EXHIBIT 10.27
LEASE
THIS LEASE, dated for reference purposes on the 17th day of July, 1995, is
entered into by and between VAT Partners II, a California general partnership,
hereinafter referred to as "Landlord," and 99 Only Stores, a California
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corporation, hereinafter referred to as "Tenant."
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WITNESSETH:
In consideration of the mutual covenants and agreements herein contained
and of the due and faithful performance of each and all of the terms, covenants
and conditions hereof to be performed, the parties agree as follows:
1. PREMISES.
1.1 The Premises and the Shopping Center. Landlord hereby leases to
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Tenant and Tenant hereby leases from Landlord, for the term and at
the rental and upon the covenants and conditions set forth herein,
that portion of an existing building ("Building") consisting of
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approximately 21,240 square feet and the land on which it is
situated (collectively, the "Premises"), together with nonexclusive
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rights in all easements, rights and appurtenances relating thereto
including, without limitation, those contained in the Declaration
(defined at Paragraph 1.3) (collectively, the "Easements") and
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subject only to Permitted Liens (as defined in Section 22 below).
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The Premises are part of a shopping center located at the northwest
corner of Sepulveda Boulevard and Vermont Avenue in Torrance,
California (the "Shopping Center"). The Shopping Center is legally
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described upon Exhibit A attached hereto and made a part hereof. The
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Premises are located within the Shopping Center substantially as
shown on the site plan (the "Site Plan") attached hereto as Exhibit
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B and made a part hereof.
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1.2 Ground Floor Area of the Premises, the Building and the Shopping
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Center. Landlord represents that, as of the date of this Lease, for
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purposes of calculating any charges based on the square feet of a
building area in question, (i) the Building shall be deemed to
contain forty-six thousand eight hundred thirty-two (46,832) square
feet of ground floor area, (ii) the ground floor area of all
building area located in the Shopping Center shall be deemed to
contain forty-eight thousand thirty-two (48,032) square feet, and
(iii) the ground floor area of the Premises shall be deemed to be
twenty-one thousand two hundred and forty (21,240) square feet. The
ground floor area of the Premises, the Building or the other
buildings located within the Shopping Center shall be calculated by
measuring from the exterior of exterior walls and the middle of any
common walls. The computation of ground floor area shall exclude
mezzanines and the corridor area of the Building, but shall include
all floors of any multi-store building and all outdoor sales, garden
center or nursery or similar area used exclusively by one occupant
or tenant of the Shopping Center for commercial purposes (except
that non-building areas which are part of the Common Area (as
defined in Paragraph 5.1 below) and which are used on an occasional
basis for sales or promotions shall be excluded from the computation
of total floor area).
In the event of a change in the number of square feet of ground floor area
of the Premises, the Building or the buildings located within the Shopping
Center, all prorations based on square feet shall be revised accordingly so that
Tenant's pro rata share of a cost will be based on the ratio that the ground
floor area of the Premises bears to the ground floor area of the building or the
buildings located in the Shopping Center which exist from time to time.
1.3 The Declaration. As of the date this Lease is fully executed, the
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Shopping Center is subject to that certain Declaration of
Establishment of Protective Covenants, Conditions and Restrictions
and in the Alternate for Grants of Easements dated August 14, 1974
and recorded January 26, 1976 as Instrument No. 534 in the official
records of the County of Los Angeles, State of California, as such
document was subsequently amended by that certain Amendment to
Declaration and Establishment of Covenants, Conditions and
Restrictions dated March 4, 1976. Tenant acknowledges that Landlord
is currently negotiating with McDonald's a new Declaration and
Establishment of Covenants, Conditions and Restrictions to replace
the Declaration. Any such new Declaration shall be subject to
Tenant's approval, which shall not unreasonably be withheld or
delayed.
(a) Landlord represents and warrants as of the date this
Lease is fully executed that (i) to Landlord's
knowledge, Landlord is not in breach or default of the
Declaration nor do there exist any events,
circumstances, acts or omissions which, whether with or
without the passage of time or the giving of notice or
both, would constitute a default or breach under the
Declaration by Landlord, and (ii) other than the
Declaration, the PNS Stores lease and the Pioneer
Chicken lease, there are no agreements affecting the
Common Area. Landlord further represents and warrants
that, as of the date this Lease is fully executed, the
terms of the PNS Stores lease and the Pioneer Chicken
lease do not conflict with the terms of this Lease, and
Landlord agrees not to modify or amend such leases so as
to conflict with this Lease. Landlord shall pay when due
all sums required of it under the Declaration and shall
perform all other obligations of Landlord under the
Declaration so as to avoid any default under, or
termination of, the Declaration. Landlord shall not
directly or indirectly allow the Declaration to expire
or consent to a voluntary termination of, or exercise
any option to cancel or terminate, the Declaration
except in connection with a new Declaration as described
in Paragraph 1.3 above. Landlord represents and warrants
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that it has not as of the execution of this Lease, and
hereby agrees that Landlord shall
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not, consent to or approve any amendment or modification
of the Declaration without the prior written consent of
Tenant. Without first obtaining written instructions
from Tenant, Landlord shall not consent or approve under
the Declaration any proposed conduct of any current or
potential occupant of the Shopping Center or any portion
thereof, or any other matter whatsoever. Landlord
represents and warrants that Landlord has disclosed in
writing to Tenant all consents or approvals given under
the Declaration to any current, past or potential
occupant of the Shopping Center or any portion thereof,
or any other matter whatsoever. Tenant shall be deemed
to have instructed Landlord to withhold such consent or
approval in the event Tenant does not provide Landlord
with instructions within fourteen (14) days after
receipt of Landlord's notice seeking Tenant's
instructions. Landlord agrees to immediately provide to
Tenant a copy of any notice served by or upon Landlord
under the Declaration.
Notwithstanding the foregoing, if a third party unaffiliated with Landlord
has a commercially reasonable need to amend the Declaration, Landlord may amend
the Declaration, provided that: (i) Tenant's direct and indirect rights and
benefits relating. to the Common Area as set forth in Paragraph 5.2(b) shall
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not be affected thereby; (ii) Tenant shall continue to have a non-exclusive
easement over all portions of the Common Area as provided in Paragraph 5.2(a)
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(iii) the construction of any building within the Shopping Center shall comply
with Paragraph 5.2(b) of this Lease; (iv) the terms of Sections 4, 5 and 6 of
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the Declaration (or substantially similar terms) shall be incorporated into any
new declaration of covenants, conditions and restrictions; (v) Tenant's rights
to continue to maintain or to install any signs as set forth in Section 11 shall
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not be affected thereby; (vi) there shall be no change in the maintenance
obligations of Landlord or Tenant as a result thereof; and (vii) there shall be
no change in any use restrictions set forth in this Lease. Landlord shall take
all reasonably necessary actions (including bringing suit and seeking injunctive
relief) to cause all third parties to comply with the Declaration.
(b) In the event Landlord shall fail to (i) pay timely any
sum due under the Declaration, or (ii) perform any other
obligation of Landlord under the Declaration and
Landlord's failure to so perform constitutes a default
by Landlord under this Lease, then in either such event,
Landlord shall be in default of this Lease and Tenant
may, at its option, without waiving any claim for
damages or other remedy available to it, attempt to cure
such failure on account of Landlord, and Landlord agrees
to reimburse Tenant for any amount incurred by Tenant as
a result of Landlord's default or for any contractual
liability incurred on behalf of Landlord in accordance
with Paragraph 18 hereto.
(c) In the event Landlord is in default under this Lease
with respect to a matter related to the operation or
maintenance of the Shopping Center pursuant to the
Declaration, Landlord shall be deemed to have assigned
to Tenant during any such period of default any and all
rights and benefits which Landlord has or may hereafter
acquire under the Declaration relating to the operation
or maintenance of the Shopping Center or any portion
thereof effective upon such default (without need for
any further action by Landlord or Tenant) including, but
not limited to, the right to deliver default notices on
behalf of Landlord, the right to cure any default by any
of the owners or occupants of the Shopping Center under
the Declaration, and the right to seek reimbursement
from such defaulting owners and/or occupants for all
costs and expenses incurred by Tenant in curing such
default.
1.4 Acceptance of Premises by Tenant.
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SUBJECT TO (I) LANDLORD'S OBLIGATIONS TO PERFORM LANDLORD'S WORK IN ACCORDANCE
WITH PARAGRAPH 3.1, (II) LANDLORD'S OBLIGATION TO PERFORM ANY MAINTENANCE,
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REPAIR OR RESTORATION WORK TO THE PREMISES AND THE COMMON AREA AS REQUIRED BY
THIS LEASE, (III) LANDLORD'S OBLIGATION TO PERFORM ANY WORK WITH RESPECT TO
COMPLIANCE WITH LAWS; (IV) LANDLORD'S OBLIGATIONS TO CONDUCT ANY HAZARDOUS
MATERIALS ABATEMENT; (V) LANDLORD'S OBLIGATIONS TO CURE ANY DEFECTS IN THE
PREMISES AND/OR THE COMMON AREA; AND (VI) LANDLORD'S REPRESENTATIONS AND
WARRANTIES, TENANT SHALL ACCEPT POSSESSION OF THE PREMISES IN AN "AS IS"
CONDITION WITH "ALL FAULTS" AS TO ALL MATTERS, INCLUDING THE FOLLOWING: TITLE;
PHYSICAL CONDITION; SIZE OR DIMENSIONS; FEASIBILITY, DESIRABILITY OR
CONVERTIBILITY OF THE PREMISES INTO ANY PARTICULAR USE; THE ZONING, BUILDING AND
LAND USE RESTRICTIONS APPLICABLE WITH RESPECT TO THE SAME, EXCEPT AS EXPRESSLY
CONTAINED OTHERWISE IN THIS LEASE.
With respect to the matters referred to in the preceding sentence, but
subject to the exceptions contained therein, Tenant waives the provisions of
Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
2. TERM.
2.1 Lease Term. The primary term of this Lease shall commence upon
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delivery to Tenant of the Premises with Landlord's Work
substantially completed in accordance with Paragraph 3.1 (the
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"Commencement Date"), and shall continue through January 31, 2005
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(the "Primary Term") . All references in this Lease to the "Lease
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Term" shall mean the Primary Term and, upon the exercise of any
option pursuant to Paragraph 2.2, the Primary Term as extended by
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any such option.
2.2 Options to Extend Term. Provided that Tenant is not in default under
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this Lease at the time any option provided for below is scheduled to
commence, Tenant is hereby granted three (3) successive options to
extend the Primary Term for additional
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consecutive periods of five (5) years each with the first such
option following the expiration of the Primary Term and subsequent
options following the expiration of the immediately preceding
option, subject to all the provisions of this Lease. Tenant shall
exercise each option, if at all, by giving written notice to
Landlord of Tenant's election to exercise the option at least one
hundred eighty (180) days prior to the commencement of the period of
years to which such option applies.
3. IMPROVEMENTS TO THE PREMISES.
3.1 Landlord's Improvements. Landlord shall substantially complete, at
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Landlord's sole expense, the work described generally on Exhibit C
attached hereto and made a part hereof ("Landlord's Work") on or
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before September 30, 1995, as such date is extended one day for each
day (or partial day) of delay caused by Tenant (or its agents,
employees, representatives, contractors, licensees or invitees), or
by a Force Majeure Event (as defined in Section 24) . "Substantial
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completion" shall mean Landlord's Work has been completed except for
minor defects, adjustments and other deficiencies of a "punchlist"
nature that would not interfere materially with Tenant's use and
occupancy of the Premises. Landlord shall provide Tenant with at
least thirty (30) days' prior written notice of the anticipated date
of substantial completion and will keep Tenant advised with respect
to any subsequent revisions thereto. Landlord's Work shall be
performed in a good and workmanlike manner, in compliance with Legal
Requirements (as defined in Paragraph 8.3), and in substantial
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conformity with any plans and specifications prepared in connection
therewith ("Landlord's Plans"). Prior to submitting Landlord's Plans
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to any governmental authority for issuance of the permits but in no
event later than forty-five (45) days after the date of this Lease,
Landlord shall deliver Landlord's Plans to Tenant and Tenant shall
approve Landlord's Plans in writing, which approval shall not be
unreasonably withheld, delayed or conditioned. Provided Tenant does
not materially interfere with the performance of Landlord's Work
during Landlord's performance of Landlord's Work, Tenant shall have
access to the Premises for the purposes contemplated by Paragraph
14.1. Within thirty (30) days after the date Tenant receives
Landlord's notice of substantial completion. ("Substantial
Completion Notice"), Tenant shall inspect the Premises and submit to
Landlord a written punch list of items to be completed or corrected.
Landlord shall proceed promptly to complete and correct all items on
such punch list within thirty (30) days of the date of receipt of
Tenant's punch list in a manner that shall not materially interfere
with Tenant's activities in or access to the Premises for the
purposes contemplated in Paragraph 14.1 below. Failure to include an
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item on the punch list shall not alter the responsibility of
Landlord to complete said item if the work for said item was never
commenced. Notwithstanding the foregoing, Tenant shall be deemed to
have conclusively acknowledged satisfactory completion of Landlord's
Work (except for latent defects, deficiencies not discoverable in
the exercise of reasonable diligence and warranties made by
Landlord), unless Tenant gives Landlord written notice otherwise
within thirty (30) days after receipt of the Substantial Completion
Notice, which notice from Tenant shall specifically identify
Tenant's objections to Landlord's Work.
3.2 Tenant's Improvements. Within ninety (90) days after execution of
this Lease, Tenant shall submit for Landlord's approval (which shall
not unreasonably be denied or delayed) preliminary plans ("Tenant's
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Preliminary Plans") showing Tenant's proposed improvements
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("Tenant's Improvements") to the Premises. If Landlord does not
respond in writing and in reasonable detail to Tenant's request for
approval within fifteen (15) days after Landlord's receipt thereof,
then Landlord's approval shall be deemed given. Landlord shall
assist and cooperate with Tenant in Tenant's efforts to obtain
approval of Tenant's Preliminary Plans (to the extent necessary) by
all appropriate governmental agencies. Within ten (10) days after
(i) Tenant's Preliminary Plans have been approved by the appropriate
governmental agencies, and (ii) Tenant has accepted possession of
the Premises from Landlord, Tenant shall commence construction of
Tenant's Improvements, which construction shall be completed
diligently and in substantial conformity with Tenant's Preliminary
Plans and in compliance with Legal Requirements.
Following completion of Tenant's Improvements, Tenant shall provide
Landlord with a revised draft of Tenant's Preliminary Plans if any changes
affecting structural or exterior elements of the Premises were made from the
draft of Tenant's Preliminary Plans originally approved by Landlord; provided,
however, no such structural or exterior changes shall be made without Landlord's
prior written approval (to the extent required hereby), which Landlord shall not
unreasonably withhold, delay or condition. All of Tenant's Improvements shall
become part of the Premises, and Tenant shall have no obligation to remove the
same upon the expiration or termination of this Lease.
4. RENT AND RENT COMMENCEMENT DATE.
4.1 Rent Commencement Date. Tenant's obligation to pay Minimum Rent
(defined in Paragraph 4.2), Taxes (defined in Paragraph 6.1), Common
Area Expenses (defined in Paragraph 5.4(a)) and all other monetary
obligations of Tenant under this Lease shall not commence until the
date occurring four (4) months after the Commencement Date (the
"Rent Commencement Date" or "RCD").
4.2 Minimum Rent. Commencing on the RCD, Tenant shall pay to Landlord,
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at such place or places as Landlord shall designate from time to
time in writing, a fixed minimum monthly rent ("Minimum Rent"),
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payable in advance on the first day of each and every calendar month
during the Lease Term, without prior notice, demand or right of
setoff (except as expressly permitted hereunder), as follows:
(a) for each month commencing on the RCD and continuing
through the end of the Primary Term, the sum of
Seventeen Thousand Six Hundred Twenty-Nine Dollars
($17,629);
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(b) for each month of the first five-year option period
immediately following the expiration of the Primary
Term, the sum of Nineteen Thousand Three Hundred
Ninety-Two Dollars ($19,392)
(c) for each month of the second five-year option period
immediately following the expiration of the Primary
Term, the sum of Twenty-One Thousand Three Hundred
Thirty-One Dollars ($21,331); and
(d) for each month of the third five-year option period
immediately following the expiration of the Primary
Term, the sum of Thirty-Three Thousand Four Hundred
Sixty-Four Dollars ($23,464).
Notwithstanding the foregoing, upon execution of this Lease, Tenant shall
pay in advance to Landlord the sum of Fifty-Two Thousand Eight Hundred
Eighty-Seven Dollars ($52,887) equal to Minimum Rent due for the first three (3)
months after the Rent Commencement Date. If the RCD occurs on a day other than
the first day of a calendar month, then. Minimum Rent and all other monetary
obligations of Tenant under this Lease shall be prorated on a per diem basis for
the partial month extending from the RCD to the beginning of the next full
calendar month and shall be payable on the first day of such next calendar month
or when otherwise due and payable in accordance with the terms hereof.
If Minimum Rent or any other sum payable by Tenant hereunder is not
received within five (5) days after Tenant's receipt of a notice from Landlord
stating that said sum is delinquent, and Landlord has properly sent a similar
delinquent notice at least two (2) other times in any Lease Year, then
commencing with the third such delinquent notice and continuing until the end of
the Lease Year in question, Landlord shall be entitled to a late charge of three
percent (3%) of the delinquent amount for each such delinquent payment in
question (where a delinquent, notice is received by Tenant).
4.3 Lease Year Defined. As used in this Lease, the term "Lease Year"
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shall mean:
(a) With respect to the first Lease Year, that period of
time commencing on the RCD and ending on the next
succeeding January 31; and
(b) With respect to each Lease Year other than the first
Lease Year, each twelve (12) month period ending on
January 31 during the Lease Term.
5. COMMON AREA.
5.1 Definition of Common Area. As used in this Lease, the term "Common
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Area" shall mean all of the area within the Shopping Center to be
used in common by the occupants thereof, which Common Area shall
include all area within the Shopping Center other than the building
areas and loading areas designated on Exhibit B.
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5.2 Tenant's Rights in the Common Area.
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(a) Landlord hereby grants to Tenant, its successors and
assigns, for the use of Tenant, its customers,
employees, invitees, licensees, visitors and contractors
free of charge, a non-exclusive easement over all
portions of the Common Area and to and from streets and
highways adjoining the Shopping Center and access
easements appurtenant thereto for the purpose of
parking, delivery and transportation of merchandise, and
for pedestrian and vehicular ingress and egress. In
addition, Tenant shall have the right to the exclusive
use of those loading facilities and related areas
adjacent to the easterly boundary of the Building which
are depicted in Exhibit B attached as may be reasonably
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necessary for loading and unloading merchandise and for
the parking of its trucks and trailers for such
purposes. Tenant shall also have the right to (i)
install and maintain a courier box in front of the
Premises for Tenant's internal operations and one or
more public telephones, vending machines and mechanical
entertainment devices on the sidewalk in front of the
Premises; and (ii) conduct sales on the sidewalk or
walkway located immediately in front of the Premises;
(iii) the nonexclusive use of the corridor as shown on
Exhibit B and (iv) the nonexclusive access to the
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electrical rooms and fire sprinkler riser rooms.
(b) Landlord covenants and agrees to provide, maintain and
preserve during the Lease Term all of the Common Area
for the non-exclusive use and benefit of Tenant, its
successors and assigns, other occupants, tenants and
subtenants of the Shopping Center and their respective
customers, employees, invitees, licensees, visitors and
contractors.
Except by written amendment to this Lease, which amendment shall
substitute a new Site Plan showing any such change to the Common Area, Landlord
shall not make and shall not allow anyone to make any change whatsoever to the
shape, size, location, layout, nature or extent of any portion of the Common
Area without the prior written consent of Tenant, which consent shall not be
unreasonably withheld, conditioned or delayed including, without limitation (1)
the construction of any building, sign, kiosk or other structure, whether
temporary or permanent (other than as set forth in the third grammatical
paragraph of this subparagraph 5.2(b)); (ii) the erection of any barrier or
fence or other alteration affecting parking or access in or to the Common Area;
or (iii) the expansion of the Pioneer Chicken building, as such building is
shown on the Site Plan.
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Notwithstanding the foregoing, Tenant consents to either (a) the
modification of the building located on the "Out Parcel" as so designated on the
Site Plan, or (b) the construction of a new building on the "Vermont Parcel" as
so designated on the Site Plan, provided that either such building (i) does not
exceed six thousand (6,000) square feet of ground floor area, (ii) does not
exceed twenty-five (25') feet in height from finished floor to the top of any
parapet, wall, tower structure or screening for said building, (iii) does not
extend beyond either "Future Building Area" as such areas are set, forth on the
Site Plan, (iv) there is only one (1) building located on either the Vermont
Parcel or the Out Parcel (but not both) at any time during the Lease Term and
(v) there is improved parking (including paving and striping) on the parcel
which does not have a building located thereon. In furtherance of the foregoing,
if Landlord decides to construct a building on the Vermont Parcel, Landlord
agrees to demolish and remove the building from the Out Parcel and then improve
the Out Parcel as additional parking area in which case said Out Parcel will
become Common Area. Any such construction work shall be performed in a diligent
manner which shall cause the least disruption to Tenant's business in the
Premises as is reasonably possible. Landlord shall use reasonable efforts to
prevent any construction work with respect to the construction of a building or
site improvements on the Vermont Parcel and if Landlord acquires the Out Parcel,
with respect to any exterior modification to the building located on the Out
Parcel or any site-work related thereto from occurring between November 15 of
one year and January 15 of the next year if any such construction work could
have a material and adverse effect on Tenant's business at the Premises.
Landlord agrees that any staging for said construction work will be located
entirely within the Vermont Parcel or Out Parcel (as the case may be) and in no
event shall interfere with ingress or egress to the Shopping Center.
Tenant shall not withhold its consent to any change to the Common Area if,
and to the extent, that (i) such change is required by law in connection with
any repair or restoration of the Shopping Center following any casualty or
condemnation; (ii) such change does not impair pedestrian or vehicular ingress
or egress from the Shopping Center or the Premises, whether for customers, for
delivery of merchandise or otherwise; (iii) such change does not impair the
visibility of the Premises, including, without limitation, the store front of
the Premises, any of Tenant's signs attached to the Premises or on any sign
monument or sign pylon on which Tenant is represented in the Shopping Center;
(iv) such change does not impair the proximity, quantity, accessibility or
availability of parking for the Premises or (v) such change does not otherwise
adversely affect Tenant's business operation in the Premises and/or the Shopping
Center. Tenant acknowledges that other tenants with leased premises located in
the Shopping Center shall have the right to (i) install and maintain a courier
box or one or more public telephones, vending machines and mechanical
entertainment devices on the sidewalk in front of the premises; and (ii) conduct
sales on the sidewalk or walkway located immediately in front of such leased
premises.
Whenever Tenant's consent is required under this Paragraph 5.2, Tenant's
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failure to respond within thirty (30) days after receipt of Landlord's written
request therefor, combined with Tenant's further failure to respond within ten
(10) days after Landlord's second request therefor is received by Tenant, shall
constitute Tenant's granting of consent provided such notices contain the
provisions contained herein concerning Tenant's waiver for failing to respond to
Landlord's written requests. The easements, covenants and restrictions herein
set forth shall run with the land and shall be a burden upon the Common Area for
the benefit of the Premises and binding upon Landlord and Landlord's heirs,
successors and assigns.
5.3 Landlord's Common Area Responsibilities. Subject to Sections 12 and
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16, at all times during the Lease Term Landlord shall insure,
maintain and repair the Common Area so that the Common Area is kept
in good and clean condition throughout the Lease Term. Landlord's
Common Area responsibilities shall include but not be limited to the
following:
(a) Maintaining the parking, driveway areas and sidewalks in
good condition and repair, and free of ice and snow;
(b) Removing all debris and thoroughly sweeping the Common
Area to the extent reasonably necessary to maintain them
in a clean and orderly condition;
(c) Maintaining all exits, monument signs, sign pylons,
directional signs, markers and lights (including lights
affixed to the Building) in good repair and condition;
(d) Providing utilities for lighting and landscaping and
sign monuments and pylons;
(e) Cleaning all lighting fixtures and common signs and
relamping as needed;
(f) Repainting of striping markers and repairing parking
bumpers as necessary;
(g) Maintaining all landscaped areas in good and healthy
condition and repairing automatic sprinkler systems and
water lines and making replacements of landscaping as
necessary;
(h) Trimming or pruning landscaping where necessary to
preserve maximum visibility of Tenant's building and
pylon or monument signs;
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(i) Maintaining and repairing all storm drain lines, sewers,
utility lines and other services located in the Shopping
Center serving the Common Area necessary for the
operation of the Common Area;
(j) Providing security for all of the Common Area for the
benefit of all occupants of the Shopping Center and
their customers and employees and personal property
(provided that the tenants/occupants of at least sixty
percent (60%) of the ground floor area of occupied
buildings in the Shopping Center agree to pay their
respective pro rata share of the reasonable cost of such
security); and
(k) Maintaining (i) commercial general liability insurance
with respect to claims for bodily injury, death or
property damage occurring in or upon the Common Area
with a policy limit of Two Million Dollars ($2,000,000)
and (ii) "all risk" form insurance insuring all Common
Area improvements (with coverage or an endorsement for
earthquake and flood and compliance with legal
requirements) against physical loss or, damage in an
amount equal to the full Replacement Cost (as defined in
Paragraph 12.4) thereof;
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(l) Subject to Paragraphs 5.4(b) and 8.3, making the Common
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Area comply with laws, rules and orders of federal,
state and municipal authorities;
(m) Subject to Paragraph 5.4(b) (vii), capital expenditures
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(as determined under generally accepted accounting
principles) which are required to be expended by
Landlord in order to comply with Landlord's obligations
hereunder with respect to the Common Area, provided any
such capital expenditures are depreciated over the
useful life of such capital expenditures and Tenant is
billed only for the appropriate annual depreciation for
said capital expenditures; and
(n) Subject to Paragraphs 5.4(b) and 10.6(4), the
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investigation and/or remediation of Hazardous Materials
in, on or about the Common Area (whether or not such
Hazardous, Materials exist in, on or about the Common
Area)
Notwithstanding the foregoing, after five (5) full years of the Primary
Term have expired, Landlord shall have the right to maintain such higher limits
of commercial general liability insurance coverage referenced in subparagraph
(k) above as is reasonable in accordance with industry practices for comparable
shopping centers in the trade area where the Shopping Center is located provided
all tenants/occupants of the Shopping Center pay their pro rata share of any
increase in the cost of such insurance.
A certificate or certificates of insurance evidencing the policies
described in paragraph 5.3(k) above shall be delivered to Tenant within ten (10)
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days after execution of this Lease and shall provide that such policies may not
be cancelled or modified without at least thirty (30) days prior written notice
to Tenant. The certificate or certificates shall also provide that Tenant shall
receive notice of renewal of such insurance not later than thirty (30) days
prior to the scheduled expiration date of each such policy.
5.4 Common Area Expenses.
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(a) Definition. Subject to Paragraph 5.4(b) below, the term
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"Common Area Expenses" means all direct costs .and
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expenses reasonably and actually incurred by Landlord as
the Operator (or otherwise) in performing Landlord's
obligations under Paragraph 5.3 hereof with respect to
-------------
the Common Area including insurance premiums as
described in Paragraph 5.3(k) above to the extent
---------------
applicable to the Common Area. Common Area Expenses
shall also include an administrative fee to Landlord as
reimbursement for Landlord's overhead cost and
administrative services in an amount not to exceed ten
percent (10%) of. Common Area Expenses excluding (w)
property management services performed by independent
contractors of Landlord, (x) insurance premiums, (y)
utilities, and (z) any capital item or capital
replacement item of Common Area Expenses to the extent
it exceed Two Thousand Dollars ($2,000), provided said
$2000 sum shall be increased by the same percentage
increase as Minimum Rent, at the same time as each
Minimum Rent adjustment during the Lease Term. In no
event shall such administrative tee be applied to Taxes.
(b) Exclusions. Notwithstanding Paragraph 5.4(a) above, in
---------- ---------------
no event shall any of the following be included in
Common Area Expenses: (i) expenses for accounting, legal
or other professional services; (ii) salaries, benefits
and other expenses or compensation of officers,
employees (except for on-site janitorial personnel) and
agents of Landlord, including without limitation, any
on-site or off-site management personnel; (iii) costs
related to repairs or other work occasioned by any cause
for which Landlord is obligated to maintain insurance
under this Lease or as to which Landlord receives
reimbursement from third parties; (iv) costs related to
repairs, maintenance or other work performed on any
building in the Shopping Center or costs related to any
repairs, maintenance or other work which primarily
benefits another occupant of the Shopping Center; (v)
costs for improvements to the Common Area in connection
with the redevelopment of the Out Parcel, the
performance of Landlord's Work, or costs related to
correcting defects in the construction of the Common
Area for any work to the Common Area performed after the
date of this Lease; (vi) expenses resulting directly or
indirectly from the negligence or willful misconduct of
Landlord or its agents or employees; (vii) premiums for
any insurance policies not required by this Lease to be
maintained by Landlord (including, without limitation,
any excess or umbrella policy and commercial general
liability insurance on any buildings in the Shopping
Center) subject to permitted increases in policy
coverage as set forth herein; (viii) depreciation on any
personal or real property; (ix) financing costs
associated with any personal or
-55-
real property including, without limitation, interest,
principal amortization, ground lease payments, points,
late payment fees, commissions and legal fees; (x)
expenses in the nature of interest, fines or penalties;
(xi) contributions to charitable and political groups;
(xii) fees, dues or expenses incurred for or relating to
any merchants association or for the purpose of
advertising, promoting or otherwise marketing the
Shopping Center; and (xiii) any gross receipts tax
levied on Landlord. Common Area Expenses shall be
reduced by the amount of any insurance proceeds or other
reimbursement, recoupment, payment, discount or
allowance or the like received or receivable by Landlord
that is properly allocable to Common Area Expenses and
the amount of any award for a temporary taking of any
part of the Common Area by any condemning authority.
(c) Payment by Tenant. Within thirty (30) days after
-----------------
execution of this Lease and thereafter not less than
sixty (60) days prior to the commencement of each
calendar year during the Lease Term, Landlord shall
notify Tenant in writing of the amount of Common Area
Expenses and Tenant's pro rata share thereof which
Landlord reasonably estimates will be incurred during
the calendar year then commencing. Tenant's pro rata
share of Common Area Expenses shall be 44.221%
(21,240/48,032) of Common Area Expenses for the Shopping
Center. Commencing on the Rent Commencement Date, and on
the first day of each month thereafter, Tenant shall pay
to Landlord one-twelfth (1/12) of Tenant's pro rata
share of such estimated Common Area Expenses for the
then current calendar year.
Within sixty (60) days after the end of each calendar year, Landlord shall
furnish to Tenant an itemized statement of Common Area Expenses with respect to
such calendar year, certified as correct by Landlord or by a responsible
officer, employee or agent of Landlord in the event Landlord is a corporation.
Such Common Area Expenses statement shall show, in reasonable detail, the
individual items comprising Common Area Expenses, the aggregate amount of Common
Area Expenses for the calendar year, the computation of Tenant's pro rata share
thereof and the total estimated payments previously made by Tenant with respect
to such calendar year. At Tenant's request, Landlord shall provide Tenant with
copies of cancelled checks, invoices and other reasonable verification of the
expenses shown on the statement. If such statement indicates that Tenant's pro
rata share of Common Area Expenses for any calendar year exceeds the total
payments previously made by Tenant with respect to such calendar year, Tenant
shall pay Landlord the deficiency within forty-five (45) days after the receipt
of Landlord's statement. If Landlord's statement indicates that the total
payments made by Tenant for any calendar year exceed Tenant's pro rata share of
Common Area Expenses incurred with respect to such calendar year, then Landlord
shall pay the excess to Tenant concurrently with the delivery to Tenant of
Landlord's statement. In the event Landlord fails to. timely provide any such
annual statement, Tenant may defer remitting to Landlord Tenant's pro rata share
of estimated Common Area Expenses as required by the last sentence of the
preceding paragraph until such time as Tenant receives such statement.
(d) Limitation of Tenant's Pro Rata Share of Certain
------------------------------------------------
Expenses. Landlord has estimated that the aggregate of
--------
Tenant's pro rata share of Taxes, Common Area Expenses
and property insurance premiums pursuant to Paragraph
---------
7.1. below (exclusive, however, of any costs or expenses
---
set forth in Paragraphs 5.3(1) or (n)) will initially be
$.10 per square foot per month. Notwithstanding anything
contained in this Lease to the contrary, in no event
shall Tenant's obligation to pay Tenant's pro rata share
of Common Area Expenses, property insurance premiums as
set forth in Section 7.1, and Taxes (a) equal more than
-----------
Thirty-Five Thousand Six Hundred Eighty Three Dollars
and Twenty Cents ($35,683.20) during any calendar year
($1.68/square foot/year) through December 31, 1996 (as
such amount shall be pro-rated for any partial year and
adjusted for any change in the square footage of the
Premises) and (b) increase in any calendar year
thereafter by more than five percent (5%) from the
actual amount expended by Tenant for Common Area
Expenses with respect to the preceding calendar year.
(e) Landlord's Maintenance of Records. Landlord shall
---------------------------------
maintain accurate records and books of account prepared
in accordance with generally accepted accounting
principles for the Common Area Expenses. Landlord shall
retain such books and records for a period of three (3)
years after the delivery to Tenant of the annual
statement with respect to which such books and records
relate. Tenant may, upon prior notice to Landlord at
reasonable business hours and without unreasonable
frequency, inspect and make copies of such books and
records and other supporting information at Tenant's
expense. In the event that a review of said books and
records conducted by Tenant discloses that the Common
Area Expenses for any calendar year have been overstated
by more than five percent (5%), then Landlord shall pay
to Tenant the reasonable cost of such review. If it is
determined by any review or otherwise that any annual
statement of Common Area Expenses delivered by Landlord
to Tenant was not correct, the statement shall be
adjusted and one party shall pay to the other upon
demand such sum as may be necessary so that the correct
amount of Common Area Expenses will have been paid by
Tenant to Landlord.
5.5 Right of Substitution. If in Tenant's judgment the cost of any
---------------------
maintenance or service item comprising Common Area Expenses is
excessive, Tenant may obtain a bid for such item from any
responsible person or company offering to perform or provide
comparable or superior maintenance or services. If any such bid
provides for a cost at least ten percent (10%) less than the cost
then being paid by Landlord for such maintenance or service, then
Landlord shall promptly, in Landlord's discretion, either (a)
substitute the services of such bidder, or (b) cause Tenant's pro
rata share to be based upon the lower bid, regardless of who
actually provides the service.
5.6 REAs.
----
-56-
Without Tenant's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, Landlord will not enter into or
amend any reciprocal easement agreements, development agreements, operating
agreements, maintenance agreements or any other instruments affecting the use,
occupancy, benefits or burdens pertaining to the Premises or the Shopping Center
or any portion thereof (collectively, the "REAs"); provided, however, that the
foregoing shall not be construed to apply to any lease, license or similar
agreement letting or permitting the occupancy or use of the leasable areas of
the Shopping Center provided the terms of any such leases, licenses or similar
occupancy agreements do not conflict with this Lease. Operating agreements or
maintenance agreements made by Landlord directly with an entity providing some
type of service for the Common Area on a regular and ongoing basis (e.g.
sweeping of the parking lot) shall not require Tenant's consent thereto.
Landlord hereby assigns to Tenant all rights and benefits which Landlord may
hereafter acquire under any REAs related to Landlord's maintenance of the Common
Area located on the Shopping Center in accordance with this Lease, including the
right to exercise any and all remedies which Landlord may be entitled to or may
hereafter acquire under the REAs; provided such assignment shall not be
effective unless Landlord is in default under this Lease because of Landlord's
failure to maintain said Common Area after Tenant has complied with Paragraph 18
------------
hereto.
6. REAL PROPERTY TAXES.
6.1 Payment by Landlord. Landlord shall pay in full before delinquency
-------------------
all ad valorem real property taxes and assessments, general and
special, which shall be assessed or imposed upon and which shall
become due and payable during the Lease Term with respect to the
Shopping Center or any part thereof or any improvements thereon and
any other taxes, impositions or charges which may be imposed on or
assessed against the Shopping Center or any part thereof where the
same are in lieu of or in substitution for ad valorem real property
taxes or are imposed to fund governmental facilities or services
which historically had been funded in whole or in part from the
collection of ad valorem real property taxes (collectively, "Taxes")
-----
provided, however, that Taxes shall not include (and Tenant shall
not be obligated to pay) any assessments imposed in connection with
the installation or construction of betterments to any part of the
Shopping Center first made after the date of this Lease with respect
to, the development of any other portion of the Shopping Center
which is redeveloped by Landlord.
6.2 Reimbursement by Tenant. Subject to Paragraphs 5.4(d), 6.3 and 6.6
----------------------- ---------------------- ---
below, Tenant shall reimburse Landlord for Tenant's pro rata share
of the amount of Taxes less any discount available for prompt
payment of such Taxes regardless of whether such prompt payment is
actually made. As of the date of this Lease, Tenant's pro rata share
of Taxes shall be based on the ratio that the ground floor area of
the Premises bears to the ground floor area of all buildings located
in the Shopping Center which are assessed in common with the
Premises. As of the date this Lease is fully executed, Landlord
represents that Tenant's pro rata share of Taxes is 44.221%
(21,240/48,032) Taxes shall be prorated between Landlord and Tenant
as of the RCD or the date of termination, as the case may be.
6.3 Time of Reimbursement. All reimbursements for Taxes to be made by
---------------------
Tenant as provided in paragraph 6.2 above shall be made on or before
-------------
the later of (i) thirty (30) days after written request therefor is
given to Tenant by Landlord, or (ii) ten (10) days prior to the date
that the payment to the taxing authority becomes delinquent.
Notwithstanding the foregoing, in no event shall Tenant be obligated
to reimburse Landlord for the amount of any Taxes unless Landlord
shall first have delivered to Tenant (x) a copy of the tax
statement, (y) evidence reasonably satisfactory to Tenant that such
Taxes have been paid by Landlord, and (z) a schedule setting forth
the method of determining Tenant's pro rata share of Taxes including
calculations of any tax allocation and documents supporting such
calculations.
6.4 Bonded Assessments. If any general or special assessment is levied
------------------
and. assessed against the Premises which by law is payable at the
option of the taxpayer in installments, Tenant may pay its share of
such assessment in installments as the same become due together with
any interest due thereon, notwithstanding the fact that Landlord may
elect to pay such assessment in full.
6.5 Right to Contest.
----------------
(a) Tenant shall have the right at its expense to contest
the rate, legality or validity of any tax or assessment
provided herein to be paid by Tenant, but no such
contest shall be carried on or maintained by Tenant
after such taxes or assessments become delinquent unless
Tenant shall (i) pay its share of the amount involved
under protest, or (ii) procure and maintain a stay of
all proceedings to enforce collection, forfeiture and
sale and provide for payment thereof together with all
penalties, interest, costs and expenses by the deposit
of a sufficient sum of money or by a good and sufficient
undertaking or other means required or permitted by law
to accomplish such stay. At the request of Tenant,
Landlord will execute or join in the execution of any
instrument or documents reasonably required by Tenant in
connection with any such contest. Upon the final
determination of any such contest in which Tenant
prevails and upon receipt by Landlord of the refund of
Taxes, Landlord shall reimburse Tenant (i) Tenant's
actual out-of-pocket expenses and costs incurred in
connection with such contest upon demand by Tenant to
the extent such expenses and costs are less than the
amount of the refund, and (ii) Tenant's pro rata share
of the net refund, meaning the refund as reduced by the
payment to Tenant under the preceding clause (i) and
Landlord deducting from the refund any reasonable
out-of-pocket expenses incurred by Landlord in
cooperating in such tax contest.
(b) Landlord may contest the rate, legality or validity of
any tax or assessment imposed upon the Shopping Center
or the Premises, but no such contest shall be carried on
or maintained by Landlord after such taxes or
assessments become delinquent unless Landlord shall (i)
pay the amount involved under protest, or (ii) procure
and maintain a stay of all proceedings to enforce
collection, forfeiture and sale and provide for payment
-57-
thereof together with all penalties, interest, costs and
expenses by the deposit of a sufficient sum of money or
by a good and sufficient undertaking or other means
required or permitted by law to accomplish such stay.
Upon the final determination of any such contest in
which Landlord prevails and upon receipt by Landlord of
the refund of Taxes, Landlord shall deduct from the
refund Landlord's reasonable out-of-pocket expenses
incurred in connection with such contest and return to
Tenant Tenant's pro rata share of the remaining portion
of such refund. Expenses incurred in connection with any
such contest of taxes by either party shall be supported
by documentation reasonably satisfactory to the other
party.
6.6 Limitation. Nothing in this Lease shall require Tenant
----------
to pay any business tax, personal property tax, rent
tax, franchise tax, income tax, excess profits tax,
estate tax, inheritance tax, succession tax, capital
levy, transfer tax or any other tax assessed or levied
against the Landlord. except as provided in this Section
-------
6 or elsewhere in this Lease.
-
Notwithstanding anything contained in this Lease to the contrary, Tenant
shall not be obligated to reimburse Landlord for the amount of any increase in
Taxes occurring after the date of this Lease which is caused by a reassessment
of the Shopping Center or the Premises resulting from the renovation or
remodeling or from the sale or other transfer of the Shopping Center or the
Premises or any part thereof, except that Tenant shall be obligated to pay
Tenant's pro rata share of any increase in Taxes resulting from (i) the first
(but not more than the first) bona fide sale of the Shopping Center or the
Premises which occurs during the Primary Term; (ii) the first (but not more than
the first) bona fide bale of the Shopping Center or the Premises which occurs
after the expiration of the Primary Term (if any options are exercised); and
(iii) any renovation or remodeling work which is part of Landlord's Work;
provided that, any increase in Tenant's pro rata share of Taxes shall be
calculated from the most recent reassessment of the Shopping Center or the
Premises regardless of the number of reassessments which have occurred after the
date of this Lease. As used herein, the phrase "bona fide sale" means an
--------------
arms-length sale, exchange or other transfer to an unrelated party; a party is
not unrelated in situations including, without limitation, where that party is
(i) an entity controlled by, controlling or under common control with or
otherwise affiliated with Landlord; (ii) a general or limited partner of
Landlord or a director, officer or shareholder of Landlord; (iii) an entity
which is" controlled by or otherwise affiliated with a general or limited
partner of Landlord or any current or former officer, director or shareholder of
Landlord; or (iv) a family member of any person or entity comprising a general
or limited partner, officer, director. or shareholder of Landlord or a family
member of any person or entity which is controlled by or affiliated with
Landlord or a general or limited partner, officer, director or shareholder of
Landlord.
7. INSURANCE.
7.1 Property Insurance. After the date of this Lease and at all times
------------------
during the Lease Term, Landlord at its expense shall maintain an
"all risk" (as such term is customarily used and accepted in the
insurance industry) form policy of insurance covering the leasable
buildings and all other improvements located in the Shopping Center
against physical loss or damage (including earthquake and flood and
compliance with legal requirements coverage or endorsements) in an
amount not less than the full Replacement Cost thereof. A
certificate of insurance evidencing the insurance, coverage required
hereunder shall be delivered to Tenant within ten (10) days after
execution of this Lease and shall provide that the policy may not be
cancelled or modified without at least thirty (30) days prior
written notice to Tenant. The certificate shall also provide that
Tenant shall receive notice of renewal of such insurance policy
annually not later than thirty (30) days prior to the policy's
scheduled expiration date. In case of loss or damage, the proceeds
of such insurance shall be applied on account of Landlord's
obligations pursuant to Section 12 below to the extent the same are
----------
made available to Landlord by the holder of any deed of trust or
mortgage on the Shopping Center.
Subject to Section 5.4(d), Tenant shall reimburse Landlord for a portion
---------------
of the policy premium based upon a fraction, the numerator of which shall be the
ground floor area of the Premises and the denominator of which shall be the
ground f1oor area of the Building. Provided that Tenant is in possession of a
current certificate of insurance or renewal notice, as the case may be, Tenant
shall, commencing with the Rent Commencement Date, make such reimbursement
within thirty (30) days after Landlord delivers written notice to Tenant of the
amount due from Tenant hereunder accompanied by a copy of the insurance policy
premium invoice and a computation of Tenant's share thereof. Subject to Section
-------
5.4(d), Tenant shall reimburse Landlord for its pro rata share of the cost of
- ------
insurance related to earthquake coverage or for an earthquake endorsement
covering the Building for so long as Landlord so insures the Building under a
blanket policy with all other properties owned or managed by Landlord and the
cost to Tenant, on an annual basis, never exceeds one hundred sixty-one percent
(161%) of Tenant's pro rata share of the then current cost of the "all risk"
policy required above. Landlord represents that as of the date of this Lease,
the cost of such earthquake endorsement for the Building is Three Thousand Two
Hundred Nineteen Dollars ($3,219) a year. Subject to Section .5.4(d),
----------------
notwithstanding the foregoing, Tenant shall be responsible for contributing
towards the cost of earthquake coverage (or an earthquake endorsement) to the
extent such cost does not exceed one hundred sixty-one percent (161%) of the
cost of the "all risk" policy.
If Tenant receives notice that the insurance for the Premises and/or
the Building which Landlord is required to obtain pursuant to this Paragraph 7.1
is to be cancelled or will expire, and if prior to twenty (20) days before the
effective date of cancellation or expiration Tenant has not received written
notice from the insurance carrier or agent that the policy will be extended or a
new policy substituted in its place, then Tenant shall have the right, upon five
(5) days' written notice, but shall have no obligation, to procure substitute
insurance. Landlord shall reimburse Tenant upon demand for that portion of the
insurance premium paid by Tenant applicable to that portion of the Building
other than the Premises which are insured by such policy.
7.2 Liability Insurance. Concurrently with Tenant's entry into the
-------------------
Premises pursuant to Paragraph 14.1 and at all times during the
--------------
Lease Term, Tenant shall maintain at its expense commercial general
liability insurance against claims for bodily injury, death or
property damage occurring in or upon the Premises. The limitation of
liability of such insurance shall be not less than One Million
Dollars ($1,000,000) combined single limit in respect to any one
occurrence for bodily injury and property damage. Such insurance
policy shall be issued in the name of Tenant and shall name Landlord
and, at Landlord's written request, any other person named by
-58-
Landlord which holds an interest in the Premises, as an additional
insured. A certificate of insurance evidencing the policy required
hereunder shall be delivered to Landlord no later than thirty (30)
days after Tenant takes possession of the Premises, and shall
reflect that the policy may not be cancelled or modified without at
least thirty (30) days prior written notice to Landlord. If Landlord
receives notice that the insurance required to be obtained by Tenant
pursuant to this Paragraph 7.2 is to be cancelled or will expire,
-------------
and if prior to twenty (20) days before the effective date of
cancellation or expiration Landlord has not received written notice
from the insurance carrier or agent that the policy will be extended
or a new policy substituted in its place, then Landlord shall have
the right, upon five (5) days' notice, but shall have no obligation,
to procure substitute insurance. Tenant shall reimburse Landlord
upon demand for Tenant's pro rata share of the cost of substitute
insurance. Subject to Paragraph 7.6, the limits of insurance shall
-------------
not limit Landlord's or Tenant's liability hereunder. The limits and
coverage of the commercial general liability insurance shall be
adjusted by agreement of Landlord and Tenant in accordance with
industry standards for similar properties in the. same type of
shopping centers in the trade area where the Shopping Center is
located no more often than once every fifth (5th) year of the Lease
Term, and any disagreement regarding the adjustment will be
submitted to arbitration, as provided below.
7.3 Tenant's Additional Insurance. At all times during which
-----------------------------
construction is being performed upon the Premises by Tenant,
Tenant's contractor shall maintain (i) commercial general liability
insurance in an amount not less than One Million Dollars
($1,000,000) per occurrence and Two Million Dollars ($2,000,000)
aggregate for bodily injury and/or property damage arising out of
said contractor's operations, (ii) workers compensation insurance at
legally required limits, and (iii) comprehensive auto liability
insurance in an amount not less than One Million Dollars
($1,000,000) combined single amount to cover damages or injuries
arising from the ownership, maintenance or use of a motor vehicle.
Notwithstanding the foregoing, nothing herein shall be interpreted
so as to require duplication of any insurance coverage.
7.4 Rating. All policies of insurance required under Paragraphs 5.3, 7.1
and 7.2 shall be written by companies of generally accepted
responsibility and credit, licensed to do business in the State in
which the Premises are located. Such insurance companies shall at
all times have a policyholder's rating of "B+" or better and
financial rating of Class X or better as reflected in the most
recent edition of "Best's Insurance Guide."
7.5 Waiver of Subrogation. To the extent permitted by law, Landlord and
---------------------
Tenant each hereby release each other and their respective officers,
employees and agents from any claims for bodily injury to or death
of any person and from property damage to the Premises, to the other
buildings and improvements in the Shopping Center including the
Common Area, and to the fixtures and personal property of either
Landlord or Tenant located in the Shopping Center that are caused by
or result from risks insured against under any insurance policy
which is required by this Lease to be maintained by Landlord or
Tenant. This release shall not be effective if the releasing party's
loss was uninsured due to a breach by the other party of its
obligation to maintain an insurance policy required by this Lease to
be maintained by such other party. Each party shall cause each
insurance policy obtained by such party pursuant to this Lease to
provide that the insurance carrier waives all right of recovery by
way. of subrogation against both parties and their respective
officers, employees and agents in connection with any injury or
damage covered by such policy.
7.6 Blanket Policies. In lieu of providing individual policies of
----------------
insurance, the insurance protection required under this Section 7
---------
may be provided in the form of blanket policies of insurance
covering the Premises and other properties. In such event, however,
certificates of insurance evidencing the coverage required hereunder
shall be provided as herein required and any such blanket policy
shall provide that the amount of insurance required under this Lease
shall not be prejudiced in any manner by other losses covered by the
policy.
7.7 Tenant's Indemnity. Except to the extent of any negligent or
------------------
intentional acts of Landlord or its agents, employees or
contractors, Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all loss, cost, claim, demand,
action and cause of action of every kind and nature arising out of
(i) the use or occupancy of the Premises, and (ii) any breach or
default in the performance of Tenant's obligations hereunder.
7.8 Landlord's Indemnity. Except to the extent of any negligent or
--------------------
intentional acts of Tenant or its agents, employees or contractors,
Landlord shall indemnify, defend and hold Tenant harmless from and
against any and all loss, cost, claim, demand, action and cause of
action of every kind and nature arising out of (i) the ownership,
management, maintenance and operation of the Shopping Center other
than the Premises, and (ii) any default or breach in the performance
of Landlord's obligations hereunder.
8. USE.
8.1 Use of Premises. The Premises may be used for the operation of a
---------------
retail store for the sale of general merchandise including, without
limitation, bargain and close-out merchandise and alcoholic
beverages (for off-premises consumption) and nonperishable food and
all other merchandise sold by Tenant in its other retail stores as
of the execution of this Lease, or for any other lawful retail use,
provided that such other lawful retail use is not a Prohibited Use
(as defined below) or is not prohibited by the Declaration.
Notwithstanding the foregoing sentence, the use of the Premises
shall not be restricted to a retail use after any time when another
tenant of the Building operates a non-retail establishment in the
Building for at least one hundred eighty (180) consecutive days.
"Retail" shall be deemed to include restaurants, banks or savings
-------
and loan associations, but not other office or service uses.
Landlord represents and warrants that, to the best of Landlord's
knowledge, there is no covenant of exclusive use or other use
restriction in effect as of the date of this Lease which restricts
the use of the Premises for the sale of general merchandise
-59-
including, without limitation, bargain and close-out merchandise and
alcoholic beverages (for off-premises consumption and non-perishable
packaged food and all other merchandise sold by Tenant in its other
retail stores as of the execution of this Lease. Tenant shall not
use the Premises or suffer or permit the Premises to be used for any
of the following uses ("Prohibited Uses") (a) a supermarket, grocery
---------------
store or food store that devotes more than fifty percent (50%) of
its sales space to the following items (whether canned, fresh or
frozen) meats, meat products, fish, poultry, fruits, vegetables or
commercial bakery products; (b) any retail use which directly
competes, at the time of a change of category of use by Tenant, if
any, with the primary business or the primary items or services sold
by a then-existing tenant of a part of the Shopping Center (provided
that Tenant shall at all times be permitted to sell any such items
or provide any such services as a non-primary part of its business
operations) or (c) any use described in Paragraph 8.2. In the event
-------------
that as a direct result of a change in the category of use of the
Premises by Tenant, the cost of insurance premiums for any insurance
coverage maintained by Landlord for the Premises and/or the Building
is increased, Tenant shall pay the increase in such premiums upon
receipt of written demand from Landlord (which demand shall include
written documentation from said insurance carrier in question
explaining the reason for the increased premium). Landlord
represents and warrants that Tenant's proposed use of the Premises
as of the date of this Lease does not warrant an increase in any
insurance coverage premium.
8.1.1 Nothing contained in this Lease shall be deemed or construed
to impose any affirmative obligation on Tenant to make any
particular use of the Premises, or any use thereof at all; and
nothing contained in this Lease shall be deemed or construed
to require Tenant to keep the Premises open for the conduct of
business during any particular hours, or any particular days,
or at all.
8.1.2 Notwithstanding anything to the contrary in this Lease, Tenant
shall notify Landlord at least thirty (30) days prior to the
time, if any, that it intends to cease operating business in
the Premises if such cessation of business may eventually
result in Landlord having the right to terminate this Lease
due to the provisions set forth below ("Go Dark Notice") . Not
--------------
less than thirty (30) days from the date of the Go Dark
Notice, Tenant may cease operating a business ("Go Dark",
-------
"Going Dark" or "Gone Dark") in the Premises. If Tenant fails
---------- ---------
to continuously operate from the Premises for a continuous
period of three hundred sixty-five (365) or more days
(regardless of whether Tenant has delivered the Go Dark Notice
or not), Landlord may terminate this Lease upon written notice
to Tenant. For purposes of this Paragraph, "Tenant" shall
include any subtenants and assignees approved by Landlord in
accordance with this Lease. Landlord's right to terminate this
Lease based on Tenant having Gone Dark must be exercised if at
all, between the three hundred sixty-fifth (365th) day and the
four hundred fifty-fifth (455th) day after Tenant first failed
to operate from the Premises after Going Dark. Subject to the
provisions contained below, the Lease shall then terminate as
of the date set forth in said termination notice, (the
"Termination Date") as if said Termination Date were the date
----------------
specified in this Lease for the expiration of this Lease. Such
Termination Date shall be not less than sixty (60) days and
not more than ninety (90) days from delivery of said notice.
All obligations of Landlord and Tenant under this Lease
(excluding those that expressly survive expiration hereof),
and all rights of any assignees, sublessees, concessionaires
and licensees of Tenant, shall expire on the Termination Date
and be of no further force and effect. Notwithstanding
anything to the contrary contained in this Lease, Tenant shall
not be considered to have "Gone Dark" and Landlord's right to
terminate the Lease pursuant to this Paragraph 8.1.2 shall not
---------------
apply to any period of time when (i) Tenant is diligently
causing the Premises to be remodeled or (ii) Tenant is unable
to or is not obligated to occupy the Premises because of
damage to the Premises or a taking as set forth in Paragraphs
----------
12 and 16, respectively. Moreover, any termination notice
---------
received by Tenant shall be rendered null and void if (a)
Tenant commences business operations from the Premises in at
least seventy-five percent (75%) of the ground floor area
thereof at any time between the date Tenant receives a
termination notice and the Termination Date, or (b) Tenant
obtains a fully executed letter of intent (or similar
instrument) between Tenant and a bona fide assignee or
sublessee prior to the time Tenant receives termination notice
from Landlord, the Lease is assigned or at least seventy-five
percent (75%) of the ground floor area of the Premises is
subleased between the date the termination notice is received
by Tenant and the Termination Date and the respective assignee
or sublessee is obligated to commence and does commence
business operations within the Premises in at least
seventy-five percent (75%) of the ground floor area thereof
prior to the one hundred eightieth (180th) day after the
Termination Date. Tenant shall provide Landlord notice of its
possession of any such letter of intent, and the assignment of
the Lease or sublease of the Premises.
8.2 Restrictions on Landlord's Use. Landlord and Tenant (with respect to
------------------------------
the Premises only) covenant that no part of Shopping Center shall be
used for any of the following purposes: (i) tanning, health,
exercise club or spa, racquet club, gymnasium, bowling alley,
skating rink or other sports or recreational facility; (ii) school,
library or reading room, or house of worship; (iii) movie theater,
auditorium or meeting hail; (iv) massage parlor, adult bookstore, a
so-called "head-shop", tattoo parlor, or off-track betting
establishment; (v) car wash, automobile repair work, or automotive
service, automobile body shop, or automobile, boat, trailer or truck
leasing or sales; (vi) amusement park, carnival, banquet facility,
dance hail or other entertainment facility, video game room, pool
hail, arcade or other amusement center; (vii) cocktail lounge,
tavern, bar, disco, nightclub,, hotel or motor inn, (viii) any
manufacturing, industrial, warehouse or office use (except
incidental to a retail operation); (ix) funeral parlor, laundromat,
animal breeding or storage, pawn shop, flea market, swap meet, or
junk yard; (x) uses which would require Landlord or any prospective
occupant of the Shopping Center to obtain a variance or similar
authorization from applicable, governmental authorities due to the
failure to comply with applicable parking requirements; (xi)
drilling for and/or removal of subsurface substances, dumping,
disposal, incineration or reduction of garbage or refuse; or (xii)
any use which is unlawful,, immoral or which constitutes a public or
private nuisance or produces objectionable noise, light or
vibration. Notwithstanding the foregoing, an "entertainment
facility" shall not include an indoor children's playground facility
(such as Leaps and Bounds, Tutor Time or Discovery Zone). Such
covenants shall run with the land comprising the Shopping Center. In
the event of a breach of such covenants, Tenant shall be entitled to
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injunctive relief and any other available remedy. Nothing in this
Paragraph shall prohibit Tenant from operating in accordance with
Paragraph 8.1.
--------------
8.3 Compliance with Laws. Any applicable law, rule or order (whether
----------------------
present or future) of a federal, state or municipal authority
related to the use and occupancy of the Premises as a commercial
establishment shall hereafter be referred to individually as a
"Legal Requirement" and collectively as "Legal Requirements". Tenant
----------------- ------------------
agrees promptly, at Tenant's expense, to comply with all Legal
Requirements with respect to the Premises (including any structural
alteration or improvements) which are required due to the following
("Tenant's Compliance Requirements") (a) Tenant's particular and
--------------------------------
specific use of the Premises; (b) Tenant's personal property (such
as Tenant's fixtures, furniture and equipment); or (c) Tenant's
voluntary and intentional actions (as opposed to an action taken to
comply with a governmental mandate which is triggered for a reason
other than Tenant's voluntary and intentional actions).
Landlord agrees to comply with all Legal Requirements applicable to (i)
those improvements which constitute the Premises except for Tenant's Compliance
Requirements and (ii) the Common Area. Notwithstanding the foregoing, with
respect to Landlord's obligations to comply with a Legal Requirement with
respect to the Premises, Tenant agrees to contribute the lesser of (a) the cost
of complying with said Legal Requirement or (b) the first One Thousand Dollars
($1,000) towards the cost thereof for each "compliance event" or if the Legal
Requirement at issue applies to the Common Area, (a) the lesser of Tenant's pro
rata share of the cost of such "compliance event" for the Common Area or (b) the
first One Thousand Dollars ($1,000) towards the cost thereof for each
"compliance event". Any issue concerning a Legal Requirement with respect to
Hazardous Materials shall not be addressed by this paragraph, it being
acknowledged that Paragraph 10.6 shall control any such issue. It is Landlord's
--------------
and Tenant's intention that with respect to those situations where Tenant is
obligated to reimburse Landlord for some portion of the cost of complying with a
Legal Requirement, all costs related to a new Legal Requirement, a modification
to an existing Legal Requirement or a new interpretation of a Legal Requirement
shall be considered one "compliance event". For instance, if Landlord must make
a number of changes to the Common Area after the RCD to comply with a particular
law such as the Americans with Disabilities Act ("ADA"), all such modifications
to the Common Area made in response thereto (such as the construction of an
access ramp or the designation of "handicapped" parking spaces) shall be deemed
the same compliance event for purposes of calculating Tenant's contribution. If
Landlord's share (i.e. any amount Landlord is not reimbursed for by any other
party) of the cost of complying with a Legal Requirement for which Landlord is
responsible, is less than or equal to One Hundred Thousand Dollars ($100,000) in
the aggregate during each five year period of the Lease Term (which periods
shall correspond with the time periods when Minimum Rent is adjusted)
("Landlord's Threshold Cost"), then Landlord shall take all necessary actions to
comply with such Legal Requirement. In such case, Tenant shall reimburse
Landlord as set forth above and Landlord shall be responsible for. the balance
of such compliance cost.
If the cost to Landlord to satisfy .a Legal Requirement exceeds Landlord's
Threshold Cost, then Landlord shall have the right to terminate this Lease upon
not less than thirty (30) days' written notice to Tenant or pay any cost in
excess of Landlord's Threshold Cost. Landlord shall notify Tenant in writing of
Landlord's election to terminate or to contribute such excess sum within thirty
(30) days of Landlord's discovery of its requirement to comply with the Legal
Requirement at issue. Any termination notice served by Landlord in accordance
with this paragraph shall be accompanied by a statement showing the estimated
cost of complying with said Legal Requirement (which cost shall be competitively
bid) and a summary of all compliance costs paid solely by Landlord within the
applicable five (5) year period of the Lease Term. If the Lease terminates
pursuant to this Paragraph 8.3, all obligations of Landlord and Tenant under
--------------
this Lease shall terminate (except those which expressly survive expiration
hereof) on the date set forth in Landlord's termination notice.
If Landlord elects to terminate this Lease, Tenant shall have the right,
exercisable by written notice delivered to Landlord within thirty (30) days
after receipt by Tenant of Landlord's termination notice, to agree to bear
Tenant's pro rata share of the cost of complying with the Legal Requirement at
issue in excess of Landlord's Threshold Cost if such expense is related to the
Common Area or the entire amount of such cost in excess of Landlord's Threshold
Cost if said expense is related to the Premises. In either of such events, this
Lease shall continue, Landlord's termination notice shall be rendered null and
void, and Landlord shall take all actions necessary to comply with the Legal
Requirement.
Both parties shall have the right at their respective expense to contest
or review by legal proceedings the validity or legality of any Legal Requirement
with which it is required to comply hereunder, and during such contest, either
party may refrain from complying therewith except to the extent required by
judicial order (including an injunction) . The party contesting such Legal
Requirement shall indemnify and hold the other party harmless from any loss or
damage suffered by the other party as a result of any such contest or delay in
compliance.
9. UTILITIES.
Tenant shall pay or cause to be paid all charges for gas, water,
electricity, light, heat or power, telephone or other communication services
used or supplied upon or in connection with the Premises from and after the date
on which Tenant accepts possession of the Premises and throughout the Lease
Term. Tenant shall not be responsible to pay for any cost with respect to the
installation, maintenance or repair of that portion of any utility line and
installation which is located outside of the Premises (whether used exclusively
by Tenant or in common with another entity), all of which shall be the
responsibility of Landlord. Subject to Paragraph 10.2, Tenant agrees to pay for
--------------
the maintenance or repair of any utility line or installation located within the
Premises which exclusively serves the Premises (including the electrical panel
once installed) which is not otherwise the obligation of Landlord. In
furtherance of the foregoing and as part of Landlord's Work, Landlord shall
provide Tenant with separately metered utilities prior to the commencement of
this Lease. Landlord shall not be liable to Tenant for the failure or
interruption of any utility service to be furnished to the Premises (once
Landlord has fulfilled its obligation with respect to Landlord's Work), except
to the extent of any negligent or intentional act of Landlord or Landlord's
agents, employees or contractors and no such utility interruption shall
constitute a constructive eviction of Tenant unless Landlord fails to comply
with Paragraph 18 hereto with respect to any maintenance obligation Landlord has
------------
concerning utilities.
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10. MAINTENANCE, REPAIRS AND ALTERATIONS.
10.1 Obligations of Tenant. Subject to Landlord's obligations under
-----------------------
Paragraphs 3.1, 8.3, 10.2 and 10.3 and provided that the following
------------------------- ----
items are not damaged as a result of structural failure, Tenant at
its expense shall maintain the interior of the Premises and all
fixtures, mechanical systems, equipment and improvements located in
and exclusively serving the Premises, and all of Tenant's signs,
exterior doors, store front, plate glass and glazing material, in
good order, condition and repair throughout the Lease Term, ordinary
wear and tear and damage from casualty governed by the provisions of
Section 12 hereof excepted.
----------
10.2 Warranty of Landlord. Landlord warrants that the storefront, canopy,
--------------------
roof, doors (including without limitation the side loading door),
windows, floor, lighting, electrical, plumbing, heating, ventilating
and air conditioning ("HVAC") system located in the Premises at the
time possession of the Premises is accepted by Tenant shall be in
good condition and working order. Landlord at Landlord's sole cost
and expense, shall effect all repairs and make any necessary
replacements to any such building systems which are required within
one (1) year following the Commencement Date; provided, however,
that except to the extent provided in Paragraph 7.6, Landlord shall
-------------
not be required to make repairs to or replacements of such systems
where the same are damaged due to the negligent or intentional acts
of Tenant, its employees or contractor. In addition, and without
reducing Landlord's obligations under the preceding sentence,
Landlord hereby assigns to Tenant all assignable warranties of
materialmen, subcontractors and equipment manufacturers in effect,
if any, applicable to work performed upon or materials and equipment
incorporated in or installed upon the Premises; provided, however,
that the foregoing assignment shall be effective only to the extent
that Landlord does not avail itself of said warranties in fulfilling
Landlord's obligations hereunder or under the lease of the other
tenant of the Building.
10.3 Obligations of Landlord. In addition to Landlord's obligations under
-------------------------
paragraphs 5.3, 8.3 and 10.2 above, but subject to Sections 12 and
------------------- ---- -----------
16 below, Landlord shall, at its sole expense:
--
(a) Perform all maintenance and make all repairs,
replacements and alterations necessary or appropriate to
keep the structure of the store building located on the
Premises watertight (to the extent feasible) and in good
order, condition and repair, including, without
limitation, each of the following:
(1) The exterior walls, interior load bearing walls,
and interior roof structural columns;
(2) The roof, including the roof membrane, structure
and supports, such that watertight conditions
shall be maintained (to the extent feasible)
during the Lease Term;
(3) The foundations, floor slab and structural
supports;
(4) The gutters, downspouts and roof drain system;
(5) All wiring, plumbing, pipes, conduits and other
water, sewage, utility and sprinkler fixtures and
equipment (including, without limitation, all
connections with and components of any private
sewage system serving the Premises) which are
located within the slab of the store building
portion of the Premises, beneath the Premises or
between said store building and the main public
utility lines.
(6) The fire sprinkler system servicing the Premises,
including the periodic testing, monitoring and
certification thereof; and
(7) All areas of the Building (including the exterior
canopies), and all portions thereof, which are not
leased by others, including the loading corridor
and area at the rear of the Building, emergency
exit corridors, and the areas relating to access
to the electrical panels and fire sprinkler
risers.
It is the intention of Landlord and Tenant that although Landlord is not
warranting that the Premises will be watertight at all times during the Lease
Term, Landlord does covenant to maintain the Premises in as close to a water
tight condition as is commercially reasonable.
(b) Notwithstanding anything contained in this Lease to the
contrary but subject to the limitations on Tenant's pro
rata share of expenses under Paragraph 5.4(d) and only
---------------
after the warranty in Paragraph 10.2 expires, Tenant
--------------
shall reimburse Landlord up to One Thousand Dollars
($1,000) per calendar year for the cost of repair and
maintenance work related to the non-structural elements
of the roof to the Premises (but not any replacement
thereto) . Tenant shall reimburse Landlord for such
costs and expenses within fifteen (15,) days of
Landlord's written demand therefor, which demand shall
contain copies of all paid receipts or invoices for the
work performed. In no event shall Tenant be responsible
for any cost related to replacing the roof in whole or
in part or for any maintenance or repair costs related
to the structural elements of the roof. For purposes of
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the foregoing sentence, "structural elements of the
roof" shall be deemed to include all components of the
roof located underneath the plywood sheets (such as the
purlins or columns)
(c) Subject to Sections 12 and 16, Landlord shall also
----------- --
perform all maintenance and make all repairs and
replacements which result from any structural failure of
the Premises or which become necessary or appropriate at
any time because of any act, negligence or default under
this Lease of Landlord, its agents, employees, licensees
or contractors.
(d) Except as otherwise provided in paragraph 7.5, if any
-------------
repairs or replacement for which Landlord, is obligated
are necessitated by the negligent or intentional acts of
Tenant or its agents or contractor, Tenant shall
reimburse Landlord on demand for the reasonable cost of
effecting such repairs or replacements to the extent so
caused by Tenant's negligence or intentional acts.
10.4 Installations. Tenant at its expense may install in the Premises
-------------
such fixtures and equipment as Tenant may desire, and Tenant may
from time to time remove, replace, alter or add to such fixtures and
equipment. Tenant shall repair any damage to the Premises or
Building caused by or attributable to the installation, use,
maintenance, repair and/or removal of any such fixtures or
equipment. All fixtures which are not permanently attached to the
Premises and equipment installed by Tenant shall remain the property
of Tenant and may be removed by Tenant at any time during or at the
expiration of the Lease Term, and if requested by Landlord, shall be
removed at the expiration of the Lease Term or upon earlier
termination of this, Lease.
10.5 Alterations. Tenant at its expense may alter or remodel the Premises
-----------
at any time or times during the Lease Term. However, no changes
shall be made which affect the structural or exterior elements of
the Premises or any other portion of the Premises Landlord is
required to maintain or repair without the prior written approval of
Landlord, which approval shall not be unreasonably withheld, delayed
or conditioned. All such alterations or remodeling shall be
performed in accordance with Legal Requirements and subject to the
following sentence, shall become the property of Landlord upon
termination of this LeaseWith respect to any alterations which
exceed Fifty Thousand Dollars ($50,000) to install (at the time of
said installation) and for which Tenant has not obtained Landlord's
prior consent (whether required or not), Tenant shall remove such
alterations upon expiration (or earlier termination) of the Lease
Term (or earlier termination of the Lease) and restore the Premises
to substantially the same condition as existed prior to the making
of said installation in question, unless Landlord notifies Tenant
within thirty (30) days prior to the expiration of the Lease Term
that Landlord agrees to accept such alterations or portions thereof.
Landlord agrees to respond in writing to any written inquiry of
Tenant concerning the initial making of said alterations (prior to
installation) or the removal thereof (at the end of the Lease Term)
within ten (10) days after receipt of said inquiry. Tenant shall
give Landlord at least fifteen (15) days' prior written notice
before undertaking any work in the Premises, so Landlord may post
appropriate notices of non-responsibility.
10.6 Hazardous Materials.
--------------------
10.6.1 Definitions. As used in this Lease, the term "Hazardous
----------- ---------
Materials" shall mean any substance, material, chemical, gas,
---------
waste or other matter (including but not limited to asbestos)
, the existence, release, movement, migration, use, handling,
storage, treatment, transportation or disposal of which is or
may be harmful to the environment, public health or safety or
the source of liability based upon the contamination of
property or the environment or the existence of which requires
remediation thereof. The term "Environmental Law" shall mean
-----------------
any law, code, regulation, ruling, ordinance or order of any
federal, state or local governmental authority which
regulates, prohibits or imposes liability for the
contamination, of property, soil, water or air by Hazardous
Materials, the release, movement, migration, use, handling,
storage, treatment, transportation or disposal of Hazardous
Materials; the remediation of Hazardous Materials; or the
repair and/or replacement of any part of the Premises
necessary to make the Premises comply with applicable
standards concerning the environment and/or public health and
safety.
10.6.2 Representations and Warranties. Landlord represents and
------------------------------
warrants that, to the best of Landlord's knowledge, as of the
date hereof (i) the Shopping Center and the soil and ground
water on and under the Shopping Center are free of Hazardous
Materials other than as disclosed in the Phase I Environmental
Site Assessment prepared by Dames & Moore on October 15, 1993
as Job No. 25700-002-128 (the "Environmental Audit") delivered
-------------------
to Tenant prior to the execution of this Lease; (ii) the
Shopping Center is in compliance with all Environmental Law
regulating the handling, transportation, storage, treatment,
use and disposition of Hazardous Materials; (iii) there are no
underground storage tanks at the Shopping Center; (iv) there
are no Hazardous Materials used, handled or stored at the
Shopping Center except in compliance with Environmental Law;
(v) there are no governmental investigations regarding
possible Hazardous Materials at the Shopping Center; and (vi)
Landlord has received no notices of an anticipated
investigation regarding possible Hazardous Materials at the
Shopping Center.
10.6.3 Removal of Hazardous Materials from the Premises. Landlord
-----------------------------------------------
shall be responsible for complying with all Environmental Law
affecting or relating to the Premises arising out of
conditions existing as of the date Tenant accepts delivery of
possession of the Premises or which occur at any time
thereafter (including any time following the expiration of the
Lease Term), other than as a result of the actions of Tenant
or that of its employees, agents or contractors.
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In furtherance of the foregoing, and without limiting the scope thereof,
if it is determined at any time in connection with Tenant's initial construction
work or subsequent maintenance of the Premises by Landlord or Tenant or
otherwise that the Premises (or other portions of the Shopping Center affecting
the Premises) contain Hazardous Materials (whether or not such Hazardous
Materials were: 1) known to exist, 2) known to exist, but not then known to be
Hazardous Materials, or 3) then existing and not a Hazardous Material, but
subsequently changed to become a Hazardous Material) at the time possession of
the Premises was accepted by Tenant, and if the continued presence of such
Hazardous Materials will interfere with Tenant's use of the Premises, then
Landlord shall cause the same to be removed, contained or neutralized in
accordance with Environmental Law (the foregoing being hereafter referred to as
"abated" or "abatement") by a licensed, certified and qualified abatement
------ ---------
contractor reasonably acceptable to Tenant. Notwithstanding the foregoing, if
at any time the asbestos contained in the roof. cement (as disclosed by the
Environmental Audit) must be abated for any reason, Landlord shall abate the
same at Landlord's sole cost.
Landlord shall bear the entire cost of abating Hazardous Materials
within or affecting the Premises unless the only reason Landlord is required to
abate the Hazardous Materials is because of Tenant's voluntarily remodeling of
the Premises, in which case Tenant shall pay the reasonable cost of the
Hazardous Materials abatement (which Landlord shall perform) to the extent such
abatement is necessitated by Tenant's remodeling.
If the total cost to Landlord to abate any Hazardous Materials in
compliance with Environmental Law (less any contribution from other parties) is
less than One Hundred Thousand Dollars ($100,000) in a given five (5) year
period (which periods shall correspond with the time periods when Minimum Rent
is adjusted) ("Landlord's Abatement Threshold for the Premises"), Landlord shall
abate such Hazardous Materials. In such case, Tenant shall reimburse Landlord
(a) the lesser of the cost of such "abatement procedure" or (b) the first One
-------------------
Thousand Dollars ($1,000) of any such "abatement procedure" cost. Landlord shall
be responsible for the balance of such cost, if any. It is the intention of
Landlord and Tenant that all costs related to removing a particular Hazardous
Material from the Premises at the time such abatement procedure is undertaken
shall be interpreted to be the same "abatement procedure" for purposes of
calculating Tenant's contribution. For example, the removal of all asbestos
containing materials from the Premises would be, considered the same abatement
procedure; while the removal of a different Hazardous Material from a piece of
equipment would not be considered the same abatement procedure.
If the total Hazardous Materials abatement cost for Landlord (with respect
to the Premises) as described above exceeds Landlord's Abatement Threshold for
the Premises, then Landlord shall have the right either (a) to terminate this
Lease as of the date specified in Landlord's notice which shall be no earlier
than the latest reasonably necessary date for termination (provided, however,
that Tenant shall have the right to elect in writing within five (5) days of
Landlord's notice to have the Lease terminated earlier than the date specified
in Landlord's notice so long as the date of such termination is no less than
thirty (30) days from the date of Landlord's notice), or (b) to pay the
reasonable cost in excess of Landlord's Abatement Threshold for the Premises.
Landlord shall notify Tenant in writing, of Landlord's election to so terminate
or to contribute the excess cost within thirty (30) days after the later of (x)
discovery of Hazardous Materials in the Premises, or (y) when Landlord is
required by Environmental Law to commence abatement. Any such notice shall be
accompanied by a statement showing the estimated cost of remediation (which cost
shall be competitively bid) and a summary of all abatement costs with respect to
the Premises paid solely by Landlord in the applicable five (5) year period. If
Landlord elects to terminate this Lease, Tenant shall have the right,
exercisable by written notice delivered to Landlord within thirty (30) days
after receipt by Tenant of Landlord's termination notice, to agree to bear the
Hazardous Materials abatement cost with respect to the Premises which exceeds
Landlord's Abatement Threshold for the Premises in which event this Lease shall
continue, Landlord's termination notice shall be rendered null and void, and
Landlord shall promptly proceed to remediate such Hazardous Materials within the
Premises.
10.6.4 Removal of Hazardous Materials from Common Area. Landlord
-----------------------------------------------
shall be responsible for complying with all Environmental Law
affecting or relating to the Common Area arising out of
conditions existing as of the date Tenant accepts delivery of
possession of the Premises or which occur at any time
thereafter (including any time following the expiration of the
Lease Term), other than as a result of the actions of Tenant
or that of its employees, agents or contractors.
(a) Landlord shall require the other occupants of Shopping
Center to comply with applicable, Environmental Law
governing Hazardous Materials although said occupants
may store, use or handle Hazardous Materials in their
respective premises in the usual operation of their
retail businesses provided such Hazardous Materials are
stored, used or handled in compliance with Environmental
Law. In the event of a release of any Hazardous
Materials in, on or about Shopping Center by any
occupant thereof other than Tenant which violates
applicable Environmental Law, Landlord shall require
such occupant to promptly remediate such release if such
remediation is required by Environmental Law. Landlord
agrees, to the extent permissible and not in derogation
of Landlord's rights or interests, to make available to
Tenant the opportunity to participate in any
indemnification provided to Landlord by such occupant to
the extent of the damage incurred by Tenant by reason of
such release.
(b) If it is determined at any time during the Lease Term
that the Common Area contains, or is affected by,
Hazardous Materials and the existence of such Hazardous
Materials is not the result of the actions of Tenant or
any of its respective agents, employees or contractors,
then if required by Environmental Law, Landlord shall
cause such Hazardous Materials to be abated by a
licensed, certified and qualified abatement contractor
in accordance with Environmental Law. In the event
Landlord conducts Hazardous Materials abatement in or on
the Common Area other than as a result of the actions of
Landlord, Tenant or another occupant of Shopping Center
(or any of their respective agents, employees or
contractors), Tenant shall reimburse Landlord as a part
of Common Area Expenses for (a) the lesser of Tenant's
pro rata share of the cost of such abatement or (b) the
first One Thousand Dollars ($1,000) of such cost
(between Landlord and Tenant) per "occurrence". Each
discrete and noncontinuous release or discharge of
Hazardous Materials (and all abatement resulting
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therefrom) shall constitute a separate "occurrence", but
a continuous action or event such as an underground
migration of Hazardous Materials initially resulting
from a discrete release or discharge shall constitute
only one "occurrence". If the total cost to Landlord
(less any contribution from other parties) to abate an
"occurrence" of Hazardous Materials in the Common Area
is less than One, Hundred Thousand Dollars ($100,000) in
a given five (5) year period (which periods shall
correspond with the time periods when Minimum Rent is
adjusted) ("Landlord's Common Area Abatement
Threshold"), Landlord shall abate such Hazardous
Materials. In such case, Tenant shall reimburse Landlord
as provided above, and Landlord shall be responsible for
the balance of such cost.
If Landlord's share of the abatement cost with respect to the Common Area
to comply with Environmental Law exceeds Landlord's Common Area Abatement
Threshold, then Landlord shall have the right either (a) to terminate this Lease
upon the date specified in Landlord's notice which shall be no earlier than the
latest reasonably necessary date for termination (provided, however, that Tenant
shall have the right to elect in writing within five (5) days of Landlord's
notice to have the Lease terminated earlier than the date specified in
Landlord's notice so long as the date of termination is no less than thirty (30)
days from the date of Landlord's notice), or (b) to pay the reasonable cost in
excess of Landlord's Common Area Abatement Threshold. Landlord shall notify
Tenant in writing, of Landlord's election to so terminate or to contribute the
excess cost within thirty (30) days after the later of (x) discovery of
Hazardous Materials in the Common Area, or (y) when Landlord is required by
Environmental Law to commence abatement. Any such notice shall be accompanied by
a statement showing the estimated cost of abatement (which cost shall be
competitively bid) and a summary of all abatement costs for the Common Area
which were paid solely by Landlord during the applicable five (5) year period.
If Landlord elects to terminate this Lease, Tenant shall have the right,
exercisable by written notice delivered to Landlord within thirty (30) days
after receipt by Tenant of Landlord's termination notice, to agree to bear
Tenant's pro rata share of the Hazardous Materials abatement cost for the Common
Area which exceeds Landlord's Common Area Abatement Threshold, in which event
this Lease shall continue, Landlord's termination notice shall be rendered null
and void, and Landlord shall promptly proceed to abate such Hazardous Materials
within the Common Area.
10.6.5 Landlord's Indemnity for Hazardous Materials. Landlord
--------------------------------------------
shall indemnify, defend and hold Tenant harmless from and
against any and all claims, judgments, damages, statutory and
other penalties, fines, costs, liabilities or losses
(including, without limitation, reasonable sums paid in
settlement of claims, attorneys' fees, consultant fees and
expert fees, whether or not litigation has been commenced)
which arise at any time (including at any time after the
expiration of the Lease Term) from or in connection with
Hazardous Materials existing in or on the Shopping Center or
any portion thereof as of the date Tenant accepts delivery of
possession of the Premises or which occur at any time
thereafter due to acts or omissions of Landlord or its agents,
employees or contractors, to the extent not caused by the
actions of Tenant or Tenant's employees, agents or
contractors. Such indemnity, defense and hold harmless shall
not include consequential damages to the extent such damages
were caused by a party other than Landlord or Landlord's
agents, employees or contractors.
10.6.6 Use; Tenant's Indemnity for Hazardous Materials. Tenant
-----------------------------------------------
shall have the right to store, use and handle Hazardous
Materials on the Premises in the usual operation of Tenant's
retail business on the Premises provided that such Hazardous
Materials are stored, used, handled and disposed of in
compliance with all Environmental Law. Tenant shall be
responsible for all costs incurred in complying with all
Environmental Law relating to Hazardous Materials which Tenant
or its agents or contractors bring into or onto or about the
Premises at any time during the Lease Term.
Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, judgments, damages, statutory and other penalties,
fines, costs, liabilities or losses (including, without limitation, reasonable
sums paid in settlement of claims, attorneys' fees, consultants' fees and
experts' fees, whether or not litigation has been commenced) which. arise at any
time (including after expiration of the Lease Term) from or in connection with
Hazardous Materials which are stored, used or handled in, on or about the
Premises by Tenant or its agents, employees, contractors, subtenants, successors
or assigns to the extent not caused by the actions of Landlord or Landlord's
employees, agents or contractors.
10.6.7 Rent Abatement. Tenant shall be entitled to an
--------------
equitable abatement of Minimum Rent and all other amounts
payable hereunder, to the extent any Hazardous Materials
abatement materially interferes with Tenant's use of the
Premises and/or Common Area.
10.6.8 Interpretation. The provisions of this Paragraph 10.6
-------------- --------------
shall supersede any other provisions in this Lease regarding
the use, maintenance, repair, remediation, construction,
remodel or reconstruction of the Premises or the Common Area
or any part thereof, to the extent inconsistent with the
provisions hereof. The representations, warranties and
agreements of the parties set forth herein shall survive the
expiration of the Lease Term or the termination of this Lease
for any reason whatsoever.
11. SIGNS.
Tenant may install and maintain upon the Premises, including the
front, sides and rear exterior parapet walls, such building identification signs
advertising the business conducted on the Premises by Tenant as are permitted by
applicable law. After the date of this Lease, should Tenant want to modify the
structure to which any of its signs is attached or the location of any of said
signs, Landlord shall have the right to approve such change, which approval
shall not be unreasonably withheld, conditioned or delayed. In furtherance of
the foregoing, should Tenant desire to substitute a different trade name in any
existing sign structure or cabinet, Landlord shall have no right to approve such
action. In addition, Tenant shall be entitled to affix and maintain throughout
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the Lease Term an electrically illuminated sign panel bearing its business name
and logo upon both sides of the bottom fifty percent (50%) of the sign pylon
located in the Common Area as of the date of this Lease (as designed on the Site
Plan) and upon both sides of each sign pylon or monument hereafter installed in
the Shopping Center at any time during the Lease Term. Prior to the RCD,
Landlord shall provide to such sign pylons and monuments all electrical lines
and hookups necessary for Tenant to affix and maintain its electrically
illuminated sign panels thereon and Landlord shall maintain such lines and
hookups thereafter during the Lease Term. All building signs and pylon and
monument sign panels installed by Tenant (i) shall be of the size, type and logo
which Tenant customarily uses from time to time in its business, (ii) shall
comply with all applicable laws, rules and ordinances of state or local
governmental authorities, (iii) shall remain the property of Tenant, (iv) shall
be removed by Tenant at the termination of this Lease (or sooner if Tenant
desires), and (v) shall be maintained at all times in good order, condition and
repair, at Tenant's sole expense.
Immediately after the execution of this Lease, Tenant may construct a hardboard
sign in the Common Area to announce Tenant's store opening and Tenant may
maintain such sign until Tenant has installed Tenant's building identification
sign(s) Immediately after execution of this Lease and continuing until fourteen
(14) days after Tenant's store opening at the Premises, Tenant shall also be
permitted to hang such banners and other temporary signs outside the Premises as
Tenant deems desirable to announce Tenant's store opening. Tenant shall have the
right to place two (2) signs at conspicuous places within the Shopping Center
(not exceeding twenty (20) square feet each), informing the public of any nearby
stores of Tenant for a period not to exceed ninety (90) days after the
termination of this Lease.
12. DAMAGE TO THE PREMISES; SHOPPING CENTER.
12.1 Repair and Restoration.
------------------------
(a) Except as otherwise specifically provided in this
Section 12, if the Premises, the Building or any other
leasable buildings or improvements located on Shopping
Center are damaged by any cause whatsoever, this Lease
shall remain in full force and effect and Landlord
shall, at its sole expense, repair, restore and rebuild
the same with all reasonable dispatch and diligence, so
far as practicable and lawful, to complete units of like
quality, nature and condition, with the same layout and
parking to floor area ratios as that which existed
immediately prior to the occurrence of such damage.
Landlord's obligation to repair, restore and rebuild as
set forth in this Paragraph 12.1(a) shall supersede any
----------------
provision of applicable law to the contrary, which
provisions the parties hereby waive. Any such repair,
restoration and rebuilding of the Premises shall be
performed in accordance with plans and specifications
approved in writing by Tenant, prepared by a licensed
architect selected and employed by Landlord and approved
in writing by Tenant, and performed by a licensed
general contractor selected and employed by Landlord and
approved in writing by Tenant. None of the approvals to
be obtained from Tenant in the previous sentence shall
be unreasonably withheld, conditioned or delayed. During
such repair, restoration and rebuilding of the Premises,
Tenant shall at all times have access to the Premises
for the purpose of inspecting the work in progress and
for the purpose of installing trade fixtures, equipment,
merchandise, advertising and signs; provided, however,
that Tenant's rights of access shall not be exercised in
a manner which materially impedes Landlord's repair,
restoration or rebuilding of the Premises.
(b) In the event that the Premises, the Building or any
other leasable buildings or Common Area improvements
located on Shopping Center are damaged to the extent
that the Premises are not reasonably suitable for the
normal conduct of Tenant's business as carried on prior
to said damage, Tenant may nevertheless elect to
continue occupancy during the repair, restoration and
rebuilding period or discontinue occupancy until
satisfaction of the conditions set forth below;
provided, however, that if Tenant's continued occupancy
will materially delay completion of Landlord's repair,
restoration or rebuilding of the Premises, then the
three (3) month period specified in Clause (1) of
Paragraph 12.1(c) shall be extended by the period of
-----------------
delay attributable to Tenant's continued occupancy and,
provided further, that if Tenant's continued occupancy
will materially increase the cost of such repair,
restoration or rebuilding, Tenant shall pay the full
amount of such increase. In the event Tenant elects to
continue occupancy of the Premises, then from the date
of such damage until completion of repair, restoration
and rebuilding, there shall be an equitable adjustment
in Minimum Rent and all other amounts payable hereunder,
taking into account the interference, with Tenant's
normal conduct of business. In the event Tenant elects
to discontinue occupancy, then Minimum Rent and all
other amounts payable hereunder shall completely abate
from the date of damage for the duration of the period
of repair, restoration and rebuilding. Tenant shall not
be required to accept delivery, of possession of the
Premises and to commence paying Minimum Rent and other
charges payable by Tenant to Landlord hereunder until
the earlier of (i) the date on which Tenant recommences
to conduct business on the entire Premises, or (ii)
sixty (60) days after the last to occur of all of the
following events:
(1) The architect in charge of the construction
certifies in writing to Tenant that said
construction has been completed in substantial
accordance with the approved plans and
specifications and that the Premises is in
compliance with all laws, ordinances, regulations
and requirements of governmental authorities
having jurisdiction thereof;
(2) A certificate of occupancy or an equivalent use
permit and all other requisite permits and
approvals necessary for the conduct of Tenant's
business on the Premises and for the public to
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have access to the Premises are issued by the
appropriate legal authorities and Tenant shall
have received certified or photostatic copies of
the same; and
(3) If the location of the foundations or exterior
walls has been changed, Landlord delivers to
Tenant an as-built drawing of the restored
Premises.
(c) Tenant may terminate this Lease upon thirty (30) days
written notice to Landlord in the event Landlord fails
or is unable to (1) obtain a building permit for any
repairs, rebuilding or restoration required under this
Section 12 within three (3) months from the date of
damage to the Premises; or (2) complete such repairs,
rebuilding and restoration and comply with the
conditions in Section 12.1(b) for the resumption of
Minimum Rent, and other charges payable by Tenant
hereunder with all reasonable dispatch and diligence.
12.2 Last Twelve Months Exception. If the Premises or the Building are
----------------------------
destroyed within the last twelve (12) months of the Lease Term (as
extended at the time of destruction) , to the extent that the cost
of repair and restoration of either the Premises or the Building
exceeds thirty-three percent (33%) of the then Replacement Cost of
the Premises or the Building, as the case may be, Tenant shall have
the option, exercisable by written notice within the earlier of (a)
the later of ten (10) days after destruction and ten (10) days
before Landlord is scheduled to commence any repair or restoration
thereof (provided Landlord has provided Tenant with written notice
of the date such restoration is scheduled to commence) or (b) sixty
(60) days after the date of the occurrence of such damage, to (i)
terminate this Lease, provided that it releases to Landlord all of
Tenant's claim or interest in and to insurance proceeds otherwise
allowable for the repair and restoration of said improvements; or
(ii) affirm its obligations under this Lease by waiving Tenant's
rights pursuant to Paragraph 2.2 above to elect not to exercise the
-------------
next succeeding option to extend the Lease Term, provided, however,
that Landlord shall immediately undertake. the repair, restoration
and rebuilding of the Premises and/or the Building in accordance
with Paragraph 12.1 above.
--------------
If the Premises and/or the Building are destroyed within the last
twelve (12) months of the Lease Term (as extended at the time of destruction),
to the extent that the cost of repair and restoration of either the Premises or
the Building exceeds thirty-three percent (33%) of the then Replacement Cost (as
defined in Paragraph 12.4 below) of the Premises or the Building, as the case
may be, Landlord shall have the option, exercisable by written notice to Tenant
to terminate this Lease, if Landlord serves any such notice within sixty (60)
days after the date of such damage and Tenant has not conditionally waived its
right to not exercise its next available option pursuant to the prior paragraph
prior to the Landlord serving any such notice on Tenant. Notwithstanding the
foregoing, Tenant may render any such termination null and void by exercising
its next available option within thirty (30) days after receipt of any
termination notice from Landlord. Landlord shall cooperate with Tenant to
determine the Replacement Cost of the entire Building and/or the Premises.
12.3 Uninsured Casualty Exceptions.
-------------------------------
12.3.1 Uninsured Casualty Affecting Premises.
--------------------------------------
If the Premises is damaged or destroyed by any cause for which insurance
coverage is not obtained despite Landlord's compliance with Paragraph 7.1 and
-------------
the cost of repairing or restoring the Premises is in excess of twenty percent
(20%) of the then Replacement Cost of the Premises, then Landlord shall have the
right to elect to terminate this Lease upon the terms and conditions contained
in this Paragraph 12.3.1. Prior to serving any notice to terminate pursuant to
----------------
this Paragraph 12.3.1, Landlord shall first obtain at least two (2) bona fide
-----------------
bids from licensed and qualified contractors estimating the cost to repair or
restore the Premises. If Landlord elects to terminate this Lease pursuant to
this Paragraph 12.3.1, Landlord must do so by giving written notice to Tenant of
----------------
such election not later than sixty (60) days after the damage or destruction.
One copy of each bid obtained by Landlord for such repair and restoration must
be attached to Landlord's notice of termination. Landlord's failure to give such
notice within said sixty (60) day period shall be deemed Landlord's election not
to terminate this Lease but instead to repair and restore the Premises. In the
event Landlord does not terminate, is deemed not to have terminated or does not
have the right to terminate this Lease pursuant to this Paragraph 12.3.1, then
----------------
Landlord shall repair and restore the Premises in accordance with Paragraph
---------
12.1. If Landlord elects to terminate this Lease, Tenant shall have the right,
- ----
exercisable by notice delivered to Landlord within thirty, (30) days after
receipt by Tenant of Landlord's notice, to agree to bear all costs and expenses
of repair and restoration of the Premises in excess of twenty percent (20%) of
the Replacement Cost of the Premises, in which event this Lease shall not be
terminated and Landlord shall repair and restore the Premises and the Building
in accordance with Paragraph 12.1.
---------------
12.3.2 Uninsured Casualty Affecting Building. If the Building (other
-------------------------------------
than the Premises) is damaged or destroyed by any cause for
which insurance coverage is not obtained despite Landlord's
compliance with Paragraph 7.1, and the cost of repairing and
-------------
restoring the Building (other than the Premises) is in excess
of twenty percent (20%) of the then Replacement Cost of the
Building (other than the Premises) and provided that the
Premises is also significantly damaged or destroyed as a
result of such occurrence (but the restoration cost of the
premises does not render the Premises subject to Paragraph
----------
12.3.1), then Landlord shall have the right to terminate this
------
Lease upon the terms and conditions contained in this
paragraph 12.3.2. Prior to serving any notice to terminate
pursuant to this Paragraph 12.3.2, Landlord shall first obtain
----------------
at least two (2) bonafide bids from licensed and qualified
contractors estimating the cost to repair or restore the
Building (other than the Premises) . If Landlord elects to
terminate this Lease pursuant to this Paragraph 12.3.2,
----------------
Landlord must do so by giving written notice to Tenant of such
election not later than sixty (60) days after the damage or
destruction. One copy of each bid obtained by Landlord for
such repair and restoration must be attached to Landlord's
notice of termination. Landlord's failure to give such notice
within said sixty (60) day period shall be deemed Landlord's
election not to terminate this Lease but instead to repair and
restore the Premises and the Building. In the event Landlord
does not terminate, is deemed not to have terminated or does
not have the right to terminate this Lease pursuant to this
Paragraph 12.3.2, then Landlord shall repair and restore the
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Premises in accordance with paragraph 12.1. If Landlord elects
--------------
to terminate this Lease, Tenant shall have the right,
exercisable by notice delivered to Landlord within thirty (30)
days after receipt by Tenant of Landlord's notice, to agree to
bear all costs and expenses of repair and restoration of the
Building (other than the Premises) in excess of twenty percent
(20%) of the Replacement Cost thereof, in which event this
Lease shall not be terminated and Landlord shall repair and
restore the Premises and the Building in accordance with
Paragraph 12.1.
---------------
Further, if the Building is damaged or destroyed by any cause for
which insurance coverage is not obtained despite Landlord's compliance with
Paragraph 7.1, and the cost of repairing and restoring the Building (other than
- ------------
the Premises) is in excess of twenty percent (20%) of the then Replacement Cost
of said Building (other than the Premises), but the Premises is not also
significantly damaged or destroyed as a result of such occurrence, then Landlord
shall not have .the right to terminate this Lease but in such event Landlord
shall have no obligation to repair or restore the remainder of Building except
to the extent necessary to assure that the Premises is secure and structurally
sound and capable of being separately operated.
12.3.3 Limitations. Any termination by Landlord pursuant to
-----------
Paragraph 12.3.2 shall not be effective unless Landlord
----------------
concurrently terminates the lease(s) of every tenant of the
Building. In the event Landlord terminates this Lease in
accordance with Paragraph 12.3.1 or 12.3.2 and then Landlord
---------------- ------
(or a person or entity affiliated with Landlord) commences to
rebuild the Premises or the leasable building area (or
substantially similar thereof) located on Shopping Center, as
the case may be, within three (3) years after the date of such
damage or destruction, Landlord shall immediately notify
Tenant of Landlord's intention so to rebuild and Tenant shall
have the option to enter into a new lease with Landlord on the
same provisions as contained in this Lease for a term equal to
the balance of the Lease Term, including any available option
periods remaining as of the date of damage or destruction.
Tenant shall exercise such option, if at all, by notifying
Landlord of Tenant's intention to exercise such option within
sixty (60) days after Landlord's notice to Tenant of
Landlord's intention to rebuild.
12.4 "Replacement Cost" Defined. As used in this Lease, the term
--------------------------
"Replacement Cost" means the reasonably estimated cost of fully
repairing and restoring the building(s) and other improvements in
question as nearly as practicable to the condition existing
immediately prior to the damage or destruction, excluding, however,
Tenant's alterations, trade fixtures and equipment.
13. LIENS.
Tenant shall do all things reasonably necessary to prevent the filing of
any mechanic's liens or other liens against the Premises or any part thereof by
reason of work, labor, services or materials supplied or claimed to have been
supplied to Tenant. If any such lien shall at any time be filed against the
Premises, Tenant shall either cause the same to be discharged of record within
thirty (30) days after the date of filing the same or, if Tenant in its
discretion and in good faith determines that such lien should be contested,
furnish such security or bond as may be reasonably necessary to release any lien
or charge against the Premises during the pendency of such contest.
14. RIGHTS OF ACCESS.
14.1 By Tenant. Provided the completion of Landlord's Work is not
----------
unreasonably interfered with, Tenant may enter the Premises prior to
the RCD for the purposes of inspecting the Premises and constructing
Tenant's Improvements and installing its trade fixtures, equipment,
merchandise, advertising and signs.
14.2 By Landlord. Provided that Tenant's business is not unreasonably
------------
interfered with, Landlord and its authorized agents and
representatives shall be entitled to enter the Premises at
reasonable times, upon at least five (5) business days prior notice,
for the purpose of inspecting the same and showing the Premises to
prospective purchasers and lenders. Additionally, Landlord shall
have the right to enter the Premises for the purpose of performing
any maintenance or repair to the Premises or other portions of the
Building as may be required or permitted by this Lease, provided
that Landlord notifies Tenant in writing at least five (5) business
days prior to beginning any such maintenance or repairs, except in
case of an emergency in which case Landlord shall provide such prior
notice as shall be reasonable under the circumstances. Landlord
shall use reasonable efforts to notify Tenant of Landlord's need to
enter the Premises as the result of an emergency. For purposes of
the foregoing sentence, an emergency shall be deemed to exist where
immediate action is necessary to prevent injury to persons or
substantial damage to property. Landlord shall perform all such
maintenance or repair work in a manner which shall cause the least
interference reasonably possible with the operation by Tenant of its
business in the Premises and with the Common Area rights of Tenant
and Tenant's customers, agents and invitees consistent with prudent
property management practices. Tenant shall be entitled to an
equitable abatement of Minimum Rent and all other amounts payable
hereunder to the extent any such maintenance or repair work
materially interferes with the use of the Premises and/or the Common
Area by Tenant. Landlord agrees that no forcible entry of the
Premises will be made except to prevent injury to persons or
substantial damage to property.
15. ASSIGNMENT AND SUBLETTING.
Tenant shall not assign this Lease or sublet the Premises or any portion
thereof without the prior written consent of Landlord, which shall not be
unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing,
the consent of Landlord shall not be required for the assignment of this Lease
or the sublet of any portion of the Premises to (i) any entity which controls
Tenant or which is controlled by or under common control with, Tenant or (ii)
any entity resulting from the consolidation or merger of Tenant or (iii) any
-68-
entity which acquires substantially all of the store assets of Tenant or
substantially all of the store locations of Tenant in the state or region of a
state where the Premises are located. In the event Tenant sublets all or any
portion of the Premises, Landlord agrees to enter into a written nondisturbance,
recognition and attornment agreement with such subtenant, in form and substance
reasonably satisfactory to Landlord.
(a) If Tenant desires to assign this Lease or sublet
the Premises or any portion thereof that would
result in more than fifty percent (50%) of the
Premises occupied by subleases or assignees of
Tenant ("Subject Space") and Landlord's consent is
required, Landlord shall have twenty (20) days
from receipt of Tenant's request for consent
("Tenant's Notice") to notify Tenant in writing of
Landlord's intent to recapture the Subject Space
("Recapture Notice"). Within ten (10) days from
receipt of the Recapture Notice, Tenant shall have
the right to revoke or withdraw Tenant's Notice by
written notice to Landlord ("Revocation Notice"),
in which event Landlord shall have no further
right to recapture the Subject Space. If Landlord
has timely given the Recapture Notice and Tenant
has timely given the Revocation Notice, and if
Landlord consents to the proposed assignment or
sublease, after the date of such assignment or
sublease, Tenant shall pay to Landlord fifty
percent (50%) of the Transfer Premium (as
hereinafter defined) received by Tenant from such
assignment or subletting. If Landlord fails timely
to give the Recapture Notice, Tenant shall have no
obligation to pay Landlord any portion of the
Transfer Premium. The term Transfer Premium shall
mean:
(i) with respect to an assignment, the consideration
received by Tenant from the assignee for the assignment,
less brokerage commissions, attorneys' fees, remodeling
costs and other reasonable costs and expenses incurred
by Tenant in connection with the assignment; and
(ii) with respect to a subletting, rentals and other amounts
paid by the subtenant to Tenant, when and as paid, in
excess of all amounts payable by Tenant to Landlord
after Tenant has deducted brokerage commissions,
attorneys' fees, remodeling costs and other reasonable
costs and expenses incurred by Tenant in connection with
the subletting from such excess rentals and other
amounts paid by the subtenant.
Amounts payable by Tenant to Landlord in accordance with this Section 15
----------
shall be due within thirty (30) days following receipt of the payments from the
assignee or subtenant with respect to which the payments to Landlord are due.
No assignment, subletting or other transfer of this Lease or of possession
of the Premises shall relieve Tenant of its primary liability under this Lease.
Each assignee shall assume and agree to perform all obligations of Tenant under
this Lease; and, by accepting an assignment of this Lease, such assumption shall
be conclusively presumed for the benefit of Landlord. Landlord's consent to any
one assignment or sublease shall not be deemed a consent to any subsequent
assignment or sublease. Tenant shall, upon demand, provide evidence reasonably
satisfactory to Landlord as to costs incurred by Tenant in connection with any
assignment or sublease.
16. EMINENT DOMAIN.
16.1 Taking Defined. If there is any taking of all or any part of the
--------------
Premises or Shopping Center or access roads, to Shopping Center
because of the exercise of the power of eminent domain, whether by
condemnation proceedings or otherwise, or any transfer of any part
of the Premises or of Shopping Center or access roads to Shopping
Center made in avoidance of the exercise of the power of eminent
domain (all of the foregoing being hereinafter referred to as a
"taking") during the Lease Term, the rights and obligations of the
parties with respect to such taking shall be as provided in this
Section 16.
16.2 Substantial Taking. If title to all of the Building or the part
-------------------
thereof comprising the Premises is taken, or if title to so much of
any portion of Shopping Center is taken, so that a reasonable amount
of restoration thereof will not, in Tenant's reasonable judgment,
result in the Premises being reasonably suited for Tenant's
continued occupancy, then this Lease shall terminate on the date
that possession of the Premises, or such part of Shopping Center, is
taken. In such event, neither party shall have any further rights or
obligations hereunder, except as otherwise provided herein and
except that Tenant shall have the right to participate in any
condemnation award or in the purchase price paid, in accordance with
Paragraph 16.6 below.
--------------
16.3 Partial Taking. If title to any part of the Building of which the
--------------
Premises is a part is taken and the remaining part of the Premises,
after restoration of the Building, is suited in Tenant's reasonable
judgment for Tenant's continued occupancy, this Lease shall
terminate only as to the part of the Premises so taken as of the
date that possession of such part is taken and shall continue in
effect as to the part of the Premises remaining. In such event,
neither party shall have any further right or obligation with
respect to the portion of the Premises so taken except that Tenant
shall have the right to participate in any condemnation award or in
the purchase price paid in accordance with Paragraph 16.6 below. In
--------------
the event that the Premises, following restoration thereof, is not
suited in Tenant's reasonable business judgment for Tenant's
continued occupancy, this Lease shall terminate pursuant to the
terms of Paragraph 16.2.
--------------
16.4 Temporary Taking. If the whole or any part of the Premises or
----------------
Shopping Center is taken for ninety (90) days or less, this Lease
shall not terminate and Tenant shall continue to pay the full amount
of Minimum Rent and other charges payable by Tenant hereunder and to
perform and observe all of the other terms and conditions hereof as
though the taking had: not occurred (except to the extent to which
Tenant is prevented from so doing by the terms of the order of the
taking authority). Tenant shall be entitled to receive the entire
award made for the temporary taking of the Premises and Tenant's pro
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rata share for the temporary taking of Shopping Center. If the
taking extends beyond the expiration of the Lease Term the award
shall be apportioned between Landlord and Tenant.
16.5 Repair, Restoration, Rebuilding.
--------------------------------
(a) In the event of a taking, unless this Lease is
terminated as provided in Paragraphs 16.2 or 16.3,
--------------- -----
Landlord shall, at its sole expense, promptly repair,
restore and rebuild the remainder of the Premises and/or
Shopping Center, so far as practicable to a complete
unit of like quality, nature and condition as that which
existed immediately prior to the taking, provided,
however, that if the award of severance damages made
available to Landlord does not cover at least eighty
percent (80%) of the cost of such repair, restoration
and rebuilding, Landlord shall have the option to
terminate this Lease upon not less than thirty (30)
days' written notice to Tenant. If Landlord elects to
terminate this Lease pursuant to this Paragraph 16.5(a),
-----------------
Landlord must do so by giving written notice to Tenant
of such election not later than sixty (60) days after
the date the severance award is finalized. As a
condition to Landlord exercising such termination right,
Landlord must obtain at least two (2) bona fide bids
from licensed and qualified contractors verifying that
the severance award received by Landlord will not cover
at least eighty percent (80%) of the cost of repairing
and restoring the Premises and/or Shopping Center.
Landlord shall attach one copy of each bid obtained by
Landlord for such repair and restoration to Landlord's
notice of termination.
Landlord's failure to give such notice within said sixty (60) day period
shall be deemed Landlord's election not to terminate this Lease but instead to
repair and restore the Premises and or Shopping Center. In the event Landlord
does not terminate or is deemed to have not terminated this Lease pursuant to
this Paragraph 16.5(a), then Landlord shall repair and restore the Premises
------------------
and/or Shopping Center. If Landlord elects to terminate this Lease, Tenant shall
have the right, exercisable by notice delivered to Landlord within thirty (30)
days after receipt by Tenant of Landlord's termination notice, to agree to bear
all costs and expenses of repair and restoration of the Premises to the extent
that eighty percent (80%) of said repair or restoration costs exceeds the award
of severance damages made available to Landlord, in which event this Lease shall
not be terminated and Landlord shall repair and restore the Premises and/or
Shopping Center. With respect to the Premises only, any repair, restoration and
rebuilding work shall be conducted in the same manner, with the same approvals
and the same rights of Tenant to inspect the work as are provided for in
Paragraph 12.1(a) above.
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Notwithstanding anything to the contrary in this Lease, Tenant may cancel
this Lease upon thirty (30) days' written notice to Landlord in the event
Landlord fails to: (1) obtain a building permit for any repair, rebuilding or
restoration required under this Section 16 within three (3) months from the date
of taking; or (2) complete such repairs, rebuilding and restoration with all
reasonable dispatch and diligence.
(b) During the period between the effective date of any
taking and the completion of repair, restoration and
rebuilding of the Premises and/or the Shopping Center,
Minimum Rent and all other charges payable by Tenant
under this Lease, shall be equitably abated to the
extent that the Premises and/or the other portions of
the Shopping Center are not then suitable in Tenant's
reasonable discretion for the conduct of Tenant's
business. Upon the completion of repair, restoration and
rebuilding of the Premises, other portions of the
Shopping Center and access necessary for the fullest
possible use of the Premises or the remaining portion
thereof, Minimum Rent shall thereafter and throughout
the balance of the Lease Term be reduced equitably, and
all other charges required to be paid by Tenant to
Landlord under this Lease shall likewise be reduced in
the same proportion, except as set forth below. The
repair, restoration and rebuilding of the Premises will
not be deemed complete until the earlier of the dates
referred to in paragraph 12.1(b).
-----------------
16.6 Notices; Compensable Interests.
-------------------------------
(a) In the event Landlord or Tenant receives any notice of
any kind specified below, Landlord or Tenant shall
promptly give the other party a photocopy of the notice
received:
(1) Notice of intended taking;
(2) Service of any legal process relating to
condemnation of any portion of the Premises or
Shopping Center or any improvement located
thereon, or any easement appurtenant thereto;
(3) Notice in connection with any proceedings or
negotiations with respect to such a condemnation;
or
(4) Notice of intent or willingness to make or
negotiate a private purchase, sale or transfer in
lieu of condemnation.
(b) Any award for any taking shall belong to and be paid to
Landlord, except that Tenant shall be entitled to and
shall receive prior to any distribution to Landlord any
sums specifically awarded on account of Tenant's
leasehold improvements, personal property, trade
fixtures and alterations made to the Premises by Tenant
in accordance with this Lease which have been taken as
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part of the taking or, if the same have not been taken
as part of a taking, a sum for reasonable removal and
relocation costs. Landlord and Tenant each agree to
execute and deliver to the other any instruments that
may be necessary or appropriate to effectuate or
facilitate the provisions of this Lease relating to a
taking.
17. TENANT'S DEFAULT.
(a) Tenant shall be in default under this Lease if:
(i) Tenant fails to pay any installment of Minimum Rent or any
other amount payable by Tenant under the terms of this Lease,
when and as the same shall become due and payable under the
terms hereof, and any such failure continues for a period of
more than ten (10) days after notice thereof in writing is
given to Tenant by Landlord; or
(ii) Tenant fails to keep and perform any of the other covenants,
conditions or agreements set forth in this Lease and agreed to
be kept and performed by it, and any such failure continues
for a period of more than thirty (30) days after notice
thereof in writing stating the nature of said failure is given
to Tenant by Landlord; provided, however, that if the cause
for giving such notice involves making repairs or taking other
acts reasonably requiring a longer period of time than thirty
(30) days to complete or remedy, then Tenant shall not be In
default hereunder so long as Tenant has commenced to cure the
failure referred to in said notice within said thirty (30) day
period and thereafter continues diligently until completion to
cure such failure.
(b) In the event of a default by Tenant, Landlord may, so
long as such default continues, either terminate this
Lease by written notice to Tenant, which written notice
shall specify a date for such termination at least three
(3) days after the date of such notice, or not terminate
this Lease as a result of the default.
(c) In the event Landlord terminates this Lease pursuant to
the provisions of Paragraph 17(b) hereof, Landlord may
--------------
then, or at any time thereafter, re-enter the Premises
or any part thereof and expel or remove therefrom Tenant
and any other persons occupying the same and again
repossess and enjoy the Premises. In the event of such
termination by Landlord, Landlord shall be entitled to
recover in one or more awards of judgment from Tenant:
(1) the worth, at the time of the award of the unpaid
Minimum Rent which had been earned at the time of
termination;
(2) the worth at the time of the award of the amount
by which the unpaid Minimum Rent which would have
been earned after termination until the time of
award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided;
(3) the worth at the time of the award of the amount
by which the unpaid Minimum Rent for the balance
of the Lease Term after the time of the award
exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; and
(4) any other amount necessary to compensate Landlord
for all the detriment proximately caused by
Tenant's failure to perform Tenant's obligations
under this Lease or which in the ordinary course
of things would be likely to result therefrom.
The "worth at the time of the award", as used in (1) and (2) of this
paragraph l7(c) is to be computed by allowing interest at a rate equal to the
- -------------
Overdue Rate (as hereinbelow defined). The "worth at the time of the award"
referred to in (3) of this Paragraph 17(c) is to be computed by discounting such
--------------
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award, plus one percent (1%).
(d) In the event Landlord does not terminate this Lease as
permitted by Paragraph 17(b) above, and without barring
--------------
Landlord's later election to terminate pursuant to
Paragraph 17(b), Landlord shall be entitled to the
--------------
remedy described in California Civil Code Section 1951.4
to enforce all of Landlord's rights hereunder to collect
Minimum Rent and other charges payable by Tenant
hereunder, including the right as the same become due,
and Tenant shall remain and continue liable to Landlord
under all of the terms of this Lease.
(e) If Landlord does not terminate this Lease as permitted
by Paragraph 17(b) above, Landlord may, without waiving
any claim for damages or other remedy available to
Landlord, cure Tenant's default for the account of
Tenant. Any reasonable sum or reasonable contractual
liability incurred by Landlord in curing Tenant's
default shall be deemed paid or incurred for the account
of Tenant and Tenant agrees to hold Landlord harmless
therefrom and reimburse Landlord upon demand therefor,
plus interest thereon at the Overdue Rate.
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(f) The remedies of Landlord in the, event of the default of
Tenant as provided in this Section 17 are not intended
to be exclusive of any other remedies which may be
permitted by law.
18. LANDLORD'S DEFAULT.
Landlord shall be in default under this Lease (i) if Landlord fails
to make a repair or perform any maintenance required to be made or performed by
it under the terms of this Lease (including without limitation any breach under
the Declaration which becomes a default under this Lease as well); or (ii) any
of Landlord's representations under this Lease was materially untrue as of the
date of such representation and such breach is not, or cannot be cured, within a
reasonable time frame and without any damage to Tenant; or (iii) if Landlord
fails to keep and perform any of the other covenants, conditions or agreements
set forth in this Lease which Landlord has agreed to keep; or (iv) if Landlord
fails to timely pay (a) any tax or other charge which is a lien upon the
Premises, (b) any installment of principal or interest upon any deed of trust
which is a superior lien than this Lease, or (c) any monetary obligation under
the Declaration or any REA instrument affecting the Premises, and any such
failure continues for a period of thirty (30) days after delivery of written
notice to Landlord of the necessity for such repairs, maintenance or other
action to be performed by Landlord provided, however, that if the cause for
giving such notice involves taking acts reasonably requiring a longer period of
time than thirty (30) days to complete or remedy, then Landlord shall not be in
default hereunder so long as Landlord has commenced to cure the failure referred
to in said notice within said thirty (30) day period and thereafter continues
diligently until completion to cure such failure; and provided further, in the
case of an emergency, within such shorter period after delivery of such notice
as Tenant shall determine to be reasonable under the circumstances.
In the event of a default by Landlord, Tenant shall have all remedies available
under applicable law, in equity or otherwise and may, without waiving any claim
for damages or other remedy available to it under this Lease, cure such default
for the account of Landlord. Any reasonable amount paid or reasonable
contractual liability incurred by Tenant in curing such default shall be deemed
paid or incurred for the account of Landlord, and Landlord agrees to hold Tenant
harmless therefrom and reimburse Tenant upon demand therefor plus interest
thereon at the Overdue Rate. If Landlord fails to reimburse Tenant for any
amount paid for the account of Landlord hereunder or otherwise due Tenant from
Landlord within thirty (30) days of receipt of Tenant's demand therefor, said
amount may be offset by Tenant against Minimum Rent or other charges payable
hereunder up to an amount equal to one month's worth of the then scheduled
Minimum Rent, plus, one month's obligation for estimated Common Area Expenses
per Lease Year ("Tenant Uncontested Offset Amount") . If any offset
--------------------------------
would exceed Tenant's Uncontested Offset Amount in a given Lease Year and
Landlord disputes the amount Tenant claims as reimbursement for curing such
default in excess of Tenant's Uncontested Offset Amount, Tenant shall not have
the right to offset any amount in excess of Tenant's Uncontested Offset Amount
unless and until Landlord and Tenant have reached a final resolution of said
issue after following the arbitration procedure set forth in Paragraph 31. The
------------
amount of any offset amount in excess of Tenant's Uncontested Amount which is
submitted to arbitration shall not be limited in any manner, except as
determined through said arbitration process. Notwithstanding the foregoing,
Tenant may cure any default described in Paragraph 18(a) (i) prior to the
------------------
expiration of the thirty (30) day period set forth therein if the curing of such
default prior to the expiration of such period is reasonably necessary to
protect the Shopping Center or Tenant's interest therein from imminent harm or
to prevent injury or damage to persons or property.
19. ESTOPPEL CERTIFICATES.
At any time after the RCD either party, within thirty (30) days
after delivery of a request in writing from the other, shall execute and deliver
a statement in writing certifying that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the same is in full
force and effect as modified and stating the modifications), the dates to which
Minimum Rent and other charges payable hereunder have been paid and any other
factual information a purchaser, lender, assignee or sublessee may reasonably
request.
20. SUBORDINATION AND NONDISTURBANCE.
This Lease is and shall be prior to any deed of trust recorded after the
date of this Lease affecting all or any part of the Premises. If, however, the
holder of any deed of trust requires that this Lease be subordinated to such
deed of trust, Tenant agrees to subordinate this Lease to that deed of trust if
Landlord first obtains from such holder a written nondisturbance agreement in
form and substance consistent with what is reasonably acceptable to a lender of
similar nature with the lender in question and otherwise reasonably satisfactory
to Tenant (and consistent with the form of such agreement Tenant normally
obtains). Such non-disturbance agreement shall provide, among other matters,
that so long as Tenant shall not be in default under this Lease after notice and
beyond any applicable cure period, (i) the term of this Lease shall not be
terminated or modified in any respect whatsoever, nor shall Tenant's occupancy
of the Premises be disturbed or affected in any way;
(i) Tenant shall not be named as a defendant in any legal
action or other proceeding instituted by such holder;
(iii) in the event of default under any lien and upon
foreclosure of any other transfer by the holder of said
deed of trust, said holder or its successor-in-interest
agrees to perform all of the duties and responsibilities
of Landlord under this Lease as a direct lease with
Tenant; and (iv) such holder agrees that (a) all
insurance proceeds payable as a result of damage or
destruction of the Premises shall be applied to the
repair and restoration of such damage or destruction
pursuant to the terms- of this Lease and (b) all
proceeds as a result of the exercise of eminent domain
shall be distributed as provided in this Lease. In no
event shall Tenant's obligations be increased by such
nondisturbance agreement. Such nondisturbance agreement
shall be recorded in the office of the county recorder
of the county in which the Premises are located. The
term "deed of trust" as used herein includes mortgages,
deeds of trust, other monetary liens or encumbrances,
all modifications, extensions, renewals and replacements
thereof, given as collateral security for any obligation
affecting the Premises.
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21. END OF TERM.
At the expiration or earlier termination of the Lease Term, Tenant shall:
(i) subject to Paragraph 10.5, surrender the Premises in the same condition as
--------------
they were upon acceptance of possession thereof at the commencement of the Lease
Term, subject to normal wear and tear, damage by the elements, damage that
pursuant to Sections 12 and does not have to be repaired and repairs that are
-----------
the Landlord's responsibility to make; deliver all keys to the Premises to
Landlord; and (ii) remove from the Premises and the Shopping Center all of its
signs, sign panels, sign supports and pylons, trade fixtures, equipment and
other personal property. Except as otherwise provided in this Lease, upon
termination hereof prior to the scheduled expiration of the Lease Term, the
parties shall be relieved of and from all liabilities and obligations hereunder,
except for those which accrued on or before the date of termination and remain
unperformed as of said date. All covenants and indemnities of the parties shall
survive the expiration of the Lease Term on earlier termination of this Lease to
the extent required for the full performance thereof.
22. LANDLORD'S WARRANTY OF TITLE; QUIET POSSESSION.
(a) Landlord represents and warrants that as of the date
this Lease is fully executed, it has good title to the
Shopping Center, including without limitation, the
Premises and the Common Area, subject only to Permitted
Liens (as defined below), that it has full right and
authority to make this Lease and to perform as required
under this Lease, and that this Lease does not conflict
with any other agreement to which Landlord is bound
"permitted Liens" means (a) current taxes not past due,
and (b) those exceptions to the Preliminary Title Report
issued by First American Title Insurance Company dated
June 23, 1994. Landlord represents and warrants that
Tenant's use of the Premises for the sale of general
merchandise including, without limitation, bargain and
close-out merchandise and alcoholic beverages (for
off-premises consumption) and non-perishable packaged
food and all other merchandise sold by Tenant in its
other retail stores as. of the execution of this Lease,
and the use of the Common Area for access to the
Premises and other purposes contemplated by this Lease,
shall not be prevented or materially impaired at any
time during the Lease Term, by any restriction,
covenant, lease or agreement entered into by Landlord,
whether of record or not.
(b) Subject to the permitted Liens, Landlord covenants that
upon payment of the rental herein reserved and the due
performance by Tenant of the covenants and agreements
herein contained on its part to be performed, Tenant
shall at all times peaceably and quietly hold and enjoy
the Premises and all of the rights granted it under this
Lease during the Lease Term.
23. BROKERAGE.
Landlord acknowledges that Tenant has been represented in connection with
this Lease by Jose Legaspi of The Legaspi Company ("Broker") . Landlord shall
pay a commission to Broker pursuant to a separate agreement between Landlord and
Broker. Each party represents and warrants that it has caused or incurred no
claims for brokerage commissions or finders fees in connection with the
execution of this Lease by any party other than Broker. Each party shall
indemnify and hold the other harmless from and against any claims for a
commission or finder's fee (other than by Broker) caused by the party whose
actions or alleged commitments form the basis for such claim.
24. FORCE MAJEJRE.
Whenever a period of time is provided for in this Lease for Landlord or
Tenant to perform or do any act or thing, there shall be excluded from the
computation of such period of time any period during which performance is
delayed due to strikes, riots, acts of God, shortages of labor, governmental
laws, rules or regulations, or from any other cause or causes beyond the
reasonable control of the party (other than financial inability to perform)
required to perform such act or do such thing, or that of its agents, servants,
employees or contractors ("Force Majeure Event")
-------------------
25. LEASE MEMORANDUM.
Within ten (10) days after Landlord's receipt thereof in form and
substance reasonably acceptable to Landlord and Tenant, Landlord shall execute,
acknowledge and deliver to Tenant a memorandum of this Lease. Tenant may cause
said memorandum to be recorded in the office of the county recorder of the
county in which the Premises are located. Upon expiration of the Lease Term or
earlier termination of this Lease, Tenant shall execute, acknowledge and deliver
to Landlord all such instruments as may be reasonably necessary or appropriate
to establish of record that Tenant's rights and interest in the Premises and
Common Area have terminated.
26. ATTORNEYS' FEES.
The prevailing party in any arbitration, action or proceeding instituted
by one party against the other for the enforcement or construction of this Lease
shall be entitled to reasonable attorneys' fees and costs incurred in such
action in addition to all other relief to which such party may be entitled.
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27. NOTICES.
Any and all notices by Landlord to Tenant, or by Tenant to Landlord, shall
be in writing and either personally served or sent by registered or certified
mail, postage prepaid, or by a nationally recognized overnight courier or
delivery service (such as Federal Express or UPS), addressed as follows:
Notices to Landlord: VAT Partners II
3236 Stone Valley Road West, Suite 230
Alamo, California 94507
Attention: Donald F. Gaube
Notices to Tenant; 99Cent Only Stores
4000 E. Union Pacific Avenue
Commerce, CA 90023
Attention: Real Estate Department
Either party at any time may change its address by notice to the other party in
writing given as provided in this Section. The earlier of the (i) date of
receipt or (ii) three (3) days after the date such notice is given in accordance
with this Section shall constitute the initial date of notice in computing the
elapsed time as specified in any notice requirement in this Lease. Minimum Rent
shall be payable in lawful money of the United States of America to Landlord at
the address as set forth in this Section or as set forth in any change of
address for which notice is given pursuant to this Section.
28. SUCCESSORS.
Subject to Section 15 above, each of the terms, covenants and
----------
conditions of this Lease shall extend to and be binding upon and shall inure to
the benefit of Landlord and Tenant, and their respective legal representatives,
successors and assigns. Whenever in this Lease reference is made to either
Landlord or Tenant, the reference shall be deemed to include, wherever
applicable, the legal representatives, successors and assigns of such parties.
Notwithstanding the foregoing, references herein to "Landlord" shall mean only
the person(s) or entity(ies) holding fee title to the Premises at the time in
question, it being agreed that upon conveyance of said fee title, the grantor
(and each successive grantor) shall be relieved of and from all obligation
accruing, under this Lease after the date of such conveyance, except to the
extent of liability from acts prior to such time. Such conveyance shall not
relieve any former Landlord of any obligation or liability first arising prior
to such conveyance.
29. INTERPRETATION.
This Lease shall be interpreted in accordance with the laws of the
State in which the Premises are located. The language in all parts of this Lease
shall be construed in all cases as a whole and according to its fair meaning and
not strictly for or against Landlord or Tenant, nor shall the fact that any
portion of this Lease was drafted by Landlord or by Tenant be reason for the
construction of such portion against or in favor of either party. If any clause
or provision herein contained is adjudged invalid, the same shall not affect the
validity of any other clause or provision of this Lease.
30. RELATIONSHIP OF PARTIES.
Nothing contained herein shall be deemed or construed by the parties
hereto, or by any third party, as creating the relationship of principal and
agent or of a partnership or joint venture between the parties hereto. It is
understood and agreed that neither the method of computation of rent nor any
provision contained herein, nor any of the acts of the parties hereto, shall
create a relationship other than the relationship of landlord and tenant.
31. ARBITRATION.
Except as otherwise provided in this Lease, any controversy or claim
arising out of or related to this Lease or the breach of any provisions hereof
shall be submitted to binding arbitration in Los Angeles County, California in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Any such
arbitration proceeding shall commence upon sixty (60) days notice by either
party and shall be heard by a panel of three (3) arbitrators each of which shall
be a licensed attorney having at least seven (7) years experience in the
negotiation and drafting of commercial real property leases. In addition to any
other relief awarded, the prevailing party shall be entitled to an award of
costs and reasonable attorneys' fees. At the option of either Landlord or
Tenant, any of the following matters may be commenced and prosecuted in any
court of competent jurisdiction: (1) any action or proceeding for unlawful
detainer or ejectment; (2) any action for specific performance or injunctive
relief; and (3) any action seeking a defense of or indemnification from any
claim which is the subject of a pending court action.
32. ENTIRE AGREEMENT.
This Lease constitutes the entire agreement between the parties
hereto and supersedes all previous agreements and understandings between the
parties in any way relating to the subject matter hereof, including without
limitation, any letter of intent or proposal to lease. No amendment to or
modification of this Lease shall be binding unless the same is in writing and
signed by both Landlord and Tenant.
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33. OFFER TO LEASE.
Execution and delivery by Landlord of this Lease constitutes an
offer which shall not be deemed accepted by Tenant until Tenant has executed
this Lease and delivered a duplicate original thereof to Landlord.
34. AUTHORITY.
Each individual signing on behalf of a party hereto represents and
warrants that he or she is authorized by the Board of Directors, managing
partner or other appropriate body or individual, as the case may be, to execute
this Lease on behalf of such party.
35. HOLDING OVER.
Landlord hereby consents to Tenant remaining in possession of the
Premises after expiration or termination of the Lease Term, such holdover
tenancy shall be on a month-to-month basis, terminable at any time upon thirty
(30) days' written notice. Such month-to-month tenancy shall be upon the same
terms and conditions contained herein so far as applicable, with Minimum Rent
equal to the amount of Minimum Rent in effect immediately prior to the
expiration or termination of the Lease Term, payable in advance at the beginning
of each month for the period of such tenancy.
36. ANNOUNCEMENTS.
Without the prior written consent of Tenant, Landlord will not make
any oral or written public announcement of Tenant's execution of this Lease or
the transactions contemplated hereby.
37. INTEREST ON DELINQUENT AMOUNTS.
Except as expressly provided otherwise herein, any amount payable
under this Lease which is not received before delinquency shall bear interest
from the expiration of the notice period until the date received at the Overdue
Rate provided such sum is not received within five (5) days after receipt of
notice that said sum is overdue. The "Overdue Rate" shall be a per annum rate
equal to the lesser of: (1) two percent (2%) above the "prime" rate of interest
for U.S. money center banks (or equivalent) as published from time to time in
the Wall Street Journal, or (2) the highest rate of interest permitted under
applicable usury laws. Neither demand for nor receipt of interest on any
delinquent sum shall excuse the obligation to timely pay such sum or waive any
default with respect thereto.
38. NO WAIVER.
No delay or omission by Landlord or Tenant to exercise any right or remedy
such party is entitled to shall be construed as a waiver of any such right or
remedy or of any breach by Tenant or Landlord, as the case may be, unless such
waiver be in writing signed by the party waiving said right. Any waiver by the
non-breaching party of a breach of any term, covenant or condition contained in
this Lease, on any one occasion, shall not be deemed to be a waiver of such
term, covenant or condition due to a subsequent breach of the same or of any
other term, covenant or condition contained in this Lease. The subsequent
acceptance of rent or other amounts payable by one party hereunder shall not be
deemed to be a waiver of any preceding breach by that same party of any term,
covenant or condition of this Lease, other than the failure of such breaching
party to pay the particular rent or other amount so accepted, regardless of the
non-breaching party's knowledge of such preceding breach at the time of
acceptance of such rent or other amount.
39. NOTICE OF SALE
If during the Term of this Lease Landlord elects to sell (or is
considering selling) the Premises (whether by itself or together with other
property, the "Property"), Landlord shall so notify Tenant in writing. Tenant
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shall have the opportunity to negotiate in good-faith for a period of thirty
(30) days (the "Negotiation Period") with Landlord to purchase the Property,
------------------
provided, however, Landlord has not otherwise granted a purchase option, a right
of first refusal, right of first offer or other special rights with respect to
the Property to another party. Tenant's opportunity to negotiate with Landlord
to purchase the Property shall not be construed as a purchase option, a right of
first refusal or right of first offer. After the expiration of the Negotiation
Period, Tenant shall have no further right under this Section.
40. OTHER BUILDING SPACE
If the portion of the Building excluding the Premises is vacant ("Other
Building Space"), Landlord agrees to be responsible for the maintenance and
repair of the Other Building Space. If the Other Building Space Goes Dark and
remains Dark for more than six (6) consecutive months during the first lease
year of each option period under Paragraph 2.2, unless Landlord has executed a
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letter of intent with another tenant(s) for the Other Building Space, Tenant
shall have the right to terminate this Lease upon ninety (90) days' written
notice given within thirty (30) days of the expiration of such six-month period.
Tenant shall also have the right to terminate this Lease if, within six (6)
months of execution of a letter of intent, Landlord fails to execute a lease or
either (a) Landlord fails diligently to pursue the renovation of the Other
Building Space (including applying for a building permit), or (b) the new tenant
fails to open for business. Tenant must exercise the termination right, if at
all, by giving Landlord at least ninety (90) days' written notice within thirty
(30) days of-the expiration of such six-month period.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the date
and year first above mentioned.
LANDLORD: VAT Partners II,
a California general partnership
By: TENAX INVESTMENT COMPANY
a Delaware corporation and
Manage General Partner
By: /s/ Donald F. Gaube
----------------------------
Donald F. Gaube
President
Landlord' s Taxpayer
Identification Number:
95-4467282
TENANT: 99Cent Only Stores
a California corporation
By: /s/ Jeff Gold
----------------------------
Jeff Gold
Vice President
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Date: July ____, 1995
Landlord: VAT Partners II,
a California general partnership
Tenant: 99Cent Only Stores
A California corporation
Location: NWC Sepulveda Boulevard and Vermont Avenue
City of: Torrance
County of: Los Angeles
State of: California
Store No.: __________
1. PREMISES 1
1.1 The Premises and the Shopping Center 1
1.2 Ground Floor Area of the Premises, the Building and the Shopping Center 1
1.3 The Declaration 2
1.4 Acceptance of Premises by Tenant 3
2. TERM 4
2.1 Lease Term 4
2.2 Options to Extend Term 4
3. IMPROVEMENTS TO THE PREMISES 4
3.1 Landlord's Improvements 4
3.2 Tenant's Improvements 5
4. RENT AND RENT COMMENCEMENT DATE 5
4.1 Rent Commencement Date 5
4.2 Minimum Rent 6
4.3 Lease Year Defined 6
5. COMMON AREA 7
5.1 Definition of Common Area 7
5.2 Tenant's Rights in the Common Area 7
5.3 Landlord's Common Area Responsibilities 8
5.4 Common Area Expenses 10
5.5 Right of Substitution 12
5.6 REAs 12
6. REAL PROPERTY TAXES 13
6.1 Payment by Landlord 13
6.2 Reimbursement by Tenant 13
6.3 Time of Reimbursement 13
6.4 Bonded Assessments 14
6.5 Right to Contest 14
6.6 Limitation 14
7. INSURANCE 15
7.1 Property Insurance 15
7.2 Liability Insurance 16
7.3 Tenant's Additional Insurance 17
7.4 Rating 17
7.5 Waiver of Subrogation 17
7.6 Blanket Policies 17
7.7 Tenant's Indemnity 17
7.8 Landlord's Indemnity 17
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8. USE 18
8.1 Use of Premises 18
8.2 Restrictions on Landlord's Use 19
8.3 Compliance with Laws 20
9. UTILITIES 21
10. MAINTENANCE, REPAIRS AND ALTERATIONS 22
10.1 Obligations of Tenant 22
10.2 Warranty of Landlord 22
10.3 Obligations of Landlord 22
10.4 Installations 24
10.5 Alterations 24
10.6 Hazardous Materials 24
11. SIGNS 28
12. DAMAGE TO THE PREMISES; SHOPPING CENTER 29
12.1 Repair and Restoration 29
12.2 Last Twelve Months Exception 31
12.3 Uninsured Casualty Exceptions 31
12.4 "Replacement Cost" Defined 33
13. LIENS 33
14. RIGHTS OF ACCESS 33
14.1 By Tenant 33
14.2 By Landlord 33
15. ASSIGNMENT AND SUBLETTING 34
16. EMINENT DOMAIN 35
16.1 Taking Defined 35
16.2 Substantial Taking 35
16.3 Partial Taking 35
16.4 Temporary Taking 35
16.5 Repair, Restoration, Rebuilding 36
16.6 Notices; Compensable Interests 37
17. TENANT'S DEFAULT 37
18. LANDLORD'S DEFAULT 39
19. ESTOPPEL CERTIFICATES 40
20. SUBORDINATION AND NONDISTURBANCE 40
21. END OF TERM 41
22. LANDLORD'S WARRANTY OF TITLE; QUIET POSSESSION 41
23. BROKERAGE 42
24. FORCE MAJEJRE 42
25. LEASE MEMORANDUM 42
26. ATTORNEYS' FEES 42
27. NOTICES 42
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28. SUCCESSORS 43
29. INTERPRETATION 43
30. RELATIONSHIP OF PARTIES 43
31. ARBITRATION 44
32. ENTIRE AGREEMENT 44
33. OFFER TO LEASE 44
34. AUTHORITY 44
35. HOLDING OVER 44
36. ANNOUNCEMENTS 45
37. INTEREST ON DELINQUENT AMOUNTS 45
38. NO WAIVER 45
39. NOTICE OF SALE 45
40. OTHER BUILDING SPACE 46
EXHIBIT A LEGAL DESCRIPTION OF SHOPPING CENTER
EXHIBIT B SITE PLAN OF SHOPPING CENTER
EXHIBIT C LANDLORD'S WORK
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