Exhibit 10.16
OFFICE LEASE
Between
THE BLACKSTONE GROUP, LLC
A California Limited Liability Company
("Landlord")
and
COMMUNITY NATIONAL BANK
A National Banking Association
("Tenant")
April 12,2001
OFFICE LEASE
FOR
COMMUNITY NATIONAL BANK
This Lease ("Lease") dated April 12, 2001 by and between THE BLACKSTONE
GROUP, LLC, a California limited liability company ("Landlord"), and COMMUNITY
NATIONAL BANK, A National Banking Association ("Tenant"), is entered into with
respect to the following facts:
RECITALS
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A. Landlord is the owner of the unimproved real property located at the
southeast corner of 9th Avenue and Canterbury Place, Escondido, California, on
which Landlord intends to construct a three-story, steel-framed, Class A office
building of stone and black curtain-wall of glass, with approximately 32,148
rentable square feet ("Building"), a minimum of 120 parking spaces, a two-lane,
drive-up facility and automated teller machine, and other improvements to be
built pursuant to plans and specifications to be approved by Landlord and Tenant
(cumulatively the "Project").
B. Tenant desires to lease from Landlord the Building and to obtain an
option to lease less than all of the Building after ten years. Landlord is
willing to lease the Building to Tenant and to grant such option on the terms
set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
SECTION I
DEFINITIONS
The definitions contained in this Lease shall be used to interpret this Lease.
As used in this Lease, the following words and phrases, whenever used in this
Lease, shall have the meanings set forth in this Section; and only such
meanings, unless such meanings are expressly contradicted, limited or expanded
elsewhere herein.
1.01 Date of this Lease: April 12, 2001
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1.02 Landlord's Mailing Address: Xxxx X. Xxxxxxx, Manager
-------------------------- The Blackstone Group, LLC
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
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1.03 Tenant's Mailing Address: Community National Bank
------------------------ Attn: L. Xxxxx Xxxxx, Jr.
Senior Vice President and CFO
000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
1.04 Adjustment Date: Defined in Paragraph 5.02.
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1.05 Alteration: Any addition or change to, or modification of, the Premises
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made by Tenant, including, without limitation, fixtures, but excluding trade
fixtures and Tenant's Improvements (as defined below).
1.06 Annual Rent: When used herein, the term "Annual Rent" shall mean the yearly
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rent for the Premises as stated below and subject to adjustment as set forth in
Section V:
The rent for the Term shall be determined based upon a ten percent (10%)
per annum return to the Landlord of land costs and development and improvement
expenditures agreed upon by Landlord and Tenant in advance, not to exceed
$6,162,000.00, which amount shall include those matters set forth in Exhibit F
and incorporated herein, and shall include but not be limited to the Tenant
Improvement Allowance defined in Paragraph 1.55, and the Bank canopy and
drive-up improvements, including pneumatic tubing, reflected on Exhibit F. The
Annual Rent shall remain unchanged for the first two (2) years of the Term and
shall be increased by four and one-half percent (4 1/2%) on the first day of the
third (3rd) Lease Year. Thereafter through the remainder of the Term and any
Extended Term, the Annual Rent shall (a) be increased annually on each
Adjustment Date in accordance with Paragraphs 5.02 and 5.03 and (b) be reset
according to Market Rent at the beginning of the Option Terms as set forth in
Paragraph 5.05.
1.07 ATM: Defined in Paragraph 2.04.
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1.08 Authorized Representative: Any officer, agent, employee or independent
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contractor retained or employed by either party, acting within authority given
him by that party.
1.09 Awards: Defined in Paragraph 14.01.c.
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1.10 Bank Branch: That portion of the Building to be used by Tenant as a bank
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branch, as shown on Exhibit A-2, including but not limited to the two-lane,
Drive-through facility and ATM.
1.11 Building: Defined in Paragraph A.
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1.12 Commencement Date: The earlier of (1) twenty (20) business days after
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Landlord has delivered to Tenant written notice of substantial completion of
Landlord's Work (as specified in Exhibit B), including passage of final
inspection by the City of Escondido, issuance of a certificate of occupancy and
electric meter activation or (2) the date on which Tenant opens for business,
but in no event earlier than March 1, 2002. Landlord and Tenant acknowledge that
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it is their intent that Tenant shall begin its Tenant Improvements at the
earliest possible time in conjunction with the Project Schedule (attached hereto
as Exhibit G), but in no event later than November 15, 2001. In the event Tenant
is granted access to make its Tenant Improvements later than November 15, 2001,
the Commencement Date shall be adjusted accordingly. In the event that Landlord
does not complete Landlord's Work (as specified in Exhibit B) on or before May
1, 2002, except as may be extended by an Unavoidable Delay or as a result of any
act or omission of Tenant, then for each day until Landlord delivers to Tenant
written notice of substantial completion of Landlord's Work, Tenant shall
receive $1,000.00 a day credit toward its first month's rent obligation (and any
immediately successive months in the event the credit exceeds the first month's
rent), following the Commencement Date. If Landlord has not delivered notice of
substantial completion of Landlord's work by March 1, 2002, Tenant may cancel
the Lease by written notice to Landlord given before delivery to Tenant of
written notice of substantial completion. Further, in the event Landlord does
not deliver written notice to Tenant of issuance of building permits, and
approval of the Drive-through facility and zoning for Tenant's intended banking
uses by the City of Escondido, for the Project on or before September 1, 2001,
Tenant may cancel the Lease by written notice given to Landlord on or before
October 1, 2001.
1.13 Common Areas: Defined in Paragraph 2.03.b.1.
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1.14 Common Area Costs: Defined in Paragraph 2.03.b.4.
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1.15 Condemnation: Defined in Paragraph 14.01.a.
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1.16 Condemnor: Defined in Paragraph 14.01.d.
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1.17 Damage: Injury, deterioration, or loss to a person or property caused by
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another person's acts or omissions. Damage includes death.
1.18 Damages: A monetary compensation or indemnity that can be recovered in the
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courts by any person who has suffered damage to his person, property, or rights
through another's act or omission.
1.19 Date of Taking: Defined in Paragraph 14.01.b.
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1.20 Destruction: Any Damage to or disfigurement of the Premises.
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1.21 Drive-through: The Drive-through banking facility, including those portions
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of the Property primarily used for access to and from such facility, as shown on
Exhibit A.
1.22 Encumbrance: Any deed of trust, mortgage, or other written security device
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or agreement affecting the Premises, and the note or other obligation secured by
it, that constitutes security for the payment of a debt or performance of an
obligation.
1.23 Exhibits:
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The following Exhibits attached to this Lease are hereby incorporated in and
made a part of this Lease:
Exhibits A Site Plan
Exhibits A-1 and A-2 Drawings of Project and Building and Bank Branch space, respectively.
Exhibit B Construction (Description of Landlord's Work and Tenant's Work)
Exhibit C Sign Plan
Exhibit C-1 Allocation of Sign Rights to Rentable Area and Spaces in the Building
Exhibit D Memorandum of Commencement and Other Dates
Exhibit E Rules and Regulations
Exhibit F Agreed upon Land Costs and Development and Improvement Expenditures
Exhibit G Project Schedule
1.24 Expiration: The coming to an end of the time specified in this Lease as its
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Term.
1.25 Extended Term: The Term of this Lease after the Initial Terms, i.e. the
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Option Terms.
1.26 Good Condition: The good physical condition of the Premises and each
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portion of the Premises, including, without limitation, signs, windows,
appurtenances, and Tenant's personal property (as defined below). "In good
condition" means first-class, neat, clean, and broom-clean, and is equivalent to
similar phrases referring to physical adequacy in appearance and for use.
1.27 Hold Harmless: To defend and indemnify from all liability, losses,
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penalties, Damages, costs, expenses (including, without limitation, attorneys'
fees), causes of action, or judgments arising out of or related to any Damage,
to any Person or property.
1.28 Initial Terms: Defined in Paragraph 3.01.
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1.29 Landlord: Defined in the Preamble.
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1.30 Landlord's Work: Defined in Exhibit B.
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1.31 Landlord's Common Area Costs: Defined in Paragraph 2.03.b.4
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1.32 Law: Any judicial decision, statute, constitution, ordinance, resolution,
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regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal, or other government agency or authority having
jurisdiction over the parties or the Premises, or both, in effect either at the
time of execution of the Lease or at any time during the Term, including,
without limitation, any regulation or order of a quasi-official entity or body
(e.g., board of fire examiners or public utilities).
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1.33 Lease Interest Rate: One percent (1%) per annum plus the rate prevailing at
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the time any applicable interest hereunder is to commence established by the
Federal Reserve Bank of San Francisco on advances to member banks under
Sections 13 and 13.a. of the Federal Reserve Act as now in effect or hereafter
from time to time amended; but in no event to exceed the maximum rate allowable
under applicable usury laws.
1.34 Lease Year: Each consecutive twelve- (12-) month period during the Term,
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with the first Lease Year beginning on the Commencement Date.
1.34 Lender: The beneficiary, mortgagee, secured party, or other holder of an
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Encumbrance.
1.35 Lien: A charge imposed on the Premises by someone other than Landlord, by
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which the Premises are made security for the performance of an act, including
but not limited to, mechanics' liens.
1.36 Maintenance: Repairs, replacement, repainting, resurfacing, and cleaning.
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1.37 Option Terms: Defined in Paragraph 3.02.
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1.38 Option Notice: Defined in Paragraph 3.02.
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1.39 Party: Defined in Paragraph 25.02.f.
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1.40 Permitted Use: General office use and/or the conduct of a lawful business,
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consistent with area class A office building standards, local zoning and any
applicable CC&R's, including any and all incidental activities in which a state
or national bank, or any parent or subsidiary of such bank, may be allowed to
engage in by law or regulation.
1.41 Person: One or more human beings, or legal entities or other artificial
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persons, including, without limitation, partnerships, corporations, trusts,
estates, associations, and any combination of human beings and legal entities.
1.42 Premises: During the Initial Term, the entire Building as shown on Exhibit
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A-1; during the Extended Term, the Bank Branch and such other portion of the
Building that Tenant continues to lease.
1.43 Project: Defined in Paragraph A.
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1.44 Property: Defined in Paragraph 2.01.
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1.45 Provision: Any term, agreement, covenant, condition, clause, qualification,
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restriction, or other stipulation in the Lease that defines or otherwise
controls, establishes, or limits the performance required or permitted by either
party.
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1.46 Refurbishment Allowance: Defined in Paragraph 3.03.
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1.47 Rent: All fees, charges, expenses or other amounts owing from Tenant to
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Landlord under this Lease, including but not limited to Annual Rent and Tenant's
Proportionate Share of Common Area Costs, real property taxes, insurance
premiums and Refurbishment Allowance Repayment.
1.48 Rentable Area: Means the square footage of the Premises and other spaces
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within and outside the Building allocated to tenants in accordance with the most
recent Building Owners and Managers Association (BOMA) standards.
1.49 Restoration: The reconstruction, rebuilding, rehabilitation, and repairs
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that are necessary to return destroyed portions of the Premises and other
property to substantially the same physical conditional they were in immediately
before the destruction.
1.50 Security Deposit: The sum of Fifty Thousand Dollars ($50,000) deposited
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with Landlord pursuant to Section VI.
1.51 Sign Plan: Defined in Exhibit C.
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1.52 Successor: Assignee, transferee, personal representative, heir, or other
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Person or entity succeeding lawfully, and pursuant to the provisions of this
Lease, to the rights or obligations of either Party.
1.53 Tenant: Defined in the Preamble.
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1.54 Tenant's Costs: Tenant's Proportionate Share of real property taxes and
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assessments, substitute or additional taxes, Common Area charges, insurance,
Landlord's maintenance costs, and other similar charges payable by Tenant under
this Lease.
1.55 Tenant Improvement Allowance: Landlord shall provide to Tenant an
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Improvement Allowance of $30.00 per-square-foot for all of the Building, except
the Bank Branch, consisting of approximately 29,237 rentable square feet and
resulting in an allowance of approximately $877,000.00. The Improvement
Allowance may be drawn against at any time until Landlord obtains a permanent
loan secured by the Premises to replace its construction financing. The
permanent loan shall be obtained no earlier than 60 days following the
Commencement Date. If any amount of the improvement allowance remains unexpended
above existing unpaid invoices and contracts for Tenant Improvements at the time
of such refinancing, such unexpended amount shall no longer be available to
Tenant for improvements or other purpose. If at the Commencement Date there are
unexpended funds in the Tenant Improvement Allowance, Tenant's Annual Rent shall
be reduced consistent with the rent calculation formula set forth in Paragraph
1.06 whereby the Initial Rent is to be set so as to provide Landlord a ten
percent (10%) annual return on land costs and "expended" funds. If any remaining
Tenant Improvement Allowance funds are subsequently expended with the approval
of Tenant prior to the refinancing, the Rent accordingly shall be adjusted
upwards. Tenant shall fund the Bank Branch improvements on its own account,
without an allowance from Landlord.
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1.56 Tenant Improvements: Any addition to or modification of the Premises made
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by or on behalf of Tenant before, at, or near the commencement of the Term,
including, without limitation, fixtures (not including Tenant's Trade Fixtures).
1.57 Tenant's Personal Property: Tenant's equipment, furniture, merchandise, and
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movable property placed in the Premises by Tenant (not including Tenant's Trade
Fixtures).
1.58 Tenant's Proportionate Share: That percentage which is the ratio of the
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Rentable Area (as defined in the most recent Building Owners and Managers
Association (BOMA) standards) in the Premises to the total Rentable Area in the
Building, as determined upon completion of the Tenant Improvements by Landlord's
architect (with Tenant's concurrence) in accordance with such standards. While
Tenant leases the entire Building, Tenant's Proportionate Share shall be One
Hundred Percent (100%). In the event that Tenant elects during the Option
Term(s) to lease less than the entire Building, Tenant's Proportionate Share for
the Extended Term shall be recalculated accordingly.
1.59 Tenant's Trade Fixtures: Any property installed in or on the Premises by
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Tenant for purposes of trade, manufacture, ornament, or related use, including
the ATM and drive-through facility.
1.60 Term: The period of time during which Tenant has a right to occupy the
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Premises, including any option to extend the Term in accordance with the
provisions of Paragraph 3.02 of this Lease.
1.61 Termination: The ending of the Term for any reason before Expiration.
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1.62 Unavoidable Delays: Any and all delays caused by an act of God, fire,
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earthquake, flood, explosion, action by the elements, invasion, insurrection,
riot, mob violence, sabotage, inability to procure or general shortage of labor,
equipment, facilities, materials or supplies on the open market (provided they
were timely ordered), failure of transportation, strikes, lockouts, action of
labor unions, orders of governmental or civil or military or naval authorities,
changes in applicable governmental laws, regulations or restrictions (excluding
regulations or restrictions pertaining to zoning of the Premises), or any other
cause (except inability to obtain financing or to proceed with its obligations
under this Lease because of lack of funds), which is similar or dissimilar to
the foregoing, but not within the respective control of Landlord or Tenant, as
the case may be.
SECTION II
PREMISES
2.01 Lease of Premises.
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Landlord leases to Tenant and Tenant leases from Landlord the Premises which are
all or a part
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of the Building on the land described as City of Escondido, County of San Diego,
State of California commonly known as Xxxx 0 xxx 0 xx Xxxxxxxxx Xxxxx No. 766-R
(which land is hereinafter referred to as the "Property"). The Premises
initially consist of approximately 72,633 square feet, which constitutes all of
the Building and includes the exterior space devoted to the ATM, the
Drive-through, parking and landscape areas, all as shown on Exhibit A-1.
2.02 Airspace Rights.
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This Lease confers no rights either with regard to the subsurface of the
Property (other than any basement that is part of the Premises) or with regard
to airspace above the top of the roof or any appliance to be affixed to the roof
of the Building as shown on Exhibit A, except for access for maintenance to
mechanical systems and for, subject to obtaining Landlord's written approval in
advance, which approval shall not be unreasonably withheld, installation and
maintenance of an antenna an/or satellite dish as may be sought by Tenant. While
the Tenant leases more than half of the Rentable Area of the Building, Landlord
may not lease or license for use any air space for use which materially
interferes with Tenant's use. At no time shall Landlord (1) lease or license for
use any airspace to advertise banking or business services that are competitive
with Tenant's services or (2) interfere in any way with any approved
communications system(s) installed and used on the roof by Tenant.
2.03 Appurtenant Rights.
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The appurtenant rights referred to in this Lease are as follows:
a. Ingress and Egress.
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Tenant and its invitees, customers and authorized representatives shall
have full and unimpaired access to the Premises at all times except as
provided in the Sections of this Lease concerning destruction and
condemnation.
b. Common Areas.
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1. Common Areas Defined.
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The term "Common Areas" means all areas and facilities outside the
premises of all tenants and within the exterior boundaries of the
Property which are for the general use and convenience of Tenant and
of other tenants of the Building and their respective authorized
representatives and invitees. Common areas include, without
limitation, pedestrian walkways and patios, landscaped areas,
sidewalks, elevators, service corridors, restrooms, stairways,
decorative walls, throughways, loading areas, parking areas, and
roads, all as shown on Exhibit A.
2. Tenant's Right To Use.
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While Tenant leases the entire Building, Landlord gives to Tenant and
its authorized representatives, invitees, and subtenants and their
authorized
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representatives and invitees, the exclusive right to use the Common
Areas, including the roof, subject to Section 2.02, subject to
Landlord's rights set forth in subparagraph 2.03.b.3 and 2.03.b.4.
When and if Tenant ceases to lease the entire Building, Landlord gives
to Tenant and its authorized representative, invitees, and subtenants
(if any) and their authorized representatives and invitees, the
nonexclusive right to use the Common Areas, with others who are
entitled to use the Common Areas, subject to Landlord's rights set
forth in subparagraphs 2.03.b.3 and 2.03.b.4.
3. Maintenance and Management.
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Tenant shall, while it leases the entire Building and subject to the
provisions of Section 9.01, at its sole cost and expense, maintain or
cause to be maintained and kept in good condition the Common Areas and
every part thereof, damage by fire, earthquake, subsidence,
construction defect or other act of God excepted. Any of these
expenditures that are capital expenditures, as determined in
accordance with generally accepted accounting principles, including,
but not limited to, roof replacements and major parking for
rehabilitation and replacement, shall, to the extent they are not
collected by Landlord in reserve or as pass-through depreciation, be
prorated on an annual basis over the useful life of the improvement or
facility so replaced, and from the date of any expenditure, there
shall be included in Common Area Costs during any single year only the
pro rata portion of that expenditure as is properly allocable to that
year. Any Common Area Costs paid by Tenant and subsequently reimbursed
to Landlord by insurance or condemnation proceeds shall be reimbursed
to Tenant pro rata within thirty (30) days following Landlord's
receipt of such proceeds. In doing so, Tenant shall have the right to:
(a) Establish and enforce reasonable rules and regulations applicable
to all tenants concerning the maintenance, management, use and
operation of the Common Areas.
(b) Close temporarily any of the Common Areas for maintenance
purposes.
(c) Prescribe certain sections within the Common Areas for use as
parking spaces by Tenant and Tenant's employees, and in such a
case Tenant shall require its employees to use only those
sections for parking.
(d) Select a person to maintain and operate any of the Common Areas.
Subject to Landlord's reasonable review and approval, Tenant
shall have the right to negotiate and enter into a contract with
that person on such terms and conditions and for such period of
time as is reasonable and proper, both as to service and as to
cost.
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In the event that Tenant continues for thirty (30) days following
receipt of written notice thereof from Landlord to fail to meet its
obligations under this subparagraph 2.03.b.3, Tenant shall be in
breach of this Lease and Landlord shall have the immediate authority
to take over the maintenance and management of the Common Areas upon
providing written notice to Tenant of its intent to do so.
Notwithstanding Tenant's right to maintain and manage the Common
Areas, Landlord shall have the right to:
(a) Close any of the Common Areas to whatever extent required in the
opinion of Landlord's counsel to prevent a dedication of any of
the Common Areas or the accrual of any rights of any person or of
the public to the Common Areas; provided that no such closure may
materially impair Tenant or Tenant's business operations.
(b) Make changes to the Common Areas, including, without limitation,
changes in the location of driveways, entrances, exits, vehicular
parking spaces, parking areas, the direction or flow of traffic,
and removal of land from the Common Areas; provided that no such
change may materially impair Tenant or Tenant's business
operations, and such change has been approved by Tenant in
writing in advance.
In the event that Tenant elects during the Option Terms to lease less
than the entire Building, Landlord shall take over the maintenance and
management of the Common Areas during the Extended Term and shall
assume Tenant's rights and obligations with respect to maintenance and
management of the Common Areas. Further, Landlord shall allot to
Tenant (i) for the Bank Branch the minimum number of spaces required
by the City of Escondido for a full service, retail branch with ATM
and drive-up windows, such spaces to include the spaces closest to the
Bank Branch entrance and ATM, other than any spaces reserved for
disabled persons, and may be reserved and signed for. Tenant's
employees and customers upon Tenant's request, and (ii) additional
spaces in proportion to the Rentable Area Tenant continues to lease
excluding the Bank Branch as compared to the total Rentable Area in
the Building excluding the Bank Branch. In the event the City of
Escondido no longer has a minimum parking space requirement, Landlord
shall allot the Bank Branch 5 spaces per 1,000 square feet of Rental
Area of the Bank Branch. Any spaces designated for disabled persons
shall be apportioned toward Tenant's allotment of spaces based upon a
ratio of the Rentable Area leased by Tenant compared to the Total
Rentable Area in the Building.
In addition to the above, Landlord shall establish a reserve fund for
the estimated cost of the repair and replacement of the roof, as may
be required of Landlord pursuant to Section 9.01. Tenant shall pay to
Landlord $2,600 annually as its contribution to such roof reserve
fund. This amount shall be paid by Tenant to Landlord in equal monthly
installments of $216.67 on the first day of each and every calendar
month of the Initial Term and the Option Terms, if any, while
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Tenant leases the entire Building. Tenant shall pay this sum only
until such time as the reserve is fully funded based on an estimate of
the cots of replacement obtained by Landlord and approved by Tenant.
Such estimate shall be subject to being updated by Landlord with the
approval of Tenant. Landlord shall place Tenant's payment in an
interest-bearing account, with the interest to be allotted toward the
roof replacement reserve. The reserve fund and Tenant's payments
thereto are based upon a roof lifetime of fifteen (15) years. In the
event the roof is built to standards supporting a longer estimated
life (e.g. 20-year bondable roof) Tenant's payment to the reserve fund
shall be readjusted and reamortized to reflect the actual estimated
lifetime of the roof. During any period where Tenant leases some but
not all of the Building, Tenant shall contribute its Tenant's
Proportionate Share to the reserve fund.
4. Common Area Costs Defined.
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Common Area Costs means all costs of any kind paid or incurred by
Landlord or its agents or employees ("Landlord's Common Area Costs")
or by Tenant, as the case may be, for the maintenance and operation
of the Common Areas including, by way of examples and not as a
limitation upon the generality of the foregoing, costs of repairs and
replacements to improvements within the Building as appropriate to
maintain the Building in an excellent condition and costs of
resurfacing, repainting and restriping, cleaning, sweeping, and other
janitorial services, policing, purchase, construction, and maintenance
of refuse receptacles, planting and relandscaping, directional signs
and other markers, car stops, lighting and other utilities (any such
utilities and services not separately metered or charged for or to the
Common Area shall be fairly allocated so that Tenant will only pay its
Proportionate Share of utilities and services supplied to the Common
Area and not to any leased premises), reasonable depreciation
allowance on improvements, machinery, and equipment used in connection
with the Common Areas or rental expense for such machinery and
equipment, premiums on public liability and property damage insurance,
and commercially reasonable professional management fees (which can be
paid to Landlord if Landlord manages the Common Area). Common Area
Costs shall not include debt service, ground rent, construction of any
improvements (except to the extent that such improvements can be
reasonably expected to reduce Common Area Costs, and are approved by
Tenant in writing in advance, in which case the cost of such
improvements shall be amortized for their expected useful life span)
and commercially unreasonable amounts or types of insurance.
During such time as Landlord manages the Common Areas, Landlord shall
keep full, accurate and separate books of account covering the
Landlord's Common Area Costs, and all statements of costs delivered to
Tenant shall accurately reflect the total Landlord's Common Area Costs
and Tenant's Proportionate Share. Landlord shall retain the books of
account for at least thirty-six (36) months after the expiration of
each accounting period. Tenant shall have the right at all reasonable
times during the Term to inspect the books of account at Landlord's
office.
5. Tenant's Share Of Costs.
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If Tenant elects to lease some but not all of the Building:
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(a) Tenant shall be responsible for Tenant's Proportionate Share of
all Common Area Costs (as described in subparagraph 2.03.b.4)
during the Term, whether incurred by Landlord or Tenant or their
agents or employees. Common Area Costs that cover a period not
wholly within the Term shall be prorated.
(b) Tenant shall pay to Landlord an amount reasonably estimated by
Landlord to be Tenant's Proportionate Share of Landlord's Common
Areas Costs on the first (1st) day of each month, commencing as
of and on the Commencement Date of this Lease, or on the first
(1st) day of the month following the Commencement Date of this
Lease if such date is a day other than the first day of a
calendar month, and continuing during the Term. Landlord may
adjust the estimated monthly Landlord's Common Area Costs at the
end of each calendar quarter on the basis of Landlord's
reasonably anticipated costs for the following calendar quarter.
(c) Within sixty (60) days after the end of each calendar year,
Landlord shall furnish to Tenant a statement showing the total
Landlord's Common Area Costs, Tenant's Proportionate Share of the
total Landlord's Common Area Costs and the estimated monthly
payments made by Tenant during the calendar year just ended. Each
statement shall be prepared, signed and certified to be correct
by Landlord. If Tenant's Proportionate Share of Landlord's Common
Area Costs for any calendar quarter exceeds the payments made by
Tenant, Tenant shall pay Landlord the deficiency within ten (10)
days after receipt of the statement. If Tenant's payments made
during the calendar year exceed Tenant's Proportionate Share of
Landlord's Common Area costs, Landlord may, at its option, pay
Tenant the excess at the time Landlord furnishes the statement
to Tenant or credit the excess against future payments by Tenant
for Landlord's Common Area Costs.
6. Signs.
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Subject to the Landlord's consent, which shall not be unreasonably
withheld, Tenant may affix signs, logos and other descriptive
materials upon walls, windows and doors of the Premises so as to be
visible from the exterior of the Premises so long as such signs comply
with all applicable laws and regulations. Landlord and Tenant have
approved sign plans attached hereto as Exhibit C (the "Sign Plan").
Landlord is to obtain the City of Escondido's approval of the Sign
Plan by September 1, 2001. Tenant, at its expense, shall install,
maintain in good condition, repair and/or replace all of its signs. If
Tenant elects during the Option Terms to lease less than the entire
Building, Tenant's sign rights shall be reduced according to the
Rentable Area and particular space leased, as set forth in Exhibit
C-1. If any other tenant leases more Rentable Area within the Building
than does Tenant, Landlord may thereafter assign the Building name and
most prominent sign rights to another tenant at the Building. Prior to
such time, the Building shall
12
be known as the "Community National Bank Building" and shall be so
signed.
2.04 Exterior Banking Facilities.
---------------------------
Tenant shall have the right to operate exterior banking facilities as shown on
Exhibit A-2, which shall be (a) walk up night deposits, automatic teller
machines and similar facilities generally used in the banking business from time
to time (collectively "ATM") and (b) the Drive-through. In the event that Tenant
elects during Option Term(s) to lease less than the entire Building, Landlord
shall designate two (2) parking spaces as close as possible to the ATM for the
exclusive use of Tenant's customers and lighting around the ATM and
Drive-through shall be provided by Tenant. Landlord will install from the
Premises and under the Property, at Landlord's sole cost and expense, utilities,
tubes, and other facilities required by Tenant to operate the ATM and
Drive-through and access thereto for purposes of repair and maintenance.
Landlord will obtain, at Landlord's sole cost, all governmental approvals and
consents necessary to permit construction of the ATM and the Drive-through, and
shall submit the plans and specifications for installation of the ATM and
Drive-through with its site plan submitted to the City of Escondido, for project
approval.
SECTION III
TERM
3.01 Term.
----
The Initial Terms of this Lease (the "Initial Terms") shall be for fifteen (15)
years for the Bank Branch (including the ATM and Drive-through), and ten (10)
years for the balance of the Building, following the Commencement Date. The
parties agree to execute and attach as Exhibit D to this Lease a memorandum
setting forth the Commencement Date, Expiration, Option Notice periods and
Extended Term commencement dates as soon as such dates can be determined.
3.02 Options to Extend Term.
----------------------
Tenant is given the option to extend the Initial Terms, respectively, as set
forth herein, on all of the provisions contained herein by giving notice of
exercise (the "Option Notice") to Landlord not more than 360 days and not less
than 270 days before the Expiration of the respective Initial Terms or Extended
Terms of the Lease.
Tenant shall have two 5-year extension options for the Bank Branch and three
5-year options for the rest of the Building (respectively "Option Terms"). As
for the rest of the Building, Tenant may exercise its option to extend the term
for some or all of the Rentable Area in increments as set forth below, at
Tenant's sole discretion, provided that if Tenant has previously returned any of
such Rentable Area to Landlord, Tenant shall be deemed to have surrendered its
right to relet such space pursuant to the options contained herein.
13
In determining the portions of the second and third floors of the Building as to
which Tenant may exercise its option, such portion (a) may not be less than
2,500 square feet of Rentable Area or such other amount as may be agreed to by
both Landlord and Tenant in writing; (b) must not leave less than 2,500 square
feet of Rentable Area on any floor of the Building, or such other amount as may
be agreed to by both Landlord and Tenant in writing; (c) must be contiguous to
any other portion leased on the same floor; (d) must leave a remainder on any
floor which is, and must itself be, in compliance with all applicable building
and fire codes, governmental laws, regulations or restrictions; and (e) may not
be split between the second and third floors unless all of one of those floors
is leased by Tenant. Provided, however, that, with respect to the first floor of
the Building, Tenant may only exercise its option for either the Bank Branch or
the entire first floor.
If Tenant is in default on the date of giving the Option Notice beyond any time
to cure such default allowed by statute or created under this Lease, whichever
is greater ("Cure Period"), the Option Notice shall be totally ineffective, or
if Tenant is in default beyond any Cure Period on the date the Extended Term is
to commence and does not cure the default within the Cure Period, the Extended
Term shall not commence and this Lease shall expire at the end of the Initial
Term or Extended Term if the Term has been previously extended.
3.03 Refurbishment Allowance.
-----------------------
During the eleventh Lease Year, Landlord shall pay directly to Tenant's
contractor(s) a refurbishment allowance of Six Dollars ($6.00) per square foot
of Rentable Area in the Premises still leased by Tenant, including the Rentable
Area within the Bank Branch (the "Refurbishment Allowance") for the purpose of
upgrading and modernizing the Premises in such manner as Tenant shall choose,
subject to Landlord's approval (which approval shall not be unreasonably
withheld or delayed).
3.04 Exclusive Use During Extended Term.
----------------------------------
While Tenant operates a Bank Branch at the Building, and in the event that
Tenant does not lease the entire Building during the Extended Term(s), Landlord
shall not lease, use, permit or consent to the use of any portion of the
Building or the Property (other than the Bank Branch) to a financial institution
organized as a bank, savings and loan, credit union, or thrift association,
without the prior written consent of Tenant, which consent may be arbitrarily
withheld; provided that such restriction does not preclude Landlord from leasing
to stock brokerage companies or other similar companies which may offer some
services similar to and/or competitive with Tenant's banking business provided
those similar services are not the primary business of such companies.
Landlord specifically agrees to include in each lease or other occupancy
agreement covering all portions of the Building and/or Property other than the
Bank Branch, a provision which shall (1) notify each such other tenant or
occupant of the provisions of this Paragraph, (2) contain the agreement of each
such other tenant or occupant not to violate the provisions of this Paragraph,
and (3) contain the agreement of each such other tenant or occupant that Tenant
may enforce the
14
agreement described in clause (2).
SECTION IV
ACCEPTANCE AND TENANT IMPROVEMENTS
4.01 Acceptance Of Premises.
----------------------
Commencement of the Term without specific written objection by Tenant shall
constitute Tenant's acknowledgment that the Premises are in satisfactory
condition.
4.02 Tenant Improvements.
-------------------
Tenant, at its sole cost and expense (including Tenant's use of its Tenant
Improvement Allowance, as defined in Section 1.55), shall construct, or cause to
be constructed, the Tenant Improvements specified in Exhibit B and shall employ
for such purpose the same contractor that Landlord has selected to construct the
Building. Landlord hereby consents to the construction of such Tenant
Improvements subject to Tenant's agreement to remove the Tenant Improvements
designated on Exhibit B and to restore the Premises to the condition specified
therein at Expiration or Termination, provided Landlord designates before
installation of such Improvements which Improvements will be required to be so
removed. Regardless of any provision herein, Tenant shall not be obligated to
remove any interior walls, ceilings, floors or mechanical systems.
SECTION V
RENT
5.01 Annual Rent.
-----------
Tenant agrees to pay to Landlord, without any prior demand being required
therefor and without any set-offs or deductions whatsoever, Annual Rent as
specified in Paragraph 1.06, payable in equal monthly installments as specified
in Paragraph 1.06, in advance, on the first day of each and every calendar month
throughout the Term. Partial months shall be prorated. All Rent shall be paid to
the Landlord at the Landlord's Mailing Address unless otherwise directed in
writing by Landlord.
5.02 Periodic Rent Adjustments.
-------------------------
The Annual Rent shall be adjusted as of the first day of each Lease Year
beginning on the first day of the fourth (4th) Lease Year (each date being an
"Adjustment Date"), for the period beginning with such Adjustment Date and
ending on midnight of either the date which precedes the next Adjustment Date or
the last day of the Term, whichever is applicable (each period being an
"Adjustment Period"), in accordance with Paragraph 5.03. For and in those Lease
Years when Annual Rent is reset to Market Rent (defined in Paragraph 5.05),
there shall be no
15
adjustment made under Paragraph 5.03 for the Rentable Area for which there is a
Market Rent adjustment.
The following formula shall be used to prorate the rent between the Bank Branch
and the balance of the Building at Lease Year 11, when the balance of the
Building, or such portion thereof as Tenant elects to continue lease, is to be
reset to Market Rent in the event Tenant exercises its option therefor and/or if
Tenant returns some or all of the balance of the Building to Landlord: All of
the land costs and development and improvement expenditures used to determine
the Annual Rent under paragraph 1.06, except (1) the Bank's Addition (e.g. for
canopy and drive-up improvements, including pneumatic tubing) listed as a line
item in Exhibit F attached hereto and (2) the Tenant Improvement Allowance for
the Building (which will be allocated to the balance of the Building's cost),
shall be prorated between the Bank Branch and the balance of the Building based
on a ratio equal to their respective Rentable Area. All of the costs of the
Bank's Addition listed as a line item in Exhibit F attached hereto shall be
attributable to the Bank Branch only.
5.03 Calculation of Adjustments.
--------------------------
The base for computing the Annual Rent adjustment is the Consumer Price Index
for all urban consumers ("all-items") for Los Angeles-Riverside-Orange County
(1982-84=100), published by the United States Department of Labor, Bureau of
Labor Statistics ("Index"). The Annual Rent payable during each Adjustment
Period following each Adjustment Date shall be the Annual Rent in effect
immediately before the Adjustment Date in question multiplied by a fraction, the
numerator of which is the most recently published Index figure preceding such
Adjustment Date, and the denominator of which is the most recently published
Index figure preceding either the Commencement Date in the case of the first
Adjustment Date or the preceding Adjustment Date in the case of each adjustment
after the first adjustment. If at any Adjustment Date the Index shall not exist
in the same form as recited above, the Parties shall substitute any official
index published by the Bureau of Labor Statistics or similar government agency,
as may then be in existence and shall be most nearly equivalent thereto. If the
Parties shall be unable to agree upon a successor index, the Parties, or either
of them, shall refer the choice to arbitration.
Notwithstanding anything to the contrary in this Paragraph 5.03, the adjusted
Annual Rent payable after an Adjustment Date shall not be less than three
percent (3%) nor more than five percent (5%) of the annual rent in effect prior
to such Adjustment Date.
5.04 Late Charge.
-----------
Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, loss of interest, and late
charges which may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Premises. Accordingly, if any Rent payment shall not be
received by Landlord or Landlord's designee, or bear post office cancellation,
within five (5) days after such payment became due, Tenant shall pay to Landlord
a late charge for each such payment, equal to $5.00 or 10% of such overdue
amount, whichever shall be greater. The
16
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur, by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to any such overdue amount nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder.
5.05 Reset to Market.
---------------
In the event that Tenant elects to extend the term for any of the balance of the
Building pursuant to its three 5-year options to do so, then for such space and
for the initial Lease Year of such Option Term, the per square foot rate for
calculating Annual Rent with respect to the Premises (excluding Bank Branch),
shall be reset to then current fair market rent ("Market Rent") as set forth
below. In the event that Tenant elects to extend the term for the Bank Branch
pursuant to its two 5-year options to do so, then for such space and for the
initial Lease Year of such Option Term, Rent for the Bank Branch similarly shall
be reset to then current Market Rent as set forth below.
a. Procedure.
---------
To achieve a determination of Market Rent, Tenant may begin the process of
negotiating the Market Rent up to 18 months before the commencement of the
next Option Period. If the parties reach agreement on the Market Rent at
least 15 months preceding the next Option period, they shall immediately
execute an amendment to this Lease setting forth such Market Rent. If the
parties are unable to agree on the Market Rent at least 15 months preceding
the commencement of the next Option Period, then the determination of
annual Market Rent shall be made in accordance with paragraph 5.05.e.,
below. Anything in this Section 5.05 to the contrary notwithstanding, in no
case shall the Annual Rent after determination of the Market Rent under
this Section 5.05 be less than the Annual Rent for the then current Term.
b. Criteria.
--------
Market Rent shall be the fair market rental value of the relevant Premises
(i) under and subject to the provisions of this Lease (e.g., triple net
provisions) and (ii) at the highest and best use of the relevant Premises.
In any such predetermination of Market Rent there shall be excluded any
consideration of the Tenant's goodwill and/or "going business" value of
Tenant's business, and Tenant's trade fixtures.
c. Determination By Appraisal.
--------------------------
If the Parties are unable to agree upon the Market Rent within the time
period set forth in Paragraph 5.05.a, then the Parties shall each appoint a
qualified appraiser within 14 days thereafter who shall consult with each
other and, although each shall prepare its own appraisal, determine if they
can mutually agree on a Market Rent. If the two appraisers cannot agree on
a Market Rent, they shall appoint a third qualified appraiser who has not
performed any services for either party, who also shall prepare a separate
appraisal and
17
state its determination as to the Market Rent. The three appraisals shall
then be averaged to determine the Market Rent, although if any one of the
three appraisals is more than ten percent (10%) different from the average
of the other two, only the closest two determinations shall be used. If
either party refuses or fails to appoint an appraiser pursuant to this
paragraph, then the appraisal performed by the appraiser appointed by the
other party shall be used to determine Market Rent. Each party shall pay
the expense of the appraiser that it appointed, and the parties shall
equally share the expense of the third appraiser. As used herein, the term
"qualified appraiser" shall mean a certified M.A.I. real estate appraiser
who shall have been active full-time over the previous five (5) years in
the appraisal of commercial properties located in San Diego County.
SECTION VI
SECURITY DEPOSIT
6.01 Security Deposit.
----------------
Upon execution of this Lease, Tenant shall deposit with Landlord the sum
specified as the Security Deposit. The Security Deposit shall be held by
Landlord without obligation or liability for payment of interest thereon as
security for the faithful performance by Tenant of all of the terms of this
Lease to be observed and performed by Tenant. The Security Deposit shall not be
mortgaged, assigned, transferred or encumbered by Tenant without the prior
written consent of Landlord. Landlord shall not be required to keep the Security
Deposit separate from its general funds, nor shall Landlord be required to pay
interest on the Security Deposit.
6.02 Application Of Security Deposit.
-------------------------------
Should Tenant at any time during the Term hereof be in default under any
provision of this Lease, Landlord may, at its option and without prejudice to
any other remedy which Landlord may have at law or in equity, appropriate the
Security Deposit, or the portion thereof as may be deemed necessary, and apply
same toward payment of Rent or to loss or damage sustained by Landlord due to
the default on the part of Tenant. Within five (5) days after written demand by
Landlord, Tenant shall deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to the original sum deposited.
6.03 Refund.
------
Should Tenant perform all of its obligations under this Lease, the Security
Deposit, or any unapplied balance thereof then remaining, shall be returned to
Tenant within fourteen (14) days following delivery of the Premises to Landlord,
unless such funds are required for repairs of the Premises, in which event any
unappropriated balance then remaining shall be delivered to Tenant within thirty
(30) days following delivery of the Premises to Landlord.
6.04 Reduction of Security Deposit.
-----------------------------
18
In the event Tenant relinquishes any portion of the Building to Landlord at the
end of any Initial Term or Option Term, and provided Tenant is not in default
under the Lease, the Security Deposit shall be reduced in proportion to the
reduction in the Rentable Area of the Premises, and the difference shall be
applied to the first installment of Annual Rent next coming due.
SECTION VII
TAXES, ASSESSMENTS
7.01 Personal Property Taxes.
-----------------------
Tenant shall pay before delinquency all taxes, assessments, license fees, and
other charges ("taxes") that are levied and assessed against Tenant's personal
property installed or located in or on the Premises, and that become payable
during the Term. On written demand by Landlord, Tenant shall furnish Landlord
with satisfactory evidence of these payments within a reasonable period of time.
If any taxes on Tenant's personal property are levied against Landlord or
Landlord's property, or if the assessed value of the Building is increased by
the inclusion of a value placed on Tenant's personal property, and if Landlord
pays the taxes on any of these items or the taxes based on the increased
assessments of these items, Tenant, on demand, shall immediately reimburse
Landlord for the sum of the taxes levied against Landlord, or the proportion of
the taxes resulting from the increase in Landlord's assessment. Landlord shall
have the right to pay these taxes regardless of the validity of the levy.
7.02 Real Property Taxes.
-------------------
a. Tenant's Proportionate Share.
----------------------------
Tenant shall pay its Proportionate Share of all real property taxes, and
general and special assessments, levied and assessed against the Property
and the Building ("real property taxes"). Provided, however, that Tenant
shall not be required to pay any increase in such taxes which results from
reassessment of the Property upon transfer or sale of the Property.
Each year Landlord shall notify Tenant of Landlord's calculation of
Tenant's Proportionate Share of the real property taxes. Tenant shall pay,
directly to the taxing authority unless otherwise instructed by Landlord,
its Proportionate Share of the real property taxes semiannually not later
than ten (10) days before the taxing authority's delinquent date or ten
(10) days after receipt of the tax xxxx, whichever is later. If Landlord's
Lender requires Landlord to impound real property taxes on a periodic basis
during the Term, Tenant, on notice from Landlord indicating this
requirement, shall pay its Proportionate Share of real property taxes to
Landlord on a periodic basis in accordance with the Lender's requirements.
Landlord shall impound the tax payments received from Tenant in accordance
with the requirements of the Lender.
19
b. New Assessments.
---------------
If any general or special assessment is levied and assessed against the
Building or Property, Landlord can elect to either pay the assessment in
full or allow the assessment to go to bond. If Landlord pays the assessment
in full, Tenant shall pay to Landlord each time a payment of real property
taxes is made a sum equal to that which would have been payable (as both
principal and interest) had Landlord allowed the assessment to go to bond.
c. Proration of Tenant's Tax Liability.
-----------------------------------
Tenant's liability to pay real property taxes shall be prorated on the
basis of a 365-day year to account for any fractional portion of a fiscal
tax year included in the Term at its commencement and expiration or
termination.
d. Substitute and Additional Taxes.
-------------------------------
Tenant shall not be required to pay any municipal, county, state, or
federal income or franchise taxes of Landlord, or any municipal, county,
state or federal estate, succession, inheritance, or transfer taxes of
Landlord. If at any time during the Term, the State of California or any
political subdivision of the state, including any county, city, city and
county, public corporation, district, or any other political entity or
public corporation of this state, levies or assesses against Landlord a
tax, fee, or excise on (1) the square footage of the Premises, (2) the act
of entering into this Lease, or (3) the occupancy of Tenant, or levies or
assesses against Landlord any other tax, fee, or excise, however described,
including, without limitation, a so-called value added tax, as a direct
substitution in whole or in part for, or in addition to, any real property
taxes, Tenant shall pay before delinquency that tax, fee, or excise.
Tenant's share of any such tax, fee, or excise shall be substantially the
same as Tenant's Proportionate Share.
e. Right to Contest.
----------------
(1) Tenant, at its sole cost, shall have the right, at any time to seek a
reduction in the assessed valuation of the Premises or to contest any
real property taxes that are to be paid by Tenant. If Tenant seeks a
reduction or contests the real property taxes, the failure on Tenant's
part to pay the real property taxes shall not constitute a default so
long as Tenant complies with the provisions of this section.
(2) Landlord shall not be required to join in any proceeding or contest
brought by Tenant unless the provisions of any law require that the
proceeding or contest be brought by or in the name of Landlord or any
owner of the Premises. In that case, Landlord shall join in the
proceeding or contest or permit it to be brought in Landlord's name as
long as Landlord is not required to bear any cost.
(3) Tenant, on final determination of the proceeding or contest, shall
immediately pay
20
or discharge any decision or judgment rendered, together with all
costs, charges, interest and penalties incidental to the decision or
judgment. If Tenant does not pay the real property taxes when due and
Tenant seeks a reduction or contests them as provided in this section,
before the commencement of the proceeding or contest, Tenant shall
furnish to Landlord a surety bond issued by an insurance company
qualified to do business in California. The amount of the bond shall
equal one hundred and fifty percent (150%) of the total amount of real
property taxes in dispute. The bond shall hold the Landlord and the
Premises harmless from any damage arising out of the proceeding or
contest and shall insure the payment of any judgment that may be
rendered.
(4) Even if the bond, cash deposit or other security is furnished by
Tenant as provided in this section, Landlord shall not be required to
withhold payment of any levy or assessment if, at any time, any part
of the Property is in immediate danger of being forfeited or sold
because of non-payment of a levy or assessment.
SECTION VIII
USE, LIMITATIONS ON USE
8.01 Use.
---
Tenant shall use and occupy the Premises for the use specified in Paragraph 1.40
and for no other use.
8.02 Limitations on Use.
------------------
Tenant's use of the Premises as provided in this Lease shall be in accordance
with the following:
a. Cancellation Of Insurance: Increase In Insurance Rates.
------------------------------------------------------
Tenant shall not do, bring, or keep anything in or about the Premises that
will cause a cancellation of any insurance covering the Building. If the
rate of any insurance carried by Landlord is increased as a result of
Tenant's use not stated within Paragraph 1.40, Tenant shall pay to Landlord
within ten (10) days before the date Landlord is obligated to pay a premium
on the insurance, or within ten (10) days after Landlord delivers to Tenant
a certified statement from Landlord's insurance carrier stating that the
rate increase was caused by an activity of Tenant on the Premises as
permitted in this Lease, whichever date is later, a sum equal to the
difference between the original premium and the increased premium.
b. Compliance With Laws.
--------------------
Tenant shall comply with all laws concerning the Premises or Tenant's use
of the Premises, including, without limitation, the obligation at Tenant's
cost to alter, maintain,
21
or restore the Premises in compliance and conformity with all laws relating
to the condition, use, or occupancy of the Premises during the Term.
Except that Tenant shall not be obligated to comply with any law that
requires alterations, maintenance, or restoration to the Premises unless
the alterations, maintenance, or restoration are required as a result of
Tenant's particular and specific use of the Premises at the time. Landlord
shall make any alterations, maintenance, or restoration to the Premises
required by such laws that Tenant is not obligated to make.
c. Waste: Nuisance.
---------------
Tenant shall not use the Premises in any manner that will constitute waste,
nuisance, or unreasonable annoyance (including, without limitation, the use
of loudspeakers or sound or light apparatus that can be heard or seen
outside the Premises) to other tenants in the Building, except for the
necessary lighting, loud speakers and sound apparatus for the ATM and the
Drive-through. Tenant shall not use the Premises for sleeping, washing
clothes, preparation of food for sale or the preparation, manufacture, or
mixing of anything that might emit any odor or objectionable noises or
lights into the Building, with the exception that Tenant may maintain and
operate a kitchen in its lounge areas for the use of employees and
invitees.
d. Overloading.
-----------
Tenant shall not do anything on the Premises that will cause damage to the
Building. No machinery, apparatus, or other appliance shall be used or
operated in or on the Premises that will in any manner injure, vibrate, or
shake the Premises.
SECTION IX
MAINTENANCE
9.01 Landlord's Maintenance of the Premises.
--------------------------------------
In addition to the responsibilities for the Common Areas set forth in Paragraph
2.03(b)(3) above, and except as provided in Paragraph 9.04 and the Paragraphs
herein concerning destruction and condemnation, after Landlord delivers the
completed Building and the agreed-upon Tenant Improvements, Landlord shall
maintain, in good condition, and replace as reasonably necessary, without
reimbursement (except to the extent that maintenance is required because of some
negligent, reckless or willful act or omission of Tenant or any of its
invitees), all structural parts of the Building (including but not limited to
foundations, bearing and exterior walls, roof, subflooring and slab, including
but not limited to any damage to the structural parts of the building due to
soil subsidence), utility lines and facilities outside the Building shell or
beneath the slab or foundation, warranty work and any work necessary to correct
original, latent defects on all improvements delivered by the Landlord, and
other capital improvements except where the cost of construction of the
improvements is approved by Tenant in advance and does not exceed
22
savings to the Tenant of related operating expenses over the balance of the
term.
If and when Tenant continues to lease, some but not all of the Building,
then Landlord shall maintain, in good condition, and replace as reasonably
necessary, the following during the balance of the Initial Terms and any Option
Term:
a. The unexposed electrical, plumbing, and sewage systems in the Common Area
for the furnishing to the Building of various utilities (except to the
extent that the same are the obligation of the appropriate public utility
company); provided, however, that Landlord shall not be required to make
repairs necessitated by reason of the negligent conduct of Tenant, anyone
claiming under Tenant or their respective guests or invitees.
b. The Building's heating, ventilating, air conditioning and fire sprinkler
systems other than the separate heating, ventilating and air conditioning
system which services the Premises exclusively.
9.02 Tenant's Share Of Landlord Maintenance Costs of the Premises.
------------------------------------------------------------
If Tenant elects not to lease some but not all of the Building, Tenant shall
reimburse Landlord for Tenant's Proportionate Share of the costs of Landlord's
maintenance and/or replacement under Paragraph 9.01, except for any such costs
incurred due to the defective condition of the Building, as distinguished from
normal wear and tear.
Any of these expenditures that are capital expenditures, as determined in
accordance with generally accepted accounting principles, including, but not
limited to, roof replacements and major parking for rehabilitation or
replacement, shall, to the extent they are not collected by Landlord in reserve
or as pass-through depreciation, be prorated on an annual basis over the useful
life of the improvement or facility so replaced, and from the date of any
expenditure, there shall be included in Tenant's Proportionate Share during any
single year only the pro rata portion of that expenditure as is properly
allocable to that year. Any Tenant's Proportionate Share paid by Tenant and
subsequently reimbursed to Landlord by insurance or condemnation proceeds shall
be reimbursed to Tenant pro rata within thirty (30) days following Landlord's
receipt of such proceeds.
Within thirty (30) days after the end of each calendar year, Landlord shall
furnish to Tenant a statement showing Landlord's total maintenance costs under
Paragraph 9.01 and Tenant's Proportionate Share thereof for the calendar quarter
just ended. Reimbursement shall be made by Tenant within ten (10) days after
Tenant receives such statement.
9.03 Tenant's Remedies.
-----------------
Landlord shall have thirty (30) days after notice from Tenant to commence to
perform its obligations under Paragraph 9.01, except that Landlord shall perform
its obligations immediately if the nature of the problem presents a hazard or
emergency. If Landlord does not perform its obligations within the time
limitations in this Paragraph, Tenant can perform the obligations and have the
right to be reimbursed for the sum it actually expends in the performance of
Landlord's
23
obligations to the extent it exceeds Tenant's Proportionate Share. If Landlord
does not reimburse Tenant within thirty (30) days after demand from Tenant,
Tenant's sole remedy shall be to institute suit against Landlord, and Tenant
shall not have the right to withhold from future rent the sums Tenant has
expended.
9.04 Tenant's Maintenance.
--------------------
Except as provided in Paragraph 9.01 and 9.02, Tenant at its cost shall
maintain, in good condition, all portions of the Premises including, without
limitation, all Tenant's personal property, improvements, plate glass, lighting,
electrical, plumbing and sewage systems, exposed cables and all heating,
ventilating and air conditioning systems, except for defective conditions in the
Premises which are caused by Landlord (for which Landlord will be responsible).
Tenant shall be liable for any damage to the Building resulting from the acts or
omissions of Tenant or its authorized representatives. During the Initial Term
and during any time thereafter when Tenant leases the entire Building, Tenant
shall maintain, at its sole cost and expense, a full maintenance contract on the
Building's HVAC system, which contract shall provide for replacement of the HVAC
if necessary. During any period where Tenant leases some but not all of the
Building, Landlord shall maintain such a HVAC maintenance contract and Tenant
shall contribute its Tenant's Proportionate Share thereto.
SECTION X
ALTERATIONS
10.01 Consent Required.
----------------
Except as required in Exhibit B as part of Tenant's Work, Tenant shall not make
any structural alterations to the Premises without Landlord's prior written
consent, which consent shall not be unreasonably withheld. Landlord's consent
may be conditioned on Tenant's agreement to remove all or any designated part of
such alterations and to restore the Premises to the condition designated by
Landlord in its consent at Expiration or Termination, provided Landlord
identifies which alterations are to be removed at the time it provides its
consent to install them. Tenant, at its cost, shall have the right to make,
without Landlord's consent, nonstructural alterations to the interior of the
Premises not exceeding $50,000 in cost. Any alterations made shall remain on and
be surrendered with the Premises on Expiration or Termination, except that, with
respect to alterations not requiring Landlord's approval, Landlord can elect
within thirty (30) days before Expiration, or within ten (10) days after
Termination, to require Tenant to remove any alterations that Tenant has made to
the Premises. If Landlord so elects, Tenant at its cost shall restore the
relevant Premises to the condition designated by Landlord in its election,
before the last day of the Term, or within thirty (30) days after notice of
election is given, whichever is later.
Anything in this Paragraph 10.01 to the contrary notwithstanding, Tenant shall
have the absolute right to remove Tenant's personal property and trade fixtures,
bank vaults, vault doors, safe deposit boxes, ATM facilities, Drive-through
teller facilities and connection devices. Tenant shall perform all restoration
made necessary by the removal of any such property within the time periods
stated in this Paragraph 10.01.
24
10.02 Notice To Landlord.
------------------
If Tenant makes any alterations to the Premises as provided in this paragraph,
the alterations shall not be commenced until five (5) days after Landlord has
received notice from Tenant stating the date the installation of the alterations
is to commence so that Landlord can post and record an appropriate notice of
nonresponsibility.
10.03 Mechanics' Liens.
----------------
Tenant shall pay all costs for construction done by it or caused to be done by
it on the Premises as permitted by this Lease. Tenant shall keep the Building
and Property free and clear of all mechanics' liens resulting from construction
done by or for Tenant.
Tenant shall have the right to contest the correctness or the validity of any
such lien if, immediately on written demand by Landlord, Tenant procures and
records a lien release bond issued by a corporation authorized to issue surety
bonds in California in an amount equal to one and one-half times the amount of
the claim of lien. The bond shall meet the requirements of Civil Code Section
3143 and shall provide for the payment of any sum that the claimant may recover
on the claim (together with costs of suit, if it recovers in the action).
SECTION XI
UTILITIES AND SERVICES
Tenant shall make all arrangements for and pay for all utilities and services
furnished to or used by it in and at the Premises, including, without
limitation, janitorial services, gas, electricity, water, telephone and cable
services, and for all connection charges; except that, with respect to any
portion of the Premises which cannot practicably be separately metered so that
some or all utilities and services must be supplied by Landlord, as to such
utilities and services, Tenant shall reimburse Landlord on a monthly basis for
Landlord's costs in furnishing them within ten (10) days after Tenant receives
an invoice from Landlord. The amount which Tenant shall pay to Landlord for
furnishing such utilities and services shall be the ratio of the entire cost of
the utilities and services furnished to all the tenants included in the bills
that the total number of square feet of the Premises so supplied bears to the
total number of square feet leased by all the tenants included in the bills.
Landlord agrees to provide five (5) separate utility meters for the Building,
including one (1) meter for the Bank Branch and Drive-through, one (1) meter for
each of the three (3) floors of the Building, and one (1) meter for the Common
Areas.
SECTION XII
INDEMNITY AND EXCULPATION, INSURANCE
12.01 Exculpation of Landlord.
------------------------
25
Tenant, as a material part of the consideration to Landlord, hereby assumes all
risk of damage to property or injury to persons in or upon the Premises from any
cause other than Landlord's active negligence, and Tenant waives all claims
against Landlord for damage to person or property arising for any reason, except
that Landlord shall be liable to Tenant for damage to Tenant resulting from the
acts or omissions of Landlord or its authorized representatives.
12.02 Indemnity.
---------
Tenant shall hold Landlord harmless from all liability for damage to any person
or property occurring in, on or about the Premises, except that Landlord shall
be liable to Tenant for, and shall hold Tenant harmless from, damage resulting
from the acts or omissions of Landlord or its authorized representatives.
If Tenant elects to lease some but not all of the Building, Landlord shall hold
Tenant harmless from all liability for damage to any person or property
occurring in or on the Common Area and all other premises within the Building
other than the Premises, except that Tenant shall be liable to Landlord for, and
shall hold Landlord harmless from, damage resulting from the acts or omissions
of Tenant or its authorized representatives.
A Party's obligation under this Paragraph to indemnify and hold the other Party
harmless shall be limited to the sum that exceeds the amount of insurance
proceeds, if any, received by the Party being indemnified.
12.03 Public Liability and Property Damage Insurance.
----------------------------------------------
Tenant at its cost shall maintain public liability and property damage insurance
with a single combined liability limit of not less than $2,000,000 and property
damage limits of not less than $1,000,000 insuring against all liability of
Tenant and its authorized representatives arising out of and in connection with
Tenant's use or occupancy of the Premises.
All public liability insurance and property damage insurance shall insure
performance by Tenant of the indemnity provisions of Paragraph 12.02 and may be
secured through blanket insurance coverage. Both Parties shall be named as
additional insureds and the policies shall contain cross-liability endorsements.
12.04 Increase In Amount Of Public Liability And Property Damage Insurance.
--------------------------------------------------------------------
Not more frequently than once each year, if, in the reasonable opinion of
Landlord's Lender or of the insurance broker retained by Landlord, the amount of
any public liability and property damage insurance coverage provided for in
Paragraph 12.03 at that time is not adequate, the insurance coverage shall be
reasonably increased as required by either Landlord's Lender or Landlord's
insurance broker.
12.05 Tenant's Fire Insurance.
-----------------------
Tenant at its cost shall maintain on all its personal property, improvements,
and alterations in, on
26
or about the Premises, a policy of standard fire and extended coverage
insurance, with vandalism and malicious mischief endorsements, to the extent of
at least one hundred percent (100%) of their full replacement value. The
proceeds from any such policy shall be used by Tenant for the replacement of
personal property or the restoration of Tenant's improvements or alterations.
12.06 Plate Glass Insurance.
---------------------
All glass in and at the Premises is Tenant's risk unless damage thereto is
caused by the act of omission of Landlord or its agents, or is caused by
subsidence. Tenant at its cost may maintain full coverage plate glass insurance
on the Premises. Both Landlord and Tenant shall be named as additional insured
if such insurance is purchased by Tenant.
12.07 Fire Insurance on Building and Common Area.
------------------------------------------
At such time as Tenant does not lease the entire Building, Landlord shall
maintain on the Building and Common Area a policy or policies of standard fire
and extended coverage insurance to the extent of at least one hundred percent
(100%) of full replacement value. While Tenant Leases the entire Building,
Tenant shall maintain insurance reasonably satisfactory to Landlord and
Landlord's lender with an insurer approved by Landlord (such approval shall not
be unreasonably withheld), as is required hereunder and shall pay the premiums
directly to the insurer. Such policy or policies shall contain a vandalism and
malicious mischief endorsement and shall cover any and all other hazards and
have such other endorsements as Landlord determines is prudent from time to
time. The insurance policy shall be issued in the names of Landlord, Landlord's
Lender, and Tenant, as their interests appear.
a. Payment of Premiums.
-------------------
Tenant shall reimburse Landlord for Tenant's Proportionate Share of the
premiums paid by Landlord for maintaining fire insurance on the Building.
Reimbursement shall be made by Tenant within ten (10) days after Tenant
receives from Landlord a statement indicating Tenant's Proportionate Share
of such premium. Tenant's obligation to pay insurance costs shall be
prorated for any partial year at the commencement and expiration or
termination of the Term. Tenant shall not be liable for increases in the
insurance premiums caused by a particular use or activity of any other
tenant in the Building (excluding Tenant's own subtenants) or Landlord or
caused by improvements constructed by or for the exclusive benefit of any
other tenant (excluding Tenant's own subtenants) or Landlord.
b. Insurance Impounds.
------------------
If Landlord's Lender requires Landlord to impound insurance premiums for
the Building on a periodic basis during the Term, Tenant, on notice from
Landlord indicating this requirement, shall pay a sum of money toward its
liability under this Paragraph to Landlord on a periodic basis in
accordance with the Lender's requirements. Landlord shall impound the
insurance premiums received from Tenant in accordance with the requirements
of the Lender.
27
c. Determination Of Replacement Value.
----------------------------------
The "full replacement value" of the Building shall be determined by the
company issuing the insurance policy at the time the policy is initially
obtained. Not more frequently than once each year thereafter, either party
shall have the right to notify the other party that it elects to have the
replacement value redetermined by the insurance company. The
redetermination shall be made promptly and in accordance with the rules and
practices of the Board of Fire Underwriters, or a like board recognized and
generally accepted by the insurance company, and each party shall be
promptly notified of the results by the company. The insurance policy shall
be adjusted according to the redetermination.
12.08 Business Interruption Insurance.
-------------------------------
Tenant at its cost shall maintain business interruption insurance insuring that
monthly rent will be paid to Landlord for a period of up to six (6) months if
the Premises are destroyed or rendered inaccessible by a risk insured against
under Paragraph 12.07.
12.09 Waiver Of Subrogation.
---------------------
The parties release each other and their respective authorized representatives
from any claims for damage to any person and to the Premises and the Building
and Property, and to the fixtures, personal property, tenant's improvements, and
alterations of either Landlord or Tenant in or on the Premises and the Building
and Property that are caused by or result from risks insured against under any
insurance policies carried by the parties and in force at the time of any such
damage.
Each party shall cause each insurance policy obtained by it to provide that the
insurance company waives all right of recovery by way of subrogation against
either party in connection with any damage covered by any policy. Neither party
shall be liable to the other for any damage caused by fire or any of the risks
insured against under any insurance policy required by this Lease. If any
insurance policy cannot be obtained with a waiver of subrogation, or is
obtainable only by the payment of an additional premium charge above that
charged by insurance companies issuing policies without waiver of subrogation,
the party undertaking to obtain the insurance shall notify the other party of
this fact. The other party shall have a period of ten (10) days after receiving
the notice either to place the insurance with a company that is reasonably
satisfactory to the other party and that will carry the insurance with a waiver
of subrogation, or to agree to pay the additional premium if such a policy is
obtainable at additional cost. If the insurance cannot be obtained or the party
in whose favor a waiver of subrogation is desired refuses to pay the additional
premium charged, the other party is relieved of the obligation to obtain a
waiver of subrogation rights with respect to the particular insurance involved.
12.10 Other Insurance Matters.
-----------------------
All the insurance required to be maintained by the Parties under this Lease
shall:
a. Be issued by insurance companies authorized to do business in the State of
California,
28
with a financial rating of at least an A+ status as rated in the most
recent edition of Best's Insurance Reports.
b. Be issued as a primary policy.
c. Contain an endorsement requiring thirty (30) days' written notice from the
insurance company to both parties and Landlord's Lender before cancellation
or change in the coverage, scope or amount of any policy.
Each policy, or a certificate of the policy, together with evidence of payment
of premiums, shall have been previously deposited or shall be deposited with the
other party at the commencement of the Term, and on renewal of the policy not
less than twenty (20) days before expiration of the term of the policy.
SECTION XIII
DESTRUCTION
13.01 Destruction Due To Risk Covered By Insurance.
--------------------------------------------
If, during the Term, the Premises, the Building or the Common Area are totally
or partially destroyed from a risk covered by the insurance required to be
carried by Landlord in Paragraph 12.07, rendering the Premises totally or
partially inaccessible or unusable, Landlord shall restore the Premises, the
Building or the Common Area to substantially the same condition as they were in
immediately before destruction. Such destruction shall not terminate this Lease.
In the event the destruction cannot be repaired within twelve (12) months,
however, the Lease may be terminated by Tenant, effective as of the date of
destruction, by written notice to Landlord given within thirty (30) days after
notice given by Landlord to Tenant of the estimated date for completion of
repairs. If Landlord does not provide Tenant with a written notice of an
estimated date of repairs within ninety (90) days from the date of destruction,
Tenant may elect to terminate the Lease at any time thereafter until Landlord
provides a written notice to Tenant of the estimated date of completion of
repairs, with a date of completion within twelve (12) months of the date of
destruction. If Landlord provides notice of a date of estimated completion, and
Tenant does not (or cannot) elect to terminate the Lease, then for each day,
except for Unavoidable Delays, that the destruction is not repaired past the
estimated date of completion, Landlord shall pay Tenant $1,000.00. If the
existing laws do not permit such restoration or if Landlord's Lender requires
that insurance proceeds be applied to financing secured by the Building and
Landlord is unwilling or unable to perform such restoration with Landlord's own
funds, either party may terminate this Lease by giving thirty (30) days notice
to the other party.
13.02 Destruction Due To Risk Not Covered By Insurance.
------------------------------------------------
If, during the Term, the Premises, the Building or the Common Area are totally
or partially destroyed from a risk not covered by the insurance required to be
carried by Landlord in Paragraph 12.07, rendering the Premises totally or
partially inaccessible or unusable, Landlord
29
shall restore the Premises, the Building or the Common Area to substantially the
same condition as they were in immediately before destruction. Such destruction
shall not terminate this Lease. In the event the destruction cannot be repaired
within twelve (12) months, however, the Lease may be terminated by Tenant,
effective as of the date of destruction, by written notice to Landlord given
within thirty (30) days after notice given by Landlord to Tenant of the
estimated date for completion of repairs. If Landlord does not provide Tenant
with a written notice of an estimated date of repairs within ninety (90) days
from the date of destruction, Tenant may elect to terminate the Lease at any
time thereafter until Landlord provides a written notice to Tenant of the
estimated date of completion of repairs, with a date of completion within twelve
(12) months of the date of destruction. If Landlord provides notice of a date of
estimated completion, and Tenant does not (or cannot) elect to terminate the
Lease, then for each day, except for Unavoidable Delays, that the destruction is
not repaired past the estimated date of completion, Landlord shall pay Tenant
$1,000.00. If the existing laws do not permit the restoration, either party can
terminate this Lease immediately by giving thirty (30) days notice to the other
party.
If the cost of restoration exceeds twenty percent (20%) of the then replacement
value of the Premises or the Building that are destroyed, Landlord may elect to
terminate this Lease by giving thirty (30) days notice to Tenant.
In the case of destruction to the Premises only, if Landlord elects to terminate
this Lease, Tenant, within fifteen (15) days after receiving Landlord's notice
to terminate, can elect to pay to Landlord, at the time Tenant notifies Landlord
of its election, the difference between twenty percent (20%) of the then
replacement value of the Premises and the actual cost of restoration, in which
case Landlord shall restore the Premises. Landlord shall give Tenant
satisfactory evidence that all sums contributed by Tenant as provided in this
Paragraph have been expended by Landlord in paying the cost of restoration.
If Landlord elects to terminate this Lease and Tenant does not elect to perform
the restoration or contribute toward the cost of restoration as provided in this
Paragraph, this Lease shall terminate.
13.03 Extent Of Landlord's Obligation To Restore.
------------------------------------------
If Landlord is required or elects to restore the Premises as provided in
Paragraphs 13.01 and 13.02, Landlord shall not be required to restore
alterations made by Tenant, Tenant's improvements, Tenant's trade fixtures, and
Tenant's personal property, such excluded items being the sole responsibility
of Tenant to restore, regardless of the amount of insurance proceeds received by
Tenant.
13.04 Abatement Or Reduction Of Rent.
------------------------------
a. Destruction Without Termination Of Lease.
----------------------------------------
In case of destruction to the Premises by any cause which does not,
pursuant to the prior provisions of this Section XIII cause the termination
of this Lease, there shall be no abatement of rent for six (6) months from
the date of destruction. This rent shall be reimbursed to Tenant, however,
if the Lease is subsequently terminated, effective as of
30
the date of destruction, because the repairs cannot be completed within
twelve (12) months. Thereafter, there shall be an abatement of rent until
the date of completion of restoration based on the extent to which the
destruction interferes with Tenant's use of the Premises.
b. Destruction Which Causes Termination Of Lease.
---------------------------------------------
In case of destruction to the Premises by any cause which does, pursuant to
the prior provisions of this Section XIII, cause the termination of this
Lease, there shall be an abatement of rent between the date of destruction
and the date of termination of this Lease based on the extent to which the
destruction interferes with Tenant's use of the Premises.
13.05 Loss During Last Part Of Term.
-----------------------------
If destruction to the Premises occurs during the last two hundred and forty
(240) days of the relevant Term, and if the cost of restoration exceeds ten
percent (10%) of the then replacement value of the Premises or Building that are
destroyed, then either party can terminate this Lease by giving notice to the
other party not more than thirty (30) days after the destruction.
13.06 Waiver Of Civil Code Sections.
-----------------------------
Tenant waives the provisions of Civil Code Section 1932(2) and Civil Code
Section 1933(4) with respect to any destruction of the Premises.
SECTION XIV
CONDEMNATION
14.01 Definitions.
-----------
a. "Condemnation" means (1) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a condemnor and (2) a voluntary sale or
transfer by Landlord to any condemnor, either under threat of condemnation
or while legal proceedings for condemnation are pending.
b. "Date of Taking" means the date the Condemnor has the right to possession
of the property being condemned.
c. "Awards" means all compensation, sums, or anything of value awarded, paid
or received on a total or partial Condemnation, less attorney's fees and
legal costs incurred in obtaining such award.
d. "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of eminent domain.
31
14.02 Parties' Rights And Obligations To Be Governed By Lease.
-------------------------------------------------------
If, during the Term or during the period of time between the execution of this
Lease and the Commencement Date, there is any taking of all or any part of the
Building, the Property or any interest in this Lease by Condemnation, the rights
and obligations of the parties shall be determined pursuant to this Section XIV.
14.03 Total Taking.
------------
If the Premises are totally taken by Condemnation, this Lease shall terminate on
the Date of Taking.
14.04 Partial Taking.
--------------
a. Partial Taking Of Premises.
--------------------------
If any portion of the Premises is taken by condemnation, this Lease shall
remain in effect, except that Tenant can elect to terminate this Lease if
the remaining portion of the Premises is rendered unsuitable for Tenant's
continued use of the Premises. If Tenant elects to terminate this Lease,
Tenant must exercise its right to terminate by giving notice to Landlord
within thirty (30) days after the nature and the extent of the taking have
been finally determined. If Tenant elects to terminate this Lease as
provided herein, Tenant also shall notify Landlord of the date of
termination, which date shall not be earlier than thirty (30) days nor
later than ninety (90) days after Tenant has notified Landlord of its
election to terminate; except that this Lease shall terminate on the Date
of Taking if the Date of Taking falls on a date before the date of
termination as designated by Tenant. If Tenant does not terminate this
Lease within the 30-day period, this Lease shall continue in full force and
effect, except that Annual Rent shall be reduced pursuant to subparagraph
14.04.c.
b. Partial Taking Of Common Areas.
------------------------------
If any portion of the Common Area is taken by Condemnation, this Lease
shall remain in full force and effect, except that if such portion of the
Common Area is taken by Condemnation such that the Premises is rendered
unusable for Tenant's continued use of the Premises, either Party shall
have the election to terminate this Lease pursuant to this paragraph. If
such condemnation results in a reduction of the total parking for the
Project by more than 10%, or prevents the use of the Drive-through, Tenant
may terminate this Lease pursuant to this paragraph.
If a party elects to terminate this Lease, it must exercise its right to
terminate by giving notice to the other party within thirty (30) days after
the nature and extent of the Taking have been finally determined. The party
terminating this Lease also shall notify the other party of the date of
termination, which date shall not be earlier than thirty (30) days or late:
than ninety (90) days after the terminating party has notified the other
party of its
32
election to terminate; except that this Lease shall terminate on the Date
of Taking if the date of taking falls on a date before the date of
termination designated in the notice from the terminating party. If this
Lease is not terminated within the 30-day period, it shall continue in full
force and effect.
c. Effect On Rent.
--------------
If any portion of the Premises is taken by Condemnation and this Lease
remains in full force and effect, on the Date of Taking the Annual Rent
shall be reduced by an amount that is in the same ratio to Annual Rent as
the value of the area of the portion of the Premises taken bears to the
total value of the Premises immediately before the Date of Taking.
d. Waiver Of Code Of Civil Procedure Section 1265.130.
--------------------------------------------------
Each party waives the provisions of Code of Civil Procedure Section
1265.130 allowing either party to petition the Superior Court to terminate
this Lease in the event of a partial taking of the Premises.
e. Landlord's Election To Prevent Lease Termination.
------------------------------------------------
In the event of a partial taking, if, within thirty (30) days after the
date that the nature and extent of the taking are finally determined,
Landlord notifies Tenant that Landlord at its cost will add on to the
remaining Premises and parking area so that the area and the approximate
layout of the Premises and parking area will be substantially the same
after the date of taking as they were before the date of taking, and
Landlord commences the restoration promptly and completes the restoration
within one hundred twenty (120) days after Landlord notifies Tenant, this
Lease shall continue in full force and effect without any reduction in
annual rent.
f. Restoration Of Premises.
-----------------------
If there is a partial taking of the Premises and this Lease remains in full
force and effect, Landlord at its cost shall accomplish all necessary
restoration with all due diligence.
Annual Rent shall be abated or reduced during the period from the Date of
Taking until the completion of restoration, but all other obligations of
Tenant under this Lease shall remain in full force and effect. The
abatement or reduction of Annual Rent shall be based on the extent to which
the restoration interferes with Tenant's use of the Premises.
14.05 Award.
-----
The award shall belong to and be paid to the Parties in accordance with then
applicable law.
14.06 Temporary Taking.
----------------
33
The taking of the Premises or any part of the Premises by military or other
public authority shall constitute a taking of the Premises by condemnation only
when the use and occupancy by the taking authority has continued for longer than
180 consecutive days. During the 180-day period all the provisions of this Lease
shall remain in full force and effect, except that rent shall be abated or
reduced during such period of taking based on the extent to which the taking
interferes with Tenant's use of the Premises, and Landlord shall be entitled to
whatever award may be paid for the use and occupation of the Premises for the
period involved.
SECTION XV
ASSIGNMENT
15.01 Prohibition Against Voluntary Assignment, Subletting, and Encumbering.
---------------------------------------------------------------------
Tenant shall not voluntarily assign or encumber its interest in this Lease or in
the Premises, or sublease all or any part of the Premises, or allow any other
person or entity (except Tenant's authorized representatives) to occupy or use
all or any part of the Premises, without first obtaining Landlord's written
consent, which consent may be withheld by Landlord in its sole discretion, the
Parties hereby acknowledging that the proper mix of tenants in the Building and
various subjective factors relating to the operation and investment value of the
Building can only be determined by Landlord. Any assignment, encumbrance, or
sublease without Landlord's consent shall be voidable and, at Landlord's
election, shall constitute a default. No consent to any assignment, encumbrance,
or sublease shall constitute a further waiver of the provisions of this Section.
a. Partnership or Limited Liability Company.
----------------------------------------
If Tenant is a general partnership or limited liability company, a
withdrawal or change, voluntary, involuntary, or by operation of law, of
the partner(s)or member(s) owning fifty-one percent (51%) or more of the
partnership or company, or the dissolution of the partnership or
company, shall be deemed a voluntary assignment. If Tenant is a limited
partnership, any change in a general partner of Tenant which would be
considered a voluntary or involuntary assignment under this Lease if such
general partner were itself the Tenant shall be deemed a voluntary
assignment by the limited partnership.
b. Multiple Individuals.
--------------------
If Tenant consists of more than one person, a purported assignment,
voluntary, involuntary, or by operation of law, from a majority of persons
to the others or to a third party shall be deemed a voluntary assignment.
c. Corporation.
-----------
If Tenant is a corporation, any dissolution, merger, consolidation, or
other reorganization of Tenant, or the sale or other transfer of a
controlling percentage of the capital stock of
34
Tenant, or the sale of at least fifty-one percent (51%) of the value of the
assets of Tenant, shall be deemed a voluntary assignment. The phrase
"controlling percentage" means the ownership of, and the right to vote,
stock possessing at least fifty-one percent (51%) of the total combined
voting power of all classes of Tenant's capital stock issued, outstanding,
and entitled to vote for the election of directors. This subparagraph shall
not apply to corporations the stock of which is traded through an exchange
or over the counter and shall not apply in the event Tenant makes a public
offering of its stock. Anything in this Section to the contrary
notwithstanding, Landlord's prior consent shall not be required in the case
of an assignment of this Lease in connection with a merger, consolidation,
reorganization, or sale of assets or stock of Tenant, provided that the
assignee has a financial net worth, certified by an independent certified
public accountant, which is equal to or greater than the net worth of
Tenant as of the date hereof or as of the date of the assignment, whichever
is greater. In the event of such a proposed assignment, Tenant shall give
Landlord written notice of the proposed assignment at least forty-five (45)
days in advance, which notice shall set forth the information required to
substantiate that no consent is required hereunder.
15.02 Assignment Of Rents.
-------------------
Tenant immediately and irrevocably assigns to Landlord, as security for
Tenant's obligations under this Lease, all rent from any subletting of all or a
part of the Premises as permitted by this Lease, and Landlord, as assignee and
as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this Lease; except that, until the occurrence of an act of default by
Tenant, Tenant shall have the right to collect such rent.
15.03 Procedure.
---------
If at any time or from time to time during the Term Tenant desires to assign
this Lease or sublet all or any part of the Premises, Tenant shall give notice
to Landlord setting forth terms and provisions of the proposed assignment or
sublease, and the identity of the proposed assignee or subtenant. Tenant shall
promptly supply Landlord with such information concerning the business
background and financial condition of such proposed assignee or subtenant as
Landlord may reasonably request. Landlord shall have the option, exercisable by
notice given to Tenant within twenty (20) days after Tenant's notice is given,
either to sublet such space from Tenant at the rental and on the other terms set
forth in this Lease for the term set forth in Tenant's notice, or, in the case
of an assignment, to terminate this Lease. If Landlord does not exercise such
option, Tenant may assign the Lease or sublet such space to such proposed
assignee or subtenant on the following further conditions:
a. Landlord shall have approved such proposed assignee or subtenant;
b. The assignment or sublease shall be on the same terms set forth in the
notice given to Landlord;
c. No assignment or sublease shall be valid and no assignee or sublessee shall
take
35
possession of the Premises until an executed counterpart of such assignment
or sublease has been delivered to Landlord; and
d. No assignee or sublessee shall have a further right to assign or sublet
except on the terms herein contained.
If Tenant requests Landlord to consent to a proposed assignment or subletting,
Tenant shall pay to Landlord, whether or not consent is ultimately given,
Landlord's reasonable attorney's fees, not to exceed $1,000.00, incurred in
connection with each such request as additional Rent.
Notwithstanding the other provisions of this Paragraph 15.03 to the contrary,
during the Initial Term and, if Tenant has elected to lease some but not all of
the Building, Landlord shall be deemed to have consented to any subletting by
Tenant so long as the sublease (i) is for a term ending at or before the
Expiration of this Lease, (ii) does not purport to give the subtenant any right
which is not expressly given to Tenant under this Lease, (iii) requires the
subtenant to abide by all applicable terms of this Lease, including the
foregoing prohibition against further subletting or assignment, and (iv) an
executed counterpart of such assignment or sublease has been delivered to
Landlord.
15.04 Involuntary Assignment.
----------------------
No interest of Tenant in this Lease shall be assignable by operation of law
(including, without limitation, the transfer of this Lease by testacy or
intestacy). Each of the following acts shall be considered an involuntary
assignment:
a. If Tenant is or becomes bankrupt or insolvent, makes an assignment for the
benefit of creditors, or institutes a proceeding under the Bankruptcy Code
in which Tenant is the bankrupt; or, if Tenant is a partnership or consists
of more than one person or entity, if any partner of the partnership or
other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors.
b. If a writ of attachment or execution is levied on this Lease.
c. If, in any proceeding or action to which Tenant is a party, a receiver is
appointed with authority to take possession of the Premises.
An involuntary assignment shall constitute a default by Tenant and Landlord
shall have the right to elect to terminate this Lease, in which case this Lease
shall not be treated as an asset of Tenant. If a writ of attachment or execution
is levied on this Lease, Tenant shall have forty-five (45) days in which to
cause the attachment or execution to be removed. If any involuntary proceeding
in bankruptcy is brought against Tenant, or if a receiver is appointed, Tenant
shall have ninety (90) days in which to have the involuntary proceeding
dismissed or the receiver removed.
SECTION XVI
36
DEFAULT
16.01 Tenant's Default.
----------------
The occurrence of any of the following shall constitute a default by Tenant:
a. Failure to pay Rent or Tenant's costs when due.
b. Failure to perform any other provision of this Lease.
16.02 Notices Of Default.
------------------
Prior to exercising any remedy hereunder, Landlord shall give Tenant notice of
any default under Paragraph 16.01. Tenant shall have five (5) days to cure a
default consisting of failure to pay Rent or Tenant's costs when due, and thirty
(30) days to cure a curable default consisting of failure to perform any other
provisions of this Lease; provided that if the curable default cannot reasonably
be cured within thirty (30) days, Tenant shall not be in default of this Lease
if Tenant commences to cure the default within the 30-day period and diligently
and in good faith continues to clear the default.
Notices given under this paragraph shall specify the alleged default and the
applicable Lease provisions, and shall demand that Tenant perform the provisions
of this Lease or pay the Rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such notice shall be deemed
a forfeiture or a termination of this Lease unless Landlord so elects in the
notice.
The purpose of the notice requirements set forth in this Section is to satisfy
the notice requirements of the unlawful detainer statutes of the State of
California. No further notices are required for Landlord to maintain an unlawful
detainer proceeding, and to the extent the law may be construed to require
additional notices, such notices are hereby expressly waived by Tenant.
16.03 Landlord's Remedies.
-------------------
Landlord shall have the following remedies if Tenant commits a default. These
remedies are not exclusive; they are cumulative in addition to any remedies now
or later allowed by law:
a. Tenant's Right To Possession Not Terminated.
-------------------------------------------
Landlord can continue this Lease in full force and effect, and the Lease
will continue in effect as long as Landlord does not terminate Tenant's
right to possession. Landlord shall have the right to collect rent when
due. During the period Tenant is in default, Landlord can enter the
Premises and relet them or any part of them to third parties for Tenant's
account. Tenant shall be liable immediately to Landlord for all costs
Landlord incurs in reletting the Premises, including, without limitation,
brokers' commissions, expenses of remodeling the Premises required by the
reletting, and like costs. Reletting can be for a
37
period shorter or longer than the remaining relevant Term of this Lease.
Tenant shall pay to Landlord the rent due under this Lease on the dates the
rent is due, less the rent Landlord receives from any reletting. No act by
Landlord allowed by this subparagraph shall terminate this Lease unless
Landlord notifies Tenant that Landlord elects to terminate this Lease.
After Tenant's default and for as long as Landlord does not terminate
Tenant's right to possession of the Premises, if Tenant obtains Landlord's
consent Tenant shall have the right to assign or sublet its interest in
this Lease, but Tenant shall not be released from liability. Landlord's
consent to a proposed assignment or subletting under this subparagraph
shall not be unreasonably withheld.
If Landlord elects to relet the Premises as provided in this subparagraph,
rent that Landlord receives from reletting shall be applied to the payment
of:
First, any indebtedness from Tenant to Landlord other than rent due from
Tenant;
Second, all costs, including for maintenance, incurred by Landlord in
reletting; and
Third, rent due and unpaid under this Lease. After deducting the payments
referred to in this subparagraph, any sum remaining from the rent Landlord
receives from reletting shall be held by Landlord and applied in payment of
future rent as rent becomes due under this Lease. In no event shall Tenant
be entitled to any excess rent received by Landlord. If, on the date rent
is due under this Lease, the rent received from the reletting is less than
the rent due on that date, Tenant shall pay to Landlord, in addition to the
remaining rent due, all costs, including for maintenance, Landlord incurred
in reletting that remain after applying the rent received from the
reletting as provided in this subparagraph.
b. Termination Of Tenant's Right To Possession.
-------------------------------------------
Landlord can terminate Tenant's right to possession of the Premises at any
time. No act by Landlord other than giving notice to Tenant shall
terminate this Lease. Acts of maintenance, efforts to relet the Premises,
or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession. On termination, Landlord has the right to
recover from Tenant:
(1) The worth, at the time of the award, of the unpaid rent that had been
earned at the time of termination of this Lease;
(2) The worth, at the time of the award, of the amount by which the unpaid
rent that would have been earned after the date of termination of this
Lease until the time of award exceeds the amount of the loss of rent
that Tenant proves could have been reasonably avoided;
(3) The worth, at the time of the award, of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the
amount of the loss of rent that
38
Tenant proves could have been reasonably avoided; and
(4) Any other amount, and court costs, necessary to compensate Landlord
for all detriment proximately caused by Tenant's default.
"The worth, at the time of the award", as used in (1) and (2) of this
subparagraph, is to be computed by allowing interest at the "Lease Interest
Rate" (as defined in Section 1.33). "The worth, at the time of the award", as
referred to in (3) of this subparagraph, is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award, plus one percent (1%).
c. Appointment Of Receiver.
-----------------------
If Tenant is in default of this Lease, Landlord shall have the right to
have a receiver appointed to collect rent and conduct Tenant's business.
Neither the filing of a petition for the appointment of a receiver nor the
appointment itself shall constitute an election by Landlord to terminate
this Lease.
d. Landlord's Right To Cure Tenant's Default.
-----------------------------------------
Landlord, at any time after Tenant commits a default, can cure the default
at Tenant's cost. If Landlord at any time, by reason of Tenant's default,
pays any sum or does any act that requires the payment of any sum, the sum
paid by Landlord shall be due immediately from Tenant to Landlord at the
time the sum is paid, and if paid at a later date shall bear interest at
the Lease Interest Rate from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant. The sum, together with accrued interest
on it, shall be additional Rent.
16.04 Interest On Unpaid Rent.
-----------------------
Rent and Tenant charges not paid when due shall bear interest at the Lease
Interest Rate.
16.05 Tenant's Right To Cure Landlord's Default.
-----------------------------------------
Landlord shall be in default of this Lease if it fails or refuses to perform any
provision of this Lease that it is obligated to perform if the failure to
perform is not cured within thirty (30) days after notice of the default has
been given by Tenant to Landlord and to Landlord's Lender, if Landlord has
delivered notice to Tenant of the Lender's name and address for notice. If the
default cannot reasonably be cured within thirty (30) days, Landlord shall not
be in default of this Lease if Landlord commences to cure the default within the
thirty (30) day period and diligently and in good faith continues to cure the
default.
Tenant, at any time after Landlord commits a default, can cure the default at
Landlord's cost. If Tenant at any time, by reason of Landlord's default, pays
any sum or does any act that requires the payment of any sum, the sum paid by
Tenant shall be due immediately from Landlord to Tenant at the time the sum is
paid and if paid at a later date shall bear interest at the Lease
39
Interest Rate from the date that the sum is paid by Tenant until Tenant is
reimbursed by Landlord.
If Landlord is in default of this Lease, Tenant shall have the right to have a
receiver appointed to operate the Building in place of Landlord, including the
collection of all rents due Landlord. Neither the filing of a petition for the
appointment of a receiver nor the appointment itself shall constitute an
election by or allow Tenant to terminate this Lease.
Anything in this Lease to the contrary notwithstanding, Tenant's sole remedy
upon any default by Landlord (other than the appointment of a receiver as
specified above) shall be the collection of money damages from Landlord and
Tenant shall have no right to terminate this Lease except in the case of
Landlord's failure to restore the Premises as required by Section XIII.
16.06 Limitation Of Landlord's Liability.
----------------------------------
If Landlord is in default of this Lease, and as a consequence Tenant recovers a
money judgment against Landlord, the judgment shall be satisfied only out of the
proceeds of sale received on execution of the judgment and levy against the
right, title, and interest of Landlord in the Building and Property and out of
rent or other income from such Building and Property receivable by Landlord or
out of the consideration received by Landlord from the sale or other disposition
of all or any part of Landlord's right, title, and interest in the Building
and/or Property. Neither Landlord nor any of the partners comprising the
partnership designated as Landlord shall be personally liable for any
deficiency.
16.07 Unavoidable Delays.
------------------
Except as otherwise expressly provided in this Lease, if Landlord or Tenant
shall, as a result of any Unavoidable Delays, fail punctually to perform any
obligation on its part to be performed under this Lease, then such failure shall
be excused and not be a breach of this Lease by the Party in question, but only
to the extent occasioned by such Unavoidable Delays. If any right or option of
either Party to take any action under or with respect to this Lease is
conditioned upon the same being exercised within any prescribed period of time
or at or before a named date, then such prescribed period of time and such named
date shall be deemed to be extended or delayed, as the case may be, for a period
equal to the period of delay occasioned by any Unavoidable Delay.
Notwithstanding anything to the contrary herein, the provisions of this
Paragraph 16.07 shall not be applicable to Tenant's obligation to pay rent or to
either Party's obligation to pay any other sums, monies, costs, charges or
expenses required to be paid by either Party hereunder. The Party contending an
event constitutes an Unavoidable Delay which could result in an extension or an
excuse for performance, shall give written notice of such event to the other
Party within ten (10) days of the event in question.
SECTION XVII
LANDLORD'S ENTRY ON PREMISES
40
17.01 Right Of Entry.
--------------
Landlord and its authorized representatives shall have the right to enter during
normal business hours the Premises after giving reasonable notice (at least 24
hours in advance in a nonemergency situation) to Tenant for any of the following
purposes:
a. To determine whether the Premises are in good condition and whether Tenant
is complying with its obligations under this Lease;
b. To do any necessary maintenance and to make any restoration to the Premises
or the Building that Landlord has the right or obligation to perform;
c. To serve, post, or keep posted any notices required or allowed under the
provisions of this Lease;
d. To post "for sale" signs at any time during the Term, to post "for rents or
"for lease" signs during the last three (3) months of an expiring Term, or
during any period while Tenant is in default;
e. To show the Premises to prospective brokers, agents, buyers, tenants, or
persons interested in an exchange, at any time during the Term; or
f. To shore the foundations, footings, and walls of the Premises or the
Building and to erect scaffolding and protective barricades around and
about the Premises, but not so as to prevent entry to the Premises, and to
do any other act or thing necessary for the safety or preservation of the
Premises or the Building if any excavation or other construction is
undertaken or is about to be undertaken on any adjacent property or nearby
street. Landlord's right under this provision extends to the owner of the
adjacent property on which excavation or construction is to take place and
the adjacent property owner's authorized representatives.
17.02 Effect And Manner Of Entry.
--------------------------
Landlord shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance, or other damage arising out of Landlord's entry on
the Premises as provided herein, except damage resulting from the acts or
omissions of Landlord or its authorized representatives. Tenant shall not be
entitled to an abatement or reduction of rent if Landlord exercises any rights
reserved in this paragraph. Landlord shall conduct its activities on the
Premises during normal business hours, unless waived by Tenant in writing, and
in a manner that will cause the least possible inconvenience, annoyance, or
disturbance to Tenant. Tenant shall have the right to escort Landlord and/or its
authorized representative during any entry on the Premises under this Section.
SECTION XVIII
41
SUBORDINATION, ESTOPPEL, AND NO MERGER
18.01 Automatic Subordination.
-----------------------
This Lease is and shall be prior to any encumbrance recorded after the date of
the Lease affecting the Building and Property. If, however, a Lender requires
that this Lease be subordinate to any such encumbrance, this Lease shall be
subordinate to that encumbrance, if Landlord first obtains from the Lender a
written agreement that provides substantially the following:
"As long as Tenant performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under the
encumbrance, and no steps or procedures taken under the encumbrance, shall
affect Tenant's rights under this Lease."
Tenant shall attorn to any purchaser at any foreclosure sale, or to any grantee
or transferee designated in any deed given in lieu of foreclosure.
Tenant shall execute the written agreement and any other documents required by
the Lender to accomplish the purposes of this Paragraph 18.01 within five (5)
business days after receiving such documents. If Tenant fails to timely execute
and deliver any such documents or instruments, Tenant irrevocably constitutes
and appoints Landlord as Tenant's special attorney-in-fact to execute and
deliver any such documents or instruments.
18.02 Right To Estoppel Certificates.
------------------------------
Each party, within ten (10) business days after notice from the other party,
shall execute and deliver to the other party, in recordable form, a certificate
stating that this Lease is unmodified and in full force and effect, or in full
force and effect as modified, and stating the modifications. The certificate
also shall state the amount of monthly rent, the dates to which the rent has
been paid in advance, and the amount of any security deposit or prepaid rent.
Failure to deliver the certificate within ten (10) business days shall be
conclusive upon the party failing to deliver the certificate for the benefit of
the party requesting the certificate and any successor to the party requesting
the certificate, that this Lease is in full force and effect and has not been
modified except as may be represented by the party requesting the certificate.
If a party fails to deliver the certificate within the ten (10) business days,
the party failing to deliver the certificate irrevocably constitutes and
appoints the other party as its special attorney-in-fact to execute and deliver
the certificate to any third party.
18.03 No Merger.
---------
There shall be no merger of this Lease or the leasehold estate hereunder with
the fee estate in the Property and or the Premises by reason of the facts that
this Lease or the leasehold estate hereunder may be held, directly or
indirectly, by or for the account of any entities who hold the fee estate. No
such merger shall occur unless all entities having an interest in the fee estate
and all entities (including any leasehold mortgagee) having an interest in this
Lease or the leasehold estate hereunder, join in a written statement effecting
such merger and duly record the same.
42
SECTION XIX
NOTICE
Any notice, demand, request, consent, approval, or communication that either
party desires or is required to give to the other party or any other person
shall be in writing and either served personally or sent by prepaid, first-class
mail, return receipt requested. Any notice, demand, request, consent, approval,
or communication that either party desires or is required to give to the other
party shall be addressed to the other party at the address set forth in
Paragraphs 1.02 or 1.03, unless subsequently changed by the party by notice in
the manner provided in this Paragraph. Notice shall be deemed communicated
within forty-eight (48) hours from the time of mailing if mailed as provided in
this Paragraph.
SECTION XX
WAIVER
20.01 Delay Or Omission.
-----------------
No delay or omission in the exercise of any right or remedy of either Party on
any default by the other Party shall impair such a right or remedy or be
construed as a waiver.
20.02 Waiver Of Default.
-----------------
No waiver of any breach or default by either Party shall constitute a waiver of
any other breach or default, whether of the same or any other covenant or
conditions. The receipt and acceptance by Landlord of rent shall not constitute
a waiver of any preceding default other than the default in the payment of the
particular rental payment so accepted, regardless of Landlord's knowledge of the
preceding breach at the time of accepting the rent; nor shall acceptance of rent
or any other payment after termination constitute a reinstatement, extension or
renewal of the Lease or revocation of any notice or any other act previously
given or done by Landlord.
20.03 Acceptance Of Surrender.
-----------------------
No act or conduct of Landlord, including, without limitation, the acceptance of
the keys to any part or all of the Premises, shall constitute an acceptance of
the surrender of any part or all of the Premises by Tenant before the expiration
of the Term. Only a notice from Landlord to Tenant shall constitute acceptance
of the surrender of the Premises and accomplish a termination of the Lease.
20.04 Consents.
--------
43
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant. No waiver,
benefit, privilege or service voluntarily given or performed by either party
shall give the other any contractual right by custom, estoppel or otherwise to
receive the same at any other time.
SECTION XXI
RECORDATION, QUITCLAIM DEED
21.01 Prohibition Against Recording Lease; Recordable Memorandum Of Lease.
--------------------------------------------------------------------
This Lease shall not be recorded, but the Parties shall concurrently with the
execution of this Lease execute and record a Memorandum of Lease in recordable
form.
21.02 Quitclaim Deed.
--------------
Tenant shall execute and deliver to Landlord on the expiration or termination of
any part of this Lease, immediately on Landlord's request, a quitclaim deed to
the relevant Premises, in recordable form, designating Landlord as transferee.
SECTION XXII
SALE OR TRANSFER OF PREMISES
If Landlord sells or transfers all or any portion of the Building and/or
Property, Landlord, on consummation of the sale or transfer, shall be released
from any liability under this Lease, provided Landlord's successor has assumed,
in writing for the benefit of Tenant, all of Landlord's obligations under this
Lease. If any security deposit or prepaid rent has been paid by Tenant,
Landlord can transfer the security deposit or prepaid rent to Landlord's
successor and on such transfer Landlord shall be discharged from any further
liability in reference to the security deposit or prepaid rent.
SECTION XXIII
RESOLUTION OF DISPUTES
23.01 Mediation.
---------
Any controversy or dispute arising out of this Lease, other than one arising in
whole or in part from Tenant's failure to pay Rent or any other monetary
obligation required hereunder, shall first be submitted to JAMS/Endispute or any
successor entity for resolution through mediation within thirty (30) days after
the dispute arises. The Parties shall cooperate with the mediator and shall
44
comply with any reasonable conditions imposed on such mediation by the mediator.
The mediator's fee shall be divided equally between the Parties. In the event
that the parties cannot agree on a mediator, either party may apply to the
Superior Court of the State of California, San Diego County, North County Branch
to make an assignment of mediator.
23.02 Litigation.
----------
In the event that the Parties fail to resolve the dispute through mediation
within thirty (30) days after it is submitted to the Center, either Party may
file suit in the Superior Court of the State of California, San Diego County,
North County Branch, for resolution of the dispute. In the event that either
party files suit under this Section 23.02, both Landlord and Tenant agree to
request that the Superior Court send the dispute to non-binding arbitration at
the earliest opportunity.
23.03 Attorney's Fees.
---------------
If either Party commences an action against the other Party arising out of or in
connection with this Lease, the prevailing Party shall be entitled to have and
recover from the losing Party reasonable attorneys' fees and costs of suit.
If either Party becomes a party to any litigation with anyone not a Party to
this Lease, including arbitration, concerning this Lease, the Premises, the
Property, or the Building, by reason of any act or omission of the other Party
or its authorized representatives, and not by any act or omission of the Party
that becomes a party to that litigation or any act or omission or its authorized
representatives, the Party that causes the other Party to become involved in the
litigation shall be liable to that Party for reasonable attorneys' fees and
court costs incurred by it in the litigation.
SECTION XXIV
SURRENDER OF PREMISES, HOLDING OVER
24.01 Surrender Of Premises Or Termination.
------------------------------------
On Expiration or ten (10) days after Termination of any Term, Tenant shall
surrender to Landlord the relevant Premises and all Tenant's improvements and
alterations in good condition (except for ordinary wear and tear occurring after
the last necessary maintenance made by Tenant and destruction to the Premises
covered by Section XIII), except for alterations that Tenant has the right to
remove or is obligated to remove under the provisions of Paragraph 10.01. Tenant
shall remove all its personal property within the above-stated time periods.
Tenant shall perform all restoration made necessary by the removal of any
alterations or Tenant's personal property within the above-stated time periods.
Landlord can elect to retain or dispose of in any manner any alterations or
Tenant's personal property that Tenant does not remove from the relevant
Premises on expiration or termination of any Term as allowed or required by this
Lease. Title to any such alterations or Tenant's personal
45
property that Landlord elects to retain or dispose of on expiration or
termination of the Lease shall vest in Landlord. Tenant waives all claims
against Landlord for any damage to Tenant resulting from Landlord's retention or
disposition of any such alterations or Tenant's personal property. Tenant shall
be liable to Landlord for Landlord's costs for storing, removing, and disposing
of any alterations or Tenant's personal property.
If Tenant fails to surrender the relevant Premises on expiration or ten (10)
days after termination of any Term as required herein, Tenant shall hold
Landlord harmless from all damages resulting from Tenant's failure to surrender
the relevant Premises, including, without limitation, claims made by a
succeeding tenant resulting from Tenant's failure to surrender the relevant
Premises.
24.02 Holding Over.
------------
If Tenant, with Landlord's consent, remains in possession of the Premises after
Expiration or Termination, or after the date in any notice given by Landlord to
Tenant terminating this Lease, such possession by Tenant shall be deemed to be a
month-to-month tenancy terminable on ninety (90) days' notice given at any time
by either party with prorated Annual Rent for the first six (6) months following
such Expiration or Termination at one hundred ten percent (110%) of the Annual
Rent immediately preceding such Expiration or Termination, and thereafter at
one hundred twenty-five percent (125%) of the prorated Annual Rent immediately
preceding such Expiration or Termination. If Tenant, without Landlord's consent,
remains in possession of the Premises after Expiration or Termination, or after
the date in any notice given by Landlord to Tenant terminating this Lease and
following the expiration of any period for Tenant to cure as provided for in
this Lease or by statute, such possession by Tenant shall be deemed to be a
month-to-month tenancy with prorated Annual Rent at one hundred fifty percent
(150%) of the Annual Rent immediately preceding such Expiration or Termination.
During any such month-to-month tenancy, Tenant shall pay all Rent required by
this Lease. All provisions of this Lease, except those pertaining to its Term,
shall apply to the month-to-month tenancy.
SECTION XXV
MISCELLANEOUS PROVISIONS
25.01 General Conditions.
------------------
a. Time Of Essence.
---------------
Time is of the essence of each provision of this Lease.
b. Corporate Authority.
-------------------
If either party is a corporation, that party shall deliver to the other
party on execution of this Lease a certified copy of a resolution of its
board of directors authorizing the execution of this Lease and naming the
officers that are authorized to execute this Lease on behalf of the
corporation.
46
c. Successors.
----------
This Lease shall be binding on and inure to the benefit of the parties and
their successors except as provided in Section XV.
d. Rent Payable In U.S. Money.
---------------------------
Rent and all other sums payable under this Lease must be paid in lawful
money of the United States of America.
e. Real Estate Brokers, Finders.
----------------------------
Each party represents that it has not had dealings with any real estate
broker, finder, or other person, with respect to this Lease in any manner
except Xxxx Xxxxxxx & Company who Landlord has retained and Coldwell Banker
Commercial who Tenant has retained. The commission owing to Xxxx Xxxxxxx &
Company and Coldwell Banker Commercial and the conditions to payment of
such commissions are set forth in a separate Commission Agreement dated
March 19, 2001. Each Party shall hold harmless the other Party from all
damages resulting from any claims that may be asserted against the other
Party by any other broker, finder, or other person, with whom the other
Party has or purportedly has dealt.
f. Status Of Parties On Termination Of Lease.
-----------------------------------------
Except as provided in Section XVI, if a party elects to terminate this
Lease as allowed in this Lease, on the date the Lease terminates the
parties shall be released from further liabilities and obligations and
Landlord shall return to Tenant any unearned rent, as long as Tenant is
not in default on the date the Lease terminates.
g. Exhibits--Incorporation In Lease.
--------------------------------
All exhibits referred to are attached to this Lease and incorporated by
reference.
h. Consents of Parties.
-------------------
Except as expressly provided in this Lease, whenever consent or approval of
either Party is required, that Party shall not unreasonably withhold or
delay giving such consent or approval.
25.02 Interpretation Of Lease.
-----------------------
a. California Law.
--------------
This Lease shall be construed and interpreted in accordance with the laws
of the State of California.
b. Integrated Agreement, Modification.
----------------------------------
47
This Lease contains all the agreements of the parties and cannot be amended
or modified except by a written agreement signed by the party to be
charged.
c. Provisions And Covenants And Conditions.
---------------------------------------
All provisions, whether covenants or conditions, on the part of Tenant
shall be deemed to be both covenants and conditions.
d. Captions, Table Of Contents.
---------------------------
The captions and Table Of Contents (if any) of this Lease shall have no
effect on its interpretation.
e. Singular And Plural.
-------------------
When required by the context of this Lease, the singular shall include the
plural.
f. Joint And Several Obligations.
-----------------------------
"Party" shall mean Landlord and Tenant; and if more than one person or
entity is Landlord or Tenant, the obligations imposed on that party shall
be joint and several.
g. Severability.
------------
The unenforceability, invalidity, or illegality of any provision shall not
render the other provisions unenforceable, invalid, or illegal.
h. Rules And Regulations--Incorporation In Lease.
--------------------------------------------
Landlord shall have the right from time to time to establish reasonable
rules and regulations and amendments thereto for the safety, care, and
cleanliness of the Premises, the Building, and all Common Areas, or for the
preservation of good order. Such rules and regulations shall be posted for
inspection by Tenant. Tenant shall comply with the rules and regulations,
and a violation of any of them shall constitute a default by Tenant under
this Lease. If there is a conflict between the rules and regulations and
any of the provisions of this Lease, the provisions of this Lease shall
prevail. Landlord shall make reasonable efforts to enforce the rules and
regulations uniformly against all tenants in the Building, and no such
rules and regulations shall require Tenant to pay additional rent or other
charges under this Lease. The initial rules and regulations are attached as
Exhibit E.
48
SECTION XXVI
CONDITIONS TO EFFECTIVENESS OF THE LEASE
Notwithstanding any other provision of this Lease to the contrary, the
obligations of the parties to consummate this Lease shall be subject to the
satisfaction or waiver; on or before the dates indicated, of each of the
conditions set forth below and, if waived, must be waived in writing and by the
party(ies) for whose benefit such condition is specified as having been
established, unless otherwise indicated therein.
a. On or before 30 days following execution of the Lease, the parties shall
agree on the form and content of all Exhibits, other than Exhibit D. This
condition is for the benefit of both Landlord and Tenant.
b. Landlord shall procure all necessary governmental approvals to allow the
development of the contemplated project on or before September 1, 2001.
This condition is for the benefit of Tenant.
c. Landlord shall procure all necessary financing for construction of the
project no later than July 15, 2001, such financing to be upon such terms
and conditions as Landlord may approve in its sole and absolute discretion.
This condition is for the benefit of both Landlord and Tenant.
The foregoing are conditions precedent to the effectiveness of the Lease. If any
event does not occur by the respective date designated for completion, either
party may thereafter terminate this Lease by written notice given to the other
party before such event is satisfactorily completed.
ARTICLE XXVII
NET LEASE
Landlord and Tenant acknowledge and agree that this Lease shall `be a true "net
lease." Therefore, it is the purpose, intent and agreement of Landlord and
Tenant that, except as expressly set forth in this Lease to the contrary,
Landlord shall pass through to Tenant any charge, cost or fee associated with
Landlord's operation of the Property, whether or not such charge, cost or fee is
set forth in this Lease or whether or not such charge, cost or fee presently
exists or arises in the future.
IN WITNESS WHEREOF, the parties have executed this Lease as of the Date of this
Lease.
LANDLORD: THE BLACKSTONE GROUP, LLC
A California Limited Liability Company
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx, Managing Member
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TENANT: CONMUNITY NATIONAL BANK
A National Banking Association
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Its: President & CEO
---------------------------------
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Its: Executive Vice President
---------------------------------
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