SONORA PLAZA
-------------------------
(PROJECT)
COST U LESS, INC.
--------------------------
(TENANT)
LEASE
TABLE OF CONTENTS
-----------------
PAGE
----
1. PREMISES............................................... 1
2. TERM................................................... 1
3. RENT................................................... 1
5. LATE CHARGES........................................... 5
6. INTEREST ON PAST-DUE OBLIGATIONS....................... 5
7. USE.................................................... 5
8. UTILITIES AND SERVICES................................. 6
9. MAINTENANCE AND REPAIR................................. 6
10. ALTERATIONS............................................ 6
11. MECHANICS' LIENS....................................... 7
12. INSURANCE AND INDEMNITY................................ 7
13. WAIVER OF SUBROGATION.................................. 8
14. DAMAGE OR DESTRUCTION.................................. 8
15. CONDEMNATION........................................... 9
16. ASSIGNMENT AND SUBLETTING.............................. 9
17. HAZARDOUS MATERIALS.................................... 10
18. DEFAULT................................................ 11
19 SUBORDINATION.......................................... 12
20. NOTICES................................................ 13
21. ATTORNEYS' FEES........................................ 13
22. ESTOPPEL CERTIFICATE................................... 13
23. LANDLORD'S LIABILITY................................... 13
24. BROKERS................................................ 13
25. LANDLORD'S ACCESS...................................... 13
26. EXAMINATION OF LEASE................................... 14
27. RECORDING.............................................. 14
28. SURRENDER OF PREMISES; HOLDING OVER.................... 14
29. COMMON AREA AND FACILITIES............................. 14
30. SIGNS.................................................. 15
31. MERGER................................................. 16
32. QUIET POSSESSION....................................... 16
33. SECURITY MEASURES...................................... 16
34. LANDLORD'S RESERVATIONS................................ 16
35. EASEMENTS.............................................. 16
37. GENERAL PROVISIONS..................................... 16
FLOOR PLANS............................................ EXHIBIT "A"
LEASE SUMMARY.......................................... EXHIBIT "B"
RULES AND REGULATIONS.................................. EXHIBIT "C"
________________________________________________________________________________
_______Management ________Leasing ________Legal
________________________________________________________________________________
LEASE
-----
This Lease is dated as of August __, 1993, by and between INMOSTRAT
CORPORATION, a Delaware corporation ("Landlord"), and COST U LESS, INC., a
Hawaii corporation ("Tenant"), who agree as follows:
1. Premises
--------
Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, upon the terms and conditions hereof, those certain premises (the
"Premises") shown on the plan attached hereto as Exhibit "A", and further
described in the Lease Summary attached hereto as Exhibit "B". The Premises are
a portion of the retail center commonly known as Sonora Plaza located at 708 -
824 East Mono Way, California Highway 108, Sonora California, which retail
center, including all buildings and other improvements and appurtenances, is
hereinafter referred to as the "Project". A legal description of the Project is
set forth in Exhibit "A" hereto.
2. Term.
----
The term of this Lease shall be as specified in Exhibit "B" hereof and
shall commence upon the "Commencement Date" shown on Exhibit "B" hereto.
3. Rent.
----
3.1 Base Rent. Tenant shall pay to Landlord as basic monthly rental
---------
for the Premises the amount set forth in Item 4 of Exhibit "B" hereto (the "Base
Rent"), without offset or deduction, in advance on the first day of each month.
Rent for any period during the term hereof which is for less than one month
shall be prorated based upon a 30-day month. Rent shall be payable in lawful
money of the United States to Landlord at the address set forth in Exhibit "B"
hereto, or at such other places as Landlord may designate in writing.
3.2. Percentage Rent.
---------------
(a) In addition to the Base Rent, Tenant shall pay to Landlord at the
time and in the manner herein specified percentage rent equal to the amount set
forth in Item 5 of Exhibit "B" hereto (the "Percentage Rent"). The Percentage
Rent shall be computed monthly and on or before the fifteenth (15th) day
immediately following the end of each calendar month falling entirely within the
term hereof, Tenant shall pay to Landlord an amount equal to N/A% of the amount
by which Tenant's Net Sales during such month exceeds that month's pro rata
portion of the Annual Breakpoint (as such term is defined in Item 5 of Exhibit
"B"). Within thirty (30) days after the end of each calendar year and after the
end of the term hereof, there shall be determined the net sales of Tenant during
the year and thereupon an adjustment shall be made with respect to Percentage
Rent for such year to the end that if Tenant's obligation for Percentage Rent,
calculated on an annual basis, is less than the Percentage Rent actually paid by
Tenant for that year, the excess shall be applied toward subsequent installments
of Percentage Rent falling due, or, if the term of this Lease has expired,
Tenant shall be entitled to a refund forthwith of the excess amount paid. If
Tenant shall have paid Percentage Rent in an amount less than the Percentage
Rent due, as calculated on an annual basis, then Tenant shall forthwith pay such
difference. Tenant's net sales for any period during which Tenant does not
continuously and uninterruptedly conduct its business shall be deemed to be the
greater of Tenant's net sales for (i) such period or (ii) the corresponding
period of the preceding calendar year.
(b) Tenant shall furnish to Landlord an annual statement of Net Sales
thirty (30) days after the close of each year. Such statements shall be signed
and certified by Tenant and shall be accompanied by any Percentage Rent owed by
Tenant.
(c) Tenant shall keep full and accurate books and records of the Net
Sales as hereinafter defined including the Net Sales of any subtenant, licensee
or concessionaire) for a period of two (2) years after the close of each year.
Such books and records shall include, but not be limited to, such records which
would normally be examined and required to be kept by an independent certified
public accountant pursuant to accepted auditing standards in performing an audit
of Tenant's gross sales and all income, sales and occupation tax returns. Tenant
shall install in the Premises cash registers of a type acceptable to and
approved by Landlord, and such cash registers shall be equipped with a
cumulative totaling device which shall be sealed. Tenant shall cause all sales
in, upon or from the Premises to be registered upon said cash registers. The
receipt by Landlord of any statement or any payment of Percentage Rent for any
period shall
not bind it as to the correctness of the statement or the payment. Within two
(2) years after the receipt of any such statement, Landlord at any time shall be
entitled to an audit of such Net Sales either by Landlord or by a certified
public accountant to be designated by Landlord. If it shall be determined as a
result of such audit, which shall be binding upon both Landlord and Tenant, that
there has been a deficiency in the payment of Percentage Rent, then such
deficiency shall become immediately due and payable with interest from the date
when said payment should have been made at a rate equal to three percent in
excess of the prime rate as established from time to time by First Interstate
Bank of California. If such audit shall disclose any wilful or substantial
inaccuracies, this Lease may thereupon be cancelled and terminated at the option
of Landlord. In any event, if Tenant's statement for the pertinent year shall
have understated net sales by more than two percent (2%), then the Tenant shall
pay all of Landlord's reasonable costs and expenses connected therewith,
including the cost of the audit. Any information gained from such statements or
inspection shall be confidential; provided, however, that such information may
-------- -------
be disclosed in connection with any litigation between the parties and may be
disclosed to any prospective purchaser or any lender or prospective lender for
the Project upon the condition that such purchaser or lender guard the
confidentiality of the information.
(d) "Net Sales" of Tenant is defined to be the gross selling price
of all merchandise or services sold in or from the Premises by the Tenant, its
subtenants, licensees and concessionaires, whether for cash or on credit and
whether made by store personnel or by vending machines, excluding therefrom the
following:
(i) The selling price of all merchandise returned by
customers and accepted for full credit or the amount of discounts and allowances
made thereon;
(ii) Goods returned to sources or transferred to another
store or warehouse owned by or affiliated with Tenant;
(iii) Sums and credits received in the settlement of claims
for loss of or damage to merchandise;
(iv) The price allowed on all merchandise traded in by
customers for credit or the amount of credit for discounts and allowances made
in lieu of acceptance thereof;
(v) Alteration workroom charges and delivery charges;
(vi) Cash refunds made to customers in the ordinary course
of business, but this exclusion shall not include any amount paid or payable for
what are commonly referred to as trading stamps;
(vii) Interest, service or sales carrying charges or other
charges, however denominated, paid by customers for extension of credit on sales
where not included in the merchandise sales price;
(viii) Receipts from public telephones, stamp machines, or
public toilet locks;
(ix) Gift certificates, or like vouchers, until such time as
the same shall have been converted into sale by redemption;
(x) Sales taxes, so-called luxury taxes, consumers' excise
taxes, gross receipts taxes and other similar taxes now or hereafter imposed
upon the sale of merchandise or services, but only if collected separately from
the selling price of merchandise or services and collected from customers;
(xi) Sales of fixtures, equipment or property which are not
stock in trade.
All sales originating at the Premises shall be considered as made and completed
therein, even though bookkeeping and payment of the account may be transferred
to another place for collection and even though actual filling of the sale or
service order and actual delivery of the merchandise may be made from a place
other than the Premises. Each sale upon installment of credit or layaway shall
be treated as a sale for the full price in the month during which the said sale
shall be made, irrespective of the time when Tenant shall receive payment from
its customers, and no deduction shall be allowed for uncollectible payments or
uncollectible credit accounts.
3.3. Additional Rents.
----------------
For each calendar year during the term hereof, Tenant shall pay
to Landlord, as additional rents, Tenant's Share (as defined below) of:
(a) the Real Property Taxes (as defined below) for such calendar
year;
(b) the Common Area Operating Expenses (as defined below) for such
calendar year; and
Tenant shall also pay the aggregate amount of Personal Property Taxes (as
defined below), and any value added tax, excise, sales or privilege tax which
are imposed or levied by any governmental agency upon Landlord on account of
this Lease or the rental paid hereunder.
Said categories of additional rents are mutually exclusive and may be billed
separately or in any combination as determined by Landlord. All amounts payable
by Tenant under this Paragraph 3.3 shall be collectively referred to as
"Additional Rents".
2
3.3.1 Definitions:
-----------
(a) "Tenant's Share" is defined, for purposes of this Lease, as
the percentage determined by dividing the approximate rentable square footage of
the Premises by the total approximate rentable square footage contained in the
Project, except that, where a certain item is not attributable to all tenants
because a particular tenant has provided for certain service at that Tenant's
own expense with Landlord's consent, then in that event Landlord shall determine
a different proportion, as appropriate, from the proportion described above. Set
forth in Exhibit "B" hereto is a calculation of Tenant's Share based on the
current size of the Premises and the Project. It is understood and agreed that
the square footage figures set forth in Exhibit "B" are approximations which
Landlord and Tenant agree are reasonable and shall not be subject to revision
except in connection with an actual change in the size of the Premises or a
change in the space available for lease in the Project.
(b) "Real Property Taxes" is defined as all real property taxes
and assessments, general or special, ordinary or extraordinary (computed as if
paid in permitted installments regardless of whether actually so paid), and
other governmental levies imposed upon or with respect to the Project, together
with any tax on or measured by gross rentals received from the rental of space
in the Project.
(c) "Common Area Operating Expenses" is defined, for purposes of
this Lease, as all costs, if any, incurred by Landlord for:
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, of the Common Areas (as defined in Section 29
of this Lease), including (without limitation) parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, curbs, signs, drainage systems, landscaped areas, striping, bumpers,
irrigation systems, common area lighting facilities and fences and gates;
(ii) Trash disposal services;
(iii) Tenant directories;
(iv) Fire detection systems, including sprinkler system
maintenance and repair;
(v) Security services, including any legal fees;
(vi) Painting and repainting of exterior walls, striping,
sealing and paving and repaving of all parking and driving areas;
(vii) Seasonal decorations and promotion of the Project;
(viii) Dues and assessments of any property owners'
association;
(ix) Property management services (which shall not be in
excess of 5% of gross rent collected) and any other service to be provided by
Landlord hereunder; and
(x) Water, gas and electricity to service the Common
Areas.
In addition, "Common Area Operating Expenses" shall include all expenses
incurred in connection with any additional land made available for parking or
other common purposes.
Notwithstanding anything to the contrary contained herein,
Common Area Operating Expenses shall not include any of the following:
(i) legal fees, auditing fees, brokerage commissions,
advertising costs, or other related expenses incurred by Landlord in an effort
to generate rental income;
(ii) repairs, alterations, additions, improvements, or
replacements made to rectify or correct any defect in the original design,
materials or workmanship of the Project or Common Areas (but not including
repairs, alterations, additions, improvements or replacements made as a result
of ordinary wear and tear);
(iii) damage and repairs attributable to fire or other
casualty;
(iv) damage and repairs necessitated by the negligence or
wilful misconduct of Landlord, Landlord's employees, contractors or agents;
(v) executive salaries to the extent that such services
are not in connection with the management, operation, repair or maintenance of
the Project;
(vi) Landlord's general overhead expenses not related to
the Project;
(vii) legal fees, accountant's fees and other expenses
incurred in connection with disputes with tenants or other occupants of the
Project or associated with the enforcement of the terms of any leases with
tenants or the defense of Landlord's title to or interest in the Project or any
part thereof unless the outcome is to the financial benefit of all tenants;
(viii) costs (including permit, license and inspection
fees) incurred in renovating or otherwise improving, decorating, painting or
altering (1) vacant space (excluding Common Areas) in the
3
Project or (2) space for tenants or other occupants in the Project and costs
incurred in supplying any item or service to less than all of the tenants in the
Project;
(ix) costs incurred due to a violation by Landlord or
any other tenant of the Project of the terms and conditions of a lease;
(x) cost of any specific service provided to Tenant or
other occupants of the Project for which Landlord is reimbursed or any other
expense for which Lessor is or will be reimbursed by another source (i.e.,
expenses covered by insurance or warranties);
(xi) costs and expenses which would be capitalized
under generally accepted accounting principles, with the exception of the cost
of cost-saving capital improvements, which shall be amortized over their useful
life;
(xii) building management fees in excess of the
management fees specified hereinabove;
(xiii) cost incurred with owning and/or operating the
parking lot(s) serving the Project by independent parking operator(s) if a fee
is paid for parking;
(xiv) fees paid to Landlord or any affiliate of Landlord
for goods or services in excess of the fees that would typically be charged by
unrelated, independent persons or entities for similar goods and services.
(xv) rent called for under any ground lease or master
lease; and
(xvi) principal and/or interest payments called for
under any debt secured by a mortgage or deed of trust on the building.
(e) "Personal Property Taxes" is defined as all city, county,
and other jurisdictional impositions levied upon trade fixtures, furnishings,
equipment and all other personal property of Landlord or Tenant (in which case
Tenant's Share shall be 100%) on the Premises or otherwise used in connection
with the Premises. Tenant shall endeavor to secure from the taxing authorities
separate billings of taxes on its trade fixtures, furnishing, equipment and
other personal property on the Premises and, in such event, Tenant shall pay
such separate assessments in full prior to delinquency.
3.3.2 Tenant's Share of Real Property Taxes and Common Area
Operating Expenses shall be payable by Tenant within ten (10) days after a
reasonably detailed statement of actual expenses is presented to Tenant by
Landlord. At Landlord's option, however, an amount may be estimated by Landlord
from time to time of Tenant's Share of Real Property Taxes and Common Area
Operating Expenses and the same shall be payable monthly, as Landlord shall
designate, during each twelve-month period of the Lease term, on the same day as
the Base Rent is due hereunder. In the event that Tenant pays Landlord's
estimate of Tenant's Share of Real Property Taxes and Common Area Operating
Expenses as aforesaid, Landlord shall deliver to Tenant within one hundred
twenty (120) days after the expiration of each calender year a reasonably
detailed statement showing Tenant's Share of the actual Real Property Taxes and
Common Area Operating Expenses incurred during the preceding year. If Tenant's
payments under this paragraph during said preceding year exceed Tenant's Share
as indicated on said statement, Tenant shall be entitled to credit the amount of
such overpayment against Tenant's Share of Real Property Taxes and Common Area
Operating Expenses next falling due. If Tenant's payments under this paragraph
during said preceding year were less than Tenant's Share as indicated on said
statement, Tenant shall pay to Landlord the amount of the deficiency within ten
(10) days after delivery by Landlord to Tenant of said statements.
3.3.3 If Landlord incurs any Personal Property Tax, Landlord
shall furnish Tenant a statement showing the amount incurred and Tenant's Share
thereof, and Tenant shall pay the stated amount within thirty (30) days after
receipt thereof. Tenant shall also pay any value added tax, excise, sales,
rental, privilege tax or other similar tax at any time imposed upon the rent
payments or any other payments to Landlord hereunder, and such taxes shall be
paid by Tenant at the time and in addition to the rent or other payments
required under this Lease.
3.3.4 Tenant agrees to pay as Additional Rent all costs for any
additional services, goods or material provided by Landlord or others at
Tenant's request, other than those that are Landlord's obligation to provide
under this Lease.
3.3.5 The termination of this Lease shall not terminate
Tenant's obligation to pay the Additional Rents for the year in which the Lease
terminates. Tenant's obligations for the year of termination shall be prorated
as of the date of termination on the basis of a 360-day year. Such prorated
amount shall be billed to Tenant when the amount has been computed by Landlord,
and Tenant agrees to pay such amount to Landlord within ten (10) days after the
date of billing.
3.3.6 Tenant shall have the right, at Tenant's expense during
regular business hours and with prior notice, to inspect Landlord's books and
records at Landlord's principal office and verify the basis and computations of
any Additional Rents charged to Tenant under this Article 3. It is agreed that,
because of Tenant's access to Landlord's books and records, Landlord shall have
no obligation to duplicate any portion of Landlord's records or invoices for
Tenant. All computations shall be based upon unaudited
4
amounts obtained from Landlord's books and records. If after such inspection and
computation, Tenant disputes the amount of Additional Rents owed, a
certification as to the proper amount shall be made by Landlord's certified
public accountant, which certification shall be final and conclusive. Tenant
agrees to pay the cost of such certification unless it is determined that
Landlord's original statement overstated the Additional Rents by more than five
percent (5%). Failure of Tenant to object in writing to Landlord's basis or
computation of any Additional Rents within thirty (30) days after Tenant's
receipt of Landlord's invoice shall conclusively constitute Tenant's acceptance
of such basis and computation.
3.3.7 All monetary obligations of Tenant to Landlord under the terms
of this Lease, including but not limited to Additional Rents and any other
expenses payable by Tenant hereunder, shall be deemed to be rent.
5. Late Charges.
------------
Tenant acknowledges that late payment by Tenant to Landlord of Base
Rent, Percentage Rent, Additional Rents or other sums due under this Lease will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impractical to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Project. Accordingly, if any installment of Base Rent,
Percentage Rent, Additional Rents or any other sum due from Tenant is not
received by Landlord or Landlord's designee within five (5) days after such
amount is due, Tenant shall pay to Landlord a late charge equal to Fifty Dollars
($50.00) or eight percent (8%) of such overdue amount, whichever is greater. A
returned check due to insufficient funds will be treated as a late payment. The
parties agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant. Acceptance of
any late charge by Landlord shall not constitute a waiver of Tenant's default
with respect to the overdue amount, or prevent Landlord from exercising any of
the other rights and remedies available to Landlord.
6. Interest on Past-due Obligations.
--------------------------------
Any amount due to Landlord not paid when due shall bear interest from
the date due until paid at the rate of ten percent (10%) per annum; provided,
however, that interest shall not be payable on late charges pursuant to Article
5.
7. Use.
---
7.1 Specific Use. The Premises shall be used and occupied only under
------------
the trade name and for the purpose set forth in Item 10 of Exhibit "B" hereto
and shall not be used for any other purpose without Landlord's prior written
consent.
7.2 Compliance With Law. Tenant shall, at Tenant's expense, promptly
-------------------
comply with all applicable statutes, ordinances, rules, regulations, orders,
covenants and restrictions of record, and requirements of any fire insurance
underwriters or rating bureaus, now in effect or which may hereafter come into
effect, during the term of this Lease, relating in any manner to the Premises or
the occupation or use by Tenant of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants of the Project, or injure or annoy
them; nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises or the Project or commit any waste in, on or about the Premises or
the Project. In the event Tenant fails to comply with the provisions of this
paragraph 7.2 and Landlord should therefore be charged an additional insurance
premium, Tenant immediately upon demand shall reimburse Landlord for such
additional premium.
7.3 General Business Use. Tenant agrees to be open for business and
--------------------
to operate all or substantially all of the Premises throughout the term of this
Lease during regular and customary hours for such type of business on all
business days. Tenant shall keep its display windows well lighted from dusk
until such reasonable time as may be fixed from time to time by Landlord for all
of the tenants in the Project unless prevented by causes beyond Tenant's
reasonable control. Tenant agrees not to change the advertised name of the
business operated in the Premises without the written permission of Landlord.
Tenant agrees to conduct its business at all times in a high-class and reputable
manner. Tenant covenants that it will not, during the term of this Lease
directly or indirectly operate or own any similar type of business within a
radius of the number of miles from the location of the Premises which is set
forth in Item 11 of Exhibit "B" hereto.
5
The restriction contained in this paragraph shall apply to any corporation or
partnership of which Tenant is a principal shareholder or a partner; and if
Tenant is a corporation or partnership, said restriction shall apply to the
principal shareholders or to any partners of Tenant. Tenant shall not use the
sidewalks adjacent to the Premises for business purposes except ingress and
egress without the written consent of Landlord, nor permit the use of any part
of the Premises for sleeping apartments or lodging. No auction, distress,
going-out-of-business, fire or bankruptcy sales shall be conducted in the
Premises without the advance written consent of the Landlord, nor allow carts,
portable signs, devices or any other objects to be stored or to remain outside
the defined exterior walls and permanent doorways of the Premises. Tenant will
not use or operate the Premises so as to emit therefrom any noise, litter, or
odor which, in Landlord's reasonable opinion, is obnoxious or otherwise
constitutes a public or private nuisance and shall conduct or permit any use or
act which unreasonably disturbs or annoys any other tenant of Landlord. In
addition, Tenant shall at all times during the Lease term or any extension
thereof, comply with all other reasonable rules and regulations at any time or
from time to time established by Landlord covering use of the Premises and
Common Areas. Tenant further acknowledges that Tenant is familiar with all
conditions, restrictions and grants of easement affecting the Premises and
agrees to comply with the same so long as they are consistent with the
provisions of this Lease.
7.4 Acceptance of Premises. Tenant acknowledges that it has satisfied
----------------------
itself by its own independent investigation that the Premises are suitable for
their intended use, and that neither Landlord nor Landlord's agent or agents
have made any representation or warranty as to the present or future suitability
of the Premises or the Project for the conduct of Tenant's business. Tenant's
taking possession or use of the Premises for any purpose shall constitute
Tenant's acceptance of the Premises and the Project in their existing condition.
8. Utilities and Services.
----------------------
8.1 Tenant to Pay. Tenant shall pay, directly to the appropriate
-------------
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Premises. However, if any services or utilities are jointly metered with
other premises, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
8.2 Interruptions. There shall be no abatement of rent and Landlord
-------------
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Landlord's
reasonable control or in cooperation with governmental request or directions;
provided, however, that if any utility to the Premises should become unavailable
for a continuous period in excess of 48 hours, and such unavailability is caused
by Landlord or Landlord's employees or agents, all Base Rent shall abate until
utility service to the Premises is restored. Landlord agrees to use reasonable
efforts to cause the cessation of any such interruption and, to the extent
reasonably possible, to effect repairs during non-business hours.
9. Maintenance and Repair.
----------------------
9.1 Landlord's Obligations. Landlord shall repair and maintain the
----------------------
Common Areas (as defined in Article 29) and the structural portions of the
building in which the Premises are located, which structural portions include
only the foundations, structural portions of exterior walls (excluding glass and
doors) and roof. There shall be no abatement of rent or liability of Landlord on
account of any injury or interference with Tenant's business with respect to any
improvements, alterations or repairs made by Landlord to the Premises or the
Project or any part thereof; provided, however, that if such repairs,
alterations or improvements are necessary as a result of any wilful misconduct
or negligence of Landlord or Landlord's employees or agents, or if the Premises
are rendered unusable by Tenant, all Base Rent shall abate until Tenant's full
use of the Premises is restored.
9.2 Tenant's Obligations. Except as provided in paragraph 9.1, Tenant
--------------------
at its cost shall keep the Premises in good and sanitary order, condition and
repair with ordinary wear and tear excepted. All of Tenant's repairs shall be of
a quality and class equal to the original work. If any portion of the Premises
or any system or equipment in the Premises which Tenant is obligated to repair
cannot be fully repaired, Tenant shall promptly replace such portion of or
system or equipment in the Premises, regardless of whether the benefit of such
replacement extends beyond the Lease term. Tenant shall also maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating and
air conditioning contractor and provide Landlord with copies thereof. Landlord
shall have the right, upon written notice to Tenant, to undertake the
responsibility for preventive maintenance of the heating and air conditioning
system at Tenant's expense. In addition, Tenant shall, at Tenant's expense,
repair any damage to the roof, foundation or structural portions of walls caused
by Tenant's acts or omissions. It is the intention of Landlord and Tenant that,
at all times during the Lease term, Tenant shall maintain the Premises in an
attractive, first-class and fully operative condition.
10. Alterations.
-----------
Tenant shall not make any alterations, additions or improvements in
excess of $10,000 to the Premises without Landlord's prior written consent. All
proposed alterations, additions or improvements shall be presented to Landlord
in written form with detailed plans and working drawings. Any consent given by
Landlord shall be deemed conditioned upon Tenant's acquiring all necessary
permits. All alterations shall be performed by a contractor approved by
Landlord, and shall be completed in compliance with law and the plans and
specifications approved by Landlord. Tenant shall give Landlord not less than
ten (10) days
6
notice prior to the commencement of any work in the Premises by Tenant, and
Landlord shall have the right to post notices of non-responsibility in the
Premises as provided by law. Should Tenant make any alterations, improvements,
or additions without Landlord's prior approval, or use a contractor not
expressly approved by Landlord, Landlord may at any time during the term of this
Lease require that Tenant remove any or all such improvements.
11. Mechanics' Liens.
----------------
11.1 Tenant's Covenants. Tenant shall pay, when due, all claims for
------------------
labor or materials furnished or alleged to be furnished to or for Tenant at or
for use in the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or the Project.
11.2 Contest of Lien. Tenant may contest the correctness or the
---------------
validity of any mechanic's lien if, immediately upon demand by Landlord, Tenant
procures and records a lien release bond issued by a corporation authorized to
issue surety bonds in the jurisdiction in which the Premises are located in an
amount equal to the claim of lien. The bond shall provide for the payment of any
sum that the claimant may recover on the claim. If a final judgment establishing
the validity or existence of a lien for any amount is entered, Tenant shall
immediately pay and satisfy the same.
11.3 Right to Cure. If Tenant shall be in default in payment of any
-------------
mechanic's lien claim and shall not have given Landlord security to protect the
Premises, the Project, and Landlord from liability for such claim of lien,
Landlord may, but shall not be required to, pay said claim and any costs. The
amount so paid, together with reasonable attorneys' fees and court costs
incurred in connection with the release of such lien and/or the defense in a
foreclosure action, shall be immediately due and owing from Tenant to Landlord,
and Tenant shall pay the same to Landlord with interest at the maximum lawful
rate from the date of Landlord's payment.
12. Insurance; Indemnity.
--------------------
12.1 Tenant's Insurance. Tenant shall, at Tenant's expense, obtain
------------------
and keep in force during the term of this Lease:
(a) Comprehensive general liability insurance with broad form
general liability endorsement, in an amount of not less than $1,000,000 per
occurrence of bodily injury and property damage combined, and shall insure
Tenant with Landlord as an additional insured against liability arising out of
the use, occupancy or maintenance of the Premises. Compliance with the above
requirement shall not, however, limit the liability of Tenant hereunder.
(b) Worker's compensation coverage as required by law, together
with employer's liability coverage, with a limit of not less than $500,000.
(c) Replacement cost fire and extended coverage insurance, with
vandalism and malicious mischief, sprinkler leakage and earthquake sprinkler
leakage endorsements, in an amount sufficient to cover not less than 100% of the
full replacement cost, as the same may exist from time to time, of all Tenant's
personal property, fixtures, equipment, and tenant improvements.
12.2 Insurance Policies. Tenant shall deliver to Landlord copies of
------------------
liability insurance policies required under (a) above, or certificates
evidencing the existence and amounts of such insurance, within seven (7) days
after the Commencement Date. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30) days prior
written notice to Landlord. Tenant shall, prior to the expiration of such
policies, furnish Landlord with evidence of renewals thereof.
12.3 No Representation of Adequate Coverage. Landlord makes no
--------------------------------------
representation that the limits or forms of coverage of insurance specified in
this Article 12 are adequate to cover Tenant's property or obligations under
this Lease.
12.4 Hazard Insurance. During the Lease term, Landlord shall
----------------
maintain policies of insurance covering loss of or damage to the Premises in
such amount or percentage of replacement value as Landlord or its insurance
adviser deems reasonable in relation to the age, location, type of construction
and physical condition of the Premises and the availability of such insurance at
reasonable rates. Such policies shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage,
earthquake sprinkler leakage, and Inflation Guard endorsement, and any other
perils (except flood and earthquake, unless required by any lender holding a
security interest in the Premises) which Landlord deems necessary. Tenant shall
pay the Tenant's Share of the premiums for the insurance policies maintained
under this paragraph 12.4.
12.5 Indemnity. Tenant shall indemnify and hold harmless Landlord
---------
and Landlord's directors, officers, employees, agents, guests, invitees, and
lenders from and against all losses, claims, costs, damage, liability or
expenses, including but not limited to reasonable attorneys' fees, arising out
of any and all injuries to or death of any person or damage to any property
arising out of any occurrence on or in the Premises, except to the extent caused
by the wilful misconduct or negligence of Landlord, or arising from any breach
or default in the performance of any of Tenant's obligations under this Lease,
or arising from any act or omission of Tenant or Tenant's directors, officers,
contractors, customers, invitees, employees. If any action or proceeding is
brought against Landlord by reason of any such matter, Tenant upon notice from
Landlord shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord and Landlord shall cooperate with Tenant in such
defense. Landlord need not have first paid any such claim in order to be so
indemnified. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property of Tenant or injury to persons, in, upon
or about the
7
Premises or the Project arising from any cause and Tenant hereby waives all
claims in respect thereof against Landlord.
12.6 Landlord hereby indemnifies and agrees to hold Tenant harmless
from and to defend Tenant against any and all claims of liability for any injury
or damage to any person or property whatsoever occurring in, on or about the
Premises or the Project, to the extent such injury or damage is caused by the
neglect, fault or omission of any duty with respect to the same by Landlord, its
agents, contractors, employees or invitees. Landlord further indemnifies and
agrees to hold Tenant harmless from and against any and all claims arising from
any breach or default in the performance of any obligation on Landlord's part to
be performed under the terms of this Lease or arising from any act or negligence
of Landlord or any of its agents, contractors, employees or invitees from and
against all reasonable costs, attorneys' fees, expenses and liabilities incurred
in or about any such claim or any action or proceeding brought thereon.
13. Waiver of Subrogation.
---------------------
As long as their respective insurers so permit, Landlord and Tenant
hereby mutually waive their respective rights of recovery against each other for
any loss insured by fire, extended coverage and other property insurance
policies existing for the benefit of the respective parties. Each party shall
obtain any special endorsements, if required by their insurer, to evidence
compliance with such waiver.
14. Damage or Destruction.
---------------------
14.1 Landlord's Obligation to Rebuild. If the Premises are damaged or
--------------------------------
destroyed, Landlord shall promptly and diligently repair the Premises unless
Landlord has the right to terminate this Lease as provided in paragraph 14.2
below and Landlord elects to so terminate.
14.2 Landlord's Right to Terminate. Landlord shall have the right to
-----------------------------
terminate this Lease following damage to or destruction of the Premises or the
Project if any of the following occurs: (i) insurance proceeds, together with
additional amounts Tenant agrees to contribute, are not available to Landlord to
pay one hundred percent (100%) of the cost to fully repair the damaged Premises
and the Project; (ii) more than fifty percent (50%) of the rentable square feet
of the Project is damaged or destroyed, or the Project is damaged or destroyed
to the extent of more than one-third (1/3) of the replacement cost thereof,
notwithstanding that the Premises may have sustained little or no damage; (iii)
the Premises cannot, in Landlord's reasonable opinion, be fully repaired by
Landlord within one hundred eighty (180) days after the date of the damage or
destruction; (iv) the Premises cannot be safely repaired because of the presence
of hazardous factors, including, but not limited to, earthquake faults,
radiation, chemical waste and other similar dangers; (v) the then existing laws
do not permit the Premises to be restored to substantially the same condition as
they were in immediately before destruction; (vi) the Premises are destroyed or
damaged during the last two (2) years of the term of this Lease; or (vii) Tenant
is in default under the terms of this Lease at the time of such damage or
destruction.
If Landlord elects to terminate this Lease, Landlord shall give Tenant
written notice of its election to terminate within thirty (30) days after it has
knowledge of such damage or destruction, and this Lease shall terminate fifteen
(15) days after the date Tenant receives such notice. If this Lease is
terminated, Landlord shall, subject to the rights of its lenders, be entitled to
receive and retain all the insurance proceeds resulting from such damage,
except for those proceeds payable under policies obtained by Tenant which
specifically insure Tenant's personal property. If Landlord elects not to
terminate the Lease, Landlord shall, as soon as reasonably possible and to the
extent the required materials and labor are readily available through usual
commercial channels, repair such damage, and this Lease shall continue in full
force and effect.
If the Premises shall be destroyed or rendered untenantable and
Landlord fails to commence the restoration within 60 days after the casualty
occurs or fails to complete the restoration within 180 days after the casualty
occurs or the casualty occurs during the last 2 years of the Lease term, Tenant
may terminate this Lease upon written notice to Landlord.
14.3 Limited Obligation to Repair. Landlord's obligation, should it elect
----------------------------
or be obligated to repair or rebuild, shall be limited to the Premises and
Tenant shall, at its expense, replace or fully repair all Tenant's personal
property and any alterations paid for by Tenant existing at the time of such
damage or destruction. Tenant shall replace or repair all exterior signs, trade
fixtures, equipment, display cases and other personal property installed by
Tenant in the Premises immediately upon Landlord's completion or restoration of
the Premises.
14.4 Abatement of Rent. In the event of repair or restoration by Landlord
-----------------
as herein provided, rent shall be abated proportionately with the degree to
which the operation of Tenant's business from the Premises is impaired during
the period of such repair or restoration. Such abatement shall commence upon
such damage or destruction and end upon substantial completion by Landlord of
the repair or
8
reconstruction which Landlord is obligated or undertakes to do. Tenant shall not
be entitled to any compensation or damages from Landlord for loss of the use of
the Premises, damage to Tenant's personal property or any inconvenience
occasioned by such damage, repair or restoration unless such loss or damage is a
result of the negligence or wilful misconduct of Landlord or Landlord's
employees or agents. Unless Landlord elects to terminate this Lease, this Lease
shall remain in full force and effect.
14.5 Replacement Cost. The determination in good faith by Landlord of
----------------
the estimated cost of repair of any damage, the replacement cost, or the time
period required for repair shall be conclusive for purposes of this Article 14.
15. Condemnation.
------------
15.1 Taking. The term "Taking", as used in this Article 15, shall mean
------
an appropriation or taking under the power of eminent domain by any public or
quasi-public authority or a voluntary sale or conveyance in lieu of condemnation
but under threat of condemnation.
15.2 Total Taking. In the event of a Taking of the entire Premises,
------------
this Lease shall terminate and expire as of the date possession is delivered to
the condemning authority and Landlord and Tenant shall each be released from any
liability accruing pursuant to this Lease after such termination.
15.3 Partial Taking. If there is a Taking of a portion of the
--------------
Premises, this Lease shall remain in effect, except that if more than twenty-
five percent (25%) of the total number of square feet in the Premises is taken,
or if the remaining portion of the Premises is rendered unsuitable for Tenant's
continued use of the Premises, either Landlord or Tenant may terminate this
Lease by giving written notice of such election within thirty (30) days after
Landlord gives Tenant written notice of such partial Taking, and in which event
this Lease shall terminate as of the date the condemnation authority takes
possession of the Premises. In the event of a partial Taking which does not
result in the termination of this Lease, on the date of such Taking rent shall
be reduced in the proportion that the number of square feet in the Premises
taken bears to the total number of square feet in the Premises, and Tenant at
its cost shall accomplish all necessary restoration.
15.4 Award. Any award for the Taking of all or any part of the
-----
Premises or the Project shall be the property of Landlord, except that Tenant
shall be entitled to any separate award for loss of or damage to Tenant's trade
fixtures, removable personal property and unamortized tenant improvements that
have been paid for by Tenant. For that purpose, the cost of such improvements
shall be amortized over the original term of this Lease excluding any options.
15.5 Temporary Taking. No temporary taking of the Premises or of
----------------
Tenant's rights under this Lease shall terminate this Lease or give Tenant any
right to abatement of rent. Any award made to Tenant by reason of such temporary
taking shall belong entirely to Tenant.
16. Assignment and Subletting.
-------------------------
16.1 Prohibition. Tenant shall not voluntarily or by operation of law
-----------
assign, mortgage, sublet, or otherwise transfer or encumber all or any part of
Tenant's interest in the Lease, or in the Premises, without Landlord's prior
written consent, which consent shall not be unreasonably withheld. Any purported
assignment or subletting contrary to the provisions hereof without consent shall
be void. "Transfer" within the meaning of this Article 16 shall include the
transfer or transfers aggregating: (a) if Tenant is a corporation, more than
fifty percent (50%) of the voting stock of such corporation, or (b) if Tenant is
a partnership, more than fifty percent (50%) of the profit and loss
participation in such partnership. As Additional Rent hereunder, Tenant shall
reimburse Landlord for actual legal and other expenses incurred by Landlord in
connection with any request by Tenant for consent to any assignment or
subletting; provided, however, that such expenses do not exceed $2,500. In
connection with any proposed assignment or sublease, Tenant shall submit to
Landlord in writing (i) the name of the proposed assignee or subtenant; (ii)
such information as to such assignee's or subtenant's financial responsibility
and standing as Landlord may reasonably require; (iii) the proposed use of the
Premises by such assignee or subtenant; (iv) all of the terms and conditions
upon which the proposed assignment or subletting is to be made; and (v) an
instrument of assignment or sublease wherein such assignee or subtenant assumes
all of Tenant's obligations hereunder and agrees to be bound by the terms
hereof.
16.2 If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under this
Lease 50% of the Profit (defined below) on such transaction as and when received
by Tenant, unless Landlord gives written notice to Tenant and the assignee or
subtenant that Landlord's share of the Profit shall be paid by the assignee or
subtenant to Landlord directly. The "Profit" means (A) all amounts paid to
Tenant for such assignment or sublease, including "key" money, monthly rent in
excess of the monthly rent payable under
9
this Lease, and all fees and other consideration paid for the assignment or
sublease, including fees under any collateral agreements, less (B) costs and
expenses directly incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate broker's commissions
and costs of renovation or construction of tenant improvements required under
such assignment or sublease. Tenant is entitled to recover such costs and
expenses before Tenant is obligated to pay Landlord's share of the Profit to
Landlord. The Profit in the case of a sublease of less than all the Premises is
the rent allocable to the subleased space as a percentage on a square footage
basis.
(ii) Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or sublease of the
Premises within thirty (30) days after the transaction documentation is signed,
and Landlord may inspect Tenant's books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly furnish to Landlord
copies of all the transaction documentation, all of which shall be certified by
Tenant to be complete, true and correct. Landlord's receipt of Landlord's share
of the Profit shall not be a consent to assignment or subletting. The breach of
Tenant's obligation under this paragraph shall be a material default of this
Lease.
16.3 Scope. If this Lease is assigned, or if the Premises or any part
-----
thereof is sublet or occupied by any person other than Tenant, Landlord may
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the rent under this Lease and apply any excess rent so collected as
provided herein. No assignment or subletting shall affect the continuing primary
liability of Tenant (which, following assignment, shall be joint and several
with the assignee), to pay the rent due Landlord and to perform all other
obligations to be performed by Tenant hereunder. If Landlord approves an
assignment or sublease proposal and Tenant fails to complete the proposed
assignment or sublease within sixty (60) days following Landlord's approval,
Tenant shall again comply with the notice and approval procedure set forth in
this Article 16 as if no notice had been received.
16.4 Waiver. Landlord's consent to any assignment or subletting of the
------
Premises by Tenant shall not constitute an acknowledgement that Tenant is not
then in default under this Lease, nor shall such consent be deemed a waiver of
any then existing default. The consent by Landlord to any assignment or
subletting shall not constitute a consent to any subsequent assignment or
subletting by Tenant or to any subsequent or successive assignment or subletting
by the subtenant. In the event of any default under this Lease, Landlord may
proceed directly against Tenant, any guarantors or any other person or entity
responsible for the performance of this Lease, including the subtenant, without
first exhausting Landlord's remedies against any other person or entity
responsible therefor, or any security held by Landlord or Tenant. Tenant waives
notice of any default of any assignee or subtenant.
17. Hazardous Materials.
-------------------
17.1 Hazardous Materials. Tenant shall comply with all environmental
-------------------
laws relating to "Hazardous Materials" (as hereinafter defined) affecting the
Premises, the improvements thereon, the business conducted thereon by Tenant, or
any activity or condition on or in the Premises. Without limiting the generality
of the foregoing, Tenant shall not cause or permit any Hazardous Material to be
brought upon, kept, or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees in violation of any environmental laws,
without the prior written consent of Landlord. If Tenant breaches the
obligations stated in the preceding sentence, or if the presence of Hazardous
Material on the Premises caused or permitted by Tenant results in contamination
of the Premises, the Project, or any adjacent property, then Tenant shall
indemnify, defend and hold Landlord harmless from any and all claims, judgments,
damages, penalties, fines, costs, liabilities or losses (including, without
limitation, diminution in value of the Premises, the Project, and/or adjacent
property, damages for the loss or restriction on use of rentable or usable space
or of any amenity of the Premises, the Project, and/or adjacent property,
damages arising from any adverse impact on marketing of the Premises, the
project, and/or adjacent property, and sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees which arise during or after the
term or extended term of this Lease as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or ground water on or under the Premises, the Project,
and/or adjacent property. Without limiting the foregoing, if the presence of any
Hazardous Material on the Premises caused or permitted by Tenant results in any
contamination of the Premises, the Project, and/or adjacent property, Tenant
shall promptly take all actions at its sole expense as are necessary to return
the Premises, the Project, and/or adjacent property to the condition existing
prior to the introduction of any such Hazardous Material to the Premises, the
Project, and/or adjacent property; provided that Landlord's approval of such
actions shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Premises, the Project, and/or adjacent
property. As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material or waste which is or becomes regulated by any local,
state or federal governmental authority. The provisions of this Article 17 shall
survive the expiration or earlier termination of this Lease and Tenant's
surrender of the Premises to Landlord.
17.2 Hazardous Materials Disclosure. Tenant shall immediately notify
------------------------------
Landlord of Tenant's receipt of any notice, citation or other communication
received by Tenant relating to the presence, storage, use or release of any
Hazardous Materials in, on or about the Premises.
17.3 Hazardous Materials Inspection. Landlord shall have the right,
------------------------------
but not the duty, to inspect the Premises at any time to determine whether
Tenant is complying with the requirements of this Article 17. If Tenant is not
in compliance with the requirements of this Article 17, Landlord shall have the
right, but not the obligation, to immediately enter upon the Premises to remedy
any condition which is in violation of the terms of this Lease or caused by
Tenant's failure to comply with the requirements of this
10
Lease. Landlord shall use reasonable efforts to minimize interference with
Tenant's business as a result of any such entry by Landlord, but shall not be
liable for any interference caused thereby.
17.4 Default. Any failure of Tenant to comply with the provisions of
-------
this Article 17 shall be a material default enabling Landlord to exercise any of
the remedies set forth in this Lease.
17.5 Hazardous Waste. Landlord represents and warrants to Tenant that,
---------------
as of the date of this Lease, neither the Premises nor any portion of the
Project contains Hazardous Wastes or Hazardous Materials in violation of the
legal limitations imposed by laws applicable to the Project. Landlord agrees to
indemnify and hold Tenant harmless from and against any and all losses, damages,
claims, penalties, liabilities, suits, costs and expenses (including, without
limitation, reasonable attorneys' fees and also including, without limitation,
costs of remedial actions or cleanups suffered or incurred by Tenant) arising
out of or related to any release or presence of Hazardous Wastes or Materials
on, under or in the Premises or the Project to the extent such release or
presence is due to the act or omissions of Landlord or Landlord's agents and
employees.
18. Default.
-------
18.1 Default - Definition. The occurrence of any one or more of the
--------------------
following events shall constitute a material default of this Lease by Tenant:
(a) The vacation or abandonment of the Premises by Tenant. Vacation
of the Premises shall include the failure to occupy the Premises for a
continuous period of sixty (60) days or more, whether or not the rent is paid.
(b) Suspension or cessation of business by Tenant on the Premises for
fourteen (14) consecutive days or for more than fourteen (14) days in any
calendar month (unless excused in connection with a casualty or condemnation as
provided herein).
(c) The unreasonable disturbance of other tenants in the Project by
Tenant or its customers or employees which continues or is repeated after
written notice by Landlord of the fact and nature of the disturbance.
(d) The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a
Notice to Pay Rent or Quit pursuant to the applicable unlawful detainer
statutes, such Notice to Pay Rent or Quit shall also constitute the notice
required by this paragraph.
(e) The breach by Tenant of any of the covenants, conditions or
provisions of paragraphs 11 (mechanics' liens), 16 (assignment), 17 (hazardous
materials), 18.1(b) (suspension of business), 18.1(g) (insolvency), 18.1(h)
(false statement), 19 (subordination), 22 (estoppel certificates), 27
(recording), or 35 (easements), and the continuation of such breach for a period
of ten (10) days.
(f) The failure by Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Tenant
other than those referenced in subparagraphs (b) and (c) above, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Tenant under applicable unlawful detainer statutes.
(g) (i) The making by Tenant of any general arrangement or general
assignment for the benefit of creditors; (ii) Tenant becoming a "debtor" as
defined in 11 U.S.C. (S) 101 or any successor statute thereto (unless, in the
case of a petition filed against Tenant, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 18.1(e) is contrary to
any applicable law, such provision shall be of no force or effect.
(h) The discovery by Landlord that any financial statement given to
Landlord by Tenant, or its successor in interest, or by any guarantor of
Tenant's obligation hereunder, was materially false.
18.2 Remedies. In the event of any default or breach of this Lease by
--------
Tenant, Landlord shall have the following remedies, which remedies are not
exclusive and are cumulative in addition to any remedies now or later allowed by
law:
(a) Landlord may continue this Lease in full force and effect, and
the Lease will continue in effect as long as Landlord does not terminate
Tenant's right to possession, and Landlord shall have the right to collect rent
when due. During the period Tenant is in default, Landlord may enter the
Premises and relet them, or any part of them, to third parties for Tenant's
account. Tenant shall be liable immediately to Landlord for all costs Landlord
incurs in reletting the Premises, including, without limitation, brokers'
commissions, expenses of remodeling the Premises required by the reletting, and
like costs. Reletting can be for a period shorter or longer than the remaining
term of this Lease. Tenant shall pay to Landlord the rent due under this Lease
on the dates the rent is due, less the rent Landlord receives from any
reletting.
11
No act by Landlord allowed by this paragraph shall terminate this Lease unless
Landlord notifies Tenant that Landlord elects to terminate this Lease. After
Tenant's default and for as long as Landlord does not terminate Tenant's right
to possession of the Premise, if Tenant obtains Landlord's consent Tenant shall
have the right to assign or sublet its interest in this Lease, but Tenant shall
not be released from liability.
If Landlord elects to relet the Premises as provided in this
paragraph, rent received by Landlord from reletting shall be applied to the
payment of:
(i) First, any indebtedness from Tenant to Landlord other than rent
due from Tenant;
(ii) Second, all costs, including for maintenance, incurred by
Landlord in reletting;
(iii) Third, rent due and unpaid under this Lease. After deducting the
payments referred to in this paragraph, any sum remaining from the rent received
by Landlord from reletting shall be held by Landlord and applied in payment of
future rent as rent becomes due under this Lease. In no event shall Tenant be
entitled to any excess rent received by Landlord. If, on the date rent is due
under this Lease, the rent received from the reletting is less than the rent due
on that date, Tenant shall pay to Landlord, in addition to the remaining rent
due, all costs, including for maintenance, incurred by Landlord in reletting for
which Landlord has not been reimbursed.
(b) Upon such notice as provided for herein, Landlord may terminate
Tenant's right to possession of the Premises. No act by Landlord other than
giving notice to Tenant shall terminate this Lease. Acts of maintenance, efforts
to relet the Premises, or the appointment of a receiver on Landlord's initiative
to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession. On termination, Landlord has the
right to recover from Tenant:
(i) The worth, at the time of the award, of the unpaid rent that
had been earned at the time of termination of this Lease;
(ii) The worth, at the time of the award, of the amount by which the
unpaid rent that would have been earned after the date of termination of this
Lease until the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided;
(iii) The worth, at the time of the award, of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of the loss of rent that Tenant proves could have been reasonably
avoided; and
(iv) Any other amount, and court costs, necessary to compensate
Landlord for all detriment proximately caused by Tenant's default.
"The worth, at the time of the award," as used in (i) and (ii) of this
paragraph, is to be computed by allowing interest at the rate of ten percent
(10%) per annum. "The worth, at the time of the award", as referred to in (iii)
of this paragraph, is to be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award, plus
one percent (1%).
(c) Landlord shall have the right to have a receiver appointed to
collect rent. Neither the filing of a petition for the appointment of a receiver
nor the appointment itself shall constitute an election by Landlord to terminate
this Lease.
(d) Landlord, at any time after Tenant commits a default, may cure
the default at Tenant's cost. If Landlord at any time, by reason of Tenant's
default, pays any sum or does any act that requires the payment of any sum, the
sum paid by Landlord shall be due immediately from Tenant to Landlord at the
time the sum is paid, and if paid at a later date shall bear interest at the
rate of ten percent (10%) per annum from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant. The sum, together with interest on it,
shall be Additional Rent.
18.3 Landlord's Default. Landlord shall not be in default unless
------------------
Landlord fails to perform the obligations required of Landlord within a
reasonable time, but in no event later than thirty (30) days after receipt of
written notice by Tenant to Landlord (and its lender(s) of record who have
provided Tenant with notice) specifying the nature of such default; provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, then Landlord shall not be
deemed to be in default if it shall commence such performance within such thirty
(30) day period and thereafter diligently prosecute the same to completion.
19. Subordination.
-------------
This Lease and Tenant's rights hereunder are and will remain
subordinate to any ground lease, mortgage, deed of trust or any other
hypothecation for security now or hereafter placed upon the Project, and to all
increases, renewals, modifications, consolidations, replacements, and extension
thereof (collectively referred to as the "Mortgage"); provided, however, that
Tenant's rights hereunder shall not be affected and its quiet enjoyment of the
Premises shall not be disturbed so long as Tenant performs its obligations
hereunder. If the holder of a Mortgage becomes the owner of the Project by
reason of foreclosure or acceptance of a deed in lieu of foreclosure, at such
holder's election Tenant will be bound to such holder or its
successor-in-interest under all terms and conditions of this Lease, and Tenant
will be deemed to have attorned to and recognized such holder or successor as
Landlord's successor-in-interest for the remainder of the Lease term of any
extension thereof. The foregoing is self-operative and no further instrument of
subordination and/or attornment will be necessary unless required by Landlord or
the holder of a Mortgage, in which case Tenant will, within ten (10) days after
written request, execute and deliver without charge any documents reasonably
required by Landlord or such holder in order to confirm the subordination and
attornment set forth above. Should the holder of a Mortgage request that this
Lease and Tenant's rights hereunder be made superior, rather than subordinate,
to the Mortgage, then Tenant will,
12
within ten (10) days after written request, execute and deliver without charge
such agreement as may be reasonably required by such holder in order to
effectuate and evidence such superiority of the Lease to the Mortgage. Tenant
hereby irrevocably appoints Landlord as Tenant's attorney-in-fact, which
appointment is coupled with an interest, to execute, deliver and record the
documents described in this Article 19 in Tenant's name, place and stead;
provided, however, that such appointment shall not take effect unless such ten
(10) day period shall have expired and Tenant shall have failed to respond or
object to such request.
20. Notices.
-------
Any notice required or permitted to be given under this Lease shall be
in writing and shall be by personal delivery or by mail. Mailed notices shall be
deemed given upon actual receipt at the address required, or forty-eight (48)
hours following deposit in the mail, postage prepaid, whichever first occurs. At
the date of execution of this Lease, the addresses of Landlord and Tenant are as
set forth in Exhibit "B" hereto. After the Commencement Date, the address of
Tenant shall be the address of the Premises, Landlord may change its address by
giving notice to Tenant in accordance with this Article 20.
21. Attorneys' Fees.
---------------
If either party brings an action to enforce the terms hereof or
declares rights hereunder, the prevailing party in such action, trial or appeal
thereon shall be entitled to his reasonable attorneys' fees to be paid by the
losing party as fixed by the court in the same or a separate suit, and whether
or not such action is pursued to decision or judgment. Landlord shall be
entitled to reasonable attorneys' fees and all other costs and expenses incurred
in the preparation and service of notice of default and consultations in
connection therewith, whether or not a legal proceeding is subsequently
commenced in connection with such default.
22. Estoppel Certificate.
--------------------
22.1 Tenant's Obligation. Tenant shall, within ten (10) days
-------------------
following written request by Landlord, execute and deliver to Landlord a
statement prepared by Landlord (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any; (ii) acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord or stating the nature of any
uncured defaults; (iii) evidencing the status of the Lease as may be required
either by a lender making a loan to Landlord to be secured by deed of trust or
mortgage covering the Premises or a purchaser of the Premises from Landlord;
(iv) certifying the amount of current rent and security deposit; and (v)
certifying to such other information as Landlord, Landlord's agents, mortgagees,
prospective mortgagees, or purchasers may reasonably request.
22.2 Failure to Provide. Tenant's failure to deliver an estoppel
------------------
certificate within such ten (10) day period shall be conclusive upon Tenant (i)
that this Lease is in full force and effect without modification except as may
be represented by Landlord; (ii) that there are now no uncured defaults in
Landlord's performance; (iii) that not more than one month's rent has been paid
in advance; and (iv) that the other information requested by Landlord is correct
as stated in the form presented by Landlord.
23. Landlord's Liability.
--------------------
The term "Landlord" as used herein shall mean only the owner or
owners, at the time in question, of the fee title or a lessee's interest in a
ground lease of the Project. In the event of any transfer of such title or
interest, Landlord herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of any
liability as respects Landlord's obligations thereafter to be performed.
24. Brokers.
-------
The parties recognize as the broker(s) involved in this transaction
the person(s) or firm(s) specified in Exhibit "B" hereto, and agree that
Landlord shall be solely responsible for the payment of brokerage commission to
such broker(s) unless expressly provided otherwise under this Lease. Tenant
hereby indemnifies and holds Landlord harmless from and against any costs,
expenses, attorneys' fees or liability for compensation which may be claimed by
any broker, finder or other similar party by reason of any dealings or actions
of Tenant.
25. Landlord's Access.
-----------------
25.1 Landlord's Entry on Premises. Landlord and its authorized
----------------------------
representatives shall have the right to enter the Premises at all reasonable
times and upon reasonable notice to Tenant (except in the case of an emergency)
for any of the following purposes:
(a) To determine whether the Premises are in good condition and
whether Tenant is complying with its obligations under this Lease.
(b) To maintain and restore the Premises or the Project and other
improvements in which the Premises are located as Landlord deems necessary, or
to the extent of Landlord's right or obligation.
(c) To serve, post, or keep posted any notices required or allowed
under the provisions of this Lease.
13
(d) To post "for sale" signs at any time during the term, and to
show the Premises to prospective brokers, agents, buyers, tenants, lenders, or
persons interested in an exchange, at any time during the term of this Lease.
(e) To shore the foundations, footings, and walls of the Premises or
the Project and to erect scaffolding and protective barricades around and about
the Premises, but not so as to prevent entry to the Premises, and to do any
other act or thing necessary for the safety or preservation of the Premises or
the Project and other improvements in which the Premises are located. Landlord's
right under this provision extends to the owner of any adjacent property on
which excavation or construction is to take place and the adjacent property
owner's authorized representatives.
Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance, or other damage arising out of
Landlord's entry on the Premises as provided in this Article 25. Landlord shall
conduct its activities on the Premises as allowed in this Article 25 in a manner
that will minimize, to the extent practicable, any annoyance, or disturbance to
Tenant or interference with Tenant's operation of its business. Tenant shall not
be entitled to an abatement or reduction of rent if Landlord exercises any
rights reserved in this Article 25.
Nothing in this Article 25 shall be deemed to impose any obligation on
the part of Landlord to do anything that is allowed by this Article 25.
25.2 Keys; Emergency. Landlord shall have the right to retain keys
---------------
to the Premises and to unlock all doors in or upon the Premises other than to
files, vaults and safes, and in the case of emergency to enter the Premises by
any reasonably appropriate means, and any such entry shall not be deemed a
forcible or unlawful entry or detainer of the Premise or an eviction.
26. Examination of Lease.
--------------------
Submission of this Lease for examination or signature by Tenant does
not create a reservation of or option to Lease. This Lease shall only become
effective and binding upon full execution hereof by both Landlord and Tenant.
27. Recording.
---------
Tenant shall not record this Lease nor a short form memorandum thereof
without Landlord's prior written consent.
28. Surrender of Premises; Holding Over.
-----------------------------------
28.1 Surrender of Premises. Upon the expiration or termination of
---------------------
this Lease, Tenant shall surrender the Premises to Landlord in good condition,
normal wear and tear excepted, clean and free of debris. Any alterations,
additions, or improvements shall remain on and be surrendered with the Premises,
except that Landlord may, at its option, require that Tenant at Tenant's cost
remove any or all of said alterations, additions, or improvements, including but
not limited to any signs, notices and displays placed by Tenant, and restore the
Premises to its condition as of the Commencement Date, normal wear and tear
excepted. Tenant shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, air-conditioning, window coverings,
wall coverings, carpets, wall panelling, ceilings and plumbing on the Premises
in good operating condition.
Landlord can elect to retain or dispose of in any manner any
alterations and/or Tenant's personal property that Tenant does not remove from
the Premises on expiration or termination of the Lease as allowed or required by
this Lease by giving at least ten (10) days' notice to Tenant. Title to any such
alterations and/or Tenant's personal property that Landlord elects to retain or
dispose of on expiration of the ten (10) day period shall vest in Landlord.
Tenant waives all claims against Landlord for any damages suffered by Tenant
resulting from Landlord's retention or disposition of any such items. Tenant
shall be liable to Landlord for Landlord's costs for restoring, removing and
disposing of any such alterations and/or Tenant's personal property.
If Tenant fails to surrender the Premises to Landlord on the date as
required herein, Tenant shall hold Landlord harmless from all damages resulting
from Tenant's failure to surrender the Premises, including, without limitation,
claims made by a succeeding tenant resulting from Tenant's failure to surrender
the Premises.
28.2. Holding Over. If Tenant, with Landlord's consent, remains in
------------
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Tenant, except that
the rent payable shall be one hundred thirty-five percent (135%) of the rent
payable immediately preceding the termination date of this Lease, and all
options, if any, granted under this Lease shall be deemed terminated and be of
no further effect during said month-to-month tenancy
29. Common Area and Facilities.
--------------------------
29.1 Definition. The term "Common Areas" is defined as all areas and
----------
facilities outside the Premises and within the exterior boundary line of the
Project that are provided and designated by the Landlord from time to time for
the general non-exclusive use of Landlord, Tenant, and other tenants of the
Project and their respective employees, suppliers, shippers, customers and
invitees, including but not limited to common entrances, lobbies, corridors,
stairways and stairwells, public restrooms, elevators, parking areas to the
extent not otherwise prohibited by this Lease, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls.
14
29.2 Rules and Regulations. Tenant agrees to abide by and conform
---------------------
to the rules and regulations attached hereto as Exhibit "C" with respect to the
Project and Common Areas, and to cause its employees, suppliers, shippers,
customers, and invitees to so abide and conform. Landlord or such other
person(s) as Landlord may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
modify, amend and enforce said rules and regulations. Landlord shall not be
responsible to Tenant for the non-compliance with said rules and regulations by
other tenants, their agents, employees and invitees of the Project.
29.3 Changes. Landlord shall have the right, in Landlord's sole
-------
discretion, from time to time:
(a) To make changes to the Project interior and exterior and Common
Areas, including, without limitation, changes in the location, size, shape,
number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, restrooms, driveways, entrances,
parking spaces, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, decorative walls, landscaped areas and walkways; provided,
however, Landlord shall at all times provide the parking facilities required by
applicable law;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land and improvements outside the boundaries
of the Project to be a part of the Common Areas, provided that such other land
and improvements have a reasonable and functional relationship to the Project;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Project, or any portion thereof;
(f) To close all or a portion of Common Areas to such extent as may
be legally sufficient, in the opinion of Landlord's counsel, to prevent a
dedication thereof or the acquisition of any rights therein by any person or by
the public, such closing not to unreasonably interfere with the conduct of
Tenant's business; and
(g) To do and perform such other acts and make such other changes
in, to, or with respect to the Common Areas and Project as Landlord may, in the
exercise of sound business judgement, deem to be appropriate.
29.4 Parking.
-------
29.4.1 Unless Landlord otherwise notifies Tenant, Tenant shall
have Landlord's permission to use, together with the other tenants, the Common
Areas allocated for parking.
29.4.2 If Tenant commits, permits or allows any of the
prohibited activities in the parking areas as described in the Lease or the
rules then in effect, then Landlord shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Tenant, which shall be
immediately payable upon demand by Landlord.
29.4.3 Neither Landlord nor any parking operator shall have
any liability or responsibility to Tenant or any party parking in the parking
areas for any loss or damage that may be occasioned by or may arise out of such
parking, including but not limited to loss of property or damage to person or
property from any cause whatsoever, and Tenant hereby waives any and all claims
of any kind or nature as against Landlord and/or Landlord's parking operator by
reason of occurrences in the parking areas and the driveway exits and entrances
thereto.
30. Signs.
-----
30.1 Tenant's Signs. Tenant acknowledges that the Premises are a
--------------
part of an integrated retail center and that control of all signs by Landlord is
essential to the maintenance of uniformity, propriety and aesthetic values in
the retail center. Landlord may attach hereto as Exhibit "D" sign criteria
which, if so attached, shall be adhered to by Tenant. Nonetheless, Tenant shall
not place on or about the exterior of the Premises or on the windows or doors
thereof any sign or other material without Landlord's prior written approval.
Tenant shall submit all exterior sign plans for Landlord's prior approval and
upon such approval, the same any be attached here as Exhibit "D". Tenant shall
have the right, at its own expense, to erect and maintain upon the interior of
the Premises all signs and advertising matter customary or appropriate in the
conduct of Tenant's business. Notwithstanding the above, Tenant shall upon
request of Landlord immediately remove any exterior or interior sign,
advertisement, decoration, lettering or notice which Tenant has placed in, upon,
above or about the Premises and which Landlord reasonably deems objectionable or
offensive, and if Tenant fails or refuses to do so Landlord may enter upon the
Premises and remove the same.
30.2 Landlord's Signs. Landlord reserves the right in Landlord's
----------------
sole discretion to place and locate on the roof, exterior of the Project, and in
any area of the Project not leased to Tenant such signs, notices, displays and
similar items as Landlord deems appropriate in the proper operation of the
Project.
15
30.3 Compliance with Laws. Any sign that Tenant has the right to
--------------------
place, construct, and maintain shall comply with all laws, and Tenant shall
obtain any approval required by such laws. Landlord makes no representation with
respect to Tenant's ability to obtain such approval.
30.4 Landlord to Have Use of Premises for Its Signs. Landlord shall
----------------------------------------------
have the right to use for its signs the exterior walls and roof of the Project.
31. Merger.
------
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, or a termination by Landlord, shall not work a merger, and
shall, at the option of Landlord, terminate all or any existing subtenancies or
may, at the option of Landlord, operate as an assignment to Landlord of any or
all of such subtenancies.
32. Quiet Possession.
----------------
Upon Tenant paying the rent for the Premises and observing and
performing all of the covenants, conditions and provisions on Tenant's part to
be observed and performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof subject to all of the provisions of this
Lease.
33. Security Measures.
-----------------
Tenant hereby acknowledges that Landlord shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Project. Tenant assumes all responsibility for the
protection of Tenant, its agents, and invitees and the property of Tenant and of
Tenant's agents and invitees from acts of third parties. Nothing herein
contained shall prevent Landlord, at Landlord's sole option, from providing
security protection for the Project or any part thereof, in which event the cost
thereof shall be included within the definition of Operating Expenses, as set
forth in Paragraph 3.2.1(f).
34. Landlord's Reservations.
-----------------------
34.1 Landlord shall have the following rights:
(a) To change the name, address or title of the Project or the
building in which the Premises are located upon not less than 90 days prior
written notice;
(c) To place such signs, notices or displays as Landlord reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Project or on pole signs in the Common Areas.
34.2 Tenant shall not suffer or permit anyone, except in emergency,
to go upon the roof of any building in the Project.
35. Easements.
---------
35.1 Landlord reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Landlord deems necessary or
desirable, and to cause the recordation of parcel maps and restrictions, so long
as such easements, rights, dedications, maps and restrictions do not interfere
with the use of the Premises by Tenant. Tenant shall sign any reasonable
documents upon request of Landlord.
35.2 The obstruction of Tenant's view, air, or light by any
structure erected in the vicinity of the Project, whether by Landlord or third
parties, shall in no way affect this Lease or impose any liability upon
Landlord.
37. General Provisions.
------------------
37.1 Time. Time is of the essence with respect to the obligations
----
to be performed under this Lease.
37.2 Severability. The invalidity of any provision of the Lease as
------------
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
16
37.3 Choice of Law. This Lease shall be construed and enforced in
-------------
accordance with the laws of the jurisdiction in which the Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.
37.4 Lender Modification. Tenant agrees to make such reasonable
-------------------
modifications to this Lease as may be reasonably required by an institutional
lender in connection with the obtaining of financing or refinancing of the
Project.
37.5 Merchant's Association. Tenant agrees that, in the event a
----------------------
merchant's association is formed in the Project by Landlord or with Landlord's
written consent, it will join said merchant's association, pay all reasonable
dues, and abide by all reasonable rules and regulations promulgated by said
association.
37.7 Multiple Parties. If more than one person or entity is named as
----------------
Tenant herein, except as otherwise expressly provided herein, the obligations of
Tenant herein shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.
37.8 Conflict. Any conflict between the printed provisions,
--------
exhibits, or addenda of this Lease and the typewritten or handwritten
provisions, if any, shall be controlled by the typewritten or handwritten
provisions.
37.9 Binding Effect. The covenants and agreement contained in this
--------------
Lease shall be binding on the parties hereto and on their respective successors
and assigns to the extent this Lease is assignable.
37.10 Waiver. No waiver by Landlord of any provision hereof shall be
------
deemed to be a waiver of such provision or any subsequent breach of the same or
any other term, condition or covenant of this Lease. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach at the time of acceptance of such payment. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord.
37.11 Entire Agreement. This Lease contains all agreements of the
----------------
parties with respect to any matters mentioned herein and supersedes any prior or
contemporaneous agreement or understanding. This Lease may be modified in
writing only, signed by the parties in interest at the time of the modification.
Except as otherwise stated in this Lease, Tenant hereby acknowledges that
neither the real estate broker listed in Exhibit "B" hereto nor any cooperating
broker on this transaction nor the Landlord or any employee or agent of any of
said persons had made any oral or written warranties or representations to
Tenant relative to the condition or use by Tenant of the Premises or the
Project, and Tenant acknowledges that Tenant assumes all responsibility
regarding the Occupational Safety Health Act, the legal use and adaptability of
the Premises and the compliance thereof with all applicable laws and regulations
in effect during the term of this Lease.
37.12 Authority. If Tenant is a corporation, trust, or general or
---------
limited partnership, Tenant, and each individual executing this Lease on behalf
of such entity, represent and warrant that such individual is duly authorized to
execute and deliver this Lease on behalf of said entity. Landlord may at its
option require evidence of such authority satisfactory to Landlord.
37.13 Exhibits. All exhibits, amendments, riders and addenda attached
--------
hereto are hereby incorporated herein and made a part hereof.
37.14 Landlord's Consent. Wherever Landlord's consent or permission
------------------
is required under this Lease, such consent or permission shall not be
unreasonably withheld or delayed.
17
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first written above.
"LANDLORD"
INMOSTRAT CORPORATION,
a Delaware corporation
/s/ David Huyette
By: David Huyette
Its: President
"TENANT"
COST U LESS, INC.,
a Hawaii corporation
/s/ Allan C. Youngberg
By: Allan C. Youngberg
Its: Secretary/Treasurer
18
--------------------------------------------------------
SONORA PLAZA SHOPPING CENTER
- ------------ ------------
708 - 824 East Mono Way, Sonora, CA 95370
--------------------------------------------------------
[PLAN OF SONORA PLAZA SHOPPING CENTER APPEARS HERE]
PLOT PLAN NOT TO SCALE
- --------------------------------------------------------------------------------
EXHIBIT A
- --------------------------------------------------------------------------------
Form No. 1068 (11/83) Your No.: 975-760-51
Preliminary Report Our No.: 30505-TO
(Rev. 11/18/82)
EXHIBIT A
DESCRIPTION:
All that real property situate in the State of California, County of Tuolumne,
City of Sonora described as follows:
PARCEL 1:
A portion of Government LOT 3 in the Northwest Quarter of Section 6, Township 1
North, Range 15 East, M. D. B. & M., and more particularly described as follows:
BEGINNING at the intersection of the northwesterly right of way line of State
Highway 108 and the westerly boundary of that certain 2.05 acre Parcel 2 deeded
to the Sonora Elementary School in Volume 315 of Official Records at Page 392
and shown in Volume 12 of Record of Surveys at Page 64; thence from a tangent
which bears South 55 degrees 18' 03" West southwesterly along a curve, concave
to the southeast, having a radius of 1740.00 feet, a central angle of 02 degrees
19' 14" and an arc length of 70.47 feet to a brass pin in a 6" X 6" concrete
post; thence South 53 degrees 01' West 899.66 feet, more or less, to the South
boundary of the aforesaid Government LOT 3; thence North 89 degrees 30' West
along the South boundary of said Government LOT 3 about 116 feet to the center
of the Pacific Gas and Electric Company ditch; thence northeasterly along the
center of said water ditch, the following courses: North 56 degrees 14.7" East
26.93 feet to a 1/2 inch steel bar; North 31 degrees 19.3' East 38.36 feet to a
1/2 inch steel bar; North 05 degrees 57.3' East 67.09 feet to a 1/2 inch steel
bar; North 12 degrees 24.6' West 87.25 feet; North 09 degrees 11.1' East 77.43
feet; North 25 degrees 13.6' West 128.79 feet; North 05 degrees 36.5' West
149.10 feet; North 28 degrees 13' East 50.20 feet; North 47 degrees 28.7' East
204.44 feet; North 68 degrees 33.5' East 107.54 feet; South 82 degrees 10.1'
East 128.90 feet to a 1/2 inch steel bar; North 83 degrees 32.7' East 78.60 feet
to a 1/2 inch steel bar; North 71 degrees 04.7' East 110.55 feet to a 1/2 inch
steel bar; North 58 degrees 38.4' East 70.90 feet to a 1/2 inch steel bar; North
38 degrees 30.4' East 87.74 feet; to a 1/2 inch steel bar; North 18 degrees
13.3' East 102.86 feet; North 15 degrees 16.6' West 42.24 feet; North 51 degrees
14.9' East 44.47 feet to a point from which the northwest corner of Section 6
bears North 84 degrees 06' 46" West 2088.77 feet; thence North 82 degrees 45.9'
East along Pacific Gas and Electric Company ditch 41.00 feet to the westerly
boundary of the aforementioned 2.05 acre Parcel 2 shown in Volume 12 of Record
of Surveys at Page 64; thence from a tangent which bears South 21 degrees 01'
30" East, southeasterly
Page 14
Form No. 1068 (11/83) Your No.: 975-760-51
Preliminary Report Our No.: 30505-TO
(Rev. 11/18/82)
along a curve, concave to the southwest, having a radius of 345.00 feet, a
central angle of 06 degrees 31' 01" and an arc length of 39.24 feet; thence
South 14 degrees 30' 29" East 210.16 feet; thence South 14 degrees 19' 29" East
280.65 feet to the northerly right of way line of State Highway 108 and the
point of beginning.
LESS AND EXCEPTING FROM the property just described the following:
BEGINNING at a point on the westerly boundary of that certain 2.05 acre parcel
of land shown as Parcel 2 in Volume 12 of Record of Surveys at Page 64, from
which the northwesterly line of State Highway 108 bears South 17 degrees 24' 12"
East 43.54 feet; thence South 17 degrees 24' 12" East 43.54 feet to the
northwesterly line of State Highway 108; thence from a tangent which bears North
53 degrees 49' 45" East, northeasterly along a curve, concave to the northwest,
having a radius of 60.00 feet, a central angle of 71 degrees 13' 57" and an arc
length of 74.59 feet to the POINT OF BEGINNING.
PARCEL 2:
A portion of Government LOT 3 in the Northwest Quarter of Section 6, Township 1
North, Range 15 East, M. D. B. & M., and more particularly described as follows:
COMMENCING at the Northwest corner of Section 6, Township 1 North, Range 15
East, M. D. B. & M., County of Tuolumne, State of California; thence South 86
degrees 45' 35" East 2068.63 feet to a 3/4 inch diameter steel bar with brass
tag L.S. 3159 on the westerly boundary of Parcel 2 as shown in Volume 12 of
Record of Surveys at Page 64 in the Office of the Tuolumne County Recorder;
thence from a tangent which bears South 38 degrees 50' 00" East, southeasterly
along a curve, concave to the southwest, having a radius of 345.00 feet, a
central angle of 17 degrees 43' 47" and an arc length of 106.76 feet; thence
South 82 degrees 41' 11" West 41.00 feet to the TRUE POINT OF BEGINNING; thence
southwesterly along the Pacific Gas and Electric Company water ditch the
following courses: South 51 degrees 15' 45" West 44.46 feet; South 15 degrees
16' 43" East 42.23 feet; South 18 degrees 13' 45" West 102.83 feet to a 1/2"
diameter steel bar; South 38 degrees 23' 31" West 87.73 feet to a 1/2" diameter
steel bar; South 58 degrees 36' 49" West 70.87 feet to a 1/2" diameter steel
bar; South 71 degrees 04' 32" West; 110.54 feet to a 1/2"
Page 15
LEASE SUMMARY
1. TENANT: COST U LESS, INC.
2. PREMISES: 760 Mono Way
3. RENTABLE AREA: 23,150 sq.ft.
4. BASE RENT: $10,418 per month for the first 36 months; $11,575 per month for
Months 37-60; $12,733 per month for Months 61-96; $13,890 per month
thereafter
5. PERCENTAGE RENT: None
6. TERM: 10 YEARS AND 0 MONTHS
7. COMMENCEMENT DATE: See Item 14.2 below
8. TENANT'S SHARE: 23,150 / 162,595 = 14.2%
9. SECURITY DEPOSIT: None
10. USE: general retail
TRADE NAME: COST U LESS, INC.
11. NON-COMPETE: Tenant will not operate or own any similar type of business
within a radius of 20 miles from the Premises.
12. ADDRESS FOR PAYMENTS AND NOTICES:
LANDLORD
SONORA PLAZA
c/o CARLSBERG MANAGEMENT COMPANY
2800 28th Street, Suite 222
Santa Monica, CA 90405
TENANT
COST U LESS, INC.
1810 15th Place, NW #203
Issaquah, WA 98027
Attn:
13. BROKER(S): Pearson Realty, Iliff Thorn
14. ADDITIONAL PROVISIONS:
14.1 Advance Rent.
------------
Upon execution of this Lease, Tenant shall pay to Landlord the Base
Rent for one (1) full calendar month.
14.2 Commencement Date.
-----------------
The Commencement Date shall be five months following the date on which
Landlord tenders possession of the Premises to Tenant following the
vacation of the Premises by the former tenant and the removal of such
former tenant's trade fixtures.
EXHIBIT "B"
14.3 First Option to Renew and Extend.
--------------------------------
In the event Tenant is not then in default of any of its obligations
pursuant to this Lease, Landlord hereby grants to Tenant an option to
extend the term of this Lease for an additional five (5) year period
at a monthly Base Rent of $15,048 for the first 24 months of such
period and $16,205 for the remainder thereof, and otherwise on the
terms of this Lease. In the event Tenant desires to exercise such
option and thereby extend the initial term of this Lease, Tenant shall
notify Landlord in writing of such intention no later than 60 days
prior to the expiration of the initial term.
14.4 Second Option to Renew and Extend.
---------------------------------
In the event Tenant is not then in default of any of its obligations
pursuant to this Lease, Landlord hereby grants to Tenant an option to
extend the term of this Lease beyond the first extended term for an
additional five (5) year period at a rental equal to the then "Fair
Market Rate" (as hereinafter defined), but in no event less than the
rental payable at the end of the first extended term hereof, and on
other terms to be determined by the parties. During the first 60 days
of the last six months of the first extended term, Tenant shall notify
Landlord of its intent to (i) pursue negotiations to extend the term
of this Lease or (ii) surrender the Premises to Landlord at the
expiration of the first extended term. In the event Tenant desires to
pursue negotiations to extend the term of this Lease, such
negotiations shall be completed no later than 90 days prior to the
expiration of the first extended term. In the event Tenant desires to
exercise such option and thereby extend the first extended term of
this Lease pursuant to the terms and conditions agreed to by the
parties, Tenant shall notify Landlord in writing of such intention no
later than 60 days prior to the expiration of the first extended term.
"Fair Market Rate" shall mean the rate for which comparable space in
the area of the Project is being rented at the time the Lease term is
extended pursuant to this option.
14.5 Notification of Available Space.
-------------------------------
In the event any other space in the Project becomes available for
lease, Landlord will so notify Tenant and will not enter into a lease
of such space with any other person (other than pursuant to any then-
existing renewal rights) until a period of ten (10) business days
after such notification shall have expired.
14.6 Early Occupancy.
---------------
Tenant shall be entitled to occupy the Premises prior to the
Commencement Date for the purpose of making improvements and setting
up only. Such occupancy shall be subject to all provisions of this
Lease, except for the obligation to pay rent therefor, and such
occupancy shall not advance the termination date thereof.
14.7 Tenant Improvements.
-------------------
Improvements. Tenant shall make the alterations to the Premises
------------
described in Exhibit "1" attached or to be attached to this Addendum
upon mutual approval of Landlord and Tenant ("Improvements"). Landlord
shall pay the cost of Improvements, including cost of space plans,
working drawings and cost of demolition, if any, up to a maximum of
$69,450; and all cost and expense in excess of such amount in
connection with the completion of Improvements shall be the sole
responsibility, cost and expense of Tenant, and shall be paid promptly
by Tenant, except that Tenant shall be given credits against its
obligation to pay Base Rent hereunder, up to a total of $50,550 in
such credits, taken at the rate of no more than $5,000 per month, to
offset the cost to Tenant of Improvements. Improvements shall be
performed by Tenant's contractor, which shall be subject to approval
by Landlord, in accordance with plans approved by Landlord and
pursuant to a construction contract approved by Landlord.
Funding. Notwithstanding the foregoing, Landlord shall be responsible
-------
for funding Improvements only in accordance with the following
procedures: (i) funding by Landlord will be prorata with Tenant's
funding, based on total
EXHIBIT "B"
bid amount of entire cost of Improvements, except that Landlord
may holdback until completion up to 10% of the amount to the
funded by it, and (ii) such funding shall be subject to
Landlord's and/or its lender's reasonable satisfaction with
supporting documentation, such as invoices and lien releases.
Timetable. In connection with Improvements, Landlord and Tenant
---------
agree that time is of the essence and that they will cooperate in
adhering to the construction schedule.
Changes. Changes in the mutually approved working drawings and
-------
specifications for Improvements shall be made only by mutual
consent, which shall not be unreasonably withheld or delayed.
Tenant Approval. The taking of possession or use of the Premises
---------------
by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Project were at
such time in satisfactory condition and in conformity with the
provisions of this Addendum and the Lease in all respects.
Tenant Work. Tenant shall bear the entire expense and
-----------
responsibility for providing within the Premises (whether affixed
to the Premises or not) all trade fixtures and merchandise and
all other property incidental to the operation of the type of
business to be operated by Tenant, to the extent not provided
under Improvements. All of the foregoing shall meet the criteria
of building standard improvements utilized in the Project and
shall include, but not be limited to, the furnishing and
installation of all furniture, shelving, store fixtures,
furnishings, interior decorations, graphics, mirrors and other
fixtures, lighting and other special effects, electrical and
mechanical connections of all fixtures and equipment peculiar to
Tenant's occupancy, except as designated herein as Improvements.
14.8 Certain Repairs.
---------------
Prior to the Commencement Date, Landlord shall put the HVAC and
mechanical/electrical/plumbing systems for the Premises in good
working order. Thereafter, Tenant shall maintain a preventative
maintenance contract thereon with a qualified licensed
contractor. Landlord shall be responsible for the costs of any
HVAC repairs, other than routine maintenance, incurred before
June 30, 1994, but only so long as Tenant maintains such
contract, except that Landlord shall not be responsible for the
cost of any HVAC repair if it is required because of Tenant's
negligence or wilful misconduct. Landlord shall also be
responsible for repairs necessitated by any roof leaks through
June 30, 1994, except to the extent caused by Tenant's negligence
or wilful misconduct.
14.9 Limitation on Certain Common Area Operating Expenses.
----------------------------------------------------
Notwithstanding anything in this Lease to the contrary, (i) the
amount payable by Tenant with respect to each of 1994 and 1993,
to the extent applicable, on an annualized basis, on account of
Common Area Expenses, Real Property Taxes and hazard insurance
premiums shall not exceed $26,391 and (ii) the amount payable by
Tenant as Common Area Expenses on account of discretionary
contractual services and direct personnel costs shall not
increase more than ten percent (10%) annually on an annualized,
cumulative basis.
14.10 Limitation on Real Property Taxes.
---------------------------------
Notwithstanding anything herein to the contrary, Tenant shall not
be responsible for paying any portion of Real Property Taxes
which would not have been payable but for a sale of the Project
during the initial term hereof, except that Tenant shall be
responsible for paying such portion which is attributable to one
such sale (but only one such sale) during any five-year period to
the following extent: one-third of such portion in the first year
it becomes due, two-thirds thereof in the second year, and all of
such portion in each year thereafter.
EXHIBIT "B"
Landlord reserves the right to prohibit or impose conditions upon the
installation in the Premises of heavy objects which might overload the floors.
13. No tenant shall purchase or otherwise obtain for use in the Premises
water, ice, towel, vending machine, janitorial, maintenance or other like
services, except from persons authorized by Landlord, and at hours and under
regulations fixed by Landlord.
14. Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's opinion, tends to impair the reputation of the
Project or its desirability as an office building and upon written notice from
Landlord any tenant shall refrain from or discontinue such advertising.
15. Any persons employed by any tenant to do janitor work, shall, while in
the Project and outside of the Premises, be subject to and under the control and
direction of the manager of the Project (but not as an agent or servant of said
manager or of Landlord, and tenant shall be responsible for all acts of such
persons).
16. All doors opening onto public corridors shall be kept closed, except
when in use for ingress and egress.
17. The requirements of tenants will be attended to only upon application
to the Office of the Building.
18. Canvassing, soliciting and peddling in the Project are prohibited and
each tenant shall cooperate to prevent the same.
19. All office equipment of any electrical or mechanical nature shall be
placed by tenants in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise or annoyance.
20. No air conditioning unit or other similar apparatus shall be installed
or used by any tenant without the written consent of Landlord.
21. There shall not be used in any space, or in the public halls of the
Project, either by tenants or others, any hand trucks except those equipped with
rubber tires and side guards.
22. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires or
stringing of wires will be allowed without written consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to the
premises shall be subject to the approval of Landlord.
23. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing drapes when the sun's rays fall
directly on windows of the Premises. Tenant shall not obstruct, alter or in any
way impair the efficient operation of Landlord's heating, ventilating and air
conditioning system and shall not place bottles, machines, parcels or any other
articles on the induction unit enclosure so as to interfere with air flow.
Tenant shall not tamper with or change the setting of any thermostats or
temperature control valves.
24. All parking drives and area, pedestrian walkways and other public
areas forming a part of the Project shall be under the sole and absolute control
of Landlord with the exclusive right to regulate and control these areas. Tenant
agrees to conform to the rules and regulations that may be established by
Landlord for these areas from time to time.
EXHIBIT "C"
RULES AND REGULATIONS ATTACHED
TO AND MADE A PART OF OFFICE SPACE LEASE
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or used for any purpose
other than ingress and egress. The halls, passages, entrances, elevators,
stairways, balconies and roof are not for the use of the general public, and
Landlord shall in all cases retain the right to control or prevent access
thereto by all persons whose presence in the judgment of Landlord shall be
prejudicial to the safety, character, reputation or interests of the Project and
its tenants, provided that nothing herein contained shall be construed to
prevent such access by persons with whom the tenant normally deals in the
ordinary course of its business unless such persons are engaged in illegal
activities. No tenant and no employees of any tenant shall go upon the roof of
the Project without the written consent of Landlord.
2. No awnings or other projections shall be attached to the outside walls
of the Project without the prior written consent of Landlord. Except as
otherwise specifically approved by Landlord, all electrical ceiling fixtures
hung in offices or spaces along the perimeter of the Project must be
fluorescent, or a quality, type, design and bulb color approved by Landlord.
3. No sign, advertisement or notice shall be exhibited, painted or
affixed by any tenant on any part of, or so as to be seen from the outside of,
the Premises or the Project without the prior written consent of Landlord. In
the event of the violation of the foregoing by any tenant, Landlord may remove
same without any liability, and may charge the expense incurred in such removal
to the tenant violating this rule. Interior signs on doors and directory tablet
shall be inscribed, painted or affixed for each tenant by Landlord at the
expense of such tenant, and shall be of a size, color and style acceptable to
Landlord.
4. The toilets and wash basins and other plumbing fixtures shall not be
used for any purpose other than for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All damage
resulting from any misuse of the fixtures shall be borne by the tenant who, or
whose servants, employees, agents, visitors or licensees shall have caused the
same.
5. No tenant shall in any way deface any part of the Project. No boring,
cutting or stringing of wires or laying of linoleum or other similar floor
coverings shall be permitted except with the prior written consent of Landlord
as Landlord may direct.
6. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Premises and no cooking shall be done or permitted by any
tenant on the Premises except that the preparation of coffee, tea, hot chocolate
and similar items for the tenant and its employees and business visitors shall
be permitted. No tenant shall cause or permit any unusual or objectionable odors
to escape from the Premises.
7. Except as may be specifically permitted by the Lease, the Premises
shall not be used for manufacturing or for the storage of merchandise except as
such storage may be incidental to the use of the Premises for general office
purposes. No tenant shall occupy or permit any portion of his premises to be
occupied as an office for a public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber shop, manicure shop or employment agency. No
tenant shall engage or pay any employees on the Premises except those actually
working for such tenant on the Premises nor advertise for laborers giving an
address at the Premises. The Premises shall not be used for lodging or sleeping
or for any immoral or illegal purposes.
8. No tenant shall make, or permit to be made any unseemly or disturbing
noises, sounds or vibrations or disturb or interfere with occupants of this or
neighboring buildings or premises or those having business with them whether by
the use of any musical instruments, radio, phonograph, unusual noise, or in any
other way.
9. No tenant shall throw anything out of doors or down the passageways.
10. No tenant shall at any time bring or keep upon the Premises any
inflammable, combustible or explosive fluid, chemical or substance except in
such compliance with all federal, state and local laws. The tenant shall not do
or permit anything to be done in the leased premises, or bring or keep anything
therein, which shall in any way increase the rate of fire insurance on the
Project, or on the property kept therein, or obstruct or interfere with the
rights of other tenants, or in any way injure or annoy them, or conflict with
the regulations of the Fire Department or the fire laws, or with any insurance
policy upon the Project, or any part thereof, or with any rules and ordinances
established by the Board of Health or other governmental authority.
11. No additional locks or bolts of any kind shall be placed on any of the
doors or windows by any tenant, nor shall any changes be made in existing locks
or the mechanism thereof. Each tenant must, upon the termination of this
tenancy, restore to Landlord all keys of stores, offices, and toilet rooms,
either furnished to, or otherwise procured by, such tenant, and in the event of
the loss of any keys so furnished, such tenant shall pay to Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such change.
12. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which Landlord may determine from time to time. The moving of safes or other
fixtures or bulky matter of any kind must be made upon previous notice to the
manager of the Project and under his supervision, and the persons employed by
any tenant for such work must be acceptable to Landlord. Landlord reserves the
right to inspect all safes, freight or other bulky articles to be brought into
the Project and to exclude from The Project all safes, freight or other bulky
articles which violate any of these Rules and Regulations or the lease of which
these Rules and Regulations are a part.
EXHIBIT "C"
14.11 Exclusive Use.
-------------
Landlord shall not lease any other space in the Project to any other
person whose business is that of a warehouse club store carrying
substantially the same range of merchandise as Tenant.
IMPORTANT:
- ---------
Any additional provisions on any additional pages of this Exhibit "B" are
incorporated herein by reference.
"LANDLORD"
INMOSTRAT CORPORATION,
a Delaware corporation
/s/ David Huyette
By: David Huyette
Its: President
"TENANT"
COST U LESS, INC.,
a Hawaii corporation
/s/ Allan C. Youngberg
By: Allan C. Youngberg
Its: Secretary/Treasurer
ESTOPPEL LETTER
---------------
Sonora Plaza Partnership
2800 28th Street, Suite 222
Santa Monica, CA 90405
RE: 760 E. Mono Way, Sonora California
---
Sonora, California (the "Premises")
Dear Sir or Madam:
Inmostrat Corporation, as landlord (the "Landlord"), entered into a lease
---------------------
for the above-referenced Premises (the "Lease") with the undersigned, as tenant,
dated August, 1993.
------------
At the request of the Landlord, and knowing that you or your successors and
assigns and all parties having any interest in the Premises are relying upon the
accuracy of the information contained herein, and the undersigned certifies as
follows:
1. The Lease is in full force and effect, and Tenant is in actual
possession of the Premises, except as follows: none.
----
2. The Lease has not been modified, supplemented or amended in any way
except as indicated therein or as follows: none.
----
3. All work required by the Lease to be performed by the Landlord has
been completed and is in accordance with the provisions of the Lease.
4. (a) The fixed monthly rent recently payable under the terms of the
Lease is $10,418.00.
---------
(b) The fixed monthly rent payable under the terms of the Lease has
been paid through October 31, 1995.
----------------
(c) All additional charges (rent or otherwise, i.e. taxes, insurance,
common area maintenance, other escalations, if applicable) payable under the
terms of the Lease has been paid through October 31, 1995.
----------------
(d) The Lease shall terminate on May 1, 2004.
-----------
(e) the Lease contains 2, 5-year year options to renew on the
---------
following terms and conditions: fixed $15,048-1st 24 months, $16,205-36 months,
----------------------------------------------
then "Fair Market".
- ------------------
5. Except as set forth in the Lease, there are no claims, offsets,
setoffs, rebates, concessions, abatements or defenses against or with respect to
rent, additional rent or other sums payable under the terms of the Lease.
6. There are no defaults under the terms of the Lease by the Landlord
that have continued beyond the expiration of any applicable grace period
provided for in the Lease for the cure thereof. There are no defaults under the
terms of the Lease by the Tenant that have continued beyond the expiration of
any applicable grace period provided for in the Lease for the cure thereof,
except as follows: none.
----
7. The amount of the security deposit under the Lease is $0.00.
----
8. Tenant has no option or right to purchase the Premises or any part
thereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
26 day of October, 1995.
Very truly yours,
Cost U Less, Inc.
-----------------
By: /s/ Allan C. Youngberg
----------------------------
VP-CFO
Allan C. Youngberg
------------------------------
(Printed Name and Title)
Tenant Estoppel Letter
October 17, 1995
Belgravia Capital Corporation
19900 MacArthur Boulevard, Suite 1100
Irvine, CA 92715
RE: 760 E. Mono Way, Sonora, California
---
Gentlemen:
It is our understanding that you are about to make a loan to Sonora Plaza
------------
Partnership, the Landlord, or successor-in-interest to the landlord under our
- -----------
lease, secured by a mortgage on the captioned premises and, as a condition
precedent thereof, you have required this certification by the undersigned.
The undersigned, as tenant under that certain lease made with Inmostrat
---------
Corporation, as landlord, dated August, 1993, (the "Lease"), hereby ratifies the
- ----------- ------------
Lease and certifies to you and your successors and assigns that:
(a) the undersigned entered into occupancy of the premises described in
the Lease on December 2, 1993;
----------------
(b) the fixed monthly rental presently payable under the Lease is
$10,418.00;
- ----------
(c) the Lease is in full force and effect and, except as indicated above,
has not been assigned, modified, supplemented or amended in any way and the
undersigned has no notice of any assignment, pledge hypothecation by the
landlord of the Lease or of the rentals thereunder;
(d) a true and complete copy of the Lease (including all amendments and
modification thereof) is attached hereto as Exhibit A;
---------
(e) the Lease represents the entire agreement between the parties with
respect to the above space in the above-mentioned building;
(f) the term of the Lease expires on May 1, 2004;
-----------
(g) all construction and other obligations of a material nature to be
performed by the landlord under the Lease have been satisfied, except at
follows: none;
----
Belgravia Capital Corporation
October 17, 1995
Page 2
(h) any required payments by the landlord to the undersigned for tenant
improvements have been made;
(i) on this date there are no existing defenses or offsets which the
undersigned has against the enforcement of the lease by the Landlord and the
undersigned has no knowledge of any event which with the giving of notice, the
passage of time or both would constitute a default under said Lease;
(j) the undersigned is not entitled to any offsets, abatements, deductions
or otherwise against the rent payable under the Lease from and after the date
hereof, except as follows: none;
----
(k) no rental, other than for the current month, has been paid in advance;
(l) the amount of the security deposit presently held under the Lease is
$0.00;
----
(m) the rentals under the Lease have been paid through the month of
October 31, 1995.
- ----------------
Very truly yours,
Cost U Less, Inc.
-----------------
By: /s/ Allan C. Youngberg
-----------------------
Title: VP-CFO
---------------------