LEASE AT
U.S. HIGHWAY 190 AND FORT HOOD ST.
KILLEEN, TEXAS
HOLLYWOOD VIDEO PARTNERS, LLC
LANDLORD
and
HOLLYWOOD ENTERTAINMENT CORPORATION,
TENANT
TABLE OF CONTENTS
1 Lease Agreement, Premises and Common Area . . . . . . . . . . . . .1
2. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3 . Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
4. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
5. Building Construction . . . . . . . . . . . . . . . . . . . . . . .3
6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
8. Repairs and Maintenance . . . . . . . . . . . . . . . . . . . . . .6
9. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
10. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . .8
11. Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
12. Fixtures and Personal Property. . . . . . . . . . . . . . . . . . .9
13. Signage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. Lighting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17. Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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18. Damage to Premises. . . . . . . . . . . . . . . . . . . . . . . . 11
19. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 11
20. Permitted Transfers, Assignment and Subletting. . . . . . . . . . 12
21. Access to Premises. . . . . . . . . . . . . . . . . . . . . . . . 13
22. Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . 13
23. Defaults by Landlord. . . . . . . . . . . . . . . . . . . . . . . 14
24. Surrender of Premises . . . . . . . . . . . . . . . . . . . . . . 15
25. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
26. Subordination, Non-Disturbance and Attornment . . . . . . . . . . 15
27. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
28. Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
29. Covenant of Title and Quiet Enjoyment . . . . . . . . . . . . . . 16
30. Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . . 16
31. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . 16
32. Limitations on Landlord's Liability . . . . . . . . . . . . . . . 16
33. Waiver of Contractual or Statutory Landlord's Lien. . . . . . . . 17
34. Collateral Assignment . . . . . . . . . . . . . . . . . . . . . . 17
35. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
36. Tenant's Conduct of Business. . . . . . . . . . . . . . . . . . . 17
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37. Construction Disputes . . . . . . . . . . . . . . . . . . . . . . 17
38. Landlord's Acquisition Contingency. . . . . . . . . . . . . . . . 18
39. Drop Box. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
40. Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . 18
EXHIBITS
EXHIBIT "A" - Legal Description of the Land
EXHIBIT "B" - Site Plan of Premises
EXHIBIT "C" - Landlord/Tenant Work
EXHIBIT "C-1" Responsibility Schedule
EXHIBIT "D" - Commencement Date Endorsement Sheet
EXHIBIT "E" - Non-Disturbance and Attornment Agreement
EXHIBIT "F" - Memorandum of Lease
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LEASE
This lease (herein the "LEASE") is deemed to be entered into this __th
day of _______________, 1995 between HOLLYWOOD VIDEO PARTNERS, LLC a Nevada
Limited Liability Company (herein the "LANDLORD") and HOLLYWOOD ENTERTAINMENT
CORPORATION, an Oregon corporation (herein the "TENANT") according to the
following terms and conditions:
39. LEASE AGREEMENT; PREMISES AND COMMON AREA.
A. PREMISES. For valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord hereby agrees to
lease to Tenant and Tenant hereby agrees to lease from Landlord in
accordance with the terms of this Lease that real property situated in the
CITY OF KILLEEN, State of TEXAS, commonly known as the INTERSECTION OF U.S.
HIGHWAY 190 AND FORT HOOD ST., consisting of approximately 48,177 square
feet of land (herein the "LAND") and a building of approximately 8,000
square feet (herein the "BUILDING") collectively referred to as the
"PREMISES." The legal description of the Land and a graphical depiction of
the Premises in the form of a site plan (herein the "SITE PLAN") are
respectively attached hereto as EXHIBITS "A" and "B."
B. COMMON AREA. If the Premises are part of a common-interest
subdivision (herein the "PROJECT"), the Landlord hereby grants Tenant the
right to use the "COMMON AREAS" thereof. Such Common Areas constitute the
areas and facilities outside the Premises designated for the general non-
exclusive use of Tenant and other lessees of the Project and such tenant's
respective employees, suppliers, shippers, customers, and invitees. The
Common Areas include parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, walkways, parkways, driveways, and landscaped
areas. If the Premises are in a Project, the Tenant acknowledges that this
Lease is subject to pre-existing recorded instruments (herein the "PROJECT
DOCUMENTS") affecting the Common Areas and the operation of businesses
within the Project. Tenant hereby agrees to comply with the terms of the
Project Documents and rules and regulations affecting the use of the Common
Areas. Upon Tenant's request, Landlord shall deliver to Tenant a current
Preliminary Title Report or Title Report and all underlying documents shown
as exceptions to title affecting the Premises. Upon the discovery of any
document affecting title which would prohibit or restrict Tenant's use of
the Premises for a retail entertainment software or video rental and sales
store, then Tenant may terminate this Lease upon thirty (30) days' prior
written notice to Landlord, unless Landlord is able to remove such
prohibition or restriction within said 30-day period. Notwithstanding the
foregoing, Landlord understands and agrees that the Premises can be used by
tenant as a retail entertainment software or video sales and rental store
and Tenant's ability to so use the Premises is a condition precedent to
this Lease. Landlord represents that nothing contained in the Project
Documents or applicable zoning will prohibit construction of the Building
as contemplated in this Lease. Landlord shall make no changes to the
Common Area or other improvements in the Project which would adversely
impact the visibility of or access to the Premises or reduce parking
available to the Premises or otherwise interfere with Tenant's business.
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40. TERM
A. INITIAL TERM. The "INITIAL TERM" of this Lease shall be for
fifteen (15) years beginning on the "COMMENCEMENT DATE" and ending on the
last day of the month fifteen (15) years following the Commencement Date.
The Commencement Date shall be on the earlier of Tenant's acceptance of the
Premises or Tenant's opening for business. Landlord shall give Tenant not
less than ten (10) days prior written notice of substantial completion of
"LANDLORD'S WORK" after which Tenant shall have an additional ten (10) days
to inspect the Building so as to assure itself that it has been constructed
in accordance with approved plans and specifications, normal and customary
"PUNCH LIST" items excepted. Plans and specifications for Landlord's Work
are attached hereto as EXHIBIT "C." Tenant shall notify Landlord of any
construction or design defects or material deviations from said plans and
specifications within said ten (10) day period or Tenant shall be deemed to
have accepted the Premises. Landlord shall deliver to Tenant within thirty
(30) days from Tenant's acceptance of the Premises, a Certificate of
Occupancy therefor. After Tenant's acceptance of the Premises, Landlord
shall correct any minor "Punch List" items no later than thirty (30) days
after Tenant's acceptance of the Premises. In accordance with the
foregoing, Landlord and Tenant shall specify the exact Commencement Date on
the Commencement Date Endorsement sheet attached hereto as EXHIBIT "D."
B. RENEWAL TERM. Tenant shall have the right to renew this Lease
for two (2) additional periods of five (5) years each so long as Tenant is
not in breach of any provision of this Lease. Tenant shall notify Landlord
in writing not later than one hundred eighty (180) days prior to the
expiration of the initial term or any existing renewal term of Tenant's
election to so renew the Lease.
41. RENT
A. BASE RENT. Beginning forty-five (45) days from the Commencement
Date, Tenant shall pay Landlord as "BASE RENT" for the Premises without any
claim, offset, or deduction, (except as otherwise expressly provided in
this Lease) the following sums:
Lease Base Annual Monthly Base
Year Rental Annual Rental
------ ----------- -------------
Years 1-5 $141,200.00 $11,766.67
Years 6-10 $162,380.00 $13,531.67
Years 11-15 $162,380.00 $13,531.67
Years 16-20 $186,737.00 $15,561.42
Years 21-25 $214,747.55 $17,895.63
payable on the first day of each month, without notice, during the term
hereof. Notwithstanding the foregoing, if the Commencement Date is other
than on the first day of the month, then the first monthly base rent
installment shall be for that first initial partial month calculated by
multiplying the base rent by a fraction, the numerator of which is the
remaining days of that month, and the denominator of which is the total
number of days in that month.
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B. COMMON AREA EXPENSE. If the Premises are in a Project, in
addition to Base Rent, Tenant shall pay Landlord Tenant's share of Common
Area expenses attributable to the Premises, as set for the paragraph 8.C.
4. USE. The Premises shall be used for the sale and rental of
pre-recorded audio and/or video products (including, but not limited to
tapes and compact discs), audio and/or video software, laser disks
and/or home entertainment software; the rental of video and/or audio
equipment and sale and/or rental of related accessories including, but
not limited to, the demonstration, display and training, and the sale of
electronic equipment; the sale and/or rental of any substitutes for such
products as well as all uses incidental thereto (including storage,
service and repair); the sale of food products that are normally sold in
a movie theater; and for any lawful and permitted uses.
5. BUILDING CONSTRUCTION.
A. CONSTRUCTION DEADLINE. Landlord shall substantially complete
construction of the Building ("LANDLORD'S WORK") no later than AUGUST 1,
1995 (the "SCHEDULED DELIVERY DATE") in accordance with the plans and
specifications, and if the Building has not been substantially completed
thereby, Tenant shall receive two days 'free rent' for each one-day
period of delay. In the event Landlord fails to complete Landlord's
Work within one hundred twenty (120) days after the Scheduled Delivery
Date, Tenant shall be entitled to terminate this Lease and receive a
refund of any and all amounts previously paid by Tenant to Landlord, or
Tenant may continue to accrue 'free rent' until Landlord has
substantially completed Landlord's Work.
B. LANDLORD'S AND TENANT'S CONSTRUCTION WORK. Landlord agrees at
Landlord's expense, to perform Landlord's Work in a good and workmanlike
manner in the construction of the Premises substantially in accordance
with the plans and specifications and "RESPONSIBILITY SCHEDULE"
respectively attached hereto and made a part hereof as EXHIBIT "C" and
EXHIBIT "C-1". Landlord shall utilize first quality new materials in
compliance with all applicable laws, ordinances, rules and statutes.
Once Landlord has substantially completed Landlord's Work, it shall
notify Tenant that the Premises are ready for Tenant's occupancy. All
work on the Premises other than that to be so performed by Landlord is
to be done by Tenant, at Tenant's expense (herein "TENANT'S WORK").
Tenant's Work shall be constructed in a good and workmanlike manner, in
accordance with its plans and specifications to be submitted to Landlord
for its approval, which approval shall not be unreasonably withheld, and
shall be deemed approved if Landlord does not object to Tenant's plans
in writing within FIVE (5) days of the Landlord's receipt thereof,
specifying in detail Landlord's reasonable objections thereto.
C. TENANT'S CONSTRUCTION ALLOWANCE. Landlord agrees to provide
Tenant with a cash allowance of $12.00 per square foot (or $96,000.00 in
total) for the purpose of constructing its leasehold improvements
(hereinafter, "TENANT'S CONSTRUCTION ALLOWANCE"). Landlord agrees that
Tenant's Construction Allowance shall be due and payable within ten (10)
days following receipt by Landlord of properly executed lien waiver forms;
provided, however, if Landlord fails to pay Tenant's Construction
Allowance within such ten-day period, then the Free Rent Period (as
defined below) shall be extended for that number of days equal to the
quotient of the unpaid Tenant's Construction Allowance together with
Accrued Interest (hereinafter defined) divided by the per diem Base
Rental and Additional Tent which is to be paid by Tenant during the
Primary Term of the Lease rounded to the nearest whole number. For
example, if the unpaid Tenant's Construction Allowance and
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Accrued Interest is $50,000.00 and the per diem Base Rental and
Additional Rent is equal to $420, then the Free Rent Period shall be
extended by 119 days beyond the Rent Commencement Date ($50,000.00
divided by $420 is equal to 119). For purposes hereof, the term
"ACCRUED INTEREST" shall mean interest on the unpaid portion of Tenant's
Construction Allowance at a rate equal to the lesser of (a) the maximum
rate permitted by law, or (b) two percent (2%) plus the prime rate of
interest most recently published in the Wall Street Journal (the
"DEFAULT RATE") from the date Tenant's Construction Allowance was
required to be paid by Landlord through the end of the Free Rent Period,
as extended hereby.
D. CONSTRUCTION PERIOD INSURANCE. Landlord agrees to obtain and
maintain at its expense public liability insurance and worker's
compensation insurance adequate to fully protect Tenant and Landlord
against any and all liability for death or injury to persons or damage
to property by reason of construction of Landlord's Work. Tenant
agrees, at its expense, to obtain and maintain public liability
insurance and worker's compensation insurance adequate to fully protect
Landlord as well as Tenant from and against any and all liability for
death or injury to person, or, damage to property, by reason of the
construction of Tenant's Work.
E. SIMULTANEOUS CONSTRUCTION. Except in the event of the negligence
of Landlord, its agents, or employees, if Landlord's Work and Tenant's
Work progresses simultaneously, Landlord shall not be liable for any
injury to person or damage to property of Tenant, or of Tenant's
employees, licensees or invitees, from any cause whatsoever occurring
upon or about the Premises, and Tenant shall indemnify and hold Landlord
harmless from any and all liability and claims arising out of or
connected with any such injury or damage.
6. TAXES. In addition to Base Rent, Tenant agrees to pay to Landlord
additional payments as follows:
A. OBLIGATION TO PAY. Tenant shall pay all real property taxes and
general assessments, and special assessments (herein "TAXES") which may
be levied or assessed against the Premises, either directly or as a
result of the Premises being located within the Project by any lawful
authority for each calendar year or portion thereof. Tenant's
obligations hereunder shall be pro-rated for any partial lease year and
shall survive the expiration of the term of this Lease for tax payments
on the last year hereof
B. PAYMENT PROCEDURE. The Taxes during the Initial Term or any
renewal term shall be paid annually. Upon receipt of all tax bills and
assessment bills attributed to any calendar year during the Initial Term
of any renewal term, Landlord shall furnish Tenant with a statement of
the Taxes payable for such year along with a copy of such tax bills.
Tenant shall pay such taxes to Landlord at least fifteen (15) days
prior to the date Landlord is required to pay said Taxes. A copy of a
tax bill or assessment bill submitted by Landlord to Tenant shall at all
times be sufficient evidence of the amount of Taxes levied or assessed
against the property to which such bill relates. Upon Tenant's written
request, Landlord shall notify Tenant in writing of Landlord's estimate
of Tenant's annual proportionate share of Taxes due hereunder. The
obligations shall survive the expiration of the term of this Lease.
Tenant shall be solely responsible for payment of taxes with respect to
Tenant's fixtures, business equipment, and personal property.
Notwithstanding any other provisions of this Lease, in the event of a
special assessment for a public or private improvement, the life of
which extends beyond the term of the Lease, the taxes and assessments
for such improvement shall be amortized over the estimated length of the
improvement, not to exceed twenty (20) years; Tenant shall only be
responsible to pay the amortized portion thereof during the term of the
Lease. In addition, Tenant shall not be responsible to pay the amortized
portion thereof during the term of the Lease. In addition, Tenant shall
not be responsible to pay any traffic impact fees billed by any
governmental agency as part of the Taxes.
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C. CONTEST. Tenant may, at its option, contest any Taxes against
the Premises and attempt to obtain a reduction in the assessed valuation
upon the Premises for the purpose of reducing any such Tax assessment.
Without expense or liability to Landlord, Landlord shall cooperate with
Tenant and execute any document which may be reasonably necessary and
proper for any proceeding. If a Tax reduction is obtained there shall
be a proportionate reduction in Tenant's Taxes for such year, and any
excess payments by Tenant shall be refunded by Landlord, without
interest, when such refunds have been received by Landlord. In the event
Landlord desires to contest the Taxes due on the Premises, Tenant agrees
to cooperate with Landlord and execute any document which may be
reasonably necessary and proper for any proceeding at no cost to Tenant.
D. EXCLUSIONS. Tenant shall not be responsible for any income, excess
profits, estate, single business, inheritance or succession tax levied
against Landlord.
7. INSURANCE.
A. LIABILITY INSURANCE. Landlord shall obtain and maintain
commercial General Liability insurance (herein "LIABILITY INSURANCE") on
the Premises and appurtenant areas, naming Landlord and Tenant (as an
additional insured) with coverage of not less than Three Million Dollars
($3,000,000) per occurrence for combined bodily injury and property
damage.
B. CASUALTY INSURANCE. Landlord shall also obtain and maintain
all risk property insurance (herein "CASUALTY INSURANCE") covering fire
and extended coverage, vandalism and malicious mischief, sprinkler
leakage and all other perils of direct physical loss or damage insuring
the improvements located in the Premises and all appurtenances thereto
(excluding Tenant's property) for the full replacement value thereof
C. RENTAL INTERRUPTION INSURANCE. Landlord shall also obtain and
maintain rental interruption insurance (herein "RENTAL INTERRUPTION
INSURANCE") covering a period not to exceed one (1) year.
D. PLATE GLASS INSURANCE. Tenant shall be responsible for the
maintenance, repair and replacement of the plate glass in or on the
Premises, but shall not be required to keep plate glass insurance.
E. PAYMENT OF INSURANCE. Tenant shall reimburse Landlord for
Landlord's annual total costs for the premiums for Liability Insurance,
Casualty Insurance, and Rental Interruption Insurance (herein
collectively "INSURANCE"). Tenant's costs for such premium shall be due
and payable, in advance, as follows: (i) Beginning on the Commencement
Date, and continuing on the first day of each month thereafter, Tenant
shall pay monthly to Landlord, Landlord's costs for the premiums of such
Insurance; and (ii) any additional amounts for Insurance for any year
shall be paid by Tenant to Landlord upon written demand. Landlord, shall
furnish Tenant a certificate of such Insurance. Notwithstanding the
foregoing, Tenant may elect to carry some or all insurance referred to in
this paragraph upon ten (10) days' prior written notice to Landlord, in
which event Landlord shall be relieved of its obligation to do so and
Landlord shall be named as an additional insured under Tenant's policy
of insurance, and Tenant shall in such event have no obligation to
reimburse Landlord for such insurance costs. In no event shall Tenant be
required to reimburse Landlord for Landlord's insurance costs which
duplicate insurance which Tenant elects to carry hereunder.
F. INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least A, V, or such other rating as may be
required by a lender having a lien on the Premises, as set forth in the
most current
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issue of "Best's Insurance Guide." Tenant shall not do or permit to be done
anything which shall invalidate the insurance policies referred to in
this Paragraph 7. The insuring party shall cause to be delivered to the
other party certified copies of, or certificates evidencing the
existence and amounts of, the insurance, and with the additional
insureds, required hereunder. No such policy shall be cancelable or
subject to modification except after thirty (30) days' prior written
notice to the non-insuring party. The insuring party shall at least
thirty (30) days prior to the expiration of such policies, furnish the
non-insuring party with evidence of renewals or "insurance binders"
evidencing renewal thereof, or, if the Landlord is the non-insuring
party, the Landlord may order such insurance and charge the cost thereof
to Tenant.
G. WAIVER OF SUBROGATION RIGHTS. Landlord and Tenant and all
parties claiming under them mutually release and discharge each other
from all claims and liabilities arising from or caused by any casualty,
hazard, or activity covered by insurance on the Premises and waive any
right of subrogation which might otherwise exist in or accrue to any
person on account thereof. Each insurance policy to be carried by
Landlord or Tenant under this Lease (other than Tenant's Insurance)
shall include a clause or endorsement to the effect the waiver contained
herein will not adversely affect or impair such policy or prejudice the
right of the insured to recover under such policy, and each such policy
shall permit this waiver of liability and contain a waiver of
subrogation.
H. ADDITIONAL PREMIUMS DUE TO HAZARDOUS USE. Tenant shall not
keep, use, sell or offer for sale in or upon the Premises any article
which may be prohibited by the standard form of fire insurance policy.
Tenant shall pay any increase in premiums for fire and extended coverage
insurance that may be charged on the amount of such insurance which may
be carried by Landlord on the Premises resulting from the type of
merchandise sold by Tenant in the Premises. In determining whether
increased premiums are the result of Tenant's use of the Premises, a
schedule, issued by the organization making the insurance rate on the
Premises, showing the various components of such rate, shall be
conclusive evidence of the several items and charges which make up the
fire insurance rate on the Premises.
The Tenant also shall pay in such event, any additional premium on the
rent insurance policy that may be carried by the Landlord for its
protection against rent loss through fire. Bills for such additional
premiums shall be tendered by Landlord to Tenant at such times as
Landlord may reasonably elect, and shall be due from, and payable by,
Tenant within thirty (30) days of written demand therefor.
8. REPAIRS AND MAINTENANCE,
A. STRUCTURE AND PREMISES. Tenant shall, at its sole cost and
expense, maintain or cause to be maintained (and where necessary,
replace) the Premises, including but not limited to, all structural
systems, roof membrane, load-bearing walls, floor slabs, and HVAC system
and equipment. Such maintenance obligations shall also include the
parking areas, landscaped areas, sidewalks, driveways and pylon sign on
the Premises and all facilities, trade fixtures and other equipment
located inside the Building. Upon request, Landlord shall deliver to
Tenant copies of all warranties and guarantees that are issued by
contractors and manufacturers with respect to the construction of the
Premises and the materials and equipment installed therein. Landlord
shall use its best efforts to have Tenant named on all such warranties
and guarantees for which a beneficiary is named.
B. CONTENTS. Tenant shall, at Tenant's expense, keep, maintain,
repair, and, if necessary, replace the interior of the Premises, trade
fixtures, marquees, and signage so that the same are in good condition
and repair. Furthermore, Tenant agrees to maintain a comprehensive
maintenance contract approved by Landlord on the HVAC system.
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C. COMMON AREA. Notwithstanding anything in this paragraph to
the contrary, if the Premises are within a common-interest subdivision
and an operator is delegated or appointed to perform the repair or
maintenance obligations that would otherwise be the responsibility of
Tenant, then Tenant shall be relieved of the obligation to perform such
maintenance or repairs. In such event, Tenant shall pay, in accordance
with any declarations of the covenants, conditions, restrictions, and
easements, and/or common-area maintenance agreements, its proportionate
cost of the repair and maintenance obligations excluding principal or
interest payments on the loans secured by mortgages on the Premises,
depreciation or amortization of any improvements, the cost of any
special service provided to less than all tenants, and costs and
expenses incurred in connection with leasing space in the Project.
D. DEFAULT. If Tenant fails to perform any maintenance, repairs
or replacements required to be performed by it under this Lease, then in
addition to all other available rights and remedies, Landlord may give
Tenant written notice thereof, and perform such maintenance, repairs or
replacements itself or through an independent contractor and all costs
and expenses incurred in connection therewith, together with an interest
on the balance thereof remaining unpaid from time to time at the lesser
of the prime commercial rate of interest being charged by the Bank of
America from time to time plus two percent (2%) or the maximum permitted
by law, shall become due and owing from Tenant to Landlord, on demand.
E. EMERGENCY. Notwithstanding anything to the contrary contained
herein, in the case of an emergency, Landlord shall have the right to
immediately perform any such maintenance, repairs or replacements (and
charge Tenant the costs and expenses incurred) without giving Tenant
prior written notice thereof or an opportunity to cure, provided that
Landlord shall give contemporaneous notification to Tenant of the
emergency and the related maintenance, repairs or replacements, however,
if contemporaneous notice is not practicable, as determined by Landlord
in its reasonable judgment, then Landlord shall provide notice as soon
thereafter as may reasonably be practicable.
F. CONSTRUCTION QUALITY AND WARRANTY. Landlord warrants and
guarantees Landlord's Work to have been accomplished in a first class
manner with good workmanship and materials for a period of twelve (12)
months from the Commencement Date. After expiration of said twelve (12)
month warranty period, Landlord shall assign to Tenant any and all
warranties and guaranties of third parties held by Landlord, except in
the event same are unassignable, Landlord shall enforce same for the
benefit of Tenant.
G. COMPLIANCE WITH LAW. Landlord warrants that upon completion
of Landlord's Work, such work will comply with all applicable codes and
regulations affecting the Premises. Landlord shall be responsible for
paying any or all fines or penalties for noncompliance or violation of
such codes and regulations during the term of this Lease with respect to
Landlord's Work. Tenant shall be responsible for paying any or all
fines or penalties for noncompliance or violation of codes and
regulations of governmental authorities during the term of this Lease
with respect to Tenant's Work.
9. UTILITIES.
A. Hook-Ups. Landlord shall cause the necessary mains,
conduits and other facilities to be provided to make water, sewer, gas,
phone and electricity available to the Premises in accordance with the
Plans and Specifications.
B. Payments. Tenant shall pay for all water, gas, heat, light,
power, telephone and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to the Premises, Tenant shall pay at
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Landlord's option, either Tenants share or a reasonable proportion to be
determined by Landlord of all charges jointly metered with other tenants
in the Project.
C. REFUSE COLLECTION. Tenant shall be solely responsible for and
promptly pay all charges for collection of refuse and garbage from the
Premises. If the Premises are part of the Project and the operator of
the Project provides garbage collection service for all occupants of the
Project, then Tenant shall pay its proportionate share thereof.
D. CAPACITY. Tenant shall not install any equipment which can
exceed the capacity of any utility facilities as specified in the Plans
and Specifications and if any equipment installed by Tenant requires
additional utility facilities it shall be installed at Tenant's expense
in compliance with all code requirements and plans and specifications
subject to Landlord's prior written approval.
E. INTERRUPTION. Except in the event of the negligence of
Landlord, its agents, or employees, Landlord shall not be liable to
Tenant in damages or otherwise if the said utilities or services are
interrupted or terminated because of necessary repairs, installations,
or improvements, or any cause beyond the Landlord's reasonable control,
nor shall any such interruption or termination relieve Tenant of the
performance of any of its obligations hereunder, except that if Tenant
is unable to operate its business for a period greater than forty-eight
(48) hours after the occurrence of said interruption or termination,
there shall be an abatement of Base Rent hereunder during such period.
10. ENVIRONMENTAL MATTERS.
A. REPRESENTATIONS AND INDEMNITY. Landlord represents and warrants
that: (i) any handling, transportation, storage, treatment or usage of
hazardous or toxic substances that has occurred on the Premises shall be
in compliance with all applicable federal, state and local laws,
regulations and ordinances; (ii) to the best of its knowledge, no leak,
spill, discharge, emission or disposal of hazardous or toxic substances
has occurred on the Premises; and (iii) the soil, groundwater, soil
vapor on or under the Premises is or will be free of toxic or hazardous
substances. Except to the extent caused by Tenant, Landlord agrees to
indemnify, defend and hold Tenant and its officers, employees and agents
harmless from any claims, judgments, damages, fees, penalties, costs,
liabilities (including sums paid in settlement of claims) or loss
including attorney's fees, consultants fees, and expert fees to the
extent that those representations and warranties are false or
inaccurate, unless the presence of such toxic or hazardous substances
are present as the result of the negligence or willful misconduct of
Tenant, its officers, employees or agents. Without limiting the
generality of the foregoing, this indemnification includes costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision because of
the presence or suspected presence of toxic or hazardous substances in
the soil or groundwater on or under the Premises, unless the toxic or
hazardous substances are present as the result of the negligence or
wilful misconduct of Tenant, its officers, agents or employees.
B. ENVIRONMENTAL REPORTS AND TERMINATION RIGHTS. Landlord shall
obtain and deliver to Tenant a "Phase I Environmental Report" and any
other environmental reports obtained by Landlord. Either Landlord or
Tenant may terminate this Lease within fifteen (15) days of its receipt
of such report(s), if the environmental report(s) indicate, in such
party's reasonable discretion, that the Premises are contaminated with
hazardous or toxic substances. If either Landlord or Tenant fails to
terminate this Lease within fifteen (15) days of its receipt of the
environmental reports(s), then the parties shall have waived any right
to terminate this Lease based on the environmental report(s). In no
event shall Tenant be obligated to remediate, remove or take any
responsibility whatsoever for Hazardous Materials are present by the
acts of Tenant or its agents.
8
11. ALTERATIONS. Tenant shall not make any exterior or structural
alterations to any portion of the Premises without the prior written
consent of Landlord which shall not be unreasonably withheld. Except for
Tenant's property, all alterations, additions, and improvements
constructed by Landlord shall become, upon termination of this Lease,
the property of Landlord. Tenant shall be permitted to make interior
non-structural alterations, additions and improvements costing less than
$50,000.00 without Landlord's prior written consent.
12. FIXTURES AND PERSONAL PROPERTY. Any trade fixtures, business
equipment, inventory, trademarked items, signs, decorative soffit,
counters, shelving, showcases, mirrors and other removable personal
property installed in or on the Premises by Tenant, at its expense,
shall remain the property of the Tenant. Landlord agrees that Tenant
shall have the right to remove any and all of such items. Tenant at its
expense shall immediately repair any damage occasioned by the removal of
Tenant's property, and upon expiration or earlier termination of this
Lease, shall leave the Premises in a "broom clean" condition, free of
debris, normal wear and tear excepted. Tenant shall pay before
delinquency all taxes, assessments, license fees and public charges
levied, assessed or imposed upon its business operation in the Premises
as well as upon Tenant's property in, or upon the Premises. If any such
items of Tenant's property are assessed with property of Landlord, then
such assessment shall be equitably divided between Landlord and Tenant
on the basis of the relative fair market value of Tenant's property. No
taxes, assessments, fees, or charges referred to in this paragraph shall
be considered as real property "Taxes." Landlord hereby waives,
releases, and relinquishes any and all rights of distraint, levy,
attachment or recourse to such Tenant's property.
13. SIGNAGE. Tenant shall have the right to install, at Tenant's sole
expense, Tenant's sign package provided it is in compliance with
applicable governmental regulations and ordinances and the "Project
Documents." Prior to or simultaneously with the execution of this Lease,
Tenant shall submit to Landlord its sign package, which shall be deemed
approved by the Landlord. Landlord shall cooperate with Tenant in
filing any signage application, permit and/or variance for said signage
or with respect to the Premises. Tenant's signage package may include
marquee-type signage on the interior of the Premises visible from the
exterior and Tenant may replace the signage on the marquee from time to
time without permission of Landlord so long as such signage and
replacements are in compliance with applicable law and the Project
Documents. Furthermore, neither Landlord nor any other party may place
any signage or other advertisements on the exterior wall or roof of the
Premises without obtaining the prior written consent of Tenant.
14. LIENS. Neither Tenant nor Landlord shall cause any lien,
encumbrance or charge arising out of any unpaid work or work claim of
any contractor, mechanic, laborer, or materialman to affect the
Premises. If any lien or notice of lien on account of an alleged debt
of Tenant or Landlord shall be filed against the Premises, then Tenant
or Landlord, as the case may be, shall, within thirty (30) days after
notice of the filing thereof, cause the lien to be discharged of record
by payment, deposit or bond. If the responsible party fails to cause
such lien or notice of lien to be discharged by either paying the
amounts claimed to be due or by procuring the discharge of such lien by
deposit or by bonding proceedings, then the other party hereto shall be
entitled to defend any actions for foreclosure of such lien by the
lienor or to pay-off such lien. Any money paid by the responsible party
and all costs and expenses, including attorney's fees, incurred by
Landlord in connection therewith, together with interest at the lesser
of the prime rate of interest for commercial loans charged by the Bank
of America plus two percent (2%) per annum or the maximum rate permitted
by law thereon shall be paid by Tenant to Landlord on demand. In the
event that the
9
responsible party diligently contests any such claim, it agrees to
indemnify, defend, and hold harmless the non-responsible party from any and
all costs, liability and damages, including attorney's fees resulting
therefrom, and, if requested, upon demand, immediately to deposit with
Landlord cash or surety bond in form and with a company satisfactory to
the nonresponsible party in an amount equal to one hundred fifty percent
(150%) of such contested claim.
15. OPERATIONS.
A. COMPLIANCE WITH LAW. Tenant and Landlord agree to comply with
all laws, ordinances, orders and regulations affecting the use and
occupancy of the Premises or the Project. Tenant agrees to comply with
the reasonable regulations and requirements of any insurance
underwriter, inspection bureau or similar agency with respect to the
Premises. Tenant also agrees to permit Landlord to comply with such
recommendations and requirements.
B. PROHIBITIONS. Tenant agrees not to (i) permit any illegal
practice to be carried on or committed on the Premises; (ii) make use of
or allow the Premises to be used for any purpose that might invalidate
the rate of insurance therefor; (iii) keep or use or permit to be kept
or used on the Premises any flammable fluids, gases, or explosives
without the prior written permission of Landlord except for normal
cleaning products; (iv) use the Premises for any purpose whatsoever
which might create a nuisance; (v) deface or injure the Building; (vi)
overload the floor; (vii) commit or suffer any waste; or (viii) install
any equipment that overloads electrical lines.
16. LIGHTING. Subject to any restrictions in the Project Documents,
Landlord agrees to provide adequate lighting of the Land including the
parking lot from thirty (30) minutes before dusk until 2:00 a.m., which
lighting shall include the illumination of any pylon or monument sign
advertising Tenant's business conducted in the Premises, as well as
lighting for the other signage and backlit awnings utilized by Tenant in
the advertising of the business conducted by Tenant in the Premises if
same is not separately metered and controlled by Tenant.
17. PARKING. If the Premises are part of a Project, Tenant shall have
the non-exclusive right to use all of the parking spaces in the Project
in accordance with the Project Documents. Except to the extent required
by law, Landlord shall not require, nor shall Tenant be obligated to
permit, any fire lane, loading zone, handicapped parking or other
restrictive parking to be located in the vicinity of Tenant's storefront
and entrance to the Premises.
18. DAMAGE TO PREMISES.
A. RECONSTRUCTION. If the Premises or any portion thereof shall
be damaged or destroyed by fire or other casualty, Tenant shall
immediately notify Landlord orally and in writing and Landlord shall
(except as provided below) diligently remove any resulting debris and
repair, restore, or rebuild as is necessary to substantially return the
Premises to the condition existing immediately prior to such damage or
destruction and this Lease shall remain in full force and effect.
Notwithstanding the foregoing, if any repairs, restorations or
reconstruction are not commenced within ninety (90) days from the date
of the casualty and are not actually repaired, restored or reconstructed
to substantially the same condition existing prior to the casualty
within eight (8) months of the date of the casualty, Tenant may
terminate this Lease by thirty (30) days' prior written notice thereof
to Landlord. Landlord shall not be required to provide funds in excess
of insurance proceeds which may be required
10
for such repairing, restoring or rebuilding. In the event of a termination
of the Lease as aforesaid, this Lease shall be null and void and of no
further force or effect and the parties shall have no further rights or
obligations to each other hereunder. Notwithstanding anything to the
contrary herein contained, Landlord shall have no right, title, interest
or claim to insurance maintained by Tenant with respect to Tenant's
property, including, but not limited to insurance proceeds payable with
respect thereto.
B. RENT ABATEMENT. Tenant shall be entitled to a prorated
deduction of Base Rent for that period in which the Premises is
untenantable. Such deduction shall be based on the proportion of the
space rendered untenantable bears to the space occupied, provided,
however, if Tenant is unable, in its reasonable discretion, to operate
its business in the Premises, there shall be a full abatement of Rent.
C. SOURCE OF FUNDS. Landlord agrees to accept the property
insurance proceeds recoverable under Landlord's Casualty Insurance as
payment in full for any loss or damage to the Premises, and not to make
any claim against Tenant for any loss or damage to the improvements
located in the Premises which occur and arise as a result of matters
which can be covered by insurance, unless such loss or damage was caused
by the acts or omissions of Tenant or Tenant's employees, agents,
contractors, or invitees, and only after application of insurance
proceeds received in connection with such loss or damage.
19. INDEMNIFICATION.
A. BY TENANT. Except to the extent caused by Landlord's
negligence or willful misconduct, Tenant indemnifies and holds Landlord
harmless from and against any and all cost, expense, claims, demands,
and liabilities, including attorney's fees, arising from Tenant's use of
the Premises, or from any act or any failure to act, in or about the
Premises by Tenant or its agents, employees, or contractors, or from any
breach or default by Tenant of this Lease. If any action or proceeding
shall be brought against Landlord by reason of any such claim, Tenant
shall defend the Landlord at Tenant's expense by counsel reasonably
satisfactory to Landlord.
B. BY LANDLORD. Except to the extent caused by Tenant's
negligence or willful misconduct, Landlord indemnifies and holds Tenant
harmless from and against any and all cost, expense, claims, demands,
and liabilities, including attorney's fees, arising from Landlord's
obligations or use of the Premises, or from any act, or any failure to
act, in or about the Premises or Land by Landlord or its agents,
employees, contractors, or invitees, or from any breach or default by
Landlord of this Lease. If any action or proceeding shall be brought
against Tenant by reason of any such claim, Landlord shall defend the
same at Landlord's expense by counsel reasonably satisfactory to Tenant.
20. PERMITTED TRANSFERS, ASSIGNMENT, AND SUBLETTING.
A. PERMITTED TRANSFERS. Tenant shall have the absolute right to
sublet, assign or otherwise transfer its interest in this Lease to an
entity which has, after such subletting, assignment, or transfer, a net
worth in excess of five million dollars ($5,000,000) calculated under
generally accepted accounting principles, or to a licensee, franchisee
or any parent or operating subsidiary of Tenant, or subsidiary of
Tenant's parent or to a corporation with which it may merge or
consolidate ("PERMITTED TRANSFER"), without Landlord's approval, as long
as Tenant remains fully liable for full performance of all its
obligations under this Lease. The sale or exchange of stock in the
Tenant in a public offering and the subsequent sale of such stock on a
nationally recognized exchange (including, but not limited to, the
NASDAQ) shall not constitute an assignment under this paragraph.
B. TENANT'S ASSIGNMENT OR SUBLEASE. Subject to the limitations
hereof, Tenant shall have the right to transfer, assign, and sublet to
or enter into a license or concession
11
agreement with a third party for any lawful use not in contravention of
the Project Documents or other agreements affecting the Premises which
runs with the Land upon the prior written consent of Landlord, which
consent shall not be unreasonably withheld, provided however, that if
Landlord fails to respond to any request by Tenant for Landlord's
consent or approval within thirty (30) days of such request, the consent
or approval of Landlord shall be deemed given. In the event of an
assignment, subletting, or other transfer pursuant to this subparagraph,
Tenant shall remain primarily liable for the full performance of its
obligations under this Lease. Except in the event of a Permitted
Transfer, Tenant shall pay to Landlord seventy-five percent (75%) of all
"profits" derived by Tenant from such assignment or sublease. For
purposes of this subparagraph, "profits" shall mean the proceeds
actually received by Tenant from any assignee or sublessee of Tenant
over the Base Rent and any other additional charges payable to Landlord
hereunder. Tenant shall furnish Landlord with a sworn statement,
certified by an authorized representative of Tenant, setting forth in
detail the computation of receipts, and Landlord, or its
representatives, shall have access to the books, records and papers of
Tenant in relation thereto, and the right to make copies thereof.
Seventy-five percent (75%) of Tenant's profits shall be paid to Landlord
in installments as Tenant receives them from such assignee or subtenant.
Landlord shall credit Tenant three-quarters of all reasonable costs
incurred by Tenant in securing and entering into such sublease or
assignment, including, but not limited to brokerage commissions, rent
concessions, legal, advertising, and construction allowances, but in no
event shall such credits exceed the profits.
C. LANDLORD'S ASSIGNMENT. Landlord shall have the right to
transfer, assign and convey, in whole or in part, any or all of the
right, title and interest to the Premises, provided, such transferee or
assignee shall be bound by the terms, covenants and agreements herein
contained, and shall expressly assume and agree to perform the covenants
and agreements of Landlord contained herein. In the event that Landlord
executes a mortgage affecting the Premises which is of senior priority
to this Lease, then Tenant may require Landlord to concurrently execute
a nondisturbance and attornment agreement with such lender, reasonably
acceptable to Tenant.
21. ACCESS TO PREMISES. Except in the case of an emergency, upon
reasonable prior notice (but in no event less than twenty-four (24)
hours), Landlord may enter the Premises to inspect, to show the Premises
to prospective purchasers and lenders, or to perform maintenance and
repair obligations imposed upon Landlord by this Lease.
22. DEFAULT; REMEDIES.
A. DEFAULT. The occurrence of any of the following shall constitute a
material default of this Lease by Tenant (herein "EVENT OF DEFAULT"):
1. Any failure by Tenant to pay Base Rent or make any
other payment required to be made by Tenant hereunder within ten (10)
days after receipt of written notice from the Landlord;
2. A failure by Tenant to observe and perform any other
provision of this Lease to be observed or performed by the Tenant,
where such failure continues for thirty (30) days after written notice
thereof by Landlord to Tenant, except that this (30) day period shall
be extended for a reasonable period of time if the alleged default is
not reasonably capable of cure within said thirty (30) day period and
Tenant proceeds to diligently cure the default; and
3. The making by Tenant of any general assignment for
the benefit of creditors, the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt, or a petition for
reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is
12
dismissed within sixty (60) days); the appointment of a trustee or
receiver to take possession that is not restored to Tenant within thirty
(30) days, or the attachment, execution or other judicial seizure that
is not discharged within thirty (30) days.
B. REMEDIES. Upon an Event of Default by Tenant, then Landlord may,
in addition to any other right or remedy available at law, do the
following:
1 . Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to
do so, Landlord may, without prejudice to any other remedy which he may
have for possession or arrearages in rent, enter upon and take possession
of the Premises and expel or remove Tenant and any other person who may
be occupying the Premises or any part thereof without breaching the
peace. Additionally, in such event Landlord shall be entitled to
recover from Tenant: (i) the worth at the time of the award of the
unpaid rent which had been earned at the time of termination; (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 that the Tenant proves could have been
reasonably avoided; (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 the Tenant proves
could be reasonably avoided; and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by the
Tenant's failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom,
including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, and that portion
of the leasing commission paid by Landlord applicable to the unexpired
term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the prior sentence shall be 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%).
Efforts by Landlord to mitigate damages caused by Tenant's default or
breach of this Lease shall not waive Landlord's right to recover damages
under this paragraph. If termination of this Lease is obtained through
the provisional remedy of unlawful detainer, Landlord shall have the
right to recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Landlord may reserve therein the right to
recover all or any part thereof in a separate suit for such rent and/or
damages. Landlord shall be entitled to recover the unamortized portion
of the brokerage commissions paid by Landlord under this Lease;
2. Enter upon and take possession of the Premises without
terminating this Lease and expel or remove Tenant and any other person
who may be occupying the Premises or any part thereof without breaching
the peace, and, Landlord shall use its reasonable efforts to relet the
Premises on commercially reasonable terms and receive the rent therefor;
and Tenant agrees to pay to Landlord on demand any deficiency on a
monthly basis that may arise by reason of such reletting. Landlord
shall be entitled to recover the unamortized portion of the brokerage
commissions paid by Landlord under this Lease; and
3. Enter upon the Premises without breaching the peace, and do
whatever Tenant is obligated to do under the terms of this Lease, in which
case Tenant shall reimburse Landlord on demand for any reasonable expenses
which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease plus interest at a rate equal to the lesser of
the prime rate of interest for commercial loans charged by the Bank of
America plus two (2%) percent or the maximum rate permitted by law from the
date of any expenditure until Landlord has been paid for same.
13
23. DEFAULTS BY LANDLORD. If Landlord defaults in the performance of
any of its obligations under this Lease, which default continues for a
period of more than thirty (30) days after receipt of written notice
from Tenant to Landlord and Landlord's lender, if any, specifying such
default, or if such default is of a nature to require more than thirty
(30) days for remedy and continues beyond the time reasonably necessary
to cure (and Landlord has not undertaken procedures to cure the default
within such thirty (30) day period and diligently pursued such efforts
to complete cure), Tenant may, in addition to any other remedy available
at law or in equity at its option, upon written notice, incur any
expense necessary to perform the obligation of Landlord specified in
such notice and deduct such expense from the Base Rent or other charges
next becoming due.
24. SURRENDER OF PREMISES. Tenant shall, upon expiration of this
Lease, or any earlier termination of this Lease for any cause, surrender
to Landlord the Premises in good order and "broom clean" condition,
ordinary wear and tear excepted, including, without limitation, all
building apparatus and equipment then upon the Premises, and all
alterations, improvements and other additions which may be made or
installed by either party to, in, upon or about the Premises, except for
Tenant's property, which shall remain the property of Tenant.
25. CONDEMNATION. If the Premises or any portion thereof or the
Project are taken under the power of eminent domain, or sold under the
threat of the exercise of said power (all of which are herein called
"CONDEMNATION"), this Lease shall terminate as to the part so taken as
of the date the condemning authority takes title or possession,
whichever first occurs. If more than five percent (5%) of the floor
area of the Premises, or more than twenty percent (20%) of that portion
of the Common Areas designated as parking for the Project is taken by
Condemnation, Tenant may, at Tenant's option, to be exercised in writing
only within thirty (30) days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within
thirty (30) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority
takes such possession. If Tenant does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and
effect as to the portion of the Premises remaining, except that the rent
shall be reduced in the proportion that the floor area of the Premises
so taken bears to the total floor area of the Premises. No reduction of
rent shall occur if the only area taken is that which is not part of the
Premises. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Landlord, whether
such award shall be made as compensation for diminution in value or the
leasehold or for the taking of the fee, or as severance damages;
provided however, that Tenant shall be entitled to any award for loss of
or damage to Tenant's property and relocation expenses. If this Lease
is not terminated by reason of such Condemnation, Landlord shall, from
severance damages received by Landlord in connection with such
Condemnation, repair any damage to the Premises caused by such
Condemnation except to the extent that Tenant has been reimbursed
therefor by the condemning authority. Tenant shall pay any amount in
excess of such severance damages required to complete such repair.
26. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT. Upon written
request of Landlord, or any mortgagee or beneficiary of Landlord, Tenant
shall, in writing, subordinate its rights hereunder to the interest of
any ground lessor of the Land and to the lien of any mortgage or deed of
trust, now or hereafter in force against the Land and/or Building, and
to all advances made or hereafter to be made thereon, provided, however,
that the ground lessor, or the mortgagee or trustee named in said
mortgage or trust deed shall agree to execute a Non-Disturbance
Agreement in favor of Tenant in the form attached hereto as EXHIBIT "E."
In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage of deeds
of trust, upon any such foreclosure or sale
14
Tenant agrees to recognize such beneficiary or purchaser as the Landlord
under this Lease, provided all of Tenant's rights under this Lease
continue unabated.
27. NOTICES. Notices and demands required or permitted hereunder shall
be sent by certified mail, return receipt requested, postage prepaid, or
by Federal Express or other reputable overnight courier service and
shall be deemed to have been given upon the date the same is postmarked
if sent by certified mail or the day deposited with Federal Express or
such other reputable overnight courier service, but shall not be deemed
received until one (1) business day following deposit with Federal
Express or other reputable overnight courier service or three (3) days
following deposit in the United States Mail sent to Landlord and Tenant
at the addresses specified beneath their signatures hereof or at such
other address requested in writing by either party upon fifteen (15)
days' prior notice to the other party.
28. HOLDING OVER. If Tenant or any party claiming under Tenant remains
in possession of the Premises or any part thereof after any termination
or expiration of this Lease, Landlord, in its sole discretion, may treat
such holdover as a month-to-month tenancy subject to all the terms and
conditions of this Lease provided herein except Base Rent shall be a sum
equal to one hundred fifty (150%) of the Rent most recently paid by
Tenant to Landlord.
29. COVENANT OF TITLE AND QUIET ENJOYMENT. Upon Tenant paying the
rent and charges for the Premises and observing and performing all of
the covenants, conditions, and provisions on Tenant's part to be observed
and performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof subject to all of the provisions of
this Lease.
30. ESTOPPEL CERTIFICATE. Either party, upon request of the other
party, shall execute, acknowledge and deliver an instrument, stating, if
the same is true, that this Lease is a true and exact copy of the Lease
between the parties hereto, that there are no amendments hereof (or
stating what amendments there may be), that it is then in full force and
effect and that, to the best of its knowledge, there are no offsets,
defense or counterclaims with respect to the payment of Rent reserved
hereunder or in the performance of the other terms, covenants and
conditions hereof on the part of Tenant or Landlord, as the case may be,
to be performed, and that as of such date no default has been declared
hereunder by either party or if not specifying the same. Such
instrument will be executed by other party and delivered to the
requesting party within fifteen (15) days of receipt, or else the
statements made in the proposed estoppel request shall be deemed to be
correct.
31. FORCE MAJEURE. In the event that either party hereto shall be
delayed or hindered in or prevented from the performance required
hereunder by reason of strikes, lockouts, labor troubles, failure of
power, riots, insurrection, war, acts of God, or other reason of like
nature not the fault of the party delayed in performing work or doing
acts (herein collectively, "PERMITTED DELAY"), such party shall be
excused for the period of time equivalent to the delay caused by such
Permitted Delay. Notwithstanding the foregoing, any extension of time
for a Permitted Delay shall be conditioned upon the party seeking an
extension of time delivering written notice of such Permitted Delay to
the other party within ten (10) days of the event causing the Permitted
Delay, and the maximum period of time which Landlord shall be permitted
to delay any act or performance of work due to a Permitted Delay shall
be sixty (60) days.
15
32. LIMITATIONS ON LANDLORD'S LIABILITY. Notwithstanding anything to
the contrary contained in this Lease, in the event of any default or
breach by Landlord with respect to any of the terms, covenants and
conditions of this Lease to be observed, honored or performed by
Landlord, Tenant shall look solely to the estate and property of
Landlord in the Land and building(s) owned by Landlord comprising the
Premises for the collection of any judgment (or any other judicial
procedures requiring the payment of money by Landlord) and no other
property or assets of Landlord shall be subject to levy, execution, or
other procedures for satisfaction of Tenant's remedies.
33. WAIVER OF CONTRACTUAL OR STATUTORY LANDLORD'S LIEN. Any statutory
or contractual security interest or lien of Landlord against Tenant's
property shall be and is hereby expressly forever waived and released.
Landlord agrees to execute on demand any and all instruments as may be
reasonably requested by Tenant and/or Tenant's lender in connection with
the provisions of this paragraph.
34. COLLATERAL ASSIGNMENT. Tenant shall have the right, at any time
and from time to time during the Initial Term and the renewal terms, as
security for any indebtedness owed by Tenant to collaterally assign its
right, title and interest in and to this Lease to its lender and if such
lender enforces its rights and remedies under and pursuant to said
assignment or encumbrance, this Lease shall continue in full force and
effect, subject to the terms of this Lease. In connection with any such
collateral assignment, Landlord agrees to execute within thirty (30) days
of written demand an agreement to provide such lender with notice and
opportunity to cure any of Tenant's defaults hereunder for an additional
twenty (20) day period after expiration of cure periods herein provided
to Tenant. Nothing herein shall entitle Tenant to encumber or mortgage
Landlord's fee interest in the Premises, including the improvements
thereon.
35. BROKERS. Landlord covenants and agrees to pay broker's
commissions, if any, in accordance with a separate agreement executed by
and between Landlord and any brokers and, further, agrees to indemnify
Tenant for all claims and demands made by any such broker. In addition,
Landlord and Tenant agree to indemnify and hold each other harmless from
and against any and all liability and cost which Landlord or Tenant, as
applicable, may suffer in connection with any other real estate brokers
claiming by, through, or under Landlord or Tenant, as applicable, seeking
any commission, fee or payment in connection with this Lease.
36. TENANT'S CONDUCT OF BUSINESS. Notwithstanding anything in this
Lease to the contrary, nothing in this Lease shall be construed as an
obligation for Tenant to open or operate its business in the Premises.
Tenant shall have the right to remove Tenant's property and cease
operations in the Premises at any time and at Tenant's sole discretion.
However, the right to cease to operate its business shall not affect
Tenant's obligation to pay all amounts due hereunder and be obligated to
perform all covenants and obligations hereunder. Tenant shall give
Landlord thirty (30) days' prior written notice of its intention to
cease its business operations on the Premises. At such time it is
operating its business in the Premises, Tenant agrees to conduct its
business in a first-class manner consistent with reputable
business standards and practices. Furthermore, in no event shall Tenant be
liable to Landlord for damages as a result of operating other stores in the
area surrounding the Premises or any other area, nor shall Tenant be
limited or restricted in any way from opening or operating other stores in
the area surrounding the Premises or any other area.
37. CONSTRUCTION DISPUTES. Any disputes which may arise between
Landlord and Tenant concerning Landlord's Work or Tenant's Work shall be
submitted to an architect mutually
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selected by Landlord's architect and Tenant's architect, within fifteen
(15) days from notice of the existence of such dispute. Such dispute
shall be adjudicated by the appointed architect within thirty (30) days
of his or her appointment based upon any documentation submitted to him
by Landlord and Tenant. The appointed architect's adjudication of the
dispute shall be final and binding upon Landlord and Tenant who agree
hereby to abide by such decision.
38. LANDLORD'S ACQUISITION CONTINGENCY. The obligations of Landlord
and Tenant under this Lease are contingent upon Landlord's acquisition
of the Land on or before one hundred twenty (120) days from the
execution of this Lease. If said Land is not acquired within such
120-day period, then either Landlord or Tenant shall have the right to
terminate this Lease upon giving sixty (60) days' prior written notice
thereof to the other party hereto. Conversely, if Landlord or Tenant
fails to give such notice of termination within the 60-day period, then
this contingency shall be deemed to be thereafter and forever waived.
If the Lease is duly terminated pursuant to the terms of this paragraph,
then the Lease shall be considered null and void, any and all sums paid
by Tenant to Landlord shall be forthwith refunded and the parties shall
have no further obligations to the other with respect to this Lease.
39. DROP BOX. Subject to compliance with the Project Documents and
applicable law, Tenant may install a drive-by drop box within the Common
Area. The drop box will measure approximately four feet (4') wide,
forty-four inches (44") tall, and thirty-five inches (35") in depth at a
location visible from Tenant's front door, easily accessible to
vehicular traffic and within 30 feet (30') of the Premises.
40. MISCELLANEOUS PROVISIONS.
A. ATTORNEYS' FEES. If either Landlord or Tenant institutes any
action or proceeding against the other relating to the provisions of
this Lease, or any default hereunder, the unsuccessful party in such
action or proceeding agrees to reimburse the prevailing party for the
reasonable expenses of attorneys' fees. Such reimbursement shall
include all legal expenses incurred prior to trial, at trial and at all
levels of appeal and post judgment proceedings.
B. CUMULATIVE RIGHTS AND REMEDIES. All rights and remedies of
Landlord and Tenant herein created or otherwise extending at law are
cumulative, and the exercise of one or more rights or remedies may be
exercised and enforced concurrently or consecutively and whenever and as
often as deemed desirable, except that to the extent any such rights
and/or remedies of Landlord or Tenant existing at law conflict with the
terms of this Lease, then the terms of this Lease shall control.
C. SUCCESSORS AND ASSIGNS. All covenants, promises, conditions,
representations and agreements herein contained shall be binding upon,
apply and inure to the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
D. WAIVER. The failure of either Landlord or Tenant to insist
upon strict performance by the other of any of the covenants,
conditions, and agreements of this Lease shall not be deemed a waiver of
any subsequent breach or default in any of the covenants, conditions and
agreements of this Lease.
E. INTERPRETATION. The parties hereto agree that it is their
intention hereby to create only the relationship of Landlord and Tenant,
and no provision hereof, or act of either party hereunder, shall ever be
construed as creating the relationship of principal and agent, a
partnership, a joint venture or other enterprise between the parties
hereto.
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F. RECORDING. Tenant shall not record this Lease. At Tenant's
request, the parties shall join in the execution of a memorandum or
so-called "short-form" of this Lease for the purposes of recordation in
accordance with the form attached hereto as EXHIBIT "F" and made a part
hereof. Any recording costs associated with the memorandum or short
form of this Lease shall be borne by the party requesting recordation.
G. CONSENT. In connection with any approval or consent of
Landlord required by the terms and conditions of the Lease, Landlord
covenants and agrees that it shall not unreasonably withhold or delay
any such consent or approval. Furthermore, in the event that Landlord
fails to respond to any request by Tenant for Landlord's consent or
approval within thirty (30) days of such request, the consent or
approval of Landlord shall be deemed given.
H. SEVERABILITY. Any provision of this Lease which shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate
any other provisions hereof and such other provisions shall remain in
full force and effect.
I. GOVERNING LAW. This Lease shall be governed by the laws of
the state in which the Premises are located.
J. OBLIGATIONS WHICH SURVIVE EXPIRATION OF THE LEASE. The
following obligations of Landlord shall survive the expiration or
termination of the Lease: (a) any obligation herein permitted to be
performed after the end of the termination of this Lease; (b) any
obligation not reasonably susceptible of performance prior to the
termination of this Lease; and (c) any obligation to be performed
pursuant hereto at or before the end of the Initial Term or any renewal
term which is not so performed. The provisions of this Lease with
respect to any obligation of Tenant to pay any sum owing after the
expiration or other termination of this Lease shall survive the
expiration or other termination of this Lease.
K. TIME OF THE ESSENCE. Time shall be of the essence in
interpreting the provisions of this Lease.
L. INTEREST ON PAST-DUE OBLIGATIONS. If Tenant shall fail to
pay, when the same is due and payable and after proper notice and the
expiration of all cure periods, Base Rent or any other payment due
hereunder, said unpaid amounts shall bear interest from the due date
thereof to the date of payment at an annual rate of interest equal to
the lessor of the prime rate of interest for commercial loans charged by
First National Bank of Chicago plus two percent (2.0%) or the maximum rate
permitted by law. Tenant shall in addition, pay as Additional Rent a
fee of One Hundred Dollars ($100.00) for processing of late payments.
M. ENTIRE AGREEMENT. This Lease contains all of the agreements
of the parties hereto with respect to matters covered or mentioned in
this Lease and no prior agreement, letters, representations, warranties,
promises, or understandings pertaining to any such matters shall be
effective for any such purpose. The Lease may be amended or added to
only by an agreement in writing signed by the parties hereto or their
respective successors in interest.
N. COUNTERPARTS. This Lease may be executed in any number of
counterparts with the same effect as if all Parties hereto had signed the
same document. All counterparts shall be construed together and shall
constitute one Lease.
O. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Project.
Tenant assumes all responsibility for the protection of Tenant, its
agents, and invitees and the property of Tenant and of Tenant's agents
and invitees from acts of third parties.
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P. RENT. All monetary obligations or charges to be paid by Tenant
to Landlord under the terms of this lease shall be treated like "rent"
hereunder.
Q. AUTHORITY TO EXECUTE. The individuals executing this Lease on
behalf of Landlord represent and warrant to Tenant that they are fully
authorized and legally capable of executing this Lease on behalf of
Lessor and that such execution is binding upon all parties holding an
ownership interest in the Project.
"LANDLORD"
HOLLYWOOD VIDEO PARTNERS, LLC
177 S. Beverly Drive
Beverly Hills, California 90212-3002
Dated: 3/1/95 By: /s/ M. E. Zimmerman
---------------- ----------------------------------
Mark E. Zimmerman
"TENANT"
HOLLYWOOD ENTERTAINMENT CORPORATION
10300 S.W. Allen Boulevard
Beaverton, Oregon 97005
Dated: 2/20/95 By: /s/ VP
--------------- ---------------------------------
Its Vice President
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ADDENDUM
Addendum to Lease Agreement
by and Between Hollywood Video Partners, LLC,
Trustee or Assigns ("Lessor")
and Hollywood Entertainment
Corporation dba Hollywood Video
Superstore ("Lessor")
This Addendum to Lease Agreement shall amend, modify and supersede the
specific terms of the Lease Agreement to which this Addendum is attached.
1. THIS LEASE IS CONTINGENT UPON THE APPROVAL BY LANDLORD AND THE CITY OF
KILLEEN, TEXAS OF TENANT'S PLANS AND ELEVATIONS TO BE SUBMITTED BY THE
TENANT INCLUDING, BUT NOT LIMITED TO SIGNAGE AND COLORS. IN THE EVENT
EITHER LANDLORD OR THE CITY OF KILLEEN, TEXAS DO NOT APPROVE THE PLANS AS
SET FORTH HEREIN AND, IF TENANT IN ITS SOLE DISCRETION, DOES NOT ALTER THE
PLANS, TENANT MAY TERMINATE THIS LEASE.
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
FIELD NOTES for a tract of land in Bell County, Texas, part of the John Gosline
Survey, Abstract No. 344, and the land herein described being a part of Lot 1,
Block 2, Highland Development Corporation Commercial Subdivision, an addition to
the city of Killeen, Bell County, Texas, being of record in Cabinet A, Slide 71-
A, Plat Records of Bell County, Texas.
BEGINNING at a 3/8" iron rod set in the south margin of U.S. Highway 190
(Central Texas Expressway) that bears N. 43 DEG. 11' 36" W., 493.88 feet, and N.
49 DEG. 02' 31" W., 99.55 feet from the northwest corner of Lot 1, for the
northeast corner of this.
THENCE N. 82 DEG. 50'14" W., 385.04 feet to a 3/8" iron rod set for the
southwest corner of this.
THENCE N. 07 DEG. 09' 46" E., 178.54 feet, a 3/8" iron rod set, and N. 40 DEG.
58' 10" E., 65.80 feet, to a 3/8" iron rod set in the south margin of U. S.
Highway 190 for the northwest corner of this.
THENCE S. 49 DEG. 02' 31" E., 419.28 feet with the south margin of U. S. Highway
190 to the PLACE OF BEGINNING, containing 1.106 acres of land.
EXHIBIT "B"
SITE PLAN OF PREMISES
[MAP]
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EXHIBIT "B"
SITE PLAN OF PREMISES
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