RETAIL SPACE LEASE
THIS LEASE ("Lease") is entered into as of the date set forth in Section
1.1 by and between Landlord and Tenant.
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 Date of Lease:
1.2 Landlord: THE IRVINE COMPANY,
a Delaware corporation
1.3 Tenant: Chicago Pizza & Brewery, Inc., a California corporation
1.4 Tenant's Trade Name: BJ's Restaurant & Brewhouse (Article 11)
1.5 Shopping Center: The Market Place III, located in the City of
Irvine, County of Orange, State of California. (Article 2)
1.6 Premises: 13130 Jamboree Road, Irvine, California 92602, the
approximate location of which is shown on Exhibit B. (Article 3)
1.7 Floor Area: Approximately eight thousand forty-five (8,045) square
feet with an adjacent Patio Area of one thousand six hundred fifty-nine (1,659)
square feet. (Article 3)
1.8 Term: One hundred twenty (120) months. (Article 4)
1.8 (a) Option to Extend: Sixty (60) months. (Article 28)
1.9 Opening Date: Not applicable. (Article 4)
OR
1.10 Time to Complete One hundred fifty (150) days following
Substantial Completion of the Premises. (Article 4)
Tenant's Work:
1.11 Delayed Opening Rental: Forty One Thousand Twenty Nine and 50/100
Dollars ($41,029.50) per month. (Article 6)
1.12 Minimum Annual Rental: (Article 7)
Months Following Commencement Date Dollars Per Annum Dollars Per Month
Dollars Per Square Foot Per Annum
1 - 12 $240,000 $20,000 $29.83
13-36 $252,000 $21,000 $31.32
37-60 $264,000 $22,000 $32.81
61-120 See Section 7.2
121-180 (if applicable) See Article 28
1.13 Percentage Rate: Six Percent (6%). (Article 7)
1.14 Use of Premises: For the primary operation of a "BJ's Restaurant
and Brewhouse" specializing in the preparation and sale of the food and beverage
items shown on the menu attached hereto as Exhibit H (subject to variations from
time to time, provided that the type of food and beverage items offered at the
Premises and the theme and concept of the restaurant remain relatively the same
as of the Date of Lease and such variations are consistent with other "BJ
Restaurant and Brewhouse" locations. The Premises shall be used solely for the
use stated above and for no other use or purpose. (Article 11)
1.15 Initial Promotional Assessment: Eight Thousand Dollars ($8,000)
(one-time charge). (Article 15)
1.16 Promotional Charge: One and 00/100 Dollars ($1.00) per square
foot of Floor Area of the Premises per annum. (Article 15)
1.17 Insurance Limits: Two Million Dollars ($2,000,000) (Article
16)
1.18 Architectural Review Fee: Seven Hundred Fifty Dollars ($750.00)
(Exhibit C)
1.19 Security Deposit: Twenty Five Thousand Dollars ($25,000)
(Article 22)
1.20 Guarantor(s): None. (Exhibit E)
1.21 Broker(s): Ira Spilky & Associates (Article 27)
1.22 Addresses for Notices and Payments: Article 24
LANDLORD TENANT
- -------- ------
NOTICES TO: NOTICES TO:
- ----------- -----------
The Irvine Company Chicago Pizza & Brewery, Inc.
c/o Donahue Schriber 16162 Beach Boulevard, Suite 200
Tustin, California 92680 Huntington Beach, CA 92647
2777 El Camino Real Attention: President
Tustin, California 92680 Chicago Pizza & Brewery, Inc. 26131 Marguerite
Parkway, Suite A
Mission Viejo, California 92692
Attention: Secretary
WITH COPY TO: WITH COPY TO:
- ------------- -------------
The Irvine Company None.
-
550 Newport Center Drive
P.O. Box 6370
Newport Beach, California 92660
Attention: General Counsel
LANDLORD'S ADDRESS FOR PAYMENTS: TENANT'S ADDRESS FOR STATEMENTS
- -------------------------------- -------------------------------
AND REPORTS: AND BILLINGS:
- ------------ -------------
The Irvine Company Chicago Pizza & Brewery, Inc. 19401-40th Avenue West,
Suite 312
c/o Donahue Schriber Lynnwood, Washington 98836
Tustin, California 92680 Attention: Controller
2777 El Camino Real
Tustin, California 92680
Attention: Accounts Receivable
1.23 Tenant Improvement Allowance: Eighty Thousand Dollars ($80,000)
(Exhibit C)
This Article 1 is intended to supplement and/or summarize the provisions
set forth in the balance of this Lease. If there is any conflict between any
provisions contained in this Article 1 and the balance of this Lease, the
balance of this Lease shall control.
ARTICLE 2
EXHIBITS
The following Exhibits are attached to this Lease and, by this reference,
made a part of this Lease:
EXHIBIT A - Site plan of a retail shopping center and/or commercial development
constructed or to be constructed on real property located in the city, county
and state specified in Article 1 ("Shopping Center"). Landlord, at any time,
may change the shape, size, location, number and extent of the improvements
shown on Exhibit A and eliminate, add or relocate any improvements to any
portion of the Shopping Center including, without limitation, buildings, parking
areas (including parking structures), roadways, curb cuts, temporary or
permanent kiosks, displays or stands, and may add land to and/or withdraw land
from the Shopping Center. The notations and designations found on Exhibit A are
intended only for the convenience of Landlord and are not intended to define,
limit or otherwise alter the intent or scope of this Lease or of any other lease
to which Landlord may be a party, nor as a representation or warranty as to
current occupancy or future occupancy of any particular tenant in the Shopping
Center.
EXHIBIT B - Premises.
EXHIBIT C - Construction Provisions.
EXHIBIT D - Tenant's Statement of Gross Sales.
EXHIBIT E - Guarantee of Lease.
EXHIBIT F - Tenant's Certificate.
EXHIBIT G - Tenant's Estoppel.
EXHIBIT H - Tenant's Menu
ADDENDUM TO LEASE - The terms and conditions set forth in the Addendum to
Lease attached hereto are, by this reference, made a part of this Lease. Where,
and to the extent that, any provision contained in the Addendum to Lease is
contrary to or inconsistent with any provision contained in the printed portion
of this Lease, the provision contained in the Addendum to Lease shall control.
ARTICLE 3
PREMISES
3.1 PREMISES. Landlord leases to Tenant and Tenant leases from Landlord,
for the "Term" (as defined in Article 4) and upon the covenants and conditions
set forth in this Lease, the premises described in Section 1.6 ("Premises").
3.2 RESERVATION. Landlord reserves the right to use the exterior walls,
floor, roof and plenum in, above and below the Premises for the installation,
maintenance, use and replacement of pipes, ducts, utility lines and systems,
structural elements serving the Shopping Center and for such other purposes as
Landlord deems necessary. In exercising its rights reserved herein, Landlord
shall not materially and unreasonably interfere with the operation of Tenant's
business on the Premises.
3.3 FLOOR AREA. The term "Floor Area", as used in this Lease, shall mean
all areas designated by Landlord for the exclusive use of a tenant measured from
the exterior surface of exterior walls (and extensions, in the case of openings)
and from the center of interior demising walls, and shall include, but not be
limited to, restrooms, mezzanines, patios, warehouse or storage areas, clerical
or office areas and employee areas. The Premises contain approximately the
number of square feet of Floor Area specified in Section 1.7. Landlord shall
have the right during the Term to remeasure the Floor Area of the Premises for
accuracy. If an error is found, Landlord shall so certify to Tenant and this
Lease shall be amended so as to reflect the actual Floor Area and corresponding
"Minimum Annual Rental" (as defined in Section 7.1) and "Additional Rental" (as
defined in Section 7.4) based on such actual Floor Area.
3.4 RELOCATION. Landlord shall have the right, at any time and from time to
time upon ninety (90) days' prior written notice to Tenant, to relocate Tenant
to other premises ("New Premises") within the Shopping Center; subject, however,
to the following terms and conditions: (a) The New Premises shall have
approximately the same Floor Area as is contained in the Premises, (b) the New
Premises shall be leased to Tenant on the same terms and conditions as provided
in this Lease, except that there shall be a proportionate adjustment of Minimum
Annual Rental and Additional Rental based upon the Floor Area in the New
Premises, (c) Landlord shall pay to Tenant, within thirty (30) days following
the date Tenant initially opens for business in the New Premises, those expenses
reasonably incurred by Tenant in connection with the relocation of Tenant's
personal property; provided, however, Tenant has first provided Landlord with an
itemized list of these expenses (accompanied with copies of invoices and proofs
of payment of same), and (d) Landlord shall pay all costs of the leasehold
improvements to be constructed at the New Premises and such leasehold
improvements shall be substantially similar to the leasehold improvements in the
Premises. In its notice to Tenant, Landlord shall set forth a timetable for
completion of the leasehold improvements in the New Premises. If the New
Premises is unacceptable to Tenant for any reason, Tenant shall have the right
as its sole remedy hereunder, upon written notice to Landlord to be given within
thirty (30) days after Landlord's notice of relocation to Tenant, to terminate
this Lease on thirty (30) days' written notice to Landlord. Landlord shall pay
to Tenant, within sixty (60) days after said notice is given and upon vacation
of the Premises by Tenant, the unamortized book value of Tenant's leasehold
improvements, excluding items removable by Tenant at the expiration of the Term
pursuant to Section 27.24 (to the extent said leasehold improvements were paid
for by Tenant, as evidenced by invoices and proofs of payment of same),
depreciated on a straight-line basis over the Term, and Tenant shall provide
Landlord with a bill of sale for said leasehold improvements.
ARTICLE 4
TERM
4.1 TERM. This Lease shall be effective from and after the date specified
in Section 1.1 ("Date of Lease"). The term of this Lease ("Term") shall
commence on that date (the "Commencement Date") which is the earliest of: (a)
the date Tenant initially opens for business to the public in the Premises, (b)
the date set forth in Section 1.9 as the "Opening Date", or (c) the date
immediately following the expiration of the period set forth in Section 1.10 as
the "Time to Complete Tenant's Work". The Term shall continue, unless sooner
terminated in accordance with the provisions of this Lease, for the number of
months specified in Section 1.8 from the first day of the month following the
Commencement Date.
ARTICLE 5
POSSESSION
5.1 SUBSTANTIAL COMPLETION. The term "Substantial Completion of the
Premises", as used in this Lease, shall mean the date Landlord notifies Tenant
in writing that "Landlord's Work" (as specified in Exhibit C) is substantially
complete to the point that Tenant's contractor may commence the construction of
"Tenant's Work" (as specified in Exhibit C).
5.2 DELIVERY OF POSSESSION. Tenant shall accept possession of the Premises
from Landlord upon Substantial Completion of the Premises. Tenant shall deliver
each of the following to Landlord prior to Substantial Completion of the
Premises: (a) "Security Deposit", "Architectural Review Fee", "Initial
Promotional Assessment", the first monthly installment of the "Promotional
Charge", the first monthly installment of Tenant's estimated share of "Common
Area Expenses" and the first monthly installment of "Minimum Annual Rental" (as
each is defined in this Lease); (b) executed copies of policies of insurance or
certificates thereof (as required under Article 16); (c) copies of governmental
permits and authorizations (as required under this Lease); (d) "Final Plans" (as
defined in Exhibit C); and (e) a copy of Tenant's building permit. Tenant shall
pay to Landlord, upon its execution of this Lease, the sums specified in
subparagraph (a) above. Landlord shall not be obligated to deliver possession
of the Premises to Tenant until such items are delivered, but the date of
Substantial Completion of the Premises shall not be affected by Tenant's failure
to deliver any of such items.
ARTICLE 6
CONSTRUCTION AND DELAYED OPENING
6.1 CONSTRUCTION. Tenant shall commence construction of Tenant's Work upon
Substantial Completion of the Premises and delivery of possession of the
Premises to Tenant, and shall diligently prosecute same to completion.
6.2 DELAYED OPENING RENTAL. If Tenant fails to open for business to the
public in the Premises on or before the Commencement Date, Tenant shall pay to
Landlord, as Additional Rental, and in addition to Minimum Annual Rental
specified in Section 7.1, the amount set forth in Section 1.11, in arrears, on
the last day of the month for each month or partial month Tenant is not open for
business in the Premises following the Commencement Date ("Delayed Opening
Rental"). Delayed Opening Rental for any partial month shall be prorated on the
basis of thirty (30) days.
6.3 CERTIFICATES. Within ten (10) days after Tenant initially opens for
business to the public in the Premises, Tenant shall (a) execute and deliver to
Landlord a certificate substantially in accordance with the criteria set forth
in Section 21.3 of this Lease ("Tenant's Certificate"), and (b) deliver to
Landlord the certificate of occupancy for the Premises issued by the appropriate
governmental agency.
ARTICLE 7
RENTAL
7.1 MINIMUM ANNUAL RENTAL. Tenant shall pay the sum specified in Section
1.12 ("Minimum Annual Rental") in the monthly installments specified, in
advance, on or before the first (1st) day of each month, without prior demand
and without offset or deduction, commencing on the Commencement Date. Should
the Commencement Date be a day other than the first (1st) day of a calendar
month, then the monthly installment of Minimum Annual Rental for the first
partial month shall be equal to one-thirtieth (1/30th) of the monthly
installment of Minimum Annual Rental for each day from the Commencement Date to
the end of the partial month.
7.2 ADJUSTMENT TO MINIMUM ANNUAL RENTAL. The Minimum Annual Rental payable
under Section 1.12 and this Article 7 shall be adjusted on each anniversary date
of the Commencement Date of this Lease ("Adjustment Date") to reflect any
increases in the cost of living in accordance with the "Index" (as defined in
Section 27.21 of this Lease), using as the base month ("Base Month") the month
ninety (90) days prior to the Commencement Date, and using as the comparison
month ("Comparison Month") the month ninety (90) days prior to the Adjustment
Date.
7.3 PERCENTAGE RENTAL.
(a) During the Term, Tenant shall pay to Landlord, as provided below, the
dollar amount by which the percent specified in Section 1.13 ("Percentage Rate")
of Tenant's "Gross Sales" (as defined in subparagraph (b) below) exceeds
the Minimum Annual Rental paid by Tenant to Landlord during each calendar year,
or at Landlord's option, its fiscal year, of the Term ("Percentage Rental"). On
or before the tenth (10th) day of each month during the Term following the
Commencement Date, Tenant shall pay to Landlord the amount by which the
Percentage Rate of Gross Sales during the preceding month exceeds the
installment of Minimum Annual Rental paid by Tenant for that month. For the
purpose of computing Percentage Rental, Gross Sales made during the first
partial month, if any, following the Commencement Date shall be added to the
Gross Sales made during the first full calendar month (provided the first
partial month is within the same calendar (or fiscal) year as the first full
month) and Tenant shall pay to Landlord the amount by which the Percentage Rate
of Gross Sales during this entire period exceeds the monthly installments of
Minimum Annual Rental which were paid by Tenant during this period. Tenant
shall furnish to Landlord a certified statement of Gross Sales within ten (10)
days after the close of each calendar month and a certified annual statement,
including a monthly breakdown of Gross Sales, on or before the twentieth (20th)
day after the end of each year. Statements shall be in the form and certified
in the manner shown in Exhibit D attached to this Lease, which form Landlord may
revise from time to time. Statements shall include the Gross Sales of all
subtenants, licensees and concessionaires of Tenant. Following receipt by
Landlord of Tenant's certified annual statement, Landlord shall determine the
Gross Sales of Tenant for the preceding year and the amounts paid to Landlord as
Minimum Annual Rental and Percentage Rental and shall make an adjustment as
follows: If Tenant paid to Landlord an amount greater than the Percentage Rental
required to be paid for said year, Tenant shall be entitled to a credit against
Tenant's next payment(s) of Percentage Rental for the amount of the overpayment.
If Tenant paid an amount less than the Percentage Rental required to be paid,
the difference shall be paid to Landlord with the submission of said certified
annual statement. Percentage Rental shall be computed separately with respect
to each year. For the purpose of computing Percentage Rental, Tenant's Gross
Sales for any period during which Tenant does not continuously and
uninterruptedly conduct its business, as required by Article 11, shall be deemed
to be Tenant's Gross Sales for the corresponding period during the last year in
which Tenant operated continuously and uninterruptedly.
(b) The term "Gross Sales", as used in this Lease, shall mean the gross
selling price of all merchandise or services sold or rented in or from the
Premises by Tenant, its subtenants, licensees and concessionaires, whether for
cash or on credit and whether made by store personnel or by machines, as well as
any business interruption or loss of income insurance proceeds attributable to
lost sales revenue received by Tenant with respect to the Premises, excluding
therefrom the following: (i) The selling price of all merchandise returned by
customers and accepted for full credit; (ii) interest or other charges paid by
customers for extension of credit; (iii) receipts from vending machines used
solely by Tenant's employees; (iv) sales taxes, excise taxes or gross receipts
taxes imposed by governmental entities upon the sale of merchandise or services,
but only if collected from customers separately from the selling price and paid
directly to the respective governmental entities; and (v) proceeds from the sale
of fixtures, equipment or property which are not stock in trade. The exclusions
listed in this subparagraph (b) shall be referred to as "Exclusions from Gross
Sales". All sales originating at the Premises shall be deemed made and
completed from the Premises even though bookkeeping or payment of the account is
transferred to another location for collection or filling of the sale or service
order and actual delivery of the merchandise is made from a location other than
the Premises. Each installment sale, credit sale or layaway sale shall be
treated as a sale for the full cash price at the time of such sale or deposit.
7.4 ADDITIONAL RENTAL. Tenant shall pay, as "Additional Rental", all sums
required to be paid by Tenant to Landlord pursuant to this Lease in addition to
Minimum Annual Rental and Percentage Rental (including, without limitation,
interest, late charges, Service Charges, reimbursement for attorneys' fees and
expenses and auditing costs). Landlord shall have the same rights and remedies
for the nonpayment of Additional Rental as it has with respect to the nonpayment
of Minimum Annual Rental. It is the intention of Landlord and Tenant that
the Minimum Annual Rental, Percentage Rental and Additional Rental to be paid
hereunder shall be paid to Landlord absolutely net without deduction of any
amount of any nature whatsoever, except as otherwise expressly provided in this
Lease.
7.5 PLACE OF PAYMENT. Tenant shall pay Minimum Annual Rental, Percentage
Rental and Additional Rental to Landlord at Landlord's Address for Payments and
Reports specified in Section 1.22, or to such other address and/or person as
Landlord may from time to time designate in writing to Tenant.
7.6 LATE PAYMENTS. If Tenant fails to pay when the same is due any Minimum
Annual Rental, Percentage Rental or Additional Rental, the unpaid amounts shall
bear interest at the maximum lawful rate from the date due to and including the
date of payment. In addition, Tenant acknowledges that the late payment of any
installment of Minimum Annual Rental, Percentage Rental or Additional Rental
will cause Landlord to incur certain costs and expenses, the exact amount of
which are extremely difficult or impractical to fix. These costs and expenses
may include, without limitation, administrative and collection costs and
processing and accounting expenses. Landlord recognizes that occasionally
circumstances beyond Tenant's control, such as clerical error or postal error,
may occur which delay the receipt by Landlord of payments timely made by Tenant.
As a reasonable allocation of responsibility for costs and expenses incurred by
Landlord as a result of late payments, no late charge shall be payable by Tenant
for the first two (2) times in any consecutive twelve (12) month period that any
installment of Minimum Annual Rental, Percentage Rental or Additional Rental is
not received by Landlord from Tenant within five (5) days after such installment
is due, unless Tenant fails to make payment of such installment to Landlord
within five (5) days after written notice from Landlord that such installment
has not been received. If Tenant fails to make payment of such installment to
Landlord within such five (5) day period, Tenant shall immediately pay to
Landlord the late charge specified in this Section. In addition, without regard
for the reason any installment is not received by Landlord when due, and without
the need for any additional prior notice, the third (3rd) time in any
consecutive twelve (12) month period, and each time thereafter in such
consecutive twelve (12) month period, any installment of Minimum Annual Rental,
Percentage Rental or Additional Rental is not received by Landlord from Tenant
within five (5) days after such installment is due, Tenant shall immediately pay
to Landlord a late charge equal to Five Hundred Dollars ($500.00) for any
installment of Minimum Annual Rental due, and Two Hundred Fifty Dollars
($250.00) for any installment of Percentage Rental or Additional Rental due.
Landlord and Tenant agree that this late charge represents a reasonable estimate
of the costs and expenses Landlord will incur and is fair compensation to
Landlord for its loss suffered by reason of late payment by Tenant. Upon
accrual, all such late charges shall be deemed Additional Rental.
ARTICLE 8
TENANT FINANCIAL DATA
8.1 RECORDATION OF SALES. At the time of a sale or other transaction,
Tenant shall record the sale or other transaction either in a cash register or
computer with sealed continuous tape or by using any other method of recording
sequentially numbered purchases and keeping a cumulative total.
8.2 BOOKS AND RECORDS. For a period of three (3) years following the
submittal of its certified annual statement for each calendar or fiscal year,
Tenant shall keep and maintain full and accurate books of account and records
relative to transactions from the Premises in accordance with generally accepted
accounting principles consistently applied. The books of account and records
kept and maintained by Tenant for audit purposes shall include all records,
receipts, journals, ledgers and documents reasonably necessary to enable
Landlord or its auditors to perform a complete and accurate audit of Tenant's
Gross Sales and Exclusions from Gross Sales in accordance with generally
accepted accounting principles.
8.3 AUDITS. Landlord, at any time within three (3) years after receipt of
any certified annual statement and upon not less than fifteen (15) days' prior
written notice to Tenant, may cause an audit to be made of Tenant's Gross Sales
and Exclusions from Gross Sales and all of Tenant's records and books necessary
to audit such items. Tenant shall make all such books and records available for
the audit at the Premises or at Tenant's offices in the state in which the
Premises are situated. If the audit discloses an underpayment of Percentage
Rental, Tenant shall immediately pay to Landlord the amount of the underpayment,
with interest at the "Interest Rate", as defined in Section 27.18, from the date
the payment should have been made through and including the date of payment. If
the audit discloses an underreporting of Gross Sales in excess of two percent
(2%) of the reported Gross Sales, whether or not additional Percentage Rental is
due, then Tenant shall also immediately pay to Landlord all reasonable costs and
expenses incurred in the audit and in collecting the underpayment, including
auditing costs and attorneys' fees. If the audit discloses an overpayment of
Percentage Rental, Tenant shall be entitled to a credit in the amount of the
overpayment against the next payment(s) of Percentage Rental due.
8.4 FINANCIAL STATEMENTS. Within fifteen (15) days after Landlord's written
request, Tenant shall furnish Landlord with financial statements including, but
not limited to, balance sheets, profit and loss statements, income statements
and statements of changes in financial condition reflecting Tenant's current
financial condition, certified by Tenant or its financial officer. If Tenant is
a publicly-traded corporation, delivery of Tenant's last published financial
information shall be satisfactory for purposes of this Section 8.4. Any
information obtained from Tenant's financial statements shall be confidential
and shall not be disclosed other than to carry out the purposes of this Lease;
provided, however, Landlord shall incur no liability for the inadvertent
disclosure of any such information. Landlord may divulge the contents of any
financial statements in connection with any financing arrangement or sale of
Landlord's interest in the Premises or Shopping Center or in connection with any
administrative or judicial proceedings.
ARTICLE 9
TAXES
9.1 REAL PROPERTY TAXES.
(a) As used in this Lease, the term "Taxes" shall include any form of tax or
assessment, license fee, license tax, tax or excise on rental, or any other
levy, charge, expense or imposition imposed by any Federal, state, county or
city authority having jurisdiction, or any political subdivision thereof, or any
school, agricultural, lighting, drainage or other improvement or special
assessment district (individually and collectively, "Governmental Agencies") on
any interest of Landlord or Tenant (including any legal or equitable interest of
Landlord or its mortgagee, if any) in the Premises, the remainder of the
Shopping Center or the underlying realty including, but not limited to: (i) Any
impositions (whether or not such impositions constitute tax receipts to
Governmental Agencies) in substitution, partially or totally, of any impositions
now or previously included within the definition of real property taxes
including, without limitation, those imposed or required by Governmental
Agencies to increase tax increments to Governmental Agencies and for services
such as fire protection, street, sidewalk and road maintenance, refuse removal
or other governmental services formerly provided without charge to property
owners or occupants; (ii) any impositions allocable to or measured by the area
of the Premises, the sales generated from the Premises or any rental payable
under this Lease; and (iii) any impositions upon this Lease transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises. The term "Taxes" shall not include Landlord's general
income taxes, inheritance, estate or gift taxes.
(b) From and after the Commencement Date, Tenant shall pay to Landlord, as
Additional Rental, a share of the Taxes pursuant to subparagraph (c) below.
Taxes for any partial year shall be prorated. Landlord, at its option, may
collect Tenant's payment of its share of Taxes after the actual amount of Taxes
are ascertained or in advance, monthly or quarterly, based upon estimated Taxes.
If Landlord elects to collect Tenant's share of Taxes based upon estimates,
Tenant shall pay to Landlord from and after the Commencement Date, and
thereafter on the first (1st) day of each month or quarter during the Term (as
determined by Landlord), an amount estimated by Landlord to be the monthly or
quarterly Taxes payable by Tenant. Landlord may periodically adjust the
estimated amount. If Landlord collects Taxes based upon estimated amounts, then
following the end of each calendar year or, at Landlord's option, its fiscal
year, Landlord shall furnish Tenant with a statement covering the year just
expired showing the total Taxes payable by Tenant for that year and the payments
made by Tenant with respect to that year, as set forth above. If the actual
Taxes payable for that year exceed Tenant's payments for that year, Tenant shall
pay to Landlord the deficiency within ten (10) days after its receipt of the
statement. If Tenant's payments exceed the actual Taxes payable for that year,
Tenant shall be entitled to offset the excess against the next payment(s) of
Taxes that become due to Landlord.
(c) If the Premises and underlying realty are part of a larger parcel for
assessment purposes or are within a multi-level building ("larger parcel"),
Tenant's share of the Taxes shall be determined by multiplying all of the Taxes
on the larger parcel, excluding Taxes on the "Common Area" (as defined in
Section 13.1), by a fraction, the numerator of which shall be the Floor Area of
the Premises and the denominator of which shall be the Floor Area in the larger
parcel which is occupied as of the commencement of the applicable calendar or
fiscal year, exclusive of the Common Facilities.
9.2 OTHER PROPERTY TAXES. Tenant shall pay, prior to delinquency, all
taxes, assessments, license fees and public charges levied, assessed or imposed
upon its business operation, trade fixtures, leasehold improvements, merchandise
and other personal property in, on or upon the Premises. If any such items
of property are assessed with property of Landlord, then the assessment shall be
equitably divided between Landlord and Tenant. Landlord shall reasonably
determine the basis of prorating and dividing any of these assessments. No
taxes, assessments, fees or charges referred to in this Section 9.2 shall be
considered Taxes under the provisions of Section 9.1.
9.3 CONTESTING TAXES. If Landlord contests any Taxes levied or assessed
during the Term, Tenant shall pay to Landlord that portion of all costs incurred
by Landlord in connection with such contest, pursuant to the formula set forth
in Section 9.1(c) for the allocation of Taxes. If Landlord receives a refund
pursuant to its contest of any Taxes, then, provided Tenant has paid its share
of the total Taxes and its share of the costs incurred by Landlord in connection
with such contest as required by this Article 9, Landlord shall reimburse Tenant
that portion of the total refund prorated in the same manner as set forth in
Section 9.1 (c).
ARTICLE 10
UTILITIES
10.1 TENANT'S PAYMENT OF UTILITY CHARGES. Tenant agrees to pay directly to
the appropriate utility company all charges for utility services supplied to
Tenant for which there is a separate meter and/or submeter to the Premises.
Tenant agrees to pay to Landlord its share of all charges for utility services
supplied to the Premises for which there is no separate meter or submeter upon
billing by Landlord of Tenant's share, as reasonably determined by Landlord.
Landlord shall not be liable in damages for any failure or interruption of any
utility or service. No failure or interruption of any utility or service shall
entitle Tenant to terminate this Lease or discontinue making payments of Minimum
Annual Rental, Percentage Rental or Additional Rental. If Tenant fails to
pay when due any charges referred to in this Article 10, Landlord may pay the
charge and Tenant shall reimburse Landlord, as Additional Rental, for any amount
so paid by Landlord within ten (10) days after demand therefor.
10.2 LANDLORD'S OPTION TO PROVIDE UTILITIES.
(a) Landlord shall have the option from time to time to supply any and all
utilities to the Premises. If Landlord shall elect to supply any utilities to
the Premises, Tenant will pay all charges, as Additional Rental, for its
requirements for such service tendered by Landlord. Tenant shall pay Landlord,
or Landlord's designated third party service provider, within (10) days after
delivery to Tenant of statements therefor at the applicable rates determined by
Landlord from time to time. Landlord agrees that such applicable rates shall
not exceed the "all-inclusive" rate which the Tenant would be charged directly
for the same service by the public utility company serving the general area in
which the Premises is located, but in no event shall the applicable rate be less
than Landlord's actual "all-inclusive cost of providing such service.
(b) Tenant acknowledges that it shall reimburse Landlord on an equitable
basis for Landlord's cost of providing the systems and equipment ("Utility
Systems") necessary to supply any utilities to the Premises. The cost for
maintenance and operation of the Utility Systems is a component of Common Area
Expenses, as defined in Section 13.5, and subject to reimbursement under Section
13.6. Notwithstanding the foregoing, Tenant shall, at Tenant's sole expense
maintain, repair and replace any portion of the Utility Systems and equipment
exclusively serving the Premises.
(c) Without limitation on the foregoing provisions of this Section 10.2,
Landlord may discontinue providing any utilities then being provided by Landlord
upon thirty (30) days' prior written notice to Tenant, in which event Tenant
shall obtain such utilities directly from the applicable utility company, and be
responsible for all of the costs therefor.
ARTICLE 11
TENANT'S CONDUCT OF BUSINESS
11.1 PERMITTED TRADE NAME AND USE. Tenant shall use the Premises solely
under the trade name specified in Section 1.4 and shall not use the Premises
under a different trade name without Landlord's prior written consent, which
consent shall not be unreasonably withheld. Tenant shall use the Premises
solely for the use specified in Section 1.14. Tenant acknowledges that Tenant's
agreement to use the Premises solely for the use specified in Section 1.14
is a material inducement to Landlord to enter into this Lease, and that Tenant
shall not be permitted to change the use of the Premises without the prior
written consent of Landlord, which consent Landlord may grant or withhold in its
sole and absolute discretion. Tenant agrees that the foregoing provision is
reasonable in light of Landlord's legitimate interest in determining the mix of
uses which will be present in the Shopping Center.
11.2 COVENANT TO OPEN AND OPERATE. Tenant covenants to open for business to
the public in the Premises fully fixturized and stocked with merchandise and
inventory, on or before the Commencement Date. From and after the Commencement
Date, but subject to temporary closures necessitated by casualty, condemnation
or permitted remodeling, Tenant shall operate continuously and uninterruptedly
in the entire Premises the business which it is permitted to operate under the
provisions of this Lease and, at all times, shall keep and maintain within the
Premises an adequate stock of merchandise and trade fixtures to service and
supply the usual and ordinary requirements of its customers.
11.3 HOURS OF BUSINESS. From and after the Commencement Date, Tenant shall
keep the entire Premises continuously open for business during the days and
hours established by Landlord from time to time for the Shopping Center
generally, including, but not limited to, all holidays except Thanksgiving Day,
Christmas Day, New Year's Day and Easter Day. Subject to Article 17 and Section
27.25, Tenant shall pay to Landlord a Two Hundred Fifty Dollar ($250.00) per day
penalty for each day that Tenant fails to continuously remain open for business
during the hours previously established by Landlord. Tenant shall have its
window displays, exterior signs and exterior advertising displays adequately
illuminated continuously during those hours and days that the Premises are
required to be open for business to the public.
11.4 HOURS FOR DELIVERIES. Tenant shall use its best efforts to require all
deliveries, (exclusive of United Parcel Service and U.S. Postal Service),
loading, unloading and services to the Premises to be completed between 7:00
a.m. and 10:00 a.m. each day. All deliveries, loading, unloading and services
to the Premises shall be accomplished within the service areas of the Shopping
Center.
11.5 RULES AND REGULATIONS. Tenant shall keep the Premises in a neat and
clean condition, free from any objectionable noises, odors or nuisances, shall
operate its business without unreasonable noise or vibration emanating from the
Premises, and shall comply with all applicable health, safety and police laws,
ordinances and regulations of any governmental authority having jurisdiction
over the Premises or the Shopping Center. Tenant shall not sell merchandise
from vending machines or allow any coin or token operated vending machine on the
Premises, except those exclusively used by employees and pay telephones provided
for the convenience of its customers. Unless otherwise specifically permitted
in Section 1.14, Tenant shall not install or operate in or about the Premises
any type of automated teller machine (ATM) for the disposition of cash or
conducting banking transactions or for the sale of event tickets. Tenant shall
deposit trash and rubbish only within receptacles approved by Landlord. Tenant
shall cause trash receptacles to be emptied at Tenant's cost and expense;
provided, however, at Landlord's option, Landlord may provide trash removal
services, the cost of which shall be paid for by Tenant either (a) as a Common
Area Expense, or (b) pursuant to an equitable proration of said costs by
Landlord. Tenant shall not display or sell merchandise or allow carts, signs or
any other object to be stored or to remain outside the Premises. Tenant shall
not erect any aerial or antenna on the roof, exterior walls or any other portion
of the Premises. Tenant shall not solicit or distribute materials in the Common
Area. Landlord, from time to time, may establish further reasonable and
non-discriminatory rules and regulations for the Shopping Center, and Tenant
shall abide by same. Tenant shall neither conduct on the Premises, nor
advertise with respect to the Premises, any liquidation, "going out of
business", distress, "lost our lease" or similar sale.
11.6 ADVERTISING MEDIA. Tenant shall not affix upon the Premises any sign,
advertising placard, name, insignia, trademark, descriptive material or other
like item unless approved by Landlord in writing, in advance, in accordance with
Exhibit C. No advertising medium shall be utilized by Tenant which can be heard
or seen outside the Premises including, without limitation, flashing lights,
searchlights, loudspeakers, phonographs, radios or televisions. Tenant shall
not display, paint or place any handbill, bumper sticker or other advertising
device on any vehicle parked in the Common Area. Tenant shall not distribute
any handbills or other advertising matter in the Shopping Center.
Notwithstanding the above, Tenant shall erect signs at its own expense in
accordance with (a) the sign criteria established by Landlord, (b) the Final
Plans, and (c) all applicable laws, ordinances and regulations, and shall
maintain these signs in good condition and repair during the Term.
11.7 RADIUS RESTRICTION. During the Term, neither Tenant nor any entity
owned by or controlled directly or indirectly by or under common control with
Tenant, nor any shareholder or partner holding more than fifty percent (50%) of
the shares or partnership interest, as the case may be, of Tenant shall own,
operate or have any financial interest in any business similar to the business
of Tenant, as set forth in Section 1.14, if such other business is opened after
the Date of Lease specified in Section 1.1 and its front door or storefront
opening is located within three (3) miles of the front door or storefront
opening of the Premises. Without limiting Landlord's remedies if Tenant
violates this covenant, Landlord, for so long as Tenant is operating the other
business, may include the gross sales (as the term Gross Sales is defined in
this Lease) of the other business in the Gross Sales made from the Premises for
the purpose of computing Percentage Rental. Landlord or its authorized
representative, at all reasonable times during the Term and for a period of at
least three (3) years after expiration or earlier termination of this Lease,
shall have the right to inspect, audit, copy and make extracts of the books,
records and accounts pertaining to such other business, in the manner set forth
in Section 8.3, for the purpose of determining and verifying the additional
Percentage Rental due to Landlord pursuant to this Section 11.7.
11.8 SHOPPING CENTER NAME. Tenant shall use the name of the Shopping Center
in its advertising as the address reference for the Premises. Tenant shall not
use the name of the Shopping Center for any other purpose. Landlord reserves
the right, in its sole discretion, to change the name and logo of the Shopping
Center at any time.
ARTICLE 12
MAINTENANCE, REPAIRS AND ALTERATIONS
12.1 LANDLORD'S MAINTENANCE OBLIGATIONS. Landlord shall maintain in good
condi-tion and repair the foundations, roofs and exterior surfaces of the
exterior walls of all buildings (exclusive of doors, door frames, door cheeks,
windows, window frames and, unless Landlord elects to include cleaning of the
storefronts and storefront awnings of tenants of the Shopping Center as part of
Common Area mainte-nance pursuant to Section 13.2 below, storefronts and
storefront awnings); provided, however, if any repairs or replacements are
necessitated by the negligence or willful acts of Tenant or anyone claiming
under Tenant or by reason of Tenant's failure to observe or perform any
conditions or agreements contained in this Lease, or caused by alterations,
additions or improvements made by Tenant or anyone claiming under Tenant, the
cost of same shall be the sole responsibility of Tenant. It is acknowledged by
Tenant that the cost of some of Landlord's maintenance obligations referenced in
the preceding sentence shall be prorated and paid as Common Area Expenses.
Notwithstanding anything to the contrary contained in this Lease, Landlord shall
not be liable for failure to make repairs required to be made by Landlord under
the provisions of this Lease unless Tenant has previously notified Landlord in
writing of the need for such repairs and Landlord has failed to commence and
complete the repairs within a reasonable period of time following receipt of
Tenant's written notification. Tenant waives the provisions of Sections 1941
and 1942 of the Civil Code of the State of California, or any superseding
statute, and of any other law permitting Tenant to make repairs at Landlord's
expense.
12.2 LANDLORD'S RIGHT OF ENTRY. Landlord, its agents, contractors, servants
and employees may enter the Premises following reasonable notice to Tenant and
Landlord's good faith efforts to coordinate such entry with Tenant's on-site
management so as to minimize interference with Tenant's business operations
(except in a case of emergency): (a) to examine the Premises; (b) to perform any
obligation or exercise any right or remedy of Landlord under this Lease; (c) to
make repairs, alterations, improvements or additions to the Premises or to other
portions of the Shopping Center as Landlord deems necessary or desirable; (d) to
perform work necessary to comply with laws, ordinances, rules or regulations of
any public authority or of any insurance underwriter; and (e) to perform work
that Landlord deems necessary to prevent waste or deterioration in connection
with the Premises should Tenant fail to commence such repairs or, after
commencing same, fail to diligently pursue such repairs to completion within
three (3) days after written demand by Landlord. If Landlord makes any repairs
which Tenant is obligated to make pursuant to the terms of this Lease, Tenant
shall pay the cost of such repairs to Landlord, as Additional Rental, promptly
upon receipt of a bill from Landlord for same. In exercising its right of entry
herein provided, Landlord shall not materially and unreasonably interfere with
the operation of Tenant's business on the Premises.
12.3 TENANTS MAINTENANCE OBLIGATIONS. Tenant, at its expense, shall keep
the Premises and all utility facilities and systems exclusively serving the
Premises ("Tenant Utility Facilities") in first-class order, condition and
repair and shall make replacements necessary to keep the Premises and Tenant
Utility Facilities in such condition. All replacements shall be of a quality
equal to or exceeding that of the original. At the option of Landlord, (i)
Tenant shall contract with a service company approved by Landlord for the
regular (but not less frequently than quarterly) maintenance, repair and/or
replacement (when necessary) of the heating, ventilating and air conditioning
equipment serving the Premises and shall provide Landlord with a copy of any
service contract within ten (10) days following its execution, or (ii) Landlord
may contract with a service company of its own choosing (or provide such service
itself) for the maintenance, repair and/or replacement of the heating,
ventilating and air conditioning equipment serving the Premises and collect a
reserve or bill Tenant for the cost of same, as Additional Rental. The sum so
billed to Tenant shall become immediately due to Landlord. In either event,
Landlord may elect to be responsible for the replacement, as necessary, of the
heating, ventilating and air conditioning equipment or any elements, components
or portions thereof, in which event Landlord shall have the right to establish
and collect from Tenant, as Additional Rental, a reasonable reserve to be
maintained by Landlord and used for the purpose of paying the cost of such
replacement. Such reserve may, at Landlord's option, either be collected as
part of Common Area Expenses or billed to Tenant separately.
12.4 ALTERATIONS. After initially opening the Premises for business,
without first obtaining the written approval of Landlord in accordance with the
provisions of Exhibit C, Tenant shall not make or cause to be made to the
Premises or the Tenant Utility Facilities any addition, renovation, alteration,
reconstruction or change (collectively, "Alterations") (i) costing in excess of
Ten Thousand Dollars ($10,000.00), (ii) involving structural changes or
additions, (iii) affecting the exterior storefront, mechanical systems, fire
sprinkler systems, exterior walls, floors, ceilings or roof of the Premises,
(iv) erecting or increasing the size of an existing mezzanine, or (v) requiring
or resulting in any penetration of the roof, demising walls or floor of the
Premises. All Alterations shall be constructed in accordance with the
provisions of Exhibit C.
ARTICLE 13
COMMON AREA
13.1 DEFINITION OF COMMON AREA. The term "Common Area", as used in this
Lease, shall mean all areas within the exterior boundaries of the Shopping
Center and adjacent streets, now or later made available for the general use of
Tenant and other persons entitled to occupy Floor Area in the Shopping Center
(including all landscaping, parking areas, parking structures, if any, and other
improvements and facilities). Without limiting the generality of the
foregoing, Landlord may include in the Common Area those portions of the
Shopping Center presently or later sold or leased to purchasers or tenants, as
the case may be, until the commencement of construction of the building(s)
thereon, at which time there shall be withdrawn from the Common Area those areas
not provided by the owner or tenant for common use.
13.2 MAINTENANCE AND USE OF COMMON AREA. Landlord shall maintain the
Shopping Center in a first-class condition similar to other shopping centers in
Orange County, California, however, the manner in which the Shopping Center
shall be managed shall be determined by Landlord in its sole discretion. If any
owner or tenant of any portion of the Shopping Center maintains its own Common
Area (Landlord shall have the right to allow any purchaser or tenant to so
maintain its own Common Area and to exclude such purchaser or tenant from
participation in the payment of Common Area Expenses, as provided for in
Sections 13.5 and 13.6), then Landlord shall not have responsibility for the
maintenance of that portion of the Common Area. The use and occupancy by Tenant
of the Premises shall include the non-exclusive use of the Common Area (except
those portions of the Common Area on which have been constructed or placed
permanent or temporary kiosks, displays, carts and stands and except areas used
in the maintenance or operation of the Shopping Center) in common with Landlord
and the other tenants of the Shopping Center and their customers and invitees,
subject to rules and regulations concerning the use of the Common Area
established by Landlord from time to time.
13.3 CONTROL OF AND CHANGES TO COMMON AREA. Landlord shall have the sole
and exclusive control of the Common Area, and the right to make changes to the
Common Area. Landlord's rights shall include, but not be limited to, the right
to (a) restrain the use of the Common Area by unauthorized persons; (b) utilize
from time to time any portion of the Common Area for promotional, entertainment
and related matters; (c) place permanent or temporary kiosks, displays, carts
and stands in the Common Area and to lease same to tenants; (d) temporarily
close any portion of the Common Area for repairs, improvements or Alterations,
to discourage noncustomer use, to prevent dedication or an easement by
prescription or for any other reason deemed sufficient in Landlord's reasonable
judgment; and (e) renovate, upgrade or change the shape and size of the Common
Area or add, eliminate or change the location of improvements to the Common Area
including, without limitation, buildings, parking areas, roadways and curb cuts,
and to construct buildings on the Common Area. Landlord may determine the
nature, size and extent of the Common Area and whether portions of same shall be
surface, underground or multiple-deck, as well as make changes to the Common
Area from time to time which, in its opinion, are deemed desirable for the
Shopping Center.
13.4 PARKING. Tenant and its employees shall park their vehicles only in
the parking areas from time to time designated for that purpose by Landlord.
Without limiting the generality of the foregoing, if Landlord implements any
program related to parking, parking facilities or transportation facilities
including, but not limited to, any program of parking validation, employee
shuttle transportation during peak traffic periods or other program to limit,
control, enhance, regulate or assist parking by customers of the Shopping
Center, Tenant agrees to participate in the program and to pay its proportionate
share of the costs of the program under reasonable and nondiscriminatory rules
and regulations from time to time established by Landlord. Tenant shall furnish
Landlord with a list of its and its employees' vehicle license numbers at any
time during the Term within ten (10) days after Landlord's written request.
Tenant authorizes Landlord to tow, at Tenant's expense, any vehicle belonging to
Tenant or Tenant's employees parked in violation of these provisions and/or to
attach violation stickers or notices to any such vehicle. Tenant agrees to
assume responsibility for compliance by its employees with these parking
provisions and to indemnify and defend Landlord and its agents from and against
all cost, expense and liability arising from Landlord's reasonable enforcement
efforts.
13.5 COMMON AREA EXPENSES. The term "Common Area Expenses", as used in this
Lease, shall mean all costs and expenses incurred by Landlord in (a) operating,
managing, policing, insuring, repairing and maintaining the Common Area and the
onsite management and/or security offices, merchants' association offices,
postal services, parking structures, if any, nonprofit community buildings and
child care centers located in the Shopping Center from time to time ("Common
Facilities"), (b) maintaining, repairing and replacing the exterior surface of
exterior walls (and storefronts and storefront awnings if Landlord has elected
to include the cleaning of same as part of Common Area maintenance) and
maintaining, repairing and replacing roofs of the buildings from time to time
constituting the Shopping Center, and (c) operating, insuring (including
reasonable reserves for deductibles and any self-insured retention), repairing,
replacing and maintaining all utility facilities and systems including, without
limitation, sanitary sewer lines and systems, fire protection lines and systems,
security lines and systems and storm drainage lines and systems not exclusively
serving the premises of any tenant or store ("Common Utility Facilities"), mall
furniture and equipment, seasonal and holiday decorations, Common Area lighting
fixtures, Shopping Center sign monuments and directional signage. Common Area
Expenses shall include, without limitation, the following: Expenses for
maintenance, landscaping, repaving, resurfacing, repairs, replacements,
painting, lighting, cleaning, trash removal, security, fire protection and
similar items; nonrefundable contributions toward reserves for replacements
other than equipment; depreciation or rental on equipment; charges, surcharges
and other levies related to the requirements of any Federal, state or local
governmental agency; expenses related to the Common Utility Facilities; Taxes on
the improvements and land comprising the Common Area; public liability and
property damage insurance on the Common Area; standard "all risks" fire and
extended coverage insurance with, at Landlord's option, an earthquake damage
endorsement covering the Common Facilities; and a sum payable to Landlord for
administration and overhead in an amount equal to fifteen percent (15%) of the
Common Area Expenses for the applicable year.
13.6 PRORATION OF COMMON AREA EXPENSES. Portions of the Shopping Center
are, or may be, owned or leased from time to time by various persons or entities
occupying freestanding facilities or other facilities containing a substantial
amount of Floor Area and contributing to the Common Area Expenses on a basis
other than that described herein (collectively, "Other Stores"). The
contributions, if any, received from the Other Stores towards the Common Area
Expenses shall be credited against the total Common Area Expenses and the
balance thereof shall be prorated in the following manner:
(a) From and after the Commencement Date, Tenant shall pay to Landlord, on
the first (1st) day of each calendar month, an amount estimated by Landlord to
be the monthly amount of Tenant's share of the Common Area Expenses. The
estimated monthly charge may be adjusted periodically by Landlord on the basis
of Landlord's reasonably anticipated costs.
(b) Following the end of each calendar year or, at Landlord's option, its
fiscal year, Landlord shall furnish to Tenant a statement covering the calendar
or fiscal year (as the case may be) just expired, showing the actual Common Area
Expenses for that year, the amount of Tenant's share of the Common Area Expenses
for that year and the monthly payments made by Tenant during that year for the
Common Area Expenses. If Tenant's share of the Common Area Expenses exceeds
Tenant's prior payments, Tenant shall pay to Landlord the deficiency within ten
(10) days after receipt of such annual statement. If Tenant's payments for the
calendar year exceed Tenant's actual share of the Common Area Expenses, and
provided Tenant is not in arrears as to the payment of any Minimum Annual
Rental, Percentage Rental or Additional Rental, Tenant may offset the excess
against payments of Common Area Expenses next due Landlord. An appropriate
proration of Tenant's share of the Common Area Expenses as of the Commencement
Date and the expiration date of the Term shall be made.
(c) Tenant's share of the Common Area Expenses shall be determined by
multiplying the Common Area Expenses that remain after applying the
contributions, if any, paid by the Other Stores (less reserves, to the extent
available) by a fraction, the numerator of which is the number of square feet of
Floor Area in the Premises and the denominator of which is the number of square
feet of Floor Area in the Shopping Center occupied by tenants as of the
commencement of the applicable calendar year or fiscal year (as the case may be)
or, at Landlord's option, each calendar or fiscal quarter, exclusive of the
Floor Area occupied by the Other Stores and exclusive of the Common Facilities.
(d) Notwithstanding anything contained in this Section 13.6 to the contrary,
tenants in the Shopping Center that maintain, repair and replace the roofs
located above their premises shall not be included in the proration of the
Common Area Expenses relative to the roofs in the Shopping Center which are
maintained by Landlord as part of the Common Area, and the Floor Area of such
premises shall be excluded from the calculations made pursuant to Section
13.6(c) with respect to the maintenance, repair and replacement of roofs.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not assign, sublet, enter
into franchise, license or concession agreements, change ownership or voting
control, or otherwise transfer (including any transfer by operation of law) all
or any part of this Lease, Tenant's interest in the Premises or Tenant's
business (collectively, "Assignment" or "Assign") without first procuring the
written consent of Landlord, which consent shall not be unreasonably withheld,
subject to the terms, covenants and conditions contained in this Lease. Under
no circumstances shall Tenant mortgage, encumber, pledge or hypothecate this
Lease or its interest in the Premises. If Tenant is a corporation which, under
the then current guidelines published by the Commissioner of Corporations of the
State of California, is not deemed a public corporation or is an
unincorporated association or partnership, the transfer, assignment or
hypothecation, whether in one (1) transaction or a series of transactions, of
any stock or interest in such corporation, association or partnership in excess
of an aggregate of forty-nine percent (49%) shall be deemed an Assignment within
the meaning and provisions of this Article 14.
14.2 PROCEDURES. Should Tenant desire to enter into an Assignment, Tenant
shall request, in writing, Landlord's consent to the proposed Assignment at
least sixty (60) days before the intended effective date of the proposed
Assignment, which request shall include the following: (a) full particulars of
the proposed Assignment including its nature, effective date, terms and
conditions, (b) a description of the identity, net worth and previous business
experience of the proposed transferee (c) a complete business plan prepared by
the proposed transferee; and (d) any further information relevant to the
proposed Assignment which Landlord shall reasonably request.
Within thirty (30) days after receipt of Tenant's request for consent to
the proposed Assignment together with all of the above-required information,
Landlord shall respond and shall have the right either to: (i) consent to the
proposed Assignment; or (ii) refuse to consent to the proposed Assignment.
14.3 STANDARD FOR CONSENT. Tenant agrees that Landlord may refuse its
consent to the proposed transfer on any reasonable grounds, and (by way of
example and without limitation) Tenant agrees that it shall be reasonable for
Landlord to withhold its consent if any of the following situations exist or may
exist: (a) the use to which the Premises will be put by the proposed
transferee is different than the use set forth in Section 1.14; (b) the proposed
transferee's financial condition is inadequate to support all of the financial
and other obligations of Tenant under this Lease; (c) the business reputation or
character of the proposed transferee is not reasonably acceptable to Landlord;
(d) the proposed transferee is not likely to conduct on the Premises a business
of a quality substantially equal to that conducted by Tenant; (e) the nature of
the proposed transferee's proposed or likely use of the Premises would impose an
increased burden on the Common Area, or involve any increased risk of the
presence, use, release or discharge of Hazardous Materials, as defined in
Section 27.29; (f) Landlord has not received assurances acceptable to Landlord
in its sole discretion that all past due amounts owing from Tenant to Landlord,
if any, will be paid and all other defaults on the part of Tenant, if any, will
be cured prior to the effective date of the proposed Assignment; (g) in
Landlord's reasonable business judgment the annual Percentage Rental Landlord
anticipates receiving from the proposed transferee is less than the average
annual Percentage Rental Landlord has received from Tenant during the two (2)
years immediately prior to the proposed Assignment; and (h) in Landlord's
reasonable business judgment the Assignment would breach any covenant of
Landlord respecting radius, location, use or exclusivity relating to the
Shopping Center, or, in Landlord's sole discretion, conflict with, be
incompatible with or have an adverse impact on the tenant mix of the Shopping
Center.
Any purported Assignment without Landlord's prior written consent shall be
void and of no force or effect and shall not confer any estate or benefit on
anyone. Further, any such purported Assignment shall constitute an event of
default by Tenant which shall not be susceptible to cure or rectification
pursuant to Section 19.4 hereof. A consent to one (1) Assignment by Landlord
shall not be deemed to be a consent to any subsequent Assignment to any other
party.
14.4 PERMITTED ASSIGNMENT. Provided Tenant is a publicly-traded
corporation, Tenant shall have the right without Landlord's consent, to enter
into an Assignment to any subsidiary corporation of Tenant, Tenant's parent
corporation or to any corporation succeeding to substantially all of the assets
of Tenant as a result of a consolidation or merger, or to a corporation to which
all or substantially all of the assets of Tenant have been sold ("Permitted
Assignment"), provided that within fifteen (15) days after the effective date of
any such transfer the assignee or sublessee executes and delivers to Landlord an
instrument meeting the requirements of Section 14.6, and containing an express
assumption of all of Tenant's obligations under this Lease.
14.5 NO RELEASE. No Assignment, or Permitted Assignment, whether with or
without Landlord's consent, shall relieve Tenant or any Guarantor hereunder from
its covenants and obligations under this Lease.
14.6 FORM. Any Assignment shall be evidenced by an instrument in form and
content satisfactory to Landlord and executed by Tenant and the transferee,
assignee, sublessee, licensee or concessionaire, as the case may be.
14.7 RENTAL INCREASE. If Tenant assigns its interest in this Lease or
sublets the Premises, other than in the case of a Permitted Assignment, the
Minimum Annual Rental then payable by Tenant shall be increased, effective as of
the date of such Assignment, to the greater of (a) an amount equal to the total
of the Minimum Annual Rental plus Percentage Rental required to be paid by
Tenant pursuant to this Lease during the twelve (12) month period immediately
preceding the request for Landlord's consent to the Assignment, (b) Minimum
Annual Rental specified in Section 1.12, adjusted in accordance with the
provisions of Section 27.21 of this Lease relating to percentage adjustments in
the "Index" (as defined in Section 27.21), or (c) a sum equal to the then fair
market rental value of the Premises, as the same shall be agreed upon by
Landlord and Tenant. In the event Landlord and Tenant are unable to agree upon
the then fair market rental value of the Premises sixty (60) days prior to the
effective date of the Assignment, then the fair market rental value shall be
determined in accordance with the following: The Premises shall be appraised by
an M.A.I. Appraiser chosen by Landlord ("First Appraiser"). If the appraisal
determined by the First Appraiser is deemed unacceptable by Tenant, then Tenant
shall so advise Landlord in writing within ten (10) working days after receipt
of the appraisal by the First Appraiser and Tenant shall have the right to
engage an M.A.I. Appraiser ("Second Appraiser") to appraise the Premises. In the
event Landlord shall deem the appraisal by the Second Appraiser to be
unacceptable, then Landlord shall advise Tenant within ten (10) working days
after receipt of the appraisal by the Second Appraiser, and the First Appraiser
and Second Appraiser shall together choose an M.A.I. Appraiser ("Third
Appraiser"). The cost of the Second and Third Appraisers shall be borne by
Tenant. If the appraisal determined by the Third Appraiser is greater than the
highest appraisal or lower than the lowest appraisal given by the First
Appraiser and Second Appraiser, then the appraisal shall be the average of the
first two (2) appraisals. If the appraisal determined by the Third Appraiser is
not greater than the highest appraisal nor lower than the lowest appraisal
determined by the First Appraiser and Second Appraiser, then the appraisal shall
be the sum of the appraisals of the First Appraiser, Second Appraiser and Third
Appraiser, divided by three (3). The appraisal process shall commence not later
than forty-five (45) days prior to the effective date of the Assignment and be
concluded within thirty (30) days after the start of such forty-five (45) day
period. The appraisal shall be limited to the then prevailing fair market
rental value of the Premises for the use specified in Section 1.14.
14.8 REASONABLENESS OF RESTRICTIONS. Tenant acknowledges and agrees that
each of the rights of Landlord set forth in Section 14.3, above, in the event of
a request for Landlord's consent to an Assignment is a reasonable restriction
for purposes of California Civil Code, Section 1951.4.
14.9 NO LIABILITY. Landlord shall have no liability for damages to Tenant
or to any proposed transferee if it is adjudicated that Landlord's consent has
been unreasonably withheld and such unreasonable withholding of consent
constitutes a breach of this Lease or other duty to Tenant, the proposed
transferee or any other person on the part of Landlord. In such event, Tenant's
sole remedy shall be to have the proposed Assignment declared valid as if
Landlord's consent had been given.
ARTICLE 15
PROMOTIONAL SERVICES AND ADVERTISING
15.1 ASSOCIATION OR PROMOTIONAL SERVICE. Tenant shall either (a) maintain
membership in a merchants' association ("Association") or (b) participate in a
promotional service ("Service") to be provided by Landlord. If Landlord has
established an Association, Landlord may at any time discontinue the Association
and establish a Service. If Landlord has established a Service, Landlord
may at any time discontinue the Service and establish an Association.
15.2 SERVICE. The purpose of a Service shall be to promote the Shopping
Center for the benefit of all of the tenants therein. Landlord may select a
committee to render advice to Landlord in connection with advertising or
promotional activities. As compensation for directing the Service and for
payment of the salaries of a promotional director, secretary and other personnel
who, in Landlord's judgment, will effectively carry out the purposes of the
Service, Landlord shall receive a sum not greater than twenty-five percent (25%)
of the assessments collected and/or contributed by Landlord pursuant to the
provisions of this Article 15.
15.3 ASSOCIATION. In the event an Association is established, Tenant shall
become a member of the Association, maintain its membership in good standing,
abide by the Association bylaws and regulations, pay its share of any other
assessments which might be imposed by the Association and cooperate in the
activities of the Association throughout the Term. If there is any conflict
between the bylaws and/or regulations of the Association and the provisions of
this Lease, this Lease shall control. The provisions of this Section 15.3 shall
be deemed to be covenants for the benefit of Landlord and the Association and
may be enforced by each of them. Further, Landlord agrees to become a member of
the Association and to pay, on a noncumulative basis, an assessment equal to
twenty-five percent (25%) of all monies collected by the Association from its
members (excluding Landlord) each fiscal or calendar year (as the case may be).
15.4 PROMOTIONAL CHARGE AND INITIAL PROMOTIONAL ASSESSMENT. Upon execution
of this Lease, Tenant shall pay to Landlord, who shall receive same on behalf of
the Association or the Service, as the case may be, an "Initial Promotional
Assessment" in the amount specified in Section 1.15. Thereafter, Tenant shall
pay to Landlord, as Tenant's share of costs of operation of the Association or
Service, as the case may be, an annual charge ("Promotional Charge"). The
Promotional Charge payable by Tenant for the first full or partial calendar or
fiscal year (as determined by Landlord) of the Term shall be the sum determined
by multiplying the number of square feet of Floor Area in the Premises by the
sum specified in Section 1.16. The Promotional Charge payable by Tenant for
each full or partial calendar or fiscal year thereafter shall be adjusted in
accordance with the formula contained in the following paragraph.
On each anniversary of the Commencement Date ("Adjustment Date"), the
Promotional Charge shall be increased to reflect the greater of (i) any change
in the cost of living, in accordance with the Index, as set forth in Section
27.21 of this Lease, using as the Base Month the month ninety (90) days prior to
the Commencement Date, and using as the Comparison Month the month ninety (90)
days prior to the Adjustment Date, and (ii) five cents ($.05) per square foot of
Floor Area in the Premises.
15.5 PAYMENT. Tenant's obligation to pay the Promotional Charge shall
commence upon the Commencement Date. The Promotional Charge shall be paid by
Tenant, as Additional Rental, (i) within ten (10) days of billing for same or,
at Landlord's option, (ii) monthly or quarterly. In addition, Tenant agrees to
pay, as Additional Rental, any and all charges incurred in the collection of the
Promotional Charge from Tenant, including attorneys' fees and costs of
suit, if any, which the Association or Landlord, as the case may be, may incur
in connection with the collection of same, plus interest at the maximum lawful
rate from and after the due date to and including the date of payment.
15.6 ADVERTISING. In addition to the Promotional Charge and Initial
Promotional Assessment, from and after the Commencement Date Tenant shall expend
each calendar year for advertising a sum not less than two percent (2%) of its
Gross Sales for the calendar year. Tenant shall designate the location of the
Premises by reference to the Shopping Center by name in its advertising. The
advertising shall be in newspapers, tabloids, direct mailings or other media
covering the trade area served by the Shopping Center. Further, the advertising
shall include annual participation in at least one (1) tabloid for direct
mailing sponsored by the Association or Service. Tenant shall furnish to
Landlord with its annual report of Gross Sales, and at any time upon request by
Landlord, a certified statement showing the amounts expended for advertising.
If Tenant fails to so advertise, Tenant shall pay to Landlord, upon demand, the
difference between (a) the amount actually expended by Tenant for advertising
during the preceding calendar year, and (b) the amount which Tenant was required
to expend for advertising during the applicable calendar year, as required
pursuant to this Article 15.
ARTICLE 16
INSURANCE
16.1 TENANT'S INSURANCE. Tenant, at its sole cost and expense, commencing
on the earlier of (i) the date of Substantial Completion of the Premises, or
(ii) the date Tenant is given earlier access to the Premises, and continuing
during the Term, shall procure, pay for and keep in full force and effect the
following types of insurance, in at least the amounts and in the forms specified
below:
(a) Comprehensive or commercial general liability insurance with coverage
limits of not less than the combined single limit for bodily injury, personal
injury, death and property damage liability per occurrence specified in Section
1.17 or the current limit carried by Tenant, whichever is greater, insuring
against any and all liability of the insureds with respect to the Premises or
arising out of the maintenance, use or occupancy of the Premises or related to
the exercise of any rights of Tenant pursuant to this Lease, subject to
increases in amount as Landlord may reasonably require from time to time. All
such liability insurance shall specifically insure the performance by Tenant of
the indemnity agreement as to liability for injury to or death of persons and
injury or damage to property set forth in Section 16.6. Further, all such
liability insurance shall include, but not be limited to, personal injury,
blanket contractual, cross-liability and severability of interest clauses,
products/completed operations, broad form property damage, independent
contractors, owned, nonowned and hired vehicles and, if alcoholic beverages are
served, sold, consumed or obtained in the Premises, liquor law liability.
(b) Worker's compensation coverage as required by law, including employer's
liability coverage, with a limit of not less than Five Hundred Thousand Dollars
($500,000.00) and waiver by Tenant's insurer of any right of subrogation against
Landlord by reason of any payment pursuant to such coverage.
(c) Business interruption or loss of income insurance in amounts sufficient
to insure Tenant's business operations for a period of not less than one (1)
year.
(d) Plate glass insurance covering all plate glass on the Premises at full
replacement value. Tenant shall have the option either to insure this risk or
to self-insure.
(e) Insurance covering all of Tenant's Work, Tenant's leasehold
improvements, Alterations permitted under Article 12, trade fixtures,
merchandise and personal property from time to time in, on or about the Premises
in an amount not less than their full replacement value from time to time,
including replacement cost endorsement, providing protection against any peril
included within the classification Fire and Extended Coverage, sprinkler damage,
vandalism, malicious mischief and such other additional perils as covered in an
"all risks" standard insurance policy. Any policy proceeds shall be used for
the repair or replacement of the property damaged or destroyed unless this Lease
shall cease and terminate under the provisions of Article 17.
(f) Any insurance policies designated necessary by Landlord with regard to
Tenant's, or Tenant's contractors', construction of Tenant's Work, as well as
with regard to the construction of Alterations including, but not limited to,
contingent liability and "all risks" builders' risk insurance, in amounts
acceptable to Landlord.
16.2 POLICY FORM. All policies of insurance required of Tenant herein shall
be issued by insurance companies with general policy holder's rating of not
less than A and a financial rating of not less than Class X, as rated in the
most current available "Best's Key Rating Guide", and which are qualified to do
business in the State of California. All such policies, except for the Worker's
Compensation coverage, shall name and shall be for the mutual and joint benefit
and protection of Landlord, Tenant and Landlord's agents and mortgagee(s) or
beneficiary (ies) as additional insureds. The policies described in
subparagraphs (c) and (e) of Section 16.1 shall also name Landlord and
Landlord's mortgagee(s) or beneficiary (ies) as loss payees. Executed copies of
the policies of insurance or certificates thereof shall be delivered to Landlord
prior to Tenant, its agents or employees entering the Premises for any purpose.
Thereafter, executed copies of renewal policies or certificates thereof shall be
delivered to Landlord within thirty (30) days prior to the expiration of the
term of each policy. All policies of insurance delivered to Landlord must
contain a provision that the company writing the policy will give to Landlord
thirty (30) days' prior written notice of any cancellation or lapse or the
effective date of any reduction in the amounts of insurance. All policies
required of Tenant herein shall be endorsed to read that such policies are
primary policies and any insurance carried by Landlord or Landlord's property
manager shall be noncontributing with such policies. No policy required to be
maintained by Tenant shall have a deductible greater than Twenty-Five Thousand
Dollars ($25,000.00) unless approved in writing by Landlord.
16.3 BLANKET POLICIES. Notwithstanding anything to the contrary contained
in this Article 16, Tenant's obligation to carry insurance may be satisfied by
coverage under a so-called blanket policy or policies of insurance; provided,
however, that the coverage afforded Landlord will not be reduced or diminished
and the requirements set forth in this Lease are otherwise satisfied by such
blanket policy or policies.
16.4 INCREASED PREMIUMS DUE TO USE OF PREMISES. Tenant shall not do any act
in or about the Premises which will tend to increase the insurance rates upon
the Premises or the Shopping Center of which the Premises are a part. Tenant
agrees to pay to Landlord, upon demand, the amount of any increase in premium
for insurance resulting from Tenant's use of the Premises, whether or not
Landlord shall have consented to the act on the part of Tenant. If Tenant
installs upon the Premises any electrical equipment which constitutes an
overload of the electrical lines servicing the Premises, Tenant, at its own
expense, shall make whatever changes are necessary to comply with the
requirements of the insurance underwriters and any appropriate governmental
authority.
16.5 REIMBURSEMENT OF INSURANCE PREMIUMS BY TENANT. Landlord, at all times
from and after Substantial Completion of the Premises, shall maintain in effect
during the Term a policy or policies of insurance covering the building of which
the Premises are a part (including boiler and machinery) in an amount not less
than eighty percent (80%) of the full replacement cost (exclusive of the cost of
excavations, foundations and footings) or the amount of insurance Landlord's
mortgagee(s) or beneficiary(ies) may require Landlord to maintain, whichever is
the greater, providing protection against any peril generally included in the
classification "Fire and Extended Coverage", loss of rental income insurance and
such other additional insurance as covered in an "all risks" standard insurance
policy, with earthquake coverage insurance if deemed necessary by Landlord in
Landlord's sole judgment or if required by Landlord's mortgagee(s) or
beneficiary(ies) or by any Federal, state, county, city or local authority.
Landlord's obligation to carry this insurance may be brought within the coverage
of any so-called blanket policy or policies of insurance carried and maintained
by Landlord. From and after the Commencement Date, Tenant agrees to pay to
Landlord, as Additional Rental, its share of the cost to Landlord of this
insurance, including reasonable reserves for deductibles and any self-insured
retention. The cost of such insurance for any partial year of the Term shall be
prorated. Payment shall be made in the same manner set forth for payment of
Taxes in Section 9.1(b). Tenant's share of the premiums for this insurance shall
be a fractional portion of the premiums, the numerator of which shall be the
Floor Area of the Premises and the denominator of which shall be the Floor Area
of all areas which are covered by this insurance and are occupied as of the
commencement of the applicable calendar or fiscal year, exclusive of the Common
Facilities.
16.6 INDEMNITY. "Landlord" for the purposes of this Section 16.6 shall mean
and include Landlord and Landlord's directors, officers, shareholders, agents
and employees. To the fullest extent permitted by law, Tenant covenants with
Landlord that Landlord shall not be liable for any damage or liability of any
kind or for any injury to or death of persons or damage to property of Tenant or
any other person occurring from and after Substantial Completion of the Premises
(or such earlier date if Tenant is given earlier access to the Premises) from
any cause whatsoever related to the use, occupancy or enjoyment of the Premises
by Tenant or any person thereon or holding under Tenant including, but not
limited to, damages resulting from any labor dispute. Tenant shall pay for,
defend (with an attorney approved by Landlord), indemnify, and save Landlord
harmless against and from any real or alleged damage or injury and from all
claims, judgments, liabilities, costs and expenses, including attorney's fees
and costs, arising out of or connected with Tenant's use of the Premises and its
facilities, or any repairs, Alterations or improvements (including original
improvements and fixtures specified as Tenant's Work) which Tenant may make or
cause to be made upon the Premises, any breach of this Lease by Tenant and any
loss or interruption of business or loss of rental income resulting from any of
the foregoing; provided, however (and though Tenant shall in all cases accept
any tender of defense of any action or proceeding in which Landlord is named or
made a party and shall, notwithstanding any allegations of negligence or
misconduct on the part of Landlord, defend Landlord as provided herein), Tenant
shall not be liable for such damage or injury to the extent and in the
proportion that the same is ultimately determined to be attributable to the
negligence or misconduct of Landlord. This obligation to indemnify shall
include all of Landlord's attorneys' fees, litigation costs, investigation costs
and court costs and all other costs, expenses and liabilities incurred by
Landlord or its counsel from the first notice that any claim or demand is to be
made or may be made. Tenant's obligations under this Section 16.6 shall survive
the termination of this Lease.
16.7 WAIVER OF SUBROGATION. Except to the extent that insurance required to
be maintained by Tenant pursuant to this Article 16 covers loss to Landlord,
Landlord and Tenant each waive any rights each may have against the other on
account of any loss or damage occasioned to Landlord or Tenant, as the case may
be, their respective property, the Premises or its contents, or to other
portions of the Shopping Center arising from any liability, loss, damage or
injury caused by fire or other casualty for which property insurance is carried
or required to be carried pursuant to this Lease. The insurance policies
obtained by Landlord and Tenant pursuant to this Lease shall contain
endorsements waiving any right of subrogation which the insurer may otherwise
have against the noninsuring party. The foregoing release and the foregoing
requirement for waivers of subrogation shall be operative only so long as the
same shall neither preclude the obtaining of such insurance nor diminish, reduce
or impair the liability of any insurer. If Landlord has contracted with a third
party for the management of the Shopping Center, the waiver of subrogation by
Tenant herein shall also run in favor of such third party.
16.8 FAILURE BY TENANT TO MAINTAIN INSURANCE. If Tenant refuses or neglects
to secure and maintain insurance policies complying with the provisions of this
Article 16, Landlord may secure the appropriate insurance policies and Tenant
shall pay, upon demand, the cost of same to Landlord, as Additional Rental.
16.9 SUFFICIENCY OF COVERAGE. Neither Landlord nor any of Landlord's agents
make any representation that the types of insurance and limits specified to be
carried by Tenant under this Lease are adequate to protect Tenant. If Tenant
believes that any such insurance coverage is insufficient, Tenant shall provide,
at its own expense, such additional insurance as Tenant deems adequate. Nothing
contained herein shall limit Tenant's liability under this Lease.
ARTICLE 17
DAMAGE
17.1 INSURED CASUALTY. In the case of damage by fire or other perils
covered by the insurance specified in Section 16.5, the following provisions
shall apply:
(a) Within a period of sixty (60) days after all applicable permits have
been obtained, Landlord shall commence such repair, reconstruction and
restoration of the Premises as Landlord, in its reasonable business judgment,
deems necessary, and shall diligently prosecute the same to completion;
provided, however, that Tenant, at its cost, shall repair and restore all items
of Tenant's Work and replace its stock in trade, trade fixtures, furniture,
furnishings and equipment. Tenant shall commence this work promptly upon
delivery of possession of the Premises to Tenant and shall diligently prosecute
same to completion.
(b) Notwithstanding the foregoing, if the Premises is totally destroyed, or
if the Shopping Center is destroyed to an extent of at least fifty percent (50%)
of the then full replacement cost thereof as of the date of destruction, then
(i) if the destruction occurs during the last two (2) years of the Term,
Landlord and Tenant shall each have the right to terminate this Lease, and (ii)
if the destruction occurs prior to the last two (2) years of the Term, Landlord
shall have the right to terminate this Lease. In each case, the termination
right shall be exercised by the terminating party giving written notice to the
other party within thirty (30) days after the date of destruction. If Landlord
terminates this Lease pursuant to (ii) above, then upon Landlord's receipt of
any insurance proceeds payable by reason of such destruction, Landlord shall pay
to Tenant from such proceeds an amount equal to the unamortized book value of
Tenant's leasehold improvements paid for by Tenant and Tenant's fixtures and
equipment which are not capable of removal from the Premises, reduced by the
amount of proceeds of any insurance carried or required to be carried by Tenant
on such items pursuant to Article 16.
17.2 UNINSURED CASUALTY. If the Premises or the Shopping Center are damaged
as a result of any casualty not covered by the insurance specified in
Section 16.5, Landlord, within ninety (90) days following the date of such
damage, shall commence repair, reconstruction or restoration of the Premises to
the extent provided herein and shall diligently prosecute the same to completion
or, if the damage to the Premises, or to the buildings in the Shopping Center
excluding the Premises, and excluding any freestanding buildings, is greater
than ten percent (10%) of the total replacement cost, Landlord may elect within
said ninety (90) days not to so repair, reconstruct or restore the damaged
property, in which event, at Landlord's option, this Lease shall cease and
terminate upon the expiration of such ninety (90) day period. In the event
Landlord elects to restore the Premises, Tenant shall have the same repair,
restoration and replacement obligations it has pursuant to Section 17.1 (a).
17.3 DISTRIBUTION OF PROCEEDS. In the event of the termination of this
Lease pursuant to this Article 17, all proceeds from the Fire and Extended
Coverage insurance carried pursuant to Article 16 and all insurance covering
Tenant's Work and Tenant's leasehold improvements, but excluding proceeds for
trade fixtures, merchandise, signs and other personal property, shall be
disbursed and paid to Landlord.
17.4 ABATEMENT. In the event of repair, reconstruction and restoration, as
provided in this Article 17, and provided Tenant has maintained the business
interruption or loss of income insurance required pursuant to Article 16, to the
extent that the proceeds of such business interruption or loss of income
insurance may be exhausted during the period of repair, reconstruction and
restoration, Minimum Annual Rental payable hereunder shall be thereafter abated
proportionately with the degree to which Tenant's use of the Premises is
impaired during the remainder of the period of repair, reconstruction and
restoration; provided, however, the amount of Minimum Annual Rental abated
pursuant to this Section 17.4 shall in no event exceed the amount of loss of
rental income insurance proceeds actually received by Landlord. Tenant shall
continue the operation of its business on the Premises during any such period to
the extent reasonably practicable from the standpoint of prudent business
management, and the obligation of Tenant to pay Percentage Rental and Additional
Rental shall remain in full force and effect. Tenant shall not be entitled to
any compensation or damages from Landlord for loss of use of the whole or any
part of the Premises or the building of which the Premises are a part, Tenant's
personal property or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration.
17.5 WAIVER OF TERMINATION. Tenant waives any statutory rights of
termination which may arise by reason of any partial or total destruction of the
Premises.
ARTICLE 18
EMINENT DOMAIN
18.1 TAKING. The term "Taking", as used in this Article 18, shall mean an
appropriation or taking under the power of eminent domain by any public or
quasi-public authority or a voluntary sale or conveyance in lieu of condemnation
but under threat of condemnation.
18.2 TOTAL TAKING. In the event of a Taking of the entire Premises, this
Lease shall terminate and expire as of the date possession is delivered to the
condemning authority and Landlord and Tenant shall each be released from any
liability accruing pursuant to this Lease after the date of such termination,
but Minimum Annual Rental, Percentage Rental and Additional Rental for the last
month of Tenant's occupancy shall be prorated and Landlord shall refund to
Tenant any Minimum Annual Rental and Additional Rental paid in advance.
18.3 PARTIAL TAKING. If there is a Taking of (a) more than twenty-five
percent (25%) of the Floor Area of the Premises or, (b) a portion of the
Premises and, regardless of the amount taken, the remainder of the Premises is
not one (1) undivided parcel of property, either Landlord or Tenant may
terminate this Lease, as of the date Tenant is required to vacate a portion of
the Premises, upon giving notice in writing of such election to the other party
within thirty (30) days after receipt by Tenant from Landlord of written notice
that a portion of the Premises has been so appropriated or taken.
18.4 AWARD. The entire award or compensation in any such condemnation
proceeding, whether for a total or partial Taking, or for diminution in the
value of the leasehold or for the fee, shall belong to and be the property of
Landlord; and, in any event, the holder of any mortgage or deed of trust
encumbering the Shopping Center shall have a first priority to the extent of the
unpaid balance of principal and interest on its loan. Without derogating the
rights of Landlord or said lender under the preceding sentence, Tenant shall be
entitled to recover from the condemning authority such compensation as may be
separately awarded by the condemning authority to Tenant or recoverable from the
condemning authority by Tenant in its own right for the taking of trade fixtures
and equipment owned by Tenant and for the expense of removing and relocating its
trade fixtures and equipment, but only in the event that the compensation
awarded to Tenant shall be in addition to and shall not diminish the
compensation awarded to Landlord as provided above.
18.5 CONTINUATION OF LEASE. In the event of a Taking, if Landlord and
Tenant elect not to terminate this Lease as provided above (or have no right to
so terminate), Landlord agrees, at Landlord's cost and expense as soon as
reasonably possible after the Taking, to restore the Premises (to the extent of
the condemnation proceeds) on the land remaining to a complete unit of like
quality and character as existed prior to the Taking and, thereafter, Minimum
Annual Rental shall be reduced on an equitable basis, taking into account the
relative value of the portion taken as compared to the portion remaining, and
Landlord shall be entitled to receive the total award or compensation in such
proceedings.
ARTICLE 19
DEFAULTS BY TENANT
19.1 EVENTS OF DEFAULT. Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental or any other charge payable by Tenant pursuant to this Lease for a period
of five (5) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute), or should Tenant be in default in the prompt and
full performance of any other of its promises, covenants or agreements herein
contained for more than a reasonable time (in no event to exceed ten (10) days)
after written notice thereof from Landlord to Tenant specifying the particulars
of the default (provided, however, any notice shall be in lieu of, and not in
addition to, any notice required under Section 1161 of the Code of Civil
Procedure of California or any similar, superseding statute), or should Tenant
vacate or abandon the Premises, or should Tenant make any general assignment for
the benefit of creditors, or should there be filed against Tenant 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, same is dismissed within sixty (60) days), or should Tenant
institute any proceedings under the Bankruptcy Code or any similar or successor
statute, code or act, or should an appointed trustee or receiver take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease where possession is not restored to Tenant within thirty
(30) days, or should substantially all of Tenant's assets located at the
Premises or Tenant's interest in this Lease be attached or judicially seized
where the seizure is not discharged within thirty (30) days, then Landlord may
treat the occurrence of any one (1) or more of the foregoing events as a breach
of this Lease and, in addition to any or all other rights or remedies of
Landlord by law provided, Landlord shall have the right, at Landlord's option,
without further notice or demand of any kind to Tenant or any other person, (a)
to declare the Term ended and to re-enter and take possession of the Premises
and remove all persons therefrom, or (b) without declaring this Lease terminated
and without terminating Tenant's right to possession, to re-enter the Premises
and occupy the whole or any part for and on account of Tenant and to collect any
unpaid rentals and other charges which have become payable or which may
thereafter become payable, or (c) even though it may have re-entered the
Premises as provided in subparagraph (b) above, to thereafter elect to terminate
this Lease and all of the rights of Tenant in or to the Premises. In any case
in which Landlord shall re-enter and occupy the whole or any part of the
Premises, by unlawful detainer proceedings or otherwise, Landlord, at its
option, may repair, alter, subdivide or change the character of the Premises
from time to time in such manner as Landlord deems best, may relet the Premises
or any part thereof and receive the rents therefor, and none of such actions
shall constitute a termination of this Lease, a release of Tenant from any
liability hereunder, or result in the release or exoneration of any Guarantor.
Landlord shall not be deemed to have terminated this Lease or the liability of
Tenant to pay any Minimum Annual Rental, Percentage Rental, Additional Rental or
other charges later accruing by any re-entry of the Premises pursuant to Section
19.1 (b) above, or by any action in unlawful detainer or otherwise to obtain
possession of the Premises, unless Landlord shall have notified Tenant in
writing that it has so elected to terminate this Lease.
19.2 TERMINATION OF LEASE. Should Landlord elect to terminate this Lease
pursuant to the provisions of Sections 19.1 (a) or (c) above, Landlord may
recover from Tenant, as damages, the following: (a) The worth at the time of
award of any unpaid rental which had been earned at the time of the termination,
plus (b) the worth at the time of award of the amount by which the unpaid rental
which would have been earned after termination until the time of award exceeds
the amount of rental loss Tenant proves could have been reasonably avoided, plus
(c) the worth at the time of award of the amount by which the unpaid rental for
the balance of the Term after the time of award exceeds the amount of rental
loss that Tenant proves could be reasonably avoided, plus (d) any other amounts
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which, in the
ordinary course of things, would be likely to result therefrom including, but
not limited to, any costs or expenses incurred by Landlord in (i) retaking
possession of the Premises, including reasonable attorneys' fees therefor, (ii)
maintaining or preserving the Premises after any default, (iii) preparing the
Premises for reletting to a new tenant, including repairs or alterations to the
Premises, (iv) leasing commissions, or (v) any other costs necessary or
appropriate to relet the Premises, plus (e) at Landlord's election, any other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by the laws of the State of California.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest at the maximum lawful rate. As used in
subparagraph (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
situated nearest to the location of the Shopping Center at the time of award
plus one percent (1%).
19.3 DEFINITION OF RENTAL. For purposes of this Article 19 only, the term
"rental" shall be deemed to be Minimum Annual Rental, Percentage Rental,
Additional Rental and all other sums required to be paid by Tenant pursuant to
the terms of this Lease. All sums, other than Minimum Annual Rental, shall, for
the purpose of calculating any amount due under the provisions of Section
19.2(c) above, be computed on the basis of the average monthly amount accruing
during the immediately preceding sixty (60) month period, except that if it
becomes necessary to compute these sums before the sixty (60) month period has
occurred, then these sums shall be computed on the basis of the average monthly
amount accruing during the shorter period.
19.4 NONMONETARY DEFAULTS. Notwithstanding any other provision of this
Article 19, if the default complained of, other than a default for the payment
of monies, cannot be rectified or cured within the period requiring
rectification or curing, as specified in the written notice relating to the
default, then, as to a default susceptible to being cured, the default shall be
deemed to be rectified or cured if Tenant, within the notice period, shall have
commenced to rectify or cure the default and shall thereafter diligently and
continuously prosecute same to completion.
19.5 ASSIGNMENT OF RENTS AND PROFITS. In the event of default by Tenant
hereunder, Tenant hereby grants to and confers upon Landlord the right, power
and authority, at Landlord's sole option and without affecting any of Landlord's
other rights or remedies hereunder, to collect all rents and profits received by
Tenant as a result of the possession by Tenant of the Premises. Such amounts
shall include, but shall not be limited to, amounts due under sublease, license
or concession arrangements. Upon any such default, Landlord shall have the
right to collect such rents and profits, including those past due and unpaid.
The collection of such rents and profits shall not cure, waive or satisfy any
default or notice of default hereunder.
ARTICLE 20
DEFAULTS BY LANDLORD
20.1 LANDLORD'S LIABILITY. If Landlord fails to perform any of the
covenants, provisions or conditions contained in this Lease on its part to be
performed within thirty (30) days after written notice of default (or if more
than thirty (30) days shall be required because of the nature of the default, if
Landlord shall fail to diligently proceed to commence to cure the default
after written notice), then Landlord shall be liable to Tenant for all damages
sustained by Tenant as a direct result of Landlord's breach and Tenant shall not
be entitled to terminate this Lease as a result thereof. It is expressly
understood and agreed that any judgment against Landlord resulting from any
default or other claim under this Lease shall be satisfied only out of the net
rents, issues, profits and other income actually received from the operation of
the Shopping Center, and Tenant shall have no claim against Landlord (as
Landlord is defined in Section 16.6) or any of Landlord's personal assets for
satisfaction of any judgment with respect to this Lease.
20.2 CURE BY ASSIGNEE. If any part of the Premises is at any time subject
to a first mortgage or a first deed of trust, and this Lease or the rentals due
from Tenant hereunder are assigned by Landlord to a mortgagee, trustee or
beneficiary ("Assignee" for purposes of this Article 20 only) and Tenant is
given written notice of the assignment including the post office address of
Assignee, then Tenant shall also give written notice of any default by Landlord
to Assignee, specifying the default in reasonable detail and affording Assignee
a reasonable opportunity to make performance for and on behalf of Landlord. If
and when Assignee has made performance on behalf of Landlord, the default shall
be deemed cured.
ARTICLE 21
SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE
21.1 SUBORDINATION. Upon written request of Landlord, Landlord's mortgagee,
the beneficiary of a deed of trust of Landlord or a lessor of Landlord,
Tenant will subordinate its rights pursuant to this Lease in writing (a) to the
lien of any mortgage, deed of trust or the interest of any lease in which
Landlord is the lessee (or, at Landlord's option, cause the lien of said
mortgage, deed of trust or the interest of any lease in which Landlord is the
lessee to be subordinated to this Lease), (b) to the Agreements referred to in
Article 25, (c) upon any building hereafter placed upon the land of which the
Premises are a part, and (d) to all advances made or hereafter to be made upon
the security thereof.
21.2 ATTORNMENT. In the event any proceedings are brought for foreclosure,
or in the event of the exercise of the power of sale under any mortgage or deed
of trust made by Landlord encumbering the Premises, or should a lease in which
Landlord is the lessee be terminated, Tenant shall attorn to the purchaser or
lessor under such lease upon any foreclosure, sale or lease termination and
recognize the purchaser or lessor as Landlord under this Lease, provided that
the purchaser or lessor shall acquire and accept the Premises subject to this
Lease.
21.3 TENANT'S CERTIFICATE. Tenant agrees, upon not less than ten (10) days
prior notice by Landlord, to execute, acknowledge and deliver to Landlord, a
statement in writing in substantially the form of Exhibit "F" hereto or in such
other form as may be required by Landlord's mortgagee or beneficiary ("Tenant's
Certificate"). It is intended that any Tenant's Certificate delivered pursuant
hereto may be relied upon by Landlord, any prospective tenant of the Premises,
any current or prospective mortgagee or beneficiary, or by any other party who
may reasonably rely on such statement. At Landlord's option, the failure to
deliver such Tenant's Certificate within such time shall be a default under this
Lease by Tenant, and it shall be conclusively presumed, and shall constitute a
representation and warranty by Tenant, that (i) this Lease is in full force and
effect without modification, and (ii) Landlord is not in breach or default of
any of its obligations under the Lease.
ARTICLE 22
SECURITY DEPOSIT
22.1 SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit
with Landlord the sum specified in Section 1.19 ("Security Deposit"). The
Security Deposit shall be held by Landlord, without obligation or liability for
payment of interest thereon, as security for the faithful performance by Tenant
of all of the terms of this Lease to be observed and performed by Tenant.
Landlord shall not be required to keep the Security Deposit separate from its
general funds.
22.2 APPLICATION OF SECURITY DEPOSIT. Should Tenant be in default of any
provision of this Lease at any time during the Term hereof, Landlord may, at its
option and without prejudice to any other remedy which Landlord may have at law
or in equity, apply the Security Deposit or any portion thereof same toward
payment of Minimum Annual Rental, Percentage Rental, Additional Rental or to any
loss or damage sustained by Landlord due to the default on the part of Tenant.
Within five (5) days after written demand by Landlord, Tenant shall deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to the
original sum deposited, and Tenant's failure to do so shall constitute a
material default under this Lease.
22.3 REFUND. Should Tenant perform all of its obligations under this Lease,
the Security Deposit or any balance thereof then remaining shall be returned to
Tenant within sixty (60) days of the expiration of the Term or the earlier
termination of this Lease. Tenant hereby expressly waives the benefit of any
statutory right to the return of any unused portion of the Security Deposit
earlier than sixty (60) days after the expiration of the Term or earlier
termination of this Lease.
22.4 SALE OF PREMISES. Landlord may deliver the Security Deposit to the
purchaser of Landlord's interest in the Premises and Landlord shall then be
discharged from any further liability with respect to the Security Deposit.
This Section 22.4 shall also apply to any subsequent transfer of Landlord's
interest in the Premises.
ARTICLE 23
QUIET ENJOYMENT
Upon Tenant's payment of Minimum Annual Rental, Percentage Rental and
Additional Rental and its observation and performance of all of the covenants,
terms and conditions of this Lease to be observed and performed by Tenant,
Tenant shall peaceably and quietly hold and enjoy the Premises from and after
delivery thereof to Tenant; subject, however, to (a) the rights of the parties
as set forth in this Lease, (b) any mortgage or deed of trust to which this
Lease is subordinate, (c) any ground or underlying leases, agreements and
encumbrances to which this Lease is subordinate, (d) all matters of record, and
(e) disturbances, odors and similar inconveniences which are commonly associated
with shopping centers of the type and size of the Shopping Center and/or with
tenants located in such shopping centers.
ARTICLE 24
NOTICES
Every notice, demand or request (collectively "Notice") required hereunder
or by law to be given by either party to the other shall be in writing. Every
provision of this Lease which provides that either party shall notify the other
of any particular matter shall be governed by this Section. Notices shall be
given by personal service or by United States certified or registered mail,
postage prepaid, return receipt requested, or by telegram, mailgram or same-day
or overnight private courier, addressed to the party to be served at the address
indicated in Section 1.22 or such other address as the party to be served may
from time to time designate in a Notice to the other party. Notice personally
served shall be effective when delivered to the party upon whom such Notice is
served. If served by registered or certified mail, Notice shall be conclusively
deemed served on the date shown on the return receipt, but if delivery is
refused or the Notice is unclaimed, Notice shall conclusively be deemed given
forty eight (48) hours after mailing. If served by telegram, mailgram or
private courier, Notice to the addressee shall be conclusively deemed given as
confirmed by the telegraphic agency or private courier service making delivery.
Copies of any Notice shall be sent to the addresses, if any, designated for
service of copies of Notices in Section 1.22; but the inadvertent failure to
serve a copy of a Notice, either to the address so designated or in the manner
provided in this Section, shall not render service of Notice invalid if the
original Notice is served in accordance with this Section. Notice given by
facsimile or telecopy shall not be effective unless receipt of such Notice is
acknowledged by the recipient in writing, in which case the effective date of
such Notice shall be the date of such written acknowledgement.
ARTICLE 25
TITLE OF LANDLORD
Landlord covenants that, as of the date of this Lease, there are no liens
upon its estate other than (a) covenants, conditions, restrictions, easements,
ground leases, mortgages or deeds of trust (collectively, "Agreements"); (b)
liens and encumbrances which do not prevent Tenant from using the Premises as
permitted by this Lease; (c) the effect of any zoning laws of the city, county
and state where the Shopping Center is situated, and (d) general and special
taxes not delinquent. Tenant agrees that (i) as to its leasehold estate, it and
all persons in possession or holding under it will conform to and will not
violate the terms of the Agreements or any matters of record, and (ii) this
Lease is subordinate to the Agreements and any amendments or modifications
thereto; provided, however, if the Agreements are not of record as of the date
of this Lease, then this Lease shall automatically become subordinate to the
Agreements upon recordation so long as the Agreements do not prevent Tenant from
using the Premises for the use set forth in Section 1.14. Tenant further agrees
to execute and return to Landlord, within ten (10) days of written demand by
Landlord, an agreement in recordable form subordinating this Lease to the
Agreements.
ARTICLE 26
SHOPPING CENTER REMODELING
At any time during the Term, Landlord may remodel or expand, in any manner,
the existing Shopping Center, which work may include the addition of shops
and/or the addition of new buildings to the Shopping Center (collectively,
"Remodeled Center"). If Landlord deems it necessary for construction personnel
to enter the Premises in order to construct the Remodeled Center, Landlord shall
give Tenant no less than fifteen (15) days' prior notice and Tenant shall allow
such entry. Landlord shall use reasonable efforts to complete the work
affecting the Premises in an efficient manner so as not to interfere
unreasonably with Tenant's business. Tenant shall not be entitled to any
damages or to reduction in Minimum Annual Rental, Percentage Rental or
Additional Rental for any interference or interruption of Tenant's business upon
the Premises or for any inconvenience caused by such construction work.
Landlord shall have the right to use a portion of the Premises to accommodate
any structures required for the Remodeled Center. If, as a result of Landlord
utilizing a portion of the Premises for such purpose, there is a permanent
increase or decrease in the Floor Area of the Premises of one percent (1%) or
more, there shall be a proportionate adjustment of Minimum Annual Rental and all
other charges based on Floor Area. During the course of construction, Tenant
shall continue to pay Minimum Annual Rental, Percentage Rental and Additional
Rental.
ARTICLE 27
MISCELLANEOUS
27.1 WAIVER. Any waiver by either party of a breach by the other party of a
covenant of this Lease shall not be construed as a waiver of a subsequent
breach of the same covenant. The consent or approval by either party to
anything requiring such party's consent or approval shall not be deemed a waiver
of such party's right to withhold consent or approval of any subsequent similar
act. No breach of a covenant of this Lease shall be deemed to have been waived
by the other party unless the waiver is in writing and is signed by such party.
27.2 RIGHTS CUMULATIVE. Except as provided herein to the contrary, and
subject to the specific limitations contained in Article 20, the respective
rights and remedies of the parties specified in this Lease shall be cumulative
and in addition to any rights and remedies not specified in this Lease.
27.3 ENTIRE AGREEMENT. It is understood that there are no oral or written
agreements or representations between the parties hereto affecting this Lease
and this Lease supersedes and cancels any and all previous negotiations,
arrangements, representations, brochures, agreements and understandings, if any,
between Landlord and Tenant. Confirming the understandings and agreements
described in this Section 27.3, Tenant agrees to execute and deliver to Landlord
Tenant's Estoppel in the form and within the content of Exhibit G attached
hereto ("Tenant's Estoppel") concurrently with Tenant's execution and delivery
of this Lease.
27.4 NO REPRESENTATION. Landlord reserves the absolute right to effect such
other tenancies in the Shopping Center as Landlord, in the exercise of its sole
business judgment, shall determine to best promote the interests of the Shopping
Center. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or number of tenants shall, during the Term of this Lease,
occupy any space in the Shopping Center.
27.5 AMENDMENTS IN WRITING. No provision of this Lease may be amended
except by an agreement in writing signed by Landlord and Tenant.
27.6 NO PRINCIPAL/AGENT RELATIONSHIP. Nothing contained in this Lease shall
be construed as creating the relationship of principal and agent or of
partnership or joint venture between Landlord and Tenant.
27.7 LAWS OF CALIFORNIA TO GOVERN. This Lease shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to the choice of law provisions thereof.
27.8 SEVERABILITY. If any provision of this Lease or the application of
such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.
27.9 SUCCESSORS. All rights and obligations of Landlord and Tenant under
this Lease shall extend to and bind the respective heirs, executors,
administrators and the permitted concessionaires, successors, subtenants and
assignees of the parties. If there is more than one (1) Tenant hereunder, each
shall be bound jointly and severally by the terms, covenants and agreements
contained in this Lease.
27.10 TIME OF THE ESSENCE. Except for the delivery of possession of the
Premises to Tenant, time is of the essence of all provisions of this Lease of
which time is an element.
27.11 WARRANTY OF AUTHORITY. If Tenant is a corporation or partnership,
each individual executing this Lease on behalf of the corporation or partnership
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of the corporation or partnership and that this Lease is
binding upon the corporation or partnership. If Tenant is a corporation, Tenant
hereby covenants and warrants that (a) Tenant is a duly qualified corporation
and all steps have been taken prior to the date hereof to qualify Tenant to do
business in the State of California, and (b) all franchise and corporate taxes
have been paid to date.
27.12 MORTGAGE CHANGES. Tenant shall not unreasonably withhold its consent
to changes or amendments to this Lease requested by the holder of a mortgage or
deed of trust or such similar financing instrument encumbering Landlord's fee
interest in the Premises so long as such changes do not materially alter the
economic terms of this Lease or materially diminish the rights, or materially
increase the obligations, of Tenant.
27.13 WAIVER OF RIGHTS OF REDEMPTION. Tenant waives any and all rights of
redemption granted under any present and future laws in the event Landlord
obtains the right to possession of the Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease or otherwise.
27.14 NO IMPLICATION OF EXCLUSIVE USE. Nothing contained in this Lease
shall be deemed to give Tenant an express or implied exclusive right to operate
any particular type of business in the Shopping Center.
27.15 BROKERS. Tenant represents and warrants that it has not had any
dealings with any realtors, brokers or agents in connection with the negotiation
of this Lease, except as may be specifically set forth in Section 1.21, and
agrees to pay any realtors, brokers or agents not referenced in Section 1.21 and
to hold Landlord harmless from the failure to pay any realtors, brokers or
agents and from any cost, expense or liability for any compensation, commission
or charges claimed by any other realtors, brokers or agents claiming by, through
or on behalf of Tenant with respect to this Lease and/or the negotiation hereof.
27.16 NO RECORDING. Tenant shall not record this Lease or any short form
memorandum of this Lease.
27.17 TRANSFER OF LANDLORD'S INTEREST. Should Landlord sell, exchange or
assign this Lease (other than a conditional assignment as security for a loan),
then Landlord, as transferor, shall be relieved of any and all obligations on
the part of Landlord accruing under this Lease from and after the date of such
transfer provided that Landlord's successor in interest shall assume such
obligations from and after such date. No holder of a mortgage or deed of trust
to which this Lease is subordinate shall be responsible in connection with the
Security Deposit unless the mortgagee or holder of such deed of trust actually
receives the Security Deposit.
27.18 INTEREST ON PAST DUE OBLIGATIONS. Except where another rate of
interest is specifically provided for in this Lease, any amount due from either
party to the other under this Lease which is not paid when due, shall bear
interest at the rate per annum ("Interest Rate") equal to the prime interest
rate charged by Wells Fargo Bank plus two (2) percentage points (but in no event
to exceed the maximum lawful rate) from the date ten (10) days after such amount
was originally due to and including the date of payment.
27.19 RIGHT TO SHOW PREMISES. During the last one hundred twenty (120) days
of the Term or earlier termination of this Lease, Landlord shall have the right
to go upon the Premises to show same to prospective tenants or purchasers and to
post appropriate signs, during normal business hours and upon reasonable notice
to Tenant.
27.20 LIENS. Tenant shall pay all costs for work performed by or on account
of it and shall keep the Premises and the Shopping Center free and clear of
mechanics' liens or any other liens. Tenant shall give Landlord immediate
notice of any lien filed against the Premises or the Shopping Center as a result
of any work of improvement performed by or on behalf of Tenant. Tenant shall
immediately cause any lien to be discharged or removed of record by either
paying the amount thereof or recording a statutory lien release bond in an
amount equal to one hundred fifty percent (150%) of the amount of said lien. If
Tenant fails to do so, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies available to Landlord under this
Lease, to either pay and discharge such lien, without regard to the validity
thereof, or procure and cause to be recorded a statutory lien release bond and
to (a) collect from Tenant as Additional Rental; or (b) deduct from any Tenant
Improvement Allowance or any other amount payable by Landlord to Tenant under
this Lease (i) all costs incurred by Landlord in paying and discharging such
lien, or in procuring such bond, and (ii) all expenses incurred by Landlord in
connection with such lien, including attorneys' fees and costs, recording fees
and administrative costs and expenses.
27.21 INDEX. Wherever in this Lease there is a reference to the "Index",
such reference shall refer to the following:
(a) The "Index", as used in this Lease, shall be deemed to mean The United
States Department of Labor, Bureau of Labor Statistics Consumer Price Index for
Urban Wage Earners and Clerical Workers, Los Angeles-Riverside-Orange County,
California Average, Subgroup "All Items", (1982-1984 = 100). If at any time
there shall not exist the Index in the format recited herein, Landlord shall
substitute any official index published by the Bureau of Labor Statistics or
successor or similar governmental agency as may then be in existence and shall,
in Landlord's opinion, be most nearly equivalent thereto.
(b) The sum to be increased in accordance with the provisions of the Index
shall be increased using the following formula: such sum shall be increased by
a percentage equal to the percentage increase, if any, in the Index published
for the Comparison Month over the Index published for the Base Month; provided,
however, in no event shall said sum be less than that which was due immediately
preceding the date of adjustment.
27.22 FAILURE TO SUBSTANTIALLY COMPLETE PREMISES. Notwithstanding anything
to the contrary contained herein, (a) if for any reason whatsoever Substantial
Completion of the Premises has not occurred on or before the last day of the
twenty-fourth (24th) month following the Date of Lease, or (b) if Landlord
should at any time postpone or abandon the development or construction of the
Shopping Center or that portion of the Shopping Center in which the Premises are
located, then either party may elect to terminate this Lease by giving
thirty (30) days' notice of such election to the other party. If such notice is
given, this Lease and the rights and obligations of the parties pursuant to this
Lease shall cease and terminate without the need for the execution of any
further or other instrument but, if Landlord shall request, Tenant shall execute
an instrument in recordable form confirming the termination of this Lease and of
Tenant's release and surrender all right, title and interest in and to the
Premises under this Lease or otherwise. If this Lease is terminated pursuant to
this Section 27.22, neither party shall have any further or additional rights,
remedies, claims or liability arising out of this Lease or the termination of
this Lease.
27.23 INDEPENDENT CONTRACTORS. Whenever in this Lease it provides that
Landlord shall perform certain work or services, Landlord shall be entitled to
contract with an independent contractor to perform said work or services or may
provide the services itself.
27.24 TRADE FIXTURES, PERSONAL PROPERTY AND ALTERATIONS. Upon the
expira-tion or earlier termination of the Term, Tenant shall remove from the
Premises all of Tenant's trade fixtures, furniture, equipment, signs,
improvements, additions and Alterations to the extent such items are not
permanently affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to leave the Premises
in a neat and clean condition. Upon the removal of Tenant's exterior signage,
Tenant shall, at its sole cost, restore the building fascia to its original
condition. Tenant may encumber or finance its movable fixtures and equipment
installed in the Premises, and no such encumbrance or financing shall be deemed
an Assignment, provided such encumbrance or financing creates a security
interest in such movable fixtures and equipment, only, and confers no interest
in the Premises. All trade fixtures, signs and other personal property
installed in or attached to the Premises by Tenant must be new when so installed
or attached.
27.25 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
(except financial) beyond the reasonable control of the party obligated to
perform, shall excuse the performance by that party for a period equal to the
prevention, delay or stoppage, except the obligations imposed with regard to
Minimum Annual Rental, Percentage Rental and Additional Rental to be paid by
Tenant pursuant to this Lease; provided the party prevented, delayed or stopped
shall have given the other party written notice thereof within thirty (30) days
of such event causing the prevention, delay or stoppage. Notwithstanding
anything to the contrary contained in this Section 27.25, in the event any work
performed by Tenant or Tenant's contractor results in a strike, lockout and/or
labor dispute, the strike, lockout and/or labor dispute shall not excuse the
performance by Tenant of the provisions of this Lease.
27.26 TERMINATION AND HOLDING OVER. This Lease shall terminate without
further notice upon the expiration of the Term. Tenant shall have no right to
extend or renew this Lease upon the expiration of the Term. Upon the expiration
or earlier termination of the Term, Tenant shall peaceably and quietly surrender
the Premises broom-clean and in the same condition (including, at Landlord's
option, the demolition and removal of any improvements made by Tenant to the
Premises as part of Tenant's Work or otherwise) as the Premises were in upon
delivery of possession of same to Tenant by Landlord, reasonable wear and tear
and any damage to the Premises which Tenant is not required to repair pursuant
to Article 17 excepted. Should Tenant hold over in the Premises beyond the
expiration or earlier termination of this Lease, the holding over shall not
constitute a renewal or extension of this Lease or give Tenant any rights under
this Lease. In such event, Landlord may, in its sole discretion, treat Tenant
as a tenant at will, subject to all of the terms and conditions in this Lease,
except that Minimum Annual Rental shall be an amount equal to the greater of (a)
one and one-half (1-1/2) times the sum of Minimum Annual Rental and Percentage
Rental which was payable by Tenant for the twelve (12) month period immediately
preceding the expiration or earlier termination of this Lease, or (b) the then
currently scheduled rental for comparable space in the Shopping Center, as the
same is reasonably determined in Landlord's sole business judgment. In the
event Tenant fails to surrender the Premises upon the expiration or earlier
termination of this Lease, Tenant shall indemnify and hold Landlord harmless
from all loss or liability which may accrue therefrom including, without
limitation, any claims made by any succeeding tenant founded on or resulting
from Tenant's failure to surrender. Acceptance by Landlord of any Minimum
Annual Rental, Percentage Rental or Additional Rental after the expiration or
earlier termination of this Lease shall not constitute a consent to a holdover
hereunder, constitute acceptance of Tenant as a tenant at will, or result in a
renewal of this Lease.
27.27 ATTORNEYS' FEES AND PROCESSING CHARGES. In the event that, at any
time after the date of this Lease, either Landlord or Tenant shall institute any
action or proceeding against the other relating to the provisions of this Lease
or any default hereunder, the party not prevailing in such action or proceeding
shall reimburse the prevailing party for its actual attorneys' fees, and all
fees, costs and expenses incurred in connection with such action or proceeding,
including, without limitation, any post-judgment fees, costs or expenses
incurred on any appeal or in collection of any judgment.
If at the request of Tenant or in connection with any such transaction
initiated by Tenant, Landlord shall prepare, review or execute any amendment,
modification, consent to Assignment, approval, fixture subordination, waiver or
other agreement or instrument relating to this Lease or the Premises, or any
Extension Amendment or New Lease pursuant to Section 28.3 of this Lease if
Tenant has been granted an option to extend the Term, Tenant agrees to pay to
Landlord, as Additional Rental, (i) a reasonable processing charge in accordance
with the schedule of charges from time to time established by Landlord, and (ii)
Landlord's reasonable attorneys' fees and expenses incurred in connection with
the evaluation and documentation thereof. Landlord may, at its option, require
the payment of all or a portion of such charges and/or fees in advance.
27.28 SERVICE CHARGE. Tenant acknowledges that Tenant's failure to submit
any required document, certificate, report, statement of Gross Sales, insurance
policy or certificate as and when required in this Lease will cause Landlord to
incur additional costs of administration, and agrees that in the event Tenant
fails to submit any required document, certificate, report, statement of Gross
Sales, insurance policy or certificate as and when required in this Lease,
Tenant shall pay to Landlord, as Additional Rental, a "Service Charge" in the
amount of One Hundred Dollars ($100.00) for each week or portion thereof that
said failure continues. Tenant agrees that such Service Charge shall not
constitute damages, and that neither Tenant's payment of such Service Charge nor
Landlord's acceptance of such payment shall result in a cure of any default
under this Lease, or waiver of any default under this Lease by Landlord.
27.29 HAZARDOUS MATERIALS. Tenant, at its sole cost and expense, shall
comply with all laws relating to the storage, use, handling and disposal of
hazardous, toxic or radioactive matter including, without limitation, those
materials identified in Section 25501(k) of the California Health and Safety
Code, as amended from time to time (collectively, "Hazardous Materials"). In
the event Tenant intends or does store, use, handle or dispose of any Hazardous
Materials, Tenant shall notify Landlord in writing at least ten (10) days prior
to their first appearance on the Premises and Tenant's failure to do so shall
constitute a default under the Lease. Such notification shall include
identification (type and common name) and quantities of all Hazardous Materials,
or any combination thereof, which are or are intended to be stored, used,
handled or disposed of on, under or about the Premises. Landlord may, at any
time or from time to time, require Tenant to conduct monitoring or evaluation
activities with respect to Hazardous Materials on the Premises, at Landlord's
sole discretion, and at Tenant's sole cost and expense, performed by
environmental specialists approved in advance by Landlord. Such monitoring
and/or evaluation activity may include, without limitation, soil testing, air
testing, production waste stream analysis, and if necessary, in Landlord's sole
discretion, groundwater testing. In the event Tenant intends to store, use,
handle or dispose of Hazardous Materials, Tenant shall complete, execute and
deliver to Landlord an Environmental Questionnaire and Disclosure Statement, in
Landlord's then current form ("Environmental Questionnaire"), prior to the
execution of this Lease or ten (10) days prior to the first appearance of the
Hazardous Materials on the Premises. The completed Environmental Questionnaire
shall be deemed incorporated into this Lease for all purposes, and Landlord
shall be entitled to rely fully on the information contained therein. Tenant
shall update and resubmit to Landlord the Environmental Questionnaire
periodically as required by Landlord and immediately if materials changes occur
in the nature or content of Hazardous Materials being stored, used, handled or
disposed of on the Premises.
Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with, true, correct, complete and legible copies of, any environmental
reports or notices relating to the Premises which may be filed or prepared by or
on behalf of, or delivered to or served upon, Tenant, including but not limited
to reports filed pursuant to any self-reporting requirements, reports filed
pursuant to any applicable laws or this Lease, all permit applications, permits,
monitoring reports, workplace exposure and community exposure warnings or
notices and all correspondence and other documents associated with actual or
threatened investigation or enforcement action by any governmental entity or
third party. In addition, Tenant shall promptly notify Landlord of, and shall
promptly provide Landlord with, true, correct, complete and legible copies of
environmental items relating to the Premises which may be filed or prepared by
or on behalf of, or delivered to or served upon, Tenant. In the event of a
release or threatened release of any Hazardous Material on the Premises or to
the environment from the Premises, Tenant shall promptly notify Landlord and
provide Landlord with copies of all reports and correspondence with or from all
governmental agencies, authorities or any other persons relating to such release
or threatened release.
"Landlord" as used in this Paragraph shall have the same meaning as in Section
16.6. Tenant shall be solely responsible for, shall pay for, defend (with an
attorney approved by Landlord), indemnify and hold Landlord harmless against and
from all claims, judgments, liabilities, penalties, costs and expenses,
including attorneys' fees and costs arising out of or connected with its
storage, use, handling or disposal of Hazardous Materials on the Premises. In
addition,, except with respect to any Hazardous Materials installed in or placed
on the Premises by Landlord or any agent, employee or contractor of Landlord,
Tenant shall be solely responsible for, shall pay for, defend, indemnify and
hold Landlord, and the Premises harmless against and from all claims,
judgements, liabilities, penalties, liens, costs and expenses, including
attorneys' fees and costs, arising out of or connected with the removal,
clean-up and/or restoration work and materials necessary to return the Premises,
and any other property of whatever nature, to their condition existing prior to
the appearance of the Hazardous Materials on the Premises. Tenant's obligations
under this Section 27.29 shall survive the expiration or earlier termination of
the Lease.
27.30 WAIVER OF TRIAL BY JURY. Landlord and Tenant desire and intend that
any disputes arising between them with respect to or in connection with this
Lease be subject to expeditious resolution in a court trial without a jury.
Therefore, Landlord and Tenant each hereby waive the right to a trial by jury of
any cause of action, claim, counterclaim or cross-complaint in any action,
proceeding or other hearing brought by either Landlord against Tenant or Tenant
against Landlord on any matter whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises or any claim of injury or damage, or the
enforcement of any remedy under any law, statute, or regulation, emergency or
otherwise, now or hereafter in effect.
ARTICLE 28
OPTION
28.1 OPTION TO EXTEND. Provided the following criteria are met, Tenant
shall have the right to extend the Term for the number of months set forth in
Section 1.8(a):
(a) Tenant has not been in default (including, but not limited to, any
default cured by payment or performance following legal action by Landlord) and
no event has occurred which, given the passage of time or the giving of notice
or both, could be declared a default under this Lease during the Term;
(b) Tenant has reached Gross Sales during the ___________ month period prior
to the month in which the "Extension Notice", as defined below, is delivered to
Landlord such that Tenant has paid Percentage Rental to Landlord for such
________________ month period;
(c) Tenant is the original signatory of this Lease and has not sublet any
portion of the Premises except for any Permitted Assignment as defined in
Section 14.4; and
(d) Landlord and Tenant are able to reach agreement, within ninety (90) days
of the date Landlord receives the Extension Notice, for remodel of the Premises
to the extent deemed necessary by Landlord, which remodel shall be at Tenant's
cost. Landlord and Tenant shall use reasonable efforts and act in good faith in
order to mutually agree prior to the end of the ninety (90) day period on the
scope of the remodel.
28.2 EXERCISE OF OPTION. Tenant may exercise its right to so extend the
Term only by delivering written notice to Landlord of Tenant's desire to so
extend the Term ("Extension Notice") no later than one hundred eighty (180) days
nor earlier than two hundred forty (240) days prior to expiration of the
Term ("Extension Notice Period"). The Extension Notice shall be accompanied by
any monthly sales report(s) required by this Lease to be delivered to Landlord
for the period specified in Section 28.1(b), if same has not already been
delivered to Landlord.
28.3 NEW LEASE OR EXTENSION AMENDMENT.
(a) Within thirty (30) days of the date Landlord and Tenant reach agreement
as to the remodel of the Premises, and provided all of the other criteria in
Section 28.1 have been met, Landlord shall prepare and deliver to Tenant at
least two (2) counterparts of an amendment to this Lease ("Extension Amendment")
or, if Landlord is then utilizing a form of lease different from this
Lease, Landlord shall deliver to Tenant a new lease ("New Lease"). The
Extension Amendment or New Lease shall provide for an increase in Minimum Annual
Rental effective upon the commencement of the option Term to be determined at
Landlord's option in one of the following manners:
(i) Increase to the fair market rental for the Premises;
(ii) Increase by an amount equal to the sum of Minimum Annual Rental plus
Percentage Rental required to have been paid by Tenant pursuant to this Lease
during the twelve (12) month period preceding the month in which the Extension
Notice is delivered to Landlord; or
(iii) Increase to an amount equal to the Minimum Annual Rental payable as of
the Commencement Date increased by an amount reflecting the increase in the cost
of living in accordance with the "Index" as defined in Section 27.21 using as
the Base Month the month ninety (90) days prior to the Commencement Date, and
using as the Comparison Month the month ninety (90) days prior to the expiration
date of the initial Term as specified in Section 1.8.
During the option Term, the Minimum Annual Rental shall continue to be adjusted
annually as provided in Section 7.2 of this Lease.
(