STORE LEASE AGREEMENT
by and between
EL CORTE INGLES, S.A.,
as "Landlord"
and
GOTTSCHALKS INC.,
as "Tenant"
Dated as of August 20, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS. . 1
Section 1.1 Definitions. . . . . . . . 1
Section 1.2 Effect of Basic Terms. . . 5
ARTICLE II
GRANT AND TERM . . . . . . 6
Section 2.1 Grant and Term of Lease. . 6
Section 2.2 Acceptance of Premises; Quiet
Enjoyment. . . . . . . . 6
Section 2.3 Surrender of Premises. . . 6
Section 2.4 Holding Over.. . . . . . . 7
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT
AGREEMENT 7
Section 3.1 Lease Controls Over REA. . 7
Section 3.2 Covenants Regarding REA. . 7
ARTICLE IV
RENT AND OTHER CHARGES . . . . 8
Section 4.1 Minimum Annual Rent. . . . 8
Section 4.2 Percentage Rent. . . . . . 8
Section 4.3 Utilities Charge . . . . . 10
Section 4.4 Common Area Maintenance
Costs. . . . . . . . . . 10
Section 4.5 Taxes. . . . . . . . . . . 10
Section 4.6 Late Payment Charges . . . 11
Section 4.7 Rent Payments. . . . . . . 12
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS 12
Section 5.1 Permitted Use. . . . . . . 12
Section 5.2 Signs. . . . . . . . . . . 12
Section 5.3 Alterations of Premises. . 13
Section 5.4 Use of Common Areas. . . . 14
Section 5.5 Compliance with REA. . . . 15
Section 5.6 Compliance with Requirements15
Section 5.7 Liens. . . . . . . . . . . 16
ARTICLE VI
REPAIRS AND MAINTENANCE. . . . 17
Section 6.1 Tenant's Obligations . . . 17
Section 6.2 Landlord's Obligations . . 18
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION. 18
Section 7.1 Damage or Destruction. . . 18
Section 7.2 Condemnation . . . . . . . 20
ARTICLE VIII
INSURANCE . . . . . . . 21
Section 8.1 Tenant's Insurance . . . . 21
Section 8.2 Landlord's Insurance . . . 23
Section 8.3 Waiver of Subrogation. . . 23
Section 8.4 Governmental and Insurance
Requirements . . . . . . . . . . . . 23
Section 8.5 Indemnification. . . . . . 24
Section 8.6 Landlord Exculpation . . . 24
ARTICLE IX
ASSIGNMENT AND SUBLETTING . . . 25
Section 9.1 Notice to Landlord . . . . 25
Section 9.2 Landlord's Approval. . . . 25
Section 9.3 Permitted Transactions . . 26
Section 9.4 Compliance with REA. . . . 26
Section 9.5 Documentation and Expenses 26
ARTICLE X
DEFAULT. . . . . . . . 27
Section 10.1 Events of Default. . . . . 27
Section 10.2 Remedies . . . . . . . . . 28
Section 10.3 Attorneys' Fees. . . . . . 30
Section 10.4 Agreement to Arbitrate . . 31
Section 10.5 No Set-off/Counterclaims . 31
Section 10.6 Right of Redemption. . . . 31
Section 10.7 No Waiver. . . . . . . . . 31
Section 10.8 Unperformed Covenants of
Landlord May Be Performed By
Tenant . . . . . . . . . . 32
ARTICLE XI
[INTENTIONALLY OMITTED]. . . . 32
ARTICLE XII
OPTIONS. . . . . . . . 32
Section 12.1 Renewal Options. . . . . . 32
Section 12.2 Lease Terms Applicable . . 33
Section 12.3 Rent During Renewal Terms. 33
Section 12.4 Lease Amendment. . . . . . 34
ARTICLE XIII
MISCELLANEOUS PROVISIONS. . . . 34
Section 13.1 Notices. . . . . . . . . . 34
Section 13.2 Brokers. . . . . . . . . . 34
Section 13.3 Subordination of Lease . . 35
Section 13.4 Unavoidable Delays . . . . 35
Section 13.5 Estoppel Certificates. . . 35
Section 13.6 Relationship of Parties. . 36
Section 13.7 Governing Law; Jurisdiction 36
Section 13.8 Interpretation . . . . . . 36
Section 13.9 Captions . . . . . . . . . 37
Section 13.10 Partial Invalidity . . . . 37
Section 13.11 Waivers. . . . . . . . . . 37
Section 13.12 Accord and Satisfaction. . 37
Section 13.13 Counterparts . . . . . . . 37
Section 13.14 Entire Agreement . . . . . 37
Section 13.15 Successors and Assigns . . 38
Section 13.16 Survival of Obligations. . 38
Section 13.17 Submission of Lease. . . . 38
Section 13.18 Memorandum of Lease. . . . 38
Section 13.19 Attachments. . . . . . . . 38
EXHIBITS
EXHIBIT A LEGAL DESCRIPTION OF SHOPPING CENTER A-1
EXHIBIT B SITE PLAN OF SHOPPING CENTER. B-1
EXHIBIT C LEGAL DESCRIPTION OF PREMISES C-1
EXHIBIT D SCHEDULE OF REA AND RELATED AGREEMENTS D-1
EXHIBIT E DETERMINATION OF FAIR MARKET RENTAL VALUE E-1
EXHIBIT F FORM OF MEMORANDUM OF LEASE . G-1
EXHIBIT G SCHEDULE OF EXISTING MORTGAGES H-1
STORE LEASE AGREEMENT
Antelope Valley Mall
Palmdale, California
THIS STORE LEASE AGREEMENT (this "Lease"),
made as of this 20th day of August, 1998, by and
between EL CORTE INGLES, S.A., a Spanish corporation,
having an address at ▇▇▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇ ("Landlord"), and
GOTTSCHALKS INC., a Delaware corporation, having an
address at ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel ("Tenant").
R E C I T A L S
A. Landlord, Tenant and ▇▇▇▇▇▇ (defined
below) are parties to that certain Asset Purchase
Agreement (defined below). Prior to the date hereof,
▇▇▇▇▇▇ leased the Premises (defined below) from
Landlord. Pursuant to the Asset Purchase Agreement,
Tenant is to purchase certain assets of ▇▇▇▇▇▇. The
Asset Purchase Agreement requires Landlord to terminate
▇▇▇▇▇▇' lease and enter into this Lease with Tenant.
B. Concurrently with execution of this
Lease, Landlord has terminated ▇▇▇▇▇▇' lease. Landlord
now desires to lease to Tenant, and Tenant desires to
lease from Landlord, the Premises on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of the
foregoing Recitals, the receipt and sufficiency of
which is hereby acknowledged by each party as of the
time of execution and delivery hereof, and in further
consideration of the rents reserved and the covenants
and conditions set forth herein, Landlord and Tenant
agree as follows:
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS
Section 1.1 Definitions. As used in this
Lease, the following Terms shall have the meanings set
forth below:
"Alterations" shall have the
meaning ascribed thereto in Section 5.3.
"Annual Report" shall have the
meaning ascribed thereto in Section 4.2(b).
"Asset Purchase Agreement":
That certain Asset Purchase Agreement dated as of July
21, 1998, by and among Tenant, as Buyer, ▇▇▇▇▇▇, as
Seller, and Landlord, in its capacity as the sole
shareholder of ▇▇▇▇▇▇, together with all other
agreements and documents entered into by Landlord and
Tenant in connection therewith.
"Common Areas": The parking
areas, sidewalks, landscaped areas, courts, malls,
roofs, streets, roadways, loading platforms, service
area, curbs, corridors, stairways, elevators,
escalators, comfort stations, lounges and shelters and
all other facilities designated as "Common Area" under
the REA.
"Default" shall have the
meaning ascribed thereto in Section 10.1.
"Developer" shall mean the
Person responsible for managing and maintaining the
Common Areas under the REA.
"Fair Market Rental Value"
shall mean the fair market rental value of the
Premises, as of the date and for the time period of
determination, to be determined in accordance with the
terms of Article XII and, as necessary, Exhibit E
attached hereto and made a part hereof.
"Floor Area" shall have the
meaning given such term in the REA.
"Gross Sales" shall mean the
gross selling price of all merchandise or services sold
in or from the Premises by Tenant, its subtenants,
licensees or concessionaires, whether for cash or on
credit, adjusted by excluding the following:
(i) Any exchange of merchandise between
stores owned by or affiliated with
Tenant where such exchange is made
solely for the convenient operation
of Tenant's business and not for the
purpose of consummating a sale made
in, at or from the Premises, or for
the purpose of depriving Landlord of
the benefit of a sale which would
otherwise be made in or at the
Premises;
(ii) Returns to shippers or
manufacturers;
(iii) Cash or credit refunds to customers
on transactions (not to exceed the
actual selling price of the item
returned) otherwise included in
Monthly Gross Sales, including,
without limitation, (a) sums and
credits received in the settlement
of claims for loss of or damage to
merchandise, to the extent
previously reported as part of Gross
Sales and (b) the price allowed on
all merchandise traded in by
customers for credit or the amount
of credit for discounts and
allowances made in lieu of
acceptance thereof, but not
including any amount paid or payable
for what are commonly referred to as
trading stamps;
(iv) Sales of fixtures, machinery,
equipment or property which are not
stock in trade;
(v) Amounts collected and paid by Tenant
to any government for any sales,
excise, luxury, gross receipts taxes
or other similar taxes now or
hereafter imposed upon the sales of
merchandise or services;
(vi) The amount of any discount on sales
to employees;
(vii) Alteration workroom charges and
delivery charges;
(viii) Interest, service or sales
carrying charges or other
charges, however denominated,
paid by customers for extension
of credit on sales and where
not included in the merchandise
sales price;
(ix) Receipts from public telephones,
stamp machines, public toilet locks
or vending machines installed solely
for use by Tenant's employees; and
(x) Gift certificates, or like vouchers,
until such time as the same shall
have been converted into a sale by
redemption.
"▇▇▇▇▇▇" means The ▇▇▇▇▇▇
Company, a California corporation, a wholly-owned
subsidiary of Landlord.
"Imposition" shall have the
meaning ascribed thereto in Section 4.5.
"Initial Term": The initial
10-year Term of this Lease.
"Interest Rate": The rate of
interest per annum equal to the lesser of: (i) the
highest lawful rate of interest that Tenant may be
charged; or (ii) the "prime rate" announced from time
to time by Chase Manhattan Bank, N.A., New York, New
York, for short-term, unsecured loans to its most
credit-worthy customers. In the event Chase Manhattan
Bank, N.A. shall discontinue reporting its "prime rate"
or shall cease to exist, Landlord shall select a
substitute bank, and the "prime rate" reported by such
bank shall be used for computing interest payable
hereunder.
"Lease Year": A period of
twelve (12) consecutive full calendar months,
commencing as of the day after the Saturday which is
closest (by number of days) to January 31 and ending on
the Saturday which is closest (by number of days) to
January 31 of the following calendar year. The first
Lease Year shall be the period commencing on the Term
Commencement Date and ending on January 30, 1999. The
final Lease Year shall be the period commencing on the
day after the Saturday which is closest (by number of
days) to January 31st of the calendar year in which the
Lease Term (as it may be extended) expires and ending
on the expiration date of the Lease Term. It is
acknowledged that this definition of Lease Year is
intended to coincide with Tenant's fiscal year.
"Major" shall mean each of the
parties to the REA, as more particularly set forth in
Exhibit D attached hereto and made a part hereof.
"Minimum Annual Rent" shall
have the meaning ascribed thereto in Section 4.1.
"Mortgages" shall have the
meaning ascribed thereto in Section 13.3.
"Notice" shall have the meaning
ascribed thereto in Section 13.1(a).
"Option(s)" shall have the
meaning ascribed thereto in Article XII.
"Percentage Rent" shall have
the meaning ascribed thereto in Section 4.2(a).
"Permitted Use" shall mean any
lawful use which complies with the REA and is not
prohibited for the Premises by the REA.
"Person" means any individual,
partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint
venture, governmental authority or other entity of
whatever nature.
"Premises": That certain real
property and improvements thereon described in Exhibit
C attached hereto and made a part hereof.
"Prohibited Use" shall mean any
use which is prohibited for the Premises by the REA.
"REA" shall mean that certain
Amendment to and Restatement of Construction, Operation
and Reciprocal Easement Agreement and each of the other
documents related thereto, as more particularly
described in Exhibit D attached hereto and made a part
hereof, all as the same may be amended or modified from
time to time.
"Renewal Term(s)" shall have
the meaning ascribed thereto in Article XII.
"Rent": Minimum Annual Rent,
Percentage Rent, utilities charges, Impositions,
insurance costs and all other amounts and charges
payable by Tenant under any provision of this Lease.
"Requirements" shall mean all
federal, state and local statutes, laws, ordinances,
rules, regulations, authorizations and requirements
relating to the Premises or the use thereof, including,
without limitation, planning, zoning, subdivision,
environmental, toxic and hazardous waste, health, fire
safety and handicap access and all encumbrances,
covenants, conditions and restrictions, violation of
which encumbrances, covenants, conditions and
restrictions could either create a lien or result in a
termination of any agreement beneficial to the use or
manner of use of the Premises or any portion thereof.
"Shopping Center": The land
and improvements known as "Antelope Valley Mall", with
a street address of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ "P", in the City
of Palmdale, County of Los Angeles, and State of
California, more particularly described in Exhibit A
attached hereto and made a part hereof and depicted on
the site plan attached hereto as Exhibit B and made a
part hereof.
"Taking" shall have the meaning
ascribed thereto in Section 7.2(a).
"Tenant's Employees and
Invitees" shall have the meaning ascribed thereto in
Section 5.4.
"Term": The 10-year period
commencing on the Term Commencement Date and expiring
on August 20, 2008, as such term may be extended or
shortened pursuant to the terms hereof, including,
without limitation, as it may be extended for the
period of any Renewal Term(s).
"Term Commencement Date":
August 20, 1998.
"Unavoidable Delays" shall have
the meaning ascribed thereto in Section 13.4.
Section 1.2 Effect of Basic Terms. Each of
the foregoing definitions and basic provisions is set
forth in this Article I for convenient reference only
and shall be construed in conjunction with, and limited
by, references thereto in other provisions of this
Lease.
ARTICLE II
GRANT AND TERM
Section 2.1 Grant and Term of Lease.
(a) Landlord does hereby let and
lease to Tenant the Premises, together with all right
to use the Common Areas for the Term, subject to the
terms and conditions set forth in this Lease.
(b) Landlord reserves the right to
enter the Premises at any time in case of emergency and
at all other reasonable times and upon reasonable
advance notice (i) to inspect the condition of the
Premises; and (ii) to make repairs to the building in
which the Premises are located, to the extent Landlord
is required to do so, or is otherwise permitted to do
so, pursuant to the terms of this Lease.
Section 2.2 Acceptance of Premises; Quiet
Enjoyment.
(a) Acceptance of Premises. Tenant
accepts the Premises "as-is," but subject to the
express representations, warranties and covenants of
Landlord set forth in the Asset Purchase Agreement and
in this Lease.
(b) Quiet Enjoyment. Landlord
covenants that Tenant, upon paying the Rent and
performing and observing all other terms and conditions
of this Lease to be performed or observed by Tenant,
shall peacefully and quietly have, hold and enjoy the
Premises and the appurtenances thereto throughout the
Term without hindrance, ejection or molestation by
Landlord or any other person or entity lawfully
claiming through Landlord or claiming paramount title
to Landlord, subject only to the terms of this Lease,
the REA and any Mortgage or ground lease to which this
Lease is subordinate.
Section 2.3 Surrender of Premises. Upon
the expiration or earlier termination of the Term,
Tenant shall deliver up and surrender to Landlord
possession of the Premises, including all alterations,
additions, improvements and fixtures, other than
Tenant's trade fixtures, in good order, condition and
state of repair, ordinary wear and tear excepted, and
shall deliver all keys to the Premises to the office of
Landlord at the Shopping Center or as otherwise
directed by Landlord. Tenant shall have fifteen (15)
days after the date the Term of this Lease expires or
earlier terminates to remove its personal property and
trade fixtures; provided, however, that (a) Tenant
shall repair all damage to the Premises resulting from
or arising out of such removal, (b) during such period
Tenant shall perform and be liable for all obligations
and conditions imposed on Tenant hereunder except for
the payment of Rent, including, without limitation,
maintenance, repair, apportionment of taxes,
maintenance of insurance, compliance with Requirements
and assumption of liability for the Premises. The
obligations set forth in the preceding sentence shall
survive the termination of this Lease. Any property of
Tenant not removed from the Premises within such
fifteen (15) day period shall be deemed abandoned. In
addition to all other remedies available, Landlord may,
but shall not be obligated to, retain or dispose of any
or all such property without liability to Tenant. In
the event that Landlord elects to dispose of such
property, Landlord shall so notify Tenant, and Tenant
shall, no later than ten (10) days after such notice,
remove all such property from the Premises; provided,
however, that if Tenant fails to so remove such
property, then Landlord may do so, and Tenant shall pay
to Landlord, on demand, all costs and expenses incurred
by Landlord in disposing of such property, including,
without limitation, reasonable attorneys' fees and
disbursements, together with interest thereon, calcu-
lated at the Interest Rate, from the date Landlord ex-
pended such amounts.
Section 2.4 Holding Over. If not sooner
terminated, this Lease shall end on the date set forth
in the definition of "Term" in Section 1.1 without the
necessity of notice from either Landlord or Tenant to
terminate this Lease, Tenant hereby waiving notice to
vacate the Premises. If Tenant, or any party claiming
under Tenant, including, without limitation,
subtenants, licensees or concessionaires, remains in
possession of the Premises or any part thereof after
the expiration or termination of this Lease, no tenancy
or interest in the Premises shall result therefrom but
such holding over shall, at Landlord's option, be
deemed a month-to-month tenancy and, otherwise, shall
be an unlawful detainer and all such parties shall be
subject to immediate eviction and removal. As
Landlord's sole remedy for such holding over, Tenant
shall pay to Landlord for any full or partial month
Tenant holds over in the Premises after the expiration
or termination of this Lease a sum equal to one hundred
fifty percent (150%) of the Minimum Annual Rent and
Percentage Rent paid or payable by Tenant under this
Lease with respect to the last full month of the Lease
Term.
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT AGREEMENT
Section 3.1 Lease Controls Over REA. As
between Landlord and Tenant, the terms and provisions
of this Lease shall control notwithstanding any
conflict with the provisions of the REA. Tenant shall
be fully liable for the performance of all obligations
under the REA in accordance with all of the terms and
provisions thereof, to the extent that Tenant has
expressly assumed responsibility for the performance of
any such obligations under the terms of this Lease.
Landlord is and shall remain fully liable for the
performance of all of Landlord's obligations under the
REA in accordance with all of the terms and provisions
thereof, to the extent that Tenant has not expressly
assumed responsibility for the performance of such
obligations under the terms of this Lease.
Section 3.2 Covenants Regarding REA.
Landlord will fully and faithfully carry out and
perform the terms, covenants, provisions and conditions
of the REA to be performed by the Landlord. Tenant
will fully and faithfully carry out and perform the
terms, covenants, provisions and conditions of the REA
which, under the express terms of this Lease, are to be
performed by the Tenant. Landlord will exert its best
efforts in exercising all of Landlord's rights and
remedies under the REA to enforce performance of all
terms, covenants, provisions, and conditions of the
REA; and Landlord will not take any of the actions
requiring Landlord's approval thereunder, without first
having delivered to Tenant a copy of the request for
approval and any documentation or material as to which
such approval is requested or required and thereafter
obtained Tenant's written approval thereof, which
approval shall not be unreasonably withheld,
conditioned or delayed. Landlord will not enter into
any agreement amending, supplementing or cancelling the
REA without first obtaining Tenant's prior written
approval thereto, which approval shall not be
unreasonably withheld, conditioned or delayed.
Landlord hereby appoints Tenant as Landlord's true and
lawful attorney-in-fact to take in Landlord's name
whatever reasonable action Tenant may deem appropriate
to enforce performance of the terms of the REA and to
avail itself on Landlord's behalf of any remedy therein
granted Landlord in the event (i) Tenant shall notify
Landlord that the obligations under the REA are not
being properly performed and (ii) Landlord shall fail
to take action to Tenant's reasonable satisfaction
within a reasonable time after receiving notice
thereof.
It is the intent of the parties to this Lease
that this Lease and the REA are and shall remain
mutually dependent and co-existent documents. Tenant
shall have the right (in its sole and absolute
discretion) to terminate this Lease by giving Landlord
notice to such effect within ninety (90) days after the
REA shall, under its express terms and conditions,
expire or terminate or be cancelled, and this Lease
shall terminate on the last day of the month next
succeeding the month in which such notice is given.
ARTICLE IV
RENT AND OTHER CHARGES
Section 4.1 Minimum Annual Rent. Tenant
agrees to pay to Landlord as rental for the Premises
the sum of Two Hundred Twenty-Six Thousand Six Hundred
Seventy-Nine Dollars ($226,679.00) per Lease Year (the
"Minimum Annual Rent"), payable in advance in equal
monthly installments of Eighteen Thousand Eight Hundred
Eighty-Nine and 91/100 Dollars ($18,889.91), on or
before the first (1st) day of each calendar month for
the balance of the Term. Minimum Annual Rent shall be
prorated (on the basis of a 30-day month and 360-day
year) for any partial month and partial Lease Year
comprising a portion of the Term of this Lease. In the
event that the Term expires or is terminated on a date
other than the last day of a calendar month, Tenant
shall pay Landlord, on the first (1st) day of the last
month of the Term, a pro rata portion of a monthly
installment of such Minimum Annual Rent, calculated on
a per diem basis for a month of thirty (30) days.
Section 4.2 Percentage Rent.
(a) Formula for Calculation. In
addition to Minimum Annual Rent, Tenant covenants and
agrees to pay to Landlord as additional rent for each
Lease Year the sum of Three percent (3.0%) of the
amount by which Tenant's Gross Sales for such Lease
Year exceeds the Minimum Annual Rent ("Percentage
Rent"). Percentage Rent shall be payable, in arrears,
on or before March 10 for the immediately preceding
Lease Year. The amount of Percentage Rent payable by
Tenant hereunder for the first Lease Year shall be
prorated by computing the Percentage Rent that would be
payable based on Gross Sales for the first 365 days of
the Term and multiplying that number by a fraction, the
numerator of which is the number of days in the first
Lease Year and the denominator of which is 365. Such
prorated Percentage Rent for the first Lease Year shall
be payable prior to the 455th day of the Term. The
Percentage Rent payable by Tenant for the final Lease
Year shall be prorated by computing the Percentage Rent
that would be payable based on Gross Sales for the last
365 days of the Term and multiplying that number by a
fraction, the numerator of which is the number of days
in the final Lease Year and the denominator of which is
365. Such prorated Percentage Rent for the final Lease
Year shall be payable within 90 days after the Term
expiration date.
(b) Annual Report. On or before
March 10 during the Term (including the March 10
following the end of the Term), Tenant shall furnish
Landlord with a written statement (the "Annual
Report"), certified by Tenant's chief financial officer
or comptroller, of total Gross Sales made from the
Premises during the preceding Lease Year, which Annual
Report shall contain Tenant's computation of Percentage
Rent for such Lease Year. The Annual Report shall be
in form reasonably satisfactory to Landlord and shall
contain such details and breakdown as may accurately
depict Gross Sales. The Annual Report shall not carry
forward transactions completing in the preceding Lease
Year, or carry back transactions completed in the
following Lease Year.
(c) Records. Tenant shall maintain
at the Premises or at its principal record keeping
office within the continental United States at all
times during the Term, full, complete and accurate
books of account and records in accordance with
generally accepted accounting practices consistently
applied for all operations of the business conducted in
or from the Premises, including the recording of Gross
Sales and the receipt of all merchandise into, and the
delivery of all merchandise from, the Premises during
the Term, and shall retain such books and records,
copies of all tax reports and tax returns submitted to
taxing authorities, as well as copies of contracts,
vouchers, checks, inventory records, electronic data
recordings and other documents, recordings, and papers
in any way related to the operation of such business
for at least three (3) years from the end of the period
to which they are applicable, or, if any audit is
required or a controversy should arise between the
parties hereto regarding the Rent payable hereunder,
until such audit or controversy is terminated, even
though such retention period may extend beyond the
expiration of the Term or earlier termination of this
Lease.
(d) Review of Books and Records.
The acceptance by Landlord of payments of Percentage
Rent or any Annual Report pursuant to Section 4.2(b)
above shall not prejudice Landlord's right to examine
Tenant's books, records and accounts in order to verify
the amounts set forth thereon. Landlord may at any
reasonable time during the Term (but not more
frequently than once during any calendar year) cause a
complete or partial audit to be made of Tenant's books,
records and other documents relating to the Premises,
including the books and records of any subtenant,
licensee or concessionaire, for all or any part of the
three (3) year period immediately preceding the day of
the giving of such notice by Landlord to Tenant.
Landlord or its duly authorized representatives shall
have full and free access to such books and records and
the right to require of Tenant, its agents and
employees, such information or explanation with respect
to such books and records as may be necessary for a
proper examination and audit thereof. If such audit
discloses an understatement in an Annual Report of
Gross Sales, Tenant shall pay the deficiency in
Percentage Rent with, interest thereon calculated at
the Interest Rate, and, if Gross Sales have been
understated in any Annual Report by four percent (4%)
or more, Tenant shall pay to Landlord, as Rent, the
cost of said audit, upon demand.
(e) Confidentiality. Any
information regarding Tenant's business operations
delivered to or made available to Landlord, or
otherwise obtained by Landlord in the exercise of its
rights under subsection (d), above, shall be held in
strictest confidence by Landlord. Landlord shall
disclose such information only to its accountants,
attorneys and other consultants and shall require all
such parties to keep all information regarding Tenant
strictly confidential. Nothing in this subsection (e)
prohibits Landlord from disclosing such material when
ordered to do so by a court of competent jurisdiction,
or when necessary to properly plead or prosecute a
legal action brought by Landlord against Tenant for
nonpayment of Percentage Rent.
Section 4.3 Utilities Charge.
(a) Tenant shall apply to the
municipality or respective utilities companies for all
required utility services to the Premises. Tenant
shall pay all required deposits and meter charges for
utilities to the Premises to the respective utility
supplier(s).
(b) Tenant shall pay promptly, as
and when same shall become due, all water rents, rates
and charges, all sewer rents, rates and charges and all
charges for electricity, gas, heat, steam, hot and/or
chilled water, air conditioning, ventilating, lighting
systems, sprinkler systems and all other utilities sup-
plied to the Premises.
Section 4.4 Common Area Maintenance Costs.
Tenant shall pay, as Rent, Common Area Maintenance
charges as specified in the REA or any lesser amount
specified in a separate agreement thereunder. Tenant
shall pay Common Area Maintenance charges as referenced
herein within thirty (30) days after Tenant has
received a ▇▇▇▇ therefor.
Section 4.5 Taxes.
(a) Tenant shall pay before
delinquency all real and personal property taxes,
general and special assessments, and other public
charges levied upon or assessed against the Premises,
the land thereunder, or any of the building structures,
fixtures, equipment, or improvements thereon
(collectively, "Impositions"). Tenant shall deliver to
Landlord reasonable evidence of payment prior to the
time said Impositions have become delinquent.
(b) Any Imposition relating to a
fiscal period of the taxing authority, a part of which
period is included within the Term of this Lease and a
part of which is included prior to the beginning of the
Term of this Lease or after the termination of this
Lease shall (whether or not such Imposition shall be
paid, assessed, levied or imposed upon or become due
and payable and a lien upon the Premises or a part
thereof during the term of this Lease) be adjusted as
between Landlord and Tenant as of the Term Commencement
Date or as of the date of the termination of the Term
of this Lease, as the case shall require, so that
Landlord shall pay that proportion of such Imposition
which that part of such fiscal period included in the
period of time prior to the commencement or after the
termination of the Term, as the case may be, bears to
such fiscal period, and Tenant shall pay the remainder
thereof.
(c) In the event Landlord is unable
to secure separate tax bills for Tenant as herein
described, then Tenant shall pay to Landlord, prior to
such time as said Impositions would be due and payable,
all Impositions attributable to the Premises. Personal
property taxes shall be allocated directly to Tenant's
personal property. Real property taxes will be
allocated by virtue of the ratio of the Floor Area of
the Premises to the total gross leasable area in the
Shopping Center, which said gross leasable area shall
not include any part of the Common Area in the Shopping
Center, being assessed on the tax ▇▇▇▇ which relates to
the Premises.
(d) If Tenant fails to pay any such
taxes, assessments or other public charges which it is
obligated to pay as provided in this section before the
same become delinquent, then and in such event,
Landlord may pay the same together with any interest
and penalties thereon, and the amount so paid shall be
deemed additional Rent immediately due and payable by
Tenant to Landlord on demand, together with interest
thereon at the Interest Rate.
(e) Anything in this section to the
contrary notwithstanding, Landlord agrees that Tenant
shall have the right, at Tenant's sole cost and
expense, to contest the legality or validity of any
Impositions payable by Tenant, but no such contest
shall be carried on or maintained by Tenant after such
Impositions become delinquent unless Tenant shall have
duly paid the amount involved under protest or shall
procure and maintain a stay of all proceedings to
enforce any collection thereof and any forfeiture or
sale of the leased property, and shall also provide for
payment thereof together with all penalties, interest,
costs and expenses by deposit of a sufficient sum of
money or by a good and sufficient undertaking as may be
required by law to accomplish such stay. Landlord
shall, at the request of Tenant and at Tenant's sole
expense, execute or join in the execution of any
instrument of documents necessary in connection with
any such contest except bonds of undertakings. In the
event of any such contest made by Tenant, Tenant shall
promptly, upon final determination thereof, pay and
discharge the amount indicated or resulting from said
contest, together with any penalties, fines, interest,
costs and expenses that may have accrued thereon.
Section 4.6 Late Payment Charges. Late
payments of Rent or any other sum due from Tenant
hereunder, including all amounts paid by Landlord on
behalf of Tenant to satisfy any condition or covenant
of this Lease and all costs incurred by Landlord in
enforcing the terms of this Lease, shall bear interest
from the date Tenant receives written notice of such
late payment or default (as applicable) until paid at
the Interest Rate.
Section 4.7 Rent Payments. All Rent
payable by Tenant under this lease shall be paid in
United States Dollars without prior demand therefor and
without any deductions, offsets or counterclaims except
those expressly permitted under the terms of this
Lease, to Landlord and shall be delivered on or before
the due date thereof via wire transfer to
Bank of America, S.A.
Principal Office: ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
For Credit To:
El Corte Ingles, S.A.
Account number ▇▇▇▇▇▇▇▇
or to such other payee and at such other place as
Landlord may hereafter designate from time to time by
written notice to Tenant. Notwithstanding anything to
the contrary in this Lease, Tenant may withhold any
portion of Rent which Tenant is required to withhold by
virtue of Landlord's status as a foreign person under
Section 1445 of the Internal Revenue Code or other
applicable law.
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS
Section 5.1 Permitted Use.
(a) Tenant shall use the Premises
only for the Permitted Use and for no other purpose
whatsoever.
(b) Tenant covenants that Tenant
shall not use or allow the Premises or any part thereof
to be used or occupied for any Prohibited Use or any
immoral or unlawful purpose or in violation of any
certificate of occupancy or certificate of compliance
for the Premises.
Section 5.2 Signs. Tenant shall have the
right, without Landlord's consent, to erect any and all
signs on or about the Premises it elects, provided that
such signage complies with the REA and all
Requirements. From time to time upon Tenant's request,
Landlord covenants to assist Tenant (at no cost or
expense to Landlord) in processing any and all
approvals necessary for Tenant to erect such signage.
Section 5.3 Alterations of Premises.
(a) All changes, alterations or
modifications to the Premises (collectively,
"Alterations") shall be made in accordance with this
Section 5.3. Tenant shall have the right to perform
non-structural modifications to, remodel and
redecorate, retexturize, recarpet and repaint the
Premises without obtaining the prior written consent of
Landlord; provided (i) the proposed Alteration does not
affect the exterior appearance of the Premises,
including, without limitation, the storefront or the
storefront sign of the Premises, or the roof,
foundation, supports or structural integrity of the
building of which the Premises is a part; (ii) Tenant
submits an information copy of all remodeling plans to
Landlord at least thirty (30) days prior to the date
any such work is scheduled to commence; (iii) the total
cost of all work involved in the Alteration does not
exceed Three Hundred Thousand Dollars ($300,000) in any
one project or an aggregate amount of Six Hundred
Thousand Dollars ($600,000) in any one Lease Year; and
(iv) such work does not violate any code, ordinance or
Requirement and does not cause Landlord's insurance
rates to increase. Except for the foregoing, Tenant
shall not make any Alterations to any portion of the
Premises without, in each instance, obtaining
Landlord's prior written consent.
(b) All work ("Work") pertaining to
any Alteration to the Premises, including, without
limitation, Tenant's Work, shall comply with the
following:
(i) No Work shall be undertaken
until Tenant shall have procured and paid for, so
far as the same may be required, from time to
time, all permits and authorizations of all
municipal departments and governmental
subdivisions having jurisdiction. Provided no
default exists hereunder, Landlord shall join in
the application for such permits and
authorizations whenever such action is necessary;
provided, however, that Landlord shall not incur
any expense or be subject to any liability as a
result of joining in any such application.
Within ten (10) days after completion of the
Work, Tenant shall deliver to Landlord a
certificate of occupancy or such similar
certificates as may be required or customary by
applicable laws and legal requirements.
(ii) All Work shall be performed
promptly and in a good and workmanlike manner and
in compliance with all applicable permits and
laws, and in accordance with the orders, rules
and regulations of the National Board of Fire
Underwriters or any other body hereafter
exercising similar functions, and Tenant shall
furnish Landlord with evidences and assurances
reasonably acceptable to Landlord that all such
Work shall be completed, subject to Unavoidable
Delays, at least one (1) year prior to the end of
the Term of this Lease.
(iii) The cost of any Work shall
be paid promptly by Tenant so that the Premises
shall at all times be free and clear of liens for
labor and materials supplied or claimed to have
been supplied in connection therewith.
(iv) Tenant shall carry, or
shall cause to be carried, worker's compensation
insurance covering all persons employed in
connection with any Work and with respect to whom
death or bodily injury claims could be asserted
against Landlord, Tenant or the Premises, and,
without duplication of any insurance required by
Article VIII hereof, adequate all-risk and
builders risk insurance for the mutual benefit of
Tenant and Landlord in amounts satisfactory to
Landlord and, at Landlord's request, such other
insurance in favor of Landlord in types and
amounts as are reasonable and customary, all at
Tenant's expense, at all times when any such Work
is in progress; provided, however, that Tenant
shall be fully liable for any failure to maintain
such insurance, including, without limitation,
Tenant's obligation to indemnify Landlord for the
failure to maintain insurance in accordance with
the provisions of this Lease. All such insurance
shall be provided by a company or companies of
recognized responsibility and reasonably
satisfactory to Landlord, and all policies or
certified copies of policies issued by the
respective insurers, bearing notations evidencing
the payment of premiums or accompanied by other
evidence satisfactory to Landlord of such
payment, shall be delivered to Landlord prior to
the commencement of any Work.
Section 5.4 Use of Common Areas.
(a) All Common Areas shall be
subject to the exclusive control and management of
Developer as set forth in the REA. Tenant and Tenant's
officers, directors, employees, agents, subtenants,
contractors, subcontractors, concessionaires and
licensees, and the officers, directors, employees and
agents of Tenant's subtenants, concessionaires and
licensees, and the customers, patrons and business
invitees of Tenant and of Tenant's subtenants,
concessionaires and licensees (hereinafter,
collectively, "Tenant's Employees and Invitees") shall
have the non-exclusive right to use (without cost or
expense to Tenant or Tenant's Employees or Invitees
other than as expressly provided in this Lease) the
Common Areas for the purpose of gaining ingress to and
egress from the Premises, for the passage and parking
of vehicles, and for the passage and accommodation of
pedestrians, such right to be in common with Landlord
and those occupants (and the employees and invitees of
such occupants) of the Shopping Center from time to
time authorized to use said common areas for such
purposes.
(b) Notwithstanding anything to the
contrary contained in Section 5.4(a) hereof, Landlord
shall exercise best efforts to cause Developer to
maintain, manage and operate the Common Areas
(including, but not by way of limitation, the parking
area) in good order, condition and repair in conformity
with the REA so as to at all times maintain an
appearance and attractiveness reasonably equivalent to
the level of same existing as of the date hereof.
Developer's obligations to be enforced by Landlord
pursuant to the preceding sentence in respect of the
maintenance, management and operation of the Common
Areas shall include, but not be limited to, the
following:
(i) Undertaking such maintenance
and construction work (including replacements as
required) as is necessary to preserve and
maintain the utility of the Common Areas;
(ii) The care and maintenance of
all identification signs and all planters
(including those adjacent to the Premises but
excluding any signs and planters of Tenant) and
landscaping at the Shopping Center;
(iii) The adequate illumination
of the Common Areas at all times of darkness that
Tenant is open for business (plus a period of
one-half hour after Tenant closes for business);
(iv) The payment prior to
delinquency of all real estate and personal
property taxes and assessments levied on the
Common Areas;
(v) The removal of dirt and
debris and rubbish (including the regular
sweeping of the parking area and all sidewalks);
and
(vi) The operation, management
and maintenance of the enclosed mall, including
the heating, ventilating, air-conditioning,
lighting and housekeeping of the same and the
maintenance (and replacement as required) of
landscaping therein.
Section 5.5 Compliance with REA. Tenant
shall abide by the terms of the REA. Landlord agrees
that it will not change, amend or alter (or agree or
consent to change, amend or alter) any term or
condition of the REA without the prior written consent
of Tenant, which consent shall not be unreasonably
withheld.
Section 5.6 Compliance with Requirements.
(a) Insofar as the same relate to
or are caused by Tenant's occupancy and use of the
Premises, and Tenant's other activities under this
Lease, throughout the Term, Tenant shall, at Tenant's
sole cost and expense, promptly comply with all present
and future Requirements applicable to the Premises,
subject, however, to Tenant's rights to contest any
such Requirements, as set forth in clause (b) below.
Tenant shall likewise comply with the provisions of all
of Tenant's insurance policies required to be
maintained hereunder or otherwise carried by Tenant
with respect to the Premises from time to time.
(b) Tenant shall have the right,
after prior notice to Landlord, at Tenant's sole cost
and expense, to contest by appropriate legal
proceedings diligently prosecuted in good faith, in the
name of Tenant, the validity or application of any
Requirements; provided, however, that Tenant may delay
compliance therewith until the final determination of
such proceeding only if by the terms of any such
Requirements, compliance therewith pending the
prosecution of any such proceeding may legally be
delayed without subjecting Landlord to the risk of any
criminal liability, or imminent forfeiture of its
estate, for failure so to comply therewith, and
provided further that if any fine, lien, charge or
civil liability may be incurred by reason of such
non-compliance, (i) Tenant furnishes to Landlord
security satisfactory to Landlord, against such fine,
lien, charge or civil liability in accordance with
Section 5.7, and (ii) Tenant shall be solely
responsible for payment of such fine, lien, charge or
civil liability and shall indemnify, defend and hold
Landlord harmless with respect thereto.
Section 5.7 Liens.
(a) Tenant agrees that it will pay
or cause to be paid all costs for work done by it or
caused to be done by it on the Premises of a character
which will or may result in liens on Landlord's
reversionary estate therein, and Tenant shall keep the
Premises free and clear of all mechanics' liens and
other liens on account of work done for Tenant or
persons claiming under it. If any such lien shall at
any time be filed against the Premises, Tenant shall
either cause the same to be discharged within thirty
(30) days after the recording thereof, or, if Tenant,
in Tenant's discretion and in good faith, determines
that such lien should be contested, shall furnish such
security as may be necessary or required to prevent any
foreclosure proceedings against the Premises during the
pendency of such contest. If Tenant shall fail to
furnish such security, then, in addition to any other
right or remedy of Landlord resulting from such
failure, Landlord may, but shall not be obligated to,
discharge the same either by paying the amount claimed
to be due, procuring the discharge of such lien by
giving security, or in such other manner as is, or may
be, prescribed by law. Tenant shall repay to Landlord,
as Rent, on demand, all sums disbursed or deposited by
Landlord pursuant to the provisions of this Section
5.7, including all costs, expenses and attorneys' fees
incurred by Landlord in connection therewith. Nothing
contained herein shall imply any consent or agreement
on the part of Landlord to subject Landlord's estate to
liability under any mechanics' lien or other lien law.
(b) Should any claims of lien be
filed against the Premises or any action affecting the
title to the Premises be commenced, the party receiving
notice of such lien or action shall forthwith give the
other party written notice thereof. Landlord or its
representative shall have the right to post and keep
posted upon the Premises notices of nonresponsibility
or such other notices which Landlord may deem to be
proper for the protection of Landlord's interest in the
Premises. Tenant shall, before the commencement of any
work which might result in any such lien, give to
Landlord advance written notice of its intention to do
so in reasonably sufficient time to enable the posting
of such notices.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section 6.1 Tenant's Obligations.
(a) Tenant shall, at its sole cost
and expense (except as provided to the contrary in this
Section 6.1) at all times during the Term and any
extensions thereof, keep the Premises in good order,
condition and repair, damage by casualty excepted.
Subject to the limitations set forth in Section 6.1(b),
Tenant's maintenance and repair obligation hereunder
include, without limitation:
(i) all equipment or facilities
serving the Premises, such as plumbing, heating,
air conditioning, ventilating, electrical or
lighting facilities, fire sprinkler and/or
standpipe and hose or other automatic fire
extinguishing systems, including fire alarm
and/or smoke detection systems and equipment,
fire hydrants, fixtures, walls (interior and
exterior) including reasonably periodic painting
of interior walls in painting of exterior walls
to the extent required by the REA, ceilings,
floors, windows, doors, plate glass, landscaping,
driveways, parking lots, fences, signs, sidewalks
and parkways; and
(ii) restorations, replacements
or renewals, when necessary, to keep the Premises
and all improvements thereon or a part thereof in
good order, condition and state of repair.
(iii) Tenant shall maintain
maintenance contracts with respect to the
elevators, the escalators and the heating,
ventilation and air conditioning systems located
in the Premises.
(b) Notwithstanding anything to the
contrary in Section 6.1(a), Tenant is not responsible
for maintenance, repairs or replacements which are
(i) the responsibility of
Landlord pursuant to Section 6.2, or
(ii) the responsibility of the
Developer or any other party pursuant to the REA.
(c) Notwithstanding anything to the
contrary in Section 6.1(a), if (i) any repair or
replacement which is reasonably estimated to exceed
$100,000 is required with respect to any portion of the
Premises for which Tenant is responsible pursuant to
Section 6.1(a) (hereinafter, a "Capital Repair"), and
(ii) the Useful Life of such Capital Repair (as defined
herein) exceeds the Remaining Term of the Lease (as
defined herein), then Landlord shall fund a portion of
the cost of such repair or replacement equal to a
fraction, the numerator of which is the Excess Useful
Life (as defined herein) and the denominator of which
is the Useful Life. As used herein, (A) the "Useful
Life" of a Capital Repair means the reasonably
anticipated useful life of such Capital Repair
(determined by generally accepted accounting standards,
consistently applied), (B) the "Remaining Term" means
the portion of the Term remaining, including the
Renewal Term under any Option which has been exercised,
but not the Renewal Term under any Option which has not
been exercised and (C) the term "Excess Useful Life"
means, with respect to a Capital Repair, the difference
between the Useful Life thereof and the Remaining Term.
As used herein, "Landlord's Capital Repair
Contribution" means, with respect to any Capital
Repair, Landlord's contribution to the cost of such
Capital Repair made pursuant to this Section 6.1(c).
Landlord shall fund Landlord's Capital Repair
Contribution within ten (10) business days after
receipt of invoices therefor from Tenant (which may be
submitted as Tenant receives invoices for such work).
(d) If Tenant exercises an Option
after the Excess Useful Life of a Capital Repair has
been determined, then Tenant shall reimburse to
Landlord, on the first day of the Renewal Term with
respect to such Option, a portion of Landlord's Capital
Repair Contribution equal to a fraction (not to exceed
100%), the numerator of which is the Renewal Term and
the denominator of which is the Excess Useful Life. In
order that this Section 6.1(d) may be properly applied
with respect to subsequent Option exercises, (i) the
Excess Useful Life of a Capital Repair will be deemed
reduced by the period of each Renewal Term with respect
to which payment is made by Tenant pursuant to this
Section 6.1(d) and (ii) Landlord's Capital Repair
Contribution with respect to a Capital Repair will be
deemed reduced by each payment received by Landlord
pursuant to this Section 6.1(d) with respect to that
Capital Repair.
Section 6.2 Landlord's Obligations.
Notwithstanding anything to the contrary herein,
Landlord shall be responsible throughout the Term for
maintaining and repairing all structural portions of
the Building, including the roof (including any
skylights), foundations, structural walls, and other
load-bearing portions of the structure.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1 Damage or Destruction.
(a) Tenant shall give Landlord
prompt notice of any damage to the Premises by fire or
other casualty.
(b) If the Premises shall be
rendered wholly untenantable by a casualty, unless
terminated pursuant to Section 7.1(d)(i) or 7.1(d)(ii)
hereof, this Lease shall remain in full force and
effect except that Rent shall fully ▇▇▇▇▇ commencing on
the date of loss and continuing until the earlier to
occur of: (i) the date Tenant reopens the Premises for
business, which reopening Landlord and Tenant shall
diligently work together to expedite, or (ii) the date
forty five (45) days after Tenant completes the
restoration, pursuant to Section 7.1(e), of the
structural elements of the building of which the
Premises form a part.
(c) If only a portion of the
Premises shall be rendered untenantable, this Lease
shall remain in full force and effect except that Rent
shall partially ▇▇▇▇▇ commencing on the date of loss
and continuing until the earlier to occur of: (i) the
date Tenant reopens the repaired portion of the
Premises for business, which reopening Landlord and
Tenant shall diligently work together to expedite, or
(ii) the date forty five (45) days after Landlord
completes the restoration, pursuant to Section 7.1(e),
of the structural elements of the building of which the
Premises form a part. In such event, the Rent shall be
reduced to an amount computed by multiplying the Rent
applicable prior to such damage by a fraction, the
numerator of which is the Floor Area of the Premises
tenantable after such damage and the denominator of
which is the Floor Area of the Premises prior to such
damage.
(d) If there shall be damage to the
Shopping Center by fire or other casualty, whether or
not the Premises is affected thereby, in which: (i)
the Premises shall be sufficiently damaged to render
the entire Premises wholly untenantable; (ii) the
damage or destruction to the Premises is to an extent
that it cannot be repaired with reasonable diligence
within one (1) year after the destruction or damage;
(iii) either the Shopping Center or the building of
which the Premises are a part is damaged to the extent
of fifty percent (50%) or more of its insured
replacement cost; (iv) the loss is caused by any risk
not covered by either Landlord's or Tenant's insurance;
(v) the damage occurs during the last three (3) years
of the Term; or, (vi) any insurance proceeds received
by Landlord or Tenant for such damage are inadequate or
unavailable for repairs, other than because of any
deductible amount of any policy other than Tenant's
earthquake insurance policy, then, in any such event,
either party shall have the option to terminate this
Lease. Said option shall be exercised, if at all, by
notice to the other party on or before the ninetieth
(90th) day after the date of loss and, if exercised,
shall be effective on the last day of the first (1st)
full calendar month falling at least sixty (60) days
after such notice. If Tenant elects to terminate this
Lease pursuant to this Section 7.1(d), then Tenant
shall turn over to Landlord any insurance proceeds
received by Tenant with respect such damage and
destruction (other than proceeds of insurance covering
tenant's personal property (including, without
limitation, merchandise and equipment) and trade
fixtures. If either party elects to terminate this
Lease pursuant to clause (iv) or (vi), above, the other
party may avoid termination of this Lease by (i)
committing in writing to pay the additional funds
required to complete the necessary repairs and
restoration, which writing shall be delivered to the
terminating party within ten (10) days after delivery
of the termination notice, and (ii) providing to the
terminating party, within a reasonable period after
delivery of such notice, not to extend beyond the date
which is 90 days after the date of loss, security for
payment of such excess costs reasonably satisfactory to
the terminating party and its lenders (if any).
(e) If there shall be damage to the
Premises by fire or other casualty and this Lease is
not terminated, Tenant shall promptly commence and
diligently prosecute the restoration and repair of the
Premises, including all exterior walls, roofs, floors
and supports, all internal partitions, fixtures, trade
fixtures, shelving, casework, furniture and furnishings
used in connection with the operation of Tenant's
business in the Premises, as nearly as practicable to
their respective conditions prior to such damage.
Section 7.2 Condemnation.
(a) The term "Taking" as used in
this Section 7.2, shall mean an appropriation or taking
under the power of eminent domain by any public or
quasi-public authority or a voluntary sale or
conveyance in lieu of condemnation but under threat of
condemnation.
(b) In the event of a Taking of the
entire Premises, this Lease shall terminate and expire
as of the date possession is delivered to the
condemning authority and Landlord and Tenant shall each
be released from any liability accruing pursuant to
this Lease after such termination.
(c) If there is a Taking of (a)
more than twenty-five percent (25%) of the Premises, or
(b) any portion of the Building and, regardless of the
amount taken, if the remainder of the Building is not
one undivided structure, either Landlord or Tenant may
terminate this Lease as of the date Tenant is required
to vacate the Premises upon giving notice in writing of
such election within thirty (30) days after receipt of
Tenant from Landlord of written notice that a portion
of the Premises has been so appropriated or taken.
(d) If this Lease is terminated as
a result of a Taking, Tenant shall be entitled to any
separate award made to Tenant for relocation costs,
good will and any of Tenant's fixtures and equipment
which are not capable of removal from the Premises;
provided such separate award does not diminish
Landlord's award. Subject to the foregoing, Landlord
shall be entitled to the entire award or compensation
in such condemnation proceedings, or settlement in lieu
thereof, irrespective of whether such award or
settlement shall be obtained as compensation for
diminution in value to the leasehold or the leasehold
improvements thereto or to the fee of the Premises, but
the Minimum Annual Rent, Percentage Rent and any other
Rent for the last month of Tenant's occupancy shall be
prorated and Landlord shall refund to Tenant any
Minimum Annual Rent, Percentage Rent and other Rent
paid in advance. Notwithstanding the foregoing and
subject to Section 2.3, in the event this Lease is
terminated as provided above, Tenant may remove all of
its removable trade fixtures, furniture and equipment
from the Premises, provided that Tenant immediately
repairs any damage occasioned to the Premises by reason
of such removal so as to leave the Premises in a neat
and clean condition. Notwithstanding the foregoing, in
no event shall Tenant be entitled to any portion of any
award or compensation, if following the payment of such
sum to Tenant, there would not be sufficient funds or
proceeds to pay the unpaid principal balance of any
obligation of Landlord secured by a deed(s) of trust or
mortgage(s) on the fee interest in the Premises and/or
the Building.
(e) In the event of a Taking, if
Landlord and Tenant elect not to so terminate this
Lease as provided above (or have no right to so
terminate), Tenant agrees, at Tenant's cost and expense
(subject to Tenant's rights hereunder) as soon as
reasonably possible after the Taking, to restore the
Building on the Land remaining to a complete unit of
like quality and character as existed prior to the
Taking, and thereafter the Minimum Annual Rental
payable hereunder shall be reduced on an equitable
basis, taking into account the relative value of the
portion taken as compared by the portion remaining. In
such event, Tenant shall be entitled to receive any and
all award or compensation in connection with such
Taking until Tenant has received funds sufficient to
complete such restoration, and Landlord shall be
entitled to receive the remaining portion of the total
award of compensation.
ARTICLE VIII
INSURANCE
Section 8.1 Tenant's Insurance.
(a) Tenant shall carry, from and at
all times after the date hereof, at Tenant's sole cost
and expense, the following insurance:
(i) public liability and
property damage insurance covering the Premises
and Tenant's use thereof against claims for
personal injury or death and property damage
occurring in, on or about the Premises and
affording protection to the limits of not less
than Three Million Dollars ($3,000,000) per
occurrence with respect to any one (1) bodily
injury or damage to property, which insurance
shall, in addition, extend to any liability of
Tenant arising out of the indemnities contained
in Section 8.5 by contractual liability
endorsement. All liability policies shall
contain a so called "occurrence clause";
(ii) fire and casualty insurance
covering the Premises, in an amount equal to
ninety percent (90%) of the replacement cost
thereof (excluding foundations and footings);
(iii) fire insurance with
extended coverage, covering such items of
Tenant's merchandise, inventory, signs,
furniture, trade fixtures, equipment, leasehold
improvements and other property of Tenant, now or
hereafter placed in, on or about the Premises in
an amount equal to ninety percent (90%) of the
replacement cost thereof;
(iv) business interruption
insurance covering Tenant's loss of business
income for the period it would take to
reconstruct the Premises after a casualty using
reasonable diligence and rental loss insurance
covering Tenant's obligation to pay Minimum
Annual Rent under this Lease;
(v) in the event Tenant installs
in, adjoining or beneath the Premises any steam
boiler or similar equipment, broad form boiler
insurance;
(vi) earthquake insurance in an
amount equal to one hundred percent (100%) of the
replacement cost of the Premises, to the extent
the same is available at commercially reasonable
rates and with deductibles of commercially
reasonable amounts (it being agreed that Tenant
may maintain required earthquake coverage through
a blanket policy covering several (or all) store
locations owned or affiliated with Tenant and
having a maximum aggregate coverage limit of
Twenty Million Dollars ($20,000,000)); and
(vii) such other insurance as
may in Tenant's reasonable judgment be prudent to
carry from time to time.
(b) All insurance policies required
to be carried by Tenant shall be issued by companies
with a general policyholder's rating of not less than
"A" and a financial size rating of "VI" as rated in the
most current available "Best's Insurance Reports", and
qualified to do business in the State of California.
Each insurance policy shall name Landlord, Tenant and
Mortgagee as insureds as their interests may appear
and, to the extent possible, any other parties in
interest from time to time designated in writing by
notice from Landlord to Tenant. Executed copies of
each insurance policy, duplicate originals or original
certificates thereof (provided that such certificates
shall evidence all of the required coverage herein
provided) shall be delivered by Tenant to Landlord
within ten (10) days after delivery of possession of
the Premises to Tenant and thereafter within thirty
(30) days prior to the expiration of prior policies.
All insurance policies shall contain a provision that
the underwriter will give Landlord and Mortgagee at
least thirty (30) days prior written notice of any
cancellation or lapse of such insurance or the
effective date of any reduction in the amounts thereof
or increase of the deductible. All insurance policies
shall be written as primary policies which do not
contribute to, and are in excess of, any coverage which
Landlord may carry. All insurance policies shall
contain an agreement by the insurers that the coverage
afforded thereby shall not be affected by any
construction work in or about the Premises and that no
act or omission by the Tenant shall impair or affect
the rights of the Landlord to receive and collect the
proceeds under the policies.
(c) Any insurance required to be
carried by Tenant may be provided under a blanket
policy of insurance covering additional items or
locations or insureds; provided, however, that: (i)
Landlord and Mortgagee shall be named as an additional
insured thereunder (or covered by broad form Landlord
endorsement or contractual coverage); (ii) any such
blanket policy or policies shall specify total
insurance allocated to Tenant's improvements and
property; and (iii) the requirements for Tenant's
insurance set forth herein are otherwise satisfied.
Tenant agrees to use its best efforts to ensure that
the coverage afforded Landlord and any such other
parties in interest under any future blanket policy of
insurance will not be diminished by reason of the use
of such blanket policy of insurance, and Tenant shall
expend commercially reasonable amounts in connection
with obtaining such coverage.
(d) The deductibles and
self-insured retentions included in Tenant's insurance
policies shall be in amounts as may be commercially
reasonable from time to time.
(e) If Tenant refuses or neglects
to secure and maintain insurance policies complying
with the provisions of this Section 8.1, Landlord may
secure the appropriate insurance policies and Tenant
shall pay, upon demand, the costs of same to Landlord
as Rent.
Section 8.2 Landlord's Insurance. Landlord
at its cost shall carry, from and at all times after
the date of delivery of the Premises to Tenant, all
insurance required to be carried by Landlord pursuant
to (i) any Mortgages which either presently or in the
future may exist as a lien against the Premises and
(ii) the REA, to the extent that insurance required to
be carried by Tenant pursuant to this Lease is
insufficient to satisfy either of such obligations of
Landlord.
Section 8.3 Waiver of Subrogation.
Landlord and Tenant each waive any rights it may have
against the other on account of any loss or damage
occasioned to Landlord or Tenant, as the case may be,
their respective property, the Premises or its contents
or to other portions of the Shopping Center arising
from any liability, loss, damage or injury caused by
fire or other casualty for which property insurance is
carried or required to be carried pursuant to this
Lease. Each of the parties hereto, on behalf of their
respective insurance companies insuring the property of
either Landlord or Tenant against any such loss, to the
extent of any recovery under such insurance, waives any
right of subrogation that it may have against the
other. Each waiver shall be expressly included in, and
shall comply with the requirements of, the respective
insurance policies.
Section 8.4 Governmental and Insurance
Requirements.
(a) Tenant shall comply, at
Tenant's sole cost and expense, with all reasonable
requirements of the insurance underwriters, or any
similar public or private body, provided that any such
requirements of such insurance underwriters, or any
similar public or private body, are conditions to the
continuance of any of the insurance coverage required
hereunder, and any governmental authority having
jurisdiction over insurance rates with respect to the
use or occupancy of the Premises as a part of Shopping
Center, including, without limitation (i) installing
fire extinguishers or automatic dry chemical
extinguishing systems; (ii) making any changes,
modifications, alterations or additions in the
sprinkler system within the Premises; and (iii)
relocating partitions, trade fixtures or other contents
within the Premises.
(b) Tenant shall not commit any act
or suffer to exist on the Premises any circumstances
which will violate any reasonable restrictions
contained in any of Tenant's or Landlord's policies of
fire and casualty or public liability insurance,
prevent Landlord from continuing the coverage presently
provided in Landlord's insurance policies from
insurance companies reasonably acceptable to Landlord
or cause the rates for any such policies to increase
beyond the minimum rates from time to time applicable
to the Premises or the Shopping Center for the
Permitted Use, provided such minimum rate would have
been available to Landlord but for Tenant's actions or
use. In the event that Landlord receives any notice
from Landlord's insurance company regarding any
violation by Tenant of any of Landlord's insurance
policies, or of any proposed increase in Landlord's
premiums from the minimum rate from time to time
applicable thereunder because of any act, omission or
sufferance by Tenant in, on or under the Premises,
Landlord shall notify Tenant, and Tenant shall
reimburse Landlord as additional Rent the amount of any
such increase promptly following Landlord's written
demand therefor.
(c) In the event that Landlord
receives any notice from Landlord's insurance company
regarding any violation by Tenant of any of Landlord's
insurance policies, or of any proposed increase in
Landlord's premiums from the minimum rate from time to
time applicable thereunder because of any act, omission
or sufferance by Tenant in, on or under the Premises,
Landlord shall notify Tenant, and Tenant shall
reimburse Landlord as additional Rent the amount of any
such increase promptly following Landlord's written
demand therefor.
Section 8.5 Indemnification. To the
fullest extent permitted by law, Tenant covenants with
Landlord that Landlord shall not be liable for any
damage or liability of any kind or for any injury to or
death of persons or damage to property of Tenant or any
other person occurring from and after the date Tenant
is given access to the Premises from any cause
whatsoever related to the use, occupancy or enjoyment
of the Premises including, but not limited to, the
sidewalks and landscaped areas immediately adjacent to
the Building and Tenant's drive-through area, if any,
by Tenant or any person thereon or holding under Tenant
including, without limitation, damages resulting from
any labor dispute, and Tenant shall defend (using
counsel mutually approved by Landlord and Tenant or
Tenant's insurer), indemnify and save Landlord harmless
from all liability whatsoever on account of any real or
alleged damage or injury and from liens, claims and
demands related to the use of the Premises and its
facilities, or any repairs, alterations or improvements
(including any improvements and fixtures constructed or
installed by Tenant) which Tenant may make or cause to
be made with respect to the Premises, and any loss or
interruption of business or loss of rental income
resulting therefrom. Notwithstanding anything to the
contrary in the foregoing, Tenant shall not be liable
for damage or injury occasioned by the negligence or
willful misconduct of Landlord or any ground lessor,
mortgagee or owner of all or any part of the Shopping
Center or their respective employees, agents or
contractors.
Section 8.6 Landlord Exculpation. Landlord
shall endeavor to conduct its activities with respect
to the Premises in a prudent and businesslike manner.
However, Landlord shall not be liable for any damage to
property entrusted to employees of Landlord, its
partners or agents, nor for loss of or damage to any
property damage or loss of business which may be
sustained by the person, goods, ▇▇▇▇, merchandise or
property of Tenant, its employees, invitees or
customers or any other person in or about the Premises
caused by or resulting from, but not limited to, fire,
steam, electricity, gas, water or rain which may leak
or flow from or into any part of the Premises, or from
the breakage, leakage, obstruction or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures of same, whether the
injury, damage or loss of business results from
conditions arising upon the Premises, other portions of
the Shopping Center or from other sources, so long as
the same does not result from the negligence or wilful
misconduct of Landlord or its employees, agents, and
contractors or Landlord's breach of any of its express
obligations under this Lease. Landlord shall not be
liable for interference with the light or other
incorporeal hereditaments. Tenant shall give prompt
notice to Landlord in case of fire or accidents in the
Premises or in the Shopping Center or of defects
therein or in the fixtures or equipment. Landlord
shall not be liable for any damages arising from any
act or neglect of any other tenant in the Shopping
Center, except to the extent of Landlord's liability
for breach of Landlord's obligation to enforce the REA,
as provided in Section 3.2.
ARTICLE IX
ASSIGNMENT AND SUBLETTING
Section 9.1 Notice to Landlord. If Tenant
wishes to assign its rights under this Lease or sublet
all or any portion of the Premises, Tenant shall
deliver written notice of its intention to do so to
Landlord at least thirty (30) days prior to the
effective date of any such proposed assignment or
subletting, specifying in such notice whether Tenant
proposes to assign or sublet, the proposed effective
date thereof, identification of the proposed assignee
or sublessee with a description of the proposed
business operations to be conducted at the Premises.
Such notice shall also be accompanied by current
financial statements of the proposed assignee or
subtenant, a copy of the proposed assignment or
sublease documents, or, if not available, a letter of
commitment or letter of intent setting forth material
terms and provisions of the proposed assignment or
sublease.
Section 9.2 Landlord's Approval. Landlord
will notify Tenant of its approval or disapproval of a
proposed assignment or sublease within a reasonable
time (in no event earlier than fifteen (15) days nor
longer than thirty (30) days) after receipt of such
notice from Tenant as set forth above. Landlord shall
not unreasonably withhold its approval of Tenant's
assignment of this Lease or subletting of the Premises.
The factors which may be viewed in determining the
reasonableness of Landlord's approval or disapproval of
a proposed assignment or subletting and the conditions
which may be imposed by Landlord as part of its
consenting thereto shall be as follows:
(a) The use of the Premises following
the assignment or sublease would be
different from the Permitted Use set
forth in this Lease;
(b) In Landlord's reasonable business
judgment, the proposed assignee or
subtenant lacks sufficient business
reputation or experience to operate
a business of the type and quality
permitted under the terms of this
Lease;
(c) In Landlord's reasonable business
judgment, the present financial
worth of the proposed assignee or
subtenant is inadequate to ensure
such assignee's or subtenant's
performance under the terms of its
agreement relating to the Premises;
(d) The proposed assignment or sublease
transaction would breach a covenant
of Landlord respecting radius,
location, use or exclusive use in
any other lease, financing agreement
or other agreement relating to the
Shopping Center.
It is expressly understood and agreed that Landlord's
consent shall not be required for any transfer of
Tenant's interest under this Lease which is considered
to be a Permitted Transaction (as defined below).
Section 9.3 Permitted Transactions.
Notwithstanding anything to the contrary herein,
Landlord's consent shall not be required for any of the
following (collectively, "Permitted Transactions"):
(i) Any transfer by Tenant of any
interest under this Lease to any
corporation, partnership or other
entity which controls, is controlled
by, or is under common control with
the named Tenant hereunder or its
successors by merger, consolidation
or other comparable transaction, the
primary purpose of which is not the
transfer of Tenant's interest under
this Lease.
(ii) Any transfer by Tenant of any
interest under this Lease to the
owner of a department store chain
with assets equal to or greater than
Tenant's.
(iii) Tenant may enter into concession
arrangements or license agreements,
or otherwise permit the occupation
and use of a portion of the Premises
by a subtenant, licensee or
concessionaire, provided that the
areas covered by such licenses or
concession agreements do not exceed
usage in excess of twenty-five
percent (25%) of the Floor Space of
the Premises; provided, however that
all sales of licensees or
concessionaires shall be included
within Gross Sales as defined in
this Lease.
Section 9.4 Compliance with REA. Tenant
shall not assign its rights under this Lease or sublet
all or any portion of the Premises unless Tenant
complies, at Tenant's expense, with the provisions of
the REA applicable to such assignment or subletting.
Landlord agrees to cooperate, at no expense to
Landlord, with Tenant's efforts to obtain any consents
required under the REA and to otherwise comply with the
REA in connection with any proposed assignment or
sublease.
Section 9.5 Documentation and Expenses.
Each assignment or sublease shall be evidenced by an
instrument made in such written form as is satisfactory
to Landlord and executed by Tenant and the assignee or
subtenant. In the event of an assignment, the assignee
shall assume and promise to perform the terms,
covenants and conditions of this Lease which are
obligations of Tenant, from and after the date the
Assignee takes possession. Unless expressly released
by Landlord, in writing, Tenant shall remain fully
liable to perform its duties under this Lease following
any assignment of the Lease. Tenant shall, on demand
of Landlord, reimburse Landlord for Landlord's
reasonable costs, including attorneys' fees, incurred
in obtaining advice and preparing documentation for
each assignment or sublease, up to a maximum of $1,500
per transaction.
ARTICLE X
DEFAULT
Section 10.1 Events of Default. Each of the following events
shall constitute a "Default" by Tenant under this
Lease:
(a) If Tenant shall fail to pay any
Rent under this Lease when the same shall become due
and payable and the failure shall continue for five (5)
business days after written notice (it being understood
such period shall run concurrently with any statutory
notice period); or
(b) If Tenant shall transfer
Tenant's interest in this Lease in contravention of
Article IX hereof; or
(c) If Tenant shall fail to perform
or observe any of its obligations under this Lease
(including, without limitation, Tenant's failure to
perform those obligations under the REA expressly
assumed by Tenant in this Lease) other than those
specified above in this Section 10.1 and the failure
shall continue for thirty (30) days after notice,
unless a shorter period of time for such performance or
observance is otherwise expressly set forth in this
Lease; provided, however, that in the case of a Default
which cannot with reasonable diligence be remedied by
Tenant within said period of thirty (30) days, if
Tenant proceeds as promptly as may reasonably be
possible after the service of such notice and with all
reasonable diligence to remedy the Default and
thereafter prosecute the remedying of such Default with
all reasonable diligence, the period of time after the
giving of such notice within which to remedy the
Default shall be extended for such period as shall be
reasonably necessary to remedy the same with all
reasonable diligence;
(d) If the Premises are deemed
abandoned pursuant to California Civil Code Section
1951.3; or
(e) If an event of insolvency shall
occur including:
(i) Tenant's making an
assignment for the benefit of creditors;
(ii) Tenant's failure generally
to pay its debts as they become due;
(iii) A material adverse change
in the financial condition of Tenant;
(iv) Tenant's filing, or
acquiescing to the filing of, a petition seeking
an order for relief against it in any state or
federal court in any bankruptcy, reorganization,
liquidation, composition, extension, arrangement
or insolvency proceeding;
(v) Tenant's making an
application for, or acquiescing to, the
appointment of a trustee, examiner or custodian
for it or all or any portion of its property;
(vi) Any petition being filed
against Tenant in any state or federal court
seeking reorganization or liquidation or
insolvency proceedings, and the proceedings shall
not be dismissed, discontinued or vacated within
ninety (90) days; or
(vii) Any trustee, examiner or
custodian being appointed for Tenant, or for all
or any portion of Tenant's property, and the
trustee, examiner, or custodian shall not be set
aside within ninety (90) days after such
appointment.
Section 10.2 Remedies. Upon the occurrence of a Default, and
in addition to any other rights or remedies available
to Landlord at law or in equity, Landlord shall have
the right to:
(a) terminate this Lease and all rights
of Tenant by giving Tenant written notice that this
Lease is terminated, in which case Landlord may recover
from Tenant the sum of :
(i) the worth at the time of award
of any unpaid Rent that had been earned at the time of
termination.
(ii) the worth at the time of award
of the amount by which (A) the unpaid Rent that would
have been earned after termination until the time of
award exceeds (B) the amount of rental loss, if any, as
Tenant affirmatively proves could have been reasonably
avoided;
(iii) the worth at the time of award of the amount by
which (A) the unpaid Rent for the balance of the Term
after the time of award exceeds (B) the amount of
rental loss, if any, as Tenant affirmatively proves
could be reasonably avoided;
(iv) any other amount necessary to
compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform Tenant's
obligations or that, in the ordinary course of things,
would be likely to result; and
(v) all other amounts in addition
to or in lieu of those previously stated as may be
provided from time to time by California law; or
(b) continue this Lease, and from time
to time, without terminating this Lease, either (i)
recover all Rent and other amounts payable as they
become due or (ii) relet the Premises or any part of
the Premises on behalf of Tenant for any term, at any
rent, and pursuant to any other provisions as Landlord
deems advisable, all with the right, at Tenant's cost,
to make alterations and repairs to the Premises.
As used in clauses 10.2(a)(i) and 10.2(a)(ii) of
this Section, the worth at the time of award is
computed by allowing interest at the Interest Rate. As
used in clause 10.2(a)(iii) of this Section, the worth
at the time of award is computed by discounting that
amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus one percent
(1%).
(c) Upon the occurrence of a Default,
Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and
remove all persons and property from the Premises.
Landlord may cause property so removed from the
Premises to be stored in a public warehouse or
elsewhere at the expense and for the account of Tenant.
(d) None of the following remedial
actions, singly or in combination, shall be construed
as an election by Landlord to terminate this Lease
unless Landlord has in fact given Tenant written notice
that this Lease is terminated or unless a court of
competent jurisdiction decrees termination of this
Lease; any act by Landlord to maintain or preserve the
Premises; any efforts by Landlord to relet the
Premises; any re-entry, repossession, or reletting of
the Premises; or any reentry, repossession, or
reletting of the Premises by Landlord pursuant to this
Section. If Landlord takes any of the previous
remedial actions without terminating this Lease,
landlord may nevertheless at any time after taking any
remedial action terminate this lease by written notice
to Tenant.
(e) If Landlord relets the Premises,
Landlord shall apply the revenue as follows: first, to
the payment of any reasonable cost of reletting,
including without limitation finder's fees and leasing
commissions; and second, to the payment of Rent and
other amounts due and unpaid under this Lease.
Landlord shall hold and apply the residue, if any, to
payment of future amounts payable as they become due
and, to the extent the residue exceeds such amounts,
shall remit such excess to Tenant. Should revenue from
reletting during any month, after application pursuant
to the foregoing provisions, be less than the
reasonable cost of reletting and the Rent and other
amounts due and unpaid under this Lease, Tenant shall
pay the deficiency to Landlord promptly upon demand.
(f) After the occurrence of a Default,
Landlord, in addition to or in lieu of exercising other
remedies, may, but without any obligation to do so,
cure the breach underlying the Default for the account
and at the expense of Tenant; provided that Landlord by
prior notice shall first allow Tenant a reasonable
opportunity to cure, except in cases of emergency,
where Landlord may proceed without prior notice to
Tenant. Tenant shall, upon demand, immediately
reimburse Landlord for all costs, including costs of
settlements, defense court costs, and attorney fees,
that Landlord may incur in the course of any such cure.
(g) No security, guaranty or security
interest granted for the performance of Tenant's
obligations, which Landlord may now or hereafter hold,
shall in any way constitute a bar or defense to any
action initiated by Landlord for unlawful detainer or
for the recovery of the Premises, for enforcement of
any obligation of Tenant, or for the recovery of
damages caused by a breach of this Lease by Tenant or
by a Default.
(h) Except as expressly provided in this
Lease to the contrary, no right or remedy conferred
upon or reserved to either party is intended to be
exclusive of any other right or remedy given now or
later or existing at law or in equity or by statute.
Except to the extent that either party may have
otherwise agreed in writing, no waiver by that party of
any violation or nonperformance by the other party of
any obligations, agreements, or covenants shall be
deemed to be a waiver of any subsequent violation or
nonperformance of the same or any other covenant,
agreement, or obligation, nor shall any forbearance by
either party to exercise a remedy for any violation or
nonperformance by the other party be deemed a waiver by
that party of rights or remedies with respect to that
violation or nonperformance.
(i) Landlord may require Tenant or any
trustee for Tenant under the United States Bankruptcy
Code (as amended, the "Bankruptcy Code") to cure
Tenant's Default and to provide adequate assurances of
future performance of this Lease as provided in Section
365(b)(3) of the Bankruptcy Code, including, without
limitation, adequate assurance that; (i) Rent will be
paid when due; (ii) there shall be no substantive
breach in the provisions of this Lease relating to the
Shopping Center including, without limitation, the
Permitted Use; and (iii) that there shall be no
disruption in any Tenant mix or Tenant balance in the
Shopping Center. If Tenant or the trustee does not
cure existing Defaults and provide such assurances of
future performance within sixty (60) days after there
has been an order for relief pursuant to the Bankruptcy
Code, this Lease shall be deemed rejected, and Landlord
shall have no further liability hereunder to Tenant or
any person claiming through or under Tenant and, if
Tenant or any such person is in possession. Tenant or
any such person shall forthwith quit and surrender the
premises to Landlord.
Section 10.3 Attorneys' Fees. In the event that either party
hereto commences an action related to this Lease, the
prevailing party shall be entitled to recover from the
other party all of its costs and expenses incurred
therein, including, without limitation, reasonable
attorneys' fees and disbursements. If either party
hereto is, without fault on its own part, made a party
to any action instituted by or against the other party
to this Lease due to such other party's fault, such
other party shall indemnify the party innocently
involved and defend and hold it harmless against and
from all such costs and expenses incurred therein
including, without limitation, reasonable attorneys'
fees and disbursements.
Section 10.4 Agreement to Arbitrate. Any controversy, dispute
or claim under, arising out of, in connection with or
in relation to this Lease, including but not limited to
the negotiation, execution, interpretation,
construction, coverage, scope, performance, non-performance,
breach, termination, validity or
enforceability of this Lease or any provision hereof
shall be determined by arbitration conducted in
accordance with the Commercial Arbitration Rules or
then existing rules for commercial arbitration of the
American Arbitration Association. The arbitration
shall additionally be governed by the California
Arbitration Act. The arbitration shall be conducted in
a location in San Bernardino County and shall be before
a single arbitrator who shall be selected by mutual
agreement of the parties from among a list of seven
potential arbitrators provided by the American
Arbitration Association. If the parties cannot agree
on an arbitrator from this first list, the parties
hereto shall select an arbitrator for such arbitration
from a second list of seven potential arbitrators
provided by the American Arbitration Association with
each party alternately striking names, with the last
name remaining to be the arbitrator so selected. In
the event that either party seeks a temporary
restraining order, preliminary injunction or other
provisional relief, the provisions of Section 1281.8 of
the California Code of Civil Procedure shall apply.
The arbitration of such issues, including the
determination of any amount of damages suffered by any
party hereto by reason of the acts or omissions of any
party, shall be final and binding upon the parties to
the maximum extent permitted by law. Judgment upon any
award rendered by the arbitrator(s) may be entered by
any court having jurisdiction thereof. The parties
intend that this Article shall be valid, binding,
enforceable and irrevocable and shall survive the
termination of this Agreement. It is understood and
agreed that the terms of this Section 10.4 shall not
apply to a determination of Fair Market Rental Value,
which shall be determined pursuant to Section 12.3 of
this Lease.
Section 10.5 No Set-off/Counterclaims. Tenant shall pay all
Rent due hereunder, free of any charges, assessments,
impositions or deductions and without abatement,
deferral, reduction, set-off, counterclaim, defense or
deduction except as permitted under the express terms
of this Lease or the Asset Purchase Agreement. Tenant
shall not interpose any counterclaim(s) in any action
brought by Landlord based, in whole or in part, on
Tenant's failure to pay Rent; provided, however, that,
the foregoing to the contrary notwithstanding: (i)
Tenant may interpose any counterclaim deemed
"compulsory" under applicable court rules of civil
procedure; (ii) Tenant shall be permitted to bring a
separate action against Landlord based on any claim
which Tenant is prohibited by this Lease from asserting
as a set-off or counterclaim; and (iii) Tenant may
bring actions and assert defenses, setoffs and
counterclaims permitted to be brought or asserted
against Landlord in accordance with the terms of the
Asset Purchase Agreement.
Section 10.6 Right of Redemption. Tenant hereby waives, for
itself and all persons claiming by, through or under
Tenant, any right of redemption or for the restoration
of the operation of this Lease under any present or
future law in the event Landlord shall obtain
possession of the Premises.
Section 10.7 No Waiver. No receipt of monies by Landlord from
Tenant after the termination or cancellation of this
Lease in any lawful manner shall reinstate the Term of
this Lease, or operate as a waiver of the right of
Landlord to enforce the payment of Rent then due, or
operate as a waiver of the right of Landlord to recover
possession of the Premises by proper suit, action,
proceeding or remedy; it being agreed that, after the
termination or cancellation of this Lease, or after a
final order or judgment for the possession of the
Premises, Landlord may demand, receive and collect any
monies due, without in any manner affecting such
notice, proceeding, suit, action, order or judgment;
and any and all such monies collected shall be deemed
to be payment on account of the use and occupation or
Tenant's liability hereunder.
Section 10.8 Unperformed Covenants of Landlord May Be
Performed By Tenant. If Landlord shall fail to perform
any of the terms, provisions, covenants or conditions
to be performed or complied with by Landlord pursuant
to this Lease, or if Landlord should fail to make any
payment which Landlord agrees to make, and any such
failure shall, if it relates to a matter which is not
of any emergency nature, remain uncured for a period of
thirty (30) days after Tenant shall have served upon
Landlord notice of such failure, or for a period of
twenty-four (24) hours after service of such notice, if
in Tenant's judgment reasonably exercised such failure
related to a matter which is of an emergency nature,
then Tenant may at Tenant's option, at any time prior
to commencement of Landlord's acting to cure such
failure and thereafter if Landlord fails to diligently
perform the curing of such failure, perform any such
term, provision, covenant or condition or to make any
such payment, as Landlord's agent, and in Tenant's sole
discretion as to the necessity therefor, and Tenant
shall not be liable or responsible for any loss or
damage resulting to Landlord or anyone holding under
Landlord on account thereof. The full amount of the
cost and expense entailed, or payment so made, shall
immediately be owing and payable by Landlord to Tenant.
The option given in this Section is for the sole
protection of Tenant, and its existence shall not
release Landlord from the obligation to perform the
terms, provisions, covenants and conditions herein
provided to be performed by Landlord or deprive Tenant
of any legal rights which it may have by reason of any
such default by Landlord.
ARTICLE XI
[INTENTIONALLY OMITTED]
ARTICLE XII
OPTIONS
Section 12.1 Renewal Options. Contingent upon Tenant
satisfying all of the following conditions, and
provided that Tenant has not filed for protection under
the Federal Bankruptcy Laws at the time such option is
exercised, Tenant is hereby granted four (4) separate
options (each an "Option" and two or more,
collectively, the "Options") to extend the Term of this
Lease, each for an additional period of five (5) years
(each a "Renewal Term"), conditioned upon satisfaction
of the following requirements:
(a) No Default by Tenant shall have
occurred and remain uncured as of the date of Tenant's
exercise of its Option; and
(b) Tenant shall deliver written
notice to Landlord exercising the applicable Option not
less than six (6) full calendar months prior to the
expiration of the Term (as it may be extended by
Tenant's exercise of any Options).
Section 12.2 Lease Terms Applicable. In the event that Tenant
exercises one or more of the Options herein granted,
then all of the terms and provisions of this Lease as
are applicable during the initial Term shall likewise
be applicable during each of the applicable Renewal
Terms except that Minimum Annual Rent and Percentage
Rent payable by Tenant for each Renewal Term shall be
as set forth in Section 12.3 below.
Section 12.3 Rent During Renewal Terms.
(a) The Minimum Annual Rent (as
defined in Section 4.1 of this Lease) which shall be
due and payable during the first Renewal Term, if
exercised by Tenant, shall be determined prior to the
commencement of each applicable Renewal Term and shall
be equal to three percent (3.0%) of the average of
annual Gross Sales at the Premises for the two (2)
Lease Years preceding the commencement of the
applicable Renewal Term. Percentage Rent for the first
Renewal Term shall be calculated in accordance with the
terms of Section 4.2 of this Lease.
(b) Minimum Annual Rent and
Percentage Rent (including the formula for the
calculation thereof) for each of the second, third and
fourth Renewal Terms, if exercised by Tenant, shall be
equal to the Fair Market Rental Value of the Premises,
each with respect to the 5-year term first day as of
the commencement of the applicable Renewal Term. The
Fair Market Rental Value of the Premises shall be based
upon the rental amounts paid by tenant-operators of
department stores for retail store space of
substantially the same type, size and quality as the
Premises, and located in major regional malls in San
Bernardino County or Riverside County. Within thirty
(30) days following Landlord's receipt of Tenant's
written notice that it wishes to exercise the
applicable Option, Landlord shall deliver to Tenant a
written notice specifying Landlord's good faith
estimate of the Fair Market Rental Value for the
Premises for the applicable Renewal Term. Within
thirty (30) days following Tenant's receipt of
Landlord's good faith estimate of the Fair Market
Rental Value of the Premises, Tenant may deliver a
written notice to Landlord either setting forth
Tenant's good faith of Fair Market Rental Value, in
which case Landlord and Tenant will promptly meet and
attempt to agree in good faith upon the Fair Market
Rental Value, or agreeing to Landlord's estimate of
Fair Market Rental Value. If no agreement regarding
the applicable Fair Market Rental Value for the
Premises can be reached within fifteen (15) days after
Landlord's receipt of Tenant's estimate of Fair Market
Rental Value for the Premises, Tenant shall have ten
(10) days to cancel its exercise of the applicable
Option by delivering written notice to Landlord within
such 10-day period. If Tenant does not terminate its
exercise of the applicable Option within such 10-day
period, the Fair Market Rental Value of the Premises
for the applicable Renewal Term shall be determined in
accordance with the terms of Exhibit E.
Section 12.4 Lease Amendment. Following Tenant's exercise of
each Option and the determination of the Fair Market
Rental Value of the Premises for the applicable Renewal
Term, Landlord and Tenant will enter into an amendment
to this Lease confirming the extension of the Term of
this Lease in accordance with the terms hereof.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Notices.
(a) Any notice, demand, request,
approval, consent or other instrument (collectively, a
"Notice") which may be, or is required to be, given
under this Lease shall be in writing and given by hand
or sent by United States certified or registered mail,
return receipt requested, postage prepaid, or by an
overnight nationally recognized courier service,
addressed to Landlord at the address herein first given
with a copy to: ▇▇▇▇▇▇▇▇ McAlearny Shimoff & ▇▇▇▇, ▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., or to such
other address as Landlord may from time to time
designate to Tenant by notice in accordance with this
Section, and to Tenant at the Premises and to Tenant's
address herein first given Attention: Law Department,
or to such other address as Tenant may from time to
time designate to Landlord by notice in accordance with
this Section. All Notices shall be deemed given or
served three (3) business days after the date of
registration or certification by the postal
authorities, if mailed, or upon receipt, if sent by
overnight courier or delivered in person.
(b) Any notice which may or shall
be given under this Lease by Landlord may be given by
Landlord, by any employee of Landlord, by any attorney
representing Landlord, by any management company
operating the Shopping Center on behalf of Landlord or
any employee of, or attorney retained by, said
management company, and all notices from any of the
foregoing shall be as effective as if given by Landlord
itself.
(c) Any Notice with respect to any
assignment, alleged default, termination or other
material issue given to Landlord shall also be given to
each mortgagee of Landlord's interest in the Shopping
Center, the name and address of which mortgagee
Landlord has previously given Tenant written notice.
Section 13.2 Brokers. Landlord and Tenant each warrants and
represents to the other party hereto that it has not
dealt with any broker in negotiating or consummating
this Lease, and Landlord and Tenant each hereby agrees
to indemnify, defend and hold harmless the other party
hereto against and from any and all claims losses or
liabilities as a result of any inaccuracy in the
foregoing representation. This Section shall survive
the Term of this Lease.
Section 13.3 Subordination of Lease.
(a) This Lease is subordinate to
the lien of all mortgages, deeds of trust and security
instruments (collectively, "Mortgages"), and to all
ground leases, easement agreements and operating
agreements now covering or affecting all or any part of
the Shopping Center, including, without limitation, the
REA, and to all modifications, consolidations,
renewals, replacements and extensions of any of the
foregoing. Landlord hereby represents and warrants
that there are no Mortgages in effect with respect to
the Shopping Center or the Premises except as
specifically set forth in Exhibit G attached hereto and
made a part hereof, nor are there any REAs affecting
the Shopping Center or Tenant's rights under this Lease
except as set forth in Exhibit D attached hereto and
made a part hereof. Landlord shall exercise best
efforts to obtain from each mortgagee under a Mortgage
listed on Exhibit G a nondisturbance agreement in the
form of the "SNDA" attached to the Asset Purchase
Agreement.
(b) Subject to the terms of any
nondisturbance agreement entered into by Tenant, should
any mortgagee under a Mortgage succeed to Landlord's
interest in this Lease, Tenant shall, upon demand,
attorn to and recognize such mortgagee as Landlord
under this Lease. In the event of a sale or assignment
of Landlord's interest in this Lease or the Premises,
Tenant shall attorn to and recognize such purchaser or
assignee as Landlord under this Lease without further
act by Landlord or such purchaser or assignee.
Section 13.4 Unavoidable Delays. In the event that either
party shall be delayed or hindered in, or prevented
from, the performance of any work, service or other act
required under this Lease to be performed by such party
and such delay or hindrance is due to: (i) strikes,
lockouts, or other labor disputes; (ii) inability to
obtain labor or materials or reasonable substitutes
therefor; or, (iii) acts of God, governmental
restrictions, enemy act, civil commotion, unavoidable
fire or other casualty, or other causes of a like
nature beyond the control of the party so delayed or
hindered (collectively, "Unavoidable Delays"), then
performance of such work, service or other act shall be
excused for the period of such delay and the period for
the performance of such work, service or other act
shall be extended by a period equivalent to the period
of such delay. In no event shall any such delay
constitute a termination or extension of this Lease.
The provisions of this Section shall not operate to
excuse Tenant from the timely payment of Rent.
Section 13.5 Estoppel Certificates. Upon ten (10) business
days prior written request therefor by Landlord or
Tenant from time to time, each party agrees to execute
and to deliver to the requesting party, or to such
other addressee or addressees as the requesting party
may designate, a written statement certifying that:
(i) this Lease is in full force and effect and
unmodified, or describing any modification; (ii) that
there are no defenses or offsets against the
enforcement of this Lease, or stating with
particularity defenses or offsets claimed; stating the
date to which Rent has been paid; and (iv) stating the
Term Commencement Date and the date this Lease expires.
Section 13.6 Relationship of Parties. Nothing contained in
this Lease shall be deemed or construed as creating the
relationship of principal and agent or of partnership
or of joint venture between the parties hereto, it
being understood and agreed that neither the method of
computing Rent nor any other provision contained herein
nor any acts of the parties hereto shall be deemed to
create any relationship between the parties other than
that of Landlord and Tenant.
Section 13.7 Governing Law; Jurisdiction.
(a) Governing Law. This Lease, the
legal relations between the parties and any Action
(defined below), whether contractual or non-contractual,
instituted by any party with respect to
matters arising under or growing out of or in
connection with or in respect of this Lease, including
but not limited to the negotiation, execution,
interpretation, coverage, scope, performance, breach,
termination, validity, or enforceability of this Lease,
shall be governed by and construed in accordance with
the laws of the State of California applicable to
contracts made and performed in such State and without
regard to conflicts of law doctrines, except to the
extent that certain matters are preempted by federal
law or are governed as a matter of controlling law by
the law of the jurisdiction of incorporation of the
Tenant.
(b) Jurisdiction. Each party
hereby irrevocably submits to and accepts for itself
and its properties, generally and unconditionally, the
exclusive jurisdiction of and service of process
pursuant to the laws of the State of California and the
rules of its courts, waives any defense of forum non
conveniens and agrees to be bound by any judgment
rendered thereby arising under or out of in respect of
or in connection with this Lease or any related
document or obligation. Each party further irrevocably
designates and appoints the individual identified in or
pursuant to Section 13.1 hereof to receive notices on
its behalf, as its agent to receive on its behalf
service of all process in any such Action before any
body, such service being hereby acknowledged to be
effective and binding service in every respect. A copy
of any such process so served shall be mailed by
registered mail to each party at its address provided
in Section 13.1; provided that, unless otherwise
provided by applicable law, any failure to mail such
copy shall not affect the validity of the service of
such process. If any agent so appointed refuses to
accept service, the designating party hereby agrees
that service of process sufficient for personal
jurisdiction in any action against it in the applicable
jurisdiction may be made by registered or certified
mail, return receipt requested, to its address provided
in Section 13.1. Each party hereby acknowledges that
such service shall be effective and binding in every
respect. Nothing herein shall affect the right to
serve process in any other manner permitted by
applicable law.
(c) As used in this Section 13.7,
"Action" shall mean any action, complaint, petition,
investigation suit or other proceeding before any
arbitrator or any other governing body or entity having
appropriate jurisdiction.
Section 13.8 Interpretation. The neuter, feminine or
masculine pronoun when used herein shall each include
each of the other genders and the use of the singular
shall include the plural. In the event of any conflict
between the terms of this Lease, and the terms of the
Asset Purchase Agreement (including any related
agreements entered into by Landlord and Tenant), the
terms of the Asset Purchase Agreement shall prevail
over any contrary term of this Lease.
Section 13.9 Captions. The captions of Articles and Sections
contained in this Lease are for convenient reference
only and shall not be deemed or construed as in any
manner limiting or amplifying the terms and provisions
hereof.
Section 13.10 Partial Invalidity. If any term or provision of
this Lease, or the application thereof to any person or
circumstance, shall to any extent be determined to be
invalid or unenforceable by a court of competent
jurisdiction, then 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.
Section 13.11 Waivers. The waiver by Landlord of any breach of
any term, covenant or condition contained in this Lease
shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent breach of
the same or any other term, covenant or condition
contained in this Lease. The subsequent acceptance of
Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term,
covenant or condition of this Lease or of any right of
Landlord to a forfeiture of the Lease by reason of such
breach, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such
Rent. No term, covenant or condition of this Lease
shall be deemed to have been waived by Landlord unless
such waiver be in writing and signed by Landlord.
Section 13.12 Accord and Satisfaction. No payment by Tenant,
or receipt by Landlord, of a lesser amount than the
Rent payment due under this Lease shall be deemed or
construed to be other than a payment or receipt on
account of the earliest Rent due. Neither the
endorsement or statement on any check nor the receipt
or negotiation of any such check by Landlord, shall be
deemed or construed to be an accord and satisfaction.
Section 13.13 Counterparts. This Lease may be executed in
several counterparts, each of which shall be deemed an
original and all of which shall together constitute one
and the same instrument.
Section 13.14 Entire Agreement. This Lease and the Asset
Purchase Agreement incorporate all undertakings between
the parties hereto with respect to Tenant's lease of
the Premises. Tenant hereby acknowledges that neither
Landlord nor Landlord's employees, agents or
contractors have made any representations or promises
to Tenant with regard to the Premises or the Shopping
Center or this Lease that have not been expressly
stated in this Lease and, therefore, Tenant hereby
waives any and all claims against, or liability of,
Landlord and Landlord's employees, agents, and
contractors based thereon. Landlord hereby
acknowledges that Tenant and its employees and officers
have made no representations or promises with regard to
Tenant's operations, sales figures or methods of doing
business or any other matter except as expressly
contained in this Lease, and Landlord, therefore,
hereby waives any claim with respect thereto or based
thereon.
Section 13.15 Successors and Assigns. This Lease and each of
the terms and conditions hereof shall inure to the
benefit of, and be binding upon, Landlord, and
Landlord's heirs, executors, administrators, successors
and assigns. This Lease and each of the terms and
conditions hereof shall also be binding upon Tenant,
and Tenant's heirs, executors, administrators,
successors and assigns and shall inure to the benefit
of Tenant and only such assigns of Tenant to whom the
assignment by Tenant has been made and consented to in
accordance with the provisions of Article IX of this
Lease.
Section 13.16 Survival of Obligations. All obligations of each
party which by their nature involve performance after
the end of the Term, or which cannot be ascertained or
have been fully performed until after the end of the
Term, shall survive the expiration or earlier
termination of this Lease.
Section 13.17 Submission of Lease. Submission of this Lease by
one party to the other for examination or execution
does not constitute an offer made, or an option
granted, to enter into this Lease.
Section 13.18 Memorandum of Lease. Landlord and Tenant agree
to execute a memorandum of this Lease, which memorandum
shall be substantially in the form attached hereto as
Exhibit F and shall be recorded in the applicable real
property records as soon as possible after the date of
this Lease.
Section 13.19 Attachments. Attached hereto and made a part of
this Lease are the following: Exhibits A-G, inclusive.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, Landlord and Tenant
have caused their duly authorized representatives to
execute this Lease as of the date first above written.
LANDLORD:
EL CORTE INGLES, S.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Its: INTERNATIONAL DIVISION DIRECTOR
TENANT:
GOTTSCHALKS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: PRESIDENT
EXHIBIT A
LEGAL DESCRIPTION OF SHOPPING CENTER
EXHIBIT B
SITE PLAN OF SHOPPING CENTER
EXHIBIT C
LEGAL DESCRIPTION OF PREMISES
EXHIBIT D
SCHEDULE OF REA AND RELATED AGREEMENTS
EXHIBIT E
DETERMINATION OF FAIR MARKET RENTAL VALUE
1. Efforts to Agree Upon Fair Market Rental Value.
If pursuant to the terms of the Lease, Fair
Market Rental Value is to be determined with
respect to any Renewal Term, Landlord and Tenant
shall promptly commence negotiation to reach
agreement on Fair Market Rental Value for the
applicable Renewal Term. If Landlord and Tenant
are unable to reach agreement on Fair Market
Rental Value within the time period provided in
the Lease and the parties wish to proceed with a
method of resolving the disagreement regarding
Fair Market Rental Value, the terms of Section 2
below shall apply.
2. Arbitration Regarding Fair Market Rental Value.
(a) If Landlord and Tenant are to proceed with
the method of determining Fair Market
Rental Value under this Exhibit E, then
within ten (10) days of the date either
Landlord or Tenant delivers written notice
to the other party hereto confirming that,
pursuant to the terms of the Lease, Fair
Market Rental Value is to be determined in
accordance with the terms of Exhibit E,
Landlord and Tenant shall each
simultaneously submit to the other in a
sealed envelope its good faith estimate of
Fair Market Rental Value. If the higher of
such estimates is not more than one hundred
five percent (105%) of the lower of such
estimates, then Fair Market Rental Value
shall be the average of the two estimates.
If one party ("Refusing Party") refuses to
simultaneously submit such estimate to the
other party ("Other") within such 10-day
period, then the Other may notify the
Refusing Party of the Other's willingness
to make such simultaneous submittal. If
the Refusing Party fails to make such
simultaneous submittal within five (5)
business days thereafter, the other party's
good faith estimate of Fair Market Rental
Value shall be Fair Market Rental Value.
(b) If the higher of the estimates is more than
one hundred five percent (105%) of the
lower of such estimates, then either
Landlord or Tenant may, by written notice
to the other at any time within ten (10)
days following the exchange of estimates,
require that the disagreement be resolved
by arbitration. Within seven (7) days
after such notice, the parties shall select
as an arbitrator a mutually acceptable
independent MAI appraiser with experience
in real estate activities, including at
least ten (10) years experience in
appraising anchor store retail space in
major regional shopping malls. If the
parties cannot agree on an appraiser within
such seven (7) day period, then within a
second period of seven (7) days, each shall
select and inform the other party of an
independent MAI appraiser meeting the
aforementioned criteria and within a third
period of seven (7) days, the two
appraisers shall select a panel of three
additional appraiser meeting the
aforementioned criteria and the three
appraisers shall determine Fair Market
Rental Value pursuant to this Exhibit E by
majority vote of such three appraisers.
Both Landlord and Tenant shall be entitled
to present evidence supporting their
respective positions to the panel of three
appraisers. If one party shall fail to
make such appointment within said second
seven (7) day period, then the appraiser
chosen by the other party shall be the sole
arbitrator, who shall determine Fair Market
Rental Value pursuant to this Exhibit E.
(c) Once the arbitrators have been selected as
provided above, then, as soon thereafter as
practicable but in any case within fourteen
(14) days, the arbitrators shall select one
of the two estimates of Fair Market Rental
Value submitted by Landlord and Tenant,
which must be the one that is closer to
Fair Market Rental Value as determined by
the majority of the arbitrators. The
arbitrators' selection shall be binding
upon Landlord and Tenant. The party whose
estimate is not chosen by the arbitrators
shall pay the costs of the arbitrators and
any experts retained by the arbitrators.
Any fees of any counsel or expert engaged
directly by Landlord or Tenant, however,
shall be borne by the party retaining such
counsel or expert.
EXHIBIT F
FORM OF MEMORANDUM OF LEASE
Recording Requested By And
When Recorded Return To:
Gottschalks Inc.
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
______________________________________________________________________________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (this
"Memorandum"), dated as of August 20, 1998, is entered
into by and between El Corte Ingles, S.A., a Spanish
corporation ("Landlord"), and Gottschalks Inc., a
Delaware corporation ("Tenant"). Landlord and Tenant
have entered into that certain Store Lease Agreement
dated as of August 20, 1998 (the "Store Lease"),
pursuant to which Landlord demised and leased to Tenant
and Tenant hired from Landlord the Premises as more
particularly described in the Lease (the "Premises"),
which Premises are located on the real property
described in Exhibit A attached hereto and made a part
hereof.
LANDLORD AND TENANT AGREE AS FOLLOWS:
1. For and in consideration of the
rental reserved and of the mutual covenants, agreements
and conditions set forth in that certain Store Lease,
Landlord does hereby lease to Tenant and Tenant does
hereby lease from Landlord, upon all terms and
conditions set forth in the Store Lease, the Premises.
The primary term of the Lease is ten (10) years
commencing on August 20, 1998 and expiring on August 20,
2007.
2. On the terms and conditions more
specifically set forth in the Store Lease, Tenant has
certain fixed rights to renew the Term of the Lease as
more specifically set forth therein. Specifically,
Tenant has been granted four separate options to renew
the Term of the Lease, each for an additional period of
five (5) years.
3. This Memorandum has been prepared to
provide notice that the Premises are subject to the
terms and conditions of the Store Lease, which terms
are hereby incorporated into this Memorandum by this
reference. In no event shall the terms of this
Memorandum be deemed to modify, amend, limit or
otherwise affect the terms and conditions of the Store
Lease. In the event of any inconsistency between the
terms of this Memorandum and the terms of the Store
Lease, the terms of the Store Lease shall control.
IN WITNESS WHEREOF, Landlord and Tenant
have caused their duly authorized representatives to
execute this Memorandum as of the date first written
above.
LANDLORD:
EL CORTE INGLES, S.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Its: INTERNATIONAL DIVISION DIRECTOR
TENANT:
GOTTSCHALKS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: PRESIDENT
EXHIBIT A
Description of Real Property
EXHIBIT G
SCHEDULE OF EXISTING MORTGAGES
A. Current preliminary title report:
Title Company:
Date of report:
Order No.:
B. Existing Mortgages: