LEASE
BETWEEN
FOOTHILL-PARKSTONE I, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
("LANDLORD")
AND
THE WET SEAL, INC.
A DELAWARE CORPORATION
("TENANT")
November 21, 1996
TABLE OF CONTENTS
Page
ARTICLE 1. BASIC LEASE PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1. LANDLORD'S ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. TENANT'S ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6. OPTION TO EXTEND . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7. INITIAL GUARANTEED MINIMUM MONTHLY RENTAL. . . . . . . . . . . . . . 2
1.8. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. REVISION OF SITE PLAN. . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. MEASUREMENT OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . 2
2.4. TITLE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. COMMENCEMENT OF TERM . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. FAILURE OF COMMENCEMENT. . . . . . . . . . . . . . . . . . . . . . . 3
3.3. OPTION TO EXTEND TERM. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4. RENTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1. GUARANTEED MINIMUM MONTHLY RENTAL. . . . . . . . . . . . . . . . . . 5
4.2. ADDITIONAL RENTAL AND IMPOUNDS . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5. LATE CHARGE AND PROCESSING FEE. . . . . . . . . . . . . . . . . . . 6
ARTICLE 6. REAL ESTATE TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2. ALLOCATION FOR DEMISED PREMISES. . . . . . . . . . . . . . . . . . . 6
6.3. PRORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4. DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.5. RENTAL TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.6. DUE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.7. COMMUNITY FACILITIES DISTRICT. . . . . . . . . . . . . . . . . . . . 8
6.8. CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 7. PERSONAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 8. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
TABLE OF CONTENTS (cont'd)
Page
ARTICLE 9. COMMON AREAS; MAINTENANCE AND COSTS . . . . . . . . . . . . . . . . 9
9.1. COMMON AREAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.2. USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.3. VEHICLE PARKING. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.4. MAINTENANCE OF COMMON AREAS. . . . . . . . . . . . . . . . . . . . . 9
9.5. TENANT'S PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . .10
9.6. TENANT'S ELECTION TO MAINTAIN. . . . . . . . . . . . . . . . . . . .10
ARTICLE 10. USES PROHIBITED. . . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE 11. ALTERATIONS AND FIXTURES . . . . . . . . . . . . . . . . . . . . .12
11.1. NO ALTERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .12
11.2. PAYMENT OF COSTS. . . . . . . . . . . . . . . . . . . . . . . . . .12
11.3. REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 12. BUILDING MAINTENANCE, REPAIR AND TRASH COLLECTION. . . . . . . . .13
12.1. TENANT'S OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . .13
12.2. LANDLORD'S OBLIGATION . . . . . . . . . . . . . . . . . . . . . . .14
12.3. TENANT'S OPTION . . . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE 13. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . .14
13.1. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .14
13.2. NOISES AND TOXIC WASTES . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE 14. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
14.1. LANDLORD'S INSURANCE. . . . . . . . . . . . . . . . . . . . . . . .16
14.2. REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .17
14.3. INSURABLE INTEREST. . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE 15. INDEMNIFICATION - LIABILITY INSURANCE BY TENANT. . . . . . . . . .17
15.1. TENANT'S INSURANCE REQUIREMENTS . . . . . . . . . . . . . . . . . .17
15.2. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . .18
15.3. DAMAGE TO TENANT'S PROPERTY . . . . . . . . . . . . . . . . . . . .19
15.4. WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 16. FREE FROM LIENS. . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 17. ABANDONMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 18. SIGNS AND AUCTIONS . . . . . . . . . . . . . . . . . . . . . . . .20
18.1. SIGN CRITERIA . . . . . . . . . . . . . . . . . . . . . . . . . . .20
18.2. DISPLAYS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ii
TABLE OF CONTENTS (cont'd)
Page
ARTICLE 19. UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 20. ENTRY AND INSPECTION . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 21. DAMAGES AND DESTRUCTION OF PREMISES. . . . . . . . . . . . . . . .21
21.1. OBLIGATION TO REPAIR. . . . . . . . . . . . . . . . . . . . . . . .21
21.2. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE 22. ASSIGNMENT, SUBLETTING AND ENCUMBRANCE . . . . . . . . . . . . . .22
22.1. LANDLORD'S CONSENT REQUIRED . . . . . . . . . . . . . . . . . . . .22
22.2. TENANT'S APPLICATION (ASSIGNMENT AND SUBLEASE). . . . . . . . . . .24
22.3. COLLECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
22.4. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
22.5. ASSUMPTION OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . .25
ARTICLE 23. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
23.1. DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
23.2. MITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
23.3. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
23.4. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
23.5. FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . .26
23.6. FORM OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . .27
23.7. NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 24. SURRENDER OF LEASE . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 25. SALE OF PREMISES BY LANDLORD . . . . . . . . . . . . . . . . . . .27
ARTICLE 26. ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . .27
26.1. THIRD PARTY LITIGATION. . . . . . . . . . . . . . . . . . . . . . .27
26.2. BETWEEN LANDLORD AND TENANT . . . . . . . . . . . . . . . . . . . .28
ARTICLE 27. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 28. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 29. SUCCESSORS IN INTEREST . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 30. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 31. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . . . . . .29
iii
TABLE OF CONTENTS (cont'd)
Page
ARTICLE 32. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 33. TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 34. SUBORDINATION, ATTORNMENT. . . . . . . . . . . . . . . . . . . . .30
34.1. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . .30
34.2. ATTORNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
34.3. ESTOPPEL CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE 35. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 36. ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 37. LANDLORD'S LIMITED LIABILITY . . . . . . . . . . . . . . . . . . .32
ARTICLE 38. NO ORAL AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 39. BINDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
ARTICLE 40. RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . .33
ARTICLE 41. INTEREST ON PAST DUE OBLIGATIONS . . . . . . . . . . . . . . . . .34
ARTICLE 42. OPTION TO LEASE, NO OPTION . . . . . . . . . . . . . . . . . . . .34
ARTICLE 43. PRIOR RECORDED DOCUMENTS . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 44. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 45. CONFIDENTIALITY OF LEASE . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 46. HELICOPTER PAD ACCESS. . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 47. FINANCING SPREAD . . . . . . . . . . . . . . . . . . . . . . . . .36
iv
LEASE
THIS LEASE is made and entered into as of November 21, 1996, by and
between FOOTHILL-PARKSTONE I, LLC, a California limited liability company
("Landlord"), and THE WET SEAL, INC., a Delaware corporation ("Tenant").
ARTICLE 1.
BASIC LEASE PROVISIONS
1.1. LANDLORD'S ADDRESS. Foothill-Parkstone I, LLC, 0000 Xxxx Xxxxx
Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000, Attn: Xxxxxx Xxxxxxx, with
copies to Offenbloch-Parkstone Partners I, 00000 Xx Xxx Xxxx, Xxxxx 000, Xxxxxx
Xxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxx, and to Xxxxxx XX Xxxxxxx, 000
Xxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx
X. Xxxxxxx.
1.2. TENANT'S ADDRESS. The Wet Seal, Inc., 00 Xxxxxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attn: Xxxxxx Xxxxxx, President, with a copy to Xxxxxxxx &
Xxxxxxxx, 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, Attn:
Xxxxxx X. Xxxxxxxx.
1.3. USE. A business specializing in light manufacturing, storage and
distribution of clothing and office and administrative functions related
thereto.
1.4. DEMISED PREMISES. A building containing approximately One Hundred
Eighty-Eight Thousand Two Hundred (188,200) square feet (the "Building"),
together with the parcel of real estate upon which such Building is located and
containing approximately Four Hundred Sixty-Seven Thousand Eight Hundred
Thirty-Four (467,834) net usable square feet of land (the "Parcel") in the
unincorporated community of Foothill Ranch, in the County of Orange, State of
California, and generally as shown on the site plan attached hereto as EXHIBIT
A. The demised premises shall include an approximately 20,500 square foot office
mezzanine to be constructed by Landlord, but shall not include a merchandise
access platform and garment rack system to be built by Tenant within the demised
premises containing approximately 95,000 usable square feet (collectively, the
"Merchandise Access Platform"), all in accordance with the provisions of EXHIBIT
B hereto. Tenant acknowledges that a lot line adjustment is being processed
which will result in the Parcel being one or more separate legal lots pursuant
to the California Subdivision Map Act. Tenant shall execute any documents
reasonably requested by Landlord to effectuate such lot line adjustment. Tenant
further acknowledges that Landlord will not obtain fee title to the Parcel until
such lot line adjustment is recorded.
1.5. TERM. Ten (10) years from the commencement date described in
Section 3.1.
1.6. OPTION TO EXTEND. One (1) option to extend for five (5) years.
1.7. INITIAL GUARANTEED MINIMUM MONTHLY RENTAL. Forty-Three and
five/tenths cents ($0.435) per gross leasable square foot of the Building per
month for the first sixty (60) months, then forty-seven and five/tenths cents
($0.475) per gross leasable square foot of the Building per month for the next
sixty (60) months.
1.8. SECURITY DEPOSIT. No security deposit will be required from
Tenant under this Lease.
ARTICLE 2.
PREMISES
2.1. DEMISED PREMISES. The premises leased to Tenant, together with
appurtenances associated with such premises (collectively, the "demised
premises"), are more particularly described or referred to in Section 1.4 above.
2.2. REVISION OF SITE PLAN. The site plan attached hereto as EXHIBIT A
is preliminary only, and prior to the commencement of the term hereof Landlord
may modify said site plan with Tenant's consent, but Tenant shall not withhold
such consent so long as such modification does not materially alter the site of
the Building, materially interfere with the access by Tenant or any of Tenant's
employees or invitees to the Building or the visibility of the Building,
materially affect the use by Tenant of the Building, materially increase
Tenant's obligations, or materially decrease Tenant's rights hereunder.
2.3. MEASUREMENT OF PREMISES. Following substantial completion of the
Building and prior to commencement of the Lease term as provided in Section 3.1,
Landlord shall cause the gross leasable square footage of the Building to be
determined. For purposes hereof, the gross leasable square footage of the
Building shall be measured from the exterior face of all exterior walls and
shall include the ground floor and the office mezzanine, but shall exclude the
Merchandise Access Platform. Landlord shall certify in writing to Tenant the
gross leasable square footage as so determined, which shall then be multiplied
by the Lease rental rates set forth in Section 1.7 in order to establish the
amount of Guaranteed Minimum Monthly Rental hereunder.
2.4. TITLE DISCLOSURE. Landlord has disclosed to Tenant all
encumbrances known by Landlord to exist on the demised premises by providing to
Tenant preliminary title report no. OR-9638583 dated as of September 4, 1996 as
issued by First American Title Insurance Company.
ARTICLE 3.
TERM
3.1. COMMENCEMENT OF TERM. The initial term of this Lease shall be for
the period set forth in Section 1.5 above. Such term, and Tenant's obligation to
pay all sums provided for herein including Guaranteed Minimum Monthly Rental,
shall commence on the
2
later date to occur (the "commencement date") of the following: (a) October 1,
1997, (b) one hundred twenty (120) days after the date Landlord makes the
Building available for Tenant to commence Tenant's work described below with
respect to the Merchandise Access Platform, after Tenant receives at least
thirty (30) days' prior written notice from Landlord or (c) the date on which
all exterior and interior improvements to be constructed by Landlord (as set
forth in Article 8 below and EXHIBIT B attached hereto) have been substantially
completed and as to which a temporary certificate of occupancy has been issued
(the "substantial completion"). Landlord agrees to make the Building available
for Tenant to commence Tenant's work described below with respect to the office
mezzanine at least seventy-five (75) days prior to the date of substantial
completion. Should such commencement date not occur on the first day of a
calendar month, the term hereunder shall be extended by the remaining days in
said month. Tenant shall fully fixturize and improve its facility on the demised
premises, and construct the Merchandise Access Platform as provided in Article 8
below, in a first class manner, all pursuant to plans and specifications
approved by Landlord as provided in Article 8 below and EXHIBIT B hereto.
Subject to delays due to matters of force majeure, Landlord and Tenant shall use
their good faith efforts to comply with the construction schedule attached
hereto as EXHIBIT C.
3.2. FAILURE OF COMMENCEMENT. If Landlord, after using good faith
efforts, has not obtained a building permit for the construction of the Building
on or before that date which is three (3) months after the date first written
above, then either Landlord or Tenant may terminate this Lease by giving written
notice of such election to the other party at any time prior to the obtaining of
such building permit. If this Lease is terminated pursuant to this Section, the
parties shall have no further obligation to each other.
3.3. OPTION TO EXTEND TERM. Tenant is hereby granted the option to
extend the term of this Lease for one (1) additional period of five (5) years
(the "extended term"; as used in this Lease, "term" shall include the extended
term, if applicable, unless the context clearly indicates otherwise) upon all
the terms and conditions of this Lease, subject to the following terms,
conditions and exceptions:
(a) Tenant shall notify Landlord in writing of Tenant's election
to extend the term of this Lease at least nine (9) months but no more than
fifteen (15) months prior to the expiration of the then existing term.
(b) If this Lease is terminated at any time, the option to extend
shall also be terminated.
(c) If Tenant is in default under any of the terms and conditions
of this Lease beyond any applicable notice and cure period on the date of giving
written notice of exercise of such option or on the day preceding the first day
of the extended term, at Landlord's option the notice shall be null and void,
the extended term shall not commence and this Lease shall expire at the end of
the original term.
(d) The Guaranteed Minimum Monthly Rental in effect as of
commencement of the extended term shall be adjusted to ninety five percent (95%)
of the then fair market rental value (as determined below) of the demised
premises. If Landlord and Tenant
3
are unable to agree upon the then fair market rental value of the demised
premises. then no later than seven (7) months prior to the first day of the
extended term, Tenant shall, at Tenant's sole expense, send to Landlord a
written appraisal report, prepared by an appraiser of Tenant's choice, which
states the appraiser's estimate of the fair market rental value of the demised
premises as of the date that the extended term will commence. If Tenant fails to
provide such report at least seven (7) months prior to the beginning of the
extended term, Landlord shall within thirty (30) days of such failure obtain, at
Landlord's sole expense, an appraisal of the fair market rental value of the
demised premises from an appraiser of Landlord's choice, and such appraiser
shall determine the fair market rental value of the demised premises as of the
first day of the extended term, which determination shall be binding on the
parties hereto, If Tenant provides such appraisal report within the time period
specified and Landlord disagrees with such appraisal report, Landlord shall
within thirty (30) days after receipt of such appraisal report obtain, at
Landlord's sole expense, an appraisal of the fair market rental value from an
appraiser of Landlord's choice. If Landlord and Tenant are unable to agree upon
the fair market rental value of the demised premises after receiving the two (2)
appraisal reports, then the two (2) appraisers shall select a third appraiser
whose expense shall be borne equally by the parties; if the two (2) appraisers
cannot agree on a third appraiser, the third appraiser shall be appointed, on
petition of either party, by the presiding Superior Court judge in Orange
County, California, the costs . thereof to be borne equally by the parties.
Landlord and Tenant shall instruct the three (3) appraisers to complete their
determinations of the fair market rental value of the demised premises not later
than five (5) months prior to the first day of the extended term. If the three
(3) appraisers cannot agree upon the fair market rental value of the demised
premises, the fair market rental value of the demised premises shall be the
arithmetic average of the two (2) of the three (3) appraisals which are closest
in amount and the third appraisal shall be disregarded. For purposes of the
appraisals set forth herein, (i) all appraisers shall have at least five (5)
years' experience in the appraisal of commercial/industrial real property in the
area in which the demised premises is located and shall be members of
professional organizations such as MAI or its equivalent, and (ii) "fair market
rental value" shall mean the price that a ready and willing tenant would pay, as
of the first day of the extended term, as minimum monthly rent, to a ready and
willing landlord of property comparable to the demised premises as it exists at
such time if such property were exposed for lease on the open market for a
reasonable period of time (including, but only to the extent customarily
applicable to similar leases at such time, market concessions such as free rent,
tenant improvement allowances and moving allowances).
(e) The option to extend set forth in Section 3.3 shall be for
the benefit of Tenant and any permitted successors and assigns of Tenant.
However, if any such permitted successors or assigns (other than an entity
controlling, controlled by or under common control with Tenant) exercise such
option, the Guaranteed Minimum Monthly Rental provided for in Section 3.3(d)
shall be one hundred percent (100%) of the then fair market rental value.
4
ARTICLE 4.
RENTAL
4.1. GUARANTEED MINIMUM MONTHLY RENTAL. Commencing as of the
commencement date as contemplated in Section 3.1 and during the remainder of the
term of this Lease, Tenant shall pay to Landlord as Guaranteed Minimum Monthly
Rental for the demised premises the applicable sum set forth in Section 1.7
above, which sum shall be paid in advance on the first day of each calendar
month. If the term of this Lease commences on a day other than the first day of
a calendar month, Tenant shall pay Guaranteed Minimum Monthly Rental in advance
for such fractional month prorated based upon the remaining days in such
fractional month as compared to the total number of days in such month. All
rental to be paid by Tenant to Landlord shall be paid without deduction, offset,
prior notice or demand to the address provided in Article 28.
4.2. ADDITIONAL RENTAL AND IMPOUNDS.
(a) In addition to the Guaranteed Minimum Monthly Rental, Tenant
shall pay to Landlord, at the time and in the manner herein specified,
Additional Rental as follows:
(i) Real Estate Taxes, rental taxes and business taxes
as set forth in Article 6 of this Lease;
(ii) Personal property taxes as set forth in Article 7
of this Lease;
(iii) Expenses in connection with the common areas as
set forth in Article 9 of this Lease;
(iv) Fire insurance and extended coverage as set forth
in Article 14 of this Lease (unless Tenant elects to obtain such insurance
for the Building as permitted by Article 14) and other insurance costs as
set forth in Article 15 of this Lease; and
(v) Utilities as set forth in Article 19 of this
Lease.
(b) Rather than xxxx and collect the foregoing Additional Rental
after the expenses are incurred, Landlord may estimate Tenant's share of all or
any portion of said costs and expenses for a period of not more than twelve (12)
months in advance, and may collect and impound Tenant's estimated share in
advance on a monthly basis. As soon as reasonably possible after each year,
Landlord shall provide to Tenant a reconciliation of any of Tenant's accounts
which are impounded for the twelve (12) month period ending the preceding
December 31. Said reconciliation statement shall set forth in reasonable detail
the costs and expenses paid by Landlord, and shall include a computation as to
Tenant's pro rata share (as determined pursuant to Section 6.2). In the event
Tenant has overpaid its share of said costs and
5
expenses in payment of impounds, Landlord shall credit Tenant's account for the
amount of said overpayment (or if at the end of the Lease term there remains
unreimbursed credits due Tenant as a result of any such overpayments theretofore
having been made by Tenant, Landlord shall then pay to Tenant a sum equal to the
sum of such unused credits), and in the event of an underpayment, Tenant shall
pay to Landlord the amount of said underpayment within twenty (20) days after
the date of mailing of the statement of reconciliation. Tenant may, at its sole
cost and expense, once with respect to each year cause an audit of the books and
records of Landlord (but only to the extent relating to the computation of
Additional Rental) to be made by an independent certified public accountant or
other qualified representative of Tenant, and if the computation of such
Additional Rental previously made by Landlord shall be found to be inaccurate,
then there shall be an adjustment and one party shall pay to the other within
twenty (20) days of demand such sums as may be necessary to settle in full the
accurate amount of said Additional Rental as should have been paid to Landlord
for the period or periods covered by such inaccurate statement or statements.
Additionally, Landlord will provide to Tenant copies of all real estate tax and
assessment bills, as well as copies of any insurance premium invoices which
serve as a basis for the determination of Additional Rental.
ARTICLE 5.
LATE CHARGE AND PROCESSING FEE
In addition to Article 41, if Tenant fails to pay any sum due to
Landlord under this Lease within five (5) days of its due date, Tenant shall pay
to Landlord, as Additional Rental, a late charge equal to five percent (5%) of
the overdue amount. In the event Tenant makes payment by check for any payment
due hereunder and such check is returned by Landlord's or Tenant's financial
institution for any reason, the amount paid by such check shall be past due and
subject to the above-referenced late charge, plus Tenant shall pay to Landlord
as Additional Rental a processing fee of Fifty Dollars ($50.00). If Tenant's
check is so returned more than twice during any consecutive twelve (12) month
period, Landlord may thereafter, by written notice to Tenant, require that all
future payments to be made by Tenant be made by cashier's check or money order.
ARTICLE 6.
REAL ESTATE TAXES
6.1. GENERAL. During the term of this Lease, Tenant shall pay as
Additional Rental to Landlord annual real estate taxes and assessments levied
upon the demised premises.
6.2. ALLOCATION FOR DEMISED PREMISES. In the event the Parcel is not
separately assessed, the applicable taxes and assessments levied upon the
demised premises and the Parcel shall be determined by (a) with respect to the
taxes and assessments levied upon land, the ratio that the gross land area of
the demised premises bears to the total gross land area within the entire tax
parcel for which a separate assessment is made as such taxes are assessed in
6
that separate tax parcel plus (b) with respect to the taxes and assessments
levied on buildings, the amount so levied on the Building.
6.3. PRORATION. Any such tax or assessment for the year in which the
term of this Lease commences or ends shall be prorated. With respect to any
assessment which may be levied against or upon the demised premises and which,
under the laws then in force, may be evidenced by improvement or other bonds
payable in annual installments, only the annual payments on said assessment
shall be included in computing Tenant's obligation for taxes and assessments.
6.4. DEFINITION. The term "real estate taxes and assessments" as used
herein shall be deemed to mean all taxes and assessments imposed upon the real
property and improvements constituting the demised premises and the tax parcel
which includes the demised premises, including any taxes resulting from
reassessment of the real property to fair market value upon completion of
construction of the Building and related improvements as contemplated herein,
but excluding any taxes resulting from reassessment of the real property to fair
market value due to a change of ownership of the real property subsequent to the
completion of construction of the Building and related improvements contemplated
herein. The term "real estate taxes and assessments" shall also be deemed to
mean any transfer taxes charged in conjunction with the recordation of a
Memorandum of Lease, but shall not include personal income taxes, personal
property taxes, inheritance taxes, gift taxes, capital levies or franchise taxes
levied against Landlord, but not directly against said demised premises. "Real
estate taxes and assessments" also include any charge or fee replacing any tax
or assessment previously included within the definition of real estate taxes and
assessments, and any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the demised premises by any
governmental agency. In addition to the foregoing, Tenant acknowledges that the
demised premises are, or will be, subject to that certain Second Completely
Amended and Restated Declaration of Covenants, Conditions and Restrictions
recorded on April 30, 1992 as Instrument 92-283832 in the Official Records of
Orange County, California, as amended (the "CC&Rs"), also referred to in Section
43 below. There shall also be included in the real estate taxes and assessments
the amount of assessments levied pursuant to the CC&Rs and applicable to the
demised premises, determined by utilizing the allocations set forth in the
CC&Rs.
6.5. RENTAL TAXES. Tenant shall pay as Additional Rental to Landlord
any and all excise, privilege and other taxes, other than net income taxes, gift
taxes, capital levies and estate taxes, levied or assessed by any federal, state
or local authority upon the rent and other amounts payable by Tenant to Landlord
hereunder, and Tenant shall bear a pro rata share, as equitably determined by
Landlord, of any business tax levied upon Landlord by any governmental authority
which is based or measured in whole or in part by the amount charged or received
by Landlord from Tenant under this Lease or from Landlord's ownership of the
demised premises (referred to herein as "rental taxes").
6.6. DUE DATE. Said Additional Rental under this Article 6 is due
twenty (20) days after the date of mailing of a statement therefor.
7
6.7. COMMUNITY FACILITIES DISTRICT. Tenant acknowledges that the
demised premises are within the boundaries of the County of Orange Community
Facilities District No. 87-4 ("CFD 87-4") and that a special tax will be
included in the annual property tax xxxx for the repayment of bonded
indebtedness incurred by CFD 87-4, all as more specifically set forth in a
Notice of Special Tax ("Notice") in the form attached hereto and incorporated
herein as Exhibit D. Concurrently with the execution of this Lease, Tenant shall
execute and deliver to Landlord the Notice.
6.8. CONTESTS. Tenant shall have the right to contest the amount of
real estate taxes and assessments levied against the demised premises, provided
that no such contest shall subject Landlord or the demised premises to any risk
of foreclosure or any interest or penalties with respect to such real estate
taxes and assessments. Without limiting the foregoing, Tenant acknowledges that
Tenant will be required to pay such real estate taxes and assessments timely,
but under protest, if Tenant elects to contest the amount thereof.
ARTICLE 7.
PERSONAL PROPERTY TAXES
During the term of this Lease, Tenant shall pay prior to delinquency
all taxes assessed against and levied upon fixtures, furnishings, equipment and
all other personal property of Tenant contained in or on the demised premises,
and when possible Tenant shall cause said fixtures, furnishings, equipment and
other personal property to be assessed and billed separately from the real
property of Landlord. In the event any or all of Tenant's fixtures, furnishings,
equipment and other personal property shall be assessed and taxed with
Landlord's real property, Tenant shall pay as Additional Rental to Landlord its
share of such taxes.
ARTICLE 8.
CONSTRUCTION
Landlord, at its sole cost and expense, shall commence and pursue to
completion the construction of all improvements to be erected by Landlord to the
extent required in EXHIBIT B hereto. Except for the construction of improvements
by Landlord and the Tenant allowances provided by Landlord as set forth on
EXHIBIT B hereto, Tenant shall be solely responsible for the costs of all
improvements on or in the demised premises, including but not limited to the
Merchandise Access Platform and any and all permit fees, utility connection fees
and charges, license fees, or other fees or charges in connection with the use
and improvement of the demised premises by Tenant and the operation of Tenant's
business on or in the demised premises; provided, that Landlord and NOT Tenant
shall be responsible for payment of such non-recurring fees as traffic impact,
transportation corridor and development fees which are payable upon issuance of
Tenant's building permit for construction during the initial Lease term of the
Merchandise Access Platform.
8
ARTICLE 9.
COMMON AREAS; MAINTENANCE AND COSTS
9.1. COMMON AREAS. As used in this Lease, "Common Areas" shall mean
all areas upon the Parcel except for the Building, including but not limited to
(except as shown on Exhibit A) all parking areas, driveways, sidewalks, loading
areas, access roads, corridors, landscaping and planted areas.
9.2. USE. Tenant shall have the exclusive right to use the Common
Areas for the purposes intended, subject to such reasonable, non-discriminatory
rules and regulations as Landlord may establish from time to time. Such right
shall be irrevocable unless Tenant is in default of its obligations under this
Lease beyond any applicable notice and cure period. Tenant shall abide by such
rules and regulations and shall cause others who use the Common Areas with
Tenant's express or implied permission to abide by Landlord's rules and
regulations. At any time, Landlord may temporarily close any Common Areas to
perform any acts in the Common Areas as, in Landlord's judgment, are desirable
to make repairs to the Common Areas or to avoid a dedication of the Common Areas
to the public. Tenant shall not materially adversely interfere with the rights
of Landlord. Except as contemplated above or as otherwise permitted by this
Lease, Landlord shall not take any actions which materially adversely interfere
with the rights of Tenant to use the Common Areas.
9.3. VEHICLE PARKING. All parking stalls provided to Tenant in the
Common Areas shall be limited to vehicles no larger than standard-size
automobiles or pickup utility vehicles, and shall be subject to Landlord's
reasonable, non-discriminatory rules and regulations. Tenant shall not cause
large trucks or other large vehicles to be parked within the Common Areas,
except for those locations specifically designated for such purpose on EXHIBIT
A.
9.4. MAINTENANCE OF COMMON AREAS. Unless Tenant elects to assume such
obligations pursuant to Section 9.6 below, Landlord shall maintain the Common
Areas in good order, condition and repair. Tenant shall pay all costs incurred
by Landlord for the operation and maintenance of the Common Areas. Costs of
operating and maintaining the Common Areas include, but are not limited to, the
following: gardening and landscaping within the Common Areas; utilities, water
and sewage charges in connection with the Common Areas; maintenance of signs;
premiums for liability, property damage, fire and other types of casualty
insurance on the Common Areas and worker's compensation insurance; all property
taxes and assessments levied on or attributable to the Common Areas (provided
that any real estate taxes and assessments governed by Article 6 above shall not
be included in this Section 9.4); all personal property taxes levied on or
attributable to personal property used in connection with the Common Areas;
straight-line depreciation on personal property (but not any real property)
owned by Landlord which is consumed or used in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the Common Areas; fees
for required licenses and permits; repairing, resurfacing, repaving,
maintaining, painting, lighting, cleaning, refuse removal, security and similar
items in connection with the Common Areas; and a reasonable allowance to
9
Landlord for Landlord's overhead and supervision of the Common Areas as set
forth below ("Landlord's Allowance"). Landlord's Allowance for the initial
twelve (12) months of the term of this Lease shall be Fourteen Thousand Dollars
($14,000). Effective on each annual anniversary date of the commencement date,
commencing on that date which is one (1) year after the commencement date (or
the first day of the next succeeding month if the term of this Lease does not
commence as of the first day of a month), Landlord's Allowance shall be
increased by multiplying Landlord's Allowance then in effect by a fraction, the
numerator of which shall be the Consumer Price Index for the month two (2)
months prior to each such adjustment date and the denominator of which shall be
the Consumer Price Index for the same month for the prior year. The Consumer
Price Index to be used is the Consumer Price Index For All Urban Consumers - All
Items, for the Los Angeles/Anaheim/ Riverside metropolitan area, published
monthly by the United States Department of Labor, in which 1982-1984 equals 100.
If the 1982-1984 base is no longer utilized for the Consumer Price Index at the
adjustment date, then the adjustment shall be based upon applicable conversion
tables. If no such conversion tables are available or if said Consumer Price
Index is no longer published, Landlord shall substitute an index which is
published by the Bureau of Labor Statistics or similar agency and which is most
nearly equivalent to the Index described above. Landlord may cause any or all of
such services to be provided by third parties and the cost of such services
shall be included in the costs of. operating and maintaining the Common Areas.
If Landlord hires a third party to perform the overall supervision of the Common
Areas, any management fees paid to such third party shall be deducted from
Landlord's Allowance otherwise to be paid to Landlord as provided above.
Notwithstanding the foregoing, costs of operating and maintaining the Common
Areas shall not include the following: capital expenditures and any depreciation
or amortization thereof other than those expenditures and depreciation incurred
with respect to personal property consumed or used in the operation and
maintenance of the Common Areas; reserves for future expenditures; fees and
expenses for attorneys which may be incurred in lease negotiations and eviction
proceedings, as well as brokers' commissions and similar professional expenses
incurred in connection with lease negotiations; costs associated with the
financing or refinancing of the Building or the Common Areas or any portion
thereof; mortgage payments and ground rents payable by Landlord; repairs and
restoration due to casualty or condemnation; costs associated with correcting
construction defects or repairs due to poor workmanship; costs of correcting
environmental problems; costs incurred with respect to legally mandated
improvements or changes; management or administrative fees in excess of the
then-market rate; and insurance deductibles and self-insurance costs.
9.5. TENANT'S PAYMENT. Tenant shall pay all of the costs of operating
and maintaining the Common Areas (prorated for any fractional month) upon
written notice from Landlord that such costs are due and payable, and in any
event prior to delinquency.
9.6. TENANT'S ELECTION TO MAINTAIN. Notwithstanding the foregoing
provisions of this Article 9, so long as Tenant is not in default of any
provision of this Lease beyond any applicable notice and cure period, then
Tenant may elect by giving Landlord at least thirty (30) days' prior written
notice to assume Landlord's obligations to maintain the Common Areas in good
order, condition and repair pursuant to Section 9.4 above. In such event, Tenant
shall maintain the Common Areas to the same level and standards as Landlord has
previously
10
been maintaining the Common Areas (or, if Tenant makes such election prior to
Landlord commencing the maintenance of the Common Areas, then to such level and
standards as Landlord may impose, which levels and standards will be consistent
with similar areas within Foothill Ranch). Provided that Tenant has elected to
maintain insurance pursuant to Section 14.1 below and to maintain the Common
Areas pursuant to this Section 9.6, no allowance shall be paid to Landlord or to
Tenant (including Landlord's Allowance) for such periods during which Tenant is
so maintaining such insurance and such Common Areas. If Tenant fails to maintain
the Common Areas as required after so electing to do so, then in addition to any
remedies provided for in Article 23 below, Landlord shall have the right to take
over such maintenance of the Common Areas, in which event Tenant's rights
pursuant to this Section 9.6 shall terminate and be of no further force or
effect.
ARTICLE 10.
USES PROHIBITED
Tenant shall not use, or permit the demised premises or any part
thereof to be used, for any purpose other than the purpose for which the demised
premises are hereby leased as set forth in Section 1.3 above; and no use shall
be made or permitted to be made of the demised premises, nor acts done, which
will increase the existing rate of insurance upon the Building (once said rate
is established), or cause a cancellation of any insurance policy covering said,
Building or any part thereof, nor shall Tenant sell or permit to be kept, used
or sold in or about the demised premises any article which may be prohibited by
standard form of insurance policies. For purposes hereof, the use of the demised
premises by Tenant as contemplated in Section 1.3 above will not, per se, be a
use which will cause the cancellation of any insurance policy covering the
Building or any part thereof or constitute a use which will increase the
existing rate of insurance on the Building (once said rate is established).
Tenant shall, at its sole cost, comply with any and all requirements (pertaining
to the use of the demised premises) of any insurance organization or company
necessary for the maintenance of reasonable fire and public liability insurance
covering the demised premises and appurtenances. Notwithstanding anything to the
contrary contained herein, except as provided below in this Article, there shall
not be sold, leased, licensed or otherwise conveyed, or permitted to be sold,
leased, licensed or otherwise conveyed, at retail, any merchandise or services
in or from the demised premises, excluding (i) Tenant's fixtures, equipment or
property which are not stock in trade, and (ii) food, beverage and cigarette
sales made through vending devices on the demised premises. For purposes of this
restriction, "at retail" shall mean the sale, lease, license or other conveyance
of merchandise or services to ultimate consumers. Notwithstanding the foregoing,
Tenant shall be permitted to conduct sales at retail from the demised premises,
provided that such sales shall not occur more than once in any calendar quarter
and shall not last for more than three (3) consecutive days at any time.
11
ARTICLE 11.
ALTERATIONS AND FIXTURES
11.1. NO ALTERATIONS. Subject to the provisions of EXHIBIT B hereto,
Tenant shall not make or suffer to be made any alterations of the demised
premises, or any part thereof, including the addition of any equipment to be
placed on the roof, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, delayed or conditioned by Landlord, and the
prior receipt by Landlord of a copy of Tenant's building permit, if applicable.
Notwithstanding the foregoing, Tenant may, without Landlord's prior written
consent, make non-structural interior alterations of the Building; provided that
(a) with respect to the racking system to be installed in the Merchandise Access
Platform, such alterations do not exceed Seventy-Five Thousand Dollars ($75,000)
during any consecutive twelve (12) month period and (b) with respect to all
other alterations, such alterations do not exceed Twenty Thousand Dollars
($20,000) individually, or Fifty Thousand Dollars ($50,000) in the aggregate
during any consecutive twelve (12) month period. Any such alterations shall be
in conformance with the requirements of all municipal, state and federal
governmental authorities.
11.2. PAYMENT OF COSTS. Tenant is solely responsible for all costs
associated with any additions or alterations to the demised premises performed
by or for Tenant, including any and all permit fees, license fees, utility
charges or other fees or charges, except those costs expressly agreed to be paid
by Landlord under the terms of this Lease.
11.3. REMOVAL. Upon the expiration or earlier termination of this
Lease, Tenant shall not remove any original equipment installed by Landlord or
permanent partitions, electrical or plumbing items or other alterations or
additions added by Tenant which cannot be removed without irreparable or
material damage to the Building; provided, however, if requested by Landlord,
Tenant shall be obligated and entitled to remove any and all machinery,
equipment, furnishings, trade fixtures and other personal property installed by
Tenant. Notwithstanding the foregoing, at the time of request by Tenant for
consent from Landlord to make any alterations or additions to the demised
premises (or, if Landlord's consent is not required, then at the time of making
any alterations or additions to the demised premises), Tenant may request that
Landlord inform Tenant as to whether Tenant will be required to remove such
alterations or additions at the expiration or earlier termination of this Lease.
If Tenant makes any such request, Landlord shall so inform Tenant, and such
decision shall be binding upon the expiration or earlier termination of this
Lease. Additionally, except for the racking system to be installed by Tenant in
the Merchandise Access Platform (which Tenant shall remove upon the expiration
or earlier termination of this Lease), Tenant shall not be required to remove
any of the improvements contemplated to be installed by Tenant pursuant to
EXHIBIT B in connection with the initial construction of the Building. Any
damage done to the demised premises in connection with any such removal by
Tenant shall be repaired at Tenant's sole cost and expense. Unless removed as
specified in this paragraph, all such property left on the demised premises
shall at the expiration or earlier termination of this Lease become the property
of Landlord and remain upon the demised premises. All costs incurred by Landlord
in the subsequent removal of such property
12
required to be removed by Tenant hereunder, and the repair of any damage
associated with such removal, shall be reimbursed by Tenant to Landlord upon
completion of such removal.
ARTICLE 12.
BUILDING MAINTENANCE, REPAIR AND TRASH COLLECTION
12.1. TENANT'S OBLIGATIONS. As of the earlier of the commencement
date or the date Tenant takes occupancy of the demised premises for purposes of
conducting its business, Tenant shall be deemed to have accepted the demised
premises as being in good and sanitary order, condition and repair; except that
Tenant shall have (a) sixty (60) days after entering the demised premises to
give Landlord written notice of any patent defects in the demised premises and
(b) one (1) year after entering the demised premises to give Landlord written
notice of any latent defects in the demised premises and Landlord shall
forthwith correct any such defects delineated by Tenant. Subject to the
provisions of Article 9 above and Section 12.2 below, Tenant shall at all times
during the term of this Lease, and at Tenant's sole cost and expense, keep,
maintain and repair (including, but subject to the provisions of Article 21, any
damage caused as a result of any burglary or by natural elements) the Building
and other improvements upon the demised premises in good and sanitary order,
condition and repair, including without limitation, the maintenance and repair
of the heating and air conditioning system for the Building, all elevators
serving the Building, all interior walls, windows or other glass, glazing,
casements, doors, plumbing, pipes, electrical wiring and conduits. Subject to
Landlord's obligations in Article 9 above with respect to the Common Areas,
Tenant shall at all times during the term of this Lease, and at Tenant's sole
cost and expense, keep, maintain and repair (including any injury caused by
disease, infestation or natural elements) all landscaping and other improvements
within the demised premises at least to the standard required by the CC&Rs more
fully described in Article 43. If Landlord has any warranties which remain in
effect with respect to any repairs which Tenant is obligated to make, Landlord
shall, upon request, assign to Tenant the right to enforce any such applicable
warranties. Subject to Article 9 and Section 12.2, if any portion of the demised
premises, or any system or equipment exclusively serving the demised premises,
or any landscaping or other improvement within the demised premises for which
Tenant is responsible to maintain cannot be fully repaired, then Tenant shall,
at Tenant's sole cost and expense, promptly replace the same with new or
reconditioned equipment, landscaping or other item, as applicable, of like kind
and quality. Tenant shall also, at its sole cost and expense, be responsible for
any nonstructural alterations or improvements (including, without limitation,
any alterations or improvements which are primarily nonstructural but which
require penetration or other minor modification of the structure in order to
complete) to the demised premises necessitated as a result of the requirement of
any municipal, state or federal authority which may be imposed due to Tenant's
specific use of the demised premises. Tenant hereby waives all rights provided
for by Sections 1941 and 1942 of the Civil Code of the State of California to
make said repairs which Landlord is obligated to make under this Lease; provided
that if Landlord fails to make any such repairs after the giving of notice and
the expiration of any applicable time period provided for herein, then Tenant
may make such repairs and xxx Landlord for the cost thereof (provided that in no
event may Tenant offset any amounts incurred by Tenant in connection with the
making of any such repairs against any
13
amount owing by Tenant to Landlord under this Lease). On the last day of the
term of this Lease or sooner termination of this Lease, Tenant shall surrender
the demised premises with all appurtenances, in good condition and repair,
reasonable wear and tear and damage not required to be repaired pursuant to
Article 21 or Article 35 excepted, but subject to Section 11.3 above.
12.2. LANDLORD'S OBLIGATION. Notwithstanding the provisions of Section
9.3 and Section 12.1 above and subject to Tenant's option set forth in Section
12.3 below, Landlord shall, at Landlord's sole cost and expense, maintain and
keep in good repair (and replace, as necessary) the exterior walls, roof,
gutters, downspouts and foundation of the Building. In no event will Tenant go,
or authorize any person to go, onto the roof of the Building without the prior
written consent of Landlord, which consent will be given only upon Landlord's
satisfaction that any repairs necessitated as a result of Tenant's action will
be made by Tenant, at Tenant's expense, and will be made in such a manner so as
not to invalidate any guarantee relating to said roof. Landlord shall not be
required to make any repairs to the exterior walls, roof or foundation unless
and until Tenant has notified Landlord in writing of the need for such repairs,
or Landlord otherwise obtains actual knowledge of the need for such repairs, and
Landlord shall commence actions to effectuate such repair within ten (10) days
thereafter and shall diligently pursue such repair to completion. If Tenant has
warranties with respect to any repairs which Landlord is obligated to make,
Tenant shall on request assign to Landlord the right to enforce any such
applicable warranties.
12.3. TENANT'S OPTION. Notwithstanding the foregoing provisions of
Section 12.2, so long as at least two (2) years remain in the then-existing term
and Tenant is not in default of any provision of this Lease beyond any
applicable notice and cure period, then Tenant may elect, by giving Landlord at
least thirty (30) days' prior written notice, for Tenant to maintain and repair:
(a) the exterior walls and foundation (but not the roof) of the Building, and
(b) all structural systems within the Building. In such event, Tenant shall be
under the same duty of care as Landlord in maintaining the Building in good
order, condition and repair as provided in Section 12.2 above. For such purpose,
Tenant shall execute a service contract with a management company or servicer,
subject to Landlord's prior written approval, which approval shall not be
unreasonably withheld or delayed. Tenant shall not make any such repairs of a
structural nature or exceeding $20,000 in each case or $50,000 in the aggregate
unless and until Landlord has approved the same in writing (which approval shall
not be unreasonably withheld, delayed or conditioned by Landlord) and Tenant has
provided Landlord with a copy of Tenant's building permit, if required. Landlord
shall reimburse Tenant for the entire cost of all such approved repairs and
maintenance of the Building walls and foundation incurred by Tenant, within
twenty (20) days after receiving from Tenant a reasonably detailed statement
therefor.
ARTICLE 13.
COMPLIANCE WITH LAWS
13.1. GENERAL PROVISIONS. Tenant shall, at its sole cost and expense,
comply with all requirements of all municipal, state and federal governmental
authorities now in force or which may hereafter be in force pertaining to the
use of the demised premises, and shall
14
faithfully observe in said use all municipal ordinances and state and federal
statutes now in force or which shall hereinafter be in force. The judgment of
any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any such order, code or statute in said use, shall be
conclusive of that fact as between Landlord and Tenant. Subject to nonstructural
alterations or improvements to be made by Tenant pursuant to Section 12.1 above,
Landlord shall, at its sole cost and expense, comply with all governmental
requirements regarding all capital improvements and upgrades to any portion of
the Building and the Common Areas which are based upon any fire, safety,
handicap (including but not limited to the federal Americans With Disabilities
Act, 42 U.S.C. Section 12101 ET SEG.), building or other codes, ordinances or
laws; provided, that such improvements or upgrades do not result from Tenant's
specific use or layout of the demised premises (as opposed to the general use of
the demised premises as a corporate headquarters with a warehouse) or any
negligent or willful misconduct of Tenant.
13.2. NOISES AND TOXIC WASTES.
(a) Tenant shall not commit, or suffer to be committed, any waste
upon the demised premises, or any nuisance or other act or thing which may
disturb the quiet enjoyment of any other occupant in the vicinity of the demised
premises. No noise, vibrations or offensive odors shall be emitted outside of
the demised premises as a result of Tenant's use of the demised premises;
provided that Landlord acknowledges that there will be noise, vibrations and
odors from Tenant's delivery trucks moving to and from the demised premises as
customary for uses such as Tenant's contemplated use, and such items shall not
be deemed a breach of this sentence.
(b) Except for normal cleaning substances customarily used in the
industry, Tenant shall not use, store or permit toxic waste or other toxic or
hazardous substances on the demised premises during the term of this Lease,
without the prior written consent of Landlord. Except for normal cleaning
substances customarily used in the industry, in the event Tenant desires to use
or store toxic or hazardous substances on the demised premises (including but
not limited to petroleum based fuels), Tenant shall request such use in an
application to Landlord which shall explain in detail the types of substances
which Tenant desires to use, the proposed location and manner of storage of same
and the manner of disposition of such substances or by-products or remains
thereof. Tenant shall deliver to Landlord copies of all studies, reports and
other information submitted by Tenant to any governmental entity or agency
regulating the use of such substances, concurrently with the delivery of same to
such governmental agency or entity. In no event shall Tenant store any toxic or
hazardous substances in underground tanks. The proposed use of such toxic or
hazardous substances shall be approved, if necessary, by the local fire
department and the exterior of the demised premises shall clearly set forth a
label as to the toxic or hazardous substances located within the demised
premises. In the event that any such toxic or hazardous substances are
hereinafter found on, under or about the demised premises except as expressly
allowed by Landlord, Tenant shall take all necessary and appropriate actions and
shall spend all necessary sums to cause the same to be cleaned up and
immediately removed from and about the demised premises, and Landlord shall in
no event be liable or responsible for any costs or expenses incurred in so
doing. Tenant shall
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at all times observe and satisfy the requirements of, and maintain the demised
premises in compliance with, all federal, state and local environmental
protection, occupational, health and safety and similar laws, ordinances,
restrictions, licenses and regulations, including but not limited to, the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), Safe Drinking
Water Act (42 U.S.C. Section 3000(f) et seq.), Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), Clean Air Act (42 U.S.C. Section 7401 et seq.),
Comprehensive Environmental Response of Compensation and Liability Act (42
U.S.C. Section 9601 et seq.), California Health and Safety Code (Section 25100
et seq., Section 39000 et seq.), and California Water Code (Section 13000 et
seq.). Should Tenant at any time receive any notice of violation of any laws,
including those aforementioned, or be given a citation with respect thereto,
Tenant shall (i) immediately notify Landlord of such violation or citation, (ii)
provide Landlord with a copy of same, (iii) commence to cure the deficiency set
forth in the violation or citation within five (5) days after the date of
receipt thereof and complete such cure diligently (but in any event within
thirty (30) days after receipt of such violation or citation) and (iv)
immediately provide Landlord with proof of the curing of such deficiency or
complained of matter. Should Tenant at anytime default in or fail to perform or
observe any of its obligations under this Article 13, Landlord shall have the
right, but not the duty, without limitation upon any of Landlord's other rights
pursuant hereto, to perform the same, and Tenant agrees to pay to Landlord,
within twenty (20) days of demand, all costs and expenses incurred by Landlord
in connection therewith, including without limitation, attorneys' fees, together
with interest from the date of expenditure at the highest rate allowed by law.
Tenant hereby indemnifies Landlord and agrees to defend with counsel selected by
Landlord and hold Landlord harmless for any loss incurred by or liability
imposed on Landlord by reason of Tenant's failure to perform or observe any of
its obligations or agreements under this Article 13. Landlord may enter the
demised premises (including the Building) at any reasonable time, upon prior
notice to Tenant, for the purpose of ascertaining compliance by Tenant with the
requirements of this Article 13. Notwithstanding anything to the contrary
contained above in this paragraph, Tenant shall have no obligation to take any
actions, spend any sums or indemnify Landlord with respect to any toxic or
hazardous substances (x) which are brought onto the demised premises by Landlord
or (y) which existed on the demised premises prior to the commencement of the
term of this Lease (unless such toxic or hazardous substances were brought onto
the demised premises by Tenant, its consultants, representatives or agents). For
purposes hereof, toxic or hazardous substances shall include any toxic or
hazardous material or substance as defined in any Federal, State of California
or local law, ordinance, rule or statute.
ARTICLE 14.
INSURANCE
14.1. LANDLORD'S INSURANCE. Unless Tenant elects to maintain such
insurance as provided below in this Section 14.1, Landlord shall maintain
throughout the term of this Lease casualty insurance on the Building for an
amount equal to one hundred percent (100%) of the full replacement cost of the
Building and otherwise satisfying the conditions set forth in EXHIBIT E attached
hereto and any conditions imposed by any lender with a deed of trust encumbering
the Parcel. Such insurance shall contain no co-insurance or contribution
clauses, a
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replacement cost endorsement and deductibles as set forth in Exhibit E hereto.
Landlord may, but shall not be obliged to, take out and carry any other form or
forms of insurance as it or the mortgagees of Landlord may require from time to
time. Notwithstanding the contributions by Tenant to the cost of insurance
premiums with respect to the Building or any alterations of the demised
premises, as are provided herein, Tenant acknowledges that it has no right to
receive any proceeds from any such insurance policies carried by Landlord.
During the term of this Lease, Landlord may also maintain a rental income
insurance policy, at Tenant's expense, with loss payable to Landlord in an
amount equal to one (1) year's Guaranteed Minimum Monthly Rental and Additional
Rental (including without limitation, estimated Common Area maintenance charges,
real estate taxes and assessments and insurance premiums).
Notwithstanding the foregoing provisions of this Section 14.1, so long
as Tenant is not in default of any provision of this Lease beyond any applicable
notice and cure period, then Tenant may elect by giving Landlord at least thirty
(30) days' prior written notice to maintain the foregoing insurance on the
Building using a carrier reasonably satisfactory to Landlord pursuant to a
policy or policies meeting the requirements of this Section 14.1 and of Sections
15.1(c) through (e) below; provided that the deductible amount of any such
insurance maintained by Tenant may be up to Ten Thousand Dollars ($10,000) for
each loss except for (a) damages resulting from sewer back-up which may have a
deductible of up to Twenty-Five Thousand Dollars ($25,000), (b) damages
resulting from flood which may have a deductible of up to Fifty Thousand Dollars
($50,000), and (c) damages resulting from earthquake which may have a,
deductible of up to the greater of five percent (5%) of value or Two Hundred
Fifty Thousand Dollars ($250,000).
14.2. REIMBURSEMENT. Tenant shall pay to Landlord, as Additional
Rental hereunder, the cost of said insurance maintained by Landlord; unless
Tenant maintains such insurance as permitted in Section 14.1 above. Said
Additional Rental is due twenty (20) days after Tenant's receiving from Landlord
a reasonably detailed statement therefor.
14.3. INSURABLE INTEREST. With respect to said casualty insurance,
Landlord and Tenant agree that Landlord's insurable interest in the demised
premises includes all improvements to the demised premises, except Tenant's
removable trade fixtures or Tenant's personal property which are insured by
Tenant's personal property insurance.
ARTICLE 15.
INDEMNIFICATION - LIABILITY INSURANCE BY TENANT
15.1. TENANT'S INSURANCE REQUIREMENTS. Tenant shall, at its sole cost
and expense, commencing as of the date Tenant is given access to the demised
premises for any purpose and throughout the entire term of this Lease, procure,
pay for and keep in full force and effect:
(a) Comprehensive liability insurance with respect to the demised
premises and the operations of or on behalf of Tenant in, on or about the
demised premises,
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including but not limited to personal injury, product liability (if applicable),
blanket contractual, owner's protective, broad form property damage liability
coverage, host liquor liability and owned and non-owned automobile liability in
an amount not less than $3,000,000.00 combined single limit. Such policy shall
contain the following provisions:
(i) Severability of interest;
(ii) Cross liability;
(iii) An endorsement stating "such insurance as is
afforded by this policy for the benefit of the Landlord shall be primary as
respects any liability or claims arising out of the occupancy of the
demised premises by Tenant, or Tenant's operations and any insurance
carried by Landlord shall be excess and noncontributory"; and
(iv) With respect to improvements, alterations and the
like required or permitted to be made by Tenant hereunder, contingent
liability and builder's risk insurance.
(b) Worker's compensation coverage as required by law, together
with employer's liability coverage.
(c) All policies of insurance required to be carried by Tenant
pursuant to these requirements shall be written by responsible insurance
companies authorized to do business in the State of California. All such
insurance required by Tenant hereunder may be furnished by Tenant under any
blanket policy carried by it or under a separate policy therefor. A copy of each
paid up policy evidencing such insurance or a certificate of insurance
evidencing such policy shall be delivered to Landlord prior to the date Tenant
is given the right of possession of the demised premises, and upon renewals,
prior to the expiration of such coverage. In no event shall the then limits of
any policy be considered as limiting the liability of Tenant under this Lease.
(d) Each policy evidencing above insurance shall contain a
provision including Landlord, Landlord's managing agent and any lenders on the
demised premises as additional insureds.
(e) In the event that Tenant fails to maintain and pay for
insurance required by this Article, Landlord may (but without obligation to do
so) procure such insurance and pay the premiums therefor, in which event Tenant
shall repay Landlord all sums so paid by Landlord within twenty (20) days
following Landlord's written demand to Tenant for such payment.
15.2. INDEMNIFICATION. Unless caused by the negligent or intentional
act or omission of Landlord, or any agent, representative, contractor or
employee of Landlord, or by the breach of this Lease by Landlord, Tenant shall
defend, indemnify and hold harmless Landlord against and from all claims,
damages, costs (including attorneys' fees and court costs,
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even if on appeal), judgments and liabilities arising from Tenant's use of the
demised premises or the conduct of its business arising from any act, neglect,
fault or omission of Tenant, or of its agents, employees or invitees. Unless
caused by the negligent or intentional act or omission of Tenant or any agent,
representative, contractor or employee of Tenant, or by the breach of this Lease
by Tenant, Landlord shall defend. indemnify and hold harmless Tenant against and
from all claims, damages, costs (including attorneys' fees and court costs, even
if on appeal). judgments and liabilities arising from any act, neglect, fault or
omission of Landlord, or of its agents, employees or invitees on or about the
demised premises.
15.3. DAMAGE TO TENANT'S PROPERTY. Unless caused by the negligent or
intentional act or omission of Landlord, or any agent, representative,
contractor or employee of Landlord, or by the breach of this Lease by Landlord,
Landlord or its agents shall not be liable for any damage to property entrusted
to employees of Tenant, nor the loss of or damage to any property by theft or
otherwise, nor for any injury or damage to persons or property resulting from
fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak from any part of the Building or from the pipes, appliances or plumbing
works therein or from the roof, street or subsurface or from any other place or
resulting from dampness or any other patent or latent cause whatsoever. Unless
caused by the negligent or intentional act or omission of Landlord, or any
agent, representative, contractor or employee of Landlord, or by the breach of
this Lease by Landlord, Landlord or its agents shall not be liable for
interference with the light or other incorporeal hereditaments. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Building or
of defects therein or in the fixtures or equipment.
15.4. WAIVER OF SUBROGATION. Neither Landlord nor Tenant (or any of
their officers, directors or shareholders) shall be liable for any damage by
fire or other peril includable in the casualty insurance policy required to be
maintained pursuant to Section 14.1 above or includable in any casualty
insurance policy actually maintained by either with respect to the demised
premises (whether or not required to be maintained pursuant to this Lease), no
matter how caused, it being understood that the damaged party will look solely
to its insurer for reimbursement. Landlord's and Tenant's policies of casualty
insurance shall contain a waiver of subrogation confirming the foregoing. Any
waiver of rights required by this Section shall be ineffective if such waiver
shall be unobtainable, or shall result in a breach of the insurance contract or
in a material increase in the cost of insurance of the waiving party, unless the
other party shall pay such increase within twenty (20) days after notice
thereof.
ARTICLE 16.
FREE FROM LIENS
Tenant shall keep the demised premises free from any liens arising
out of any work performed, material furnished or obligation incurred by Tenant.
In the event a mechanic's or materialmen's lien is filed against the demised
premises as a result of any work performed by or through Tenant, Tenant shall
promptly remove such lien either through payment in full or through the
recording of a release bond in the statutory amount. Failure by Tenant to remove
the lien to the reasonable satisfaction of Landlord and to the satisfaction of
Landlord's title insurance
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company within ten (10) days after written demand therefor from Landlord shall
entitle Landlord to remove the lien as set forth in the preceding sentence.
Tenant shall, within ten (10) days after written demand therefor from Landlord,
reimburse Landlord for all costs and expenses (including attorneys' fees)
incurred by Landlord in connection with the removal of the lien.
ARTICLE 17.
ABANDONMENT
Tenant shall not vacate or abandon the demised premises at any time
during the term of this Lease. The demised premises shall be deemed abandoned by
Tenant within the meaning of Section 1951.2 of the California Civil Code and
this Lease shall terminate, without prejudice to any of Landlord's other rights
hereunder, if Landlord gives written notice of its belief of abandonment in
compliance with Section 1951.3 of the California Civil Code and Tenant fails to
give Landlord written notice of its intent not to abandon the demised premises
in compliance with Section 1951.3 of the California Civil Code.
ARTICLE 18.
SIGNS AND AUCTIONS
18.1. SIGN CRITERIA. Tenant shall at its sole cost and expense prepare
sign construction drawings, in accordance with Landlord's sign criteria as
described in the CC&Rs defined in Section 43, which drawings shall be submitted
to Landlord for Landlord's prior written approval, which approval shall not be
unreasonably withheld, delayed or conditioned by Landlord. Tenant agrees to
install signs for the Building which shall conform with the approved sign
drawings within thirty (30) days after the commencement date of this Lease.
18.2. DISPLAYS. Without Landlord's prior written consent, Tenant shall
not display or sell merchandise outside the defined exterior walls and permanent
doorways of the Building.
ARTICLE 19.
UTILITIES
Subject only to Article 9 with respect to the Common Areas, Tenant
shall pay before delinquency all charges for water, gas, heat, electricity,
power, telephone service, and all other services and utilities, including any
connection, use or other fees required to be paid as a result of Tenant's use of
the demised premises, used in, upon or about the demised premises by Tenant or
any of its subtenants, licensees or concessionaires during the term of this
Lease.
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ARTICLE 20.
ENTRY AND INSPECTION
Landlord and its agents may enter into and upon the demised premises
(including the Building) at all reasonable times upon at least twenty-four (24)
hours' advance notice to Tenant (except in the case of an emergency in which
event no prior notice shall be required) for the purpose of: (a) inspecting the
same, (b) maintaining the Building, (c) posting notices of nonresponsibility for
alterations, additions or repairs, or (d) placing upon the Parcel or Building
any "For Sale" signs. No entry made by Landlord or its agent pursuant to this
Article 20 may materially adversely interfere with access to or visibility of
the demised premises by Tenant or its employees or invitees or with Tenant's use
of the demised premises. Tenant shall permit Landlord, at any time within ninety
(90) days prior to the expiration of this Lease, to place upon the demised
premises any "For Lease" signs, and during such ninety (90) day period, Landlord
or its agents may, during normal business hours, enter upon the demised premises
(including the Building) and exhibit same to prospective tenants and purchasers.
ARTICLE 21.
DAMAGES AND DESTRUCTION OF PREMISES
21.1. OBLIGATION TO REPAIR. In the event of (a) partial or total
destruction of the demised premises which requires repairs to the demised
premises, or (b) the Building being declared unsafe or unfit for occupancy by
any authorized public authority, in either event for any reason other than
Tenant's act, use or occupation, which declaration requires repairs to the
Building, Landlord shall forthwith make said repairs to substantially the same
condition as Landlord originally constructed the demised premises pursuant to
the terms of this Lease (but subject to any changes in laws, codes and
ordinances in the interim). Landlord shall promptly commence such repairs upon
receiving actual knowledge of the occurrence of an event described in the
preceding sentence which creates the necessity for such repairs, but in any
event not later than twenty (20) days following receipt of written notice from
Tenant. Such repairs shall be completed in an expedient manner as quickly as
reasonably possible, but in any event within twelve (12) months from receipt of
Tenant's notice. No such destruction (including any destruction necessary in
order to make repairs required by any declaration made by any public authority)
shall in any way annul or void this Lease, except that Tenant shall be entitled
to a proportionate reduction of the Guaranteed Minimum Monthly Rental and
Additional Rental while such repairs are being made, such proportionate
reduction to be based upon the extent to which such destruction or the making of
such repairs shall interfere with the business carried on by Tenant in the
Building. However, if (i) during the last two (2) years of the term of this
Lease (A) the demised premises are damaged as a result of fire or any other
insured casualty or any casualty required to be insured against under this
Lease, (B) such damage is to an extent which results in Tenant being unable to
reasonably conduct its operations in the Building (which determination Tenant
shall make and give written notice to Landlord with respect to within twenty
(20) days after the date of such casualty), and (C) the necessary repairs are
reasonably anticipated by Landlord to take greater than fifty percent (50%) of
the remaining term of this
21
Lease to complete; or (ii) the demised premises are damaged at any time by a
casualty not insured or required to be insured against and such damage is to an
extent which results in Tenant being unable to reasonably conduct its operations
in the Building (which determination Tenant shall make and give written notice
to Landlord with respect to within twenty (20) days after the date of such
casualty), either party may within thirty (30) days following the date such
damage occurs terminate this Lease by written notice to the other party.
Additionally, in the event of any damage which would result in Landlord having
the right to terminate this Lease as provided in subparagraph (i) above, Tenant
shall have ten (10) days after demand from Landlord to exercise any remaining
option to extend the term of this Lease pursuant to Section 3.3. Notwithstanding
the provisions of Section 3.3 above, Tenant shall give written notice of such
election to exercise within such ten (10) day period. If Tenant timely exercises
any such option to extend the term of this Lease, then the provisions of
subparagraph (i) above shall not apply with respect to such casualty. If either
party elects to terminate this Lease, all rentals shall be prorated between
Landlord and Tenant as of the date of such destruction. Notwithstanding anything
to the contrary contained in this Lease, if this Lease is not terminated as set
forth above after the occurrence of any casualty, then Tenant shall pay to
Landlord, prior to Landlord being obligated to commence any repair or
reconstruction work as set forth above, an amount equal to the deductible amount
of any insurance policy covering such casualty with respect to insured
casualties, and an amount equal to the costs of such repair and/or
reconstruction with respect to any uninsured casualty.. Additionally, in the
event of damage or destruction to all or any portion of the Common Areas, if
such damage or destruction results in a material interference with Tenant's use
of or access to the demised premises, Tenant shall be entitled to a
proportionate reduction of the Guaranteed Minimum Monthly Rental and Additional
Rental while such repairs are being made, to be determined as set forth above in
this Section 21.1 with respect to other casualties. The foregoing provisions of
this Section 21.1 relating to the payment of deductibles and relating to payment
for uninsured casualties shall apply equally with respect to damage or
destruction of the Common Areas.
21.2. WAIVER. In respect to any partial or total destruction
(including any destruction necessary in order to make repairs required by any
such declaration of any authorized public authority) which Landlord is obligated
to repair or may elect to repair under the terms of Section 21.1, Tenant waives
any statutory right it may have to cancel this Lease as a result of such
destruction, including, without limitation, any such rights Tenant may otherwise
have pursuant to California Civil Code Section 1932 or 1933. Notwithstanding the
foregoing, Tenant shall have the right to make such repairs if Landlord fails to
do so within the time periods required above, and in such event, Tenant shall
have the right to xxx Landlord for reimbursement for the cost incurred by Tenant
in making such repairs, but Tenant shall have no right to offset such amounts
against any amounts payable by Tenant pursuant to the terms of this Lease.
ARTICLE 22.
ASSIGNMENT, SUBLETTING AND ENCUMBRANCE
22.1. LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by
operation of law assign, license, franchise, transfer, mortgage, hypothecate, or
otherwise
22
encumber all or any part of Tenant's interest in this Lease or in the demised
premises. and shall not sublet, franchise, change ownership or license all or
any part of the demised premises, without the prior written consent of Landlord
in each instance, which consent shall not be unreasonably withheld, delayed or
conditioned and any attempted assignment, license, franchise, transfer,
mortgage, encumbrance, subletting or change of ownership without such consent
shall be wholly void and shall confer no rights upon any third parties. Without
in any way limiting Landlord's right to refuse to give such consent for any
other reason or reasons, Landlord reserves the right to refuse to give such
consent if in Landlord's reasonable discretion and opinion the type or quality
of the business operation conducted on the demised premises or throughout any
other portion of the land adjacent to the demised premises is or may be in any
way adversely affected during the term of the Lease by such proposed assignment,
license, franchise, transfer, mortgage, encumbrance or subletting, or the
financial worth of the proposed new tenant is less than that of Tenant as of the
date this Lease is executed. Furthermore, Landlord shall not be entitled to
condition Landlord's consent to any sublease upon Tenant's duty to pay over to
Landlord any rent or other consideration received by Tenant from any such
subtenant, either initially or over the term of the sublease, in excess of the
rent called for hereunder nor shall Landlord be entitled to receive any such
excess rent, or. in case of the sublease of a portion of the demised premises,
in excess of such rent fairly allocable to such portion. For purposes of this
Lease, no sale, transfer, issuance, encumbrance or other assignment of shares of
the capital stock of Tenant or of any entity controlling Tenant shall be deemed
a transfer or assignment of this Lease or a subletting or change of ownership of
the demised premises or any part thereof. Notwithstanding anything to the
contrary contained in this Lease, Tenant shall have the right, without the prior
consent of Landlord, to assign this Lease or sublet the demised premises to a
corporation or other entity which: (i) is Tenant's parent corporation; or (ii)
is a wholly-owned subsidiary of Tenant; or (iii) is a corporation which Tenant
or Tenant's parent corporation owns or the shareholders of Tenant or Tenant's
parent corporation own in excess of fifty percent (50%) of the outstanding
capital stock; or (iv) as a result of a consolidation, merger or other
reorganization with Tenant and/or Tenant's parent corporation, shall own all or
substantially all of the assets of Tenant or Tenant's parent corporation; or (v)
acquires or is acquiring all or substantially all of the assets of Tenant. Any
assignment or subletting pursuant to the above shall be subject to the following
conditions: (a) Tenant shall remain fully liable during the unexpired term of
this Lease; and (b) any such assignment or subletting shall be subject to all of
the terms, covenants and conditions of this Lease. Additionally, notwithstanding
anything to the contrary contained in this Lease, Tenant shall have the right,
without the prior consent of Landlord, to assign this Lease or sublet the
demised premises to an entity which has a net worth computed pursuant to
generally accepted accounting principles consistently applied (as shown in
financial statements to be delivered to Landlord by such entity prior to the
effective date of such assignment or subletting) of at least Fifty Million
Dollars ($50,000,000) (subject to adjustment as set forth below); provided that
such entity expressly assumes all of Tenant's obligations hereunder in a writing
reasonably acceptable to Landlord. Such $50,000,000 amount shall be increased at
the same times, and using the same formula, as Landlord's Allowance is increased
pursuant to Section 9.4 above. Provided the foregoing conditions relating to net
worth and written assumption of obligations are satisfied, Tenant shall be
released from its obligations hereunder upon consummation of such assignment.
23
22.2. TENANT'S APPLICATION (ASSIGNMENT AND SUBLEASE). In the event
that Tenant desires at any time to assign this Lease or to sublet the demised
premises or any portion thereof, Tenant shall submit to Landlord, at least sixty
(60) days prior to the proposed "effective date" of the assignment or sublease,
in writing: (a) unless Landlord's consent is not required for such assignment or
subletting pursuant to Section 22.1 above, a notice of request for permission to
assign or sublease, setting forth the proposed effective date, which shall be no
less than sixty (60) days or more than one hundred eighty (180) days after the
sending of such notice; (b) the name of the proposed subtenant or assignee; (c)
the nature of the proposed subtenant's or assignee's business to be carried on
in the demised premises; (d) a current financial statement of Tenant and the
proposed subtenant or assignee; and (e) such other information as Landlord may
reasonably request. Each such request by Tenant shall be accompanied by a One
Hundred Fifty Dollar ($150.00) payment to Landlord as the cost for processing
such request.
22.3. COLLECTION. Any rental payments or other sums received from
Tenant or any other person in connection with this Lease shall be conclusively
presumed to have been paid by Tenant or on Tenant's behalf. Landlord shall have
no obligation to accept any rental payments or other sum from any person other
than Tenant, unless (a) Landlord has been given prior written notice to the
contrary by Tenant, and (b) if Landlord's consent is required to any such
assignment or sublease, Landlord has consented to payment of such sums by such
person other than Tenant. If this Lease be assigned, or if the demised premises
or any part thereof be sublet or occupied by anybody other than Tenant, Landlord
may (but shall not be obligated to) collect rent from the assignee, subtenant or
occupant and apply the net amount collected to the rent and other sums herein
required and retain any excess rent so collected, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of Tenant's
covenant set forth in the first sentence of Section 22.1 above, nor shall such
assignment, subletting, occupancy or collection be deemed an acceptance by
Landlord of the assignee, subtenant or occupant as tenant, or a release of
Tenant from further performance by Tenant of covenants on the part of Tenant
herein contained except as otherwise expressly provided in Section 22.1 above.
Except as otherwise expressly provided in Section 22.1 above, no assignment or
subletting shall affect the continuing primary liability of Tenant hereunder
(which, following assignment, shall be joint and several with the assignee), and
Tenant shall not be released from performing any of the terms, covenants and
conditions of this Lease.
22.4. WAIVER. Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or any failure by Landlord to take action against any assignee or
sublessee, Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee. Consent by Landlord to one
assignment, subletting, occupation or use by another person shall not be deemed
a consent to any subsequent assignment, subletting, occupation or use by another
person.
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22.5. ASSUMPTION OF OBLIGATIONS. Each assignee or transferee, other
than Landlord, shall assume all obligations of Tenant under this Lease and shall
be and remain liable jointly and severally with Tenant (except as otherwise
expressly provided in Section 22.1 above) for the payment of the rent, and for
the due performance of all the terms, covenants, conditions and agreements
herein contained on Tenant's part to be performed, for the term of this Lease.
No assignment shall be binding on Landlord unless such assignee or Tenant shall
deliver to Landlord an executed instrument on Landlord's form or on such other
form as may be reasonably acceptable to Landlord. The failure or refusal of the
assignee to execute such instrument of assumption shall not release or discharge
the assignee from its liability, and shall provide Landlord with an option to
terminate said assignment.
ARTICLE 23.
DEFAULT
23.1. DAMAGES. If Tenant fails to make any rental or Additional Rental
or other payment required by the provisions of this Lease within ten (10) days
after written notice that the same was not paid when due, or, subject to Section
34.3(b), fails within fifteen (15) days after written notice thereof to commence
actions to correct any breach or default in performing any covenants, terms or
conditions of this Lease other than nonpayment of rent or Additional Rental or
fails to continuously and diligently prosecute such actions to completion after
commenced (with diligence being determined based on customary industry
practice), or if Tenant abandons the demised premises before the end of the
term, Landlord shall have the right at any time thereafter to elect to terminate
this Lease and Tenant's right to possession hereunder. The foregoing cure
periods (including pursuant to Section 34.3(b)) shall run concurrently with, and
shall not be in addition to, any statutory cure periods. Upon such termination,
Landlord shall. have the right to recover against Tenant:
(a) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(b) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; and
(d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.
The "worth at the time of award" of the amounts referred to in subparagraphs (a)
and (b) above shall be computed by allowing interest at ten percent (10%) per
annum. The worth at the time of award of the amount referred to in subparagraph
(c) shall be computed by discounting such
25
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
23.2. MITIGATION. Such efforts as Landlord may make to mitigate the
damage caused by Tenant's breach of this Lease shall not constitute a waiver of
Landlord's right to recover damages against Tenant hereunder, nor shall anything
herein contained affect Landlord's right to indemnification against Tenant for
any liability arising prior to the termination of this Lease for personal
injuries or property damage.
23.3. TERMINATION.
(a) Notwithstanding any of the foregoing, the breach of this
Lease by Tenant, or an abandonment of the demised premises by Tenant, shall not
constitute a termination of this Lease, or of Tenant's right of possession
hereunder, unless and until Landlord elects to do so, and until such time
Landlord shall have the right to enforce all of its rights and remedies under
this Lease, and otherwise at law, including the right to recover rent, and all
other payments to be made by Tenant hereunder, as they become due; provided,
however, that until such time as Landlord elects to terminate this Lease, and
Tenant's right of possession hereunder, Tenant shall have the right to sublet
the demised premises or to assign its interests in this Lease, or both, subject
only to the written consent of Landlord, which consent shall not be unreasonably
withheld.
(b) The parties hereto agree that acts of maintenance or
preservation or efforts to re-lease the demised premises, or the appointment of
a receiver upon the initiative of Landlord to protect its interests under this
Lease shall not constitute a termination of Tenant's right of possession for the
purposes of this Section unless accompanied by a written notice from Landlord to
Tenant of Landlord's election to so terminate.
23.4. ASSIGNMENT. As security for the performance by Tenant of all of
its duties and obligations hereunder, Tenant does hereby assign to Landlord the
right, power and authority, during the continuance of this Lease, to collect the
rents, issues and profits of the demised premises, and retain said rents, issues
and profits as they become due and payable. Upon any such breach or default,
Landlord shall have the right at any time thereafter, without notice except as
provided for above, either in person, by agent or by a receiver to be appointed
by a court, to enter and take possession of said demised premises and collect
such rents, issues and profits, including those past due and unpaid, and apply
the same, less costs and expenses of operation and collection, including
reasonable attorneys' fees, upon any indebtedness secured hereby, and in such
order as Landlord may determine.
23.5. FINANCIAL CONDITION. Tenant acknowledges that Landlord has
executed this Lease in reliance on the financial information furnished by Tenant
to Landlord as to Tenant's financial condition. In the event that it is
determined at any time subsequent to the date of this Lease that any of the
financial information furnished by Tenant is substantially untrue or inaccurate,
Tenant shall be deemed to be in default under this Lease, which default shall
not be subject to cure, and which shall entitle Landlord to exercise all
remedies reserved to Landlord under this Lease or otherwise available to
Landlord by law.
26
23.6. FORM OF PAYMENT. In the event of a default of any rental payment
or other payment due under this Lease, Landlord may in Landlord's notice to
Tenant of such default require that Tenant's payment to cure the default be in
cash, cashier's check and/or certified check. Landlord and Tenant agree that
should Landlord so elect to require payment by cash, cashier's check or
certified check in Landlord's notice to Tenant, a tender of money to cure the
default which is not in the form requested by Landlord shall be deemed a failure
to cure the default.
23.7. NO WAIVER. Nothing contained in this Article 23 shall in any way
diminish or be construed as waiving any of Landlord's other remedies elsewhere
in this Lease or by law or in equity.
ARTICLE 24.
SURRENDER OF LEASE
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to Landlord of any or all of
such subleases or subtenancies.
ARTICLE 25.
SALE OF PREMISES BY LANDLORD
In the event of any sale of the demised premises by Landlord, provided
that the transferee expressly assumes in writing the obligations of Landlord
accruing hereunder after the consummation of such transfer, Landlord shall be
and is hereby entirely freed and relieved of all liability under any and all of
its covenants and obligations contained in or derived from this Lease arising
out of any act, occurrence or omission occurring after the consummation of such
sale; and the purchaser at such sale or any subsequent sale of the demised
premises shall be deemed, without any further agreement between the parties or
their successors in interest or between the parties and any such purchaser, to
have assumed and agreed to carry out any and all of the covenants and
obligations of Landlord under this Lease.
ARTICLE 26.
ATTORNEYS' FEES
26.1. THIRD PARTY LITIGATION. If Landlord is involuntarily made a
party defendant to any litigation concerning this Lease or the demised premises
by reason of any act or omission of Tenant, then Tenant shall defend and hold
harmless Landlord from all liabilities by reason thereof, including reasonable
attorneys' fees and all costs incurred by Landlord in such litigation.
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26.2. BETWEEN LANDLORD AND TENANT. If either Landlord or Tenant or
their successors and assigns shall commence any legal proceedings either in
court or by arbitration against the other with respect to the enforcement or
interpretation of any of the terms and conditions of this Lease, the
nonprevailing party therein shall pay to the other all expenses of said
litigation, including reasonable attorneys' fees as may be fixed by the court or
arbitrator having jurisdiction over the matter. The parties hereto agree that
the State of California is the proper jurisdiction for litigation of or
performance under any matters relating to this Lease, with venue in Orange
County, and service mailed to the address of Tenant set forth herein shall be
adequate service for such litigation.
ARTICLE 27.
HOLDING OVER
Any holding over after the expiration of the term of this Lease, with
the consent of Landlord, shall be construed to be a tenancy from month to month,
cancelable upon thirty (30) days written notice, and upon the same terms and
conditions as exist during the last year of the term hereof except the
Guaranteed Minimum Monthly Rental shall be increased to (a) one hundred
twenty-five percent (125%) of the Guaranteed Minimum Monthly Rental during the
last year of the term hereof if Landlord and Tenant are then actively
negotiating an extension of the term hereof or (b) one hundred fifty percent
(150%) of the Guaranteed Minimum Monthly Rental during the last year of the term
hereof if Landlord and Tenant are not then actively negotiating an extension of
the term hereof.
ARTICLE 28.
NOTICES
All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand delivery or professional messenger
service) to either party or may be sent by certified mail, with postage prepaid,
return receipt requested, or delivered by U.S. Express Mail. or by Federal
Express or any other commercial courier service guaranteeing overnight delivery,
charges prepaid, and addressed as set forth in Sections 1.1 and 1.2, as
appropriate. Any such notice shall be effective when received. Any party may
change its address for purposes of this Section by giving notice to the other
party as herein provided.
ARTICLE 29.
SUCCESSORS IN INTEREST
The covenants herein contained shall, subject to the provisions as to
assignment, apply to and bind the heirs, successors, executors, administrators
and assigns of all the parties hereto; and all of the parties hereto shall be
jointly and severally liable hereunder.
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ARTICLE 30. FORCE MAJEURE
If either party hereto shall be delayed or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, restrictive
governmental laws or regulations or other cause without fault and beyond the
control of the party obligated (financial inability excepted), performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay; provided, however, nothing in this Article 30 contained
shall excuse Tenant from the prompt payment of any rental or other charge
required of Tenant hereunder except as may be expressly provided elsewhere in
this Lease and nothing in this Article 30 contained shall result in an extension
of the period set forth in Section 3.1(b) above if Tenant's work is delayed or
prevented due to an event specified herein. Notwithstanding the foregoing, if
Landlord is unable to substantially complete that portion of the Office Work
required to be constructed by Landlord pursuant to EXHIBIT B hereto on a timely
basis for any reason other than Tenant's actions or inactions (including
Tenant's failure to satisfy the schedule attached hereto as EXHIBIT C to the
extent applicable to such work), then Landlord shall not be deemed to have
substantially completed its work pursuant to Section 3.1(c) above and the
commencement date shall be delayed accordingly.
ARTICLE 31.
PARTIAL INVALIDITY
If any term, covenant, condition or provision of this Lease is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby.
ARTICLE 32.
CAPTIONS
The various headings and numbers herein and the grouping of the
provisions of this Lease into separate sections and paragraphs are for the
purpose of convenience only and shall not be considered a part hereof.
ARTICLE 33.
TIME
Time is of the essence of this Lease.
29
ARTICLE 34.
SUBORDINATION, ATTORNMENT
34.1. SUBORDINATION. This Lease, at Landlord's option, shall be
subordinate to the lien of any deed of trust, mortgage or ground lease
subsequently placed upon the Parcel or any part thereof, and to any and all
advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. As a condition of such
subordination, the beneficiary, mortgagee or ground lessor, as applicable (the
"Lender") shall execute and deliver to Tenant a commercially reasonable
non-disturbance and attornment agreement binding upon Lender and its successors
and assigns which shall, among other items, provide that (a) Tenant shall not be
dispossessed of its right to quiet enjoyment of the demised premises in the
event of a foreclosure or other action under the deed of trust, mortgage or
ground lease as long as Tenant shall not be in default under this Lease beyond
any applicable notice and cure period, and (b) such Lender agrees that, if the
Lender (or its successor as a result of the enforcement or foreclosure of the
mortgage, deed of trust or ground lease) comes into possession or acquires title
to the demised premises as a result of the enforcement or foreclosure of the
mortgage, deed of trust, or ground lease, the Lender (or such successor) agrees
to recognize. Tenant and agrees not to disturb Tenant in its possession of the
demised premises for any reason other than one which would entitle Landlord to
disturb Tenant pursuant to this Lease. Said agreement shall further provide that
Tenant and Lender (or such successor) shall be bound each to the other under all
of the terms, covenants and conditions of this Lease accruing during the balance
of the term thereof. If any Lender shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Tenant, 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 hereof; provided, that such Lender executes a commercially reasonable
nondisturbance and attornment agreement with Tenant as contemplated above.
Subject to the foregoing, upon the request of Landlord, Tenant shall execute and
return to Landlord, within twenty (20) days after demand therefor, a
subordination agreement in recordable form subordinating this Lease to existing
or future secured interests.
34.2. ATTORNMENT. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord covering the demised premises, Tenant
shall attorn to the purchaser upon any such foreclosure or sale and recognize
such purchaser as Landlord under this Lease, subject to the provisions of
Section 34.1 above. Tenant shall not be obligated to attorn to the purchaser or
transferee upon any foreclosure sale or sale or transfer in lieu of foreclosure
unless and until such purchaser or transferee acknowledges in writing the
privity of contract between it, as Landlord, and Tenant.
34.3. ESTOPPEL CERTIFICATE.
(a) If upon any sale, assignment or hypothecation of the demised
premises or the Parcel by Landlord, an estoppel certificate, and/or financial
statement and/or
30
assignment of rights shall be requested of Tenant, Tenant agrees, within twenty
(20) days thereafter, to deliver Tenant's last regularly published financial
statement, and to deliver such estoppel certificate (in recordable form)
addressed to any such proposed mortgagee or purchaser or to Landlord certifying
the requested information to the extent relating to this Lease, including among
other things, the dates of commencement and termination of this Lease, the
amounts of security deposits (if any), that this Lease is in full force and
effect (if such be the case) and that to Tenant's knowledge there are no
defenses, offsets or defaults of Landlord, or noting such defenses, offsets or
defaults as actually exist. Such mortgagee and purchaser shall have the right to
rely on such estoppel certificate and financial statement. Tenant shall in the
same manner acknowledge and execute any assignment of rights to receive rents as
required by any mortgagee of Landlord.
(b) Should Tenant fail to provide such estoppel certificate,
financial statement or assignment of rights within twenty (20) days of the
service on Tenant of a request therefor, then Landlord shall give Tenant a
second request to provide such estoppel certificate, financial statement or
assignment of rights referring to this Lease and this Section 34.3(b) and
stating that failure to return such estoppel certificate is a material breach of
this Lease. If Tenant fails to provide such estoppel certificate, financial
statement or assignment of rights within ten (10) days of the service on Tenant
of such second request therefor, then such failure shall be deemed to be a
material breach of this Lease by Tenant, which breach shall not have any further
cure periods notwithstanding the provisions of Section 23.1.
ARTICLE 35.
CONDEMNATION
In the event that by a condemnation or a transfer in lieu thereof by
power of eminent domain by a public or quasi-public authority, twenty percent
(20%) or more of the Building is taken, either party may upon written notice
given within thirty (30) days after such taking or transfer in lieu thereof
terminate this Lease. Notwithstanding the foregoing, if Tenant is willing to
remain upon the demised premises after such condemnation without any abatement
of rent or other matters hereunder, then Landlord shall not have the right to
terminate this Lease as a result of the immediately preceding sentence.
Additionally, in the event of (a) condemnation of less than twenty percent (20%)
of the Building or (b) a condemnation of Common Area which restricts access to
the Building or takes parking spaces, and which in any of such events also
results in a material, adverse effect on the business of Tenant being conducted
from the Building, Tenant shall have the right to terminate this Lease upon
written notice to Landlord given within thirty (30) days after such taking or
transfer in lieu thereof. If this Lease is not terminated as a result of such
taking or transfer in lieu thereof, the terms and conditions of this Lease shall
remain unchanged. Tenant and Landlord shall each have the right to pursue any
and all claims which either may have for compensation from the condemning
authority as a result of such condemnation. Landlord shall only be required to
restore the demised premises after an event of condemnation to the extent of
proceeds actually received by Landlord in consideration of the condemnation of
the demised premises and Tenant shall pay to Landlord, prior to Landlord being
obligated to commence any restoration work, an amount equal to the excess of the
costs of such
31
restoration over the proceeds actually received by Landlord in consideration of
the condemnation of the demised premises.
ARTICLE 36.
ACKNOWLEDGMENT
Upon written request from Landlord, Tenant agrees to acknowledge the
rent and term start date within thirty (30) days after the commencement of the
lease term pursuant to Article 3 herein.
ARTICLE 37.
LANDLORD'S LIMITED LIABILITY
The liability of Landlord under this Lease shall be limited to
Landlord's equity interest in the demised premises as well as the rents, issues,
profits, and income derived or to be derived from Landlord's ownership,
operation and leasing of the demised premises. Tenant agrees to look solely to
Landlord's equity interest in the demised premises and such rents, issues,
profits and income for the satisfaction of any liability, duty or obligation of
Landlord with respect to this Lease, or the relationship of Landlord and Tenant
hereunder, and no other assets of Landlord shall be subject to any liability
therefor. In no event shall Tenant seek, and Tenant does hereby waive, any
recourse against the shareholders and/or constituent partners of Landlord and
the partners, directors, officers or shareholders thereof, or any of their
respective personal assets for such satisfaction.
ARTICLE 38.
NO ORAL AGREEMENT
THIS LEASE COVERS IN FULL EACH AND EVERY AGREEMENT OF EVERY KIND OR
NATURE WHATSOEVER BETWEEN THE PARTIES AND THEIR RESPECTIVE AGENTS AND
REPRESENTATIVES HERETO CONCERNING THIS LEASE, AND ALL PRELIMINARY NEGOTIATIONS
AND AGREEMENTS OF WHATSOEVER KIND OR NATURE ARE MERGED HEREIN, AND THERE ARE NO
ORAL AGREEMENTS. LANDLORD SPECIFICALLY DOES NOT WARRANT THAT ANY OTHER OCCUPANT,
PRESENT OR FUTURE, IN THE VICINITY OF THE DEMISED PREMISES SHALL REMAIN AN
OCCUPANT DURING THE TERM OF THIS LEASE. TENANT SHALL HOLD LANDLORD HARMLESS FROM
ALL DAMAGES (INCLUDING ATTORNEYS' FEES AND COSTS) RESULTING FROM ANY CLAIMS THAT
MAY BE ASSERTED AGAINST LANDLORD BY ANY BROKER, FINDER, OR OTHER PERSON WITH
WHOM TENANT HAS OR PURPORTEDLY HAS DEALT, EXCEPT THE LEASING AGENT FOR THE
DEMISED PREMISES DULY APPOINTED BY LANDLORD.
32
ARTICLE 39. BINDING
If Tenant is a corporation, Tenant represents and warrants that each
individual executing this Lease on behalf of Tenant is duly authorized to
execute and deliver this Lease on behalf of Tenant and shall deliver appropriate
certification to that effect, if requested. If Tenant is a partnership, joint
venture, or other unincorporated association, each individual executing this
Lease on behalf of Tenant thereby represents that this Lease is binding on
Tenant. Furthermore, Tenant agrees that the execution of any written consent
hereunder, or of any written modification or termination of this Lease, by any
general partner of Tenant or any other authorized agent of Tenant shall be
binding on Tenant. All parties to this Lease as Tenant shall be jointly and
severally liable for all obligations of Tenant. This Lease may be executed in
more than one counterpart with the same effect as if all parties had executed
the same instrument.
ARTICLE 40.
RIGHT OF FIRST REFUSAL
If Landlord decides to market the demised premises for sale, Landlord
covenants to promptly give Tenant notice of such decision. If Landlord receives
a bonafide offer from a third party which is not affiliated (directly or
indirectly) with Landlord or Landlord's members or their owners to purchase the
demised premises (but excluding an offer to joint venture or form a similar type
of entity with Landlord or any such affiliate of Landlord or Landlord's members
or their owners, in which event such joint venture or similar type of entity
shall remain subject to this Article 40 as if it were the original Landlord
hereunder) and Landlord desires to accept such offer, Landlord shall give
written notice to Tenant (the "Original Notice") indicating the purchase price
and terms upon which Landlord is willing to sell the demised premises. Tenant
shall then have the right and option to purchase the demised premises at the
price and upon the terms offered in the Original Notice provided that Tenant
gives Landlord written notice of Tenant's election to so acquire the demised
premises on or before five (5) business days after the date Landlord gives the
Original Notice to Tenant. Tenant's failure to elect to acquire the demised
premises upon such terms and conditions within such five (5) business day period
shall be deemed to be an election by Tenant to not exercise such right. If
Tenant timely exercises such right, then Tenant shall purchase, and Landlord
shall sell, the demised premises to Tenant upon the terms and conditions set
forth in the Original Notice. If Tenant does not timely exercise such right,
then Landlord shall have the right to sell the demised premises on terms not
less favorable to Landlord than those set forth in the Original Notice, provided
that such sale is consummated within one hundred eighty (180) days after the
expiration of such five (5) business day period.
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ARTICLE 41.
INTEREST ON PAST DUE OBLIGATIONS
Any amount due from Tenant to Landlord hereunder which is not paid
when due (including, without limitation, amounts due as reimbursement to
Landlord for costs incurred by Landlord in performing obligations of Tenant
hereunder upon Tenant's failure to so perform) shall bear interest at the
reference rate then being charged by Bank of America, N.A. in its San Francisco,
California office plus five percent (5%), but in no event higher than the
highest rate then allowed under the usury laws of the State of California, from
the date due until paid, unless otherwise specifically provided herein.
ARTICLE 42.
OPTION TO LEASE, NO OPTION
THE SUBMISSION OF THIS LEASE TO TENANT IS FOR EXAMINATION PURPOSES
ONLY AND DOES NOT CONSTITUTE A RESERVATION OF, OR OPTION FOR TENANT TO LEASE, OR
OTHERWISE CREATE ANY INTEREST OF TENANT IN THE DEMISED PREMISES. EXECUTION OF
THIS LEASE BY TENANT AND ITS RETURN TO LANDLORD SHALL CONSTITUTE AN OFFER TO
LEASE WHICH LANDLORD SHALL HAVE NO OBLIGATION TO ACCEPT. LANDLORD'S ACCEPTANCE
SHALL ONLY BE EVIDENCED BY LANDLORD'S EXECUTION OF THIS LEASE AND DELIVERY TO
TENANT.
ARTICLE 43.
PRIOR RECORDED DOCUMENTS
Tenant acknowledges that this Lease and Tenant's rights and
obligations hereunder are subject to the provisions of certain recorded
documents which exist of record as of the date hereof and which are prior to
this Lease. Such documents include, without limitation, that certain Second
Completely Amended and Restated Declaration of Covenants, Conditions and
Restrictions recorded in the Official Records of Orange County, California on
April 30, 1992 as Instrument No. 92-283832, as amended (herein called the
"CC&Rs"). To the extent of any ambiguity between any provision of the CC&Rs and
this Lease, the provisions which impose the greatest restrictions and burdens on
Tenant shall prevail.
ARTICLE 44.
BROKERS
Except for CB Commercial Real Estate Group, Inc., to which Landlord
shall pay a lease commission in the amount set forth in Landlord's published
commission schedule previously delivered to CB Commercial Real Estate Group,
Inc., Landlord represents and
34
warrants to Tenant and Tenant represents and warrants to Landlord that no broker
or finder has been engaged by Landlord or Tenant, respectively, in connection
with the transaction contemplated by this Lease, and that no broker or finder is
in any way connected with such transaction. Except as expressly set forth above,
in the event of any claim for brokers' or finders' fees or commissions in
connection with the negotiation, execution or consummation of this Lease or the
transactions contemplated hereby, Tenant shall indemnify, hold harmless and
defend Landlord from and against such claim if it shall be based upon any
statement, representation or agreement made by Tenant, and Landlord shall
indemnify, hold harmless and defend Tenant from and against such claim if it
shall be based upon any statement, representation or agreement made by Landlord.
ARTICLE 45.
CONFIDENTIALITY OF LEASE
Landlord and Tenant each agrees that the terms and conditions of this
Lease are confidential, that their disclosure could adversely affect its
respective relationships with other parties, and that neither party shall
disclose the terms and conditions of this Lease to any other person without the
prior written consent of the other party. Subsequent to execution of this Lease,
each party will cooperate with the other in making a public announcement after
prior consultation and review of the language which either party proposes to use
in such announcement. Notwithstanding the foregoing, either party may disclose
such terms and conditions: (a) to its attorneys, accountants, potential
transferees, brokers or lenders, or (b) as required by law or in connection with
any legal action to enforce or interpret this Lease. The parties agree that
damages would be an inadequate remedy for the breach of this provision, and that
either party may obtain specific performance of this provision and seek
injunctive relief to prevent its breach or continued breach.
ARTICLE 46.
HELICOPTER PAD ACCESS
Landlord shall use commercially reasonable efforts to cooperate with
Tenant in the provision of a community helicopter pad on other land in the
general vicinity of the Parcel, for the nonexclusive use of Landlord, Tenant and
other tenants or permittees of Landlord. Landlord is not making any
representation or warranty as to whether any such helicopter pad will be
permitted by the applicable governmental agencies. Further, Landlord shall not
be obligated to incur any cost or liability in connection with the provision of
such helicopter pad. However, Landlord will assist Tenant in connection with the
provision of such helicopter pad, including coordinating the processing of all
necessary governmental authorizations therefor. If such pad is created, Landlord
shall provide Tenant with access thereto, subject to reasonable rules and
regulations related thereto.
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ARTICLE 47.
FINANCING SPREAD
Landlord has informed Tenant that Landlord intends to obtain a
permanent loan after the completion of construction of the Building. Upon the
determination of the same (if Landlord elects to obtain a permanent loan),
Landlord shall give Tenant written notice (the "Terms Notice") of the material
terms (including financial and non-financial terms) upon which Landlord can
obtain such permanent financing. Tenant shall have five (5) business days after
the giving of the Terms Notice to give written notice to Landlord that Tenant
can provide or arrange for such financing on terms which are financially more
advantageous to Landlord, and upon other terms and conditions which are no less
favorable to Landlord, than those set forth in the Terms Notice. If Tenant
timely gives such notice to Landlord, then Tenant shall be obligated to provide
or arrange for such financing on the terms and conditions set forth in such
Tenant's notice. Failure of Tenant to timely give such Tenant's notice shall be
deemed a waiver of all rights of Tenant with respect to making or arranging for
such original permanent loan. However, if Tenant does not elect to make or
arrange for such financing with respect to the original permanent loan, Tenant
shall have the right, at any time but only once, to provide or arrange for
refinancing of such permanent loan (or any replacement permanent loan) on terms
and conditions which are financially more advantageous to Landlord, and upon
other terms and conditions which are no less favorable to Landlord, than those
then existing in any permanent loan Landlord then has with respect to the
demised premises. If Landlord is not otherwise refinancing the permanent loan at
such time, Tenant shall pay directly to all third parties, or shall reimburse
Landlord for, all costs incurred in connection with such refinancing, including,
without limitation, prepayment penalties, points, loan fees, attorneys' fees,
appraisal expenses and all other applicable fees and expenses. Such payment
shall be made when required by such third party or, in the event of a
reimbursement to Landlord, within twenty (20) days of demand. If Tenant makes or
arranges for such financing as contemplated by this Article, then Landlord shall
pay to Tenant, at such time as Landlord otherwise would have been obligated to
make such payments pursuant to the permanent financing set forth in the Terms
Notice (or any then applicable replacement permanent loan), the difference
between the amount that Landlord is obligated to pay to the lender obtained by
Tenant and the amount which Landlord would have been obligated to pay to
Landlord's lender. Notwithstanding the foregoing, Landlord shall not be required
to make any such payment until five (5) business days after Landlord receives
the rental payment from Tenant for such month. Landlord shall only be obligated
to make such payments during such period that the financing made or arranged for
by Tenant actually remains in place (i.e., such obligation terminates if such
financing is refinanced or prepaid). Tenant shall only have the right to provide
or arrange for such financing one (1) time during the term of this Lease.
Notwithstanding the foregoing, Landlord shall not be obligated to accept any
such financing provided by Tenant if such financing is unacceptable to
Landlord's construction lender for the construction of the Building.
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IN WITNESS WHEREOF, the parties have duly executed this Lease together
with the herein referred to Exhibits which are attached hereto and incorporated
herein by this reference, on the day and year first above written.
"LANDLORD"
FOOTHILL-PARKSTONE I, LLC, a California
limited liability company
By: OFFENBLOCH-PARKSTONE PARTNERS I, a
California limited partnership, Member
By: BUCK EQUITIES, LTD., a California
limited partnership, General
Partner
By: BUCK CORPORATION, INC.,
a California corporation,
general partner
By: /s/ Xxxxx Xxxxxx
---------------------------
Print Name: Xxxxx Xxxxxx
-------------------
Its: V.P.
--------------------------
By: DB VENTURES LLC,
a California limited liability company
By:/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Print Name: XXXXXX X. XXXXXXX
----------------------------------
Its: MANAGING MEMBER
-----------------------------------------
"TENANT"
THE WET SEAL, INC., a Delaware corporation
By:/s/ Xxxxxx X. Xxxxxx
------------------------------------------
Print Name: Xxxxxx X. Xxxxxx
----------------------------------
Its: President & COO
-----------------------------------------
By:/s/ Xxxxx Xxxxxxxxx
------------------------------------------
Print Name: Xxxxx Xxxxxxxxx
----------------------------------
Its: Vice Chairman-CEO
-----------------------------------------
37
