EXHIBIT 10.1
LEASE
between
STATE OF WISCONSIN INVESTMENT BOARD,
AN INDEPENDENT AGENCY OF THE STATE OF WISCONSIN
(Lessor)
and
UNITED MERCHANDISING CORP.,
a California corporation
(Lessee)
Dated as of March 5, 1996
Demised Premises: 7351 McGuire Avenue, Fontana, CA
Big 5, Fontana, CA
2-12-96 (8)
TABLE OF CONTENTS
ARTICLE 1.- PREMISES .................................................... 1
1.1. Demised Premises ......................................... 1
1.2. Title and Condition of the Demised Premises .............. 1
1.3. Quiet Enjoyment .......................................... 2
ARTICLE 2.- TERM ........................................................ 2
2.1. Primary Term ............................................. 2
2.2. Option to Extend ......................................... 2
ARTICLE 3.- RENTAL ...................................................... 2
3.1. Rental For Primary Term and Option Terms ................. 2
3.2. Consumer Price Index ..................................... 4
3.3. Additional Rental ........................................ 5
3.4. Place of Payment ......................................... 5
3.5. No Counterclaim, Abatement, etc .......................... 5
ARTICLE 4.- USE ......................................................... 6
4.1. Permitted Use ............................................ 6
4.2. Forbidden Uses ........................................... 6
4.3. No Covenant To Operate or Occupy ......................... 6
4.4. Laws and Regulations ..................................... 6
ARTICLE 5.- TAXES AND UTILITIES ......................................... 8
5.1. Taxes .................................................... 8
5.2. Income Taxes ............................................. 9
5.3. Utilities ................................................ 9
ARTICLE 6.- MAINTENANCE AND ALTERATIONS ................................. 9
6.1. Maintenance and Repair ................................... 9
6.2. Alterations and Additions ................................ 9
6.3. Machinery and Fixtures ................................... 10
ARTICLE 7.- DAMAGE OR DESTRUCTION ....................................... 10
7.1. Notice to Lessor ......................................... 10
7.2. Damage or Destruction .................................... 11
7.3. No Termination ........................................... 11
7.4. Damage or Destruction During the Last Year of the Term ... 11
7.5. Rebuilding of Premises ................................... 12
7.6. Destruction During Option Terms .......................... 12
ARTICLE 8. - CONDEMNATION ............................................... 12
8.1. Condemnation Award ....................................... 12
8.2. Total or Substantial Taking .............................. 13
8.3. Partial Taking ........................................... 13
8.4. Condemnation During Option Terms ......................... 13
8.5. Taking Defined ........................................... 13
ARTICLE 9. - INSURANCE .................................................. 14
9.1. Nature of Insurance ...................................... 14
9.2. Adjustment of Claims ..................................... 16
9.3. Endorsement in Favor of Lender ........................... 16
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9.4. Certificates of Insurance .............................. 16
ARTICLE 10. - INDEMNIFICATION .......................................... 17
ARTICLE 11. - LIENS .................................................... 17
ARTICLE 12. - ADVANCES BY LESSOR: PERMITTED CONTESTS ................... 18
12.1. Advances ............................................... 18
12.2. Permitted Contests ..................................... 18
ARTICLE 13. - CONDITIONAL LIMITATIONS; EVENTS OF DEFAULT AND REMEDIES... 18
13.1. Default ................................................ 18
13.2. Lessor's Option to Terminate ........................... 19
13.3. Recovery of Damage; Termination of Lease ............... 20
13.4. Expenses of Lessor; Continuation of Lease .............. 20
13.5. Additional Rights of Lessor ............................ 21
13.6. Attorneys' Fees and Other Expenses ..................... 21
ARTICLE 14. - ASSIGNMENT AND SUBLETTING ................................ 22
ARTICLE 15. - MISCELLANEOUS PROVISIONS ................................. 23
15.1. Subordination .......................................... 23
15.2. No Merger .............................................. 24
15.3. Surrender .............................................. 24
15.4. Binding Effect ......................................... 25
15.5. Headings ............................................... 25
15.6. Successors and Assigns ................................. 25
15.7. Notices ................................................ 25
15.8. Local Law to Apply ..................................... 26
15.9. Time is of the Essence ................................. 26
15.10. No Waiver .............................................. 26
15.11. Liability of Lessor and Release ........................ 26
15.12. Financial Statements ................................... 26
15.13. Late Charge ............................................ 27
15.14. Lessor's Right To Perform and Right to Enter ........... 27
15.15. Lessee's Quitclaim ..................................... 27
15.16. Invalidity ............................................. 27
15.17. Hold Over .............................................. 27
Exhibit A - Legal Description of Demised Premises
Exhibit B - Plot Plan of Demised Premises
Exhibit C - Subordination Agreement
Exhibit D - Lessee's Lender's Estoppel and Waiver Letter
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LEASE
THIS LEASE is made as of this _________ day of _______________, 1996, by and
between STATE OF WISCONSIN INVESTMENT BOARD, AN INDEPENDENT AGENCY OF THE STATE
OF WISCONSIN (hereinafter called "Lessor"), and UNITED MERCHANDISING CORP., a
California corporation (hereinafter called "Lessee").
ARTICLE 1. - PREMISES
1.1. DEMISED PREMISES. For and in consideration of the rental hereinafter
reserved, and the mutual covenants, agreements and conditions
hereinafter contained, Lessor does hereby lease to Lessee and Lessee
does hereby rent from Lessor that certain real property commonly
known as 7351 McGuire Avenue, City of Fontana, County of San
Bernardino, State of California, more particularly described in
Exhibit A attached hereto and made a part hereof; together with all
easements, rights and appurtenances in connection therewith;
together with the buildings and improvements now erected or
hereafter to be erected upon the above described real property,
including, without limitation, any fixtures and equipment which are
an integral part of the buildings and improvements for purposes of
their use and operation as an office, warehouse or distribution
facility or which cannot be removed without material damage to such
buildings and improvements (which, by way of example, shall include
all HVAC and mechanical systems, conveyor systems, loading docks,
load leveler systems, carpeting and wall coverings). The real
property owned by Lessor and leased hereunder does not include, and
Lessee shall retain ownership and the right to remove, those items
of personal property and trade fixtures that are attached to or used
in the buildings and improvements solely for the purpose of Lessee
conducting its business therein and which can be removed without
material damage to the buildings and improvements (including,
without limitation Lessee's satellite communication equipment, music
and intercom systems, security systems, and racking systems). Said
real property and the building and improvements thereon may
hereinafter be called "the Premises" or "the Demised Premises". Said
real property exclusive of the building and improvements may
hereinafter be called "the Land". For the convenience of the parties
hereto a plot plan is attached hereto as Exhibit B on which the
Demised Premises is outlined in black.
1.2. TITLE AND CONDITION OF THE DEMISED PREMISES. Lessee represents that
the Demised Premises and the title thereto have been examined and
approved by Lessee and for all purposes of this Lease, Lessee hereby
accepts the Demised Premises in its present condition. Lessee
further represents that the Demised Premises was constructed for the
benefit of Lessee and that Lessee has occupied the Premises since
February, 1990. To Lessee's actual knowledge, as of the date of
execution of this Lease, the Demised Premises is in good condition
and repair and is in compliance with laws.
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1.3. QUIET ENJOYMENT. So long as Lessee shall not be in default under the
terms of this Lease, Lessee shall quietly have and enjoy the Demised
Premises during the term of this Lease.
ARTICLE 2.- TERM
2.1. PRIMARY TERM. The primary term (herein called the "Primary Term")
shall commence on the date hereof (the "Commencement Date") and
shall end at midnight on ______________________, unless terminated
sooner pursuant to the terms hereof.
2.2. OPTION TO EXTEND. Subject to the provisions of this Section 2.2,
Lessee shall have three (3) consecutive options to extend the term
of this Lease for five (5) years each. (Such additional terms may
hereinafter be called "Option Terms".) Such options shall be
personal to United Merchandising Corp., or its Affiliate, as that
term is defined in Section 14.2 hereof, and may not be exercised by
an assignee or sublessee under the Lease, unless said assignee or
sublessee is an Affiliate of United Merchandising Corp., nor may
Lessee exercise an option as provided herein for the purpose of
subletting or assigning the Demised Premises during such Option Term
to any party who is not an Affiliate. The first Option Term shall
commence on the day following the expiration of the Primary Term and
end at midnight five (5) years thereafter. Each succeeding Option
Term shall commence on the day following the preceding Option Term
and end at midnight five (5) years thereafter. Each option shall be
exercised by giving notice to Lessor in writing of the exercise
thereof at least twelve (12) months prior to the commencement of
each Option Term, which notice shall be irrevocable by Lessee. All
Option Terms shall be on the same terms and conditions as otherwise
provided in this Lease, except that the rents payable during the
Option Terms shall be adjusted as set forth below. Notwithstanding
the foregoing, in the event an Event of Default (as defined in
Section 13.1, hereof) exists under this Lease at the time Lessee
exercises its option to extend the term of this Lease, or if an
Event of Default pursuant to the provisions of Section 13.1.1(a)
hereof exists as of the commencement of the respective Option Term,
then Lessor shall have, in addition to all of Lessor's other rights
and remedies under this Lease, the right to terminate such option
and to cancel Lessee's exercise of such option, in which event this
Lease shall expire at the expiration of the Primary Term or any then
existing Option Term, as the case may be.
ARTICLE 3. - RENTAL
3.1. RENTAL FOR PRIMARY TERM AND OPTION TERMS. Commencing on the
Commencement Date and thereafter on the first day of each calendar
month of the Primary Term, and continuing thereafter until the end
of the Primary Term and any Option Term of this Lease. Lessee agrees
to pay, and Lessor agrees to accept, as rental for the Demised
Premises, for each calendar year during the term of this Lease the
sum(s) set forth below in subparagraph(s) 3.1.1 et. seq.
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Said annual rent shall be paid in equal monthly installments in the
amount(s) set forth in said subparagraph(s). For periods of less
than a full calendar month, said monthly rental payment shall be
prorated based on the relationship of the number of days of the term
of this Lease in such month to the total number of days in such
month. If the Commencement Date occurs on other than the first day
of a calendar month, the rental for such partial month shall be
prorated as aforesaid and shall be due and payable on the
Commencement Date.
3.1.1. Commencing on the date referred to in Paragraph 3.1. above,
and continuing for the next sixty (60) full calendar months ("First
Period") of the term of this Lease, the annual rent referred to in
said Paragraph 2.1. shall be the sum of One Million Three Hundred
Fifty Six Thousand Four Hundred Fifty Six and no/100 Dollars
($1,356,456.00) to be paid in equal monthly installments of One
Hundred Thirteen Thousand Thirty Eight and no/100 Dollars
($113,038.00).
3.1.2. Commencing on the first day following the last day of the
First Period, and continuing until the end of the Primary Term
("Second Period"), the annual and monthly rents payable under the
Lease shall be increased and adjusted once by a fixed amount equal
to the percentage increase in the consumer price index ("C.P.I."),
as hereinafter defined, calculated as follows: The adjusted annual
and monthly rents that shall be payable throughout the Second Period
shall be equal to (a) the rent set forth in Paragraph 3.1.1. above,
(b) multiplied by a fraction, (i) the numerator of which shall be
the C.P.I. as of the last day of the First Period and (ii) the
denominator of which shall be the C.P.I. as of the Commencement
Date; provided, however, that the increase in rent shall not be less
than ten and 41/100 percent (10.41%) or be more than twenty one and
67/100 percent (21.67%) of the rental amounts payable during the
First Period under Paragraph 3.1.1. above.
3.1.3. In the event Lessee exercises its right to extend the Lease
for the First Option Term pursuant to the provisions of Section 2.2,
above, commencing on the first day following the last day of the
Primary Term and continuing fox the next sixty (60) months (the
"First Option Term"), the annual and monthly rents payable under the
Lease shall be increased and adjusted once by an amount equal to the
percentage increase in the consumer price index ("C.P.I."), as
hereinafter defined, calculated as follows: The adjusted annual and
monthly rents that shall be payable throughout the First Option Term
shall be equal to (a) the rents set forth in Paragraph 3.1.2. above,
(b) multiplied by a fraction, (i) the numerator of which shall be
the C.P.I. as of the last day of the Primary Term, and (ii) the
denominator of which shall be the C.P.I. as of the last day of the
First Period; provided, however, that the increase in rents shall
not be less than ten and 41/100 percent (10.41%) or be more than
twenty one and 67/100 percent (21.67%) of the rental amounts payable
during the Second Period under Paragraph 3.1.2. above.
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3.1.4. In the event Lessee exercises its right to extend the Lease
for the Second Option Term pursuant to the provisions of Section
2.2, above, commencing on the first day following the last day of
the First Option Term and continuing for the next sixty (60) months
(the "Second Option Term"), the annual and monthly rents payable
under the Lease shall be increased and adjusted once by an amount
equal to the percentage increase in the consumer price index
("C.P.I."), as hereinafter defined, calculated as follows: The
adjusted annual and monthly rents that shall be payable throughout
the Second Option Term shall be equal to (a) the rents set forth in
Paragraph 3.1.3. above, (b) multiplied by a fraction, (i) the
numerator of which shall be the C.P.I. as of the last day of the
First Option Term, and (ii) the denominator of which shall be the
C.P.I. as of the last day of the Primary Term; provided, however,
that the increase in rent shall not be less than ten and 41/100
percent (10.41%) or be more than twenty four and 62/100 percent
(24.62%) of the rental amounts payable during the First Option Term
under Paragraph 3.1.3. above.
3.1.5. In the event Lessee exercises its right to extend the Lease
for the Third Option Term pursuant to the provisions of Section 2.2,
above, commencing on the first day following the last day of the
Second Option Term and continuing for the next sixty (60) months
(the "Third Option Term"), the annual and monthly rents payable
under the Lease shall be increased and adjusted once by an amount
equal to the percentage increase in the consumer price index
("C.P.I."), as hereinafter defined, calculated as follows: The
adjusted annual and monthly rents that shall be payable throughout
the Third Option Term shall be equal to (a) the rents set forth in
Paragraph 3.1.4. above, (b) multiplied by a fraction, (i) the
numerator of which shall be the C.P.I. as of the last day of the
Second Option Term, and (ii) the denominator of which shall be the
C.P.I. as of the last day of the First Option Term; provided,
however, that the increase in rent shall not be less than ten and
41/100 percent (10.41%) or be more than twenty four and 62/100
percent (24.62%) of the rental amounts payable during the Second
Option Term under Paragraph 3.1.4. above.
3.2. CONSUMER PRICE INDEX. For purposes hereof, the C.P.I. shall be the
Consumer Price Index, for all Urban Consumers, "All Items" average
for Los Angeles - Anaheim - Riverside, California, published by the
U.S. Department of Labor, Bureau of Labor Statistics, from time to
time. In the event the Department of Labor or the United States
government shall cease to publish the Consumer Price Index then the
successor index (or most comparable) shall be used unless the
parties hereto otherwise agree. In the event the Department of Labor
or United States government alters the calculation or formula by
which the C.P.I. is determined, the official replacement index
published by either the Department of Labor or the United States
government shall be utilized unless the parties mutually agree chat
an alternative index should be utilized. In the event there is no
official replacement index published the parties hereto covenant and
agree to use reasonable, good faith efforts to agree on an
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index which most closely approximates the information and data
contained in the C.P.I. as of the date of this Lease.
3.3. ADDITIONAL RENTAL. In addition to the scheduled rental payable under
this Article 3, Lessee agrees to pay, as Additional Rental, such
other sums and expenses as shall be required by the terms of this
Lease.
3.4. PLACE OF PAYMENT. All rental due hereunder shall be paid to Lessor
at the address set forth in Section 15.7 herein, as such person or
address may be changed from time to time.
3.5. NO COUNTERCLAIM, ABATEMENT, ETC. This Lease is a net Lease and
except to the extent otherwise expressly provided in this Lease, the
scheduled rent and all other sums payable by Lessee hereunder shall
be paid without notice, demand, offset, suspension, deduction or
abatement and this Lease shall continue in full force and effect and
the obligations and liabilities of Lessee hereunder shall in no way
be released, discharged or otherwise affected (except as expressly
provided herein) by reason of:
3.5.1. any damage to or destruction of or any condemnation or
similar taking of the Demised Premises or any part thereof;
3.5.2. any restriction or prevention of or interference with any use
of the Demised Premises or any part thereof;
3.5.3. any title defect or encumbrance:
3.5.4. any bankruptcy, insolvency, reorganization or other like
proceeding relating to Lessee or by any court, in any such
proceeding;
3.5.5. any claim which Lessee has or might have against Lessor;
3.5.6. any default or failure on the part of Lessor to perform or
comply with any of the terms hereof or of any other agreement with
Lessee; or
3.5.7. any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, any present or future law to the
contrary notwithstanding, whether or not Lessee shall have notice or
knowledge of any of the foregoing. Except as expressly provided in
Sections 7.2. and 8.2. hereof, Lessee waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or
surrender this Lease or the Demised Premises, or any part thereof,
or to any abatement, suspension, deferment, diminution or reduction
of rent or any other sum payable by Lessee hereunder. Nothing
contained herein shall relieve Lessor of its liability to Lessee for
Lessor's breach of any of its obligations under this Lease.
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ARTICLE 4. - USE
4.1. PERMITTED USE. During the Primary term of the Lease, Lessee may use
the Demised Premises for retail, warehouse or distribution purposes,
or for any other lawful purpose approved by Lessor, which approval
shall not be unreasonably withheld, provided said use does not
conflict with the terms of any Covenants, Conditions and
Restrictions of record ("CC&R's") existing and of record as of the
date of this Lease. During the Option terms of the Lease, Lessee may
use the Demised Premises for retail, warehouse or distribution
purposes either consistent with its then practices or otherwise
involving only softgoods and for no other use whatsoever without the
prior written consent of the Lessor, which consent may be withheld
in Lessor's sole and absolute discretion.
4.2. FORBIDDEN USES. Lessee shall not suffer any act to be done or any
condition to exist on the Demised Premises, or any part thereof, or
any article to be brought thereon, which may be dangerous (unless
Lessee employs such safeguards as may be required by law or if not
provided for by law, then as may be reasonable) or which may, in
law, constitute a nuisance, public or private, or which may make
void or voidable any insurance required hereunder to be in force
with respect to the Demised Premises, or any part thereof.
4.3. NO COVENANT TO OPERATE OR OCCUPY. Nothing herein contained shall
require Lessee to continuously operate any particular type of
business on the Demised Premises or to continuously occupy the
Demised Premises. Nothing contained in this Section 4.3 shall be
deemed to relieve Lessee of the full and absolute responsibility for
the maintenance and upkeep of the Demised Premises throughout the
term of this Lease.
4.4. LAWS AND REGULATIONS. Lessee shall not use the Demised Premises or
permit anything to be done in or about the Demised Premises which
will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter
be enacted or promulgated. Lessee shall at its sole cost and expense
comply with all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which may hereafter be
in force relating to or affecting the condition, use or occupancy of
the Demised Premises, including, without limitation, the Americans
with Disabilities Act of 1990, (42 USC Section 12181-12183) and all
orders, rules, regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising
similar functions) now or hereafter applicable to or affecting the
Premises or any part thereof, or any use or condition of the
Premise, whether or not such compliance shall require structural
alterations or additions or interfere with Lessee's use of the
Demised Premises. In the event Lessee is so required to undertake
code required alterations to the Premises Lessee shall notify Lessor
of such requirements before undertaking any such code related
alterations that affect the roof, foundations or any other
structural elements or components of improvements or
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any of the building systems owned by Lessor. If such code required
alterations are required because of other alterations that Lessee
proposes to undertake of the Premises, Lessee shall not undertake
such other alterations unless Lessor has first approved the same
after taking into consideration the code required alterations that
will be required as a result thereof, which approval by Lessor shall
not be unreasonably withheld.
4.5. HAZARDOUS MATERIALS. Lessee covenants to comply, and to cause its
employees, agents, licensees, contractors and permitted assignees or
sublessee to comply, with all local, state and federal laws, rules
and regulations, now or at any time hereafter governing the use,
handling, storage, treatment, removal, production, manufacture,
transportation or disposal of hazardous or toxic substances or
materials on the Demised Premises ("Laws"), and Lessee shall
indemnify, defend and hold harmless Lessor from and against any and
all liabilities, losses, damages, costs, expenses (including
attorneys fees and expenses of Lessor), causes of action, suits,
claims, demands or judgments of any nature (i) resulting from any
spills or discharges of hazardous or toxic substances or materials
on the Demised Premises during the Primary Term or any Option Term
or during any period prior to the Commencement Date when Lessee was
in occupancy of the Premises, caused by any act or omission of
Lessee, or (ii) arising out of any failure on the part of Lessee, or
its employees, agents, licensees, contractors or permitted assignees
or sublessee to comply with all Laws. This indemnity shall include
the cost of any required or necessary repair, cleanup or
detoxification, and the preparation of any closure or other required
plans, whether such action is required or necessary prior to or
following the termination of this Lease. Neither the written consent
by Lessor to the presence of hazardous or toxic materials or
substances on, under or about the Premises nor the strict compliance
by Lessee with all Laws shall excuse Lessee from Lessee's obligation
of indemnification pursuant hereto. Lessee's obligations pursuant to
the foregoing indemnity shall survive the termination of this Lease.
Lessee further covenants and agrees to remove any of its hazardous
or toxic personal property from the Demised Premises at the
expiration or earlier termination of this Lease. Upon Lessor's
written request, Lessee shall deliver to Lessor copies of all
studies, reports and other information submitted by Lessee to any
governmental entity or agency regulating the use of such substances
and materials. Should Lessee at any time receive any notice of
violation of any Laws or be given a citation with respect thereto,
or receive notice of any claims made by any third party against
Lessee relating to the presence or suspected presence of hazardous
or toxic materials or substances on the Premises, Lessee shall
notify Lessor of such notice of violation, citation, or claim and
shall provide Lessor with a copy of the same, and, with respect to
any such violation of Laws or citations, shall cure the deficiency
set forth in such notice of violation or citation within the time
required. Any consent or approval, express or implied, by Lessor of
Lessee's use or handling
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of any hazardous or toxic materials or substances shall not
constitute an assumption of risk by Lessor regarding such materials
or substances or a warranty or certification by Lessor that Lessee's
use or handling of such materials or substances is safe or
reasonable or in compliance with any Laws.
ARTICLE 5. - TAXES AND UTILITIES
5.1. TAXES. As additional rental under this Lease Lessee hereby agrees
that it shall pay, prior to delinquency, all taxes (including,
without limitation, sales and use taxes), assessments and bonds
(including, without limitation, all assessments and bonds for public
improvements or benefits, whether or not commenced, or completed
prior to the date hereof and whether or not completed within the
term hereof), ground rents, water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees
and other authorization fees and other charges, in each case whether
general or special, ordinary or extraordinary, foreseen or
unforeseen, of every character (including all interest and penalties
thereon), which at any time during or in respect of the term hereof
may be assessed, levied, confirmed or imposed on, or in respect of
or be a lien upon (a) the Demised Premises or any part thereof or
any estate, right or interest therein, (b) any occupancy, use or
possession of or activity conducted on the Demised Premises or any
part thereof, (c) any Basic Rent or additional rent reserved or
payable hereunder (excluding any taxes referred to in (i), (ii) or
(iii) of (f) below, (d) this Lease, (e) the gross receipts from the
Demised Premises or the earnings from the use or occupancy thereof,
or (f) Lessor, in its capacity as owner or Lessor of the Demised
Premises, including any tax, surtax or charge measured solely by
rents received by Lessor in respect of the leasing of the Demised
Premises, but excluding municipal, county, state or federal income
taxes assessed against Lessor, municipal, state, or federal capital
levy, estate, succession, inheritance or transfer taxes of Lessor,
or corporation franchise taxes imposed upon any corporate owner of
the Lessor's interest in the Demised Premises; provided, however,
that if at any time during the term of this Lease the methods of
taxation prevailing at the commencement of the term hereof shall be
altered so that in lieu of or as a supplement to or a substitute for
the whole or any part of the taxes, assessments, levies, impositions
or charges now levied, assessed or imposed on real estate and the
improvements thereon, there shall be levied, assessed and imposed,
(i) a tax, assessment, levy, imposition or charge, wholly or
partially as a capital levy or otherwise, on the rents received
therefrom, or (ii) a tax, assessment, levy (including but not
limited to any municipal, state or federal levy), imposition or
charge measured by or based in whole or in part upon the Demised
Premises and imposed upon Lessor, or (iii) a license fee measured
by the rent payable by Lessee under this Lease, then all such
taxes, assessments, levies, impositions or charges or the part
thereof so measured or based, shall be deemed to be included within
the term "Taxes" for the purposes hereof, to the extent that such
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Taxes would be payable if the Demised Premises were the only
property of Lessor subject to such Taxes, and Lessee shall pay and
discharge the same as herein provided in respect of the payment of
all other Taxes. Lessee shall have the option to pay such tax or
assessment in installments, except that each installment thereof,
and any interest thereon, must be paid no later than the earlier to
occur of the final date fixed for the payment thereof or the date on
which a penalty for non-payment could be imposed, and the whole
amount thereof must be paid prior to the expiration of the term of
this Lease, as it may be extended pursuant to Section 2.2. of this
Lease. Taxes and assessments shall be prorated at the end of the
term of this Lease. Lessee will furnish to Lessor, within thirty
(30) days after payment thereof, proof of the payment (copies of tax
bills and cancelled checks shall be deemed sufficient) of any such
tax, assessment, levy, fee, rent or charge which is payable by
Lessee pursuant to this Section.
5.2. INCOME TAXES. Anything in the foregoing to the contrary notwith-
standing, Lessee shall have no obligation under this Lease to pay
any net income, franchise, excess profit or gift, estate or
inheritance tax levied upon or assessed against Lessor, unless such
tax is in lieu of or a substitute for any other tax or assessment
upon or with respect to the Demised Premises which, if such other
tax or assessment were in effect, would be payable by Lessee
hereunder.
5.3. UTILITIES. As additional rental hereunder, Lessee agrees to pay all
charges for water, gas, light, heat, telephone, electricity, power
and other utility and communications services rendered or used on or
about the Demised Premises and all other costs and expenses of any
kind whatsoever arising in connection with the furnishing of such
services to the Premises.
ARTICLE 6. - MAINTENANCE AND ALTERATIONS
6.1. MAINTENANCE AND REPAIR. Lessee will, at its cost and expense, keep
and maintain the Demised Premises, including any rebuilt, additional
or substituted buildings and other improvements in good repair and
condition, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforseen,
subject to the provisions of Section 15.3, hereinafter. Lessor shall
not be required to maintain, alter, repair, rebuild or replace the
Demised Premises or any part thereof, and Lessee expressly waives
the right to make repairs at the expense of Lessor which may be
provided for in any law now in effect or hereafter enacted. Lessor
and its authorized representatives may enter the Demised Premises,
or any part thereof at any reasonable time for the purpose of
inspecting the same. Lessor shall not have any duty to make any such
inspection nor shall it incur any liability or obligation for not
making any such inspection.
6.2. ALTERATIONS AND ADDITIONS. Subject to Lessor's approval of certain
alterations, as described hereinafter, Lessee shall have the right
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at any time to make (a) such additions, alterations, changes or
improvements, in, on or to the Demised Premises as Lessee may deem
necessary or proper, provided, however, that (i) any and all such
work shall fully comply with all codes and regulations and with
other recorded requirements relating to the Demised Premises (such
as CC&R's), (ii) except to the extent required of Lessee by any
governmental authority, no work done by Lessee shall lessen the
market value of the Demised Premises, and (iii) except to the extent
required of Lessee by any governmental authority, no work done by
Lessee shall diminish Lessor's ability to use and/or release the
Demised Premises on the termination or expiration of this Lease.
Lessee shall pay promptly for all such work done by it or upon its
order. Lessee covenants and agrees to give Lessor written notice of
any alteration which affects the roof, foundation or any other
structural elements or components or the building systems, together
with a copy of Lessee's plans and specifications prior to the
commencement of work. Lessee shall also deliver to Lessor, upon
completion of any such work, copies of any "as-built" plans obtained
by Lessee in connection with such additions or alterations. Without
limiting any of Lessee's other obligations with respect to
alterations hereunder, in the event Lessee proposes alterations to
the structure of the improvements, or to any permanent building
systems (such as plumbing and/or HVAC) Lessee shall obtain Lessor's
prior written approval of such alterations, which approval shall not
be unreasonably withheld and will be deemed granted if not
disapproved, with explanation, within two (2) weeks after submittal
by Lessee to Lessor of plans for such alterations.
6.3. MACHINERY AND FIXTURES. In addition to the foregoing, Lessee may, at
any time during the term of this Lease and at its sole cost and
expense, install, assemble or place upon the Demised Premises any
items of machinery or equipment, trade fixtures or other personal
property used or useful in Lessee's business. All such machinery,
equipment, trade fixtures or other personal property shall be and
remain the property of Lessee and Lessee may remove the same from
the Demised Premises at any time prior to the expiration or earlier
termination of this Lease, and in the event of any such removal,
Lessee shall repair any damage to the Demised Premises caused
thereby, at Lessee's cost and expense.
ARTICLE 7. - DAMAGE OR DESTRUCTION
7.1. NOTICE TO LESSOR. If the Demised Premises or any part thereof shall
be damaged or destroyed by fire or other casualty, Lessee shall
promptly notify Lessor of such destruction or damage if the cost of
rebuilding, replacing and repairing such damage or destruction, as
estimated by Lessee, shall either exceed Twenty Five Thousand and
no/100 Dollars ($25,000.00) or affect the roof, foundation or any
other structural elements or components or the building systems
(such as plumbing and/or HVAC) on the Premises. Lessee expressly
waives the provisions of any present or future law
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relating to damage or destruction and agrees that the provisions of
this Lease shall control the rights of Lessor and Lessee.
7.2. DAMAGE OR DESTRUCTION. If the Demised Premises shall be destroyed or
damaged from any cause Lessee shall forthwith repair and restore the
same to substantially the same condition existing immediately prior
to said damage or destruction with all reasonable dispatch and
diligence. Said restoration and repair shall include all fixtures
and equipment in the Demised Premises owned by Lessee and so damaged
or destroyed. So long as Lessee's net worth is Twenty Million and
no/100 Dollars ($20,000,000.00) or more and the amount of any
insurance proceeds payable with respect to any such damage or
destruction of the Demised Premises is less than One Million and
no/100 Dollars ($1,000,000.00), Lessee shall be entitled to receive
such insurance proceeds and shall apply the same as may be required
to the restoration and repair of the Demised Premises as required
under this Article 7. If Lessee's net worth at the time of such
damage or destruction is less than Twenty Million and no/100 Dollars
($20,000,000.00) or if the amount of such insurance proceeds payable
with respect to any such damage or destruction is One Million and
no/100 Dollars ($1,000,000.00) or more, then such insurance proceeds
payable with respect to such damage or destruction shall be paid
into an escrow account and such proceeds shall be disbursed to
Lessee as required to pay invoices for the work or restoration and
repair of the Premises. Any balance of such proceeds remaining
following completion of such repair or restoration shall be
disbursed to Lessee. Lessee shall comply, and shall require all its
contractors to comply, with all federal, state and local laws in
making any said repairs and restoration.
7.3. NO TERMINATION. Except as provided in Section 7.4, such destruction
or damage to the Demised Premises shall not terminate this Lease,
notwithstanding any laws of the state in which the Demised Premises
are located to the contrary.
7.4. DAMAGE OR DESTRUCTION DURING THE LAST YEAR OF THE TERM. Anything in
this Article 7 to the contrary notwithstanding, if the Demised
Premises shall be destroyed or damaged so as to materially interfere
with Lessee's business in the Premises (as reasonably determined by
Lessee using its good faith business judgment) during the last 12
months of the term hereof by reason of any cause, and the Demised
Premises cannot be completely restored within a period of sixty (60)
working days from the date of commencement of such repairs, this
Lease may be terminated upon written notice by either party to the
other and any and all insurance proceeds covering the Premises shall
be paid to Lessor and insurance proceeds covering Lessee's personal
property and trade fixtures shall be paid to Lessee. Provided,
however, that if at the time of said destruction or damage, Lessee
has exercised an option to extend this Lease pursuant to Article 2
hereof, then this Lease shall not be terminable by either party but
shall continue until the expiration of such Option Term and Lessee
shall forthwith repair and restore the Demised Premises as required
pursuant to Sections 7.2 and 7.5
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hereof. Upon such termination Lessee shall be relieved from all
liabilities hereunder except the liability to pay rent up to the
date of such damage or destruction and any accrued charges, costs,
and expenses required to be paid by Lessee hereunder up to said date
and any other liabilities Lessee may have hereunder, including,
without limitation, any indemnity obligations, arising prior to such
termination.
7.5. REBUILDING OF PREMISES. If the Demised Premises shall be damaged or
destroyed by any casualty during the primary term of this Lease, and
this Lease is not terminated pursuant to the provisions of Section
7.4, above, then this Lease shall continue in full force and effect
and Lessee shall promptly, at its cost and expense, restore and
rebuild the Demised Premises as nearly as may be practicable under
the circumstances to substantially the same condition existing
immediately prior to said damage or destruction irrespective of the
availability or sufficiency of any fire or other insurance proceeds
payable with respect thereto. If the cost and expense of such
repairs shall exceed the amount of any such net proceeds, the
deficiency shall be paid by Lessee.
7.6. DESTRUCTION DURING OPTION TERMS. If any portion of the Demised
Premises shall be damaged or destroyed by any casualty during any
Option Term of this Lease, and the Premises cannot reasonably be
expected to be completely restored within three hundred sixty five
(365) days of the date of such loss, then Lessee may elect to
restore or rebuild the Demised Premises in the manner set forth in
Section 7.2 and 7.5 or Lessee may, within ninety (90) days after
such loss or damage give to Lessor a thirty (30) day notice, in
writing, cancelling and terminating the Option Term then in effect.
On the expiration of said thirty (30) day notice, the Option Term
shall terminate. As a condition to such termination, any and all
insurance proceeds covering the Lessor's interest in the Premises
shall be paid to Lessor and the insurance proceeds covering Lessee's
personal property and trade fixtures shall be paid to Lessee. Upon
such termination Lessee shall be relieved from all liabilities
hereunder except the liability to pay rent up to the date of such
damage or destruction and, subject to any insurance payment to
Lessor, any accrued charges, costs, and expenses required to be paid
by Lessee hereunder up to said date and all other liabilities Lessee
may have hereunder, including, without limitation, any indemnity
obligations, arising prior to such termination.
ARTICLE 8. - CONDEMNATION
8.1. CONDEMNATION AWARD. Any condemnation award arising out of a total or
partial taking of the Demised Premises shall belong solely to the
Lessor except for any portion of the award attributable to Lessee's
leasehold interest during the Primary Term (but not during any
exercised or unexercised Option Term) of this Lease, Lessee's trade
fixtures, equipment or leasehold improvements made by Lessee at its
expense. In addition, Lessee shall have the right to claim
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any compensation as may be separately awarded or receivable by
Lessee in Lessee's own right on account of its relocation expenses,
loss of goodwill, any cost or loss Lessee may suffer for the removal
of its merchandise, furniture, trade fixtures or equipment, or the
interruption of, or damage to Lessee's business.
8.2. TOTAL OR SUBSTANTIAL TAKING. If during the Primary Term of this
Lease:
8.2.1. the entire Demised Premises shall be taken by condemnation or
other eminent domain proceedings pursuant to any law, general or
special, or
8.2.2. any substantial portion of the Demised Premises which is
sufficient in Lessee's reasonable and good faith judgment to render
the remaining portion thereof unsuitable for Lessee's continued use
or occupancy of the Demised Premises shall be taken by such
proceedings, then Lessee may, within thirty (30) days after any such
taking, give notice to Lessor of its intention to terminate this
Lease on any rental payment day specified in such notice which
occurs not less than ninety (90) days after such notice.
8.3. PARTIAL TAKING. If a portion of the Demised Premises shall be taken
by condemnation or other eminent domain proceedings pursuant to any
law, general or special, which taking is not sufficient to require
Lessee to give notice of its intention to terminate this Lease as
provided in Section 8.2, then this Lease shall continue in full
effect without abatement or reduction of rent (except as provided
hereinafter in this Section 8.3), additional rent or other sums
payable by Lessee hereunder notwithstanding such taking, and Lessee
shall, promptly after any such taking and at its expense, repair any
damage caused by any such taking in conformity with the requirements
of Section 7.2 so that after the completion of such repairs the
Demised Premises shall be, as nearly as practicable in a condition
as good as the condition thereof immediately prior to such taking.
In the event of any such taking by condemnation or other eminent
domain proceedings, Lessee shall be entitled to receive all of the
award payable in connection with such taking. If the cost of any
repairs required to be made by Lessee pursuant to this Section 8.3,
shall exceed the amount of the award, the deficiency shall be paid
by Lessee. Subject to Lessee's rights to receive all awards for
reconstruction of the improvements, any award granted and allocated
to Lessor's interest in the Demised Premises shall be paid to Lessor
and Lessee shall be entitled to an equitable abatement of rent based
upon the extent of the Premises taken and the adverse effect on
Lessee's ability to use and enjoy the Premises following such
taking.
8.4. CONDEMNATION DURING OPTION TERMS. Not Used.
8.5. TAKING DEFINED. For the purposes of this Lease, all amounts payable
pursuant to any agreement with any condemning authority which has
been made in settlement of or under threat of any
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condemnation or other eminent domain proceeding affecting the
Demised Premises shall be deemed to constitute an award made in such
proceeding.
ARTICLE 9. - INSURANCE
9.1. NATURE OF INSURANCE. Lessee will at all times maintain insurance on
the Demised Premises of the following character:
9.1.1. Insurance against loss or damage by fire and other risks from
time to time included under so-called "all-risk", including extended
coverage endorsements and boiler and machinery comprehensive
coverage, standard for use in the State of California, and also
including earthquake and flood coverage, in amounts equal to the
full replacement value of the Demised Premises, reviewed annually.
As used herein, "full replacement value" shall mean actual
replacement cost (exclusive of the cost of excavation, foundations
and subsurface footing) without deduction for physical depreciation.
Notwithstanding anything to the contrary contained in this Article
9, in the event Lessee's net worth is at any time less than Twenty
Million and no/100 Dollars ($20,000,000.00), Lessee shall provide
for the insurance required pursuant to this Section 9.1.1 to have a
deductible for earthquake coverage of no greater than twelve and
5/100 percent (12.5%) of the value of the property required to be
insured and for all other insurance required hereunder, a deductible
of no greater than Seventy Five Thousand and no/100 Dollars
($75,000.00) per occurrence. So long as Lessee's net worth exceeds
Twenty Million and no/100 Dollars ($20,000,000.00), any deductible
amounts shall be subject to the self-insurance limits set forth in
section 9.1.3, hereinafter. In the event this Lease is terminated
pursuant to the provisions of Sections 7.4 or 7.6, above, Lessee's
obligation to pay insurance proceeds to Lessor shall include the
amounts of any deductible and/or any self-insured retention amounts.
9.1.2. Commercial general liability insurance against claims for
bodily injury, death or property damage occurring on, in or about
the Demised Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford protection of not less than a
combined single limit liability of Five Million and no/100 Dollars
($5,000,000.00), providing coverage for, among other things, blanket
contractual liability, premises and personal injury coverage, with
the deletion of railroad track (railroad protective liability), if
applicable, and the exclusion for explosion, collapse or
underground hazard, if applicable. In no event shall the liability
amount be less than Five Million and no/100 Dollars ($5,000,000.00).
Said minimum limit of liability shall be subject to periodic
adjustment (but no more frequently than once every five years), so
as to conform with standard industry practice for similar properties
in similar geographic locations. Any such adjustment must be
reasonably approved by Lessee and documented by written amendment to
this Lease.
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9.1.3. Such insurance shall be written by companies licensed to do
business in the State of California and with a general policy
holder's rating of at lease B+ and a financial rating of at least X
in the most current "Best Insurance Report" (or its equivalent
replacement should such report cease to be issued) or as otherwise
reasonably approved by Lessor, as available on the Commencement Date
and annually thereafter. Such insurance shall (i) name as the
insured parties thereunder Lessee, the Lessor and Bristol Group,
Inc., as their interests may appear; (ii) shall contain an
endorsement that such insurance shall remain in full force and
effect notwithstanding that the insured may have waived its right of
action against any party prior to the occurrence of a loss; (iii)
shall, to the extent commercially available, contain an endorsement
prohibiting cancellation, failure to renew, reduction of amount of
insurance or change in coverage without the insurer's first giving
Lessor thirty (30) days prior written notice of such proposed
action; (iv) provide that any insurer issuing liability insurance
waives all rights of recovery by way of subrogation against Lessor
or Lessee, as the case may be, and their respective shareholders,
partners, beneficial owners, agents, employees and representatives
in connection with any loss or damage covered by such insurance; (v)
be primary and non contributory, and (vi) comply with any other
requirements set forth in this Article 9. Such insurance may be
obtained by Lessee by endorsement on its blanket insurance policies,
provided that such blanket policies satisfy the requirements
specified above in this Section. Lessee may carry all or any part of
such insurance:
a. (i) under any plan of self-insurance which it may from
time to time have in force and effect, with a
self-insured retention of up to Five Hundred Thousand
and no/100 Dollars ($500,000.00) (except any earthquake
deductible may be up to twelve and 5/100 percent (12.5%)
of the value of the property required to be insured) so
long as Lessee's net worth exceeds Twenty Million and
no/100 Dollars ($20,000,000.00) (which self-insured
retention may be increased by Lessee to Seven Hundred
Fifty Thousand and no/100 Dollars ($750,000.00) so long
as Lessee's net worth exceeds Thirty Five Million and
no/100 Dollars ($35,000,000.00) and to One Million and
no/100 Dollars ($1,000,000.00) so long as Lessee's net
worth exceeds Fifty Million and no/100 Dollars
($50,000,000.00), provided that in no event shall
Lessee's self insured retention exceed the sum of One
Million and no/100 Dollars ($1,000,000.00), or (ii)
under a "blanket" policy or policies covering other
liabilities of Lessee and its subsidiaries, controlling
or affiliated corporations, or
b. partly under such a plan of self-insurance and partly
under such "blanket" policies.
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Lessor shall not be required to prosecute any claim against any
insurer or to contest any settlement proposed by any insurer,
provided that Lessee may, at its cost and expense, prosecute any
such claim or contest any such settlement, and in such event Lessee
may bring any such prosecution or contest in the name of Lessor,
Lessee or both, and Lessor shall cooperate with Lessee and will join
therein at Lessee's written request upon receipt by Lessor of an
indemnity from Lessee against all costs, liabilities and expenses in
connection with such cooperation, prosecution or contest.
9.2. ADJUSTMENT OF CLAIMS. Insurance claims by reason of damage or
destruction to any portion of any Demised Premises shall be adjusted
by and at the cost of Lessee, provided, however, that if the loss
shall be in excess of One Hundred Thousand and no/100 Dollars
($100,000.00), no final adjustment shall be made with the insurance
company or companies, without the written approval of Lessor of the
amount of the adjustment.
9.3. ENDORSEMENT IN FAVOR OF LENDER. Upon thirty (30) days advance
written notice from Lessor, each such insurance policy (other than
liability insurance policies) maintained pursuant to this Section
shall, to the extent available, bear a standard first mortgagee
endorsement in favor of any lender holding a first deed of trust on
the Demised Premises (hereinafter called "Lender"), but,
notwithstanding such endorsement, each payment for a single loss
which does not exceed One Hundred Thousand and no/100 Dollars
($100,000.00) shall be made directly to Lessee, and all other loss
under any such policy shall be made payable to Lender, but
recoveries under any such policies received by Lender shall be paid
to Lessee for the repair and restoration of the Demised Premises as
provided in Sections 7.2 or 7.4 of this Lease. Every such policy
shall provide that the issuer thereof waives all rights of
subrogation against Lessee, Lessor, any successor to Lessor's
interest in the Demised Premises, that ten (10) days' prior written
notice of cancellation shall be given to Lessor and Lender and that
such insurance, as to the interest of Lender therein, shall not be
invalidated by any act or neglect of Lessor or Lessee or any owner
of the Demised Premises, nor by any foreclosure or any other
proceedings or notices thereof relating to the Demised Premises, nor
by any change in the title or ownership of the Demised Premises, nor
by occupancy of the Demised Premises for purposes more hazardous
than are permitted by such policy.
9.4. CERTIFICATES OF INSURANCE. Lessee shall deliver to Lessor promptly
after the execution and delivery of this Lease certificates of
insurance evidencing all the insurance which is required to be
maintained by Lessee hereunder, and Lessee shall, at least thirty
(30) days prior to the expiration of any such insurance, deliver
certificates of insurance evidencing the renewal of such insurance.
Should Lessee fail to maintain or renew any insurance provided for
in this Section, or to deliver to Lessor any of such policies or
certificates, Lessor at its option, but without obligation so to
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Big 5, Fontana, CA
2-12-96 (8)
do, may upon fifteen (15) days' notice to Lessee, procure such
insurance, and any sums expended by it to procure such insurance
shall be additional rent hereunder and shall be repaid by Lessee
within ten (10) days following the date on which demand therefor
shall be made by Lessor.
ARTICLE 10. - INDEMNIFICATION
10.1. Lessee agrees to indemnify, defend and hold Lessor harmless from and
against, any and all liabilities, losses, damages, costs, expenses
(including attorneys' fees and expenses of Lessee and Lessor),
causes of action, suits, claims, demands or judgments of any nature
arising from:
10.1.1. any injury to, or the death of, any person or any damage to
property on the Demised Premises or upon adjoining sidewalks or
streets, or in any manner growing out of or connected with the use,
nonuse, condition or occupancy of the Demised Premises or the
construction or repair of any improvements on the Demised Premises,
or resulting from the condition of adjoining sidewalks or streets,
10.1.2. violation of any agreement or condition of this Lease and of
any contracts or agreements of which Lessee has notice, or which
shall have existed at the commencement of this Lease or which shall
have been approved by Lessee, and of any restrictions, laws,
ordinances or regulations affecting the Demised Premises or the
occupancy or use thereof,
10.1.3. any encroachment of improvements on the Demised Premises
upon property adjoining the Demised Premises, and
10.1.4. any contest permitted by Section 12.2.
ARTICLE 11. - LIENS
11.1. Lessee will not permit to remain, and will promptly discharge, at
its cost and expense, all liens (other than liens created by Lessor)
upon the Demised Premises; provided that the existence of any
mechanic's, laborer's, materialman's, supplier's or vendor's lien or
right thereto shall not constitute a violation of this Section if
payment is not yet due under the contract which is the foundation
thereof. Lessor is hereby given authority to enter upon the Demised
Premises at any time to post any notices which in its opinion shall
be necessary to hold Lessor harmless from any claim or liability
arising out of any work done on the Demised Premises. Notice is
hereby given that Lessor will not be liable for any labor, services
or materials furnished or to be furnished to Lessee, or to anyone
holding the Demised Premises through or under Lessee, and that no
mechanic's or other such lien for any such labor or materials shall
attach to or affect the interest of Lessor in and to the Demised
Premises.
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ARTICLE 12. - ADVANCES BY LESSOR: PERMITTED CONTESTS
12.1. ADVANCES. If Lessee shall fail to make any payment or perform any act on
its part to be made or performed under this Lease, then, subject to the
provisions of Section 12.2 hereof, Lessor may (but shall not be obligated
to), upon fifteen (15) days written notice to Lessee and without waiving
any default or releasing Lessee from any obligation, make such payment or
perform such act for the account and at the cost and expense of Lessee.
All sums so paid by Lessor and all necessary and incidental costs and
expenses (including attorneys' fees and expenses) incurred in connection
therewith, together with interest at the rate of twelve percent (12%) per
annum from the date of the making of such payment by Lessor, shall be
payable by Lessee to Lessor, on demand.
12.2. PERMITTED CONTESTS. Lessee shall not be required to pay any tax,
assessment, levy, fee, rent or charge or to discharge or remove any lien,
encumbrance or charge or to comply with any law, rule, order, regulation
and ordinance, so long as Lessee shall contest, in good faith and at its
cost and expense, the amount or validity thereof, by appropriate
proceedings which shall operate during the pendency thereof to prevent the
sale, forfeiture or loss of the Demised Premises or any part thereof.
While any such proceedings are pending, Lessor shall not have the right to
pay, remove, cause to be discharged or comply with the tax, assessment,
levy, fee, rent, charge, lien, encumbrance, law, rule, order, regulation
or ordinance being contested. Each such contest shall be promptly
prosecuted to a final conclusion, and Lessee will pay, and save Lessor
harmless against all losses, judgments and costs (including attorneys'
fees and expenses) in connection therewith, and will, promptly after the
final determination of such contest, pay and discharge the amounts which
shall be levied, assessed or imposed or determined to be payable therein,
together with all penalties, fines, interests, costs and expenses thereon
or in connection therewith. No such contest shall subject Lessor to risk
of any criminal liability, and Lessee shall give reasonable security to
Lessor as may be demanded by Lessor to insure payment of or compliance
with any tax, assessment, levy, fee, rent, charge, lien, encumbrance, law,
rule, order, regulation or ordinance contested as provided in this Section
and to prevent any such sale or forfeiture.
ARTICLE 13. - CONDITIONAL LIMITATIONS; EVENTS OF DEFAULT AND REMEDIES
13.1 DEFAULT. Any of the following occurrences, following the below described
notices and opportunities to cure, shall constitute an event of default
("Event of Default") under this Lease:
13.1.1. if Lessee shall:
a. fail to make any payment of rent, or other sum herein
required to be paid by Lessee and such failure shall continue
for ten (10) days after Lessor shall have given written notice
of such non-payment to Lessee, or
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b. fail to substantially perform any of Lessee's other covenants,
agreements or obligations hereunder and such failure shall
continue for thirty (30) days after Lessor shall have given
written notice to Lessee specifying such failure or, if such
default cannot be cured by the payment of money and cannot
with due diligence be cured within such thirty (30) day
period, if Lessee shall fail to proceed promptly to cure the
same and thereafter prosecute the curing of such default with
diligence, or
13.1.2. if Lessee shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any present or future
federal bankruptcy act or under any similar federal or state law, or shall
be adjudicated a bankrupt or insolvent or shall make an assignment for the
benefit of its creditors or shall admit in writing its inability to pay
its debts generally as they become due, or if a petition or answer
proposing the adjudication of Lessee as a bankrupt or its reorganization
under any present or future federal bankruptcy act or any similar federal
or state law shall be filed in any court and such petition or answer shall
not be discharged or denied within ninety (90) days after the filing
thereof, or
13.1.3. if Lessee shall make a general assignment for the benefit of
creditors or if a receiver, trustee or liquidator of Lessee or of all or
substantially all of Lessee's assets or of Lessee's interest in the
Demised Premises shall be appointed in any proceeding brought by Lessee,
or if any such receiver, trustee or liquidator shall be appointed in any
proceeding brought against Lessee and shall not be discharged within
ninety (90) days after such appointment or if Lessee shall consent to or
acquiesce in such appointment.
13.1.4. If Lessee shall furnish financial statements to Lessor that are
known to Lessee to be false or misleading.
13.2. LESSOR'S OPTION TO TERMINATE. In the event of a default of Lessee, Lessor
shall have the right, at its election, then or thereafter while any such
event of default shall continue and notwithstanding the fact that Lessor
may have some other remedy hereunder or at law or in equity, to give
Lessee written notice of Lessor's intention to terminate the term of this
Lease on a date specified in such notice, which shall be not less than
thirty (30) days after the giving of such notice, and upon the date so
specified, the term of this Lease and the estate hereby granted shall
expire and terminate and all rights of Lessee hereunder shall expire and
terminate. In lieu of terminating this Lease, Lessor may elect to continue
this Lease, in which event Lessor shall have the immediate right of
re-entry and possession of the Demised Premises and the right to remove
all persons and property therefrom. Should Lessor elect to re-enter as
herein provided or should Lessor take possession pursuant to legal
proceedings or pursuant to any notice provided for by law, Lessor may from
time to time re-let the Demised Premises or any part thereof for such term
or terms and at such rental or rentals and
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upon such terms and conditions as Lessor may deem advisable, with the
right to make repairs and alterations to the Demised Premises.
13.3. RECOVERY OF DAMAGE; TERMINATION OF LEASE. In the event of any termination
of the term of this Lease as provided in this Article Lessee shall quit
and surrender the Demised Premises to Lessor, and Lessor may without
further notice re-enter and repossess the same by summary proceedings,
ejectment or otherwise, and in any such event neither Lessee nor any
person, claiming through or under Lessee shall be entitled to possession
or to remain in possession of the Demised Premises but shall forthwith
quit and surrender the Demised Premises. Upon such termination, Lessor may
recover from Lessee: (a) the worth at the time of award of the unpaid rent
which had been earned at the time of termination; (b) the worth at the
time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of
such rental loss that Lessee proves could have been reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid rent
for the balance of the term after the time of award exceeds the amount of
such rental loss that Lessee proves could be reasonably avoided; and (d)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform its obligations under
this Lease or which in the ordinary course of things would be likely to
result therefrom. The "worth at the time of award" of the amounts referred
to in (a) and (b) above is computed by allowing interest at an annual
interest rate of ten percent (10%). The "worth at the time of award" of
the amount referred to in (c) above is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). Nothing herein contained shall
limit or prejudice the right of Lessor, in any bankruptcy or
reorganization or insolvency proceeding, to prove for and obtain by reason
of such termination an amount to the maximum allowed by any bankruptcy or
reorganization or insolvency proceedings, or to prove for and obtain by
reason of such termination, an amount equal to the maximum allowed by any
statute or rule of law whether such amount shall be greater or less than
the excess referred to above. In the event that Lessee, prior to the
occurrence of an Event of Default hereunder, exercises an option to extend
the term of this Lease pursuant to Section 2.2 and at the time of
commencement of the Option Term an Event of Default exists hereunder but
not an Event of Default giving Lessor the right to terminate the option
and cancel Lessee's exercise thereof pursuant to Section 2.2, then, for
purposes of the preceding clause (d) of this Section 13.3, Lessor shall be
entitled to recover from Lessee any consequential damages arising out of
or in connection with Lessor's inability to terminate such option and
recover possession of the Demised Premises at the expiration of the
Primary Term or any then-existing Option Term, as the case may be.
13.4. EXPENSES OF LESSOR; CONTINUATION OF LEASE. If Lessor shall re-enter and
obtain possession of the Demised Premises following an event of default,
and elect to continue this Lease, Lessor shall
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Big 5, Fontana, CA
2-12-96 (8)
have the right, without notice, to repair or alter the Demised Premises in
such manner as Lessor deems necessary or advisable so as to put the
Demised Premises in good order and to make the same rentable, and shall
have the right, at Lessor's option, to re-let the Demised Premises or any
part thereof. Lessee agrees to pay to Lessor on demand all expenses
incurred by Lessor in obtaining possession, and in altering, repairing and
putting the Demised Premises in good order and condition, and in reletting
the same, including fees of attorneys and architects, and all other
reasonable expenses or commissions, and Lessee further agrees to pay to
Lessor upon the rental payment dates following the date of such re-entry
until the expiration of the term of this Lease the sums of money which
would have been payable by Lessee as rent hereunder on said rental payment
dates if Lessor had not re-entered and resumed possession of the Demised
Premises deducting only the net amount of rent, if any, which Lessor shall
actually receive (after deducting from the gross receipts the expenses,
costs and payments of Lessor which in accordance with the terms of this
Lease would have been borne by Lessee) in the meantime from and by any
reletting of the Demised Premises. In addition, Lessee shall remain liable
for all sums otherwise payable by Lessee under this Lease, and Lessor
shall have the right from time to time to bring successive actions or
other legal proceedings against Lessee for the recovery of such deficiency
or expenses. The liability of Lessee herein provided shall survive the
commencement of any action to secure possession of the Demised Premises.
Nothing herein contained shall be deemed to require Lessor to wait to
commence such action or other legal proceedings until the date when this
Lease would have expired had there been no such event of default.
13.5. ADDITIONAL RIGHTS OF LESSOR. No right or remedy herein conferred upon or
reserved to Lessor is intended to be exclusive of any right or remedy, and
every right and remedy shall be cumulative and in addition to any other
right or remedy given hereunder or now or hereafter existing at law unless
otherwise provided herein. The failure of Lessor to insist at any time
upon the strict performance of any covenant or agreement or to exercise
any right, power or remedy contained in this Lease shall not be construed
as a waiver or relinquishment thereof for the future. The receipt by
Lessor of any rent or other sum payable hereunder with knowledge of the
breach of any covenant or agreement contained in this Lease shall not be
deemed a waiver of such breach, and no waiver by Lessor of any provision
of this Lease shall be deemed to have been made unless expressed in
writing and signed by Lessor. Lessor shall be entitled, to the extent
permitted by law, to injunctive relief in case of the violation, or
threatened violation, of any covenant, agreement, condition or provision
of this Lease or to any other remedy allowed to Lessor by law.
13.6. ATTORNEYS' FEES AND OTHER EXPENSES. If Lessee shall be in default in the
performance of any of its obligations under this Lease and an action shall
be brought for the enforcement thereof in which it shall be determined
that Lessee was in default, Lessee shall pay to
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2-12-96 (8)
Lessor the expenses incurred in connection therewith including reasonable
attorneys' fees. If Lessor shall without fault on its part be made a party
to any litigation commenced against Lessee, and if Lessee shall not
provide Lessor with counsel reasonably satisfactory to Lessor, Lessee
shall pay all costs and attorneys' fees incurred or paid by Lessor in
connection with such litigation. Lessor and lessee agree to cooperate with
each other in a timely manner on the selection of counsel to represent
Lessor.
ARTICLE 14. ASSIGNMENT AND SUBLETTING
14.1. Subject to the provisions of Section 2.2, above, relating to the option
terms of this Lease being personal to Lessee and subject to the provisions
of Section 4.1, above, relating to the restrictions on the use of the
Demised Premises, Lessee may sublet up to eighty percent (80%) of the
Demised Premises or any part thereof, or may assign its interest under
this Lease, provided that each assignment or sublease shall expressly be
made subject to the provisions of this Lease and further provided that
Lessee shall remain primarily liable under the terms of this Lease. No
assignment or sublease made as permitted by this Section shall affect or
reduce any obligations of Lessee or rights of Lessor hereunder. Any
assignment or subletting of the Premises during or for any Option Term
shall be subject to the provisions of Section 14.3, hereinafter.
14.2. Notwithstanding the foregoing, and notwithstanding the provisions and
restrictions with respect to options as set for in Section 2.2, above,
Lessee may freely assign, sublease or transfer this Lease (i) to any
corporation which owns or controls Lessee, (ii) to any corporation owned
or controlled by Lessee, (iii) to any corporation owned or controlled by,
or which is an Affiliate of any corporation which owns or controls Lessee,
(iv) to any corporation resulting from a consolidation or to the surviving
corporation in case of a merger, to which consolidation or merger Lessee
shall be a party, or (v) to a corporation to which all or substantially
all of the assets of Lessee have been sold (any such entity referred to in
(i) through (v) above being herein referred to as an "Affiliate").
14.3. If, during any Option Term Lessee desires to assign the Lease Lessee shall
give Lessor written notice of such intent, accompanied by the identity of
the proposed assignee and such other information as lessor may reasonably
request and which is in the possession of Lessee. Lessor shall then have a
period of twenty (20) days following receipt of such notice and
information within which to notify Lessee in writing that Lessor elects
either (i) to terminate this Lease as of the date specified by Lessee in
the information provided to Lessor, in which event Lessee shall be
relieved of all liabilities hereunder except the liability to pay rent up
to the date of such termination and any accrued charges, costs and
expenses required to be paid by Lessee hereunder up to the date of such
termination, and any other liabilities Lessee may have hereunder,
including, without limitation, any indemnity obligations arising prior to
such termination, or (ii) to permit such assignment, which
22
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2-12-96 (8)
permission shall not be unreasonably withheld. In the event Lessee sublets
the Premises for occupancy during an Option Term and such sublet provides
for a rental stream in excess of that payable by Lessor to Lessee
hereunder, than seventy five percent (75%) of such "profits" (being
defined as all income received by Lessee from a subtenant in excess of
remodel, brokerage and other similar costs incurred in connection with the
transaction) shall be payable to Lessor and the remaining twenty five
percent (25%) shall be paid to Lessee. In the event Lessee sublets the
Premises for occupancy during an Option Term and such sublet covers fifty
one percent (51%) or more of the Demised Premises, such sublet shall be
deemed an assignment for purposes of this Section 14.3 and subject to
Lessor's right to either permit the subletting or terminate this Lease.
The provisions of this Section 14.3 shall not apply in connection with any
subletting by Lessee (i) to any corporation which owns or controls Lessee,
(ii) to any corporation owned or controlled by Lessee, (iii) to any
corporation owned or controlled by or affiliated with any corporation
which owns or controls Lessee, (iv) to any corporation resulting from a
consolidation or to the surviving corporation in case of a merger, to
which consolidation or merger Lessee shall be a party, or (v) to a
corporation to which all or substantially all of the assets of Lessee have
been sold (any such entity referred to in (i) through (v) above being
herein referred to as an "Affiliate").
ARTICLE 15. - MISCELLANEOUS PROVISIONS
15.1. SUBORDINATION. In the event the Demised Premises are subject to one or
more mortgages or deeds of trust, Lessor agrees to deliver to Lessee on or
before the commencement of the term of this Lease a Non-Disturbance,
Attornment and Subordination Agreement executed by each such mortgagee or
holder of said deed of trust in the form attached hereto as Exhibit C. If
Lessor fails to deliver said Agreement to Lessee prior to the commencement
of the term hereof, Lessee may, at its option, defer the payment of any
and all rental due hereunder until said Agreement is delivered to Lessee.
During such period of deferral, said rental shall accrue without
interest. Lessee shall pay such accrued rent in full to Lessor within
fifteen (15) days after Lessee's receipt of said Agreement in recordable
form fully executed by each such Beneficiary.
15.1.1. Lessee covenants that it will execute an agreement subordinating
this Lease to any mortgage or deed of trust subsequently placed upon the
Demised Premises in either the form attached hereto as Exhibit C or in
such other form as may be requested by Lessor's mortgagee provided such
other form in no way increases Lessee's liabilities or obligations
hereunder or diminishes Lessee's rights hereunder. Lessor covenants that
it will execute an agreement setting forth certain information regarding
this Lease, as well as acknowledging certain rights of Lessee and any
lender of Lessee, in the form attached hereto as Exhibit D.
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15.1.2. From time to time (but not more than twice in any calendar year)
upon not less than thirty (30) days prior written notice which shall be
accompanied by a form of estoppel statement, each party shall execute,
acknowledge and deliver to the other a statement in writing:
a. certifying that this Lease is unmodified (except for any
amendments specifically stated) and in full force and effect
(or, if modified, that the same is in full force and effect as
modified),
b. setting forth the date of termination of the term of this
Lease and the status of the exercise of any Option Terms,
c. setting forth the then currently scheduled monthly rent
payable under the Lease and the date to or through which rent
has been paid,
d. acknowledging that there are not, to such party's knowledge,
any uncured defaults on the part of the other hereunder, or
specifying such defaults if any are claimed, and
e. acknowledging that such party has no claims or offsets against
the other party, or specifying such claims or offsets if any
are claimed.
In addition to the foregoing, Lessee covenants and agrees to use good
faith efforts to cooperate with Lessor in providing any additional
information relating to the status of the Lease reasonably requested in
connection with such estoppel. Any such estoppel statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of
the real property of which the Demised Premises are a part.
15.2. NO MERGER. There shall be no merger of this Lease or of the leasehold
estate hereby created with the fee estate in the Demised Premises or any
part thereof by reason of the fact that the same person may acquire or
hold, directly or indirectly, all or part of such fee estate and this
Lease or the leasehold estate hereby created or any interest in this
Lease, and this Lease shall not be terminated for any cause except as
expressly provided in this Lease.
15.3. SURRENDER. Upon the expiration or earlier termination of this Lease,
Lessee shall surrender the Demised Premises to Lessor in the same
condition in which the Demised Premises was originally received from
Lessor except as repaired, rebuilt, restored, altered or added to, as
permitted by any provision of this Lease, and except for ordinary wear,
tear or obsolescence. Lessee shall remove from the Demised Premises on or
prior to such expiration or earlier termination all property situated
thereon which is not owned by Lessor, and at its cost and expense shall
repair any damage caused by such removal. Property not so removed shall
become the property
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2-12-96 (8)
of Lessor, and Lessor may thereafter cause such property to be removed
from the Demised Premises and disposed of, but the cost of any such
removal and disposition as well as the cost of repairing any damage caused
by such removal shall be borne by Lessee.
15.4. BINDING EFFECT. This Lease may not be changed, modified or discharged
except by a writing signed by Lessor and Lessee. All covenants, conditions
and obligations contained in this Lease shall be binding upon and inure to
the benefit of the respective successors and assigns of Lessor and Lessee
to the same extent as if each successor and assign were named as a party
to this Lease.
15.5. HEADINGS. The headings contained in this Lease have been inserted for
convenience only and shall not have the effect of modifying, amending or
changing the express terms and provisions of this Lease.
15.6. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained
shall, subject to the provisions of Article 14 of this Lease, apply to and
bind the heirs, successors, executors, administrators and assigns of all
the parties hereto; and all of the parties hereto shall be jointly and
severally liable hereunder.
15.7. NOTICES. All notices and demands of any kind which either party may be
required or desire to make or serve upon the other party shall be made in
writing and sent by certified or registered mail, return receipt
requested, to the following addresses, which notices shall be deemed
effective on either receipt or refusal of acceptance:
To Lessor: State of Wisconsin Investment Board
c/o Bristol Group, Inc.
400 Montgomery Street
San Francisco, California 94104
Attn: Jeffrey S. Kott
Copy to: State of Wisconsin Investment Board
Post Office Box 7842
Madison, Wisconsin 53707
Attention: Director of Real Estate
To Lessee: United Merchandising Corp.
2525 E. El Segundo Boulevard
El Segundo, California 90245
Attention: President or Secretary
or to such other addresses as each party may from time to time request in
writing as provided by the notice requirements set forth in this Section.
From and after the date five (5) years from the commencement of the term
of this Lease notices may also, or in lieu of the preceding requirement,
be sent via overnight courier. Until Lessee receives written notice to the
contrary from Lessor, rental payments hereunder shall be made payable to
Bristol Group, Inc., at the address for Lessor set forth above.
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2-12-96 (8)
15.8. LOCAL LAW TO APPLY. This Lease is governed by the law of the State of
California and any question arising hereunder shall be construed or
determined according to such law.
15.9. TIME IS OF THE ESSENCE. Time is of the essence of this Lease.
15.10. No Waiver. No delay or omission in the exercise of any right or remedy of
Lessor on any default by Lessee shall impair such right or remedy or be
construed as a waiver.
No act or conduct of Lessor, including, without limitation, the
acceptance of the keys to the Premises, shall constitute an acceptance of
the surrender of the Premises by Lessee before the expiration date of the
Term. Only a notice from Lessor to Lessee shall constitute acceptance of
the surrender of the Premises and accomplish a termination of the Lease.
Lessor's consent to or approval of any act by Lessee requiring Lessor's
consent or approval shall not be deemed to waive or render unnecessary
Lessor's consent to or approval of any subsequent act by Lessee.
15.11. LIABILITY OF LESSOR AND RELEASE. In the event of any sale of the Demised
Premises by Lessor, Lessor shall be and is hereby entirely freed and
relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any
act, occurrence or omission occurring after the consummation of such
sale. Lessor agrees to deliver to Lessee an agreement signed by any
person or persons who may purchase all of any part of Lessor's interest
in the Demised Premises, which agreement shall formally recognize and
accept all of Lessor's obligations, responsibilities and duties hereunder
occurring from and after the date of the sale. Lessor's liability
hereunder, including any liability of Lessor prior to any transfer of the
Premises, shall be limited to Lessor's interest in the Premises, not to
exceed Ten Million and no/100 Dollars ($10,000,000.00), including,
without limitation, any and all income produced therefrom and the
proceeds of any sale and the proceeds of any insurance policies which
cover all or any of the Premises up to, but not in excess of Ten Million
and no/100 Dollars ($10,000,000.00). At no time shall Lessor, nor any
trustee, officer, director, shareholder, partner, agent, representative
or holder of any beneficial interest in Lessor have or incur any personal
liability whatsoever with respect to this Lease.
15.12. FINANCIAL STATEMENTS. Lessee will, upon request of Lessor (but not more
frequently than once per annum), provide its most current audited
financial statements to Lessor prepared under generally accepted
accounting principles consistently applied and signed by either an
officer of Lessee or by a representative of a nationally accepted
accounting firm.
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2-12-96 (8)
15.13. LATE CHARGE. If Lessee fails to pay any rent or additional charges when
due, and such failure occurs more than one time in any calendar year,
then, if for any subsequent late payments during such calendar year, such
unpaid amounts shall be subject to a late payment charge equal to five
percent (5%) of the unpaid amounts in each instance. The late payment
charge has been agreed upon by Lessor and Lessee, after negotiation, as
liquidated damages and a reasonable estimate of the additional
administrative costs and detriment that will be incurred by Lessor as a
result of any such failure to pay by Lessee, the actual costs thereof
being extremely difficult if not impossible to determine.
15.14. LESSOR'S RIGHT TO PERFORM AND RIGHT TO ENTER. In connection with Lessor's
right to enter the Premises to determine whether Lessee is complying with
its obligations under Section 4.5, Lessor shall have the right to inspect
the Premises, upon reasonable prior notice to Lessee and provided such
inspection can be completed without interference to Lessee's use and
enjoyment of the Premises. Lessor reserves for itself and its agents the
right to enter the Demised Premises at all reasonable times, and upon
reasonable prior notice to Lessee, to inspect the Demised Premises, to
show the Demised Premises to prospective purchasers, mortgagees,
beneficiaries, to post notices of non-responsibility, to determine
whether Lessee is complying with its obligations under this Lease, and to
perform any obligations, if any, required hereunder on the part of
Lessor. Lessee hereby waives any claim for damages for any injury or
inconvenience to or interference with Lessee's business, any loss of
occupancy or quiet enjoyment of the Demised Premises, any right to
abatement of rental or additional charges, or any other loss occasioned
by Lessor's exercise of any of its rights under this Section 15.15
provided Lessor shall act diligently and use its best efforts to minimize
any interferences with, or interruption of, Lessee's business.
15.15. LESSEE'S QUITCLAIM. upon Lessee's receipt of the written request of
Lessor after the expiration of the Lease and any extensions thereof, or
upon the earlier termination thereof as provided herein, Lessee shall
execute in recordable form and deliver to Lessor a quitclaim deed in
favor of Lessor conveying all of Lessee's right, title and interest in
and to the Demised Premises as defined herein.
15.16. INVALIDITY. In the event that any provision of this Lease shall be held
invalid, void, illegal or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, impair or invalidate the remaining
provisions of this Lease which shall remain in full force and effect.
15.17. HOLD OVER. Should Lessee hold over the Demised Premises, or any part
thereof, after the expiration or earlier termination of the term of this
Lease, unless otherwise agreed to in writing, such holding over shall
constitute and be construed as a tenancy from month to month only,
cancellable upon thirty (30) days written
27
Big 5, Fontana, CA
2-12-96 (8)
notice. All obligations and duties imposed by this Lease upon Lessor
and Lessee shall remain the same during any such period of
occupancy, with the exception that the minimum rent for such hold
over tenancy shall be increased to one hundred fifty percent (150%)
of the minimum rent during the last year of the term or extended
term hereof. Acceptance of rental by Lessor shall not result in a
renewal of this Lease. If Lessee fails to surrender the Premises
upon the expiration of this Lease despite demand to do so by Lessor,
Lessee shall be liable for losses directly incurred by Lessor in
connection with such holding over.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the
day and year first above written.
State of Wisconsin Investment Board,
an independent agency of the
State of Wisconsin
By /s/ Patricia Lipton
----------------------------------
Patricia Lipton
Title: Executive Director
UNITED MERCHANDISING CORP.,
a California corporation
By Steven G. Mills
----------------------------------
President
By Kathleen Reid Seidner
----------------------------------
Secretary
Lessee
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2-12-96 (8)
Exhibit A
Legal Description
PARCEL NO. A:
THE NORTH 208 FEET OF THE WEST 208 FEET OF LOT 8 OF ARROWHEAD VINEYARD TRACT NO.
1, IN THE CITY OF FONTANA, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER
PLAT RECORDED IN BOOK 16 OF MAPS, PAGE 69, RECORDS OF SAID COUNTY.
TOGETHER WITH THAT PORTION OF REDWOOD AVENUE (MC GUIRE AVENUE) ABANDONED BY
RESOLUTION NO. 90-210 OF THE CITY COUNCIL OF FONTANA, RECORDED NOVEMBER 5, 1990,
INSTRUMENT NO. 90-443227, OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:
BEING A PORTION OF REDWOOD AVENUE, FORMERLY KNOWN AS COLORADO AVENUE, OF
ARROWHEAD VINEYARD TRACT NO. 1, IN THE CITY OF FONTANA, COUNTY OF SAN
BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 16 OF MAPS, PAGES
69, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE WEST LINE OF LOT 8 OF SAID TRACT, WHICH BEARS SOUTH
00 DEG. 15' 57" WEST, 46.93 FEET FROM THE NORTHWEST CORNER OF SAID LOT; THENCE
SOUTH 00 DEG. 15' 57" WEST, 110.65 FEET ALONG SAID WEST LINE TO A POINT ON A
NON-TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 368.00 FEET, A RADIAL
LINE OF SAID CURVE THROUGH SAID POINT BEARS SOUTH 82 DEG. 56' 41" WEST, THENCE
NORTHERLY 47.02 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 7 DEG. 19' 16"
TO A LINE THAT IS PARALLEL WITH AND 3.00 FEET WEST OF THE WEST LINE OF SAID LOT;
THENCE NORTH 00 DEG. 15' 57" EAST, 60.74 FEET ALONG SAID PARALLEL LINE; THENCE
NORTH 45 DEG. 10' 12" EAST, 4.25 FEET TO THE POINT OF BEGINNING.
PARCEL NO. B:
LOT 13, TRACT NO. 13596, IN THE CITY OF FONTANA, COUNTY OF SAN BERNARDINO, STATE
OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 212 OF MAPS, PAGES 99 THROUGH 105,
INCLUSIVE, RECORDS OF SAID COUNTY, AND AS AMENDED BY CERTIFICATE OF CORRECTION
RECORDED OCTOBER 31, 1990, INSTRUMENT NO. 90-435126, OFFICIAL RECORDS.
[PLAN DRAWING]
EXHIBIT B
Big 5, Fontana, CA
12-28-95 (1)
Recorded at the request of
UNITED MERCHANDISING CORP., and
to be mailed after recording to:
United Merchandising Corp.
Attn.: W. Huff
Legal Department
P.O. Box 92088
Los Angeles, California 90009
EXHIBIT C
NON-DISTURBANCE, ATTORNMENT
AND SUBORDINATION AGREEMENT
United Merchandising Corp., a California corporation, ("Lessee") has
entered into a lease (the "Lease") dated March 5, 1996, with
("Lessor") of the premises commonly known as , and more particularly described
in Exhibit A attached hereto (the "Demised Premises").
("Beneficiary") is the holder of the beneficial interest under a Deed of Trust
dated____________________, recorded in the Official Records in the County of ,
State of______________________________as Instrument No. ______________________
in Book No. __________Page _________ on ____________________________on said
Demised Premises (the "Deed of Trust"). Lessee and Beneficiary desire hereby to
establish certain rights, safeguards, obligations and priorities with respect to
their respective interests by means of the following non-disturbance, attornment
and subordination agreements.
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. Provided the Lease is in full force and effect and there are no defaults
by Lessee in the payment of rent thereunder, then:
1.1. The right of possession of Lessee to the Demised Premises and
Lessee's rights arising out of the Lease shall not be affected or
disturbed by Beneficiary in the exercise of any of its rights under
the Deed of Trust or the Note secured thereby.
1.2. Lessee shall not be named in any foreclosure action related to the
Deed of Trust.
C-1-
Big 5, Fontana, CA
12-28-95 (1)
1.3. In the event that Beneficiary or any other person acquires title to
the Demised Premises pursuant to the exercise of any remedy provided
for in the Deed of Trust or under the laws of the state in which the
Demised Premises are located, the Lease shall not be terminated or
affected by said foreclosure or sale resulting from any such
proceeding; and Beneficiary hereby covenants that any sale by it of
the Demised Premises pursuant to the exercise of any rights and
remedies under the Deed of Trust or otherwise, shall be made subject
to the Lease and the rights of Lessee thereunder; and Lessee
covenants and agrees to attorn to Beneficiary or such other person
as its new lessor; and the Lease shall continue in full force and
affect as a direct lease between Lessee and Beneficiary or such
other person, as Lessor, upon all the terms, covenants, conditions
and agreements set forth in the Lease between Lessee and Lessor.
However, in no event shall Beneficiary or such person be:
1.3.1. liable for any act or omission of Lessor, except for those
acts or omissions for which Lessee has given Beneficiary
notice thereof prior to said foreclosure or sale;
1.3.2. bound by any payment of rent made by Lessee for periods
extending beyond the date of said foreclosure or sale except
for those rental payments provided for under the Lease;
1.3.3. bound by any amendment to the Lease made subsequent to the
date of this Agreement without the written consent of
Beneficiary, which consent shall not be unreasonably withheld
or withheld for the purpose of effectuating a change in terms
to the Deed of Trust. Beneficiary hereby consents to any such
subsequent amendment if the primary purpose of such amendment
is to provide for the expansion or remodeling of the Demised
Premises or an extension of the primary term or option
periods, so long as there is no decrease in the minimum rent
payable under the Lease.
Notwithstanding the foregoing, the rights and obligations of lessee
and Beneficiary, respectively, upon such attornment shall, to the
extent of the then remaining balance of the term of the Lease,
including any renewals or extensions thereof, be the same as now set
forth in the Lease and by this reference the Lease is incorporated
herein as part of this Agreement.
1.4. Beneficiary agrees that in the event of casualty or condemnation,
insurance or condemnation proceeds shall be used for the purpose of
reconstruction in the circumstances set forth in the Lease and
subject to the provisions of the Lease.
2. The Lease shall be subject and subordinate to the lien of the Deed of
Trust and to all the terms, conditions and provisions thereof, to all
advances made or to be made thereunder, and to any renewals, extensions,
C-2-
Big 5, Fontana, CA
12-28-95 (1)
modifications or replacements thereof, not inconsistent with Paragraph 1
of this Agreement.
3. Any notices or other communication required or desired to be given by one
party to the other party hereto shall be given in writing by mailing the
same by certified United States Mail, return receipt requested, postage
prepaid, addressed as follows:
To Lessee: United Merchandising Corp.
2525 E. El Segundo Boulevard
El Segundo, California 90245
Attention: President or Secretary
To Beneficiary: _________________________________
_________________________________
_________________________________
_________________________________
or to such other addresses as the respective parties may from time to time
designate by notice given as provided in this Agreement.
4. This Agreement may not be modified other than by an agreement in writing
signed by the parties hereto or by their respective successors in
interest.
5. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and assigns.
6. The foregoing provisions shall be self operative and effective without the
execution of any further instruments on the part of either parry hereto.
7. Should Beneficiary cease to have a beneficial interest under the Deed of
Trust, Beneficiary shall give prompt written notice to Lessee of the
reconveyance, assignment or other form of termination of said beneficial
interest.
C-3-
Big 5, Fontana, CA
12-28-95 (1)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this _________ day of ________, 19_______.
By___________________________________
Title:
By___________________________________
Title:
BENEFICIARY
UNITED MERCHANDISING CORP., a
California corporation
By___________________________________
President
By___________________________________
Secretary
LESSEE
C-4-
Exhibit D
FORM OF LANDLORD'S CERTIFICATE
_____________,199__
[LANDLORD]
______________
______________
Re: Lease dated March 5, 1996, as amended(the "Lease"), between _______,
a _________ (the "Landlord"), and United Merchandising Corp., a
California corporation (the Tenant")
Premises: BIG 5 Fontana Warehouse
7351 McGuire Avenue
Fontana, California (the "Premises")
Gentlemen:
The undersigned Landlord, the owner of the above described Premises and the
holder of the Lease, has been advised by Tenant that Tenant has granted a
security interest in personal property located on the Premises to General
Electric Capital Corporation ("GE Capital"), as agent for itself and certain
other lenders under Credit Agreement among Tenant, GE Capital and the other
lenders party thereto, and GE Capital, as agent. The undersigned for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
the undersigned, hereby consents, agrees, certifies and confirms as follows:
1. The information set forth below is correct:
a. Commencement Date
of the Lease: [Date]
b. Current annual
minimum rent payable: [$Amount]
c. Month and date through which minimum
rent, and all other sums due and payable
to Landlord, have been paid: [Date]
2. The Lease is in full force and effect and represents the entire agreement
between Landlord and Tenant, and the Lease as originally executed has not
been modified, changed, altered or amended in any way.
1/26/96
FORM OF LANDLORD'S CERTIFICATE
D-1
[LANDLORD]
_______________,199___
2
3. Tenant is not in default under the Lease, and to the best of Landlord's
knowledge, there has not occurred any event which, by lapse of time or
otherwise, would constitute a default by Tenant under the Lease.
4. Landlord hereby consents to the granting by Tenant of any liens on
or security interests in Tenant's personal property located on the
Premises. Landlord agrees to permit the entry and occupancy, by the
holders ("Holder") of such liens or security interests and their
representatives, onto the Premises for a period not exceeding sixty (60)
consecutive days for the proposes of removing, selling or otherwise
disposing of merchandise, inventory, equipment, furniture, trade fixtures
and other personal property of Tenant (but excluding fixtures in which
Landlord has an interest as hereinafter described) subject to such liens
or security interests so long as Holder agrees: (a) to promptly repair any
physical damage to the Premises actually caused by the conduct of such
removal (ordinary wear and tear excluded); (b) to pay Landlord the rent
and other monetary amounts due under the lease or, in the case where the
Lease has been terminated, those amounts that would have became due under
the Lease if the Lease were still in effect (including, without
limitation, any amounts due for payment of taxes, utilities or
maintenance) for the actual period of occupancy by such holder, pro-rated
on a per diem basis determined on a 30-day month (provided that such
amounts paid to Landlord would exclude any adjustments under the Lease for
default, holdover status or other similar charges, if any); and (c) to
provide and retain liability and property insurance coverage and utilities
to the extent required by the Lease; provided, that (i) if Holder is
prohibited, by reason of the commencement of any bankruptcy case or
insolvency proceedings by or against Tenant, from entering upon the
Premises or from enforcing its liens or security interest, then, at
Holder's option, such 60-day period shall be stayed during the period of
such prohibition and shall continue thereafter for the number of days
remaining in such period, and (ii) Holder would not be liable for any
delinquent rent or other amounts owing by Tenant under the Lease or for
any diminution in value of the Premises caused by the absence of any such
personal property actually removed or by any necessity of replacing such
personal property. Notwithstanding anything herein to the contrary, in no
event shall Holder's right to enter or occupy the Premises pursuant to
this Certificate extend beyond sixty (60) days from the date of
termination of the term of the Lease, and at any time thereafter Landlord
shall have the right to have any personal property of Tenant that may be
located upon the Premises removed from the Premises in accordance with the
terms of the Lease and applicable law. Any reference in this Certificate
to Tenant's "trade fixtures" or "personal property" shall not mean or
include any fixtures or equipment which are an integral part of the
buildings and improvements comprising the Premises for purposes of their
use and operation as an office, warehouse and distribution facility or
which cannot be
1/26/96
FORM OF LANDLORD'S CERTIFICATE
D-2
[LANDLORD]
__________,199 ___
3
removed without material damage to such buildings and improvements (which,
by way of example, shall include all HVAC and mechanical systems, conveyor
systems, loading docks, load leveler systems, carpeting and wall
coverings), and, as used herein, any references to Tenant's "fixtures" or
"personal property" shall mean and be limited to those items that are
attached to or used in the buildings and improvements comprising the
Premise solely for the purpose of Tenant conducting its business therein
and which can be removed without material damage to such buildings and
improvements (including, by way of example, Tenant's satellite
communication equipment, music and intercom systems, security system and
racking systems).
5. With respect to any financing provided by any bank or other institutional
lender or investor to Tenant now or hereafter, existing, and which is
secured by any such personal property, Landlord hereby subordinates to
any lien or security interest securing such financing, any statutory or
contractual lien that Landlord may have with respect to the merchandise,
inventory, furniture, trade fixtures and other personal property of
Tenant, whether now located on or about the Premises or hereafter brought
thereout.
6. No action to which Landlord consents under this document shall constitute
a default under the Lease, permit Landlord to terminate the Lease or
reenter or repossess the Premises or otherwise provide the basis for the
exercise of any remedy by Landlord.
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FORM OF LANDLORD'S CERTIFICATE
D-3
[LANDLORD]
______________,199__
4
7. Landlord hereby agrees to provide GE Capital, concurrently with the
issuance to Tenant, a copy of all notices of default delivered to Tenant.
Landlord further agrees to accept from GE Capital any payment or
performance tendered or made by GE Capital to cure any such default
(including, without limitation, all payment defaults), it being understood
that GE Capital shall have no obligation to cure any such default.
Notices to GE Capital should be sent to:
Mr. Steven C. Bierman
General Electric Capital Corporation
350 South Beverly Drive, Suite 200
Beverly Hills,California 90212
Sincerely,
UNITED MERCHANDISING CORP.
Kathleen Reid-Seidner
Vice President and Secretary
Acknowledged this ____day of__________, 199_
WITNESSES: LANDLORD:
____________________ ____________________
____________________ By:________________
Title:_____________
1/26/96
FORM OF LANDLORD'S CERTIFICATE
D-4