RETAIL LEASE between LA CAÑADA PROPERTIES, INC., a California corporation, as Landlord and SPORT CHALET, INC., a Delaware corporation, as Tenant La Cañada, California
Exhibit
10.6
between
LA
CAÑADA PROPERTIES, INC.,
a
California corporation,
as
Landlord
and
SPORT
CHALET, INC.,
a
Delaware corporation,
as
Tenant
La
Cañada, California
TABLE
OF CONTENTS
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Page
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1.
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Premises
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2
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2.
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Improvements
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2
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3.
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Term
of this Lease; Options to Extend the Term
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2
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4.
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Rent
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4
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5.
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Taxes
and Assessments
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5
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6.
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Utilities
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6
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7.
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Uses
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6
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8.
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Tenant’s
Alterations, Additions or Improvements
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8
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9.
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Common
Areas
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9
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10.
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Common
Area Expenses
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10
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11.
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Maintenance
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11
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12.
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Insurance
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13
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13.
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Indemnity
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14
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14.
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Damage
and Destruction
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14
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15.
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Condemnation
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15
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16.
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Assignment
and Subletting
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15
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17.
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Subordination
and Attornment
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16
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18.
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Tenant
Defaults
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17
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19.
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Landlord
Defaults
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18
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20.
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Tenant’s
Property; Surrender; Holding Over
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18
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21.
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Agreements
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19
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22.
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Quiet
Enjoyment
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19
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23.
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Estoppel
Statements
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19
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24.
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Force
Majeure
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19
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25.
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Signs
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19
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26.
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Real
Estate Brokers
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19
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27.
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Memorandum
of Lease
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19
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28.
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Notices
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19
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29.
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Attorneys’
Fees
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19
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30.
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Waiver
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19
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31.
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Lease
Binding Upon Successors
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19
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32.
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Interpretation
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20
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33.
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Interest
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20
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34.
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Invalidity
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20
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35.
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Time
of the Essence
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20
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36.
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Governing
Law
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20
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37.
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Approvals
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20
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38.
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Counterparts
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20
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39.
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Expedited
Dispute Resolution
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20
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40.
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Termination
of Existing Lease
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20
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41.
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Renaming
of Sport Xxxxxx Xxxxx
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00
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00.
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Waiver
of Consequential Damages
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21
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43.
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Entire
Agreement
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21
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Exhibit
A
- Site Plan
Exhibit
B
- Legal Description of the Shopping Center
Exhibit
C
- Construction of Premises
Exhibit
D
- Approved Tenant Exterior Sign Specifications
Exhibit
E
- List of Existing Exclusives
Exhibit
F
- Memorandum of Lease
Exhibit
G
- Form of Subordination, Non-Disturbance and Attornment
Agreement
THIS
RETAIL LEASE (this “Lease”)
dated
as of January 11, 2008, is entered into by and between LA CAÑADA PROPERTIES,
INC., a California corporation (“Landlord”)
and
SPORT CHALET, INC., a Delaware corporation (“Tenant”).
BASIC
LEASE PROVISIONS
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Premises
Address:
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Premises
at an address to be determined within the Shopping Center to be
commonly
known as “La Cañada Flintridge Town Center”, located at the northeast
corner of Angeles Crest Highway and Foothill Boulevard, in La Cañada,
California.
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Lease
Term:
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“Initial
Term”
from the “Commencement
Date”
(as hereinafter defined) through the January 31 first occurring
following the expiration of one hundred twenty (120) full months
after the
Commencement Date, with options to extend the Term for three (3)
“Option
Terms”
(as hereinafter defined) of sixty (60) months
each.
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Minimum
Rent:
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Period
of Term
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Minimum
Rent
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Commencement
Date-Month 60
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1/12th
of $18.00 per square foot of Premises Floor Area
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Month
61-Expiration of Initial Term
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1/12th
of $19.80 per square foot of Premises Floor Area
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First
Option Term
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1/12th
of $22.74 per square foot of Premises Floor Area
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Second
Option Term
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1/12th
of $24.84 per square foot of Premises Floor Area
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Third
Option Term
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1/12th
of $27.84 per square foot of Premises Floor Area*
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*Minimum
Rent during the Third Option Term shall equal the greater of (i)
$27.84
per square foot of Premises Floor Area, or (ii) the “Fair
Market Rental Rate”
(as hereinafter defined) as of the commencement of the Third Option
Term
as determined in accordance with Section
3(c)(ii)
below.
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Percentage
Rent:
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Ten
percent (10%) of Tenant’s annual “Gross Sales” for any “Fiscal
Year” (as such terms are hereinafter defined) to the extent annual
Gross Sales for such Fiscal Year exceed $13,500,000.00 up to
$17,000,000.00 in annual Gross Sales, plus eight percent (8%) of
annual
Gross Sales for any such Fiscal Year to the extent annual Gross
Sales for
such Fiscal Year exceed $17,000,000.00.
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Security
Deposit:
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None
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Permitted
Use:
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Display
and retail sale and lease of sporting equipment and apparel as
are from
time to time sold and leased in similar sized retail stores operated
by
Tenant in Southern California under the trade name “Sport Chalet” and for
no other use or purpose, subject to the provisions of Sections 7
and 16 below.
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Approximate
Floor
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Area
of the Premises:
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45,000
square feet exclusive of the “Mezzanine” and the “Side Yard”
(as such terms are hereinafter
defined).
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Address
of Landlord:
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Address
of Tenant:
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For
Delivery By U.S. Mail:
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Sport
Chalet, Inc.
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La
Cañada Properties, Inc.
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One
Sport Chalet Drive
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P.O.
Box 376
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La
Cañada, CA 91011
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Xx
Xxxxxx, XX 00000
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Attn:
Xx. Xxxxxx Xxxxxxx
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For
Delivery Other than By U.S. Mail:
La
Cañada
Properties, Inc.
000
Xxxxxxxx Xxxxxxxxx
Xx
Xxxxxx, XX 00000
Tenant’s
Trade Name: Sport
Chalet
Exhibits:
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A
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Site
Plan
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B
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Legal
Description of the Shopping Center
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C
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Construction
of Premises
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1
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D
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Approved
Tenant Exterior Sign Specifications
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E
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Presently
Existing Exclusives
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F
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Memorandum
of Lease
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G
|
Form
of Subordination, Non-Disturbance and Attornment
Agreement
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1. PREMISES.
(a) Landlord
leases to Tenant and Tenant leases from Landlord certain premises (the
“Premises”)
consisting of all or part of a building (the “Building”)
either
existing or to be constructed pursuant to this Lease approximately in the
area
shown on the “Site
Plan”
attached hereto as Exhibit
A
and
incorporated herein by this reference, which Building contains or shall contain
approximately forty-five thousand (45,000) square feet of “Floor
Area”
(as
hereinafter defined), together with certain improvements (the “Improvements”)
located therein, for the “Term”
(as
hereinafter defined), at the rental, and upon the terms, conditions and
provisions set forth in this Lease. The Premises is a part of a larger
“Shopping
Center”
located
in the City of La Cañada, County of Los Angeles, State of California, shown on
Exhibit
A
and
legally described on Exhibit B
attached
hereto and incorporated herein by this reference. As used herein, the term
“Floor
Area”
shall
mean all areas from time to time available, or held for the exclusive use
and
occupancy of occupants or future occupants of the Shopping Center (including,
without limitation, mezzanines used for the customer accessible display or
sale
of merchandise, provided that mezzanines used for storage or display of
merchandise which is not accessible to customers shall not be included in
Floor
Area), measured from the exterior surface of exterior walls and from the
center
of interior demising partitions. Floor Area shall not include any areas used
for
truck parking, loading or unloading, trash storage or sidewalk. The Premises
shall be constructed with a mezzanine (the “Mezzanine”)
for
storage and/or display of merchandise which is not accessible to customers;
provided, that it is acknowledged and agreed by the parties that the Mezzanine
may not be used for office use. Neither the Mezzanine nor the Side Yard shall
be
deemed to constitute Floor Area under this Lease and Tenant shall not be
liable
for payment of rent or additional charges with respect to the Mezzanine or
Side
Yard. The parties agree and acknowledge that the Site Plan is not yet final
and
Landlord shall have the right to make changes to the Site Plan and the Shopping
Center from time to time, subject to the provisions of Section
9(c)
below.
(b) The
Floor
Area of the Premises shall be the estimated Floor Area stated in Section
1(a)
above,
unless and until adjusted pursuant hereto. Either party shall have the right
to
have a licensed architect measure the Floor Area of the Premises within ninety
(90) days following initial occupancy by Tenant. If either party determines
that
the actual Floor Area of the Premises varies from that set forth in Section
1(a),
such
party (the “Recalculating
Party”)
shall
give notice to the other party of the Recalculating Party’s determination of the
actual Floor Area of the Premises, together with reasonably detailed supporting
documentation for the making of such determination. The other party shall
have
the right to confirm such calculation. In the event of a deviation from the
Floor Area set forth in Section
1(a)
above,
then such agreed upon amount of Floor Area shall be the Floor Area of the
Premises for all purposes of this Lease and all calculations under this Lease
which vary depending upon the amount of Floor Area within the Premises
(including, without limitation, monthly Minimum Rent), shall be appropriately
retroactively and prospectively adjusted, and any appropriate adjustment
payment
from one party to the other based upon such Floor Area shall be made within
thirty (30) days of such agreement upon such Floor Area and the parties shall
execute an amendment to this Lease confirming the Floor Area; provided, however,
that unless specifically otherwise hereafter approved in writing by Tenant,
in
no event shall the Floor Area of the Premises for purposes of this Lease
be
deemed to contain more than forty-five thousand five hundred (45,500) square
feet of Floor Area.
(c) The
Premises shall also include, without such space being deemed to constitute
Floor
Area and without Tenant having to pay rental therefor, a side yard area adjacent
to the Building containing approximately two thousand five hundred (2,500)
square feet of area (the “Side
Yard”),
approximately in the area shown on Exhibit
A,
which
Side Yard shall contain a swimming pool (the “Pool”)
and
other ancillary improvements for use as a part of the Premises consistent
with
the Permitted Use under this Lease, to be constructed as shown on Schedule
1
of
Exhibit
C
attached hereto and in accordance with the terms of Exhibit
C
attached
hereto.
2. IMPROVEMENTS.
Landlord shall, at Landlord’s sole cost and expense, perform certain work in
connection with the construction of the Premises in accordance with Exhibit
C
attached
hereto and incorporated herein by this reference (“Landlord’s
Work”).
Tenant shall, at Tenant’s sole cost and expense, install all improvements,
furniture, trade fixtures, equipment, personal property and inventory in
the
Premises, except to the extent included in Landlord’s Work (collectively,
“Tenant’s
Work”)
in
accordance with Exhibit
C
attached
hereto.
3. TERM
OF
THIS LEASE; OPTIONS TO EXTEND THE TERM.
(a) (i) The
“Term”
of
this
Lease shall be the period commencing upon the “Commencement
Date”
(as
hereinafter defined) and, unless sooner terminated or extended as herein
provided, expiring on the January 31 first following the expiration of one
hundred twenty (120) full months following the Commencement Date (such January
31 is herein referred to as the “Initial
Term Expiration Date”).
As
used herein, the term “Commencement
Date”
shall
mean the date which is the earlier to occur of (A) the date Tenant opens
to the
public for business from the Premises, or (B) one hundred twenty (120) days
after the “Substantial
Completion Date”
(as
defined in Exhibit
C).
Landlord’s current good faith estimate is that the Substantial Completion Date
shall occur on or about June 1, 2008.
2
(ii) Landlord
shall provide Tenant with written notice at least sixty (60) days prior to
the
then estimated Delivery Date which notice shall specify the then estimated
Substantial Completion Date (the “Estimated
Substantial Completion Date”).
Notwithstanding anything to the contrary contained in this Lease, (1) if
the
actual Delivery Date is earlier than the Estimated Substantial Completion
Date,
then Tenant shall have the right to defer acceptance of delivery of the Premises
until the Estimated Substantial Completion Date, in which case it shall be
deemed that the Substantial Completion Date did not occur, for all purposes
of
this Lease, until such Estimated Substantial Completion Date; and (2) if
the
actual Substantial Completion Date is later than the Estimated Substantial
Completion Date, then Tenant shall be entitled to one (1) day of abatement
of
Minimum Rent and “Tenant’s
Share of Common Area Expenses, Taxes and Insurance”
(as
hereinafter defined) for each day following the Estimated Substantial Completion
Date until the actual Substantial Completion Date.
(b) Tenant
and its agents, contractors and employees shall have the right, without any
obligation to pay rent or other charge, to enter the Premises for the purpose
of
performance of Tenant’s Work prior to the Commencement Date and no such entry by
Tenant shall be deemed an acceptance of the Premises, provided that any such
entry prior to the Substantial Completion Date (i) shall be subject to
Landlord’s prior written approval (which approval shall not be unreasonably
withheld, conditioned or delayed) and (ii) shall be coordinated with Landlord’s
Work so as to avoid interference with Landlord’s Work. Tenant may use such
utilities as are available during the course of such entry for fixturization
purposes prior to the Commencement Date. During the course of any entry by
Tenant for fixturization purposes prior to the Commencement Date, all terms
and
conditions of this Lease (but not Tenant’s obligation to make payments in
respect of rent or other charges under this Lease) shall apply.
(c) (i) Landlord
hereby grants Tenant three (3) separate options (the “Options”)
to
extend the Term of this Lease for three (3) separate consecutive terms (the
“Option
Terms”)
of
five (5) years each, following expiration of the then existing Term, upon
all
the terms and conditions contained in this Lease, except for the payment
of
Minimum Rent which shall be as specified in the Basic Lease Provisions with
the
Fair Market Rental as to the third Option Term Rate determined in accordance
with Section
3(c)(ii)
below.
Tenant shall give written notice of the exercise of each Option to Landlord
at
least nine (9) months prior to the expiration of the then applicable Term.
References in this Lease to the “Term”
shall
mean the initial Term of this Lease, as the same may be extended by any Option
Terms, as applicable.
(ii) (1) If
Tenant
exercises the Option to extend the Term for the third Option Term, the Fair
Market Rental Rate for the Premises as of the commencement of the third Option
Term for purposes of determining the Minimum Rent for the third Option Term
shall be determined as follows. For purposes of this Lease, the “Fair
Market Rental Rate”
shall
mean the fair market rental rate for the Premises as of the commencement
of the
third Option Term, based on prevailing rentals then being charged to new
and
renewal tenants in comparable retail projects in the vicinity of the Shopping
Center, for comparably improved space of equivalent quality, size and location
(or adjusting the rental rate as appropriate for differences therein), taking
into account the length of the third Option Term, manner of pass-through
of
additional rent charges, and any improvements or improvement allowance then
being offered.
(2) At
least
two hundred forty (240) days before the commencement of the third Option
Term,
Landlord shall deliver written notice to Tenant specifying Landlord’s
determination of the Fair Market Rental Rate (“Landlord’s
Determination”).
Within fifteen (15) days following Tenant’s receipt of such Landlord’s notice
specifying Landlord’s Determination of the Fair Market Rental Rate, Tenant shall
deliver written notice to Landlord either agreeing with Landlord’s Determination
of the Fair Market Rental Rate or disagreeing therewith and specifying Tenant’s
determination of the Fair Market Rental Rate (“Tenant’s
Determination”).
In
the event Tenant so disagrees with Landlord’s Determination of the Fair Market
Rental Rate, then Landlord and Tenant shall promptly meet and endeavor in
good
faith to reach agreement upon the Fair Market Rental Rate for the third Option
Term. In the event Landlord and Tenant are unable to agree upon the Fair
Market
Rental Rate prior to two hundred (200) days before the commencement of the
third
Option Term, Landlord and Tenant shall each appoint, by written notice delivered
to the other prior to one hundred ninety (190) days before the commencement
of
the third Option Term, a real estate appraiser who is a member of the American
Institute of Real Estate Appraisers (or its equivalent) and who has significant
current experience appraising rental rates for commercial real property in
the
vicinity of the Premises, to participate in the determination of the Fair
Market
Rental Rate. The two appraisers so appointed shall be instructed to appoint,
within twenty (20) days thereafter, a third appraiser who is similarly
qualified. If either Landlord or Tenant fails timely to appoint a qualified
appraiser as provided above, then the determination of Fair Market Rental
Rate
to be made hereunder shall be made solely by such qualified appraiser as
may
have been appointed by the other party, and such determination of the Fair
Market Rental Rate by such sole appraiser shall be binding upon both Landlord
and Tenant. If the two appraisers appointed by Landlord and Tenant cannot
agree
on the appointment of a third appraiser within the time period provided,
either
Landlord or Tenant may seek the appointment of the same by the presiding
judge
for the Superior Court with jurisdiction over the area including the Premises.
Such appraisers shall work together and share information in their efforts
to
determine and agree upon the Fair Market Rental Rate. The Fair Market Rental
Rate shall be determined in accordance with the procedure set forth
below.
(3) The
role
of the appraisers shall be to select from Landlord’s Determination and Tenant’s
Determination which is closest to the actual Fair Market Rental Rate as
determined by the appraisers. The appraisers shall have no power to adopt
a
compromise or “middle ground” between the contended Fair Market Rental Rates
submitted by the parties or to adopt any Fair Market Rental Rate other than
the
contended Fair Market Rental Rate submitted by the party which is closest
to the
appraisers’ determinations as to actual Fair Market Rental Rate (and if the
difference between each of the contended Fair Market Rental Rates submitted
by
the parties and the Fair Market Rental Rate determined by the appraisers
is the
same, the average of Landlord’s Determination and Tenant’s Determination shall
be adopted). If the appraisers do not agree upon the actual Fair Market Rental
Rate, then each appraiser shall determine which of Landlord’s Determination or
Tenant’s Determination is closest to the actual Fair Market Rental Rate
determined by such appraiser and the contended Fair Market Rental Rate so
selected by at least two of the appraisers shall be the Fair Market Rental
Rate.
The Fair Market Rental Rate as so determined by the appraisers as provided
herein shall be binding upon both Landlord and Tenant as the Fair Market
Rental
Rate, which rate shall be used for purposes of determination of the Minimum
Rent
payable during the third Option Term.
3
(4) Landlord
and Tenant will use all reasonable diligence to cause their appointed appraisers
to perform in good faith and in a timely manner in order to make the
determination of the Fair Market Rental Rate on or before the commencement
of
the third Option Term. In the event such appraisers do not make such
determination prior to the commencement of the third Option Term, the Lease
shall nevertheless continue in full force and effect until such determination
is
made, and Tenant shall pay Minimum Rent during such period based upon
calculation of Fair Market Rental Rate using the amount asserted by Landlord
to
be the Fair Market Rental Rate. Upon the determination by such appraisers
of the
Fair Market Rental Rate, the excess (if any) of the amount paid to Landlord
by
Tenant as provided above over the Minimum Rent as so determined hereunder
applicable to the period from the commencement of the third Option Term to
the
date on which the Fair Market Rental Rate was so determined shall be credited
by
Landlord against the Minimum Rent next due from Tenant. The payment by Tenant
of
Minimum Rent based upon the greater of the amount specified in the Basic
Lease
Provisions or the amount of the Fair Market Rental Rate as so determined
shall
commence on the first day of the month following the date of such determination
(but not earlier than the commencement of the third Option Term), and in
addition to such monthly installments of Minimum Rent, Tenant shall pay to
Landlord the deficiency, if any, in the amount earlier paid by Tenant as
Minimum
Rent based on Landlord’s asserted Fair Market Rental Rate in relation to the
amount ultimately determined hereunder as the Minimum Rent for the third
Option
Term. Landlord and Tenant shall each bear the costs and fees of the appraiser
appointed by each of them and shall share equally the cost of the third
appraiser.
4. RENT.
(a) Tenant
shall pay Landlord “Minimum
Rent”
during
the Term in the amounts specified in the Basic Lease Provisions.. Minimum
Rent
for any partial month occurring during the Term shall be prorated based upon
the
number of days within such month. Minimum Rent shall be paid in monthly
installments, in advance, on the first day of each calendar month, but if
the
date on which Tenant’s obligation for the payment of Minimum Rent commences is
not the first day of a month, then that portion of such Minimum Rent which
is
attributable to the days in that month from the first date for which Minimum
Rent is due until the end of that month shall be paid on the first date for
which Minimum Rent is due.
(b) (i) Commencing
with the Commencement Date, Tenant shall pay as “Percentage
Rent”
for
each fiscal year of Tenant during the Term (which fiscal year is presently
April
1 to March 31, and is herein referred to as the “Fiscal
Year”),
an
amount equal to ten percent (10%) of annual Gross Sales from the Premises
for
any Fiscal Year to the extent annual Gross Sales for such Fiscal Year exceed
$13,500,000.00 up to $17,000,000.00 in annual Gross Sales, plus eight percent
(8%) of annual Gross Sales from the Premises for any such Fiscal Year to
the
extent annual Gross Sales for such Fiscal Year exceed
$17,000,000.00.
(ii) As
used
herein, “Gross
Sales”
means
the total gross receipts of all merchandise sold or leased including the
charges
for all services performed by Tenant or by any subtenant, licensee or
concessionaire, wholesale or retail, cash, credit, or otherwise, including,
without limitation, the value of all consideration other than money received
therefor (except for trade-ins which are intended for resale by Tenant from
the
Premises): (1) where the orders originate, in, at, from or arising out of
the
use of the Premises, whether delivery or performance is made from the Premises
or from some other place and regardless of the place of bookkeeping for,
payment
of, or collection of any account, and (2) which Tenant, or any subtenant,
licensee or concessionaire, in the customary course of its business, would
attribute to its operations at the Premises. Excluded from Gross Sales are:
(I) any exchange or transfer of merchandise between stores or warehouses of
Tenant or any subtenant, licensee or concessionaire made solely for the
convenient operation of Tenant’s or any subtenant’s, licensee’s or
concessionaire’s business and not to consummate a sale made in or from the
Premises; (II) returns to shippers or manufacturers; (III) cash or
credit refunds to customers on transactions otherwise included in Gross Sales;
(IV) sales of fixtures and equipment, which are not stock for sale or
trade; (V) sales, luxury or excise taxes, gross receipt taxes, and other
taxes now or hereafter imposed upon the sale or value of merchandise or
services, whether added separately to the selling price of the merchandise
or
services and collected from customers or included in the retail selling price;
(VI) the sums and credits received in settlement of claims for loss or damage
to
merchandise; (VII) receipts from public telephones, vending machines, ticket
sales (including, without limitation, tickets to sporting or other entertainment
events and/or ski lift and/or travel package tickets) to the extent paid
to a
third party operator or venue or if sold by Tenant at no or nominal profit,
and
fees for fishing, hunting or other sporting licenses paid to governmental
authorities; (VIII) interest, carrying charges, or other finance charges
in
respect of sales made on credit; (IX) sales to employees at a discount, not
exceeding three percent (3%) of total Gross Sales in any Fiscal Year; (X)
accounts receivable, not to exceed three percent (3%) of Gross Sales in any
Fiscal Year, which have been determined to be uncollectible for federal income
tax purposes during such Fiscal Year, provided, however, that if any such
amounts are actually collected in a later Fiscal Year, such amount so collected
shall be included in the Gross Sales for such later Fiscal Year; (XI) sublease
rents or other consideration received in connection with an assignment,
sublease, license, concession or other grant of a right of occupancy with
respect to any portion of the Premises; (XII) sales of merchandise ordered
by
catalogue regardless of place of order or delivery; and (XIII) charges paid
to
all credit card companies.
(iii) Tenant
shall furnish Landlord within sixty (60) days after the end of each Fiscal
Year
during the Term, a statement, certified by Tenant, setting forth the Gross
Sales
made during such Fiscal Year including a calculation of any Percentage Rent
owing for such Fiscal Year together with a payment of the amount of any
Percentage Rent owing for such Fiscal Year.
4
(iv) During
the Term, Tenant shall keep at the Premises or at its home or regional office,
complete, accurate books of account and records with respect to the business
conducted in or from the Premises and shall retain such books and records
and
reasonable supporting documentation for at least two (2) years from the end
of
the period to which they are applicable. Landlord’s acceptance of Percentage
Rent shall be without prejudice to Landlord’s examination and audit rights.
Landlord may at any reasonable time during normal business hours, upon ten
(10)
days’ prior notice to Tenant, cause a complete audit to be made of such books,
records and other materials which Tenant is required to retain (including,
without limitation, the books and records of any subtenant, licensee or
concessionaire) for all or any part of the two (2) years immediately preceding
the giving of such notice. Landlord may require Tenant to produce such
information about such books and records as is necessary for a proper
examination and audit thereof and to make such books and records available
to
Landlord for examination and audit; provided, however, that nothing contained
in
this Lease shall be deemed to provide Landlord with the right to review any
of
Tenant’s records with respect to any other store locations other than as may be
necessary for determination of Gross Sales from the Premises. Any such audit
shall be conducted in a manner so as to minimize interference with Tenant’s
business operations. If such audit discloses any underpayment by Tenant of
Percentage Rent, Tenant shall pay to Landlord the amount of such underpayment
within thirty (30) days following Tenant’s receipt of such audit. If such audit
discloses any overpayment by Tenant of Percentage Rent, Landlord shall refund
to
Tenant the amount of such overpayment together with delivery to Tenant of
such
audit. If such audit discloses that Tenant’s annual statement of Gross Sales
understates Gross Sales made during the applicable Fiscal Year by three percent
(3%) or more, Tenant shall pay Landlord within thirty (30) days after demand,
Landlord’s reasonable cost in conducting such audit (as evidenced by invoices or
other reasonable supporting documents delivered to Tenant). Landlord shall
not
conduct such an audit of Tenant’s records more than once in any given Fiscal
Year. Failure of Landlord to conduct such an audit within two (2) years
following submission to Landlord of the applicable annual Gross Sales statement
shall constitute the waiver by Landlord of any right to audit Gross Sales
specified within such annual Gross Sales statement. Any information obtained
by
Landlord as a result of any such audit shall be held in strict confidence
by
Landlord, except that such information may be disclosed by Landlord to a
proposed lender or purchaser with respect to a prospective sale or financing
of
the Shopping Center or when Landlord is required to comply with lawful orders
of
a court or governmental agency.
(v) Notwithstanding
anything to the contrary contained in this Lease, if Tenant during the Term
of
this Lease operates or causes or permits to be operated a “Sport Chalet” store
(or a store operating under such other trade name under which the majority
of
current “Sport Chalet” stores are then operating) within the city boundaries of
Glendale, Eagle Rock or Pasadena (as such city boundaries exist as of the
date
hereof), and the Gross Sales from the Premises are reduced following the
opening
of such other store, then the Percentage Rent thereafter payable under this
Lease during such period as such other store is operating within such city
boundaries shall be the greater of (1) the amount of Percentage Rent payable
under this Lease for the year preceding the opening of such other store,
or (2)
the Percentage Rent due without regard to the provisions of this clause
(v).
(c) All
amounts payable by Tenant to Landlord pursuant to this Lease other than Minimum
Rent, including, without limitation, Percentage Rent and “Tenant’s
Share of Common Area Expenses, Taxes and Insurance”
(as
hereinafter defined), shall be deemed to constitute “Additional
Rent”.
For
purposes of this Lease, “Tenant’s
Share of Common Area Expenses, Taxes and Insurance”
shall
mean the aggregate of (i) Tenant’s Share of Common Area Expenses, (ii) Tenant’s
Share of Taxes pursuant to Section
5
below,
and (iii) Tenant’s Share of insurance costs pursuant to Section
12(a)
below.
References in this Lease to “Rent”
shall
mean Minimum Rent and Additional Rent.
(d) Tenant
acknowledges that the late payment by Tenant to Landlord of any sums due
under
this Lease will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of such costs being extremely difficult and impracticable
to
fix. Such costs include, without limitation, processing and accounting charges,
and late charges that may be imposed on Landlord by the terms of any encumbrance
or note secured by all or any portion of the Shopping Center. Therefore,
if
Tenant fails to pay any rent within ten (10) days of the due date under this
Lease for any reason, Tenant shall pay to Landlord, as additional rent, the
sum
of five percent (5%) of the overdue amount as a late charge; provided, however,
that as to the initial such late payment in any twelve (12) consecutive calendar
month period during the Term, such late charge shall not be payable unless
such
failure to pay when due is not cured within five (5) days after Tenant’s receipt
of written notice thereof from Landlord. Landlord’s acceptance of any late
charge shall not constitute a waiver of Tenant’s default with respect to the
overdue amount or prevent Landlord from exercising any of the other rights
and
remedies available to Landlord under this Lease, at law or in
equity.
(e) Notwithstanding
anything to the contrary contained in this Lease, Landlord hereby agrees
that
Tenant shall not be obligated to pay in excess of the “Cap
Amount”
(as
hereinafter defined) for Tenant’s Share of Common Area Expenses, Taxes and
Insurance during the Term. As used herein, the “Cap
Amount”
shall
mean Six Dollars ($6.00) per square foot of Premises Floor Area per annum
during
the period prior to the expiration of the initial calendar year of the Term
(prorated for any partial year including the Commencement Date), and such
Cap
Amount shall be increased five percent (5%) per annum (calculated on a
cumulative and compounding basis) over the prior year’s Cap Amount from and
after the expiration of the initial calendar year during the Term; except
that
the Cap Amount for the initial year of the first Option Term (if the Term
is
extended by the first Option Term) shall be the actual amount of Tenant’s Share
of Common Area Expenses, Taxes and Insurance during such year. Such limitation
on Tenant’s obligation for Tenant’s Share of Common Area Expenses, Taxes and
Insurance shall be calculated as if Tenant’s obligation for Tenant’s Share of
Common Area Expenses, Taxes and Insurance were paid during any period of
time in
which Tenant’s obligation to make payments in respect of Tenant’s Share of
Common Area Expenses, Taxes and Insurance is suspended and/or abated pursuant
to
this Lease.
5
5. TAXES
AND
ASSESSMENTS.
(a) Landlord
shall pay, on or before the due date, all taxes and assessments levied against
the Shopping Center (including, without limitation, the land underlying the
Shopping Center) during the Term.
(b) Tenant
shall pay to Landlord, as additional rent, “Tenant’s
Share”
(as
hereinafter defined) of the real estate taxes, general and special assessments
and other governmental charges (collectively, “Taxes”)
levied
upon and assessed against the Shopping Center, for each tax year of the Term
from and after the Commencement Date; provided, however, impact or development
fees in connection with development of the Shopping Center shall not be included
within the definition of Taxes. Such taxes shall be payable by the later
to
occur of (i) thirty (30) days following Tenant’s receipt from Landlord of the
applicable Tax xxxx together with a calculation of the amount of such Tax
owing
by Tenant in accordance with this Section
6,
and
(ii) fourteen (14) days prior to delinquency. Following written request from
Tenant, Landlord shall furnish Tenant with proof of payment of Taxes. In
the
event of assessments which may be paid in installments by reason of bonding
or
otherwise, Landlord may elect to make payment under the installment plan.
In any
event, Tenant’s payment obligations under this Section shall be as if Landlord
made payment over the longest period of time permitted by the assessment
and
Tenant shall bear no liability as to installments which are not due during
the
Term of this Lease.
(c) For
purposes of this Section
5,
“Tenant’s
Share”
is
defined as a fraction, the numerator of which is the Floor Area within the
Premises and the denominator of which is the Floor Area within the Shopping
Center (provided that, except as set forth in this subparagraph (c), in no
event
shall such denominator be less than the amount of Floor Area shown within
the
building areas of the Shopping Center on the Site Plan). Such computation
shall
be made separately for each tax year.
(d) Should
the first or final tax year occurring during the Term include a period of
time
prior to or following the Term, as applicable, Tenant shall be responsible
to
Landlord for a pro rata portion of its tax obligation as described herein,
based
on the portion of such tax year included in the Term of this Lease. This
Section
includes Tenant’s total responsibility for Taxes for the Shopping Center,
including, without limitation, for the Common Areas thereof.
(e) There
shall be excluded from the tax xxxx to which Tenant contributes for the purposes
of computing Tenant’s Share (i) income, excess profits, estate, business,
inheritance, succession, documentary transfer, franchise, capital, or similar
taxes or assessments upon Landlord (as opposed to the Shopping Center or
portions thereof); (ii) special taxes and assessments to pay for the initial
construction of the Shopping Center or of off-site improvements (including,
without limitation, sewer and/or street improvements) that serve the Shopping
Center and are required as a condition to the development of the Shopping
Center; and (iii) any increase in Taxes resulting from the second (2nd)
or any
subsequent “change
in ownership”
(as
defined in Division 1, Part 0.5, Chapter 2 of the California Revenue and
Taxation Code) of all or any part of the Shopping Center occurring during
any of
(1) the initial five (5) years of the Term, (2) the remainder of the Initial
Term after the expiration of the initial five (5) years of the Term, and/or
(3)
any Option Term.
(f) Any
rebates, refunds, or abatements of Taxes received by Landlord (net of Landlord’s
reasonable costs to obtain the same) subsequent to payment of the applicable
Taxes by Tenant shall, to the extent attributable to Tenant’s Share of any such
Taxes previously paid by Tenant, be refunded to Tenant on a pro rata basis
within thirty (30) days of receipt thereof by Landlord or credited against
Tenant’s next payment of Taxes if such credit will be applied within such thirty
(30)-day period. Any such rebate, refund or abatement realized by Landlord
(net
of Landlord’s reasonable costs to obtain the same) prior to payment by Tenant
shall result in an immediate reduction in the Taxes upon which Tenant’s Share is
calculated.
(g) Tenant
shall have such rights to contest in good faith the validity or amount of
Taxes
as are permitted by law, either in its own name or in the name of Landlord
(if
required by the taxing authority), in either case with Landlord’s reasonable
cooperation (but at no cost or expense to Landlord), subject to obtaining
Landlord’s prior written consent therefor, which consent shall not be
unreasonably withheld, conditioned or delayed. Any resultant refund, rebate
or
reduction shall be used first to repay the reasonable expenses of obtaining
such
relief. Landlord shall provide Tenant with government notices of assessment
(or
reassessment) in time sufficient to reasonably permit Tenant, at Tenant’s
election, to make contest. The term “contest”
as
used
in this Section
5(g)
means
contest, appeal, abatement or other proceeding, prescribed by applicable
law to
obtain tax reduction or tax refund, howsoever denominated.
(h) Tenant
shall pay prior to delinquency all taxes, assessments, fees and charges imposed
on its furniture, trade fixtures, equipment, inventory and other personal
property (collectively, “Tenant’s
Personal Property”)
in the
Premises. If any such Tenant’s Personal Property is assessed jointly with the
property of Landlord, such assessment shall be reasonably and equitably
allocated between Landlord and Tenant.
6. UTILITIES.
Landlord shall provide to the Premises at all times necessary utilities services
including electric, water, gas, telephone and other necessary utility lines
and
sewerage lines capable of adequately providing for Tenant’s needs, but in no
event of less capacity than specified in Exhibit C
attached
hereto. Landlord shall cause all such utilities to be separately metered
for the
Premises and shall be responsible for any utilities hook-up, connection,
installation, development, impact or similar fees with respect to the Premises.
Tenant shall pay applicable use charges for all such utilities serving the
Premises during the Term directly to the applicable utility provider. Landlord
shall not be liable for any interruption in utilities service to the Premises
due to any cause (other than the gross negligence or willful misconduct of
Landlord or any of Landlord’s employees, agents or contractors), but Landlord
shall reasonably cooperate with Tenant to endeavor to avoid any such
interruption in utilities service to the Premises.
6
7. USES.
(a) Promptly
following the completion of Tenant’s Work, Tenant shall open for business from
the Premises for one (1) day for the Permitted Use set forth in the Basic
Lease
Provisions under the trade name of “Sport Chalet” or such other trade name as is
then being used by the majority of Tenant's current “Sport Chalet” stores.
Landlord hereby represents and warrants to Tenant that the operation for
business from the Premises for the retail sale and/or lease of sporting
equipment (including, without limitation, ski, snowboard and diving equipment),
sporting goods, sports apparel and active wear (including, without limitation,
ski and/or snowboard apparel), and/or athletic footwear will not violate
any
agreements respecting exclusive use rights or restrictions on use within
the
Shopping Center or any portion thereof. In the operation of business from
the
Premises, Tenant shall not permit any waste of the Premises or any objectionable
noises, odors or nuisances.
(b) Following
such initial opening for business from the Premises, the trade name under
which
the Premises is operated for business may be changed to an alternate trade
name
used by the majority of Tenant’s store locations or such other trade name as may
be approved in writing by Landlord (which approval shall not be unreasonably
withheld, conditioned or delayed), and the use of the Premises may be changed
to
an alternate lawful retail use with the prior written consent of Landlord
(which
consent shall not be unreasonably withheld, conditioned or delayed); provided,
however, that use of the Premises shall not be changed to a use which violates
a
restriction or covenant of Landlord then in effect respecting exclusivity
of use
set forth in any lease, occupancy agreement or other agreement setting forth
easements, covenants, conditions, restrictions and/or matters of record with
respect to all or any other part of the Shopping Center entered into prior
to
the date of this Lease and which are specified on Exhibit
E
attached
hereto and incorporated herein by this reference (provided that Landlord
shall
deliver to Tenant, promptly following any request by Tenant, a list of such
then
effective restrictions and covenants).
(c) Tenant
will be open for business from the Premises during such days and hours as
it
deems reasonable and practicable in its sole business judgment for the operation
of its business. In entering into this Lease, Landlord is not relying upon
Tenant’s operation of its business from the Premises for in excess of such one
(1) day period. Nothing in this Lease shall be construed to require a business
to be continuously operated in the Premises or to require the Premises to
be
continuously occupied. However, in the event that following such initial
opening, the Premises ceases to be operated for a period in excess of one
hundred twenty (120) consecutive days or for more than one hundred fifty
(150)
days in any period of twelve (12) consecutive months (other than any cessation
of operations resulting from a casualty, condemnation or other “Force
Majeure Event”,
as
hereinafter defined), Landlord shall thereafter prior to re-opening of the
Premises for business have the right to terminate this Lease effective upon
sixty (60) days prior written notice to Tenant; provided, however, that in
the
event Tenant or a Transferee commences operation for business with the general
public from the Premises during such sixty (60) day period, then Landlord's
election to terminate shall be nullified and this Lease shall continue in
full
force and effect.
(d) Notwithstanding
anything to the contrary contained in this Lease, Landlord agrees that no
other
portion of the Shopping Center or any adjacent or contiguous property owned
by
Landlord or any entity controlling, controlled by, or under common control
with,
Landlord (collectively, any “Adjacent
Property”)
shall
be operated for the primary purpose of, and no other Shopping Center or Adjacent
Property occupant shall devote in excess of the lesser of (i) five percent
(5%)
of the Floor Area within its store, or (ii) one thousand (1,000) square feet
of
Floor Area within its store, to the sale or lease of sporting equipment or
sporting goods (including, without limitation, ski, snowboard and diving
equipment), or sports apparel (including, without limitation, ski and/or
snowboard apparel) and/or athletic footwear, and Landlord shall use commercially
reasonable efforts to enforce compliance with the agreements of Landlord
set
forth in this sentence. The covenants contained in this Section shall terminate
if, after the initial opening of the Premises for business pursuant to this
Lease, the Premises is not used for the primary purpose of the retail sale
of
sporting equipment or sporting goods (including, without limitation, ski,
snowboard and diving equipment), or sports apparel (including, without
limitation, ski and/or snowboard apparel) and/or athletic footwear for a
continuous period of one hundred twenty (120) days, unless because of a
casualty, condemnation or other Force Majeure Event.
(e) Landlord
covenants and agrees that the Shopping Center shall be constructed, leased,
operated, maintained and managed as a first class shopping center and that
no
premises (and no portion of any premises) in the Shopping Center (excluding
any
existing uses as of the date hereof) shall be used or occupied for any of
the
following: any unlawful use; funeral establishment; automobile sale, leasing,
repair or display establishment or used car lot, including body repair
facilities; auction or bankruptcy sale; pawn shop; outdoor circus, carnival
or
amusement park, or other entertainment facility; bowling alley; primarily
pool
or billiard establishment; shooting gallery; refinery; adult bookstore or
facility selling, renting or displaying pornographic or adult books, literature,
or videotapes (materials shall be considered “adult” or “pornographic” for such
purpose if the same are not available for sale or rental to children under
18
years old because they explicitly deal with or depict human sexuality), provided
that sale, rental or display of such items as an incidental part of a permitted
business (from not more than ten percent (10%) of the sales area of such
business and so as to constitute less than ten percent (10%) of the gross
sales
of such business) shall be permitted; massage parlor; any residential use,
including but not limited to living quarters, sleeping apartments or lodging
rooms; theater; auditorium, meeting hall, ballroom, school or other place
of
public assembly; unemployment agency; gymnasium, health club, exercise or
dance
studio; dance hall; cocktail lounge or bar (except as an incident to a permitted
restaurant), disco or night club; bingo or similar games of chance, but lottery
tickets and other items commonly sold in retail establishments may be sold
as an
incidental part of business; video game or amusement arcade, except as an
incidental part of another primary business: skating or roller rink; car
wash,
car repair; second hand store, auction house, or flea market; sit-down, full
service restaurant in the Shopping Center and located within one hundred
feet
(100’) of the Premises; or non-retail use (which shall not prohibit in the
Shopping Center office use incident to a permitted retail operation or such
uses
commonly referred to as “quasi-retail” or “service retail” such as by way of
example and without limitation, a travel agency, real estate office, insurance
agency or accounting service, so long as same do not exceed ten percent (10%)
of
the Floor Area of the Shopping Center). Tenant shall not use the Premises
for
any of the foregoing prohibited uses.
7
(f) Provided
Tenant obtains Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, Tenant shall have a right
to use
the roof of the Building for any antennae or other communications equipment
or
other roof-top mounted equipment as Tenant may deem desirable for the operation
of its business; provided, however, that no roof penetrations shall be made
without obtaining Landlord’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed and may be conditioned on Tenant’s use of
Landlord’s designated roofing contractor so long as the fee charged is
commercially reasonable for the work performed, and Tenant shall, at its
own
expense, promptly repair any damage or wear to the roof resulting from such
use
of Tenant’s equipment and remove such roof-mounted communications equipment at
the expiration of the Term or earlier termination of this Lease and repair
any
damage resulting from such removal. Tenant shall coordinate any such roof
work
with Landlord so as not to impair any roof warranty then in effect.
(g) Landlord
shall disclose to Tenant any information Landlord has regarding present and
future zoning affecting the Premises and regarding the condition of the
Premises, including, structural, mechanical and environmental conditions.
If not
heretofore provided to Tenant, Landlord shall promptly hereafter deliver
to
Tenant a copy of the “Phase I” environmental study of the Shopping Center
completed on or about November 1, 2006, and a copy of the “Phase II”
environmental study of the Shopping Center completed on or about June 17,
1998.
Any further invasive testing desired by Tenant with respect to the Shopping
Center shall be performed at Tenant’s cost, subject to Landlord’s prior written
approval, which approval shall not be unreasonably withheld, conditioned
or
delayed. Landlord covenants, represents and warrants that as of the delivery
of
possession of the Premises to Tenant, the Premises shall not contain any
“Hazardous
Substances”
(as
hereinafter defined), and no other part of the Shopping Center shall contain
any
Hazardous Substances in such quantity as would constitute a violation of
applicable federal, state or local governmental laws, statutes, rules,
regulations, ordinances, codes, orders or other requirements (collectively,
any
“Laws”)
or
would adversely affect Tenant’s use or occupancy of the Premises, operation of
business from the Premises, or access to or parking serving the Premises.
Landlord shall not incorporate or permit or suffer to be incorporated, knowingly
or unknowingly, any material containing any Hazardous Substances into the
Premises. Landlord shall use commercially reasonable efforts to prevent any
action by any person other than Tenant and/or any of Tenant’s employees, agents
and/or contractors that would cause the Premises to be in violation of
applicable Laws relating to Hazardous Substances, or would subject the Premises
to any remedial obligations under such Laws. In the event Hazardous Substances
are or become located in, upon, under or about the Premises and/or any other
portion of the Shopping Center, other than as a result of the acts or omissions
of Tenant and/or any of Tenant’s employees, agents and/or contractors, Landlord
shall, to the extent required by applicable governmental authorities, remediate
such contamination, at no cost to Tenant, upon discovery of such contamination.
Each party shall immediately notify the other party in reasonable detail
of any
existing, pending or threatened regulatory action, third party claims, and/or
contamination relating to Hazardous Substances with respect to the Shopping
Center of which such notifying party becomes aware (other than by notice
from
the other party). Landlord shall indemnify, defend and hold harmless Tenant
from
and against any and all damages, claims, actions, penalties, demands, losses,
liabilities, costs and/or expenses (including, without limitation, reasonable
attorneys’ fees and expenses), arising out of or in connection with the presence
of Hazardous Substances in, upon, under or about the Premises and/or any
other
portion of the Shopping Center which are not caused to be so present as a
result
of the acts or omissions of Tenant and/or any of Tenant’s employees, agents
and/or contractors. The obligations of Landlord pursuant to the provisions
of
the immediately preceding sentence shall survive the expiration of the Term
or
earlier termination of this Lease. As used in this Lease, the term “Hazardous
Substance”
means
any asbestos, petroleum product or by-product or hazardous or toxic substance,
material or waste which is or becomes regulated by any local government
authority, the State of California or the United States.
(h) Tenant
shall not incorporate or permit any material containing any Hazardous Substances
to be incorporated into the Premises, provided that nothing contained herein
shall be deemed to prohibit Tenant's use within the Premises of items in
customary amounts customarily used in the operation of a store for the permitted
use under this Lease but constituting Hazardous Substances as defined herein
(including, by way of example and without limitation, customary cleaning
fluids
and/or lead diving weights). Tenant shall prevent any action by Tenant and/or
any of Tenant’s employees, agents and/or contractors that will cause the
Premises to be in violation of applicable Laws relating to Hazardous Substances,
or would subject the Premises to any remedial obligations under such Laws.
In
the event Hazardous Substances are or become located in, upon, under or about
the Premises and/or any other portion of the Shopping Center, as a result
of the
acts or omissions of Tenant and/or any of Tenant’s employees, agents and/or
contractors, Tenant shall remediate such contamination, at no cost to Landlord,
upon discovery of such contamination. Tenant agrees to immediately notify
Landlord in reasonable detail of any existing, pending or threatened regulatory
action, third party claims, and/or contamination relating to Hazardous
Substances with respect to the Shopping Center resulting from the acts or
omissions of Tenant and/or any of Tenant’s employees, agents and/or contractors.
Tenant shall indemnify, defend and hold harmless Landlord from and against
any
and all damages, claims, actions, penalties, demands, losses, liabilities,
costs
and/or expenses (including, without limitation, reasonable attorneys’ fees and
expenses), arising out of or in connection with the presence or release of
Hazardous Substances in, upon, under or about the Premises and/or any other
portion of the Shopping Center which are caused to be so present or released
as
a result of the acts or omissions of Tenant and/or any of Tenant’s employees,
agents and/or contractors. The obligations of Tenant pursuant to the immediately
preceding sentence shall survive the expiration of the Term or earlier
termination of this Lease.
8. TENANT’S
ALTERATIONS, ADDITIONS OR IMPROVEMENTS.
(a) Tenant
may make non-structural alterations and improvements to the interior of the
Premises costing not more than $50,000 per work of alterations and/or
improvements, without the prior approval of Landlord. Tenant shall not make
any
alterations to any structural or exterior portions of the Premises without
first
obtaining the prior written approval of Landlord, which approval shall not
be
unreasonably withheld, conditioned or delayed, and shall be deemed granted
if
Tenant is not notified in writing of a reasonable basis for Landlord’s
withholding of such approval within fifteen (15) days of Tenant’s request
therefor. Upon the expiration of the Term or sooner termination of this Lease,
Tenant may remove its furniture, fixtures and equipment so long as Tenant
promptly repairs any damage resulting from such removal. Tenant’s alterations
and improvements to the Premises (except Tenant’s trade fixtures, equipment and
personal property), shall become Landlord’s property upon expiration of the Term
or earlier termination of this Lease, and Landlord will accept the Premises
as
altered without any obligation upon Tenant to restore the Premises to its
former
condition; except, however, that Landlord may require removal upon the
expiration of the Term or earlier termination of this Lease of alterations
or
improvements made subsequent to performance of Landlord’s Work provided that
Landlord may only so require removal of items which Landlord notified Tenant
at
the time of Landlord’s approval of the installation thereof (or within ten (10)
days of Landlord’s first learning of the installation thereof if not requiring
Landlord’s approval for installation) that such items would be subject to such
requirement for removal, and provided further that in no event shall Tenant
be
required to remove any of the Tenant’s Work (or any repair or replacement
thereof) prior to, upon or after the expiration of the Term or earlier
termination of this Lease. Tenant shall be responsible for all damage resulting
from any construction, alterations or additions in or to the Premises during
the
Term made by Tenant (collectively, any “Tenant
Construction Work”),
whether or not Landlord’s consent therefor is necessary or was obtained. All
Tenant Construction Work shall be performed in accordance with all necessary
governmental approvals and permits, which Tenant shall obtain at its sole
expense and in accordance with all applicable Laws. All Tenant Construction
Work
shall be performed in a good and workmanlike manner and diligently prosecuted
to
completion.
8
(b) Tenant
shall provide Landlord with at least ten (10) days prior written notice of
any
alterations or improvements work to be performed by Tenant during the Term.
During the pendency of any work of construction which may result in the
imposition of a mechanic’s or materialman’s lien upon the Premises, Landlord may
post in the Premises in a reasonable manner and/or record notices of
non-responsibility in accordance with applicable Laws. The provisions of
this
Section
8(b)
shall
apply to Tenant’s Work and to work in the Premises by or on behalf of Tenant
during the Term.
(c) Neither
Tenant nor Landlord shall permit any mechanic’s, materialman’s or other lien
against the Premises or the Shopping Center in connection with any labor,
materials or services furnished or claimed to have been furnished by or on
behalf of such party. If any such lien shall be filed against the Premises
or
Shopping Center, the party charged with causing the lien shall cause the
same to
be discharged within thirty (30) days after notice, provided, however, that
either party may contest any such lien, so long as the enforcement thereof
is
stayed. Each party shall indemnify, defend and hold harmless the other from
and
against any and all costs, losses, liabilities, claims, demands and expenses
(including, without limitation, reasonable attorneys’ fees and expenses) arising
as a result of any mechanic’s, materialman’s or other lien filed against the
Premises or the Shopping Center in connection with any labor, materials or
services furnished or claimed to have been furnished on behalf of the
indemnifying party.
9. COMMON
AREAS.
(a) As
used
in this Lease, the term “Common
Areas”
shall
mean those portions of, and facilities within, the Shopping Center which
are
intended for the common non-exclusive use of the occupants, their customers,
agents and employees including, without limitation, parking areas, driveways,
malls, walkways, loading zones and landscaping. Prior to the Commencement
Date,
Landlord shall construct the Common Areas of the Shopping Center substantially
as shown on Exhibit
A
attached
hereto (other than any Common Areas adjacent to any undeveloped pad sites
not
reasonably required for the operation of Tenant’s business from the
Premises).
(b) Tenant,
as well as its agents, employees and customers shall have and are granted
nonexclusive access to, and use of all Common Areas. Tenant’s use of the Common
Areas shall be subject to such reasonable non-discriminatory rules and
regulations as Landlord deems necessary or advisable for proper and efficient
use, operation and maintenance of the Common Areas, provided that in no event
shall such rules and regulations increase the monetary obligations owing
from
Tenant to Landlord under this Lease or otherwise materially increase the
obligations or diminish the rights of Tenant under this Lease. In no event
shall
there ever be a charge for use of the parking facilities within the Shopping
Center. Landlord may from time to time establish, subject to Tenant’s prior
written approval (which approval shall not be unreasonably withheld, conditioned
or delayed), such employee parking systems and/or employee parking areas
reasonably designated by Landlord (which shall be free of any charge to Tenant
or its employees) as are not unreasonably burdensome to the operation of
Tenant’s business, and provide sufficient means of transportation and security
for access to and use of such employee parking. Landlord shall use commercially
reasonable efforts to prevent use of the Common Areas by other than Shopping
Center tenants, occupants and their customers. Landlord shall cause the Common
Areas to be maintained and operated in a first-class, professional manner
and
condition as is customary and appropriate for the operation of first-class
retail centers comparable to the Shopping Center in the vicinity of the Shopping
Center. So long as access, parking and other essential services are reasonably
available so as to avoid any material adverse affect upon the operation of
Tenant’s business from the Premises, Landlord may at any time temporarily close
any of the Common Areas to make repairs or to such extent as may, in Landlord’s
reasonable opinion, be necessary to prevent a dedication thereof or the accrual
of rights to any person or to the public therein, and perform such other
acts in
and to the Common Areas as, in Landlord’s good business judgment, are advisable
to improve the use thereof by occupants and tenants, their employees and
invitees, so long as the same is effected in a manner to minimize interference
with the operation of business of the occupants of the Shopping Center
including, without limitation, Tenant. Subject to compliance with applicable
governmental requirements and restrictions, including without limitation,
the
conditions of approval affecting the Shopping Center, Landlord shall maintain
the Common Areas well lighted until at least thirty (30) minutes after Tenant’s
normal business hours (but until at least 11:00 P.M. every day, and until
midnight during the month of December). If lighting is required after such
time
in excess of customary security lighting, expenses in connection with
electricity to service such additional after-hours lighting shall be prorated
between the occupants of the Shopping Center who remain open during such
after-hours lighting period. In operation of business from the Premises,
Tenant
shall comply with any governmentally required carpooling requirements as
to
Tenant’s employees. Notwithstanding anything to the contrary contained in this
Lease, Landlord shall not allocate more square footage of the Shopping Center
to
the food service category than is stated in the existing conditions of approval
heretofore granted with respect to the Shopping Center by the City of La
Cañada
in the existing Conditional Use Permit issued for the Shopping
Center.
9
(c) Landlord
shall have the right, from time to time, to make changes to the Common Areas
from as depicted on the Site Plan, provided that, (i) Landlord shall not
make
changes to the area designated as “Primary Common Areas” on the Site Plan (the
“Primary
Common Areas”)
unless
the prior written consent of Tenant is first obtained, which consent may
be
granted or withheld, in Tenant’s sole and absolute discretion, and (ii) Landlord
shall not make changes to the other portions of the Common Areas unless the
prior written consent of Tenant is first obtained, which consent shall not
be
unreasonably withheld, conditioned or delayed. Landlord shall not change
the
dimensions or location of the Premises. Notwithstanding anything to the contrary
contained in this Lease, Landlord hereby agrees that (A) in no event shall
the
number of parking spaces contained within the entire Shopping Center be less
than the greater of that required by applicable Laws or five (5) parking
spaces
per each one thousand (1,000) square feet of Floor Area within the Shopping
Center, (B) in no event shall Landlord change the size, configuration or
number
of parking spaces within the Primary Common Areas, unless the prior written
consent of Tenant is first obtained, which consent may be granted or withheld,
in Tenant’s sole and absolute discretion, and (C) in no event shall any kiosks
be located within the Primary Common Areas, unless the prior written consent
of
Tenant is first obtained, which consent may be granted or withheld, in Tenant’s
sole and absolute discretion,.
(d) Tenant
shall have the right during the Term to use the sidewalk area in front of
the
Premises storefront for purposes of the display and/or sale of Tenant's
merchandise therefrom, provided that any such sales activity (as opposed
to
displays) shall require the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed, and any such
display
and/or sale shall be conducted in a professional manner, so as not to materially
and adversely affect pedestrian or vehicular traffic within the Shopping
Center,
and Tenant shall be responsible for the clean up of any trash in the adjacent
Common Areas resulting from such sidewalk use.
10. COMMON
AREA EXPENSES.
(a) As
used
in this Lease, the term “Common
Area Expenses”
shall
mean all costs actually incurred by Landlord for the operation, maintenance
and
repair of the Common Areas, including, without limitation, maintenance and
repair (and, during any of the Option Terms, resurfacing) of the parking
areas
(except that the cost of such resurfacing during the Option Terms shall be
amortized over its useful life and only the yearly amortization included
in
Common Area Expenses); cleaning, sweeping, repainting and restriping the
parking
areas; maintenance of refuse receptacles, landscaping, common utility lines
serving all tenants of the Shopping Center, directional signs and other markers;
Common Area utility costs; costs of Landlord’s policies of all risk and
commercial general liability insurance for the Common Areas maintained pursuant
to Section 12(b)
below;
and a reasonable fee (the “Management
Fee”)
for
management, supervision and administration of the Shopping Center not to
exceed
ten percent (10%) of the total of other items of Common Area Expenses exclusive
of such insurance costs. In no event shall Common Area Expenses include any
of
the following: (1)
any
structural repairs or any other expenditures which, in accordance with generally
accepted accounting principles, are not fully chargeable to current account
in
the year the expenditure is incurred, except that any capital expenditures
(w)
required for parking area resurfacing in the Option Terms, (x) in the nature
of
other repairs or replacements to the Common Areas reasonably required to
keep
the Common Areas in the condition required under this Lease, (y) intended
to
result in costs savings, or (z) required to comply with applicable governmental
requirements for the Common Areas not in effect as of the Commencement Date,
shall be amortized over their respective reasonably anticipated useful lives
and
to the extent that such useful life occurs during the Term of this Lease,
then
annual amortization of such cost may be included in Common Area Expenses
during
the applicable year of the Term;
(2)
except
for the Management Fee, fees, costs or expenses relating to management,
administration or supervision of all or any part of the Shopping Center
(including, without limitation, individual compensation or other expenses
with
respect to officers, executives or on- or off-site management or administrative
personnel of Landlord, or third parties engaged by Landlord to provide such
services, or any other costs or expenses relating to administrative,
bookkeeping, accounting, management or similar services or functions with
respect to the Shopping Center);
(3)
rent or
other amounts payable under any ground lease or master lease, or interest,
amortization or other repayment of indebtedness or costs, fees, points or
other
expenses in connection with any financing or refinancing of all or any part
of
the Shopping Center;
(4)
cost of
correcting defects in the initial design or construction of the Shopping
Center
or any expansion thereof;
(5)
costs of
correcting any non-compliance of the Shopping Center or any part thereof
with
applicable Laws as of the Commencement Date;
(6)
any
costs relating to removal or remediation of Hazardous Substances, except
routine
parking lot maintenance;
(7)
cost for
which Landlord is reimbursed, receives a credit or is otherwise compensated
(other than tenant reimbursements for Common Area Expenses);
(8)
costs of
repair or restoration required due to casualty damage or condemnation, other
than the commercially reasonable deductible amount of any insured loss, but
earthquake insurance deductibles shall not be includable in Common Area
Expenses;
(9)
reserves
for anticipated future expenses beyond the current year;
(10)
legal
and other professional fees, or advertising or promotional expenses (including,
but not limited to, those relating to Christmas or other seasonal decorations
or
promotional events);
(11)
interest
or penalties incurred as a result of Landlord’s failure to pay any xxxx as it
shall become due or costs resulting from the negligence or wilful misconduct
of
Landlord, its employees, agents and/or contractors;
(12)
costs of
leasing any item which if purchased, rather than leased, would be excluded
from
Common Area Expenses pursuant hereto;
(13)
any
amount paid to any corporation or other entity related to Landlord or to
the
managing agent of Landlord which is in excess of the amount which would have
been paid in the absence of such relationship;
(14)
costs
related to the operation of Landlord as an entity rather than the operating
of
the Shopping Center (including, without limitation, costs of formation of
the
entity, internal accounting, legal matters and/or preparation of tax returns)
or
costs associated with marketing or selling Shopping Center or any interest
therein, or converting the Shopping Center to a different form of
ownership;
(15)
leasing
commissions, attorneys’ fees, costs and disbursements, and other expenses
(including, without limitation, advertising) incurred in connection with
leasing, renovating, or improving space for tenants or other occupants or
prospective tenants or occupants of the Shopping Center or development of
other
properties, or costs (including, without limitation, permit, license, and
inspection fees) incurred in renovating or otherwise improving or decorating,
painting or redecorating space for tenants or other occupants or vacant
space;
(16)
costs of
any services sold to tenants or other occupants for which Landlord is entitled
to be reimbursed by such tenants or other occupants as an additional charge
or
rental over and above the basic rent and escalations payable under the lease
with such tenant or other occupant, and costs associated with valet parking
(including, without limitation, wages and other expenses);
(17)
any
depreciation or amortization of the Building or other buildings and improvements
within the Shopping Center;
(18)
expenses
in connection with goods, services or other benefits of a type provided to
some
tenants but not available to Tenant (such as, by way of illustration and
not in
limitation, special services provided to food service tenants) or which Tenant
is required to separately pay for or provide pursuant to this Lease (such
as, by
way of illustration and not in limitation, HVAC maintenance for other occupants’
premises if Tenant is maintaining the HVAC system serving the Premises at
Tenant’s expense); and
(19)
repairs
and/or maintenance of any pylon or other sign which does not include any
Tenant
signage but does include signage of other tenants or occupants of the Shopping
Center.
10
(b) From
and
after the Commencement Date during the Term, Tenant shall pay as additional
rent
“Tenant’s
Share”
(as
hereinafter defined) of the Common Area Expenses. As used herein, “Tenant’s
Share”
of
Common Area Expenses is defined as that fraction of the Common Area Expenses,
the numerator of which is the Floor Area within the Premises and denominator
of
which is the Floor Area within the Shopping Center (provided that in no event
shall such denominator be less than the amount of Floor Area shown within
the
building areas of the Shopping Center on Exhibit
A,
provided, however, if any tenant or occupant separately maintains portions
of
the Common Area, then such costs shall be excluded from Common Area Expenses
and
the denominator shall not include the Floor Area of such tenants or occupants;
provided further, that if any undeveloped pad building areas are excluded
from
such denominator, then Common Area Expenses shall not include costs allocable
to
an equitable share of Common Area surrounding such undeveloped pad buildings).
Tenant’s payment under the provisions of this Section
10(b)
shall be
due and payable not sooner than thirty (30) days following receipt by Tenant
of
an itemized billing from Landlord, which billing shall be no more frequently
than monthly, nor less frequently than annually during the Term; provided,
however, that Landlord shall have the right to estimate Common Area Expenses
and
Tenant’s Share thereof, based on Landlord’s reasonable good faith estimate of
Common Area Expenses for the coming year. Beginning with the first full calendar
month following thirty (30) days after Tenant’s receipt of Landlord’s written
estimate, Tenant shall include one-twelfth (1/12th) of its annual obligation
for
Tenant’s Share of Common Area Expenses based upon such estimate with each
payment of Minimum Rent thereafter until actual expenditures are thereafter
computed by Landlord. Within ninety (90) days following the close of each
calendar year, Landlord shall calculate actual expenditures for Common Area
Expenses for such calendar year and Tenant’s Share thereof and provide such
accounting to Tenant (the “Annual
Statement”).
If
the Annual Statement shows that Tenant’s payments of estimated Tenant’s Share of
Common Area Expenses exceeds actual Tenant’s Share of Common Area Expenses for
such calendar year, Landlord shall accompany said Annual Statement with a
payment to Tenant of the amount of such excess. If the Annual Statement shows
that Tenant’s payments of estimated Tenant’s Share of Common Area Expenses were
less than actual Tenant’s Share of Common Area Expenses for such calendar year,
Tenant shall pay such difference to Landlord within thirty (30) days of Tenant’s
receipt of the Annual Statement.
(c) Landlord
shall keep at the Shopping Center or at another location in Southern California,
complete, accurate books of account and records with respect to the Common
Area
Expenses, and shall retain such books and records and reasonable supporting
documentation for at least two (2) years from the date Landlord submits its
Annual Statement for such year. Tenant’s payment of Tenant’s Share of Common
Area Expenses shall be without prejudice to Tenant’s examination and audit
rights. Tenant may at any reasonable time during normal business hours, upon
ten
(10) days’ prior notice to Landlord, cause a complete audit to be made of such
books, records and other materials which Landlord is required to retain for
any
year occurring wholly or in part during the Term within two (2) years following
Tenant’s receipt of the Annual Statement for such year, provided that if Tenant
discovers any errors made in any year of the Term, then Tenant may audit
and
inspect Landlord’s books and records for all prior years of the Term as to the
applicable line item(s) of expenses for which such error was found, and any
overpayment with respect to such prior year(s) shall be refunded by Landlord
as
provided herein. No such audit or examination shall be conducted by an auditor
being paid on a contingency basis or based upon a percentage of any recovery
by
Tenant. Tenant may require Landlord to produce such information about such
books
and records as is necessary for a proper examination and audit thereof and
to
make such books and records available to Tenant for examination and audit.
Any
such audit shall be conducted in a manner so as to minimize interference
with
Landlord’s business operations. If such audit discloses any overpayment by
Tenant of Tenant’s Share of Common Area Expenses, Landlord shall refund to
Tenant the amount of such overpayment within thirty (30) days following
Landlord’s receipt of such audit. If such audit discloses any underpayment by
Tenant of Tenant’s Share of Common Area Expenses, Tenant shall pay the amount of
such deficiency to Landlord together with delivery to Landlord of such audit.
If
such audit discloses an overpayment by Tenant of Tenant’s Share of Common Area
Expenses by three percent (3%) or more, Landlord shall pay to Tenant within
thirty (30) days after demand, Tenant’s reasonable cost in conducting such audit
(as evidenced by invoices or other reasonable supporting documents delivered
to
Landlord).
11. MAINTENANCE.
(a) Tenant
will, at its sole cost and expense, keep, maintain, repair and replace (when
necessary) the interior portions of the Premises (which Landlord is not
obligated to repair in accordance with Section
11(b)
below)
in first-class condition and make all needed repairs thereto, including plate
glass, doors, windows, exposed interior utility lines, meters, pipes, conduits,
fixtures and other equipment and systems (including, without limitation,
HVAC
equipment) serving exclusively the Premises and equipment and personal property
of Tenant within the Premises, the Pool and elevators exclusively serving
the
Premises. Tenant shall permit no waste, damage or injury to the Premises.
Tenant
shall perform all necessary repairs, alterations and improvements to cause
the
Premises to comply with all applicable Laws, except that Landlord (and not
Tenant) shall be responsible for making any capital repairs, alterations
or
improvements to the Premises required to cause the Premises to comply with
applicable Laws to the extent that such compliance is not required as a result
of Tenant’s particular use of the Premises or Tenant's particular Alterations to
the Premises, but the cost of such capital item may be includable in Common
Area
Expenses on an amortized basis as provided in Section
10(a)
above.
Notwithstanding anything to the contrary contained in this Lease, if at any
time
during the Term of this Lease, Tenant is required to make any replacements
to
the HVAC equipment serving the Premises or other mechanical or utility systems
serving the Premises having a useful life extending beyond the expiration
of the
Term of this Lease, then Landlord shall reimburse Tenant for a fraction of
the
costs of the applicable replacement item, the numerator of which is the number
of months in the reasonably anticipated useful life of the applicable
replacement item beyond the expiration of the Term of this Lease and the
denominator of which is the total number of months in the reasonably anticipated
useful life of the applicable replacement item, which reimbursement shall
be
made by Landlord to Tenant within thirty (30) days following Tenant’s submission
to Landlord of request therefor accompanied by reasonable evidence of the
costs
of such replacement item.
11
(b) Landlord
will, at its sole cost and expense, keep, maintain, repair and replace in
first-class and professional manner and repair consistent with the standards
of
first-class shopping centers comparable to the Shopping Center located in
the
vicinity of the Shopping Center, and (subject to Tenant’s obligation to perform
necessary repairs, alterations or improvements to the Premises to comply
with
applicable Laws where such compliance is required as a result of Tenant’s
particular use of, or alterations to, the Premises) perform any repairs,
improvements or alterations required by applicable Laws to, the foundation,
footings, roof, roof membrane, exterior walls (provided that Common Area
Expenses may include (i) graffiti removal from and touch-up painting of exterior
walls, and (ii) complete painting of exterior walls not more often than once
per
each five (5) year period during the Term, provided that the cost of such
complete painting shall be amortized over a five (5) year period and Common
Area
Expenses shall only include one-fifth (1/5th) of the cost thereof during
each
year of such amortization) and structural portions of, the Premises (excluding
front doors, windows, and plate glass), utility lines, meters, pipes, conduits,
fixtures and other equipment and systems (except if exposed within the Premises
and serving exclusively the Premises), exterior sprinkler systems, gutters
and
downspouts, plus all Common Areas of the Shopping Center. Tenant may give
Landlord notice of such repairs as may be required under the terms of this
Section, and Landlord shall proceed forthwith to effect the same with reasonable
diligence, but in no event later than thirty (30) days after having received
notice (or such greater period of time as is reasonably necessary to complete
such repairs in the event such repairs are not reasonably susceptible of
completion within thirty (30) days, provided Landlord shall, following receipt
of such notice from Tenant, promptly commence such repairs and diligently
prosecute the same to completion). In event of an “emergency” (which, as used in
this Lease, shall mean a situation posing an imminent risk of material property
damage, injury to persons or interruption of business operations in the
Premises), Tenant shall have the right, but not the obligation, to undertake
immediate repairs of such nature as would normally be Landlord’s responsibility,
and notify Landlord promptly after such repairs have been undertaken (including,
without limitation, notice by telephone, to the extent reasonably practicable).
If Landlord fails to repair any portion of the Premises which is Landlord’s
responsibility, within the thirty (30) day period set forth above (or such
greater period of time as is reasonably necessary to complete such repairs
in
the event such repairs are not reasonably susceptible of completion within
thirty (30) days, provided that following receipt of such notice from Tenant,
Landlord promptly commences such repairs and diligently prosecutes the same
to
completion) and upon delivery of an additional notice to Landlord, or in
the
case of any emergency as above stated, Tenant may without notice perform
the
repairs or maintenance and Landlord shall reimburse Tenant for the reasonable
cost of such repairs within thirty (30) days following Landlord’s receipt from
Tenant of invoices and/or other reasonable evidence of the amount of such
costs;
provided, however, that in the event Landlord in good faith disputes whether
Tenant properly performed an obligation of Landlord hereunder or the cost
of
such performance, Landlord shall have the right to dispute the same by
institution of a reference proceeding in accordance with the provisions of
Section 39
below.
If it is determined pursuant to such proceeding that Tenant did not properly
perform an obligation of Landlord in accordance herewith or that the cost
of
such performance was unreasonable, then Tenant shall not have any right to
reimbursement for the cost of performance as herein provided (or, as to a
determination of unreasonable cost, Tenant shall not be entitled to
reimbursement of the portion of the cost of such performance determined to
be
unreasonable). If it is determined pursuant to such proceeding that Tenant
properly performed an obligation of Landlord hereunder, then Landlord shall
within thirty (30) days following such determination, reimburse Tenant for
the
reasonable cost of such performance as determined pursuant to such action,
plus
interest thereon at the “Interest
Rate”
(as
hereinafter defined) from the date of Tenant’s expenditure until Landlord’s
reimbursement. Should Landlord fail to pay such amount as is owing in accordance
herewith (A) within thirty (30) days of receipt of invoice and/or other
reasonable evidence of the amount of such costs (if Landlord does not institute
an action within such thirty (30) day period to in good faith dispute as
herein
provided), or (B) within thirty (30) days after such determination by such
action, as applicable, Tenant may deduct and offset such amount (including
interest at the Interest Rate from the time such expenditure was made by
Tenant
until paid by Landlord) from Minimum Rent, Percentage Rent, Tenant’s Share of
Common Area Expenses, Taxes and Insurance and other monetary obligations
of
Tenant owing to Landlord hereunder, provided that in no event shall such
deduction or offset exceed twenty-five percent (25%) of Minimum Rent for
the
applicable month, or such greater percentage as is necessary to allow Tenant
full recovery of the amount owing over the remainder of the Term.
(c) Landlord
and its authorized representatives may enter the Premises during usual business
hours, upon not less than twenty-four (24) hours’ prior written notice to Tenant
to (i) inspect the same; and (ii) show the same to prospective mortgagees,
buyers and, in the final six (6) months of the Term, tenants. Landlord may,
upon
reasonable prior notice to Tenant (except that no such prior notice shall
be
required in an emergency situation of imminent personal injury or material
property damage where notice is not reasonably practicable under the
circumstances), enter the Premises to make additions, alterations or repairs
to
the Premises as Landlord is required to make in accordance with this Lease
or in
order to comply with applicable Laws, provided, however, that all such
additions, alterations and/or repairs shall be performed in a manner so as
to
minimize interference with the operation of Tenant’s business from the Premises.
In addition, in event of an emergency, Landlord shall have the right, but
not
the obligation, to undertake immediate repairs of such nature as would normally
be Tenant’s responsibility, and notify Tenant promptly after such repairs have
been undertaken (including, without limitation, notice by telephone, to the
extent reasonably practicable). If Tenant fails to repair any portion of
the
Premises which is Tenant’s responsibility, within thirty (30) days after notice
from Landlord of the necessity for such repair (or such greater period of
time
as is reasonably necessary to complete such repairs in the event such repairs
are not susceptible of completion within thirty (30) days, provided that
following receipt of such notice from Landlord, Tenant promptly commences
such
repairs and diligently prosecutes the same to completion), or in the case
of any
emergency as above stated, Landlord may perform the repairs or maintenance
and
Tenant shall reimburse Landlord for the reasonable cost of such repairs within
thirty (30) days following Tenant’s receipt from Landlord of invoices or other
reasonable evidence of the amount of such costs; provided, however, that
in the
event Tenant in good faith disputes whether Landlord properly performed an
obligation of Tenant hereunder or that the cost of such performance was
unreasonable, Tenant shall have the right to dispute the same by institution
of
a reference proceeding in accordance with the provisions of Section
39
below.
If it is determined pursuant to such proceeding that Landlord did not properly
perform an obligation of Tenant in accordance herewith or that the cost of
such
performance was unreasonable, then Landlord shall not have any right to
reimbursement for the cost of performance as herein provided (or, as to a
determination of unreasonable cost, Landlord shall not be entitled to
reimbursement of the portion of the cost of such performance determined to
be
unreasonable). If it is determined pursuant to such proceeding that Landlord
properly performed an obligation of Tenant hereunder, then Tenant shall within
thirty (30) days following such determination, reimburse Landlord for the
reasonable cost of such performance as determined pursuant to such action,
plus
interest thereon at the Interest Rate from the date of Landlord’s expenditure
until Tenant’s reimbursement.
12
12. INSURANCE.
(a) (i) Landlord
shall maintain at all times during the Term an “All
Risk Policy”
(as
hereinafter defined) insuring against damage to any portion of the Premises,
and
appurtenances thereto. Such insurance shall be in the full amount of replacement
cost (subject only to reasonable deductible amounts and exclusive of footings,
foundation and excavation), without deduction for physical depreciation and
shall provide that the proceeds of any loss shall be payable in the manner
provided for in this Lease. Such policy shall be obtained from an insurer
licensed to do business within the State of California having a policy holder’s
rating of at least A- and a financial rating of not less than VIII in the
most
recently published Best’s Insurance Guide. Landlord shall, within ten (10) days
following receipt of written request therefor from Tenant (but not more often
than annually), provide Tenant with a certification of such insurance coverage,
which certificate shall indicate, among other things, that Tenant is a
certificate holder along with Landlord and that the Premises and all the
improvements and Landlord’s fixtures appurtenant thereto, have been insured to
their full replacement value, without deduction for physical depreciation.
As
used herein, the term “All
Risk Policy”
shall
mean a policy of fire and other property insurance in the form commonly referred
to in the industry as “all risk” with extended endorsement (false arrest, libel,
slander, invasion of privacy, theft, vandalism and malicious mischief coverage)
and including such other coverage as Landlord reasonably deems appropriate
or as
required by Landlord’s lender; provided that although Landlord may elect to
obtain coverage for flood and earthquake in addition to such policy, Tenant
shall not be required to pay any part of the premium allocable to such
coverages.
(ii) From
and
after the Commencement Date during the Term, Tenant shall reimburse Landlord
for
“Tenant’s
Share”
(as
hereinafter defined) of the premium costs of the insurance described in
Section
12(a)(i)
above.
Tenant’s schedule of payments for reimbursement shall be established in the same
manner as described in Section
5
above,
for Tenant’s Share of Taxes. “Tenant’s
Share”
for
purposes of this Section
12(a)(ii)
shall be
a fraction, the numerator of which is the Floor Area within the Premises
and the
denominator of which is the Floor Area of the improvements covered by the
insurance policy which is the subject of the premium.
(iii) From
the
date of delivery of the Premises to Tenant, Tenant will maintain or cause
to be
maintained (which may be, without limitation, by self-insurance), at its
sole
cost, an All Risk Policy insuring against damage to Tenant’s improvements and
any personal property or equipment in the Premises. Such insurance shall
be in
the full amount of replacement cost (subject only to reasonable deductible
amounts), without deduction for physical depreciation.
(b) (i) From
the
date of delivery of the Premises to Tenant, Tenant will maintain at its sole
cost commercial general liability insurance covering the Premises and Tenant’s
use thereof against claims from personal injury, bodily injury, death and
property damage occurring in or about the Premises, such insurance in each
case
to afford protection to a combined single limit of at least Five Million
Dollars
($5,000,000.00) (such insurance extending to any liability of Tenant arising
out
of the indemnities provided for in Section
13
below),
and naming Landlord as an additional insured thereunder. In addition, from
the
date of delivery of the Premises to Tenant and thereafter during the Term,
Tenant shall maintain worker’s compensation insurance as required by applicable
Laws and a commercially reasonable policy of employer’s liability insurance
coverage.
(ii) From
the
date of delivery of the Premises to Tenant, Landlord will maintain, as a
Common
Area Expense, commercial general liability insurance covering the Common
Areas
against claims from personal injury, bodily injury, death and property damage
occurring in or about the Common Areas, such insurance in each case to afford
protection to a combined single limit of at least Five Million Dollars
($5,000,000.00) (such insurance extending to any liability of Landlord arising
out of the indemnities provided for in Section
13
below),
and naming Tenant as an additional insured thereunder.
(iii) The
policies maintained by Landlord and Tenant pursuant to this Section
12(b)
shall
each (1) include a cross-liability endorsement (or equivalent) providing
that
Landlord and Tenant, although insureds, may recover on account of the negligence
of the other, and (2) provide that such insurance is not contributory with
the
coverage which the other party may carry and is primary insurance coverage
and
not excess insurance coverage or overage insurance coverage.
13
(c) (i) The
policies of insurance maintained by Landlord and Tenant pursuant to this
Lease
shall (1) provide that the insurer will give at least thirty (30) days’ written
notice of any cancellation, reduction in coverage, lapse or failure to renew,
to
the insured party or parties thereunder, and (2) be obtained from an insurer
with a policy holder’s rating of at least A- and a financial rating of not less
than VIII in the most recently published Best’s Insurance Guide and is subject
to increase in accordance with customary industry practice for comparable
tenants of comparable premises for a comparable use. Landlord and Tenant
agree
to deliver to the other certificates of insurance evidencing the existence
in
force of the policies of insurance described in this Lease. Each of such
certificates shall provide that such insurance shall not be canceled, reduced
in
coverage, lapse or materially amended unless thirty (30) days’ prior written
notice of such cancellation, reduction in coverage, lapse or amendment is
given
to the party designated on such certificate as the holder thereof.
(ii) Any
insurance required by this Section
12
may be
satisfied by blanket, umbrella and/or excess liability insurance, covering
additional items or locations or insureds, so long as the coverage afforded
(including, without limitation, coverage as to additional insureds) will
not be
reduced or diminished by reason of the use of such blanket, umbrella and/or
excess liability policy of insurance.
(d) Landlord
and Tenant waive any rights each may have against the other on account of
any
loss or damage caused to Landlord or Tenant, as the case may be, their
respective property, the Premises or its contents or to the other portions
of
the Shopping Center, arising from any risk generally covered by all-risk
insurance if such waiver does not invalidate such policies or prohibit recovery
thereunder. The parties each, for their respective insurance, waive any right
of
subrogation that any insurer may have against Landlord or Tenant. Landlord
and
Tenant shall use their respective reasonable good faith efforts to obtain
such
waiver.
13. INDEMNITY.
(a) Tenant
shall indemnify, defend and hold harmless Landlord, and Landlord’s members,
partners, shareholders, officers, directors, employees, agents, successors
and
assigns (collectively, the “Landlord
Indemnified Parties”),
from
and against, any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs (collectively,
“Tenant
Covered Claims”),
which
Tenant Covered Claims shall include, without limitation, reasonable attorneys’
fees and expenses, to the extent arising or resulting from
(i)
the
negligence or wilful misconduct of Tenant or Tenant’s agents, employees and/or
contractors;
and/or
(ii)
Tenant’s
use of the Premises including, without limitation, any occurrence within
the
Premises following delivery of possession of the Premises to Tenant and prior
to
the expiration of the Term or earlier termination of this Lease except to
the
extent resulting from the negligence or wilful misconduct of Landlord or
Landlord’s agents, employees and/or contractors. In case any action or
proceeding is brought against Landlord or any Landlord Indemnified Parties
by
reason of any such Tenant Covered Claims, Tenant, upon notice from Landlord,
agrees to promptly defend the same at Tenant’s sole cost and expense by counsel
approved in writing by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed.
(b) Landlord
shall indemnify, defend and hold harmless Tenant and Tenant’s members, partners,
shareholders, officers, directors, employees, agents, successors and assigns
(collectively, the “Tenant
Indemnified Parties”),
from
and against, any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs (collectively,
“Landlord
Covered Claims”),
which
Landlord Covered Claims shall include, without limitation, reasonable attorneys’
fees and expenses, to the extent arising or resulting from
(i)
the
negligence or wilful misconduct of Landlord or Landlord’s agents, employees
and/or contractors;
and/or
(ii)
any
occurrence within the Common Areas except to the extent resulting from the
negligence or wilful misconduct of Tenant or Tenant’s agents, employees and/or
contractors. In case any action or proceeding is brought against Tenant or
any
Tenant Indemnified Parties by reason of any such Landlord Covered Claims,
Landlord, upon notice from Tenant, agrees to promptly defend the same at
Landlord’s sole cost and expense by counsel approved in writing by Tenant, which
approval shall not be unreasonably withheld, conditioned or
delayed.
(c) The
obligations of the parties pursuant to this Section
13
shall
survive the expiration of the Term or sooner termination of this
Lease.
14. DAMAGE
AND DESTRUCTION
(a) If
the
Premises is damaged or destroyed by fire or other casualty required to be
covered by the All Risk Policy referred to in Section
12(a)(i)
or to
the extent of ten percent (10%) or less of the then Premises replacement
cost by
a casualty not required to be covered by the All Risk Policy, then, unless
either party terminates this Lease pursuant to this Section
14,
Landlord shall promptly commence to repair and/or reconstruct the Premises
to
substantially its prior condition (the parties hereby agreeing that Landlord
shall not be obligated for the repair and/or restoration of any items of
Tenant’s Work or alterations made by Tenant not covered by the insurance
maintained by Landlord pursuant to this Lease).
(b) In
the
event the Premises is damaged or destroyed to the extent of more than ten
percent (10%) of their then replacement cost by a casualty not required to
be
covered by the All Risk Policy, then Landlord shall elect, by written notice
to
Tenant delivered within sixty (60) days following the occurrence of such
casualty damage either (i) to repair and reconstruct the Premises, in which
event, Landlord shall promptly commence and diligently perform such work
in
accordance with Section
14(a)
above,
or (ii) to terminate this Lease, provided that Tenant shall have the right
to
nullify any such election to terminate by Landlord by agreeing in written
notice
to Landlord delivered within ten (10) business days following Tenant’s receipt
of such termination notice, to pay for the costs of repair and reconstruction
of
the Premises to the extent in excess of ten percent (10%) of the then Premises
replacement cost, in which event Tenant shall be responsible for such excess
costs and shall pay such excess costs pursuant to a construction disbursement
procedure reasonably acceptable to the parties and Landlord shall promptly
commence and diligently perform such work in accordance with Section
14(a)
above.
14
(c) Following
any casualty to the Premises and/or the Shopping Center which materially
adversely affects the operation of Tenant’s business from the Premises or access
thereto or parking therefor, Landlord shall within sixty (60) days following
such casualty, deliver written notice to Tenant reasonably estimating in
good
faith the time necessary to complete the repair and/or restoration necessitated
by such casualty. In the event the time estimated for completion of such
repair
exceeds three hundred (300) days following the occurrence of such casualty,
then
Tenant shall have the right to terminate this Lease by written notice delivered
to Landlord within fifteen (15) days following Tenant’s receipt of such estimate
notice. In addition, in the event that Tenant does not terminate this Lease
pursuant to the previous sentence and such repair in fact is not completed
within three hundred (300) days following the occurrence of the casualty
(or
such longer period as may have been estimated by Landlord in such notice),
Tenant shall have the right to terminate this Lease upon thirty (30) days
prior
written notice to Landlord, provided that if such repair is completed within
such thirty (30) day period, such termination shall be nullified and this
Lease
shall continue in full force and effect. In addition to the foregoing, in
the
event of any casualty to the Premises occurring during the final eighteen
(18)
months of the Term, requiring in excess of ninety (90) days to repair, either
party may terminate this Lease by written notice to the other within thirty
(30)
days of the occurrence of the casualty, except that if Landlord so elects
to
terminate this Lease and Tenant has an available Option to extend the Term
remaining, then Tenant may nullify such election to terminate by exercising
such
Option to extend the Term within thirty (30) days following receipt of such
termination notice from Landlord, in which event such casualty shall be treated
in the manner of casualties occurring other than during the final eighteen
(18)
months of the Term. Unless this Lease is so terminated in accordance with
this
Section
14(c),
this
Lease shall continue in full force, and Landlord shall perform its repair
obligation under the other provisions of this Section
14.
Upon
any termination of this Lease under this Article
14,
the
Minimum Rent, Percentage Rent, and Tenant’s Share of Common Area Expenses, Taxes
and Insurance and any other amounts owing from Tenant to Landlord pursuant
to
this Lease shall be adjusted as of the date of such termination and the parties
shall be released without further obligation to the other coincident with
the
surrender of possession of the Premises to Landlord, except for items which
have
accrued and are unpaid.
(d) If
neither party terminates this Lease pursuant to foregoing provisions of this
Section
14,
and if
the operation of Tenant’s business from the Premises or parking therefor or
access thereto is interfered with as a result of any damage or destruction,
Tenant’s obligation for the payment of Minimum Rent, Percentage Rent, Tenant’s
Share of Common Area Expenses, Taxes and Insurance and any other amounts
owing
from Tenant to Landlord pursuant to this Lease during the period the Premises
are so rendered unfit shall be equitably abated from the date of the casualty
based upon the extent of the interference resulting from such casualty (or
shall
be fully abated for such period if the operation of Tenant’s business from the
remaining portion of the Premises is not reasonably practicable) and Tenant
shall resume full payment upon the date which is sixty (60) days following
completion of the restoration work by Landlord (or such earlier date upon
which
Tenant reopens for business to the general public from the
Premises).
(e) The
parties waive such rights of termination as may be granted to them in the
event
of casualty damage to the Premises by the laws of the State of California,
it
being their agreement that the rights of termination set forth in this Lease
shall be exclusive.
15. CONDEMNATION.
(a) If
during
the Term, all or any portion of the Premises is taken by right of eminent
domain
or condemnation by a competent governmental authority or by conveyance in
lieu
thereof (collectively, any “Taking”),
or if
such a portion of the Shopping Center is so Taken as Tenant reasonably
determines shall have a material adverse effect upon the operation of Tenant’s
business from the Premises (including, without limitation, material impairment
of parking therefor or access thereto), Tenant may terminate this Lease upon
written notice to the Landlord within thirty (30) days following the date
of
such Taking. In the event Tenant does not so terminate this Lease, Landlord
shall promptly and diligently restore the Premises, Common Areas and/or other
portions of the Shopping Center as are so Taken, as the case may be, to as
near
their condition as existed prior to such Taking as is reasonably possible.
In
the event of a Taking which does not result in the termination of this Lease,
Tenant’s obligations for Minimum Rent, Percentage Rent, Tenant’s Share of Common
Area Expenses, Taxes and Insurance and any other amounts owing from Tenant
to
Landlord under this Lease shall be equitably abated following such Taking
based
upon the extent of the interference with the operation of Tenant’s business from
the Premises and Tenant shall resume full payment upon the date which is
sixty
(60) days following the completion of the restoration work by Landlord (or
such
earlier date upon which Tenant reopens for business to the general public
from
the Premises). In the event of a temporary Taking not extending beyond the
Term,
but which adversely affects Tenant’s operation from its Premises, Tenant shall
have the right to elect either to terminate this Lease in accordance herewith
or
to not terminate this Lease and receive all compensation awarded by the
condemning authority with respect to such temporary Taking of the Premises
relating to the use thereof during the Term of this Lease but not in excess
of
the Rent due hereunder and not beyond the Term of this Lease.
(b) Landlord
shall be entitled to that portion of the award payable in connection with
any
such Taking attributable to the diminution in value of Landlord’s reversionary
interest in the Premises and Tenant shall be entitled to that portion of
the
award payable in connection with such Taking attributable to diminution in
value
of Tenant’s leasehold, damage to Tenant’s business and loss of goodwill and
Tenant’s relocation costs.
(c) The
parties waive such rights of termination as may be granted to them in the
event
of condemnation of the Premises by the laws of the State of California, it
being
their agreement that the rights of termination set forth in this Lease shall
be
exclusive.
15
16. ASSIGNMENT
AND SUBLETTING.
(a) Except
as
otherwise specifically provided herein, Tenant shall not assign Tenant’s
interest in this Lease or sublet any portion of the Premises (collectively,
“Transfer”)
without obtaining in each instance the prior consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. Landlord’s consent
to any Transfer shall not constitute a waiver of the necessity for such consent
to any subsequent Transfer. Notwithstanding a Permitted Transfer or other
Transfer consented to by Landlord, Tenant shall remain liable for the full
performance of every obligation under this Lease to be performed by Tenant.
Any
permitted assignee or subtenant pursuant to this Section
16
may
change the trade name under which the business operating from the Premises
is
operated and/or the use of the Premises in accordance with the provisions
of
Section
7(b)
above,
including, without limitation, the requirement that Landlord’s consent thereto
is first obtained, which consent shall not be unreasonably withheld, conditioned
or delayed. The acceptance by Landlord of rent or any other sum due hereunder
from any person or entity other than Tenant shall not be deemed to be a waiver
of any provision contained herein or a consent to any assignment or sublease.
Tenant shall reimburse Landlord for its costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) incurred in connection with
any proposed assignment or subletting (whether or not Landlord consent is
granted), other than a Permitted Transfer, within thirty (30) days following
receipt of request for reimbursement accompanied by reasonable supporting
documentation with respect thereto, but not to exceed a maximum reimbursement
of
One Thousand Dollars ($1,000.00).
(b) Notwithstanding
anything to the contrary contained herein, in the event of any proposed Transfer
(other than a Permitted Transfer) which is an assignment of this Lease or
a
sublet of all or substantially all of the Premises for all or substantially
all
of the remaining Term of this Lease, Landlord shall have the right, exercisable
by written notice to Tenant delivered within fifteen (15) days following
receipt
of Tenant’s request for Landlord’s consent to the proposed Transfer, to
terminate this Lease effective as of the proposed Transfer effective date,
subject to Landlord’s payment to Tenant on or before such termination effective
date an amount equal to the unamortized cost (as of the termination effective
date, based upon monthly straight line amortization over the Initial Term
of
this Lease) of Tenant’s Work, as such cost shall be reasonably evidenced by
documentation provided by Tenant to Landlord. However, Tenant shall have
the
right to nullify any such election to terminate by Landlord by agreeing,
in
written notice delivered to Landlord within fifteen (15) days following receipt
of such termination notice from Landlord, to withdraw Tenant’s request for
consent to such proposed Transfer, in which event this Lease shall continue
in
full force and effect as if Tenant had never submitted such request for
Landlord’s consent to such proposed Transfer.
(c) In
the
event of any Transfer (other than a Permitted Transfer), Tenant shall pay
to
Landlord fifty percent (50%) of any “Excess
Consideration”
received by Tenant from such Transfer, as and when received. As used herein,
“Excess
Consideration”
means
the total rent and other consideration of any kind or nature payable by the
Transferee (other than for sale or use of trade fixtures and other personal
property items) less the total amount of rent payable by the Tenant under
this
Lease from and after the effective date of the Transfer after Tenant’s recapture
from the rent payable by such Transferee of Tenant’s actual out-of-pocket costs
reasonably incurred in connection with the applicable Transfer, including,
without limitation, reasonable attorneys’ fees, reasonable brokerage
commissions, costs of improvements made for the benefit of the Transferee,
allowances granted to the Transferee or other monetary concessions granted
to
any such Transferee.
(d) Notwithstanding
anything to the contrary contained in this Section
16
above,
Tenant may, without Landlord’s consent (but upon reasonable prior notice to
Landlord) at any time (i) assign this Lease or sublease the whole or any
part of
the Premises to any entity controlled by, controlling or under common control
with Tenant or to any entity resulting from the consolidation or merger of
Tenant into or with such other entity or the acquisition of substantially
all of
the assets of Tenant by such entity, or (ii) license, grant a concession
of or
otherwise permit the use of one or more portions of the Premises which are
not
separately demised and do not exceed an aggregate of twenty-five percent
(25%)
of the Floor Area of the Premises to licensees, concessionaires or users
which
are not inconsistent with Tenant’s permitted use of the Premises (including,
without limitation, any licensee selling ski and/or other sports-oriented
vacation tours or packages). Any such assignment or subletting, licensing,
or
granting of permission for use pursuant to the immediately preceding sentence
is
referred to in this Lease as a “Permitted
Transfer”
and
any
assignee, subtenant, licensee or other user under a Permitted Transfer is
referred to in this Lease as a “Permitted
Transferee”.
In
addition, the sale or transfer of all or any part of Tenant’s stock or other
equity interests shall not constitute an assignment or other transfer requiring
Landlord’s consent.
(e) In
the
event of any transfer of Landlord’s interest in the Premises, following the
assumption of Landlord’s remaining obligations under this Lease by such
transferee, Landlord shall be automatically relieved of any and all obligations
and liabilities accruing with respect to the period from and after the date
of
such transfer and assumption.
17. SUBORDINATION
AND ATTORNMENT.
(a) Upon
notice by Landlord, Tenant shall subordinate its rights under this Lease
to any
lease(s) wherein Landlord is the lessee and to the lien of any mortgage(s)
or
deed(s) of trust (collectively, “Instrument”),
regardless of whether such Instrument now exists or is hereafter created,
to all
advances thereunder, to any interest thereon, and to all modifications,
consolidations, renewals, replacements and extensions thereof, provided the
lessors, mortgagees or beneficiaries agree to provide Tenant with an agreement
of non-disturbance in a commercially reasonable form reasonably acceptable
to
Tenant and Landlord, agreeing to recognize this Lease and Tenant’s rights
hereunder in the event of termination or foreclosure under the Instrument
so
long as Tenant is not in default under this Lease beyond the expiration of
any
applicable notice and cure periods. Tenant agrees to execute any agreement
evidencing such subordination and non-disturbance in the form attached hereto
as
Exhibit
G
and
incorporated herein by this reference or such other commercially reasonable
form
as is reasonably acceptable to Tenant, at Landlord’s request. Any such lessor,
mortgagee or beneficiary may elect to have this Lease prior to its instrument,
and in the event of such election and upon notification by such lessee,
mortgagee or beneficiary to Tenant, this Lease shall be deemed prior to said
Instrument, whether this Lease is dated prior or subsequent to said Instrument.
Notwithstanding anything to the contrary contained in this Lease, it shall
be a
condition precedent to the performance of each of Tenant’s obligations under
this Lease (including, without limitation, Tenant’s obligation for the payment
of Minimum Rent, Percentage Rent and Tenant’s Share of Common Area Expenses,
Taxes and Insurance), that Tenant obtain from each lessor, mortgagee or
beneficiary under an Instrument presently encumbering the Shopping Center,
an
agreement of non-disturbance in the form attached hereto as Exhibit
G
or in
other commercially reasonable form reasonably acceptable to Tenant and
Landlord.
16
(b) If
Landlord’s interest in the Premises is transferred (except in a sale-leaseback
financing transaction), or if any proceedings are brought for the foreclosure
of, or in the event of the exercise of the power of sale under, any Instrument,
or if any lease in a sale-leaseback transaction wherein Landlord is the lessee
is terminated, Tenant shall attorn to and recognize such purchaser, assignee,
mortgagee or beneficiary as Landlord under this Lease, provided such purchaser,
assignee, mortgagee or beneficiary has executed or agrees to execute an
agreement of subordination, non-disturbance and attornment in the form attached
hereto as Exhibit
G
or in
other commercially reasonable form reasonably acceptable to Tenant and Landlord,
recognizing this Lease and Tenant’s rights hereunder.
18. TENANT
DEFAULTS.
(a) The
occurrence of either of the following shall constitute a default by Tenant
pursuant to this Lease: (i) Tenant’s failure to pay rent when due under this
Lease, where such failure continues for five (5) days after notice that such
payment is due; and (ii) Tenant’s failure to observe or perform any covenant,
term or condition of this Lease (other than the payment of rent) where such
failure continues for thirty (30) days after notice thereof from Landlord
to
Tenant; provided that if such failure cannot reasonably be cured within such
thirty (30) day period, Tenant shall not be in default hereunder so long
as
Tenant commences such cure within such thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(b) In
the
event of any default by Tenant pursuant to Section
18(a)
above,
in addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all
rights
of Tenant hereunder by giving written notice of such intention to terminate.
In
the event that Landlord shall elect so to terminate this Lease, then Landlord
may recover from Tenant:
(i) The
worth
at the time of award of any unpaid rent which had been earned at the time
of
such termination; plus
(ii) 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 Tenant proves could have been reasonably avoided; plus
(iii) 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 have been reasonably avoided; plus
(iv) 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
term
“rent”
as
used
in Section
18(b)
shall be
deemed to mean Minimum Rent only. As used in Sections
18(b)(i)
and
(ii)
above,
the “worth at the time of award” is computed by allowing interest at the
Interest Rate. As used in Section
18(b)(iii)
above,
the “worth at the time of award” is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award
plus one percent (1%).
(c) In
the
event of any default by Tenant pursuant to Section
18(a)
above
and Tenant’s abandonment of the Premises, (i) Landlord shall also have the right
to reenter the Premises and remove all persons and property therefrom by
summary
proceedings or otherwise; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant or disposed
of in a reasonable manner by Landlord, and/or (ii) Landlord shall have the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee’s breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject only to reasonable
limitations).
(d) In
the
event Landlord shall elect to reenter as provided in Section
18(c)
above,
or shall take possession of the Premises pursuant to legal proceedings or
pursuant to any notice provided by law, and if Landlord does not elect to
terminate this Lease, then Landlord may from time to time, without terminating
this Lease, either recover all rental as it becomes due or relet the Premises
or
any part thereof for such term or terms and at such rental or rentals and
upon
such other terms and conditions as Landlord in its reasonable discretion
may
deem advisable. In the event that Landlord shall elect to relet, then rentals
received by Landlord from such reletting shall be applied to the payment
of any
indebtedness owed by Tenant to Landlord and the residue, if any, shall be
held
by Landlord and applied in payment of future rent as the same may become
due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then
Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated
and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained,
any
costs and expenses reasonably incurred by Landlord in such reletting. No
reentry
or taking possession of the Premises by Landlord pursuant to this Section
18,
shall
be construed as an election to terminate this Lease unless a written notice
of
such intention be given by Landlord to Tenant or unless the termination thereof
be decreed by a court of competent jurisdiction. Landlord may at any time
after
such reletting elect to terminate this Lease for any such default by
Tenant.
17
(e) All
rights, options and remedies of Landlord contained in this Lease shall be
construed and held to be cumulative, and no one of them shall be exclusive
of
the other, and Landlord shall have the right to pursue any one or all of
such
remedies or any other remedy or relief which may be provided by law, whether
or
not stated in this Lease. Landlord’s failure to insist upon strict performance
of any term, covenant or condition of this Lease or to exercise any right
or
remedy it has shall not be deemed a waiver or relinquishment for the future
of
such performance, right or remedy unless in writing signed by Landlord. No
waiver by Landlord shall constitute a waiver of any subsequent
breach.
(f) Landlord
waives such liens, if any, to which it may have a right with respect to the
merchandise, furniture, trade fixtures and other personal property of Tenant
located on or about the Premises and shall from time to time execute such
documents as Tenant may reasonably request to acknowledge such
waiver.
19. LANDLORD
DEFAULTS.
(a) Except
as
otherwise expressly provided in this Lease, Landlord shall be in default
under
this Lease if Landlord fails to perform any of its obligations hereunder
and
said failure continues for a period of thirty (30) days after Tenant gives
Landlord notice thereof (unless such failure cannot reasonably be cured within
thirty (30) days) and Landlord shall have commenced to cure within said thirty
(30) days and continues diligently to pursue the curing of the same). Tenant
shall give to any holder of indebtedness secured by a first lien upon the
Premises whose address has previously been provided to Tenant, a copy of
any
notice of default served upon the Landlord. Tenant further agrees that any
such
holder of indebtedness shall have the right to cure any Landlord default
within
the time period provided for such cure by Landlord pursuant to this Lease.
If
such default is not cured within the specified time period, Tenant may exercise
any right or remedy available to it at law or in equity or under this Lease.
Tenant shall have the right to cure any such default upon written notice
to
Landlord (but no such additional notice shall be required in an emergency
situation) and Landlord shall reimburse Tenant for the reasonable cost thereof
within thirty (30) days following receipt from Tenant of invoices or other
reasonable evidence of the amount of such costs; provided, however, in the
event
Landlord in good faith disputes whether Tenant properly performed an obligation
of Landlord, Landlord may dispute the same by institution of a reference
proceeding pursuant to Section
39
below
within thirty (30) days following Tenant’s request for reimbursement. If it is
determined pursuant to such proceeding that Tenant’s cure was proper, Landlord
shall, within ten (10) days following such determination, reimburse Tenant
for
the cost of such cure (plus interest at the Interest Rate from the date of
Tenant’s expenditure until reimbursement). Should Landlord fail to pay Tenant
any amount due Tenant (a) within thirty (30) days following receipt of Tenant’s
invoices or other evidence (if Landlord does not institute a reference
proceeding disputing such cure), or (b) within ten (10) days after determination
by reference, Tenant may, notwithstanding anything to the contrary contained
in
this Lease, deduct and offset such amount (including, without limitation,
interest at the Interest Rate from the time of Tenant’s expenditure until
repaid) from any monetary obligation of Tenant owing Landlord hereunder,
provided that in no event shall such deduction or offset exceed twenty-five
percent (25%) of Minimum Rent for the applicable month, or such greater
percentage as is necessary to allow Tenant full recovery of the amount owing
over the remainder of the Term. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall have the right to offset any unpaid
reference or court award from any monetary obligation due under this Lease.
Any
amount due from Landlord to Tenant shall bear interest at the Interest Rate
from
the date due until paid. All rights, options and remedies of Tenant contained
in
this Lease shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and Tenant shall have the right to pursue
any
one or all of such remedies or any other remedy or relief which may be provided
by law, whether or not stated in this Lease. Tenant’s failure to insist upon
strict performance of any term, covenant or condition of this Lease or to
exercise any right or remedy it has shall not be deemed a waiver or
relinquishment for the future of such performance, right or remedy unless
in
writing signed by Tenant. No waiver by Tenant shall constitute a waiver of
any
subsequent breach.
(b) In
the
event that Landlord shall be liable to Tenant for damages sustained by Tenant
as
a result of Landlord’s breach of this Lease, it is expressly understood and
agreed that any money judgment resulting from any default or other claim
arising
under this Lease shall be satisfied only out of Landlord’s interest in the
Shopping Center, the proceeds thereof and therefrom and the rent payable
under
this Lease, and no other real, personal or mixed property of Landlord, wherever
situated, shall be subject to levy on any such judgment obtained against
Landlord and if such interest is insufficient for the payment of such judgment,
Tenant will not institute any further action, suit, claim or demand, in law
or
in equity, against Landlord for or on account of such deficiency. Tenant
hereby
waives, to the extent waivable under law, any right to satisfy such money
judgment against Landlord except from Landlord’s interest in the Shopping
Center, the proceeds thereof and therefrom and the rent payable under this
Lease.
20. TENANT’S
PROPERTY; SURRENDER; HOLDING OVER.
(a) Any
furniture, trade fixtures and other equipment and personal property of Tenant
not permanently affixed to the Premises shall be Tenant’s property. Tenant may
remove its personal property which it has stored or placed in the Premises.
Tenant, at its sole expense, shall immediately repair any damage to the Premises
caused by installation or removal of any personal property unless such damage
is
caused by the negligence or wilful misconduct of Landlord and/or any of
Landlord’s employees, agents, representatives and/or contractors. Any personal
property of Tenant not removed from the Premises within thirty (30) days
following the expiration of the Term or any earlier termination of this Lease
shall become Landlord’s property.
18
(b) Tenant
shall surrender possession of the Premises upon the expiration of the Term
or
earlier termination of this Lease, broom clean, free of debris, in good order
and state of repair (excepting Landlord’s obligations under this Lease and
ordinary wear and tear), and deliver the keys as Landlord designates. In
the
event Tenant holds over in the Premises following the expiration of the Term
or
earlier termination of this Lease, Tenant’s occupancy shall be considered a
tenancy from month to month (terminable upon thirty (30) days’ notice by either
party) on all terms and conditions of this Lease, except that Tenant’s
obligation for monthly Minimum Rent during such holdover shall equal (i)
during
the initial month of such holding over, one hundred twenty-five percent (125%)
of the monthly Minimum Rent in effect immediately preceding the expiration
of
the Term or earlier termination of the Lease, and (ii) from and after the
expiration of the initial month of such holding over, one hundred fifty percent
(150%) of the monthly Minimum Rent in effect immediately preceding the
expiration of the Term or earlier termination of the Lease. If Tenant fails
to
surrender the Premises upon the expiration of the Term or earlier termination
of
this Lease despite demand to do so by Landlord notifying Tenant of a successor
tenant, Tenant shall indemnify, defend and hold harmless Landlord from and
against any and all claims, demands, losses, liabilities, costs and/or expenses
(including, without limitation, reasonable attorneys’ fees and expenses) arising
as a result thereof, including, without limitation, any claim made by any
succeeding tenant founded on or resulting from such failure to
surrender.
21. AGREEMENTS.
The
parties hereby acknowledge that this Lease shall be subordinate to existing
matters of record (the “Agreements”),
subject to Section
7(a)
above.
This Lease shall not be subordinate to any new Agreement or any amendment
or
supplement to the existing Agreements, which is not first approved by Tenant
in
writing, which approval shall not be unreasonably withheld, conditioned or
delayed.
22. QUIET
ENJOYMENT.
Upon
payment by Tenant of the rent and the observance and performance of all of
the
agreements, covenants, terms and conditions on Tenant’s part to be observed and
performed, Tenant shall quietly enjoy the Premises for the Term without
hindrance or interruption by Landlord or any other person or persons lawfully
or
equitably claiming by, through or under Landlord, subject to the terms of
this
Lease.
23. ESTOPPEL
STATEMENTS.
Within
twenty (20) days after each written request from either party in connection
with
a sale, financing, assignment or other transfer of such party’s interest in this
Lease, the non-requesting party shall execute and deliver to the requesting
party or its designee (and the requesting party and each designee may rely
thereon) an estoppel certificate certifying that this Lease is unmodified
(except for any amendments specifically stated) and in full force and effect,
setting forth the date through which Minimum Rent has been paid, and
acknowledging that there are not, to such party’s actual knowledge, any uncured
defaults on the part of the other party hereunder or specifying such defaults
if
any are claimed, and certifying, to such party’s actual knowledge, as to such
other factual matters as may be reasonably requested.
24. FORCE
MAJEURE.
If
either party is delayed or hindered in or prevented from the performance
of any
act required hereunder because of strikes, lockouts, inability to procure
labor
or materials, failure of power, restrictive Laws, riots, insurrection, war,
fire
or other casualty or other reason of a similar or dissimilar nature beyond
the
reasonable control of the party delayed, financial inability excepted (any
“Force
Majeure Event”),
performance of such act shall be excused for the period of the Force Majeure
Event, and the period for the performance of such act shall be extended for
an
equivalent period. Delays or failures to perform resulting from lack of funds
shall not be Force Majeure Events.
25. SIGNS.
Tenant
shall be entitled to the maximum lawful Building signage (including, without
limitation, the right to identification on at least two (2) sides of the
Building), and monument/pylon signage within the Shopping Center in accordance
with Exhibit
D
attached
hereto and incorporated herein by this reference.
26. REAL
ESTATE BROKERS.
Landlord and Tenant agree and acknowledge that The Clover Company has acted
as
broker in connection with this Lease (the “Broker”)
and
Landlord agrees that Landlord shall pay the commission due such Broker in
connection herewith and indemnify, defend, and hold Tenant harmless from
any
commission claims of such Broker. Other than the Broker, Tenant warrants
that it
has not dealt with a broker regarding this Lease, and shall indemnify, defend
and save Landlord harmless from all claims, actions, damages, expenses and
liability whatsoever, including, without limitation, reasonable attorneys’ fees
and expenses, arising from any claim for commission or finder’s fee regarding
this Lease. Other than the Broker, Landlord warrants that it has not dealt
with
a broker regarding this Lease, and shall indemnify, defend and save Tenant
harmless from all claims, actions, damages, expenses and liability whatsoever,
including, without limitation, reasonable attorneys’ fees and expenses, arising
from any claim for commission or finder’s fee regarding this Lease.
27. MEMORANDUM
OF LEASE.
This
Lease shall not be recorded. However, a memorandum hereof in the form attached
hereto as Exhibit F
shall be
executed, in recordable form, by both parties concurrently herewith and recorded
by Landlord, at Landlord’s expense, with the official charged with recordation
duties for the county in which the Shopping Center is located. Tenant shall
execute a termination of such memorandum of this Lease in form and substance
reasonably acceptable to Landlord, which termination instrument Landlord
may
record upon the expiration of the Term or earlier termination of this
Lease.
28. NOTICES.
Any
notice, demand, request, approval, consent or other instrument which is,
or is
required to be, given under this Lease shall be in writing and shall be deemed
to have been given (a) two (2) days after when mailed by United States
registered or certified mail return receipt requested, postage prepaid, or
(b)
when received, if sent by overnight courier or delivery service, addressed
to
Landlord or Tenant at the respective addresses set forth in the Basic Lease
Provisions or such other address or addresses as either party may designate
by
notice to the other in accordance with this Section
28.
29. ATTORNEYS’
FEES.
In the
event either party shall institute any action or proceeding against the other
party relating to this Lease, the unsuccessful party in such action or
proceeding shall reimburse the successful party for its disbursements incurred
in connection therewith and for its reasonable attorneys’ fees as fixed by the
court. In addition to the foregoing award of attorneys’ fees to the successful
party, the successful party in any lawsuit on this Lease shall be entitled
to
its attorneys’ fees incurred in any post-judgment proceedings to collect or
enforce the judgment. This provision is separate and several and shall survive
the merger of this Lease into any judgment on this Lease.
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30. WAIVER.
No
waiver of any breach of any of the terms, covenants, agreements, restrictions
or
conditions of this Lease shall be valid unless in writing and signed by the
party to be charged with such waiver, nor shall any waiver be construed as
a
waiver of any succeeding breach of any of the same or other covenants,
agreements, restrictions, or conditions hereof.
31. LEASE
BINDING UPON SUCCESSORS.
Subject
to the provisions of Section
16
above,
each of the terms, covenants and conditions of this Lease shall extend to
and be
binding upon and shall inure to the benefit of not only Landlord and Tenant,
but
each of their respective heirs, administrators, legal representatives,
successors and assigns. Whenever in this Lease reference is made to either
Landlord or Tenant, the reference shall be deemed to include, wherever
applicable, the heirs, legal representatives and administrators, successors
and
assigns, as if such parties were named in every case.
32. INTERPRETATION.
Captions of the sections or parts of this Lease are for convenience only
and
shall not be considered or referred to in resolving questions of interpretation
or construction. The words “Landlord”
and
“Tenant”
when
used herein shall be applicable to one or more persons as the case may be,
and
the singular shall include the plural, and the neuter shall include the
masculine and feminine, and if there be more than one, the obligations hereof
shall be joint and several. The word “persons”
wherever used shall include individuals, firms, associations and corporations.
The language in all parts of this Lease shall in all cases be construed as
a
whole and in accordance with its fair meaning and shall not be construed
strictly for or against Landlord or Tenant.
33. INTEREST.
Any
amount owing from one party to the other under this Lease which is not paid
within ten (10) days of the date when due shall thereafter bear interest
at the
Interest Rate. As used herein, the term “Interest
Rate”
means
a
per annum rate of interest equal to the lesser of (1) two percent (2%) per
annum
over the then most recent annual prime or reference rate of interest announced
by Bank of America N.A. (or in the event Bank of America N.A. ceases to publish
a prime or reference rate, the prime rate of a comparable national banking
institution reasonably agreed upon by the parties), or (2) the maximum rate
permitted by applicable law.
34. INVALIDITY.
If any
provision of this Lease shall prove to be invalid, void or illegal, it shall
in
no way affect, impair or invalidate any other provision hereof.
35. TIME
OF
THE ESSENCE.
Time is
expressly declared to be “of the essence” in this Lease and in each and every
provision hereof wherein time for performance is a factor.
36. GOVERNING
LAW.
This
Lease shall be governed by, and construed in accordance with, the laws of
the
State of California.
37. APPROVALS.
Except
to the extent specifically otherwise provided in this Lease, whenever the
approval or consent of either of the parties hereto is required under this
Lease, such approval or consent shall not be unreasonably withheld, conditioned
or delayed.
38. COUNTERPARTS.
This
Lease may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which, taken together, shall constitute one
and
the same instrument.
39. EXPEDITED
DISPUTE RESOLUTION.
At the
election of either Landlord or Tenant, any dispute with respect to the subject
matter of this Lease (except an unlawful detainer action by Landlord) shall
be
resolved by a referee pursuant to the provisions of California Code of Civil
Procedure Section 638 et seq.,
for a
determination to be made which shall be binding upon the parties as if tried
before a court or jury. The parties agree specifically as to the
following:
(a) Within
five (5) business days after service of a demand by a party hereto, the parties
shall agree upon a single referee who shall then try all issues, whether
of fact
or law, and then report a finding or judgment thereon. If the parties are
unable
to agree upon a referee either party may seek to have one appointed, pursuant
to
California Code of Civil Procedure Section 640, by the presiding judge of
the
County Superior Court where the Shopping Center is located.
(b) The
compensation of the referee shall be such charge as is customarily charged
by
the referee for like services. The cost of such proceedings shall initially
be
borne equally by the parties. However, the prevailing party in such proceedings
shall be entitled, in addition to all other costs, to recover its contribution
for the cost of the reference as an item of damages and/or recoverable
costs.
(c) If
a
reporter is requested by either party, then a reporter shall be present at
all
proceedings, and the fees of such reporter shall be borne by the party
requesting such reporter. Such fees shall be an item of recoverable costs.
Only
a party shall be authorized to request a reporter.
(d) The
referee shall apply all California Rules of Procedure and Evidence and shall
apply the substantive law of California in deciding the issues to be heard.
Notice of any motions before the referee shall be given, and all matters
shall
be set at the convenience of the referee.
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(e) The
referee’s decision under California Code of Civil Procedure Section 644, shall
stand as the judgment of the court, subject to appellate review as provided
by
the laws of the State of California.
(f) The
parties agree that they shall in good faith endeavor to cause any such dispute
to be decided within four (4) months. The date of hearing for any proceeding
shall be determined by agreement of the parties and the referee, or if the
parties cannot agree, then by the referee.
(g) The
referee shall have the power to award damages and all other relief.
40. TERMINATION
OF EXISTING LEASE.
THE
PARTIES ACKNOWLEDGE THAT LANDLORD CURRENTLY LEASES TO TENANT CERTAIN EXISTING
PREMISES OCCUPIED BY TENANT LOCATED ACROSS FOOTHILL BOULEVARD FROM THE SHOPPING
CENTER (THE “EXISTING PREMISES”) PURSUANT TO AN EXISTING LEASE (THE “EXISTING
LEASE”). TENANT’S EXISTING LEASE FOR THE EXISTING PREMISES SHALL TERMINATE
THIRTY (30) DAYS FOLLOWING THE OPENING OF THE PREMISES FOR BUSINESS UNDER
THIS
LEASE. TENANT SHALL NOT BE LIABLE FOR RENT OR OTHER CHARGES UNDER THE EXISTING
LEASE DURING SUCH THIRTY (30) DAY PERIOD FOLLOWING THE OPENING OF THE PREMISES
FOR BUSINESS UNDER THIS LEASE. TENANT SHALL SURRENDER POSSESSION OF THE EXISTING
PREMISES IN THE CONDITION REQUIRED FOR SURRENDER UNDER THE EXISTING LEASE
ON OR
BEFORE SUCH EFFECTIVE DATE OF THE TERMINATION OF THE EXISTING LEASE. HOWEVER,
IF
TENANT FAILS TO SO SURRENDER POSSESSION OF THE EXISTING PREMISES BY THE
TERMINATION EFFECTIVE DATE OF THE EXISTING LEASE, THEN TENANT’S CONTINUED
OCCUPANCY OF THE EXISTING PREMISES SHALL THEREAFTER CONSTITUTE A HOLDING
OVER
UNDER THE EXISTING LEASE.
41. RENAMING
OF SPORT CHALET DRIVE. Landlord
agrees to reasonably cooperate with Tenant in attempting to cause the City
Council of La Cañada and any other applicable governmental authorities whose
consent therefor is required, to rename the street which is so identified
on
Exhibit A as “Sport Chalet Drive”, provided that Tenant shall be solely
responsible for all costs and expenses of attempting to cause such renaming
and
in no event shall this Lease be contingent upon such renaming.
42. WAIVER
OF
CONSEQUENTIAL DAMAGES.
Notwithstanding anything to the contrary contained in this Lease, in no event
shall either party be liable to the other party for any consequential damages
in
connection with this Lease or any breach of this Lease, provided that amounts
which Landlord is entitled to collect as damages from Tenant under California
Civil Code Section 1951.2 in the event of a default by Tenant not cured within
the applicable period for cure under Section
18
above
shall not be deemed to constitute consequential damages for purposes
hereof..
43. ENTIRE
AGREEMENT.
This
Lease contains the entire agreement of the parties hereto with respect to
the
matters covered thereby, and no other agreement, statement or promise made
by
any party hereto, or to any employee, officer or agent of any party hereto,
which is not contained herein, shall be binding or valid. All prior or
contemporaneous agreements or writings between or among the parties are
specifically merged into this Lease. This Lease may not be amended, modified
or
supplemented except by written instrument executed by Landlord and
Tenant.
IN
WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first written above.
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LANDLORD:
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TENANT:
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LA
CAÑADA PROPERTIES, INC.,
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SPORT
CHALET, INC.,
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a
California corporation
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a
Delaware corporation
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By:
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/s/
Xxxx Xxxxxx
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By:
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/s/
Xxxxxx Xxxxxxx
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Print
Name:
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Print
Name:
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Its:
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Its:
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|||
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By:
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Print
Name:
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Its:
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21
