LEASE
THIS LEASE is dated as of July 20, 1988, for purpose of reference only, and
is made by and between PACIFIC QUADRANT DEVELOPMENT COMPANY, a California
general partnership, having an office at c/o 0000 Xxxxx Xxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000 ("Landlord"), and WICKES COMPANIES,
INC., a Delaware corporation, having an office at c/o Orchard Supply Hardware,
0000 Xxx Xxx Xxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 ("Tenant").
ARTICLE ONE
PREMISES AND DEFINITIONS
1.1 Demise of Premises. Landlord hereby leases to Tenant, and Tenant
leases from Landlord, for the Lease Term, the Premises together with: (i) the
non-exclusive right to use the Common Area of the Shopping Center described in
this Lease, (ii) the right to erect signs as set forth in Article 14 hereof,
(iii) rights to ingress and egress to and from the Premises over the Common Area
to and over the public street known as Market Place which provides access to
Xxxxxxxxx Canyon Road and Alcosta Boulevard, and (iv) any and all other rights,
easements, and appurtenances in and to the Premises and the Shopping Center.
1.2 Definitions. As used herein, the following terms shall have the
following meanings:
A. Base Monthlv Rent. The term "Base Monthly Rent" shall mean the
fixed rent to be paid by Tenant during the Lease Term, which is set forth in
Sections 5.1 and 5.2.
B. Building. The term "Building" shall mean the approximately
thirty-one thousand and sixty-two (31,062) square foot structure which is part
of the Premises.
C. Commencement Date. The term "Commencement Date" shall mean the
date upon which the Lease Term commences, as more particularly defined in
Section 3.2.
D. Common Area. The term "Common Area" shall mean those portions of
the Shopping Center designated as such on Exhibit "B-1", including, without
limitation, the automobile parking areas, pedestrian and vehicular access ways,
sidewalks, passageways, and ingress and egress areas.
E. Effective Date. The term "Effective Date" shall mean the date on
which this Lease is executed by the last signatory whose execution is required
to make it binding on Landlord and Tenant.
F. Excusable Delay. The term "Excusable Delay" shall mean any
extension of the time for performance by either Landlord or Tenant of its
obligations under this Lease because of a delay resulting from a cause beyond
the reasonable control of the party obligated to perform, as more particularly
described in Section 20.8.
G. Lease Term. The term "Lease Term" shall mean the term of this
Lease which shall commence and be for the period described in Section 3.1, as
such period may be extended by tenant pursuant to Article 4.
H. Lease Year. The term "Lease Year" shall mean any twelve (12)
month period commencing on February 1st and terminating on the following
January 31st; provided, however, that (i) if the Commencement Date occurs
between February 2 and June 30 (inclusive), then the first Lease Year shall
be the period commencing on the Commencement Date and terminating on the
first January 31 thereafter; and (ii) if the Commencement Date occurs
between July 1 and January 30 (inclusive), then the First Lease Year shall
be the period commencing on the Commencement Date and terminating on the
second January 31 thereafter.
I. Legal Requirements. The term "Legal Requirements" shall mean all
laws, statues, ordinances, building codes, zoning regulations, ordinances,
orders, rules, regulations or requirements of all federal, state, local and
municipal governments, the appropriate agencies, offices, departments, boards
and commissions thereof, whether now or hereafter in effect which may affect or
be applicable to the Premises, the Shopping Center, or any part thereof or to
the use or manner of use of all or any part of the Premises or the Shopping
Center.
J. Premises. The term "Premises" shall mean the one-story concrete
block building to be constructed in accordance with the provisions hereof prior
to the Commencement Date, which building is to contain approximately thirty-one
thousand and sixty-two (31,062) square feet of floor space, a receiving area of
approximately two thousand six hundred forty (2,640) square feet of floor space,
a mezzanine of approximately one thousand seven hundred twenty-nine (1,729)
square feet of floor space above the receiving area, a nursery area of
approximately nine thousand six hundred sixty-seven (9,667) square feet, and an
adjoining building to house a pick-up station containing approximately six
thousand four hundred and twenty (6,420) square feet of floor area with an
adjoining outside yard area of approximately nine thousand eight hundred and
forty-seven (9,847) square feet, all in the location shown on Exhibit "B-1"
attached hereto. The final building size may be adjusted to avoid conflict with
the adjacent storm sewer easement and be consistent with the final plans,
specifications and working drawings to be approved by Landlord and Tenant.
K. Shopping Center. The term "Shopping Center" shall mean that
property consisting of approximately 4.27 acres located near the intersection of
the Xxxxxxxxx Canyon Road and Market Place in San Xxxxx, Contra Costa County,
California which is more particularly described by Exhibit "A" attached hereto
and by the site plan attached hereto as Exhibit "B-1". Landlord and Tenant
acknowledge that as of the Effective Date the Shopping Center has not been
constituted as a separate legal parcel by the recordation of a final subdivision
map. The City of San Xxxxx has approved subdivision map number 69-49 dated May
1988 that is consistent with Exhibits A and B-1. Landlord shall cause all
conditions to the recordation of such approved subdivision map to be satisfied
and cause it to be recorded so that the Shopping Center is constituted as a
separate legal parcel. Landlord shall not allow any changes to be made to such
subdivision map without the prior written consent of Tenant.
L. Shop Pads. The term "Shop Pads" shall mean those two areas within
the Shopping Center identified as "Shops" on the site plan attached hereto as
Exhibit "B-1" showing a maximum buildable area for shop buildings Landlord
intends to construct in the future of 3,186 square feet and 4,814 square feet,
respectively. Notwithstanding the foregoing, Landlord shall have the right to
adjust the Shop Pads to change their size and configuration so long as (i) the
location of the Shop Pads is not changed, and (ii) the buildable area of both
Shop Pads taken together does not exceed 8,000 square feet.
M. Tenant's Proportionate Share. The term "Tenant's Proportionate
Share" shall initially mean eighty-four and one-tenth percent (84.1%), subject
to adjustment pursuant to this Section. If any buildings are constructed in the
Shopping Center other than the Building (including buildings on the Shop Pads),
upon substantial completion of any such building Tenant's Proportionate Share
shall be adjusted to that percentage equivalent to the quotient obtained by
dividing the net leaseable area of the Building (including the entire area of
any nursery that is within walls, but excluding any receiving area, pickup area,
and outdoor yard area) by the net leaseable area of the ground floor area of all
buildings within the Shopping Center (including the Building and any buildings
constructed on the Shop Pads); provided, however, that in no event shall
Tenant's Proportionate Share ever exceed eighty-nine and eight-tenths percent
(89.8%).
N. Agreed Interest Rate. The term "Agreed Interest Rate" shall mean
that interest rate determined as of the time it is to be applied that is equal
to the lessor of (i) five percent (5%) in excess of the discount rate
established by the Federal Reserve Bank of San Francisco as it may be adjusted
from time to time, or (ii) the maximum interest rate permitted by Law.
ARTICLE TWO
PRE-TERM CONSTRUCTION
2.1 Obligations of the Parties: Landlord shall be obligated to install
certain improvements on the Shopping Center prior the Commencement Date in
accordance with the provisions of the Construction Agreement attached to the
Lease as Exhibit C.
ARTICLE THREE
TERM OF LEASE
3.1 Term of Lease. The term of this Lease shall begin on the Commencement
Date and, unless extended pursuant to Article 4 hereof, shall terminate upon the
expiration of the twenty-fifth (25th) Lease Year.
3.2 Commencement Date. The term "Commencement Date" shall mean that date
upon which all of the following have been achieved or have occurred, subject to
the provisions of subparagraph A and B hereof: (i) Landlord has achieved
Substantial Completion of the Premises Improvements and the Common Area
Improvements, pursuant to Exhibit C; (ii) all governmental approvals have been
issued which are necessary to permit Tenant to legally occupy the Premises for
the uses permitted by this Lease, and to open for business to customers; and
(iii) the Premises have been "Ready for Tenant's Fixturing" (as defined in
Section 7D of Exhibit C") for more than ninety (90) days and Tenant has not been
prevented from entering the Premises for the purpose of installing its personal
property, fixtures, appliances and equipment. Notwithstanding the foregoing,
the following shall apply:
A. The Commencement Date shall occur no later than the date on which
Tenant opens the Premises for business to customers; and
B. The Commencement Date shall not occur between November 15 of any
year and the following January 31; provided, however, that if Tenant opens the
Premises for business to customers during such period, the Commencement Date
shall be the date on which Tenant so opens the Premises for business to
customers.
ARTICLE FOUR
OPTIONS TO EXTEND
4.1 Grant of Option to Extend. Tenant shall have five (5) independent and
successive options to extend the initial Lease Term for five (5) Years for each
such option to extend.
4.2 Exercise of Option. Tenant may exercise any of the options to extend
granted to it by this Article at any time prior to the expiration of the then
Lease Term (as it may have previously been extended pursuant to this Article) by
delivering written notice of such election to Tenant, subject to the following
limitations:
(a) No exercise of an option to extend shall be effective if Tenant
is in default of its obligations under this Lease, Tenant has received written
notice of such default from Landlord, such default may be cured but has not been
cured, and any applicable grace or notice periods under this Lease have expired.
(b) If this Lease is terminated, Tenant's options to extend shall
also terminate.
(c) If on the date there remains one hundred eighty (180) days before
the expiration of the then Lease Term (as it may have been previously extended
by Tenant pursuant to this Article), Tenant has not given Landlord written
notice of its election to extend the Lease Term pursuant to any remaining option
to extend that it may have, Landlord shall notify Tenant in writing ("Landlord's
Reminder") that the Lease will expire on the scheduled expiration date. If
Tenant then fails to give Landlord written notice of its election to extend the
Lease Term pursuant to a then existing option within ten (10) days following
delivery to Tenant of Landlord's Reminder, all remaining options to extend
granted to Tenant pursuant to this Article shall terminate
4.3 Terms of Lease During Extension Period. If Tenant exercises any
option to extend the Lease Term pursuant to this Article, it shall lease the
Premises from Landlord, and Landlord shall lease the Premises to Tenant, on all
of the terms and conditions contained in this Lease during such extension period
(including all obligation to pay Percentage Rent pursuant to Section 5.3),
except that (i) the Base Monthly Rent may be adjusted pursuant to Section 5.2
for such extension period, and (ii) nothing herein shall be construed to grant
to Tenant any additional options to extend the Term (i.e., if Tenant exercises
the first option to extend, there shall thereafter only remain four (4) more
options to extend the Lease Term as provided in paragraph 4.1).
ARTICLE FIVE
RENT
5.1 Base Monthly Rent. Tenant agrees to pay Landlord, and Landlord agrees
to accept during the initial Lease Term, at such place as Landlord shall from
time to time designate by notice to Tenant, a base monthly rent ("Base Monthly
Rent") of Forty Thousand Eight Hundred Two Dollars ($40,802) per month;
provided, however, that if the Premises Construction Costs paid by Landlord are
less than One Million Eight Hundred Thousand Dollars ($l,800,000) as determined
pursuant to Exhibit C, the Base Monthly Rent of Forty Thousand Eight Hundred Two
Dollars ($40,802) shall be reduced by an amount equal to one-twelfth (l/12th) of
the product obtained by multiplying (i) ninety-five thousandths (.095) by (ii)
the difference between One Million Eight Hundred Thousand Dollars ($1,800,000)
and the amount of Premises Construction Costs actually paid by Landlord. Base
Monthly Rent shall be payable in equal monthly installments, in advance, on the
first day of each and every calendar month during the Lease Term commencing on
the Commencement Date and on the first day of each month thereafter during the
Lease Term; provided, however that all Base Monthly Rent and other payments
hereunder shall be apportioned based on the actual days in the period to which
the Base Monthly Rent or payment applies.
5.2 Base Monthly Rent During Extension Periods. If the Lease Term is
extended pursuant to Article 4 hereof, then Tenant shall pay Base Monthly Rent
during each such extension period(s) in a monthly amount equal to seventy-five
percent (75%) of the amount derived by dividing sixty (60) into the total Base
Monthly Rent plus Percentage Rent paid by Tenant to Landlord during the five (5)
Lease Years immediately preceding the commencement of the extension period in
question; provided, however, that in no event shall the Base Monthly Rent for
any extension period be less than the Base Monthly Rent due during the period
immediately preceding the extension period in question. If the Base Monthly
Rent payable during any extension period exceeds the Base Monthly Rent payable
during the initial Lease Term, then Tenant shall receive a credit against the
Percentage Rent payable during each Lease Year during such extension period that
is equal to the positive difference between (i) the Base Monthlv Rent that
became due during the Lease Year in question, and (ii) the Base Monthly Rent
that would have become due during the Lease Year in question had the Base
Monthly Rent been equal to the rent payable during the initial Lease Term
pursuant to paragraph 5.1. Such credit shall be non-cumulative. By way of
example only, (i) if during the Lease Year in question during an extension
period the Base Monthly Rent is Forty-Five Thousand Dollars ($45,000) per month
resulting in a total of Five Hundred Forty Thousand Dollars ($540,000) due as
Base Monthly Rent for the entire Lease Year in question, (ii) if during the same
Lease Year the Percentage Rent that is otherwise payable is Seventy-Five
Thousand Dollars ($75,000), then (iii) Tenant shall be entitled to a credit of
Fifty Thousand Three Hundred Seventy-Six Dollars ($50,376) against the
Seventy-Five Thousand Dollars ($75,000) of Percentage Rent that is due, so that
Tenant is only obligated to make a cash payment of Twenty-Four Thousand Six
Hundred Twenty-Four Dollars ($24,624) to satisfy its obligation to pay
Percentage Rent for the Lease Year in question during the extended term. The
figure of $50,376 used in the preceding example is the difference between
$540,000 (the total Base Monthly Rent payable during the Lease Year in question
that occurs during the extended period) and the amount of $489,624 (which is the
total Base Monthly Rent that would have been payable during the Lease Year in
question at the rate of $40,802 per month, which is equal to the Base Monthly
Rent payable during the initial Lease Term pursuant to paragraph 5.1, assuming
that no adjustment is required by said paragraph 5.1).
5.3 Percentage Rent.
A. Percentage Rent Formula. In addition to Base Monthly Rent, during
the Lease Term, if Gross Sales (as hereinafter defined) exceed Twelve Million
Dollars ($12,000,000), then Tenant shall pay to Landlord as "Percentage Rent"
the amounts set forth below to the right of the total Gross Sales for such Lease
Year:
GROSS SALES TOTAL
FOR LEASE YEAR PERCENTAGE RENT DUE
$12,000,000 or less None
$12,000,001 to $17,000,000 2% of amount of Gross Sales in excess
of $12,000,000 up to $17,000,000
$17,000,001 and up $100,000 plus 1% of amount of Gross
Sales in excess of $17,000,000
By way of example only, if Gross Sales for the Lease Year in question is
$19,000,000, the Percentage Rent for that Lease Year would be $120,000.
B. Calculation of Gross Sales for First Lease Year. If the
Commencement Date is a date other than February 1st, the first Lease Year will
be more or less than twelve (12) months, and accordingly the method for
calculating Percentage Rent shall be adjusted as provided in the Section to
avoid distortion. If, for the period commencing with the Commencement Date and
terminating on the first anniversary of said date (the "First Twelve Months"),
Gross Sales exceed Twelve Million Dollars ($12,000,000), a hypothetical
"Percentage Rent" for the First Twelve Months shall be calculated in accordance
with the table set forth in Section 5.3, based on the total Gross Sales for the
First Twelve Months. Such hypothetical "Percentage Rent" shall be multiplied by
a fraction, the numerator of which shall be the number of days in the first
Lease Year and the denominator of which shall be three hundred sixty-five (365).
If the first Lease Year is less than twelve (12) months, such amount shall be
the Percentage Rent due for the first Lease Year and shall be due and payable
within thirty (30) days after the end of the First Twelve Months. If the First
Lease Year is more than twelve (12) months, then (i) such hypothetical
"Percentage Rent" for the First Twelve Months shall be multiplied by a fraction,
the numerator of which shall be the number of days in the first Lease Year in
excess of 365 days and the denominator of which shall be 365, (ii) the result of
such multiplication shall then be added to the Percentage Rent for the last
twelve (12) month period of the first Lease Year based on the table set forth in
Section 5.3 above, and (iii) that sum shall be the total Percentage Rate for the
first Lease Year. It is understood that Gross Sales during a portion of the
first Lease Year will be used twice in calculating Percentage Rent for the first
Lease Year if it is more than twelve (12) months, but such double counting shall
be rectified by the proration formula above and shall not increase Tenant's
total Percentage Rent obligations hereunder. By way of example only, (i) if the
Commencement Date is October 1, 1988 and accordingly the first Lease Year
commences on October 1, 1988 and ends on January 31, 1990, (ii) Gross Sales for
the period beginning October 1, 1988 and ending September 30, 1989 total
$14,000,000, (iii) Gross Sales for the period beginning February 1, 1989 and
ending January 31, 1990 total $15,000,000, then (iv) Percentage Rent payable for
the first Lease Year commencing October 1, 1988 and ending January 31, 1990
would be $53,479.45.
C. Method of Payment. Percentage Rent shall be paid by Tenant within
ninety (90) days after the end of each Lease Year. Each such payment of
Percentage Rent shall be accompanied by a statement setting forth Gross Sales
made during the preceding Lease Year signed by an officer of the Tenant's
operating division in charge of the Premises.
D. Definition of Gross Sales. For the purpose of determining the
Percentage Rent to be paid hereunder, "Gross Sales" shall mean the total
receipts (determined at the time of sale) from all merchandise and services sold
or rendered in the Premises by Tenant or any subtenant, concessionaire, or
licensee, whether for cash or on a charge, credit or time basis (without reserve
or deduction for inability or failure to collect), less the selling price of any
goods returned by any customer (to the extent that the selling price of any such
returned goods has been included in Gross Sales) and less that part of the sales
price of merchandise which is paid by the trading in of other merchandise of the
customer (although the proceeds from the subsequent sale of such trade-in
merchandise shall be included in Gross Sales hereunder) and further expressly
excluding the following:
1. Sales at a discount to employees of Tenant or a subtenant,
concessionaire, or licensee;
2. Revenues derived from service charges made for credit
transactions, delivery charges for products sold from the Premises, sales
from vending machines, income from the sale of stamps, money orders,
express checks, and bank checks, check-cashing receipts, revenues from
lockers, public toilets, and telephones, all sums received from the sale of
tickets of admission to theatrical, circus, church and sports events, and
all sums received from the sale of such other items as form an
inconsequential part of the business of Tenant or any subtenant,
concessionaire, or licensee:
3. All sums representing so-called "sales taxes" collected directly
from customers, based upon present and future laws of the federal, state or
local government, and collected by Tenant or any subtenant, licensee or
concessionaire in the operation of its business on the Premises, and any
other tax, excise or duty which is levied or assessed against Tenant or any
subtenant, licensee or concessionaire by any federal, state, municipal, or
local authority based on sales of specific merchandise on the Premises, or
the privilege or license to sell or distribute specific merchandise from
the Premises, whether or not the amount thereof is passed on to, or
collected by, Tenant or any subtenant, licensee or concessionaire from any
purchaser thereof;
4. The transfer of merchandise by Tenant, or a subtenant, licensee or
concessionaire, or any subsidiary of any of them from the Premises to
another store or a place of business owned or operated by Tenant, or a
subtenant, licensee or concessionaire, all of which shall not constitute a
sale;
5. Proceeds from the sale of gift certificates or like vouchers;
provided, however, that when any such certificate or voucher is redeemed
for merchandise at the Premises (whether said certificate or voucher was
initially sold at the Premises or at another location), then the retail
price of the goods allocable to such redemption shall be included in Gross
Sales;
6. Donations of merchandise to non-profit charitable and religious
institutions:
7. Service charges, finance charges, interest and discounts
attributable to "charge accounts" and credit cards to the extent the same
are paid by customers, or to the extent the same are paid by or charged to
Tenant or any subtenant, licensee or concessionaire by any credit company;
8. Charges for labor performed outside of the Premises or arranged by
a "Home Improvement" or "Decorations" department of Tenant or any of its
subtenants, licensees, or concessionaires, but including the receipts from
the sale of merchandise from the Premises in connection therewith: and
9. Sums received in partial payment for merchandise sold upon the
"layaway" or "will call" basis, provided said sums shall be included in
Gross Sales when the sale has been concluded by delivery of the merchandise
to the customer. Any such partial payments that are forfeited by customers
also shall be included in Gross Sales.
E. Arbitration. Any dispute with respect to proper exclusions from
Gross Sales may be submitted to arbitration in the manner provided in Section
20.6.
5.4 Records. Within twelve (12) months after Landlord's receipt of
Tenant's statement of Gross Sales and not more frequently than once per Lease
Year, Landlord and its agents or representatives may inspect Tenant's records of
sales made in the Premises to determine the propriety of Tenant's statement.
Such inspection shall be conducted at Tenant's accounting offices, wherever such
offices are now or hereafter located. Any claim by Landlord for revision of any
statement of Gross Sales or Percentage Rent, which claim is not made to Tenant
within twelve (12) months after the date of delivery of such statement to
Landlord, shall be deemed waived by Landlord. If Landlord discovers that Tenant
has under-reported its Gross Sales by more than three percent (3%) of Tenant's
actual Gross Sales, then Tenant shall promptly pay the reasonable cost of the
Landlord's audit, plus the amount of the deficiency in Percentage Rent. Except
as to the level of disclosure customarily required by prospective mortgagees and
purchasers of Landlord's interest in the Premises, Landlord agrees to hold in
confidence all sales figures and other information obtained from Tenant's
records. Tenant makes no representation or warranty as to the sales which it
expects to make in the Premises.
ARTICLE SIX
TAXES
6.1 Personal Property Taxes. Tenant shall pay, prior to delinquency, all
taxes levied against its personal property and trade fixtures located on the
Premises. If the assessed value of Landlord's property is increased by
inclusion of Tenant's personal property and trade fixtures located on the
Premises, then Tenant shall pay to Landlord upon demand the portion of taxes
attributable to Tenant's property and fixtures.
6.2 Real Estate Taxes.
A. Definition. As used herein, the term "Real Estate Taxes" shall
mean the following: (i) ad valorem real property taxes; (ii) assessments for
public improvements, services, or benefits (subject to Subsection 6.2C hereof);
and (iii) any other tax or charge imposed by any governmental or quasi
governmental authority having the power to tax or levy assessments which is
levied or assessed against the Shopping Center or the rent payable pursuant to
this Lease. The term "Real Estate Taxes" shall not include any estate,
inheritance, succession, capital levy, corporate franchise, excess profits,
transfer or income tax of Landlord. If any assessments are levied against the
Shopping Center, Landlord may elect to either pay the assessment in full or
allow the assessment to go to bond. If Landlord pays the assessment in full,
Tenant shall pay to Landlord each time payment of Real Estate Taxes as made a
sum equal to that which would have been payable (as both principal and interest)
had Landlord allowed the assessment to go to bond.
B. Tenant's Obligation to Pay. Tenant shall pay in the manner and
within the time specified within Subsection 6.2E Tenant's Proportionate Share
(defined and calculated as provided in Subsection 1.2M) of any Real Estate Taxes
which become due and payable upon the Shopping Center during each Lease Year
included within the period commencing with the Commencement Date and ending with
the expiration of the initial and any extension term or terms of this Lease. As
an alternative to calculation of Tenant's obligation to pay its fair share of
Real Estate Taxes based upon the definition contained in Subsection 1.2M,
Landlord may propose an allocation of Real Estate Taxes which become due and
payable upon the Shopping Center and Tenant shall pay its share of such Real
Estate Taxes as allocated by Landlord so long as Landlord demonstrates to
Tenant's reasonable satisfaction that the allocations made by Landlord of such
Real Estate Taxes to the various components of the Shopping Center are fair and
reasonable and are based upon the information used by the tax assessor
(including assessors' work sheets or such other information as may be reasonably
available to Landlord) establishing the amount of such Real Estate Taxes. If
this alternative calculation is used, Tenant shall pay (i) one hundred percent
(100%) of all Real Estate Taxes fairly allocable to the Building; (ii) one
hundred percent (100%) of all Real Estate Taxes fairly allocable to the land
immediately beneath the Building and all areas that Tenant has the exclusive
right to use; (iii) Tenant's Proportionate Share of Real Estate Taxes fairly
allocable to the land and improvements that are within the Common Area that are
not devoted to the exclusive use of any other tenant of the Shopping Center and
are not within the Shop Pads. Should the County Assessor establish a separate
tax parcel containing the Premises and an equitable portion of the Common Area,
and thereafter separately assess taxes applicable to such parcel and the
improvements located thereon, then notwithstanding the foregoing, either
Landlord or Tenant may elect that Tenant's share of Real Estate Taxes shall be
the taxes allocated by the County Assessor to such tax parcel provided Landlord
and Tenant have each approved the boundaries established for the tax parcel as
constituting an equitable division of the Shopping Center for Real Estate Tax
purposes. Notwithstanding anything contained herein, Tenant shall not be
obligated to pay any Real Estate Taxes allocable to the Shop Pads or any other
buildings and the land immediately beneath them that are within the Shopping
Center which are reserved to the exclusive use of Landlord or any other party.
Should Landlord and Tenant be unable to reach agreement as to the fair share of
Real Estate Taxes required to be paid by Tenant, either Landlord or Tenant may
require that the matter be determined by arbitration as provided for within
Section 20.6.
C. Future Voluntary and Existing Assessments. Notwithstanding
anything contained herein, the parties agree as follows:
(1) Tenant shall only be obligated to pay up to Four Thousand Dollars
($4,000) per tax fiscal year on account of the assessments affecting the
Shopping Center which are described in the exceptions to title attached to the
Lease as Exhibit F. This limit on Tenant's obligation shall be pro rated for
any partial tax fiscal year during the Lease Term. Landlord shall be
responsible for any other amount owed pursuant to such assessments without a
right of reimbursement from Tenant.
(2) Landlord shall be obligated to pay, without a right of reimbursement
from Tenant, any future assessments not described in the title exceptions
attached to the Lease as Exhibit F if all of the following are true with respect
to the future assessment in question: (i) such assessments were authorized by a
vote or approval of the required number of benefitted property owners, (ii)
Landlord voted in favor of or approved such assessments (either as owner of the
Shopping Center or as owner of other property effected by such assessments), and
(iii) Tenant did not approve in writing such assessments (which approval shall
not be unreasonably withheld).
D. Adjustments. The Real Estate Taxes for each Lease Year shall be
the Real Estate Taxes due and payable during said Lease Year. All taxes shall
be apportioned between Landlord and Tenant as of the dates of commencement and
termination of this Lease. In addition, if any Lease Year shall be greater than
or less than twelve (12) months, or if the Real Estate Tax year shall be
changed, an appropriate adjustment shall be made. If there shall be more than
one taxing authority, the Real Estate Taxes for any period shall be the sum of
the Real Estate Taxes for said period attributable to each taxing authority.
E. Manner of Payment. Landlord shall submit to Tenant true copies of
the xxxx for any Real Estate Taxes for each tax year or portion of a tax year
included within the Lease Term and, not less than thirty (30) days prior to the
date when such Real Estate Taxes would become delinquent, shall xxxx Tenant for
any amount that may be payable by Tenant. Said xxxx shall be accompanied by a
proper computation of the amount payable by Tenant and such amount shall be paid
by Tenant at least ten (10) days before the date or dates of delinquency of such
Real Estate Taxes. If Tenant shall not have received such xxxx at least thirty
(30) days prior to the time for payment, Tenant shall not be required to make
payment until twenty (20) days after receipt of said xxxx.
F. Right to Contest. Tenant, at its sole cost, shall have the right
at any time to seek a reduction in the assessed valuation of the Premises and
the Common Area or to contest any Real Estate Taxes that are to be reimbursed or
paid by Tenant. If Tenant seeks a reduction or contests the Real Estate Taxes,
Tenant's failure to pay such taxes shall not constitute a default under this
Lease as long as Tenant complies with the provisions of this paragraph.
Landlord shall not be required to join in any proceeding or contest brought by
Tenant, unless the provisions of any law require that the proceeding or contest
be brought by or in the name of Landlord or any owner of the Premises. In that
case, Landlord shall join in the proceeding or contest, or permit it to be
brought in Landlord's name, as long as Landlord is not required to bear any
cost. On final determination of the proceeding or contest, Tenant shall
immediately pay or discharge any decision or judgment rendered, together with
all costs, charges, interests, and penalties incidental to the decision or
judgment. If, after Tenant has made a payment of Real Estate Taxes, Landlord
receives a refund of any portion of taxes on which such payment was based,
Landlord shall promptly pay Tenant's portion of the refund to Tenant. Landlord
shall take such action as is reasonably requested by Tenant for the purpose of
making payment to the tax collector, obtaining information and other data from
the county or city tax assessor, and instituting and maintaining any proceeding
or contest allowed under this paragraph with respect to all Real Estate Taxes in
connection with the Premises. Notwithstanding the foregoing if Tenant elects
not to pay when due an installment of taxes the amount of which is being
contested, Tenant shall provide security satisfactory to Landlord's lender to
assure that taxes as determined together with interest and penalties, if any,
will be paid and that in no event shall any tax sale be permitted to occur,
taxes assessed to be paid under protest if necessary to prevent a tax sale.
G. Receipts. Landlord shall pay when due all Real Estate Taxes and
other taxes and assessments assessed against the Shopping Center and shall
provide Tenant with copies of receipted tax bills promptly after receipt of the
same from the taxing authorities; provided, however, that to the extent Tenant
has not performed its obligation to pay Real Estate Taxes pursuant to this
Article, or Tenant is exercising its right to delay payment in connection with
its right to contest a tax pursuant to Subsection 6.2F, Landlord shall be
excused from paying that portion of the Real Estate Taxes not paid by Tenant.
ARTICLE SEVEN
MAINTENANCE, REPAIR AND ALTERATIONS
7.1 Tenant's Repairs. Subject to the provisions of Section 7.2, Section
15.3, and Articles 16 and 17, and the other provisions of this Lease, Tenant
shall, during the Lease Term: (i) repair and maintain the interior of the
Building; (ii) repair, maintain, and replace when necessary all elements of the
pick-up station that are part of the Premises; (iii) repair and maintain the
exterior surfaces of the Building (including the roof membrane, except that
Landlord shall be responsible for the repair, maintenance, and replacement of
the roof membrane during the first five years of the Lease Term as provided in
Section 7.2); and (iv) repair and maintain the HVAC equipment servicing the
Premises. In discharging the foregoing obligations, Tenant shall have the
benefit of any warranties or guarantees issued by third parties with respect to
the Building or any equipment installed therein, and Landlord shall reasonably
cooperate to make such guarantees and warranties available to such Tenant.
7.2 Landlord's Repairs. Subject to the provisions of Section 15.3 and
Articles 16 and 17 below, Landlord shall at its sole cost and without right of
reimbursement from Tenant: (i) repair, maintain, and replace when necessary
utility services (water, sewer, gas, and electrical) up to the point of entry to
the Building; (ii) perform any maintenance, repair, or replacement of the roof
membranes the need for which, is identified prior to the fifth (5th) anniversary
of the Commencement Date; and (iii) maintain, repair, and replace when necessary
the structural portions of the Building, including the floor slab, bearing
walls, foundations, and structural roof. Landlord shall also make any repairs
required (i) because of the settling of the Premises (including all repairs
required as a result of the existing soil and ground water conditions), or (ii)
as a result of the act, default or negligence of Landlord, its employees,
agents, licensees or contractors. Notwithstanding the foregoing , if damage to
the premises is caused by Tenant, its agents, employees, or contractors, to the
extent the cost to repair or restore such damage is not covered by insurance,
Tenant shall be responsible for the cost of such repair or restoration. Tenant
hereby waives the benefits of California Civil Code Section 1941, but only to
the extent that Section 1941 imposes obligations on Landlord which exceed
Landlord's obligations under this Lease.
7.3 Requirements of Law. If any federal, state or municipal government or
any department or division thereof has condemned or hereafter shall condemn the
Premises or Shopping Center or any part thereof as unsafe or as not in
conformity with all Legal Requirements, or if any federal, state or municipal
government or any department or division thereof has ordered or hereafter shall
order any alterations or repairs thereof, Landlord shall immediately at its sole
cost and expense make such alterations and repairs as may be necessary to comply
with Legal Requirements (the validity of which Landlord shall be entitled to
contest) ("Required Work"), the following shall apply:
A. Landlord and Tenant shall each have the right to contest the
validity of any Required Work. Tenant's right to do so shall be governed by the
provisions of Subsection 6.2F to the extent applicable.
B. Tenant shall perform any Required Work that must be made to the
Premises at Tenant's sole cost and expense that is required because of Tenant's
particular and specific use of the Premises, and which is not being generally
required to be made to other similar buildings in the same jurisdiction governed
by the governmental authority in question.
C. If Tenant is not required to perform the Required Work pursuant to
Subsection 7.3B above, then Landlord shall perform the Required Work. If the
Required Work relates to a Legal Requirement that was in effect as of the
Effective Date of the Lease, Landlord shall perform the Required Work at its
sole cost, without a right of reimbursement from Tenant. To the extent any
Required Work to be performed by Landlord interferes with Tenant's use of the
Premises, Tenant shall be entitled to an abatement of Base Monthly Rent to the
extent the performance of the Required Work interferes with Tenant's use of the
Premises.
D. If Landlord is required to perform the Required Work and such
Required Work does not relate to a Legal Requirement in effect as of the
Effective Date of the Lease, then Tenant shall contribute to the cost of the
Required Work in the form of additional rent payable during the remainder of the
Lease Term. The amount of additional rent Tenant is to pay with respect to each
Required Work shall be determined as follows:
(1) All costs paid by Landlord to perform the Required Work
shall be amortized over the useful life of the improvement, with interest on the
unamortized balance at the then prevailing market rate Landlord would pay if it
borrowed funds to construct such improvements from an institutional lender.
Landlord shall inform Tenant of the monthly amortization payment that would be
required to so amortize such costs (with interest) over such useful life of the
improvement, and shall also provide Tenant with the information upon which such
determination is based.
(2) If the Required Work is not performed on the Building or any
other element of the Premises, but is performed in the Common Area or other part
of the Shopping Center, as additional rent Tenant shall pay an amount equal to
Tenant's Proportionate Share of such monthly amortization payment. If the
Required Work relates to the Building or other element of the Premises, Tenant
shall pay as additional rent an amount equal to such monthly amortization
payment. Tenant's obligation to pay such additional rent shall continue for
each month after the Required Work in question is completed until the first to
occur of (i) the expiration of the Lease Term, or (ii) the end of the term over
which such costs were amortized. Such amount shall be due at the same time Base
Monthly Rent is due. If by reason of such Legal Requirements or the work done
by Landlord in connection therewith, Tenant is deprived of the use of the
Premises, then the Base Monthly Rent and other charges payable by Tenant to
Landlord hereunder shall be abated in proportion to the time during which, and
to that portion of the Premises of which, Tenant shall be deprived as a result
thereof. All such alterations and repairs shall be done in accordance with
plans and specifications approved by Tenant, which approval shall not be
unreasonably withheld. Notwithstanding the above, if such condemnation or Legal
Requirement is the direct result or is caused by Tenant's particular and
specific use of the Premises (the validity and applicability of which Tenant
shall be entitled to contest), then Tenant shall immediately at Tenant's own
cost and expense comply therewith, and no abatement of rent shall be granted.
7.4 Tenant's Alterations.
A. Non-Structural Alterations. Tenant shall have the right, without
Landlord's prior consent, at its sole cost and expense to make such
nonstructural alterations and changes to such parts of the Premises as Tenant
shall deem expedient or necessary for its purposes.
B. Structural Alterations. Tenant may make structural alterations
and additions to the Premises, if Tenant has first obtained Landlord's written
consent; provided, however, that Landlord's written consent shall not be
required with respect to any structural, alteration or addition to the Premises
that costs less than Twenty-Five Thousand Dollars ($25,000) to make.
C. Cooperation By Landlord. Landlord shall execute and deliver upon
request of Tenant such instrument or instruments embodying the approval of
Landlord, and shall otherwise cooperate at no cost to Landlord as may be
required by any public or quasi-public authority for the issuance of any
license, variance or permit required for the making of alterations, changes
and/or installations in, to or upon the Premises by Tenant.
D. Notices. Tenant shall give Landlord ten (10) days' prior notice
of the commencement of construction of all alterations costing in excess of
$25,000, so that Landlord may post notices of non-responsibility.
7.5 Permits. Each party shall procure all necessary permits before making
any repairs, alterations, other improvements or installations to the Premises
and/or Shopping Center, or a portion thereof, including without limitation, any
alterations made pursuant to Section 7.3. Each party shall give written notice
to the other of any repairs required of the other pursuant to the provisions of
this Article, and the party responsible for such repairs shall promptly commence
such repairs and to prosecute the same to completion diligently, subject only to
Excusable Delays.
7.6 Mechanic's Liens. Subject to performances by the other party of any
applicable reimbursement obligation under this Lease, each party (i) shall pay
promptly when due the entire cost of any work done by it on the Premises so that
the Premises at all times shall be free of liens for labor and materials, and
(ii) shall save harmless and indemnify the other from and against any and all
injury, loss, claims or damage to any person or property occasioned by or
arising out of the doing of any such work by such party or its employees, agents
or contractors. Such work shall be done with materials of good quality and in a
good and workmanlike manner, and shall comply with all Legal Requirements.
ARTICLE EIGHT
COMMON AREA
8.1 Grant of Easement and Right to Use. Landlord shall continuously and
without interruption make available, and hereby grants and demises to Tenant, a
non-exclusive easement and the right for Tenant, its subtenants and their
respective agents, employees, contractors, customers, guests, licensees and
invitees (in common with Landlord and all persons, firms and corporations
conducting business within the Shopping Center and their respective customers,
guests, licensees, invitees, subtenants, employees and agents) to use those
portions of the Shopping Center shown as "Common Area" on Exhibit X-x for
ingress, egress, parking, and all purposes for which such areas would
customarily be used. Landlord may not subdivide the Shopping Center unless the
following conditions are satisfied: (i) Tenant approves the configuration of
the subdivision; and (ii) Landlord causes to be prepared, recorded, and made
effective a set of covenants, conditions and restrictions which are consistent
with and protect the rights granted to Tenant by this Lease and which have been
approved by Tenant and to which Tenant is a party.
8.2 Restrictions on Use of Common Area. The Premises and the other areas
of the Shopping Center upon which the construction of buildings and similar
improvements is permitted are shown on Exhibit B-1 as the "Shops" and are
defined herein as the "Shop Pads". Landlord agrees that at no time shall any
buildings, or other structures be erected upon the Common Area (except bumper
guards, curbs, landscape planters, lighting standards, and landscaping
improvements required by applicable governmental authorities, and pylon and
directional signs in the locations, if any, shown on Exhibit B-1 or otherwise
approved by Tenant), nor shall Landlord alter the parking layout, the parking
facilities, or the ingress-egress areas to the Shopping Center or the site of
the Shop Pads shown on Exhibit B-1, without the prior written approval of
Tenant. Tenant shall have the right to approve the size and style of any pylon
or directional signs located in the Common Area, but in no event shall Tenant be
obligated to approve any such sign or other structure which substantially
interferes with or impedes the visibility of Tenant's signs located in the
Shopping Center. Landlord agrees as follows with respect to the Shop Pads: (i)
no buildings (other than the Building) shall be constructed in the Shopping
Center except within the Shop Pads; (ii) any building constructed on either of
the Shop Pads shall be single story building, the area of which does not exceed
the area of the Shop Pad on which it is constructed; (iii) any building
constructed on either of the Shop Pads shall be of a design that is consistent
with the PUD zoning applicable to the Shopping Center as of the Effective Date;
and (iv) any buildings constructed on either of the Shop Pads may not be used
for the uses specified in Subsections 11.2A and 11.2B.
8.3 Duties of Landlord. Landlord shall repair and maintain the Common
Area in a first class and clean condition and shall pay all costs and expenses
of whatsoever nature necessary therefor, such obligation to include but not be
limited to:
(a) Maintaining signs, landscaped areas, lighting standards and
parking area surfaces (including stripe painting and the removal of
standing water therefrom), and removing rubbish and other refuse and
debris;
(b) Keeping the Common Area well illuminated during those hours of
darkness when Tenant is conducting its business on the Premises and until
one (1) hour after closing of Tenant's business;
(c) Providing at least 204 parking spaces within the Common Area;
(d) Paying all Real Estate Taxes applicable to the Common Area;
(e) Maintaining and paying for "all-risk" insurance on the
improvements that are part of the Common Area; and
(f) Paying all wages, workers' compensation insurance, unemployment
taxes and other costs and expenses of employees and independent contractors
necessary to maintain and operate the Common Area.
8.4 Reimbursement by Tenant.
A. Definition of Common Area Maintenance Costs. Tenant shall
reimburse Landlord for Tenant's Proportionate Share of the Common Area
Maintenance Costs. The term "Common Area Maintenance Costs" shall mean all
direct costs and expenses reasonably paid or incurred by Landlord during the
Lease Year in question in performing its obligations pursuant to Section 8.3.
Notwithstanding the foregoing or anything to the contrary in this Lease, in no
event shall "Common Area Maintenance Costs" include or shall Tenant otherwise be
required to reimburse Landlord for any of the following: (i) the cost of
repairing or replacing any portion of the Common Area or Landlord's
Construction, the original construction of which was defective or not
constructed substantially in accordance with the specifications approved by
Tenant; (ii) any payments made by Landlord on account of assessments applicable
to the Common Areas which either do not relate to installment payments which are
payable during the Lease Term or on account of those assessments existing as of
the Effective Date which are more particularly described in Exhibit F (except as
may otherwise be required by Subsection 6.2C); (iii) any fee to or charge by
Landlord or any other person and/or entity for management, supervision, profit
and/or general overhead to the extent that the total of any such fees or charges
for the billing period in question exceeds five percent (5%) of all other Common
Area Maintenance Costs for the same period (excluding Real Estate Taxes,
insurance premiums, and capital improvements); (iv) depreciation, ground lease
payments, mortgage payments, or reserves; (v) interest and other cost and
charges for Landlord's financing; (vi) late charges, penalties and unearned
discounts occasioned by Landlord's late payments; (vii) promotional and
advertising costs; (viii) costs incurred as a consequence of the act, default or
negligence of Landlord, other occupants of the Shopping Center or their agents,
employees and contractors; (ix) expenditures required to be capitalized under
generally accepted accounting principles, except to the extent of the amortized
cost of such item based on its useful life that is allocable to the billing
period in question; (x) costs not reimburseable to Landlord by all other tenants
of the Shopping Center; (xi) merchant association or similar dues and fees.
B. Method of Payment. The reimbursement of Landlord by Tenant of
Tenant's Proportionate Share of the Common Area Maintenance Costs shall be
payable within thirty (30) days following Landlord's written demand therefor,
which demand shall be made no more often than once every three (3) calendar
months and no less often than once each Lease Year; provided, however, that
Landlord and Tenant may agree from time to time with respect to particular Lease
Year(s) that Tenant will pay with each installment of Base Monthly Rent and
without further demand by Landlord, an equal monthly installment of Landlord's
good faith estimate of the Common Area Maintenance Costs for the present Lease
Year, based on prior costs incurred exclusive of extraordinary expenditures, if
such estimate is subject to annual adjustment based on the actual Common Area
Maintenance Costs. Tenant's obligation to pay its Tenant's Proportionate Share
of the Common Area Maintenance Costs is expressly conditioned upon its prior
receipt of a written demand by Landlord accompanied by such statements, bills,
invoices or other documentation, certified by Landlord, as shall be necessary or
reasonably appropriate for a proper analysis of such charges; except that during
any Lease Year when Tenant shall have paid monthly installments of Common Area
Maintenance Costs, Landlord shall provide such documentation to Tenant once,
within sixty (60) days after the expiration of such Lease Year, and Landlord and
Tenant shall adjust the Common Area Maintenance Costs for such Lease Year within
thirty (30) days after Tenant's receipt of said documentation. Tenant's
Proportionate Share of the Common Area Maintenance Costs for the first and last
Lease Year shall be appropriately and equitably apportioned.
C. Audit. Landlord shall keep good and accurate books and records in
accordance with generally accepted accounting principles concerning the
operation, maintenance and management of the Common Area. Such books and
records, and the underlying invoices and other original documentation, shall be
kept by Landlord and made available for inspection by Tenant for a period of at
least one (1) year after the expiration of the period to which such books,
records, and original documentation relates. Tenant and its agents shall have
the right at any time and from time to time during normal business hours to
inspect and copy such books and records. Any dispute with respect to the
propriety of an inclusion in or exclusion from Common Area Maintenance Cost may
be submitted to arbitration in the manner provided in Section 20.6.
8.5 Repair of Common Area.
A. Notice to Tenant. Landlord shall notify Tenant in writing at
least ten (10) days prior to the commencement of any reconstruction, repairing
or repaving of the Common Area. If such reconstruction, repair or repaving
substantially impedes or interferes with normal access to the Premises in a
manner which interferes with Tenant's business therein, and such condition
continues in excess of five (5) days after notice to Landlord from Tenant, then
the Base Monthly Rent and other charges payable by Tenant to Landlord shall
xxxxx until such work no longer substantially impedes or interferes with normal
access to the Premises.
B. Destruction of Other Improvements. If at any time during the term
of this Lease any building in the Shopping Center, other than the Building
included in the Premises, is damaged or destroyed partially or totally by fire,
the elements or any other casualty or occurrence, Landlord shall within a
reasonable time (but in no event later than three (3) months after such damage
or destruction) commence the rebuilding or demolishing of any such building and
diligently prosecute such rebuilding or demolition to completion. If the
building is demolished, Landlord shall clean-up all rubbish and debris and level
and grade and pave such area so that the same shall be in good, safe and
presentable condition for use as a parking area by Tenant and other occupants of
the Shopping Center. Nothing herein shall prohibit Landlord from rebuilding at
some future date on any area where such damaged or destroyed building was
located, subject to the limitations contained in this Lease.
8.6 Indemnity and Insurance. Landlord shall indemnify and hold Tenant
harmless from and against any and all claims, liabilities, judgments, damages or
causes of action (i) for injury to any person or property while on or about the
Common Area, unless caused by the negligence or default of Tenant or its agents
or employees acting within the course and scope of their employment or agency,
or (ii) which arise or are claimed to arise from the acts, default or negligence
of Landlord, or its agents, employees and contractors. For the purpose of so
protecting Tenant, Landlord shall pay for and keep in full force and effect a
comprehensive general liability insurance policy covering the Common Area within
the Shopping Center, with liability limits of Five Million Dollars ($5,000,000)
and such other policy provisions as are commercially reasonable. The liability
limits for such insurance shall be subject to periodic adjustment at the request
of either Landlord or Tenant to such new limits as are then commercially
reasonable under the circumstances or are required by an institutional lender
whose loan is secured by the Shopping Center; provided, however, that (i) Tenant
may not request that such limits be adjusted more frequently than every three
(3) years during the Lease Term; and (ii) any dispute concerning what liability
limits or other policy provisions are required by this Section 8.6 shall be
settled by arbitration conducted in the manner described in Section 20.6.
Tenant shall be named as an additional insured in such policy and a copy of such
insurance policy, or a certificate evidencing such coverage, shall be delivered
to Tenant by Landlord on or prior to the Commencement Date. Said certificate
and policy shall provide that the policy shall not be cancelled or materially
changed without at least ten (10) days' prior written notice to Tenant, that the
policy is in addition to, and does not contribute with, any other insurance
carried by Tenant, and that the coverage of the policy with respect to any
insured is not defeated as a consequence of the acts or omission of any other
party. Renewal certificates or policies shall be delivered to Tenant not fewer
than fifteen (15) days prior to the expiration date of the expiring policy
theretofore furnished pursuant to this Section. The insurance that Landlord is
required to carry pursuant to this Section 8.6 may be issued as a primary policy
or be part of a blanket policy if the blanket policy specifically provides that
the amount of insurance required by this Section shall be in no way prejudiced
by other losses covered by the policy. If the blanket policy is prejudiced by
other losses, Landlord must carry sufficient excess or umbrella coverage such
that total coverage is in no way prejudiced by other losses.
ARTICLE NINE
UTILITIES
Tenant shall promptly pay for all utilities furnished to the Premises from
and after the Commencement Date, including water, gas and electricity. If the
Premises are rendered unfit for retail use because of an interruption in water,
electricity, fire protection, sewer or other utility service or for any other
reason and not due to the fault of Tenant, and such condition continues for a
period that is longer than the greater of sixty (60) days or the period of
Tenant's business interruption insurance coverage (if any), then Tenant shall
have the option to terminate this Lease. Notwithstanding the foregoing, if the
Premises are so made unfit for retail use as a result of a breach by Landlord of
its obligations under this Lease or because of the negligence or willful
misconduct of Landlord, its agents, employees or contractors, in addition to
such right to terminate, Tenant shall be entitled to an abatement of base
Monthly Rent and Additional Rent in proportion to the interference with Tenant's
use of the Premises resulting therefrom
ARTICLE TEN
INDEMNITY AND PUBLIC LIABILITY
Tenant shall save Landlord harmless and indemnify Landlord from and against
any and all claims, damages or causes of action for damages to any person or
property while in or on the Premises, unless caused by the acts, negligence or
default of Landlord, its employees, agents, licensees or contractors. Tenant
shall maintain, with respect to the Premises, public liability insurance with
limits of Five Million Dollars ($5,000,000) and such other policy provisions as
are commercially reasonable, which (i) names Landlord as an additional insured
and (ii) is primary insurance which provides that the insurer shall be liable
for the full amount of the loss up to and including the full amount of liability
set forth in the declarations without the right of contribution from any other
insurance coverage of Landlord. The liability limits for such insurance shall
be subject to periodic adjustment at the request of either Landlord or Tenant to
such new limits as are then commercially reasonable under the circumstances or
are required by an institutional lender whose loan is secured by the Shopping
Center; provided, however, that (i) Landlord may not request that such limits be
adjusted more frequently than every three (3) years during the Lease Term; and
(ii) any dispute concerning what liability limits or other policy provisions are
required by this Article Ten shall be settled by arbitration conducted in the
manner described in Section 20.6. All such insurance may be carried under a
blanket policy covering the Premises and any other stores and facilities of
Tenant. A copy of the certificate of insurance shall be delivered to Landlord
upon Landlord's written request therefor and no such policy shall be cancellable
without fifteen (15) days' prior written notice to Landlord.
ARTICLE ELEVEN
USE
11.1 Permitted Uses. The Premises may be used and occupied for the
operation of an Orchard Supply Hardware retail store, or for any other lawful
purpose except those uses described in Subsection 11.2A. Nothing in this Lease
shall be construed to require Tenant to conduct business in the Premises.
11.2 Prohibited Uses.
A. Uses Unrelated to Tenant's Use. No portion of the Shopping Center
may be used for any of the following purposes: adult bookstores, pornographic
shops, amusement centers (including but not limited to bowling alleys, skating
rinks, racquetball courts, dance halls, amusement arcades and movie theaters),
flea markets, billiard rooms, health spas, bars (other than in connection with a
"sit down" restaurant), car washes, massage parlors, schools, automotive service
centers, or motorcycle shops. No portion of the Shopping Center may be used for
office uses; provided, however, that (i) minor management offices incidental to
restaurant or retail uses are permitted; (ii) offices that are essentially
retail in character are permitted (e.g., travel agencies, real estate or
security brokerage firms, retail financial institutions such as banks, and
financial services companies).
B. Restriction on Competitive Uses. So long as Tenant or an assignee
or sublessee of Tenant's interest in the Premises is operating a retail home
improvement center on the Premises, Landlord shall not lease, rent or occupy any
portion of the Shopping Center, other than the Premises, or permit any portion
of the Shopping Center, other than the Premises, to be occupied by any person or
entity for use principally as a retail home improvement center or as a retail
store engaged in the sale of building supplies, hardware, paint, garden
supplies, electrical supplies, and plumbing supplies.
C. Remedies. Landlord's failure to comply with this Section 11.2
shall be deemed a material default hereunder, entitling Tenant to all remedies
available at law or in equity for such breach, including the remedies of
damages, injunctive relief, and specific performance. In addition, Landlord and
Tenant agree that if any third party uses any part of the Shopping Center in
violation of Subsections 11.2A or 11.2B and Landlord does not promptly commence
legal action to terminate such use within thirty (30) days following written
demand therefor by Tenant and thereafter diligently prosecutes such legal action
to completion, then if Tenant so elects and in addition to any other remedy that
it may have, during the period beginning with the expiration of said fifteen
(15) day period and ending when Landlord commences such legal action, or during
any period when Landlord is not diligently prosecuting such legal action to
completion, (i) any Gross Sales made by Tenant during such period shall be
excluded from determining the amount of Percentage Rent due for the Lease Year
during which such default continues; and (ii) Tenant may withhold any payment of
Percentage Rent that is due with such withheld Percentage Rent becoming due and
payable (without interest) at such time as Landlord's default pursuant to this
Section is cured.
ARTICLE TWELVE
ASSIGNMENT AND SUBLETTING
Tenant shall have the absolute right, without Landlord's consent, to
transfer and assign this Lease or to sublet all or any portion of the Premises
to: (i) any entity which will use the Premises for any lawful retail use; (ii)
a subsidiary, affiliate, division or corporation controlled by Tenant or
Tenant's parent corporation; (iii) a successor corporation related to Tenant or
Tenant's parent corporation by merger, consolidation, non-bankruptcy
reorganization, or government action; or (iv) a purchaser of substantially all
of the assets of Tenant or Tenant's parent corporation. With respect to any
proposed assignment or sublease other than those enumerated above, Tenant must
obtain Landlord's prior written consent, which shall not be unreasonably
withheld or delayed. In the event Tenant assigns its interest in this Lease,
Tenant shall not be relieved of liability for the performance of the obligations
of the Tenant under this Lease unless Landlord consents in writing to such
release, which consent shall not be unreasonably withheld.
ARTICLE THIRTEEN
FIXTURES
All counters, shelving, light fixtures, and other equipment and trade
fixtures installed by or at the expense of Tenant, and all movable additions and
improvements made to the Premises by or at the expense of Tenant, which can be
removed without causing structural damage, shall remain the property of Tenant.
Tenant may, but shall not be obligated to, remove the same or any part thereof
at any time or times during the term hereof; provided, however, that Tenant, at
its sole cost and expense, shall make any repairs occasioned by such removal.
ARTICLE FOURTEEN
SIGNS
14.1 Exterior Signs. Tenant shall have the right, in conformity with
applicable Legal Requirements, to erect and thereafter to replace: (i) signs on
the front, side, roof and sidewalks of the Building and the other structures
within the Premises, and (ii) illuminated signs in the Common Area. Tenant
shall erect, maintain and replace all such signs at Tenant's sole cost and
expense, except to the extent included in Landlord's obligations in Article 2
and Article 7 hereof. Landlord shall not impair the visibility of any Tenant's
signs. Subject to all Legal Requirements (including necessary city and county
approvals) at all times Tenant shall have the right to maintain a monument sign
(i) of a size and design that is compatible with the design criteria applicable
to the Shopping Center and the surrounding developments and which also complies
with all Legal Requirements, and (ii) is in the location in the Common Area
along Market Place that is shown on Exhibit B-1 and in the location adjacent to
Xxxxxxxxx Canyon Road shown on Exhibit B-2. The parties acknowledge that as of
the Effective Date Landlord is the owner of the real property along Xxxxxxxxx
Canyon Road that is intended to be the location of a monument sign as shown on
Exhibit B-2. Landlord grants to Tenant the right to have Tenant's business
(specifically including the trade name "Orchard Supply Hardware") identified on
a monument sign that shall be constructed by Landlord in that location and
maintained by Landlord throughout the Lease Term, which manner of identification
shall be of a design, size, and prominence on such sign that is acceptable to
Landlord and Tenant and complies with all Legal Requirements. Landlord shall
use all reasonable efforts to secure all necessary governmental approvals for
the installation of the signs described in this Section 14.1; provided, however,
that nothing herein shall imply a warranty by Landlord as to the availability of
such building and monument signs. Landlord's obligation being limited to
providing such signage as may be approved by the City of San Xxxxx pursuant to
application processed by Landlord with due diligence. Landlord shall create an
easement appurtenant to Lot 4 which will permit Landlord to erect, maintain and
replace the sign and adjacent landscape on Xxxxxxxxx Canyon Road in accordance
with the easement, which easement shall be submitted to Tenant for its review
and approval prior to the conveyance of the property upon which the easement is
located.
14.2 Interior Signs. Tenant shall have the right, at its sole risk and
expense and in conformity with all Legal Requirements, to install and maintain
its usual and customary signs and fixtures in the interior of the Premises,
including without limitation, flat paper signs in the interior
ARTICLE FIFTEEN
CASUALTY INSURANCE
15.1 All-Risk Insurance. During the course of the construction of the
Premises Improvements by Landlord described in Exhibit C, Landlord shall
maintain full replacement cost "builder's risk" casualty insurance (excluding
earthquake and flood) for the Premises Improvements, the cost of which shall be
a Premises Construction Cost, as defined in Section 5B of Exhibit C. After the
Commencement Date Tenant shall obtain and maintain an "all-risk" policy of
casualty insurance (excluding earthquake and flood) on the Building and all
other improvements constituting the Premises, which insurance may be carried
under a blanket insurance policy. Such insurance shall be for the mutual
benefit of Landlord and Tenant (and any insitututional mortgagee as defined in
Article 19 hereof), as named insureds as their interests may appear. The amount
of such insurance shall not be less than the full replacement cost of the
Building and the other insured improvements. Certificates evidencing all such
insurance shall be delivered to Landlord upon Landlord's written request. All
insurance required by this Section (i) shall be primary insurance without a
right of contribution from any other insurance, (ii) shall be in a form
reasonably satisfactory to Landlord, (iii) shall be carried with companies
reasonably acceptable to Landlord (iv) shall provide that such policy shall not
be subject to cancellation or change except after at least thirty (30) days
prior written notice to Landlord, and (v) shall not have a "deductible" in
excess of that which is commercially reasonable and has been approved by
Landlord. Tenant shall pay, at the time such premiums become due, the premiums
for the "all risk" casualty insurance carried by it pursuant to this Section
15.2 Insurance Proceeds.
A. Claim Adjustment; Escrow. In the event of any damage to or
destruction of the Premises after the Effective Date, Landlord and Tenant shall
adjust the loss and settle all claims with the insurance companies issuing the
casualty policies.For the purposes hereinafter stated, Landlord and Tenant
hereby irrevocably assign the proceeds from such insurance policies to an escrow
account to be established at a mutually agreeable national or state bank having
its principal office in the State of California. Subject to the provisions of
Article 16, such funds shall be used for the repair, restoration, rebuilding and
replacement of the Premises and any damaged portion of the Common Area. All
insurance proceeds shall be paid into said escrow account, which account shall
require the signature of both Landlord and Tenant for withdrawals.
B. Disbursement for Restoration. Subject to the provisions of
Article 16, in the event of such damage or destruction, the restoring party
shall be entitled to withdrawals from such escrow account upon presentation of
the following: (i) bills for labor and materials expended in repair,
restoration, rebuilding or replacement; (ii) the restoring party's sworn
statement that the labor and materials for which payment is being made have been
furnished or delivered on site; and (iii) the certificate of a supervising
architect (selected by Landlord and Tenant and approved by the institutional
first mortgagee, if any) certifying that the work being paid for has been
completed in accordance with the work drawings and specifications previously
approved by Landlord and Tenant, and in a first-class, good and workmanlike
manner in accordance with all applicable Legal Requirements. Any fees payable
to the supervising architect shall be paid out of the insurance proceeds.
C. Excess Proceeds. Subject to the provisions of Article 16, any
excess insurance proceeds not needed to pay the cost to repair, restore or build
and replace the Premises shall be paid to Landlord and Tenant in the following
order of priority: (i) first, to Tenant until Tenant has recovered the total
amount contributed by Tenant toward the payment of Premises Construction Costs
pursuant to Exhibit C, which in any event shall not exceed One Hundred Thousand
Dollars ($100,000); and (ii) thereafter, any remaining insurance proceeds shall
be paid to Landlord.
D. Insufficient Proceeds. If the insurance proceeds available for
any repair, restoration, rebuilding or replacement required by Section 16.2 are
inadequate to pay the cost thereof, Tenant shall pay the deficiency.
15.3 Waiver of Subrogation. The parties hereto release each other, and
their respective agents, employees, and subtenants, from any liability for
injury to any person or damage to property that is caused by or results from any
risk insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage; provided, however, that any
such person or entity shall not be released from such liability to the extent
any damages resulting from such injury or damage are not covered by the recovery
obtained by the insured from such insurance if the insurance in question permits
such a partial release in connection with obtaining a waiver of subrogation from
the insurer. This release shall be in effect only so long as the applicable
insurance policy contains a clause to the effect that this release shall not
affect the right of the insured to recover under such policy. Each party shall
use its best efforts to cause each insurance policy obtained by it to provide
that the insurer waives all right of recovery by way of subrogation against the
other party and its agents, employees, and subtenants in connection with any
injury or damage covered by such policy. If, however, any insurance policy
cannot be obtained with such a waiver of subrogation, then the party obtaining
such insurance shall notify the other party of that fact and thereupon shall be
relieved of the obligation to obtain such a waiver of subrogation rights from
the insurer with respect to the particular insurance involved. Tenant agrees
that in the event of a sale of the Premises by Landlord, that to the extent
permitted by the particular insurer involved, the above waiver of subrogation
shall continue in favor of the original Landlord hereunder, its officers,
employees, agents and representatives, as well as be in favor of any such
purchaser and its officers, employees, agents and representatives.
ARTICLE SIXTEEN
DAMAGE AND REPAIR
16.1 Abatement or Adjustment of Rent. If the whole or any part of the
Premises shall be damaged or destroyed by fire or other casualty after the
Effective Date and before the termination hereof, then in every case the Base
Monthly Rent and other charges payable by Tenant to Landlord hereunder shall be
abated or adjusted, as the case may be, in proportion to that portion of the
Premises of which Tenant shall be deprived on account of such damage or
destruction or the work of repair, restoration, rebuilding or replacement and
the interference with Tenant's use of the Premises occasioned by any of the
foregoing; provided, however, that the Base Monthly Rent will not be so abated
to the extent Tenant actually receives business interruption insurance proceeds
allocable to such rent obligation if Tenant elects to carry such Insurance. Any
dispute with respect to the proper adjustment to or abatement of Base Monthly
Rent and other charges payable hereunder may be submitted to arbitration in the
manner provided in Section 20.6.
16.2 Repairs and Restoration.
A. Obligation to Restore. Unless this Lease is terminated, Landlord
agrees that in the event damage by any peril occurs to the Common Area at any
time, Landlord forthwith shall proceed to repair, restore, replace or rebuild
the Common Area to substantially the condition in which the same existed
immediately prior to such damage, in accordance with working drawings and
specifications approved by Landlord and Tenant. Landlord shall diligently
prosecute said work to completion without delay or interruption, except for
Excusable Delays. Unless this Lease is terminated, in the event damage by any
peril occurs to the Premises, Tenant shall proceed to repair and restore the
Premises to substantially the condition in which the same existed immediately
prior to such event.
B. Tenant's Right to Terminate. Notwithstanding the foregoing, if
(i) a building permit for any repairs, rebuilding or restoration required
hereunder cannot be obtained within six (6) months of the date of such damage or
destruction is not obtained, or (ii) the destruction event occurs prior to the
Commencement Date and as a consequence of such event Substantial Completion of
the Common Area Improvements and the Premises Improvements cannot be achieved by
December 1, 1990 (subject to extension by Excusable Delays), then in any such
event Tenant may terminate this Lease by giving Landlord written notice of
Tenant's election to so terminate this Lease within ninety (90) days after the
occurrence of the event which gives rise to Tenant's right to terminate.
C. Damage by Uninsured Peril. Notwithstanding the foregoing, Tenant
shall have the option to terminate this Lease upon the occurrence of the
following: (i) the Premises are damaged by a peril not covered by the insurance
required to be carried pursuant to Section 15.1 and are not covered by valid and
collectible insurance in effect at the time of such damage, or if covered by
insurance not required by Section 15.1, there is applicable a deductible which
exceeds One Hundred Thousand Dollars ($100,000); (ii) the estimated cost to
repair such damage exceeds insurance proceeds, if any, as may be made available
by an amount in excess of One Hundred Thousand Dollars ($l00,000); and (iii)
Landlord does not agree in writing to pay or cause to be paid the amount by
which the cost to restore the damage is in excess of One Hundred Thousand
Dollars ($100,000) over and above insurance proceeds, if any, available.
D. Damage at End of Term. Notwithstanding the foregoing, if such
damage or destruction (i) shall occur during the last five (5) Lease Years of
the initial term of this Lease Term, as the same may be extended, and (ii) shall
cost more than twenty-five percent (25%) of the full replacement cost of the
Building (minus the cost of excavation, footings and foundations) to restore,
then either party may terminate this Lease as of the date of such damage or
destruction by giving written notice to the other party within sixty (60) days
thereafter of its election to so terminate, unless Tenant within thirty (30)
days after receipt of any such notice from Landlord shall give notice to
Landlord of its intention to extend the term of this Lease in accordance with
any option or right Tenant may have as provided in Article 4 hereof, in which
case this Lease shall not be terminated although notice of termination may
previously have been given by Landlord; in such case, Landlord's notice of
termination shall be void and of no effect and Tenant shall repair and restore
the Premises as required by this Lease.
E. Effect of Termination. In the event of termination of this Lease
pursuant to the provisions of this Section 16.2, this Lease shall terminate, the
Base Monthly Rent and any other sums payable by Tenant to Landlord hereunder
shall be apportioned between Landlord and Tenant as of the date of the
termination of this Lease, and the parties shall be mutually released hereunder
from all liability and obligations hereunder thereafter arising. Out of the
insurance proceeds collected as a result of damage to the Premises, Tenant shall
be entitled to recieve that amount equal to the lesser of Two Hundred Thousand
Dollars ($200,000) or the product obtained by multiplying (i) all Premises
Construction Costs paid by Tenant by (ii) a fraction, the numerator of which is
the number of months remaining in the Lease Term (including any extension
periods where Tenant exercises its option prior to the event of damage) and the
denominator of which is the total number of months in the Lease Term (as it may
have been so extended prior to the event of damage).
16.3 Acceptance of Premises After Reconstruction. If the Premises are
destroyed or damaged and the Lease is not terminated, then if Tenant is required
to repair, restore and/or rebuild the damaged portion of the Premises as above
provided, Tenant shall proceed with due diligence to contract with licensed
contract for the required construction and shall thereafter diligently cause
such contractor to proceed with said construction and Tenant shall not be
required to accept delivery of possession of the affected portion of the
Premises nor to commence paying Base Monthly Rent and other charges at the rate
originally provided in this Lease (i.e., without abatement other than as
provided within Section 16.1) until the earlier of (a) the date on which Tenant
recommences to conduct business on affected portion of the Premises or (b)
ninety (90) days after the date on which (i) Tenant's contractor has caused the
affected portion of the Premises to be completed as nearly as practicable to the
condition existing immediately prior to such destruction or damage and in
compliance with all laws, ordinances, regulations and requirements of
governmental authorities having jurisdiction thereof and the National Board of
Fire Underwriters, and (ii) Tenant acting with due diligence has obtained all
requisite permits necessary for Tenant to conduct is business on the affected
portion of the Premises, such permits having been issued by the appropriate
legal authorities.
ARTICLE SEVENTEEN
CONDEMNATION
17.1 Total Taking. If, after the execution of this Lease and prior to the
expiration of the term hereof, if the whole of the Premises shall be taken by
exercise of the power of eminent domain by any public or private authority, or
conveyed by Landlord to said authority in lieu of such taking, then this Lease
and the term hereof shall terminate as of the date of such taking.
Notwithstanding the foregoing, Tenant may elect to to continue to occupy the
Premises, subject to the terms and provisions of this Lease, for all or such
part as Tenant may elect, of the period between the date of such taking and the
date that possession of the Premises must be surrendered to the taking
authority. In which event, the Base Monthly Rent and other charges payable by
Tenant to Landlord hereunder shall be apportioned between Landlord and Tenant as
of the date of termination of this Lease
17.2 Partial Taking.
A. Rights to Terminate. After the Effective Date and prior to the
expiration of the Lease Term, if any public or private authority takes less than
the whole of the Premises by exercise of the power of eminent domain, or if
Landlord shall make a conveyance to said authority in lieu of such taking, and
such taking:
(a) Occurs prior to the Commencment Date; or
(b) Results in a reduction by ten percent (10%) or more of the ground
floor area of the Building or any other improvements constituting the
Premises: or
(c) Results in the elimination of twenty-five percent (25%) or more
parking spaces in the Common Area: or
(d) Results in a taking of a portion of the Common Area which
substantially impedes or interferes with access to the Premises or results
in a taking of any access to the Shopping Center, which substantially
impedes or interferes with access to the Shopping Center, (unless, in
either case, Landlord promptly provides an adequate substitute within sixty
(60) days after the taking);
then Ten ant may, at its election, terminate this Lease by giving Landlord
written notice of such election within thirty (30) days after Tenant shall have
received notice of such taking or conveyance. In the event of termination by
Tenant under the provisions of this Section 17.2, this Lease and the term hereof
shall cease and terminate as of the date of such taking.
B. Apportionment of Rent. Notwithstanding the foregoing, Tenant may elect
to continue to occupy the Premises, subject to the terms and provisions of this
Lease, for all or such part, as Tenant may elect, of the period between the date
of such taking and the date that possession of the Premises must be surrendered
to the taking authority. In which event, the Base Monthly Rent and other
charges payable by Tenant to Landlord hereunder shall be apportioned between
Landlord and Tenant as of the date of termination or this Lease.
17.3 Restoration and Abatement of Rent.
A. Landlord's Obligation to Restore. In the event of a taking which would
not entitle Tenant to terminate this Lease, or if Tenant, having such right,
elects not to terminate this Lease, then this Lease and the term thereof shall
continue in full force and effect and Landlord, at Landlord's sole cost and
expense, shall forthwith restore the remaining portions of the Premises,
including any and all improvements, together with the remaining portions of the
Common Area, to an architectural whole in substantially the condition prior to
such taking. Notwithstanding the foregoing, Landlord shall have the option to
terminate this Lease upon the occurrence o' the following: (i) the condemnation
award recovered by Landlord is insufficient to pay the entire costs of
restoration required by this Section, and such insufficiency is in excess of One
Hundred Thousand Dollars ($100,000); and (ii) Tenant does not agree in writing
to pay the amount by which the restortion costs exceeds the amount of the
condemnation award recovered by Landlord plus One Hundred Thousand Dollars
($100,000) to be contributed by Landlord or caused to be paid by Landlord.
B. Abatement of Rent. A just proportion of the Base Monthly Rent and
other charges payable by Tenant hereunder, according to the nature and extent of
the injury to the Premises and to Tenant's business, shall be suspended or
abated until the completion of such restoration. Thereafter, the Base Monthly
Rent and other charges shall be reduced in proportion to the square footage of
the Building remaining after said taking and shall be reduced an equitable
amount for any other portion of the Premises taken or any other substantial
interference with Tenant's rights under this Lease. Any dispute with respect to
the proper amount of Base Monthly Rent and other charges that should be abated
or suspended during the period of restoration or thereafter may be submitted to
arbitration in the manner provided in Section 20.6.
17.4 Condemnation Award. All compensation awarded for any taking under
Sections 17.1 and 17.2 hereof shall be shared by Landlord and Tenant as their
interests may appear; provided, however, that Landlord shall not be entitled to,
and Tenant shall have the sole right to make a claim for and retain any award
made by the appropriating authority for (i) Tenant's loss of business, (ii)
damage to, depreciation of, or cost of removal of fixtures, personality or
improvements installed in the Premises or other portions of the Shopping Center
by or at the expense of Tenant, (iii) the unamortized value of Tenant's
contribution to the Premises Construction Costs, and (iv) any other award made
by the appropriating authority directly to Tenant.
17.5 Release. In the event of any termination of this Lease as the result
of the provisions of this Article, the parties shall be mutually released from
all liability and obligations thereafter arising under this Lease.
17.6 Temporary Taking.
A. No Right to Terminate. If, after the execution of this Lease and
prior to the expiration of the Lease Term the whole of the Premises shall be
taken under power of eminent domain by any public or private authority, or
conveyed by Landlord to said authority in lieu of such taking, for temporary use
or occupancy, the foregoing provisions of this Article shall not apply, and
Tenant shall continue to pay in the manner and at the times specified herein,
the full amount of the Base Monthly Rent and other charges payable by Tenant
hereunder and, except only to the extent that Tenant may be prevented from doing
so pursuant to the terms of the order of the appropriating authority, Tenant
shall perform and observe all the other terms and obligations to be performed
and observed by Tenant, as though such taking had not occurred.
B. Award for Temporary Taking. In the event of any such taking of
the nature referred to in this Section, Tenant shall be entitled to receive the
entire amount of the award made for such taking whether paid by way of damages,
rent or otherwise, unless such period of temporary use or occupancy shall extend
beyond the termination of the Lease, in which case such award shall be
apportioned between Landlord and Tenant as of the date of termination of this
Lease. Upon the expiration of any such period of temporary use or occupancy,
Tenant shall restore the Premises, as nearly as reasonably possible, to their
condition immediately prior to such taking. Any portion of the award received
by Tenant as compensation for the cost of restoration of the Premises shall be
applied by Tenant to such restoration and, if such period of temporary use or
occupancy shall extend beyond the termination of the Lease, after deduction of
the unamortized value of Tenant's contribution to the Premises Construction
Costs, any remaining compensation shall be paid to Landlord on the day of
termination of this Lease to the extent not theretofore disbursed by Tenant in
connection with such restoration.
ARTICLE EIGHTEEN
DEFAULT AND REMEDIES
18.1 Events of Tenant's Default. Tenant shall be in default of its
obligations under this Lease if any of the following events occurs:
(i) Tenant fails to pay any Base Monthly Rent, Percentage Rent, or
any other monetary obligation when due and such failure is not cured within
five (5) business days after delivery of written notice from Landlord
specifying such failure.
(ii) Tenant fails to perform or breaches any other term, covenant, or
condition of this Lease and Tenant rails to cure such default within thirty
(30) days after delivery of written notice from Landlord specifying the
nature of such default; provided, however, that if such default cannot
reasonably be cured within thirty (30) days, Tenant shall not be in default
if it commences such cure within said thirty (30) day period.
(iii) A court makes or enters a decree or order with respect to
Tenant or Tenant submits to or seeks a decree or order (or a petition or
pleading is filed in connection therewith) which: (a) grants, constitutes,
or seeks an order for relief, appointment of trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United States; (b)
approves as properly filed, or seeks approval of, a petition seeking
liquidation or reorganization under said bankruptcy laws or any other
debtor's relief law or statute of the United States or any state thereof;
or (c) otherwise directs or seeks a winding-up or liquidation of Tenant;
provided, however, that if any petition, decree or order of the type
described above is not voluntarily filed or made by Tenant, then Tenant
shall not be in default until such petition, decree or order remains
undischarged for a period of one hundred eighty (180) days.
18.2 Landlord's Remedies. In the event of any default by Tenant, Landlord
shall have the following remedies, in addition to all other rights and remedies
provided by law or otherwise provided in this Lease:
A. Enforce Lease. Landlord may keep this Lease in effect and enforce
by an action at law or in equity all of its rights and remedies under the Lease,
including the right to recover the rent and other sums as they become due by
appropriate legal action.
B. Right to Cure. Landlord may make any payment or perform any
obligation of Tenant. All sums paid by Landlord and all necessary costs of such
performance by Landlord shall be reimbursed to Landlord within ten (10) business
days after demand by Landlord as additional rent, and shall bear interest at the
Agreed Interest Rate from the date of disbursement until reimbursement by
Tenant.
C. Terminate Lease. Landlord may, at Landlord's election, terminate
this Lease by giving Tenant written notice of termination, in which event this
Lease shall terminate on the date set forth for termination in such notice. Any
such termination shall not relieve Tenant from the payment of any sums then due
Landlord or from any claim for damages resulting from Tenant's default.
Following termination of the Lease, and without prejudice to any other remedies
Landlord may have, Landlord may then or any time thereafter: (i) peaceably
enter the Premises upon voluntary surrender by Tenant or expel or remove Tenant
therefrom together with any other persons occupying it, using such legal
proceedings as are then available; and (ii) remove all property of Tenant
therefrom at Tenant's expense.
D. Damages. If Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2 as in effect on the Effective Date of this
Lease, including, but not limited to, the right of Landlord to recover the worth
at the time of award of the amount by which the unpaid rent for the balance of
the Lease Term after the time of award exceeds the amount of such rental loss
for the same period that Tenant proves could be reasonably avoided.
18.3 Tenant's Right to Cure.
A. Certain Defaults. If Landlord shall fail to pay (i) the taxes,
assessments or other charges levied against the Shopping Center (except for any
portion payable by Tenant as to which Tenant is delinquent in payment), or (ii)
any principal or interest due on any mortgages, liens or encumbrances the
foreclosure of which might affect the interest of Tenant hereunder, Tenant may
make such payments and charge to Landlord the amount so paid, and withhold and
deduct from any rents herein reserved the amounts so paid, and any payments in
excess of said rents shall be paid by Landlord to Tenant.
B. Other Defaults. If Landlord shall breach or fail to perform any
agreement or condition in this Lease on Landlord's part to be performed not
covered by Section 18.3A, and if Landlord shall not cure such breach or failure
within thirty (30) days after notice from Tenant specifying such breach or
failure (or, if such breach or failure shall reasonably take more than thirty
(30) days to cure, shall not have commenced to cure the same with the thirty
(30) days and thereafter diligently prosecuted the same to completion), Tenant
may, at Tenant's option, without waiving any claim for damages for breach of
this Lease, at any time thereafter cure such breach or failure for the account
of Landlord and any amount paid or any contractual liability incurred by Tenant
in so doing shall be deemed paid or incurred for the account of Landlord and
Landlord shall reimburse Tenant therefor and save Tenant harmless therefrom;
provided, however, that Tenant may cure any such breach or failure as aforesaid
prior to the expiration of said 30-day period, without notice to Landlord, if an
emergency exists or, after notice to Landlord, if the curing of such breach or
failure prior to the expiration of said 30-day period is reasonably necessary to
protect the Premises or Tenant's interest therein or to prevent injury or damage
to persons or property. If Landlord shall fail to reimburse Tenant upon demand
for any amount paid or liability incurred for the account of Landlord hereunder,
said amount or liability may be deducted by Tenant from the next due or any
succeeding payments of Base Monthly Rent, Percentage Rent, or other charges
payable by Tenant to Landlord hereunder. Amounts due Tenant from Landlord
pursuant to this paragraph shall bear interest at the Agreed Interest Rate from
the date of disbursement until reimbursement by Landlord.
C. Waiver. Tenant hereby waives the benefits of California Civil
Code Section 1942, but only to the extent that Section 1942 provides remedies to
Tenant which exceed Tenant's rights and remedies under this Lease.
ARTICLE NINETEEN
SUBORDINATION, QUIET ENJOYMENT AND ZONING
19.1 Subordination.
A. Obligation to Subordinate. Upon the request of Landlord in
writing, Tenant shall subordinate this Lease to the lien of any mortgage made by
an institutional lender, the principal amount of which, when added to the
outstanding amounts secured by all other mortgages to which this Lease is
subordinate, does not exceed eighty percent (80%) of the appraisal received by
the lender determining the then fair market value of the property encumbered by
such mortgage; provided, however, that, prior to any such subordination, the
mortgagee shall enter into a written agreement with Tenant in recordable form,
specifying that: (i) in the event of foreclosure or other action taken under
the mortgage, this Lease and the rights of Tenant hereunder shall not be
disturbed but shall continue in full force and effect and any party acquiring
the Premises through foreclosure shall be obligated to recognize all of the
rights of Tenant and perform all of Landlord's obligations under this Lease so
long as Tenant is not in default hereunder, (ii) the mortgagee or any party
acquiring the Premises through foreclosure (or other action under the mortgage,
which action may include acceptance of a deed in lieu of foreclosure) shall in
no event be: (a) liable for any act, omission or default of Landlord occurring
prior to the date of acquisition of the Premises, (b) subject to any offsets or
deficiencies which the Tenant might be entitled to assert against Landlord, (c)
bound by an payment of rent or additional rent made by the Tenant to the
Landlord more than thirty (30) days in advance, (d) bound by any amendment or
modification of the Lease made without the written consent of the mortgagee or
its successors in interest, or (e) liable to Tenant for the return of any
security deposit held by Landlord under the Lease unless mortgagee shall acquire
possession of such deposit, in which event such deposit shall be subject to
return to Tenant in accordance with the provisions of the Lease, and; (iii) the
mortgagee shall permit insurance proceeds and condemnation proceeds to be used
for any restoration and repair required by the provisions of Article 16 and
Article 17 hereof. Tenant agrees that if the mortgagee or any person claiming
under the mortgagee shall succeed to the interest of Landlord in this Lease,
Tenant will recognize said mortgagee or person as its landlord under the terms
of this Lease; provided, however, that said mortgagee or person shall assume all
of the obligations of Landlord hereunder during the period that said mortgagee
or person holds Landlord's interest in the Premises.
B. Definitions. As used herein, the term "mortgage" includes
mortgages, deeds of trust and other similar instruments, and modifications
and extensions thereof. As used herein, the term "mortgagee" means any
lender which holds a mortgage, or any party which is a beneficiary under
a deed of trust. As used herein, the term "institutional lender" shall
mean a bank or trust company, savings bank, savings and loan association
company, insurance company, college or university, pension or retirement
fund, credit company, real estate investment trust, or syndication managed
by a national real estate investment firm or brokerage house (e.g.,
JMB Realty, Xxxxxxx Xxxxx, etc.) so long as such institutional lender has
a net worth in excess of Twenty-Five Million Dollars ($25,000,000).
19.2 Quiet Enjoyment. Landlord covenants and agrees with Tenant that upon
Tenant's observing and performing all of the terms, covenants and conditions on
Tenant's part to be observed and performed hereunder, Tenant may peaceably and
quietly occupy and enjoy the Premises without hindrance or molestation from
Landlord or any other persons claiming through Landlord.
19.3 Zoning and Good Title. Landlord warrants and represents, upon which
warranty and representation Tenant has relied in the negotiation and execution
of this Lease, as follows:
A. Landlord is the owner of the Shopping Center in fee simple
absolute, free and clear of all encumbrances except those shown on Exhibit
"F" attached hereto;
B. Landlord has full right and lawful authority to execute this Lease
for the term, in the manner, and upon the conditions and provisions herein
contained;
C. There is no legal impediment to the construction and use of the
Premises as a retail store other than obtaining PUD permit, subdivision
approval, completion of Design Review Board process of City of San Xxxxx,
completion of Planning Commission of City of San Xxxxx approval process,
building permits and approval of a development agreement between Landlord
and the City of San Xxxxx regarding the construction of certain
improvements (e.g., construction of a fire line);
D. The Shopping Center is not subject to any easements, restrictions,
zoning ordinances or similar governmental regulations which prevent their
use for retail store purposes;
E. The Premises are presently zoned for retail store use; and
F. The Premises are free of Hazardous Materials as of the Effective
Date.
Landlord shall furnish without expense to Tenant, within thirty (30) days after
written request therefor by Tenant, an updated title report covering the
Premises and the Shopping Center showing the condition of title as of the date
of such report.
19.4 Tenant's Right to Terminate. If for reasons other than Tenant's act
or omission, a final adjudication (i.e., not subject to further appeal) shall
prohibit the use of the Premises as a retail store, in addition to its other
rights and remedies, Tenant shall have the right to terminate this Lease by so
notifying Landlord within thirty (30) days following such adjudication;
whereupon the unamortized portion of Tenant's contribution to the Premises
Construction Costs shall be paid by Landlord to Tenant within ten (10) days of
Tenant's demand. As a condition of such right to terminate, Tenant shall fully
cooperate with Landlord and participate in all proceedings relating to the
prohibition of such use, and shall diligently contest any litigation the
objective of which is to prohibit such use.
ARTICLE TWENTY
MISCELLANEOUS
20.1 Landlord's Right to Enter. Landlord and its agents may enter the
Premises at all reasonable times to show the Premises to prospective purchasers,
and to make such repairs, improvements, alterations or additions as may be
required by Landlord under the provisions of this Lease. In making such entry,
Landlord shall not unreasonably interfere with the conduct of Tenant's business.
If as a result of any such entry Tenant is deprived of the use of the Premises,
the Base Monthly Rent and other charges payable by Tenant to Landlord hereunder
shall be abated or adjusted, as the case may be, in proportion to that period of
time during which, and to that portion of the Premises of which, Tenant shall be
deprived as a result thereof.
20.2 Surrender of Possession. Upon the expiration or termination of this
Lease, Tenant shall remove its personal property and trade fixtures, and shall
surrender the Premises to Landlord in good condition, damage by fire and
casualty, structural defects, condemnation, maintenance and repairs required to
be performed by Landlord, and reasonable wear and tear excepted.
20.3 Holding Over. If Tenant shall continue to occupy the Premises after
the expiration of the term of this Lease, without a written agreement with
Landlord providing for such occupancy, such occupancy shall not be deemed to
extend or renew the term of this Lease, but shall continue as a tenancy at will
from month-to-month. Such tenancy shall be upon the covenants and conditions
herein contained and at the rental in effect during the last Lease Year,
prorated and payable for the period of such occupancy.
20.4 Waivers. Failure of either party to complain of any act or omission
on the part of the other party, no matter how long the same may continue, shall
not be deemed to be a waiver by said party of any of its rights hereunder. No
waiver by either party at any time, express or implied, of any breach of any
provision of this Lease shall be deemed a waiver of a breach of any other
provision of this Lease or a consent to any subsequent breach of the same or any
other provision. If any action by either party shall require the consent or
approva1 of the other party, the other party's consent to or approval of such
action on any one occasion shall not be deemed a consent to or approval of said
action on any subsequent occasion or a consent to or approval of any other
action on the same or any subsequent occasion. Any and all rights and remedies
which either party may have under this Lease or at law or in equity shall be
cumulative, and shall not be deemed inconsistent with each other; and no one of
them, whether exercised or not, shall be deemed to be an exclusion of any other,
and any or all of such rights and remedies may be exercised at the same time.
20.5 Payment and Performance Under Protest.
A. Payment. If at any time a dispute shall arise as to any amount or
sum of money to be paid by one party to the other under the provisions hereof,
the party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded
as a voluntary payment, and such party shall thereafter have the right to
institute suit for the recovery of such sum, or to have the dispute settled by
arbitration as hereinafter provided. If it shall be adjudged or determined that
there was no legal obligation to pay such sum or any part thereof, the party
paying such sum shall be entitled to recover such sum or so much thereof as it
was not required to pay.
B. Performance. If at any time a dispute shall arise between the
parties hereto as to any work to be performed by either of them under the
provisions hereof, the party against whom the obligation to perform the work is
asserted may perform such work and pay the costs thereof "under protest" and the
performance of such work shall in no event be regarded as a voluntary
performance, and such party shall thereafter have the right to institute suit
for the recovery of the costs of such work, or proceed to have the dispute
settled by arbitration. If it shall be adjudged or determined that there was no
legal obligation to perform such work or any part thereof, the party performing
such work shall be entitled to recover the costs of such work or the cost of so
much thereof as it was not required to perform.
20.6 Arbitration.
A. Obligation to Arbitrate. The parties hereto shall not be deemed
to have agreed to determine any dispute arising out of this Lease by arbitration
unless specifically provided for herein. In any case for which arbitration is
specifically provided hereunder, the party desiring arbitration shall so notify
the other party in writing and shall in such notice appoint a person as
arbitrator on its behalf. Within ten (10) days after receipt of such notice,
the other party by written notice to the original party shall appoint a second
person as arbitrator on its behalf. The arbitrators thus appointed shall as
promptly as possible determine such matter; provided however, that:
(i) If the second arbitrator shall not have been appointed within the
ten-day period as aforesaid, the first arbitrator shall proceed to
determine such matter and shall render its decision and award in writing
within thirty (30) days after the expiration of said ten-day period.
(ii) If the two arbitrators are unable to agree within ten (10) days
after the appointment of the second arbitrator, then they shall give
written notice to the parties of their failure to agree, and the parties
shall mutually appoint a third arbitrator. If the parties fail to agree
upon the selection of such third arbitrator within ten (10) days after the
arbitrators appointed by the parties give notice as aforesaid, then within
five (5) days thereafter, either party may upon notice to the other party
request such appointment by the American Arbitration Association (or any
successor organization) or, in its failure or inability to act, may apply
to a court of competent jurisdiction for a court appointment of a third
arbitrator.
(iii) Within thirty (30) days after the appointment of the third
arbitrator the arbitrators shall render their decision and award in
writing, upon the concurrence of at least two of them. Such decision and
award, or the decision and award of the single arbitrator as provided in
subsection (a) hereof, shall be final and conclusive on the parties, and
counterpart copies thereof shall be delivered to each of the parties. In
rendering such decision and award, the arbitrator(s) shall not add to,
subtract from or otherwise modify the provisions of this Lease. Judgment
may be had on the decision and award of the arbitrators so rendered in any
court of competent jurisdiction.
B. Procedure. Each arbitrator must be qualified and impartial, and must
have at least ten (10) years' experience in the County of Contra Costa (or such
other county as is mutually agreeable to Landlord and Tenant) in the State of
California in a calling connected with the matter of the dispute. The
arbitration shall be conducted, to the extent consistent with this Section 20.6,
in accordance with the prevailing rules of the American Arbitration Association
(or any successor organization). If there is more than one arbitrator, each
party shall pay the fees and expenses of the arbitrator appointed by such party,
plus one-half (1/2) of the fees and expenses of the third arbitrator and all
other expenses of the arbitration (other than the fees and disbursements of
attorneys or witnesses for each party). If there is only one arbitrator, the
fees and expenses of such arbitrator shall be borne by the parties equally.
20.7 Notices. All notices and other communications authorized or required
hereunder shall be in writing and shall be given by mailing the same by
certified mail or registered mail, return receipt requested, postage prepaid.
Any such notice or other communication shall be deemed to have been given when
received by the party to whom such notice or other communication shall be
addressed. If intended for Landlord, such notice shall be mailed to the address
first above written or such other address as Landlord may hereafter designate by
notice to Tenant; if intended for Tenant, such notice shall be mailed to Orchard
Supply Hardware at 0000 Xxx xxx Xxx, Xxx Xxxx, Xxxxxxxxxx 00000, Attention:
Director of Real Estate, with a copy to Wickes Companies, Inc. at 0000 Xxxxx
Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx
Xxxxxxxxxxx, or such other address or addresses as Tenant may hereafter
designate by notice to Landlord.
20.8 Excusable Delay. In the event that Landlord or Tenant shall be
delayed in or prevented from the performance of any act (other than Tenant's
obligation to make payments of rent, additional rent and other charges required
hereunder) by reason of any fine or other casualty loss, strikes, lockouts,
unavailability of materials, failure of power, restrictive governmental laws or
regulations, riots, insurrections, the act, failure to act or default of the
other party, war or other reason beyond its control (an "Excusable Delay"), then
performance of such act shall be excused for the period of the delay and the
period for the performance of such act shall be extended for a period equivalent
to the period of such delay. Notwithstanding the foregoing, lack of funds shall
not be deemed to be a cause beyond the control of either party.
20.9 Waiver of Landlord's Lien. Within ten (l0) days of request by
Tenant, Landlord shall execute any document necessary to waive any right, title,
lien, or interest in Tenant's trade fixtures or equipment located in the
Premises. Such waiver may require Landlord to grant to the party requiring
Tenant to obtain such waiver a license to enter the Premises in order to
assemble, inventory, or remove the equipment covered by the lien waiver,
provided that such party repairs any damage caused by such removal.
20.10 Estoppel Certificates. At any time and from time, upon written
request from the other, Landlord and Tenant shall execute, acknowledge and
deliver to the other, or to any person designated by the other, a statement in
writing certifying: (i) that the Lease is unmodified and is in full force and
effect or, if there have been modifications, that the same is in full force and
effect as modified (stating the modifications); (ii) that the other party is not
in default in the performance of its covenants hereunder or, if there have been
such defaults, specifying the same; and (iii) the dates to which the rent and
other charges have been paid hereunder.
20.ll Recordation. Simultaneously herewith, Landlord and Tenant have
entered into a memorandum of lease for recording. Upon the commencement of the
Lease Term, Landlord and Tenant shall enter into a recordable agreement in the
form attached hereto as Exhibit G.
20.12 Invalidity of Particular Provision. If any term or provision of
this Lease or the application hereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, then the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
20.13 Announcement of Tenant's Store. Within thirty (30) days after
giving Landlord written notice of its intention to do so, Tenant may erect, at
Tenant's expense, an appropriate sign on the Shopping Center announcing the
coming of Tenant's store.
20.14 Captions and Definitions of Parties. The captions of the sections
of this Lease are for convenience only and are not a part of this Lease and do
not in any way limit or modify the terms and provisions of this Lease. The word
"Landlord" and the pronouns referring thereto shall mean, where the context so
admits or requires, the persons, firm or corporation named herein as Landlord or
the mortgagee in possession of the land and building comprising the Premises.
If there is more than one Landlord, the covenants of Landlord shall be the joint
and several obligation of each of them. Any pronoun herein shall be read in the
singular or plural number and in such gender as the context may require.
20.15 No Partnership. Nothing contained herein shall be deemed or
construed as creating the relationship of principal and agent or of partnership
or of joint venture between the parties hereto, it being understood and agreed
that neither any provision contained herein, nor any acts of the parties hereto,
shall be deemed to create any relationship between the parties hereto other than
the relationship of landlord and tenant.
20.16 Transfer of Title. Landlord shall not convey its interest in the
Shopping Center until it has fully performed all of its obligations pursuant to
Article Two without the prior written consent of Tenant. Thereafter, Landlord
and its successors in interest shall have the right to transfer their interests
in the Premises and the Shopping Center at any time and to any person or entity
without the consent of Tenant. In the event of any transfer by Landlord, the
Landlord originally named herein (and in the case of any subsequent transfer,
the transferor) shall be relieved of all liability for the performance of the
obligations of the Landlord under this Lease which accrue after the date of
transfer only if its transferee agrees in writing for the benefit of Tenant to
assume and be bound by the terms of this Lease and to perform all obligations of
the Landlord hereunder; provided, however, that under no circumstances shall
Pacific Quadrant Development Company be released from its obligation under
Article Two of this Lease. Landlord shall promptly notify Tenant in writing of
any change in the ownership of the Premises, giving the name and address of the
new owner and instructions regarding the payment of rent. In the event of any
change in or transfer of Landlord's title in and to the Premises or any part
thereof (whether voluntary or involuntary, or by act of Landlord or by operation
of law), Tenant shall be under no obligation to pay rents or other charges
thereafter accruing, until Tenant shall have been notified in writing of such
change in title and given satisfactory proof thereof; the withholding of rents
or other charges payable by Tenant to Landlord hereunder in the meantime shall
not be deemed a default by Tenant.
20.17 Successors and Assigns. Except as otherwise provided in this Lease,
the covenants, agreements, terms and provisions of this Lease shall be bind upon
and inure to the benefit of Landlord and Tenant and their respective successors,
assigns, heirs, executors and administrators.
20.18 Brokerage. Landlord and Tenant each represent and warrant to the
other that they have not dealt with any real estate agent or broker in
connection with this transaction, other than Xxxxxxxxx & Xxxxxxx, whose
commission shall be paid by Landlord.
20.19 Reasonable Expenditures. Any expenditure by a party permitted or
required under this Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be reasonably incurred, and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business hours.
20.20 Approvals. Unless expressly indicated otherwise, whenever this
Lease requires the approval or consent of either Landlord or Tenant, such
approval or consent shall not be unreasonably withheld or delayed.
20.21 Entire Agreement. This document contains the entire and only
agreement between the parties, and no oral statement or representations or prior
written matter not contained in this instrument shall have any force and effect.
This Lease shall not be modified in any way except by a writing executed by both
parties.
IN WITNESS WHEREOF, the parties hereto have executed this lease by their
respective officers thereunto duly authorized.
LANDLORD: TENANT:
PACIFIC QUADRANT DEVELOPMENT COMPANY WICKES COMPANIES, INC.
a California general partnership A Delaware corporation
By Pacific RIM Development Corporation /s/
/s/
By The Quadrant Corporation,
a Washington corporation
/s/
