▇▇▇▇▇▇ & ▇▇▇▇▇
GUARANTY OF LEASE
THIS GUARANTY OF LEASE is made as of January 5, 1996, by ▇▇▇▇▇▇ & NOBLE,
INC., a Delaware corporation ("GUARANTOR"), for the benefit of Chico Crossroads
Center, a California limited partnership ("LANDLORD").
RECITALS:
▇. ▇▇▇▇▇▇ & ▇▇▇▇▇ Superstores, Inc., a Delaware corporation, is the
Tenant under that certain lease (the "LEASE") with Landlord dated _____, 1996,
respecting certain premises (the "PREMISES") located at Chico Crossroads
Shopping Center, City of Chico, County of Butte, State of California, as more
particularly described in the Lease.
B. As a condition to entering into the Lease, Landlord requires that
Guarantor guarantee the full performance of the obligations of Tenant under the
Lease.
NOW, THEREFORE, in consideration of the execution of the Lease by Landlord
and other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor covenants and agrees as follows:
AGREEMENT
1. GUARANTEE. Guarantor hereby absolutely, irrevocably and
unconditionally guarantees to Landlord the full and faithful performance of all
of the covenants, conditions, agreements and undertakings of Tenant to be kept
and performed by Tenant, its successors and assigns under the Lease including,
but not limited to, the payment when due of all rent, additional rent, property
taxes, insurance, and other sums payable by Tenant, its successors and assigns
to Landlord under the Lease (collectively the "OBLIGATIONS") if such Obligations
are not paid or performed, as the case may be, after any notice and/or cure
period provided for in the Lease. Guarantor understands and agrees that this
Guaranty is unconditional and continuing and is a guaranty of payment and
performance and not of collection.
2. INDEPENDENT OBLIGATION. The liability of Guarantor hereunder is
independent of the obligation of Tenant or any other person or entity and a
separate action or separate actions may be brought and prosecuted against
Guarantor whether or not any action is brought or prosecuted against Tenant or
whether Tenant is joined in any such action or actions.
3. MODIFICATIONS TO LEASE. Guarantor's obligations under this Guaranty
of Lease shall not be extinguished, discharged, diminished or reduced in any way
by any modification or amendment of the Lease including, but not limited to, any
modification of payment dates or amounts, or any subsequent sublease or
assignment of the Lease made with or without the consent of Landlord. Guarantor
hereby waives any right to approve any modification or amendment of the Lease
and agrees that its obligations hereunder shall be modified to the same extent
and with the same force and effect as any modification or amendment of the
Lease.
4. NO WAIVER. No failure on the part of Landlord to pursue any remedy
under this Guaranty of Lease or under the Lease shall constitute a waiver on the
part of Landlord of its right to pursue such remedy on the basis of the same or
a subsequent default.
5. WAIVER OF EXONERATION. Guarantor waives any right to require Landlord
to (a) proceed against Tenant, (b) pursue any other right or remedy available to
Landlord, or (c) have the property of Tenant first applied to the discharge of
the Obligations. Guarantor further waives any defense it may acquire by reason
of Landlord's election of any remedy against Guarantor or Tenant, or both.
6. WAIVER OF SUBROGATION. Until the obligations of Tenant under the
Lease have been performed in full, Guarantor shall have no right of subrogation
against Tenant, and Guarantor hereby expressly waives any right to enforce any
remedy which Landlord now has or may hereafter acquire against Tenant.
Guarantor hereby waives the benefit of, and any right to participate in, any
security now or hereafter held by Landlord for the performance of any
obligations of Tenant under the Lease.
7. WAIVER OF PRESENTMENTS. Guarantor waives any presentments, demands
for performance, notices of nonperformance, protests, notices of protest,
notices of dishonor, and notices of acceptance of this Guaranty and waives all
notices of the existence, creation, or incurring of new or additional
Obligations.
8. OTHER GUARANTOR WAIVERS. Without limiting the generality of the
preceding paragraphs, Guarantor hereby waives all rights and defenses to:
(a) All defenses by reason of any lack of authority of Tenant
respecting Obligations accruing under the Lease or this Guaranty;
-2-
(b) Any and all rights it may have now or in the future to require or
demand that Landlord pursue any right or remedy Landlord may have against Tenant
or any other third party;
(c) Any defense as a surety, it being understood and agreed that, at
its option, Landlord may treat this instrument as either a guaranty or a
suretyship;
(d) Any duty or obligation of Landlord to disclose to Guarantor any
facts Landlord may know or hereafter know about Tenant, regardless of whether
Landlord has reason to believe that any such facts materially increase the risk
beyond that which Guarantor intends to assume or has reason to believe that such
facts are unknown to Guarantor or has a reasonable opportunity to communicate
such facts to Guarantor, it being understood and agreed that Guarantor is fully
responsible for being and keeping informed of the financial condition of Tenant
and of any and all circumstances bearing on the risk of nonperformance of any
Obligation;
(e) Any defense based upon an election of remedies by Landlord,
including any election which destroys or impairs any right of subrogation,
reimbursement or contribution which Guarantor may have, or any rights or
benefits under any provisions of applicable law in any way qualifying,
conditioning or limiting the obligations of Guarantor based on any steps or
procedures that landlords should take before proceeding against Guarantor; and
(f) Any defense by reason of any invalidity, irregularity or
unenforceability of all or any part of the Obligations.
9. BANKRUPTCY. This Guaranty will continue unchanged by any bankruptcy,
reorganization or insolvency of Tenant, or any successor or assignee thereof, or
by any disaffirmance or abandonment by a trustee of Tenant. Notwithstanding any
modification, discharge or extension of the indebtedness or any amendment,
modification, stay or cure of Landlord's rights which may occur in any
bankruptcy or reorganization case or proceeding concerning Tenant whether
permanent or temporary, and whether assented to by Landlord, Guarantor hereby
agrees that it shall be obligated hereunder to pay and perform the Obligations
in accordance with the terms of the Lease and the terms of this Guaranty.
Guarantor understands and acknowledges that by virtue of this Guaranty,
Guarantor has specifically assumed any and all risks of a bankruptcy or
reorganization case or proceeding with respect to Tenant.
10. GOVERNING LAW. This Guaranty of Lease shall be construed and
interpreted in accordance with the laws of the State of California.
-3-
11. CAPTIONS. The captions and paragraph numbers appearing in this
Guaranty of Lease are inserted only as a matter of convenience and are not to be
used to interpret this Guaranty of Lease.
12. EXAMINATION OF LEASE. Guarantor acknowledges that it has (a) received
a copy of the Lease, (b) read and understood the terms and provisions of the
Lease including, but not limited to, the covenants, conditions, agreements and
undertakings of Tenant to be kept and performed by Tenant under the Lease, (c)
read and understood the provisions of this Guaranty of Lease, and (d) understood
the obligations of Guarantor under this Guaranty of Lease, including the legal
effect of such obligations and has been advised by legal counsel respecting such
obligations.
13. RELEASE OF GUARANTY. Notwithstanding anything to the contrary
contained herein, at such time as Tenant is released from liability under the
Lease in accordance with the terms thereof, this Guaranty shall be null and void
and of no further force or effect.
14. ATTORNEYS' FEES. Guarantor agrees that if Landlord shall employ an
attorney to present, enforce or defend Landlord's rights or remedies hereunder,
Guarantor shall pay any and all reasonable attorneys' fees, related
disbursements and court costs incurred by Landlord in connection therewith.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty of Lease as of the
date first hereinabove set forth.
"GUARANTOR"
▇▇▇▇▇▇ & NOBLE, INC.,
a Delaware Corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
-▇-
▇▇▇▇▇▇ & ▇▇▇▇▇ BOOKSTORE
LEASE AGREEMENT
DATED: January 16 , 1995
LANDLORD: Chico Crossroads Center,
a California limited partnership
TENANT: ▇▇▇▇▇▇ & NOBLE SUPERSTORES, INC.,
A DELAWARE CORPORATION
PREMISES: Chico Crossroads Shopping Center
Chico, California
TABLE OF CONTENTS
1. DEMISE AND PREMISES. . . . . . . . . . . . . . . . . . . . . . . . -1-
2. TERM OF LEASE, HOLDOVER AND OPTIONS. . . . . . . . . . . . . . . . -1-
3. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
4. CONSTRUCTION OF THE PREMISES . . . . . . . . . . . . . . . . . . . -4-
5. DELIVERY AND ACCEPTANCE OF THE PREMISES. . . . . . . . . . . . . . -7-
6. COVENANT OF TITLE AND QUIET ENJOYMENT. . . . . . . . . . . . . . . -8-
7. USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . -8-
8. REAL ESTATE TAXES. . . . . . . . . . . . . . . . . . . . . . . . . -11-
9. COMMON AREA. . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
10. MAINTENANCE BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . -15-
11. MAINTENANCE BY TENANT. . . . . . . . . . . . . . . . . . . . . . . -15-
12. ALTERATIONS, ADDITIONS AND IMPROVEMENTS. . . . . . . . . . . . . . -16-
13. SIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
14. LANDLORD'S RIGHT OF ENTRY. . . . . . . . . . . . . . . . . . . . . -17-
15. UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
16. PARKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
17. [INTENTIONALLY DELETED]. . . . . . . . . . . . . . . . . . . . . . -18-
18. [INTENTIONALLY DELETED). . . . . . . . . . . . . . . . . . . . . . -18-
19. NO BUILD AREA, VISIBILITY AND ACCESS . . . . . . . . . . . . . . . -18-
20. ASSIGNMENT AND SUBLEASING. . . . . . . . . . . . . . . . . . . . . -19-
21. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
22. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
23. RELEASE AND WAIVER OF SUBROGATION. . . . . . . . . . . . . . . . . -21-
24. FIRE AND CASUALTY DAMAGE . . . . . . . . . . . . . . . . . . . . . -21-
25. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
26. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
27. HAZARDOUS MATERIALS. . . . . . . . . . . . . . . . . . . . . . . . -26-
28. SUBORDINATION AND NON-DISTURBANCE. . . . . . . . . . . . . . . . . -28-
29. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
30. MEMORANDUM OF LEASE. . . . . . . . . . . . . . . . . . . . . . . . -29-
31. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
32. TENANT'S ENTRY PRIOR TO COMMENCEMENT DATE. . . . . . . . . . . . . -29-
33. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
34. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
35. LANDLORD'S SUBORDINATION . . . . . . . . . . . . . . . . . . . . . -30-
36. ESTOPPEL CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . -30-
37. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
38. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
EXHIBIT A - Legal Description
EXHIBIT B - Shopping Center Site Plan
EXHIBIT C - Notice of Lease
EXHIBIT D - Landlord's Work
EXHIBIT E - Intentionally Deleted
EXHIBIT F - Use Provisions
EXHIBIT G - Tenant's Prototype Signage and Elevation Designs
EXHIBIT H - Subordination, Non-Disturbance and Attornment Agreement
EXHIBIT I - Memorandum of Lease
-2-
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between CHICO CROSSROADS
CENTER, a California limited partnership ("LANDLORD"), whose address is:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and whose Federal taxpayer identification number is ▇▇-▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ &
▇▇▇▇▇ SUPERSTORES, INC., a Delaware corporation, d/b/a ▇▇▇▇▇▇ & Noble
Bookstore ("TENANT"). The Effective Date of the Lease is the date of last
execution (as defined in Paragraph 37.6 below) and is hereby established as
January 16, 1996.
1. DEMISE AND PREMISES
1.1 Landlord, in consideration of the rents hereinafter reserved and
agreed to be paid by Tenant, hereby leases to Tenant and Tenant hereby leases
from Landlord the following described premises (the "PREMISES") situated within
the City of Chico, County of Butte, California, being part of a shopping center
commonly known as Chico Crossroads Shopping Center (the "SHOPPING CENTER"), and
comprised of a portion of a building (the "BUILDING"), which portion contains
Leasable Square Footage (as defined in Paragraph 3.1) of approximately 24,660
square feet (with a width of approximately 128 feet and a depth of
approximately 154 feet, irregularly shaped), together with the nonexclusive use
and benefit of all of Landlord's appurtenant rights, privileges and easements.
The Premises has a mailing address recognized by the United States Postal
Service of:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1.2 For the purposes of this Lease, "TENANT'S PROPORTIONATE SHARE"
shall equal a fraction, the numerator of which is the Leasable Square Footage of
the Premises as determined by the Square Footage Certificate (defined below),
and the denominator of which is the total Leasable Square Footage of all
buildings in the Shopping Center, including the Premises, shown on EXHIBIT B,
whether those buildings are constructed or occupied, and all buildings
constructed that are not shown on EXHIBIT B, whether occupied or not. Currently
Landlord estimates the denominator of the fraction to be 267,533 Leasable Square
Feet as of the Effective Date hereof, resulting in an estimated Tenant's
Proportionate Share of 9.22%, but in the event additional buildings not shown on
EXHIBIT B are at any time constructed within the Shopping Center, whether owned
by Landlord or others, Tenant's Proportionate Share shall be appropriately
adjusted as of the day said additional buildings are completed, whether such
buildings are occupied or not.
1.3 A legal description of the Shopping Center is set forth in
EXHIBIT A, and the Premises are outlined on the site plan of the Shopping Center
attached as EXHIBIT B. Landlord covenants that the Shopping Center is or will be
substantially as shown on Exhibit B and contains at least 265,000 Leasable
Square Feet.
2. TERM OF LEASE, HOLDOVER AND OPTIONS
2.1 The term of this Lease (the "TERM") shall commence on the date
of Landlord's delivery and Tenant's acceptance of the Premises as provided in
Article 5 below ("COMMENCEMENT DATE") and shall end on the last day of the
fifteenth (15th) Lease Year (as defined in Paragraph 3.4), plus, if applicable,
the number of additional days required such that the expiration of the Term,
including any extensions thereof, shall not occur during the months of September
through and including January.
The Term may be extended as provided in Paragraph 2.4 below and, in such event,
"Term" shall include any and all of such extensions.
2.2 Landlord and Tenant agree to sign within thirty (30) days
following the Rent Commencement Date (as defined in Paragraph 3.3) a Notice of
Lease in the form set forth in EXHIBIT C, reciting the Commencement Date, the
Rent Commencement Date and the expiration date of the primary Term.
2.3 Should Tenant continue to occupy the Premises, or any part
thereof, after the expiration of the Term, unless otherwise agreed in writing,
such occupancy shall constitute and be construed as a tenancy from month to
month, and either Landlord or Tenant may terminate such tenancy upon thirty (30)
days written notice to the other. Such month-to-month tenancy shall otherwise
be on and subject to all of the other terms and provisions set forth in this
Lease, except that "Fixed Rent" during such month-to-month tenancy shall be paid
at the rate of 125% of the Fixed Rent in effect immediately prior to the
expiration of the Term.
2.4 Provided Tenant shall not then be in default (beyond any
applicable cure period) under this Lease, Tenant shall have the right, privilege
and option to extend the Term for three (3) successive periods of five (5) years
each under the same terms and conditions of this Lease then in effect, except
that the rental paid for any option period shall be the amount indicated in
Paragraph 3.2 below. If Tenant elects to exercise any option, it shall do so by
giving Landlord written notice at least one hundred eighty (180) days prior to
the expiration of the then existing Term.
3. RENT
3.1 Tenant agrees and covenants to pay Landlord an annual fixed rent
in the sum equal to the product of the dollar amount set forth in Paragraph 3.2
below multiplied by the Leasable Square Footage of the Premises ("FIXED RENT").
Fixed Rent shall be payable in advance, without demand, on the first day of each
calendar month in equal monthly installments and shall not be increased, abated
or diminished except as set forth herein. For purposes of this Lease, "LEASABLE
SQUARE FOOTAGE" shall mean the amount of space in the Premises as measured from
the middle of common walls and the exterior of outside walls and such
measurement shall exclude adjacent corridors, elevator shafts, stairwells,
heating and ventilation facilities and telephone and electric rooms not
exclusively serving the Premises, and any part of the Common Area (defined
below); provided, however, that the parties agree that Tenant's Building
Proportionate Share (as defined in Paragraph 9.10) of the square footage of the
telephone and electrical room serving the Premises and the adjoining premises
shall be deemed to be included within the Leasable Square Footage of the
Premises. The Leasable Square Footage of the Premises shall be determined and
certified in writing (the "SQUARE FOOTAGE CERTIFICATE") by an architect or other
individual selected by Landlord and Tenant. In no event shall the Leasable
Square Footage of the Premises for the purposes of this Lease exceed one hundred
two percent (102%) of the square footage set forth in Paragraph 1.1 above.
3.2 Fixed Rent shall be determined as follows:
(a) Fixed Rent for the first (1st) through tenth (1Oth) Lease
Years shall equal Nine and 70/100 Dollars ($9.70) per annum per square foot of
Leasable Square Footage as established by the Square Footage Certificate.
(b) Fixed Rent for the eleventh (11th) through fifteenth (15th)
Lease Years shall equal Ten and 93/100 Dollars ($10.93) per annum per square
foot of Leasable Square Footage as established by the Square Footage
Certificate.
(c) Fixed Rent for the sixteenth (16th) through twentieth (20th)
Lease Years (I.E., the "FIRST RENEWAL TERM") shall equal Twelve and 56/100
Dollars ($12.56) per annum per square foot of Leasable Square Footage as
established by the Square Footage Certificate.
-2-
(d) Fixed Rent for the twenty-first (21st) through twenty-fifth
(25th) Lease Years (I.E., the "SECOND RENEWAL TERM") shall equal Fourteen and
45/100 Dollars ($14.45) per annum per square foot of Leasable Square Footage as
established by the Square Footage Certificate.
(e) Fixed Rent for the twenty-sixth (26th) through thirtieth
(30th) Lease Years (I.E., the "THIRD RENEWAL TERM") shall equal Sixteen and
62/100 Dollars ($16.62) per annum per square foot of Leasable Square Footage as
established by the Square Footage Certificate.
3.3 Tenant's obligation to pay Fixed Rent and Additional Rent (as
defined in Paragraph 3.5) shall commence on the "RENT COMMENCEMENT DATE" which
is defined as the earlier of (i) one hundred fifty (150) days after Landlord
delivers and Tenant accepts the Premises in accordance with Article 5 below, or
(ii) the date Tenant first opens for business in the Premises. In the event,
however, Tenant accepts the Premises even though one or more of the conditions
set forth in Paragraph 5.1 have not been satisfied, the Rent Commencement Date
shall not occur until either (i) Landlord has satisfied all of such conditions
(including the Post-Commencement Date Work, as defined in Paragraph 5.1,
permitted to be performed after the Commencement Date pursuant to Paragraph 5.1)
or (ii) Tenant opens for business to the public. In the event the Post-
Commencement Date Work is not completed within ninety (90) days after the
Commencement Date, Tenant shall deduct as liquidated damages from its first and,
if necessary, subsequent payments of Fixed Rent one day's rent (calculated at
the daily rate based on a thirty day month) for each day such completion of the
Post-Commencement Date Work is delayed beyond such ninety day period after the
Commencement Date. Notwithstanding any provision in this Lease to the contrary,
if the Rent Commencement Date under this Paragraph 3.3 would otherwise occur on
or after the first Monday preceding Thanksgiving Day (or such date plus the
number of days beyond fourteen (14) days, if any, which the June 13th date in
clause (ii) of Paragraph 5.4 herein has been delayed pursuant thereto) through
and including the following January 31, then the Rent Commencement Date shall
not occur until the following February 1, or such earlier date Tenant opens for
business. If the Rent Commencement Date is not the first day of a calendar
month, the first month's Fixed Rent shall be prorated, and shall be payable with
the first full monthly installment of Fixed Rent due hereunder.
3.4 A "LEASE YEAR" is defined as the twelve (12) full calendar
months following the Rent Commencement Date plus any partial calendar month in
which the Rent Commencement Date occurs, and each period of twelve (12) full
calendar months thereafter.
3.5 Tenant shall pay as additional rent ("ADDITIONAL RENT") any and
all charges to be paid under this Lease in addition to Fixed Rent, including but
not limited to Tenant's Proportionate share of Real Property Taxes and
Assessments, Percentage Rent, insurance, and CAM Expenses, whether or not the
same may be designated as Additional Rent. Fixed Rent and Additional Rent are
hereinafter collectively called "RENT".
3.6 (a) In addition to Fixed Rent, Tenant agrees to pay to
Landlord, as annual "PERCENTAGE RENT," a sum equal to (i) four and one-half
percent (4.5%) times (ii) the positive difference, if any, between (a) Tenant's
Gross Sales (hereinafter defined) in any fiscal year during the Term, less (b)
the Breakpoint (as hereinafter defined) for such fiscal year. For purposes of
this Lease, the Breakpoint shall mean $4,750,000, which sum shall be increased
by fifteen percent (15%) after each of the tenth (1Oth), fifteenth (15th),
twentieth (20th) and twenty-fifth (25th) full fiscal years. Tenant shall owe no
Percentage Rent for any fiscal year unless Tenant's Gross Sales during such
period exceeds the then Breakpoint. Tenant shall submit to Landlord, within
sixty (60) days following the end of each fiscal year during the Term, a written
statement signed by Tenant and certified by an officer of Tenant to be true and
correct, showing in reasonably accurate detail the amount of Tenant's Gross
Sales for the preceding fiscal year, together with remittance of any Percentage
Rent due.
(b) For the purposes of this Lease, the term
"Gross Sales" shall mean all sales from all business conducted by Tenant or any
subtenant, assignee, licensee or concessionaire upon or from the Premises,
except: (i) the amount of any sales tax, use tax, gross receipts tax, successor
tax or similar tax by whatever name called, imposed by a federal, state,
-3-
municipal or governmental authority directly on sales and collected from
customers; (ii) reimbursement for third party delivery charges; (iii)
proceeds of claims for damage to or loss of merchandise; (iv) sales other
than to retail customers of damaged or aged merchandise; (v) sales of gift
certificates, provided that if gift certificates are sold from the Premises
or elsewhere are redeemed at the Premises, such redemption shall constitute a
sale; (vi) license fees and rents paid to Tenant by subtenants and licensees;
(vii) credit card charges paid by Tenant to credit card companies such as
Visa and Mastercard, not to exceed five percent (5%) of Tenant's Gross Sales
in any year; (viii) forfeited deposits or installments on customers' special
order purchases or merchandise provided such merchandise is not resold; (ix)
income from telephone or vending machines; (x) sums raised for and donated to
charitable organizations; (xi) the exchange of merchandise between the stores
of Tenant where such exchange is made solely for the convenient operation of
the business of Tenant and not for the purpose of depriving Landlord of the
benefit of a sale which otherwise would be made from the Premises; (xii) the
amount of returns to shippers and manufacturers; (xiii) proceeds from the
sale of trade fixtures, machinery and equipment; (xiv) the amount of any cash
or credit refund made upon any sale from the Premises previously included in
Gross Sales; and (xv) sales of merchandise discounted to employees, not to
exceed three percent (3%) of Tenant's Gross Sales in any year.
(c) Tenant hereby agrees at all times during
the Term to keep true, full and accurate books of account containing a complete
statement of Tenant's Gross Sales. Tenant hereby grants to Landlord and its
agents and accountants the right, during Tenant's normal business hours and upon
reasonable notice, to inspect the books of account and the checks, bills,
vouchers, statements and records kept in connection with the business done or
transacted in or upon the Premises by Tenant, at Tenant's home office in
Westbury, New York (or such other location as may be chosen by Tenant), for the
purpose of verifying Tenant's Gross Sales. Landlord, for itself and for its
agents, lenders, prospective buyers, legal advisors, financial advisors and
accountants, agrees to keep confidential all sales figures, audits and reports
furnished by or obtained from Tenant.
(d) Landlord may retain an independent
Certified Public Accountant of Landlord's own selection to perform an audit of
Tenant's Gross Sales, provided such audit shall not unreasonably interfere with
the operation of Tenant's business. If any statement of Tenant's Gross Sales
previously furnished by Tenant shall reflect less than ninety-seven percent
(97%) of the amount of Tenant's Gross Sales as shown by such audit and
additional Percentage Rent is payable by Tenant as a result of such
understatement, Tenant shall immediately pay the reasonable cost of such audit
for the understated period. In any event, Tenant shall promptly pay to Landlord
all additional Percentage Rent shown by any audit to be payable hereunder.
(e) The term "fiscal year" as used herein
shall mean, for the first fiscal year, the date Tenant's store opens for
business through the last Saturday of the following January and, for each fiscal
year thereafter, the last Sunday of January through the last Saturday of the
following January, with the exception of the last fiscal year of the Lease term,
for which the fiscal year shall end at midnight of the last day of the Term.
Tenant shall have the right to change its fiscal year and, in such event, Tenant
shall notify Landlord in writing of such change and Tenant shall pay Percentage
Rent for any short fiscal year brought about by such change. For purposes of
computing Percentage Rent for the first and last partial fiscal years, Gross
Sales for such partial year shall be added to the Gross Sales for the next
succeeding or prior months during the Lease term, as the case may be, so that
Percentage Rent is computed based on a 12-month period (such 12-month period
herein referred to as the "EXTENDED PERIOD"). If Percentage Rent is payable for
such Extended Period, then to calculate the Percentage Rent for the first and
last fiscal years, such amount shall be prorated based on the ratio that the
number of days in the first or last fiscal year, as the case may be, bears to
the days in the Extended Period.
4. CONSTRUCTION OF THE PREMISES
4.1 Landlord shall, at Landlord's sole expense and in compliance
with all applicable codes, laws, regulations and ordinances, perform the work
set forth on EXHIBIT D annexed hereto ("LANDLORD'S WORK"). Within forty-five
(45) days after the Effective Date, Tenant shall complete the preparation of
-4-
plans and specifications for Tenant's finish-out work and all other work
(including any work which is not the responsibility of Landlord as set forth
in EXHIBIT D) necessary to prepare the Premises for Tenant's occupancy and
deliver same to Landlord and Landlord's architect. Landlord shall, within
five (5) business days after receipt of such plans and specifications, either
approve or disapprove such plans and specifications. If Landlord disapproves
same, Landlord's objections shall be stated with sufficient particularity to
permit Tenant to revise said plans. The above procedure shall continue until
Tenant's plans and specifications are approved by Landlord (such plans and
specifications, as approved by Landlord, hereinafter referred to as "TENANT'S
PLANS" and the work shown thereon hereinafter referred to as "TENANT'S
WORK"). If Landlord fails to approve or disapprove Tenant's plans and
specifications within the aforesaid five (5) business day period, such plans
and specifications shall be deemed approved by Landlord. Landlord shall not
unreasonably withhold its consent to Tenant's plans and specifications.
Within the earlier to occur of (i) sixty (60) days after Landlord has
approved Tenant's Plans or (ii) March 15, 1996 (the "PERMIT PERIOD"),
Tenant shall use reasonably diligent efforts to obtain a building permit for
Tenant's Work (including all signage) and shall deliver Landlord notice upon
its receipt thereof ("TENANT'S PERMIT NOTICE"). If Tenant fails to obtain a
building permit for Tenant's Work within the Permit Period, Tenant may,
without liability or further obligation, terminate this Lease upon written
notice to Landlord delivered within five (5) days after the expiration of the
Permit Period, and this Lease shall have no further force or effect. If
Tenant fails to terminate the Lease as aforesaid within five (5) days after
expiration of the Permit Period, Tenant shall be deemed to have received a
building permit and Tenant's right to terminate this Lease under this
Paragraph shall cease. Notwithstanding the foregoing, if Tenant fails to
obtain a building permit for Tenant's Work prior to the expiration of the
Permit Period, Landlord shall be entitled to extend the Permit Period by not
more than thirty (30) days by notice to Tenant and obtain such permits on
Tenant's behalf (Tenant being responsible for any municipal fees to obtain
said permits) making only those changes to Tenant's Plans as are approved by
Tenant and which are necessary to comply with applicable governmental codes
and regulations. If Landlord obtains the permits necessary to complete
Tenant's Work within sixty (60) days of expiration of the Permit Period,
Tenant's option to terminate this Lease as provided in this paragraph 4.1
shall cease.
4.2 Provided Landlord has delivered the Contingency Satisfaction
Notice to Tenant or such Contingency Satisfaction Notice is deemed delivered
pursuant to Paragraph 37.14, Landlord shall obtain all necessary approvals,
licensing and building permits for Landlord's Work and shall commence
construction of Landlord's Work (collectively, "LANDLORD'S PRELIMINARY WORK")
on or prior to the date ("LANDLORD'S WORK COMMENCEMENT DATE") which is ten
(10) days from the earlier of (i) the date Landlord receives Tenant's Permit
Notice or (ii) the date Landlord receives a written notice from Tenant that
Tenant has waived its right under Paragraph 4.1 to terminate this Lease
because of failure to obtain a building permit (the "PERMIT WAIVER NOTICE")
(such notices referred to in clauses (i) and (ii) to be delivered no earlier
than sixty (60) days after Lease execution). If Landlord fails to perform
Landlord's Preliminary Work on or prior to Landlord's Work Commencement Date,
Tenant may, without liability or further obligation, terminate this Lease
upon ten (10) days written notice to Landlord, in which event this Lease shall
terminate and shall have no further force or effect upon the expiration of
such ten (10) day period, unless all necessary approvals, licensing and
building permits for Landlord's Work have been obtained and Landlord's Work
has commenced prior to the expiration of such ten (10) day period.
4.3 In the event Landlord fails to complete construction of the
Landlord's Work and deliver the Premises to Tenant in accordance with Article
5 below within eighty (80) days from Landlord's Work Commencement Date (which
date shall not be subject to delays permitted under Article 33) (the "OUTSIDE
DATE"), Tenant may, without liability or further obligation,
terminate this Lease upon thirty (30) days written notice to Landlord, in
which event this Lease shall terminate and shall have no further force or
effect upon the expiration of such thirty (30) day period, unless Landlord's
Work has been completed prior to the expiration of such thirty (30) day
period.
4.4 If Landlord fails to complete the construction of Landlord's Work
and deliver the Premises to Tenant in accordance with Article 5 below on or
before the Outside Date and Tenant does not elect to terminate this Lease in
accordance with the provisions of Paragraph 4.3, Tenant shall deduct as
liquidated damages from its first and, if necessary, subsequent payments of
Fixed Rent one-
-5-
half (1/2) day's rent (calculated at a one-half of the daily rate based on a
thirty day month) for each day such completion and delivery is delayed beyond
the Outside Date. It is hereby agreed that the liquidated damages to which
Tenant is entitled hereunder is a reasonable estimate of the damages to
Tenant that would be caused by Landlord's delay in completing Landlord's Work
and delivering the Premises.
4.5 Landlord hereby agrees to pay to Tenant a construction payment (the
"CONSTRUCTION PAYMENT") in an amount equal to One Hundred Sixty-five
Thousand and 00/100 Dollars ($165,000.00), which Construction Payment is
made not as an inducement to Tenant to enter into this Lease but to defray
the cost of Tenant's Work. Landlord shall pay the Construction Payment
within thirty (30) days after Tenant's Work has been completed, Tenant has
obtained a certificate of occupancy for the Premises, Tenant has opened for
business and Tenant has delivered lien waivers for all work performed or
material supplied (except no lien waivers shall be required for any
subcontractor whose work or materials does not exceed $3,000). Provided
Tenant has complied with the above requirements, if Landlord fails to pay the
Construction Payment within thirty (30) days after notice from Tenant that
same is past due, Tenant shall have the right, in addition to any other
rights or remedies available to Tenant hereunder, at law or in equity, to
offset the amount owing from future installments of Fixed Rent and any
additional charges payable by Tenant under the Lease until Tenant is
reimbursed said Construction Payment in full, with interest on the remaining
balance from the date such Construction Payment was due until so reimbursed
to Tenant at the rate of ten percent (10%) per annum.
4.6 Attached hereto as EXHIBIT G are the design elevations and store
fronts to be constructed by Tenant as part of Tenant's Work (the "ELEVATION
DESIGNS"). Within sixty (60) days after the Effective Date, Landlord shall
process and obtain the necessary discretionary approvals from the City of
Chico (including the Architectural Review Board) for construction of said
Elevation Designs (excluding building permits). Tenant shall give Landlord
prior notice of any changes in the Elevation Designs and any material changes
thereto shall not be made without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed; provided,
however, Landlord may withhold its consent if any such material change
(i) requires additional approvals from the City of Chico or delay the
processing of Landlord's application for said approvals, (ii) requires
structural modifications to the building of which the Premises are a part, or
(iii) affects the design or dimensions of the Blockbuster Video elevations or
storefront. Notwithstanding the foregoing provisions of Paragraph 4.5 and
this Paragraph 4.6, within thirty (30) days of the Effective Date, Landlord
shall prepare construction drawings for the construction of additional wall
openings on the west and south elevations of the Premises, as indicated on
EXHIBIT G annexed hereto, including any structural modifications necessary to
ensure the structural integrity of the building (whether or not such
modifications are located within the Premises) and Tenant shall approve or
disapprove such drawings within five (5) days of submission by Landlord and
shall cooperate with Landlord to finally approve such drawings within five
(5) days after the expiration of such fifteen (15) day preparation period.
On or before the latest to occur of (i) ten (10) business days after
Tenant's final approval of such drawings or (ii) March 1, 1996, Landlord shall
obtain bid submissions for such additional wall openings, from at least three
(3) contractors, one (1) of which, at Tenant's option, shall be a contractor
designated by Tenant (prior to the date Landlord submits its drawings for
bids) and reasonably acceptable to Landlord. Landlord shall immediately
thereafter deliver to Tenant copies of the bid packages received by Landlord
from all of the bidders, together with an itemized budget showing a detailed
breakdown by trade and contractor, unit costs and those additional costs
associated with the modifications not located within the Premises but
required as a result of the requested wall openings. Within five (5)
business days from receipt of the bids by Tenant, Tenant shall direct
Landlord whether to accept or reject any of the bids. In the event Tenant
directs Landlord to accept any of the bids, Landlord shall arrange for the
performance of such work, the Construction Payment shall be reduced by the
amount of the lowest bid, together with Landlord's actual out-of-pocket cost
to prepare the construction drawings (in an amount not to exceed $4,600), and
the construction of such additional wall openings (including, without
limitation, any required structural modifications located within or outside
the Premises) shall be deemed to be part of Landlord's Work for all purposes
of this Lease. In the event Landlord does not perform such work as
aforesaid, the Construction Payment shall nevertheless be reduced by
Landlord's actual out-of-pocket cost to prepare the construction drawings, in
an amount not to exceed $4,600.
-6-
5. DELIVERY AND ACCEPTANCE OF THE PREMISES
5.1 Landlord shall have completed Landlord's Work and delivered the
Premises to Tenant, and Tenant shall be required to accept the Premises, only
after all of the following conditions are satisfied, provided, however, that
items (e) and (f) below (collectively, the "POST-COMMENCEMENT DATE WORK")
shall not be required to be completed until forty-five (45) days after the
Commencement Date, provided Landlord has commenced such work as of the
Commencement Date, and, in the reasonable judgment of Landlord's architects,
Landlord is able to complete such work within such forty-five (45) day
period, and Tenant shall accept the Premises subject to completion of such
items (e) and (f):
(a) Landlord's Work has been substantially completed as verified by
mutual inspection by Landlord and Tenant pursuant to Paragraph 5.2 below.
(b) Landlord has provided Tenant with a certificate of occupancy
or local equivalent issued by the appropriate authority, certifying that the
base building complies with all applicable laws, provided, however, that if
such a certificate of occupancy is customarily issued only once Tenant's Work
is completed, then the condition of obtaining a certificate of occupancy for
the shell of the building shall be waived by Tenant.
(c) Landlord has approved Tenant's Plans.
(d) Landlord has delivered to Tenant the Square Footage Certificate.
(e) Landlord has delivered to Tenant all of the written warranties
required under Paragraph 11.2 below.
(f) Landlord has completed the building facade (exclusive of such
tenant's signage and canopy) for the other tenant in the building in which
the Premises is located.
(g) Landlord has performed any improvements to the Common Areas
(as defined in Paragraph 9.1) which are required as a condition to
obtaining required approvals from the City of Chico for Landlord's Work
including, without limitation, any required utility relocations, at a cost
not to exceeds $100,000.00. If the cost of such improvements exceed
$100,000.00 Landlord may terminate this Lease upon ten (10) days written notice
to Tenant together with evidence of such costs and, unless Tenant notifies
Landlord within such ten (10) day period that Tenant elects to reimburse
Landlord for such costs in excess of $100,000, this Lease shall terminate and
have no further force or effect, provided, however, that Landlord shall
reimburse Tenant for any actual out-of-pocket architectural fees, not to
exceed $50,000, incurred by Tenant to prepare Tenant's plans and
specifications within ten (10) days of Tenant's submission of a ▇▇▇▇
therefor.
5.2 When Landlord considers Landlord's Work to be substantially
complete, it shall notify Tenant of same in writing, together with a request
that Tenant notify Landlord of any item which shall materially interfere with
or prevent the commencement of Tenant's Work. Within ten (10) days of
receipt of Landlord's notice, Tenant and Landlord shall make an inspection to
determine whether Landlord's Work is substantially complete. If Tenant's
inspection discloses any item which, in Tenant's reasonable judgment, shall
materially interfere with or prevent the commencement of Tenant's Work,
Tenant shall provide Landlord with written notice thereof within said ten (10)
day period and Landlord shall correct such items before Landlord's Work shall
be deemed substantially complete. Within three (3) business days after
Tenant's acceptance of the Premises, Landlord shall change into Tenant's name
all utilities exclusively serving the Premises.
5.3 In the event Tenant accepts the Premises notwithstanding Landlord's
obligation to correct or complete any items under Paragraph 5.1 (a) of which
Landlord received written notice within the period required under Paragraph
5.2, Landlord shall complete said items within thirty (30) days after
Tenant's inspection under Paragraph 5.2 above. Tenant's acceptance of the
Premises shall not in any
-7-
way diminish or otherwise affect Landlord's warranty, maintenance or repair
obligations set forth elsewhere in this Lease. In addition, Landlord shall
correct all defects in the construction of Landlord's Work, provided Tenant
gives Landlord written notice of such defects on or before the expiration of
the first (1st) Lease Year.
5.4. Notwithstanding any provision of this Lease to the contrary, at
Tenant's option, Tenant shall not be required to accept the Premises (and
Landlord shall be deemed not to have delivered the Premises) between June 13th
and the next succeeding September 30th; provided, however, that (i) if
Tenant does not timely deliver its plans and specifications to Landlord as
required under Paragraph 4.1, such June 13th date shall be delayed one day
for each day Tenant has delayed delivering its plans to Landlord and (ii) if
(x) Tenant does not deliver to Landlord Tenant's Permit Notice or Permit
Waiver Notice on or before March 15, 1996, and (y) Landlord has previously
delivered to Tenant a Contingency Satisfaction Notice, then such June 13th
date shall be delayed one day for each day after March 15, 1996 until Tenant
delivers to Landlord Tenant's Permit Notice or Tenant's Permit Waiver Notice,
provided that unless Landlord delivers to Tenant a written reminder notice
within the five (5) day period prior to March 15, 1996 stating that Landlord
has not yet received the Permit Notice or Permit Waiver Notice, such day for
day delay in the June 13th date shall not commence until Landlord has
delivered to Tenant such a reminder notice. In the event Tenant delays its
acceptance and Landlord's delivery of the Premises pursuant to this Paragraph
5.4, the Commencement Date and the Rent Commencement Date shall be delayed
correspondingly.
6. COVENANT OF TITLE AND QUIET ENJOYMENT
Landlord represents and warrants to Tenant that Landlord is solely
vested with fee simple title to the Premises and the Shopping Center and has
full right and lawful authority to lease the Premises to Tenant pursuant to
the terms hereof, subject, however, to the satisfaction of the Contingencies
set forth in subparagraphs 37.14(a) and (b). Landlord covenants with Tenant
to keep Tenant in quiet enjoyment and possession of the Premises during the
Term, provided Tenant is not in default under this Lease beyond any
applicable cure period. Landlord further represents and warrants to Tenant
that, as of the Commencement Date: (i) no zoning or similar ordinance,
restrictive covenant or other encumbrance or restriction prevents the
performance of Tenant's Work (subject, however, to Tenant's obligation to
obtain building permits for Tenant's Work) or the use of or Tenant opening
for business within the Premises for the specific purposes set forth in
Paragraph 7.1, or otherwise conflicts or is inconsistent with the terms of
this Lease; (ii) upon delivery of the Contingency Satisfaction Notice, no
joinder or approval of any other person or entity (including any lender or
mortgagee) is required with respect to Landlord's right and authority to
enter into this Lease; and (iii) as of the Commencement Date, there is no
underlying or superior lease affecting the Premises.
7. USE OF PREMISES
7.1 Tenant may use the Premises for the purpose of the display and
retail sale of (i) books, books on tape and books on other media, magazines,
periodicals, recorded music, video tapes and disks, video games, computer
software and computer games and various media and merchandise incidental
thereto (collectively with the Cafe, as defined below, the "INITIAL USE"),
and (ii) subject to those exclusive use and prohibited use provisions contained
in existing leases with other tenants or occupants of the Shopping Center, as
more particularly set forth on Exhibit F, and exclusive of those uses
described in Paragraph 7.4, (x) other merchandise typically sold in a
majority of Tenant's other stores in California and (y) any other lawful
retail use; provided, however, Tenant may not devote more than two thousand
(2,000) square feet of floor area to the display and retail sale of each of
the following: (i) video tapes and disks and video games or products which
are a technological evolution thereof (for sale only as opposed to rental),
(ii) recorded music, including CD's, tapes, record or products which are a
technological evolution thereof, and (iii) computer software or computer
games and various media and merchandise incidental thereto, including CD-I
and CD-ROM, and any product which is a technological evolution thereof and
home entertainment software. Furthermore, for so long
-8-
as the existing leases for buildings "C" and "F" are in full force and
effect, Tenant may not use the Premises for the sale, rental or display of
office equipment, business or office supplies, office furniture, appliances
or electronic equipment (I.E., computers, video recorders, televisions,
stereo equipment, cellular phones, household appliances or items which are a
technological evolution of the foregoing) or to provide business services
such as photocopying and printing; provided, however, the sale of electronic
accessories which are related to the sale of other merchandise sold by Tenant
(EG., computer boards or accessories sold with computer software) shall be
permitted, provided the sale of said merchandise does not exceed five hundred
(500) square feet. Landlord represents that there are no other exclusive use
provisions contained in existing leases in the Shopping Center other than as
set forth on EXHIBIT F and upon receipt of the Contingency Satisfaction
Notice, no such exclusives shall affect or in any way limit Tenant's right to
use the Premises for the Initial Use except as expressly set forth in this
Article 7. Tenant may also operate within the Premises or grant a concession
or sublease for a "coffee bar" or "coffee shop" or similar operation (the
"CAFE") providing its customers with coffee, tea, and other beverages,
pastries, sandwiches, snacks and other pre-prepared or packaged food or
non-alcoholic beverage items, as well as merchandise incidental thereto,
provided that such Cafe does not exceed 2,500 square feet (plus any outdoor
seating). Notwithstanding the foregoing provisions of this Paragraph 7.1,
but subject to the provisions of Paragraph 7.5, Tenant shall not use the
Premises or allow the Premises to be used in violation of any exclusive use
restriction of which Landlord has given Tenant written notice and which is
hereafter granted to a new tenant or occupant of the Shopping Center after
the expiration or termination of any existing lease affecting buildings A,
the "Blockbuster premises", C, D, F, H or Pad 1 (as indicated on the site
plan annexed hereto as EXHIBIT B), provided such tenant or occupant M is a
first class national or regional retail chain store with at least twenty (20)
stores in California and the use of its premises is substantially similar to
its use in the majority of its stores in California, (ii) such tenant or
occupant occupies an entire building (or the entire Blockbuster premises) or
more than 20,000 square feet of leasable area, (iii) shall not have as its
primary use the rental or sale of computer software or computer games (EG.,
Egghead Software) although such tenant or occupant may sell or rent such
products as part of its overall business (EG., Best Buy), (iv) no such
exclusive use restriction shall prevent Tenant from utilizing the Premises
for the Initial Use or for the display, rental or sale of products for which,
at the time Tenant receives written notice of such exclusive, Tenant has
allocated at least 1,000 square feet of leasable area of retail floor space
(such future use restrictions hereafter granted to a tenant or occupant which
are permitted as aforesaid, "PERMITTED FUTURE EXCLUSIVES" and each such
tenant or occupant satisfying the foregoing conditions, a "MAJOR REPLACEMENT
TENANT").
7.2 Tenant covenants to initially open and operate for at least one (1)
day as a ▇▇▇▇▇▇ & ▇▇▇▇▇ Superstore, fully stocked and staffed as consistent
with the operations of Tenant's other ▇▇▇▇▇▇ & Noble Superstores in
California. In the event that the Premises shall, at any time after the Rent
Commencement Date, be closed for business for a period of thirty (30)
consecutive days or more, other than as a result of a remodeling (for a
period of not more than nine months) or a cause or event referred to in
Articles 24, 25 or 33 herein, or due to Tenant's impending subletting of the
Premises or assigning of its interest in the Lease which shall be completed
within six (6) months of said closure, then at any time thereafter, Landlord
may terminate this Lease by giving Tenant written notice thereof and this
Lease shall terminate on the forty-fifth (45th) day after the giving of such
written notice by Landlord, whereupon neither Landlord nor Tenant shall have
any further liability hereunder (except any Rent then due and unpaid), except
Tenant shall have the right to nullify Landlord's termination notice by
delivering notice to Landlord that Tenant shall reopen for business and
Tenant in fact does reopen for business prior to the expiration of such
45-day period. Nothing in this Lease or otherwise shall at any time require
Tenant to keep the Premises open for business.
7.3 Landlord hereby represents and warrants that, upon Landlord's
delivery of the Premises pursuant to Article 5 above, the Premises and the
Shopping Center and all parts thereof shall be in full compliance with all
applicable laws, ordinances and regulations of all federal, state, county and
municipal authorities ("LEGAL REGUIREMENTS"), including Title III of the
Americans With Disabilities Act of 1990, any regulations promulgated
thereunder and any similar state or local laws or regulations. Landlord shall
comply with all Legal Requirements, including any changes thereto, relating
to the physical condition of all parts of the Premises and the Shopping
Center, except Tenant shall comply
-9-
with Legal Requirements including any changes thereto to the extent such
Legal Requirements apply to Tenant's specific use or alteration of the
Premises and not to real estate generally.
7.4 Except with respect to the premises under leases with Homebase,
Food 4 Less, Circuit City, Office Depot and Hometown Buffet to the extent
permitted thereby under those permitted use provisions of such tenants set
forth on EXHIBIT F annexed hereto, Landlord shall not lease or permit the use
of space in the Shopping Center for the following: (i) any bowling alley;
(ii) any arcade; (iii) any tavern or bar within five hundred (500) feet of the
Premises, except to the extent incidental to a restaurant operated primarily
for on-premises consumption; (iv) any health club, spa or gymnasium; (v) any
night club or discotheque; (vi) any second hand or surplus store within five
hundred (500) feet of the Premises; (vii) any mobile home park or trailer
court; (viii) any dumping, disposing, incineration or reduction of garbage
(exclusive of appropriately screened dumpsters located in the rear of any
building); (ix) any fire sale, bankruptcy sale (unless pursuant to a court
order) or auction house operation, (x) any central laundry or dry cleaning
plant or laundromat within five hundred (500) feet of the Premises (except
that this prohibition shall not be applicable to on-site service provided
solely for pickup and delivery by the ultimate consumer, including nominal
supporting facilities); (xi) any automobile, truck, trailer or recreational
vehicle sales, leasing, display or repair; (xii) any skating rink; (xiii) any
living quarters, sleeping apartments or lodging rooms; (xiv) any veterinary
hospital, animal raising facilities or pet shop (except that this prohibition
only prohibits a pet shop if it is adjacent to the Premises and excludes the
existing pet store at the Shopping Center and replacements thereof provided
such replacement is a national or regional pet retail chain similar to Petco
or Petsmart); (xv) any mortuary; (xvi) any establishment selling or
exhibiting pornographic materials; (xvii) except for Building A indicated on
the site plan annexed hereto as EXHIBIT B, any restaurant within three
hundred feet (300') of the Premises; (xviii) any movie theater within three
hundred feet (300') of the Premises; (xix) any separately demised newsstand;
or (xx) any use which is a public or private nuisance.
7.5 Except as may be permitted by those permitted use provisions of
certain leases set forth on EXHIBIT F, including, without limitation,
Blockbuster Video (provided that to the extent Landlord's consent may be
withheld as provided in said leases, Landlord shall not modify the use
provisions of such leases with respect to the Exclusive Uses (hereinafter
defined) granted to Tenant hereunder in any manner which would diminish the
exclusive rights granted to Tenant herein) and except as may be permitted by
future leases to Major Replacement Tenants, to the extent such leases contain
Permitted Future Exclusives, Landlord, and its successors and assigns, shall
not operate or permit under any circumstances to be operated within the
Shopping Center any other store selling or displaying for sale or rental
books, books on tape and books on other media, magazines, periodicals,
computer software or computer games (collectively, "EXCLUSIVE USES"), or any
other coffee bar or coffee shop in which coffee, similar beverages and
products incidental thereto are the primary items offered for sale (e.g.
Starbucks). The foregoing restrictions with respect to any of the Exclusive
Uses shall be void and of no further force and effect with respect to such
use in the event Tenant (including any permitted successor or assignee) no
longer uses the Premises for such use for more than a one year period
provided, however, that ceasing all business operations in the Premises shall
not be deemed to be a cessation of a particular use for the purposes hereof
unless such cessation continues for more than five (5) years. The Incidental
Sale of such items in connection with the overall business of another
operator or tenant shall not be deemed a violation of this Paragraph 7.5. As
used herein, "INCIDENTAL SALE" shall mean less than fifty (50) square feet of
floor area of such operator's or tenant's display area is devoted, in the
aggregate, to the sale and/or display of the aforesaid items; provided,
however, that with respect to a Major Replacement Tenant, "INCIDENTAL SALE"
shall mean less than ten percent (10%) of floor area is devoted, in the
aggregate, to the sale and/or display of the aforesaid items, but in no event
greater than one thousand (1,000) square feet (except with respect to a Major
Replacement Tenant which sells or rents computer software or computer games
as part of its overall business, EG., Best Buy, but not as its primary use,
EG. Egghead Software, for which no square foot limitation shall apply with
respect to the display area for computer software or computer games). In the
event Landlord breaches its covenants contained in this Paragraph 7.5 with
respect to Tenant's exclusive, and such breach is a result of Landlord's
entering into a lease or consenting to an assignment or sublease permitting
or failing, in each instance, to prohibit such tenant, assignee or sublessee
from using its premises fcr Tenant's Exclusive Uses, and such breach is not
cured witnin thirty (30) days after written notice to
-10-
Landlord, in lieu of any other remedy, Fixed Rent shall be automatically
reduced to one-half (1/2) of stated Fixed Rent under Paragraph 3.2 above
until such use terminates, and Tenant shall have, in addition to all other
remedies available to Tenant, the right to terminate this Lease effective
sixty (60) days after giving Landlord written notice of such termination,
unless Landlord cures such breach within thirty (30) days after such notice,
and, upon such termination, Landlord shall pay Tenant the unamortized value
of Tenant's Work upon the reasonable documentation of such value, which value
has been amortized over the Lease term. In the event Tenant does not elect
to terminate the Lease within two (2) years after the breach of the covenants
contained in this Paragraph 7.5, Fixed Rent shall be automatically restored
to the Fixed Rent under Paragraph 3.2 above. In the event the covenants
contained in this Paragraph 7.5 are breached solely by tenants or other
operators in the Shopping Center and not by reason of Landlord's entering
into a lease or consenting (when Landlord has the right to withhold its
consent) to an assignment or sublease permitting or failing to prohibit such
tenant, assignee or sublessee from using its premises for Tenant's Exclusive
Uses, then, in lieu of the remedy provided in the preceding sentence,
Landlord, at Landlord's cost, shall use its best efforts to take all action
necessary (including, without limitation, the commencement of legal action)
to cause such other tenant or operation to cease operating in violation of
the provisions of this Paragraph 7.5.
8. REAL ESTATE TAXES
8.1 Landlord represents and warrants that Real Property Taxes and
Assessments relating to the Premises and the Shopping Center, except current
taxes and assessments not delinquent, have been paid in full. Landlord shall
pay promptly when they are due all Real Property Taxes and Assessments
relating to the Premises and the Shopping Center, except as provided in
Paragraph 8.3 below.
8.2 For purposes of this Article 8, "REAL PROPERTY TAXES AND
ASSESSMENTS" shall mean only the taxes and assessments imposed by municipal,
county, state and district governmental authorities (as distinguished from
federal governmental authorities) against the owners of real property, which
are measured by the value or gross revenues of the subject property separate
from any other property owned by Landlord. Landlord estimates the Real
Property Taxes and Assessments relating to the Premises for the first (1st)
Lease Year (excluding any reassessment resulting from Tenant's Work) will be
approximately $26,500, based upon the 1995-1996 real estate tax ▇▇▇▇ for the
tax lot affecting the Premises which Tenant acknowledges it has received and
reviewed. Real Property Taxes and Assessments shall be prorated, if
necessary, based on a three hundred sixty-five (365) day year to take into
account any partial tax year in which the Rent Commencement Date and the
expiration of the lease Term occur. The term Real Property Taxes and
Assessments shall also include any tax or excise on rent or other taxes
payable by Landlord on account of or measured by the rentals and/or other
charges payable under this Lease. If under the laws of the State of
California, or any political subdivision thereof, at any time during the term
of the Lease, the methods of taxation shall be altered so as to impose in
lieu of current methods for the assessment and taxation of real property, in
whole or in part, taxes based on other standards, or in lieu of any increase
therein, such tax shall be included within the Real Property Taxes and
Assessments to be paid by Tenant for the purposes of this Lease. Nothing
contained in this Lease, however, shall be deemed or construed to include
within Real Property Taxes and Assessments: (i) any transfer, documentary or
stamp tax; (ii) any tax upon the income, profits or business of Landlord
(except to the extent same are in lieu of Real Property Taxes and
Assessments); or (iii) any personal property taxes, payroll taxes, capital
levy, or franchise taxes or inheritance or estate taxes, even though such
taxes may become a lien against the Premises, the Shopping Center or Landlord.
8.3 If the Premises together with a proportionate share of the Common
Areas in the Shopping Center constitutes a separate tax lot which has been
approved by Landlord and Tenant for the purpose of prorating Real Property
Taxes and Assessments, Tenant shall pay, as additional rent, any and all Real
Property Taxes and Assessments relating to the Premises and said
proportionate share of the Common Areas. Tenant shall make any such payment
on or before the later of (i) the due date thereof or (ii) thirty (30) days
after Landlord provides Tenant with a copy of the tax ▇▇▇▇ therefor (if not
-11-
sent directly to Tenant by the taxing authority). Landlord shall be
responsible for any interest or penalties which are due by reason of
Landlord's failure to deliver any tax ▇▇▇▇ to Tenant at least thirty
(30) days prior to the date on which such interest and/or penalty is
assessed.
8.4 If the Premises and a proportionate share of the Common Areas are
not separately assessed by a separate tax lot approved by Landlord and Tenant
for proration purposes, Tenant shall reimburse Landlord for its Proportionate
Share of Real Property Taxes and Assessments on or before the later of (i)
thirty (30) days prior to the due date thereof or (ii) thirty (30) days after
Landlord has furnished Tenant with a copy of the tax ▇▇▇▇ and a copy of
Landlord's computations establishing the amounts payable by Tenant. Within
ten (10) days after receipt of Tenant's written request therefor, Landlord
shall furnish Tenant with such additional substantiating evidence in support
of Landlord's tax computation as Tenant may reasonably require. Tenant's
Proportionate Share of Real Property Taxes and Assessments shall be based
upon the ratio between the total Leasable Square Footage within the Premises
to the total Leasable Square Footage upon the separate tax lot in which the
Premises are situated (legally defined as Parcel 3 of Vesting Parcel Map No.
95 recorded September 22, 1994, in Book 34 at Page 7 of Parcel Maps, Butte
County Records and hereinafter referred to as "TENANT'S TAX LOT") ; provided
that Landlord shall equitably adjust the Real Property Taxes and Assessments
allocable to land, excluding improvements, and to Common Area improvements,
to be prorated to and paid by Tenant, in the event that Tenant's Tax Lot does
not contain a proportionate share of the Common Areas within the Shopping
Center, based on the ratio between the Leasable Square Footage in Tenant's
Tax Lot to the Leasable Square Footage within the Shopping Center.
8.5 If any general or special assessment is assessed against the
Shopping Center, Landlord shall elect to pay the assessment in installments
over the longest period of time allowed by applicable law, and only those
installments (or partial installments) attributable to the Term shall be
considered in determining Tenant's tax liability for such assessment.
Notwithstanding any provision of this Lease to the contrary, except as set
forth in the following sentence, Landlord (and not Tenant) shall be obligated
to pay any assessment for special improvements heretofore installed or
hereafter installed in connection with the initial development of the
Shopping Center or the Premises, such as, by way of illustration only, the
widening of the exterior roads and the installation and/or hook up to sewer
and sewer lines, sanitary and storm drainage systems and other utility lines
and systems (whether public or private). Tenant shall pay its Proportionate
Share of the assessments presently imposed against the Shopping Center
pursuant to a certain agreement establishing the ▇▇▇▇▇▇▇ Avenue Assessment
District (the "WHITMAN ASSESSMENTS"). Landlord represents that the Whitman
Assessments allocable to the tax lot affecting the Premises during the term
hereof shall in no event exceed $10,000 per annum.
8.6 Tenant shall receive its Proportionate Share of any refunds or
rebates of Real Property Taxes and Assessments paid to Landlord and
attributable to the Term.
8.7 Landlord shall provide Tenant with a copy of any increased tax
assessment within fifteen (15) days of its receipt. Tenant shall have the
right to contest any assessment or the validity of any tax. Tenant agrees to
indemnify Landlord and hold Landlord harmless from all out of pocket costs
and expenses arising out of any contest made by Tenant.
8.8 Tenant shall pay prior to delinquency all taxes and assessments
levied upon and assessed against Tenant's Personal Property (as defined in
Paragraph 12.2) in the Premises.
9. COMMON AREA
9.1 The Common Areas of the Shopping Center shall consist of all
portions of the Shopping Center which shall not be occupied by buildings
leased or held for lease, as more specifically depicted on EXHIBIT B. The
general term "COMMON AREAS" includes all parking areas, landscape areas,
aisles, driveways, entrances, exits, walkways, corridors, elevators and
elevator shafts, stairwells, sidewalks, roadways, loading areas or
appurtenances (unless the operation, repair and maintenance of a particular
loading area or appurtenances is the responsibility of the tenant or tenants
who have the use of same),
-12-
service roads, lighting facilities (if used to illuminate the Common Areas),
common heating, utility and ventilation facilities and utility, mechanical,
telephone and electric rooms, drainage facilities, traffic control signs and
fences.
9.2 Landlord hereby gives and grants to Tenant during the Term, for the
benefit of Tenant and Tenant's subtenants, licensees and concessionaires, and
their respective employees, contractors, customers, invitees and deliverymen,
the right to use all of the Common Areas, in common with Landlord and all
other tenants and occupants of the Shopping Center and their respective
employees, contractors, agents, assigns, customers, invitees and deliverymen.
The rights hereby granted with respect to the Common Areas shall run with
and bind the Shopping Center and the land on which it is located, shall be
binding upon Landlord and Landlord's successors in title to all or any part
of the Shopping Center, and shall constitute an irrevocable, nonexclusive
easement appurtenant to the Premises for the benefit of, and shall be
enforceable by, Tenant and its successors and assigns throughout the Term.
9.3 Unless required by law, Landlord shall not alter the size or
location of curb cuts or private drives that provide access to the Shopping
Center without providing reasonably equivalent access nor reduce parking
ratios within the Shopping Center below that required by Article 16, without
the prior written consent of Tenant. Landlord may designate portions of the
Common Areas as parking spaces for employees of occupants of the Shopping
Center, subject to the prior written approval of Tenant, which consent shall
not be withheld if such employee parking located within the No Build Area is
located in the row of parking bordering ▇▇▇▇▇▇▇ Avenue.
9.4 Landlord shall not provide for or knowingly permit the use of the
Common Areas by any person or legal entity other than as set forth in
Paragraph 9.2.
9.5 Tenant shall not be required to pay its Proportionate Share of any
expenses (including Real Property Taxes and Assessments, CAM Expenses or
costs of insurance) relating to any land added to the Shopping Center until
such land is improved with a building or buildings and such land directly
benefits the Shopping Center.
9.6 Landlord shall keep and maintain the Common Areas in good condition
and repair in a manner consistent with first class shopping centers of a
similar size and nature. Such maintenance shall include repairing and
replacing paving; keeping the Common Areas properly drained, free of snow,
ice, water, rubbish and other obstructions, and in neat, clean, orderly and
sanitary condition; keeping the Common Areas and such other areas suitably
lighted during, and for appropriate periods before and after, Tenant's
business hours; maintaining signs, markers, painted lines and other means and
methods of pedestrian and vehicular traffic control; maintaining adequate
roadways, entrances and exits; and maintaining any plantings and landscaped
areas.
9.7 Tenant agrees to reimburse Landlord for Tenant's Proportionate Share
of all reasonable expenses incurred directly in connection with the
maintenance, repair and operation of the Common Areas ("CAM EXPENSES"). CAM
Expenses shall be limited by the terms of Paragraphs 9.8 and 9.9 and the
other provisions hereunder. CAM Expenses may include an administrative fee
equal to ten (10%) percent of the total of all other expenses included within
CAM Expenses hereunder (excluding, however, any and all insurance, taxes and
capital expenditures included therein). CAM Expenses invoiced to the Tenant
shall identify the nature of each CAM Expense and Tenant's Proportionate
Share of such CAM Expense. Tenant shall reimburse Landlord its Proportionate
Share of the CAM Expenses within thirty (30) days of its receipt of
Landlord's invoice. Alternatively, Landlord may, prior to the Rent
Commencement Date or the beginning of any subsequent calendar year, provide
Tenant a written estimate of the CAM Expenses for the calendar year and
Tenant shall pay one-twelfth (1/12th) of such estimate as Additional Rent
with each payment of Fixed Rent during such calendar year. Within sixty (60)
days after the end of each calendar year, Landlord shall furnish to Tenant a
detailed statement showing the total CAM Expenses, Tenant's Proportionate
Share of such CAM Expenses (prorated for any partial calendar year) and the
total of the monthly payments made by Tenant to Landlord during such calendar
year. Such statement shall be certified by Landlord as being correct.
Landlord shall pay
-13-
to Tenant any overpayment concurrently with the delivery of such-statement,
and Tenant shall pay to Landlord any underpayment for such year with Tenant's
next succeeding CAM Expense payment. Landlord shall keep good and accurate
books and records for a period of three (3) years in accordance with
generally accepted accounting principles concerning the operation,
maintenance and repair of the Common Areas, and Tenant and its agents shall
have the right, upon ten (10) days' notice, not more often than once per
year, to audit, inspect and copy such books and records at Landlord's
principal place of business. If any statement of CAM Expenses previously
furnished to Tenant shall be greater than one hundred three percent (103%) of
the actual CAM Expenses shown by such audit, Landlord shall immediately pay
Tenant's reasonable out-of-pocket costs of such audit for the period audited.
In any event, Landlord shall promptly pay Tenant all CAM Expenses shown by
such audit to be overpaid by Tenant and Tenant shall promptly pay Landlord
all CAM Expenses shown by such audit to be underpaid by Tenant.
9.8 CAM Expenses shall exclude expenses due to: (i) capital improvements;
(ii) repairs and replacements, which under sound accounting principles and
practices should be classified as capital expenditures; (iii) painting,
redecorating or other work that Landlord performs for any other tenant or
prospective tenant of the Shopping Center (as compared to periodic repainting
of the Building not to exceed once every five (5) years for the benefit of
the Premises which may be included within CAM Expenses); (iv) repairs or
other work (including rebuilding) occasioned by fire, windstorm or other
casualty or by condemnation; (v) any costs that are separately charged to and
payable by tenants or for which Landlord is compensated by insurance proceeds
or warranties; (vi) leasing commissions and expenses of procuring tenants,
including lease concessions and lease take-over obligations; (vii)
depreciation, except depreciation of equipment used exclusively for the
maintenance of the Shopping Center; (viii) interest on and amortization of
debt; (ix) taxes of any nature, including Real Estate Taxes and Assessments
(payment of which is specifically addressed in Article 8 above) and interest
and penalties for late payment of taxes (unless caused by Tenant's late
payment of its Proportionate Share of taxes); (x) rent payable under any
lease to which this Lease is subject; (xi) off-premises supervisory personnel
or property managers; (xii) costs and expenses of enforcing leases against
tenants, including legal fees; (xiii) managing agents' commissions or fees,
however characterized; (xiv) expenses resulting from any violation by
Landlord of the terms of any lease of space in the Shopping Center or of any
ground or underlying lease or any mortgage; (xv) the repair of any part of
the Common Areas that was inadequately designed or defectively constructed;
(xvi) Landlord's maintenance or repair description as required pursuant to
Article 10; (xvii) insurance (payment of which is specifically addressed in
Article 21); (xviii) expenses for vacant or vacated space, including utility,
security and renovating costs for such space; (xix) all costs and expenses
associated with Environmental Clean-up Work (hereinafter defined) except if
caused or permitted by Tenant, its employees, agents, contractors or
invitees; and (xx) any costs and expenses associated with Landlord's
compliance with Legal Requirements pursuant to Paragraph 7.3 above; and (xxi)
parking lot resurfacing and restriping during the first three (3) Lease
Years; provided, however, that CAM Expenses may include the annual amortized
cost to replace the parking lot within the Shopping Center if replaced after
the initial term of the Lease, such amortization to be based upon the useful
life of the parking lot (based on generally accepted accounting principles).
9.9 Notwithstanding the foregoing, Tenant's Proportionate Share of CAM
Expenses for the first full calendar year during the Term shall not exceed
$7,500. After such first full calendar year and through and including the
fifth (5th) full calendar year during the term, Tenant's Proportionate Share
of CAM Expenses shall not exceed one hundred five percent (105%) of the CAM
Expenses paid by Tenant for the preceding calendar year.
9.10 Tenant's Proportionate Share for the purposes of calculating
Tenant's share of CAM Expenses which relate only to the Building and solely
benefit the tenants within the Building shall equal a fraction, the numerator
of which is the Leasable Square Footage of the Premises as determined by the
Square Footage Certificate, and the denominator of which is the total
Leasable Square Footage of the Building ("TENANT'S BUILDING PROPORTIONATE
SHARE"). Currently Landlord estimates the denominator of the fraction to be
31,341 Leasable Square Feet as of the Effective Date hereof, resulting in
Tenant's Building Proportionate Share to be 79.6%. To the extent Tenant pays
such Building Proportionate Share for certain CAM Expenses relating only to
the Building (EG., Building repainting, exterior Building
-14-
lighting and maintenance and repair of fire protection systems within the
Building), comparable CAM Expenses which relate to the remainder of the
Shopping Center and not to the Building shall be excluded in the calculation
of Tenant's Proportionate Share of CAM Expenses (EG., Building repainting,
exterior Building lighting and maintenance and repair of fire protection
systems within the Building).
10. MAINTENANCE BY LANDLORD
10.1 Except for any repairs necessitated by Tenant's (or Tenant's
employees, contractors, agents or invitees) negligence or intentionally
wrongful acts (for which Tenant shall be responsible at its sole cost),
Landlord shall, at its sole expense, (except to the extent includible in CAM
Expenses as provided hereinabove) make all structural repairs to the Premises
and the Shopping Center, including but not limited to all repairs to the
slab, foundation, load bearing walls, roof and any other structural members.
In addition, Landlord shall, at its expense (unless herein expressly set
forth as Tenant's expense): (i) keep the roof of the Premises free of leaks;
(ii) maintain the underground and otherwise concealed utilities located
within the Common Areas and the exterior surface of the outside walls of the
Premises and the Shopping Center, excluding window glass, plate glass and
doors (unless damage to such glass or doors is caused by a structural shift);
(iii) keep in good order, condition and repair the down spouts and gutters of
the Premises and the Building of which the Premises is a part; and (iv)
maintain all fire protection systems in the Common Areas. Notwithstanding
any provision of this Lease to the contrary, (a) in the event of an emergency
or (b) in the event Landlord fails to commence any maintenance or repair of
the Premises required under this Paragraph 10.1 within ten (10) business
days after written notice from Tenant or fails to complete such maintenance
and repair within thirty (30) days after such notice, (but if such repair
reasonably requires longer than 30 days, then Landlord shall have such
additional period of time provided Landlord's repair is being diligently and
continuously prosecuted), then in either of such events Tenant shall have the
right (but not the obligation) to perform Landlord's maintenance and repair
obligations under this Paragraph 10.1 , and Landlord shall reimburse Tenant
for the reasonable out-of-pocket costs incurred by Tenant within thirty (30)
days after Tenant submits a written invoice therefor. Notwithstanding the
foregoing, Tenant shall reimburse Landlord Tenant's Building Proportionate
Share of the cost to (i) repair and maintain the roof of the Building after
the tenth (1Oth) Lease Year, excluding the gutters and down spouts, and (ii)
the annual amortized cost of any roof replacements to the Building after the
fifteenth (15th) Lease Year, such amortization to be based upon the useful
life of the roof (based on generally accepted accounting principles).
10.2 The terms and conditions of Articles 24 and 25 shall control with
respect to repairs or maintenance required due to casualty or condemnation,
respectively.
11. MAINTENANCE BY TENANT
11.1 Subject to Paragraph 5.3 and Articles 10, 24 and 25, Tenant shall
maintain in good repair and condition, at its sole cost and expense (i) the
interior plumbing (provided same was not part of Landlord's Work) and other
mechanical systems which are located within or on the Building and
exclusively serve the Premises; (ii) window glass, plate glass and doors
(unless damage to such glass or doors is caused by a structural shift); (iii)
heating, air conditioning and electrical systems serving exclusively the
Premises; and (iv) the interior, non-structural surfaces of the Premises.
Tenant's obligations under this paragraph shall not include repairs which are
covered by Landlord's insurance as required herein.
11.2 As of the Commencement Date and to the extent of Landlord's Work,
the heating and air conditioning system serving the Premises (the "SYSTEM")
and the plumbing and electrical systems serving the Premises shall be in good
operating condition. On the Commencement Date, Landlord shall furnish Tenant
with a five (5) year minimum repair or replacement written warranty for the
major components of the System (I.E., pumps, condensers and motors) and a one
(1) year parts and labor written warranty for the System and shall assign any
and all existing warranties for systems serving
-15-
the Premises, which shall include payments for all labor, but such warranties
shall not relieve Landlord of any obligations set forth in this Lease.
11.3 Tenant shall use reasonable care and diligence to keep and maintain
the Premises free from waste or nuisance and shall deliver the Premises to
Landlord broom clean at the expiration of this Lease, reasonable wear and
tear and casualty excepted.
12. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
12.1 Tenant shall not create any openings in the roof or exterior walls,
nor make any structural alterations, additions or improvements to the
Premises, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Tenant shall have the right at all times to
erect or install cabinets, shelves, electrical outlets, machinery, air
conditioning or heating equipment and trade fixtures and other equipment,
provided Tenant complies with all Legal Requirements in connection therewith.
12.2 All alterations, additions or improvements made by Tenant which are
permanently attached to and made part of the Premises shall become the
property of the Landlord at the expiration of the Lease term, except for
signs, trade fixtures, furnishings, machinery and equipment used in Tenant's
business and furnished by Tenant (collectively, "PERSONAL PROPERTY"), which
Personal Property shall be removed by Tenant at the expiration or earlier
termination of this Lease and Tenant shall repair any damages caused by such
removal. For Federal income tax purposes, Tenant's signs, trade fixtures and
furnishings are defined herein as equipment. Except as set forth above and
provided Tenant has obtained Landlord's consent to perform alterations, if
consent is required under the terms of this Lease, Tenant shall have no
obligation to remove any other alterations or improvements or to restore the
Premises at the expiration or earlier termination of this Lease.
12.3 Tenant shall have the right to make interior alterations to the
Premises of a non-structural nature without Landlord's consent provided
Tenant shall comply with all Legal Requirements in connection therewith.
12.4 At Tenant's sole cost and expense, Tenant shall be permitted to
construct an antenna or satellite dish on the roof of the Premises, provided
that (i) Tenant secures any permits required by governmental authority for
installation, (ii) such antenna or dish it does not impair the structural
integrity of the roof and (iii) Tenant coordinates such installation with
Landlord's roofing contractor to avoid violations of any roofing warranties.
12.5 Notwithstanding the ownership of the alterations, additions or
improvements to the Premises, Tenant retains the right to depreciation
deductions of all such alterations, additions or improvements made at
Tenant's expense.
13. SIGNS
13.1 Subject to approvals required by the City of Chico, Landlord
warrants and represents that to the best of its actual knowledge as of the
date hereof, there are no signage restrictions which bind the Shopping Center
either by a restrictive covenant or uniform sign plan filed with the local
governing authority that would prevent Tenant from erecting its prototype
signage as shown on Exhibit G. Provided Tenant's proposed signage complies
with all applicable laws and is substantially similar to Tenant's
prototypical signage used in Tenant's other stores in California, Landlord's
consent shall not be required with respect to Tenant's exterior signage.
13.2 During the term hereof Tenant shall not be required to remove its
signs unless required to do so by local codes enacted subsequent to the
date hereof. Tenant may at any time remodel or replace the sign facia to
conform with Tenant's then standard signage so long as such signage does
-16-
not materially exceed the initial total sign area or violate applicable deed
or master lease restrictions or sign ordinances, provided that Tenant may
repair or replace any damaged or worn signs to their pre-existing condition
notwithstanding any changes in deed or master lease restrictions made
subsequent to the Effective Date or, to the extent legally allowed, sign
ordinances enacted or amended subsequent to the Effective Date. To the extent
permitted under governmental regulations, Tenant shall have the right to
affix window appliques, interior signs and other treatments commonly used at
Tenant's other locations. Tenant shall remove all signs and appliques at the
expiration or earlier termination of this Lease, and shall repair any damage
caused by such removal. Landlord shall not allow any signage other than
Tenant's to be erected on the Premises.
13.3 Landlord agrees that Tenant may, at its expense, erect and maintain
its standard pylon sign panel in the location previously reserved for Payless
Drugs on the Freeway Pylon sign located where noted on EXHIBIT B. If a new
pylon or monument sign is constructed in the Shopping Center, Tenant shall
have the right to erect its standard sign panel thereon of a size and at a
location priority consistent with the Tenant's relative Proportionate Share
among other occupants of the Shopping Center that are given signage on such
pylon or monument sign, provided, however, that Tenant pays such
proportionate share of the cost of constructing said sign. Landlord agrees
that Tenant shall have the right to install its sign panel on the Shopping
Center's freeway pylon in the location currently occupied by Payless Drugs.
13.4 Prior to the Commencement Date Tenant shall have the right to erect
on the Premises a temporary "Coming Soon" sign or signs announcing Tenant's
anticipated opening.
14. LANDLORD'S RIGHT OF ENTRY
14.1 Landlord and its authorized agents may enter the Premises, after
prior written notice and during Tenant's normal business hours (except in the
case of an emergency posing imminent threat of injury to persons or damage to
property), for the following purposes: (i) to inspect the general conditions
and state of repair of the Premises; (ii) to make repairs required of
Landlord; and (iii) to show the Premises to any prospective purchaser or
mortgagee. If requested by Tenant, such entry by Landlord shall be under the
supervision of Tenant. Landlord shall not interfere with or create a hazard
to Tenant's normal business operations during such entry.
14.2 Within one hundred eighty (180) days prior to the expiration of the
Term, Landlord may enter the Premises during Tenant's normal business hours
to show the Premises to prospective tenants. During the final sixty (60)
days of the Term, Landlord and its authorized agents may erect on, or about,
the Premises its customary sign advertising the property for lease, provided
such sign does not interfere with or create a hazard to Tenant's normal
business operation.
15. UTILITIES
15.1 Tenant shall pay before delinquency all charges for gas, water,
electricity and any other utility services used solely on the Premises during
the Term hereof by Tenant.
15.2 Landlord, at its expense, shall cause the Premises to be
individually metered for each utility service and provide the service
connections at points mutually acceptable to Landlord and Tenant. If a
utility does not allow or provide for separate metering or sub-metering,
Tenant will pay its share of the consumption charges based upon the ratio of
the Leasable Square Footage of the Premises to the total Leasable Square
Footage of all buildings covered by the utility ▇▇▇▇. Notwithstanding the
preceding, utility charges for restaurants, hair salons, laundromats, health
clubs and other utility intensive uses shall not be included within the
calculation of Tenant's share of commonly metered consumption charges.
Notwithstanding the foregoing, Landlord may keep the domestic water service
for the Building on its account and place a submeter or submeters in the
Building to separately meter usage in the Premises and the adjacent premises.
In such event, Tenant shall reimburse Landlord for
-17-
the actual cost of water usage for the Premises as opposed to a reimbursement
based upon a proportionate share of floor area.
15.3 In the event of an interruption in any utility service, Landlord
shall diligently pursue the resumption of service. If any such interruption
is causes by the negligence of or breach of this Lease by Landlord and, as a
result, Tenant is not able to conduct its customary level of sales for
similar periods, then Fixed Rent, Additional Rent and other charges hereunder
shall be equitably adjusted during the period of such interruption.
16. PARKING
Landlord shall provide Tenant and its employees, customers and other
invitees with the non-exclusive use of parking spaces within the No Build
Area (defined below) equal to the greater of: (i) 525 parking spaces, as
shown on the site plan annexed hereto as EXHIBIT A or (ii) the number of
parking spaces imposed by any local code requirements. In addition, Landlord
shall provide for the non-exclusive use of all tenants or other occupants of
the Shopping Center (excluding Petco's exclusive parking and employee
designated parking and Circuit City's pickup area, all as designated on
EXHIBIT A), and their respective employees, customers and other invitees, the
greater of: (a) three and one-half (3.5) parking spaces per one thousand
(1,000) square feet of Leasable Square Footage within the Shopping Center; or
(b) the number of parking spaces imposed by any local code requirements.
17. [INTENTIONALLY DELETED]
18. [INTENTIONALLY DELETED]
19. NO BUILD AREA, VISIBILITY AND ACCESS
19.1 Landlord agrees that, during the Term, it will not construct or
permit to be constructed any building, sign, tower or other structure or
improvement, or, unless required by law, plant any tree or other growing
plant (except replacements of existing trees or plants, provided same will
not exceed nor is reasonable anticipated to exceed four feet in height), or
make any other change whatsoever in the area depicted as the No Build Area on
EXHIBIT B (the "NO BUILD AREA"). Notwithstanding anything contained in this
Lease to the contrary, but subject to Paragraph 9.3 and Article 16 herein,
Landlord may modify the layout and/or design of the Common Areas and/or
building areas outside of the No Build Area and/or within building limit
lines shown within the No Build Area on the attached EXHIBIT B without
Tenant's prior written approval. In the event that Landlord violates the
terms of this Paragraph 19.1, which violation materially impairs access to
the Premises, parking availability or visibility of Tenant's signage or
windows, and such violation is not cured within twenty (20) days after
written notice from Tenant, in addition to all other available rights and
remedies at law in or in equity, Tenant, at its option, may terminate this
Lease upon written notice to the Landlord. Notwithstanding the foregoing, in
the event that such material impairment results from a violation of the terms
of this Paragraph 19.1 by a person or entity other than Landlord and in the
further event that Landlord has the legal right to prohibit any such person
or entity from violating the provisions of this ▇▇▇▇▇▇▇▇▇ ▇▇.▇, ▇▇▇▇▇▇▇▇
shall not be deemed to be in default under the provisions of this Paragraph
19.1 and Tenant shall not have the right to terminate this Lease if Landlord,
within sixty (60) days of receipt of written notice from Tenant of such
violation, commences a legal action to cause such person or entity to cease
such violation and thereafter diligently prosecute such legal action to
completion.
19.2 In the event access to the Premises or visibility of Tenant's
signage and/or windows is materially impaired for a continuous period of
greater than ten (10) days following Landlord's receipt of written notice of
such material impairment from Tenant due to Landlord's negligence or any
other act or omission by or within the control of Landlord, then Fixed Rent,
Additional Rent and all other charges payable by Tenant under this Lease
shall be equitable adjusted or, if Tenant is unable to
-18-
continue operating, abated for the period commencing on the expiration of
said ten (10) day period and continuing during the term of such material
impairment.
20. ASSIGNMENT AND SUBLEASING
20.1 Except as otherwise provided in this Article 20 or in Paragraph 7.1
above (regarding a sublease for a coffee shop), Tenant may not assign this
Lease or sublease the Premises, in whole or in part, without the express
written consent of Landlord, which consent shall not be unreasonably
withheld. Landlord shall consent or withhold such consent by written notice
to Tenant within fifteen (15) business days of Tenant's written request for
Landlord's consent, together with (i) the name and legal composition of the
proposed assignee, subtenant or other transferee, (ii) the nature of the
business proposed to be carried on in the Premises, (iii) the major terms and
provisions of the proposed assignment, sublease or other transfer, and (iv)
such reasonable financial and other information concerning the proposed
transferee as Landlord may request. If Landlord fails to respond to Tenant's
request within such fifteen (15) business day period, Landlord shall be
deemed to have consented to such assignment or subletting. It shall be
unreasonable for Landlord to withhold its consent to an assignment or a
subletting if (i) the proposed assignee or subtenant is of such financial
standing and operational responsibility as to give reasonable assurance of
the payment of all rental and other amounts reserved in this Lease and
compliance with all of the terms, covenants, provisions and conditions of
this Lease, (ii) the use of the Premises or the subleased premises is
consistent with those uses generally found in first class shopping centers,
(iii) the primary use of the Premises or subpremises does not directly
compete with the primary business of a then-existing tenant or subtenant in
the Shopping Center, (iv) the use is not a prohibited use under Paragraph 7.4
hereof, (v) the use of the Premises or subpremises does not violate any
exclusive provisions or restrictions contained in other then-existing leases
in the Shopping Center or any recorded instrument affecting the Shopping
Center, (vi) the assignee or sublessee operates at least three (3) other
stores substantially similar to the operation proposed at the Premises, and
(vii) the net worth of the assignee or sublessee is at least $5,000,000
(collectively, the "ASSIGNMENT/SUBLETTING CONDITIONS").
20.2 Any provision of this Lease to the contrary notwithstanding, Tenant
may assign this Lease or sublease the Premises, in whole or in part, without
the express written consent of Landlord, to: (i) any corporation into which
or with which Tenant has merged or consolidated; (ii) any parent, subsidiary,
successor, or affiliated corporation of Tenant; (iii) any person or entity
that acquires all or substantially all of the assets or operations of Tenant
within the state in which the Premises are located; or (iv) any partnership
of which more than twenty-five percent (25%) of the partnership interest shall
be owned by Tenant or the parent corporation of Tenant, provided Tenant or
such parent corporation is a general partner; provided that, in all of the
foregoing events, Tenant's use restrictions in Paragraph 7.1 shall remain
applicable.
20.3 No assignment shall operate to release Tenant of its liabilities and
obligations hereunder. Tenant's assignee shall agree in writing to assume
and perform all of the terms and conditions of this Lease on Tenant's part to
be performed from and after the effective date of such assignment.
Notwithstanding any provision of this Lease (except for Paragraph 20.2), no
assignee or sublessee of Tenant shall be subject to any use restrictions
contained in Paragraph 7.1 hereof, so long as such assignee's or sublessee's
use of the Premises does not violate any deed or master lease restrictions
and the Assignment/Subletting Conditions are satisfied. The sale or
conveyance of the capital stock of or other equity interest in Tenant shall
not constitute an assignment of this Lease.
20.4 Provided any assignee of Landlord assumes in writing all of
Landlord's's obligations under this Lease accruing and to be performed from and
after the date of such assignment and so notifies Tenant, Landlord may assign
its interest in this Lease during the term hereof, and Landlord shall
thereupon be released from all future obligations under this Lease with
respect to events occurring or other matters arising after Tenant receives
notice of such assignment and assumption; provided, however, Tenant shall
make all payments required under this Lease to Landlord, or its successors in
-19-
interest, unless and until Tenant is notified of such assignment and
assumption, and Tenant shall in no way be liable to any assignee for any
amounts due hereunder until Tenant is so notified.
21. INSURANCE
21.1 Tenant shall during the Lease term, at its sole expense, maintain in
full force general liability insurance issued by one or more insurance
carriers, insuring against liability for injury to or death of persons and
loss of or damage to property occurring in and on the Premises. Such
liability insurance shall name Landlord as an additional insured. The
coverage limits for such liability insurance shall be at least Three Million
Dollars ($3,000,000.00) combined single limits for bodily injury and property
damage per occurrence. Such policy shall be written as a primary policy not
contributory with or in excess of any policy which Landlord may carry. Any
such policy shall provide that any loss payable to Landlord shall be payable
notwithstanding any act or negligence of Tenant which may otherwise result in
a forfeiture of said insurance. Such insurance shall be written an
"occurrence basis."
21.2 Landlord shall during the Lease term maintain in full force the
following insurance: (i) general liability insurance issued by one or more
insurance carriers, insuring against liability for injury to or death of
persons and loss of or damage to property occurring in and on the Common
Areas and in and on the entire Shopping Center, with coverage limits of at
least Three Million Dollars ($3,000,000.00) combined single limits for bodily
injury and property damage per occurrence; and (ii) all risk property damage
insurance and a standard extended coverage endorsement issued by one or more
insurance carriers covering the Premises and all of the other buildings and
improvements in the Shopping Center to the extent of their full replacement
value exclusive of foundation and excavation costs. Landlord shall name
Tenant, together with others having insurable interests, as additional
insureds on all insurance policies required under this Paragraph 21.1 that
cover and insure the Premises. Within thirty (30) days of demand and
presentation of paid invoices, Tenant shall reimburse Landlord for Tenant's
Proportionate Share of Landlord's cost of insurance carried by Landlord
pursuant to the provisions of this Paragraph 21.2. Landlord estimates that
Tenant's Proportionate Share of Landlord's cost of insurance for the first
(1st) Lease Year will be twenty-five cents ($.25) per square foot of Leasable
Square Footage of the Premises. The casualty policies to be provided by
Landlord may included a one (1) year rental loss endorsement and such other
endorsements and coverages as Landlord, in its reasonable discretion from
time to time may elect to obtain or which may be required by Landlord's first
trust deed lender on the Shopping Center. Said policies may also be endorsed
with standard mortgagee's loss payable endorsements in favor or, and in a
form satisfactory to, any encumbrancers of Landlord, provided that all such
encumbrancers shall have agreed to make the proceeds of such casualty
insurance reasonable available for restoration and repair to the extent
required by this lease. The requirement under this Paragraph that Landlord
provide casualty insurance on other building improvements in the Shopping
Center shall not be construed to require that such insurance be provided for
leasehold improvements constructed by tenants and/or other occupants and/or
their trade fixtures and other personal property or for plate glass.
Landlord may permit the above-required insurance relative to the other
building improvements to be carried by the tenants and/or occupants of such
buildings, either with third-party insurance companies or by self-insurance
and with reasonable deductibles, provided that such self-insurance and
deductibles is/are acceptable to the holder of the first trust deed loan
encumbering the Shopping Center.
21.3 Landlord and Tenant may comply with their insurance obligations
hereunder by endorsement to any blanket policy of insurance provided,
however, the coverage afforded the other party and any other additional
insureds above shall not be reduced or diminished by reason of the use of
such blanket policy of insurance and shall be no less than that which would
have been afforded under a separate policy or policies. Landlord and Tenant
shall deliver to each other certificates issued by the insurance carrier or
carriers for each policy of insurance that they are required to maintain
pursuant to the terms of this Lease within ten (10) days after request
therefor. Any insurance required by this Article to be procured by one party
for the benefit of another party shall contain a provision that the insurance
cannot be terminated without thirty (30) days prior written notice to the
other party. All
-20-
insurance required of a party under this Article 21 shall be maintained with
insurance companies qualified to do business in the state in which the
Premises are located and otherwise reasonable acceptable to the other party.
21.4 Tenant shall not knowingly conduct any operation in the Premises
which would cause suspension or cancellation of the all risk property damage
insurance carried by Landlord or by any other occupant of the Shopping
Center. If Tenant should change its use of the Premises and thereby cause an
increase above normal rates in the premium for the all risk property damage
insurance carried by Landlord, the amount of such increase shall be
reimbursed to Landlord by Tenant upon demand and presentation by Landlord of
written evidence of such increase and paid invoices therefor. Tenant shall
not be responsible for any portion of the cost of any insurance above normal
rates caused by another tenant's activities within the Shopping Center.
22. INDEMNITY
Tenant and Landlord (each an "INDEMNITOR") will indemnify the other (each
an "INDEMNITEE") against, and hold Indemnitee harmless from, all claims,
liabilities, demands or causes of action, including all reasonable expenses
of the Indemnitee incidental thereto, for injury to or death of any person
and subject to Article 23 below, damage to any property arising within or on
the Shopping Center, including the Premises, and caused by Indemnitor's
negligent act or omission or the negligent act or omission of any employee
or agent of Indemnitor and, in the case of Tenant, any use or occupancy of or
state or condition of the Premises the repair or correction of which is not
the responsibility of Landlord under this Lease. The liability of Indemnitor
to indemnify Indemnitee as hereinabove set forth shall not extend to any
matter against which Indemnitee shall be effectively protected by insurance,
provided that, if any such liability shall exceed the amount of the effective
and collectible insurance in question, the liability of Indemnitor shall
apply to such excess.
23. RELEASE AND WAIVER OF SUBROGATION
Landlord and Tenant hereby waive and release each other of and from any
and all rights of recovery, claim, action or cause of action against each
other, their agents, officers, directors, partners and employees, for any
loss or damage that may occur to the Premises or any other improvements in
the Shopping Center, or Personal Property, including building contents owned
by the releasing party, within the Premises and/or the Shopping Center, by
reason of fire or the elements of nature or other events normally covered by
extended all risk property damage insurance coverage, regardless of cause or
origin including negligence of Landlord or Tenant and their agents, officers,
directors, partners and employees. Landlord and Tenant shall immediately give
written notice of the terms of the mutual waivers contained in this Article
23 to each of their respective insurance companies which have issued policies
of insurance covering all risk property damage, and shall have the insurance
policies properly endorsed to reflect the insurance company's acknowledgment
of such waiver and the absence of any subrogation rights. Each party shall
provide to the other, annually within ten (10) days after request therefor,
evidence that its all risk property damage insurance policies have been so
endorsed.
24. FIRE AND CASUALTY DAMAGE
24.1 If the Premises should be damaged by fire or other casualty such
that rebuilding or repairs cannot be completed within one hundred eighty
(180) days from the date of such damage, Tenant may, within thirty (30) days
of the determination of the number of days necessary to restore the Premises,
terminate this Lease on written notice to Landlord and, in such event, Fixed
Rent, Additional Rent and all other charges payable by Tenant hereunder shall
be prorated, taking into account any abatement under Paragraph 24.6 below, to
and from the date of such termination.
-21-
24.2 If the Premises should be damaged by fire or other casualty during the
last eighteen (18) months of the Term such that the cost of rebuilding or
repairs exceeds twenty percent (20%) of the replacement cost of the Premises,
then, unless Tenant exercises any right it may have to extend the Term,
Landlord may, within thirty (30) days after the determination of the cost of
such rebuilding and repairs, terminate this Lease on written notice to Tenant
and, in such event, Fixed Rent, Additional Rent and all other charges payable
by Tenant hereunder shall be prorated, taking into account any abatement
under Paragraph 24.6 below, to and from the date of such termination.
24.3 If the Premises should be damaged and this Lease cannot be or is not
terminated by Landlord or Tenant pursuant to Paragraphs 24.1 or 24.2 above,
then Landlord shall, at its sole cost and risk, proceed forthwith to rebuild
or repair the Premises (to the extent of Landlord's Work only) in compliance
with all Legal Requirements and otherwise to substantially the condition
which existed prior to such damage, except that Tenant shall have the right
to require Landlord to make changes to the Premises in the course or such
restoration, subject to Landlord's approval of such changes to the extent
required under Article 12 above. Although Landlord shall cooperate
reasonable with Tenant in incorporating approved changes into Landlord's
Work, Landlord shall not be required to make any change that would delay the
commencement or completion of Landlord's Work, unless Tenant agrees that any
rental abatement provided for under Paragraph 24.6 below will end on the date
such abatement would have ended but for such delay. If the cost and expense
of restoration of the Premises is increased by any change or changes made by
Tenant then Tenant shall pay Landlord, within thirty (30) days after demand
therefor, the amount or amounts by which the cost or expense of restoration
of the Premises was thereby increased.
24.4 In the event Landlord is required to rebuild and repair the Premises
under Paragraph 24.3 above and Landlord does not commence such rebuilding and
repair within ninety (90) days after the damage or destruction or,
thereafter, fails to pursue diligently such rebuilding and repair to
completion, then, in addition to all other rights or remedies available to
Tenant under this Lease or at law or in equity, Tenant may terminate this
Lease effective upon giving written notice thereof to Landlord, unless
Landlord cures such default within thirty (30) days of receipt or written
notice of such default from Tenant.
24.5 The cost of rebuilding and repair of the Premises and the Shopping
Center and the number of days within which the Premises can be rebuilt or
repaired shall be determined by Landlord's general contractor, subject to
verification thereof by an independent contractor mutually acceptable to both
Landlord and Tenant. If Tenant desires verification by an independent
contractor, the one hundred eighty (180) day period in Paragraph 24.1 above
and the ninety (90) day period in Paragraph 24.4 above shall be extended for
any period of time required to verify such number of days.
24.6 If so much of the Premises or Common Areas shall be damaged so that
Tenant is unable to conduct its normal business operations from the Premises,
in Tenant's reasonable judgment, then all Fixed Rent, Additional Rent and all
other charges payable by Tenant hereunder to Landlord shall ▇▇▇▇▇ commencing
upon the happening of such damage. If only a portion of the Premises is
damaged, Fixed Rent shall ▇▇▇▇▇ proportionately. Such abatement and tolling
of the term shall end on the earlier to occur of: (i) one hundred twenty
(120) days after completion of rebuilding or repair of damage or (ii) the
date on which Tenant's conduct of its business from the Premises shall be
resumed. The date on which rebuilding or repairs are deemed to be complete
shall be the date on which a permanent or temporary certificate of occupancy
(or local equivalent thereof) is issued with respect to such rebuilding or
repair, provided that the only condition to any such temporary certificate
shall be the installation of Tenant's fixtures and any leasehold improvement
work to be performed by Tenant.
24.7 If this Lease cannot be or is not terminated by Landlord or Tenant
pursuant to Paragraph 24.1 or 24.2 above, then all insurance proceeds payable
with respect to any damage or destruction of the Premises shall be applied
solely to the cost of the rebuilding or repair of the damage or destruction.
In the event the insurance proceeds are insufficient to cover the costs of
the rebuilding or repairs, the excess costs shall be borne by the Landlord.
-22-
24.8 If (i) more than twenty percent (20%) of the Leasable Square
Footage of the buildings of the Shopping Center is damaged or destroyed or
(ii) any part of the No Build Area or (iii) more than 20% of the balance of
the Common Areas is damaged or destroyed, irrespective in either event of
whether the Premises is damaged or destroyed, and if after the happening of
either of such events Landlord does not commence within ninety (90) days
after such damage or destruction and diligently continue thereafter to
restore the same, Tenant shall have the right to terminate this Lease by
giving written notice of such termination to Landlord, effective upon the
expiration of sixty (60) days following the giving of such notice, unless
Landlord commences such work within sixty (60) days of Landlord's receipt of
such notice.
24.9 Notwithstanding the foregoing provisions of this Article 24, (a)
in the event of any casualty which is not covered by Landlord's insurance
(provided that Landlord shall have complied with its obligations under
Articles 21 and 23 hereof regarding the maintenance of Landlord's insurance),
the result of which is that the cost of restoration shall exceed twenty-five
percent (25%) of the replacement cost of the Premises, Landlord shall have
the right to terminate this Lease by written notice to Tenant given not later
than thirty (30) days after the date on which the projected cost of
restoration is determined.
25. CONDEMNATION
25.1 In the event any part of the Premises or a "Substantial Portion
of the Shopping Center" (as defined in Paragraph 25.3) is taken or condemned
by any competent authority or is conveyed by deed in lieu of condemnation (a
"TAKING"), Tenant shall have the right: (a) to terminate this Lease as of the
first day following the earlier of the date of title transfer or the date of
the taking of possession by the condemning authority, or (b) to continue the
Lease in full force and effect with a reduced Fixed Rent commensurate with
the fair rental value of the Premises (such reduction to be in proportion to
the reduction in the fair rental value of the Premises before the taking or
condemnation as compared to the fair rental value of the Premises following
the taking or condemnation and the completion of any restoration and repair
to be performed by Landlord), in lieu of the amount of Fixed Rent otherwise
provided herein, which reduction in Fixed Rent shall be effective the earlier
of the date of title transfer or the date the taking of possession by the
condemning authority. Tenant shall give notice to Landlord of its election
within sixty (60) days after the date Landlord notifies Tenant of the
impending Taking.
25.2 If Tenant does not elect to terminate this Lease as set forth
herein, then Landlord shall commence and diligently continue thereafter to
restore any portion of the Premises, the Common Areas and the other buildings
in the Shopping Center remaining after the Taking to substantially the same
condition and tenantability as existed immediately preceding the Taking or
demolish and remove the remaining portions of building that are not
reasonably susceptible to restoration.
25.3 For the purposes of Paragraph 25.1, a "Substantial Portion of the
Shopping Center" is defined to mean any of the following: (i) ten percent
(10%) or more of the parking areas of the Shopping Center; (ii) twenty percent
(20%) or more of the Leasable Square Footage of the buildings within the
Shopping Center; (iii) loss through the Taking of direct access from the
Premises to any adjacent street or highway (unless comparable access is or
will promptly be available); or (iv) more than ten percent (10%) of the No
Build Area.
25.4 Termination of this Lease because of Taking shall be without
prejudice to the rights of either Landlord or Tenant to recover from the
condemning authority compensation and damages for the injury or loss
sustained by them as a result of the taking. Without limiting the foregoing,
Tenant shall have the right to make a claim against the condemning authority
for the value of its trade fixtures, furniture and personal property, damages
for interruption or relocation of business in the Premises, loss of good
will, moving and remodeling expenses and value of any leasehold improvements
made by Tenant on or to the Premises; provided, however, that Tenant shall
not be permitted to make any claim for any "positive value" or "bonus value"
of its leasehold estate.
-23-
26. DEFAULT
26.1 Tenant shall be in default under this Lease if and only if one of
the following events shall occur:
(a) Tenant shall fail to pay Fixed Rent or Additional Rent
payable hereunder when due, and such failure shall continue for ten (10) days
after Landlord gives Tenant written notice of its failure to pay; or
(b) Tenant shall fail to perform any of its other obligations
under this Lease and such failure shall continue for more than thirty (30)
days after Landlord gives Tenant written notice of its failure to perform,
provided that, if such failure cannot reasonably be cured by Tenant within
such 30-day period, Tenant shall not be in default if Tenant commences to cure
the failure within such 30-day period and diligently thereafter pursues the
cure to completion; or
(c) Tenant or any guarantor of Tenant's obligations under this
Lease makes a transfer in fraud of creditors or makes an assignment for the
benefit of creditors; or
(d) Tenant or any guarantor of Tenant's obligations under this
Lease files a petition under federal bankruptcy statutes or under any similar
law or statute of the United States or any state, or if Tenant or such
guarantor is adjudged bankrupt or insolvent in proceedings filed against
Tenant or such guarantor; or
(e) Tenant fails, within ninety (90) days after an appointment
pursuant to any state or federal bankruptcy or other statute, law or
regulation, of a receiver or trustee for the Premises or for all or
substantially all of the assets of Tenant or any guarantor of Tenant's
obligations under this Lease, to have such appointment vacated.
26.2 If Tenant shall be in default under this Lease, Landlord may, in
addition to all other remedies available at law or in equity, elect one of
the following:
(a) Cure the default for the account and at the expense of
Tenant, and Tenant shall reimburse Landlord upon demand for the reasonable
cost of curing Tenant's default, together with interest at the rate specified
in Paragraph 26.5 below from the date incurred or paid by Landlord until such
costs are paid to Landlord, and such costs and interest shall be deemed to be
additional rental hereunder.
(b) Immediately terminate this Lease and Tenant's right to
possession of the Premises, and repossess the same by summary proceedings or
other appropriate action, and Landlord shall thereupon be entitled to receive
from Tenant (subject to the defenses and limitations provided Tenant under
California Civil Code Section 1951.2) all damages specified in California
Civil Code Section 1951.2(a), including the following: (i) the worth at the
time of award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Tenant proves could be
reasonably avoided; and (iv) such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable law. As
used in clauses (i) and (ii) above, the "worth at the time of award" shall be
computed by allowing interest at the rate set forth in Paragraph 26.5 hereof.
As used in clause (iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the discount rate of the Federal
Reserve Board of San Francisco at the time of the award plus one percent (1%),
but not in excess of ten percent (10%) per annum.
(c) Continue this Lease in effect without terminating Tenant's
right to possession even though Tenant has breached this Lease and abandoned
the Premises and to enforce all of
-24-
Landlord's rights and remedies under this Lease, including the right to
recover the rent as it becomes due under this Lease; provided, however, that
Landlord may at any time thereafter elect to terminate this Lease for such
previous breach by notifying Tenant in writing that Tenant's right to
possession of the Premises has been terminated. The parties intend that
Landlord have (subject to the defenses and limitations provided Tenant under
California Civil Code Section 1951.2) the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has
right to sublet or assign, subject only to reasonable limitations).
(d) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the State of California.
Landlord's failure to act on any default or breach of covenant on the part of
Tenant shall not be or be construed to be a waiver thereof, nor shall any
custom or practice which may grow up between the parties in the course of
administering this Lease be construed to waive or to lessen the right to
Landlord to insist upon the performance by Tenant of any term, covenant or
condition hereof, or to exercise any rights given Landlord on account of any
such default. A waiver of a particular breach, or default, shall not be
deemed to be a waiver of the same or any subsequent breach or default.
Landlord's acceptance of rent or the performance hereunder shall not be, or
be construed to be, a waiver of any term, covenant or condition of this Lease
or breach or default thereof by Tenant, whether or not such breach or default
is then known to Landlord. The voluntary or other surrender of this Lease by
Tenant or a mutual cancellation of this Lease shall, at Landlord's option,
either not result in a merger and shall operate as an assignment to Landlord
of any and all subleases made by Tenant to the extent permitted under such
subleases, or shall terminate all such existing subleases.
26.3 In the event this Lease is assigned or the Premises is sublet by
Tenant pursuant to Article 20 above and a default occurs thereafter requiring
notice as provided in Paragraph 26.1 above, Landlord agrees that it will
furnish Tenant with a copy of the notice at the same time it is sent to the
assignee or subiessee to the address set forth on page one hereof or the last
address for notices provided to Landlord by Tenant in writing. In the event
that the default is not cured by the assignee or sublessee during the
specified time periods, Tenant shall have, for an additional period of ten
(10) days, the option (but not the obligation) to cure the default.
26.4 In addition to all other remedies available to Tenant under this
Lease or at law or in equity, if Landlord fails to perform any of its
obligations under the Lease and such failure continues thirty (30) days after
Tenant first gives Landlord written notice of such failure or, if the
performance of such obligation cannot be reasonably completed within such
30-day period, in the event Landlord fails to commence within such 30-day
period and thereafter diligently pursue to completion the performance of such
obligation, then Tenant may (but shall not be obligated to) perform the
obligation of Landlord and the reasonable cost thereof shall be payable from
Landlord to Tenant upon demand. If Landlord fails to reimburse Tenant on
demand for the reasonable cost of performing Landlord's obligation, or if
Landlord fails to timely pay to Tenant any other amount due to Tenant under
this Lease within fifteen (15) days after Tenant gives Landlord written
notice of such past due amount, then Tenant may in either of such events
deduct any such amounts owing from Landlord, plus interest thereon as
provided in Paragraph 26.5 below, from Fixed Rent, Additional Rent or other
charges due or to become due Landlord under this Lease. If Tenant has not
received or received credit for all such amounts and interest thereon at the
expiration of the Term, Tenant may, at its option, extend the Term on the
same terms and conditions then in effect until all such amounts and interest
thereon are fully paid by application of all Fixed Rent, Additional Rent and
other charges accruing during such extended term. Notwithstanding anything
to the contrary in this Lease, Landlord shall not be in default under any
provision of this Lease which would give rise to the right of Tenant to
terminate or offset any amount due Landlord under the Lease unless written
notice specifying such default is mailed to Landlord and to all mortgagees
and/or trust deed holders and/or assignees of which Tenant has, prior to such
notice, been notified in writing ("SECURED PARTIES"), and such specified
default is not cured within thirty (30) days after such notice has been
mailed to Landlord and to the Secured Parties, or within any period not to
exceed one hundred twenty (120) days that Landlord or any of the Secured
Parties is proceeding to cure such default with due diligence, including, in
the case of the Secured Parties, any period that any
-25-
of the Secured Parties is taking steps with due diligence to obtain the legal
right to cure such default on behalf of Landlord, provided such Secured Party
has given Tenant notice of its intention to cure such default within thirty
(30) days after such notice has been mailed. Tenant hereby grants to any
Secured Party the right to cure defaults under this Lease on the part of
Landlord and agrees to provide each Secured Party reasonable access to the
Premises for the purpose of curing such defaults.
26.5 In the event either party hereto fails to pay any sum due under
this Lease within ten (10) days from the due date specified in this Lease,
such past due amount shall accrue, and the failing party shall be liable for,
interest from the original due date until paid at an annual rate equal to the
lesser of (i) the prime rate then published in the WALL STREET JOURNAL plus
three percent (3%) or (ii) the maximum rate permitted by law.
27. HAZARDOUS MATERIALS
27.1 The following terms shall have the meanings ascribed to them under
this Paragraph 27.1:
(a) "Hazardous Materials" shall mean any chemical, substance,
material or combination thereof which is or may be hazardous to human health
or safety or to the environment due to its radioactivity, ignitability,
infectiousness or other harmful or potentially harmful properties or effects,
including petroleum and petroleum products, asbestos, radon, polychlorinated
biphenyls ("PCBs") and all of those chemicals, substances, materials or
combinations thereof that are listed, defined or regulated in any manner by
any Environmental Law (defined below).
(b) "Environmental Cleanup Work" shall mean any cleanup,
remediation, removal, construction, alteration, demolition, renovation or
installation that is required in connection with Hazardous Materials
installed, used, stored, handled or located on the Subject Property (defined
below) or disposed of from the Subject Property in order to
comply with any Environmental Law.
(c) "Environmental Law" shall mean any federal, state or local
environmental, health and/or safety-related law, and any related decision of
the courts, ordinance, rule, regulation, code, order, directive, guideline,
permit or permit condition.
(d) "Subject Property" shall mean the Premises, the Shopping
Center and any adjacent property owned or leased by or otherwise under
Landlord's control, including the improvements thereon and the subsurface
soils and groundwater therein and thereunder.
27.2 Landlord hereby represents and warrants, to its actual knowledge,
the following to Tenant:
(a) During Landlord's period of ownership, the Subject Property
has not been used for the disposal of refuse or waste, or for the generation,
processing, manufacture, storage, handling, treatment, release, discharge or
disposal of any Hazardous Materials, except as typically as part of the
operation of a retail shopping center and in compliance with all
Environmental Laws.
(b) The Subject Property is in compliance with all Environmental
Laws, or will be prior to the Commencement Date.
(c) During Landlord's period of ownership, no (i) asbestos-
containing materials, (ii) machinery, equipment or fixtures containing
polychlorinated biphenyls, (iii) storage tanks for gasoline or any other
substance or (iv) urea formaldehyde foam insulation has been installed, used,
stored, handled or located on the Subject Property.
27.3 Landlord shall comply with, and shall pay all costs incurred in
complying with, any Environmental Law then in effect and the environmental
state, condition and quality of the Subject
-26-
Property, including the performance of and payment for any Environmental
Cleanup Work and the preparation of any closure or other required plans,
excluding, however, any compliance and/or costs related to Hazardous
Materials on the Shopping Center to the extent established to have been
caused by Tenant's (or Tenant's employees, agents or contractors) use and/or
occupancy of the Premises or of the Shopping Center.
27.4 Notwithstanding any other provision of this Lease, Landlord shall
and hereby does agree to indemnify, protect, defend and hold harmless Tenant
and its partners, directors, officers, employees, shareholders, agents,
contractors and each of their respective successors and assigns from and
against any and all claims, judgments, damages, penalties, fines, taxes,
costs, liabilities, losses and expenses arising at any time during or after
the Term as a result of or in connection with: (i) Landlord's breach of any
representation, warranty or covenant contained in this Article 27; or (ii) the
presence of Hazardous Materials on, under or about the Subject Property,
except to the extent same are the result of Tenant's (or its employees,
agents or contractors) activities on or in the Premises or the Shopping
Center.
27.5 In the event of Landlord's breach of any representation, warranty
or covenant contained in this Article 27 which adversely affects Tenant's
ability to carry on its business at the Premises and provided that Landlord
shall have failed to cure any such breach within thirty (30) after Tenant
first gives Landlord written notice of such breach (or such longer period not
to exceed ninety (90) days as may be reasonably necessary if such cure cannot
be reasonably completed within such thirty (30) day period and if Landlord
has commenced such cure within thirty (30) days if its receipt of such notice
and is diligently pursuing the completion of same), Tenant shall have the
right, in addition to all other remedies provided herein, to (i) terminate
this Lease by written notice to Landlord if the existence of Hazardous
Materials which are not caused by the acts or omissions of Tenant has caused
Tenant to cease operations at the Premises, such termination to be effective
as of the date set forth in such notice, or (ii) cease operations within the
Premises in whole or in part and have the Fixed Rent, Additional Rent and any
other charges payable by Tenant hereunder equitably abated based upon the
extent of interference with the conduct of Tenant's business from such
condition until Landlord has cured such breach.
27.6 Tenant agrees not to store any Hazardous Materials on the
Premises and agrees not to release or discard any Hazardous Materials on the
Premises or the Shopping Center; provided, however, Tenant may store, handle
and use the following chemicals, substances or materials if they are used,
stored, handled and disposed of in material compliance with Environmental
Laws then in effect: (i) chemicals, substances or materials routinely used in
office areas; (ii) janitorial supplies, cleaning fluids or other chemicals,
substances or materials reasonably necessary for the day-to-day operation or
maintenance of the Premises by Tenant, and (iii) chemicals, substances or
materials, reasonably necessary for the construction or repair of
improvements on the Premises.
27.7 Notwithstanding any other provision of this Lease, Tenant shall
and hereby does agree to indemnify, protect, defend and hold harmless
Landlord and its partners, directors, officers, employees, shareholders,
agents, contractors and each of their respective successors and assigns from
and against any and all costs (including, without limitation, costs of
Environmental Cleanup Work), claims, judgments, damages, penalties, fines,
taxes, costs, liabilities, losses and expenses arising at any time during or
after the Term as a result of or in connection with (i) the presence of any
Hazardous Materials on the Premises or the Shopping Center as the result of
activities on or in the Premises or the Shopping Center by or under Tenant or
(ii) Tenant's failure to comply with its obligations under this Article 27.
Tenant shall provide prompt written notice to Landlord of the existence of
Hazardous Materials on the Premises and/or any adjoining property within the
Shopping Center of which Tenant has actual knowledge and with copies of all
notices of violation of Environmental Laws received by Tenant.
-27-
28. SUBORDINATION AND NON-DISTURBANCE
28.1 If Tenant does not deliver to Landlord a Contingency Termination
Notice (as defined in Paragraph 37.14) notwithstanding the failure of
Landlord to deliver a Subordination, Non-Disturbance and Attornment Agree-
ment as required in Paragraph 37.14(c), then Tenant shall have no obligation
to pay Fixed Rent, Additional Rent or other charges otherwise payable under
this Lease until Landlord obtains for Tenant such Subordination, Non-Disturbance
and Attornment Agreement. In any event, Tenant shall have the option to
terminate this Lease if such Subordination, Non-Disturbance and Attornment
Agreement is not obtained with one hundred eighty (180) days after the
Commencement Date. Landlord further agrees that, before it shall have the
right to subject and subordinate this Lease to the lien of any mortgages or
deeds of trust hereafter placed upon Landlord's interest in the Shopping Center,
Landlord shall have first secured for Tenant's benefit a written Subordination,
Non-Disturbance and Attornment Agreement substantially in the form set forth in
Exhibit H, subject only to the addition of terms and provisions required by the
mortgagee or trust deed beneficiary as are customarily found in such agreements
between nationally recognized tenants and institutional lenders on the security
of first-class shopping center developments in the Northern California area.
28.2 If Landlord defaults in making payment under any mortgage or deed of
trust encumbering all or any part of the Shopping Center the foreclosure of
which will terminate Tenant's right to possession of the Premises, or if Land-
lord is in breach or in default of any such mortgage or deed of trust in any
respect, Tenant shall have the right but not the duty to make all payments of
Fixed Rent and other charges thereafter becoming due under this Lease to the
mortgagee or beneficiary thereunder in lieu of Landlord, and payments so made
shall discharge the obligation of Tenant hereunder with respect to such
payments.
29. NOTICES
29.1 Any notice required to be given under the terms of this Lease shall
be in writing and shall be effective upon the earlier of: (i) receipt,
(ii) refusal to accept delivery or (iii) three (3) days after being deposited
in the U.S. mail, postage prepaid, via registered or certified mail return
receipt requested, or one (1) day after being deposited with a nationally
recognized overnight courier, if to Landlord at the address set forth on page 1
hereof, and if to Tenant to the following addresses:
▇▇▇▇▇▇ & ▇▇▇▇▇ Superstores, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President of Real Estate
with a copy to the same addresses, Attention: Lease Administration. For
invoices or statements, an additional copy shall be sent to Tenant at the
following address:
Accounts Payable Department
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Property Accounting
29.2 Payments of Fixed Rent and other changes shall be forwarded to Land-
lord at the address set forth on page 1 hereof via first class mail. If at any
time, or from time to time, there shall be more than one Landlord, the Land-
lords shall designate a party to receive all notices and rent payments, and
service upon or payment to the designated party shall constitute service upon
or payment to all. Tenant shall not be required to issue multiple checks for
any single payment of Fixed Rent or other charges hereunder.
-28-
29.3 Either party may designate a new address for notice hereunder and/or
for the payment of Fixed Rent and other charges upon ten (10) days' advance
written notice to the other party in the manner set forth in Paragraph 29.1
above.
30. MEMORANDUM OF LEASE
Landlord agrees, upon Tenant's request, to execute a Memorandum of Lease
in the form of EXHIBIT 1. Either party may record the Memorandum of Lease at
its expense following the Effective Date hereof. The provisions of this Lease
shall control, however, in regard to any omissions from the Memorandum of Lease
or any provisions hereof which may be in conflict with the Memorandum of Lease.
31. LIENS
If because of any act or omission of Tenant a mechanic's or other lien
shall be filed against the Premises or the Shopping Center, Tenant shall, at
Tenant's own cost and expense, within thirty (30) days after notice of the
filing thereof, cause the same to be cancelled and discharged of record, or
shall furnish Landlord with a surety bond issued by a surety company protecting
Landlord from any loss because of non-payment of such lien claim. In the event
Tenant posts a surety bond, Tenant shall be entitled to contest any such lien
claims by appropriate judicial proceedings. Landlord shall at all times have
the right to post and to keep posted on the Premises such notices as are
provided for under or by virtue of the laws of the State of California for
the protection of Landlord's interest in and to the Premises from mechanics
liens or liens of a similar nature. At least twenty (20) days prior to
Tenant's commencement of any labor or work or construction (except for Tenant's
Work expressly contemplated herein) having a projected cost in excess of Fifty
Thousand Dollars ($50,000.00), Tenant shall deliver to Landlord notification
thereof specifying the nature and location of the intended work and the expected
date of commencement and completion thereof, and thereupon Landlord shall have
the right to post notices of non-responsibility on or about the Premises.
32. TENANT'S ENTRY PRIOR TO COMMENCEMENT DATE
Landlord grants Tenant, its employees and agents, a license to enter the
Premises for purpose of inspecting Landlord's construction of Landlord's Work
prior to the Commencement Date. In exercising such license, neither Tenant nor
its employees or agents shall interfere with the workmen, mechanics or
contractors of Landlord. Tenant's storage or installation within the Premises
of any of its fixtures, inventory or other items of Personal Property prior
to the Commencement Date shall not be deemed an acceptance of the Premises by
Tenant.
33. FORCE MAJEURE
Landlord and Tenant shall be excused for the period of any delay in
performance of any obligations hereunder when prevented from doing so by the
wrongful or negligent acts or omissions of the other party or by causes beyond
either party's control, which shall include all labor strikes, civil distur-
bance, war, war-like operations, invasions, rebellion, hostilities, military
or usurped power, sabotage, governmental regulations or controls, fires or
other casualty, inability to obtain any material or service or acts of God.
Notwithstanding the foregoing: (i) nothing contained in this Article 33 shall
excuse Tenant from paying in a timely fashion any payments due under the terms
of this Lease from and after the Rent Commencement Date; and (ii) with respect
to Landlord's construction obligations under Article 4 above, (x) no delay
under this Article 33 shall be effective unless Landlord shall have notified
Tenant of the delay within three (3) business days of Landlord's obtaining
actual knowledge of the event giving rise to such delay; and (y) no delay
under this Article 33 shall be permitted in connection with delays caused by
the failure of the Premises or the Shopping Center to comply with
-29-
local governmental ordinances, codes or regulations in effect on the Effective
Date of this Lease or the implementation of same.
34. BROKERS
Tenant and Landlord represent and warrant to each other that such party
has not had any dealings with any realtor, broker or agent in connection with
this Lease or the negotiation hereof, other than CB Commercial Real Estate
Group, Inc. and ▇▇▇▇▇ Real Estate ("BROKERS"), and each party agrees to defend,
indemnify and hold the other party harmless from any cost, expense or liability,
including reasonable attorney's fees, for any breach of this representation.
Landlord shall be responsible for all fees and commissions payable to Brokers
in connection with this Lease. Tenant represents to Landlord that it has not
agreed to pay any such fee or commission to the Brokers, or either of them.
35. LANDLORD'S SUBORDINATION
Within fifteen (15) days after request from Tenant, Landlord shall execute
a subordination agreement in favor of Tenant's lender with respect to any liens
arising in favor of Landlord against Tenant's fixtures and personal property.
Such subordination agreement shall be in a form reasonably acceptable to Land-
lord, Tenant and Tenant's lender. Any restriction on Landlord's right to remove
Tenant's fixtures and/or other personal property upon the termination or
expiration of this Lease in any such agreement shall expire no later than thirty
(30) days following such expiration or termination and notice by Landlord to
such lender mailed to the last address provided to Landlord for such purpose by
such lender. Said agreement shall obligate Tenant's lender, for Landlord's
benefit, to repair any damages to the Premises resulting from any removal of
Tenant's trade fixtures and personal property by or under such lender.
36. ESTOPPEL CERTIFICATES
Within fifteen (15) days after written request from a party hereto,
the other party shall execute, acknowledge and deliver to the requesting party
an estoppel certificate certifying: (i) that this Lease is unmodified and in
full force and effect (or, if there have been modifications, that this Lease is
in full force and effect, as modified, and stating the date and nature of each
modification); (ii) the date to which rental and other sums payable hereunder
have been paid; (iii) that no notice has been received by such other party of
any default which has not been cured, except as to defaults specified in the
estoppel certificate; and (iv) such other matters as may reasonably be
requested by the other party, its lender, assignee or purchaser (or proposed
lender, assignee or purchaser). Any such estoppel certificate may be relied
upon by any such purchaser, lender or assignee for estoppel purposes only, and
no party executing such estoppel certificate shall be liable for damages or
other losses as a result of inaccuracy in the information contained in such
estoppel certificate absent bad faith or gross negligence.
37. MISCELLANEOUS
37.1 The failure of Landlord or Tenant to insist upon prompt and strict
performance of any of the terms, conditions or undertakings of this Lease, or
to exercise any right herein conferred, in any one or more instances, shall not
be construed as a waiver of the same or any other term, condition, undertaking,
right or option.
37.2 The terms, covenants, agreements, conditions and undertakings
contained herein shall be binding upon and shall inure to the benefit of the
heirs, successors in interest and assigns of the parties hereto. Where
more than one party shall be the Landlord under this Lease, the word
"Landlord" whenever used in this Lease shall include all Landlords jointly
and severally.
-30-
37.3 This Lease contains the entire agreement between the parties hereto
and no representations, inducements, promises or agreements, oral or otherwise,
entered into prior to the execution of this Lease, will alter the covenants,
agreements and undertakings herein set forth. This Lease shall not be
modified in any manner, except by an instrument in writing executed by all
parties.
37.4 If any term or provision of this Lease or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law. The terms and provisions of this Lease shall not be construed against
or in favor of a party hereto merely because such party or its counsel is the
draftsman of this Lease.
37.5 All of the terms and words used in this Lease, regardless of the
number and gender in which they were used, shall be deemed and construed to
include any other number (singular and plural), and any other gender
(masculine, feminine or neuter), as the context or sense of this Lease or any
paragraph or clause hereof may require, the same as if the words had been fully
and properly written in the number and gender.
37.6 Any reference contained in this Lease to the "Effective Date" or
similar terms shall mean the last date on which any party required to execute
or initial this Lease does so, and such date shall be set forth in the first
paragraph of this Lease where indicated.
37.7 Tenant and Landlord each warrant and represent that the party signing
this Lease on behalf of each has authority to enter into this Lease and to bind
Tenant and Landlord, respectively, to the terms, covenants and conditions
contained herein. Each party shall deliver to the other, upon request, all
documents reasonably requested by the other evidencing such authority, including
a copy of all corporate resolutions, consents or minutes reflecting the
authority of persons or parties to enter into agreements on behalf of such
party.
37.8 Article or Paragraph headings or captions contained herein are
provided for convenience purposes only and shall not be considered in any way
in connection with the construction of the substantive terms and provisions of
this Lease.
37.9 This Lease shall be governed by and construed and enforced in
accordance with the laws of tne state in which the Premises is located.
37.10 In the event either party hereto initiates litigation or hires legal
counsel to enforce or protect its rights under this Lease, the prevailing party
shall be entitled to recover from the unsuccessful party, in addition to any
other damages or relief awarded or obtained, all court costs and reasonable
attorneys' fees incurred in connection with such litigation or action by legal
counsel.
37.11 Nothing contained in this Lease shall be construed to create a
partnership, joint venture or relationship of principal and agent between Land-
lord and Tenant. No provision of this Lease shall be construed to confer any
rights or remedies upon any party other than Landlord and Tenant.
37.12 When used herein, the terms "including" and "includes" and similar
words or phrases shall be deemed to be terms of illustration only and not
limitation.
37.13 Any dispute between Landlord and Tenant with respect to any issue
arising out of this Lease which is, pursuant to the specific provisions of this
Lease, either expressly made subject to resolution by arbitration or involves a
sum of money (other than a dispute regarding the payment and/or amount of Fixed
Rent) which is less than $100,000 (as the case may be, an "ARBITRABLE DISPUTE")
shall be determined by arbitration in Butte County, in accordance with the rules
of the American Arbitration Association ("AAA"). The arbitrator(s) shall act as
promptly as possible to determine and conclude the issue. Any arbitrator must
have at least ten (110) years experience in operating or managing commercial
-31-
real estate in the City of Chico and shall not be related to nor have worked
for either Landlord or Tenant. The determination of the arbitration shall be
conclusive upon the parties and judgment upon the same may be entered in any
court having jurisdiction over the parties and the subject matter of the
dispute. Landlord or Tenant shall have the right to submit an Arbitrable
Dispute (and only such dispute) to binding arbitration under the Expedited
Procedures provisions (Rules 53 through 57 in the January 1, 1990 edition)
("EXPEDITED ARBITRATION") of the Commercial Arbitration Rules of the AAA.
In cases where the parties utilize such Expedited Arbitration: (i) the parties
will have no right to object if the arbitrator so appointed was on the list
submitted by the AAA and was not objected to in accordance with Rule 54
(provided such arbitrator meets the criteria contained for appointment as an
arbitrator), (ii) the first hearing shall be held within seven (7) business days
after the appointment of the arbitrator, and (iii) the losing party in such
arbitration shall pay the arbitration costs charged by AAA and/or the
arbitrator.
37.14 This Lease and the obligations of Landlord and Tenant hereunder are
expressly made contingent upon the satisfaction of the following contingencies
and conditions (collectively, the "CONTINGENCIES"), which Contingencies
Landlord agrees to use its best efforts to satisfy:
(a) Landlord shall deliver to Tenant a termination agreement signed by
Payless Drugs (the "PAYLESS TERMINATION AGREEMENT") pursuant to which Payless
Drugs agrees to terminate its lease and vacate their premises in the
Shopping Center upon not more than thirty (30) days advance written notice from
Landlord;
(b) Landlord shall deliver to Tenant an agreement with Circuit City and
Office Depot permitting Tenant to operate its business in the Premises for those
purposes set forth in Paragraph 7.1 hereof without restriction or limitation in
conflict with Tenant's rights under this Lease;
(c) Landlord shall obtain from the current holder of any mortgage or
deed of trust encumbering all or any part of the Shopping Center, a Subordin-
ation, Non-Disturbance and Attornment Agreement in the form substantially as
set forth in EXHIBIT H, or, at Landlord's request, such other commercially
reasonable form mutually acceptable to such holder and Tenant;
(d) Landlord shall deliver to Tenant evidence reasonably satisfactory
to Tenant that the lease with Blockbuster Video has been fully executed and
delivered;
(e) Landlord has obtained approval from the Architectural Review Board
of the City of Chico of the Elevation Designs annexed hereto as EXHIBIT G.
If any of the Contingencies set forth in clauses (a), (b) and (c) are
not satisfied within thirty (30) days after the Effective Date or any of the
Contingencies set forth in clauses (d) and (e) are not satisfied within sixty
(60) days after the Effective Date, Tenant (if any of (a) through (e) are not
satisfied) or Landlord (if any of (a), (b), (d) or (e) are not satisfied) may
terminate this Lease upon written notice to the other (the "CONTINGENCY
TERMINATION NOTICE"), whereupon this Lease shall be null and void as if the
parties had not entered into same and neither party shall have any rights or
liabilities hereunder. Notwithstanding the foregoing, if Landlord seeks to
terminate this Lease because the condition specified in clause (d) is not
satisfied, Tenant may, within ten (10) days after receipt of Landlord's
Contingency Termination Notice, nullify Landlord's termination notice by sending
Landlord a notice whereby Tenant agrees to lease the Blockbuster premises upon
all of the same terms and conditions as this Lease and the parties shall
promptly proceed to enter into such a lease and this Lease shall remain in full
force and effect. Upon satisfaction by Landlord of the Contingencies, Landlord
shall deliver a notice thereof to Tenant certifying that the Contingencies have
been satisfied and Landlord's option to terminate this Lease as provided in this
Paragraph 37.14 shall thereafter be null and void (the "CONTINGENCY
SATISFACTION NOTICE"), which Contingency Satisfaction Notice shall be deemed
given if Landlord has not delivered the Contingency Termination Notice within
ninety (90) days after the Effective Date.
-32-
37.15 After the Commencement Date and upon obtaining all required permits
for the construction of Tenant's Work, Tenant shall promptly commence
construction of Tenant's Work and shall thereafter diligently prosecute such
construction to completion in accordance with the approved Tenant's Plans and
in a good and workmanlike manner and in compliance with all applicable laws,
rules and regulations. During construction, the Premises shall be enclosed by
a construction barricade approved by Landlord, separating the Premises from
the balance of the Shopping Center. The construction barricade shall be
painted and decorated in form reasonably satisfactory to Landlord. Tenant's
contractor shall be responsible for the repair, replacement or cleanup of any
damage done by Tenant or its general contractor to other contractors work
and/or the Premises or adjacent properties. Tenant's contractor shall
contain its storage of materials and his operations within the Premises and
that certain staging area for Tenant's nonexclusive use designated as the
"Staging Area" on the attached EXHIBIT B. All trash and surplus construction
materials shall be stored within the Premises and shall be promptly removed
from the Shopping Center. Tenant's contractor or subcontractors shall not
post signs on any part of the Shopping Center other than within the
construction barricade or on the fence or barricade. Tenant's Work shall be
coordinated under Landlord's direction so that Tenant's Work will not
unreasonably interfere with or delay the completion of any other construction
work in the Shopping Center or the quiet enjoyment of other occupants of the
Shopping Center (including keeping all access and drive aisles reasonably
free from debris and vehicles) and Tenant shall cause its contractors to
reasonably coordinate Tenant's Work with any such other work with Landlord
or, at Landlord's direction, with other contractors or Landlord's architect.
37.16 Notwithstanding anything contained in this Lease to the contrary,
Landlord shall not be responsible for the correction or repair of construction
defects in any of the Landlord's Work to be maintained and repaired by Tenant
except for patent defects in such work of which Landlord receives written notice
from Tenant within sixty (60) days of the Rent Commencement Date and except for
latent defects in such work of which Landlord receives written notice from
Tenant within twelve (12) months of the Rent Commencement Date.
-33-
38. EXHIBITS
All Exhibits referred to herein shall be considered a part hereof for all
purposes with the same force and effect as if copied at full length herein. The
Exhibits attached hereto are listed as follows:
EXHIBIT A - Legal Description
EXHIBIT B - Shopping Center Site Plan
EXHIBIT C - Notice of Lease
EXHIBIT D - Landlord's Work
EXHIBIT E - Intentionally Deleted
EXHIBIT F - Use Provisions
EXHIBIT G - Tenant's Prototype Signage and Proposed
Elevation Designs
EXHIBIT H - Subordination, Non-Disturbance and Attornment
Agreement
EXHIBIT I - Memorandum of Lease
EXECUTED by Landlord and Tenant on the respective dates set forth below,
but effective as of the Effective Date.
LANDLORD:
CHICO CROSSROADS CENTER, a California
Limited Partnership
By: JMLB, Inc. its general partner
Date executed by Landlord: By: /s/ Illegible
--------------------------------
Name:
January 16, 1996 Title: President
-----------------------------
TENANT:
▇▇▇▇▇▇ & ▇▇▇▇▇ SUPERSTORES, INC.
Date executed by Tenant: By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
January 5, 1996 Title: Executive Vice President
-34-
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situate in the County of Butte, City of Chico,
State of California, described as follows:
Lots 1 through 9, as shown on that certain Parcel Map entitled, "Vesting Parcel
Map No. 95", which map was filed in the office of the Recorder of the County of
Butte, State of California, September 22, 1994, in Book 134 of Maps, at Pages 84
and 85.
A-1
EXHIBIT B
SHOPPING CENTER SITE PLAN
B-1
EXHIBIT C
NOTICE OF LEASE
As required under the Lease Agreement (the "Lease') dated _________. 19__,
between the undersigned parties and covering approximately _______ square
feet of space located in the Chico Crossroads Shopping Center, Chico,
California, the undersigned hereby establish and agree that: (i) the term of
the Lease commenced on _________________, 19__, and shall expire on
____________, 20__, subject to Tenant's extension options under the Lease; (ii)
the Fixed Rent for the first full calendar month of the Lease term is $_________
and (iii) the Rent Commencement Date is ______________________, 19__.
LANDLORD:
CHICO CROSSROADS CENTER
By: _____________________________
Name:
Title:
TENANT:
▇▇▇▇▇▇ & NOBLE SUPERSTORES, INC.
By: ___________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
C-1
EXHIBIT "D"
LANDLORD'S WORK
Landlord agrees to demise a portion of the existing building ("Building")
for Tenant as outlined on Exhibit "B" and specifically in the area
crosshatched and designated as the Premises on Exhibit "G". Landlord shall
prepare at its sole cost and expense plans and specifications (the "Plans")
for Landlord's Work (as hereinafter defined). Landlord's Work shall be
completed substantially in accordance with the Plans and applicable governing
codes, in a good and workmanlike manner, utilizing both new materials and
existing components.
To the extent that certain portions of Landlord's Work are existing or have
already been completed, Landlord's obligations shall be deemed satisfied,
provided:
1. All improvements are in good working condition and in compliance with all
applicable building code requirements.
2. All existing electrical and mechanical systems shall be in good working
order at the time of "Delivery" and Landlord warrants same for a period of
one (1) year from the Delivery Date (and a five (5) year warranty on
major components of the HVAC System (i.e. pumps, motors, condensers)).
LANDLORD'S WORK: Landlord's Work is defined for purposes of this Exhibit "D"
as items A through I.
All of the following work shall be set forth in the Plans and shall be
provided to meet all applicable governing codes and regulations. The term
"provide" as used herein means to furnish and install.
A. BUILDING SHELL:
The Building and Demised Premises shall include:
1. Complete roofing system, including roofing membrane, roof deck,
and structure. Provided Tenant's store front (to be provided as
part of Tenant's Work) is glass store front system with shading
coefficient of 5.7 or less, Landlord's work shall include
insuring that the building "shell" complies with the current
Title 24 energy requirements. To the extent Tenant's Work (as
hereinafter defined) including store fronts and ceiling system,
are required to meet energy code requirements, Landlord shall not
be required to make said improvements.
2. Complete structural system; columns, beams, and/or rafters
(exposed construction).
3. Building and site shall be free of all hazardous materials
(including but not limited to asbestos, underground storage tanks,
etc.) to the extent required by the applicable governmental
authorities. Hazardous materials shall be properly handled
(i.e., encapsulated) as required by governing codes and
regulations.
4. Exterior wall surfaces of the structure shall be painted
masonry block. No additional insulation shall be provided.
5. Secondary access/exit door(s) with frame and all required
hardware. Landlord and Tenant shall coordinate door locations,
sizes and hardware.
6. The Building "shell" shall be designed and constructed to
conform with all
Exhibit "D", Page 1
applicable governing codes and regulations including ADA
criteria.
7. All existing interior improvements, including floor covering,
demising walls (except electrical room), restrooms, dropped
ceiling, lighting and fixtures shall be demolished and removed.
The premises will be delivered in broom clean condition.
8. New demising wall shall include 1/2" CDX plywood on the ▇▇▇▇▇▇
& Noble side under the dry wall, fastened with dry wall screws
pursuant to local code. New demising dry wall shall be taped,
sanded and paint ready.
B. UTILITIES:
Shall be provided to the Building Shell and located as shown on the
Plans.
1. Domestic water service: Per local code requirements, 1 1/2"
minimum. Landlord may supply the entire building with an
internal metering system for billing.
2. Sewer service: Existing 4" minimum sewer line.
3. Natural gas service: 1 1/2" natural gas line suitable to supply
the required BTU/hr for the HVAC system. A 1 1/2" stubbed gas
service, capped in place, will be provided in the attic space
for future service.
4. Telephone service: Existing telephone service located in the
electrical room shall be left in place.
C. FLOOR SLAB:
A smooth concrete floor slab ready for Tenant floor coverings.
Floor slab shall support not less than 125 p.s.f and all blemishes,
spalls and cracks shall be repaired as required to accept new floor
covering.
D. ELECTRICAL:
1. Provide separate electrical service and meter for the Demised
Premises.
2. Provide one (1) 277/480 volt-3 phase, 4 wire 800 AMP main painel
with remote meter, Panel shall be placed on finish grade, 3/4"
plywood backing boards at the location shown on the Plans. All
existing electrical runs for lighting and other services will be
disconnected and removed. In slab electrical conduit will be
disconnected and left in place. Any existing recessed
electrical receptacles will be left in place with service
disconnected. Abandoned electrical circuit boxes shall be
removed and patched.
E. AIR CONDITIONING & HEATING:
1. Landlord shall utilize existing heating and cooling units
wherever possible.
2. Total system shall supply a minimum of 1.0 ton per 350 square
feet contained in the Demised Premises, fully functional and
capable of maintaining 78 degrees Fahrenheit in cooling mode
(summer) and 72 degrees Fahrenheit in heating mode (winter).
3. Units will be set and curb mounted with the return and supply
stubbed to bottom of truss joist.
Exhibit "D", Page 2
4. HVAC system to include disconnect, weather disconnect to HVAC
units, conduit, power wiring, thermostat and gas piping (where
required).
5. AU HVAC equipment to comply with Clean Air Act requirements.
F. STORE FRONT:
Landlord shall demolish all exterior facade and other architectural
features on the store front; including removal of all existing
store fronts, glass and doors, leaving any bulkheads in place.
G. FIRE SPRINKLER SYSTEMS & CENTRAL STATION REPORTING SYSTEMS:
Provide monitoring for the existing fire sprinkler system per the
Plans and according to applicable code. Any system monitoring,
alarms, specialty items or alarm fees for a "shell" condition as
required by applicable code shall be included within Landlord's
scope of work. Existing system shall be modified for the proposed
demising; existing drops will be left in place. All other work to
modify the system to conform to Tenant's Work shall be completed by
Tenant.
H. SITE DEVELOPMENT:
1. Parking areas shall be hard-surfaced with concrete, asphalt or
other material and properly striped.
2. All ADA requirements and all other governing codes must be
adhered to in total site and building development.
3. Walks shall be surfaced with concrete, stone, brick paver or
other hard surfaced materials as specified by Landlord.
I. OTHER:
1. Any permits, fees, licenses, Architectural drawings,
Engineering consulting services or anything of the sort
necessary for the Landlord's Work shall be provided by
Landlord at sole cost and expense.
2. Landlord shall, at its sole cost and expense, secure from City
or local governing body a Temporary Certificate of Occupancy
or other suitable permit granted to the Tenant and providing
for Tenant's right to complete its improvements (subject to
Tenant obtaining its building permit), or if not available, a
letter from Landlord's architect certifying that Landlord's
Work has been substantially completed.
3. To the extent any portion of the above described Landlord's
work is not sufficient to meet applicable governing standards,
the foregoing shall be modified with Tenant's consent to meet
such applicable governmental standards at Landlord's sole cost
and expense. These changes shall not serve to extend the time
frames as provided in the Lease.
4. Any work not specifically set forth herein above, including
the completion of store fronts and architectural features
necessary to operate the Demised Premises as a typical ▇▇▇▇▇▇
& Noble store shall be completed by Tenant ("Tenant's Work").
Exhibit "D", Page 3
EXHIBIT E
INTENTIONALLY DELETED
▇- ▇
▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇ - ▇
PETCO
8. USE
(a) Tenant shall have the right to use and occupy the Premises for the
operation of a retail pet supply store, which may include the sale of pet
food and supplies, live fish, bird and small animal, daytime grooming,
incidental veterinary services, and related goods and services, and for no
other use or purpose, without Landlord's prior written approval. Such
approval by Landlord shall not unreasonable be withheld, provided that
Landlord may withhold such approval to any such use that would (i) violate
any covenant, condition or restriction then in effect regarding the Shopping
Center, or any portion thereof, of which Tenant receives written notice from
Landlord within ten (10) days of a request by Tenant for a list of such
covenants, conditions or restrictions, or (ii) any exclusive use or
prohibited use set forth in the attached EXHIBIT "D-1 ". Landlord may also
withhold its approval to the use of the Premises for any non-retail use or
for use as an auditorium, meeting hall, school or other place of public
assembly, gymnasium or dance hall; for bingo or similar games of chance, or
as a massage parlor, video gam arcade, bowling alley, skating rink, car wash,
car repair or car rental agency, nightclub or adult book or adult video store
or as a restaurant or for medical or other office uses (other than an office
incidental to the operation of a retail business otherwise approved by
Landlord).
(b) Tenant covenants that it will not use the Premises for or permit upon
the Premises anything unlawful or otherwise against public policy.
HOMETOWN BUFFET
14. PERMITTED USE. The Premises shall be used as a sit-down family
oriented buffet style restaurant which may, at the option of Tenant and
subject to applicable laws and governmental regulation, serve alcohol and for
no other use or purpose without Landlord's consent, which consent shall not
unreasonably be withheld. Landlord may refuse to grant such consent, in its
sole and absolute discretion, however, to a change in use if the proposed new
use would (i) duplicate the primary use of any other occupant of the Shopping
Center at the time Landlord is requested to approve of such new use, or (ii)
violate any exclusive use granted to any other tenant or occupant within the
Shopping Center, prior to tenant's requesting Landlord to approve the
proposed new use, or (iii) require a greater number of parking spaces under
applicable governmental codes and/or ordinances than the parking required for
the Premises when used as a sit-down family oriented buffet style restaurant;
provided that this provision shall not be construed so as to prohibit the
operation of the Premises as a sit-down family oriented buffet style
restaurant serving alcoholic beverages. Landlord may also refuse to grant
its consent to a proposed new use, in Landlord's sole and absolute
discretion, if the request for such consent is received by Landlord during
the Initial Term. So long as Tenant is not in default under this Lease, no
other portion of the Shopping Center will be leased, subleased, operated or
otherwise used for the operation of a sit-down family oriented buffet style
restaurant; provided that this restriction shall not apply to the building
areas designated
1
"B", "D" or "H" on the attached EXHIBIT "A-1", while any such building area
is leased by the existing lease for the building space on such area (I.E.,
the existing leases with Home Base Inc., Pay Less Drugs and Food-4-Less), as
said leases may from time to time be modified and/or amended, extended or
renewed. The permitted uses under all leases subsequently entered into by
Landlord covering any portion of the Shopping Center will require compliance
with applicable use restrictions resulting from "exclusive use" commitments
to tenants of the Shopping Center (including the restriction set forth
above). Tenant and Landlord will have the mutual non-exclusive right to
enforce the restriction supporting the exclusive use commitment to Tenant
under this Lease as set forth above. Said restriction shall terminate and be
of no further force and effect if (i) at any time following Tenant's opening
of the Premises for business with the public, the operations of such business
shall cease for a continuous period of twelve (12) months, or (ii) for a
twelve (12) month period following the substantial completion of the
Landlord's Work and the Tenant's Work, Tenant does not initially open and
operate from the Premises as a sit-down family oriented buffet style
restaurant, unless such failure to initially open or operate said business is
the result of strikes, lockouts, riots, insurrection, fire or other casualty,
Acts of God, or other causes beyond Tenant's reasonable control (other than
financial). Nothing contained in this paragraph shall be construed as
releasing Tenant from its obligation to initially open the Premises for
business and to thereafter continuously operate the Premises as required by
this Lease. If requested by Tenant, Landlord shall provide for the recording
of a memorandum of this Lease which will include the exclusive right to
operate a sit-down family oriented buffet style restaurant as granted by this
Section. Tenant shall not do or permit anything to be done on, in or about
the Premises or Shopping Center which in any way will obstruct or interfere
with the rights of any other tenant or subtenant of the Shopping Center;
provided, however, that Tenant shall not be in violation of the provision so
long as it is using the Premises consistently with the above-stated use
clause. Tenant shall not commit waste upon or make any use thereof which may
make void or voidable any insurance on the Premises or Shopping Center and in
the event any act upon the Premises or Shopping Center by Tenant or any use
thereof by Tenant, including any unauthorized vacancy thereof, results in an
increase or extra premium payable for insurance on the Premises or Shopping
Center, said increase or extra premium payable for insurance on the Premises
or Shopping Center, said increase or extra premium shall be paid by Tenant
upon, demand by Landlord. Tenant shall conduct its business from the
Premises under its trade name, "HomeTown Buffet," or any other name used by a
majority of Tenant's restaurants in the State of California, or under any
other trade name approved by Landlord, which approval shall not unreasonably
be withheld.
2
Notwithstanding the foregoing or any other provision in this Lease to the
contrary, in no event may Tenant use the demised premises:
(a) For entertainment purposes such as: cinema, theatre, skating rink,
bowling alley, bar, tavern, discotheque, dance hall, amusement gallery,
poolroom, pool hall, health club, gym, massage parlor or off-track betting
facility.
(b) For the renting, leasing or sale of any motor vehicle including but
not limited to: operation of a dealership relating to motorcycles,
automobiles, trucks and/or recreational vehicles, including trailers.
(c) For any nonretail purpose, provided that this shall not be construed
to prohibit office, storage, repair and/or alteration facilities incidental
to retailing.
(d) For the operation of a hardware store or home improvement center or
for the purpose of selling home improvement items, including but not limited
to, lumber, building materials and/or garden supplies.
(e) For any business, trade or profession which requires or has a license
or permit to conduct a pharmacy, or which employs or is required to employ a
registered or licensed pharmacist, or for the conduct of any store,
business, trade or profession which is called, labelled, named or is
commonly known or is referred to as a "drug store," "pharmacy" or
"apothecary."
(f) As a retail grocery, meat or produce store of any nature; PROVIDED,
that this provision shall not prohibit the use of the demised Premises, with
Landlord's approval as required above, as a specialty bake shop or as a
delicatessen so long as the Gross Sales from such specialty bake stop or
delicatessen operation does not exceed one percent (1%) of the overall Gross
Sale from the Premises in any Lease Year.
(g) As a mortuary; church; bookstore or other establishment which
prohibits the admission of minors or those below a specified age such as
eighteen (18) years, because of merchandise and/or activities explicitly
dealing with or depicting human sexuality; so called head shops; video
stores; off-track betting parlors; pawn shops; junk yards; flea markets;
recycling facilities; massage parlors; car wash facilities; nightclubs;
dance halls; secondhand stores (other than "antique" stores); dry cleaning
or laundry plants.
3
(h) For any use or purpose not customarily found in first-class retail
shopping centers, similar to the Shopping Center, in the Northern California
area.
(i) As a fast-food restaurant specializing in the sale of hamburgers or
specialty sandwiches.
(j) A store primarily used for the sale and/or display of consumer
electronics, recorded music (records, compact discs, cassette tapes or
otherwise) and/or office supplies.
Tenant agrees that all of Tenant's operations and activities on or from
the Premises and the Shopping Center shall be conducted in compliance with
all applicable statutes, ordinances, orders, laws, governmental rules and
regulations, and the requirements of all federal, state and municipal
governments and appropriate departments, commissions, boards and offices
thereof, which may be applicable to the Premises and/or the Shopping Center.
Landlord will promptly notify Tenant if Landlord's insurance carrier or
underwriter claims an increase in premiums attributable to Tenant's use or
that Tenant's activities may invalidate Landlord's coverage(s), and will
cooperate with Tenant, at Tenant's sole cost and expense, in efforts to
resolve any dispute over any change in premium or effect on Landlord's
coverages.
The use restrictions in this Section 14 will not restrict Tenant's right
to maintain up to four coin-operated amusement devices on the Premises
(without the need for further consent from Landlord).
Landlord warrants that Tenant's intended use does not conflict with any
existing lease or any existing use restriction affecting the Shopping Center
or any other recorded document binding upon the parties or the Premises,
EXCEPT as otherwise described herein.
4
CIRCUIT CITY
18. USE.
(a) Tenant shall initially maintain, use and operate the Premises as a
retail store for (i) the sale of consumer, office and automotive electronics
products (which include, but shall not be limited to, televisions, stereos,
speakers and video recorders and players), computer hardware and software,
entertainment software and entertainment media (which include, but shall not
be limited to, records, game cartridges, video tapes, cassettes and compact
discs), cellular telephones, household appliances (which include, but shall
not be limited to, refrigerators, freezers, stoves, microwave ovens, vacuum
cleaners and dishwashers) and related goods and the sale and installation of
motor vehicle audio, stereo and telephone systems (all of such items being
herein collectively referred to as the "Products"), and (ii) renting,
servicing, repairing and warehousing of the Products (collectively herein,
the "Initial Use").
(b) Thereafter, Tenant shall have the right to use the Premises for any
lawful retail use; provided, however, that the Premises shall not be used
(i) for any illegal purpose, (ii) for any use prohibited under paragraph
19(a)(viii) below, (iii) in violation of any exclusive use restriction
granted a tenant or other occupant of the Shopping Center pursuant to a Prior
Lease or any restrictive covenant in a Prior Lease shown on EXHIBIT "F", or
(iv) in violation of any other applicable provision of the "Permitted Title
Encumbrances" contained in EXHIBIT 7-1.
(c) Nothing contained in this Lease shall be construed to require Tenant
to operate the Premises continuously for the use first stated or for
any other use. However, should Tenant fail to open and engage in the Initial
Use for at least one (1) business day within one (1) full year following the
Commencement Date, subject to force majeure (financial inability excepted),
Landlord shall have the right upon thirty (30) days' prior written notice to
Tenant to terminate the Lease and thereafter Tenant shall be relieved of all
obligations hereunder. If this Lease is so terminated pursuant to this
paragraph 18(c), the Improvements shall become the property of Landlord, and
Landlord shall not be required to deliver the Tenant Improvement Allowance as
required by Exhibit "C". Notwithstanding anything to the contrary, Tenant
may eliminate Landlord's termination right if within the thirty (30) day
period following Tenant's receipt of Landlord's termination notice, Tenant
opens for business in the Premises.
19.
(vi) TENANT'S EXCLUSIVE USE. So long as the Premises are used for the
initial uses set forth in paragraph 18, no other tenant or occupant of the
Shopping Center shall be entitled to sell or rent (or rent to own) any of the
Products, subject only to rights granted any such tenants under the Prior
Leases.
(viii) PROHIBITED ACTIVITIES. Subject to the rights of tenants under the
Prior Leases, Landlord shall not operate or lease (or permit to be operated
or leased) any building or tenant space in the Shopping Center for use as:
(A) a bar, pub, nightclub, music hall or disco in which less than fifty
percent (50%) of its space or revenue is devoted to and derived from food
service;
(B) a bowling alley;
(C) a billiard or bingo parlor;
(D) a flea market;
(E) a massage parlor;
(F) a funeral home;
(G) a facility for the sale of paraphernalia for use with illicit drugs;
(H) a facility for the sale or display of pornographic material (as
determined by community standards for the area in which the Shopping Center is
located);
(I) an off-track betting parlor;
(J) a carnival, amusement park or circus;
(K) a gas station, car wash or auto repair or body shop, other than within
the building area designated as "Pad 1" on the Site Plan (the parties
specifically acknowledging that Tenant's car stereo installation facility is
not included in this prohibition (K));
(L) a facility for the sale of new or used motor vehicles, trailers or
mobile homes;
(M) a facility for any use which is illegal or dangerous, constitutes a
nuisance or is inconsistent with an integrated, community-oriented retail
and commercial shopping center;
(N) a skating rink;
(0) an arcade, pinball or computer gameroom (provided that retail
facilities in the Shopping Center, exclusive of the Premises, may operate
no more than four (4) such electronic games incidentally to their primary
operations);
(P) service-oriented offices (such as, by way of example, medical
or employment offices, travel agencies, real estate agencies or dry
cleaning establishments) or other nonretail uses within 250 feet of the
Premises, except for offices and storage facilities incidental to a primary
retail operation;
(Q) a banquet hall, auditorium or other place of public assembly;
(R) a training or educational facility (including, without limitation,
a beauty school, ▇▇▇▇▇▇ college, reading room, school or other facility
catering primarily to students or trainees rather than customers);
(S) a theater of any kind; or
(T) a gymnasium, sport or health club or spa.
In addition to the foregoing, Landlord shall not operate, lease or
permit to be operated or leased any restaurant within any building on
Landlord's Premises, which is located within three hundred (300) feet of the
front entrance to the Building, subject, however, to the rights of tenants
under the Prior Leases. In addition, no auction, fire or
going-out-of-business sale shall be conducted in the Shopping Center,
subject, however, to the rights of tenants under the Prior Leases.
EXHIBIT "F"
PERMITTED ENCUMBRANCES
A. Other Shopping Center occupants' exclusive uses and restrictive covenants
in Prior Leases prohibit the following uses of the Premises:
1. Any non-retail purpose (the following shall not be deemed non-retail:
▇▇▇▇▇▇ shops, insurance agencies, travel agencies, medical, dental or
optometric facilities, beauty salons, banks, small loan offices, real estate
offices and gasoline service stations, and the following if incidental to
retailing: other offices, storage, repairs and alteration facilities).
2. A business selling home improvement items including, but not limited
to, lumber, building materials and/or garden supplies, except that other
stores may sell such items as an incidental part of their business. For the
purposes of this paragraph, such sales shall be "incidental" if they do not
exceed fifteen percent (15%) of the sales in such business.
3. A retail grocery, meat or produce store of any nature, provided that
this restriction shall not prohibit a specialty bake shop or a delicatessen.
4. Entertainment purposes, such as: cinema, theater, skating rink,
bowling alley, bar, tavern, discotheque, dance hall, amusement gallery, pool
hall, health club, gym, massage parlor or off-track betting facility.
5. For the renting, leasing, sale of any motor vehicle including, but
not limited to: operation of any dealership relating to motorcycles,
automobiles, trucks and recreational vehicles, including trailers.
6. A restaurant (fast-food or sit-down) within two hundred (200) feet
of any wall of the building designated "B" on the Site Plan, provided that
this provision shall not apply to an ice cream store, yogurt store or donut
shop. In addition, no restaurant shall be located within two hundred (200)
feet from the front entrance of the store on the building area designated "D"
on the Site Plan, nor shall any office, other than a travel agency or real
estate firm, neither being larger than two thousand (2,000) square feet, be
located within two hundred fifty (250) feet of said front entrance. In
addition, no training or educational facilities shall be located within two
hundred (200) feet of said front entrance.
7. A business, trade or profession which requires or has a license or
permit to conduct a pharmacy, or which employs or is required to employ a
registered or licensed pharmacist or the conduct of any store, business,
trade or profession which is called, labeled, named or is commonly known or
referred to as a "drug store," "pharmacy," or "apothecary."
8. A sit-down family-oriented buffet style restaurant.
9. A restaurant.
10. So long as an office supply store has not ceased to be operating on
the premises currently designated as Building F and G on the Site Plan for a
continuous period in excess of six (6) months (excepting any periods during
which remodeling or
1
restoration work is being conducted with due diligence) the Premises may not
be operated as a store having as its primary business the sale of office
supplies, office equipment, office furniture and/or other office products and
related goods. This restriction, however, shall not be deemed to prohibit
Tenant, its subtenants, transferees, successors or assigns from using the
Premises in whole or in part, for the operation of a standard Circuit City
store or other similar store for the sale of consumer electronics, automotive
electronic products, household appliances and related goods, the
warehousing and servicing of same and/or sale and installation of car stereo,
audio and telephone systems and similar electronics equipment.
11. A theater, auditorium, meeting hall or other place of assemble; any
sports or entertainment facility within four hundred (400) feet of the
building designated "F" and "G" on the Site Plan; automobile sales or
repairs; bowling alley, pool hall or skating rink, bar serving alcoholic
beverages (except as an incident to a full kitchen restaurant operation);
funeral parlor; massage parlor, any type of karate, gymnasium, health club
or physical fitness facility within four hundred (400) feet of the building
designated "F" and "G" on the Site Plan; car wash; off-track betting
establishment; amusement or game room within two hundred (200) feet of the
building designated "F" and "G" on the Site Plan (excluding electronic games
incidental to the operation of a restaurant); a so-called "flea market" or
other operation for the sale of used goods (excluding antique stores), night
club, discotheque or dance hall; hotel or other lodging facilities; offices
(except incidental to a retail operation); school (including, without
limitation, trade school or class sessions of any nature whatsoever) within
two hundred (200) feet of said building designated "F" and "G"; gun range;
any business or use which emits offensive odors, fumes, dust or vapor, or
constitutes a public or private nuisance, or emits loud noise or sounds which
are objectionable, or creates a fire, explosive or other hazard;
manufacturing facility; warehousing (except incidental to a retail operation)
adult book store or similar store selling or exhibiting pornographic
materials as a substantial part of its business and which prohibits the
admission of minors; or a restaurant within two hundred (200) feet of said
building designated "F" and "G".
12. Any use other than a retail use.
13. Office use except (i) offices incidental to retail uses and (ii)
offices providing services to the general public and customarily found in
similar shopping centers, e.g., banking, finance services, real estate or
securities brokerage services, financial or tax-planning services,
accounting, insurance or legal services, optical, medical or dental services
or travel agencies.
B. The following uses of the Premises shall be prohibited throughout the
Lease Term:
1. The uses prohibited under the Prior Leases and set forth in Paragraphs
1-13 of Section A above, notwithstanding the expiration or termination or
amendment of any Prior Lease.
2. The sale of pet food, supplies, fish, birds and small animals and
grooming and veterinary services and related goods and services.
3. As an auditorium, meeting hall, school or other place of public
assembly, gymnasium or dance hall; for bingo or similar games of chance, or
as a massage parlor, video game arcade, bowling alley, skating rink, car
wash or car repair or car rental
2
agency, night club or adult book or adult video store which prohibits the
admission of minors to the store.
C. Permitted Title Exceptions.
1. The exceptions set forth in the Preliminary Title Report for the
Shopping Center attached hereto as EXHIBIT "F-1".
NOTWITHSTANDING ANYTHING CONTAINED IN THIS EXHIBIT "F" TO THE CONTRARY,
NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO PROHIBIT THE EXERCISE OF THE
RIGHTS AND PRIVILEGES GRANTED TO THE TENANT UNDER THE LEASE, INCLUDING BUT
NOT LIMITED TO THE TENANT'S EXCLUSIVE USE RIGHTS SET FORTH IN PARAGRAPH
19(A)(VI) OF THE LEASE.
3
FOOD 4 LESS
28. EXCLUSIVE. LESSOR covenants that it will not permit any
person other than the LESSEE to operate a retail grocery, meat,
or produce store of any nature in the Shopping Center of which
the premises are a part without first obtaining the LESSEE'S
prior written consent, so long as there shall be the operation of
a food supermarket containing not less than 40,000 square feet
within the premises, provided, however, nothing herein shall
result in the termination of such exclusive due to a temporary
closing for a reasonable period of time, including such a closing
as may occur for refurbishing, alterations, repairs in the event
of casualty, or transfer of ownership of the supermarket. Not-
withstanding the foregoing, LESSEE consents, in advance, to the
following uses:
A. a specialty bake shop;
B. a delicatessen.
32. RESTRICTION ON USE. LESSOR and LESSEE each agree that
the following uses shall not be permitted within the Shopping
Center; including the demised premises:
A) For entertainment purposes, such as: cinema, theater,
skating rink, bowling alley, bar, tavern, discotheque,
dance hall, amusement gallery, pool hall, health club,
gym, massage parlor, or off-track betting facility;
B) For the renting, leasing, sale of any motor vehicle
including but not limited to: operation of any dealer-
ship relating to motorcycles, automobiles, trucks, and
recreational vehicles, including trailers;
C) For any non-retail purpose (the following are specifi-
cally recognized as not being non-retail: ▇▇▇▇▇▇ shops,
insurance agencies, travel agencies, medical, ▇▇▇▇▇▇-
▇▇▇▇, dental or optometric facilities, beauty salons,
banks, small loan offices, real estate offices and gaso-
line service stations, and the following, if incidental
to retailing: other offices, storage, repairs and
alteration facilities).
LESSOR agrees that, with respect to the real property which
comprises the Shopping Center as depicted in Exhibit "A", the
following additional restrictions will further apply:
A) No restaurant shall be located within 200 feet from the
front entrance of the premises;
B) No office other than a travel agency or real estate
firm, neither being larger than 2,000 square feet, shall
be located within 250 feet of the front entrance;
C) No training or educational facility shall be located
within 200 feet of the front entrance to the premises.
LESSEE agrees that, with respect to the demised premises, in addition to
the uses restricted throughout the Shopper Center as before set forth, LESSEE
will not utilize the premises for a restaurant, bar-restaurant, training, or
educational facility, offices, sporting goods store, for a business whose
primary use is a yogurt shop, indoor ice cream shop, or for a pharmacy
(apothecary or drug store or super drug store) or for the purpose or
operating a home improvement center or for engaging in the sale of home
improvement items including, but not limited to, lumber, building materials,
indoor garden supplies, except that this restriction against the sale of home
improvement items shall not apply to the premises to the extent that sales of
such items are an incidental part of the business conducted within the
premises. For the purposes of this paragraph such sales shall be deemed
"incidental" if they do not exceed fifteen percent (15%) of the sales made
from the store located within the premises.
33. INITIAL USE AND RIGHT TO CLOSE STORE. LESSEE agrees that the
initial use of the premises shall be for the operation of a supermarket.
LESSOR agrees that nothing in this Lease shall be construed on compelling
LESSEE to operate any particular type of business or to keep the store in or
upon the premises open for business, and LESSEE shall have the privilege of
closing said store at any time, provided LESSEE shall continue to pay the
minimum monthly rental, additional rent, and other monetary obligations as set
forth in this Lease.
OFFICE DEPOT
1.1.19 PERMITTED USES; NATURE OF TENANT'S BUSINESS: Tenant's
initial use of the Premises (the "Initial Use") shall be the operation of an
office supply and products store for any of the following sales and services:
office supplies, furniture, machines, and other office related equipment;
computer hardware, software and related equipment; art, architectural and
engineering supplies; photocopy, facsimile, printing and related services.
The Initial Use, together with any other lawful retail purposes (subject to
the Restricted Uses set forth on EXHIBIT E), shall hereinafter be referred to
as the "Permitted Uses". Once Tenant has opened for business in the Premises
for the Initial Use, it may thereafter use the Premises for any of the
Permitted Uses.
EXHIBIT E
RESTRICTED USES AND PROHIBITED USES
A. RESTRICTED USES (restrictions upon the use of the Premises):
(1) OTHER TENANT EXCLUSIVES (restrictions for so long as the
corresponding exclusive (as set forth herein) contained in the respective
existing lease remains in effect):
(a) SEE THE ATTACHED EXHIBIT E-1
(b) CIRCUIT CITY EXCLUSIVE. So long as a consumer electronics
and/or household appliance store, once it has opened for
business, has not ceased to be operating on the premises
currently designated as Building "C" on the Site Plan for the
Shopping Center for a continuous period in excess of six (6)
months (excepting any periods during which remodeling or
restoration work is being conducted with due diligence), no
portion of the Premises may be used for a store having as
its primary business the sale of consumer electronics and
automotive electronics products, household appliances and
related goods, the warehousing and servicing of same,
and/or for the installation into motor vehicles of car
stereo, audio and telephone systems, and similar electronics,
equipment. The foregoing shall not be deemed to prohibit
Tenant, its subtenants, transferees, successors or assigns
from using the Premises, in whole or in part, for the
operation of a standard Office Depot retail facility or
other, similar store for the sale of office products
(inclusive of office electronics).
(2) RESTRICTIONS THROUGHOUT THE LEASE TERM: (a) all those prohibited
uses set forth in paragraphs B.2 and B.3 hereinbelow and in the attached Exhibit
E-2.
B. PROHIBITED USES (restrictions upon the use of the rest of the
Shopping Center):
1. So long as an office supply store has not ceased to be operating
in the Premises for a continuous period in excess of six (6) months
(excepting any periods during which remodeling or restoration work is being
conducted with due diligence), Landlord shall not permit any Occupants of the
Shopping Center, other than Tenant, to: (i) use more than one thousand
(1,000) square feet of floor area (in the aggregate) for the sale, leasing,
distribution or display of office supplies, including office furniture,
office fixtures, office machines and equipment, computers, computer hardware,
software and accessories, art supplies, architectural supplies, engineering
supplies, or (ii) be primarily engaged in the sale, leasing, distribution or
display or any of the items set forth in (i) above and/or photocopying
services, facsimile services or instant print shop services; provided that
nothing contained in this Paragraph B.1 shall be construed as prohibiting any
grocery supermarket occupying thirty-five thousand (35,000) square feet of
Leasable Area, or more; or any drug store occupying twenty-five thousand
(25,000) square feet of Leasable Area, or more; or any home improvement
center occupying ninety
E-1
thousand (90,000) square feet of Leasable Area, or more, from selling,
leasing and/or displaying any of such types of goods and/or services from its
premises within the Shopping Center if the same are sold, leased and/or
displayed by such Occupant in a majority of its other similar stores in the
Northern California area. The foregoing restrictions in this Paragraph B.1
also shall not be applicable to (i) the sale, leasing and/or display of
computers, computer hardware, software and accessories for as long as
Computer Warehouse is operating in the Shopping Center a store containing
three thousand nine hundred (3,900) square feet of Leasable Areas or less,
together with up to fifteen hundred (1500) square feet of area used
exclusively for classroom purposes; (ii) a Postal Annex store with
photocopying services and facsimile services operating in the Shopping
Center; or (iii) the sale, leasing or display of art supplies and/or a store
primarily engaged in the sale of art/craft items, occupying one thousand five
hundred (1,500) square feet of Leasable Area, or less. In addition, the
foregoing shall not apply to Circuit City Stores, Inc., its subtenants,
transferees, successors and assigns ("Circuit City"), as to which the
provisions of Paragraph B.1.(a) shall apply.
(a) So long as an office supply store, once it has opened for
business, has not ceased to be operating on the Premises
for a continuous period in excess of six (6) months
(excepting any periods during which remodeling or restoration
work is being conducted with due diligence), no portion of the
parcel occupied by Circuit City, i.e., the parcel currently
designated as Building C on the Site Plan, may be used for a
store having as its primary business the sale of office
supplies, office equipment, office furniture and/or other
office products and related goods. The foregoing shall not be
deemed to prohibit Circuit City, its subtenants, transferees,
successors or assigns from using its premises in whole or in
part, for the operation of a standard Circuit City store or
other similar store for the sale of consumer electronics,
household appliances and/or car stereo systems, as described
in Subparagraph A.(1)(b) above.
2. Landlord shall not sell, lease or otherwise permit any portion of
the Shopping Center to be used or occupied for any of the following purposes:
a theater; auditorium, meeting hall or other place of assembly; any sports or
entertainment facility within four hundred feet (400') of the Premises;
automobile sales or repairs; bowling alley, pool hall or skating rink; bar
serving alcoholic beverages (except as an incident to a full kitchen
restaurant operation); funeral parlor; massage parlor; any type of karate,
gymnasium, health club or physical fitness facility within four hundred feet
(400') of the Premises; car wash; off track betting establishment; amusement
or game room with two hundred feet (200') of the Premises (excluding
electronic games incidental to the operation of a restaurant); a so called
"flea market" or other operation for the sale of used goods (excluding
antique stores); night club, discotheque or dance hall; hotel or other
lodging facilities; offices (except incidental to a retail operation); school
(including without limitation trade school or class sessions of any nature
whatsoever) within two hundred feet (200') of the Premises; gun range; any
business or use which omits offensive odors, fumes, dust or vapor, or
constitutes a public or private nuisance, or emits loud noice or sounds which
are objectionable, or creates a fire, explosive or other hazard; manufacturing
facility; warehousing (except incidental to a retail operation); adult book
store or similar store selling or exhibiting pornographic materials as a
substantial part of its business and which prohibits the admission of minors.
E-2
3. Landlord shall not sell, lease, rent or permit any other premises
in the Shopping Center to be used or occupied for other than retail uses
customarily found in similar shopping centers in the state and county where
the Shopping Center is located.
4. Landlord covenants and agrees that there shall be no restaurants
within two hundred (200) feet of the Premises.
5. Landlord covenants and agrees that no portion of the Shopping
Center shall be used for offices excepting (i) offices incidental to retail
uses, and (ii) offices providing services to the general public and
customarily found in similar shopping centers (e.g. banking for finance
services, real estate or securities brokerage services, financial or tax
planning services, accounting, insurance or legal services, optical, medical
or dental services or travel agencies).
6. The Prohibited Uses set forth above shall be subject to the
existing leases of the present (as of the date of this Lease) Occupants of
the Shopping Center, as the same, from time to time, may be amended and/or
extended or renewed, but no such amendment shall change the definition of
"Prohibited Uses" as used in this Lease.
E-3
EXHIBIT E-1
(i) The following restrictions in Landlord's Lease with Netco Foods,
Inc., a California corporation, dated May 25, 1988, for the premises
designated "D" on the Site Plan:
1. No restaurant shall be located within two hundred feet form
the entrance of the Premises;
2. No office other than a travel agency or real estate firm,
neither being larger than two thousand (2,000) square feet, shall
be located within two hundred fifty (250) feet of the front entrance;
3. No training or educational facility shall be located within
two hundred (200) feet of the front entrance to the Premises.
(ii) The following restrictions in Landlord's Lease with Home Club,
Inc., a Delaware corporation, dated June 6, 1988, as amended, for the
premises designated "H" on the Site Plan:
The building envelopes designated "Shops F" and "Shops G" on the
Lease Plan (Rev. 1) may not exceed a total of twenty-two thousand
(22,000) square feet of floor area and may not be used, in whole or
in part, for restaurant and/or bar or office purposes, other than
office use incidental to the operation of a retail business other-
wise permitted by the Lease.
"Shops F" and "Shops G" are defined in the subject Home Club, Inc.,
Lease as the Premises leased to Tenant by this Lease.
(iii) The following restriction in Landlord's Lease with HomeTown Buffet,
Inc., a Delaware corporation, dated May 15, 1992, for the premises designated
"A" on the Site Plan:
A restriction against the operation of a sit-down family-oriented
buffet style restaurant.
References to the above respective existing leases shall include any such
lease as amended, extended and/or renewed.
E-1
EXHIBIT E-2
1. The following prohibited uses:
(a) For entertainment purposes such as: cinema, theater, skating
rink, bowling alley, bar, tavern, discotheque, dance hall, amusement
gallery, poolroom, pool hall, health club, gym, massage parlor or off-track
betting facility.
(b) For the repair, servicing, renting, leasing or sale of any motor
vehicle including, but not limited to: operation of a dealership relating
to motorcycles, automobiles, trucks and/or recreational vehicles, including
trailers.
(c) For any non-retail purpose, provided that this shall not be
construed to prohibit office, storage, repair and/or alteration facilities
incidental to retailing.
(d) For the operation of a hardware store or home improvement center
or for the purpose of selling home improvement items including, but not
limited to, lumber, building materials and/or garden supplies, unless such
sales are incidental to a permitted retail operation. For the purposes of
this paragraph (d), such sales shall be "incidental" if they do not exceed
fifteen percent (15%) of the sales in such store.
(e) For any business, trade or profession which requires or has a
license or permit to conduct a pharmacy, or which employs or is required to
employ a registered or licensed pharmacist, or for the conduct of any
store, business, trade or profession which is called, labelled, named or is
commonly known is referred to as a "drug store," "pharmacy" or "apothecary."
(f) As a retail grocery, meat or produce store of any nature or the
sale of fresh or frozen meat, produce, vegetables or dairy products.
(g) As a mortuary, church, book store or other establishment which
prohibits the admission of minors or those below a specified age such as
eighteen (18) years because of merchandise and/or activities explicitly
dealing with or depicting human sexuality, so-called head shops, video
stores, off-track betting parlors, pawn shops, junkyards, flea markets,
recycling facilities, massage parlors, car wash facilities, nightclubs,
dance halls, secondhand stores (other than "antique" stores), dry-cleaning
or laundry plants.
(h) For any use or purpose not customarily found in first-class
retail shopping centers, similar to the Shopping Center, in the Northern
California area.
(i) As a restaurant or food service use including, without
limitation, fast-food restaurants or for professional office or other
office uses, other than an office incidental to the operation of another
permitted use.
E-2-1
(j) As a pet store or any other store whose primary business consists
of (i) providing animal grooming services, veterinary or veterinary
wellness clinic, (ii) selling pets, pet supplies or pet-related accessories
and/or (iii) providing any other service or product customarily available
at a veterinary wellness clinic, pet or supply store. For the purposes of
this paragraph, "primary business" shall mean a business which utilizes
more than twenty percent (20%) of its floor area for such uses or which
comprises more than twenty percent (20%) of its sales.
(k) For so long as a consumer electronics and/or household appliances
store has not ceased to be operating in the Shopping Center for a
continuous period in excess of six (6) months (excepting any periods during
which remodeling or any restoration work is being conducted with due
diligence), for the operation of a store (i) having as its primary
business the sale of consumer electronics and automotive electronics
products, household appliances and related goods; the warehousing and
servicing of the same and/or the installation into motor vehicles of car
stereo, audio and telephone systems and similar electronic equipment or
(ii) offering installation into motor vehicles of car stereo systems.
E-2-2
HOME CLUB
4. (A) The Demised Premises may be used for any retail and/or
wholesale use and any other related uses permitted by any applicable laws,
provided that any use must be open for sales to the public.
(B) No premises in the Shopping Center, including the Demised
Premises, shall be used for any non-retail purposes (the following shall
not be deemed non-retail: ▇▇▇▇▇▇ shops, insurance agencies, travel
agencies, medical, dental or optometric facilities, beauty salons, banks,
small loan offices, real estate offices and gasoline service stations, and
the following, if incidental to retailing: other offices, storage, repairs
and alteration facilities).
(C) As long as any retail sales activity is conducted in the
Shopping Center no premises in the Shopping Center, including the Demised
Premises, shall be used for any entertainment purposes such as a cinema,
theater, skating rink, bowling alley, bar, discotheque, dance hall, amuse-
ment gallery, poolroom, health club, massage parlor, or off-track betting
facility, or for automobile, truck or recreational vehicle dealerships.
(D) Landlord agrees that so long as the Demised Premises are used
as a wholesale and/or retail home improvement store (or have ceased to be so
used within the past 12 months, or such longer period as may be reasonable
in the event of a casualty loss which requires additional time for
reconstruction), no other premises in the Shopping Center (except the Drug
Store, as defined and discussed below) shall be used for the purpose of
selling home improvement items, including, but not limited to, lumber,
building materials and/or garden supplies, except that other stores may
sell such items as an incidental part of their business. For the purposes
of this Paragraph 4(D), such sales shall be "incidental" if they do not
exceed 15% of the sales in such store. If a super drug store executes a
lease to operate in the Shopping Center ("Drug Store"), then such Drug
Store shall not use its premises for the purpose of operating a hardware or
home improvement store, so long as the Demised Premises are used as a
wholesale and/or retail home improvement store (or have ceased to be so
used within the past 12 months, or such longer period as may be reasonable
in the event of a casualty loss which requires additional time for
reconstruction). If Landlord shall grant any exclusive uses to other
tenants in the Shopping Center, then, except as provided in Paragraph 4(E)
below, such grants shall not be binding upon the Demised Premises and
Landlord shall expressly exempt the Demised Premises from such restrict-
ions.
(E) Notwithstanding the foregoing, the Demised Premises may not
be used for: (a) a food supermarket so long as a food supermarket containing
not less than 40,000 square feet is operating in the Shopping Center; or
(b) a drug store with a pharmacy which is required to employ a registered
or licensed pharmacist, so long as a drug store with a pharmacist contain-
ing not less than 20,000 square feet is operating in the Shopping Center
(or has ceased to operate within the past 12 months, or such longer
period as may be reasonable in the event of a casualty loss which
requires additional time for reconstruction).
EXHIBIT G
---------
TENANT'S PROTOTYPE SIGNAGE AND PROPOSED ELEVATION DESIGNS
G-1
[SOUTH EXTERIOR ELEVATION MAP]
[EAST/NORTH EXTERIOR ELEVATION MAP]
[FLOOR PLAN]
EXHIBIT H
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT is entered into as of the_______day of___________, 19__,
between ___________________, a ______________________, with a place of
business at _____________________, _______________________,
_____________________("Mortgagee"), and ▇▇▇▇▇▇ & ▇▇▇▇▇ Superstores, Inc., a
Delaware corporation, having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ("Tenant").
RECITALS
A. Mortgagee has made a loan to____________________________("Landlord")
in the original principal amount of $____________________ (the "Loan").
B. Mortgagee is the holder of a mortgage or deed of trust securing the
Loan (the "Mortgage") covering that certain parcel of land owned by Landlord
and described on Exhibit A attached hereto and made a part hereof, together
with the improvements erected thereon, commonly known as "___________________"
(the "Shopping Center").
C. By a certain Lease entered into between Landlord and Tenant, dated
as of___________________, 19__ (the "Lease"), Landlord leased to Tenant
certain premises within the Shopping Center, as outlined on Exhibit B
attached hereto and made a part hereof (the "Premises").
D. A copy of the Lease has been delivered to Mortgagee, the receipt of
which is hereby acknowledged.
E. The parties hereto desire to effect the subordination of the Lease to
the Mortgage and to provide for the non-disturbance of Tenant by the holder
of the Mortgage or any purchaser under a foreclosure or deed in lieu thereof.
AGREEMENT
In consideration of the premises and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Mortgagee hereby consents to and approves the Lease and all of the
terms and conditions thereof.
2. Tenant covenants and agrees with Mortgagee that the Lease is hereby
made and shall continue hereafter to be subject and subordinate to the lien
of the Mortgage, and to all modifications and extensions thereof, with the
same force and effect as if the Mortgage had been executed and delivered
prior to the execution and delivery of the Lease and without regard to the
order of priority of recording the Mortgage, subject, however, to the
provisions of this Agreement.
3. Tenant certifies that the Lease is presently in full force and
effect and unmodified and Tenant as of this date has no knowledge of any
default, charge, lien or claim of offset under the Lease.
4. Mortgagee agrees that, so long as Tenant is not in default under the
Lease beyond any applicable cure period provided for in the Lease:
(a) Tenant shall not be named or joined as a party or otherwise in
any suit, action or proceeding for foreclosure by the Mortgagee or to
enforce; any rights under the Mortgage or the Loan
H-1
(unless Tenant must be named or joined as a party in order for Mortgagee to
pursue such suit, action or proceeding, in which event Mortgagee and Tenant
shall enter into a new lease upon the same terms and conditions as were
contained in the Lease).
(b) The possession by Tenant of the Premises and Tenant's rights
under the Lease shall not be disturbed, affected or impaired by (i) any suit,
action or proceeding under the Mortgage or the Loan or for foreclosure under
the Mortgage, or any other enforcement of any rights under the Mortgage or
any other documents pertaining to the Loan, (ii) any judicial or non-judicial
foreclosure, sale or execution of the Premises or the Shopping Center, or any
deed given in lieu of foreclosure, or (iii) any default under the Mortgage or
the Loan.
(c) All condemnation awards and insurance proceeds paid or payable
with respect to the Premises or any other part of the Shopping Center and
received by Mortgagee shall be applied and paid in the manner set forth in
the Lease.
(d) Neither the Mortgage nor any other security instrument executed
in connection with the Loan shall cover or be construed as subjecting in any
manner to the lien thereof any trade fixtures, signs or other personal
property at any time furnished or installed by or for Tenant in or on the
Premises, except to the extent of any interest of Landlord in and to same.
5. If Mortgagee or any future holder of the Mortgage or any other
transferee under the Mortgage shall become the owner of the Shopping Center
or any part thereof by reason of foreclosure of the Mortgage, or if
the Shopping Center or any part thereof shall be sold as a result of any
action or proceeding to foreclose the Mortgage, or by transfer of ownership
by deed given in lieu of foreclosure, the Lease shall continue in full force
and effect, without necessity for executing any new lease, as a direct lease
between Tenant and the then owner of the Shopping Center as "Landlord" under
the Lease, upon all of the same terms, covenants and provisions contained in
the Lease, and in such event:
(a) Tenant shall be bound to such new owner under all of the terms,
covenants and provisions of the Lease for the remainder of the term thereof
(including also any extension periods, if Tenant elects or has elected to
exercise its option to extend the term) and Tenant hereby agrees to attorn to
such new owner and to recognize such new owner as "Landlord" under the Lease;
and
(b) Such new owner shall be bound to Tenant under and hereby
assumes all of the terms, covenants and provisions of the Lease for the
remainder of the term thereof (including also any extension periods,
if Tenant elects or has elected to exercise its option to extend the term),
and Tenant shall, from and after the date such new owner succeeds to the
interest of "Landlord" under the Lease, have the same remedies against such
new owner for the breach of any covenant contained in the Lease; provided,
however, that such new owner shall not (i) be bound by any rent or additional
rent which Tenant might have paid for more than one month in advance to any
prior landlord (including Landlord), or (ii) be personally liable for any
breach of the Lease by or other act or omission of any prior landlord
(including Landlord) or (iii) be bound by any amendment or modification of
the Lease made without Mortgagee's consent which would reduce fixed annual
rent or any other monetary obligation of Tenant under the Lease or (iv) be
subject to any offsets or defenses which Tenant might have against any prior
landlord (including Landlord), except for any offsets against rents or other
charges payable by Tenant under the Lease specifically permitted under the
Lease based upon a default by Landlord (provided that Tenant shall have
provided the notice and opportunity to cure to Mortgagee provided for in
Paragraph 26.4 of the Lease).
6. Tenant agrees to provide Mortgagee, and the successors and assigns
of Mortgagee of which Tenant has received written notice, with notice of any
breach or default by Landlord which would give rise to the right of Tenant to
terminate or offset any amounts due Landlord under the Lease (it being
understood that a right of offset expressly set forth in the Lease shall not
be affected by the aforesaid notice requirement except as provided in 5(b)(iv)
above), and, thereafter, the opportunity to cure such breach or default by
Landlord as provided in Paragraph 26.4 of the Lease. Mortgagee shall
H-2
have no obligation to cure (and shall have no liability or obligation for not
curing) any breach or default by Landlord, except (i) to the extent that
Mortgagee agrees or undertakes otherwise in writing or (ii) if such breach or
default continues into the period during which Mortgagee or such new owner
has possession or control of the Premises.
7. Any notices or communications given under this Agreement shall be in
writing and shall be deemed given on the earlier of actual receipt or three
(3) days after deposit in the U.S. Mail, by registered or certified mail,
return receipt requested, postage prepaid, at the respective addresses set
forth above, or at such other address as the party entitled to notice may
designate by written notice as provided herein.
8. This Agreement shall bind and inure to the benefit the parties
hereto and their respective successors and assigns.
9. This Agreement contains the entire agreement between the parties and
cannot be changed, modified, waived or cancelled except by an agreement in
writing executed by the parties against whom enforcement of such
modification, change, waiver or cancellation is sought.
10. This Agreement and the covenants contained herein shall run with and
shall bind the land on which the Shopping Center is located.
11. The term "Mortgagee," as used herein, shall include any person or
entity succeeding to Landlord's interests in and to the Premises by reason of
any power of sale or judicial foreclosure proceedings under the Mortgage or
by deed of lieu of foreclosure under the Mortgage. The term "Mortgage," as
used herein, shall mean the Mortgage, as the same may from time to time be
amended and/or modified.
12. To the extent that the Lease shall entitle Tenant to notice of the
existence of any mortgage or deed of trust, this Agreement shall constitute
such notice to Tenant with respect to the Mortgage.
13. Tenant shall not permit Tenant's leasehold estate under the Lease to
become subordinate to the lien of any deed of trust or other security
instrument made or created by Landlord, other than the Mortgage, unless the
holder of such deed of trust or other security instrument
H-3
delivers a non-disturbance agreement to Tenant in commercially reasonable
form (subject, with respect to Landlord, to the terms and conditions of the
Mortgage and/or any other loan document executed by Landlord in connection
with the loan secured by the Mortgage).
EXECUTED as of the date first written above.
MORTGAGEE:
___________________________________
By:________________________________
Name:______________________________
Title:_____________________________
TENANT:
▇▇▇▇▇▇ & ▇▇▇▇▇ SUPERSTORES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ OF ________________ Section
On_______________________________ before me,
Date Name and Title of Officer
personally appeared
Name of Signer(s)
[ ] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the
within instrument and acknowledged
to me that he/she/they executed
same in his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ OF ________________ Section
On_______________________________ before me,
Date Name and Title of Officer
personally appeared
Name of Signer(s)
[ ] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the
within instrument and acknowledged
to me that he/she/they executed
same in his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
H-6
EXHIBIT I
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is entered into as of the day of
, 1996, by and between Chico Crossroads Center, a
California limited partnership ("Landlord"), and ▇▇▇▇▇▇ & Noble Superstores,
Inc., a Delaware corporation ("Tenant").
1. Pursuant to a Lease Agreement (the "Lease") executed by Landlord and
Tenant, dated , 1996, Landlord has leased to Tenant certain Premises which
are part of a Shopping Center constructed or to be constructed on the property
described in Exhibit A attached hereto, together with all of Landlord's
appurtenant rights, privileges and easements.
2. The term of the Lease shall commence on the Commencement Date set
forth in the Lease and shall expire upon the expiration of the fifteenth
(15th) Lease Year as determined by the provisions of the Lease.
3. Tenant has an option to extend the term of the Lease for three (3)
periods of five (5) years each, on the same terms and conditions as stated in
the Lease.
4. This Memorandum of Lease is subject to all of the terms, conditions
and understandings set forth in the Lease, which are incorporated herein by
reference and made a part hereof, as though copied verbatim herein. In the
event of a conflict between the terms and conditions of this Memorandum of
Lease and the terms and conditions of the Lease, the terms and conditions of
the Lease shall prevail.
5. Landlord agrees that, during the term of the Lease, it will not
construct or permit to be constructed any building, sign, tower or other
structure or improvement, or, unless required by law, plant any tree or other
growing plant (except replacements of existing trees or plants, provided same
will not exceed nor is reasonably anticipated to exceed four feet in height),
or make any other change whatsoever in the area depicted as the No Build Area
on Exhibit B of the Lease except as expressly permitted under the Lease.
6. Except with respect to the premises under leases with Homebase, Food
4 Less, Circuit City Office Depot and Hometown Buffet to the extent permitted
thereby, Landlord shall not lease or permit the use of space in the Shopping
Center for the following: (i) any bowling alley; (ii) any arcade; (iii) any
tavern or bar within five hundred (500) feet of the Premises, except to the
extent incidental to a restaurant operated primarily for on-premises
consumption; (iv) any health club, spa or gymnasium; (v) any night club or
discotheque; (vi) any second hand or surplus store; (vii) any mobile home
park or trailer court; (viii) any dumping, disposing, incineration or
reduction of garbage (exclusive of appropriately screened dumpsters located
in the rear of any building); (ix) any fire sale, bankruptcy sale (unless
pursuant to a court order) or auction house operation, (x) any central
laundry or dry cleaning plant or laundromat within five hundred (500) feet of
the Premises (except that this prohibition shall not be applicable to on-site
service provided solely for pickup and delivery by the ultimate consumer,
including nominal supporting facilities); (xi) any automobile, truck, trailer
or R.V. sales, leasing, display or repair; (xii) any skating rink; (xiii) any
living quarters, sleeping apartments or lodging rooms; (xiv) any veterinary
hospital, animal raising facilities or pet shop (except that this prohibition
only prohibits a pet shop if it is adjacent to the Premises and excludes the
existing pet store at the Shopping Center and certain replacements thereof);
(xv) any mortuary; (xvi) any establishment selling or exhibiting pornographic
materials; (xvii) except for Building A indicated on the site plan annexed to
the Lease, any restaurant within three hundred feet (300') of the Premises;
(xviii) any movie theater within three hundred feet (300') of the Premises;
(xix) any separately demised newsstand; or (xx) any use which is a public or
private nuisance.
7. Except as may be permitted by certain existing leases set forth in
the Lease and except as may be permitted by certain future leases to Major
Replacement Tenants, to the extent such leases contain Permitted Future
Exclusives (as such terms are defined in the Lease), Landlord, and its
successors and
I-1
assigns, shall not operate or permit under any circumstances to be operated
within the Shopping Center any other store selling or displaying for sale
books, books on tape and books on other media, magazines, periodicals,
computer software or computer games, or any other coffee bar of coffee shop
in which coffee, similar beverages and products incidental thereto are the
primary items offered for sale. The incidental sale of such items in
connection with the overall business of another operator or tenant shall not
be deemed a violation of this Paragraph 7. As used herein, "incidental sale"
shall mean less than fifty (50) linear feet of shelf space of such operator's
or tenant's sales area is devoted, in the aggregate, to the sale and/or
display of the aforesaid items, except with respect to Major Replacement
Tenants for which incidental sale shall mean less than ten percent of floor
area, but in no event greater than one thousand (1,000) square feet (subject
to an exclusion on limitations on computer software and computer games for
Major Replacement Tenants for which the sale or rental of computer software
and computer games is not their primary use).
8. Landlord hereby gives and grants to Tenant during the term of the
Lease, for the benefit of Tenant and Tenant's subtenants, licensees and
concessionaires, and their respective employees, contractors, customers,
invitees and deliverymen, the right to use all of the Common Areas (as
defined in the Lease), in common with Landlord and all other tenants and
occupants of the Shopping Center and their respective employees, contractors,
assigns, customers, invitees and deliverymen. The rights hereby granted with
respect to the Common Areas shall run with and bind the Shopping Center and
the land on which it is located, shall be binding upon the Landlord and
Landlord's successors in title to all or any part of the Shopping Center, and
shall constitute an irrevocable, nonexclusive easement appurtenant to the
Premises for the benefit of, and shall be enforceable by, Tenant and its
successors and assigns throughout the term of the Lease.
EXECUTED as of the date first written above.
LANDLORD:
CHICO CROSSROADS CENTER
By:______________________________
Name:
Title:
TENANT:
▇▇▇▇▇▇ & ▇▇▇▇▇ SUPERSTORES, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ OF__________________Section
On_______________________________ before me,
Date Name and Title of Officer
personally appeared
Name of Signer(s)
[ ] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the
within instrument and acknowledged
to me that he/she/they executed
same in his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ OF__________________Section
On_______________________________ before me,
Date Name and Title of Officer
personally appeared
Name of Signer(s)
[ ] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose
name(s) is/are subscribed to the
within instrument and acknowledged
to me that he/she/they executed
same in his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary Public
I-4