LEASE AT
NEC STATE HIGHWAY 59 & STATE HIGHWAY 36
(ROSENBURG), TEXAS
DATED: September 20, 1994
--------------------
HWD VIDEO PARTNERS, INC.,
LANDLORD
and
HOLLYWOOD ENTERTAINMENT CORPORATION,
TENANT
EXHIBIT B
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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
18. Damage to Premises. . . . . . . . . . . . . . . . . 11
19. Indemnification . . . . . . . . . . . . . . . . . . 11
20. Permitted Transfers, Assignment, and Subletting . . 12
21. Access to Premises. . . . . . . . . . . . . . . . . 13
22. Default; Remedies . . . . . . . . . . . . . . . . . 13
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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
37. Construction Disputes . . . . . . . . . . . . . . . 17
38. Landlord's Acquisition Contingency. . . . . . . . . 18
39. Drop Box. . . . . . . . . . . . . . . . . . . . . . 18
40. Miscellaneous Provisions. . . . . . . . . . . . . . 18
EXHIBITS
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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 20th day of September, 1994, between HWD VIDEO PARTNERS, INC., a California
corporation (herein the "Landlord") and HOLLYWOOD ENTERTAINMENT CORPORATION, an
Oregon corporation (herein the "Tenant") according to the following terms and
conditions:
1. 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 Rosenburg,
State of Texas, commonly known as NEC State Highway 59 and
State Highway 36, consisting of approximately 34,000 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
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the visibility of or access to the Premises or reduce
parking available to the Premises or otherwise interfere
with Tenant's business.
2. 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.
3. 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 $111,800.00 $ 9,316.66
Years 6-10 $128,750.00 $10,729.16
Years 11-15 $128,750.00 $10,729.16
Years 16-20 $147,855.00 $12,321.25
Years 21-25 $170,033.00 $14,169.41
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
2
days of that month, and the denominator of which is the total number of
days in that month.
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 February 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 one day '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 $0.00 (zero) per square foot 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,
3
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 Rent 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 Accrued Interest is $50,000 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 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)
4
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 any traffic impact fees billed by any governmental
agency as part of the Taxes.
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.
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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 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
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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.
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
7
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 guarantees 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 Landlord's option,
either Tenant's 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.
8
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, fines, penalties, costs, liabilities (including
sums paid in settlement of claims) or loss including attorney's fees,
consultant's 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
report(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 unless such Hazardous Materials are present by the acts
of Tenant or its agents.
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
9
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 is 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 action 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 responsible party diligently contests any such
claim, it agrees to indemnify, defend, and hold harmless the non-responsible
party from any and all costs,
10
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 non-responsible 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 am, 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, restoration 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
11
excess of insurance proceeds which may be required 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
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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. Tenant shall have the right to
transfer, assign, and sublet to or enter into a license or concession
agreement with a third party for any lawful use not in contravention of the
Project Documents of other agreements affecting the premises which runs
with the Land without the prior written consent of the Landlord. 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.
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
13
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 thirty (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 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 has 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
14
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.
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
15
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 or deeds of trust, upon
any such foreclosure or sale 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
16
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.
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,
17
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 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.
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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 one
hundred feet (100') of the leased 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.
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.
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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.
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.
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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"
HWD VIDEO PARTNERS, INC.
c/o James Jay Rubens, Esq.
934 San Vicente Boulevard, Ste. 1000
Santa Monica, California 90402-2004
Dated: 9/20/94 By: /s/ Walker LaBrunerie
------------ ------------------------
Walker LaBrunerie,
its Vice-President
"TENANT"
HOLLYWOOD ENTERTAINMENT CORPORATION
10300 S. W. Allen Boulevard
Beaverton, Oregon 97005
Dated: 9/20/94 By: /s/ Donald J. Ekman
----------- ------------------------
Donald J. Ekman,
-------------------
its Vice President
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