1
EXHIBIT 10.69
Lease Agreement dated as of September 24, 1999 by and between West Hollywood
Property Limited Partnership and 0000 Xxxxxx Xxxx Associates Limited
Partnership (as Landlord) and The Spectrum Club Company, Inc. (as Tenant)
2
LEASE AGREEMENT
AS OF SEPTEMBER 24, 1999
LANDLORD:
WEST HOLLYWOOD PROPERTY LIMITED PARTNERSHIP
AND
0000 XXXXXX XXXX ASSOCIATES LIMITED PARTNERSHIP
TENANT:
THE SPECTRUM CLUB COMPANY, INC.
PREMISES LOCATION:
0000 XXXXXX XXXX, XXXXXXXX XXXX, XXXXXXXXXX
---------------------------
3
LAND AND BUILDING LEASE AGREEMENT
This Land and Building Lease Agreement (this "Lease") is dated as of
September 24, 1999 (the "Effective Date" or "Commencement Date"), between The
Spectrum Club Company, Inc., a California corporation ("Tenant"), and West
Hollywood Property Limited Partnership and 0000 Xxxxxx Xxxx Associates Limited
Partnership (collectively, "Landlord"), with reference to the recitals set forth
below.
RECITALS
A. Landlord is the owner of that certain real property (the "Premises"),
which legal description is attached hereto and incorporated herein as Exhibit
"A", and is commonly known as:
0000 Xxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
B. Landlord desires to lease the Premises to Tenant, and Tenant desires
to lease the Premises from Landlord, pursuant to the provisions of this Lease.
1 DEFINITIONS. The following terms, when used in this Lease, shall have the
meaning set forth in this Section.
1.1 LEASE YEAR. The term "Lease Year" shall mean the first twelve (12) full
calendar months after the Effective Date and each subsequent twelve (12) month
period thereafter during the term and any extensions.
1.2 HAZARDOUS MATERIAL. The term "Hazardous Material" means any substance,
material, or waste which is toxic, ignitable, reactive, or corrosive and which
is or becomes regulated by any local or state governmental authority or the
United States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," "restricted hazardous waste," "hazardous
substance," or "hazardous material," by any local or state law, (ii) oil and
petroleum products and their byproducts, (iii) asbestos, or asbestos-containing
materials, (iv) designated as a "hazardous substance" pursuant to the Federal
Water Pollution Control Act, (v) defined as a "hazardous waste" pursuant to the
Federal Resource Conservation and Recovery Act, or (vi) defined as a "hazardous
substance" pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act.
1.3 ENVIRONMENTAL LAW. The term "Environmental Law" shall mean, any law,
statute, regulation, order, or rule now or hereafter promulgated by any
governmental entity, whether local, state, or federal, relating to air
pollution, water pollution, noise control, and/or transporting, storing,
handling, discharge of or disposal of Hazardous Material, including, without
limitation, the following: the Clean Air Act; the Resource Conservation and
Recovery Act, as amended by the Hazardous Waste and Solid Waste Amendments of
1984; the Comprehensive Environmental Response, Compensation and Liability Act,
as amended by the Superfund Amendments and Reauthorization Act of 1986; the
Toxic Substances Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act, as amended; the Safe Drinking Water Act; OSHA; the Hazardous Liquid
Pipeline Safety Act; the Hazardous Materials Transportation Act; and the
National Environmental Policy Act, as the same may be amended from time to time.
4
2. PREMISES.
2.1 PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord, the
Premises on the terms and conditions set forth in this Lease. The Premises
consist of the real property described in Exhibit "A" together with all
improvements and fixtures on or attached to said real property, except for those
improvements and/or fixtures set forth on Schedule 2.1. More particularly, the
Premises consist of a building (the "Building"), a portion of which consists of
a health and fitness club on the ground floor (the "Club") the construction of
which has not yet been completed and another portion of which consists of a
ground floor office lobby and second floor office space (the "Office Space") for
which the tenant improvements have not yet been built out. The Premises further
include associated parking and common areas.
2.2 CONDITION OF PREMISES. Tenant represents, warrants and covenants to Landlord
that Tenant has conducted Tenant's own investigation of the Premises, the
physical condition thereof and all other matters relating thereto, including
accessibility and location of utilities, improvements, existence of hazardous
materials, taxes, operating expense data, insurance costs, zoning, covenants,
conditions and restrictions and all other matters which in Tenant's judgment
might bear upon the value and suitability of the Premises for Tenant's purposes
or Tenant's willingness to enter into this Lease. Tenant recognizes that
Landlord would not lease the Premises except on an "AS IS" basis and
acknowledges that Landlord has made no representations or warranties, express or
implied, of any kind in connection with this Lease. Landlord shall deliver the
Premises to Tenant in the same condition as the Premises now are, reasonable
wear and tear excepted. Tenant further recognizes and agrees that Landlord shall
not be required to perform any work of construction, improvement or alteration
of or to the Premises in connection with Tenant's initial occupancy of the
Premises.
3. TERM.
3.1 INITIAL TERM. The term of this Lease ("Lease Term") shall be for a period of
eighteen (18) years ("Primary Term") commencing upon the Effective Date plus the
remainder of any partial calendar month in which the Primary Term commences; it
being agreed that any such partial calendar month shall be deemed included at
the very beginning of the first Lease Year of the Primary Term. Concurrently
with the Effective Date, the Memorandum of Lease, a copy of which is attached
hereto and incorporated herein as Exhibit "B," shall be recorded; provided,
however, that, at the expiration or earlier termination of this Lease, Tenant
shall execute a disclaimer or quitclaim in a form acceptable to Landlord
evidencing such expiration or earlier termination and that Tenant no longer has
any right, title or interest in or to the Premises. The expiration date of the
term shall be the last day of the Primary Term, unless extended as set forth in
Section 3.2. References to the "term of the Lease" shall include extensions, if
any. Except as otherwise expressly stated, the terms and conditions of this
Lease shall remain in effect during any extension, renewal, or holdover of the
Primary Term.
3.2 OPTIONS TO EXTEND. Landlord hereby grants to Tenant two (2) consecutive
options (collectively, the "Extension Options" and, individually, an "Extension
Option") to extend the Lease Term each for a period of five (5) years
(collectively, the "Extension Terms" and individually an "Extension Term"), the
first Extension Term commencing upon the expiration of the Primary Term, and the
second Extension Term commencing upon the expiration of the first Extension
Term, upon each and all of the following terms and conditions:
3.2 (1) Tenant must give to Landlord, and Landlord must have received,
written notice of the exercise of each of the first and second Extension Options
no earlier than three hundred sixty (360) days and no later than two hundred
seventy (270) days prior to the end of the Primary Term and the first Extension
Term, respectively, time being of the essence. If timely notification of the
exercise of an Extension Option is not so given and received, then such
Extension Option and any succeeding Extension Option shall automatically expire
and there shall be no further right to extend the Lease Term.
5
3.2 (2) All of the terms and conditions of this Lease, except for the
Extension Options, shall apply during the Extension Terms.
3.2 (3) The provisions of Section 3.3 are conditions of the Extension
Options.
3.3 CONDITIONS TO EXTENSION OPTIONS.
3.3.1 The Extension Options are not assignable separate and
apart from this Lease, and they may not be separated from this Lease in any
manner, either by reservation or otherwise.
3.3.2 Tenant shall have no right to exercise any of the
Extension Options (i) during the time commencing from the date Landlord gives to
Tenant a notice of default and continuing until the non-compliance alleged in
said notice of default is cured (but only if such default is susceptible to
being cured and such cure is accomplished prior to the expiration of the
applicable cure period, if any), or (ii) during the period of time commencing on
the day after a monetary obligation to Landlord is due from Tenant and remains
unpaid under the Lease (without any necessity for notice thereof to Tenant) and
continuing until the obligation is paid, or (iii) if Tenant has committed any
non-curable breach of this Lease or is otherwise in default of this Lease, or
(iv) if this Lease has been terminated.
3.3.3 The period of time within which the Extension Options may
be exercised shall not be extended or enlarged by reason of Tenant's inability
to exercise such right because of the provisions of the foregoing Section 3.3.2,
provided, however, that if Landlord gives to Tenant a notice of default and it
is determined by a court of competent jurisdiction that Tenant was not actually
in default under this Lease, Tenant shall be given an additional thirty (30)
days from the date of such judicial determination in which to exercise the
applicable Extension Option.
3.3.4 At Landlord's sole election, an Extension Option shall
terminate and be of no further force or effect, notwithstanding Tenant's due and
timely exercise thereof, if, after such exercise but prior to the commencement
of the applicable Extension Term (i) Tenant is in default of any of the terms,
covenants or conditions of this Lease beyond the applicable cure period, if any,
to cure such default, or (ii) this Lease has been terminated.
As used in Sections 3.2 and 3.3, "default of this Lease" shall mean an Event of
Default (as defined in Section 17.1) and any act or omission which, with the
passage of time and/or the giving of notice by Landlord, would constitute an
Event of Default under this Lease.
4. BASE MONTHLY RENT.
4.1 NET-NET-NET LEASE. This is a net-net-net lease. All costs and expenses
arising out of the ownership, use, occupancy, maintenance and repair of the
Premises, including, but not limited to, taxes and insurance, as set forth
below, are to be paid by Tenant and without regard to whether such costs and
expenses arose, occurred or related, in whole or in part, to any period of time
before or after the Commencement Date; it being agreed that Landlord is to bear
no such costs or expenses whatsoever.
4.2 BASE MONTHLY RENT. For the first five (5) Lease Years, Tenant shall pay to
Landlord as base monthly rent (the "Base Monthly Rent") the sum of One Hundred
Sixteen Thousand Six Hundred Sixty Seven Dollars ($116,667.00). Base Monthly
Rent shall be payable by Tenant to Landlord in advance in equal monthly
installments on the first (1st) day of each calendar month during the Primary
Term and each Extension Term for which an option has been exercised, without
prior notice, invoice, demand, deduction, or offset whatsoever. The payment of
Base Monthly Rent shall commence on the Effective Date; provided, however, if
the Effective Date is on a day other than the first day of a calendar month, the
Base Monthly Rent payable by Tenant to Landlord shall be prorated for the first
fractional month of the
6
Lease Term and paid on the Effective Date. Landlord shall have the right to
accept all rent and other payments, whether full or partial, and to negotiate
checks and payments thereof without any waiver of rights, irrespective of any
conditions to the contrary sought to be imposed by Tenant. All sums due
Landlord, from time to time, under this Lease shall be deemed to constitute
rent.
4.2.1 HOLDBACK. Landlord has deposited or caused to be deposited, or
will deposit or cause to be deposited, the sum of Two Million Dollars
($2,000,000) (the "Holdback") (a) with the lender who has made the acquisition
loan to Landlord that is secured by the Premises or (b) in an escrow established
with such lender's consent and approval. The Holdback shall be disbursed to
Tenant, subject to the requirements of such lender, upon completion of the work
that is required to be performed by Tenant pursuant to Paragraph 12.3 hereof.
Tenant shall be entitled to receive monthly, so long as Tenant is not in default
under the Lease, interest in an amount equal to that earned by Landlord on the
Holdback. Landlord and Tenant contemplate that monthly interest will be payable
on the Holdback.
4.3 MONTHLY RENTAL INCREASE. The Base Monthly Rent shall increase
commencing on the first day of the sixth, eleventh and sixteenth Lease Year, and
if Tenant exercises its options to extend the term of this Lease, on the first
day of the twenty-first and twenty-sixth Lease Years (each such day, an
"Adjustment Date"), as follows:
4.3.1 On the first Adjustment Date, the Base Monthly Rent shall be
increased to be the lesser of (a) $128,811 or (b) the amount obtained by
multiplying the Base Monthly Rent payable during the prior Lease Year by a
fraction whose numerator is twice the Adjustment Month Index and whose
denominator is the Base Month Index;
4.3.2 On the second Adjustment Date, the Base Monthly Rent shall be
increased to be the lesser of (a) $135,629 or (b) the amount obtained by
multiplying the Base Monthly Rent payable during the prior Lease Year by a
fraction whose numerator is twice the Adjustment Month Index and whose
denominator is the Base Month Index;
4.3.3 On the third Adjustment Date, the Base Monthly Rent shall be
increased to be the lesser of (a) $150,602 or (b) the amount obtained by
multiplying the Base Monthly Rent payable during the prior Lease Year by a
fraction whose numerator is twice the Adjustment Month Index and whose
denominator is the Base Month Index;
4.3.4 If Tenant exercises the First Extension Option, on the fourth
Adjustment Date, the Base Monthly Rent shall be increased to $167,229; and
4.3.5 If Tenant exercises the Second Extension Option , on the fifth
Adjustment Date, the Base Monthly Rent shall be increased to $185,691;
provided, however, that if the Base Monthly Rent shall be increased, on any
Adjustment Date, pursuant to clause (b) of the applicable subsection of this
Section 4.3 rather than by clause (a) thereof, then in such case the Base
Monthly Rent shall be further increased, but not decreased, on each anniversary
of such Adjustment Date until, but not including, the next occurring Adjustment
Date by multiplying the Monthly Base Rent in effect immediately prior to such
anniversary date by a fraction whose numerator is the Index for that month which
is three (3) months prior to such anniversary date and whose denominator is the
Index for that month which is three (3) months prior to such Adjustment Date.
7
4.4 DEFINITIONS. As used in Section 4.3:
4.4.1 "Adjustment Month Index" means the Index for that month which is
three (3) months prior to the Adjustment Date.
4.4.2 "Index" means CONSUMER PRICE INDEX ALL URBAN CONSUMERS (CPI-U;
U.S. City average; All Items; 1982-84 = 100) published by the United States
Department of Labor, Bureau of Labor Statistics. If the base of the Index
changes from the 1982-84 base (100), the Index shall, thereafter, be adjusted to
the 1982-84 base 100 before the computation indicated above is made. If the
Index cannot be converted to the 1982-84 base or if the Index is otherwise
revised, the adjustment under this section shall be made with the use of such
conversion factor, formula or table for converting the Index as may be published
by the Bureau of Labor Statistics. If the Index is at any time hereafter no
longer published, a comparable index generally accepted and employed by the real
estate profession, as reasonably determined by Landlord, shall be used.
4.4.3 "Base Month Index" means the Index for that month which is five
(5) years and three (3) months prior to the Adjustment Date.
4.4.4 If the Adjustment Month Index is unavailable on the Adjustment
Date, Landlord may calculate the adjustment under this Section based on the
Index for a month preceding the Adjustment Date. When the Adjustment Month Index
becomes available, Landlord shall provide Tenant with the corrected computations
for adjustments under Section 4.3.1, and Tenant shall pay Landlord any
deficiency for any intervening months within ten (10) days of receipt of the
corrected computations. If the corrected computations show instead that Tenant
has overpaid Landlord, then Tenant shall be entitled to offset the amount of
such overpayment, less any sums due Landlord by Tenant, against Base Monthly
Rent, as the same shall come due.
5. ADDITIONAL RENT. THIS SECTION WAS INTENTIONALLY LEFT BLANK.
6. SUBSTITUTE RENT AND INCREASES. THIS SECTION WAS INTENTIONALLY LEFT BLANK.
7. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon execution hereof
One Hundred Ten Thousand Dollars ($110,000), as security for Tenant's faithful
performance of Tenant's obligations hereunder. If Tenant fails to pay rent or
other charges due hereunder, or otherwise defaults with respect to any provision
of this Lease, then Landlord may use, apply or retain all or any portion of said
security deposit for the payment of any rent or other charge in default or for
the payment of any other sum to which Landlord may become obligated, or be
permitted hereunder to pay, by reason of Tenant's default, or to compensate
Landlord for any loss or damage which Landlord may suffer thereby. If Landlord
so uses or applies all or any portion of said deposit, then Tenant shall, within
ten (10) days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore said deposit to the full amount hereinabove stated,
and Tenant's failure to do so shall be a material breach of this Lease. Tenant
shall deposit with Landlord, from time to time, additional security deposit so
that the amount of security deposit held by Landlord shall at all times bear the
same proportion to the current Monthly Base Rent as the original security
deposit bears to the original Monthly Base Rent set forth in Paragraph 4.2.
Landlord shall not be required to keep said deposit separate from its general
accounts. If Tenant performs all of Tenant's obligations hereunder, then said
deposit, or so much thereof as has not theretofore been applied by Landlord
shall be returned to Tenant (or, at Landlord's option, to the last assignee, if
any, of Tenant's interest hereunder), without payment of interest or other
increment for its use, at the expiration of the term
8
hereof, but after Tenant has vacated the Premises. No trust relationship is
created herein between Landlord and Tenant with respect to said security
deposit. Notwithstanding the foregoing, Landlord hereby waives Tenant's
obligation to provide such security deposit unless and until the occurrence of
an event pursuant to Section 16.1 which gives rise to the determination of a
Fair Market Rental Rate (as defined in said Section).
8. USE OF THE PREMISES. Tenant shall use (i) the Club portion of the Premises
only for a first class health and fitness club and other ancillary uses typical
to a Spectrum Club, (ii) the Office Space portion of the Premises, once the Deck
is completed, only for general office use and (iii) the parking and common areas
of the Premises only for parking and other common area uses and, in each such
instance, for no other uses without the prior written consent of Landlord, which
Landlord may withhold in its sole discretion. In no event shall all or any part
of the Premises be used for any of the uses set forth on Exhibit "C" attached
hereto and incorporated herein by this reference (collectively, "Prohibited
Uses"). Once Tenant has completed the applicable construction obligation
pursuant to Section 12.3, Tenant shall continuously operate the Club portion of
the Premises as a health and fitness club and the Office Space portion of the
Premises for general office use by office subtenants. Tenant has satisfied
itself, and represents to Landlord, that use of the Premises for a health and
fitness club and general office use, once the Deck is completed, is lawful and
conforms to all applicable zoning and other use restrictions and regulations
applicable to the Premises. Tenant shall, at Tenant's expense, comply promptly
with all applicable statutes, ordinances, rules, regulations, orders, covenants
and restrictions of record, and requirements in effect during the term or any
part of the term hereof, regulating the use by Tenant of the Premises,
including, without limitation, the obligation at Tenant's cost, to alter,
maintain, or restore the Premises in compliance and conformity with all laws
relating to the condition, use, or occupancy of the Premises during the term of
this Lease (including any and all requirements as set forth in the Americans
with Disabilities Act). Tenant shall not perform any acts or carry on any
practices which may injure the Premises.
9. PROPERTY TAXES, ASSESSMENTS AND UTILITIES.
9.1 TENANT'S REQUIRED PAYMENTS.
9.1.1 Except in the event that a lender of Landlord shall require, from
time to time, the establishment of an impound account for the payment of taxes
or that such taxes be paid earlier than set forth below, in which case Tenant
shall, as applicable, make such deposits into such account or pay such taxes on
or before such earlier date, in each such instance, as may be required by such
lender, Tenant shall pay 30 days before delinquency, and promptly provide to
Landlord and to any such lender of which Tenant has notice written proof of
payment for, all taxes, assessments, license fees, costs incurred pursuant to
covenants and restrictions affecting the Premises, and other charges ("taxes")
levied or assessed against all merchandise, personal property, real property,
buildings and improvements, and any other obligations which are or may become a
lien or levied against the Premises. If any such taxes paid by Tenant shall
cover any period of time after the expiration of the term hereof, then Tenant's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Landlord shall reimburse Tenant to the extent required; it being agreed that
there shall be no such proration, and Tenant shall be solely responsible for,
the entire amount of any such taxes that cover, whether in whole or in part, any
period of time prior to the term hereof. If Tenant shall fail to pay any such
taxes, then Landlord shall have the right to (i) pay the same, in which case
Tenant shall repay such amount to Landlord with Tenant's next rent installment
together with interest at the lesser of eighteen percent (18%) per annum and the
maximum rate then allowable by law and (ii) thereafter require Tenant to impound
with Landlord, or for the benefit of Landlord with any lender of Landlord, such
taxes pursuant to Section 17.7.
9
9.1.2 If at any time during the term, the state in which the Premises
are located or any political subdivision of the state, including any county,
city, county and city, public corporation, district, or any other political
entity or public corporation of that state, levies or assesses against Landlord
a tax, fee, or excise on (i) rents, including, if applicable, property taxes,
insurance, maintenance, and other costs incurred by Tenant by which Landlord may
benefit; (ii) on the square footage of the Premises; (iii) on the act of
entering into this Lease; or (iv) on the occupancy of Tenant, or levies or
assesses against Landlord any other tax, fee, or excise, however described,
including, without limitations, a so-called value added tax, as a direct
substitution in whole or in part for, or in addition to, any real property
taxes, then Tenant shall reimburse to Landlord or directly pay before
delinquency that tax, fee, or excise. It is the intention of Tenant and Landlord
that all new and increased assessments, taxes, fees, levies, and charges, and
all similar assessments, taxes, fees, levies, and charges be included within the
definition of taxes for the purpose of this Lease. If at any time during the
term of this Lease the laws concerning the methods of real property taxation
prevailing at the commencement of the term of this Lease are changed so that a
tax or excise on rents or any other tax, however described, is levied or
assessed against Landlord as a substitution in whole or in part for any real
property taxes, then taxes shall include, but not be limited to, any such
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the rent payable hereunder, including, without limitation, any
gross income tax with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use, or occupancy by Tenant of the Premises, or any portion
thereof. Accordingly, the term "taxes" shall also include any tax, fee, levy,
assessment or charge (i) in substitution of, partially or totally, any tax, fee,
levy, assessment or charge hereinabove included within the definition of
"taxes," or (ii) the nature of which was hereinbefore included within the
definition of "taxes," or (iii) which is imposed for a service or right not
charged prior to July 1, 1978, or, if previously charged, has been increased
since July 1, 1978, or (iv) which is imposed as a result of a transfer, either
partial or total, of Landlord's interest in the Premises or which is added to a
tax or charge hereinbefore included within the definition of "taxes" by reason
of such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
9.2 PAYMENTS NOT REQUIRED BY TENANT. Subject to Section 9.1.2, Tenant shall not
be required to pay any municipal, county, state, or federal income or franchise
taxes of Landlord, or any municipal, county, state, or federal estate,
succession, inheritance, or transfer taxes of Landlord.
9.3 ASSESSMENTS. If any assessment for a capital improvement made by public or
governmental authority shall be levied or assessed against the Premises, and the
assessment is payable either in a lump sum or on an installment basis, then
Tenant shall have the right to elect the basis of payment. If Tenant shall elect
to pay the assessment on the installment basis, then Tenant shall pay only those
installments which shall become due and payable during the term of this Lease.
9.4 UTILITY PAYMENTS. Tenant shall promptly pay when due all charges for water,
gas, electricity, and all other utilities furnished to or used upon the
Premises, including all charges for installation, termination, and relocations
of such service.
9.5 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises or elsewhere. When
possible, Tenant shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Landlord. If any of Tenant's said personal property shall be
assessed with Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant within ten (10) days after receipt of a written statement
setting forth the taxes applicable to Tenant's property.
9.6 TENANT'S RIGHT TO CONTEST UTILITY CHARGES, CONTEST TAXES AND SEEK REDUCTION
OF ASSESSED VALUATION OF THE PREMISES. Tenant, at its cost, shall have the
right, at any time, to seek a reduction in the assessed valuation of the
Premises or to contest any taxes or utility charges that are to be paid by
Tenant. Subject to the requirements of any lender of Landlord, if Tenant seeks a
reduction or contests any taxes or
10
utility charges, the failure on Tenant's part to pay the taxes or utility
charges shall not constitute a default as long as Tenant complies with the
provisions of this Section. Tenant may use any means allowed by statute to
protest property tax assessments or utility charges as defined in this Section 9
as long as Tenant remains current as to all other terms and conditions of this
Lease. If, during the protest period, any lease defaults occur and the protested
taxes or assessments have not been paid, then Tenant shall furnish to Landlord a
surety bond issued by an insurance company qualified to do business in the state
where the Premises are located. The amount of bond shall equal one hundred fifty
percent (150%) of the total amount of taxes in dispute. The bond shall hold
Landlord and the Premises harmless from any damage arising out of the proceeding
or contest and shall insure the payment of any judgment that may be rendered.
9.7 LANDLORD NOT REQUIRED TO JOIN IN PROCEEDINGS OR CONTEST BROUGHT BY TENANT.
Landlord shall not be required to join in any proceeding or contest brought by
Tenant unless the provisions of the law require that the proceeding or contest
be brought by or in the name of Landlord or the 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.
Tenant, on final determination of the proceeding or contest, shall immediately
pay or discharge any decision or judgment rendered, together with all costs,
charges, interest, and penalties incidental to the decision or judgment.
10. FURNITURE, FIXTURES AND EQUIPMENT.
10.1 FURNITURE, FIXTURES, AND EQUIPMENT. During the term, Tenant shall, at
Tenant's expense and from time to time, place, install, repair and maintain such
furniture, fixtures, and equipment on the Premises as may be needed and shall be
sufficient for the conduct of Tenant's business and are consistent with Tenant's
permitted use.
10.2 LANDLORD'S WAIVER. Tenant may finance equipment, trade fixtures, signs, and
furniture which may be installed in or about the Premises. Landlord shall,
within twenty (20) business days of receiving a written request, execute and
deliver to any institutional lender a Waiver and Consent Agreement approved by
Landlord and substantially in the form of Exhibit "D," attached hereto and
incorporated herein. During the term of the Lease and subject to the terms and
conditions of any applicable equipment leases or financing arrangements and
Sections 10.1 and 10.3, any furniture, fixtures, and equipment placed in the
Premises by Tenant may be replaced or removed by Tenant periodically during the
term.
10.3 REMOVAL OF FURNITURE, FIXTURES, AND EQUIPMENT AT EXPIRATION OF LEASE. At
the expiration of this Lease (whether at the end of the initial term, if no
Extension Option has been exercised, or at the end of any then applicable
Extension Term, if any Extension Option has been exercised), Tenant shall remove
all Tenant's furniture and equipment from the Premises; provided, however, that
Landlord shall have the option, but not the obligation, to elect, by written
notice to Tenant prior to such expiration, to have any or all of such furniture
and equipment, as Landlord may specify in any such notice, become the property
of Landlord upon such expiration and remain upon and be surrendered with the
Premises, without disturbance, molestation or injury. In any such event,
Landlord shall pay to Tenant an amount equal to the lesser of the actual cash
value or the unamortized value of such furniture or equipment, as then carried
on Tenant's books for federal income tax purposes. Notwithstanding the foregoing
and subject to any election by Landlord pursuant to Section 12.1, all building
fixtures and equipment (including, without limitation, air conditioning units,
heating equipment, plumbing fixtures, hot water heaters, wall covering,
carpeting or other floor covering cemented or otherwise affixed to the floor,
cabinetry and draperies) that may be installed in or attached to the Premises by
Tenant shall, on the expiration date or earlier termination of this Lease for
any reason, be the property of Landlord and remain upon and be surrendered with
the Premises, without disturbance, molestation or injury. Tenant shall make such
repairs and restoration of the Premises as are necessary to correct any damage
to the Premises from the removal of any furniture, fixtures, equipment or
alterations by Tenant and shall, subject to any election by Landlord pursuant to
Section 12.1, return the Premises to Landlord in the same condition existing (i)
as to the Club
11
portion of the Premises, when the Club was completed and opened for business,
(ii) as to the Office Space portion of the Premises, when the Office Space was
fully built out with initial tenant improvements and (iii) as to the associated
parking and common areas of the Premises, when the Deck was completed, in each
instance, normal wear and tear excepted.
10.4 RIGHT TO AFFIX SIGNS. Tenant shall have the right to affix signs
customarily used in its business upon the windows, doors, interior, and exterior
walls of the Premises, and such free-standing signs as may seem appropriate to
Tenant and are authorized by any governmental authority having jurisdiction over
the Premises. Tenant shall remove all such signs on the expiration date or
earlier termination of this Lease for any reason, unless Landlord shall elect,
in its sole discretion and by written notice to Tenant, to have any or all of
such signs be surrendered with the Premises, in which case any such signs shall
become the property of Landlord and remain upon and be surrendered with the
Premises, without disturbance, molestation or injury.
11. MAINTENANCE OF THE PREMISES.
11.1 TENANT'S OBLIGATION TO MAINTAIN THE PREMISES. During the term of this
Lease, Tenant shall, at its own expense, keep and maintain the entire Premises
in good order and repair, including, but not limited to, the interior, exterior,
floors, walls, roof, foundation, structural elements, plumbing, pipes,
electrical wiring, switches and conduits and all mechanical equipment relating
to the Premises; and the sidewalks, curbs, walls, trash enclosures, landscaping
with sprinkler system (if installed), light standards, and parking areas which
are a part of the Premises. Tenant shall make such repairs and replacements as
may be necessary, regardless of whether the benefit of such repair or
replacement extends beyond the term of this Lease. The Premises shall be
returned to Landlord at the termination or expiration of this Lease in good
condition, ordinary wear excepted. For as long as Tenant is not in default of
any of the terms and conditions of this Lease, Landlord hereby assigns to Tenant
the right to enforce all building contractor, subcontractor, and manufacturer's
warranties and guarantees applicable to the Premises; and Landlord shall
cooperate with Tenant at Tenant's request in any action to enforce such
warranties and guarantees. In the event of destruction of the Premises by fire
or casualty, the condition of the Premises upon termination of this Lease shall
be governed by Section 14.
11.2 OBLIGATION TO KEEP THE PREMISES CLEAR. Tenant shall keep the Premises,
including sidewalks adjacent to the Premises and loading areas allocated for the
use of Tenant, clean and free from rubbish and debris at all times. Tenant shall
store all trash and garbage within the Premises and arrange for regular pickup
and cartage of such trash and garbage at Tenant's expense.
11.3 LANDLORD TO HAVE NO OBLIGATION TO MAINTAIN THE PREMISES. Landlord shall
have no obligation whatsoever to construct, improve, repair, maintain or rebuild
the Premises (collectively, "Construction Obligations"). Tenant further
acknowledges and agrees that any loan that may, from time to time, be secured,
in whole or in part, by the Premises, or any part thereof, may impose certain
Construction Obligations upon Landlord, including, without limitation, those
relating to items of deferred maintenance, deferred repair or capital
improvements that may be identified, from time to time, by any such lender
(collectively, "Lender Construction Obligations"). Without limiting the
generality of the foregoing, Tenant shall be solely responsible, as between
Landlord and Tenant, for complying, diligently, promptly and at Tenant's sole
cost and expense, with any Lender Construction Obligations of which Tenant has
notice, in each instance, on or before the date for compliance, and otherwise in
full satisfaction of the other terms and conditions for such compliance, set
forth in the applicable loan documents, including, without limitation, providing
Landlord with such evidence as may be required by Landlord, from time to time,
to satisfy Lender that such Lender Construction Obligations have been satisfied
(including, without limitation, lien releases, architectural certifications,
itemization of costs spent, paid receipts and whatever other documents Landlord
may be required to provide to such lender during and upon the completion of such
Lender Construction Obligations).
12
12. REPAIRS AND ALTERATIONS.
12.1 RIGHT TO MAKE ALTERATIONS. At all times during the term of this Lease,
Tenant shall have the right to make alterations, additions, and improvements to
the interior or exterior of the Premises and parking areas adjacent to the
Premises. Nevertheless, any one alteration or addition, or related series of
alterations or additions, that is over Fifty Thousand Dollars ($50,000) or is
structural in nature or affects building systems shall not be made by Tenant
without prior written consent of Landlord, which such consent shall not be
unreasonably withheld, conditioned or delayed. Any alterations, additions, and
improvements which may be made or installed by Tenant shall be removed from the
Premises at the termination or expiration of this Lease if Landlord's consent
thereto was required and Landlord conditioned such consent on such removal. In
addition, if Landlord, in Landlord's sole discretion, shall elect to require
Tenant, by written notice to Tenant, to restore some or all of the Premises to
the condition existing when Tenant or an affiliate first acquired title to the
Premises, then Tenant shall, diligently and in a good and workmanlike manner,
commence and complete such restoration, lien free and otherwise in accordance
with the terms and conditions of this Lease, on or before the termination or
expiration of this Lease if commercially reasonable to do. If it is not
commercially reasonable for Tenant to complete such restoration by such
expiration or termination, then Tenant shall do so as soon as reasonably
possible thereafter. Landlord shall give any such notice requiring such
restoration, if at all, by no later than the date occurring 30 days after the
date of such expiration or termination. Otherwise, any such alterations,
additions, and improvements shall remain upon the Premises and be surrendered
with the Premises to Landlord. Any alteration, addition, or improvement shall be
accomplished by Tenant in a good workmanlike manner, in conformity with
applicable laws and regulations and by a contractor approved by Landlord. Upon
completion of any work, Tenant shall provide to Landlord "as-built" plans,
copies of all construction contracts, building permits, inspection reports and
all other required governmental approvals, and proof of payment of all labor and
materials. Tenant shall pay when due all claims for such labor and materials and
shall give Landlord at least twenty (20) days prior written notice of the
commencement of any such work. Landlord may enter upon the Premises, in such
case, for the purpose of posting appropriate notices, including, but not limited
to, notices of nonresponsibility.
12.2 TENANT SHALL NOT RENDER PREMISES LIABLE FOR ANY LIEN. Tenant shall have no
right, authority, or power to bind Landlord, or any interest of Landlord in the
Premises, nor to render the Premises liable for any lien or right of lien for
the payment of any claim for labor, material, or for any charge or expense
incurred to maintain, to repair, or to make alterations, additions, and
improvements to the Premises. Tenant shall in no way be considered the agent of
Landlord in the construction, erection, modification, repair, or alteration of
the Premises. Notwithstanding the above, Tenant shall have the right to contest
the legality or validity of any lien or claim filed against the Premises. No
contest shall be carried on or maintained by Tenant after the time limits in the
sale notice of the Premises for any such lien or claim unless Tenant (i) shall
have duly paid the amount involved under protest; (ii) shall have procured and
recorded a lien release bond from a bonding company acceptable to Landlord in an
amount not less than one hundred fifty percent (150%) of the amount involved; or
(iii) shall have procured a stay of all proceedings to enforce collection. Upon
a final adverse determination of any contest, Tenant shall pay and discharge the
amount of the lien or claim determined to be due, together with any penalties,
fines, interest, cost, and expense which may have accrued, and shall provide
proof of payment to Landlord.
12.3 TENANT'S INITIAL CONSTRUCTION OBLIGATIONS. Subject to the other terms and
conditions of this Lease, Tenant shall, as expeditiously as possible consistent
with sound construction practices, complete, at its expense, the construction of
the Club, the Deck and all required initial tenant improvements to the Office
Space; it being agreed, however, that in any and all events, Tenant shall have
completed the construction of the Deck and all required initial tenant
improvements to the Office Space on or before the date occurring 12 months after
the Effective Date. If Tenant shall fail to complete any of such work of
construction by such date, then Landlord may elect, in its sole discretion and
from time to time, but shall not be obligated, to complete any or all of such
work of construction, at Tenant's cost and expense. Any
13
such sums so expended by Landlord shall constitute rent and be due Landlord by
Tenant within five (5) business days of Landlord's presenting to Tenant
reasonably satisfactory evidence that such sums either are due or have been
paid. If Landlord shall elect, in its sole discretion, to complete any of such
work, then Landlord may, at any time or from time to time thereafter, also
elect, in its sole discretion, to cease any or all of such work of construction
before its completion and with no liability whatsoever to Tenant as a result
thereof. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, costs, damages, liabilities and losses of any kind
or nature arising out of or in connection with any such election by Landlord,
from time to time, either to complete or to cease all or any portion of such
work of construction.
13. INDEMNITY AND INSURANCE.
13.1 INDEMNIFICATION OF THE PARTIES. The parties to this Lease have the
following indemnification obligations:
13.1.1 INDEMNIFICATION BY TENANT. Subject to Section 13.1.2, Tenant
shall indemnify, defend, protect and hold Landlord and its affiliates harmless
from and against any and all claims, actions, proceedings, losses, costs,
damages, expenses and/or liabilities (including, without limitation, court costs
and reasonable attorneys' fees) incurred in connection with or arising at any
time and from any cause whatsoever, and whether before or after the Commencement
Date, in or about the Premises, including, without limiting the generality of
the foregoing: (i) any default by Tenant in the observance or performance of any
of the terms, covenants, or conditions of this Lease on Tenant's part to be
observed or performed; (ii) the use or occupancy of the Premises by Tenant or
any person claiming by, through, or under Tenant; (iii) the condition of the
Premises or any occurrence or happening on the Premises from any cause
whatsoever, or (iv) any acts, omissions, or negligence of Tenant or any person
claiming by, through, or under Tenant, or of the contractors, agents, servants,
employees, visitors, or licensees of Tenant or any such person, in, on, or about
the Premises, in each such instance either prior to or during the Lease term
(including, without limitation, any holdovers in connection therewith),
including, without limitation, any acts, omissions, or negligence in the making
or performance of any alterations. Tenant further agrees to indemnify, defend,
protect and hold harmless Landlord's agents, and the landlord or landlords under
all ground or underlying leases, from and against any and all claims, actions,
proceedings, losses, costs, damages, expenses and/or liabilities (including,
without limitation, reasonable attorney's fees) incurred in connection with or
arising from any claims by any persons by reason of injury to persons or damage
to property occasioned by any use, occupancy, condition, occurrence, happening,
act, omission, or negligence referred to in the preceding sentence. The
provisions of this Section shall survive the expiration or sooner termination of
this Lease with respect to any act or omission occurring prior to such
expiration or termination, and shall not be limited by reason of any insurance
carried by Landlord and Tenant.
13.1.2 INDEMNIFICATION BY LANDLORD. Landlord shall indemnify, defend,
protect and hold Tenant and its affiliates harmless from and against any and all
claims, actions, proceedings, losses, costs, damages, expenses and/or
liabilities (including, without limitation, court costs and reasonable
attorneys' fees) proximately caused by: (a) any breach or default in the
performance of any obligation required to be performed by Landlord under the
terms of this Lease or (b) any act or omission of Landlord or its agents and
employees amounting to willful misconduct or fraud.
14
13.2 INSURANCE COMPANY REQUIREMENT. Insurance required by this Lease shall be
issued by companies holding a general policyholder's rating of at least A -VII
as set forth in the most current issue of Best's Insurance Guide and authorized
to do business in the state in which the Premises are located. If this
publication is discontinued, then another insurance rating guide or service
generally recognized as authoritative shall be substituted by Landlord.
13.3 INSURANCE CERTIFICATE REQUIREMENTS. Tenant shall deliver to Landlord
certificates evidencing the existence and amounts of the insurance with loss
payable clauses as required herein and endorsements evidencing required
additional insured coverage. Each such certificate shall state that the
applicable such policy shall not be cancelable or subject to reduction of
coverage or other modification except after thirty (30) days prior written
notice to Landlord.
13.4 MINIMUM ACCEPTABLE INSURANCE COVERAGE REQUIREMENTS.
13.4.1 Tenant shall, at Tenant's expense, obtain and keep in full force
during the term of this Lease a policy of combined single limit personal injury
and property damage insurance insuring Tenant against any liability arising out
of the ownership, use, occupancy, or maintenance of the Premises and all of its
appurtenant areas. The insurance shall, at all times, be in an unimpaired amount
not less than Five Million Dollars ($5,000,000) per occurrence. The policy shall
provide blanket contractual liability coverage. However, the limits of the
insurance shall not limit the liability of Tenant. In addition, Tenant shall, at
Tenant's expense, obtain and keep in full force during the term of this Lease an
umbrella liability policy in an amount not less than Five Million Dollars
($5,000,000).
13.4.2 Tenant shall, at Tenant's expense, obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Premises. The insurance shall be in an amount not less than the
replacement value of the improvements (less slab, foundation, supports, and
other customarily excluded improvements) against all perils of fire, extended
coverage, vandalism, malicious mischief, and special extended perils ("All
Risks," as such term is used in the insurance industry). The policy shall
include a code upgrade endorsement. In addition, Tenant shall, at Tenant's
expense, obtain and keep in force during the term of this Lease a policy or
policies of insurance covering loss or damage due to perils caused by earthquake
and/or flood if the Premises is in a certified flood zone. A stipulated value or
agreed amount endorsement deleting the co-insurance provision to the policy
shall be procured.
13.4.3 Tenant shall also obtain and keep in force during the term of
this Lease a policy of business interruption insurance covering a period of one
(1) year. This insurance shall cover all real estate taxes, insurance costs and
operating expenses for the same period in addition to one (1) year's Base
Monthly Rent.
13.4.4 Tenant shall also obtain and keep in force during the term of
this Lease a worker's compensation policy, insuring against and satisfying
Tenant's obligations and liabilities under the worker's compensation laws of the
state in which the Premises are located, including Employer's Liability
insurance, in an amount of not less than One Million Dollars ($1,000,000).
13.4.5 None of the above-required coverages shall have a deductible in
an amount greater than Ten Thousand Dollars ($10,000.00).
13.4.6 Tenant's insurance shall be primary, and any insurance Landlord
may carry, from time to time, shall be secondary and noncontributory.
15
13.4.7 Tenant shall provide such other or different insurance coverage
as either Landlord or a lender of Landlord may require from time to time.
13.4.8 If, from time to time, Tenant customarily provides insurance
coverage at other of its facilities in amounts which exceed the requirements in
this Lease, or other similar facilities carry greater coverage, then Tenant
shall similarly provide such greater coverage hereunder.
13.5 ADDITIONAL INSUREDS. Tenant shall name as additional insureds on all
insurance, Landlord, Landlord's successors, assignee(s), nominee(s),
nominator(s), and agents with an insurable interest as follows:
"Landlord and, as applicable, its direct and indirect officers,
directors, shareholders, members, managers, partners and all successors,
assignee(s), subsidiaries, corporations, partnerships, proprietorships, joint
ventures, firms, and individuals as heretofore, now, or hereafter constituted on
which the named insured has the responsibility for placing insurance and for
which similar coverage is not otherwise more specifically provided."
13.6 MORTGAGE ENDORSEMENT. If requested by Landlord, the policies of insurance
required to be maintained hereunder shall bear a standard first mortgage
endorsement in favor of any holder or holders of a first mortgage lien or
security interest in the property with loss payable to such holder or holders as
their interests may appear.
13.7 RENEWALS, LAPSES OR DEFICIENCIES. Tenant shall, at least thirty (30) days
prior to the expiration of such policies or on or before such earlier date as
any lender of Landlord may require, from time to time, furnish renewal
certificates of insurance or renewal binders to Landlord and to any lender of
Landlord of which Tenant has notice. Should Tenant fail to provide to Landlord
the renewals or renewal binders, or in the event of a lapse or deficiency of any
insurance coverage specified herein for any reason, Landlord may immediately
replace the deficient insurance coverage with a policy of insurance covering the
Premises of the type and in the limits set forth above. Upon written notice from
Landlord of the placement of insurance, Tenant shall immediately reimburse
Landlord for the total cost of premiums and expense of such insurance placement.
Tenant shall not do or permit to be done anything which shall invalidate the
insurance policies. If Tenant does or permits to be done anything which shall
increase the cost of the insurance policies, then upon Landlord's demand Tenant
shall reimburse Landlord for any additional premiums attributable to any acts or
omissions or operations of Tenant causing the increase in the cost of insurance.
Notwithstanding the foregoing, however, if a lender of Landlord shall require,
at any time or from time to time, the establishment of a monthly impound account
to cover the cost of any insurance coverage required under this Lease, then
Tenant shall make such monthly deposits into such account as may be required
from time to time by such lender.
13.8 WAIVER OF SUBROGATION. Tenant and Landlord each hereby release and relieve
the other, and waive their entire right of recovery against the other, for loss
or damage caused by any peril insured against under Section 13, whether due to
the negligence of Landlord or Tenant or their agents, employees, contractors
and/or invitees to the extent that this waiver will not invalidate such
insurance. Tenant and Landlord shall, upon obtaining the policies of insurance
required hereunder, give notice to the insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in this Lease.
13.9 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that Landlord
shall not be liable for injury to Tenant's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Tenant or Tenant's employees, invitees, or any other person in or about the
Premises, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents, invitees or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances,
16
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the said damage or injury results from conditions arising upon the
Premises or upon other portions of the Building, or from other sources or
places, and regardless of the cause of such damage or injury, and whether the
means of repairing the same is inaccessible to Tenant. Landlord shall not be
liable for any damages arising from any act or neglect of any other occupant, if
any, of any portion of the Premises.
14. PARTIAL AND TOTAL DESTRUCTION OF THE PREMISES. In the event any part or all
of the Premises shall at any time during the term of this Lease be damaged or
destroyed, regardless of cause, Tenant shall give prompt notice to Landlord.
Tenant shall repair and restore all of the Premises to their original condition,
including buildings and all other improvements, as soon as circumstances permit.
Tenant shall hold Landlord free and harmless from any and all liability
resulting from such repairs and restoration. Tenant shall pay for any cost of
repair or restoration in excess of the available insurance proceeds. Tenant is
not entitled to any rent abatement during or resulting from a utility stoppage
or disruption as well as any disturbance on or partial or total destruction of
the Premises. Tenant hereby waives the provisions of California Civil Code
Sections 1932(2) and 1933(4) and provisions of any successor or other law of
like import.
15. CONDEMNATION.
15.1 CONDEMNATION DAMAGES. In the event of the taking or conveyance of the whole
or any part of the Premises by reason of condemnation by any public or
quasi-public body, Landlord and Tenant shall represent themselves independently
in seeking damages before the condemning body. Each party shall be entitled to
the amount awarded respectively to each. Tenant shall only be entitled to make a
claim, and Landlord shall not make a claim, in such proceedings for the
following:
15.1.1 A sum attributable to the unamortized values of Tenant's
leasehold improvements or alterations, calculated based on the useful life of
such improvements or alterations for federal income tax purposes, made to the
Premises by Tenant in accordance with this Lease, which improvements or
alterations Tenant would have the right to remove from the Premises upon the
termination of the Lease pursuant to the provisions of this Lease; and
15.1.2 Tenant's moving expenses, including, without limitation, its
costs in removing its merchandise, furniture, trade fixtures, and equipment.
15.2 TERMINATION OF LEASE OR RENT ADJUSTMENT DUE TO CONDEMNATION. In the event
that a condemnation prevents or substantially impairs Tenant's ability to use
the Premises for the purposes specified in Section 8, Tenant may terminate this
Lease by giving Landlord sixty (60) days written notice of its intention to
terminate this Lease after receiving notice of the condemnation from the
condemning authority. The effective date of the termination shall be the actual
date of such taking. In the event of termination, the rent for the last month of
Tenant's occupancy shall be prorated, and Landlord shall refund to Tenant any
rent paid in advance. Tenant shall thereupon be released from its obligation to
pay rent. In the event that a condemnation does not prevent or substantially
impair Tenant's ability to use the Premises for the purposes specified in
Section 8, the Base Monthly Rent shall be reduced in proportion to the amount by
which the square footage of the Premises has been reduced by such condemnation.
16. ASSIGNMENT AND SUBLETTING.
16.1 NO TRANSFERS. Except as set forth in Section 16.2, Tenant may not, directly
or indirectly, (a) sell, assign, transfer, mortgage, pledge or hypothecate the
whole or any part of its interest under this Lease, (b) sublet the whole or any
part of the Premises, or (c) allow the occupancy of the whole or any part of the
Premises by another by license, concession, joint venture, management agreement,
or otherwise, without in each case obtaining the prior written consent of
Landlord, which consent shall not be unreasonably
17
withheld, conditioned, or delayed. It is hereby deemed reasonable for Landlord
to withhold its consent, without limitation, if said decision is rendered in
good faith and is based upon the character, reputation, financial condition,
and/or business acumen and experience of Tenant's proposed successor or if
Landlord is required to obtain the consent of any lender to such proposed
subletting or assignment and, for whatever reason, such lender does not give
such consent. Likewise, any conditional or delayed response by Landlord to any
such proposed subletting or assignment shall conclusively be deemed reasonable
on the part of Landlord if caused by any corresponding conditional or delayed
response by such lender. For the purposes of this Section 16 and this Lease
generally, any of the events set forth in subsection (a), (b), or (c) above or
as provided in this Section 16.1.1, and whether being done directly or
indirectly, shall be deemed included in the references "assign," "assignment,"
"sublet," "subletting", "transfer" or any other word of like or similar import.
Without limiting the discretion of Landlord in granting or withholding consent
under this Section 16, Tenant shall not request the consent of Landlord to a
transfer, subletting or assignment (i) for any use other than the uses specified
for certain portions of the Premises in Section 8 hereof or (ii) to any party if
the quality of the business operation is or may be adversely affected thereby.
Landlord shall further not be required to consent to any assignment if Tenant
does not concurrently deliver to Landlord a reaffirmation of any guaranty of
this lease, acceptable to Landlord in its sole discretion, consenting to such
assignment. Any transfer, subletting or assignment to which Landlord has
consented shall be by an instrument in writing, satisfactory to Landlord, and
any assignee, sublessee, transferee, licensee, concessionaire or mortgagee shall
agree for the benefit of Landlord to be bound by, assume and perform all the
terms, covenants and conditions of this Lease. If Tenant transfers, sublets or
assigns its interest in this Lease, then, except in the case of one or more
subleases for not more than an aggregate of twenty five percent (25%) of the
Premises in which case the following shall not apply, the Base Monthly Rent
shall be automatically increased, but not decreased, as of the effective date of
such subletting or assignment by an amount equal to fifty percent (50%) of the
difference between the then current Base Monthly Rent and the "Fair Market
Rental Rate", which shall be determined as provided in the following subsection.
In the event of a subletting or assignment of all or any part of the Premises,
due consideration shall be given, in determining both the current Base Monthly
Rent and the Fair Market Rental Rate for the sublet or assigned portion of the
Premises, that not every part of the Premises may be of equal value to a tenant
such that any stated rental rate for the entire Premises may understate or
overstate what the corresponding rental rate for only a particular portion of
the Premises might be inasmuch as any rental rate for the entire Premises
represents a "blended" rental rate for all the different portions of the
Premises.
16.1.1 Landlord and Tenant shall each select a real estate broker with
at least ten (10) years experience leasing commercial space in the Thousand Oaks
area, and within ten (10) business days after both appraisers have been so
selected, each shall submit to the other his or her estimate of the Fair Market
Rental Rate, for Base Monthly Rent for a new lease of similar duration for the
Premises. If either broker fails to timely submit his or her estimate, such
estimate shall be disregarded and the one (1) timely estimate shall alone
constitute the Fair Market Rental Rate for the Premises. If each broker provides
a timely estimate and the higher of the two (2) is within five percent (5%) of
the lower, the two (2) shall be averaged, and such average shall be the Fair
Market Rental Rate for the Premises. If the two (2) estimates are not so within
five percent (5%), the two (2) brokers shall within an additional ten (10)
business days select a third qualified broker, who shall submit his or her
estimate to the other two (2) brokers within ten (10) business days after he or
she is selected, and the two (2) closest estimates shall be averaged, and such
average shall be the Fair Market Rental Rate for the Premises. If either party
fails timely to select its broker as provided above, the other party's broker
alone shall determine the Fair Market Rental Rate for the Premises. If the two
(2) brokers selected by Landlord and Tenant are unable to timely agree upon a
third broker, or if the third broker fails to timely submit his or her estimate,
the third broker (or a replacement therefor in the event the third broker
selected by the first two (2) has failed to timely submit his or her estimate)
shall be selected by the Landlord. Each party shall pay the fees and costs of
its broker
18
and fifty percent (50%) of the fees and costs of the third broker (if one is
required). In determining the Fair Market Rental Rate, Landlord and Tenant, and
all brokers, if any are needed, shall look to the net effective rent payable on
leases for comparable space in buildings of comparable size, quality and
location, with due regard to the Base Monthly Rent for the Extension Terms, and
to the then-prevailing base year or other method of calculating and charging for
costs of operation, but valuing the existing improvements, if any, in the
subject space on the basis of renting to a tenant for whom said improvements are
acceptable as adequate. No deduction shall be made for customary or other
broker's fees, legal expenses, or other expense which may be saved, or for
tenant improvement allowances and/or tenant improvement construction time which
may be saved.
16.1.2 If Tenant is a corporation, limited liability company,
unincorporated association, trust, general or limited partnership or any other
entity, then the direct or indirect sale, assignment, transfer or hypothecation
of any stock or other ownership interest of such entity which from time to time
in the aggregate exceeds twenty-five percent (25%) of all such interests shall
be deemed an assignment or transfer subject to the provisions of this Section 16
and otherwise for this Lease generally. Upon the occurrence of an Event of
Default (as provided in Section 17), if the Premises (or any part thereof) have
been sublet, then Landlord, in addition to any other remedies herein provided or
provided by law, may at its option collect directly from such sublessee all
rents becoming due to Tenant under such sublease and apply such rent against any
sums due to Landlord from Tenant hereunder, and no such collection shall be
construed to constitute a novation or release of Tenant from the further
performance of Tenant's obligations under this Lease. If a permitted sublease
terminates by reason of a termination of the Lease, Landlord may, in its sole
discretion, elect, by delivering written notice to such subtenant, to assume the
obligations of Tenant under such sublease, in which event such subtenant shall
recognize Landlord as the sublandlord under the sublease as if Landlord were
Tenant under such sublease (an "Assumption"). If there shall be an Assumption,
then Landlord shall not be liable to subtenant for (a) the return of any
security deposit that may have been previously posted by such subtenant under
such sublease, (b) any construction obligation of Tenant under such sublease or
(c) any default of Tenant under such sublease, including, without limitation,
any default that may be in the nature of a continuing default commencing prior
to the Assumption and continuing thereafter. Any assignment or transfer of
Tenant's interest under this Lease, and any proposed subletting or occupancy of
the Premises not in compliance with this Section 16, shall be void and shall, at
the option of Landlord exercisable by notice to Tenant, terminate this Lease.
This Lease shall not be assignable by operation of law, except that if Tenant is
a natural person, then this Lease shall be binding upon and inure to the benefit
of the estate of Tenant.
16.1.3 If Tenant sublets any of the Club portion of the Premises for a
use that is not exclusively for the benefit of the members of Tenant's Club,
then upon the effective date of such subletting, the Base Monthly Rent for such
portion of the Premises shall be the greater of (i) Fair Market Rental Rate (as
defined above) or (ii) the Base Monthly Rent payable immediately before such
event.
16.2 PERMITTED TRANSACTIONS.
16.2.1 Notwithstanding anything to the contrary contained in this
Section 16, the issuance or trading of stock registered under the Securities
Exchange Act of 1934, as amended, shall not be deemed to result in an assignment
hereunder, and shall not require the prior written consent of the Landlord.
16.2.2 Notwithstanding anything to the contrary contained in this
Section 16, Tenant may assign its interest in this Lease or sublet any part of
the Premises, without the prior written consent of Landlord, to (i) any
corporation or other entity into which or with which Tenant or its parent merges
or consolidates; (ii) any parent, subsidiary, successor or affiliated
corporation of Tenant or its parent; or (iii) any corporation or other entity
which acquires all or substantially all of the assets or issued and outstanding
19
shares of capital stock of Tenant or its parent; provided, in any and each such
instance, that any such assignee or successor shall agree in writing, in form
and substance reasonably acceptable to Landlord, to assume and perform all of
the terms and conditions of this Lease on Tenant's part to be performed. In the
event of any transaction of a type described in this Section 16.2.2 that
involves a change in control or in the event of any other transaction that,
directly or indirectly, involves a change in control, and as to the Club's
portion a change in use (even with Landlord's consent which is required), then
the Base Monthly Rent immediately following such event shall be automatically
increased, but not decreased, as of the effective date of such change by an
amount equal to fifty percent (50%) of the difference between the then current
Base Monthly Rent and the Fair Market Rental Rate for the Premises (as defined
above); provided, however, for the purpose of this calculation (A) during the
initial ten years of the Term the then current Base Monthly Rent for the
Premises shall be deemed reduced by Six Thousand Six Hundred Sixty Seven Dollars
($6,667) per month and (B) for the Base Monthly Rent payable pursuant to
Subsections 4.3.1, 4.3.2, 4.3.3, 4.3.4 and 4.3.5, if applicable, shall each
increase, but not decrease, by the same percentage increase as the increase as a
result of the provision of this Subsection. As used in this Section 16.2.2, a
transaction, or series of transactions, shall result in a "change in control"
if, as a result of such transaction or series of transactions, there shall have
been a change in the person or persons having the ultimate power, directly or
indirectly and whether through the ownership of equity interests (whether
limited partnership interests, limited liability company interests, stock,
and/or any other interests), the ownership of debt instruments or by contract
right, to direct the Tenant.
16.2.3 Notwithstanding anything to the contrary contained in this
Section 16, Tenant may sublet up to 25% of the Club portion of the Premises for
ancillary uses typical to a Spectrum Club, in any such instance without the
prior written consent of Landlord, if (A) Tenant provides Landlord with a copy
of any such sublease promptly upon written request, from time to time, by
Landlord, (B) except for the economic terms of any such sublease, the terms and
conditions of such sublease are consistent with the terms and conditions of this
Lease and (C) any such subtenant agrees, in its sublease as regards itself and
its sublease, to provide directly to Landlord, from time to time, the
information specified in Sections 22.3 and 23.2.
16.2.4 Notwithstanding anything to the contrary contained in this
Section 16, Tenant may sublease the Office Space portion of the Premises for
general office use, and no other use, in any such instance without the prior
written consent of Landlord but subject to the requirements of any lender of
Landlord, if (A) Tenant provides Landlord with a copy of any such sublease
promptly when executed and thereafter promptly upon written request, from time
to time, by Landlord, (B) except for the economic terms of any such sublease,
the terms and conditions of such sublease are consistent with the terms and
conditions of this Lease, (C) any such subtenant agrees, in its sublease as
regards itself and its sublease, to provide directly to Landlord, from time to
time, the information specified in Sections 22.3 and 23.2 and (D) the economic
terms and conditions of any such sublease, when taken as a whole, are no more
favorable to such subtenant than market conditions for comparable office space
in Thousand Oaks, California at the time of such sublease.
16.3 LANDLORD'S ADDITIONAL RIGHTS RE CLUB SUBLETTING. If (i) Tenant (or an
approved sublessee) desires to sublet any portion of the Club portion of the
Premises for a use other than that specified in Section 8, and (ii) the portion
of the Club portion of the Premises so desired to be sublet shall, when
aggregated with all other portions of the Premises then being sublet for any use
other than that specified in Section 8, account for more than twenty-five
percent (25%) of the Club portion of the Premises, then Tenant shall give not
less then ninety (90) days' prior written notice thereof to Landlord setting
forth the name of the proposed subtenant, the term, rental rate and all other
relevant particulars of the proposed subletting, including without limitation,
evidence satisfactory to Landlord that the proposed sublessee will immediately
occupy and thereafter use the sublet portion of the Premises for the entire term
of the sublease. In addition to
20
Landlord's right of approval pursuant to Section 16.1, Landlord shall have the
option, if any such subletting is proposed, to cancel this Lease as to the
affected portion of the Premises as of the proposed effective date of the
subletting set forth in Tenant's notice. The option shall be exercised, if at
all, by Landlord giving Tenant written notice thereof within sixty (60) days
following Landlord's receipt of Tenant's written request. Upon any such
cancellation, Tenant shall pay to Landlord all amounts, as estimated by
Landlord, payable by Tenant to such termination date with respect to that
portion of any obligations, costs or charges which are the responsibility of
Tenant under this Lease allocable to the affected portion of the Club portion of
the Premises. Further, upon any such cancellation, (a) Landlord and Tenant shall
have no further obligations or liabilities to each other with respect to the
affected portion of the Club portion of the Premises, except with respect to
obligations or liabilities which have accrued as of such cancellation date (in
the same manner as if such cancellation date were the date originally fixed for
the expiration of the term) and (b) if less than all of the Club portion of the
Premises are sublet, then the rent payable under Section 4 shall be reduced by
the lesser of (i) a prorated reduction of rent based upon the area of the sublet
portion as compared with the entire Premises, (ii) the base rent payable as set
forth in the proposed sublease, and (iii) Landlord's reasonable allocation as
between the sublet portion and the remainder of the Premises. Upon any such
cancellation, any new tenant (and any such new tenant's employees, licensees and
invitees) to whom Landlord may elect, from time to time, to lease any or all of
the affected portion of the Premises shall be entitled to undisturbed ingress
and egress through the unaffected portion of the Premises still leased by Tenant
if and to the extent reasonably necessary for such new tenant to access its new
premises but subject to Tenant's rules of operation for its Club applied in a
consistent and nondiscriminatory manner. Without limitation, Landlord may lease
the affected portion of the Club portion of the Premises to the proposed
sublessee, without liability to Tenant. Landlord's failure to exercise said
cancellation right as herein provided shall not be construed as Landlord's
consent to the proposed subletting.
16.4 LANDLORD'S ADDITIONAL RIGHTS RE ASSIGNMENT. Tenant shall in no event assign
less than its entire interest in this Lease. If Tenant desires to assign all
(but not less than all) of its interest in this Lease, Tenant shall give not
less than ninety (90) days' prior written notice thereof to Landlord setting
forth the name of the proposed assignee, the terms of the assignment, and any
other relevant particulars of the proposed assignment. In addition to Landlord's
right of approval pursuant to Section 16.1, Landlord shall have the option, if
any such assignment is proposed, to cancel this Lease as of the proposed
effective date of the assignment set forth in Tenant's notice. The option shall
be exercised, if at all, by Landlord giving Tenant written notice thereof within
sixty (60) days following Landlord's receipt of Tenant's written request. Upon
any such cancellation, Tenant shall pay to Landlord all amounts, as estimated by
Landlord, payable by Tenant to such termination date with respect to any
obligations, costs or charges which are the responsibility of Tenant under this
Lease. Further, upon any such cancellation, Landlord and Tenant shall have no
further obligations or liabilities to each other under this Lease, except with
respect to obligations or liabilities which have accrued as of such cancellation
date (in the same manner as if such cancellation date were the date originally
fixed for the expiration of the term). Without limitation, Landlord may lease
the Premises to the proposed assignee, without liability to Tenant. Landlord's
failure to exercise said cancellation right as herein provided shall not be
construed as Landlord's consent to the proposed assignment.
16.5 NO RELEASE OF TENANT. Regardless of Landlord's consent, no subletting or
assignment shall release Tenant of Tenant's obligation or alter the primary
liability of Tenant to pay Base Monthly Rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of
any provision hereof. Consent to one (1) assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. If any assignee of
Tenant or any successor of Tenant defaults in the performance of any of the
terms hereof, then Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against said assignee. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Tenant without notifying Tenant or
any successor of Tenant and without obtaining its or their consent thereto, and
such action shall not relieve Tenant of liability under
21
the Lease. In this regard, Tenant waives any rights or defenses of a surety,
including without limitation any set forth in California Civil Code Sections
2809, 2810, 2814, 2815, 2819, 2825, 2839, 2845 through 2850, 2899 and 3433, in
Article 3 of the California Commercial Code and in any other relevant statutes
now or hereafter enacted.
16.6 LANDLORD'S RIGHT OF ASSIGNMENT. Landlord shall be free at all times,
without need of consent or approval by Tenant, to assign its interest in this
Lease and/or to convey fee title to the Premises. Each conveyance by Landlord of
Landlord's interest in the Lease or the Premises prior to expiration or
termination hereof shall be subject to this Lease and shall relieve the grantor
of any further obligations or liability as Landlord, and Tenant shall look
solely to Landlord's successor in interest for all future obligations of
Landlord. Tenant hereby agrees to attorn to Landlord's successors in interest,
whether such interest is acquired by sale, transfer, foreclosure, deed in lieu
of foreclosure, or otherwise pursuant to the terms and conditions set forth in
Section 22.2 herein. The term "Landlord" as used in this Lease, so far as
covenants and obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner at the time in question of the fee
title of the Premises. Without further agreement, the transferee of such title
shall be deemed to have assumed and agreed to observe and perform any and all
obligations of Landlord hereunder during its ownership of the Premises.
17. DEFAULT AND TERMINATION.
17.1 EVENTS OF DEFAULT. The occurrence of any of the following events (each an
"Event of Default") shall constitute a default by Tenant:
17.1.1 Failure by Tenant to pay rent within five (5) days of when due.
17.1.2 Failure by Tenant to perform or comply with any provision of this
Lease (other than as set forth in Subsections 17.1.1, 17.1.4, 17.1.5, 17.1.6,
17.1.7 and 17.1.8) if the failure is not cured within thirty (30) days after
notice has been given to Tenant. If, however, the failure cannot reasonably be
cured within such thirty (30) day cure period, Tenant shall not be in default of
this Lease if Tenant commences to cure the failure within the cure period and
diligently and in good faith continues to cure the failure; provided that if
required by any lender, from time to time, then not more than an additional
ninety (90) days shall elapse before a cure is completed.
17.1.3 To the extent permitted by law, (i) a general assignment by
Tenant or any guarantor of this Lease for the benefit of creditors, or (ii) the
filing by or against Tenant or any guarantor of any proceeding under any
insolvency or bankruptcy law, unless in the case of a proceeding filed against
Tenant or any guarantor the same is dismissed within sixty (60) days, or (iii)
the appointment of a trustee or receiver to take possession of all or
substantially all of the assets of Tenant or any guarantor, unless possession is
restored to Tenant or such guarantor within (30) days, or (iv) any execution or
other judicially authorized seizure of all or substantially all of Tenant's
assets located upon the Premises or of Tenant's interest in this Lease, unless
such seizure is discharged within thirty (30) days.
17.1.4 Failure by Tenant to timely deliver any estoppel certificate
pursuant to Section 22.3.
17.1.5 The vacating of the Club by Tenant without the intention to
reoccupy same, or the abandonment of the Club by Tenant.
17.1.6 The vacating of a material part of the Office Space by office
subtenants without Tenant's intention, and continuing diligent efforts, to
release the same, or the abandonment of a material part of the Office Space by
Tenant and its office subtenants.
22
17.1.7 The discovery by Landlord that any financial statement given to
Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, any
successor in interest of Tenant or any guarantor was materially false.
17.1.8 Failure by Tenant to timely deliver any Non-Disturbance Agreement
pursuant to Section 22.1.
17.1.9 [INTENTIONALLY OMITTED].
17.1.10 If the performance of Tenant's obligations under this Lease is
guaranteed: (i) the termination of a guarantor's liability with respect to this
Lease other than in accordance with the terms of such guaranty, (ii) a
guarantor's refusal to honor its guaranty, (iii) a guarantor's breach of its
guaranty obligation on an anticipatory breach basis and Tenant's failure, within
sixty (60) days following written notice by or on behalf of Landlord to Tenant
of any such event, to provide Landlord with written alternative assurance or
security, which, when coupled with the then existing resources of Tenant, equal
or exceeds the combined financial resources of Tenant and the guarantor that
existed at the time of execution of this Lease or (iv) the default by any
guarantor under its guaranty, or the attempt by any such guarantor to revoke,
terminate or otherwise limit said guaranty.
17.2 LANDLORD'S REMEDIES. Landlord shall have any one or more of the following
remedies after the occurrence of an Event of Default by Tenant. These remedies
are not exclusive; they are cumulative in addition to any remedies now or later
allowed by law, in equity, or otherwise:
17.2.1 Terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant immediately shall surrender the Premises to
Landlord. If Tenant fails to so surrender the Premises, then Landlord, without
prejudice to any other remedy it has for possession of the Premises or
arrearages in rent or other damages, may reenter and take possession of the
Premises and expel or remove Tenant and any other person or entity occupying the
Premises or any part thereof, without being liable for any damages, whether
caused by the negligence of Landlord or otherwise. Tenant hereby waives the
protection available under Code of Civil Procedure Sections 1174 and 1179 and
any related sections presently existing or hereinafter enacted. In the event of
any termination of this Lease, Landlord shall have the immediate right to enter
upon and repossess the Premises, and any personal property of Tenant may be
removed from the Premises and stored in any public warehouse at the risk and
expense of Tenant.
17.2.2 No act by Landlord other than giving notice of termination to
Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the
Premises, or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of this
Lease. On termination of the Lease, Landlord shall have the right to recover
from Tenant:
17.2.2.1 The worth at the time of the award of the unpaid rent that had
been earned at the time of termination of this Lease; and
17.2.2.2 The worth at the time of the award of the amount by which the
unpaid rent that would have been earned after the date of termination of this
Lease if the Lease had not been terminated until the time of award exceeds the
amount of the loss of rent that Tenant proves reasonably could have been
avoided; and
17.2.2.3 The worth at the time of the award of the amount by which the
unpaid rent that would have been earned if the Lease had not been terminated for
the balance of the term after the time of award exceeds the amount of the loss
of rent that Tenant proves reasonably could have been avoided; and
23
Any other amount, including court costs, necessary to compensate Landlord for
all detriment proximately caused by Tenant's default.
17.2.2.4 The phrase "worth at the time of the award" as used in clauses
17.2.2.1 and 17.2.2.2 above is to be computed by allowing interest at the rate
of twelve percent (12%) per annum, but not to exceed the then legal rate of
interest. The same phrase as used in clause (iii) above is to be computed by
discounting the amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%).
17.2.3 Landlord may re-enter and take possession of the Premises without
terminating this Lease and without being liable for any damages, whether caused
by the negligence of Landlord or otherwise. Landlord may relet the Premises, or
any part of them, to third parties, but has no obligation to do so. Landlord may
relet the Premises on whatever terms and conditions Landlord, in its reasonable
discretion, deems advisable. Reletting can be for a period shorter or longer
than the remaining term of this Lease. Landlord's action under this Subsection
is not considered an acceptance of Tenant's surrender of the Premises unless
Landlord so notifies Tenant in writing. Tenant shall be immediately liable to
Landlord for all costs Landlord incurs in reletting the Premises, including,
without limitation, brokers' commissions, expenses of remodeling the Premises as
required by the reletting, and like costs. Tenant shall pay to Landlord the rent
due under this Lease on the dates the rent is due, less the rent Landlord
receives from any reletting.
17.2.3.1 If Landlord elects to relet the Premises without terminating
this Lease, any rent received will be applied to the account of Tenant, not to
exceed Tenant's total indebtedness to Landlord; no reletting by Landlord is
considered to be for its own account unless Landlord has notified Tenant in
writing that the Lease has been terminated. If Landlord elects to relet the
Premises, rent that Landlord receives from reletting will be applied to the
payment of: (i) first, any indebtedness from Tenant to Landlord other than rent
due from Tenant; (ii) second, all costs, including maintenance, incurred by
Landlord in reletting; and (iii) third, rent due and unpaid under the Lease.
After deducting the payments referred to in this Subsection, any sum remaining
from the rent Landlord receives from reletting will be held by Landlord and
applied in payment of future rent as rent becomes due under this Lease. If, on
the date rent is due under this Lease, the rent received from the reletting is
less than the rent due on that date, Tenant will pay to Landlord, in addition to
the remaining rent due, all costs, including maintenance, Landlord incurred in
reletting which remain after applying the rent received from the reletting.
Tenant shall have no right to or interest in the rent or other consideration
received by Landlord from reletting to the extent it exceeds Tenant's total
indebtedness to Landlord.
17.2.3.2 The purpose of this Section 17.2.3 is to give Landlord the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject only to reasonable
limitations); it being agreed that the restrictions imposed by this Lease on
Tenant's right to sublet or assign are reasonable.
17.2.4 Re-enter the Premises without terminating this Lease and without
being liable for any damages, whether caused by the negligence of Landlord or
otherwise, and do whatever Tenant is obligated to do under the terms of this
Lease. The expenses incurred by Landlord in affecting compliance with Tenant's
obligations under this Lease immediately shall become due and payable to
Landlord as additional rent.
24
17.2.5 In all events, Tenant is liable for all damages of whatever kind
or nature, direct or indirect, suffered by Landlord as a result of the
occurrence of an Event of Default. If Tenant fails to pay Landlord in a prompt
manner for the damages suffered, Landlord may pursue a monetary recovery from
Tenant. Included among these damages are all expenses incurred by Landlord in
repossessing the Premises (including, but not limited to, increased insurance
premiums resulting from Tenant's vacancy), all expenses incurred by Landlord in
reletting the Premises (including, but not limited to, those incurred for
advertisements, brokerage fees, repairs, remodeling to the Premises, and
replacements), all concessions granted to a new tenant on a reletting, all
losses incurred by Landlord as a result of Tenant's default (including, but not
limited to, any unamortized commissions paid in connection with this Lease), a
reasonable allowance for Landlord's administrative costs attributable to
Tenant's default, and all reasonable attorneys, fees incurred by Landlord in
enforcing any of Landlord's rights or remedies against Tenant.
17.2.6 Pursuit of any of the foregoing remedies does not constitute an
irrevocable election of remedies nor preclude pursuit of any other remedy
provided elsewhere in this Lease or by applicable law, and none is exclusive of
another unless so provided in this Lease or by applicable law. Likewise,
forbearance by Landlord to enforce one or more of the remedies available to it
on an Event of Default does not constitute a waiver of that default or of the
right to exercise that remedy later or of any rent, damages, or other amounts
due to Landlord hereunder.
17.2.7 Whether or not Landlord elects to terminate this Lease or
Tenant's right to possession of the Premises on account of any default by
Tenant, Landlord shall have all rights and remedies at law or in equity,
including, but not limited to, the right to re-enter the Premises and, to the
maximum extent provided by law, Landlord shall have the right to terminate any
and all subleases, licenses, concessions, or other consensual arrangements for
possession entered into by Tenant and affecting the Premises or, in Landlord's
sole discretion, may succeed to Tenant's interest in such subleases, licenses,
concessions, or arrangements. In the event of Landlord's election to succeed to
Tenant's interest in any such subleases, licenses, concessions, or arrangements,
Tenant shall have no further right to or interest in the rent or other
consideration receivable thereunder as of the date of notice by Landlord of such
election.
17.3 LATE CHARGE. If Tenant fails to pay when due any payment of rent or other
charges which Tenant is obligated to pay to Landlord under this Lease, there
shall be a late charge in the amount of (a) five percent (5%) or (b) if higher,
such higher amount, from time to time, as may apply to any late payment under
any loan secured by the Premises, of each such obligation. This sum is intended
to compensate for accounting and administrative expenses incurred, as well as
the loss of the use of funds. In addition to the late charge, any and all rent
or other charges which Tenant is obligated to pay to Landlord under this Lease
which are unpaid shall bear interest at the rate set forth in Section 17.5 from
the date said payment was due until paid.
17.4 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease term shall be deemed to constitute an
acceptance by Landlord or a surrender of Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to the Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord and, notwithstanding
such delivery, Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been terminated
properly. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises.
17.5 INTEREST CHARGES. Any amount not paid by one party to the other when due to
the other party will bear interest from the date due at the lower of (i) the
default rate of interest under any loan secured, in
25
whole or in part, by the Premises, or any part thereof, or, if there shall be no
such loan, then the prime commercial rate being charged by the Bank of America
N.A. in effect on the date due plus two percent (2%) per annum; and (ii) the
maximum rate permitted by law. If Bank of America N.A. is no longer in
existence, then another comparable bank or financial institution shall be
substituted by Landlord.
17.6 DEFAULT BY LANDLORD. Landlord shall be in default if Landlord fails to
perform any provision of this Lease required of it and the failure is not cured
within thirty (30) days after notice has been given to Landlord. If, however,
the failure cannot reasonably be cured within such thirty (30) day cure period,
Landlord shall not be in default of this Lease if Landlord commences to cure the
failure within the cure period and diligently and in good faith continues to
cure the failure. Notices given under this Section 17.6 shall specify the
alleged breach and the applicable Lease provisions and shall, in order to be
valid, be given concurrently to any lender holding a mortgage, deed of trust or
other security interest in the Premises. If Landlord has failed to cure a
default within the required period, such lender shall have an additional thirty
(30) days within which to cure the same or, if such default cannot be cured
within that period, such additional time as may be necessary if within such
thirty (30) day period said lender has commenced and is diligently pursuing the
actions or remedies necessary to cure the breach, default, or noncompliance
involved (including, but not limited to, commencement and prosecution of
proceedings to foreclose or otherwise exercise its rights under its mortgage or
other security instrument, if necessary to effect such cure), in which event
this Lease shall not be terminated by Tenant so long as such actions or remedies
are being diligently pursued by said lender.
17.7 IMPOUNDS. If a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of rent or for three (3) consecutive
installments of other monetary obligations of Tenant under the terms of this
Lease, then Tenant shall pay to Landlord, if Landlord shall so request and if no
lender is then requiring any such impounds, in addition to any other payments
required under this Lease, a monthly advance installment (as estimated by
Landlord) payable at the same time as the monthly rents for real property tax
and insurance expenses on the Premises which are payable by Tenant under the
terms of this Lease. Such fund shall be established to insure payment when due,
before delinquency, of any or all such real property taxes and insurance
premiums. If the amounts paid to Landlord by Tenant under the provisions of this
paragraph are insufficient to discharge the obligations of Tenant to pay such
real property taxes and insurance premiums as the same become due, then Tenant
shall pay to Landlord, upon Landlord's demand, such additional sums necessary to
pay such obligations. All moneys paid to Landlord under this paragraph may be
intermingled with other moneys of Landlord and shall not bear interest for the
benefit of Tenant. If Tenant defaults in the performance of Tenant's obligations
under this Lease, then any balance remaining from funds paid to Landlord under
the provisions of this paragraph may, at the option of Landlord, be applied to
the payment of any monetary default of Tenant in lieu of being applied to the
payment of real property tax and insurance premiums.
18. RIGHT OF INSPECTION. Landlord, Landlord's lender(s) and any authorized
representatives thereof shall have the right after seventy-two (72) hours prior
written notice to Tenant, except in the event of an emergency in which case no
notice is required, to enter upon the Premises from time to time and at all
reasonable hours for the purpose of inspecting the Premises, making repairs,
additions, or alterations in or upon the Premises or exhibiting the Premises to
prospective tenants, purchasers, lenders or others. Provided Tenant is not in
default beyond any applicable cure period, Landlord shall not exhibit any "for
sale", "for rent" or like signs, except pending the cure of any default or
during the final one hundred eighty (180) days of the term of the Lease.
19. WAIVER OF BREACH. No waiver by Landlord of any breach of any one or more of
the terms, covenants, conditions, or agreements of this Lease shall be deemed to
imply or constitute a waiver of any succeeding or other breach. Failure of
Landlord to insist upon the strict performance of any of the terms, conditions,
covenants, and agreements of this Lease shall not constitute or be considered as
a waiver or
26
relinquishment of Landlord's rights to subsequently enforce any default, term,
condition, covenant, or agreement, which shall all continue in full force and
effect. The rights and remedies of Landlord under this Lease shall be cumulative
and in addition to any and all other rights and remedies which Landlord has or
may have.
20. NOTICES.
20.1 NOTICE REQUIREMENTS. All notices, requests, or demands herein provided to
be given or made, or which may be given or made by either party to the other,
shall be given or made only in writing and shall be deemed to have been duly
given: (i) when delivered personally at the address set forth below, or to any
registered agent of the party to whom notice is being given; or (ii) on the date
delivered when sent via Overnight Mail or reputable overnight delivery service
such as, without limitation, Federal Express, properly addressed and postage
prepaid with proof of delivery; or (iii) on the date sent via facsimile
transmission with a concurrent copy being sent by another approved means
hereunder; or (iv) seventy-two (72) hours after the time the same is deposited
in the United States mail, properly addressed and first class postage prepaid,
return receipt requested. The proper address to which notices, requests, or
demands may be given or made by either party shall be the address set forth at
the end of this Section or to such other address or to such other person as any
party shall designate such address may be changed by written notice given to the
other party in accordance with this Section.
If to Tenant: The Spectrum Club Company, Inc.
Attn: Real Estate Notices
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone number: (000) 000-0000
Fax number: (000) 000-0000
If to Landlord: West Hollywood Property Limited Partnership
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxx
Phone number: 310/000-0000
Fax number: 310/000-0000
-and-
0000 Xxxxxx Xxxx Associates Limited Partnership
00000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Phone number: 310/000-0000
Fax number: 310/000-0000
20.2 PAYMENTS UNDER LEASE. Rent and all other payments due to Landlord under
this Lease shall be paid in lawful money of the United States of America without
offset or deduction to the name and at the address first given above or to such
other persons or parties or at such other places as Landlord may from time to
time designate in writing.
21. RELATIONSHIP OF THE PARTIES. This Lease shall not be deemed or construed by
the parties, nor by any third party, as creating the relationship of (i)
principal and agent, (ii) partnership, or
27
(iii) joint venture between the parties. Neither the method of computation of
rent nor any other provision of this Lease, nor any acts of the parties are
other than in the relationship of Landlord and Tenant.
22. SUBORDINATION, NON-DISTURBANCE ATTORNMENT AND ESTOPPEL.
22.1 SUBORDINATION AND NON-DISTURBANCE. Subject to the provisions of this
Section, this Lease and the leasehold estate created hereby shall be, at the
option and upon written declaration of Landlord, subject, subordinate, and
inferior to the lien and estate of any liens, trust deeds, and encumbrances
("Mortgages"), and all renewals, extensions, or replacements thereof, now or
hereafter imposed by Landlord upon the Premises; provided, however, that this
Lease shall not be subordinate to any Mortgage arising after the date of this
Lease, or any renewal, extension, or replacement thereof, unless and until
Landlord provides Tenant with an agreement ("Non-Disturbance Agreement"), signed
and acknowledged by each holder of any such interest, setting forth that, so
long as Tenant is not in default hereunder, Landlord's and Tenant's rights and
obligations hereunder shall remain in force and Tenant's right to possession
shall be upheld. If any mortgagee, trustee or ground lessor shall elect to
subordinate the lien of its mortgage, deed of trust or ground lease to this
Lease, and shall give written notice thereof to Tenant, then this Lease shall be
deemed prior to such mortgage, deed of trust, or ground lease whether this Lease
is dated prior or subsequent to the date of said mortgage, deed of trust or
ground lease or the date of recording thereof. The Non-Disturbance Agreement may
contain such additional provisions regarding nondisturbance, subordination and
attornment as are customarily requested by secured lenders with liens
encumbering real property security similar to the Premises. Tenant shall, within
ten (10) days following a request by Landlord, execute, acknowledge and deliver
the Non-Disturbance Agreement, and any other subordination agreement or other
documents required to establish of record the priority of any such encumbrance
over this Lease. Tenant's failure to execute such documents within ten (10) days
after written demand shall constitute an Event of Default by Tenant hereunder,
or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant as Tenant's attorney-in-fact. Tenant does hereby make, constitute and
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with this Section. In
addition, as long as they do not materially increase Tenant's monetary
obligations or materially diminish Tenant's rights hereunder, Tenant agrees to
make such modifications to this Lease as may be required by a lender not
affiliated with Landlord in connection with the obtaining of financing or
refinancing of the Premises. In addition, even if any such modification did
materially increase Tenant's monetary obligations or materially diminish
Tenant's rights hereunder, Tenant nonetheless still shall make such modification
if (i) it is a reasonable modification for such lender to require under the
circumstances and (ii) Landlord, in its sole discretion, elects, as between
Landlord and Tenant, to bear any increased costs resulting from such
modification that otherwise would be borne by Tenant.
22.2 ATTORNMENT. In the event of foreclosure of any Mortgage, whether superior
or subordinate to this Lease, then (i) this Lease shall continue in force; (ii)
Tenant's quiet possession shall not be disturbed unless this Lease is otherwise
terminated pursuant to its terms; (iii) Tenant shall attorn to and recognize the
mortgagee or purchaser at foreclosure sale ("Successor Landlord") as Tenant's
landlord for the remaining term of this Lease; and (iv) the Successor Landlord
shall not be bound by (a) any security deposit or payment of rent for more than
one month in advance; (b) any amendment, modification, or ending of this Lease
without the Successor Landlord's consent after the Successor Landlord's name is
given to Tenant pursuant to the notice requirements set forth in Section 20.1
herein, unless the amendment, modification, or ending is specifically authorized
by the original Lease and does not require Landlord's prior agreement or
consent; and (c) any liability for any act or omission of a prior Landlord.
22.3 TENANT'S ESTOPPEL CERTIFICATE. Tenant shall execute and deliver to
Landlord, from time to time and within ten (10) days after receipt of Landlord's
request, any estoppel certificate or other statement to be furnished to any
prospective purchaser of or any lender against the Premises. Such estoppel
certificate shall acknowledge and certify, without limitation, each of the
following matters, to the extent each may
28
be true: that this Lease is in effect and not subject to any rental offsets,
claims, or defenses to its enforcement; the commencement and termination dates
of the term; that Tenant is paying rent on a current basis; that any
improvements required to be furnished under the Lease have been completed in all
respects; that the Lease constitutes the entire agreement between Tenant and
Landlord relating to the Premises; that Tenant has accepted the Premises and is
in possession thereof; that the Lease has not been modified, altered, or amended
except in specified respects by specified instruments; and that Tenant has no
notice of any prior assignment, hypothecation, or pledge of rents or the Lease.
Tenant shall also, upon request of Landlord, certify and agree for the benefit
of any lender against the Premises that Tenant will not look to such lender: as
being liable for any act or omission of Landlord; as being obligated to cure any
defaults of Landlord under the Lease which occurred prior to the time such
lender, its successors or assigns, acquired Landlord's interest in the Premises
by foreclosure or otherwise; as being bound by any payment of rent or additional
rent by Tenant to Landlord for more than one (1) month in advance; as being
bound by Landlord to any amendment or modification of the Lease without such
lender's written consent; or as being obligated to return any security deposit.
22.3.1 If Tenant does not deliver such estoppel certificate or statement
to Landlord within such ten (10) day period, in addition to the remedies of
Landlord under Section 17.2, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following facts: (i)
that the terms and conditions of this Lease have not been changed except as
otherwise represented by Landlord; (ii) that this Lease has not been cancelled
or terminated except as otherwise represented by Landlord; (iii) that not more
than one month's Base Monthly Rent or other charges have been paid in advance;
(iv) that Landlord is not in default under this Lease and (v) the security
deposit has not been increased from the amount stated in Section 7. In such
event, Tenant shall be estopped from denying the truth of such facts. In
addition, Tenant shall be liable for any consequential damages suffered by
Landlord as a result of the Event of Default described in Section 17.1.4.
23. TENANT'S FINANCIAL STATEMENTS. From time to time during the term of the
Lease and within ten (10) days of any request by Landlord, Tenant shall provide
Landlord with Tenant's current and past three (3) years profit and loss
statements, balance sheet, statement of changes in financial position, and notes
to the financial statements both for Tenant's operations as a whole and for the
operations of the Premises (and each component thereof) separately, in each
case, either audited by an independent certified public accountant or accounting
firm or certified by Tenant's Chief Financial Officer.
24. ATTORNEYS' FEES.
24.1 RECOVERY OF ATTORNEYS' FEES AND COSTS OF SUIT. Tenant shall reimburse
Landlord, upon demand, for any costs or expenses incurred by Landlord in
connection with any breach or default under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights, or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys' fees and
costs. Such attorneys' fees and costs shall be paid by the losing party in such
action.
24.2 PARTY TO LITIGATION SUBJECT TO SECTION 24.1. Subject to Section 24.1,
Tenant shall indemnify Landlord against and hold Landlord harmless from all
costs, expenses, demands, and liability incurred by Landlord if Landlord becomes
or is made a party to any claim or action (i) instituted by Tenant, or by any
third party against Tenant, or by or against any person holding any interest
under or using the Premises by license of or agreement with Tenant; (ii) for
foreclosure of any lien for labor or material furnished to or for Tenant or such
other person; (iii) otherwise arising out of or resulting from any action or
transaction of Tenant or such other person; or (iv) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant's expense with
counsel
29
reasonably acceptable to Landlord or, at Landlord's election, Tenant shall
reimburse Landlord for any legal fees or costs incurred by Landlord in any such
claim or action.
24.3 LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable attorneys', fees
and other costs incurred in connection with Tenant's request for Landlord's
consent under Section 16, "Assignment and Subletting," or in connection with any
other act which Tenant proposes to do and which requires Landlord's consent.
Landlord may request a deposit from Tenant toward the payment of such reasonable
attorneys' fees and expenses as a condition precedent to considering any such
request, and such deposit shall apply against (but not limit) the amount payable
by Tenant for such attorneys' fees and expenses. Landlord shall have no
liability for damages resulting from Landlord's failure to give any consent,
approval, or instruction reserved to Landlord. Tenant's sole remedy in any such
event shall be an action for declaratory relief.
25. HAZARDOUS MATERIAL.
25.1 ENVIRONMENTAL COMPLIANCE. Tenant shall not cause or permit any Hazardous
Material to be brought upon, or used in or about the Premises by Tenant, its
agents, employees, contractors, or invitees, without the prior written consent
of Landlord (which Landlord shall not unreasonably withhold as long as Tenant
demonstrates to Landlord's reasonable satisfaction that such Hazardous Material
is necessary or useful to Tenant's business and will be used, kept, and stored
in a manner that complies with all laws relating to such Hazardous Material). If
Tenant breaches the obligations stated in the preceding sentence, if the
presence of Hazardous Material on the Premises caused or permitted by Tenant
results in contamination of the Premises, or if contamination of the Premises by
Hazardous Material otherwise exists or occurs and Landlord is not responsible
for the contamination, then Tenant shall indemnify, defend, and hold Landlord
harmless from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, or losses (including, without limitation, diminution in value of
the Premises, damages for the loss or restriction on use of rentable or usable
space or of any amenity of the Premises, damages arising from any adverse impact
on marketing of space of the Premises, and sums paid in settlement of claims,
attorneys' fees, consultation fees, and expert fees) which arise during or after
the term of the Lease as a result of such contamination. This indemnification of
Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation or site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises, Tenant shall promptly take all
actions at its sole expense as are recommended by environmental engineers hired
by Tenant and are necessary to return the Premises to the condition existing
prior to the introduction of any such Hazardous Material to the Premises;
provided that Landlord's approval of such actions shall first be obtained, which
approval shall not be unreasonably withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Premises.
25.2 TENANT RESPONSIBLE FOR HAZARDOUS MATERIALS. Landlord and Tenant acknowledge
that Landlord may become legally liable for the costs of complying with
Environmental Laws relating to Hazardous Material which are not the
responsibility of Landlord or the responsibility of Tenant including, without
limitation, the following: (i) a change in Environmental Laws which relate to
Hazardous Material which make Hazardous Material present on the Premises as of
the Commencement Date, whether known or unknown to Landlord, a violation of such
new Environmental Laws; (ii) Hazardous Material that migrates, flows,
percolates, diffuses, or in any way moves on to or under the Premises before or
after the Commencement Date; (iii) Hazardous Material present or under the
Premises as a result of any discharge, dumping, or spilling (whether accidental
or otherwise) on the Premises by other tenants of the Premises or their agents,
employees, contractors, or invitees, or by others before or after the
Commencement Date; or (iv) any Hazardous Material present in, on, under or about
the Premises, including, without limitation, in
30
the soil or ground water, before or after the Commencement Date. Accordingly,
Landlord and Tenant agree that the cost of complying with Environmental Laws
relating to Hazardous Material on the Premises for which Landlord is legally
liable during the term of the Lease shall be the responsibility and shall be
paid by Tenant. To the extent any such expense relating to Hazardous Material is
subsequently recovered or reimbursed through insurance, or recovery from
responsible third parties, or other action, Tenant shall be entitled to a
reimbursement to the extent it has paid the maintenance expense to which such
recovery or reimbursement relates.
25.3 LANDLORD NOT RESPONSIBLE FOR HAZARDOUS MATERIALS. As between Landlord and
Tenant, and notwithstanding anything to the contrary that may otherwise be
contained in the Lease, Landlord shall not be responsible for complying with any
Environmental Laws as regards any Hazardous Material in, on, under or about the
Premises of whatever type and wherever, whenever or however occurring, and
Tenant shall be solely responsible therefor.
25.4 SURVIVAL. The provisions of this Section 25 shall survive termination of
this Lease.
26. GUARANTOR.
26.1 The effectiveness of this Lease is further conditioned upon the concurrent
delivery to Landlord by Tenant of a guaranty, in form and substance identical to
that attached as Exhibit E, originally executed by The Sports Club Company,
Inc., with such guarantor's signature having been notarized.
26.2 It shall constitute an Event of Default of the Tenant under this Lease if
any such guarantor fails or refuses, upon reasonable request by Landlord, to
give any or all of the following: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the guarantor (and
of the party signing on guarantor's behalf) to obligate such guarantor on said
guaranty, and including in the case of corporate guarantor, a certified copy of
a resolution of its board of directors authorizing the making of such guaranty,
together with a certificate of incumbency showing the signature of the persons
authorized to sign on its behalf, (b) current financial statements of guarantor
as may from time to time be requested by Landlord, (c) an estoppel certificate,
or (d) written confirmation that the guaranty is still in effect.
27. RESERVATIONS. Landlord reserves to itself the right, from time to time, to
grant, without the consent or joinder of Tenant, such easements, rights and
dedications that Landlord deems necessary, and to cause the recordation of
parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the Premises
by Tenant. Tenant agrees to sign any documents reasonably requested by Landlord
to effectuate any such easement rights, dedication, map or restrictions.
28. GENERAL PROVISIONS.
28.1 FULL POWER AND AUTHORITY TO ENTER LEASE. Each of the parties, and each
individual signing on behalf of such party, covenants, represents and warrants
to the other party that such party, and such individual, has full power and
authority to enter into this Lease.
28.2 GENDER; NUMBER; CONSTRUCTION. The use of (i) the neuter gender includes the
masculine and feminine and (ii) the singular number includes the plural,
whenever the context requires. This Lease shall be construed neutrally and not
against the drafter
28.3 CAPTIONS. Captions in this Lease are inserted for the convenience of
reference only and do not define, describe, or limit the scope or the intent of
this Lease or any of its terms.
28.4 EXHIBITS. All attached exhibits are a part of this Lease and are
incorporated in full by this reference.
28.5 ENTIRE AGREEMENT. This Lease contains the entire agreement between the
parties relating to the transactions contemplated hereby and all prior or
contemporaneous agreements, understandings, drafts, representations and
statements, oral or written, are merged into this Lease.
31
28.6 MODIFICATION. No modification, waiver, amendment, discharge, or change of
this Lease (collectively, a "Modification") shall be valid unless it is in
writing and signed by the party against which the enforcement of the
modification, waiver, amendment, discharge, or change is or may be sought. It
shall be a condition precedent to the effectiveness of any Modification that
Tenant deliver to Landlord a reaffirmation of any guaranty of this Lease,
acceptable to Landlord in its sole discretion, consenting to such Modification.
28.7 JOINT AND SEVERAL LIABILITY. If any party consists of more than one person
or entity, the liability of each such person or entity signing this Lease shall
be joint and several.
28.8 GOVERNING LAW. This Lease shall be construed and enforced in accordance
with the laws of the state of California.
28.9 TIME OF ESSENCE. Time is of the essence of every provision of this Lease.
28.10 SEVERABILITY. In the event any term, covenant, condition, or provision of
this Lease is held to be invalid, void, or otherwise unenforceable by any court
of competent jurisdiction, the fact that such term, covenant, condition, or
provision is invalid, void, or otherwise unenforceable shall in no way affect
the validity or enforceability of any other term, covenant, condition, or
provision of this Lease.
28.11 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, all terms of
this Lease shall be binding upon, inure to the benefit of, and be enforceable by
the parties and their respective legal representatives, successors, and assigns.
28.12 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent,
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any offset of the rent or other amounts owing
hereunder against Landlord; provided, however, the foregoing shall in no way
impair the right of Tenant to commence a separate action against Landlord for
any violation by Landlord of the provisions hereof so long as notice is first
given to Landlord and any holder of a mortgage or deed of trust covering the
Premises (of whose address Tenant has theretofore been notified) and an
opportunity is granted to Landlord and such holder to correct such violation as
provided above.
28.13 NO VIOLATION OF COVENANTS AND RESTRICTIONS. Tenant shall not violate or
cause Landlord to violate any recorded covenants and restrictions affecting the
Premises. Tenant shall defend, indemnify, and hold harmless Landlord from any
costs or expenses incurred from such a violation.
28.14 MERGER. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, or a termination by Landlord shall not work a
merger, and shall, at the option of Landlord, terminate all or any existing
subtenancies or may, at the option of Landlord and as set forth in Section
16.1.2, operate as an assignment to Landlord of any or all of such subtenancies.
Tenant's acquisition of Landlord's interest in this Lease shall also not work a
merger.
28.15 SECURITY MEASURES. Tenant hereby acknowledges that the rent payable to
Landlord hereunder does not include the cost of guard services or other security
measures, and that Landlord shall have no obligation whatsoever to provide same.
Tenant assumes all responsibility for the protection of Tenant's property and
property under Tenant's control, and for the protection of Tenant and its
principals, employees, agents, licensees, invitees and subtenants (and their
respective principals, employees, agents, licensees and invitees) from any acts
of third parties.
28.16 INFORMATION PROVIDED. Tenant warrants and represents that all information
Tenant has provided to Landlord is to the best of Tenant's knowledge accurate
and correct and Tenant acknowledges that Landlord has relied upon such
information in entering into this Lease.
28.17 SURVIVAL OF OBLIGATIONS. All obligations of Tenant which either (a) by
their nature arise on or after the expiration or earlier termination of this
Lease, or (b) have not been satisfied on or before the expiration or earlier
termination of this Lease shall survive any expiration or earlier termination of
this Lease.
32
28.18 LANDLORD'S LIABILITY. The term "Landlord" as used herein shall mean only
the owner or owners at the time in question of the fee title or a lessee's
interest in a ground lease of the Premises, and if any transfer of such title or
interest occurs, then Landlord herein named (and, in case of any subsequent
transfers, then each grantor thereof) shall be relieved from and after the date
of such transfer of all liability relating to Landlord's obligations thereafter
to be performed, provided that any funds in the hands of Landlord (or the
then-grantor at the time of such transfer) in which Tenant has an interest shall
be delivered to the grantee. The obligations contained in this Lease to be
performed by Landlord shall, subject as aforesaid, be binding on Landlord's
successors and assigns only during their respective periods of ownership.
Notwithstanding anything in this Lease to the contrary, Landlord shall have no
personal liability under any provision of this Lease, Tenant hereby agreeing to
look solely to Landlord's estate in the Premises for recourse and/or recovery
for any claim, damage, liability, or other amount arising under, relating to, or
in connection with Tenant's occupancy of and/or tenancy in the Premises; it
being further agreed that, for this purpose, the Premises shall be deemed
encumbered by a loan having a loan-to-value ratio of 70% if the Premises is
unencumbered or encumbered by a loan having a lesser loan-to-value ratio at the
time the determination of the Landlord's estate in the Premises is to be made.
28.19 HOLDING OVER. If Tenant, but only with Landlord's consent (which consent
may be withheld in Landlord's sole discretion), remains in possession of the
Premises or any part thereof after the expiration of the term hereof, then such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Tenant, except at a Monthly Base Rent
equal to one hundred fifty percent (150%) of the sum of the Monthly Base Rent
otherwise due under Section 4, immediately prior to the expiration of the term
hereof, but all options and rights of first refusal, if any, granted under the
terms of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy. The foregoing provisions are in addition to
and do not affect Landlord's right of re-entry or any other rights or remedies
of Landlord hereunder or as otherwise provided at law or in equity, or both.
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all losses, costs, damages and liabilities (including attorneys' fees and
costs, and court costs) arising out of or in connection with any delay by Tenant
in surrendering and vacating the Premises, including, without limitation, any
claims made by any succeeding tenant based on any delay and any liabilities
arising out of or in connection with these claims, and Landlord's damages should
any such succeeding tenant cancel its lease based upon such holding over by
Tenant. Nothing in this Section shall be deemed to permit Tenant to retain
possession of the Premises after the expiration or sooner termination of the
term.
28.20 ARTWORK. To ensure compliance with California laws regarding rights of
artists, Tenant will not install any artwork of any nature in the Premises which
cannot be removed without damage or destruction to the artwork.
28.21 FURTHER ASSURANCES. Tenant shall, from time to time upon Landlord's
request, and at Tenant's expense, promptly execute, acknowledge and deliver any
and all such certifications, documents and writings, and otherwise promptly take
any and all such further actions, as Landlord, in good faith, may require to
effectuate the intents and purposes of this Lease.
28.22 SALE/LEASEBACK, FINANCING AND REFINANCING. Concurrently with this Lease
becoming effective, Landlord is purchasing the Premises from Tenant and
thereafter leasing the Premises back to Tenant pursuant to this Lease
(the "Sale/Leaseback"). In order to finance the Sale/Leaseback, Landlord
is pledging its interest in the Premises and this Lease to a lender,
which lender will be providing Landlord with a portion of the funds
being used by Landlord to acquire the Premises from Tenant (the "Initial
Financing"). From time to time hereafter, Landlord may refinance the
Premises, in which case Landlord would, again, pledge the Premises and
its interest in this Lease to secure any such refinancing (the Initial
Financing and any such subsequent refinancing, a "Financing"). Landlord
and one or more of its principals, directly or indirectly, are incurring
and, most likely, will incur, either directly or indirectly, certain
liabilities, both actual and contingent, in connection with the Initial
Financing and any subsequent Financing, including, without
33
limitation, pursuant to one or more personal guaranties of, without
limitation, certain so-called "recourse carve-outs" and environmental
matters (collectively, "Financing Liabilities"); it being agreed,
however, that the definition of Financing Liabilities, for the purposes
of this paragraph only, shall not include any such liabilities to the
extent such liabilities (a) arise out of the willful misconduct of
Landlord or its affiliates or (b) exceed, in the case of a Financing
subsequent to the Initial Financing, the scope of the Financing
Liabilities under the Initial Financing. Tenant desires that Landlord
enter into the Sale/Leaseback, the Initial Financing and any subsequent
Refinancing and will be benefited by each thereof. As a material part of
the consideration to Landlord for entering into this Lease, but for
which Landlord would not have entered into the Sales/Leaseback and
Initial Financing, Tenant agrees to indemnify, defend and hold each of
Landlord and its affiliates harmless from and against any and all
claims, costs, damages and liabilities in any way arising out of or in
connection with any Financing Liabilities.
28.23 CIVIL CODE SECTION 1812.97 WARNING. WARNING: USE OF STEROIDS TO INCREASE
STRENGTH OR GROWTH CAN CAUSE SERIOUS HEALTH PROBLEMS. STEROIDS CAN KEEP
TEENAGERS FROM GROWING TO THEIR FULL HEIGHT; THEY CAN ALSO CAUSE HEART DISEASE,
STROKE AND DAMAGED LIVER FUNCTION. MEN AND WOMEN USING STEROIDS MAY DEVELOP
FERTILITY PROBLEMS, PERSONALITY CHANGES, AND ACNE. MEN CAN ALSO EXPERIENCE
PREMATURE BALDING AND DEVELOPMENT OF BREAST TISSUE. THESE HEALTH HAZARDS ARE IN
ADDITION TO THE CIVIL AND CRIMINAL PENALTIES FOR UNAUTHORIZED SALE, USE, OR
EXCHANGE OF ANABOLIC STEROIDS.
34
TENANT: LANDLORD:
The Spectrum Club Company, Inc., West Hollywood Property Limited Partnership,
a California corporation a California limited partnership
By: /s/ Xxxx Xxxxxxx By: W H Property GP Corp., Inc.
--------------------------------------
Xxxx Xxxxxxx, its chief executive officer Its general partner
By: /s/ Xxx Xxxxxxx
------------------------------------
Xxx Xxxxxxx, its president
-and-
2400 Willow lane Associates Limited Partnership,
a California limited partnership
By: 0000 Xxxxxx Xxxx GP Corp., Inc.,
Its general partner
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxx, its president
