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EXHIBIT 10.87
SAN FRANCISCO LEASE
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ATHLETIC CLUB LEASE
San Francisco, California
LANDLORD: CB-1 ENTERTAINMENT PARTNERS LP
TENANT: S.F. SPORTS CLUB, INC.
DATE: As of June 1, 1997
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INDEX OF MAJOR DEFINED TERMS
DEFINED TERM PAGE
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AAA 16
Abatement Notice 56
Actual Statement 17
Additional Rent 10
Affiliate 9
Agency 52
Agency Requirements 53
All-risk 33
Allowance 1
Annual Base Rent 10
Antennae 58
Assignment Date 44
Assignment Notice 44
Building 1
Building Improvements 1
CC&R 19
Claims 32
Club 1
Commencement Date 3
Common Area Expenses 11
Common Areas 2
Condominium Association 19
Condominium Documents 19
Control 45
CPI 51
Cure Period 56
DDA 52
Deadline Date 57
Default 42
Depository 39
Development 1
Fair Market Parking Rate 51
Financial Officer 38
First-class 19
Floor Area 2
Force Majeure 57
Four Seasons Standard 22
Hazardous Materials 20
Hotel 9
Hotel Management Agreement 9
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DEFINED TERM PAGE
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Improvements 1
In-Lieu Tax 26
Initial Annual Base Rent Amount 10
Initial Term 3
Jobs Program 53
Landlord 1
Landlord Delay 5
Landlord Offer 38
Landlord's Contribution 1
Landlord's First Substantial Completion Estimate Notice 6
Landlord's Insurance 35
Landlord's Second Substantial Completion Estimate Notice 6
Lease 1
Lease Year 6
Marriott Bill 8
Marriott Hotel 8
Marriott Hotel Guests 8
Minimum Landlord's Work 4
Monthly Base Rent 11
Mortgagee Non-Disturbance Agreement 47
New York Athletic Club Lease 15
Non-Disturbance Agreement 46
Noticed Lender 55
Operating Expenses 12
Option 7
Option Date 7
Option Period 7
Other Primary Hotel Operator 22
Partial Taking 41
Person 45
Premises 1
Primary Hotel 8
Primary Hotel Bill 9
Primary Hotel Guests 8
Prime Rate 43
Property 2
Real property taxes 26
Receipts Tax 26
Rent 10
Requirements 52
Scheduled Completion Date 3
Secured Lender 40
Senior Interest Holders 46
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DEFINED TERM PAGE
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Senior Interests 46
Signage Approval Factors 55
Substantial Taking 41
Substantially Complete 3
Tax Year 24
Taxes 24
Temporary Closures 42
Tenant 1
Tenant Acceptance Notice 38
Tenant Delay 4
Tenant Installation 58
Tenant Revision 5
Tenant Termination Costs 38
Tenant's Insurance Share 40
Tenant's Share 15
Tenant's Work 3
Term 7
Termination Notice 56
Total Taking 41
Trade Fixtures 2
Unexpired Lease Term 38
Uninsured Contribution Amount 37
Work Letter 1
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ATHLETIC CLUB LEASE
San Francisco, California
THIS LEASE (the "LEASE") is made as of the 1st day of June, 1997, by and
between CB-1 ENTERTAINMENT PARTNERS LP, a California limited partnership
("LANDLORD") and S.F. SPORTS CLUB, INC., a Delaware corporation ("TENANT").
1. Premises and Common Areas.
Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the space (the "PREMISES") in a building (the "BUILDING") to be
constructed on that certain parcel of real property, in which the
Improvements (as defined herein) are to be constructed, more
particularly described in Exhibit A attached hereto and made a part
hereof. This Lease is subject to all matters of record affecting the
Property (as defined herein) and all matters that would be revealed by
an accurate survey of the Property. The Premises shall constitute part
of a development (the "DEVELOPMENT") as shown on the site plan attached
hereto as Exhibit B and made a part hereof. The Premises are designated
on the non-hatched portion of Exhibit B, with all depictions thereon
being subject to normal construction variances and tolerances, and as
otherwise provided in this Lease. Landlord, at its sole cost, shall, in
accordance with the work letter agreement attached hereto as Exhibit C
and made a part hereof (the "WORK LETTER"), perform Landlord's Work (as
defined therein) and as part of Landlord's Work, shall cause the utility
connections specified in the Work Letter to be available in the
locations specified in the Work Letter.
Construction of Premises. Tenant shall cause the Premises to be improved with
improvements (the "IMPROVEMENTS") in accordance with the Work Letter
(defined as the "BUILDING IMPROVEMENTS" in the Work Letter) and, subject
to Force Majeure (as defined herein), to the extent provided herein and
within the time(s) set forth in the Work Letter. The Improvements are to
be used as a first-class athletic club facility (the "CLUB") more
particularly described in Article 8 hereof. The design of the
Improvements shall be subject to Landlord's approval, as provided in the
Work Letter. In accordance with the terms of the Work Letter, Landlord
shall provide Tenant with a contribution in an amount not to exceed Nine
Million Five Hundred Thousand and 00/100 Dollars ($9,500,000.00) (the
"LANDLORD'S CONTRIBUTION" and/or the "ALLOWANCE"). Tenant shall equip
the Club with all required Trade Fixtures (as defined herein) as may be
necessary to operate the Club in accordance with Section 8.1 hereof.
Title to the Improvements and all alterations and additions thereto and
replacements thereof (other than Trade Fixtures) thereafter constructed
or installed on the Premises shall be and remain in Landlord. All Trade
Fixtures, however, shall remain Tenant's property, subject to permitted
customary third (3rd) party financing subject to and in accordance with
Section 46 hereof, upon the expiration or earlier termination of this
Lease; provided, however, Tenant shall not have the right to remove any
Trade Fixtures until Tenant shall cure any Default (as defined herein)
or, at the termination of the term hereof as a result of any such
Default, until Tenant complies with its payment obligations set forth
herein. "TRADE FIXTURES" means
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Tenant's athletic equipment and machines and all of Tenant's furniture
and other personal property not affixed to the Premises in such a manner
as to do material damage upon their removal. The Premises and the
Improvements are sometimes hereinafter collectively referred to as the
"PROPERTY."
Common Areas. Tenant shall have the non-exclusive right to use the Common Areas
(as defined herein), in common with other tenants and/or occupants of
the Development, subject to the Condominium Documents (as defined
herein), the CC&R (as defined herein) and any other nondiscriminatory
rules and regulations that Landlord and/or the Condominium Association
(as defined herein), as applicable, shall adopt for the Development so
long as such CC&R and rules and regulations do not (i) materially
interfere with Tenant's ability to conduct normal business operations;
(ii) materially increase Tenant's obligations under this Lease, or (iii)
materially decrease Tenant's rights under this Lease. "COMMON AREAS"
means all common areas and facilities of the Development that are now or
hereafter made available for the non-exclusive and general use,
convenience and benefit of Tenant and/or Tenant's customers, employees,
agents and invitees, including common monuments and signs;
transportation facilities areas including bus stops, taxi-limousine
stands, and bicycle parking areas; trash enclosures; landscaped areas;
areas designated as pedestrian walkways or pedestrian bridges; and
parking areas.
Control of Common Areas. Provided Landlord does not unreasonably interfere with,
hinder or obstruct Tenant's use of the Premises or Tenant's ability to
conduct business from the Premises, and does not otherwise materially
diminish any of Tenant's rights pursuant to this Lease, Landlord
reserves, the right from time to time:
To make changes to the Common Areas, or their design, including
changes in the location, size, shape and number of driveways, entrances,
parking areas, loading and unloading areas, ingress, egress, direction
of traffic, landscaped areas and walkways. Landlord shall keep Tenant
apprised as to any proposed change to the Common Areas or their design;
and
To close temporarily any portions of the Common Areas for
maintenance purposes so long as reasonable access to the Premises
remains available, including reasonable access from the parking areas of
the Building to the Premises.
Landlord agrees that rerouting of pedestrian walkways within the Common
Areas and/or rerouting of vehicles within the Common Areas shall not be
done in a manner which would materially hinder or obstruct Tenant's
ability to conduct business from the Premises.
Definition of Floor Area. The term "FLOOR AREA" as used in this Lease shall mean
the rentable square footage of the Premises (or, where applicable, of
other premises located or proposed in or outside the Development),
measured from the exterior surface of building walls (and from
extensions thereof, in the case of openings), and from the exterior
surface
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of any demising partitions. At such time as the Improvements have been
constructed, Landlord shall deliver to Tenant a notice which sets forth
the Floor Area of the Premises together with reasonable documentation
evidencing Landlord's determination of the Floor Area of the Premises.
Tenant shall have ten (10) days following the receipt of Landlord's
notice of the determination of the Floor Area in which to deliver to
Landlord a notice objecting to such determination. In the event Tenant
does not so deliver such objection notice, then, in such event,
Landlord's calculation shall be deemed accepted by Tenant and
incorporated herein by this reference. In the event that Tenant delivers
such a notice to Landlord, Landlord and Tenant shall have thirty (30)
days in which to work together to calculate the Floor Area of the
Premises. In the event Landlord and Tenant cannot so agree, then, until
agreement is reached, either party may submit such dispute to
arbitration in accordance with the rules of the San Francisco,
California chapter of the AAA (as defined herein) and the party deemed
less correct in such dispute shall pay the other party's costs of such
arbitration. Except as expressly provided to the contrary in this
Section 1.5, the procedure for arbitration shall be governed by the
proceedings set forth in Section 7.3 hereof. Landlord and Tenant
acknowledge that the projected Floor Area of the Premises shall be
approximately 94,774 square feet.
2. Term.
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Commencement. This Lease constitutes a binding agreement and the obligations of
Landlord and Tenant hereunder shall be effective upon execution and
delivery of this Lease by both Landlord and Tenant. However, the initial
term ("INITIAL Term") of this Lease shall commence upon the date (the
"COMMENCEMENT DATE") which is the earlier of (i) the date upon which
Tenant commences normal business operations from the Premises (it being
understood that the use of the Development as described in Section 2.2
hereof shall not be deemed to constitute normal business operations from
the Premises by Tenant) and (ii) the date (a) which is the later of (A)
six (6) months after Landlord shall "Substantially Complete" (as defined
herein) the Minimum Landlord's Work (as defined herein) and (B) twelve
(12) months after the installation of the concrete decks on floors
2,3,4, and 5 of the Premises (the "SCHEDULED COMPLETION DATE"), the
Scheduled Completion Date being extended by any period that Tenant using
reasonable diligence shall have been unable to (aa) substantially
complete the Improvements in accordance with the Work Letter
(collectively, "TENANT'S WORK") by the Scheduled Completion Date due to
Landlord Delays (as defined herein) and/or (bb) to conduct normal
business operations in the Premises as a result of the non-completion of
Landlord's Work by the Scheduled Completion Date (subject to extension
due to Tenant Delays (as defined herein)) and (b) on which the Premises
are reasonably accessible (1) from the parking areas of the Building and
the parking areas of the Building are reasonably accessible and usable
for parking purposes and (2) by pedestrians from the Common Areas.
"SUBSTANTIALLY COMPLETE" means (as certified by Landlord's architect)
complete subject to the completion of minor punch-list type items or
other minor components of Landlord's Work or the Minimum Landlord's
Work, as applicable, the performance of which will not materially
interfere with Tenant's Work to ready the Premises for Tenant's use and
occupancy thereof. Landlord shall diligently proceed to complete said
punch list items. "MINIMUM LANDLORD'S Work" means Landlord's Work as
describe in the Work Letter exclusive of base building systems,
mechanical systems and operational elevators. If Landlord shall be
delayed in substantially completing Landlord's Work, the Minimum
Landlord's Work and/or the Common Areas and such delay shall be caused
by or shall arise out of or in connection with any of the following
(each a "TENANT DELAY"):
Tenant's direction that Landlord delay in proceeding
with any segment or part of Landlord's Work, the Minimum
Landlord's Work and/or the Common Areas (except under
circumstances where the basis for such direction is the fact
that Landlord must rectify an error in Landlord's Work, the
Minimum Landlord's Work and/or the Common Areas that is not
otherwise attributable to Tenant); or
the performance of work by any person, or entity
employed or hired by Tenant or on behalf of Tenant that actually
delays Landlord in the completion of Landlord's Work, the
Minimum Landlord's Work and/or the Common Areas, provided that
if Landlord shall be aware of any such delay, Landlord shall
immediately notify Tenant thereof and Tenant fails to remedy any
such delay by the end of the second (2nd) day following receipt
of Landlord's notice of any such delay; or
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any acts or omissions of Tenant, or of any Affiliate (as
defined herein) of Tenant, provided that if Landlord shall be
aware of any such delay, Landlord shall immediately notify
Tenant thereof and Tenant fails to remedy any such delay by the
end of the second (2nd) day following receipt of Landlord's
notice of any such delay; or
Tenant's unreasonable delay or refusal in making changes
to the Work Letter reasonably requested by Landlord; or
any breach of any of the terms of this Lease by Tenant
that delays Landlord in substantially completing Landlord's
Work, the Minimum Landlord's Work and/or the Common Areas,
provided that if Landlord shall be aware of any such delay,
Landlord shall immediately notify Tenant thereof and Tenant
fails to remedy any such delay by the end of the second (2nd)
day following receipt of Landlord's notice of any such delay; or
any unreasonable failure on Tenant's part to-cooperate
with Landlord in connection with Landlord's performance of
Landlord's Work, the Minimum Landlord's Work and/or the Common
Areas;
then notwithstanding anything in this Lease to the contrary, Landlord's
Work and/or the Minimum Landlord's Work shall be deemed to be
Substantially Complete as of the date that substantial completion would
have occurred but for such delay and the Common Areas shall be deemed to
be accessible and reasonably usable as of the date that the Common Areas
would have been accessible and reasonably usable but for such delay, as
applicable.
If Tenant desires a change in the Work Letter or Tenant requests for any
materials, finishes or installation not originally contemplated by this
Lease or contained in the Work Letter, Tenant shall submit to Landlord
the proposed change or request (herein called a "TENANT REVISION"). A
Tenant Revision shall be subject to Landlord's approval, which approval
shall not be unreasonably withheld or delayed, and, if so approved,
Landlord shall cause to be prepared and shall submit to Tenant for its
approval or disapproval, an estimate of the delays in performance of
Landlord's Work resulting from Tenant's request for a Tenant Revision
and an estimate of the incremental increased cost to Landlord to
complete Landlord's Work as a result of such Tenant Revision, as
reasonably determined by Landlord. Tenant shall approve or disapprove
the estimate within five (5) days after receipt of such estimate. In the
event Tenant shall approve any such estimate, any delays resulting from
a Tenant Revision shall be deemed a Tenant Delay and Tenant shall be
solely responsible for any increased cost to complete Landlord's Work
resulting from a Tenant Revision and all such costs shall be paid by
Tenant to Landlord within thirty (30) days after rendition of a bill
therefor. If Tenant shall fail to respond within such five (5) day
period, then a Tenant Revision shall be deemed withdrawn.
Notwithstanding
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Tenant's approval or disapproval of Landlord's estimate with respect to
a Tenant Revision, Tenant shall be responsible for all professional fees
associated with Landlord's review of a Tenant Revision and the
preparation of Landlord's estimate(s) and revised construction documents
in connection therewith.
For all purposes hereof, "LANDLORD DELAY" means the delay in the
Substantial Completion of Tenant's Work to be the extent caused by or
arising out of or in connection with any of the following:
(i) Landlord's direction that Tenant delay in proceeding
with any segment or part of Tenant's Work (except under
circumstances where the basis for such direction is the fact
that Tenant must rectify an error in Tenant's Work that is not
otherwise attributable to Landlord); or
(ii) the performance of work by any person, or entity
employed or hired by Landlord or on behalf of Landlord that
actually delays Tenant in the completion of Tenant's Work,
provided that if Tenant shall be aware of any such delay, Tenant
shall immediately notify Landlord thereof and Landlord fails to
remedy any such delay by the end of the second (2nd) day
following receipt of Tenant's notice of any such delay; or
(iii) any acts or omissions of Landlord or of any
Affiliate of Landlord, (except in connection with the exercise
of any of Landlord's rights expressly set forth in this Lease
and/or the Work Letter) provided that if Tenant shall be aware
of any such delay, Tenant shall immediately notify Landlord
thereof and Landlord fails to remedy any such delay by the end
of the second (2nd) day following receipt of Tenant's notice of
any such delay; or
(iv) any breach of any of the terms of this Lease by
Landlord, including, without limitation, the funding of the
Allowance subject to and in accordance with the terms and
conditions of this Lease, that delays Tenant in substantially
completing Tenant's Work provided that if Tenant shall be aware
of any such delay, Tenant shall immediately notify Landlord
thereof and Landlord fails to remedy any such delay by the end
of the second (2nd) day following receipt of Tenant's notice of
any such delay; or
(v) the non-completion of Landlord's Work as of the date
on which the concrete decks are installed on floors 2,3,4 and 5
of the Premises and Tenant commences the performance of Tenant's
Work if and to the extent any such delay would not have occurred
had Landlord's Work been Substantially Completed as of such date
and Tenant has endeavored, in good faith, to use good
construction practice, but at no additional cost to Tenant, to
complete Tenant's Work as expeditiously as reasonably possible
under the circumstances and notwithstanding such non-completion
of Landlord's Work as of the date on which the concrete
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decks are installed on floors 2, 3, 4 and 5 of the Premises,
provided that if Tenant shall be aware of any such delay, Tenant
shall immediately notify Landlord thereof.
With limiting any provisions of this Lease, any dispute between the
parties as to whether a Tenant Delay or Landlord Delay has occurred or
the amount of such delay shall be subject to arbitration pursuant to
Section 7.3 hereof.
The parties shall execute an acknowledgment that Landlord's Work and/or
the Minimum Landlord's Work has been completed (or deemed to be
completed) and that the Common Areas are accessible and reasonably
usable (or deemed to be accessible and reasonably usable) and that the
Commencement Date has occurred, as soon as reasonably practicable
thereafter. Neither Landlord's failure to request, nor Tenant's failure
to execute, such agreement shall affect the Commencement Date. Landlord
shall provide Tenant (i) notice not less than one hundred twenty (120)
days prior to the date that Landlord anticipates Landlord shall
Substantially Complete Landlord's Work ("LANDLORD'S FIRST SUBSTANTIAL
COMPLETION ESTIMATE NOTICE") and (ii) a second notice to Tenant
("LANDLORD'S SECOND SUBSTANTIAL COMPLETION ESTIMATE NOTICE") not less
than thirty (30) days prior to the date that Landlord anticipates
Landlord shall Substantially Complete Landlord's Work, in each case
without taking into account any acceleration of the date Landlord's Work
shall be deemed to have been Substantially Complete as a result of one
or more Tenant Delays. The Initial Term shall terminate on the twentieth
(20th) anniversary of the Commencement Date. Reference in this Lease to
"LEASE YEAR" shall mean each successive twelve (12) month period during
the Term (as defined herein) commencing on January 1 and ending December
31 (or such other twelve (12) month period as shall be reasonably
designated by Landlord), provided that the first Lease Year shall begin
upon the Commencement Date and end on December 31 of the calendar year
in which the Commencement Date occurs, and the last Lease Year shall end
on the last day of the Initial Term or the last day of the last
exercised Option Period (as defined herein) hereunder. "TERM" as used
herein shall mean the Initial Term and all validly exercised Option
Periods.
Access Prior to Commencement Date. Until the earlier of (i) the Commencement
Date and (ii) the date on which a termination notice is served by either
Landlord or Tenant pursuant to Section 54 hereof, and subject to all
applicable laws and ordinances, Tenant shall be entitled to maintain an
office either within the Development or at a location suitable therefor
reasonably acceptable to Landlord and Tenant, or, at Landlord's
election, on the surface parking area (if any) adjacent to said
Development, all at no cost to Tenant for Monthly Base Rent, Common Area
Expenses or real property taxes (as such terms are defined herein), for
its pre-opening and construction period activity. Tenant shall be
entitled to hang a banner or other signage in the Development, subject
to compliance with applicable laws, regulations, permits, approvals,
ordinances, the Condominium Documents (if applicable) and the CC&R and
subject to Landlord's prior approval of all Signage Approval Factors (as
defined herein). Such office shall be deemed to constitute
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a part of the Premises for all purposes (including, without limitation,
Article 19 hereof (Indemnification) and Article 20 hereof (Insurance)
and Tenant's obligation to pay for utilities), but Tenant shall not be
required to pay Monthly Base Rent, Common Area Expenses or real property
taxes with respect thereto. If Landlord makes available the surface
parking area for the purpose of such temporary office, it shall be
Tenant's obligation, at its sole cost, to provide a trailer for Tenant's
use on such parking area and to pay all costs and expenses and bear all
liabilities associated therewith.
3. Options to Extend.
Landlord hereby grants to Tenant three (3) successive options (each an
"OPTION" and collectively, the "OPTIONS") to extend the term of this Lease, each
for a one hundred sixty-eight (168) month period (each an "OPTION PERIOD" and,
collectively, the "OPTION PERIODS"), upon the same terms and conditions as those
set forth in this Lease for the Initial Term (except that no options to extend
other than the Options are granted). In order to exercise an Option, Tenant must
give notice to Landlord of its intention to exercise the applicable Option on or
before the date (the "OPTION DATE") which is six (6) months prior to the end of
the Initial Term or the previous Option Period, as applicable; provided,
however, that it shall be a condition precedent to the exercise of each Option
that Tenant shall not be in Default as of the respective Option Date. Tenant's
election not to exercise an Option, or the passage of an Option Date without
exercise of the subject Option, shall thereby terminate the subsequent Option or
Options. The Options are personal to Tenant and may not be assigned except in
connection with a permitted assignment of Tenant's interest in this Lease.
Landlord shall deliver to Tenant a notice reminding Tenant of Tenant's right to
exercise an Option not more than six (6) months and not less than thirty (30)
days prior to the date Tenant may first exercise an Option, provided that in no
event shall Landlord's failure to deliver such notice impose any liability on
Landlord's part; however if Landlord fails to deliver such notice the time for
Tenant's exercise of an Option shall be extended, if necessary, to the date
which is thirty (30) days from the date of delivery of such notice from
Landlord.
4. Membership.
Tenant agrees to provide both daily passes and membership on the
following terms and conditions set forth in this Article 4. In addition, all
Club daily passes and memberships shall be subject to the nondiscriminatory
rules and regulations promulgated by Tenant for use of the Club.
Marriott Hotel Guests. Tenant shall permit room guests of the existing
adjoining convention hotel, currently being operated as a Marriott Hotel
(such hotel, the "MARRIOTT HOTEL" and such room guests of such hotel,
the "MARRIOTT HOTEL GUESTS") to have access to the Club to use the
facilities therein at such times as the Club is open for business in
consideration for daily fee payments equal to seventy-five percent (75%)
of the otherwise applicable daily rate of guests of the Club members;
provided, however, Tenant shall only be obligated to permit up to one
hundred (100) Marriott Hotel Guests daily. The operator of
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the Marriott Hotel shall be responsible for billing and collecting
payment from the Marriott Hotel Guests directly, and shall make all
payments to Tenant on a monthly basis. Tenant shall issue the operator
of the Marriott Hotel a bill ("MARRIOTT BILL") payable on the tenth
(10th) day of each calendar month, with such Marriott Bill to be based
on the actual number of daily passes Tenant provided to the Marriott
Hotel Guests for the previous calendar month. If the operator of the
Marriott Hotel does not pay in full the Marriott Bill within thirty (30)
days from its receipt of the Marriott Bill, then, in such event , Tenant
may deliver a termination notice to the operator of the Marriott Hotel
terminating the right of the Marriott Hotel and Marriott Hotel Guests to
use the Club until payment in full of all amounts due. Such termination
notice shall be delivered by Tenant and be effective five (5) days
following delivery of such notice to the operator of the Marriott Hotel.
In the event the Marriot Hotel shall fail to perform any of the terms
and conditions contained in this Section 4.1 on its part to be
performed, Landlord shall be under no obligation or liability whatsoever
to Tenant; provided, however, that until such time as Tenant and the
Marriot Hotel shall have entered into an agreement with respect to this
Section 4.1 (a copy of which Tenant shall promptly deliver to Landlord),
Landlord shall reasonably cooperate with Tenant in seeking to obtain the
performance of the Marriott Hotel with respect to such applicable terms
and conditions of this Section 4.1.
Other Hotel Guests. Tenant shall permit room guests of the to-be constructed
hotel in the Development, currently contemplated to be operated as a
Four Seasons Hotel (such hotel (which, for purposes of this Lease, shall
include any extended stay facilities operated in connection therewith or
otherwise by Landlord, the operator thereof or a successor or assign of
either), the "PRIMARY HOTEL", and such room guests of such hotel
(including such extended stay component), the "PRIMARY HOTEL GUESTS") to
have access to the Club to use the facilities therein at such times as
the Club is open for business in consideration for a reasonable daily
fee payment. Tenant hereby agrees and covenants that in no event shall
the daily fee charged to the Primary Hotel Guests exceed the daily fee
charged to Marriot Hotel Guests. The operator of the Primary Hotel shall
be responsible for billing and collecting payment from the Primary Hotel
Guests directly, and shall make all payments to Tenant on a monthly
basis. Tenant shall issue the operator of the Primary Hotel a bill
("PRIMARY HOTEL BILL") payable on the tenth (10th) day of each calendar
month, with such Primary Hotel Bill to be based on the actual number of
daily passes Tenant provided to the Primary Hotel Guests for the
previous calendar month. If the operator of the Primary Hotel does not
pay in full the Primary Hotel Bill within thirty (30) days from its
receipt of the Primary Hotel Bill, then, in such event , Tenant may
deliver a termination notice to the operator of the Primary Hotel
terminating the right of the Primary Hotel and Primary Hotel Guests to
use the Club until payment in full of all amounts due. Such termination
notice shall be delivered by Tenant and be effective five (5) days
following delivery of such notice to the operator of the Primary Hotel.
In the event the Primary Hotel shall fail to perform any of the terms
and conditions contained in this Section 4.2 on its part to be
performed, Landlord shall be under no obligation or liability whatsoever
to Tenant; provided, however, that until such time as Tenant and the
Primary Hotel shall have entered into an agreement with respect to this
Section 4.2 (a
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copy of which Tenant shall promptly deliver to Landlord), (a) Landlord
shall reasonably cooperate with Tenant in seeking to obtain the
performance of the Primary Hotel with respect to such applicable terms
and conditions of this Section 4.2 and (b) so long as Landlord or an
Affiliate (as defined herein) of Landlord is the owner of the Primary
Hotel, Landlord shall pay to Tenant the portion(s) of any Primary Hotel
Bill which the operator of the Primary Hotel does not pay to Tenant in
full in accordance with this Section 4.2 within thirty (30) days after
Landlord's receipt of the applicable Primary Hotel Bill and a statement
describing in reasonable detail the portion(s) thereof which remain due.
For purposes of this Section 4.2, "AFFILIATE" shall mean a Person (as
defined herein) which shall (i) control (as defined herein), (ii) be
under the control of, or (iii) be under common control with the Person
in question.
0.1 Performance by Marriott Hotel and Primary Hotel. If the Marriott Hotel
and/or the Primary Hotel (collectively and generically, the "HOTEL")
shall default in any of their respective obligations under Section 4.1
or 4.2 hereof, or there shall exist a bona fide dispute with the Hotel
under Section 4.1 or 4.2 hereof and Tenant notifies Landlord in writing
that Tenant has previously notified the Hotel of such dispute and that
such default or notice has been disregarded or not reasonably
satisfactorily acted upon, then upon Tenant's written request and
provided Tenant is not in default under this Lease, Landlord shall use
reasonable efforts to enforce Landlord's rights under the applicable
hotel management agreement with the Hotel (collectively and generically,
the "HOTEL MANAGEMENT AGREEMENT") for Tenant's benefit, including,
without limitation, giving notices, claims and demands to and on the
Hotel. Tenant shall reimburse Landlord for all costs incurred in
connection with the enforcement of such rights. Notwithstanding the
foregoing, Landlord shall have no obligation to commence any action at
law or in equity to obtain any relief sought by Tenant by reason of the
Hotel's breach of the Hotel's obligations under Section 4.1 or 4.2
hereof. If, after written request from Tenant, Landlord shall fail or
refuse to take appropriate action for the enforcement of Landlord's
rights against the Hotel with respect to Section 4.1 or 4.2 hereof,
Tenant shall have the right to take such action in Tenant's own name,
and for such purpose and only to such extent, all of the rights of
Landlord under the applicable Hotel Management Agreement are hereby
conferred upon and conditionally assigned to Tenant and Tenant hereby is
subrogated to such rights to the extent that the same shall apply to
Section 4.1 or 4.2 hereof; provided, however, that (a) Tenant shall only
have such rights if Tenant shall not be in default under this Lease and
(b) Landlord shall have the right to require Tenant to discontinue such
action if in the reasonable opinion of Landlord such action may cause a
default, cancellation, forfeiture or termination of the Hotel Management
Agreement or any Senior Interest. If any such action against the Hotel
in Tenant's name shall be barred by reason of lack of privity,
non-assignability or otherwise, Tenant may take such action in
Landlord's name provided Tenant has obtained the prior written consent
of Landlord, and that copies of all papers and notices of all
proceedings shall be promptly given to Landlord so that Landlord may be
kept fully informed in respect thereof.
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0.2 Residential Occupants. Tenant agrees that all applications for
membership in the Club submitted by the residential occupants and their
families at the Development shall be automatically and promptly accepted
provided that each such individual shall observe the rules and
regulations reasonably promulgated by Tenant from time to time with
respect to the use of the Club which rules and regulations shall be
consistent with the rules and regulations customarily promulgated by
operators of first-class coed athletic clubs and shall not be enforced
in a discriminatory manner.
0.3 Other Occupants. Subject to availability, Tenant agrees that all
applications for membership in the Club submitted by employees or
principals of any of the tenants in the Development shall be
automatically and promptly accepted provided that each such individual
shall observe the rules and regulations reasonably promulgated by Tenant
from time to time with respect to the use of the Club which rules and
regulations shall be consistent with the rules and regulations
customarily promulgated by operators of first-class coed athletic clubs
and shall not be enforced in a discriminatory manner.
5. Rent.
Rent shall be calculated and payable as follows:
Annual Base Rent. During the Initial Term Tenant agrees to pay Landlord annual
base rent for the Premises (the "ANNUAL BASE RENT") at the rate of Three
Million and 00/100 Dollars ($3,000,000.00) per annum (the "INITIAL
ANNUAL BASE RENT AMOUNT"). In addition to Annual Base Rent, Tenant
agrees to pay as "ADDITIONAL RENT" (sometimes referred to as "ADDITIONAL
RENT") all other charges payable by Tenant pursuant to the terms of this
Lease. Annual Base Rent together with all such additional rent is
collectively referred to herein as "RENT". Tenant shall pay Annual Base
Rent and, except as provided otherwise herein, Additional Rent, in equal
monthly installments on the first day of each month (each such equal
monthly installment of Annual Base Rent is referred to herein as
"MONTHLY BASE RENT"). If for any reason the Initial Term (or any Option
Period) commences or ends on a day other than the first day of a
calendar month (other than a termination resulting from a Default), then
Rent for the first month and for the last month of the Term shall be
prorated in the proportion that the number of days during the first and
last months of the Term bears to the actual number of days in such
months. All Rent shall be paid to Landlord, without prior demand or
notice, in lawful money of the United States of America, at such place
as Landlord may from time to time reasonably designate in writing and
shall be due and payable on the first day of each month. Rent shall be
paid to Landlord on the date due without notice or demand, and without
abatement, deduction or set-off except as otherwise expressly set forth
in this Lease. No payment by Tenant or receipt by Landlord of a lesser
amount than the Annual Base Rent or Additional Rent, nor shall any
endorsement or statement on any check or in any letter accompanying any
check or payment, as Annual Base Rent or Additional Rent, be deemed an
accord and satisfaction, and Landlord may accept such check or payment
without prejudice to
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Landlord's right to recover the balance of such Annual Base Rent and
Additional Rent or pursue any other remedy provided in this Lease or by
law.
Cost Abatement
Provided that Tenant shall not then be in default of any of
Tenant's obligations under this Lease (following notice thereof), Tenant shall
be entitled to an aggregate credit of $1,000,000 to be applied against (i) the
monthly installments of Common Area Expenses or Operating Expenses (as
hereinafter defined), as applicable, payable by Tenant in accordance with
Section 7 hereof, (ii) the installments of Taxes (as hereinafter defined)
payable in accordance with Section 12 hereof and (iii) the sums payable by
Tenant in accordance with Section 36 hereof for use of parking spaces located at
the Development.
6. Club Name.
Tenant shall be entitled to operate the Club under the name "The Sports
Club/San Francisco," although Tenant has no obligation to use such name. Tenant
shall not use the name "Millennium" or the name of the Primary Hotel in the
operating name of the Club.
7. Common Area Expenses/Operating Expenses.
Definition. Commencing upon the Commencement Date, Tenant shall pay, in addition
to Monthly Base Rent, all assessments and charges which are assessed
against or incurred in connection with the Premises and/or the Common
Areas, all assessments and charges which are assessed against or
incurred in connection with the CC&R which are reasonably allocable to
the Premises and/or the Common Areas and all charges assessed with
respect to the Premises by the Condominium Association (collectively,
"COMMON AREA EXPENSES"). If at any time during the Term the Premises
shall not be subject to a condominium form of ownership, then in lieu of
paying charges assessed by the Condominium Association, Tenant shall pay
to Landlord Tenant's Share (as defined herein) of Operating Expenses (as
defined herein). "OPERATING EXPENSES" shall mean all costs incurred by
Landlord (except as hereafter defined) in connection with the operation
of the Development for each successive twelve (12) month period (as
designated by Landlord) occurring in whole or in part during the Term
(and any renewals). Tenant hereby acknowledges that Operating Expenses
shall include the following costs (by way of illustration, but not
limitation): real property taxes and assessments and any taxes or
assessments hereafter imposed in lieu thereof with respect to the
Building, including the Common Areas; water and sewer charges; dues and
fees paid to civic organizations and associations in which Landlord is a
member in the jurisdiction in which the Building is located, provided
that it is then customary for landlords of similar buildings to be
members of such organizations and associations and to charge tenants any
such dues and fees by means of operating expenses or otherwise;
accounting fees; legal fees; management fees with respect to the
Development, (not in excess of four percent (4%) of the total revenue
derived by Landlord from Landlord's operation of the Development and
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not in excess of the management fees which are included as an operating
expense or otherwise in the other leases for commercial space in the
Building between Landlord and other commercial tenants of the Building);
utilities; janitorial services; parking patrol; labor; utilities
surcharges or any other costs levied, assessed or imposed by, or at the
direction of, or resulting from, statutes or regulations or
interpretations thereof, promulgated by any federal, state, regional,
municipal or local government authority in connection with the use or
occupancy of the Building, including the Common Areas; the cost in
excess of net insurance and condemnation proceeds of any capital
improvements (amortized over such period as Landlord shall determine
together with interest at the rate actually incurred by Landlord from a
third party lender on the unamortized balance) made to the Building,
including the Common Areas, but only if incurred by Landlord (i) to
comply with any governmental law, rule or regulation which may become
effective after the date of this Lease or any CC&R (other than in
connection with the initial construction of the Development by Landlord
(exclusive of Tenant's Work and/or any Tenant Revision)), or (ii) where
the present value of the projected costs of the improvement (including,
original purchase cost, installation and subsequent repairs and
replacements) is less than the present value of the amount reasonably
anticipated to be saved with respect to the applicable component(s) of
Operating Expense(s) or Common Area Expense(s), as applicable, payable
by Tenant subject to and in accordance with this Article 7 as the result
of such capital improvement over the remainder of the Initial Term or an
exercised Option Period, as applicable; supplies; materials; equipment;
tools; payroll expenses; rental of personal property used in the
maintenance and other upkeep of the Building (to the extent related to
the Premises and/or the Common Areas (e.g., those service facilities
and/or areas of the Building which are used to provide Building services
to the Premises and/or the Common Areas or used in connection with the
operation and maintenance of the Premises and/or the Common Areas)),
including the Common Areas; costs and expenses of gardening, landscaping
and irrigation; maintenance of signs; personal property taxes levied on
or attributable to personal property used in connection with the
Building (to the extent related to the Premises and/or the Common Areas
(e.g., those service facilities and/or areas of the Building which are
used to provide Building services to the Premises and/or the Common
Areas or used in connection with the operation and maintenance of the
Premises and/or the Common Areas)), including the Common Areas;
reasonable audit or verification fees in connection with this Article 7;
and costs and expenses (whether or not capitalized) of repairs,
resurfacing, maintenance, painting, lighting, cleaning, steam cleaning,
refuse removal, parking patrol, sweeping, sealcoating, restriping and
similar items to the extent includable in Operating Expenses or Common
Area Expenses, as applicable, subject to and in accordance with this
Article 7. Operating Expenses and Common Area Expenses, as applicable,
shall not include: depreciation of any kind, including on any buildings
or parking structures located within the Development or on any
equipment; construction costs incurred in improving or modifying space
for new tenants of the Development or renovating space vacated by any
tenant; any costs which are reimbursable by (i) tenants of the
Development (other than through their payment of Operating Expenses
and/or Common Area Expenses, as applicable), (ii) other third parties,
or (iii) proceeds of insurance; Landlord's executive
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salaries; real estate brokers' commissions; or principal or interest on
any indebtedness (except as specifically permitted above).
Exclusions. In addition to the exclusions from Operating Expenses and Common
Area Expenses set forth in Section 7.1 hereof, Operating Expenses and
Common Area Expenses shall not include the following:
the cost of capital expenditures except for those specifically
described in Section 7;
costs incurred with respect to goods or services (including
utilities, capital improvements, maintenance and repair) supplied to the
Common Areas to the extent that such goods or services are designed for
the exclusive or primary use or benefit of another tenant or tenants
(provided that if such goods or services are for the primary use or
benefit of another tenant or tenants, the cost thereof shall be included
in Operating Expenses and Common Area Expenses, as applicable, to the
extent it is fair and equitable to do so);
costs incurred to the extent that such costs are reimbursed by
insurance;
any ground lease or master lease payments;
legal fees incurred by Landlord in connection with (1) the
preparation, negotiation and enforcement of leases, subleases and lease
renewals, (2) the purchase or transfer or disposition of all or any part
of the Development or any interest therein and (3) any financing or
refinancing with respect to the Development;
all leasing costs with respect to the Development, including
hard and soft costs of tenant improvements and preparation of any
premises, tenant concessions, advertising costs and brokerage
commissions;
costs of purchasing or installing artwork or signage (it being
agreed that the cost of any such signage that identifies the Development
may be included within Common Area Expenses and Operating Expenses, as
applicable);
costs of any rental or lease of equipment or capital items that
if purchased (whether outright or financed) would otherwise be excluded
from Operating Expenses or Common Area Expenses, as applicable;
costs paid to Affiliates of Landlord in excess of market rates;
fines, penalties, late payment charges, and interest thereon,
and other amounts imposed in lieu thereof, the payment of which is
attributable to Landlord's failure to act in a commercially reasonable
manner;
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costs to the extent arising from or relating to the negligence
or willful misconduct of Landlord or Landlord's agents, principals,
employees, licensees or Affiliates;
Landlord's general overhead and general administrative expenses;
costs for repair or maintenance covered by warranties or service
contracts (however, the costs of the warranties or service contracts
shall be includable in Common Area Expenses and Operating Expenses, as
applicable);
expenditures required by Landlord's failure to comply with laws,
regulations or orders, which are required to be complied with by
Landlord under this Lease (except to the extent expressly permitted in
Section 7.1 hereof);
costs to repair latent or patent defects with respect to the
Development or Landlord's Work;
costs incurred due to the violation by Landlord or any other
occupant of the Development of the terms or conditions of any lease;
costs arising from or relating to the presence of Hazardous
Materials (as defined herein) in or about the Development;
any costs associated with the initial construction of the
Development and failure by Landlord to construct the Development in
accordance with applicable legal requirements as of the date Landlord
shall Substantially Complete Landlord's Work (exclusive of any such
costs arising out of Tenant's Work and/or any Tenant Revision);
insurance premiums, but only if and to the extent Landlord is
reimbursed for the cost thereof by Landlord's insurers;
bad debt expenses resulting from Landlord's negligence or
improper acts;
costs of charitable or political contributions and fees and dues
paid to trade associations (other than as provided in Section 7.1
hereof);
any cost payable by Tenant pursuant to other Sections of this
Lease; and
any Operating Expenses or Common Area Expenses, as applicable,
reasonably allocable to any parking structure located within the
Development.
Building Insurance. Except for Landlord's cost of the all-risk property
insurance for the Improvements, as addressed in Section 20.4 hereof, if
Landlord's cost of obtaining Landlord's Insurance (as defined herein)
for the Property and/or the Building and the
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operations thereof exceeds the cost of obtaining such insurance for the
first twelve (12) months following the Commencement Date, Tenant shall
pay to Landlord, in a manner similar to this Section 7.3 within thirty
(30) days after being billed therefore, an amount equal to Tenant's
Share of such increased cost.
"TENANT'S SHARE" shall mean a percentage equal to the quotient obtained
by dividing the Floor Area of the Premises (subject to Section 7.6
hereof) by the total number of square feet of Floor Area in the other
tenantable portions of the Development as of the date of the Actual
Statement (as defined herein) for the applicable Lease Year. Landlord
and Tenant acknowledge that at this time it is not possible to determine
the equitable allocation of all components of Operating Expenses or
Common Area Expenses, as applicable. Accordingly, Landlord shall use
commercially reasonable efforts from time to time to equitably adjust
Tenant's Share of some or all of the components of Operating Expenses to
a percentage other than that which would be arrived at by the
methodology hereinbefore described for the determination of Tenant's
Share, so as to ensure that Tenant will pay Tenant's equitable share of
Operating Expenses and if and to the extent applicable and the same
shall not result in an increase in the payment of Common Area Expenses
or Operating Expenses, as applicable, by Tenant in accordance with this
Article 7, that the methodology employed by Landlord to determine
Tenant's equitable share of Operating Expenses is substantially
consistent with the methodology employed in connection with that certain
lease between an Affiliate of Landlord, as landlord and an Affiliate of
Tenant, as tenant, for certain space in New York, New York (the "NEW
YORK ATHLETIC CLUB LEASE") for calendar years 1996 and 1997 or to
equitably adjust some or all of the components of Common Area Expenses,
so as to ensure that Tenant will pay Common Area Expenses in accordance
with the methodology hereinbefore described in Section 7.1 hereof and,
if and to the extent applicable and the same shall not result in an
increase in the payment of Common Area Expenses or Operating Expenses,
as applicable, by Tenant in accordance with this Article 7, the
methodology employed in connection with the New York Athletic Club Lease
for calendar years 1996 and 1997 (it being agreed and acknowledged that
in each instance in which the methodology employed in connection with
this Lease shall contradict or be inconsistent with the aforementioned
methodology employed in connection with the New York Athletic Club
Lease, such aforementioned methodology employed in connection with the
New York Athletic Club Lease shall prevail and govern if and to the
extent applicable and such employment shall not result in an increase in
the payment of Common Area Expenses or Operating Expenses, as
applicable, by Tenant in accordance with this Article 7.) In the event
Tenant shall dispute Landlord's determination as to the equitable
allocation of any component of Operating Expenses or Common Area
Expenses, as applicable, and if Landlord and Tenant shall have been
unable to resolve such dispute, within thirty (30) days following the
date that Tenant shall have notified Landlord of such dispute, then,
provided that Tenant shall pay all such amounts as billed by Landlord on
or before the due dates for payment, Tenant may submit such dispute to
binding arbitration in accordance with the following provisions hereof
within ten (10) days next following the
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giving of any notice by Tenant to Landlord stating that it wishes such
dispute to be determined by arbitration. Landlord and Tenant shall each
give notice to the other setting forth the name and address of an
arbitrator designated by the party giving such notice within ten (10)
days after Landlord's receipt of Tenant's arbitration notice. If either
party shall fall to give notice of such designation within said ten (10)
days, then the arbitrator to be chosen by such party shall be chosen in
the same manner as hereinafter provided for the appointment of the third
arbitrator in the case where the two arbitrators chosen hereunder are
unable to agree upon such appointment. The two arbitrators shall
designate a third arbitrator. If the two arbitrators shall fail to agree
upon the designation of a third arbitrator within ten (10) days after
the designation of the second arbitrator, then either party may apply to
the American Arbitration Association or any successor organization
thereto ("AAA") for the designation of such arbitrator; provided,
however, nothing contained herein shall be construed to require
submission of any dispute to the AAA. All arbitrators shall be persons
who shall have had at least ten (10) years experience in the business of
operating or managing commercial real estate in San Francisco,
California and shall not be affiliated with either Landlord or Tenant.
The three arbitrators shall conduct such hearings as they deem
appropriate, making their determination in writing and giving notice to
Landlord and Tenant of their determination within ten (10) days, if at
all possible, after the designation of the third arbitrator; the
concurrence of any two of said arbitrators shall be binding upon
Landlord and Tenant. Any award of the arbitrators shall be limited to
the determination as to whether Landlord made an equitable allocation of
the component(s) of Operating Expenses or Common Area Expenses, as
applicable which are the subject of such dispute. If it is determined
that Landlord has not equitably allocated a component(s) of Operating
Expenses or Common Area Expenses, as applicable, then the arbitrators
shall determine the equitable allocation thereof. The determination in
any arbitration held pursuant to this Section 7.3 shall be final and
binding upon Landlord and Tenant. Each party shall pay its own counsel
fees and expenses, if any, in connection with any arbitration under this
Section 7.3, and each party shall pay the fees and expenses of the one
of the two (2) original arbitrators appointed by or for such party and
the fees and expenses of the third arbitrator shall be shared by the
parties equally; it being agreed that if it shall be determined in the
arbitration that Landlord has not equitably allocated a component(s) of
Operating Expenses or Common Area Expenses, as applicable, and as a
result thereof Tenant shall have made an overpayment of Operating
Expenses or Common Area Expenses, as applicable, by more than five
percent (5%), then, Landlord shall pay the reasonable actual
out-of-pocket cost of the arbitration proceeding incurred by Tenant not
to exceed $7,500.00, and the amount of any such overpayment shall be
credited against the next installment (or installments if the credit
exceeds the amount of the next installment) of Monthly Base Rent due
under this Lease and if the amount of the credit exceeds the amount of
the subsequent installment(s) of Monthly Base Rent due under this Lease,
the excess shall be refunded to Tenant within thirty (30) days after the
aforementioned arbitration determination with interest thereon at the
Prime Rate (as defined herein) from the date of such overpayment.
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Statements. As soon as possible after the beginning of the Initial Term,
Landlord shall give to Tenant a statement estimating the Common Area
Expenses or Operating Expenses, as applicable for the first Lease Year.
Thereafter, Landlord shall give Tenant, prior to the expiration of each
Lease Year, a statement estimating the Common Area Expenses or Operating
Expenses, as applicable for the following Lease Year. The estimated
Common Area Expenses or Operating Expenses, as applicable, shall be the
applicable estimated amounts described in this Section 7. The estimated
Common Area Expenses or Operating Expenses, as applicable, shall be
divided into twelve (12) equal monthly installments (or, as to the first
and last Lease Year, divided by the number of calendar months in such
Lease Year), and Tenant shall pay to Landlord Tenant's monthly
installment of such Common Area Expenses or Operating Expenses, as
applicable, on the first day of each month during the Term as additional
rent. If, in any Lease Year, the actual Common Area Expenses or
Operating Expenses, as applicable, are less than the estimated payments
made by Tenant for such Lease Year, as evidenced in Landlord's statement
(the "ACTUAL STATEMENT") of actual Common Area Expenses or Operating
Expenses, as applicable, for such Lease Year (which Landlord shall
deliver to Tenant within ninety (90) days after the expiration of each
Lease Year), then any overpayment made by Tenant on the monthly
installment basis shall be credited towards the next monthly
installment(s) falling due and the estimated monthly installments of
Common Area Expenses or Operating Expenses, as applicable, shall be
adjusted to reflect such lower amounts. Similarly, if, in any Lease
Year, the actual Common Area Expenses or Operating Expenses, as
applicable, are greater than the estimated payments made by Tenant for
such Lease Year as evidenced in the Actual Statement for such Lease
Year, then Tenant shall pay the amount of such difference to Landlord
within thirty (30) days after invoice; provided, however, that if the
amount due exceeds 1/2 of Monthly Base Rent then in effect, Tenant may
pay such amount in thirty (30) day installments with each installment in
the amount of the lesser of the remainder due or 1/2 of the Monthly Base
Rent then in effect. Notwithstanding that the Term may have terminated
or expired and Tenant has vacated the Premises, when the final
determination is made of the actual Common Area Expenses or Operating
Expenses, as applicable, for the last Lease Year, Tenant shall
immediately pay to Landlord any increase due over the estimated Common
Area Expenses or Operating Expenses, as applicable, paid by Tenant and,
conversely, any overpayment made in the event actual Common Area
Expenses or Operating Expenses, as applicable, decrease, shall be
rebated by Landlord to Tenant within thirty (30) days after such
determination. The foregoing provision shall survive the expiration or
earlier termination of this Lease.
Audit. Upon prior notice, but not more frequently than once each Lease Year,
Tenant shall have the right to examine Landlord's books and records with
regard to Common Area Expenses or Operating Expenses, as applicable,
during normal business hours. If Tenant disputes the amount of Common
Area Expenses or Operating Expenses, as applicable, set forth in any
Actual Statement delivered by Landlord or otherwise paid by Tenant,
Tenant must notify Landlord of such dispute in writing within three (3)
months following Tenant's receipt of the Actual Statement. Tenant's
failure to notify Landlord of a dispute
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within said three (3) month period shall be deemed Tenant's acceptance
and approval of the accuracy of the Actual Statement. Provided Tenant
has timely given the required dispute notice and has paid the amounts
claimed to be due under the Actual Statement (including the disputed
amount), Tenant shall have the right, to be exercised, if at all, not
later than three (3) months after the date Tenant gave the dispute
notice, to cause Landlord's books and records with respect to the
relevant Lease Year to be audited by a certified public accountant, or
by another Tenant representative mutually acceptable to Landlord and
Tenant. The amounts payable under Section 7.4 hereof by Landlord to
Tenant or by Tenant to Landlord, as the case may, be shall be
appropriately adjusted on the basis of such audit. If such audit
discloses a liability for further refund by Landlord to Tenant in excess
of five percent ( 5%) of the Common Area Expense payments or Operating
Expense payments, as applicable, previously made by Tenant for such
Lease Year, Landlord shall pay for the reasonable cost of the audit not
to exceed $7,500.00; otherwise, Tenant shall pay for the cost of the
audit. Notwithstanding the foregoing, if any audit conducted by Tenant
discloses that Landlord over-reported Common Area Expenses or Operating
Expenses by more than five percent (5%) for the period covered by the
audit, then Tenant shall be entitled to audit Common Area Expenses or
Operating Expenses, as applicable, for all preceding years as to which
records are available. Landlord shall be obligated to maintain said
records for sixty (60) months (but for no such longer period of time)
after the end of each Lease Year except if a dispute with respect
thereto is then pending under Section 7.3 hereof.
Notwithstanding anything to the contrary contained herein, if in any Lease Year
during which Tenant shall be paying Operating Expenses the total Floor
Area of buildings in the Development which are tenantable is not fully
occupied, then the Operating Expenses for such Lease Year shall be
deemed to be an amount that would be incurred if such total Floor Area
were occupied for such Lease Year, but in no event shall Tenant be
required to pay more than ninety-five percent (95%) of the actual
Operating Expenses.
8. Use.
Permitted Use. The Premises shall be used exclusively for a first-class coed
athletic club operated by an operator with first-class expertise,
reputation and experience, and Tenant shall not use or permit the
Premises to be used for any other purpose, or by an operator other than
Tenant or an Affiliate of Tenant, without the prior consent of Landlord.
As used herein, "FIRST-CLASS" shall mean comparable to other athletic
clubs with comparable facilities operated by Tenant or Tenant's
Affiliates as of the date hereof. As a part of the athletic club
operated from the Premises, Tenant shall be entitled to use portions of
the Premises for uses complementary to an athletic club (but only in
support of Tenant's primary operation as an athletic club), such as a
pro shop, child care facility, delicatessen, so long as the type and
quality of such complementary uses are consistent with the services
offered in other first-class athletic clubs; provided, however, no food
or beverages (other than primarily for consumption at the Premises)
shall be sold from the Premises. Any complementary uses may be achieved
through a license, which license
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shall (i) be subject to all terms and conditions of this Lease but shall
not otherwise require Landlord's prior approval and (ii) other than with
respect to the complimentary uses in the Reebok Sports Club/New York as
of the date hereof, not conflict with an exclusive use granted by
Landlord to any then current tenant or any future tenant or occupant of
the Development of which Landlord has advised Tenant.
Compliance with Laws.
Tenant shall not use or occupy the Premises in violation of (a)
law or the certificate of occupancy issued for the Improvements or the
Building, (b) any condominium declaration, offering plan, by-laws, house
rules, and other requirements, instruments or declarations (collectively
the "CONDOMINIUM DOCUMENTS") now or hereafter ratified by any
condominium association or equivalent (the "CONDOMINIUM ASSOCIATION")
having jurisdiction over the Premises, (c) any private covenants,
conditions or restrictions or reciprocal easement agreements
(collectively, the "CC&R") which may now or hereafter be recorded
encumbering the Development or (d) any liquor license issued with
respect to the Club, and shall, upon notice from Landlord, discontinue
any use of the Premises which is in violation of law or of said
certificate of occupancy, or is a violation of the Condominium
Documents, the CC&R or said liquor license. Notwithstanding the
foregoing, after the date hereof Landlord shall not amend or modify any
existing CC&R or create new CC&R's or Condominium Documents which
materially adversely affect any of Tenant's rights hereunder or
materially increase its obligations hereunder.
Tenant shall comply with any law or directive of any
governmental authority having jurisdiction which by reason of the nature
of Tenant's particular use or occupancy shall impose any duty upon
Tenant or Landlord with respect to the Premises or with respect to the
use or occupancy thereof.
Tenant shall not do or permit to be done anything which will
increase the cost of (unless Tenant pays such increased cost) or which
will invalidate any fire, extended coverage or any other insurance
policy covering the Improvements and/or property located therein or the
Building. In the event Tenant does or permits anything to be done which
increases the cost of any insurance maintained by Landlord hereunder,
Tenant shall promptly, upon demand, as Landlord's sole remedy for such
increase (but without limiting any other remedies that may be available
to Landlord if the cause of such increase is otherwise violative of any
provisions of this Lease), reimburse Landlord for such increase. Tenant
shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Development, or use or allow the Premises to
be used for any unlawful purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises; Landlord, however,
acknowledges that certain noise and vibration are incident to Tenant's
use of the Premises, and that to the extent the same shall not exceed
noise levels generated by other athletic clubs in similar types of
buildings and shall not otherwise
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exceed the legally permissible decibel levels, the same shall not
constitute a nuisance for the purposes hereof.
Tenant shall not commit or suffer to be committed any waste in
or upon the Premises.
Tenant shall be responsible for obtaining, at Tenant's sole cost
and expense, all required licenses and/or permits authorizing the use of
the Premises for an athletic and social club and Tenant's cooking
operations with respect to the Club subject to and in accordance with
this Lease.
Hazardous Materials.
Tenant shall not use or permit any hazardous, toxic or
radioactive materials ("HAZARDOUS MATERIALS")to be brought upon, kept or
used in or about the Premises, the Improvements or any portion of the
Development by Tenant, its agents, employees or contractors, unless such
Hazardous Materials are necessary or useful to and customarily used in
Tenant's business and will be used, kept and stored in a manner that
complies with all laws regulating any such Hazardous Materials. In
addition, Tenant shall be entitled to use general office supplies,
normal janitorial supplies, supplies used in maintaining its equipment
and swimming pool supplies in a manner that complies with all laws
regulating their use. If Tenant breaches the covenants and obligations
set forth herein or, if the presence of Hazardous Materials on, in or
about the Premises, the Improvements or any other portion of the
Development caused or permitted by Tenant, its agents, employees or
contractors results in contamination of the Premises, the Improvements
or any other portion of the Development, then Tenant shall indemnify,
defend and hold Landlord and the owner(s) and operator(s) of the Common
Areas free and harmless from and against any and all claims, judgments,
damages, penalties, fines, costs, liabilities and losses (including
diminution in the value of the Premises and/or the Common Areas, damages
for the loss or restriction on use of rentable or useable space or of
any amenity of the Premises, the Improvements or any other portion of
the Development, and sums paid in settlement of claims, attorneys' fees,
consultants' fees and expert fees) which arise during or after the Term
as a result of such contamination. This indemnification by Tenant of
Landlord and the owner(s) and operator(s) of the Common Areas, includes
any and all costs incurred in connection with any investigation of site
conditions or any clean up, remedial, removal or restoration work
required by any federal, state or local governmental agency or political
subdivision because of the presence of such Hazardous Materials in, on
or about the Premises, the Improvements or any portion of the
Development, including the soil or ground water on or under the
Development. The provisions of this Section 8.3(i) shall survive the
expiration or earlier termination of this Lease.
Landlord shall not cause or permit any Hazardous Materials to be
brought upon, kept or used in or about the Premises or any other portion
of the Development by
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Landlord, its agents, employees or contractors unless such Hazardous
Materials are used, kept and stored in a manner that complies with all
laws regulating such Hazardous Materials. If Landlord breaches the
covenants and obligations set forth herein or if contamination of the
Premises or any other portion of the Development by Hazardous Materials
otherwise occurs which is caused by Landlord or its agents, then
Landlord shall indemnify, defend and hold Tenant free and harmless from
and against any and all claims, judgments, damages (but not
consequential damages), penalties, fines, costs and liabilities and
losses (including any diminution in the value of the Club, and sums paid
in settlement of claims, attorneys' fees, consultants' fees and expert
fees) which arise during or after the Term as a result of such
contamination. This indemnification by Landlord of Tenant includes any
and all costs incurred in connection with any investigation of site
conditions or any clean up, remedial, removal or restoration work
required by any federal, state or local governmental agency or political
subdivision because of the presence of such Hazardous Materials in or
about the Premises. The provisions of this Section 8.3(ii) shall survive
the expiration or earlier termination of this Lease.
Restrictions.
So long as this Lease remains in full force and effect and
Tenant is operating a Club and facilities related to the operation of such Club
in at least seventy-five percent (75%) of the Premises subject to Temporary
Closures (as defined herein), Landlord hereby agrees that neither Landlord, nor
any individual(s), firm or corporation controlled by, controlling or under
common control with Landlord shall lease to, sublease to, consent to an
assignment or sublease to, operate, own or become financially interested in, (a)
any other Club within the Development, provided that an athletic club may be
operated within the Primary Hotel not to exceed 840 square feet of Floor Area in
the aggregate, or (b) any tenant or occupant of the Development which provides
spa services or operates a beauty salon within the Development provided Tenant
is providing spa services in the Premises and/or operating a beauty salon in the
Premises subject to and in accordance with this Lease and subject to Temporary
Closures (after a reasonable period of time after the Commencement Date to
prepare the Premises for same) and if the operator of the Primary Hotel is the
Four Seasons or an Affiliate thereof, in a manner consistent with the typical
standard of operation with respect thereto of the Four Seasons in the United
States as of the date hereof (the "FOUR SEASONS STANDARD") or otherwise in a
manner consistent with the typical standard of operation with respect thereto of
the then operator of the Primary Hotel in the United States (the "OTHER PRIMARY
HOTEL OPERATOR"); provided, however, that with respect to the standard of
operation of an Other Primary Hotel Operator any such standard of operation
shall not increase (except to a de minimis extent) the cost and expense to
Tenant (which will not be recouped by Tenant) to provide spa services in the
Premises and/or operate a beauty salon in the Premises beyond that which Tenant
would have incurred in connection with the Four Seasons Standard and Tenant
shall not be required to remodel and/or reformat the portions of the Premises
providing spa services and/or being operated as a beauty salon as a direct
result of the conversion from the Four Seasons Standard to the standard of
operation of an Other Primary Hotel Operator.
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9. Notices.
All notices, consents, approvals, determinations and other
communications required or permitted to be given hereunder must be in writing
and may be given only by personal delivery, overnight delivery, facsimile
transmission or by mail, and if given by mail shall be deemed sufficiently given
only if sent by registered or certified mail, return receipt requested, to the
following address of the party to receive such notice. Notices shall be deemed
received if sent in compliance with the aforesaid requirements, upon actual
receipt for notices given by personal delivery or facsimile and upon the earlier
of actual receipt or three (3) business days after deposit of any notice in the
United States mail if sent by registered or certified mail.
If to Landlord: c/o Millennium Partners
1995 Broadway, 3rd Floor
New York, New York 10023
Attention: Chief Financial Officer
Fax: (212) 579-0662
With a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Eric R. Landau, Esq.
Fax: (212) 856-7805
If to Tenant: SCC Sports Club, Inc.
11100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90025
Attention: Real Estate Dept.
Fax: (310) 479-8879
With a copy to: Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
Fourth Floor
Los Angeles, California 90025
Attention: Ronald M. Resch, Esq.
Fax: (310) 552-3209
Either party may specify a different address for notice purposes by
written notice to the other pursuant to this Article 9.
10. Brokers.
Landlord and Tenant each warrant to the other that such party has not had any
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, and that such party knows of no real estate broker or agent who
is or might be entitled to a commission in
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connection with this Lease. If Landlord or Tenant has dealt with any person or
real estate broker or agent with respect to the transaction contemplated by this
Lease, the party so dealing with such person or broker or agent shall be solely
responsible for the payment of any fee due such person or broker or agent and
such party shall hold the other free and harmless from and against any liability
in respect thereto, including attorneys' fees and costs.
11. Holding Over.
If Tenant holds over after the expiration or earlier termination of this
Lease without the express consent of Landlord, Tenant shall become a tenant at
sufferance only, at a rental rate equal to one hundred twenty-five percent
(125%) of the Monthly Base Rent in effect upon the date of such expiration or
earlier termination (prorated on a daily basis), plus one hundred percent (100%)
of the other elements of Rent, and otherwise subject to the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Landlord of
Rent after such expiration or earlier termination shall not result in a renewal
of this Lease. The foregoing provisions of this Article 11 are in addition to
and do not affect Landlord's right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law.
12. Taxes.
Payment. Commencing upon the Commencement Date, Tenant shall be liable for and
shall pay to Landlord, as additional rent and in the manner hereinafter
provided, all (i) real property taxes, (ii) personal property taxes,
(iii) general and special assessments, (iv) water and sewer taxes,
bonds, assessments and related charges, (v) excises, levies, license and
permit fees and (vi) all other governmental charges, general and
special, ordinary and extraordinary, of any kind and nature whatsoever,
which at any time during or applicable to the Term may be assessed,
levied, confirmed, imposed upon, or become due and payable out of or in
respect of, or become a lien on the Premises, the Improvements or any
portion thereof (collectively "TAXES"). Tenant's payment of Taxes shall
be payable by Tenant in the same number of installments as taxes are due
from Landlord to the applicable taxing authorities and shall be due from
Tenant to Landlord thirty (30) days prior to the date such taxes, or
installments thereof, are due from Landlord to the taxing authorities.
If during the Term, Taxes are required to be paid to the taxing
authorities in full or in monthly, quarterly or other installments, on
any other date or dates than as presently required, then, the Taxes
shall be correspondingly accelerated or revised so that same are due
thirty (30) days before the date such Taxes, or installments thereof,
are due from Landlord to the taxing authorities. Notwithstanding the
foregoing, if Landlord is obligated to make monthly escrows of Taxes to
any Senior Interest Holder and as a result thereof, Landlord requires
all tenants of the Building under leases with Landlord to make escrows
of Taxes, then in lieu of the manner of payment referred to above, on
the first day of the month following the furnishing to Tenant of a
statement of Taxes, Tenant shall pay to Landlord a sum equal to 1/12th
of the payment of Taxes shown thereon to be due for such fiscal year for
real estate tax purposes adopted by the applicable taxing authority then
imposing taxes (the "TAX YEAR") multiplied by the number of months of
the Term
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then elapsed since the commencement of such Tax Year. Tenant shall
continue to pay to Landlord a sum equal to 1/12th of the payment of
Taxes shown on such statement on the first day of each succeeding month
until the first day of the month following the month in which Landlord
shall deliver to Tenant a new statement of Taxes. If the escrows of
Taxes required to be made by Landlord with any Senior Interest Holder
are required to be made other than monthly, then the obligations of
Tenant referred to in the immediately preceding two (2) sentences shall
be appropriately modified so that Tenant shall make the payment of Taxes
to Landlord in the same number of installations as Landlord is required
to make to such Senior Interest Holder. In the event the escrows of
Taxes required to be made by Landlord with any Senior Interest Holder
are held in an interest bearing account, then Tenant's payment of Taxes
shall be reduced by Tenant's Share of the actual interest received by
Landlord in connection therewith. If Landlord shall not furnish to
Tenant a statement of Taxes prior to the commencement of such Tax Year,
then Tenant shall continue to make monthly installment payments based
upon the previous Tax Year's statement of Taxes until Landlord shall
furnish a new statement of Taxes with respect to the then current Tax
Year. If Landlord furnishes a statement of Taxes for a Tax Year
subsequent to the commencement thereof, promptly after the statement of
Taxes is furnished to Tenant, Landlord shall give notice to Tenant
stating whether the amount previously paid by Tenant to Landlord for the
current Tax Year was greater or less than the installments of Tenant's
payment of Taxes for the current Tax Year, and (1) if there shall be a
deficiency, Tenant shall pay the amount thereof within thirty (30) days
after demand therefor, or (2) if there shall have been an overpayment,
such excess shall be refunded to Tenant within thirty (30) days of the
rendition of the aforementioned statement to Tenant. If there shall be
any increase or decrease in Taxes for any Tax Year, whether during or
after such Tax Year, then Landlord shall furnish a revised statement of
Taxes for such Tax Year, and Tenant's payment of Taxes for such Tax Year
shall be adjusted and paid or credited, as the case may be,
substantially in the same manner as provided in the preceding sentence.
If the Tax Year established by the applicable taxing authority shall be
changed, any Taxes for the Tax Year prior to such change which are
included within the new Tax Year and which were the subject of a prior
statement of Taxes shall be apportioned for the purpose of calculating
Tenant's payment of Taxes payable with respect to such new Tax Year.
If a separate real property tax bill is not issued for the Premises at
any time during the Term, but Landlord receives a tax bill for a larger
parcel of real property including the Premises, Landlord shall bill
Tenant for a pro rata share of such taxes. Landlord shall provide Tenant
with an invoice therefor together with a detailed explanation of any
proration, which proration shall be made on the basis of Tenant's Share
of the ratio between Floor Area of the Premises and the total square
feet of the Floor Area of the other tenantable portions of the taxed
unit of which the Premises form part. If Landlord shall receive any
bills, assessments or other official notices regarding any such taxes or
other charges, it shall promptly forward the same to Tenant, but an
inadvertent failure (or failures) to do so shall not be deemed a breach
hereof. All such taxes, assessments, charges and the like billed
directly to Tenant or passed on to Tenant by Landlord and paid
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by Tenant pursuant to the provisions of this Section 12.1 shall be
excluded from Common Area Expenses or Operating Expenses, as applicable.
All taxes becoming a lien upon the Premises or any portion thereof
during the first and last Tax Year shall be prorated between Landlord
and Tenant to the first and last day of the Term, respectively. Upon
Tenant's request in writing, Landlord shall furnish to Tenant proof
reasonably satisfactory to Tenant of payment of the matters referred to
in this Article. If the Premises are separately assessed for real
property taxes, Tenant shall have the right, following notice to
Landlord, to protest, contest or object to the amount or validity of any
such taxes, impositions or assessments; provided, however, that this
right to contest shall not be deemed or construed to relieve, modify or
extend Tenant's obligation to pay any such tax, imposition or assessment
before delinquency thereof unless Tenant has provided a bond or other
security satisfactory to Landlord. Tenant shall indemnify and defend
Landlord and save Landlord harmless from all costs, liabilities and
expenses incurred in connection with such proceedings.
Trade Fixtures. Tenant shall be liable for and shall pay, before delinquency,
all taxes levied against Trade Fixtures.
Protest.Tenant shall have the right, at its sole cost, to request Landlord, by
notice to Landlord given not less than ten (10) days before the last
date for filing any necessary protest or petition or taking any other
necessary action, to initiate and prosecute any proceeding for the
purpose of reducing the assessed valuation of the Premises for tax
purposes. In the event that Tenant in good faith shall request Landlord,
pursuant to the preceding sentence, to initiate and prosecute any
proceeding, Landlord shall, subject to the requirements imposed by any
mortgage of Landlord's interests in the Development, at Tenant's sole
expense, take all steps reasonably necessary to commence such proceeding
and thereafter shall diligently prosecute the same to completion. Any
actual out-of-pocket costs, including reasonable attorneys' fees,
incurred by Landlord in connection with any such proceeding brought at
Tenant's request shall be payable upon demand, as Additional Rent, by
Tenant to Landlord. Any refund of moneys received by Landlord resulting
from such proceeding attributable to the Premises and relating to real
property taxes which may have been paid by Tenant shall be refunded by
Landlord to Tenant, together with all accrued interest which is awarded
thereon and received by Landlord; provided that if any such refund shall
be made with respect to Landlord's property other than the Premises,
then Tenant's right to the same shall be limited to its pro rata portion
thereof, after payment or credit first (to the extent such monies are
received by Landlord from the taxing authority), to Tenant for
Landlord's costs previously paid by Tenant to Landlord as above provided
and second (after all costs incurred by Landlord have been recovered),
for any other actual out-of-pocket costs, including reasonable
attorneys' fees, incurred by Tenant in connection with any such
proceeding. Tenant's rights to refunds under this Section 12.3, if any,
shall survive the expiration of this Lease.
Definition. As used in this Article 12, the term "REAL PROPERTY TAXES" shall
include any form of assessment, license fee, license tax, business
license fee, commercial rental tax, levy,
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charge, tax or similar imposition, imposed by any authority having the
direct power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other
improvement or special assessment district thereof, as against any legal
or equitable interest of Landlord in the Premises, including, but not
limited to, the following: any tax on Landlord's ""right" to rent or
"right" to other income from the Premises or as against Landlord's
business of leasing the Premises; any assessment, tax, fee, levy or
charge in substitution, partially or totally, of any assessment, tax,
fee, levy or charge previously included, within the definition of real
property taxes ("IN-LIEU TAX"); any assessment, tax, fee, levy or charge
allocable to or measured by the area of the Premises or the rent payable
hereunder ("RECEIPTS TAX"), including any gross income tax or excise tax
levied by the state, city or federal government, or any political
subdivision thereof, with respect to the receipt of such rent, or upon
or with respect to the possessing, leasing, operating, managing,
maintaining, altering, repairing, using or occupying by Tenant of the
Premises or any portion thereof; any assessment, tax, fee, levy or
charge upon this transaction or upon any document to which Tenant is a
transferring party creating or transferring an interest or an estate in
the Premises; any assessment, fee, levy or charge by any governmental
agency related to any transportation plan, fund or system instituted
within the geographic area of which the Premises are a part; and
reasonable legal and other professional fees, costs and disbursements
incurred in connection with proceedings to reasonably contest, determine
or reduce real property taxes. Notwithstanding any provision of this
Article 12 expressed or implied to the contrary, Tenant shall not be
required to pay any documentary transfer taxes or recording taxes
incurred by Landlord or Landlord's federal or state income, franchise,
inheritance or estate taxes or any local income, franchise, inheritance
or estate taxes, or other taxes in lieu thereof, except for any In-Lieu
Tax or any Receipts Tax.
13. Condition of Premises.
Landlord's Work. Landlord hereby agrees to cause to be completed those acts
and/or improvements described as the Landlord's Work in the Work Letter
within the time(s) set forth therein, subject to Force Majeure or any
Tenant Delay. Landlord hereby agrees that all work to be performed by
Landlord pursuant to the Work Letter shall be constructed by Landlord or
Landlord's contractor in a good and workmanlike first-class manner and
in full compliance with all governmental regulations, ordinances and
laws existing at the time of construction. Landlord agrees to abide by
its obligations, if any, under the CC&R. By taking possession of the
Premises upon completion of the Landlord's Work and for commencement of
the construction of the Improvements, Tenant shall be deemed to have:
(i) acknowledged that Landlord's Work is substantially complete and is
accepted "as is" and "with all faults"; (ii) accepted the Premises as
suitable for the purposes for which the Premises are leased; and (iii)
acknowledged that the Premises are in a good and satisfactory condition,
except as otherwise expressly provided in the Work Letter. Landlord
hereby disclaims, and Tenant hereby waives to the full extent permitted
by law, any implied warranty that the Premises are suitable for Tenant's
intended commercial purpose, and any and all other implied warranties
(whether arising by virtue of statute,
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case law or otherwise). The foregoing provisions shall not be construed
to relieve Landlord from its obligations which are expressly set forth
in this Lease.
Design Changes. In order to provide Landlord with the necessary flexibility in
the planning and organizing of the Building, Tenant agrees that the
design of the Building (including the location of the demising walls for
the Premises) and elements of Landlord's Work shall be subject to such
changes as Landlord shall deem to be necessary or beneficial to the
Building or its tenants; provided, however, that the resulting Premises
shall be substantially equivalent for Tenant's purposes as prior to such
changes.
14. Alterations.
Landlord's Approval. From and after the later of (i) the Commencement Date, or
(ii) completion of the Improvements, Tenant, without obtaining
Landlord's prior consent, may only make alterations, additions or
improvements in or to the Premises which (a) are nonstructural in
nature, and (b) do not affect the exterior of the Premises or other
exterior portions of the Improvements (but only to the extent generally
visible from the Common Areas). All alterations, additions and
improvements other than those described in clauses (a) and (b) hereof
shall require Landlord's prior written consent. Before proceeding with
any alteration, addition or improvement which requires Landlord's prior
written consent hereunder, Tenant shall submit to Landlord plans and
specifications, including any applicable mechanical, electrical and
plumbing drawings, for the work to be done, which plans and
specifications shall require Landlord's approval. If Landlord shall
disapprove of any of Tenant's plans and specifications, Tenant shall be
advised of the reasons for such disapproval.
Requirements. Tenant agrees to provide Landlord with notice of all alterations,
additions or improvements Tenant intends to make to the Premises whether
or not they require Landlord's prior consent as provided above. Tenant
shall cause Tenant's contractor to obtain on behalf of Tenant and at
Tenant's sole cost and expense all necessary governmental permits and
certificates for the commencement and prosecution of any alteration,
addition or improvement and for final approval thereof upon completion.
All such work shall be done at such times and in such manner as Landlord
may from time to time designate. Tenant covenants and agrees that all
work done by Tenant shall be performed in full compliance with the
Condominium Documents, the CC&R, in full compliance with all laws,
rules, orders, ordinances, regulations and requirements of all
governmental agencies, offices, and boards having jurisdiction, and in
full compliance with the rules, regulations and requirements of any
insurance rating bureau having jurisdiction of the Premises or the
Building. Before commencing any work, Tenant shall give Landlord at
least ten (10) days notice of the proposed commencement of such work in
order to provide Landlord with an opportunity to post notices of
nonresponsibility. Tenant further covenants and agrees that any
mechanic's lien recorded against the Premises or the Building for work
claimed to have been done for, or materials claimed to have been
furnished to Tenant, will be discharged by Tenant, by bond or otherwise,
as
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provided in Article 16 hereof. All alterations, additions or
improvements upon the Premises made by either party, including all
wallcovering, built-in cabinetry, paneling and the like, shall, at
Landlord's option, upon the expiration or earlier termination of this
Lease become the property of Landlord, and shall, at such time, remain
upon, and be surrendered by Tenant with the Premises, as a part thereof.
Removal. All articles of personal property and movable furniture, including
Trade Fixtures and any other of Tenant's furniture and equipment which
are installed by Tenant at its expense in the Premises shall be and
remain the property of Tenant and may be removed by Tenant at any time
during the Term provided Tenant repairs any damage caused by such
removal. If Tenant shall fail to remove all of its effects from the
Premises upon the expiration or earlier termination of this Lease, for
any cause whatsoever, Landlord may, at it option, remove the same in any
manner that Landlord shall choose, and store said effects without
liability to Tenant for loss thereof so long as Landlord exercises
reasonable care in doing so. In such event, Tenant agrees to pay
Landlord upon demand any and all reasonable expenses actually paid to
third parties incurred in such removal, including court costs and
attorneys' fees and storage charges on such effects for any length of
time that the same shall be in Landlord's possession. Landlord may, at
its option, upon at least ten (10) business days' prior notice to Tenant
of the date, time and place of the sale of such effects, or any of the
same, sell any such affects at a private sale and without legal process,
for such price as Landlord may obtain and apply the proceeds of such
sale to any amounts due under this Lease from Tenant to Landlord and to
the expense incident to the removal and sale of said effects. Any rights
of Landlord under this Section 14.3 shall be subject to the rights of
lienholders with a security interest in Tenant's personal property
pursuant to Section 1.2 hereof.
16. Repairs.
Tenant's Obligations. Except as otherwise hereinafter provided, Tenant, at
Tenant's sole cost and expense, shall (i) keep, maintain (including
necessary replacements) and preserve the Property and every portion
thereof, all equipment, facilities and amenities used in connection
therewith and all items located on or about the Property, including
elevators servicing the Premises, plumbing, mechanical systems, floors
and utility systems (including HVAC system) and all portions thereof in
first-class condition and repair, (ii) when and if needed, at Tenant's
sole cost and expense (subject to the damage and destruction provisions
herein), make all repairs to the Property and every portion thereof
including the interior walls but excluding the structural columns
described in Section 15.2 hereof, (iii) repaint the interior and the
exterior of the Improvements as necessary, (iv) replace all broken
window glass, and (v) repair all facilities except for the structural
elements described in Section 15.2 hereof. Tenant's obligation to keep,
maintain, preserve and repair the Premises shall specifically extend to
the cleanup and removal of all Hazardous Materials to the extent
required by Tenant in Article 8 hereof. Tenant shall, upon the
expiration or earlier termination of the Term, surrender the Property to
Landlord in its condition as of the commencement of Tenant's operation
of the Club for member
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use, usual and ordinary wear and tear and any alterations, additions and
improvements permitted under this Lease excepted, and except as
otherwise provided in Articles 21 and 22 hereof. Landlord shall have no
obligation to alter, remodel, improve, repair, decorate or paint the
Property or any part thereof, except as provided in Section 15.2 hereof
and except for cleanup and removal of Hazardous Materials to the extent
required in Article 8 hereof. The parties hereto affirm that Landlord
has made no representations to Tenant respecting the condition of the
Property except as specifically set forth in Article 13 hereof. In
addition, the parties hereto affirm that Landlord shall have absolutely
no obligation to keep, maintain or repair any portion of the interior of
the Premises except as herein expressly provided. Landlord shall be
responsible for repairs to the Property caused by the negligence or
willful misconduct of Landlord or its employees, agents, or contractors.
Notwithstanding the foregoing, to the extent that insurance carried by
Landlord or Tenant provides coverage for the cost of any maintenance or
repair or replacement which is Tenant's obligation pursuant hereto,
Tenant shall be entitled to all benefits of such insurance.
Landlord's Obligations. Subject to the last sentence of this Section 15.2,
Landlord shall (subject to reimbursement therefor pursuant to Section 7
hereof) keep, maintain and repair, or cause to be kept, maintained and
repaired, the Building (exclusive of the Property) and the Common Areas
in a first-class manner and be responsible for the repair and
maintenance of the structural elements of the Development except to the
extent that the necessity for any repair or maintenance shall be
attributable to alterations performed by or through Tenant or by the
negligence or willful misconduct of Tenant or its employees, agents,
contractors, licensees or invitees. Notwithstanding the foregoing,
Landlord shall (without being subject to reimbursement therefor pursuant
to Section 7 hereof) repair all defects in Landlord's construction of
the Club (if and to the extent expressly provided in the Work Letter)
and Common Areas. Landlord shall grant easements and/or grant rights of
way to the extent necessary for utility companies to bring those
services identified in the Work Letter to the Premises.
16. Liens.
Except with respect to a security agreement, financing statement,
financing lien or other instrument securing the financing of Trade Fixtures and
Tenant's other furniture, fixtures, equipment and improvements approved by
Landlord, Tenant shall not permit to be recorded against the Premises or any
portion of the Development or against Tenant's leasehold interest in the
Premises, any mechanics', materialmen's or other liens, including any state,
federal or local Hazardous Material clean-up liens for which Tenant is
responsible under Article 8 hereof. Landlord shall have the right at all
reasonable times to post and keep posted on the Premises any notices which it
deems necessary for protection from such liens. If any such lien is recorded,
and is not discharged by Tenant by bond or otherwise within thirty (30) days
after the recording thereof, Landlord may, without waiving its rights and
remedies based on such breach of Tenant and without releasing Tenant from any of
its obligations, cause such liens to be released by any means it shall deem
proper, including payment in satisfaction of the claim giving rise to such
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lien. Tenant shall pay to Landlord on demand, upon notice by Landlord, any sums
incurred by Landlord to remove such liens, together with Landlord's reasonable
attorneys' fees and other expenses incurred by Landlord in connection with
obtaining such release and interest on such sums at the lesser of (i) the rate
of twelve percent (12%) per annum and (ii) the highest rate then legally
permissible from the date of such payment by Landlord. Tenant expressly reserves
the right to contest the validity of any such liens and to post bonds suitable
to cause the release of any such liens so long as (a) prior to any such contest
(and no later than thirty (30) days after such lien has been filed) Tenant at
its sole expense provides to Landlord a bond indemnifying against such lien that
complies with all applicable laws, and (b) Tenant contests such lien diligently
and in good faith; provided, however, the foregoing right of Tenant to contest
any such lien shall not impair or otherwise affect Tenant's indemnification and
other obligations with respect to such lien.
17. Entry by Landlord.
During normal business hours upon giving at least one (1) business day's
prior notice to Tenant (except in the case of emergencies, in which case no
notice shall be necessary), Landlord reserves and shall at any and all
reasonable times have the right to enter the Premises and the Improvements to
(i) inspect the same, (ii) show the Premises and the Improvements to prospective
lenders or purchasers (and prospective tenants during the last twelve (12)
months of the Term), (iii) post notices of nonresponsibility, and (iv) alter,
improve or repair the Common Areas or any other portion of the Development, all
without being deemed guilty of any eviction of Tenant or breach of quiet
enjoyment and without abatement or reduction of rent. Landlord shall provide
Tenant with the opportunity to escort Landlord with regard to any entry pursuant
hereto (except in case of an emergency). Landlord shall indemnify Tenant and
hold Tenant harmless from and against any and all claims, damages, losses or
costs (excluding consequential damages) actually incurred by Tenant as a result
of Landlord's entry upon the Premises pursuant to this Article 17 to the extent
not covered by insurance carried by Tenant or required to be carried by Tenant
hereunder. Landlord may, in order to carry out such purposes, erect scaffolding
and other necessary structures if reasonably required by the character of the
work to be performed, provided that to the extent within Landlord's reasonable
control, the business of Tenant shall be interfered with as little as is
reasonably practicable (it being agreed that Landlord shall not be required to
employ overtime or premium labor). It is understood and agreed that no provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly agreed herein by
Landlord.
18. Utilities and Services.
From and after Substantial Completion of Landlord's Work, Tenant agrees to pay
all charges for utilities and services used by it in the Premises,
including, but not limited to, gas, electricity, telephone, sanitary
sewer, storm drainage, water, and trash collection. Landlord shall
supply hot water for heat as described in the Work Letter to such
distribution facilities designated in the Design Development Plans (as
defined in the Work Letter). Tenant shall maintain in good working order
and make all necessary
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repairs and replacements to such distribution facilities to the extent
the same are located within or exclusively service the Premises, at
Tenant's own cost and expense. Such hot water shall be supplied to the
Premises at such times and periods as Tenant shall reasonably require
for conducting its business at the Premises in the manner contemplated
by this Lease and the Work Letter (not to exceed eighteen (18) hours per
day). Landlord shall supply (or cause to be supplied) chilled water to
the Premises as described in the Work Letter at such hours (not to
exceed eighteen (18) hours per day) as Tenant may designate. Within
thirty (30) days following demand therefor, Tenant shall pay to
Landlord, as Additional Rent, Landlord's then established charges which
shall not exceed one hundred percent (100%) of Landlord's out-of-pocket
costs for the quantities of such hot water and chilled water (except as
otherwise specifically provided in the Work Letter) as Tenant may
consume, as shown on the meter(s) installed by Landlord (but maintained
by Tenant). Subject to Landlord's obligation to make utility easements
and rights of way available pursuant to the provisions of Section 15.2
hereof and to bring utility lines to the Premises pursuant to Section
1.1 hereof, Landlord shall not be liable for damages or otherwise for
any failure or interruption of any utility or other service furnished to
the Premises, unless such failure shall be due to the negligence or
willful misconduct of Landlord, its agents, licensees or employees and
is not covered by rent abatement and business interruption insurance
carried or required to be carried by Tenant. Subject to Landlord's
obligation to make utility easements and rights of way available
pursuant to the provisions of Section 15.2 hereof and to bring utility
lines to the Premises pursuant to Section 1.1 hereof, Landlord does not
warrant that any of the utilities and services mentioned herein will be
free from interruptions caused by repair, renewals, improvements,
alterations, strikes, lockouts, accidents, inability of Landlord to
obtain fuel or supplies, or any other cause or causes beyond the
reasonable control of Landlord. Any such interruption of service shall
never be deemed an eviction or disturbance of Tenant's use and
possession of the Premises, or any part thereof, or give Tenant any
right to terminate this Lease.
Tenant agrees that it will not install any equipment which will exceed or
overload the capacity of any utility facilities, and that if any
equipment installed by Tenant shall require additional utility
facilities in excess of those specified in the Work Letter, the same
shall be installed at Tenant's expense in accordance with plans and
specifications to be approved in writing by Landlord in accordance with
the standards set forth in Article 14 hereof.
19. Indemnification.
Tenant's Indemnity. Notwithstanding (i) the limits of Tenant's insurance
specified in Section 20.1 hereof and (ii) whether Tenant's insurance
shall be in full force and effect, Tenant shall indemnify, defend and
hold Landlord and the Condominium Association (if applicable) harmless
from all costs, expenses, penalties, claims, demands and liabilities
("CLAIMS") arising from Tenant's use of the Property or the conduct of
its business or from any activity, work, or thing done by Tenant in or
about the Premises. Tenant shall further indemnify, defend and hold
Landlord and the Condominium Association (if
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applicable) harmless from all Claims arising from any Default, or
arising from any act, neglect, fault or omission of Tenant or of its
agents, employees or licensees in the Premises, or arising from any act,
neglect, fault or omission of Tenant's invitees in the Premises, and
from and against all costs, attorneys' fees, expenses and liabilities
incurred in connection with such Claim or any action or proceeding
brought thereon, but this indemnity shall not extend to Claims to the
extent resulting from negligent acts or omissions or willful misconduct
of Landlord or the Condominium Association, as applicable, their
respective employees, agents, licensees or invitees, to consequential or
punitive damages or to Claims that are as applicable covered by property
insurance carried by Landlord or the Condominium Association or required
to be carried by Landlord hereunder. In case any action or proceeding
shall be brought against Landlord and/or the Condominium Association, as
applicable, by reason of any such Claim, Tenant, upon notice from
Landlord and/or the Condominium Association, as applicable, shall defend
the same at Tenant's expense by counsel approved by Landlord and/or the
Condominium Association, as applicable. Tenant, as a material part of
the consideration to Landlord, hereby assumes all risk of damage to
property or injury to persons in, upon or about the Property from any
cause whatsoever, except that for which Landlord may be liable pursuant
to the indemnity contained in Section 19.2 hereof.
Landlord's Indemnity. Landlord shall indemnify, defend and hold Tenant harmless
from any and all Claims arising from any activity, work, or thing done
by Landlord in or about the Development (exclusive of the Premises).
Landlord shall further indemnify, defend and hold Tenant harmless from
all Claims arising from any breach or default in the performance of any
obligation to be performed by Landlord under the terms of this Lease or
arising from any act, neglect, fault or omission of Landlord or of its
licensees, invitees, agents or employees within the Development
(exclusive of the Premises) (provided, however, it is agreed that
tenants or other occupants of the Development and their respective
licensees, invitees, agents or employees shall not be deemed to be
Landlord's licensees, invitees, agents or employees) and from and
against all costs, attorneys' fees, expenses and liabilities incurred in
connection with such Claims or any action or proceeding brought thereon,
but this indemnity shall not extend to Claims to the extent resulting
from the negligent acts or omissions or willful misconduct of Tenant,
its employees, agents or licensees, to consequential or punitive damages
or to Claims that are covered by property insurance carried by Tenant or
required to be carried by Tenant hereunder. In case any action or
proceeding shall be brought against Tenant by reason of any such Claims,
Landlord, upon notice from Tenant, shall defend the same at Landlord's
expense by counsel approved by Tenant; it being agreed that Battle
Fowler LLP and/or counsel designated by Landlord's insurer are
acceptable to Tenant for such purpose.
No Release of Insurers. Tenant's and Landlord's indemnification obligations
under Sections 19.1 and 19.2 hereof are not intended to and shall not
relieve any insurance carrier of its obligations under policies carried
by Landlord or Tenant, and such indemnification obligations shall
survive the expiration or earlier termination of this Lease.
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20. Insurance.
Tenant's Insurance. Tenant shall, during the Term and any other period of
occupancy of the Premises, at its sole cost and expense, keep in full
force and effect the following insurance:
Property. Standard form property insurance insuring against the
perils of fire, extended coverage, vandalism, malicious mischief,
special extended coverage ("ALL-RISK") and sprinkler leakage, covering
all property owned by Tenant, for which Tenant is legally liable or that
was installed solely at Tenant's expense, and which is located on the
Premises, including interior improvements, furniture, fittings,
installations, Trade Fixtures, equipment, facilities and any other
personal property and any alterations, additions and improvements
constructed by Tenant pursuant to Section 14.1 hereof (but excluding any
property required to be insured by Landlord under Section 20.4 hereof),
in an amount not less than the full replacement cost thereof. All
proceeds from the insurance required under this Section 20.1(i) shall be
used for the repair, restoration or replacement of the damaged or
destroyed property unless this Lease terminates pursuant to Section 21
hereof, in which event the provisions of Section 20.3 hereof shall
control.
Liability. Comprehensive General Liability Insurance insuring
Tenant against any liability arising out of the lease, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be in the amount of not less than $5,000,000.00 Combined
Single Limit for injury to, or death of, one or more persons in an
occurrence, and for damage to tangible property (including loss of use)
in an occurrence. Any such coverage requirement may be satisfied by an
umbrella policy. Such policies shall insure the hazards of premises and
operations, independent contractors, contractual liability (covering the
indemnity contained in Section 19 hereof) and shall (a) name Landlord,
the Condominium Association (if applicable) and any mortgagee of
Landlord as additional insureds, (b) contain a cross liability
provision, and (c) contain a provision that "the insurance provided
Tenant hereunder shall be primary and noncontributing with any other
insurance available to Landlord or the Condominium Association," so long
as such provision may be available.
Workers' Compensation. Workers' Compensation and Employer's
Liability insurance (as required by state law).
Rental Interruption. Twelve (12) months rent abatement and
business interruption insurance which shall cover Tenant's monetary
obligations under this Lease and any direct or indirect loss of earnings
attributable to perils insured against under extended coverage all-risk
property insurance; provided, however, that Tenant shall be entitled to
self-insure such risk.
Liquor. Liquor liability insurance coverage with commercially
reasonable coverage limits, but in no event less than $5,000,000.00 per
occurrence, naming
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Landlord, the Condominium Association and any mortgagee of Landlord as
additional insureds. Any such coverage requirement may be satisfied by
an umbrella policy.
Requirements. All policies required of Tenant shall be written by an insurer
satisfactory to Landlord. Prior to the date Tenant enters the Premises,
but in no event later than sixty (60) days after the execution of this
Lease, Tenant shall deliver to Landlord copies of policies or
certificates evidencing the existence of the amounts and forms of
coverage required (or, in the event of self-insuring as permitted in
Section 20.1(iv) hereof only, evidence of the net worth of Tenant or a
Person providing a guaranty of this Lease to Landlord of not less than
$10,000,000). No such policy shall be cancelable or reducible in
coverage except after thirty (30) days' prior written notice to
Landlord. Tenant shall, within thirty (30) days prior to the expiration
of any such policies, furnish Landlord with renewals, certificates of
insurance, or "binders" thereof, and, if Tenant fails to do so within
ten (10) days following notice of such failure, then, upon an additional
notice to Tenant, Landlord may order such insurance and charge the cost
thereof to Tenant as Additional Rent. If Landlord obtains any insurance
that is the responsibility of Tenant under this Article 20, Landlord
shall deliver to Tenant a statement setting forth the cost of any such
insurance and showing in reasonable detail the manner in which it has
been computed, and, if obtainable, a certificate of insurance naming
Tenant as the insured or as an additional insured. Tenant's obligation
to carry insurance provided for in this Article 20 may be satisfied by
inclusion within the coverage of any blanket policy or policies of
insurance carried or maintained by Tenant, provided that the coverage
required herein will not be reduced or diminished by reason of the use
of such blanket policies of insurance.
Proceeds Upon Termination. In the event of damage to or destruction of the
Improvements resulting in termination of this Lease pursuant to Article
21 hereof, (i) Landlord shall be entitled to all proceeds of the
insurance required to be maintained under Section 20.4 hereof (subject
to Landlord's obligation to cause such proceeds to be disbursed for the
purposes of restoration, as herein provided) and (ii) Tenant shall
immediately pay to Landlord all of its property insurance proceeds, if
any, plus any deductible amount (subject to the limitation described
below) relating to the Improvements and all other items of property
which would have become Landlord's property upon expiration or earlier
termination of this Lease absent such damage or destruction (but not
relating to Trade Fixtures or Tenant's other equipment, furniture or
personal property). Notwithstanding the foregoing, Tenant shall not be
required to pay any such deductible amounts to Landlord unless Landlord
can reasonably demonstrate that Landlord has entered into a new lease
with a non-Affiliate of Landlord for an athletic club in the Premises
for a lease term of not less than ten (10) years within twelve (12)
months after the termination of this Lease.
Landlord's Insurance. Landlord may, but shall not be obligated to, take out and
carry any form or forms of insurance ("LANDLORD'S INSURANCE") as it may
reasonably determine advisable, or as may be required by Landlord's
mortgagee; provided, however, that
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Landlord shall be required to carry (i) Comprehensive General Liability
Insurance in amounts not less than those required of Tenant pursuant to
Section 20.1 hereof and (ii) insurance against any peril insurable under
an all-risk property insurance policy covering the Improvements,
exclusive of any item insured by Tenant pursuant to Section 20.1(i)
hereof, in an amount which is one hundred percent (100%) of the full
replacement cost of the Improvements. Landlord's obligation to carry the
all-risk property insurance provided for in this Section 20.4 may be
satisfied by inclusion of the Improvements within the coverage of any
blanket policy or policies of insurance carried or maintained by
Landlord, provided that the coverage required herein will not be reduced
or diminished by reason of the use of such blanket policies of
insurance. Tenant shall reimburse Landlord, as Additional Rent payable
in equal monthly installments, the cost of the all-risk property
insurance for the Improvements required by this Section 20.4 commencing
within thirty (30) days following demand therefor, and the premiums for
such insurance will not be included in the Insurance Escalation (as
defined herein). In the event such all-risk property insurance covers
improvements other than the Improvements, Tenant's pro rata share will
be that proportion that the Floor Area of the Improvements bears to the
total Floor Area of all improvements covered by such policy.
Insurance Escalation. Except for Landlord's cost of the all-risk property
insurance for the Improvements, as addressed in Section 20.4 hereof, if
Landlord's cost of obtaining Landlord's Insurance for the Property
and/or the Building and the operations thereof exceeds the cost of
obtaining such insurance for the first twelve (12) months following the
Commencement Date, Tenant shall pay to Landlord, as Additional Rent,
within thirty (30) days, after being billed therefore, an amount equal
to Tenant's Share of such increased cost.
Compliance. Landlord and Tenant shall promptly comply with all reasonable
requirements of the insurance authority or of any insurer now or
hereafter relating to the Premises.
Waiver of Subrogation. All policies of all-risk, fire, extended coverage or
similar property insurance which either party obtains or is required to
maintain in connection with the Development, and the insurance required
to be obtained by Tenant pursuant to the provisions of Section 20.1 (iv)
hereof, and, if obtainable, all liability policies, shall include or
shall be deemed to include a clause or endorsement denying the insurer
any rights of subrogation against the other party. Landlord and Tenant
waive all rights of recovery against the other for injury or loss due to
hazards covered by insurance containing or deemed to contain such a
waiver of subrogation clause or endorsement to the extent of the injury
or loss covered thereby.
21. Damage or Destruction.
(i) Tenant's Reconstruction. In the event the Improvements shall be damaged
by fire or other perils and this Lease shall not be terminated as
hereafter provided, Tenant, at its sole cost and expense, shall within a
period of thirty (30) days thereafter, commence repair,
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reconstruction and restoration of the Improvements to their condition
existing immediately prior to such damage and prosecute the same
diligently to completion in compliance with all applicable laws, and
this Lease shall continue in full force and effect unless this Lease is
terminated as hereinafter provided. Any such repair, reconstruction and
restoration shall be performed strictly in accordance with the
provisions of Article 14 hereof and Tenant shall be entitled to apply
the insurance proceeds to the repair, reconstruction and restoration in
the manner provided in Section 21.2 hereof. If at any time Tenant shall
fail to prosecute such work of repair or rebuilding with diligence, then
Landlord may give to Tenant notice of such failure and if such failure
continues for twenty (20) days thereafter, then Landlord, in addition to
all other rights which it may have, may, at Tenant's sole cost and
expense, enter upon the Premises, provide labor and/or materials, cause
the performance of any contract and/or take such other action as it may
deem advisable to prosecute such work. For this purpose, any contracts
made by Tenant for purposes of accomplishing repair, reconstruction and
restoration of the Improvements shall be in a form assignable to
Landlord and shall be subject to Landlord's approval. Landlord shall be
entitled to reimbursement for its costs and expenses in performing such
work from any insurance proceeds and any other moneys held by the
Depository (as defined herein) for application to the cost of such work
in accordance with Section 21.2 hereof. All costs and expenses incurred
by Landlord in carrying out such work for which it is not reimbursed by
the Depository shall be paid by Tenant upon demand, which demand may be
made by Landlord periodically as such costs and expenses are incurred,
in addition to any damages to which Landlord may be entitled hereunder.
(ii) Uninsured Casualty. In the event the Improvements shall be
damaged by peril which is not covered by insurance required to be
maintained hereunder (or which is otherwise maintained), and if a duly
qualified contractor certifies, in good faith and fair dealing, that the
amount required to repair such damage exceeds the Uninsured Contribution
Amount (as defined herein), Tenant shall have the option to terminate
this Lease upon giving notice to Landlord of its exercise of such
termination option within sixty (60) days after such damage or
destruction. Upon such termination of this Lease, the parties shall be
released without further obligations to the other coincident with the
surrender of possession of the Premises to Landlord, except for items
which theretofore accrued and are then unpaid and any obligations
specified in this Lease which are to survive the termination of this
Lease. Notwithstanding the foregoing, in the event that Tenant exercises
its option to terminate this Lease pursuant to the provisions of this
Section 21.1 (ii), Landlord shall have the option, exercisable within
thirty (30) days after Landlord's receipt of Tenant's termination
notice, to notify Tenant that Landlord elects to fund the amount
required to repair such damage and destruction in excess of the
Uninsured Contribution Amount (as defined herein), in which case such
repair, reconstruction and restoration shall be performed pursuant to
the procedures set forth in this Section 21.1(ii), except that Tenant
shall contribute the Uninsured Contribution Amount and Landlord shall
fund any additional amounts necessary to accomplish such repair,
reconstruction and restoration. The "UNINSURED CONTRIBUTION AMOUNT"
shall be
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Five Hundred Thousand ($500,000.00) Dollars if the casualty occurs
during the first (180) calendar months of the Initial Term, which amount
shall be reduced at the beginning of the one hundred ninety third
(193rd) calendar month of the Initial Term, and every twelve (12) months
thereafter, by One Hundred Thousand ($100,000.00) Dollars, until (but
not including) the beginning of the last twelve (12) months of the
Initial Term. The One Hundred Thousand ($100,000.00) Dollars Uninsured
Contribution Amount in effect for the last twelve (12) months of the
Initial Term shall remain throughout any Option Periods.
(iii) Landlord Termination. In the event that any portion of the
Development (including the Building) shall be damaged to such an extent
that Landlord, the Condominium Association or any of Landlord's lenders
shall elect not to restore same, then Landlord shall have the right to
terminate this Lease within ninety (90) days following the date of the
damage or destruction or, if applicable, within a reasonable time after
Landlord shall have been notified of the Condominium Association's or
lender's decision not to restore. Upon such termination of this Lease,
the parties shall be released without further obligations to the other
coincident with the surrender of possession of the Premises to Landlord,
except for items which theretofore accrued and are then unpaid and any
obligations specified in this Lease which are to survive the termination
of this Lease. Subject to the rights of Landlord's lenders and/or the
Condominium Association, Landlord shall not elect to terminate this
Lease unless a material portion of the Development (i.e., more than
twenty five percent (25%)) shall have been damaged. Landlord agrees that
if (1) this Lease is terminated by Landlord pursuant to this Section
21.1(iii) and Landlord thereafter reconstructs, restores or repairs the
Building or the Premises, (2) at the time of such casualty Tenant is
then operating a Club (including support facilities) within at least
seventy-five percent (75%) of the Premises, (3) at the time of such
casualty no monetary Default (as defined herein) and/or material Default
shall have occurred and be continuing under this Lease, (4) at the time
of such casualty, the Unexpired Lease Term (as defined herein) is at
least five (5) years or Tenant exercises an Option for an Option Period,
regardless of whether Tenant then would otherwise have the right to
exercise same, by delivering written notice to Landlord simultaneously
with the delivery to Landlord of the Tenant Acceptance Notice (as
defined herein) subject to and in accordance with this Section
21.1(iii), (5) within one-hundred eighty (180) days following the
termination of this Lease pursuant to this Section 21.1 (iii), Tenant
shall deliver to Landlord a statement signed and certified by the chief
financial officer of Tenant, if Tenant is a corporation, by a managing
member, if Tenant is a limited liability company, or by the chief
financial officer of a corporate general partner of Tenant, if Tenant is
a partnership (such person, the "FINANCIAL OFFICER"), to be true and
correct disclosing in reasonable detail the aggregate amount of costs
and expenses actually incurred by Tenant as the result of the cessation
of Tenant's business operations in the Premises and such termination of
this Lease (e.g., including, without limitation, the unrecouped costs
and expenses actually incurred by Tenant in connection with the
development of a Club in the Premises and reimbursement to Tenant's Club
members of membership fees) which are not covered by insurance
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maintained by Tenant or otherwise reimbursed to Tenant (collectively,
the "TENANT TERMINATION COSTS") and (6) at the time of the Landlord
Offer (as defined herein), Tenant or an Affiliate of Tenant is then
operating a first-class coed athletic club, Landlord shall not operate a
Club in the Premises or offer to lease or accept any offer to lease the
Premises to any party within a period of five (5) years after such
termination of this Lease unless Landlord shall have first offered in
writing (the "LANDLORD OFFER") to lease the Premises to Tenant on the
terms and conditions of this Lease (including, without limitation, any
unexercised Option Periods) for a term equal to the unexpired portion of
the term of this Lease as of such termination date (the "UNEXPIRED LEASE
TERM") calculated as if this Lease had not been terminated and Tenant
shall not have accepted such offer by notice to Landlord within thirty
(30) days after such offer is given to Tenant (the "TENANT ACCEPTANCE
NOTICE"). Notwithstanding the foregoing, in the event that Tenant
exercises its option to lease the Premises pursuant to this Section 21.1
(iii), Landlord shall have the option, exercisable within thirty (30)
days after Landlord's receipt of the Tenant Acceptance Notice, to
nullify the Tenant Acceptance Notice by delivering to Tenant written
notice and paying to Tenant the Tenant Termination Costs. Upon Tenant's
receipt of such nullification notice and the payment of the Tenant
Termination Costs, the Tenant Acceptance Notice shall be deemed null and
void and of no force and effect and Tenant shall be deemed to have
waived and relinquished its right to lease the Premises and Landlord
shall at any and all times thereafter be entitled to lease all or any
portion of the Premises to others at such rental and upon such terms and
conditions as Landlord in its sole discretion may desire.
Depository. The "DEPOSITORY" shall be a bank or trust company authorized to do
business in the State of California, with a net worth of at least
$10,000,000.00 selected by Tenant and approved by Landlord; provided,
however, that if (i) Tenant does not make such a selection within ten
(10) business days after notice and demand by Landlord, then Landlord
may select the Depository and (ii) if Landlord has a lender whose loan
is secured by the Property, then anyone, excluding Landlord or any
Affiliate of Landlord, designated by such lender shall be the
Depository. Subject to Section 21.5 hereof, all property insurance
moneys recovered on account of damage or destruction to the Improvements
shall be applied to the payment of the cost of repairing and replacing
the Improvements. If net available insurance moneys shall be
insufficient to pay the entire cost of such work, then Tenant shall bear
the cost thereof in excess of the net available insurance moneys. Except
for work which is reasonably expected to cost less than $100,000.00
(with respect to which Landlord shall hold the proceeds), the Depository
shall hold insurance proceeds with respect to the Improvements and shall
disburse said proceeds during the course of the work of repair,
reconstruction and restoration in accordance with the provisions set
forth below unless the Depository is Landlord's lender or a designee of
such lender, in which event the provisions of the loan documentation
shall control. The Depository shall not be required to make
disbursements more often than at thirty (30) day intervals. Landlord,
Tenant and the Depository shall reasonably, promptly and in good faith
prepare and execute reasonable and appropriate instructions for
disbursement of the proceeds which shall include a procedure for receipt
of
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certificates, plans, notices, lien releases and applications for
payment. Notwithstanding anything to the contrary contained herein,
disbursement of such insurance proceeds shall in all events (i) be
subject to such requirements as may be imposed by the Condominium
Association and/or any mortgagee of Landlord and (ii) include a
procedure for a retainage of ten percent (10%) of the cost of the work
from each draw disbursed in connection with such restoration until at
least thirty (30) days after the completion of all work. If, after all
of said work shall be completed in accordance with the terms of this
Lease and all governmental approvals and permits required have been
obtained, there are funds held by the Depository for application to the
cost of such work in excess of the amounts withdrawn, then such funds
(after first applying such funds to the costs and expenses of the
Depository) shall be delivered to Tenant; provided, however, that if the
funds held by the Depository are a result of any insurance carried by
Landlord or Section 21.5 hereof, such funds shall be delivered to
Landlord. The Depository may retain free of trust its reasonable fees
and expenses for acting as such. In the event there are not sufficient
funds held by the Depository to pay its fees and expenses, Landlord and
Tenant shall share equally the fees and expenses of the Depository.
No Termination or Rental Abatement. No destruction of or damage to the
Property or any part thereof, whether such destruction or damage be
partial or total or whether such destruction or damage shall have been
covered by insurance or not, shall entitle or permit Tenant to surrender
or terminate this Lease (except as provided in Section 21.1(ii) hereof)
or relieve Tenant from liability to pay in full the rents and other sums
and charges payable by Tenant hereunder (except as provided in Section
21.4 hereof), or from any of its obligations under this Lease. Tenant
hereby waives any rights now or hereafter conferred upon it by statute
or other law to surrender this Lease or to quit or surrender the
Property or any part thereof, or to receive any suspension, diminution,
abatement or reduction of the rent or other sums and charges payable by
Tenant hereunder on account of any such destruction or damage, except as
otherwise expressly provided in this Lease.
Limited Rental Abatement. Notwithstanding anything to the contrary contained
herein, in the event that the Improvements shall be damaged by peril
which is not covered by insurance required to be maintained hereunder
(or which is otherwise maintained), then, to the extent not covered by
the rent abatement insurance or business interruption insurance required
to be carried by Tenant pursuant to Section 20.1 (iv) hereof (whether by
self insuring or otherwise), Tenant shall be entitled to abate its
obligations to pay Monthly Base Rent and, as applicable, Common Area
Expenses or Operating Expenses, for the period from the date of such
peril until the earlier of (i) the date upon which Tenant opens for
operation of its business, or (ii) the date which is twelve (12) months
after the date of such peril, provided that such twelve (12) month
period shall be reduced to the extent that Tenant does not diligently
seek to repair the damage caused as a result of such peril and/or
re-open the Premises for the operation of its business. From and after
the expiration of such rental abatement, Tenant's obligation to pay
Monthly Base Rent and, as applicable, Common Area Expenses or Operating
Expenses shall once again commence.
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Lender's Prior Rights to Insurance Proceeds. Notwithstanding anything to the
contrary herein, Tenant acknowledges that the rights of any lender
holding a mortgage or deed of trust against the Premises ("SECURED
LENDER") to any insurance proceeds applicable to the Improvements,
except for Tenant's Insurance Share (as defined herein), shall be
superior to the rights of Landlord and Tenant to such proceeds.
"TENANT'S INSURANCE SHARE" is equal to Tenant's "pro rata share" (as
determined in accordance with Section 22.1 hereof) of the insurance
proceeds payable for the damaged Improvements. Landlord agrees to use
commercially reasonable efforts to cause the Secured Lender to make the
insurance proceeds in which the Secured Lender has a prior interest
available to Tenant for reconstruction as contemplated in this Lease.
If, within two hundred seventy (270) days following a casualty, a
Secured Lender has not made such proceeds available for reconstruction,
then at Tenant's election this Lease shall terminate as of said 270th
day, unless Landlord gives notice to Tenant on or before said 270th day
that Landlord is willing to provide the sums necessary for
reconstruction in excess of any deductibles and Tenant's Insurance
Share, in which case this Lease shall not terminate and Landlord shall
deposit such sums with the Depository and Tenant shall reconstruct the
Premises in accordance with the provisions of this Article 21 hereof.
The disbursement of any insurance proceeds applicable to the
Improvements shall be subject to the control of the Secured Lender
notwithstanding anything to the contrary in Section 21.2 hereof.
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22. Eminent Domain.
Permanent Taking. In case all of the Property (a "TOTAL TAKING"), or such part
thereof as shall substantially interfere with Tenant's use and occupancy
thereof to the extent Tenant cannot operate the Club (a "SUBSTANTIAL
TAKING"), shall be taken for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent, or in lieu of, such
taking, this Lease shall automatically terminate effective as of the
date possession is required to be surrendered to said authority. In the
event the amount of property or the type of estate taken shall not
substantially interfere with the conduct of Tenant's business (a
"PARTIAL TAKING"), Tenant shall restore the Property to substantially
its same condition prior to such Partial Taking and a fair and equitable
allowance shall be made to Tenant for the rent corresponding to the time
during which, and to the part of the Property of which, Tenant shall be
so deprived on account of such taking. Tenant shall not assert any claim
against Landlord for any compensation because of such taking. In the
event of a Total Taking, Substantial Taking or Partial Taking, any award
shall belong to and be paid to Landlord subject to the rights of any
mortgagee of Landlord's interest in the Premises or the beneficiary of
any deed of trust which constitutes an encumbrance thereon, except that
Tenant shall be entitled to any portion of such award related to (i)
Trade Fixtures or Tenant's other equipment and/or personal property
which is taken, (ii) Tenant's moving expenses and loss of goodwill,
(iii) Tenant's "pro-rata share" of the straight-line (on a 20-year
basis) unamortized costs of the Improvements taken, and (iv) in the case
of a Partial Taking only, the amount required to restore the Property to
substantially its same condition prior to such Partial Taking which
shall be held by the Depository for Landlord and shall be disbursed to
Tenant for the purposes of such restoration upon the same terms and
conditions as if they were insurance proceeds under Article 21 hereof.
For the purposes of this Section 22.1, "pro-rata share" shall be
determined by the proportion that the cost paid by Tenant for the taken
Improvements bears to the total of those costs paid therefor by Landlord
and Tenant. Nothing contained in this Section 22.1 shall be deemed to
give Landlord any interest in any award made to Tenant for the taking of
Trade Fixtures or Tenant's other personal property, fixtures and
goodwill and for relocation expenses. Landlord agrees not to interfere
with Tenant's right to participate in any condemnation proceedings. The
provisions of this Section 22.1 shall survive the termination of this
Lease.
Temporary Taking. In the event of taking of the Property or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and
rent shall not abate, and (ii) Tenant shall be entitled to receive for
itself such portion or portions of any award made for such use with
respect to the period of the taking which is within the Term provided
that if such taking shall remain in force at the expiration or earlier
termination of this Lease, Tenant shall then pay to Landlord a sum equal
to the reasonable cost of performing Tenant's obligations under Article
15 hereof with respect to the surrender of the Property and upon such
payment shall be excused from such obligations. For purpose
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of this Section 22.2, a temporary taking shall be defined as a taking
for a period of ninety (90) days or less.
Waiver. Landlord and Tenant each hereby waive any statutory rights of
termination which may arise by reason of a taking.
23. Defaults and Remedies.
Defaults. The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant ("DEFAULT"):
The vacation or abandonment of the Premises by Tenant or failure
to continuously operate the Club in accordance with Article 8 hereof
where Tenant has failed to cure such vacation, abandonment or failure to
operate within thirty (30) days following notice from Landlord to Tenant
of the need for such cure (the parties agree, however, that cessation of
operations of business from the Premises from time to time for the
purpose of remodeling the Premises or making alterations, additions or
improvements to the Property (collectively "TEMPORARY CLOSURES") shall
not be considered vacation or abandonment of the Premises provided and
on condition that; Tenant shall use commercially reasonable efforts to
complete any and all such work, from time to time, in an expeditious and
non-disruptive manner.
The failure by Tenant to make any payment of Rent or any other
payment required to be made by Tenant hereunder (including the Work
Letter), where such failure shall continue for a period of ten (10)
business days following notice from Landlord to Tenant that such payment
is due; provided, however, Tenant shall be entitled to such notice and
opportunity to cure on only two (2) occasions during any Lease Year;
The failure by Tenant to observe or perform any of the covenants
or provisions of this Lease (including the Work Letter) to be observed
or performed by Tenant, other than as specified in Sections 23.1(i) or
(ii) hereof, where such failure shall continue for a period of thirty
(30) days after notice thereof from Landlord to Tenant. If the nature of
the Default is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in Default
if Tenant shall commence such cure within said thirty-day period and
thereafter diligently prosecutes such cure to completion, which
completion shall occur not later than one hundred twenty (120) days from
the date of such notice from Landlord;
(a) The making by Tenant of any general assignment for the
benefit of creditors; (b) the filing by or against Tenant of a petition
to have Tenant adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy unless, in the case of
a petition filed against Tenant, the same is dismissed within one
hundred twenty (120) days; (c) the appointment of a trustee or receiver
to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this
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Lease, where possession is not restored to Tenant within one hundred
twenty (120) days; or (d) the attachment, execution or other judicial
seizure of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where such seizure is not
discharged within 120 days; or
The failure by Tenant to open for business to the general public
within twelve (12) months following Substantial Completion of the
Premises, subject to Force Majeure, within thirty (30) days following
notice from Landlord to Tenant of the need for such cure.
Any notice provided for in this Section 23.1 shall be in
addition to, and not in lieu of, any statutorily required notice regarding
unlawful detainer actions.
Remedies. In the event of any Default, in addition to any other remedies
available to Landlord at law or in equity, Landlord shall have the
immediate option to terminate this Lease and all rights of Tenant
hereunder. In the event that Landlord shall elect to so terminate this
Lease then Landlord may recover from Tenant:
the worth at the time of award of any unpaid Rent which had been
earned at the time of such termination; plus
the worth at the time of award of the amount by which the unpaid
Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
the worth at the time of award of the amount by which the unpaid
Monthly Base Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided.
As used in Section 23.2(i) and (ii) hereof, the "worth at the
time of award" is computed by allowing interest at the prime, base or reference
rate of The Chase Manhattan Bank of New York, or its successors, from time to
time, charged to its most favored customers on commercial loans having a 90-day
duration (the "PRIME RATE") plus two percent (2%). As used in Section 23.2(iii)
hereof, the "worth at the time of award" is computed by discounting such amount
by the Prime Rate at the time of award. Notwithstanding anything to the contrary
contained in this Lease, neither Landlord nor Tenant shall be liable for
consequential or punitive damages which may be suffered by the other as a result
of a default by Landlord or default by Tenant under this Lease.
Re-entry. In the event of any Default, Landlord shall also have the right,
without terminating this Lease, to re-enter the Premises and remove all
persons and property from the Premises; such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant. No re-entry or taking possession of the Premises by
Landlord pursuant to this Section 23.3 shall be construed as an election
to
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terminate this Lease unless a notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of
competent jurisdiction.
Cumulative Rights. Except as otherwise expressly provided in this Lease, all
rights, options and remedies of Landlord contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be
exclusive of the others, and Landlord shall have the right to pursue any
one or all of such remedies or any other remedy or relief which may be
provided by law, whether or not stated in this Lease. No waiver of any
Default shall be implied from any acceptance by Landlord of any rent or
other payments due hereunder or any omission by Landlord to take any
action on account of such Default if such Default persists or is
repeated, and no express waiver shall affect Defaults other than as
specified in said waiver.
24. Assignment and Subletting.
Landlord's Consent. Except as otherwise expressly provided in the last sentence
of Section 8.1 hereof and in Section 24.3 hereof, Tenant shall not,
either voluntarily or by operation of law, assign, sublet, pledge,
encumber, hypothecate or otherwise transfer this Lease, without the
prior consent of Landlord, which consent may be granted or withheld in
Landlord's sole and absolute discretion. Without limiting the foregoing,
it shall be a condition to Landlord's consent hereunder that the
assignee execute, acknowledge and deliver to Landlord an agreement
whereby such assignee agrees to be bound by all of the covenants and
agreements in this Lease which Tenant has agreed to keep, observe or
perform.
Notice. Subject to the provisions of Article 46 hereof, in the event Tenant
desires to assign, sublet, pledge, encumber, hypothecate or otherwise
transfer this Lease, then at least thirty (30) days prior to the date
when Tenant desires the transaction to be effective (the "ASSIGNMENT
DATE"), Tenant shall give Landlord a notice (the "ASSIGNMENT NOTICE"),
which shall set forth the name, address and business of the proposed
assignee or sublessee, information (including references) concerning the
character, ownership, and financial condition of the proposed assignee
or sublessee, the Assignment Date, and any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee. If
Landlord requests additional detail within ten (10) days after Tenant's
initial submission, the Assignment Notice shall not be deemed to have
been received until Landlord receives such additional detail, and
without otherwise limiting the provisions of Section 24.1 hereof,
Landlord may withhold consent to any assignment or sublease until such
information is provided to it.
Ownership Transfers. Except as otherwise expressly provided in this Section
24.3, any dissolution, merger, consolidation, or other reorganization of
the corporation which constitutes Tenant, or the sale or other transfer
of fifty percent (50%) or more of the corporate stock of the
corporation, or the sale of fifty percent (50%) or more of the value of
the assets of the corporation, shall be deemed an assignment prohibited
by this Article
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24 unless Landlord's prior written consent is obtained, which consent
shall not be unreasonably withheld or delayed provided and on condition
that: (i) the principal purpose for such assignment is not the
circumventing of the restrictions and limitations contained in this
Article 24; (ii) Tenant shall notify Landlord, in writing, of any such
proposed assignment not less than twenty (20) days prior to the date on
which Tenant proposes to assign its interest in this Lease; (iii) the
assignee shall be reputable and shall have in the reasonable judgment of
Landlord, sufficient financial worth to perform the obligations of
Tenant under this Lease (after consideration of the then net worth of
each Person providing a guaranty or surety of this Lease to Landlord) as
evidenced by the submission to Landlord of financial and other
information regarding the proposed assignee, including, without
limitation, its business experience, a current financial statement and
such other information as Landlord may reasonably request; (iv) Tenant
shall within ten (10) days after an assignment is executed deliver to
Landlord a copy of such assignment; (v) such assignee shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
reasonably satisfactory to Landlord, whereby such assignee shall assume
the obligations and performance of this Lease and agree to be personally
bound by and upon all of the terms and conditions of this Lease on the
part of Tenant to be performed or observed; (vi) each Person providing a
guaranty or surety of this Lease to Landlord shall deliver an agreement
in form and substance reasonably satisfactory to Landlord reaffirming
such Person's obligations and liabilities under its respective
agreement, guaranty or surety to Landlord and that such agreement,
guaranty or surety remains binding and enforceable against such Person
in accordance with its terms; (vii) the assignee shall use and occupy
the Premises only for the purposes set forth in this Lease, and for no
other purposes, in compliance with the terms and conditions of this
Lease; (viii) neither such assignment nor the acceptance of rent by
Landlord from such assignee shall, in any way, release, relieve or in
any manner affect the liability of Tenant under this Lease, it being the
agreement and understanding of the parties that assignor shall be and
remain liable under all of the terms and conditions of this Lease; and
(ix) neither such assignment nor the acceptance of rent by Landlord from
such assignee shall, in any way, release, relieve or in any manner
affect the liability of any Person providing a guaranty or surety of
this Lease to Landlord.
Notwithstanding anything to the contrary contained herein, the transfer
of shares of Tenant (if Tenant is a corporation) for purposes of this Section 24
shall not include the sale of shares by persons other than those deemed
"insiders" within the meaning of the Securities Exchange Act of 1934, as
amended, which sale is effected through the "over-the-counter market" or through
any recognized stock exchange.
The term "PERSON" as used in this Lease shall mean any individual,
corporation, partnership, joint venture, limited liability company, limited
liability partnership, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other form of business or legal association or entity, and the term "CONTROL" as
used in this Section 24.3 shall mean the direction of the management and
policies of a person or entity, whether through the ownership of voting
securities, by contract or by law.
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No Release. Any sale, assignment, subletting, hypothecation or transfer of
this Lease that is not in compliance with the provisions of this Article
24 shall, at Landlord's option, be void. The consent by Landlord to any
assignment or sublease shall not be construed as relieving Tenant or any
assignee of this Lease from any liability or obligation hereunder
whether or not then accrued. This Article 24 shall be fully applicable
to all further sales, hypothecations, transfers, assignments and
sublettings of any portion of the Premises by any successor or assignee
of Tenant.
25. Subordination.
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, and at the election of
Landlord or any mortgagee with a lien on the Premises or the Development, or any
portion thereof or any ground lessor with respect to the Premises, this Lease
shall be subject and subordinate at all times to: (i) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises, (ii) the lien of any mortgage or deed of trust which may now exist or
hereafter be executed in any amount for which the Premises is specified as
security, and (iii) the Condominium Documents (as same may now or hereafter
exist) and (iv) any CC&R (as may now or hereafter exist) that do not materially
increase Tenant's obligations hereunder nor materially decrease Tenant's rights
hereunder nor materially interfere with the conduct of Tenant's normal business
operations (all of the foregoing, collectively the "SENIOR INTERESTS" and the
holders of the Senior Interests shall be referred to as "SENIOR INTEREST
HOLDERS"). Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. In the event that any ground lease or
underlying lease terminates for any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination, attorn to and become the tenant of the
successor in interest to Landlord. Tenant covenants and agrees to execute and
deliver within fifteen (15) business days after demand by Landlord and in the
form requested by Landlord, any additional documents evidencing the
subordination of this Lease with respect to any such ground leases or underlying
leases, the lien of any such mortgage or deed of trust, the Condominium
Documents or the CC&R, and, effective upon a failure to do so, Tenant hereby
irrevocably appoints Landlord as attorney-in-fact of Tenant to execute, deliver
and record any such document in the name and on behalf of Tenant. In
consideration of, and as a condition precedent to, Tenant's agreement to be
bound by the subordination provisions of this Article 25, Landlord shall provide
to Tenant for Tenant's execution, a commercially reasonable subordination,
attornment and nondisturbance agreement ("NON-DISTURBANCE AGREEMENT"), in
recordable form, that in any event shall not provide for any material increase
in Tenant's obligations nor any material decrease in Tenant's rights under this
Lease and shall be executed by all future ground lessors, mortgage holders and
deed of trust beneficiaries of any of Landlord's interest in the Premises
desiring to subordinate this Lease to the ground lease, mortgage or deed of
trust, as applicable. In the event Landlord fails to obtain any Non-Disturbance
Agreement, then, as to the mortgage, deed of trust or ground lease which would
have been the subject thereof, this Article 25 shall be void and of no force or
effect.
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Landlord shall deliver contemporaneously with the execution of this
Lease by Landlord the form of non-disturbance agreement annexed hereto as
Exhibit H from Fleet Bank, National Association (the "MORTGAGEE NON-DISTURBANCE
AGREEMENT") and such Mortgagee Non-Disturbance shall be deemed to satisfy the
requirements described in this Article 25. Tenant agrees to execute the
Mortgagee Non-Disturbance Agreement, provided the agreement conforms
substantially to the agreement attached hereto as Exhibit H.
26. Estoppel Certificate.
Delivery. Within fifteen (15) business days following any request which Landlord
or Tenant may make from time to time, the other party shall execute and
deliver to the requesting party a statement certifying: (i) the
Commencement Date; (ii) the fact that this Lease is unmodified and in
full force and effect (or, if there has been modification hereto, that
this Lease is in full force and effect, and stating the date and nature
of such modification); (iii) the date to which the rental and other sums
payable under this Lease have been paid; (iv) that to the best of the
certifying party's knowledge, there is no current default under this
Lease by either Landlord or Tenant except as specified in the statement;
and (v) such other matters reasonably requested by the requesting party.
Landlord and Tenant intend that any statement delivered pursuant to this
Section 26.1 may be relied upon by any mortgagee, beneficiary, purchaser
or prospective purchaser of the Premises, the Club or any interest in
either, and said statement shall so state.
Failure to Deliver. Landlord's or Tenant's failure to deliver any statement
required pursuant to Section 26.1 hereof within such time shall be
conclusive upon such failing party (i) that this Lease is in full force
and effect, without modification except as may be reasonably represented
in good faith by Landlord or Tenant, (ii) that there is no uncured
default in Landlord's or Tenant's performance, and (iii) that not more
than one month's rental has been paid in advance.
Financial Statements. Within thirty (30) days after Landlord's written request,
Tenant shall furnish to Landlord (i) no more often than once per
calendar-quarter, the most current existing audited financial statements
of Tenant (which shall, at a minimum, include a balance sheet and income
statement), and (ii) if at any time Tenant is not a publicly-traded
entity or an Affiliate thereof which files consolidated financial
statements, such other information relating to Tenant's financial
condition as may be reasonably required by Landlord. Landlord shall at
all times maintain the confidentiality of the aforementioned financial
statements which are not available to the general public, except to the
extent reasonably necessary to (a) comply with applicable laws,
regulations, court or administrative orders, or to prosecute or defend
any claim or suit by litigation or otherwise under this Lease and (b)
provided that the recipients of such information agree in writing to
hold the same in confidence, (1) carry out the obligations set forth in
this Lease or documents evidencing and/or securing any Senior Interest,
(2) obtain legal, financial and/or tax advice from Landlord's attorneys,
accountants and financial advisors,
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(3) negotiate or complete a transaction with a lender to Landlord
secured by Landlord's interest in the Development, the Building or this
Lease (including, without limitation, a pledge of rents payable
hereunder) or purchaser of the Building or the Development or (4)
negotiate or complete a public or private syndication or similar
offering with respect to this Lease, Landlord, the interests of any of
the members of Landlord, the Development and/or the Building.
27. Construction.
This Lease is to be governed by and construed in accordance with the
internal laws of the State of California. Whenever the context so requires
herein, the neuter gender shall include the masculine and feminine, and the
singular number shall include the plural, and vice versa. This Lease shall be
construed as having been drafted by both parties, jointly, and not in favor of
or against one party or the other. When used herein, the terms "including,"
"include," "including, without limitation," and similar terms shall be construed
as prefacing examples, components or illustrations rather than exhaustive
definitions, unless a contrary intent is specifically stated, such as "including
and expressly limited to," or in similarly unambiguous terms.
28. Successors and Assigns.
Except as otherwise provided in this Lease, all of the covenants,
conditions and provisions of this Lease shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
29. Surrender of Premises.
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation hereof, shall not work a merger, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies. Upon the expiration or earlier termination of this Lease, Tenant
shall surrender the Premises and, subject to the provisions of Article 14
hereof, all alterations and additions thereto, in good order, repair and
condition, reasonable wear and tear excepted.
30. Attorneys' Fees.
If Landlord should bring suit for possession of the Premises, or if
Landlord or Tenant should bring suit for the recovery of any sum due under this
Lease or because of the breach of any provisions of this Lease, or for any other
relief against the other hereunder, or in the event of any other litigation
between the parties with respect to this Lease, including any action for
declaratory relief filed by Landlord or Tenant, then the prevailing party shall
be entitled to an award of all costs and expenses, including reasonable
attorneys' fees, in addition to all other relief awarded.
31. Performance by Landlord.
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If Tenant shall fail to pay any sum of money owed hereunder, or if
Tenant shall fail to perform any other act on its part to be performed
hereunder, and (except in the event of an emergency) such failure shall continue
beyond the cure periods set forth in Section 23. 1 hereof, Landlord may, without
waiving or releasing Tenant from the obligations of Tenant, but shall not be
obligated to, make any such payment or perform any such other act to be made or
performed by Tenant. All sums so paid by Landlord and all necessary incidental
costs together with interest thereon at the rate of twelve percent (12%) per
annum, from the date of such payment by Landlord, shall be payable to Landlord
upon demand as Additional Rent.
32. Late Charge and Interest.
Tenant acknowledges that the late payment by Tenant to Landlord of any
sums due under this Lease will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of such costs being extremely difficult and
impractical to fix. Such costs include processing and accounting charges, and
late charges that may be imposed on Landlord by the terms of any encumbrance or
note secured by any encumbrance covering the Premises. Therefore, if any
installment of Monthly Base Rent or any other sum of money due hereunder is not
timely paid by Tenant and such failure continues for ten (10) days after notice
thereof from Landlord, Tenant shall pay to Landlord, as Additional Rent, the sum
of four percent (4%) of the overdue amount as a late charge; provided, however,
Tenant shall be entitled to such ten (10) day notice and opportunity to cure on
only two (2) occasions during any twelve (12) month period. To the extent
permitted by applicable law, such overdue amount shall also bear interest
commencing upon the due date, as Additional Rent, at the lesser of the maximum
rate than permitted by law and twelve percent (12%) per annum. Landlord's
acceptance of any late charge or interest shall not constitute a waiver of
Tenant's default with respect to the overdue amount or prevent Landlord from
exercising any of the other rights and remedies available to Landlord under this
Lease or any law now or hereafter in effect. Notwithstanding anything to the
contrary contained herein, in no event shall Tenant be required to pay any
amounts that would be characterized as interest under applicable law in excess
of the amounts that could be lawfully charged, collected and received by
Landlord under applicable law. Landlord and Tenant intend to comply with all
usury laws with respect to this Lease.
33. Mortgagee Protection.
In the event of any default on the part of Landlord, Tenant will give
notice by registered or certified mail to any beneficiary of a deed of trust or
mortgage given by Landlord covering the Premises whose address shall have been
furnished to Tenant, and shall offer such beneficiary or mortgagee the same
opportunity to cure Landlord's default as provided to Landlord under Article 49
hereof plus an additional period of sixty (60) days. In addition, in those
instances which reasonably require such beneficiary or mortgagee to be in
possession of, or have title to, the Development (or any portion thereof) to
cure any such default, the time herein allowed to such beneficiary or mortgagee
to cure such default shall be deemed extended to include the period of time
reasonably necessary to obtain such possession or title with due diligence, and
in those
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instances in which such beneficiary or mortgagee is prohibited by any process or
injunction issued by any court or by reason of any action by any court having
jurisdiction of any bankruptcy or insolvency proceeding involving Landlord from
commencing or prosecuting foreclosure or other appropriate proceedings in the
nature thereof, the time herein allowed such beneficiary or mortgagee to
prosecute such foreclosure or other proceeding shall be extended for the period
of such prohibition.
34. Definition of Landlord.
The term "Landlord," as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners, at the time in question, of Landlord's
interest under this Lease. In the event of any transfer, assignment or other
conveyance or transfer of such title, Landlord herein named (and in case of any
subsequent transfer or conveyance, the then grantor) shall (in absence of a
writing hereafter described) be automatically freed and relieved from and after
the date of such transfer, assignment or conveyance of all liability with
respect to the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed, and in absence of
any writing to the contrary, the transferee shall be deemed to have assumed
same. Landlord may transfer its interest in the Premises or this Lease without
the consent of Tenant and such transfer or subsequent transfer shall not be
deemed a violation on Landlord's part of any of the terms or conditions of this
Lease.
35. Waiver.
A waiver of any breach of any term, covenant or condition herein
contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition herein contained, nor shall any
custom or practice which may grow up between the parties in the administration
of the terms hereof be deemed a waiver of or in any way affect the right of
Landlord or Tenant to insist upon the performance by Tenant or Landlord,
respectively, in strict accordance with said terms. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No acceptance by Landlord of a lesser sum than the Monthly Base Rent and
Additional Rent then due shall be deemed to be other than on account of the
earliest installment of such rent, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such installment
or other amount or pursue any other remedy provided in this Lease.
36. Parking.
So long as this Lease remains in full force and effect and Tenant is
operating a Club and facilities related to the operation of such Club in at
least seventy-five percent (75%) of the Premises, Landlord shall make up to one
hundred fifty (150) parking spaces available on a non-
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exclusive basis, with such spaces to be located at the Development or on
adjacent property, in Landlord's discretion, for daily use between 6:00 a.m. (or
such earlier time that the parking garage shall open) and 6:00 p.m. (or such
later time that the parking garage shall close), by Tenant and Tenant's members.
Landlord shall charge Tenant an amount equal to either (i) seventy-five percent
(75%) of the then market rate for such spaces, with the market rate for such
spaces to be based on the market rate for similarly located parking spaces in
the vicinity of the Building (as reasonably determined by Landlord) or (ii) one
hundred fifty dollars ($150) per month per space, at Tenant's option, which
option shall apply to all such parking spaces and shall be made within fifteen
(15) days after request by Landlord and shall be irrevocable. If Tenant elects
option (ii) in the preceding sentence, the one hundred fifty dollars ($150) per
month per space shall be increased each Lease Year by the CPI Increase (as
defined herein); provided, however, that notwithstanding the foregoing, the
maximum CPI Increase for any Lease Year shall be four percent (4%).
In addition to the foregoing, Tenant and Tenant's members may use in
connection with the Club the parking spaces located at the Development which are
designated as general public parking spaces if and to the extent available on a
"first come, first come" basis. The foregoing shall not be deemed to be a
representation that the aforementioned general public parking spaces shall be
available for use by Tenant and Tenant's members. Landlord shall charge Tenant
an amount equal to the then market rate for such spaces, with the market rate
for such spaces to be based on the market rate for similarly located parking
spaces in the vicinity of the Building (as reasonably determined by Landlord).
Tenant has advised Landlord that Tenant requires an additional 200
parking spaces on a non-exclusive basis in connection with the operation of the
Club and so long as this Lease remains in full force effect and Tenant is
operating a Club and facilities related to the operation of such Club in at
least seventy-five percent (75%) of the Premises, Landlord shall use
commercially reasonable efforts to secure such additional parking spaces on
adjacent property or on properties in the general vicinity of the Building. The
foregoing shall not be deemed to be a representation that such additional
parking spaces shall be available for use by Tenant and Tenant's members. In the
event Landlord shall obtain any or all of such additional parking spaces,
Landlord shall charge Tenant an amount equal to the market rate in effect for
such spaces, from time to time, (the "FAIR MARKET PARKING RATE"); provided,
however, that with respect to any such parking spaces which are located in a
property controlled by Landlord or an Affiliate of Landlord, Landlord shall
charge Tenant an amount equal to ninety percent (90%) of the Fair Market Parking
Rate for such spaces; and provided, further, that if Landlord shall charge any
other occupant of the Development a rate for any such spaces, whether or not in
a property controlled by Landlord or an Affiliate of Landlord, from time to
time, that shall be less than the rate charged Tenant for such spaces, then the
rate to Tenant shall be equitably adjusted in light of such difference.
The term "CPI" shall mean the Consumer Price Index for all Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor for San Francisco - Oakland - San Jose, CA. All Items
(1982-84=100), or a successor or substitute index reasonably
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selected by Landlord appropriately adjusted to reflect a constant base year. In
the event that the CPI ceases to use 1982-84=100 as the basis of calculation, or
if a substantial change is made in the terms or number of items contained in the
CPI, then the CPI shall be adjusted to the figure that would have been arrived
at had the manner of computing the CPI not been altered. In the event such CPI
(or a successor or substitute index) is no longer published, a reliable
governmental or other non-partisan publication evaluating the information
theretofore used in determining the CPI shall be used. No adjustments or
recomputations, retroactive or otherwise, shall be made due to a revision which
may later be made in the first published figure of the CPI for any month.
Whenever any provision hereof provides that an amount shall be adjusted by the
CPI Increase, then such amount shall be multiplied by a fraction, the numerator
of which shall be the CPI for the calendar month immediately preceding the Lease
Year for which the amount is to be determined and the denominator of which shall
be the CPI for the calendar month during which the Commencement Date has
occurred.
37. CC&R.
Tenant shall faithfully observe and comply with the Condominium
Documents, and all reasonable and nondiscriminatory rules and regulations
Landlord shall adopt for the Development (as the same may be changed from time
to time) and the CC&R. Landlord shall not be responsible to Tenant for the
violation or nonperformance by any other tenant or occupant of the Development
of the Condominium Documents (if applicable), any of said rules and regulations
or the CC&R. Landlord agrees that future amendments to the CC&R and any such
rules and regulations shall not materially interfere with or interrupt Tenant's
ability to operate a first-class Club in accordance with the terms and
provisions of this Lease and shall not materially increase Tenant's obligations
hereunder nor materially decrease Tenant's rights hereunder, nor be enforced as
to Tenant discriminatorily.
38. Headings.
The Article and Section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.
39. Examination of Lease.
Submission of this instrument for examination or signature by Landlord
or Tenant does not constitute a reservation of or option for lease, and it is
not effective as a lease or otherwise until execution by and delivery to both
Landlord and Tenant.
40. Agency Requirements.
Landlord has submitted to the Redevelopment Agency of the City and
County of San Francisco (the "AGENCY") in accordance with that certain
Disposition and Development Agreement dated as of July 1,1997, as amended,
between the Agency and Landlord (the "DDA"), (i) the Equal Opportunity Program
(Attachment No. 13 of the DDA) attached hereto as
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Exhibit D and (ii) that certain Jobs Memorandum of Understanding between the
Agency and Landlord attached hereto as Exhibit E (collectively, the
"REQUIREMENTS"). In addition, the DDA requires Landlord to undertake a certain
jobs program with respect to the Development as more particularly described in
Exhibit F attached hereto (the "JOBS PROGRAM," the Jobs Program and the
Requirements are collectively hereinafter referred to as the "AGENCY
REQUIREMENTS"). Tenant covenants and agrees to observe and perform all of the
terms, covenants, conditions, provisions and agreements in the Agency
Requirements (exclusive of item (2) of Section 3 of the DDA) in connection with
the performance of all of Tenant's obligations hereunder, including, without
limitation, the operation of the Premises, and further covenants and agrees not
to do or suffer or permit anything to be done which would result in a breach
under the Agency Requirements.
41. Prior Agreement; Amendments.
This Lease, together with the addenda and exhibits attached hereto,
contains all of the agreements of the parties hereto with respect to any matter
covered or mentioned in this Lease, and no prior agreement or understanding
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest (subject
to the consent requirement in Article 24 hereof). The parties acknowledge that
all prior agreements, representations and negotiations are deemed superseded by
this Lease to the extent they are not incorporated herein.
42. Severability.
Any provision of this Lease which shall prove to be invalid, void or
illegal in no way affects, impairs or invalidates any other provision hereof,
and such other provisions shall remain in full force and effect.
43. Limitation on Liability.
It is expressly understood and agreed that any money judgment against
Landlord resulting from any default or other claim arising under this Lease
shall be satisfied only out of Landlord's interest in (i) the Premises, if the
Premises shall then be subject to a condominium form of ownership or (ii) the
Development, if the Premises shall not then be subject to a condominium form of
ownership. No other real, personal or mixed property of Landlord, wherever
situated, shall be subject to levy on any such judgment obtained against
Landlord. If Landlord's interest in the Premises or Development, as applicable,
is insufficient for the payment of such judgment, Tenant shall not institute any
further action, suit, claim or demand, in law or in equity, against Landlord for
or on the account of such deficiency. Tenant hereby waives, to the fullest
extent waivable under law, any right to satisfy said money judgment against
Landlord except from Landlord's interest in the Development or Premises, as
applicable, and except as otherwise provided above.
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44. Riders.
Clauses, plats, exhibits, addenda and riders, if any, affixed to this
Lease are a part hereof.
45. Modification for Lender.
If, in connection with obtaining construction, interim or permanent
financing for the Premises or the Development, or any part thereof, or consent
of Landlord's existing or potential lenders to the terms of the transactions
contemplated pursuant to this Lease, a lender shall request reasonable
modifications in this Lease as a condition to such financing or the granting of
its consent, Tenant will not unreasonably withhold, delay or defer its consent
thereto, provided that such modifications do not materially increase the
obligations of Tenant hereunder, materially decrease Tenant's rights hereunder
or materially adversely affect the leasehold interest hereby created. If, in
connection with obtaining financing for Tenant's Trade Fixtures subject to and
in accordance with Section 1.2 hereof, tenant's lender shall request reasonable
modifications to this Lease, Landlord agrees to make reasonable nonmaterial
modifications to this Lease and further agrees not to unreasonably withhold,
delay or defer its consent with respect to such modifications provided such
modifications do not decrease the monetary obligations of Tenant hereunder or
materially affect Landlord's rights hereunder; provided, however, that Landlord
shall have no obligation to agree to any such modifications unless such
modifications are approved by the Senior Interest Holders.
46. Security Agreements/Leasehold Mortgages.
Tenant covenants and agrees that Tenant shall not encumber or place or permit
to be placed any mortgages or other encumbrances on the leasehold
interest granted hereunder and that no security agreement, whether by
way of conditional bill of sale, chattel mortgage or instrument of
similar import, shall be placed upon any improvement made by Tenant
which is affixed to the realty.
In the event that any of the machinery, fixtures, furniture and equipment
installed by Tenant in the Premises are purchased or acquired by Tenant
subject to a chattel mortgage, conditional sale agreement or other title
retention or security agreement, Tenant undertakes and agrees that no
such chattel mortgage, conditional sale agreement or other title
retention or security agreement or Uniform Commercial Code ("UCC")
filing statement shall be permitted to be filed as a lien against the
Building and real property of which the Premises form a part and to
cause to be inserted in any of the above described title retention,
chattel mortgage, security agreements, conditional sale agreement or UCC
filing statement the following provision:
"NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS CHATTEL
MORTGAGE, CONDITIONAL SALE AGREEMENT, TITLE RETENTION AGREEMENT,
SECURITY AGREEMENT OR UCC FILING STATEMENT SHALL NOT CREATE OR BE
FILED AS A LIEN AGAINST THE LAND, BUILDING AND
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IMPROVEMENTS COMPRISING THE REAL PROPERTY IN WHICH THE GOODS,
MACHINERY, EQUIPMENT, APPLIANCES OR OTHER PERSONAL PROPERTY
COVERED HEREBY ARE TO BE LOCATED OR INSTALLED."
In addition to any other rights that Landlord may have by reason of
Tenant's failure to comply herewith, if any such leasehold mortgage or
other encumbrance, lien or UCC filing statement, based on an agreement
as above described, is filed as an encumbrance, as applicable, against
the Building or improvements of which the Premises form a part, the
Premises and/or any interest thereon, Tenant shall, within thirty (30)
days following written notice thereof from Landlord, cause such
leasehold mortgage or other encumbrance, lien or filing statement to be
removed or discharged at Tenant's own cost and expense, and Tenant's
failure to do so shall constitute a breach of a material provision of
this Lease.
47. Authorizations.
Each individual executing this Lease on behalf of Landlord or Tenant
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of Landlord or Tenant, respectively, in accordance with the
provisions of duly adopted corporate resolutions, and that this Lease has been
duly and properly executed and delivered by Landlord or Tenant, respectively.
48. Signage.
Tenant agrees that any and all exterior building signs on the Premises
shall be subject to the approval of Landlord (and if applicable the Condominium
Association) with respect to the graphics, materials, color, design, lettering,
language, lighting, specifications and exact location ("SIGNAGE APPROVAL
FACTORS"). All signage shall be of a size not in excess of that permitted by
applicable law and shall otherwise comply with applicable laws, regulations,
permits, approvals, ordinances, the Condominium Documents and CC&R; provided,
however, that no change in the CC&R shall require Tenant to modify its original
(or, if theretofore modified, its then-existing,) exterior signs. At the
expiration or earlier termination of this Lease, Tenant shall, at Tenant's sole
cost and expense, cause all such signage to be removed from the exterior of the
Improvements and shall cause the exterior of the Improvements to be restored to
the condition existing prior to the placement of such signage. If Tenant fails
to remove such signs and restore the exterior of the Improvements by the
expiration or earlier termination of this Lease, then Landlord may perform such
work, and all costs and expenses incurred by Landlord in so performing shall be
reimbursed by Tenant to Landlord within ten (10) days after Tenant's receipt of
an invoice therefor. In addition to the foregoing, at all times Tenant shall be
entitled to erect and maintain, as needed in Tenant's judgment but subject to
Landlord's approval, throughout the Development, appropriate directional signage
with respect to Tenant's parking.
49. Default by Landlord.
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Landlord shall not be in default hereunder unless Landlord fails to
perform the obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after notice by Tenant to Landlord and to the
holder of any first mortgage or deed of trust covering the Premises whose name
and address have been furnished in writing to Tenant ("NOTICED Lender"),
specifying wherein Landlord has failed to perform such obligation; provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion (the "CURE PERIOD"). In
addition, the Noticed Lender shall be entitled to such additional period of time
to cure any such default as is set forth in Section 33 hereof. Notwithstanding
anything in this Lease to the contrary, if access to the Premises is unavailable
as a result of any blockage occurring in the Common Areas that is caused by
Landlord or its agents, Tenant shall have the right to give Landlord and any
Noticed Lender notice of such events (an "ABATEMENT NOTICE"). If the blockage in
the Common Areas which denies access to the Premises has not been repaired
within the Cure Period or such additional period of time for the Noticed Lender
to cure any such default as is set forth in Section 33 hereof (not to exceed
thirty (30) days after the Cure Period), Tenant's obligations to pay Monthly
Base Rent and Common Area Expenses (or if applicable, Operating Expenses) shall
be abated for the period after the Abatement Notice until the cure of the
condition giving rise to such notice for the entire amount of Monthly Base Rent
and Common Area Expenses (or if applicable, Operating Expenses), provided (i)
the condition giving rise to such abatement right is a denial of access to the
Premises due to a blockage of the Common Areas that is caused by Landlord or its
agents and (ii) Tenant is actually unable to and actually does not use any of
the Premises for the conduct of its business. In the event that for a period of
ninety (90) consecutive days following the Abatement Notice, the condition
giving rise to such notice has not been cured and Tenant has not conducted its
business from the Premises during such ninety ( 90) day period, Tenant shall
have the right to deliver an additional notice (a "TERMINATION NOTICE") to
Landlord and the Noticed Lender specifying that such item has not been cured
within such period and if such condition is not then cured within thirty (30)
business days after the Termination Notice, Tenant may terminate this Lease by
giving notice thereof to Landlord and the Noticed Lender prior to the date upon
which such condition is cured. The foregoing rights and remedies are in addition
to all other rights and remedies available to Tenant at law or in equity. Except
as provided in this Article 49, Tenant shall not have the right to terminate
this Lease as a result of Landlord's default hereunder. Landlord's liability
hereunder in the event of a default shall be limited as set forth in Article 43
hereof. Notwithstanding anything to the contrary contained herein, if the
blockage occurring in the Common Areas is the result of a fire or other casualty
or a taking in eminent domain, then this Article 49 shall be inapplicable and
Articles 21 and 22 hereof shall govern the rights of the parties.
50. Reasonable Consents.
Except for any matter which has a material impact on the exterior
appearance of the Improvements or except as otherwise provided herein, any time
the consent, approval, determination, designation, or other discretionary
judgment is required of Landlord or Tenant
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under this Lease, such consent, approval, determination, designation, or other
discretionary judgment shall not be unreasonably delayed, withheld, conditioned,
exercised or decided, notwithstanding the presence in some instances of words to
that effect and their absence in other instances.
51. No Recording.
It is expressly agreed that Tenant may not and shall not record this
Lease or any memorandum hereof, except as otherwise expressly provided in this
Lease. Tenant and Landlord shall execute and deliver a statutory form of
memorandum of this Lease for the purpose of recording, but said memorandum of
this Lease shall not in any circumstances be deemed to modify or to change any
of the provisions of this Lease. Upon the expiration or sooner termination of
this Lease, Tenant covenants that it will, at the request of Landlord, execute,
acknowledge and deliver an instrument canceling any memorandum of lease which is
recorded and all other documentation to record same.
52. Force Majeure.
The occurrence of any of the following events shall be referred to
herein as "FORCE MAJEURE" and shall excuse such obligations of Landlord or
Tenant as are thereby rendered impossible or reasonably impracticable for so
long as such event continues: strikes; lockouts; labor disputes; acts of God;
inability to obtain labor, materials or reasonable substitutes therefor;
governmental restrictions, regulations or controls; judicial orders; enemy or
hostile governmental action; civil commotion; fire or other casualty; and other
causes beyond the reasonable control of the party obligated to perform
(excluding financial inability). Notwithstanding the foregoing, the occurrence
of such events shall not excuse Tenant's obligations to pay Monthly Base Rent,
Common Area Expenses or any other sums hereunder (but may delay the commencement
of such obligations to the limited extent expressly provided for in Section 2.1
hereof) or excuse such obligations as this Lease may otherwise impose on the
party to obey, remedy or avoid such event.
53. Guaranty.
Currently with the execution hereof by Tenant and as a condition to the
effectiveness of this Lease, Tenant shall cause The Sports Club Company to
execute and deliver to Landlord a guaranty of this Lease in the form and
substance set forth in Exhibit G attached hereto which is acceptable to
Landlord.
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54. Condition Precedent.
Landlord and Tenant shall each have the right to terminate this Lease on
thirty (30) days' written notice to the other party (without penalty) if
Landlord shall not have closed upon additional financing for the construction of
the Improvements and other portions of the Development (all such approvals and
terms to be acceptable to Landlord in its sole and absolute discretion) not
later than December 31, 1998 ("DEADLINE DATE"). In the event that Tenant shall
serve a termination notice pursuant to this Article 54 and Landlord shall secure
the necessary financing within the aforesaid thirty (30) day period or Landlord
shall fund the Improvements and construction without the required financing (it
being expressly agreed that Landlord shall have no obligation whatsoever to do
so), then Tenant's termination notice shall be of no force and effect. In the
event Landlord or Tenant shall terminate this Lease, as aforesaid, neither party
shall have any further rights or obligations hereunder.
55. Communication Equipment and Antenna.
In the event Landlord shall make a communications antenna or satellite
dish located on the roof of the Building (generically, the "ANTENNA") available
for the non-exclusive and general use of the tenants and occupants of the
Building, then, in such event, Tenant may use the antenna in connection with the
conduct of Tenant's normal business operations in the Premises provided and on
condition that: (a) Tenant's use of the antenna shall be subject to Landlord's
reasonable approval, (b) Tenant shall pay to Landlord the monthly Building
charge for the use of the antenna as established by Landlord from time to time
within thirty (30) days after receipt of an invoice with respect thereto, (c)
Tenant shall, at its sole cost and expense, install all necessary lines, risers,
conduits and cables from the antenna to the Premises required for Tenant's use
thereof (collectively, the "TENANT INSTALLATION"), (d) the Tenant Installation
is performed in accordance with all legal requirements and in compliance with
the terms and conditions of this Lease; (e) Tenant shall indemnify and hold
Landlord harmless from any liability, cost or expense (including reasonable
attorneys' fees and disbursements) connected with or arising from the Tenant
Installation of any nature whatsoever, unless such liability, cost or expense
results solely from the acts or omissions of Landlord, or its agents, servants
or employees; (f) Tenant shall promptly repair any damage caused to the roof of
the Building or any other portion of the Building by reason of the Tenant
Installation including, without limitation, any repairs, restorations,
maintenance, renewals or replacement of the roof of the Building necessitated by
or in any way caused by or relating to the Tenant Installation; and (g) Tenant
shall remove the Tenant Installation and repair any resulting damage to the
Building and restore the portion of the roof of the Building and the Building
affected by the Tenant Installation to the condition which existed prior to the
Tenant Installation, reasonable wear and tear and damage by casualty excepted,
all at or prior to the expiration of the term of this Lease, at Tenant's sole
cost and expense.
The antenna is for the sole use of Tenant in the conduct of Tenant's
business and for no other purpose or by any other parties. Tenant shall not
resell in any form the use, or rights to the use, of the antenna including the
granting of any license or other rights. The rights granted in this Article 55
are given in connection with, and as part of the rights created under, this
Lease
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and are not separately transferable or assignable other than in connection with
an assignment or subletting permitted by this Lease.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above written.
LANDLORD: CB-1 ENTERTAINMENT PARTNERS LP,
a California limited partnership
By: CB-1 Office Partners LP, a California limited
partnership, its general partner
By: Millennium/WDG Office Partners LLC,
a California limited liability company,
its general partner
By: Millennium Partners LLC,
a New York limited liability company,
its managing member
By: Millennium Partners Management LLC,
a New York limited liability company,
its managing member
By: Millennium Manger I, Inc.,
a New York corporation,
its managing member
By: /s/ Brian Collins
-------------------------------
Name: Brian Collins
Title: Vice President
TENANT: S.F. SPORTS CLUB, INC.
By: /s/ John M. Gibbons
---------------------------------------------------------------
Name: John M. Gibbons
Title: President
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