additional
Percentage Rental is due, then Tenant shall also immediately pay to Landlord all
reasonable costs and expenses incurred in the audit and in collecting the
underpayment, including auditing costs and attorneys' fees. If the audit
discloses an overpayment of Percentage Rental, Tenant shall be entitled to a
credit in the amount of the overpayment against the next payment(s) of
Percentage Rental due.
8.4 FINANCIAL STATEMENTS. Within fifteen (15) days after Landlord's
written request, Tenant shall furnish Landlord with financial statements
including, but not limited to, balance sheets, profit and loss statements,
income statements and statements of changes in financial condition reflecting
Tenant's current financial condition, certified by Tenant or its financial
officer. If Tenant is a publicly-traded corporation, delivery of Tenant's last
published financial information shall be satisfactory for purposes of this
Section 8.4. Any information obtained from Tenant's financial statements shall
be confidential and shall not be disclosed other than to carry out the purposes
of this Lease; provided, however, Landlord shall incur no liability for the
inadvertent disclosure of any such information. Landlord may divulge the
contents of any financial statements in connection with any financing
arrangement or sale of Landlord's interest in the Premises or Shopping Center or
in connection with any administrative or judicial proceedings.
*** Confidential treatment requested.
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ARTICLE 9
TAXES
9.1 REAL PROPERTY TAXES.
(a) As used in this Lease, the term "Taxes" shall include
any form of tax or assessment, license fee, license tax, tax or excise on
rental, or any other levy, charge, expense or imposition imposed by any Federal,
state, county or city authority having jurisdiction, or any political
subdivision thereof, or any school, agricultural, lighting, drainage or other
improvement or special assessment district (individually and collectively,
"Governmental Agencies") on any interest of Landlord or Tenant (including any
legal or equitable interest of Landlord or its mortgagee, if any) in the
Premises, the remainder of the Shopping Center or the underlying realty
including, but not limited to: (i) Any impositions (whether or not such
impositions constitute tax receipts to Governmental Agencies) in substitution,
partially or totally, of any impositions now or previously included within the
definition of real property taxes including, without limitation, those imposed
or required by Governmental Agencies to increase tax increments to Governmental
Agencies and for services such as fire protection, street, sidewalk and road
maintenance, refuse removal or other governmental services formerly provided
without charge to property owners or occupants; (ii) any impositions allocable
to or measured by the area of the Premises, the sales generated from the
Premises or any rental payable under this Lease; and (iii) any impositions upon
this Lease transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises. The term "Taxes" shall
not include Landlord's general income taxes, inheritance, estate or gift taxes.
(b) From and after the Commencement Date, Tenant shall pay
to Landlord, as Additional Rental, a share of the Taxes pursuant to subparagraph
(c) below. Taxes for any partial year shall be prorated. Landlord, at its
option, may collect Tenant's payment of its share of Taxes after the actual
amount of Taxes are ascertained or in advance, monthly or quarterly, based upon
estimated Taxes. If Landlord elects to collect Tenant's share of Taxes based
upon estimates, Tenant shall pay to Landlord from and after the Commencement
Date, and thereafter on the first (1st) day of each month or quarter during the
Term (as determined by Landlord), an amount estimated by Landlord to be the
monthly or quarterly Taxes payable by Tenant. Landlord may periodically adjust
the estimated amount. If Landlord collects Taxes based upon estimated amounts,
then following the end of each calendar year or, at Landlord's option, its
fiscal year, Landlord shall furnish Tenant with a statement covering the year
just expired showing the total Taxes payable by Tenant for that year and the
payments made by Tenant with respect to that year, as set forth above. If the
actual Taxes payable for that year exceed Tenant's payments for that year,
Tenant shall pay to Landlord the deficiency within ten (10) days after its
receipt of the statement. If Tenant's payments exceed the actual Taxes payable
for that year, Tenant shall be entitled to offset the excess against the next
payment(s) of Taxes that become due to Landlord.
(c) If the Premises and underlying realty are part of a
larger parcel for assessment purposes or are within a multi-level building
("larger parcel"), Tenant's share of the Taxes shall be determined by
multiplying all of the Taxes on the larger parcel, excluding Taxes on the
"Common Area" (as defined in Section 13.1), by a fraction, the numerator of
which shall be the Floor Area of the Premises and the denominator of which shall
be the Floor Area in the larger parcel which is occupied as of the commencement
of the applicable calendar or fiscal year, exclusive of the Common Facilities.
9.2 OTHER PROPERTY TAXES. Tenant shall pay, prior to delinquency,
all taxes, assessments, license fees and public charges levied, assessed or
imposed upon its business operation, trade fixtures, leasehold improvements,
merchandise and other personal property in, on or upon the Premises. If any such
items of property are assessed with property of Landlord, then the assessment
shall be equitably divided between Landlord and Tenant. Landlord shall
reasonably determine the basis of prorating and dividing any of these
assessments. No taxes, assessments, fees or charges referred to in this Section
9.2 shall be considered Taxes under the provisions of Section 9.1.
9.3 CONTESTING TAXES. If Landlord contests any Taxes levied or
assessed during the Term, Tenant shall pay to Landlord that portion of all costs
incurred by Landlord in connection with such contest, pursuant to the formula
set forth in Section 9.1(c) for the allocation of Taxes. If Landlord receives
a refund pursuant to its contest of any Taxes, then, provided Tenant has paid
its share of the total Taxes and its share of the costs incurred by Landlord in
connection with such contest as required by this Article 9, Landlord shall
reimburse Tenant that portion of the total refund prorated in the same manner as
set forth in Section 9.1(c).
ARTICLE 10
UTILITIES
10.1 TENANT'S PAYMENT OF UTILITY CHARGES. Tenant agrees to pay
directly to the appropriate utility company all charges for utility services
supplied to Tenant for which there is a separate meter and/or submeter to the
Premises. Tenant agrees to pay to Landlord its share of all charges for utility
services supplied to the Premises for which there is no separate meter or
submeter upon billing by Landlord of Tenant's share based on the reasonable
estimates of Landlord's consultant or engineer, or at Landlord's election Tenant
shall pay Landlord's cost for installing separate meters and shall thereafter
pay based upon such meters. If no such charges are established by Landlord, then
the costs of such utilities shall be included as part of Common Area Expenses.
Landlord shall have the right at any time and from time to time during the Term
to either continue to
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contract with the existing provider of any utility service for the Premises or
to contract with a different company to provide such service.
10.2 LANDLORD'S OPTION TO PROVIDE UTILITIES.
(a) Landlord shall have the option from time to time to
supply any and all utilities to the Premises. If Landlord shall elect to supply
any utilities to the Premises, Tenant will pay all charges, as Additional
Rental, for its requirements for such service tendered by Landlord. Tenant shall
pay Landlord, or Landlord's designated third party service provider, within (10)
days after delivery to Tenant of statements therefor at the applicable rates
determined by Landlord from time to time. Landlord agrees that such applicable
rates shall not exceed the "all-inclusive" rate which the Tenant would be
charged directly for the same service by the public utility company serving the
general area in which the Premises is located, but in no event shall the
applicable rate be less than Landlord's actual "all-inclusive" cost of providing
such service.
(b) Without limitation on the foregoing provisions of this
Section 10.2, Landlord may discontinue providing any utilities then being
provided by Landlord upon thirty (30) days' prior written notice to Tenant, in
which event Tenant shall obtain such utilities directly from the applicable
utility company, and be responsible for all of the costs therefor.
(c) If Landlord supplies any utilities to the Premises,
Landlord will require that Tenant at Tenant's expense maintain, repair and
replace any portion of the systems and equipment therefor exclusively serving
the Premises. Tenant acknowledges that the cost for maintenance and operation of
the systems and equipment required to deliver the utilities to the Premises (and
not maintained, repaired and replaced by Tenant pursuant to the immediately
preceding sentence) is a component of Common Area Expenses, as defined in
Section 13.5, and subject to reimbursement under Section 13.6.
(d) Tenant acknowledges that Landlord currently has elected
to supply electricity to the Premises. With respect to such utility service, in
each calendar or fiscal year, Tenant shall pay Landlord, as Additional Rental
(a) an annual amount in twelve (12) equal monthly installments together with
Minimum Annual Rental (the "Electrical Facility Contribution"), determined by
multiplying the amount set forth in Section 1.23 by the Floor Area of the
Premises, to reimburse Landlord for the cost of providing the electrical systems
necessary to supply electricity to the Premises, and (b) a one-time charge upon
execution of this Lease equal to the amount set forth in Section 1.24, as a
reimbursement to Landlord for the cost of the electrical meter servicing the
Premises ("Electrical Meter Reimbursement").
10.3 VENTILATING AND AIR-CONDITIONING. Exhibit "H" specifies the
obligations of Landlord and Tenant (other than those obligations set forth in
Article 13) regarding the ventilating and air-conditioning equipment and system
serving the Premises or the Shopping Center. Tenant covenants and agrees to pay
to Landlord, as Additional Rental and in the same manner as Minimum Annual
Rental is payable, all charges as the same may be adjusted from time to time,
and as more particularly set forth in said Exhibit H. Landlord, in its sole
discretion, shall have the right, from time to time, to alter the ventilating
and air conditioning systems and equipment serving the Shopping Center, or any
part thereof, and Tenant agrees to execute and deliver to Landlord such
documentation as may be required to effect such alteration.
10.4 NO LIABILITY OF LANDLORD. Landlord shall not be liable in
damages for any failure or interruption of any utility or service. No failure or
interruption of any utility or service shall entitle Tenant to terminate this
Lease or to discontinue making payment of Minimum Annual Rental, Percentage
Rental or Additional Rental. If Tenant fails to pay when due any charges
referred to in this Article 10, Landlord may pay the charge and Tenant shall
reimburse Landlord, as Additional Rental, for any amounts so paid by Landlord
within ten (10) days after demand therefor.
ARTICLE 11
TENANT'S CONDUCT OF BUSINESS
11.1 PERMITTED TRADE NAME AND USE. Tenant shall use the Premises
solely under the trade name specified in Section 1.4 and shall not use the
Premises under a different trade name without Landlord's prior written consent,
which consent shall not be unreasonably withheld. Tenant shall use the Premises
solely for the use specified in Section 1.14. Tenant acknowledges that Tenant's
agreement to use the Premises solely for the use specified in Section 1.14 is a
material inducement to Landlord to enter into this Lease, and that Tenant shall
not be permitted to change the use of the Premises without the prior written
consent of Landlord, which consent Landlord may grant or withhold in its sole
and absolute discretion. Tenant agrees that the foregoing provision is
reasonable in light of Landlord's legitimate interest in determining the mix of
uses which will be present in the Shopping Center.
11.2 COVENANT TO OPEN AND OPERATE. Tenant covenants to open for
business to the public in the Premises fully fixturized and stocked with
merchandise and inventory, on or before the Commencement Date. From and after
the Commencement Date, but subject to temporary closures necessitated by
casualty, condemnation or permitted remodeling, Tenant shall operate
continuously and uninterruptedly in the entire Premises the business which it is
permitted to operate under the provisions of this Lease and, at all times, shall
keep and maintain within
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the Premises an adequate stock of merchandise and trade fixtures to service and
supply the usual and ordinary requirements of its customers.
11.3 HOURS OF BUSINESS. From and after the Commencement Date, Tenant
shall keep the entire Premises continuously open for business during the days
and hours established by Landlord from time to time for the Shopping Center
generally, including, but not limited to, all holidays except Thanksgiving Day,
Christmas Day, New Year's Day and Easter Day. Subject to Article 17 and Section
27.25, Tenant shall pay to Landlord a Two Hundred Fifty Dollar ($250.00) per day
penalty for each day that Tenant fails to continuously remain open for business
during the hours previously established by Landlord. Tenant shall have its
window displays, exterior signs and exterior advertising displays adequately
illuminated continuously during those hours and days that the Premises are
required to be open for business to the public.
11.4 HOURS FOR DELIVERIES. Tenant shall use its best efforts to
require all deliveries, (exclusive of United Parcel Service and U.S. Postal
Service), loading, unloading and services to the Premises to be completed
between 7:00 a.m. and 10:00 a.m. each day. All deliveries, loading, unloading
and services to the Premises shall be accomplished within the service areas of
the Shopping Center.
11.5 RULES AND REGULATIONS. Tenant shall keep the Premises in a neat
and clean condition, free from any objectionable noises, odors or nuisances,
shall operate its business without unreasonable noise or vibration emanating
from the Premises, and shall comply with all applicable health, safety and
police laws, ordinances and regulations of any governmental authority having
jurisdiction over the Premises or the Shopping Center. Tenant shall not sell
merchandise from vending machines or allow any coin or token operated vending
machine on the Premises, except those exclusively used by employees and pay
telephones provided for the convenience of its customers. Tenant shall deposit
trash and rubbish only within receptacles approved by Landlord Tenant shall
cause trash receptacles to be emptied at Tenant's cost and expense; provided,
however, at Landlord's option, Landlord may provide trash removal services, the
cost of which shall be paid for by Tenant either (a) as a Common Area Expense,
or (b) pursuant to an equitable proration of said costs by Landlord. Tenant
shall not display or sell merchandise or allow carts, signs or any other object
to be stored or to remain outside the Premises. Tenant shall not erect any
aerial or antenna on the roof, exterior walls or any other portion of the
Premises. Tenant shall not solicit or distribute materials in the Common Area.
Landlord, from time to time, may establish further reasonable and
non-discriminatory rules and regulations for the Shopping Center, and Tenant
shall abide by same, Tenant shall neither conduct on the Premises, nor advertise
with respect to the Premises, any liquidation, "going out of business",
distress, "lost our lease" or similar sale.
11.6 ADVERTISING MEDIA. Tenant shall not affix upon the Premises any
sign, advertising placard, name, insignia, trademark, descriptive material or
other like item unless approved by Landlord in writing, in advance, in
accordance with Exhibit C. No advertising medium shall be utilized by Tenant
which can be heard or seen outside the Premises including, without limitation,
flashing lights, searchlights, loudspeakers, phonographs, radios or televisions.
Tenant shall not display, paint or place any handbill, bumper sticker or other
advertising device on any vehicle parked in the Common Area. Tenant shall not
distribute any handbills or other advertising matter in the Shopping Center.
Notwithstanding the above, Tenant shall erect signs at its own expense in
accordance with (a) the sign criteria established by Landlord, (b) the Final
Plans, and (c) all applicable laws, ordinances and regulations, and shall
maintain these signs in good condition and repair during the Term.
11.7 RADIUS RESTRICTION. During the Term, neither Tenant nor any
entity owned by or controlled directly or indirectly by or under common control
with Tenant, nor any shareholder or partner holding more than fifty percent
(50%) of the shares or partnership interest, as the case may be, of Tenant shall
own, operate or have any financial interest in any business similar to the
business of Tenant, as set forth in Section 1. 14, if such other business is
opened after the Date of Lease specified in Section 1.1 and its front door or
storefront opening is located within three (3) miles of the front door or
storefront opening of the Premises. Without limiting Landlord's remedies if
Tenant violates this covenant, Landlord, for so long as Tenant is operating the
other business, may include the gross sales (as the term Gross Sales is defined
in this Lease) of the other business in the Gross Sales made from the Premises
for the purpose of computing Percentage Rental. Landlord or its authorized
representative, at all reasonable times during the Term and for a period of at
least three (3) years after expiration or earlier termination of this Lease,
shall have the right to inspect, audit, copy and make extracts of the books,
records and accounts pertaining to such other business, in the manner set forth
in Section 8.3, for the purpose of determining and verifying the additional
Percentage Rental due to Landlord pursuant to this Section 11.7.
11.8 SHOPPING CENTER NAME. Tenant shall use the name of the Shopping
Center in its advertising as the address reference for the Premises. Tenant
shall not use the name of the Shopping Center for any other purpose. Landlord
reserves the right, in its sole discretion, to change the name and logo of the
Shopping Center at any time.
ARTICLE 12
MAINTENANCE, REPAIRS AND ALTERATIONS
12.1 LANDLORD'S MAINTENANCE OBLIGATIONS. Landlord shall maintain in
good condition and repair the foundations, roofs and exterior surfaces of the
exterior walls of all buildings (exclusive of doors, door frames, door checks,
windows, window frames and, unless Landlord elects to include cleaning of the
storefronts and storefront awnings of tenants of the Shopping Center as part of
Common Area maintenance pursuant to Section
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13.2 below, storefronts and storefront awnings); provided, however, if any
repairs or replacements are necessitated by the negligence or willful acts of
Tenant or anyone claiming under Tenant or by reason of Tenant's failure to
observe or perform any conditions or agreements contained in this Lease, or
caused by alterations, additions or improvements made by Tenant or anyone
claiming under Tenant, the cost of same shall be the sole responsibility of
Tenant. It is acknowledged by Tenant that the cost of some of Landlord's
maintenance obligations referenced in the preceding sentence shall be prorated
and paid as Common Area Expenses. Notwithstanding anything to the contrary
contained in this Lease, Landlord shall not be liable for failure to make
repairs required to be made by Landlord under the provisions of this Lease
unless Tenant has previously notified Landlord in writing of the need for such
repairs and Landlord has failed to commence and complete the repairs within a
reasonable period of time following receipt of Tenant's written notification.
Tenant waives the provisions of Sections 1941 and 1942 of the Civil Code of the
State of California, or any superseding statute, and of any other law permitting
Tenant to make repairs at Landlord's expense.
12.2 LANDLORD'S RIGHT OF ENTRY. Landlord, its agents, contractors,
servants and employees may enter the Premises following reasonable notice to
Tenant and Landlord's good faith efforts to coordinate such entry with Tenant's
on-site management so as to minimize interference with Tenant's business
operations (except in a case of emergency): (a) to examine the Premises; (b) to
perform any obligation or exercise any right or remedy of Landlord under this
Lease; (c) to make repairs, alterations, improvements or additions to the
Premises or to other portions of the Shopping Center as Landlord deems necessary
or desirable; (d) to perform work necessary to comply with laws, ordinances,
rules or regulations of any public authority or of any insurance underwriter;
and (e) to perform work that Landlord deems necessary to prevent waste or
deterioration in connection with the Premises should Tenant fail to commence
such repairs or, after commencing same, fail to diligently pursue such repairs
to completion within three (3) days after written demand by Landlord. If
Landlord makes any repairs which Tenant is obligated to make pursuant to the
terms of this Lease, Tenant shall pay the cost of such repairs to Landlord, as
Additional Rental, promptly upon receipt of a xxxx from Landlord for same. In
exercising its right of entry herein provided, Landlord shall not materially and
unreasonably interfere with the operation of Tenant's business on the Premises.
12.3 TENANT'S MAINTENANCE OBLIGATIONS. Tenant, at its expense, shall
keep the Premises and all utility facilities and systems exclusively serving the
Premises ("Tenant Utility Facilities") in first-class order, condition and
repair and shall make replacements necessary to keep the Premises and Tenant
Utility Facilities in such condition. All replacements shall be of a quality
equal to or exceeding that of the original. At the option of Landlord, (i)
Tenant shall contract with a service company approved by Landlord for the
regular (but not less frequently than quarterly) maintenance, repair and/or
replacement (when necessary) of the heating, ventilating and air conditioning
equipment serving the Premises and shall provide Landlord with a copy of any
service contract within ten (10) days following its execution, or (ii) Landlord
may contract with a service company of its own choosing (or provide such service
itself) for the maintenance, repair and/or replacement of the heating,
ventilating and air conditioning equipment serving the Premises and collect a
reserve or xxxx Tenant for the cost of same, as Additional Rental. The sum so
billed to Tenant shall become immediately due to Landlord. In either event,
Landlord may elect to be responsible for the replacement, as necessary, of the
heating, ventilating and air conditioning equipment or any elements, components
or portions thereof, in which event Landlord shall have the right to establish
and collect from Tenant, as Additional Rental, a reasonable reserve to be
maintained by Landlord and used for the purpose of paying the cost of such
replacement. Such reserve may, at Landlord's option, either be collected as part
of Common Area Expenses or billed to Tenant separately.
12.4 ALTERATIONS. After initially opening the Premises for business,
without first obtaining the written approval of Landlord in accordance with the
provisions of Exhibit C, Tenant shall not make or cause to be made to the
Premises or the Tenant Utility Facilities any addition, renovation, alteration,
reconstruction or change (collectively, "Alterations") (i) costing in excess of
[***], (ii) involving structural changes or additions, (iii) affecting the
exterior storefront, mechanical systems, fire sprinkler systems, exterior walls,
floors, ceilings or roof of the Premises, (iv) erecting or increasing the size
of an existing mezzanine, or (v) requiring or resulting in any penetration of
the roof, demising walls or floor of the Premises. All Alterations shall be
constructed in accordance with the provisions of Exhibit C.
ARTICLE 13
COMMON AREA
13.1 DEFINITION OF COMMON AREA. The term "Common Area", as used in
this Lease, shall mean all areas within the exterior boundaries of the Shopping
Center and adjacent streets, now or later made available for the general use of
Landlord and other persons entitled to occupy Floor Area in the Shopping Center
(including all landscaping, parking areas, parking structures, if any, and other
improvements and facilities), accordingly, without limiting the generality of
the foregoing, Landlord may include in the Common Area those portions of the
Shopping Center presently or later sold or leased to purchasers or tenants, as
the case may be, until the commencement of construction of the building(s)
thereon, at which time there shall be withdrawn from the Common Area those areas
not provided by the owner or tenant for common use. At Landlord's election,
Common Area also may include similar areas located within the exterior
boundaries of the Adjacent Center and adjacent streets (whether or not the same
is located on land constituting a separate legal parcel) and any "Shared Parking
Areas" (as defined in Section 13.5) designated by Landlord.
*** Confidential treatment requested.
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13.2 MAINTENANCE AND USE OF COMMON AREA. Landlord shall maintain the
Shopping Center in a first-class condition similar to other shopping centers in
Orange County, California, however, the manner in which the Shopping Center
shall be managed shall be determined by Landlord in its sole discretion. If any
owner or tenant of any portion of the Shopping Center maintains its own Common
Area (Landlord shall have the right to allow any purchaser or tenant to so
maintain its own Common Area and to exclude such purchaser or tenant from
participation in the payment of Common Area Expenses, as provided for in
Sections 13.5 and 13.6), then Landlord shall not have responsibility for the
maintenance of that portion of the Common Area. The use and occupancy by Tenant
of the Premises shall include the non-exclusive use of the Common Area (except
those portions of the Common Area on which have been constructed or placed
permanent or temporary kiosks, displays, carts and stands and except areas used
in the maintenance or operation of the Shopping Center) in common with Landlord
and the other tenants of the Shopping Center and their customers and invitees,
subject to rules and regulations concerning the use of the Common Area
established by Landlord from time to time.
13.3 CONTROL OF AND CHANGES TO COMMON AREA. Landlord shall have the
sole and exclusive control of the Common Area, and the right to make changes to
the Common Area. Landlord's rights shall include, but not be limited to, the
right to (a) restrain the use of the Common Area by unauthorized persons; (b)
utilize from time to time any portion of the Common Area for promotional,
entertainment and related matters; (c) place permanent or temporary kiosks,
displays, carts and stands in the Common Area and to lease same to tenants; (d)
temporarily close any portion of the Common Area for repairs, improvements or
Alterations, to discourage noncustomer use, to prevent dedication or an easement
by prescription or for any other reason deemed sufficient in Landlord's
reasonable judgment; and (e) renovate, upgrade or change the shape and size of
the Common Area or add, eliminate or change the location of improvements to the
Common Area including, without limitation, buildings, parking areas, roadways
and curb cuts, and to construct buildings on the Common Area. Landlord may
determine the nature, size and extent of the Common Area and whether portions of
same shall be surface, underground or multiple-deck, as well as make changes to
the Common Area from time to time which, in its opinion, are deemed desirable
for the Shopping Center.
13.4 PARKING. Tenant and its employees shall park their vehicles only
in the parking areas from time to time designated for that purpose by Landlord.
Without limiting the generality of the foregoing, if Landlord implements any
program related to parking, parking facilities or transportation facilities
including, but not limited to, any program of parking validation, employee
shuttle transportation during peak traffic periods or other program to limit,
control, enhance, regulate or assist parking by customers of the Shopping
Center, Tenant agrees to participate in the program and to pay its proportionate
share of the costs of the program under reasonable and nondiscriminatory rules
and regulations from time to time established by Landlord. Tenant shall furnish
Landlord with a list of its and its employees' vehicle license numbers at any
time during the Term within ten (10) days after Landlord's written request.
Tenant authorizes Landlord to tow, at Tenant's expense, any vehicle belonging to
Tenant or Tenant's employees parked in violation of these provisions and/or to
attach violation stickers or notices to any such vehicle. Tenant agrees to
assume responsibility for compliance by its employees with these parking
provisions and to indemnify and defend Landlord and its agents from and against
all cost, expense and liability arising from Landlord's reasonable enforcement
efforts. Tenant acknowledges that Tenant's customers shall use, in addition to
the on-grade parking within the Shopping Center, the off-site parking areas of
certain of the office parcels adjacent to the Shopping Center as designated from
time to time by Landlord ("Shared Parking Areas"). Tenant agrees to pay its
reasonably allocated share of the cost of the maintenance and operation of the
Shared Parking Areas, billed by Landlord as part of Common Area expenses or as
separately billed by the owners of such office parcels.
13.5 COMMON AREA EXPENSES. The term "Common Area Expenses", as used
in this Lease, shall mean all costs and expenses incurred by Landlord in (a)
operating, managing, policing, insuring, repairing and maintaining the Common
Area and the onsite management and/or security offices, merchants' association
offices, postal services, parking structures, if any, nonprofit community
buildings and child care centers located in the Shopping Center from time to
time ("Common Facilities"), (b) maintaining, repairing and replacing the
exterior surface of exterior walls (and storefronts and storefront awnings if
Landlord has elected to include the cleaning of same as part of Common Area
maintenance) and maintaining, repairing and replacing roofs of the buildings
from time to time constituting the Shopping Center, and (c) operating, insuring
(including reasonable reserves for deductibles and any self-insured retention),
repairing, replacing and maintaining all utility facilities and systems
including, without limitation, sanitary sewer lines and systems, fire protection
lines and systems, security lines and systems and storm drainage lines and
systems not exclusively serving the premises of any tenant or store ("Common
Utility Facilities"), mall furniture and equipment, seasonal and holiday
decorations, Common Area lighting fixtures, Shopping Center sign monuments and
directional signage. Common Area Expenses shall include, without limitation, the
following: Expenses for maintenance, landscaping, repaving, resurfacing,
repairs, replacements, painting, lighting, cleaning, trash removal, security,
fire protection and similar items; nonrefundable contributions toward reserves
for replacements other than equipment; depreciation or rental on equipment;
charges, surcharges and other levies related to the requirements of any Federal,
state or local governmental agency; expenses related to the Common Utility
Facilities; Taxes on the improvements and land comprising the Common Area;
public liability and property damage insurance on the Common Area; standard "all
risks" fire and extended coverage insurance with, at Landlord's option, an
earthquake damage endorsement covering the Common Facilities; Tenant's
reasonably allocated share of the costs of the maintenance and operation of the
Shared Parking Areas; and a sum payable to Landlord for administration and
overhead in an amount equal to [***] of the Common Area Expenses for the
applicable year. Specifically excluded from the Common Area Expenses are "Food
Court Expenses", as more particularly described in Section 13.7, below.
*** Confidential treatment requested.
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13.6 PRORATION OF COMMON AREA EXPENSES. Portions of the Shopping
Center are, or may be, owned or leased from time to time by various persons or
entities occupying freestanding facilities or other facilities containing a
substantial amount of Floor Area and contributing to the Common Area Expenses on
a basis other than that described herein (collectively, "Other Stores"). The
contributions, if any, received from the Other Stores towards the Common Area
Expenses shall be credited against the total Common Area Expenses and the
balance thereof shall be prorated in the following manner:
(a) From and after the Commencement Date, Tenant shall pay
to Landlord, on the first (1st) day of each calendar month, an amount estimated
by Landlord to be the monthly amount of Tenant's share of the Common Area
Expenses. The estimated monthly charge may be adjusted periodically by Landlord
on the basis of Landlord's reasonably anticipated costs.
(b) Following the end of each calendar year or, at
Landlord's option, its fiscal year, Landlord shall furnish to Tenant a statement
covering the calendar or fiscal year (as the case may be) just expired, showing
the actual Common Area Expenses for that year, the amount of Tenant's share of
the Common Area Expenses for, that year and the monthly payments made by Tenant
during that year for the Common Area Expenses. If Tenant's share of the Common
Area Expenses exceeds Tenant's prior payments, Tenant shall pay to Landlord the
deficiency within ten (10) days after receipt of such annual statement. If
Tenant's payments for the calendar year exceed Tenant's actual share of the
Common Area Expenses, and provided Tenant is not in arrears as to the payment
of any Minimum Annual Rental, Percentage Rental or Additional Rental, Tenant
may offset the excess against payments of Common Area Expenses next due
Landlord. An appropriate proration of Tenant's share of the Common Area Expenses
as of the Commencement Date and the expiration date of the Term shall be made.
(c) Tenant's share of the Common Area Expenses shall be
determined by multiplying the Common Area Expenses that remain after applying
the contributions, if any, paid by the Other Stores (less reserves, to the
extent available) by a fraction, the numerator of which is the number of square
feet of Floor Area in the Premises and the denominator of which is the number of
square feet of Floor Area in the Shopping Center and the Adjacent Center (if,
pursuant to Section 13.1 above, Landlord elects to include within the Common
Area those areas of the Adjacent Center provided for common use) occupied by
tenants as of the commencement of the applicable calendar year or fiscal year
(as the case may be) or, at Landlord's option, each calendar or fiscal quarter,
exclusive of the Floor Area occupied by the Other Stores and exclusive of the
Common Facilities.
(d) Notwithstanding anything contained in this Section 13.6
to the contrary, tenants in the Shopping Center (and, if applicable, the
Adjacent Center) that maintain, repair and replace the roofs located above their
premises shall not be included in the proration of the Common Area Expenses
relative to the roofs in the Shopping Center which are maintained by Landlord as
part of the Common Area, and the Floor Area of such premises shall be excluded
from the calculations made pursuant to Section 13.6(c) with respect to the
maintenance, repair and replacement of roofs.
13.7 FOOD COURT. Landlord has designated a portion of the Shopping
Center in which the Premises is located as a food court ("Food Court").
Notwithstanding any term or provision of the Lease, Landlord shall have the
right to change the shape, size, location, number and extent of the improvements
to the Food Court and eliminate, add or relocate any improvements to any portion
of the Food Court, including, without limitation, any seating areas, restrooms,
trash facilities, dishwashing facilities, temporary or permanent kiosks,
displays or stands.
"Food Court Expenses", as used in this Lease, shall mean all costs and
expenses incurred by Landlord in connection with the operation, management,
policing, repair, maintenance and replacement of the Food Court, including, but
not limited to, costs and expenses related to (i) the common seating areas
located in the Food Court (including, but not limited to cleaning of the Food
Court tables, chairs and floors and trash removal), (ii) all facilities
servicing the Food Court (including, but not limited to employee restrooms,
customer restrooms, trash facilities and dishwashing facilities, (iii) cleaning
of common greaseshafts and fans in the Food Court, and (iv) a reasonable
allowance to Landlord for Landlord's supervision of the operation, repair,
maintenance and replacement of the Food Court in an amount equal to fifteen
percent (15%) of the total of the Food Court Expenses for each year. The Food
Court Expenses shall be prorated among, and paid by, only those tenants located
within or near the Food Court and selling food or beverages ("Food Court
Tenants"). If Tenant is located within or near the Food Court and selling food,
Tenant's share of the Food Court Expenses shall be determined by multiplying the
Food Court Expenses by a fraction, the numerator of which is the number of
square feet of Floor Area in the Premises and the denominator of which is the
number of square feet of Floor Area of stores located within or near the Food
Court and selling food or beverages which are from time to time occupied and
open for business as of the commencement of each calendar or fiscal year (as
determined by Landlord).
Tenant shall be provided statements for, and annual adjustments shall be
made to, the Food Court Expenses in the same general manner provided for in the
Lease with respect to Common Area Expenses as set forth in Section 13.6 (a) and
(b) of this Lease. Notwithstanding the foregoing, Tenant's obligation to pay its
share of the Food Court Expenses shall in no way affect Tenant's obligations to
pay its share of Common Area Expenses pursuant to this Article 13.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not assign, sublet,
enter into franchise, license or concession agreements, change ownership or
voting control, or otherwise transfer (including any transfer by operation of
law) all or any part of this Lease, Tenant's interest in the Premises or
Tenant's business (collectively, "Assignment" or "Assign") without first
procuring the written consent of Landlord, which consent shall not be
unreasonably withheld, subject to the terms, covenants and conditions contained
in this Lease. Under no circumstances shall Tenant mortgage, encumber, pledge or
hypothecate this Lease or its interest in the Premises. If Tenant is a
corporation which, under the then current guidelines published by the
Commissioner of Corporations of the State of California, is not deemed a public
corporation or is an unincorporated association or partnership, the transfer,
assignment or hypothecation, whether in one (1) transaction or a series of
transactions, of any stock or interest in such corporation, association or
partnership in excess of an aggregate of forty-nine percent (49%) shall be
deemed an Assignment within the meaning and provisions of this Article 14.
14.2 PROCEDURES. Should Tenant desire to enter into an Assignment,
Tenant shall request, in writing, Landlord's consent to the proposed Assignment
at least sixty (60) days before the intended effective date of the proposed
Assignment, which request shall include the following: (a) full particulars of
the proposed Assignment including its nature, effective date, terms and
conditions, (b) a description of the identity, net worth and previous business
experience of the proposed transferee (c) a complete business plan prepared by
the proposed transferee; and (d) any further information relevant to the
proposed Assignment which Landlord shall reasonably request.
Within thirty (30) days after receipt of Tenant's request for consent to
the proposed Assignment together with all of the above-required information,
Landlord shall respond and shall have the right either to: (i) consent to the
proposed Assignment; or (ii) refuse to consent to the proposed Assignment.
14.3 STANDARD FOR CONSENT. Tenant agrees that Landlord may refuse its
consent to the proposed transfer on any reasonable grounds, and (by way of
example and without limitation) Tenant agrees that it shall be reasonable for
Landlord to withhold its consent if any of the following situations exist or may
exist: (a) the use to which the Premises will be put by the proposed transferee
is different than the use set forth in Section 1.14; (b) the proposed
transferee's financial condition is inadequate to support all of the financial
and other obligations of Tenant under this Lease; (c) the business reputation or
character of the proposed transferee is not reasonably acceptable to Landlord;
(d) the proposed transferee is not likely to conduct on the Premises a business
of a quality substantially equal to that conducted by Tenant; (e) the nature of
the proposed transferee's proposed or likely use of the Premises would impose an
increased burden on the Common Area, or involve any increased risk of the
presence, use, release or discharge of Hazardous Materials, as defined in
Section 27.29; (f) Landlord has not received assurances acceptable to Landlord
in its sole discretion that all past due amounts owing from Tenant to Landlord,
if any, will be paid and all other defaults on the part of Tenant, if any, will
be cured prior to the effective date of the proposed Assignment; (g) in
Landlord's reasonable business judgment the annual Percentage Rental Landlord
anticipates receiving from the proposed transferee is less than the average
annual Percentage Rental Landlord has received from Tenant during the two (2)
years immediately prior to the proposed Assignment; and (h) in Landlord's
reasonable business judgment the Assignment would breach any covenant of
Landlord respecting radius, location, use or exclusivity relating to the
Shopping Center, or, in Landlord's sole discretion, conflict with, be
incompatible with or have an adverse impact on the tenant mix of the Shopping
Center.
Any purported Assignment without Landlord's prior written consent shall
be void and of no force or effect and shall not confer any estate or benefit on
anyone. Further, any such purported Assignment shall constitute an event of
default by Tenant which shall not be susceptible to cure or rectification
pursuant to Section 19.4 hereof. A consent to one (1) Assignment by Landlord
shall not be deemed to be a consent to any subsequent Assignment to any other
party.
14.4 PERMITTED ASSIGNMENT. Provided Tenant is a publicly-traded
corporation, Tenant shall have the right without Landlord's consent, to enter
into an Assignment to any subsidiary corporation of Tenant, Tenant's parent
corporation or to any corporation succeeding to substantially all of the assets
Tenant as a result of a consolidation or merger, or to a corporation to which
all or substantially all of the assets of Tenant have been sold ("Permitted
Assignment"), provided that within fifteen (15) days after the effective date of
any such transfer the assignee or sublessee executes and delivers to Landlord an
instrument meeting the requirements of Section 14.6, and containing an express
assumption of all of Tenant's obligations under this Lease.
14.5 NO RELEASE. No Assignment, or Permitted Assignment, whether with
or without Landlord's consent, shall relieve Tenant or ?? Guarantor hereunder
from its covenants and obligations under this Lease.
14.6 FORM. Any Assignment shall be evidenced by an instrument in
form and content satisfactory to Landlord and executed by Tenant and the
transferee, assignee, sublessee, licensee or concessionaire, as the case may be.
14.7 RENTAL INCREASE. If Tenant assigns its interest in this Lease or
sublets the Premises, other than in the case of a Permitted Assignment, the
Minimum Annual Rental then payable by Tenant shall be increased, effective as of
the date of such Assignment, to the greater of (a) an amount equal to the total
of the Minimum
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Annual Rental plus Percentage Rental required to be paid by Tenant pursuant to
this Lease during the twelve (12) month period immediately preceding the request
for Landlord's consent to the Assignment, or (b) a sum equal to the [***], as
the same shall be agreed upon by Landlord and Tenant. In the event Landlord and
Tenant are unable to agree upon the then fair market rental value of the
Premises sixty (60) days prior to the effective date of the Assignment, [***].
14.8 REASONABLENESS OF RESTRICTIONS. Tenant acknowledges and agrees
that each of the rights of Landlord set forth in Section 14.3, above, in the
event of a request for Landlord's consent to an Assignment is a reasonable
restriction for purposes of California Civil Code, Section 1951.4.
14.9 NO LIABILITY. Landlord shall have no liability for damages to
Tenant or to any proposed transferee if it is adjudicated that Landlord's
consent has been unreasonably withheld and such unreasonable withholding of
consent constitutes a breach of this Lease or other duty to Tenant, the proposed
transferee or any other person on the part of Landlord. In such event, Tenant's
sole remedy shall be to have the proposed Assignment declared valid as if
Landlord's consent had been given.
ARTICLE 15
PROMOTIONAL SERVICES AND ADVERTISING
15.1 ASSOCIATION OR PROMOTIONAL SERVICE. Tenant shall either (a)
maintain membership in a merchants' association ("Association") or (b)
participate in a promotional service ("Service") to be provided by Landlord. If
Landlord has established an Association, Landlord may at any time discontinue
the Association and establish a Service. If Landlord has established a Service,
Landlord may at any time discontinue the Service and establish an Association.
15.2 SERVICE. The purpose of a Service shall be to promote the
Shopping Center for the benefit of all of the tenants therein. Landlord may
select a committee to render advice to Landlord in connection with advertising
or promotional activities. As compensation for directing the Service and for
payment of the salaries of a promotional director, secretary and other personnel
who, in Landlord's judgment, will effectively carry out the purposes of the
Service, Landlord shall receive a sum not greater than [***] of the assessments
collected and/or contributed by Landlord pursuant to the provisions of this
Article 15.
15.3 ASSOCIATION. In the event an Association is established, Tenant
shall become a member of the Association, maintain its membership in good
standing, abide by the Association bylaws and regulations, pay its share of any
other assessments which might be imposed by the Association and cooperate in the
activities of the Association throughout the Term. If there is any conflict
between the bylaws and/or regulations of the Association and the provisions of
this Lease, this Lease shall control. The provisions of this Section 15.3 shall
be deemed to be covenants for the benefit of Landlord and the Association and
may be enforced by each of them. Further, Landlord agrees to become a member of
the Association and to pay, on a noncumulative basis, an assessment equal to
[***] of all monies collected by the Association from its members (excluding
Landlord) each fiscal or calendar year (as the case may be).
15.4 PROMOTIONAL CHARGE AND INITIAL PROMOTIONAL ASSESSMENT. Upon
execution of this Lease, Tenant shall pay to Landlord, who shall receive same on
behalf of the Association or the Service, as the case may be, an "Initial
Promotional Assessment" in the amount specified in Section 1.15. Thereafter,
Tenant shall pay to Landlord, as Tenant's share of costs of operation of the
Association or Service, as the case may be, an annual charge ("Promotional
Charge"). The Promotional Charge payable by Tenant for the first full or partial
calendar or fiscal year (as determined by Landlord) of the Term shall be the sum
determined by multiplying the number of square feet of Floor Area in the
Premises by the sum specified in Section 1.16. The Promotional Charge payable
by Tenant for each full or partial calendar or fiscal year thereafter shall be
adjusted in accordance with the formula contained in the following paragraph.
On each anniversary of the Commencement Date ("Adjustment Date"), the
Promotional Charge shall be increased to reflect the greater of (i) any change
in the cost of living, in accordance with the Index, as set forth in
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Section 27.21 of this Lease, using as the Base Month the month ninety (90) days
prior to the Commencement Date, and using as the Comparison Month the month
ninety (90) days prior to the Adjustment Date, and (ii) [***] per square foot of
Floor Area in the Premises.
15.5 PAYMENT. Tenant's obligation to pay the Promotional Charge shall
commence upon the Commencement Date. The Promotional Charge shall be paid by
Tenant, as Additional Rental, (i) within ten (10) days of billing for same or,
at Landlord's option, (ii) monthly or quarterly. In addition, Tenant agrees to
pay, as Additional Rental, any and all charges incurred in the collection of the
Promotional Charge from Tenant, including attorneys' fees and costs of suit, if
any, which the Association or Landlord may incur, as the case may be, in
connection with the collection of same, plus interest at the maximum lawful rate
from and after the due date to and including the date of payment.
15.6 ADVERTISING. In addition to the Promotional Charge and Initial
Promotional Assessment, from and after the Commencement Date Tenant shall expend
each calendar year for advertising a sum not less than [***] of its Gross Sales
for the calendar year. Tenant shall designate the location of the Premises by,
reference to the Shopping Center by name in its advertising. The advertising
shall be in newspapers, tabloids, direct mailings or other media covering the
trade area served by the Shopping Center. Further, the advertising shall include
annual participation in at least one (1) tabloid for direct mailing sponsored by
the Association or Service. Tenant shall furnish to Landlord with its annual
report of Gross Sales, and at any time upon request by Landlord, a certified
statement showing the amounts expended for advertising. If Tenant fails to so
advertise, Tenant shall pay to Landlord, upon demand, the difference between (a)
the amount actually expended by Tenant for advertising during the preceding
calendar year, and (b) the amount which Tenant was required to expend for
advertising during the applicable calendar year, as required pursuant to this
Article 15.
ARTICLE 16
INSURANCE
16.1 TENANT'S INSURANCE. Tenant, at its sole cost and expense,
commencing on the earlier of the date of [***], or (ii) the date [***], and
continuing during the Term, shall procure, pay for and keep in full force and
effect the following types of insurance, in at least the amounts and in the
forms specified below:
(a) Comprehensive or commercial general liability insurance
with coverage limits of not less than the combined single limit for bodily
injury, personal injury, death and property damage liability per occurrence
specified in Section 1.17 or the limit carried by Tenant, whichever is greater,
insuring against any and all liability of the insureds with respect to the
Premises or arising out of the maintenance, use or occupancy of the Premises or
related to the exercise of any rights of Tenant pursuant to this Lease, subject
to increases in amount as Landlord may reasonably require from time to time. All
such liability insurance shall specifically insure the performance by Tenant of
the indemnity agreement as to liability for injury to or death of persons and
injury or damage to property set forth in Section 16.6. Further, all such
liability insurance shall include, but not be limited to, personal injury,
blanket contractual, cross-liability and severability of interest clauses,
products/completed operations, broad form property damage, independent
contractors, owned, nonowned and hired vehicles and, if alcoholic beverages are
served, sold, consumed or obtained in the Premises, liquor law liability.
(b) Worker's compensation coverage as required by law,
including employer's liability coverage, with a limit of not less than [***] and
waiver by Tenant's insurer of any right of subrogation against Landlord and
Landlord's property manager by reason of any payment pursuant to such coverage.
(c) Business interruption or loss of income insurance in
amounts sufficient to insure Tenant's business operations for a period of not
less than one (1) year.
(d) Plate glass insurance covering all plate glass on the
Premises at full replacement value. Tenant shall have the option either to
insure this risk or to self-insure.
(e) Insurance covering all of Tenant's Work, Tenant's
leasehold improvements, Alterations permitted under Article 12, trade fixtures,
merchandise and personal property from time to time in, on or about the Premises
in an amount not less than their full replacement value from time to time,
including replacement cost, endorsement, providing protection against any peril
included within the classification Fire and Extended Coverage, sprinkler damage,
vandalism, malicious mischief and such other additional perils as covered in an
"all risks" standard insurance policy. 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 17.
(f) Any insurance policies designated necessary by Landlord
with regard to Tenant's, or Tenant's contractors', construction of Tenant's
Work, as well as with regard to the construction of Alterations including, but
not limited to, contingent liability and "all risks" builders' risk insurance,
in amounts acceptable to Landlord.
16.2 POLICY FORM. All policies of insurance required of Tenant herein
shall be issued by insurance companies with general policy holder's rating of
not less than A and a financial rating of not less than Class X as
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rated in the most current available "Best's Key Rating Guide", and which are
qualified to do business in the State of California. All such policies, except
for the Worker's Compensation coverage, name and shall be for the mutual and
joint benefit and protection of Landlord, Tenant and Landlord's agents and
mortgagee(s) or beneficiary(ies), as additional insureds. The policies
described in subparagraphs (c) and (e) of Section 16.1 shall also name Landlord
and Landlord's mortgagee(s) or beneficiary(ies) as loss payees. Executed copies
of the policies of insurance or certificates thereof shall be delivered to
Landlord prior to Tenant, its agents or employees entering the Premises for any
purpose. Thereafter, executed 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 policy. All policies of insurance delivered to Landlord must
contain a provision that the company writing the policy will give to Landlord
thirty (30) days' prior written notice of any cancellation or lapse or the
effective date of any reduction in the amounts of insurance. All policies
required of Tenant herein shall be endorsed to read that such policies are
primary policies and any insurance carried by Landlord or Landlord's property
manager shall be noncontributing with such policies. No policy required to be
maintained by Tenant shall have a deductible greater than Twenty-Five Thousand
Dollars (S25,000.00) unless approved in writing by Landlord.
16.3 BLANKET POLICIES. Notwithstanding anything to the contrary
contained in this Article 16, Tenant's obligation to carry insurance may be
satisfied by coverage under a so-called blanket policy or policies of insurance;
provided, however, that the coverage afforded Landlord will not be reduced or
diminished and the requirements set forth in this Lease are otherwise satisfied
by such blanket policy or policies.
16.4 INCREASED PREMIUMS DUE TO USE OF PREMISES. Tenant shall not do
any act in or about the Premises which will tend to increase the insurance rates
upon the Premises or the Shopping Center of which the Premises are a part.
Tenant agrees to pay to Landlord, upon demand, the amount of any increase in
premium for insurance resulting from Tenant's use of the Premises, whether or
not Landlord shall have consented to the act on the part of Tenant. If Tenant
installs upon the Premises any electrical equipment which constitutes an
overload of the electrical lines servicing the Premises, Tenant, at its own
expense, shall make whatever changes are necessary to comply with the
requirements of the insurance underwriters and any appropriate governmental
authority.
16.5 REIMBURSEMENT OF INSURANCE PREMIUMS BY TENANT. Landlord, at all
times from and after Substantial Completion of the Premises, shall maintain in
effect during the Term a policy or policies of insurance covering the building
of which the Premises are a part (including boiler and machinery) in an amount
not less than [***] of the full replacement cost (exclusive of
the cost of excavations, foundations and footings) or the amount of insurance
Landlord's mortgagee(s) or beneficiary(ies) may require Landlord to maintain,
whichever is the greater, providing protection against any peril generally
included in the classification "Fire and Extended Coverage", loss of rental
income insurance and such other additional insurance as covered in an "all
risks" standard insurance policy, with earthquake coverage insurance if deemed
necessary by Landlord in Landlord's sole judgment or if required by Landlord's
mortgagee(s) or beneficiary(ies) or by any Federal, state, county, city or local
authority. Landlord's obligation to carry this insurance may be brought within
the coverage of any so-called blanket policy or policies of insurance carried
and maintained by Landlord. From and after the Commencement Date, Tenant agrees
to pay to Landlord, as Additional Rental, its share of the cost to Landlord of
this insurance, including reasonable reserves for deductibles and any
self-insured retention. The cost of such insurance for any partial year of the
Term shall be prorated. Payment shall be made in the same manner set forth for
payment of Taxes in Section 9.1 (b). Tenant's share of the premiums for this
insurance shall be a fractional portion of the premiums, the numerator of which
shall be the Floor Area of the Premises and the denominator of which shall be
the Floor Area of all areas which are covered by this insurance and are occupied
as of the commencement of the applicable calendar or fiscal year, exclusive of
the Common Facilities.
16.6 INDEMNITY. "Landlord" for the purposes of this Section 16.6
shall mean and include Landlord and Landlord's directors, officers,
shareholders, agents and employees. To the fullest extent permitted by law,
Tenant covenants with Landlord that Landlord shall not be liable for any damage
or liability of any kind or for any injury to or death of persons or damage to
property of Tenant or any other person occurring from and after Substantial
Completion of the Premises (or such earlier date if Tenant is given earlier
access to the Premises) from any cause whatsoever related to the use, occupancy
or enjoyment of the Premises by Tenant or any person thereon or holding under
Tenant including, but not limited to, damages resulting from any labor dispute.
Tenant shall pay for, defend (with an attorney approved by Landlord), indemnify,
and save Landlord harmless against and from any real or alleged damage or injury
and from all claims, judgments, liabilities, costs and expenses, including
attorneys' fees and costs, arising out of or connected with Tenant's use of the
Premises and its facilities, or any repairs, Alterations or improvements
(including original improvements and fixtures specified as Tenant's Work) which
Tenant may make or cause to be made upon the Premises, any breach of this Lease
by Tenant and any loss or interruption of business or loss of rental income
resulting from any of the foregoing; provided, however (and though Tenant shall
in all cases accept any tender of defense of any action or proceeding in which
Landlord is named or made a party and shall, notwithstanding any allegations of
negligence or misconduct on the part of Landlord, defend Landlord as provided
herein), Tenant shall not be liable for such damage or injury to the extent and
in the proportion that the same is ultimately determined to be attributable to
the negligence or misconduct of Landlord. This obligation to indemnify shall
include all of Landlord's attorneys' fees, litigation costs, investigation costs
and court costs and all other costs, expenses and liabilities incurred by
Landlord or its counsel from the first notice that any claim or demand is to be
made or may be made. Tenant's obligations under this Section 16.6 shall survive
the termination of this Lease.
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16.7 WAIVER OF SUBROGATION. Except to the extent that insurance
required to be maintained by Tenant pursuant to this Article 16 covers loss to
Landlord, Landlord and Tenant each waive any rights each may have against the
other on account of any loss or damage occasioned to Landlord or Tenant, as the
case may be, their respective property, the Premises or its contents, or to
other portions of the Shopping Center arising from any liability, loss, damage
or injury caused by fire or other casualty for which property insurance is
carried or required to be carried pursuant to this Lease. The insurance policies
obtained by Landlord and Tenant pursuant to this Lease shall contain
endorsements waiving any right of subrogation which the insurer may otherwise
have against the noninsuring party. If Landlord has contracted with a third
party for the management of the Shopping Center, the waiver of subrogation by
Tenant herein shall also run in favor of such third party.
16.8 FAILURE BY TENANT TO MAINTAIN INSURANCE. If Tenant refuses or
neglects to secure and maintain insurance policies complying with the provisions
of this Article 16, Landlord may secure the appropriate insurance policies and
Tenant shall pay, upon demand, the cost of same to Landlord, as Additional
Rental.
16.9 SUFFICIENCY OF COVERAGE. Neither Landlord nor any of Landlord's
agents make any representation that the types of insurance and limits specified
to be carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing contained herein shall limit Tenant's liability under this Lease.
ARTICLE 17
DAMAGE
17.1 INSURED CASUALTY. In the case of damage by fire or other perils
covered by the insurance specified in Section 16.5, the following provisions
shall apply:
(a) Within a period of sixty (60) days after all applicable
permits have been obtained, Landlord shall commence such repair, reconstruction
and restoration of the Premises as Landlord, in its reasonable business
judgment, deems necessary, and shall diligently prosecute the same to
completion; provided, however, that Tenant, at its cost, shall repair and
restore all items of Tenant's Work and replace its stock in trade, trade
fixtures, furniture, furnishings and equipment. Tenant shall commence this work
promptly upon delivery of possession of the Premises to Tenant and shall
diligently prosecute same to completion.
(b) Notwithstanding the foregoing, if the Premises is
totally destroyed, or if the Shopping Center is destroyed to an extent of at
least fifty percent (50%) of the then full replacement cost thereof as of the
date of destruction, then (i) if the destruction occurs during the last two (2)
years of the Term, Landlord and Tenant shall each have the right to terminate
this Lease, and (ii) if the destruction occurs prior to the last two (2) years
of the Term, Landlord shall have the right to terminate this Lease. In each
case, the termination right shall be exercised by the terminating party giving
written notice to the other party within thirty (30) days after the date of
destruction. If Landlord terminates this Lease pursuant to (ii) above, then upon
Landlord's receipt of any insurance proceeds payable by reason of such
destruction, Landlord shall pay to Tenant from such proceeds an amount equal to
the unamortized book value of Tenant's leasehold improvements paid for by Tenant
and Tenant's fixtures and equipment which are not capable of removal from the
Premises, reduced by the amount of proceeds of any insurance carried or required
to be carried by Tenant on such items pursuant to Article 16.
17.2 UNINSURED CASUALTY. If the Premises or the Shopping Center are
damaged as a result of any casualty not covered by the insurance specified in
Section 16.5, Landlord, within ninety (90) days following the date of such
damage, shall commence repair, reconstruction or restoration of the Premises to
the extent provided herein and shall diligently prosecute the same to completion
or, if the damage to the Premises, or to the buildings in the Shopping Center
excluding the Premises, and excluding any freestanding buildings, is greater
than ten percent (10%) of the total replacement cost, Landlord may elect within
said ninety (90) days not to so repair, reconstruct or restore the damaged
property, in which event, at Landlord's option, this Lease shall cease and
terminate upon the expiration of such ninety (90) day period. In the event
Landlord elects to restore the Premises, Tenant shall have the same repair,
restoration and replacement obligations it has pursuant to Section 17.1 (a).
17.3 DISTRIBUTION OF PROCEEDS. In the event of the termination of
this Lease pursuant to this Article 17, all proceeds from the Fire and Extended
Coverage insurance carried pursuant to Article 16 and all insurance covering
Tenant's Work and Tenant's leasehold improvements, but excluding proceeds for
trade fixtures, merchandise, signs and other personal property, shall be
disbursed and paid to Landlord.
17.4 ABATEMENT. In the event of repair, reconstruction and
restoration, as provided in this Article 17, and, provided Tenant has maintained
the business interruption or loss of income insurance required pursuant to
Article 16, to the extent that the proceeds of such business interruption or
loss of income insurance may be exhausted during the period of repair,
reconstruction and restoration, Minimum Annual Rental payable hereunder shall be
thereafter abated proportionately with the degree to which Tenant's use of the
Premises is impaired during the remainder of the period of repair,
reconstruction and restoration; provided, however, the amount of Minimum Annual
Rental abated pursuant to this Section 17.4 shall in no event exceed the amount
of loss of rental income insurance proceeds actually received by Landlord.
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
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management, and the obligation of Tenant to pay Percentage Rental and Additional
Rental shall remain in full force and effect. Tenant shall not be entitled to
any compensation or damage from Landlord for loss of use of the whole or any
part of the Premises or the building of which the Premises are a part, Tenant's
personal property or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration.
17.5 WAIVER OF TERMINATION. Tenant waives any statutory rights of
termination which may arise by reason of any partial or total destruction of the
Premises.
ARTICLE 18
EMINENT DOMAIN
18.1 TAKING. The term "Taking", as used in this Article 18, shall
mean an appropriation or taking under the power of eminent domain by any public
or quasi-public authority or a voluntary sale or conveyance in lieu of
condemnation but under threat of condemnation.
18.2 TOTAL TAKING. In the event of a Taking of the entire Premises,
this Lease shall terminate and expire as of the date possession is delivered to
the condemning authority and Landlord and Tenant shall each be released from any
liability accruing pursuant to this Lease after the date of such termination,
but Minimum Annual Rental, Percentage Rental and Additional Rental for the last
month of Tenant's occupancy shall be prorated and Landlord shall refund to
Tenant any Minimum Annual Rental and Additional Rental paid in advance.
18.3 PARTIAL TAKING. If there is a Taking of (a) more than
twenty-five percent (25%) of the Floor Area of the Premises or, (b) a portion of
the Premises and, regardless of the amount taken, the remainder of the Premises
is not one (1) undivided parcel of property, either Landlord or Tenant may
terminate this Lease, as of the date Tenant is required to vacate a portion of
the Premises, upon giving notice in writing of such election to the other party
within thirty (30) days after receipt by Tenant from Landlord of written notice
that a portion of the Premises has been so appropriated or taken.
18.4 AWARD. The entire award or compensation in any such condemnation
proceeding, whether for a total or partial Taking, or for diminution in the
value of the leasehold or for the fee, shall belong to and be the property of
Landlord; and, in any event, the holder of any mortgage or deed of trust
encumbering the Shopping Center shall have a first priority to the extent of the
unpaid balance of principal and interest on its loan. Without derogating the
rights of Landlord or said lender under the preceding sentence, Tenant shall be
entitled to recover from the condemning authority such compensation as may be
separately awarded by the condemning authority to Tenant or recoverable from the
condemning authority by Tenant in its own right for the taking of trade fixtures
and equipment owned by Tenant and for the expense of removing and relocating its
trade fixtures and equipment, but only in the event that the compensation
awarded to Tenant shall be in addition to and shall not diminish the
compensation awarded to Landlord as provided above.
18.5 CONTINUATION OF LEASE. In the event of a Taking, if Landlord and
Tenant elect not to terminate this Lease as provided above (or have no right to
so terminate), Landlord agrees, at Landlord's cost and expense as soon as
reasonably possible after the Taking, to restore the Premises (to the extent of
the condemnation proceeds) on the land remaining to a complete unit of like
quality and character as existed prior to the Taking and, thereafter, Minimum
Annual Rental shall be reduced on an equitable basis, taking into account the
relative value of the portion taken as compared to the portion remaining, and
Landlord shall be entitled to receive the total award or compensation in such
proceedings.
ARTICLE 19
DEFAULTS BY TENANT
19.1 EVENTS OF DEFAULT. Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental or any other charge payable by Tenant pursuant to this Lease for a period
of five (5) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute), or should Tenant be in default in the prompt and
full performance of any other of its promises, covenants or agreements herein
contained for more than a reasonable time (in no event to exceed ten (10) days)
after written notice thereof from Landlord to Tenant specifying the particulars
of the default (provided, however, any notice shall be in lieu of, and not in
addition to, any notice required under Section 1161 of the Code of Civil
Procedure of California or any similar, superseding statute), or should Tenant
vacate or abandon the Premises, or should Tenant make any general assignment for
the benefit of creditors, or should there be filed against Tenant a petition to
have Tenant adjudged a bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, same is dismissed within sixty (60) days), or should Tenant
institute any proceedings under the Bankruptcy Code or any similar or successor
statute, code or act, or should an appointed trustee or receiver take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease where possession is not restored to Tenant within thirty
(30) days, or should substantially all of Tenant's assets located at the
Premises or Tenant's interest in this Lease be attached or judicially seized
where the seizure is not discharged within thirty (30) days, then Landlord may
treat the occurrence of any one (1) or more of the foregoing events as a breach
of this Lease and, in addition to any or all other rights or remedies of
Landlord by law provided, Landlord shall have the right, at
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Landlord's option, without further notice or demand of any kind to Tenant or any
other person, (a) to declare the Term ended and to re-enter and take possession
of the Premises and remove all persons therefrom, or (b) without declaring this
Lease terminated and without terminating Tenant's right to possession, to
re-enter the Premises and occupy the whole or any part 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) even though it may have
re-entered the Premises as provided in subparagraph (b) above, to thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises. In any case in which Landlord shall re-enter and occupy the whole or
any part of the Premises, by unlawful detainer proceedings or otherwise,
Landlord, at its option, may repair, alter, subdivide or change the character of
the Premises from time to time in such manner as Landlord deems best, may relet
the Premises or any part thereof and receive the rents therefor, and none of
such actions shall constitute a termination of this Lease, a release of Tenant
from any liability hereunder, or result in the release or exoneration of any
Guarantor. Landlord shall not be deemed to have terminated this Lease or the
liability of Tenant to pay any Minimum Annual Rental, Percentage Rental,
Additional Rental or other charges later accruing by any re-entry of the
Premises pursuant to Section 19.1 (b) above, 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.
19.2 TERMINATION OF LEASE. Should Landlord elect to terminate this
Lease pursuant to the provisions of Sections 19.1 (a) or (c) above, Landlord may
recover from Tenant, as damages, the following: (a) The worth at the time of
award of any unpaid rental which had been earned at the time of the termination,
plus (b) the worth at the time of award of the amount by which the unpaid rental
which would have been earned after termination until the time of award exceeds
the amount of rental loss Tenant proves could have been reasonably avoided, plus
(c) the worth at the time of award of the amount by which the unpaid rental for
the balance of the Term after the time of award exceeds the amount of rental
loss that Tenant proves could be reasonably avoided, plus (d) any other amounts
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, but
not limited to, any costs or expenses incurred by Landlord in (i) retaking
possession of the Premises, including reasonable attorneys' fees therefor, (ii)
maintaining or preserving the Premises after any default, (iii) preparing the
Premises for reletting to a new tenant, including repairs or alterations to the
Premises, (iv) leasing commissions, or (v) any other costs necessary or
appropriate to relet the Premises, plus (e) at Landlord's election, any 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 of California.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest at the maximum lawful rate. As used in
subparagraph (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
situated nearest to the location of the Shopping Center at the time of award
plus [***].
19.3 DEFINITION OF RENTAL. For purposes of this Article 19 only, the
term "rental" shall be deemed to be Minimum Annual Rental, Percentage Rental,
Additional Rental and all other sums required to be paid by Tenant pursuant to
the terms of this Lease. All sums, other than Minimum Annual Rental, shall, for
the purpose of calculating any amount due under the provisions of Section
19.2(c) above, be computed on the basis of the average monthly amount accruing
during the immediately preceding sixty (60) month period, except that if it
becomes necessary to compute these sums before the sixty (60) month period has
occurred, then these sums shall be computed on the basis of the average monthly
amount accruing during the shorter period.
19.4 NONMONETARY DEFAULTS. Notwithstanding any other provision of
this Article 19, if the default complained of, other than a default for the
payment of monies, cannot be rectified or cured within the period requiring
rectification or curing, as specified in the written notice relating to the
default, then, as to a default susceptible to being cured, the default shall be
deemed to be rectified or cured if Tenant, within the notice period, shall have
commenced to rectify or cure the default and shall thereafter diligently and
continuously prosecute same to completion.
19.5 ASSIGNMENT OF RENTS AND PROFITS. In the event of default by
Tenant hereunder, Tenant hereby grants to and confers upon Landlord the right,
power and authority, at Landlord's sole option and without affecting any of
Landlord's other rights or remedies hereunder, to collect all rents and profits
received by Tenant as a result of the possession by Tenant of the Premises. Such
amounts shall include, but shall not be limited to, amounts due under sublease,
license or concession arrangements. Upon any such default, Landlord shall have
the right to collect such rents and profits, including those past due and
unpaid. The collection of such rents and profits shall not cure, waive or
satisfy any default or notice of default hereunder.
ARTICLE 20
DEFAULTS BY LANDLORD
20.1 LANDLORD'S LIABILITY. If Landlord fails to perform any of the
covenants, provisions or conditions contained in this Lease on its part to be
performed within thirty (30) days after written notice of default (or if more
than thirty (30) days shall be required because of the nature of the default, if
Landlord shall fail to diligently proceed to commence to cure the default after
written notice), then Landlord shall be liable to Tenant for all damages
sustained by Tenant as a direct result of Landlord's breach and Tenant shall not
be entitled to terminate this Lease as a result thereof. It is expressly
understood and agreed that any judgment against Landlord resulting
*** Confidential treatment requested.
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from any default or other claim under this Lease shall be satisfied only out of
the net rents, issues, profits and other income actually received from the
operation of the Shopping Center, and Tenant shall have no claim against
Landlord (as Landlord is defined in Section 16.6) or any of Landlord's personal
assets for satisfaction of any judgment with respect to this Lease.
20.2 CURE BY ASSIGNEE. If any part of the Premises is at any time
subject to a first mortgage or a first deed of trust, and this Lease or the
rentals due from Tenant hereunder are assigned by Landlord to a mortgagee,
trustee or beneficiary ("Assignee" for purposes of this Article 20 only) and
Tenant is given written notice of the assignment including the post office
address of Assignee, then Tenant shall also give written notice of any default
by Landlord to Assignee, specifying the default in reasonable detail and
affording Assignee a reasonable opportunity to make performance for and on
behalf of Landlord. If and when Assignee has made performance on behalf of
Landlord, the default shall be deemed cured.
ARTICLE 21
SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE
21.1 SUBORDINATION. Upon written request of Landlord, Landlord's
mortgagee, the beneficiary of a deed of trust of Landlord or a lessor of
Landlord, Tenant will subordinate its rights pursuant to this Lease in writing
(a) to the lien of any mortgage, deed of trust or the interest of any lease in
which Landlord is the lessee (or, at Landlord's option, cause the lien of said
mortgage, deed of trust or the interest of any lease in which Landlord is the
lessee to be subordinated to this Lease), (b) to the Agreements referred to in
Article 25, (c) upon any building hereafter placed upon the land of which the
Premises are a part, and (d) to all advances made or hereafter to be made upon
the security thereof.
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 encumbering the Premises, or should a
lease in which Landlord is the lessee be terminated, Tenant shall attorn to the
purchaser or lessor under such lease upon any foreclosure, sale or lease
termination and recognize the purchaser or lessor as Landlord under this Lease,
provided that the purchaser or lessor shall acquire and accept the Premises
subject to this Lease.
21.3 TENANT'S CERTIFICATE. Tenant agrees, upon not less than ten (10)
days prior notice by Landlord, to execute, acknowledge and deliver to Landlord,
a statement in writing in substantially the form of Exhibit "F" hereto or in
such other form as may be required by Landlord's mortgagee or beneficiary
("Tenant's Certificate"). It is intended that any Tenant's Certificate delivered
pursuant hereto may be relied upon by Landlord, any prospective tenant of the
Premises, any current or prospective mortgagee or beneficiary, or by any other
party who may reasonably rely on such statement. At Landlord's option, the
failure to deliver such Tenant's Certificate within such time shall be a default
under this Lease by Tenant, and it shall be conclusively presumed, and shall
constitute a representation and warranty by Tenant, that (i) this Lease is in
full force and effect without modification, and (ii) Landlord is not in breach
or default of any of its obligations under the Lease.
ARTICLE 22
SECURITY DEPOSIT
22.1 SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall
deposit with Landlord the sum specified in Section 1.19 ("Security Deposit").
The Security Deposit shall be held by Landlord, without obligation or liability
for payment of interest thereon, as security for the faithful performance by
Tenant of all of the terms of this Lease to be observed and performed by Tenant.
Landlord shall not be required to keep the Security Deposit separate from its
general funds.
22.2 APPLICATION OF SECURITY DEPOSIT. Should Tenant be in default of
any provision of this Lease at any time during the Term hereof, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have at
law or in equity, apply the Security Deposit or any portion thereof same toward
payment of Minimum Annual Rental, Percentage Rental, Additional Rental or to any
loss or damage sustained by Landlord due to the default on the part of Tenant.
Within five (5) days after written demand by Landlord, Tenant shall deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to the
original sum deposited, and Tenant's failure to do so shall constitute a
material default under this Lease.
22.3 REFUND. Should Tenant perform all of its obligations under this
Lease, the Security Deposit or any balance thereof then remaining shall be
returned to Tenant within sixty (60) days of the expiration of the Term or the
earlier termination of this Lease. Tenant hereby expressly waives the benefit of
any statutory right to the return of any unused portion of the Security Deposit
earlier than sixty (60) days after the expiration of the Term or earlier
termination of this Lease.
22.4 SALE OF PREMISES. Landlord may deliver the Security Deposit to
the purchaser of Landlord's interest in the Premises and Landlord shall then be
discharged from any further liability with respect to the Security Deposit. This
Section 22.4 shall also apply to any subsequent transfer of Landlord's interest
in the Premises.
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ARTICLE 23
QUIET ENJOYMENT
Upon Tenant's payment of Minimum Annual Rental, Percentage Rental and
Additional Rental and its observation and performance of all of the covenants,
terms and conditions of this Lease to be observed and performed by Tenant,
Tenant shall peaceably and quietly hold and enjoy the Premises from and after
delivery thereof to Tenant; subject, however, to (a) the rights of the parties
as set forth in this Lease, (b) any mortgage or deed of trust to which this
Lease is subordinate, (c) any ground or underlying leases, agreements and
encumbrances to which this Lease is subordinate, (d) all matters of record, and
(e) disturbances, odors and similar inconveniences which are commonly associated
with shopping centers of the type and size of the Shopping Center and/or with
tenants located in such shopping centers.
ARTICLE 24
NOTICES
Every notice, demand or request (collectively "Notice") required
hereunder or by law to be given by either party to the other shall be in
writing. Every provision of this Lease which provides that either party shall
notify the other of any particular matter shall be governed by this Section.
Notices shall be given by personal service or by United States certified or
registered mail, postage prepaid, return receipt requested, or by telegram,
mailgram or same-day or overnight private courier, addressed to the party to be
served at the address indicated in Section 1.22 or such other address as the
party to be served may from time to time designate in a Notice to the other
party. Notice personally served shall be effective when delivered to the party
upon whom such Notice is served. If served by registered or certified mail,
Notice shall be conclusively deemed served on the date shown on the return
receipt, but if delivery is refused or the Notice is unclaimed, Notice shall
conclusively be deemed given forty eight (48) hours after mailing. If served by
telegram, mailgram or private courier, Notice to the addressee shall be
conclusively deemed given as confirmed by the telegraphic agency or private
courier service making delivery. Copies of any Notice shall be sent to the
addresses, if any, designated for service of copies of Notices in Section 1.22;
but the inadvertent failure to serve a copy of a Notice, either to the address
so designated or in the manner provided in this Section, shall not render
service of Notice invalid if the original Notice is served in accordance with
this Section. Notice given by facsimile or telecopy shall not be effective
unless receipt of such Notice is acknowledged by the recipient in writing, in
which case the effective date of such Notice shall be the date of such written
acknowledgement.
ARTICLE 25
TITLE OF LANDLORD
Landlord covenants that, as of the date of this Lease, there are no
liens upon its estate other than (a) covenants, conditions, restrictions,
easements, ground leases, mortgages or deeds of trust (collectively,
"Agreements"); (b) liens and encumbrances which do not prevent Tenant from using
the Premises as permitted by this Lease; (c) the effect of any zoning laws of
the city, county and state where the Shopping Center is situated, and (d)
general and special taxes not delinquent. Tenant agrees that (i) as to its
leasehold estate, it and all persons in possession or holding under it will
conform to and will not violate the terms of the Agreements or any matters of
record, and (ii) this Lease is subordinate to the Agreements and any amendments
or modifications thereto; provided, however, if the Agreements are not of record
as of the date of this Lease, then this Lease shall automatically become
subordinate to the Agreements upon recordation so long as the Agreements do not
prevent Tenant from using the Premises for the use set forth in Section 1.14.
Tenant further agrees to execute and return to Landlord, within ten (10) days of
written demand by Landlord, an agreement in recordable form subordinating this
Lease to the Agreements.
ARTICLE 26
SHOPPING CENTER REMODELING
At any time during the Term, Landlord may remodel or expand, in any
manner, the existing Shopping Center, which work may include the addition of
shops and/or the addition of new buildings to the Shopping Center (collectively,
"Remodeled Center"). If Landlord deems it necessary for construction personnel
to enter the Premises in order to construct the Remodeled Center, Landlord shall
give Tenant no less than fifteen (15) days' prior notice and Tenant shall allow
such entry. Landlord shall use reasonable efforts to complete the work affecting
the Premises in an efficient manner so as not to interfere unreasonably with
Tenant's business. Tenant shall not be entitled to any damages or to reduction
in Minimum Annual Rental, Percentage Rental or Additional Rental for any
interference or interruption of Tenant's business upon the Premises or for any
inconvenience caused by such construction work. Landlord shall have the right to
use a portion of the premises to accommodate any structures required for the
Remodeled Center. If, as a result of Landlord utilizing a portion of the
Premises for such purpose, there is a permanent increase or decrease in the
Floor Area of the Premises of one percent (1%) or more, there shall be a
proportionate adjustment of Minimum Annual Rental and all other charges based on
Floor Area. During the course of construction, Tenant shall continue to pay
Minimum Annual Rental, Percentage Rental and Additional Rental.
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ARTICLE 27
MISCELLANEOUS
27.1 WAIVER. Any waiver by either party of a breach by the other
party of a covenant of this Lease shall not be construed as a waiver of a
subsequent breach of the same covenant. The consent or approval by either party
to anything requiring such party's consent or approval shall not be deemed a
waiver of such party's right to withhold consent or approval of any subsequent
similar act. No breach of a covenant of this Lease shall be deemed to have been
waived by the other party unless the waiver is in writing and is signed by such
party.
27.2 RIGHTS CUMULATIVE. Except as provided herein to the contrary,
and subject to the specific limitations contained in Article 20, the respective
rights and remedies of the parties specified in this Lease shall be cumulative
and in addition to any rights and remedies not specified in this Lease.
27.3 ENTIRE AGREEMENT LIMITATION OF ACTIONS. It is understood that
there are no oral or written agreements or representations between the parties
hereto affecting this Lease and this Lease supersedes and cancels any and all
previous negotiations, arrangements, representations, brochures, agreements and
understandings, if any, between Landlord and Tenant. Confirming the
understandings and agreements described in this Section 27.3, Tenant agrees to
execute and deliver to Landlord Tenant's Estoppel in the form and within the
content of Exhibit G attached hereto ("Tenant's Estoppel") concurrently with
Tenant's execution and delivery of this Lease. Any claim, demand, cause of
action or defense of any kind by Tenant which is based on or arises in
connection with this Lease, the negotiations prior to its execution, or any
asserted statement, representation, arrangement, agreement or understanding
between Landlord and Tenant which is not expressly stated in this Lease shall be
barred unless Tenant commences an action thereon, or interposes in a legal
proceeding a defense based thereon, within six (6) months after the date of the
asserted inaction or omission, or the date of the occurrence of the event or
action to which the claim, demand, cause of action or defense relates, whichever
applies.
27.4 NO REPRESENTATION. Landlord reserves the absolute right to
effect such other tenancies in the Shopping Center as Landlord, in the exercise
of its sole business judgment, shall determine to best promote the interests of
the Shopping Center. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or number of tenants shall, during the Term
of this Lease, occupy any space in the Shopping Center.
27.5 AMENDMENTS IN WRITING. No provision of this Lease may be amended
except by an agreement in writing signed by Landlord and Tenant.
27.6 NO PRINCIPAL/AGENT RELATIONSHIP. Nothing contained in this Lease
shall be construed as creating the relationship of principal and agent or of
partnership or joint venture between Landlord and Tenant.
27.7 LAWS OF CALIFORNIA TO GOVERN. This Lease shall be governed by
and construed in accordance with the laws of the State of California without
giving effect to the choice of law provisions thereof.
27.8 SEVERABILITY. If any provision of this Lease or the application
of such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.
27.9 SUCCESSORS. All rights and obligations of Landlord and Tenant
under this Lease shall extend to and bind the respective heirs, executors,
administrators and the permitted concessionaires, successors, subtenants and
assignees of the parties. If there is more than one (1) Tenant hereunder, each
shall be bound jointly and severally by the terms, covenants and agreements
contained in this Lease.
27.10 TIME OF THE ESSENCE. Except for the delivery of possession of
the Premises to Tenant, time is of the essence of all provisions of this Lease
of which time is an element.
27.11 WARRANTY OF AUTHORITY. If Tenant is a corporation or
partnership, each individual executing this Lease on behalf of the corporation
or partnership represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of the corporation or partnership and
that this Lease is binding upon the corporation or partnership. If Tenant is a
corporation, Tenant hereby covenants and warrants that (a) Tenant is a duly
qualified corporation and all steps have been taken prior to the date hereof to
qualify Tenant to do business in the State of California, and (b) all franchise
and corporate taxes have been paid to date.
27.12 MORTGAGE CHANGES. Tenant shall not unreasonably with its consent
to changes or amendments to this Lease requested by the holder of a mortgage or
deed of trust or such similar financing instrument encumbering Landlord's fee
interest in the Premises so long as such change does not materially alter the
economic terms of this Lease or materially diminish the rights, or materially
increase the obligations, of Tenant
27.13 WAIVER OF RIGHTS OF REDEMPTION. Tenant waives any and all rights
of redemption granted under any present and future laws in the event Landlord
obtains the right to possession of the Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease or otherwise.
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27.14 NO IMPLICATION OF EXCLUSIVE USE. Nothing contained in this Lease
shall be deemed to give Tenant an express or implied exclusive right to operate
any particular type of business in the Shopping Center.
27.15 BROKERS. Tenant represents and warrants that it has not had any
dealings with any realtors, brokers or agents in connection with the negotiation
of this Lease, except as may be specifically set forth in Section 1.21, and
agrees to pay any realtors, brokers or agents not referenced in Section 1.21 and
to hold Landlord harmless from the failure to pay any realtors, brokers or
agents and from any cost, expense or liability for any compensation, commission
or charges claimed by any other realtors, brokers or agents claiming by, through
or on behalf of Tenant with respect to this Lease and/or the negotiation hereof.
27.16 NO RECORDING. Tenant shall not record this Lease or any short
form memorandum of this Lease.
27.17 TRANSFER OF LANDLORD'S INTEREST. Should Landlord sell, exchange
or assign this Lease (other than a conditional assignment as security for a
loan), then Landlord, as transferor, shall be relieved of any and all
obligations on the part of Landlord accruing under this Lease from and after the
date of such transfer provided that Landlord's successor in interest shall
assume such obligations from and after such date. No holder of a mortgage or
deed of trust to which this Lease is subordinate shall be responsible in
connection with the Security Deposit unless the mortgagee or holder of such deed
of trust actually receives the Security Deposit.
27.18 INTEREST ON PAST DUE OBLIGATIONS. Except where another rate of
interest is specifically provided for in this Lease, any amount due from either
party to the other under this Lease which is not paid when due, shall bear
interest at the rate per annum ("Interest Rate") equal to the prime interest
rate charged by Xxxxx Fargo Bank plus two (2) percentage points (but in no event
to exceed the maximum lawful rate) from the date ten (10) days after such amount
was originally due to and including the date of payment.
27.19 RIGHT TO SHOW PREMISES. During the last one hundred twenty (120)
days of the Term or earlier termination of this Lease, Landlord shall have the
right to go upon the Premises to show same to prospective tenants or purchasers
and to post appropriate signs, during normal business hours and upon reasonable
notice to Tenant.
27.20 LIENS. Tenant shall pay all costs for work performed by or on
account of it and shall keep the Premises and the Shopping Center free and clear
of mechanics' liens or any other liens. Tenant shall give Landlord immediate
notice of any lien filed against the Premises or the Shopping Center as a result
of any work of improvement performed by or on behalf of Tenant. Tenant shall
immediately cause any lien to be discharged or removed of record by either
paying the amount thereof or recording a statutory lien release bond in an
amount equal to one hundred fifty percent (150%) of the amount of said lien. If
Tenant fails to do so, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies available to Landlord under this
Lease, to either pay and discharge such lien, without regard to the validity
thereof, or procure and cause to be recorded a statutory lien release bond and
to (a) collect from Tenant as Additional Rental; or (b) deduct from any Tenant
Improvement Allowance or any other amount payable by Landlord to Tenant under
this Lease (i) all costs incurred by Landlord in paying and discharging such
lien, or in procuring such bond, and (ii) all expenses incurred by Landlord in
connection with such lien, including attorneys' fees and costs, recording fees
and administrative costs and expenses.
27.21 INDEX. Wherever in this Lease there is a reference to the
"Index", such reference shall refer to the following:
(a) The "Index", as used in this Lease, shall be deemed to
mean The United States Department of Labor, Bureau of Labor Statistics Consumer
Price Index for Urban Wage Earners and Clerical Workers, Los
Angeles-Anaheim-Riverside Average, Subgroup "All Items", (1982-1984 = 100). If
at any time there shall not exist the Index in the format recited herein,
Landlord shall substitute any official index published by the Bureau of Labor
Statistics or successor or similar governmental agency as may then be in
existence and shall, in Landlord's opinion, be most nearly equivalent thereto.
(b) The sum to be increased in accordance with the
provisions of the Index shall be increased using the following formula: such sum
shall be increased by a percentage equal to the percentage increase, if any, in
the Index published for the Comparison Month over the Index published for the
Base Month; provided, however, in no event shall said sum be less than that
which was due immediately preceding the date of adjustment.
27.22 FAILURE TO SUBSTANTIALLY COMPLETE PREMISES. Notwithstanding
anything to the contrary contained herein, (a) if for any reason whatsoever
Substantial Completion of the Premises has not occurred on or before the last
day of the twenty-fourth (24th) month following the Date of Lease, or (b) if
Landlord should at any time postpone or abandon the development or construction
of the Shopping Center or that portion of the Shopping Center in which the
Premises are located, then either party may elect to terminate this Lease by
giving thirty (30) days' notice of such election to the other party. If such
notice is given, this Lease and the rights and obligations of the parties
pursuant to this Lease shall cease and terminate without the need for the
execution of any further or other instrument but, if Landlord shall request,
Tenant shall execute an instrument in recordable form confirming the termination
of this Lease and of Tenant's release and surrender all right, title and
interest in and to the Premises under this Lease or otherwise. If this Lease is
terminated pursuant to this Section 27.22, neither party
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shall have any further or additional rights, remedies, claims or liability
arising out of this Lease or the termination of this Lease.
27.23 INDEPENDENT CONTRACTORS. Whenever in this Lease it provides that
Landlord shall perform certain work or services, Landlord shall be entitled to
contract with an independent contractor to perform said work or services or may
provide the services itself.
27.24 TRADE FIXTURES, PERSONAL PROPERTY AND ALTERATIONS. Upon the
expiration or earlier termination of the Term, Tenant shall remove from the
Premises all of Tenant's trade fixtures, furniture, equipment, signs,
improvements, additions and Alterations to the extent such items are not
permanently affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to leave the Premises
in a neat and clean condition. Tenant may encumber or finance its movable
fixtures and equipment installed in the Premises, and no such encumbrance or
financing shall be deemed an Assignment, provided such encumbrance or financing
creates a security interest in such movable fixtures and equipment, only, and
confers no interest in the Premises. All trade fixtures, signs and other
personal property installed in or attached to the Premises by Tenant must be new
when so installed or attached.
27.25 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
(except financial) beyond the reasonable control of the party obligated to
perform, shall excuse the performance by that party for a period equal to the
prevention, delay or stoppage, except the obligations imposed with regard to
Minimum Annual Rental, Percentage Rental and Additional Rental to be paid by
Tenant pursuant to this Lease; provided the party prevented, delayed or stopped
shall have given the other party written notice thereof within thirty (30) days
of such event causing the prevention, delay or stoppage. Notwithstanding
anything to the contrary contained in this Section 27.25, in the event any work
performed by Tenant or Tenant's contractor results in a strike, lockout and/or
labor dispute, the strike, lockout and/or labor dispute shall not excuse the
performance by Tenant of the provisions of this Lease.
27.26 TERMINATION AND HOLDING OVER. This Lease shall terminate without
further notice upon the expiration of the Term. Tenant shall have no right to
extend or renew this Lease upon the expiration of the Term. Upon the expiration
or earlier termination of the Term, Tenant shall peaceably and quietly surrender
the Premises broom-clean and in the same condition (including, at Landlord's
option, the demolition and removal of any improvements made by Tenant to the
Premises as part of Tenant's Work or otherwise) as the Premises were in upon
delivery of possession of same to Tenant by Landlord, reasonable wear and tear
and any damage to the Premises Which Tenant is not required to repair pursuant
to Article 17 excepted. Should Tenant hold over in the Premises beyond the
expiration or earlier termination of this Lease, the holding over shall not
constitute a renewal or extension of this Lease or give Tenant any rights under
this Lease. In such event, Landlord may, in its sole discretion, treat Tenant as
a tenant at will, subject to all of the terms and conditions in this Lease,
except that Minimum Annual Rental shall be an amount equal to the greater of (a)
[***] times the sum of Minimum Annual Rental and Percentage Rental which was
payable by Tenant for the twelve (12) month period immediately preceding the
expiration or earlier termination of this Lease, or (b) the then currently
scheduled [***]. In the event Tenant fails to surrender the Premises upon the
expiration or earlier termination of this Lease, Tenant shall indemnify and hold
Landlord harmless from all loss or liability which may accrue therefrom
including, without limitation, any claims made by any succeeding tenant founded
on or resulting from Tenant's failure to surrender. Acceptance by Landlord of
any Minimum Annual Rental, Percentage Rental or Additional Rental after the
expiration or earlier termination of this Lease shall not constitute a consent
to a holdover hereunder, constitute acceptance of Tenant as a tenant at will, or
result in a renewal of this Lease.
27.27 ATTORNEYS' FEES AND PROCESSING CHARGES. In the event that, at
any, time after the date of this Lease, either Landlord or Tenant shall
institute any action or proceeding against the other relating to the provisions
of this Lease or any default hereunder, the party not prevailing in such action
or proceeding shall reimburse the prevailing party for its actual attorneys'
fees, and all fees, costs and expenses incurred in connection with such action
or proceeding, including, without limitation, any post-judgment fees, costs or
expenses incurred on any appeal or in collection of any judgment.
If at the request of Tenant or in connection with any such transaction
initiated by Tenant, Landlord shall prepare, review or execute any amendment,
modification, consent to Assignment, approval, fixture subordination, waiver or
other agreement or instrument relating to this Lease or the Premises, or any
Extension Amendment or New Lease pursuant to Section 28.3 of this Lease if
Tenant has been granted an option to extend the Term, Tenant agrees to pay to
Landlord, as Additional Rental, (i) a reasonable processing charge in accordance
with the schedule of charges from time to time established by Landlord, and (ii)
Landlord's reasonable attorneys' fees and expenses incurred in connection with
the evaluation and documentation thereof. Landlord may, at its option, require
the payment of all or a portion of such charges and/or fees in advance.
27.28 SERVICE CHARGE. Tenant acknowledges that Tenant's failure to
submit any required document, certificate, report, statement of Gross Sales,
insurance policy or certificate as and when required in this Lease will cause
Landlord to incur additional costs of administration, and agrees that in the
event Tenant fails to submit any required document, certificate, report,
statement of Gross Sales, insurance policy or certificate as and when required
in this Lease, Tenant shall pay to Landlord, as Additional Rental, a "Service
Charge" in the amount
*** Confidential treatment requested.
-24-
26
of [***] for each week or portion thereof that said failure continues. Tenant
agrees that such Service Charge shall not constitute damages, and that neither
Tenant's payment of such Service Charge nor Landlord's acceptance of such
payment shall result in a cure of any default under this Lease, or waiver of any
default under this Lease by Landlord.
27.29 HAZARDOUS MATERIALS. Tenant, at its sole cost and expense, shall
comply with all laws relating to the storage, use, handling and disposal of
hazardous, toxic or radioactive matter including, without limitation, those
materials identified in Section 25501(k) of the California Health and Safety
Code, as amended from time to time (collectively, "Hazardous Materials"). In the
event Tenant intends or does store, use, handle or dispose of any Hazardous
Materials, Tenant shall notify Landlord in writing at least ten (10) days prior
to their first appearance on the Premises and Tenant's failure to do so shall
constitute a default under the Lease. Such notification shall include
identification (type and common name) and quantities of all Hazardous Materials,
or any combination thereof, which are or intended to be stored, used, handled or
disposed of on, under or about the Premises. Landlord may, at any time or from
time to time, require Tenant to conduct monitoring or evaluation activities with
respect to Hazardous Materials on the Premises, at Landlord's sole discretion,
and at Tenant's sole cost and expense, performed by environmental specialists
approved in advance by Landlord. Such monitoring and/or evaluation activity may
include, without limitation, soil testing, air testing, production waste stream
analysis, and if necessary, in Landlord's sole discretion, groundwater testing.
In the event Tenant intends to store, use, handle or dispose of Hazardous
Materials, Tenant shall complete, execute and deliver to Landlord an
Environmental Questionnaire and Disclosure Statement, in Landlord's then current
form ("Environmental Questionnaire"), prior to the execution of this Lease or
ten (10) days prior to the first appearance of the Hazardous Materials on the
Premises. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. Tenant shall update and resubmit to
Landlord the Environmental Questionnaire periodically as required by Landlord
and immediately if material changes occur in the nature or content of Hazardous
Materials being stored, used, handled or disposed of on the Premises.
Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with, true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises which may be filed or
prepared by or on behalf of, or delivered to or served upon, Tenant: reports
filed pursuant to any self-reporting requirements, reports filed pursuant to any
applicable laws or this Lease, all permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices. In
addition, Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with, true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises which may be filed or
prepared by or on behalf of, or delivered to or served upon, Tenant: all orders,
reports, notices, listings and correspondence (even those which may be
considered confidential) of or concerning the release, or threatened release,
investigation of, compliance, clean up, remedial and corrective action, and
abatement of Hazardous Materials whether or not required by applicable laws,
including, but not limited to, reports and notices required by or given pursuant
to applicable laws, and all complaints, pleadings and other legal documents
filed against Tenant related to Tenant's use, handling, storage or disposal of
Hazardous Materials on the Premises. In the event of a release or threatened
release of any Hazardous Material on the Premises or to the environment from the
Premises, Tenant shall promptly notify Landlord and provide Landlord with copies
of all reports and correspondence with or from all governmental agencies,
authorities or any other persons relating to such release or threatened release.
"Landlord" as used in this Paragraph shall have the same meaning as in
Section 16.6. Tenant shall be solely responsible for, shall pay for, defend
(with an attorney approved by Landlord), indemnify and hold Landlord harmless
against and from all claims, judgments, liabilities, costs and expenses,
including attorneys' fees and costs, arising out of or connected with its
storage, use, handling or disposal of Hazardous Materials on the Premises. In
addition, except with respect to any Hazardous Materials installed in or placed
on the Premises by Landlord or any agent, employee or contractor of Landlord,
Tenant shall be solely responsible for, shall pay for, defend, indemnify and
hold Landlord, and the Premises harmless against and from all claims, judgments,
liabilities, liens, costs and expenses, including attorneys' fees and costs,
arising out of or connected with the removal, clean-up and/or restoration work
and materials necessary to return the Premises, and any other property of
whatever nature, to their condition existing prior to the appearance of the
Hazardous Materials on the Premises. Tenant's obligations under this Section
27.29 shall survive the termination of this Lease.
27.30 WAIVER OF TRIAL BY JURY. Landlord and Tenant desire and intend
that any disputes arising between them with respect to or in connection with
this Lease be subject to expeditious resolution in a court trial without a jury.
Therefore, Landlord and Tenant each hereby waive the right to trial by jury of
any cause of action, claim, counterclaim or cross-complaint in any action,
proceeding or other hearing brought by either Landlord against Tenant or Tenant
against Landlord on any matter whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises or any claim of injury or damage, or the
enforcement of any remedy under any law, statute, or regulation emergency or
otherwise, now or hereafter in effect.
27.31 CITY OF IRVINE OCCUPANCY DISCLOSURE FORM. Pursuant to the City
of Irvine master plan approval conditions applicable to the Shopping Center,
Landlord is required to provide Tenant with a City of Irvine Occupancy
Disclosure form for the Shopping Center. Tenant acknowledges receipt of such
Occupancy Disclosure form.
*** Confidential treatment requested.
-25-
27
27.32 HAZARDOUS MATERIALS DISCLOSURE. Tenant acknowledges that the
28.3 acre parcel of land of which the Shopping Center is part has previously
been used for agricultural purposes; no other uses are known to have occurred
there. Landlord is unaware of any releases of hazardous substances on or beneath
the property -- with the following exceptions:
(a) Over the years, various agricultural chemicals have been
applied to the property. Residues of these materials may exist in the upper
layers of the soil. Landlord anticipates that any such residues will decompose
over time. The grading and development of the site also will reduce the
potential for exposure. The risks associated with this previous agricultural
chemical use on the property appear to be no greater than those that are
associated with other similarly used properties in the area.
(b) The El Toro Marine Corps Air Station, which is located
approximately 3/4 mile northeast of the property, has had several releases of
hazardous substances, many of which involved underground storage tanks.
Contaminated ground water emanating from the Air Station may have migrated
beneath portions of the property.
(c) Minor spillage has occurred from a small mobile diesel
tank that is stored in an agricultural equipment yard in the northeastern
portion of the property. Landlord plans to cleanup the minor soil contamination
prior to the development of that portion of the property.
Landlord has investigated each of these matters. None of them appear to
pose a significant risk to human health or the environment, or to interfere with
the proposed development, occupancy, or use of the property.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
-26-
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53. Supplements Article 18;
The following supplements Article 18 and is incorporated as
Section 18.6:
"TENANT'S TERMINATION RIGHTS. (a) If Landlord does not commence
the repair and restoration work to the Premises, or any portion of the Common
Area which, if not restored, will materially adversely affect Tenant's use of
the Premises for the normal conduct of its business, as required pursuant to
this Article 18, by the date (the "Repair Commencement Date") which is six (6)
months following the date of the Taking, then Tenant shall have the right to
terminate this Lease by delivering written notice to Landlord, which notice
shall be given within sixty (60) days after the Repair Commencement Date but
prior to the commencement of restoration work by Landlord. Such notice by Tenant
shall set forth the effective date of termination, which date shall not be later
than that date occurring thirty (30) days after the Repair Commencement Date. If
Tenant timely and properly exercises its foregoing option to terminate this
Lease, Tenant shall vacate and deliver possession of the Premises to Landlord
in accordance with the provisions of this Lease applicable thereto, whereafter
neither party to this Lease shall have any further liability to the other
accruing thereafter under this Lease. The failure of Tenant to timely and
properly exercise the foregoing right to terminate this Lease shall result in
the subject right to terminate being null and void. (b) If Landlord does not
repair and restore the Premises, and that portion of the Common Area which, if
not restored, will materially adversely affect Tenant's use of the Premises for
the normal conduct of its business, as required pursuant to this Article 18,
within eighteen (18) months following the date of the Taking (which eighteen
(18) month period may be extended for up to six (6) months as a result of a
Force Majeure Event or Tenant delay) (the "Repair Construction Date"), then
Tenant shall have the right to terminate this Lease by delivering written notice
to Landlord, which notice shall be given within sixty (60) days after the Repair
Construction Date but prior to the substantial completion of the restoration
work by Landlord. Such notice by Tenant shall set forth the effective date of
termination, which date shall not be later than that date occurring thirty (30)
days after the Repair Construction Date. If Tenant timely and properly exercises
its foregoing option to terminate this Lease, Tenant shall vacate and deliver
possession of the Premises to Landlord in accordance with the provisions of this
Lease applicable thereto, whereafter neither party to this Lease shall have any
further liability to the other accruing thereafter under this Lease. The failure
of Tenant to timely and properly exercise the foregoing right to terminate this
Lease shall result in the subject right to terminate being null and void."
54. Supplements Section 19.1;
The first sentence of Section 19.1 is hereby deleted and
replaced with the following: "Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental or any other charge payable by Tenant pursuant to this Lease for a period
of ten (10) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute), or should Tenant be in default in the prompt and
full performance of any other of its promises, covenants or agreements herein
contained for more than a reasonable time (in no event to exceed thirty (30)
days) after written notice thereof from Landlord to Tenant specifying the
particulars of the default (provided, however, any notice shall be in lieu of,
and not in addition to, any notice required under Section 1161 of the Code of
Civil Procedure of California or any similar, superseding statute), or should
Tenant vacate or abandon the Premises, or should Tenant make any general
assignment for the benefit of creditors, or should there be filed against Tenant
a petition to have Tenant adjudged a bankrupt or a petition for reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, same is dismissed within sixty (60) days), or
should Tenant institute any proceedings under the Bankruptcy Code or any similar
or successor statute, code or act, or should an appointed trustee or receiver
take possession of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease where possession is not restored to Tenant
within thirty (30) days, or should substantially all of Tenant's assets located
at the Premises or Tenant's interest in this Lease be attached or judicially,
seized where the seizure is not discharged within thirty (30) days, then
Landlord may treat the occurrence of any one (1) or more of the foregoing events
as a breach of this Lease and, in addition to any or all other rights or
remedies of Landlord by law provided, Landlord shall have the right, at
Landlord's option, without further notice or demand of any kind to Tenant or any
other person, (a) to declare the Term ended and to re-enter and take possession
of the Premises and remove all persons therefrom, or (b) without declaring this
Lease terminated and without terminating Tenant's right to possession, to
re-enter the Premises and occupy the whole or any part 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) even though it may have
re-entered the Premises as provided in subparagraph (b) above, to thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises."
55. Supplements Section 2 1. 1;
Section 21.1 is clarified to provide that in the event Landlord
requests Tenant to subordinate the Lease to any future liens of any mortgage,
deed of trust, or the interest of any lease in which Landlord is the lessee,
Landlord shall provide Tenant a subordination, and attornment agreement from
such lender under a deed of trust or mortgage or lessor under any ground lease
covering the Shopping Center, in a form reasonably acceptable to Landlord,
Tenant and such lender. Further, Landlord represents that as of the Date of
Lease there is no mortgage or underlying ground lease affecting the Premises or
the Shopping Center.
Xxxxxxxx - 00
00
00. Supplements Section 21.3:
The first sentence of Section 21.3 is hereby deleted and
replaced with the following: "Tenant agrees, upon not less than fifteen (15)
days prior notice by Landlord, to execute, acknowledge and deliver to Landlord,
a statement in writing in substantially the form of Exhibit F hereto or in such
other form as may reasonably be required by Landlord's mortgagee or beneficiary
("Tenant's Certificate")."
57. Supplements Section 22.2;
The second sentence of Section 22.2 is hereby deleted and
replaced with the following: "Within ten (10) days after written demand by
Landlord, Tenant shall deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to the original sum deposited, and Tenant's failure
to do so shall constitute a material default under this Lease."
58. Supplements Section 21.3;
Section 21.3 is clarified to provide that Landlord agrees, upon
not less than twenty (20) days prior written notice by Tenant (but not more
frequently than once in any twelve (12) month period), during the Term of the
Lease, to execute, acknowledge and deliver to Tenant, a statement in writing in
a form reasonably acceptable to Landlord, stating, among other things (and to
the extent accurate), that the Lease is in full force and effect without
modification (or if modified so stating and identifying the modifications), the
date to which Minimum Annual Rental and other charges are paid, and Tenant is
not in breach or default of any of its obligations under the Lease (or, if in
breach, so stating) ("Landlord's Certificate").
59. Supplements Article 25;
Article 25 is clarified to provide that there are no Agreements
or liens and encumbrances to Landlord's actual knowledge which materially and
adversely affect Tenant's use of the Premises as permitted under the Lease.
60. Supplements Section 27.3;
The last sentence of Section 27.3 is hereby deleted.
61. Supplements Section 27.15;
Section 27.15 is clarified to provide that Landlord shall pay
the broker set forth in Section 1.2 1, pursuant to the terms of a separate
agreement. Controlling over any contrary provisions of Section 27.15, Tenant and
Landlord represent and warrant that they have not had any dealings with any
realtors, brokers or agents in connection with the negotiation of the Lease,
except as may be specifically set forth in Section 1.2 1, and each agrees to pay
any realtors, brokers or agents not referenced in Section 1.21 and to hold each
other harmless from the failure to pay any realtors, brokers or agents and from
any cost, expense or liability for any compensation, commission or charges
claimed by any other realtors, brokers or agents claiming by, through or on
behalf of Tenant or Landlord, as applicable, with respect to the Lease and/or
the negotiation hereof.
62. Supplements Section 27.20;
The third sentence of Section 27.20 is hereby deleted and
replaced with the following: "Tenant shall have the right to contest any lien
filed against the Shopping Center and/or the Premises as a result of any work of
improvement performed by or on behalf of Tenant; provided, however, Tenant shall
cause such lien to be discharged or removed of record by paying the amount
thereof or recording a statutory lien release bond in an amount equal to one
hundred fifty percent (150%) of the amount of said lien no later than fifteen
(15) days after the filing of such lien."
63. Supplements Section 27.23;
Section 27.23 is hereby deleted and replaced with the following:
"Whenever in this Lease it provides that Landlord shall perform certain work or
services, Landlord shall be entitled to contract with an independent contractor
to perform said work or services or may provide the services itself provided,
such costs do not exceed the rates charged for same by unaffiliated third
parties on a competitive basis in comparable shopping centers."
64. Supplements Section 27.24;
Controlling over any contrary provisions of Section 27.24, upon
the expiration or earlier termination of the Term, Tenant has the right, in its
sole discretion, to remove all of Tenant's trade fixtures, furniture, equipment
(including its simulators), signs, improvements, additions and Alterations
whether or not such items are permanently affixed to the Premises, provided,
that, and only so long as, Tenant repairs any and all damages to the Premises
resulting from such removal. Further, Landlord agrees that Tenant may use
reconditioned simulators in the Premises, provided the appearance of such
equipment shall be in like new condition.
Xxxxxxxx - 00
00
00. Supplements Section 27.26;
The third sentence of Section 27.26 shall be hereby deleted and
replaced with the following: "Upon the expiration or earlier termination of the
Term, Tenant shall peaceably and quietly surrender the Premises broom-clean and
in substantially the same condition as the Premises were in upon delivery of
possession of same to Tenant by Landlord, reasonable wear and tear and any
damage to the Premises which Tenant is not required to repair pursuant to
Article 17 excepted; provided, however, Tenant shall not be required to demolish
and remove any improvements made by Tenant to the Premises (so long as any and
all damage caused by Tenant from its election to remove same shall be repaired
by Tenant)."
66. Supplements Section 27.28:
Controlling over any contrary provisions of Section 27.28,
Landlord shall not impose a Service Charge unless the subject failure continues
for more than ten (10) days following written notice to Tenant of such failure;
provided, however if Tenant fails to report Gross Sales and Percentage Rental
under Section 7.3, or fails to maintain the insurance required under Article 16,
no prior notice shall be required. In addition, except with respect to Tenant's
failure to provide an insurance policy or certificate in accordance with this
Lease, Tenant shall not be required to pay a Service Charge until the second
(2nd) occasion in any consecutive twelve (12) month period during the Term and
each time during such twelve (12) month period thereafter that Tenant fails to
furnish any required document, report or statement as agreed in the Lease.
67. Supplements Sections 27.29;
Section 27.29 is clarified to provide that Tenant may, without
Landlord's prior consent, use ordinary cleaning materials, hydraulic oil and
similar substances customarily used in the typical course of Tenant's business;
provided same are used in compliance with all applicable laws and manufacturers
specifications. Controlling over any contrary provisions of Section 27.29,
Landlord shall only have the right to require Tenant to conduct monitoring or
evaluation activities with respect to Hazardous Materials on the Premises, not
more than one (1) time in any twelve (12) month period, or any time if Landlord,
in its reasonable discretion, determines that Tenant is not complying with all
laws with respect to its storage, use, handling or disposal of such Hazardous
Materials. The indemnification provisions set forth in the third (3rd) paragraph
of Section 27.29 are clarified to provide that in no event shall Tenant be
responsible for liabilities to the extent arising from Landlord's negligence
willful misconduct in connection with Landlord's Work. In addition, Landlord
represents, to its actual knowledge or (without duty of investigation), that, as
of the Date of the Lease, no Hazardous Materials are present in the Premises or
the Shopping Center in violation of applicable laws. In the event that any
Hazardous Materials are located in or discharged in the Premises or the Shopping
Center other than by Tenant or its agents, contractors or employees, and such
discharge is required to be remediated pursuant to applicable laws and has a
material and adverse affect upon Tenant's use of or operation of its business
from the Premises, then Landlord (and not Tenant) shall perform or cause to be
performed the necessary remediation of such Hazardous Materials on or affecting
the Premises or the Shopping Center at no cost to Tenant; provided, however,
that the costs of remediating any minor spills and/or discharges typically
encountered in the operation of a shopping center may be included in the Common
Area Expenses.
68. Supplements Article 27;
The following supplements Article 27 and is incorporated as
Section 27.33:
"27.33 JUDICIAL REFERENCE. Any dispute between Landlord and
Tenant which is to be resolved by a reference proceeding pursuant to the
provisions of this Lease (i.e., pursuant to Section 13.8 of the Addendum
(inspection rights) or Section 27.3 (payment under protest)) shall be resolved
by a proceeding in accordance with the provisions of California Code of Civil
Procedure Section 638 et seq., for a determination to be made which shall be
binding upon the parties as if tried before a court or jury. The parties agree
specifically as to the following:
1. Within five (5) business days after service of a demand
by a party hereto, the parties shall agree upon a single referee who shall then
try all issues, whether of fact or law, and then report a finding or judgment
thereon. If the parties are unable to agree upon a referee either party may seek
to have one appointed, pursuant to California Code of Civil Procedure Section
640, by the presiding judge of the Los Angeles County Superior Court.
2. The compensation of the referee shall be such charge as
is customarily charged by the referee for like services. The cost of such
proceedings shall initially be borne equally by the parties. However, the
prevailing party in such proceedings shall be entitled, in addition to all other
costs, to recover its contribution for the cost of the reference as an item of
damages and/or recoverable costs.
3. If a reporter is requested by either party, then a
reporter shall be present at all proceedings, and the fees of such reporter
shall be borne by the party requesting such reporter. Such fees shall be an item
of recoverable costs. Only a party shall be authorized to request a reporter.
Addendum - 13
31
4. The referee shall apply all California Rules of Procedure and
Evidence and shall apply the substantive law of California in deciding the
issues to be heard. Notice of any motions before the referee shall be given,
and all matters shall be set at the convenience of the referee.
5. The referee's decision under California Code of Civil Procedure
Section 644, shall stand as the judgment of the court, subject to appellate
review as provided by the laws of the State of California.
6. The parties agree that they shall in good faith endeavor to cause
any such dispute to be decided within four (4) months. The date of hearing for
any proceeding shall be determined by agreement of the parties and the referee,
or if the parties cannot agree, then by the referee.
7. The referee shall have the power to award damages and all other
relief."
69. Supplements Exhibit C;
Controlling over any contrary provisions of Exhibit C, in no event
shall the store frontage and configuration of the Floor Area of the Premises
materially differ from that which is reflected on the Final Plans.
Addendum - 14
32
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease on
the day and year first above written.
IRVINE RETAIL PROPERTIES COMPANY,
a division of The Irvine Company, a Delaware
corporation
By: /s/ XXXXXXXXX X. XXXXX
--------------------------------------------
Xxxxxxxxx X. Xxxxx
President
Irvine Retail Properties Company
By: /s/ XXXX X XXXXXXX
--------------------------------------------
Xxxx X. Xxxxxxx
Senior Vice President, Finance & Acquisitions
Investment Properties Group
LANDLORD
LBE TECHNOLOGIES, INC., a California
corporation, dba "NASCAR Silicon Motor
Speedway"
By: /s/ XXXXX XXXXXXXXX
--------------------------------------------
Name: Xxxxx Xxxxxxxxx
------------------------------------------
Title: President & CEO
------------------------------------------
By: /s/ XXXXX XXXXX
--------------------------------------------
Name: Xxxxx Xxxxx
------------------------------------------
Title: Vice President - Real Estate
------------------------------------------
TENANT
If Tenant is a corporation, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease
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, must be attached to this Lease.
Also, the appropriate corporate seal should be affixed hereto.
-27-
33
EXHIBIT A
SITE PLAN
[IRVINE SPECTRUM CENTER PLAN]
34
EXHIBIT B
PREMISES
[IRVINE SPECTRUM CENTER PREMISES]
35
EXHIBIT C
CONSTRUCTION PROVISIONS
IRVINE SPECTRUM CENTER PHASE II
RETAIL SPACE
1. LANDLORD'S WORK
Except as herein provided, the Premises are leased to Tenant on an "as-is"
basis.
"Landlord's Work", as used in this Lease, shall mean the work specified in
items A through K, below. Landlord shall not be obligated to perform any
work or provide any facilities in relation to the Premises or the Shopping
Center except as specified in items A through K, below, as otherwise
specifically set forth in this Lease. Where two (2) types of materials or
structures are indicated, Landlord will have the option of using either.
A. Floor:
Landlord shall provide in the Premises an exposed, unsealed concrete
floor slab on the ground floor designed to support a live load of 100
pounds per square foot.
B. Storefront:
Landlord shall provide the opening(s) for Tenant's storefront.
X. Xxxxx:
Landlord's shall provide for the Premises perimeter metal studs
without drywall from finish floor surface to a height of 15 feet.
Where roof structure or one-hour gyp sheeting does not exceed 15
feet, drywall will not be provided. Otherwise, drywall will be
provided from 15 feet to the underside of the structure above.
Landlord may provide unfinished masonry wall in lieu of metal studs
at Landlord's option, in which case no drywall will be provided.
D. Egress Door:
Landlord will provide a 3'-0" x 7'-0" egress door per building code
with appropriate hardware, but hinge only, to the service corridor or
exterior at a location to be determined by Landlord.
E. Clear Height:
Clear height for the Premised shall be as indicated on Landlord's
plans for the Premises.
F. Electrical:
Landlord will provide for 480/277 volt, 3-phase, 4-wire serviced from
a central distribution point, at which central distribution point,
Landlord shall provide an empty meter base, fusible service
disconnect switch (100 amp minimum), and Landlord shall provide an
empty conduit (2" trade size minimum) to the Premises. Tenant's
fusible service disconnect switch and empty conduit sizes shall be
based on a load density of 16 VA per square foot. If Tenant requires
a different size main electrical switch and/or empty conduit,
Landlord may provide same, if available, at Tenant's expense.
G. HVAC:
Landlord will provide roof mounted air conditioning units (all
electric heat pumps), with an average cooling capacity of 300 square
feet per ton condensate drainage connection completed and stubs
through the roof for thermostat and electrical hook-up by Tenant.
H. Plumbing:
Landlord shall provide 4" sewer (under slab) and 1" water (overhead)
stub-ins to rear of the Premises.
I. Gas:
Landlord shall provide gas service to the building in which the
Premises is located and a manifold for the distribution of gas
service to the Premises.
J. Telephone:
Landlord shall supply empty 1" conduit from the main telephone panel
to the Premises.
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36
K. Automatic Fire Sprinklers:
Landlord shall provide a fire sprinkler main above the Premises and
general distribution as required to meet minimum N.F.P.A.
requirements for ordinary hazard occupancies.
II. TENANT'S WORK
"Tenant's Work", as used in this Lease, shall mean all work, other than
Landlords Work specified in Part I of this Exhibit C, which shall be
necessary to complete the Premises to a finished condition from which
business can be conducted. Tenant acknowledges receipt of a space outline
plan for the Premises and the Tenant Design and Construction Criteria for
The Entertainment Center at Irvine Spectrum ("Tenant Criteria"). All of
Tenant's Work shall be performed in accordance with the provisions of the
Final Working Drawings (as hereinafter described) for Tenant's Work.
Tenant shall perform or cause to be performed Tenant's Work at Tenant's
expense. Tenant's Work shall include, but not be limited to, the following:
A. Floors:
Tenant shall provide all floor coverings in the Premises.
Concentrated dead loads are not allowed without specific prior
written approval of Landlord. Penetrations through any walls or floor
must have prior written approval from Landlord. Penetrations may
require prior review and appropriate x-rays, the costs of which shall
be borne by Tenant.
B. Storefront:
Tenant shall construct the Storefront for the Premises ("Storefront")
in accordance with the Storefront Criteria set forth in the Tenant
Criteria.
X. Xxxxx:
Tenant shall provide drywall on all perimeter walls from finish floor
to 15' above finish floor, or from finish floor to underside of roof
structure if less than 15' or if masonry wall is provided, and all
interior demising walls and partitions and wallcoverings in the
Premises.
D. Ceiling:
Tenant shall provide the ceiling in the Premises and any necessary
catwalks or access panels in accordance with the Tenant Criteria.
Penetrations through and/or attachments to roof structures must have
prior written approval from Landlord and comply with all of
Landlord's roof specifications and installation procedures.
E. Tenant shall provide all electrical work, equipment, fixtures and
services for the Premises. Tenant shall provide all temporary power
for Tenant's construction. Tenant shall arrange and pay for electric
meter from the Landlord.
F. HVAC:
Tenant shall distribute all HVAC within the Premises. All
distribution, including ductwork, electrical and piping, shall be
within the Premises below the roofline. All construction, and
engineering costs shall be at Tenant's expense. Any rooftop
penetrations and roof repairs required shall be made using Landlord's
designated subcontractor and complying with all of Landlord's roof
specifications.
G. Plumbing:
Tenant shall provide all plumbing for the Premises. Tenant shall make
all rooftop penetrations and roof repairs using Landlord's designated
subcontractor and complying with all of Landlord's roof
specifications.
H. Gas:
Tenant shall be responsible for distribution from the manifold of all
gas service within the Premises and application for service from the
applicable utility company.
I. Telephone:
Tenant shall provide all telephone equipment for the Premises and
connections to the main panelboard.
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37
J. Automatic Fire Sprinklers:
Tenant shall make any additions or changes in the sprinkler system
provided by Landlord necessary to meet the minimum criteria of
Landlord or governmental or insurance standards. Tenant shall use
Landlord's designated contractor for this work. Tenant shall be
responsible for fire alarm monitoring, including designated phone
line, monitoring equipment and monitoring company, as required by
code.
K. Signs:
Tenant shall provide signs in accordance with the sign criteria set
forth in the Tenant Criteria.
L. Service/Fire Exit Doors:
If required by applicable codes, Tenant shall provide additional
service doors and/or fire exit doors which shall conform with code
requirements.
M. Code-Related Items:
Tenant shall be responsible for complying with any code requirements
applicable to its type of business or its operation in the Premises.
III. DESIGN APPROVAL PROCEDURE
A. Preliminary Drawings:
1. Due to the special nature of the project, prior to preparing any
drawings, Tenant shall participate in a kickoff/coordination
meeting to discuss any special conditions that may affect the
design of the Premises and to review the Tenant Criteria.
2. Within thirty (30) days from the Date of Lease, Tenant shall
submit to Landlord's architect three (3) sets of blueline prints
and one (1) set of reproducible prints showing intended design
character and finishes of the Premises ("Preliminary Drawings").
3. Preliminary Drawings shall include the following:
a. Key plan showing location of shop within Shopping Center.
b. Preliminary floor plans (scale 1/4" = 1'-0") indicating
interior design concept.
c. Typical interior elevations (scale 1/4" = 1'-0").
d. Storefront elevation and section, including any graphics,
lighting and signage and indicating all materials and
finishes (scale 1/4" = 1'-0"). Elevations shall be rendered
in color. Elevations should include existing context (i.e.,
partial elevations of retail spaces) and should be drawn
full height to top of building. All exterior signage is
considered integral to the design and is required to be
submitted with preliminary elevations.
e. Preliminary finish schedule including all colors and
materials to be used.
4. Within fifteen (15) days after receipt of the Preliminary
Drawings, Landlord's architect will return to Tenant's
architect/designer one (1) set of prints of the Preliminary
Drawings with any required modifications or with approval. If
Tenant wishes to take exception to any required modifications,
Tenant may do so only by written notice received by Landlord
within ten (10) days from the date of receipt by Tenant's
architect/designer of the required modifications. Unless
exception is so taken, it will be deemed that all comments are
acceptable to and approved by Tenant.
5. If the Preliminary Drawings are returned to Tenant with required
modifications and Tenant does not take (or is deemed not to have
taken) exception to such modifications as provided above, the
Preliminary Drawings must be revised and resubmitted to Landlord
for approval within thirty (30) days of their receipt by Tenant's
architect/designer.
6. If Tenant properly takes exception to any required modifications
as provided above, Landlord will discuss the objections with
Tenant and will work with Tenant to achieve Final Working
Drawings (as described below) that are acceptable to Landlord. If
Tenant and Landlord are unable to agree on Preliminary Drawings,
Landlord may terminate this Lease.
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7. If the Preliminary Drawings are returned "Approved as Noted" and
Tenant does not take exception, Tenant's architect shall incorporate
Landlord's modifications into the Final Working Drawings.
C. Final Working Drawings:
1. Tenant must engage an architect licensed in the State of California
for the purpose of preparing the Final Working Drawings. Final Working
Drawings must adhere to the Preliminary Drawings as approved by
Landlord.
2. Final Working Drawings shall include, but not be limited to, the
following:
a. Key plan showing location of shop within Shopping Center.
b. Floor plans (scale 1/4" = 1'0") indicating storefront
construction materials, colors and finishes as well as sliding
door track location (if required), location of partitions and
type of construction, placement of merchandising fixtures and
toilet room locations indicating placement of plumbing and
fixtures.
c. Reflected ceiling plans (scale 1/4" = 1'0") indicating ceiling
materials, various heights, location of all light fixtures,
their manufacturer's name and catalog number, lamps to be used
and mounting (recessed, surface, etc.), location of sprinkler
heads and HVAC grilles.
d. Storefront elevation and section, including any graphics,
lighting and signage. Indicate all materials and finishes,
(scale 1/4" = 1'0").
e. Interior elevations, sections and details sufficient for
construction (scale 1/4" = 1'0").
f. Complete interior finish schedule.
g. Samples and color chips of the actual materials or charts firmly
attached to 8-1/2" x 11" illustration boards and clearly labeled.
h. Sign details (scale 1/2" = 1'0") indicating elevation and
section views, letter style and size, all colors and materials,
methods of illustration, color of illuminate and voltage
requirements.
i. Mechanical drawings, including electrical, HVAC, plumbing and
automatic fire sprinklers prepared by licensed engineers or
firms licensed to prepare such drawings.
j. Drawings must indicate connected electrical loads, weights of
heavy equipment, cases, etc.
k. Specification not on drawings should be submitted on 8-1/2" x
11" paper, four sets.
l. Landlord reserves the right to require mock ups of any
materials, finishes, colors, special signs or lighting.
3. The Final Working Drawings prepared by Tenant's architect must be
submitted in the form of two (2) sets of reproducible sepia prints
and three (3) sets of black or blue line prints to the Project
Architect for approval within fifteen (15) days from the earlier of
delivery to Tenant's architect/designer or Landlord's approval of the
Preliminary Drawings. Final Working Drawings with incomplete or
inadequate information or dimensional discrepancies will be rejected.
4. Within fifteen (15) days after receipt of the Final Working Drawings,
Landlord's architect will return to Tenant's architect/designer one
(1) set of prints of the Final Working Drawings with any required
modifications or with approval. If Tenant wishes to take exception to
any required modifications, Tenant may do so only by written notice
received by Landlord within ten (10) days from the date of receipt by
Tenant's architect/designer of the required modifications. Unless
exception is so taken, it will be deemed that all comments are
acceptable to and approved by Tenant.
5. If the Final Working Drawings are returned to Tenant with comments
and Tenant does not take exception to the comments as provided above,
the Final Working Drawings must be revised and resubmitted to
Landlord for approval within fifteen (15) days of their receipt by
Tenant's architect/designer.
6. If Tenant properly takes exception to any required modifications as
provided above, Landlord will discuss the objections with Tenant and
will work with Tenant to achieve Final Working
C-4
39
Drawings that are acceptable to Landlord. If Tenant and Landlord
are unable to agree on Final Working Drawings, Landlord may
terminate this Lease.
7. Approved Final Working Drawings will be so stamped and returned
to Tenant's architect/designer who made the submittal.
C. Final Plans: The approved Final Working Drawings will be considered
the "Final Plans". Tenant agrees to provide to Landlord a complete
diskette containing the computer assisted drawings of the Final Plans.
All construction on the Premises must be in conformity to the Final
Plans. The improvements may be inspected by Landlord or its architect
who shall have the right to require all work which does not comply
with the Final Plans to be corrected by Tenant, or by Landlord at
Tenant's cost. Construction may not begin until Final Plans are at the
job site. No changes, modifications or alterations to the Final Plans
may be made without the written consent of Landlord.
D. Failure to Submit Plans: If Tenant fails to submit Preliminary
Drawings or Final Working Drawings or revisions thereto as and when
required, the period allowed for construction of the Premises as set
forth in Section 1.10 of this Lease as "Time to Complete Tenant's
Work" will be reduced by the total number of days equal to the number
of days the Preliminary Drawings or Final Working Drawings or the
revisions thereto were delivered after they were required to be
delivered. In addition, Landlord, at its option, may elect to
terminate this Lease.
E. Building Code Compliance and Nonresponsibility of Landlord: Landlord
will not check Tenant's drawings for building code compliance. All
Tenant drawings shall, however, be subject to the same engineering and
safety review as described below in Section IV.B.6 below respecting
Tenant's Work, and such review shall be subject to the same
limitations and other provisions set forth in said Section IV.B.6.
Approval of Final Working Drawings by Landlord is not a representation
that the drawings are in compliance with the requirements of
governmental authorities, and it shall be Tenant's responsibility to
meet and comply with all Federal, state and local code requirements.
Approval of Final Working drawings does not constitute assumption of
responsibility by Landlord for their accuracy, sufficiency or
efficiency and Tenant shall be totally responsible for such matters.
Tenant at all times shall maintain at the Premises the Final Plans as
approved by the Building Department, and all inspection cards with
respect to Tenant's Work.
F. Design Fees: All of Tenant's design fees (including, without
limitation, Tenant's architect and sign designer) must be paid by
Tenant.
IV. CONSTRUCTION OF PREMISES
A. Commencement of Construction: Tenant shall commence construction of
Tenant's Work in accordance with the provisions of this Lease and
shall carry such construction to completion with all due diligence.
B. General Requirements:
1. Tenant's contractor shall comply with all rules and regulations
and applicable fees as described in the Tenant's Criteria.
2. Tenant shall only engage contractors who are bondable, licenses
contractors, possessing good labor relations, capable of
performing quality workmanship and working in harmony with
Landlord and other contractors on the job. All work shall be
coordinated with other Shopping Center work.
3. Tenant shall perform or cause to be performed Tenant's Work in
all respects with applicable Federal, state, county and city
statutes, ordinances, regulations, laws and codes. All required
permits, approvals, licenses, authorizations and other permits in
connection with the construction and completion of the Premises
including, without limitation, building permits and conditional
use permits, shall be obtained and all fees (both one-time and
recurring) required in connection with the construction and
completion of the Premises including, without limitation, all
roads fees, building and conditional use permit fees, whether
similar or dissimilar, shall be paid for by Tenant.
4. Tenant shall apply and pay for all utility services including,
but not limited to, temporary utilities.
5. Tenant shall cause [illegible] contractor to provide warranties
for not less than one (1) year against defects in workmanship,
materials and equipment, commencing upon Landlord's acceptance of
Tenant's Work.
6. Tenant acknowledges that Tenant's Work shall be subject to (a)
the inspection and approval of Landlord for the purpose of
determining Tenant's compliance with the Final Working Drawings,
and (b) an engineering and safety review by Landlord for the
purpose of making
C-5
40
an assessment regarding the potential safety impact of Tenant's Work
on other portions of the Shopping Center, which review may include,
without limitation, the examination of (i) any penetrations through
the roof or other structural elements of the Premises, (ii) the
transition points from the Common Areas to the Premises, and (iii) any
flooring, common walls or similar surfaces which may constitute a
potential for leakage into other portions of the Shopping Center. Any
such inspection, approval, or review shall not constitute an approval
of architectural or engineering design, a review to determine the
structural safety of Tenant's Work or Tenant's compliance with any
building codes or other legal requirements, or otherwise constitute
any assumption of liability or responsibility by Landlord or its
agents or contractors. Tenant hereby expressly acknowledges that no
such inspection, approval or review shall in any way limit the
obligations of Tenant or the rights of Landlord under this Lease, and,
without limitation on the foregoing, Tenant's obligations under that
provision in the Lease regarding Indemnity of this Lease shall apply
to any claims, etc. (as more fully indicated in such Indemnity
provision) arising or alleged to have arisen in connection with the
Premises, Tenant's Work or the safety or structural integrity thereof.
Tenant shall, at its sole cost and expense, perform any corrective
measures required by Landlord or its agents or contractors in
connection with any such inspection, approval or review.
7. Tenant shall be responsible for having a superintendent from its
general contractors' office on site during all Tenant's Work and
fixturing work. Tenant's general contractor's superintendent or other
responsible representative shall be on the jobsite to receive all
deliveries of materials, fixtures or merchandise. Landlord reserves
the right to turn away any delivery arriving at the jobsite if
Tenant's general contractor's superintendent or other responsible
representative is not present. Tenant shall stage its construction
equipment and materials only in the staging area designated for such
purpose by Landlord.
8. Tenant shall cause its general contractor and subcontractors during
the construction of Tenant's Work to maintain the Premises and the
jobsite in a clean condition and to provide daily removal, cleanup and
proper disposal of all trash, rubbish, refuse and construction debris
and spoils generated by Tenant's general contractor and subcontractors
in dumpsters and other appropriate facilities, and not by depositing
any such trash, refuse and construction debris and spoils within other
tenant spaces or the jobsite common areas. If Landlord incurs costs to
clean up the jobsite and/or adjacent tenant spaces due to the failure
of Tenant's general contractor and subcontractors to comply with the
foregoing requirements, Tenant agrees to promptly reimburse such costs
(or Tenant's proportionate share of such costs, which Landlord shall
determine as a flat per-square-foot rate based on the Floor Area of
the Premises) upon receipt of an invoice reasonably detailing such
costs.
9. Tenant and Tenant's general contractor and subcontractors shall be
responsible for the daily removal, cleanup and proper disposal of
their own rubbish, trash and construction debris, and for providing
adequate dumpster(s) for such purpose (to be located in only areas
designated by Landlord). Tenant shall contract with a disposal company
to provide daily removal of its rubbish, trash and construction
debris. If Landlord provides dumpsters for common use, or if Tenant's
contractors use Landlord's dumpsters for disposal of rubbish, trash
and/or construction debris, Tenant shall pay its proportionate share
of the cost of such trash service, including dumpster rental and
hauling fees and charges, which Landlord shall determine as a flat
per-square-foot rate based on the Floor Area of the Premises.
10. Tenant shall be responsible for any and all damage done by Tenant's
general contractor and/or subcontractors to any of Landlord's
buildings, other tenant premises, or the project common areas. Tenant
shall at all times cause its general contractor and subcontractors to
comply with the requirements of Landlord's general contractor and/or
onsite construction manager with respect to protection of Landlord's
construction work in the project which has been completed or is in
progress, including paths of access within the project for
construction materials, equipment and labor, and coordination of
sequencing of work. Tenant agrees to promptly reimburse Landlord for
all costs incurred by Landlord to repair (including repatching and
repainting) any and all damage done by Tenant's general contractor
and/or subcontractors to any of Landlord's buildings, other tenant
premises, or the project common areas upon receipt of an invoice
reasonably detailing such costs.
11. Tenant's general contractor shall provide its own temporary toilets
within the Premises or in an area designated by Landlord. Any
temporary toilets located by Tenant or Tenant's general contractor or
subcontractors other than in areas designated by Landlord may be
removed at Tenant's expense. Temporary toilets placed onsite by
Landlord's general contractor shall not be available for use by
Tenant's general contractor, subcontractors or other personnel.
12. Tenant shall provide and pay for its own temporary power and telephone
service from locations designated by Landlord. Landlord's general
contractor's jobsite telephones shall not be available for use by
Tenant's general contractor, subcontractors or other personnel. If
tenant or Tenant's general contractor or subcontractors use Landlord's
temporary power, Tenant agrees to pay Landlord and/or Landlord's
general contractor the actual or reasonable
C-6
41
estimated cost of such power, plus a facilities charge equal
[***] of the actual or reasonably estimated cost of such
power usage.
13. Tenant and/or Tenant's general contractor shall be
responsible for providing all security deemed necessary by
Tenant to protect Tenant's Work, including furniture,
fixtures and inventory, during the conduct of Tenant's Work.
Neither Landlord nor Landlord's general contractor shall
provide or be responsible for any such security or
protection.
C. Landlord's Right to Perform Work: Landlord shall have the right, but
not the obligation, to perform on behalf of and for the account of
Tenant, subject to reimbursement of the cost thereof by Tenant, and
any all of Tenant's Work which Landlord determines, in its sole
discretion, should be performed immediately and on an emergency basis
for the best interest of the Shopping Center, including, without
limitation, work which pertains to structural components, mechanical,
sprinkler and general utility systems, fire alarm systems, roofing and
removal of unduly accumulated construction materials and debris.
D. As-Built Drawings. Tenant, at its expense, shall have prepared a
complete set of the Final Plans marked "As-Built Drawings" which fully
indicate Tenant's Work as constructed and deliver one (1) reproducible
set of such drawings to Landlord no later than thirty (30) days after
the completion of Tenant's Work.
V. ALTERATIONS
Tenant shall not perform any Alterations without the prior written approval
of Landlord. Approval shall be obtained by using the procedure set forth in
Part III above; provided, however, the initial date for delivery of the
Preliminary Drawings shall not be thirty (30) days from the date of this
Lease, but shall instead be thirty (30) days prior to the date Tenant
desires to commence the Alterations. The Preliminary Drawings and the Final
Working Drawings shall consist of the appropriate drawings in relation to
the intended Alterations.
VI. TENANT IMPROVEMENT ALLOWANCE
Provided (a) Tenant is not in default under this Lease, (b) the Premises
are lien-free and eighty-five (85) days have expired from the recordation
of the Notice of Completion described in Paragraph F below, and (c)
Landlord has approved, in advance, the scope of work and terms of any
negotiated contract for Tenant's Work or Tenant has accepted the [***] bid
(or any bid within [***]) from a minimum of [***] bids received from
contractors approved in advance by Landlord, the scope of work for which
has been approved by Landlord for a contract for construction of Tenant's
Work, then within thirty (30) business days after requirements A through J
below are satisfied, Landlord will reimburse to Tenant the lesser of (a)
the [***] paid by Tenant for Tenant's Work (specifically excluding floor
coverings, signs, fixtures, equipment, permit fees, engineering and
consulting fees and plan review fees), and (b) [***] ("Tenant Improvement
Allowance") which sum is calculated based on [***] per square foot of Floor
Area within the premises (it being understood that if the Floor Area is
increased or decreased the Tenant Improvement Allowance will be adjusted
accordingly). Notwithstanding anything herein to the contrary, in no event
shall the Tenant Improvement Allowance be used to pay for furniture,
fixtures or equipment in the Premises:
A. A building permit for the construction of Tenant's Work has been
issued by the City of Newport Beach and a copy of the building permit
has been delivered to Landlord;
B. Tenant has delivered to Landlord lien waivers and releases, in
statutory form, for all contractors, subcontractors and materialmen
who performed work or supplied materials in connection with the
completion of Tenant's Work;
C. All required inspections of Tenant's Work by governmental agencies
have taken place and the completed Tenant's Work has passed such
inspections;
D. Tenant has submitted to Landlord a copy of all building permits with
all sign-offs executed;
E. Tenant has submitted to Landlord a conformed copy of Tenant's
recorded Notice of Completion, prepared and recorded in accordance
with statutory requirements;
F. Tenant has submitted to Landlord a conformed copy of Tenant's
recorded Notice of Completion, prepared and recorded in accordance
with statutory requirements;
G. Tenant has delivered to Landlord a Certificate of Occupancy for the
Premises;
H. Tenant has submitted to Landlord invoices and proofs of payment for
Tenant's Work (specifically excluding signs, movable fixtures, permit
fees, engineering and consulting fees, and plan review fees) which
evidence expenditure by Tenant of at least [***];
*** Confidential treatment requested.
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I. Tenant has submitted to Landlord As-built Drawings for all of Tenant's
Work; and
J. Tenant has paid to Landlord all amounts owing to Landlord pursuant to
this Lease as of the date reimbursement is to be made, and Tenant is
not otherwise in default of any other term or condition or this Lease
as of such date, and no event has occurred which, given the passage of
time of the giving of notice or both, could be declared a default
under this Lease.
VII. LIENS
In the event that as a result of any work of improvement undertaken by Tenant,
any mechanics' lien or other lien is filed against the Premises, Tenant shall
immediately cause such lien to be removed of record by either paying the amount
of the lien or procuring and recording a statutory lien release bond in an
amount equal to [***] of the amount of said lien. If Tenant fails to remove such
lien and such failure continues for twenty (20) days after written demand by
Landlord to do so, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies available to landlord under this
Lease, to procure and cause to be recorded a statutory lien release bond and to
(a) collect from Tenant as Additional Rental, and/or (b) deduct from any Tenant
Improvement allowance payable to Tenant hereunder (i) all costs incurred in
procuring such bond, and (ii) the sum of [***] as reimbursement for all
recording and processing fees and administrative costs and expenses incurred by
Landlord in procuring and causing such bond to be recorded.
*** Confidential treatment requested.
43
EXHIBIT D
TENANT'S STATEMENT OF GROSS SALES
SALES VOLUME REPORT-PERCENTAGE RENTAL / /
------------------------------
( ) Month Ended
( ) Quarter Ended
( ) Other
ITEM SALES % RENTAL
---- ----- --- ------
1. $
--------------- -------------- --------- ---------------
2. $
--------------- -------------- --------- ---------------
3. $
--------------- -------------- --------- ---------------
4. $
--------------- -------------- --------- ---------------
5. TOTAL (Add lines 1+2+3+4)
==============
6. Less Minimum Annual Rental paid for period covered ( )
=========
7. Total Percentage Rental payable and
enclosed (Line 5 less Line 6) $ )
=========
TENANT:
--------------------------------
SIGNATURE:
--------------------------------
DATE:
--------------------------------
ACCOUNT NUMBER:
--------------------------------
Note: Signature constitutes certification that the information contained in
this statement is true, accurate and complete. If tenant is a corporation,
this statement must be signed by an authorized officer of Tenant. We
encourage you to send as much detailed information as practical to support
your calculations; however, in addition to documentation normally provided
IT IS ESSENTIAL THAT THIS FORM BE COMPLETED AND RETURNED to ensure that
all rental information is properly recorded to your account.
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EXHIBIT D
ANNUAL GROSS SALES VOLUME REPORT
ANNUAL GROSS SALES VOLUME REPORT FOR 19-
Month Sales
----- -----
JANUARY $ $ $
---------------- ---------------- ----------------
FEBRUARY $ $ $
---------------- ---------------- ----------------
MARCH $ $ $
---------------- ---------------- ----------------
APRIL $ $ $
---------------- ---------------- ----------------
MAY $ $ $
---------------- ---------------- ----------------
JUNE $ $ $
---------------- ---------------- ----------------
JULY $ $ $
---------------- ---------------- ----------------
AUGUST $ $ $
---------------- ---------------- ----------------
SEPTEMBER $ $ $
---------------- ---------------- ----------------
OCTOBER $ $ $
---------------- ---------------- ----------------
NOVEMBER $ $ $
---------------- ---------------- ----------------
DECEMBER $ $ $
---------------- ---------------- ----------------
GROSS SALES $ $ $
================ ================ ================
TENANT: ----------------------------
SIGNATURE: ----------------------------
DATE: ----------------------------
ACCOUNT NUMBER: ----------------------------
NOTE: Signature constitutes certification that the information contained in this
statement is true, accurate and complete. If Tenant is a corporation, this
statement must be signed by an authorized officer of Tenant. We encourage
you to send as much detailed information as practical to support your
calculations; however, in addition to documentation normally provided IT
IS ESSENTIAL THAT THIS FORM BE COMPLETED AND RETURNED to ensure that all
rental information is properly recorded to your account. If the figures
you submit differ from the monthly reports previously submitted, please
include an explanation.
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