EXHIBIT F
STORE LEASE AGREEMENT
by and between
EL CORTE INGLES,
as "Landlord"
and
GOTTSCHALKS INC,
as "Tenant"
Dated as of __________, 1998
Xxxxxx Xxxxxx Xxxx xx Xxxxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx
STORE LEASE AGREEMENT
Xxxxxx Valley Mall at Towngate
Moreno Valley, California
THIS STORE LEASE AGREEMENT (this "Lease"),
made as of
this ___ day of ___________, 1998, by and between EL
CORTE
INGLES, S.A., a Spanish corporation, having an address
at
Xxxxxxxxxx, 000, 00000 Xxxxxx XXXXX, Attention:
_______________
("Landlord"), and GOTTSCHALKS INC., a Delaware
corporation,
having an address at 0 Xxxxx Xxxx Xxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx
00000, Attention: General Counsel ("Tenant").
R E C I T A L S
A. Landlord, Tenant and Xxxxxx (defined
below) are
parties to that certain Asset Purchase Agreement
(defined below).
Prior to the date hereof, Xxxxxx leased the Premises
(defined
below) from Landlord. Pursuant to the Asset Purchase
Agreement,
Tenant is to purchase certain assets of Xxxxxx (defined
below).
The Asset Purchase Agreement requires Landlord to
terminate
Xxxxxx' lease and enter into this Lease with Tenant.
B. Concurrently with execution of this
Lease,
Landlord has terminated Xxxxxx' lease. Landlord now
desires to
lease to Tenant, and Tenant desires to lease from
Landlord, the
Premises on the terms and conditions hereafter set
forth.
NOW, THEREFORE, in consideration of the
foregoing
Recitals, the receipt and sufficiency of which is
hereby
acknowledged by each party as of the time of execution
and
delivery hereof, and in further consideration of the
rents
reserved and the covenants and conditions set forth
herein,
Landlord and Tenant agree as follows:
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS
Section I.1 Definitions. As used in this
Lease, the
following Terms shall have the meanings set forth
below:
"Alterations" shall have the meaning
ascribed
thereto in Section 5.3.
"Annual Report" shall have the
mean-ing
ascribed thereto in Section 4.2(b).
"Asset Purchase Agreement": That
certain
Asset Purchase Agreement dated as of July 21, 1998, by
and among
Tenant, as Buyer, Xxxxxx, as Seller, and Landlord, in
its
capacity as the sole shareholder of Xxxxxx, together
with all
other agreements and documents entered into by Landlord
and
Tenant in connection therewith.
"Common Areas": The parking areas,
side-
walks, landscaped areas, courts, malls, roofs, streets,
roadways,
loading platforms, service area, curbs, corridors,
stairways,
elevators, escalators, comfort stations, lounges and
shelters and
all other facilities designated as ["Common Areas"]
under the
REA.
"Default" shall have the meaning
ascribed
thereto in Section 10.1.
"Developer" shall mean the Person
responsible
for managing and maintaining the Common Areas under the
REA.
"Fair Market Rental Value" shall
mean the
fair market rental value of the Premises, as of the
date and for
the time period of determination, to be determined in
accordance
with the terms of Article XII and, as necessary,
Exhibit E
attached hereto and made a part hereof.
"Floor Area" shall have the meaning
given
such term in the REA.
"Gross Sales" shall mean the gross
selling
price of all merchandise or services sold in or from
the Premises
by Tenant, its subtenants, licensees or
concessionaires, whether
for cash or on credit, adjusted by excluding the
following:
(i) Any exchange of merchandise between
stores owned
by or affiliated with Tenant where such exchange is
made solely
for the convenient operation of Tenant's business and
not for the
purpose of consummating a sale made in, at or from the
Premises,
or for the purpose of depriving Landlord of the benefit
of a sale
which would otherwise be made in or at the Premises;
(ii) Returns to shippers or manufacturers;
(iii) Cash or credit refunds to customers
on
transactions (not to exceed the actual selling price of
the item
returned) otherwise included in Monthly Gross Sales,
including,
without limitation, (a) sums and credits received in
the
settlement of claims for loss of or damage to
merchandise, to the
extent previously reported as part of Gross Sales and
(b) the
price allowed on all merchandise traded in by customers
for
credit or the amount of credit for discounts and
allowances made
in lieu of acceptance thereof, but not including any
amount paid
or payable for what are commonly referred to as trading
stamps;
(iv) Sales of fixtures, machinery, equipment
or
property which are not stock in trade;
(v) Amounts collected and paid by Tenant to
any
government for any sales, excise, luxury, gross
receipts taxes or
other similar taxes now or hereafter imposed upon the
sales of
merchandise or services;
(vi) The amount of any discount on sales to
employees;
(vii) Alteration workroom charges and
delivery
charges;
(viii) Interest, service or sales carrying
charges
or other charges, however denominated, paid by
customers for
extension of credit on sales and where not included in
the
merchandise sales price;
(ix) Receipts from public telephones, stamp
machines,
public toilet locks or vending machines installed
solely for use
by Tenant's employees; and
(x) Gift certificates, or like vouchers,
until such
time as the same shall have been converted into a sale
by
redemption.
"Xxxxxx" means The Xxxxxx Company, a
California corporation, a wholly-owned subsidiary of
Landlord.
"Imposition" shall have the meaning
ascribed
thereto in Section 4.5.
"Initial Term": The initial 10-year
Term of
this Lease.
"Interest Rate": The rate of
inter-est per
annum equal to the lesser of: (i) the highest lawful
rate of
interest that Tenant may be charged; or (ii) the "prime
rate"
announced from time to time by Chase Manhattan Bank,
N.A., New
York, New York, for short-term, unsecured loans to its
most
credit-worthy customers. In the event Chase Manhattan
Bank, N.A.
shall discontinue reporting its "prime rate" or shall
cease to
exist, Landlord shall select a substitute bank, and the
"prime
rate" reported by such bank shall be used for computing
interest
payable hereunder.
"Lease Year": A period of twelve
(12)
consecutive full calendar months, commencing as of the
day after
the Saturday which is closest (by number of days) to
January 31
and ending on the Saturday which is closest (by number
of days)
to January 31 of the following calendar year. The
first Lease
Year shall be the period commencing on the Term
Commencement Date
and ending on January 30, 1999. The final Lease Year
shall be
the period commencing on the day after the Saturday
which is
closest (by number of days) to January 31st of the
calendar year
in which the Lease Term (as it may be extended) expires
and
ending on the expiration date of the Lease Term. It is
acknowledged that this definition of Lease Year is
intended to
coincide with Tenant's fiscal year.
"Major" shall mean each of the
parties to the
REA, as more particularly set forth in Exhibit D
attached hereto
and made a part hereof.
"Minimum Annual Rent" shall have the
meaning
ascribed thereto in Section 4.1.
"Mortgages" shall have the meaning
ascribed
thereto in Section 13.3.
"Notice" shall have the meaning
ascribed
thereto in Section 13.1(a).
"Option(s)" shall have the meaning
ascribed
thereto in Article XII.
"Percentage Rent" shall have the
meaning
ascribed thereto in Section 4.2(a).
"Permitted Use" shall mean any
lawful use
which complies with the REA and is not prohibited for
the
Premises by the REA.
"Person" means any individual,
part-nership,
corporation, business trust, joint stock compa-ny,
trust, unincor-
porated association, joint venture, governmental
authority or
other entity of whatever na-ture.
"Premises": That certain real
property and
improvements thereon described in Exhibit C attached
hereto and
made a part hereof.
"Prohibited Use" shall mean any use
which is
prohibited for the Premises by the REA.
"REA" shall mean that certain
Construction,
Operation and Reciprocal Easement Agreement and each of
the other
documents related thereto, as more particularly
described in
Exhibit D attached hereto and made a part hereof, all
as the same
may be amended or modified from time to time.
"Renewal Term(s)" shall have the
meaning
ascribed thereto in Article XII.
"Rent": Minimum Annual Rent,
Per-centage
Rent, utilities charges, Impositions, insurance costs
and all
other amounts and charges payable by Tenant under any
provision
of this Lease.
"Requirements" shall mean all
xxxxx-al, state
and local statutes, laws, ordinances, rules,
regulations, autho-
rizations and requirements relating to the Premises or
the use
thereof, including, without limitation, planning,
zoning, subdi-
vision, environmental, toxic and hazardous waste,
health, fire
safety and handi-cap access and all encumbrances,
covenants,
conditions and restrictions, violation of which
encumbrances,
cove-nants, conditions and restrictions could either
create a
lien or result in a termination of any agreement
benefi-cial to
the use or manner of use of the Premises or any portion
thereof.
"Shopping Center": The land and
improvements
known as "Xxxxxx Valley Mall at Towngate", with a
street address
of 00000 Xxxxxxxx Xxxxxx, in the City of Xxxxxx Valley,
County of
Riverside, and State of California, more particularly
described
in Exhibit A attached hereto and made a part hereof and
depicted
on the site plan attached hereto as Exhibit B and made
a part
here-of.
"Taking" shall have the meaning
ascribed
thereto in Section 7.2(a).
"Tenant's Employees and Invitees"
shall have
the meaning ascribed thereto in Section 5.4.
"Term": The 10-year period
commenc-ing on
the Term Commencement Date and expiring on __________,
2007
[INSERT TERMINATION DATE FOR INITIAL 10-YEAR TERM], as
such term
may be extended or shortened pursuant to the terms
hereof,
including, without limitation, as it may be extended
for the
period of any Renewal Terms(s).
"Term Commencement Date":
_______________
___, 1998.
"Unavoidable Delays" shall have the
meaning
ascribed thereto in Section 13.4.
Section I.2 Effect of Basic Terms. Each
of the fore-
going definitions and basic provisions is set forth in
this
Article I for convenient reference only and shall be
construed in
conjunction with, and limited by, references thereto in
other
provisions of this Lease.
ARTICLE II
GRANT AND TERM
Section II.1 Grant and Term of Lease.
(a) Landlord does hereby let and lease
to Tenant
the Premises, together with all right to use the Common
Areas for
the Term, subject to the terms and conditions set forth
in this
Lease.
(b) Landlord reserves the right to
enter the
Premises at any time in case of emergency and at all
other
reasonable times and upon reasonable advance notice (i)
to
inspect the condition of the Premises; and (ii) to make
repairs
to the building in which the Premises are located, to
the extent
Landlord is required to do so, or is otherwise
permitted to do
so, pursuant to the terms of this Lease.
Section II.2 Acceptance of Premises; Quiet
Enjoyment.
(a) Acceptance of Premises. Tenant
accepts the
Premises "as-is," but subject to the express
representations,
warranties and covenants of Landlord set forth in the
Asset
Purchase Agreement and in this Lease.
(b) Quiet Enjoyment. Landlord
cove-nants that
Tenant, upon paying the Rent and performing and
observing all
other terms and conditions of this Lease to be
performed or
observed by Tenant, shall peace-fully and quietly have,
hold and
enjoy the Premises and the appurtenances thereto
throughout the
Term without hindrance, ejection or molestation by
Landlord or
any other person or entity lawfully claiming through
Landlord or
claiming paramount title to Landlord, subject only to
the terms
of this Lease, the REA and any Mortgage or ground lease
to which
this Lease is subordinate.
Section II.3 Surrender of Premises. Upon
the expira-
tion or earlier termination of the Term, Tenant shall
deliver up
and surrender to Landlord possession of the Premises,
including
all alterations, additions, improvements and fixtures,
other than
Tenant's trade fixtures, in good order, condition and
state of
repair, ordinary wear and tear excepted, and shall
deliver all
keys to the Premises to the office of Landlord at the
Shopping
Center or as otherwise directed by Landlord. Tenant
shall have
fifteen (15) days after the date the Term of this Lease
expires
or earlier terminates to remove its personal property,
trade
fixtures; provided, however, that (a) Tenant shall
repair all
damage to the Premises resulting from or arising out of
such
removal, (b) during such period Tenant shall perform
and be
liable for all obliga-tions and condi-tions imposed on
Tenant
hereunder except for the payment of Rent, including,
without
limitation, maintenance, repair, apportionment of
taxes,
maintenance of insurance, compliance with Requirements
and
assumption of liability for the Premises. The
obligations set
forth in the preceding sentence shall survive the
termination of
this Lease. Any property of Tenant not removed from
the Premises
within such fifteen (15) day period shall be deemed
abandoned. In
addition to all other remedies available, Landlord may,
but shall
not be obligated to, retain or dispose of any or all
such
property without liability to Tenant. In the event
that Landlord
elects to dispose of such property, Landlord shall so
notify
Tenant, and Tenant shall, no later than ten (10) days
after such
notice, remove all such property from the Premises;
provided,
however, that if Tenant fails to so remove such
property, then
Landlord may do so, and Tenant shall pay to Landlord,
on demand,
all costs and expenses incurred by Landlord in
disposing of such
property, including, without limitation, reasonable
attorneys'
fees and disbursements, together with interest thereon,
calcu-
lated at the Interest Rate, from the date Landlord
ex-pended such
amounts.
7
Section II.4 Holding Over. If not sooner
terminated,
this Lease shall end on the date set forth in Section
1.1 without
the necessity of notice from either Landlord or Tenant
to
terminate this Lease, Tenant hereby waiving notice to
vacate the
Premises. If Tenant, or any party claiming under
Tenant, includ-
ing, without limitation, subtenants, licensees or
conces-
sionaires, re-mains in possession of the Premises or
any part
thereof after the expiration or termination of this
Lease, no
tenancy or interest in the Premises shall result
there-from but
such holding over shall, at Landlord's option, be
deemed a month-
to-month tenancy and, otherwise, shall be an unlawful
detainer
and all such parties shall be subject to immediate
eviction and
removal. As Landlord's sole remedy for such holding
over, Tenant
shall pay to Landlord for any full or partial month
Tenant holds
over in the Premises after the expiration or
termination of this
Lease a sum equal to one hundred fifty percent (150%)
of the
Minimum Annual Rent and Percentage Rent paid or payable
by Tenant
under this Lease with respect to the last full month of
the Lease
Term.
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT AGREEMENT
Section III.1 Lease Controls Over REA. As
between
Landlord and Tenant, the terms and provisions of this
Lease shall
control notwithstanding any conflict with the
provisions of the
REA. Tenant shall be fully liable for the performance
of all
obligations under the REA in accordance with all of the
terms and
provisions thereof, to the extent that Tenant has
expressly
assumed responsibility for the performance of any such
obligations under the terms of this Lease. Landlord is
and shall
remain fully liable for the performance of all of
Landlord's
obligations under the REA in accordance with all of the
terms and
provisions thereof, to the extent that Tenant has not
expressly
assumed responsibility for the performance of such
obligations
under the terms of this Lease.
Section III.2 Covenants Regarding REA.
Landlord will
fully and faithfully carry out and perform the terms,
covenants,
provisions and conditions of the REA to be performed by
the
Landlord. Tenant will fully and faithfully carry out
and perform
the terms, covenants, provisions and conditions of the
REA which,
under the express terms of this Lease, are to be
performed by the
Tenant. Landlord will exert its best efforts in
exercising all
Landlord's rights and remedies under the REA to enforce
performance of all terms, covenants, provisions, and
conditions
of the REA; and Landlord will not take any of the
actions
requiring Landlord's approval thereunder, without first
having
delivered to Tenant a copy of the request for approval
and any
documentation or material as to which such approval is
requested
or required and thereafter obtained Tenant's written
approval
thereof, which approval shall not be unreasonably
withheld,
conditioned or delayed. Landlord will not enter any
agreement
amending, supplementing or cancelling the REA without
first
obtaining Tenant's prior written approval thereto,
which approval
shall not be unreasonably withheld, conditioned or
delayed.
Landlord hereby appoints Tenant as Landlord's true and
lawful
attorney-in-fact to take in Landlord's name whatever
reasonable
action Tenant may deem appropriate to enforce
performance of the
terms of the REA and to avail itself on Landlord's
behalf of any
remedy therein granted Landlord in the event (i) Tenant
shall
notify Landlord that the obligations under the REA are
not being
properly performed and (ii) Landlord shall fail to take
action to
Tenant's reasonable satisfaction within a reasonable
time after
receiving notice thereof.
It is the intent of the parties to this Lease that
this
Lease and the REA are and shall remain mutually
dependent and co-
existent documents. Tenant shall have the right (in its
sole and
absolute discretion) to terminate this Lease by giving
Landlord
notice to such effect within ninety (90) days after the
REA
shall, under its express terms and conditions, expire
or
terminate or be cancelled, and this Lease shall
terminate on the
last day of the month next succeeding the month in
which such
notice is given.
ARTICLE IV
RENT AND OTHER CHARGES
Section IV.1 Minimum Annual Rent. Tenant
agrees to
pay to Landlord as rental for the Premises the sum of
_____________________ Dollars ($__________) per Lease
Year
[INSERT AMOUNT EQUAL TO 3% OF ACTUAL 1997 GROSS SALES
PER LETTER
OF BUSINESS TERMS] (the "Minimum Annual Rent"), payable
in
advance in equal monthly installments of
_____________________________________________________
Dollars
($_________), on or before the first (1st) day of each
calendar
month for the balance of the Term. Minimum Annual Rent
shall be
prorated (on the basis of a 30-day month and 360-day
year for any
partial month and partial Lease Year comprising a
portion of the
Term of this Lease. In the event that the Term expires
or is
terminated on a date other than the last day of a
calendar month,
Tenant shall pay Landlord, on the first (1st) day of
the last
month of the Term, a pro rata portion of a monthly
installment of
such Minimum Annual Rent, calculated on a per diem
basis for a
month of thirty (30) days.
Section IV.2 Percentage Rent.
(a) Formula for Calculation. In
addition to
Minimum Annual Rent, Tenant covenants and agrees to pay
to Land-
lord as additional rent for each Lease Year the sum of
Three
percent (3.0%) of the amount by which Tenant's Gross
Sales for
such Lease Year exceeds the Minimum Annual Rent
("Percentage
Rent"). Percentage Rent shall be payable, in arrears,
on or
before March 10 for the immediately preceding Lease
Year. The
amount of Percentage Rent payable by Tenant hereunder
for the
first Lease Year shall be prorated by computing the
Percentage
Rent that would be payable based on Gross Sales for the
first 365
days of the Term and multiplying that number by a
fraction, the
numerator of which is the number of days in the first
Lease Year
and the denominator of which is 365. Such prorated
Percentage
Rent for the first Lease Year shall be payable prior to
the 455th
day of the Term. The Percentage Rent payable by Tenant
for the
final Lease Year shall be prorated by computing the
Percentage
Rent that would be payable based on Gross Sales for the
last 365
days of the Term and multiplying that number by a
fraction, the
numerator of which is the number of days in the final
Lease Year
and the denominator of which is 365. Such prorated
Percentage
Rent for the final Lease Year shall be payable within
90 days
after the Term expiration date.
(b) Annual Report. On or before March
10 during
the Term (including the March 10 following the end of
the Term),
Tenant shall furnish Landlord with a written state-ment
(the
"Annual Report"), certified by Tenant's chief financial
officer
or comptroller, of total Gross Sales made from the
Premises
during the preceding Lease Year, which Annual Report
shall
contain Tenant's computation of Percentage Rent for
such Lease
Year. The Annual Report shall be in form reasonably
satisfactory
to Landlord and shall contain such details and
breakdown as may
accurate-ly depict Gross Sales. The Annual Report
shall not
carry forward transactions completing in the preceding
Lease
Year, or carry back transactions completed in the
following Lease
Year.
(c) Records. Tenant shall maintain at
the
Premises or at its principal record keeping office
within the
continental United States at all times during the Term,
full,
complete and accurate books of account and records in
accordance
with accepted accounting practices consis-tently
applied for all
operations of the business con-ducted in or from the
Premises,
including the recording of Gross Sales and the receipt
of all
merchandise into, and the delivery of all merchandise
from, the
Premises during the Term, and shall retain such books
and
records, copies of all tax reports and tax returns
submitted to
taxing authorities, as well as copies of contracts,
vouchers,
checks, inventory records, electronic data recordings
and other
documents, recordings, and papers in any way related to
the
operation of such business for at least three (3) years
from the
end of the period to which they are applicable, or, if
any audit
is required or a controversy should arise between the
parties
hereto regarding the Rent payable hereunder, until such
audit or
controversy is terminated, even though such retention
period may
extend beyond the expira-tion of the Term or earlier
termination
of this Lease.
(d) Review of Books and Records. The
acceptance
by Landlord of pay-ments of Percentage Rent or any
Annual Report
pursuant to Section 4.2(b) above shall not prejudice
Landlord's
right to examine Tenant's books, records and accounts
in order to
verify the amounts set forth thereon. Landlord may at
any reason-
able time during the Term (but not more frequently than
once
during any calendar year) cause a complete or partial
audit to be
made of Tenant's books, records and other documents
relating to
the Premises, including the books and records of any
subtenant,
licensee or concessionaire, for all or any part of the
three (3)
year period immediately pre-ceding the day of the
giving of such
notice by Landlord to Tenant. Landlord or its duly
authorized
representa-tives shall have full and free access to
such books
and records and the right to require of Tenant, its
agents and
employees, such information or explanation with respect
to such
books and records as may be neces-sary for a proper
examination
and audit thereof. If such audit discloses an
understatement in
an Annual Report of Gross Sales, Tenant shall pay the
deficiency
in Percent-age Rent with, interest thereon calculated
at the
Inter-est Rate, and, if Gross Sales have been
understated in any
Annual Report by four percent (4%) or more, Tenant
shall pay to
Landlord, as Rent, the cost of said audit, upon demand.
(e) Confidentiality. Any information
regarding
Tenant's business operations delivered to or made
available to
Landlord, or otherwise obtained by Landlord in the
exercise of
its rights under subsection (d), above, shall be held
in
strictest confidence by Landlord. Landlord shall
disclose such
information only to its accountants, attorneys and
other
consultants and shall require all such parties to keep
all
information regarding Tenant strictly confidential.
Nothing in
this subsection (e) prohibits Landlord from disclosing
such
material when ordered to do so by a court of competent
jurisdiction, or when necessary to properly plead or
prosecute a
legal action brought by Landlord against Tenant for
nonpayment of
Percentage Rent.
Section IV.3 Utilities Charge.
(a) Tenant shall apply to the
municipality or
respective utilities companies for all required utility
services
to the Pre-mises. Tenant shall pay all required
deposits and
meter charges for utilities to the Premises to the
respective
utility supplier(s).
(b) Tenant shall pay promptly, as and
when same
shall become due, all water rents, rates and charges,
all sewer
rents, rates and charges and all charges for
electricity, gas,
heat, steam, hot and/or chilled water, air
conditioning,
ventilating, lighting systems, sprinkler systems and
all other
utilities sup-plied to the Premises.
Section IV.4 Common Area Maintenance Costs.
Tenant
shall pay, as Rent, Common Area Maintenance charges as
specified
in the REA or any lesser amount specified in a separate
letter
thereunder. Tenant shall pay Common Area Maintenance
charges as
referenced herein within thirty (30) days after Tenant
has
received a xxxx therefor.
Section IV.5 Taxes.
(a) Tenant shall pay before delinquency
all real
and personal property taxes, general and special
assessments, and
other public charges levied upon or assessed against
the
Premises, the land thereunder, or any of the building
structures,
fixtures, equipment, or improvements thereon
(collectively, "Impo-
sitions"). Tenant shall deliver to Landlord reasonable
evidence
of payment prior to the time said Impositions have
become
delinquent.
(b) Any Imposition relating to a fiscal
period of
the taxing authority, a part of which period is
included within
the Term of this Lease and a part of which is included
prior to
the beginning of the Term of this Lease or after the
termination
of this Lease shall (whether or not such Imposition
shall be
paid, assessed, levied or imposed upon or become due
and payable
and a lien upon the Premises or a part thereof during
the term of
this Lease) be adjusted as between Landlord and Tenant
as of the
Term Commencement Date or as of the date of the
termination of
the Term of this Lease, as the case shall require, so
that
Landlord shall pay that proportion of such Imposition
which that
part of such fiscal period included in the period of
time prior
to the commencement or after the termination of the
Term, as the
case may be, bears to such fiscal period, and Tenant
shall pay
the remainder thereof.
(c) In the event Landlord is unable to
secure
separate tax bills for Tenant as herein described, then
Tenant
shall pay to Landlord, prior to such time as said
Impositions
would be due and payable, all Imposi-tions attributable
to the
Premises. Personal property taxes shall be allocated
directly to
Tenant's personal property. Real property taxes will
be
allocated by virtue of the ratio of the Floor Area of
the
Premises to the total gross leasable area in the
Shopping Center,
which said gross leasable area shall not include any
part of the
Common Area in the Shopping Center, being assessed on
the tax
xxxx which relates to the Premises.
(d) If Tenant fails to pay any such
taxes,
assessments or other public charges which it is
obligated to pay
as provided in this section before the same become
delinquent,
then and in such event, Landlord may pay the same
together with
any interest and penalties thereon, and the amount so
paid shall
be deemed addition-al Rent immediately due and payable
by Tenant
to Landlord on demand, together with interest thereon
at the
Interest Rate.
(e) Anything in this section to the
con-trary
notwithstanding, Landlord agrees that Tenant shall have
the
right, at Tenant's sole cost and expense, to contest
the legality
or validity of any Impositions payable by Tenant, but
no such
contest shall be carried on or maintained by Tenant
after such
Impositions become delinquent unless Tenant shall have
duly paid
the amount involved under protest or shall procure and
maintain a
stay of all proceedings to enforce any collection
thereof and any
forfeiture or sale of the leased property, and shall
also provide
for payment thereof together with all penalties,
interest, costs
and expenses by deposit of a sufficient sum of money or
by a good
and sufficient undertaking as may be required by law to
accom-
plish such stay. Landlord shall, at the request of
Tenant and at
Tenant's sole expense, execute or join in the execution
of any
instrument of documents necessary in connection with
any such
contest except bonds of undertakings. In the event of
any such
contest made by Tenant, Tenant shall promptly, upon
final deter-
mination thereof, pay and discharge the amount
indicated or
resulting from said contest, together with any
penalties, fines,
interest, costs and expenses that may have accrued
thereon.
Section IV.6 Late Payment Charges. Late
pay-ments of
Rent or any other sum due from Tenant hereunder,
including all
amounts paid by Landlord on behalf of Tenant to satisfy
any
condition or covenant of this Lease and all costs
incurred by
Landlord in enforcing the terms of this Lease, shall
bear
interest from the date Tenant receives written notice
of such
late payment or default (as applicable) until paid at
the
Interest Rate.
Section IV.7 Rent Payments. All Rent
payable by
Tenant under this lease shall be paid in United States
Dollars
without prior demand therefor and without any
deductions, offsets
or counterclaims except those expressly permitted under
the terms
of this Lease, to Landlord and shall be delivered on or
before
the due date thereof at
_______________________________________________, or to
such other
payee and at such other place as Landlord may hereafter
designate
from time to time by written notice to Tenant.
Notwithstanding
anything to the contrary in this Lease, Tenant may
withhold any
portion of Rent which Tenant is required to withhold by
virtue of
Landlord's status as a foreign person under Section
1445 of the
Internal Revenue Code or other applicable law.
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS
Section V.1 Permitted Use.
(a) Tenant shall use the Premises only
for the
Permitted Use and for no other purpose whatsoever.
(b) Tenant covenants that Tenant shall
not use or
allow the Premises or any part thereof to be used or
occupied for
any Prohibited Use or any immoral or unlawful purpose
or in
violation of any certificate of occupancy or
certificate of
compliance for the Premises.
Section V.2 Signs. Tenant shall have the
right,
without Landlord's consent, to erect any and all signs
on or
about the Premises it elects, provided that such
signage complies
with the REA and all Requirements. From time to time
upon
Tenant's request, Landlord covenants to assist Tenant
(at no cost
or expense to Landlord) in processing any and all
approvals
necessary for Tenant to erect such signage.
Section V.3 Alterations of Premises.
(a) All changes, alterations or
modifications to
the Premises (collectively, "Alterations") shall be
made in
accordance with this Section 5.3. Tenant shall have
the right to
perform non-structural modifications to, remodel and
redecorate,
retexturize, recarpet and repaint the Premises without
obtaining
the prior written consent of Landlord; provided (i) the
proposed
Alteration does not affect the exterior appearance of
the
Premises, including, without limitation, the storefront
or the
storefront sign of the Premises, or the roof,
foundation,
supports or structural integrity of the building of
which the
Premises is a part; (ii) Tenant submits an information
copy of
all remodeling plans to Landlord at least thirty (30)
days prior
to the date any such work is scheduled to commence;
(iii) the
total cost of all work involved in the Alteration does
not exceed
Three Hundred Thousand Dollars ($300,000) in any one
project or
an aggregate amount of Six Hundred Thousand Dollars
($600,000) in
any one Lease Year; and (iv) such work does not violate
any code,
ordinance or Requirement and does not cause Landlord's
insurance
rates to increase. Except for the foregoing, Tenant
shall not
make any Alterations to any portion of the Premises
without, in
each instance, obtaining Landlord's prior written
consent.
(b) All work ("Work") pertaining to any
Alteration to the Premises, including, without
limitation,
Tenant's Work, shall comply with the following:
(i) No Work shall be undertaken
until Tenant
shall have procured and paid for, so far as the same
may be
required, from time to time, all permits and
authorizations of
all municipal departments and governmental subdivisions
having
jurisdiction. Provided no default exists hereunder,
Landlord
shall join in the application for such permits and
authorizations
whenever such action is necessary; provided, however,
that
Landlord shall not incur any expense or be subject to
any
liability as a result of joining in any such
application. Within
ten (10) days after completion of the Work, Tenant
shall deliver
to Landlord a certificate of occupancy or such similar
certificates as may be required or customary by
applicable laws
and legal requirements.
(ii) All Work shall be performed
promptly and
in a good and workmanlike manner and in compliance with
all
applicable permits and laws, and in accordance with the
orders,
rules and regulations of the National Board of Fire
Underwriters
or any other body hereafter exercising similar
functions, and
Tenant shall furnish Landlord with evidences and
assurances
reasonably acceptable to Landlord that all such Work
shall be
completed, subject to Unavoidable Delays, at least one
(1) year
prior to the end of the Term of this Lease.
(iii) The cost of any Work
shall be paid
promptly by Tenant so that the Premises shall at all
times be
free and clear of liens for labor and materials
supplied or
claimed to have been supplied in connection therewith.
(iv) Tenant shall carry, or shall
cause to be
carried, worker's compensation insurance covering all
persons
employed in connection with any Work and with respect
to whom
death or bodily injury claims could be asserted against
Landlord,
Tenant or the Premises, and, without duplication of any
insurance
required by Article VIII hereof, adequate all-risk and
builders
risk insurance for the mutual benefit of Tenant and
Landlord in
amounts satisfactory to Landlord and, at Landlord's
request, such
other insurance in favor of Landlord in types and
amounts as are
reasonable and customary, all at Tenant's expense, at
all times
when any such Work is in progress; provided, however,
that Tenant
shall be fully liable for any failure to maintain such
insurance,
including, without limitation, Tenant's obligation to
indemnify
Landlord for the failure to maintain insurance in
accordance with
the provisions of this Lease. All such insurance shall
be
provided by a company or companies of recognized
responsibility
and reasonably satisfactory to Landlord, and all
policies or
certified copies of policies issued by the respective
insurers,
bearing notations evidencing the payment of premiums or
accompanied by other evidence satisfactory to Landlord
of such
payment, shall be delivered to Landlord prior to the
commencement
of any Work.
Section V.4 Use of Common Areas.
(a) All Common Areas shall be subject
to the
exclusive control and management of Developer as set
forth in the
REA. Tenant and Tenant's officers, directors,
employees, agents,
subtenants, contractors, subcontractors,
concessionaires and
licensees, and to the officers, directors, employees
and agents
of Tenant's subtenants, concessionaires and licensees,
and to the
customers, patrons and business invitees of Tenant and
of
Tenant's subtenants, concessionaires and licensees
(hereinafter,
collectively, "Tenant's Employees and Invitees") shall
have the
non-exclusive right to use (without cost or expense to
Tenant or
Tenant's Employees or Invitees other than as expressly
provided
in this Lease) the Common Areas for the purpose of
gaining
ingress to and egress from the Premises, for the
passage and
parking of vehicles, and for the passage and
accommodation of
pedestrians, such right to be in common with Landlord
and those
occupants (and the employees and invitees of such
occupants) of
the Shopping Center from time to time authorized to use
said
common areas for such purposes.
(b) Notwithstanding anything to the
contrary
contained in Section 5.4(a) hereof, Landlord shall
exercise best
efforts to cause Developer to maintain, manage and
operate the
Common Areas (including, but not by way of limitation,
the
parking area) in good order, condition and repair in
conformity
with the REA so as to at all times maintain an
appearance and
attractiveness reasonably equivalent to the level of
same
existing as of the date hereof. Developer's
obligations to be
enforced by Landlord pursuant to the preceding sentence
in
respect of the maintenance, management and operation of
the
Common Areas shall include, but not be limited to, the
following:
(i) Undertaking such maintenance
and
construction work (including replacements as required)
as is
necessary to preserve and maintain the utility of the
Common
Areas;
(ii) The care and maintenance of
all
identification signs and all planters (including those
adjacent
to the Premises but excluding any signs and planters of
Tenant)
and landscaping at the Shopping Center;
(iii) The adequate illumination
of the
Common Areas at all times of darkness that Tenant is
open for
business (plus a period of one-half hour after Tenant
closes for
business);
(iv) The payment prior to
delinquency of all
real estate and personal property taxes and assessments
levied on
the Common Areas;
(v) The removal of dirt and debris
and
rubbish (including the regular sweeping of the parking
area and
all sidewalks); and
(vi) The operation, management and
maintenance of the enclosed mall, including the
heating,
ventilating, air-conditioning, lighting and
housekeeping of the
same and the maintenance (and replacement as required)
of
landscaping therein.
Section V.5 Compliance with REA. Tenant
shall abide
by the terms of the REA. Landlord agrees that it will
not
change, amend or alter (or agree or consent to change,
amend or
alter) any term or condition of the REA without the
prior written
consent of Tenant, which consent shall not be
unreasonably
withheld.
Section V.6 Compliance with Requirements.
(a) Insofar as the same relate to or are
caused by
Tenant's occupancy and use of the Premises, and
Tenant's other
activities under this Lease, throughout the Term,
Tenant shall,
at Tenant's sole cost and expense, promptly comply with
all
present and future Requirements applicable to the
Premises,
subject, however, to Tenant's rights to contest any
such
Requirements, as set forth in clause (b) below. Tenant
shall
likewise comply with the provisions of all of Tenant's
insurance
policies required to be maintained hereunder or
otherwise carried
by Tenant with respect to the Premises from time to
time.
(b) Tenant shall have the right, after
prior
notice to Landlord, at Tenant's sole cost and expense,
to contest
by appropriate legal proceedings diligently prosecuted
in good
faith, in the name of Tenant, the validity or
application of any
Requirements; provided, however, that Tenant may delay
compliance
therewith until the final determination of such
proceeding only
if by the terms of any such Requirements, compliance
therewith
pending the prosecution of any such proceeding may
legally be
delayed without subjecting Landlord to the risk of any
criminal
liability, or imminent forfeiture of its estate, for
failure so
to comply therewith, and provided further that if any
fine, lien,
charge or civil liability may be incurred by reason of
such non-
compliance, provided that (i) Tenant furnishes to
Landlord
security satisfactory to Landlord, against such fine,
lien,
charge or civil liability in accordance with Section
5.7, and
(ii) Tenant shall be solely responsible for payment of
such fine,
lien, charge or civil liability and shall indemnify,
defend and
hold Landlord harmless with respect thereto.
Section V.7 Liens.
(a) Tenant agrees that it will pay or
cause to be
paid all costs for work done by it or caused to be done
by it on
the Premises of a character which will or may result in
liens on
Landlord's reversionary estate therein, and Tenant
shall keep the
Premises free and clear of all mechanics' liens and
other liens
on account of work done for Tenant or persons claiming
under it.
If any such lien shall at any time be filed against the
Premises,
Tenant shall either cause the same to be discharged
within thirty
(30) days after the recording thereof, or, if Tenant,
in Tenant's
discretion and in good faith, determines that such lien
should be
contested, shall furnish such security as may be
necessary or
required to prevent any foreclosure proceedings against
the
Premises during the pendency of such contest. If
Tenant shall
fail to furnish such security, then, in addition to any
other
right or remedy of Landlord resulting from Tenant's
said default,
Landlord may, but shall not be obligated to, discharge
the same
either by paying the amount claimed to be due,
procuring the
discharge of such lien by giving security, or in such
other
manner as is, or may be, prescribed by law. Tenant
shall repay
to Landlord, as Rent, on demand, all sums disbursed or
deposited
by Landlord pursuant to the provisions of this Section
5.7,
including all costs, expenses and attorneys' fees
incurred by
Landlord in connection therewith. Nothing contained
herein shall
imply any consent or agreement on the part of Landlord
to subject
Landlord's estate to liability under any mechanics'
lien or other
lien law.
(b) Should any claims of lien be filed
against
the Premises or any action affecting the title to the
Premises be
commenced, the party receiving notice of such lien or
action
shall forthwith give the other party written notice
thereof.
Landlord or its representative shall have the right to
post and
keep posted upon the Premises notices of
nonresponsibility or
such other notices which Landlord may deem to be proper
for the
protection of Landlord's interest in the Premises.
Tenant shall,
before the commencement of any work which might result
in any
such lien, give to Landlord advance written notice of
its
intention to do so in reasonably sufficient time to
enable the
posting of such notices.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section VI.1 Tenant's Obligations.
(a) Tenant shall, at its sole cost and
expense
(except as provided to the contrary in this Section
6.1) at all
times during the Term and any extensions thereof, keep
the
Premises in good order, condition and repair, damage by
casualty
excepted. Subject to the limitations set forth in
Section
6.1(b), Tenant's maintenance and repair obligation
hereunder
include, without limitation:
(i) all equipment or facilities
serving the
Premises, such as plumbing, heating, air conditioning,
ventilating, electrical or lighting facilities, fire
sprinkler
and/or standpipe and hose or other automatic fire
extinguishing
systems, including fire alarm and/or smoke detection
systems and
equipment, fire hydrants, fixtures, walls (interior and
exterior)
including reasonably periodic painting of interior
walls in
painting of exterior walls to the extent required by
the REA,
ceilings, floors, windows, doors, plate glass,
landscaping,
driveways, parking lots, fences, signs, sidewalks and
parkways;
and
(ii) restorations, replacements or
renewals,
when necessary, to keep the Premises and all
improvements thereon
or a part thereof in good order, condition and state of
repair.
(iii) Tenant shall maintain
maintenance
contracts with respect to the elevators, the escalators
and the
heating, ventilation and air conditioning systems
located in the
Premises.
(b) Notwithstanding anything to the
contrary in
Section 6.1(a), Tenant is not responsible for
maintenance,
repairs or replacements which are
(i) the responsibility of Landlord
pursuant
to Section 6.2, or
(ii) the responsibility of the
Developer or
any other party pursuant to the REA.
(c) Notwithstanding anything to the
contrary in
Section 6.1(a), if (i) any repair or replacement which
is
reasonably estimated to exceed $100,000 is required
with respect
to any portion of the Premises for which Tenant is
responsible
pursuant to Section 6.1(a) (hereinafter, a "Capital
Repair"), and
(ii) the Useful Life of such Capital Repair (as defined
herein)
exceeds the Remaining Term of the Lease (as defined
herein), then
Landlord shall fund a portion of the cost of such
repair or
replacement equal to a fraction, the numerator of which
is the
Excess Useful Life (as defined herein) and the
denominator of
which is the Useful Life. As used herein, (A) the
"Useful Life"
of a Capital Repair means the reasonably anticipated
useful life
of such Capital Repair (determined by generally
accepted
accounting standards, consistently applied), (B) the
"Remaining
Term" means the portion of the Term remaining,
including the
Renewal Term under any Option which has been exercised,
but not
the Renewal Term under any Option which has not been
exercised
and (C) the term "Excess Useful Life" means, with
respect to a
Capital Repair, the difference between the Useful Life
thereof
and the Remaining Term. As used herein, "Landlord's
Capital
Repair Contribution" means, with respect to any Capital
Repair,
Landlord's contribution to the cost of such Capital
Repair made
pursuant to this Section 6.1(c). Landlord shall fund
Landlord's
Capital Repair Contribution within ten (10) business
days after
receipt of invoices therefor from Tenant (which may be
submitted
as Tenant receives invoices for such work).
(d) If Tenant exercises an Option after
the
Excess Useful Life of a Capital Repair has been
determined, then
Tenant shall reimburse to Landlord, on the first day of
the
Renewal Term with respect to such Option, a portion of
Landlord's
Capital Repair Contribution equal to a fraction (not to
exceed
100%), the numerator of which is the Renewal Term and
the
denominator of which is the Excess Useful Life. In
order that
this Section 6.1(d) may be properly applied with
respect to
subsequent Option exercises, (i) the Excess Useful Life
of a
Capital Repair will be deemed reduced by the period of
each
Renewal Term with respect to which payment is made by
Tenant
pursuant to this Section 6.1(d) and (ii) Landlord's
Capital
Repair Contribution with respect to a Capital Repair
will be
deemed reduced by each payment received by Landlord
pursuant to
this Section 6.1(d) with respect to that Capital
Repair.
Section VI.2 Landlord's Obligations.
Notwithstanding
anything to the contrary herein, Landlord shall be
responsible
throughout the Term for maintaining and repairing all
structural
portions of the Building, including the roof (including
any
skylights), foundations, structural walls, and other
load-bearing
portions of the structure.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section VII.1 Damage or Destruction.
(a) Tenant shall give Landlord prompt
notice of
any damage to the Premises by fire or other casualty.
(b) If the Premises shall be rendered
wholly
untenantable by a casualty, unless terminated pursuant
to Section
7.1(d)(i) or 7.1(d)(ii) hereof, this Lease shall remain
in full
force and effect except that Rent shall fully xxxxx
commencing on
the date of loss and continuing until the earlier to
occur of:
(i) the date Tenant reopens the Premises for business,
which
reopening Landlord and Tenant shall diligently work
together to
expedite, or (ii) the date forty five (45) days after
Tenant
completes the restoration, pursuant to Section 7.1(e),
of the
structural elements of the building of which the
Premises form a
part.
(c) If only a portion of the Premises
shall be
rendered untenantable, this Lease shall remain in full
force and
effect except that Rent shall partially xxxxx
commencing on the
date of loss and continuing until the earlier to occur
of: (i)
the date Tenant reopens the repaired portion of the
Premises for
business, which reopening Landlord and Tenant shall
diligently
work together to expedite, or (ii) the date forty five
(45) days
after Landlord completes the restoration, pursuant to
Section
7.1(e), of the structural elements of the building of
which the
Premises form a part. In such event, the Rent shall be
reduced
to an amount computed by multiplying the Rent
applicable prior to
such damage by a fraction, the numerator of which is
the Floor
Area of the Premises tenantable after such damage and
the
denominator of which is the Floor Area of the Premises
prior to
such damage.
(d) If there shall be damage to the
Shopping
Center by fire or other casualty, whether or not the
Premises is
affected thereby, in which: (i) the Premises shall be
sufficiently damaged to render the entire Premises
wholly
untenantable; (ii) the damage or destruction to the
Premises is
to an extent that it cannot be repaired with reasonable
diligence
within one (1) year after the destruction or damage;
(iii) either
the Shopping Center or the building of which the
Premises are a
part is damaged to the extent of fifty percent (50%) or
more of
its insured replacement cost; (iv) the loss is caused
by any risk
not covered by either Landlord's or Tenant's insurance;
(v) the
damage occurs during the last three (3) years of the
Term; or,
(vi) any insurance proceeds received by Landlord or
Tenant for
such damage are inadequate or unavailable for repairs,
other than
because of any deductible amount of any policy other
than
Tenant's earthquake insurance policy, then, in any such
event,
either party shall have the option to terminate this
Lease. Said
option shall be exercised, if at all, by notice to the
other
party on or before the ninetieth (90th) day after the
date of
loss and, if exercised, shall be effective on the last
day of the
first (1st) full calendar month falling at least sixty
(60) days
after such notice. If Tenant elects to terminate this
Lease
pursuant to this Section 7.1(d), then Tenant shall turn
over to
Landlord any insurance proceeds received by Tenant with
respect
such damage and destruction (other than proceeds of
insurance
covering tenant's personal property (including, without
limitation, merchandise and equipment) and trade
fixtures. If
either party elects to terminate this Lease pursuant to
clause
(iv) or (vi), above, the other party may avoid
termination of
this Lease by (i) committing in writing to pay the
additional
funds required to complete the necessary repairs and
restoration,
which writing shall be delivered to the terminating
party within
ten (10) days after delivery of the termination notice,
and (ii)
providing to the terminating party, within a reasonable
period
after delivery of such notice, not to extend beyond the
date
which is 90 days after the date of loss, security for
payment of
such excess costs reasonably satisfactory to the
terminating
party and its lenders (if any).
(e) If there shall be damage to the
Premises by
fire or other casualty and this Lease is not
terminated, Tenant
shall promptly commence and diligently prosecute the
restoration
and repair of the Premises, including all exterior
walls, roofs,
floors and supports, all internal partitions, fixtures,
trade
fixtures, shelving, casework, furniture and furnishings
used in
connection with the operation of Tenant's business in
the
Premises, as nearly as practicable to their respective
conditions
prior to such damage.
Section VII.2 Condemnation.
(a) The term "Taking" as used in this
Section
7.2, shall mean an appropriation or taking under the
power of
eminent domain by any public or quasi-public authority
or a
voluntary sale or conveyance in lieu of condemnation
but under
threat of condemnation.
(b) In the event of a Taking of the
entire
Premises, this Lease shall terminate and expire as of
the date
possession is delivered to the condemning authority and
Landlord
and Tenant shall each be released from any liability
accruing
pursuant to this Lease after such termination.
(c) If there is a Taking of (a) more
than twenty-
five percent (25%) of the Premises, or (b) any portion
of the
Building and, regardless of the amount taken, if the
remainder of
the Building is not one undivided structure, either
Landlord or
Tenant may terminate this Lease as of the date Tenant
is required
to vacate the Premises upon giving notice in writing of
such
election within thirty (30) days after receipt of
Tenant from
Landlord of written notice that a portion of the
Premises has
been so appropriated or taken.
(d) If this Lease is terminated as a
result of a
Taking, Tenant shall be entitled to any separate award
made to
Tenant for relocation costs, good will and any of
Tenant's
fixtures and equipment which are not capable of removal
from the
Premises; provided such separate award does not
diminish
Landlord's award. Subject to the foregoing, Landlord
shall be
entitled to the entire awarded or compensation in such
condemnation proceedings, or settlement in lieu
thereof,
irrespective of whether such award or settlement shall
be
obtained as compensation for diminution in value to the
leasehold
or the leasehold improvements thereto or to the fee of
the
Premises, but the Minimum Annual Rent, Percentage Rent
and any
other Rent for the last month of Tenant's occupancy
shall be
prorated and Landlord shall refund to Tenant any
Minimum Annual
Rent, Percentage Rent and other Rent paid in advance.
Notwithstanding the foregoing and subject to Section
2.3, in the
event this Lease is terminated as provided above,
Tenant may
remove all of its removable trade fixtures, furniture
and
equipment from the Premises, provided that Tenant
immediately
repairs any damage occasioned to the Premises by reason
of such
removal so as to leave the Premises in a neat and clean
condition. Notwithstanding the foregoing, in no event
shall
Tenant be entitled to any portion of any award or
compensation,
if following the payment of such sum to Tenant, there
would not
be sufficient funds or proceeds to pay the unpaid
principal
balance of any obligation of Landlord secured by a
deed(s) of
trust or mortgage(s) on the fee interest in the
Premises and/or
the Building.
(e) In the event of a Taking, if
Landlord and
Tenant elect not to so terminate this Lease as provided
above (or
have no right to so terminate), Tenant agrees, at
Tenant's cost
and expense (subject to Tenant's rights hereunder) as
soon as
reasonably possible after the Taking, to restore the
Building on
the Land remaining to a complete unit of like quality
and
character as existed prior to the Taking, and
thereafter the
Minimum Annual Rental payable hereunder shall be
reduced on an
equitable basis, taking into account the relative value
of the
portion taken as compared by the portion remaining. In
such
event, Tenant shall be entitled to receive any and all
award of
compensation in connection with such Taking until
Tenant has
received funds sufficient to complete such restoration,
and
Landlord shall be entitled to receive the remaining
portion of
the total award of compensation.
ARTICLE VIII
INSURANCE
Section VIII.1 Tenant's Insurance.
(a) Tenant shall carry, from and at all
times
after the date hereof, at Tenant's sole cost and
expense, the
following insurance:
(i) public liability and property
damage
insurance covering the Premises and Tenant's use
thereof against
claims for personal injury or death and property damage
occurring
in, on or about the Premises and affording protection
to the
limits of not less than Three Million Dollars
($3,000,000) per
occurrence with respect to any one (1) bodily injury or
damage to
property, which insurance shall, in addition, extend to
any
liability of Tenant arising out of the indemnities
contained in
Section 8.5 by contractual liability endorsement. All
liability
policies shall contain a so called "occurrence clause";
(ii) fire and casualty insurance
covering the
Premises, in an amount equal to ninety percent (90%) of
the
replacement cost thereof (excluding foundations and
footings);
(iii) fire insurance with
extended
coverage, covering such items of Tenant's merchandise,
inventory,
signs, furniture, trade fixtures, equipment, leasehold
improvements and other property of Tenant, now or
hereafter
placed in, on or about the Premises in an amount equal
to ninety
percent (90%) of the replacement cost thereof;
(iv) business interruption
insurance covering
Tenant's loss of business income for the period it
would take to
reconstruct the Premises after a casualty using
reasonable
diligence and rental loss insurance covering Tenant's
obligation
to pay Minimum Annual Rent under this Lease;
(v) in the event Tenant installs
in,
adjoining or beneath the Premises any steam boiler or
similar
equipment, broad form boiler insurance;
(vi) earthquake insurance in an
amount equal
to one hundred percent (100%) of the replacement cost
of the
Premises, to the extent the same is available at
commercially
reasonable rates and with deductibles of commercially
reasonable
amounts (it being agreed that Tenant may maintain
required
earthquake coverage through a blanket policy covering
several (or
all) store locations owned or affiliated with Tenant
and having a
maximum aggregate coverage limit of Twenty Million
Dollars
($20,000,000)); and
(vii) such other insurance as
may in
Tenant's reasonable judgment be prudent to carry from
time to
time.
(b) All insurance policies required to
be carried
by Tenant shall be issued by companies with a general
policyholder's rating of not less than "A" and a
financial size
rating of "VI" as rated in the most current available
"Best's
Insurance Reports", and qualified to do business in the
State of
California. Each insurance policy shall name Landlord,
Tenant
and Mortgagee as insureds as their interests may appear
and, to
the extent possible, any other parties in interest from
time to
time designated in writing by notice from Landlord to
Tenant.
Executed copies of each insurance policy, duplicate
originals or
original certificates thereof (provided that such
certificates
shall evidence all of the required coverage herein
provided)
shall be delivered by Tenant to Landlord within ten
(10) days
after delivery of possession of the Premises to Tenant
and
thereafter within thirty (30) days prior to the
expiration of
prior policies. All insurance policies shall contain a
provision
that the underwriter will give Landlord and Mortgagee
at least
thirty (30) days prior written notice of any
cancellation or
lapse of such insurance or the effective date of any
reduction in
the amounts thereof or increase of the deductible. All
insurance
policies shall be written as primary policies which do
not
contribute to, and are in excess of, any coverage which
Landlord
may carry. All insurance policies shall contain an
agreement by
the insurers that the coverage afforded thereby shall
not be
affected by any construction work in or about the
Premises and
that no act or omission by the Tenant shall impair or
affect the
rights of the Landlord to receive and collect the
proceeds under
the policies.
(c) Any insurance required to be
carried by
Tenant may be provided under a blanket policy of
insurance
covering additional items or locations or insureds;
provided,
however, that: (i) Landlord and Mortgagee shall be
named as an
additional insured thereunder (or covered by broad form
Landlord
endorsement or contractual coverage); (ii) any such
blanket
policy or policies shall specify total insurance
allocated to
Tenant's improvements and property; and (iii) the
requirements
for Tenant's insurance set forth herein are otherwise
satisfied.
Tenant agrees to use its best efforts to ensure that
the coverage
afforded Landlord and any such other parties in
interest under
any future blanket policy of insurance will not be
diminished by
reason of the use of such blanket policy of insurance,
and Tenant
shall expend commercially reasonable amounts in
connection with
obtaining such coverage.
(d) The deductibles and self-insured
retentions
included in Tenant's insurance policies shall be in
amounts as
may be commercially reasonable from time to time.
(e) If Tenant refuses or neglects to
secure and
maintain insurance policies complying with the
provisions of this
Section 8.1, Landlord may secure the appropriate
insurance
policies and Tenant shall pay, upon demand, the costs
of same to
Landlord as Rent.
Section VIII.2 Landlord's Insurance.
Landlord at its
cost shall carry, from and at all times after the date
of
delivery of the Premises to Tenant, all insurance
required to be
carried by Landlord pursuant to (i) any Mortgages which
either
presently or in the future may exist as a lien against
the
Premises and (ii) the REA, to the extent that insurance
required
to be carried by Tenant pursuant to this Lease is
insufficient to
satisfy either of such obligations of Landlord.
Section VIII.3 Waiver of Subrogation.
Landlord and
Tenant each waive any rights it may have against the
other on
account of any loss or damage occasioned to Landlord or
Tenant,
as the case may be, their respective property, the
Premises or
its contents or to other portions of the Shopping
Center arising
from any liability, loss, damage or injury caused by
fire or
other casualty for which property insurance is carried
or
required to be carried pursuant to this Lease. Each of
the
parties hereto, on behalf of their respective insurance
companies
insuring the property of either Landlord or Tenant
against any
such loss, to the extent of any recovery under such
insurance,
waives any right of subrogation that it may have
against the
other. Each waiver shall be expressly included in, and
shall
comply with the requirements of, the respective
insurance
policies.
Section VIII.4 Governmental and Insurance
Requirements.
(a) Tenant shall comply, at Tenant's
sole cost and
expense, with all reasonable requirements of the
insurance
underwriters, or any similar public or private body,
provided
that any such requirements of such insurance
underwriters, or any
similar public or private body, are conditions to the
continuance
of any of the insurance coverage required hereunder,
and any
governmental authority having jurisdiction over
insurance rates
with respect to the use or occupancy of the Premises as
a part of
Shopping Center, including, without limitation (i)
installing
fire extinguishers or automatic dry chemical
extinguishing
systems; (ii) making any changes, modifications,
alterations or
additions in the sprinkler system within the Premises;
and (iii)
relocating partitions, trade fixtures or other contents
within
the Premises.
(b) Tenant shall not commit any act or
suffer to
exist on the Premises any circumstances which will
violate any
reasonable restrictions contained in any of Tenant's or
Landlord's policies of fire and casualty or public
liability
insurance, prevent Landlord from continuing the
coverage
presently provided in Landlord's insurance policies
from
insurance companies reasonably acceptable to Landlord
or cause
the rates for any such policies to increase beyond the
minimum
rates from time to time applicable to the Premises or
the
Shopping Center for the Permitted Use, provided such
minimum rate
would have been available to Landlord but for Tenant's
actions or
use. In the event that Landlord receives any notice
from
Landlord's insurance company regarding any violation by
Tenant of
any of Landlord's insurance policies, or of any
proposed increase
in Landlord's premiums from the minimum rate from time
to time
applicable thereunder because of any act, omission or
sufferance
by Tenant in, on or under the Premises, Landlord shall
notify
Tenant, and Tenant shall reimburse Landlord as
additional Rent
the amount of any such increase promptly following
Landlord's
written demand therefor.
(c) In the event that Landlord receives
any
notice from Landlord's insurance company regarding any
violation
by Tenant of any of Landlord's insurance policies, or
of any
proposed increase in Landlord's premiums from the
minimum rate
from time to time applicable thereunder because of any
act,
omission or sufferance by Tenant in, on or under the
Premises,
Landlord shall notify Tenant, and Tenant shall
reimburse Landlord
as additional Rent the amount of any such increase
promptly
following Landlord's written demand therefor.
Section VIII.5 Indemnification. To the
fullest extent
permitted by law, Tenant covenants with Landlord that
Landlord
shall not be liable for any damage or liability of any
kind or
for any injury to or death of persons or damage to
property of
Tenant or any other person occurring from and after the
date
Tenant is given access to the Premises from any cause
whatsoever
related to the use, occupancy or enjoyment of the
Premises
including, but not limited to, the sidewalks and
landscaped areas
immediately adjacent to the Building and Tenant's
drive-through
area, if any, by Tenant or any person thereon or
holding under
Tenant including, without limitation, damages resulting
from any
labor dispute, and Tenant shall defend (using counsel
mutually
approved by Landlord and Tenant or Tenant's insurer),
indemnify
and save Landlord harmless from all liability
whatsoever on
account of any real or alleged damage or injury and
from liens,
claims and demands related to the use of the Premises
and its
facilities, or any repairs, alterations or improvements
(including any improvements and fixtures constructed or
installed
by Tenant) which Tenant may make or cause to be made
with respect
to the Premises, and any loss or interruption of
business or loss
of rental income resulting therefrom. Notwithstanding
anything
to the contrary in the foregoing, Tenant shall not be
liable for
damage or injury occasioned by the negligence or
willful
misconduct of Landlord or any ground lessor, mortgagee
or owner
of all or any part of the Shopping Center or their
respective
employees, agents or contractors.
Section VIII.6 Landlord Exculpation.
Landlord shall
endeavor to conduct its activities with respect to the
Premises
in a prudent and businesslike manner. However,
Landlord shall
not be liable for any damage to property entrusted to
employees
of Landlord, its partners or agents, nor for loss of or
damage to
any property damage or loss of business which may be
sustained by
the person, goods, xxxx, merchandise or property of
Tenant, its
employees, invitees or customers or any other person in
or about
the Premises caused by or resulting from, but not
limited to,
fire, steam, electricity, gas, water or rain which may
leak or
flow from or into any part of the Premises, or from the
breakage,
leakage, obstruction or other defects of the pipes,
sprinklers,
wires, appliances, plumbing, air conditioning or
lighting
fixtures of same, whether the injury, damage or loss of
business
results from conditions arising upon the Premises,
other portions
of the Shopping Center or from other sources, so long
as the same
does not result from the negligence or wilful
misconduct of
Landlord or its employees, agents, and contractors or
Landlord's
breach of any of its express obligations under this
Lease.
Landlord shall not be liable for interference with the
light or
other incorporeal hereditaments. Tenant shall give
prompt notice
to Landlord in case of fire or accidents in the
Premises or in
the Shopping Center or of defects therein or in the
fixtures or
equipment. Landlord shall not be liable for any
damages arising
from any act or neglect of any other tenant in the
Shopping
Center, except to the extent of Landlord's liability
for breach
of Landlord's obligation to enforce the REA, as
provided in
Section 3.2.
ARTICLE IX
ASSIGNMENT AND SUBLETTING
Section IX.1 Notice to Landlord. If Tenant
wishes to
assign its rights under this Lease or sublet all or any
portion
of the Premises, Tenant shall deliver written notice of
its
intention to do so to Landlord at least thirty (30)
days prior to
the effective date of any such proposed assignment or
subletting,
specifying in such notice whether Tenant proposes to
assign or
sublet, the proposed effective date thereof,
identification of
the proposed assignee or sublessee with a description
of the
proposed business operations to be conducted at the
Premises.
Such notice shall also be accompanied by current
financial
statements of the proposed assignee or subtenant, a
copy of the
proposed assignment or sublease documents, or, if not
available,
a letter of commitment or letter of intent setting
forth material
terms and provisions of the proposed assignment or
sublease.
Section IX.2 Landlord's Approval. Landlord
will
notify Tenant of its approval or disapproval of a
proposed
assignment or sublease within a reasonable time (in no
event
earlier than fifteen (15) days nor longer than thirty
(30) days)
after receipt of such notice from Tenant as set forth
above.
Landlord shall not unreasonably withhold its approval
of Tenant's
assignment of this Lease or subletting of the Premises.
The
factors which may be viewed in determining the
reasonableness of
Landlord's approval or disapproval of a proposed
assignment or
subletting and the conditions which may be imposed by
Landlord as
part of its consenting thereto shall be as follows:
(a) The use of the Premises following the
assignment
or sublease would be different from the Permitted Use
set forth
in this Lease;
(b) In Landlord's reasonable business
judgment, the
proposed assignee or subtenant lacks sufficient
business
reputation or experience to operate a business of the
type and
quality permitted under the terms of this Lease;
(c) In Landlord's reasonable business
judgment, the
present financial worth of the proposed assignee or
subtenant is
inadequate to ensure such assignee's or subtenant's
performance
under the terms of its agreement relating to the
Premises;
(d) The proposed assignment or sublease
transaction
would breach a covenant of Landlord respecting radius,
location,
use or exclusive use in any other lease, financing
agreement or
other agreement relating to the Shopping Center.
It is expressly understood and agreed that Landlord's
consent
shall not be required for any transfer of Tenant's
interest under
this Lease which is considered to be a Permitted
Transaction (as
defined below).
Section IX.3 Permitted Transactions.
Notwithstanding
anything to the contrary herein, Landlord's consent
shall not be
required for any of the following (collectively,
"Permitted
Transactions"):
(i) Any transfer by Tenant of any interest under
this Lease
to any corporation, partnership or other entity which
controls,
is controlled by, or is under common control with the
named
Tenant hereunder or its successors by merger,
consolidation or
other comparable transaction, the primary purpose of
which is not
the transfer of Tenant's interest under this Lease.
(ii) Any transfer by Tenant of any interest under
this Lease
to the owner of a department store chain with assets
equal to or
greater than Tenant's.
(iii) Tenant may enter into concession
arrangements or
license agreements, or otherwise permit the occupation
and use of
a portion of the Premises by a subtenant, licensee or
concessionaire, provided that the areas covered by such
licenses
or concession agreements do not exceed usage in excess
of twenty-
five percent (25%) of the Floor Space of the Premises;
provided,
however that all sales of licensees or concessionaires
shall be
included within Gross Sales as defined in this Lease.
Section IX.4 Compliance with REA. Tenant
shall not
assign its rights under this Lease or sublet all or any
portion
of the Premises unless Tenant complies, at Tenant's
expense, with
the provisions of the REA applicable to such assignment
or
subletting. Landlord agrees to cooperate, at no
expense to
Landlord, with Tenant's efforts to obtain any consents
required
under the REA and to otherwise comply with the REA in
connection
with any proposed assignment or sublease.
Section IX.5 Documentation and Expenses.
Each
assignment or sublease shall be evidenced by an
instrument made
in such written form as is satisfactory to Landlord and
executed
by Tenant and the assignee or subtenant. In the event
of an
assignment, the assignee shall assume and promise to
perform the
terms, covenants and conditions of this Lease which are
obligations of Tenant, from and after the date the
Assignee takes
possession. Unless expressly released by Landlord, in
writing,
Tenant shall remain fully liable to perform its duties
under this
Lease following any assignment of the Lease. Tenant
shall, on
demand of Landlord, reimburse Landlord for Landlord's
reasonable
costs, including attorneys' fees, incurred in obtaining
advice
and preparing documentation for each assignment or
sublease, up
to a maximum of $1,500 per transaction.
ARTICLE X
DEFAULT
Section X.1 Events of Default. Each of
the
following events shall constitute a "Default" by Tenant
under
this Lease:
(a) If Tenant shall fail to pay any
Rent under
this Lease when the same shall become due and payable
and the
failure shall continue for five (5) business days after
written
notice (it being understood such period shall run
concurrently
with any statutory notice period); or
(b) If Tenant shall transfer Tenant's
interest in
this Lease in contravention of Article IX hereof; or
(c) If Tenant shall fail to perform or
observe
any of its obligations under this Lease (including,
without
limitation, Tenant's failure to perform those
obligations under
the REA expressly assumed by Tenant in this Lease)
other than
those specified above in this Section 10.1 and the
failure shall
continue for thirty (30) days after notice, unless a
shorter
period of time for such performance or observance is
otherwise
expressly set forth in this Lease; provided, however,
that in the
case of a Default which cannot with reasonable
diligence be
remedied by Tenant within said period of thirty (30)
days, if
Tenant proceeds as promptly as may reasonably be
possible after
the service of such notice and with all reasonable
diligence to
remedy the Default and thereafter prosecute the
remedying of such
Default with all reasonable diligence, the period of
time after
the giving of such notice within which to remedy the
Default
shall be extended for such period as shall be
reasonably
necessary to remedy the same with all reasonable
diligence;
(d) If the Premises are deemed
abandoned pursuant
to California Civil Code Section 1951.3; or
(e) If an event of insolvency shall
occur
including:
(i) Tenant's making an assignment
for the
benefit of creditors;
(ii) Tenant's failure generally to
pay its
debts as they become due;
(iii) A material adverse change
in the
financial condition of Tenant;
(iv) Tenant's filing, or
acquiescing to the
filing of, a petition seeking an order for relief
against it in
any state or federal court in any bankruptcy,
reorganization,
liquidation, composition, extension, arrangement or
insolvency
proceeding;
(v) Tenant's making an application
for, or
acquiescing to, the appointment of a trustee, examiner
or
custodian for it or all or any portion of its property;
(vi) Any petition being filed
against Tenant
in any state or federal court seeking reorganization or
liquidation or insolvency proceedings, and the
proceedings shall
not be dismissed, discontinued or vacated within ninety
(90)
days; or
(vii) Any trustee, examiner or
custodian
being appointed for Tenant, or for all or any portion
of Tenant's
property, and the trustee, examiner, or custodian shall
not be
set aside within ninety (90) days after such
appointment.
Section X.2 Remedies. Upon the occurrence
of a
Default, and in addition to any other rights or
remedies
available to Landlord at law or in equity, Landlord
shall have
the right to:
(a) terminate this Lease and all rights of
Tenant by
giving Tenant written notice that this Lease is
terminated, in
which case Landlord may recover from Tenant the sum of
:
(i) the worth at the time of award of
any unpaid
Rent that had been earned at the time of termination.
(ii) the worth at the time of award of
the amount
by which (A) the unpaid Rent that would have been
earned after
termination until the time of award exceeds (B) the
amount of
rental loss, if any, as Tenant affirmatively proves
could have
been reasonably avoided;
(iii) the worth at the time of award
of the
amount by which (A) the unpaid Rent for the balance of
the Term
after the time of award exceeds (B) the amount of
rental loss, if
any, as Tenant affirmatively proves could be reasonably
avoided;
(iv) any other amount necessary to
compensate
Landlord for all the detriment proximately caused by
Tenant's
failure to perform Tenant's obligations or that, in the
ordinary
course of things, would be likely to result; and
(v) all other amounts in addition to or
in lieu
of those previously stated as may be provided from time
to time
by California law; or
(b) continue this Lease, and from time to
time,
without terminating this Lease, either (i) recover all
Rent and
other amounts payable as they become due or (ii) relet
the
Premises or any part of the Premises on behalf of
Tenant for any
term, at any rent, and pursuant to any other provisions
as
Landlord deems advisable, all with the right, at
Tenant's cost,
to make alterations and repairs to the Premises.
As used in clauses 10.2(a)(i) and 10.2(a)(ii) of
this
Section, the worth at the time of award is computed by
allowing
interest at the Interest Rate. As used in clause
10.2(a)(iii) of
this Section, the worth at the time of award is
computed by
discounting that amount at the discount rate of the
Federal
Reserve Bank of San Francisco at the time of award plus
one
percent (1%).
(c) Upon the occurrence of a Default,
Landlord shall
also have the right, with or without terminating this
Lease, to
re-enter the Premises and remove all persons and
property from
the Premises. Landlord may cause property so removed
from the
Premises to be stored in a public warehouse or
elsewhere at the
expense and for the account of Tenant.
(d) None of the following remedial actions,
singly or
in combination, shall be construed as an election by
Landlord to
terminate this Lease unless Landlord has in fact given
Tenant
written notice that this Lease is terminated or unless
a court of
competent jurisdiction decrees termination of this
Lease; any act
by Landlord to maintain or preserve the Premises; any
efforts by
Landlord to relet the Premises; any re-entry,
repossession, or
reletting of the Premises; or any reentry,
repossession, or
reletting of the Premises by Landlord pursuant to this
Section.
If Landlord takes any of the previous remedial actions
without
terminating this Lease, landlord may nevertheless at
any time
after taking any remedial action terminate this lease
by written
notice to Tenant.
(e) If Landlord relets the Premises,
Landlord shall
apply the revenue as follows: first, to the payment of
any
reasonable cost of reletting, including without
limitation
finder's fees and leasing commissions; and second, to
the payment
of Rent and other amounts due and unpaid under this
Lease.
Landlord shall hold and apply the residue, if any, to
payment of
future amounts payable as they become due and, to the
extent the
residue exceeds such amounts, shall remit such excess
to Tenant.
Should revenue from reletting during any month, after
application
pursuant to the foregoing provisions, be less than the
reasonable
cost of reletting and the Rent and other amounts due
and unpaid
under this Lease, Tenant shall pay the deficiency to
Landlord
promptly upon demand.
(f) After the occurrence of a Default,
Landlord, in
addition to or in lieu of exercising other remedies,
may, but
without any obligation to do so, cure the breach
underlying the
Default for the account and at the expense of Tenant;
provided
that Landlord by prior notice shall first allow Tenant
a
reasonable opportunity to cure, except in cases of
emergency,
where Landlord may proceed without prior notice to
Tenant.
Tenant shall, upon demand, immediately reimburse
Landlord for all
costs, including costs of settlements, defense court
costs, and
attorney fees, that Landlord may incur in the course of
any such
cure.
(g) No security, guaranty or security
interest granted
for the performance of Tenant's obligations, which
Landlord may
now or hereafter hold, shall in any way constitute a
bar or
defense to any action initiated by Landlord for
unlawful detainer
or for the recovery of the Premises, for enforcement of
any
obligation of Tenant, or for the recovery of damages
caused by a
breach of this Lease by Tenant or by a Default.
(h) Except as expressly provided in this
Lease to the
contrary, no right or remedy conferred upon or reserved
to either
party is intended to be exclusive of any other right or
remedy
given now or later or existing at law or in equity or
by statute.
Except to the extent that either party may have
otherwise agreed
in writing, no waiver by that party of any violation or
nonperformance by the other party of any obligations,
agreements,
or covenants shall be deemed to be a waiver of any
subsequent
violation or nonperformance of the same or any other
covenant,
agreement, or obligation, nor shall any forbearance by
either
party to exercise a remedy for any violation or
nonperformance by
the other party be deemed a waiver by that party of
rights or
remedies with respect to that violation or
nonperformance.
(i) Landlord may require Tenant or any
trustee for
Tenant under the United States Bankruptcy Code (as
amended, the
"Bankruptcy Code") to cure Tenant's Default and to
provide
adequate assurances of future performance of this Lease
as
provided in Section 365(b)(3) of the Bankruptcy Code,
including,
without limitation, adequate assurance that; (i) Rent
will be
paid when due; (ii) there shall be no substantive
breach in the
provisions of this Lease relating to the Shopping
Center
including, without limitation, the Permitted Use; and
(iii) that
there shall be no disruption in any Tenant mix or
Tenant balance
in the Shopping Center. If Tenant or the trustee does
not cure
existing Defaults and provide such assurances of future
performance within sixty (60) days after there has been
an order
for relief pursuant to the Bankruptcy Code, this Lease
shall be
deemed rejected, and Landlord shall have no further
liability
hereunder to Tenant or any person claiming through or
under
Tenant and, if Tenant or any such person is in
possession.
Tenant or any such person shall forthwith quit and
surrender the
premises to Landlord.
Section X.3 Attorneys' Fees. In the event
that
either party hereto commences an action related to this
Lease,
the prevailing party shall be entitled to recover from
the other
party all of its costs and expenses incurred therein,
including,
without limitation, reasonable attorneys' fees and
disbursements.
If either party hereto is, without fault on its own
part, made a
party to any action instituted by or against the other
party to
this Lease due to such other party's fault, such other
party
shall indemnify the party innocently involved and
defend and hold
it harmless against and from all such costs and
expenses incurred
therein including, without limitation, reasonable
attorneys' fees
and disbursements.
Section X.4 Agreement to Arbitrate. Any
controversy, dispute or claim under, arising out of, in
connection with or in relation to this Lease, including
but not
limited to the negotiation, execution, interpretation,
construction, coverage, scope, performance,
non-performance,
breach, termination, validity or enforceability of this
Lease or
any provision hereof shall be determined by arbitration
conducted
in accordance with the Commercial Arbitration Rules or
then
existing rules for commercial arbitration of the
American
Arbitration Association. The arbitration shall
additionally be
governed by the California Arbitration Act. The
arbitration
shall be conducted in a location in San Bernardino
County and
shall be before a single arbitrator who shall be
selected by
mutual agreement of the parties from among a list of
seven
potential arbitrators provided by the American
Arbitration
Association. If the parties cannot agree on an
arbitrator from
this first list, the parties hereto shall select an
arbitrator
for such arbitration from a second list of seven
potential
arbitrators provided by the American Arbitration
Association with
each party alternately striking names, with the last
name
remaining to be the arbitrator so selected. In the
event that
either party seeks a temporary restraining order,
preliminary
injunction or other provisional relief, the provisions
of Section
1281.8 of the California Code of Civil Procedure shall
apply.
The arbitration of such issues, including the
determination of
any amount of damages suffered by any party hereto by
reason of
the acts or omissions of any party, shall be final and
binding
upon the parties to the maximum extent permitted by
law.
Judgment upon any award rendered by the arbitrator(s)
may be
entered by any court having jurisdiction thereof. The
parties
intend that this Article shall be valid, binding,
enforceable and
irrevocable and shall survive the termination of this
Agreement.
It is understood and agreed that the terms of this
Section 10.4
shall not apply to a determination of Fair Market
Rental Value,
which shall be determined pursuant to Section 12.3 of
this Lease.
Section X.5 No Set-off/Counterclaims.
Tenant shall
pay all Rent due hereunder, free of any charges,
assessments,
impositions or deductions and without abatement,
deferral,
reduction, set-off, counterclaim, defense or deduction
except as
permitted under the express terms of this Lease or the
Asset
Purchase Agreement. Tenant shall not interpose any
counterclaim(s) in any action brought by Landlord
based, in whole
or in part, on Tenant's failure to pay Rent; provided,
however,
that, the foregoing to the contrary notwithstanding:
(i) Tenant
may interpose any counterclaim deemed "compulsory"
under
applicable court rules of civil procedure; (ii) Tenant
shall be
permitted to bring a separate action against Landlord
based on
any claim which Tenant is prohibited by this Lease from
asserting
as a set-off or counterclaim; and (iii) Tenant may
bring actions
and assert defenses, setoffs and counterclaims
permitted to be
brought or asserted against Landlord in accordance with
the terms
of the Asset Purchase Agreement.
Section X.6 Right of Redemption. Tenant
hereby
waives, for itself and all persons claiming by, through
or under
Tenant, any right of redemption or for the restoration
of the
operation of this Lease under any present or future law
in the
event Landlord shall obtain possession of the Premises.
Section X.7 No Waiver. No receipt of
monies by
Landlord from Tenant after the termination or
cancellation of
this Lease in any lawful manner shall reinstate the
Term of this
Lease, or operate as a waiver of the right of Landlord
to enforce
the payment of Rent then due, or operate as a waiver of
the right
of Landlord to recover possession of the Premises by
proper suit,
action, proceeding or remedy; it being agreed that,
after the
termination or cancellation of this Lease, or after a
final order
or judgment for the possession of the Premises,
Landlord may
demand, receive and collect any monies due, without in
any manner
affecting such notice, proceeding, suit, action, order
or
judgment; and any and all such monies collected shall
be deemed
to be payment on account of the use and occupation or
Tenant's
liability hereunder.
Section X.8 Unperformed Covenants of
Landlord May Be
Performed By Tenant. If Landlord shall fail to perform
any of
the terms, provisions, covenants or conditions to be
performed or
complied with by Landlord pursuant to this Lease, or if
Landlord
should fail to make any payment which Landlord agrees
to make,
and any such failure shall, if it relates to a matter
which is
not of any emergency nature, remain uncured for a
period of
thirty (30) days after Tenant shall have served upon
Landlord
notice of such failure, or for a period of twenty-four
(24) hours
after service of such notice, if in Tenant's judgment
reasonably
exercised such failure related to a matter which is of
an
emergency nature, then Tenant may at Tenant's option,
at any time
prior to commencement of Landlord's acting to cure such
failure
and thereafter if Landlord fails to diligently perform
the curing
of such failure, perform any such term, provision,
covenant or
condition or to make any such payment, as Landlord's
agent, and
in Tenant's sole discretion as to the necessity
therefor, and
Tenant shall not be liable or responsible for any loss
or damage
resulting to Landlord or anyone holding under Landlord
on account
thereof. The full amount of the cost and expense
entailed, or
payment so made, shall immediately be owing and payable
by
Landlord to Tenant. The option given in this Section
is for the
sole protection of Tenant, and its existence shall not
release
Landlord from the obligation to perform the terms,
provisions,
covenants and conditions herein provided to be
performed by
Landlord or deprive Tenant of any legal rights which it
may have
by reason of any such default by Landlord.
ARTICLE XI
[INTENTIONALLY OMITTED]
ARTICLE XII
OPTIONS
Section XII.1 Renewal Options. Contingent
upon Tenant
satisfying all of the following conditions, and
provided that
Tenant has not filed for protection under the Federal
Bankruptcy
Laws at the time such option is exercised, Tenant is
hereby
granted four (4) separate options (each an "Option" and
two or
more, collectively, the "Options")) to extend the Term
of this
Lease, each for an additional period of five (5) years
(each a
"Renewal Term"), conditioned upon satisfaction of the
following
requirements:
(a) No Default by Tenant shall have
occurred and
remain uncured as of the date of Tenant's exercise of
its Option;
and
(b) Tenant shall deliver written notice
to
Landlord exercising the applicable Option not less than
six (6)
full calendar months prior to the expiration of the
Term (as it
may be extended by Tenant's exercise of any Options).
Section XII.2 Lease Terms Applicable. In
the event
that Tenant exercises one or more of the Options herein
granted,
then all of the terms and provisions of this Lease as
are
applicable during the initial Term shall likewise be
applicable
during each of the applicable Renewal Terms except that
Minimum
Annual Rent and Percentage Rent payable by Tenant for
each
Renewal Term shall be as set forth in Section 12.3
below.
Section XII.3 Rent During Renewal Terms.
(a) The Minimum Annual Rent (as defined
in
Section 4.1 of this Lease) which shall be due and
payable during
the first Renewal Term, if exercised by Tenant, shall
be
determined prior to the commencement of each applicable
Renewal
Term and shall be equal to three percent (3.0%) of the
average of
annual Gross Sales at the Premises for the two (2)
Lease Years
preceding the commencement of the applicable Renewal
Term.
Percentage Rent for the first Renewal Term shall be
calculated in
accordance with the terms of Section 4.2 of this Lease.
(b) Minimum Annual Rent and Percentage
Rent
(including the formula for the calculation thereof) for
each of
the second, third and fourth Renewal Terms, if
exercised by
Tenant, shall be equal to the Fair Market Rental Value
of the
Premises, each with respect to the 5-year term first
day as of
the commencement of the applicable Renewal Term. The
Fair Market
Rental Value of the Premises shall be based upon the
rental
amounts paid by tenant-operators of department stores
for retail
store space of substantially the same type, size and
quality as
the Premises, and located in major regional malls in
San
Bernardino County or Riverside County. Within thirty
(30) days
following Landlord's receipt of Tenant's written notice
that it
wishes to exercise the applicable Option, Landlord
shall deliver
to Tenant a written notice specifying Landlord's good
faith
estimate of the Fair Market Rental Value for the
Premises for the
applicable Renewal Term. Within thirty (30) days
following
Tenant's receipt of Landlord's good faith estimate of
the Fair
Market Rental Value of the Premises, Tenant may deliver
a written
notice to Landlord either setting forth Tenant's good
faith of
Fair Market Rental Value, in which case Landlord and
Tenant will
promptly meet and attempt to agree in good faith upon
the Fair
Market Rental Value, or agreeing to Landlord's estimate
of Fair
Market Rental Value. If no agreement regarding the
applicable
Fair Market Rental Value for the Premises can be
reached within
fifteen (15) days after Landlord's receipt of Tenant's
estimate
of Fair Market Rental Value for the Premises, Tenant
shall have
ten (10) days to cancel its exercise of the applicable
Option by
delivering written notice to Landlord within such
10-day period.
If Tenant does not terminate its exercise of the
applicable
Option within such 10-day period, the Fair Market
Rental Value of
the Premises for the applicable Renewal Term shall be
determined
in accordance with the terms of Exhibit E.
Section XII.4 Lease Amendment. Following
Tenant's
exercise of each Option and the determination of the
Fair Market
Rental Value of the Premises for the applicable Renewal
Term,
Landlord and Tenant will enter into an amendment to
this Lease
confirming the extension of the Term of this Lease in
accordance
with the terms hereof.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section XIII.1 Notices.
(a) Any notice, demand, request,
approval,
consent or other instrument (collectively, a "Notice")
which may
be, or is required to be, given under this Lease shall
be in
writing and given by hand or sent by United States
certified or
registered mail, return receipt requested, postage
prepaid, or by
an overnight nationally recognized courier service,
addressed to
Landlord at the address herein first given with a copy
to:
XxXxxxxx McAlearny Shimoff & Xxxx, 0 Xxxx Xxxxxxxx
Xxxxxxxxx,
X.X. Xxx 0000, Xxxxxxxx, XX 00000-0000 Attn: Xxxxxx
X.
XxXxxxxx, Esq., or to such other address as Landlord
may from
time to time designate to Tenant by notice in
accordance with
this Section, and to Tenant at the Premises and to
Tenant's
address herein first given Attention: Law Department,
or to such
other address as Tenant may from time to time designate
to
Landlord by notice in accordance with this Section.
All Notices
shall be deemed given or served three (3) business days
after the
date of registration or certification by the postal
authorities,
if mailed, or upon receipt, if sent by overnight
courier or
delivered in person.
(b) Any notice which may or shall be
given under
this Lease by Landlord may be given by Landlord, by any
employee
of Landlord, by any attorney representing Landlord, by
any
management company operating the Shopping Center on
behalf of
Landlord or any employee of, or attorney retained by,
said
management company, and all notices from any of the
foregoing
shall be as effective as if given by Landlord itself.
(c) Any Notice with respect to any
assignment,
alleged default, termination or other material issue
given to
Landlord shall also be given to each mortgagee of
Landlord's
interest in the Shopping Center, the name and address
of which
mortgagee Landlord has previously given Tenant written
notice.
Section XIII.2 Brokers. Landlord and Tenant
each
warrants and represents to the other party hereto that
it has not
dealt with any broker in negotiating or consummating
this Lease,
and Landlord and Tenant each hereby agrees to
indemnify, defend
and hold harmless the other party hereto against and
from any and
all claims losses or liabilities as a result of any
inaccuracy in
the foregoing representation. This Section shall
survive the
Term of this Lease.
Section XIII.3 Subordination of Lease.
(a) This Lease is subordinate to the
lien of all
mortgages, deeds of trust and security instruments
(collectively,
"Mortgages"), and to all ground leases, easement
agreements and
operating agreements now covering or affecting all or
any part of
the Shopping Center, including, without limitation, the
REA, and
to all modifications, consolidations, renewals,
replacements and
extensions of any of the foregoing. Landlord hereby
represents
and warrants that there are no Mortgages in effect with
respect
to the Shopping Center or the Premises except as
specifically set
forth in Exhibit G attached hereto and made a part
hereof, nor
are there any REAs affecting the Shopping Center or
Tenant's
rights under this Lease except as set forth in Exhibit
D attached
hereto and made a part hereof. Landlord shall exercise
best
efforts to obtain from each mortgagee under a Mortgage
listed on
Exhibit G a nondisturbance agreement in the form of the
"SNDA"
attached to the Asset Purchase Agreement.
(b) Subject to the terms of any
nondisturbance
agreement entered into by Tenant, should any mortgagee
under a
Mortgage succeed to Landlord's interest in this Lease,
Tenant
shall, upon demand, attorn to and recognize such
mortgagee as
Landlord under this Lease. In the event of a sale or
assignment
of Landlord's interest in this Lease or the Premises,
Tenant
shall attorn to and recognize such purchaser or
assignee as
Landlord under this Lease without further act by
Landlord or such
purchaser or assignee.
Section XIII.4 Unavoidable Delays. In the
event that
either party shall be delayed or hindered in, or
prevented from,
the performance of any work, service or other act
required under
this Lease to be performed by such party and such delay
or
hindrance is due to: (i) strikes, lockouts, or other
labor
disputes; (ii) inability to obtain labor or materials
or
reasonable substitutes therefor; or, (iii) acts of God,
governmental restrictions, enemy act, civil commotion,
unavoidable fire or other casualty, or other causes of
a like
nature beyond the control of the party so delayed or
hindered
(collectively, "Unavoidable Delays"), then performance
of such
work, service or other act shall be excused for the
period of
such delay and the period for the performance of such
work,
service or other act shall be extended by a period
equivalent to
the period of such delay. In no event shall any such
delay
constitute a termination or extension of this Lease.
The
provisions of this Section shall not operate to excuse
Tenant
from the timely payment of Rent.
Section XIII.5 Estoppel Certificates. Upon
ten (10)
business days prior written request therefor by
Landlord or
Tenant from time to time, each party agrees to execute
and to
deliver to the requesting party, or to such other
addressee or
addressees as the requesting party may designate, a
written
statement certifying that: (i) this Lease is in full
force and
effect and unmodified, or describing any modification;
(ii) that
there are no defenses or offsets against the
enforcement of this
Lease, or stating with particularity defenses or
offsets claimed;
stating the date to which Rent has been paid; and (iv)
stating
the Term Commencement Date and the date this Lease
expires.
Section XIII.6 Relationship of Parties.
Nothing
contained in this Lease shall be deemed or construed as
creating
the relationship of principal and agent or of
partnership or of
joint venture between the parties hereto, it being
understood and
agreed that neither the method of computing Rent nor
any other
provision contained herein nor any acts of the parties
hereto
shall be deemed to create any relationship between the
parties
other than that of Landlord and Tenant.
Section XIII.7 Governing Law; Jurisdiction.
(a) Governing Law. This Lease, the
legal
relations between the parties and any Action (defined
below),
whether contractual or non-contractual, instituted by
any party
with respect to matters arising under or growing out of
or in
connection with or in respect of this Lease, including
but not
limited to the negotiation, execution, interpretation,
coverage,
scope, performance, breach, termination, validity, or
enforceability of this Lease, shall be governed by and
construed
in accordance with the laws of the State of California
applicable
to contracts made and performed in such State and
without regard
to conflicts of law doctrines, except to the extent
that certain
matters are preempted by federal law or are governed as
a matter
of controlling law by the law of the jurisdiction of
incorpora-
tion of the Tenant.
(b) Jurisdiction. Each party hereby
irrevocably
submits to and accepts for itself and its properties,
generally
and unconditionally, the exclusive jurisdiction of and
service of
process pursuant to the laws of the State of California
and the
rules of its courts, waives any defense of forum non
conveniens
and agrees to be bound by any judgment rendered thereby
arising
under or out of in respect of or in connection with
this Lease or
any related document or obligation. Each party further
irrevocably desig-nates and ap-points the individual
identified
in or pursuant to Section 13.1 hereof to receive
notices on its
behalf, as its agent to receive on its behalf service
of all
process in any such Action before any body, such
service being
hereby acknowledged to be effect-ive and binding
service in every
respect. A copy of any such process so served shall be
mailed by
registered mail to each party at its address provided
in Section
13.1; provided that, unless otherwise provided by
applicable law,
any failure to mail such copy shall not affect the
validity of
the service of such process. If any agent so appointed
refuses
to accept service, the designating party hereby agrees
that
service of process sufficient for personal jurisdiction
in any
action against it in the applicable jurisdiction may be
made by
registered or certified mail, return receipt requested,
to its
address provided in Section 13.1. Each party hereby
acknowledges
that such service shall be effective and binding in
every
respect. Nothing herein shall affect the right to
serve process
in any other manner per-mitted by applicable law.
(c) As used in this Section 13.7,
"Action" shall
mean any action, complaint, petition, investigation
suit or other
proceeding before any arbitrator or any other governing
body or
entity having appropriate jurisdiction.
Section XIII.8 Interpretation. The neuter,
feminine or
masculine pronoun when used herein shall each include
each of the
other genders and the use of the singular shall include
the
plural. In the event of any conflict between the terms
of this
Lease, and the terms of the Asset Purchase Agreement
(including
any related agreements entered into by Landlord and
Tenant), the
terms of the Asset Purchase Agreement shall prevail
over any
contrary term of this Lease.
Section XIII.9 Captions. The captions of
Articles and
Sections contained in this Lease are for convenient
reference
only and shall not be deemed or construed as in any
manner
limiting or amplifying the terms and provisions hereof.
Section XIII.10 Partial Invalidity. If
any term or
provision of this Lease, or the application thereof to
any person
or circumstance, shall to any extent be determined to
be invalid
or unenforceable by a court of competent jurisdiction,
then the
remainder of this Lease, or the application of such
term or
provision to persons or circumstances other than those
as to
which it is held invalid or unenforceable, shall not be
affected
thereby.
Section XIII.11 Waivers. The waiver by
Landlord of
any breach of any term, covenant or condition contained
in this
Lease shall not be deemed to be a waiver of such term,
covenant
or condition or of any subsequent breach of the same or
any other
term, covenant or condition contained in this Lease.
The
subsequent acceptance of Rent hereunder by Landlord
shall not be
deemed to be a waiver of any preceding breach by Tenant
of any
term, covenant or condition of this Lease or of any
right of
Landlord to a forfeiture of the Lease by reason of such
breach,
regardless of Landlord's knowledge of such preceding
breach at
the time of acceptance of such Rent. No term, covenant
or
condition of this Lease shall be deemed to have been
waived by
Landlord unless such waiver be in writing and signed by
Landlord.
Section XIII.12 Accord and Satisfaction.
No
payment by Tenant, or receipt by Landlord, of a lesser
amount
than the Rent payment due under this Lease shall be
deemed or
construed to be other than a payment or receipt on
account of the
earliest Rent due. Neither the endorsement or
statement on any
check nor the receipt or negotiation of any such check
by
Landlord, shall be deemed or construed to be an accord
and
satisfaction.
Section XIII.13 Counterparts. This Lease
may be
executed in several counterparts, each of which shall
be deemed
an original and all of which shall together constitute
one and
the same instrument.
Section XIII.14 Entire Agreement. This Lease
and the
Asset Purchase Agreement incorporate all undertakings
between the
parties hereto with respect to Tenant's lease of the
Premises.
Tenant hereby acknowledges that neither Landlord nor
Landlord's
employees, agents or contractors have made any
representations or
promises to Tenant with regard to the Premises or the
Shopping
Center or this Lease that have not been expressly
stated in this
Lease and, therefore, Tenant hereby waives any and all
claims
against, or liability of, Landlord and Landlord's
employees,
agents, and contractors based thereon. Landlord hereby
acknowledges that Tenant and its employees and officers
have made
no representations or promises with regard to Tenant's
operations, sales figures or methods of doing business
or any
other matter except as expressly contained in this
Lease, and
Landlord, therefore, hereby waives any claim with
respect thereto
or based thereon.
Section XIII.15 Successors and Assigns. This
Lease and
each of the terms and conditions hereof shall inure to
the
benefit of, and be binding upon, Landlord, and
Landlord's heirs,
executors, administrators, successors and assigns.
This Lease
and each of the terms and conditions hereof shall also
be binding
upon Tenant, and Tenant's heirs, executors,
administrators,
successors and assigns and shall inure to the benefit
of Tenant
and only such assigns of Tenant to whom the assignment
by Tenant
has been made and consented to in accordance with the
provisions
of Article IX of this Lease.
Section XIII.16 Survival of Obligations. All
obligations of each party which by their nature involve
performance after the end of the Term, or which cannot
be
ascertained or have been fully performed until after
the end of
the Term, shall survive the expiration or earlier
termination of
this Lease.
Section XIII.17 Submission of Lease.
Submission of this
Lease by one party to the other for examination or
execution does
not constitute an offer made, or an option granted, to
enter into
this Lease.
Section XIII.18 Memorandum of Lease. Landlord
and
Tenant agree to execute a memorandum of this Lease,
which
memorandum shall be substantially in the form attached
hereto as
Exhibit F and shall be recorded in the applicable real
property
records as soon as possible after the date of this
Lease.
Section XIII.19 Attachments. Attached hereto
and made a
part of this Lease are the following: Exhibits A-G,
inclusive.
IN WITNESS WHEREOF, Landlord and Tenant have
caused
their duly authorized representatives to execute this
Lease as of
the date first above written.
LANDLORD:
EL CORTE INGLES, S.A.
By_____________________
Its:____________________
By: _______________________
Its:____________________
TENANT:
GOTTSCHALKS INC.
By: _______________________
Its:____________________
By: _______________________
Its:____________________
EXHIBIT A
LEGAL DESCRIPTION OF SHOPPING CENTER
EXHIBIT B
SITE PLAN OF SHOPPING CENTER
EXHIBIT C
SITE PLAN OF PREMISES
EXHIBIT D
SCHEDULE OF REA AND RELATED AGREEMENTS
EXHIBIT E
DETERMINATION OF FAIR MARKET RENTAL VALUE
1. Efforts to Agree Upon Fair Market Rental Value.
If pursuant
to the terms of the Lease, Fair Market Rental Value is
to be
determined with respect to any Renewal Term, Landlord
and Tenant
shall promptly commence negotiation to reach agreement
on Fair
Market Rental Value for the applicable Renewal Term.
If Landlord
and Tenant are unable to reach agreement on Fair Market
Rental
Value within the time period provided in the Lease and
the
parties wish to proceed with a method of resolving the
disagreement regarding Fair Market Rental Value, the
terms of
Section 2 below shall apply.
2. Arbitration Regarding Fair Market Rental Value.
(a) If Landlord and Tenant are to proceed with
the method
of determining Fair Market Rental Value under this
Exhibit E,
then within ten (10) days of the date either Landlord
or Tenant
delivers written notice to the other party hereto
confirming
that, pursuant to the terms of the Lease, Fair Market
Rental
Value is to be determined in accordance with the terms
of Exhibit
E, Landlord and Tenant shall each simultaneously submit
to the
other in a sealed envelope its good faith estimate of
Fair Market
Rental Value. If the higher of such estimates is not
more than
one hundred five percent (105%) of the lower of such
estimates,
then Fair Market Rental Value shall be the average of
the two
estimates. If one party ("Refusing Party") refuses to
simultaneously submit such estimate to the other party
("Other")
within such 10-day period, then the Other may notify
the Refusing
Party of the Other's willingness to make such
simultaneous
submittal. If the Refusing Party fails to make such
simultaneous
submittal within five (5) business days thereafter, the
other
party's good faith estimate of Fair Market Rental Value
shall be
Fair Market Rental Value.
(b) If the higher of the estimates is more than
one hundred
five percent (105%) of the lower of such estimates,
then either
Landlord or Tenant may, by written notice to the other
at any
time within ten (10) days following the exchange of
estimates,
require that the disagreement be resolved by
arbitration. Within
seven (7) days after such notice, the parties shall
select as an
arbitrator a mutually acceptable independent MAI
appraiser with
experience in real estate activities, including at
least ten (10)
years experience in appraising anchor store retail
space in major
regional shopping malls. If the parties cannot agree
on an
appraiser within such seven (7) day period, then within
a second
period of seven (7) days, each shall select and inform
the other
party of an independent MAI appraiser meeting the
aforementioned
criteria and within a third period of seven (7) days,
the two
appraisers shall select a panel of three additional
appraiser
meeting the aforementioned criteria and the three
appraisers
shall determine Fair Market Rental Value pursuant to
this Exhibit
E by majority vote of such three appraisers. Both
Landlord and
Tenant shall be entitled to present evidence supporting
their
respective positions to the panel of three appraisers.
If one
party shall fail to make such appointment within said
second
seven (7) day period, then the appraiser chosen by the
other
party shall be the sole arbitrator, who shall determine
Fair
Market Rental Value pursuant to this Exhibit E.
(c) Once the arbitrators have been selected as
provided
above, then, as soon thereafter as practicable but in
any case
within fourteen (14) days, the arbitrators shall select
one of
the two estimates of Fair Market Rental Value submitted
by
Landlord and Tenant, which must be the one that is
closer to Fair
Market Rental Value as determined by the majority of
the
arbitrators. The arbitrators' selection shall be
binding upon
Landlord and Tenant. The party whose estimate is not
chosen by
the arbitrators shall pay the costs of the arbitrators
and any
experts retained by the arbitrators. Any fees of any
counsel or
expert engaged directly by Landlord or Tenant, however,
shall be
borne by the party retaining such counsel or expert.
EXHIBIT F
FORM OF MEMORANDUM OF LEASE
Recording Requested By And
When Recorded Return To:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
_________________________________________________________________
_____________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (this "Memorandum"),
dated as
of _________, 1998, is entered into by and between El
Corte
Ingles, S.A., a Spanish corporation ("Landlord"), and
Gottschalks
Inc., a Delaware corporation ("Tenant"). Landlord and
Tenant
have entered into that certain Store Lease Agreement
dated as of
_____________, 1998 (the "Store Lease"), pursuant to
which
Landlord demised and leased to Tenant and Tenant hired
from
Landlord the Premises as more particularly described in
the Lease
(the "Premises"), which Premises are located on the
real property
described in Exhibit A attached hereto and made a part
hereof.
LANDLORD AND TENANT AGREE AS FOLLOWS:
1. For and in consideration of the rental
reserved
and of the mutual covenants, agreements and conditions
set forth
in that certain Store Lease, Landlord does hereby lease
to Tenant
and Tenant does hereby lease from Landlord, upon all
terms and
conditions set forth in the Store Lease, the Premises.
The
primary term of the Lease is ten (10) years commencing
on
__________ and expiring on ____________, 2007.
2. On the terms and conditions more
specifically set
forth in the Store Lease, Tenant has certain fixed
rights to
renew the Term of the Lease as more specifically set
forth
therein. Specifically, Tenant has been granted four
separate
options to renew the Term of the Lease, each for an
additional
period of five (5) years.
3. This Memorandum has been prepared to
provide
notice that the Premises are subject to the terms and
conditions
of the Store Lease, which terms are hereby incorporated
into this
Memorandum by this reference. In no event shall the
terms of
this Memorandum be deemed to modify, amend, limit or
otherwise
affect the terms and conditions of the Store Lease. In
the event
of any inconsistency between the terms of this
Memorandum and the
terms of the Store Lease, the terms of the Store Lease
shall
control.
IN WITNESS WHEREOF, Landlord and Tenant have
caused
their duly authorized representatives to execute this
Memo-randum
as of the date first written above.
LANDLORD:
EL CORTE INGLES, S.A.
By: __________________________________
Its: ____________________________
TENANT:
GOTTSCHALKS INC.
By: __________________________________
Its: ____________________________
EXHIBIT A
Description of Real Property
EXHIBIT G
SCHEDULE OF EXISTING MORTGAGES
A. Current preliminary title report:
Title Company:
Date of report:
Order No.:
B. Existing Mortgages:
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS 1
Section 1.1 Definitions 1
Section 1.2 Effect of Basic Terms 5
ARTICLE II
GRANT AND TERM 5
Section 2.1 Grant and Term of Lease 5
Section 2.2 Acceptance of Premises;
Quiet Enjoyment. 6
Section 2.3 Surrender of Premises. 6
Section 2.4 Holding Over. 7
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT
AGREEMENT 7
Section 3.1 Lease Controls Over REA. 7
Section 3.2 Covenants Regarding REA. 7
ARTICLE IV
RENT AND OTHER CHARGES 8
Section 4.1 Minimum Annual Rent 8
Section 4.2 Percentage Rent 8
Section 4.3 Utilities Charge 10
Section 4.4 Common Area Maintenance
Costs 10
Section 4.5 Taxes 10
Section 4.6 Late Payment Charges 11
Section 4.7 Rent Payments 11
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS 12
Section 5.1 Permitted Use 12
Section 5.2 Signs 12
Section 5.3 Alterations of Premises 12
Section 5.4 Use of Common Areas 13
Section 5.5 Compliance with REA 14
Section 5.6 Compliance with
Requirements 15
Section 5.7 Liens 15
ARTICLE VI
REPAIRS AND MAINTENANCE 16
Section 6.1 Tenant's Obligations 16
Section 6.2 Landlord's Obligations 17
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION 17
Section 7.1 Damage or Destruction 17
Section 7.2 Condemnation 19
ARTICLE VIII
INSURANCE 20
Section 8.1 Tenant's Insurance 20
Section 8.2 Landlord's Insurance 22
Section 8.3 Waiver of Subrogation 22
Section 8.4 Governmental and Insurance
Requirements 22
Section 8.5 Indemnification 23
Section 8.6 Landlord Exculpation 23
ARTICLE IX
ASSIGNMENT AND SUBLETTING 24
Section 9.1 Notice to Landlord 24
Section 9.2 Landlord's Approval 24
Section 9.3 Permitted Transactions 25
Section 9.4 Compliance with REA 25
Section 9.5 Documentation and
Expenses 25
ARTICLE X
DEFAULT 26
Section 10.1 Events of Default 26
Section 10.2 Remedies 27
Section 10.3 Attorneys' Fees 29
Section 10.4 Agreement to Arbitrate 29
Section 10.5 No Set-off/Counterclaims 30
Section 10.6 Right of Redemption 30
Section 10.7 No Waiver 30
Section 10.8 Unperformed Covenants of
Landlord May Be
Performed By Tenant 31
ARTICLE XI
[INTENTIONALLY OMITTED] 31
ARTICLE XII
OPTIONS 31
Section 12.1 Renewal Options 31
Section 12.2 Lease Terms Applicable 31
Section 12.3 Rent During Renewal Terms 32
Section 12.4 Lease Amendment 32
ARTICLE XIII
MISCELLANEOUS PROVISIONS 33
Section 13.1 Notices 33
Section 13.2 Brokers 33
Section 13.3 Subordination of Lease 33
Section 13.4 Unavoidable Delays 34
Section 13.5 Estoppel Certificates 34
Section 13.6 Relationship of Parties 34
Section 13.7 Governing Law;
Jurisdiction 35
Section 13.8 Interpretation 35
Section 13.9 Captions 36
Section 13.10 Partial Invalidity 36
Section 13.11 Waivers 36
Section 13.12 Accord and Satisfaction 36
Section 13.13 Counterparts 36
Section 13.14 Entire Agreement 36
Section 13.15 Successors and Assigns 37
Section 13.16 Survival of Obligations 37
Section 13.17 Submission of Lease 37
Section 13.18 Memorandum of Lease 37
Section 13.19 Attachments 37
EXHIBITS
EXHIBIT A LEGAL DESCRIPTION OF SHOPPING
CENTER A-1
EXHIBIT B SITE PLAN OF SHOPPING CENTER B-1
EXHIBIT C SITE PLAN OF PREMISES C-1
EXHIBIT D SCHEDULE OF REA AND RELATED
AGREEMENTS D-1
EXHIBIT E DETERMINATION OF FAIR MARKET
RENTAL VALUE E-1
EXHIBIT F FORM OF MEMORANDUM OF LEASE G-1
EXHIBIT G SCHEDULE OF EXISTING MORTGAGES H-1
EXHIBIT G
STORE LEASE AGREEMENT
by and between
EL CORTE INGLES,
as "Landlord"
and
GOTTSCHALKS INC,
as "Tenant"
Dated as of __________, 0000
Xxxxxxxx Xxxx
Xxx Xxxxxxxxxx, XX
STORE LEASE AGREEMENT
Carousel Mall
San Bernardino, CA
THIS STORE LEASE AGREEMENT (this "Lease"),
made as of
this ___ day of ___________, 1998, by and between EL
CORTE
INGLES, S.A., a Spanish corporation, having an address
at
Xxxxxxxxxx, 000, 00000 Xxxxxx XXXXX, Attention:
_______________
("Landlord"), and GOTTSCHALKS INC., a Delaware
corporation,
having an address at 0 Xxxxx Xxxx Xxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx
00000, Attention: General Counsel ("Tenant").
R E C I T A L S
A. Landlord, Tenant and Xxxxxx (defined
below) are
parties to that certain Asset Purchase Agreement
(defined below).
Prior to the date hereof, Xxxxxx leased the Premises
(defined
below) from Landlord. Pursuant to the Asset Purchase
Agreement,
Tenant is to purchase certain assets of Xxxxxx (defined
below).
The Asset Purchase Agreement requires Landlord to
terminate
Xxxxxx' lease and enter into this Lease with Tenant.
B. Concurrently with execution of this
Lease,
Landlord has terminated Xxxxxx' lease. Landlord now
desires to
lease to Tenant, and Tenant desires to lease from
Landlord, the
Premises on the terms and conditions hereafter set
forth.
NOW, THEREFORE, in consideration of the
foregoing
Recitals, the receipt and sufficiency of which is
hereby
acknowledged by each party as of the time of execution
and
delivery hereof, and in further consideration of the
rents
reserved and the covenants and conditions set forth
herein,
Landlord and Tenant agree as follows:
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS
Section I.1 Definitions. As used in this
Lease, the
following Terms shall have the meanings set forth
below:
"Alterations" shall have the meaning
ascribed
thereto in Section 5.3.
"Annual Report" shall have the
mean-ing
ascribed thereto in Section 4.2(b).
"Asset Purchase Agreement": That
certain
Asset Purchase Agreement dated as of July 21, 1998, by
and among
Tenant, as Buyer, Xxxxxx, as Seller, and Landlord, in
its
capacity as the sole shareholder of Xxxxxx, together
with all
other agreements and documents entered into by Landlord
and
Tenant in connection therewith.
"Common Areas": The parking areas,
side-
walks, landscaped areas, courts, malls, roofs, streets,
roadways,
loading platforms, service area, curbs, corridors,
stairways,
elevators, escalators, comfort stations, lounges and
shelters and
all other facilities designated as "Common Areas" under
the REA.
"Default" shall have the meaning
ascribed
thereto in Section 10.1.
"Developer" shall mean the Person
responsible
for managing and maintaining the Common Areas under the
REA.
"Fair Market Rental Value" shall
mean the
fair market rental value of the Premises, as of the
date and for
the time period of determination, to be determined in
accordance
with the terms of Article XII and, as necessary,
Exhibit E
attached hereto and made a part hereof.
"Floor Area" shall have the meaning
given
such term in the REA.
"Gross Sales" shall mean the gross
selling
price of all merchandise or services sold in or from
the Premises
by Tenant, its subtenants, licensees or
concessionaires, whether
for cash or on credit, adjusted by excluding the
following:
(i) Any exchange of merchandise between
stores owned
by or affiliated with Tenant where such exchange is
made solely
for the convenient operation of Tenant's business and
not for the
purpose of consummating a sale made in, at or from the
Premises,
or for the purpose of depriving Landlord of the benefit
of a sale
which would otherwise be made in or at the Premises;
(ii) Returns to shippers or manufacturers;
(iii) Cash or credit refunds to customers
on
transactions (not to exceed the actual selling price of
the item
returned) otherwise included in Monthly Gross Sales,
including,
without limitation, (a) sums and credits received in
the
settlement of claims for loss of or damage to
merchandise, to the
extent previously reported as part of Gross Sales and
(b) the
price allowed on all merchandise traded in by customers
for
credit or the amount of credit for discounts and
allowances made
in lieu of acceptance thereof, but not including any
amount paid
or payable for what are commonly referred to as trading
stamps;
(iv) Sales of fixtures, machinery, equipment
or
property which are not stock in trade;
(v) Amounts collected and paid by Tenant to
any
government for any sales, excise, luxury, gross
receipts taxes or
other similar taxes now or hereafter imposed upon the
sales of
merchandise or services;
(vi) The amount of any discount on sales to
employees;
(vii) Interest, service or sales carrying
charges
or other charges, however denominated, paid by
customers for
extension of credit on sales and where not included in
the
merchandise sales price;
(viii) Receipts from public telephones,
stamp
machines, public toilet locks or vending machines
installed
solely for use by Tenant's employees; and
(ix) Gift certificates, or like vouchers,
until such
time as the same shall have been converted into a sale
by
redemption.
"Xxxxxx" means The Xxxxxx Company, a
California corporation, a wholly-owned subsidiary of
Landlord.
"Imposition" shall have the meaning
ascribed
thereto in Section 4.5.
"Interest Rate": The rate of
inter-est per
annum equal to the lesser of: (i) the highest lawful
rate of
interest that Tenant may be charged; or (ii) the "prime
rate"
announced from time to time by Chase Manhattan Bank,
N.A., New
York, New York, for short-term, unsecured loans to its
most
credit-worthy customers. In the event Chase Manhattan
Bank, N.A.
shall discontinue reporting its "prime rate" or shall
cease to
exist, Landlord shall select a substitute bank, and the
"prime
rate" reported by such bank shall be used for computing
interest
payable hereunder.
"Major" shall mean each of the
parties to the
REA, as more particularly set forth in Exhibit D
attached hereto
and made a part hereof.
"Mortgages" shall have the meaning
ascribed
thereto in Section 13.3.
"Notice" shall have the meaning
ascribed
thereto in Section 13.1(a).
"Percentage Rent" shall have the
meaning
ascribed thereto in Section 4.2(a).
"Permitted Use" shall mean any
lawful use
which complies with the REA and is not prohibited for
the
Premises by the REA.
"Person" means any individual,
part-nership,
corporation, business trust, joint stock compa-ny,
trust, unincor-
porated association, joint venture, governmental
authority or
other entity of whatever na-ture.
"Premises": That certain real
property and
improvements thereon described in Exhibit C attached
hereto and
made a part hereof.
"Prohibited Use" shall mean any use
which is
prohibited for the Premises by the REA.
"REA" shall mean that certain
Reciprocal
Easement Agreement and each of the other documents
related
thereto, as more particularly described in Exhibit D
attached
hereto and made a part hereof, all as the same may be
amended or
modified from time to time.
"Rent": Per-centage Rent, utilities
charges,
Impositions, insurance costs and all other amounts and
charges
payable by Tenant under any provision of this Lease.
"Requirements" shall mean all
xxxxx-al, state
and local statutes, laws, ordinances, rules,
regulations, autho-
rizations and requirements relating to the Premises or
the use
thereof, including, without limitation, planning,
zoning, subdi-
vision, environmental, toxic and hazardous waste,
health, fire
safety and handi-cap access and all encumbrances,
covenants,
conditions and restrictions, violation of which
encumbrances,
cove-nants, conditions and restrictions could either
create a
lien or result in a termination of any agreement
benefi-cial to
the use or manner of use of the Premises or any portion
thereof.
"Shopping Center": The land and
improvements
known as "Carousel Mall", with a street address of 000
Xxxxx X.
Xxxxxx, in the City of San Bernardino, County of San
Bernardino,
and State of California, more particularly described in
Exhibit A
attached hereto and made a part hereof and depicted on
the site
plan attached hereto as Exhibit B and made a part
here-of.
"Taking" shall have the meaning
ascribed
thereto in Section 7.2(a).
"Tenant's Employees and Invitees"
shall have
the meaning ascribed thereto in Section 5.4.
"Term": The period commenc-ing on
the Term
Commencement Date and expiring on January 30, 1999, as
such term
may be extended or shortened pursuant to the terms
hereof.
"Term Commencement Date":
_______________
___, 1998.
"Unavoidable Delays" shall have the
meaning
ascribed thereto in Section 13.4.
Section I.2 Effect of Basic Terms. Each
of the fore-
going definitions and basic provisions is set forth in
this
Article I for convenient reference only and shall be
construed in
conjunction with, and limited by, references thereto in
other
provisions of this Lease.
ARTICLE II
GRANT AND TERM
Section II.1 Grant and Term of Lease.
(a) Landlord does hereby let and lease
to Tenant
the Premises, together with all right to use the Common
Areas for
the Term, subject to the terms and conditions set forth
in this
Lease.
(b) Landlord reserves the right to
enter the
Premises at any time in case of emergency and at all
other
reasonable times and upon reasonable advance notice (i)
to
inspect the condition of the Premises; and (ii) to make
repairs
to the building in which the Premises are located, to
the extent
Landlord is required to do so, or is otherwise
permitted to do
so, pursuant to the terms of this Lease.
Section II.2 Acceptance of Premises; Quiet
Enjoyment.
(a) Acceptance of Premises. Tenant
accepts the
Premises "as-is," but subject to the express
representations,
warranties and covenants of Landlord set forth in the
Asset
Purchase Agreement and in this Lease.
(b) Quiet Enjoyment. Landlord
cove-nants that
Tenant, upon paying the Rent and performing and
observing all
other terms and conditions of this Lease to be
performed or
observed by Tenant, shall peace-fully and quietly have,
hold and
enjoy the Premises and the appurtenances thereto
throughout the
Term without hindrance, ejection or molestation by
Landlord or
any other person or entity lawfully claiming through
Landlord or
claiming paramount title to Landlord, subject only to
the terms
of this Lease, the REA and any Mortgage or ground lease
to which
this Lease is subordinate.
Section II.3 Surrender of Premises. Upon
the expira-
tion or earlier termination of the Term, Tenant shall
deliver up
and surrender to Landlord possession of the Premises,
including
all alterations, additions, improvements and fixtures,
other than
Tenant's trade fixtures, in good order, condition and
state of
repair, ordinary wear and tear excepted, and shall
deliver all
keys to the Premises to the office of Landlord at the
Shopping
Center or as otherwise directed by Landlord. Tenant
shall have
fifteen (15) days after the date the Term of this Lease
expires
or earlier terminates to remove its personal property,
trade
fixtures; provided, however, that (a) Tenant shall
repair all
damage to the Premises resulting from or arising out of
such
removal, (b) during such period Tenant shall perform
and be
liable for all obliga-tions and condi-tions imposed on
Tenant
hereunder except for the payment of Rent, including,
without
limitation, maintenance, repair, apportionment of
taxes,
maintenance of insurance, compliance with Requirements
and
assumption of liability for the Premises. The
obligations set
forth in the preceding sentence shall survive the
termination of
this Lease. Any property of Tenant not removed from
the Premises
within such fifteen (15) day period shall be deemed
abandoned. In
addition to all other remedies available, Landlord may,
but shall
not be obligated to, retain or dispose of any or all
such
property without liability to Tenant. In the event
that Landlord
elects to dispose of such property, Landlord shall so
notify
Tenant, and Tenant shall, no later than ten (10) days
after such
notice, remove all such property from the Premises;
provided,
however, that if Tenant fails to so remove such
property, then
Landlord may do so, and Tenant shall pay to Landlord,
on demand,
all costs and expenses incurred by Landlord in
disposing of such
property, including, without limitation, reasonable
attorneys'
fees and disbursements, together with interest thereon,
calcu-
lated at the Interest Rate, from the date Landlord
ex-pended such
amounts.
Section II.4 Holding Over. If not sooner
terminated,
this Lease shall end on the date set forth in Section
1.1 without
the necessity of notice from either Landlord or Tenant
to
terminate this Lease, Tenant hereby waiving notice to
vacate the
Premises. If Tenant, or any party claiming under
Tenant, includ-
ing, without limitation, subtenants, licensees or
conces-
sionaires, re-mains in possession of the Premises or
any part
thereof after the expiration or termination of this
Lease, no
tenancy or interest in the Premises shall result
there-from but
such holding over shall, at Landlord's option, be
deemed a month-
to-month tenancy and, otherwise, shall be an unlawful
detainer
and all such parties shall be subject to immediate
eviction and
removal. As Landlord's sole remedy for such holding
over, Tenant
shall pay to Landlord for any full or partial month
Tenant holds
over in the Premises after the expiration or
termination of this
Lease a sum equal to one hundred fifty percent (150%)
of the
Percentage Rent paid or payable by Tenant under this
Lease with
respect to the last full month of the Lease Term.
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT AGREEMENT
Section III.1 Lease Controls Over REA. As
between
Landlord and Tenant, the terms and provisions of this
Lease shall
control notwithstanding any conflict with the
provisions of the
REA. Tenant shall be fully liable for the performance
of all
obligations under the REA in accordance with all of the
terms and
provisions thereof, to the extent that Tenant has
expressly
assumed responsibility for the performance of any such
obligations under the terms of this Lease. Landlord is
and shall
remain fully liable for the performance of all of
Landlord's
obligations under the REA in accordance with all of the
terms and
provisions thereof, to the extent that Tenant has not
expressly
assumed responsibility for the performance of any such
obligations under the terms of this Lease.
Section III.2 Covenants Regarding REA.
Landlord will
fully and faithfully carry out and perform the terms,
covenants,
provisions and conditions of the REA to be performed by
the
Landlord. Tenant will fully and faithfully carry out
and perform
the terms, covenants, provisions and conditions of the
REA which,
under the express terms of this Lease, are to be
performed by the
Tenant. Landlord will exert its best efforts in
exercising all
Landlord's rights and remedies under the REA to enforce
performance of all terms, covenants, provisions, and
conditions
of the REA; and Landlord will not take any of the
actions
requiring Landlord's approval thereunder, without first
having
delivered to Tenant a copy of the request for approval
and any
documentation or material as to which such approval is
requested
or required and thereafter obtained Tenant's written
approval
thereof, which approval shall not be unreasonably
withheld,
conditioned or delayed. Landlord will not enter any
agreement
amending, supplementing or cancelling the REA without
first
obtaining Tenant's prior written approval thereto,
which approval
shall not be unreasonably withheld, conditioned or
delayed.
Landlord hereby appoints Tenant as Landlord's true and
lawful
attorney-in-fact to take in Landlord's name whatever
reasonable
action Tenant may deem appropriate to enforce
performance of the
terms of the REA and to avail itself on Landlord's
behalf of any
remedy therein granted Landlord in the event (i) Tenant
shall
notify Landlord that the obligations under the REA are
not being
properly performed and (ii) Landlord shall fail to take
action to
Tenant's reasonable satisfaction within a reasonable
time after
receiving notice thereof.
It is the intent of the parties to this Lease that
this
Lease and the REA are and shall remain mutually
dependent and co-
existent documents. Tenant shall have the right (in its
sole and
absolute discretion) to terminate this Lease by giving
Landlord
notice to such effect within ninety (90) days after the
REA
shall, under its express terms and conditions, expire
or
terminate or be cancelled, and this Lease shall
terminate on the
last day of the month next succeeding the month in
which such
notice is given.
ARTICLE IV
RENT AND OTHER CHARGES
Section IV.1 [Intentionally Omitted]
Section IV.2 Percentage Rent.
(a) Formula for Calculation. Tenant
covenants
and agrees to pay to Landlord as rent for each Term the
sum of
Three percent (3.0%) of the amount of Tenant's Gross
Sales for
the Term ("Percentage Rent"), provided, however, that
the
Percentage Rent payable hereunder shall be reduced by
the amount
of any Operating Loss, as defined below. Percentage
Rent shall
be payable, in arrears, on or before March 10, 1999.
"Operating
Loss" means the excess, if any, of Fully Allocated
Costs, as
defined below, over Gross Sales. "Fully Allocated
Costs" means
the sum of all costs and expenses of every kind and
nature
incurred by Tenant in connection with the Premises or
the
business conducted thereon, including, without
limitation:
(i) Sums payable by the Tenant
under the
terms of this Lease (including Percentage Rent).
(ii) Other costs incurred by
Tenant in
performing or complying under this Lease.
(iii) Other costs incurred by
Tenant in
maintaining and repairing the Premises and any and all
fixtures,
equipment or property therein.
(iv) Tenant's cost of all
merchandise sold
in or from the Premises.
(v) Compensation and benefits to
Tenant's
employees working at the Premises. "Compensation and
benefits"
include, without limitation, (A) wages, salaries, and
bonuses,
(B) all contributions made and taxes paid with respect
to
employees (such as social security contributions, and
employment
taxes and workers' compensation payments) and (C)
health
insurance, 401K matching contributions, sick leave,
vacations and
pensions.
(vi) Sums payable by Tenant
pursuant to that
certain Third Amendment to Lease dated July 8, 1998 by
and
between Tenant and Mano Management Company, Inc., a
Delaware
corporation (relating to Tenant's existing Downtown San
Bernadino
store).
(vii) The prorated portion of the
following
items of Tenant's general overhead for Tenant's fiscal
year 1998
allocable to the Premises: (A) inventory carrying
charges (i.e.,
interest paid on inventory financing); (B) distribution
costs
(including the cost of operating distribution centers);
and (C)
advertising and marketing expenses. Such corporate
overhead
items shall be prorated by multiplying such corporate
overhead by
the fraction which is the number of days in the Term
divided by
365. Such corporate overhead items shall be allocable
to the
Premises based on the ratio that the gross sales in or
from the
Premises bears to the gross sales of all stores
operated by
Tenant.
(b) Report. On or before March 10,
1999, Tenant
shall furnish Landlord with a written state-ment (the
"Report"),
certified by Tenant's chief financial officer or
comptroller, of
total Gross Sales made from the Premises during the
Term, which
Report shall contain Tenant's computation of Percentage
Rent.
The Report shall be in form reasonably satisfactory to
Landlord
and shall contain such details and breakdown as may
accurate-ly
depict Gross Sales.
(c) Records. Tenant shall maintain at
the
Premises or at its principal record keeping office
within the
continental United States at all times during the Term,
full,
complete and accurate books of account and records in
accordance
with accepted accounting practices consis-tently
applied for all
operations of the business con-ducted in or from the
Premises,
including the recording of Gross Sales and the receipt
of all
merchandise into, and the delivery of all merchandise
from, the
Premises during the Term, and shall retain such books
and
records, copies of all tax reports and tax returns
submitted to
taxing authorities, as well as copies of contracts,
vouchers,
checks, inventory records, electronic data recordings
and other
documents, recordings, and papers in any way related to
the
operation of such business for at least one (1) year
from the end
of the Term, or, if any audit is required or a
controversy should
arise between the parties hereto regarding the Rent
payable
hereunder, until such audit or controversy is
terminated, even
though such retention period may extend beyond the
expira-tion of
the Term or earlier termination of this Lease.
(d) Review of Books and Records. The
acceptance
by Landlord of pay-ments of Percentage Rent or any
Report
pursuant to Section 4.2(b) above shall not prejudice
Landlord's
right to examine Tenant's books, records and accounts
in order to
verify the amounts set forth thereon. Landlord may at
any reason-
able time during the Term, or within one (1) year after
the Term
(but not more than once) cause a complete or partial
audit to be
made of Tenant's books, records and other documents
relating to
the Premises, including the books and records of any
subtenant,
licensee or concessionaire. Landlord or its duly
authorized
representa-tives shall have full and free access to
such books
and records and the right to require of Tenant, its
agents and
employees, such information or explanation with respect
to such
books and records as may be neces-sary for a proper
examination
and audit thereof. If such audit discloses an
understatement in
an Report of Gross Sales, Tenant shall pay the
deficiency in
Percent-age Rent with, interest thereon calculated at
the Inter-
est Rate, and, if Gross Sales have been understated in
any Report
by four percent (4%) or more, Tenant shall pay to
Landlord, as
Rent, the cost of said audit, upon demand.
(e) Confidentiality. Any information
regarding
Tenant's business operations delivered to or made
available to
Landlord, or otherwise obtained by Landlord in the
exercise of
its rights under subsection (d), above, shall be held
in
strictest confidence by Landlord. Landlord shall
disclose such
information only to its accountants, attorneys and
other
consultants and shall require all such parties to keep
all
information regarding Tenant strictly confidential.
Nothing in
this subsection (e) prohibits Landlord from disclosing
such
material when ordered to do so by a court of competent
jurisdiction, or when necessary to properly plead or
prosecute a
legal action brought by Landlord against Tenant for
nonpayment of
Percentage Rent.
Section IV.3 Utilities Charge.
(a) Tenant shall apply to the
municipality or
respective utilities companies for all required utility
services
to the Pre-mises. Tenant shall pay all required
deposits and
meter charges for utilities to the Premises to the
respective
utility supplier(s).
(b) Tenant shall pay promptly, as and
when same
shall become due, all water rents, rates and charges,
all sewer
rents, rates and charges and all charges for
electricity, gas,
heat, steam, hot and/or chilled water, air
conditioning,
ventilating, lighting systems, sprinkler systems and
all other
utilities sup-plied to the Premises.
Section IV.4 Common Area Maintenance Costs.
Tenant
shall pay, as Rent, Common Area Maintenance charges as
specified
in the REA or any lesser amount specified in a separate
letter
thereunder. Tenant shall pay Common Area Maintenance
charges as
referenced herein within thirty (30) days after Tenant
has
received a xxxx therefor.
Section IV.5 Taxes.
(a) Tenant shall pay before delinquency
all real
and personal property taxes, general and special
assessments, and
other public charges levied upon or assessed against
the
Premises, the land thereunder, or any of the building
structures,
fixtures, equipment, or improvements thereon
(collectively, "Impo-
sitions"). Tenant shall deliver to Landlord reasonable
evidence
of payment prior to the time said Impositions have
become
delinquent.
(b) Any Imposition relating to a fiscal
period of
the taxing authority, a part of which period is
included within
the Term of this Lease and a part of which is included
prior to
the beginning of the Term of this Lease or after the
termination
of this Lease shall (whether or not such Imposition
shall be
paid, assessed, levied or imposed upon or become due
and payable
and a lien upon the Premises or a part thereof during
the term of
this Lease) be adjusted as between Landlord and Tenant
as of the
Term Commencement Date or as of the date of the
termination of
the Term of this Lease, as the case shall require, so
that
Landlord shall pay that proportion of such Imposition
which that
part of such fiscal period included in the period of
time prior
to the commencement or after the termination of the
Term, as the
case may be, bears to such fiscal period, and Tenant
shall pay
the remainder thereof.
(c) In the event Landlord is unable to
secure
separate tax bills for Tenant as herein described, then
Tenant
shall pay to Landlord, prior to such time as said
Impositions
would be due and payable, all Imposi-tions attributable
to the
Premises. Personal property taxes shall be allocated
directly to
Tenant's personal property. Real property taxes will
be
allocated by virtue of the ratio of the Floor Area of
the
Premises to the total gross leasable area in the
Shopping Center,
which said gross leasable area shall not include any
part of the
Common Area in the Shopping Center, being assessed on
the tax
xxxx which relates to the Premises.
(d) If Tenant fails to pay any such
taxes,
assessments or other public charges which it is
obligated to pay
as provided in this section before the same become
delinquent,
then and in such event, Landlord may pay the same
together with
any interest and penalties thereon, and the amount so
paid shall
be deemed addition-al Rent immediately due and payable
by Tenant
to Landlord on demand, together with interest thereon
at the
Interest Rate.
(e) Anything in this section to the
con-trary
notwithstanding, Landlord agrees that Tenant shall have
the
right, at Tenant's sole cost and expense, to contest
the legality
or validity of any Impositions payable by Tenant, but
no such
contest shall be carried on or maintained by Tenant
after such
Impositions become delinquent unless Tenant shall have
duly paid
the amount involved under protest or shall procure and
maintain a
stay of all proceedings to enforce any collection
thereof and any
forfeiture or sale of the leased property, and shall
also provide
for payment thereof together with all penalties,
interest, costs
and expenses by deposit of a sufficient sum of money or
by a good
and sufficient undertaking as may be required by law to
accom-
plish such stay. Landlord shall, at the request of
Tenant and at
Tenant's sole expense, execute or join in the execution
of any
instrument of documents necessary in connection with
any such
contest except bonds of undertakings. In the event of
any such
contest made by Tenant, Tenant shall promptly, upon
final deter-
mination thereof, pay and discharge the amount
indicated or
resulting from said contest, together with any
penalties, fines,
interest, costs and expenses that may have accrued
thereon.
Section IV.6 Late Payment Charges. Late
pay-ments of
Rent or any other sum due from Tenant hereunder,
including all
amounts paid by Landlord on behalf of Tenant to satisfy
any
condition or covenant of this Lease and all costs
incurred by
Landlord in enforcing the terms of this Lease, shall
bear
interest from the date Tenant receives written notice
of such
late payment or default (as applicable) until paid at
the
Interest Rate.
Section IV.7 Rent Payments. All Rent
payable by
Tenant under this lease shall be paid in United States
Dollars
without prior demand therefor and without any
deductions, offsets
or counterclaims except those expressly permitted under
the terms
of this Lease, to Landlord and shall be delivered on or
before
the due date thereof at
_______________________________________________, or to
such other
payee and at such other place as Landlord may hereafter
designate
from time to time by written notice to Tenant.
Notwithstanding
anything to the contrary in this Lease, Tenant may
withhold any
portion of Rent which Tenant is required to withhold by
virtue of
Landlord's status as a foreign person under Section
1445 of the
Internal Revenue Code or other applicable law.
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS
Section V.1 Permitted Use.
(a) Tenant shall use the Premises only
for the
Permitted Use and for no other purpose whatsoever.
(b) Tenant covenants that Tenant shall
not use or
allow the Premises or any part thereof to be used or
occupied for
any Prohibited Use or any immoral or unlawful purpose
or in
violation of any certificate of occupancy or
certificate of
compliance for the Premises.
Section V.2 Signs. Tenant shall have the
right,
without Landlord's consent, to erect any and all signs
on or
about the Premises it elects, provided that such
signage complies
with the REA and all Requirements. From time to time
upon
Tenant's request, Landlord covenants to assist Tenant
(at no cost
or expense to Landlord) in processing any and all
approvals
necessary for Tenant to erect such signage.
Section V.3 Alterations of Premises.
(a) All changes, alterations or
modifications to
the Premises (collectively, "Alterations") shall be
made in
accordance with this Section 5.3. Tenant shall have
the right to
perform non-structural modifications to, remodel and
redecorate,
retexturize, recarpet and repaint the Premises without
obtaining
the prior written consent of Landlord; provided (i) the
proposed
Alteration does not affect the exterior appearance of
the
Premises, including, without limitation, the storefront
or the
storefront sign of the Premises, or the roof,
foundation,
supports or structural integrity of the building of
which the
Premises is a part; (ii) Tenant submits an information
copy of
all remodeling plans to Landlord at least thirty (30)
days prior
to the date any such work is scheduled to commence;
(iii) the
total cost of all work involved in the Alteration does
not exceed
Three Hundred Thousand Dollars ($300,000) in any one
project or
an aggregate amount of Six Hundred Thousand Dollars
($600,000);
and (iv) such work does not violate any code, ordinance
or
Requirement and does not cause Landlord's insurance
rates to
increase. Except for the foregoing, Tenant shall not
make any
Alterations to any portion of the Premises without, in
each
instance, obtaining Landlord's prior written consent.
(b) All work ("Work") pertaining to any
Alteration to the Premises, including, without
limitation,
Tenant's Work, shall comply with the following:
(i) No Work shall be undertaken
until Tenant
shall have procured and paid for, so far as the same
may be
required, from time to time, all permits and
authorizations of
all municipal departments and governmental subdivisions
having
jurisdiction. Provided no default exists hereunder,
Landlord
shall join in the application for such permits and
authorizations
whenever such action is necessary; provided, however,
that
Landlord shall not incur any expense or be subject to
any
liability as a result of joining in any such
application. Within
ten (10) days after completion of the Work, Tenant
shall deliver
to Landlord a certificate of occupancy or such similar
certificates as may be required or customary by
applicable laws
and legal requirements.
(ii) All Work shall be performed
promptly and
in a good and workmanlike manner and in compliance with
all
applicable permits and laws, and in accordance with the
orders,
rules and regulations of the National Board of Fire
Underwriters
or any other body hereafter exercising similar
functions.
(iii) The cost of any Work
shall be paid
promptly by Tenant so that the Premises shall at all
times be
free and clear of liens for labor and materials
supplied or
claimed to have been supplied in connection therewith.
(iv) Tenant shall carry, or shall
cause to be
carried, worker's compensation insurance covering all
persons
employed in connection with any Work and with respect
to whom
death or bodily injury claims could be asserted against
Landlord,
Tenant or the Premises, and, without duplication of any
insurance
required by Article VIII hereof, adequate all-risk and
builders
risk insurance for the mutual benefit of Tenant and
Landlord in
amounts satisfactory to Landlord and, at Landlord's
request, such
other insurance in favor of Landlord in types and
amounts as are
reasonable and customary, all at Tenant's expense, at
all times
when any such Work is in progress; provided, however,
that Tenant
shall be fully liable for any failure to maintain such
insurance,
including, without limitation, Tenant's obligation to
indemnify
Landlord for the failure to maintain insurance in
accordance with
the provisions of this Lease. All such insurance shall
be
provided by a company or companies of recognized
responsibility
and reasonably satisfactory to Landlord, and all
policies or
certified copies of policies issued by the respective
insurers,
bearing notations evidencing the payment of premiums or
accompanied by other evidence satisfactory to Landlord
of such
payment, shall be delivered to Landlord prior to the
commencement
of any Work.
Section V.4 Use of Common Areas.
(a) All Common Areas shall be subject
to the
exclusive control and management of Developer as set
forth in the
REA. Tenant and Tenant's officers, directors,
employees, agents,
subtenants, contractors, subcontractors,
concessionaires and
licensees, and to the officers, directors, employees
and agents
of Tenant's subtenants, concessionaires and licensees,
and to the
customers, patrons and business invitees of Tenant and
of
Tenant's subtenants, concessionaires and licensees
(hereinafter,
collectively, "Tenant's Employees and Invitees") shall
have the
non-exclusive right to use (without cost or expense to
Tenant or
Tenant's Employees or Invitees other than as expressly
provided
in this Lease) the Common Areas for the purpose of
gaining
ingress to and egress from the Premises, for the
passage and
parking of vehicles, and for the passage and
accommodation of
pedestrians, such right to be in common with Landlord
and those
occupants (and the employees and invitees of such
occupants) of
the Shopping Center from time to time authorized to use
said
common areas for such purposes.
(b) Notwithstanding anything to the
contrary
contained in Section 5.4(a) hereof, Landlord shall
exercise best
efforts to cause Developer to maintain, manage and
operate the
Common Areas (including, but not by way of limitation,
the
parking area) in good order, condition and repair in
conformity
with the REA so as to at all times maintain an
appearance and
attractiveness reasonably equivalent to the level of
same
existing as of the date hereof. Developer's
obligations to be
enforced by Landlord pursuant to the preceding sentence
in
respect of the maintenance, management and operation of
the
Common Areas shall include, but not be limited to, the
following:
(i) Undertaking such maintenance
and
construction work (including replacements as required)
as is
necessary to preserve and maintain the utility of the
Common
Areas;
(ii) The care and maintenance of
all
identification signs and all planters (including those
adjacent
to the Premises but excluding any signs and planters of
Tenant)
and landscaping at the Shopping Center;
(iii) The adequate illumination
of the
Common Areas at all times of darkness that Tenant is
open for
business (plus a period of one-half hour after Tenant
closes for
business);
(iv) The payment prior to
delinquency of all
real estate and personal property taxes and assessments
levied on
the Common Areas;
(v) The removal of dirt and debris
and
rubbish (including the regular sweeping of the parking
area and
all sidewalks); and
(vi) The operation, management and
maintenance of the enclosed mall, including the
heating,
ventilating, air-conditioning, lighting and
housekeeping of the
same and the maintenance (and replacement as required)
of
landscaping therein.
Section V.5 Compliance with REA. Tenant
shall abide
by the terms of the REA. Landlord agrees that it will
not
change, amend or alter (or agree or consent to change,
amend or
alter) any term or condition of the REA without the
prior written
consent of Tenant, which consent shall not be
unreasonably
withheld.
Section V.6 Compliance with Requirements.
(a) Insofar as the same relate to or are
caused by
Tenant's occupancy and use of the Premises, and
Tenant's other
activities under this Lease, throughout the Term,
Tenant shall,
at Tenant's sole cost and expense, promptly comply with
all
present and future Requirements applicable to the
Premises,
subject, however, to Tenant's rights to contest any
such
Requirements, as set forth in clause (b) below. Tenant
shall
likewise comply with the provisions of all of Tenant's
insurance
policies required to be maintained hereunder or
otherwise carried
by Tenant with respect to the Premises from time to
time.
(b) Tenant shall have the right, after
prior
notice to Landlord, at Tenant's sole cost and expense,
to contest
by appropriate legal proceedings diligently prosecuted
in good
faith, in the name of Tenant, the validity or
application of any
Requirements; provided, however, that Tenant may delay
compliance
therewith until the final determination of such
proceeding only
if by the terms of any such Requirements, compliance
therewith
pending the prosecution of any such proceeding may
legally be
delayed without subjecting Landlord to the risk of any
criminal
liability, or imminent forfeiture of its estate, for
failure so
to comply therewith, and provided further that if any
fine, lien,
charge or civil liability may be incurred by reason of
such non-
compliance, provided that (i) Tenant furnishes to
Landlord
security satisfactory to Landlord, against such fine,
lien,
charge or civil liability in accordance with Section
5.7, and
(ii) Tenant shall be solely responsible for payment of
such fine,
lien, charge or civil liability and shall indemnify,
defend and
hold Landlord harmless with respect thereto.
Section V.7 Liens.
(a) Tenant agrees that it will pay or
cause to be
paid all costs for work done by it or caused to be done
by it on
the Premises of a character which will or may result in
liens on
Landlord's reversionary estate therein, and Tenant
shall keep the
Premises free and clear of all mechanics' liens and
other liens
on account of work done for Tenant or persons claiming
under it.
If any such lien shall at any time be filed against the
Premises,
Tenant shall either cause the same to be discharged
within thirty
(30) days after the recording thereof, or, if Tenant,
in Tenant's
discretion and in good faith, determines that such lien
should be
contested, shall furnish such security as may be
necessary or
required to prevent any foreclosure proceedings against
the
Premises during the pendency of such contest. If
Tenant shall
fail to furnish such security, then, in addition to any
other
right or remedy of Landlord resulting from Tenant's
said default,
Landlord may, but shall not be obligated to, discharge
the same
either by paying the amount claimed to be due,
procuring the
discharge of such lien by giving security, or in such
other
manner as is, or may be, prescribed by law. Tenant
shall repay
to Landlord, as Rent, on demand, all sums disbursed or
deposited
by Landlord pursuant to the provisions of this Section
5.7,
including all costs, expenses and attorneys' fees
incurred by
Landlord in connection therewith. Nothing contained
herein shall
imply any consent or agreement on the part of Landlord
to subject
Landlord's estate to liability under any mechanics'
lien or other
lien law.
(b) Should any claims of lien be filed
against
the Premises or any action affecting the title to the
Premises be
commenced, the party receiving notice of such lien or
action
shall forthwith give the other party written notice
thereof.
Landlord or its representative shall have the right to
post and
keep posted upon the Premises notices of
nonresponsibility or
such other notices which Landlord may deem to be proper
for the
protection of Landlord's interest in the Premises.
Tenant shall,
before the commencement of any work which might result
in any
such lien, give to Landlord advance written notice of
its
intention to do so in reasonably sufficient time to
enable the
posting of such notices.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section VI.1 Tenant's Obligations. Tenant
shall at
all times keep the leased Premises, including
maintenance of
entrances and all partitions, doors, windows, fixtures,
equipment
and appurtenances thereof (including lighting and
plumbing
fixtures) in good order, condition and repair
(including
reasonably periodic interior painting), damage by
casualty
excepted, except for structural portions of the
Premises, which
shall be maintained by Landlord as set forth below. It
is also
agreed that the Tenant will maintain and repair the
heating,
ventilating, and air conditioning units, excluding
replacement of
compressors and major component parts, it being agreed
that
Tenant shall only be obligated to pay for reasonable
and
necessary routine repairs to such systems and equipment
to keep
them in good working condition but not for any more
extensive
repairs or replacements.
Section VI.2 Landlord's Obligations.
Notwithstanding
anything to the contrary herein, it is understood and
agreed that
Landlord shall be responsible throughout the Term for
maintaining
and repairing all structural portions of the Building,
including
the roof, walls, glass and other load-bearing portions
of the
structure. Landlord shall also be responsible for any
necessary
replacements of any essential building systems,
including,
without limitation, heating, ventilation and air
conditioning
(HVAC) systems, plumbing, electrical and sewage
systems.
Landlord shall be responsible for any necessary repairs
to the
heating, ventilating, and air conditioning units,
excluding
replacement of compressors and major component parts,
which are
more extensive than the reasonable and necessary
routine repairs
for which Tenant is responsible pursuant to Section
6.1.
Landlord shall not be required to make repairs to the
extent made
necessary by reason of Tenant's negligent or
intentional acts or
omissions to act. The parties acknowledge that, in
light of the
very short term of this lease, Landlord may reasonably
elect to
perform temporary repairs to systems and equipment
where more
permanent repairs, or replacement might be more
customary or
economical if the lease were of a longer term. Tenant
agrees
that Landlord may elect such temporary measures so long
as the
service provided to the Premises and Tenant's business
by such
equipment or system is not materially adversely
affected.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section VII.1 Damage or Destruction.
(a) Tenant shall give Landlord prompt
notice of
any damage to the Premises by fire or other casualty.
(b) If the Premises shall be rendered
wholly
untenantable by casualty, unless terminated pursuant to
Section
7.1(d) hereof, this Lease shall remain in full force
and effect
except that Rent shall fully xxxxx commencing on the
date of loss
and continuing until the earlier to occur of: (i) the
date
Tenant reopens the Premises for business, which
reopening
Landlord and Tenant shall diligently work together to
expedite,
or (ii) the date forty five (45) days after Landlord
completes
the restoration, pursuant to Section 7.1(e), of the
structural
elements of the building of which the Premises form a
part.
(c) If only a portion of the Premises
shall be
rendered untenantable, unless terminated pursuant to
Section
7.1(d) hereof, this Lease shall remain in full force
and effect
except that Rent shall partially xxxxx commencing on
the date of
loss and continuing until the earlier to occur of: (i)
the date
Tenant reopens the repaired portion of the Premises for
business,
which reopening Landlord and Tenant shall diligently
work
together to expedite, or (ii) the date forty five (45)
days after
Landlord completes the restoration, pursuant to Section
7.1(e),
of the structural elements of the building of which the
Premises
form a part. In such event, the Rent shall be reduced
to an
amount computed by multiplying the Rent applicable
prior to such
damage by a fraction, the numerator of which is the
Floor Area of
the Premises tenantable after such damage and the
denominator of
which is the Floor Area of the Premises prior to such
damage.
(d) If any portion of the Premises
shall be
rendered untenantable, or if there shall be damage to
the
Shopping Center, by fire or other casualty, whether or
not the
Premises is affected thereby, either party shall have
the option
to terminate this Lease. Said option shall be
exercised, if at
all, by notice to the other party on or before the
ninetieth
(90th) day after the date of loss and, if exercised,
shall be
effective on the last day of the first (1st) full
calendar month
falling at least sixty (60) days after such notice.
(e) If there shall be damage to the
Premises by
fire or other casualty and this Lease is not
terminated, Landlord
shall promptly commence and diligently prosecute the
restoration
and repair of the structural elements of the building
in which
the Premises are located, including all exterior walls,
roofs,
floors and supports to structurally sound condition,
prepared for
Tenant's restoration of the interior portions of the
Premises as
set forth below. Upon receipt of the repaired
structural
elements of the building in which the Premises are
located,
Tenant shall, at Tenant's sole cost and expense,
promptly
commence and diligently prosecute the restoration and
repair of
the nonstructural and interior portions of the
Premises,
including, without limitation, all internal partitions,
fixtures,
trade fixtures, shelving, casework, furniture and
furnishings
used in connection with the operation of Tenant's
business in the
Premises, as nearly as practicable to their respective
conditions
prior to such damage.
Section VII.2 Condemnation.
(a) The term "Taking" as used in this
Section
7.2, shall mean an appropriation or taking under the
power of
eminent domain by any public or quasi-public authority
or a
voluntary sale or conveyance in lieu of condemnation
but under
threat of condemnation.
(b) In the event of a Taking of the
entire
Premises, this Lease shall terminate and expire as of
the date
possession is delivered to the condemning authority and
Landlord
and Tenant shall each be released from any liability
accruing
pursuant to this Lease after such termination.
(c) If there is a Taking of (a) more
than twenty-
five percent (25%) of the Premises, or (b) any portion
of the
Building and, regardless of the amount taken, if the
remainder of
the Building is not one undivided structure, either
Landlord or
Tenant may terminate this Lease as of the date Tenant
is required
to vacate the Premises upon giving notice in writing of
such
election within thirty (30) days after receipt of
Tenant from
Landlord of written notice that a portion of the
Premises has
been so appropriated or taken.
(d) If this Lease is terminated as a
result of a
Taking, Tenant shall be entitled to any separate award
made to
Tenant for relocation costs, good will and any of
Tenant's
fixtures and equipment which are not capable of removal
from the
Premises; provided such separate award does not
diminish
Landlord's award. Subject to the foregoing, Landlord
shall be
entitled to the entire awarded or compensation in such
condemnation proceedings, or settlement in lieu
thereof,
irrespective of whether such award or settlement shall
be
obtained as compensation for diminution in value to the
leasehold
or the leasehold improvements thereto or to the fee of
the
Premises, but the Percentage Rent and any other Rent
for the last
month of Tenant's occupancy shall be prorated and
Landlord shall
refund to Tenant any Percentage Rent and other Rent
paid in
advance. Notwithstanding the foregoing and subject to
Section
2.3, in the event this Lease is terminated as provided
above,
Tenant may remove all of its removable trade fixtures,
furniture
and equipment from the Premises, provided that Tenant
immediately
repairs any damage occasioned to the Premises by reason
of such
removal so as to leave the Premises in a neat and clean
condition. Notwithstanding the foregoing, in no event
shall
Tenant be entitled to any portion of any award or
compensation,
if following the payment of such sum to Tenant, there
would not
be sufficient funds or proceeds to pay the unpaid
principal
balance of any obligation of Landlord secured by a
deed(s) of
trust or mortgage(s) on the fee interest in the
Premises and/or
the Building.
(e) In the event of a Taking, if
Landlord and
Tenant elect not to so terminate this Lease as provided
above (or
have no right to so terminate), Tenant agrees, at
Tenant's cost
and expense (subject to Tenant's rights hereunder) as
soon as
reasonably possible after the Taking, to restore the
Building on
the Land remaining to a complete unit of like quality
and
character as existed prior to the Taking. In such
event, Tenant
shall be entitled to receive any and all award of
compensation in
connection with such Taking until Tenant has received
funds
sufficient to complete such restoration, and Landlord
shall be
entitled to receive the remaining portion of the total
award of
compensation.
ARTICLE VIII
INSURANCE
Section VIII.1 Tenant's Insurance.
(a) Tenant shall carry, from and at all
times
after the date hereof, at Tenant's sole cost and
expense, the
following insurance:
(i) public liability and property
damage
insurance covering the Premises and Tenant's use
thereof against
claims for personal injury or death and property damage
occurring
in, on or about the Premises and affording protection
to the
limits of not less than Three Million Dollars
($3,000,000) per
occurrence with respect to any one (1) bodily injury or
damage to
property, which insurance shall, in addition, extend to
any
liability of Tenant arising out of the indemnities
contained in
Section 8.5 by contractual liability endorsement. All
liability
policies shall contain a so called "occurrence clause";
(ii) fire and casualty insurance
covering the
Premises, in an amount equal to ninety percent (90%) of
the
replacement cost thereof (excluding foundations and
footings);
(iii) fire insurance with
extended
coverage, covering such items of Tenant's merchandise,
inventory,
signs, furniture, trade fixtures, equipment, leasehold
improvements and other property of Tenant, now or
hereafter
placed in, on or about the Premises in an amount equal
to ninety
percent (90%) of the replacement cost thereof;
(iv) in the event Tenant installs
in,
adjoining or beneath the Premises any steam boiler or
similar
equipment, broad form boiler insurance;
(v) earthquake insurance in an
amount equal
to one hundred percent (100%) of the replacement cost
of the
Premises, to the extent the same is available at
commercially
reasonable rates and with deductibles of commercially
reasonable
amounts (it being agreed that Tenant may maintain
required
earthquake coverage through a blanket policy covering
several (or
all) store locations owned or affiliated with Tenant
and having a
maximum aggregate coverage limit of Twenty Million
Dollars
($20,000,000)); and
(vi) such other insurance as may in
Tenant's
reasonable judgment be prudent to carry from time to
time.
(b) All insurance policies required to
be carried
by Tenant shall be issued by companies with a general
policyholder's rating of not less than "A" and a
financial size
rating of "VI" as rated in the most current available
"Best's
Insurance Reports", and qualified to do business in the
State of
California. Each insurance policy shall name Landlord,
Tenant
and Mortgagee as insureds as their interests may appear
and, to
the extent possible, any other parties in interest from
time to
time designated in writing by notice from Landlord to
Tenant.
Executed copies of each insurance policy, duplicate
originals or
original certificates thereof (provided that such
certificates
shall evidence all of the required coverage herein
provided)
shall be delivered by Tenant to Landlord within ten
(10) days
after delivery of possession of the Premises to Tenant
and
thereafter within thirty (30) days prior to the
expiration of
prior policies. All insurance policies shall contain a
provision
that the underwriter will give Landlord and Mortgagee
at least
thirty (30) days prior written notice of any
cancellation or
lapse of such insurance or the effective date of any
reduction in
the amounts thereof or increase of the deductible. All
insurance
policies shall be written as primary policies which do
not
contribute to, and are in excess of, any coverage which
Landlord
may carry. All insurance policies shall contain an
agreement by
the insurers that the coverage afforded thereby shall
not be
affected by any construction work in or about the
Premises and
that no act or omission by the Tenant shall impair or
affect the
rights of the Landlord to receive and collect the
proceeds under
the policies.
(c) Any insurance required to be
carried by
Tenant may be provided under a blanket policy of
insurance
covering additional items or locations or insureds;
provided,
however, that: (i) Landlord and Mortgagee shall be
named as an
additional insured thereunder (or covered by broad form
Landlord
endorsement or contractual coverage); (ii) any such
blanket
policy or policies shall specify total insurance
allocated to
Tenant's improvements and property; and (iii) the
requirements
for Tenant's insurance set forth herein are otherwise
satisfied.
Tenant agrees to use its best efforts to ensure that
the coverage
afforded Landlord and any such other parties in
interest under
any future blanket policy of insurance will not be
diminished by
reason of the use of such blanket policy of insurance,
and Tenant
shall expend commercially reasonable amounts in
connection with
obtaining such coverage.
(d) The deductibles and self-insured
retentions
included in Tenant's insurance policies shall be in
amounts as
may be commercially reasonable from time to time.
(e) If Tenant refuses or neglects to
secure and
maintain insurance policies complying with the
provisions of this
Section 8.1, Landlord may secure the appropriate
insurance
policies and Tenant shall pay, upon demand, the costs
of same to
Landlord as Rent.
Section VIII.2 Landlord's Insurance.
Landlord at its
cost shall carry, from and at all times after the date
of
delivery of the Premises to Tenant, all insurance
required to be
carried by Landlord pursuant to (i) any Mortgages which
either
presently or in the future may exist as a lien against
the
Premises and (ii) the REA, to the extent that insurance
required
to be carried by Tenant pursuant to this Lease is
insufficient to
satisfy either of such obligations of Landlord.
Section VIII.3 Waiver of Subrogation.
Landlord and
Tenant each waive any rights it may have against the
other on
account of any loss or damage occasioned to Landlord or
Tenant,
as the case may be, their respective property, the
Premises or
its contents or to other portions of the Shopping
Center arising
from any liability, loss, damage or injury caused by
fire or
other casualty for which property insurance is carried
or
required to be carried pursuant to this Lease. Each of
the
parties hereto, on behalf of their respective insurance
companies
insuring the property of either Landlord or Tenant
against any
such loss, to the extent of any recovery under such
insurance,
waives any right of subrogation that it may have
against the
other. Each waiver shall be expressly included in, and
shall
comply with the requirements of, the respective
insurance
policies.
Section VIII.4 Governmental and Insurance
Requirements.
(a) Tenant shall comply, at Tenant's
sole cost and
expense, with all reasonable requirements of the
insurance
underwriters, or any similar public or private body,
provided
that any such requirements of such insurance
underwriters, or any
similar public or private body, are conditions to the
continuance
of any of the insurance coverage required hereunder,
and any
governmental authority having jurisdiction over
insurance rates
with respect to the use or occupancy of the Premises as
a part of
Shopping Center, including, without limitation (i)
installing
fire extinguishers or automatic dry chemical
extinguishing
systems; (ii) making any changes, modifications,
alterations or
additions in the sprinkler system within the Premises;
and (iii)
relocating partitions, trade fixtures or other contents
within
the Premises.
(b) Tenant shall not commit any act or
suffer to
exist on the Premises any circumstances which will
violate any
reasonable restrictions contained in any of Tenant's or
Landlord's policies of fire and casualty or public
liability
insurance, prevent Landlord from continuing the
coverage
presently provided in Landlord's insurance policies
from
insurance companies reasonably acceptable to Landlord
or cause
the rates for any such policies to increase beyond the
minimum
rates from time to time applicable to the Premises or
the
Shopping Center for the Permitted Use, provided such
minimum rate
would have been available to Landlord but for Tenant's
actions or
use. In the event that Landlord receives any notice
from
Landlord's insurance company regarding any violation by
Tenant of
any of Landlord's insurance policies, or of any
proposed increase
in Landlord's premiums from the minimum rate from time
to time
applicable thereunder because of any act, omission or
sufferance
by Tenant in, on or under the Premises, Landlord shall
notify
Tenant, and Tenant shall reimburse Landlord as
additional Rent
the amount of any such increase promptly following
Landlord's
written demand therefor.
(c) In the event that Landlord receives
any
notice from Landlord's insurance company regarding any
violation
by Tenant of any of Landlord's insurance policies, or
of any
proposed increase in Landlord's premiums from the
minimum rate
from time to time applicable thereunder because of any
act,
omission or sufferance by Tenant in, on or under the
Premises,
Landlord shall notify Tenant, and Tenant shall
reimburse Landlord
as additional Rent the amount of any such increase
promptly
following Landlord's written demand therefor.
Section VIII.5 Indemnification. To the
fullest extent
permitted by law, Tenant covenants with Landlord that
Landlord
shall not be liable for any damage or liability of any
kind or
for any injury to or death of persons or damage to
property of
Tenant or any other person occurring from and after the
date
Tenant is given access to the Premises from any cause
whatsoever
related to the use, occupancy or enjoyment of the
Premises
including, but not limited to, the sidewalks and
landscaped areas
immediately adjacent to the Building and Tenant's drive
through
area, if any, by Tenant or any person thereon or
holding under
Tenant including, without limitation, damages resulting
from any
labor dispute, and Tenant shall defend (using counsel
mutually
approved by Landlord and Tenant or Tenant's insurer),
indemnify
and save Landlord harmless from all liability
whatsoever on
account of any real or alleged damage or injury and
from liens,
claims and demands related to the use of the Premises
and its
facilities, or any repairs, alterations or improvements
(including any improvements and fixtures constructed or
installed
by Tenant) which Tenant may make or cause to be made
with respect
to the Premises, and any loss or interruption of
business or loss
of rental income resulting therefrom. Notwithstanding
anything
to the contrary in the foregoing, Tenant shall not be
liable for
damage or injury occasioned by the negligence or
willful
misconduct of Landlord or any ground lessor, mortgagee
or owner
of all or any part of the Shopping Center or their
respective
employees, agents or contractors.
Section VIII.6 Landlord Exculpation.
Landlord shall
endeavor to conduct its activities with respect to the
Premises
in a prudent and businesslike manner. However,
Landlord shall
not be liable for any damage to property entrusted to
employees
of Landlord, its partners or agents, nor for loss of or
damage to
any property damage or loss of business which may be
sustained by
the person, goods, xxxx, merchandise or property of
Tenant, its
employees, invitees or customers or any other person in
or about
the Premises caused by or resulting from, but not
limited to,
fire, steam, electricity, gas, water or rain which may
leak or
flow from or into any part of the Premises, or from the
breakage,
leakage, obstruction or other defects of the pipes,
sprinklers,
wires, appliances, plumbing, air conditioning or
lighting
fixtures of same, whether the injury, damage or loss of
business
results from conditions arising upon the Premises,
other portions
of the Shopping Center or from other sources, so long
as the same
does not result from the negligence or wilful
misconduct of
Landlord or its employees, agents, and contractors or
Landlord's
breach of any of its express obligations under this
Lease.
Landlord shall not be liable for interference with the
light or
other incorporeal hereditaments. Tenant shall give
prompt notice
to Landlord in case of fire or accidents in the
Premises or in
the Shopping Center or of defects therein or in the
fixtures or
equipment. Landlord shall not be liable for any
damages arising
from any act or neglect of any other tenant in the
Shopping
Center, except to the extent of Landlord's liability
for breach
of Landlord's obligation to enforce the REA, as
provided in
Section 3.2.
ARTICLE IX
ASSIGNMENT AND SUBLETTING
Section IX.1 Notice to Landlord. Tenant
may not
assign its rights under this Lease or sublet all or any
portion
of the Premises.
ARTICLE X
DEFAULT
Section X.1 Events of Default. Each of
the
following events shall constitute a "Default" by Tenant
under
this Lease:
(a) If Tenant shall fail to pay any
Rent under
this Lease when the same shall become due and payable
and the
failure shall continue for five (5) business days after
written
notice (it being understood such period shall run
concurrently
with any statutory notice period); or
(b) If Tenant shall transfer Tenant's
interest in
this Lease in contravention of Article IX hereof; or
(c) If Tenant shall fail to perform or
observe
any of its obligations under this Lease (including,
without
limitation, Tenant's failure to perform those
obligations under
the REA expressly assumed by Tenant in this Lease)
other than
those specified above in this Section 10.1 and the
failure shall
continue for thirty (30) days after notice, unless a
shorter
period of time for such performance or observance is
otherwise
expressly set forth in this Lease; provided, however,
that in the
case of a Default which cannot with reasonable
diligence be
remedied by Tenant within said period of thirty (30)
days, if
Tenant proceeds as promptly as may reasonably be
possible after
the service of such notice and with all reasonable
diligence to
remedy the Default and thereafter prosecute the
remedying of such
Default with all reasonable diligence, the period of
time after
the giving of such notice within which to remedy the
Default
shall be extended for such period as shall be
reasonably
necessary to remedy the same with all reasonable
diligence;
(d) If the Premises are deemed
abandoned pursuant
to California Civil Code Section 1951.3; or
(e) If an event of insolvency shall
occur
including:
(i) Tenant's making an assignment
for the
benefit of creditors;
(ii) Tenant's failure generally to
pay its
debts as they become due;
(iii) A material adverse change
in the
financial condition of Tenant;
(iv) Tenant's filing, or
acquiescing to the
filing of, a petition seeking an order for relief
against it in
any state or federal court in any bankruptcy,
reorganization,
liquidation, composition, extension, arrangement or
insolvency
proceeding;
(v) Tenant's making an application
for, or
acquiescing to, the appointment of a trustee, examiner
or
custodian for it or all or any portion of its property;
(vi) Any petition being filed
against Tenant
in any state or federal court seeking reorganization or
liquidation or insolvency proceedings, and the
proceedings shall
not be dismissed, discontinued or vacated within ninety
(90)
days; or
(vii) Any trustee, examiner or
custodian
being appointed for Tenant, or for all or any portion
of Tenant's
property, and the trustee, examiner, or custodian shall
not be
set aside within ninety (90) days after such
appointment.
Section X.2 Remedies. Upon the occurrence
of a
Default, and in addition to any other rights or
remedies
available to Landlord at law or in equity, Landlord
shall have
the right to:
(a) terminate this Lease and all rights of
Tenant by
giving Tenant written notice that this Lease is
terminated, in
which case Landlord may recover from Tenant the sum of
:
(i) the worth at the time of award of
any unpaid
Rent that had been earned at the time of termination.
(ii) the worth at the time of award of
the amount
by which (A) the unpaid Rent that would have been
earned after
termination until the time of award exceeds (B) the
amount of
rental loss, if any, as Tenant affirmatively proves
could have
been reasonably avoided;
(iii) the worth at the time of award
of the
amount by which (A) the unpaid Rent for the balance of
the Term
after the time of award exceeds (B) the amount of
rental loss, if
any, as Tenant affirmatively proves could be reasonably
avoided;
(iv) any other amount necessary to
compensate
Landlord for all the detriment proximately caused by
Tenant's
failure to perform Tenant's obligations or that, in the
ordinary
course of things, would be likely to result; and
(v) all other amounts in addition to or
in lieu
of those previously stated as may be provided from time
to time
by California law; or
(b) continue this Lease, and from time to
time,
without terminating this Lease, either (i) recover all
Rent and
other amounts payable as they become due or (ii) relet
the
Premises or any part of the Premises on behalf of
Tenant for any
term, at any rent, and pursuant to any other provisions
as
Landlord deems advisable, all with the right, at
Tenant's cost,
to make alterations and repairs to the Premises.
As used in clauses 10.2(a)(i) and 10.2(a)(ii) of
this
Section, the worth at the time of award is computed by
allowing
interest at the Interest Rate. As used in clause
10.2(a)(iii) of
this Section, the worth at the time of award is
computed by
discounting that amount at the discount rate of the
Federal
Reserve Bank of San Francisco at the time of award plus
one
percent (1%).
(c) Upon the occurrence of a Default,
Landlord shall
also have the right, with or without terminating this
Lease, to
re-enter the Premises and remove all persons and
property from
the Premises. Landlord may cause property so removed
from the
Premises to be stored in a public warehouse or
elsewhere at the
expense and for the account of Tenant.
(d) None of the following remedial actions,
singly or
in combination, shall be construed as an election by
Landlord to
terminate this Lease unless Landlord has in fact given
Tenant
written notice that this Lease is terminated or unless
a court of
competent jurisdiction decrees termination of this
Lease; any act
by Landlord to maintain or preserve the Premises; any
efforts by
Landlord to relet the Premises; any re-entry,
repossession, or
reletting of the Premises; or any reentry,
repossession, or
reletting of the Premises by Landlord pursuant to this
Section.
If Landlord takes any of the previous remedial actions
without
terminating this Lease, landlord may nevertheless at
any time
after taking any remedial action terminate this lease
by written
notice to Tenant.
(e) If Landlord relets the Premises,
Landlord shall
apply the revenue as follows: first, to the payment of
any
reasonable cost of reletting, including without
limitation
finder's fees and leasing commissions; and second, to
the payment
of Rent and other amounts due and unpaid under this
Lease.
Landlord shall hold and apply the residue, if any, to
payment of
future amounts payable as they become due and, to the
extent the
residue exceeds such amounts, shall remit such excess
to Tenant.
Should revenue from reletting during any month, after
application
pursuant to the foregoing provisions, be less than the
reasonable
cost of reletting and the Rent and other amounts due
and unpaid
under this Lease, Tenant shall pay the deficiency to
Landlord
promptly upon demand.
(f) After the occurrence of a Default,
Landlord, in
addition to or in lieu of exercising other remedies,
may, but
without any obligation to do so, cure the breach
underlying the
Default for the account and at the expense of Tenant;
provided
that Landlord by prior notice shall first allow Tenant
a
reasonable opportunity to cure, except in cases of
emergency,
where Landlord may proceed without prior notice to
Tenant.
Tenant shall, upon demand, immediately reimburse
Landlord for all
costs, including costs of settlements, defense court
costs, and
attorney fees, that Landlord may incur in the course of
any such
cure.
(g) No security, guaranty or security
interest granted
for the performance of Tenant's obligations, which
Landlord may
now or hereafter hold, shall in any way constitute a
bar or
defense to any action initiated by Landlord for
unlawful detainer
or for the recovery of the Premises, for enforcement of
any
obligation of Tenant, or for the recovery of damages
caused by a
breach of this Lease by Tenant or by a Default.
(h) Except as expressly provided in this
Lease to the
contrary, no right or remedy conferred upon or reserved
to either
party is intended to be exclusive of any other right or
remedy
given now or later or existing at law or in equity or
by statute.
Except to the extent that either party may have
otherwise agreed
in writing, no waiver by that party of any violation or
nonperformance by the other party of any obligations,
agreements,
or covenants shall be deemed to be a waiver of any
subsequent
violation or nonperformance of the same or any other
covenant,
agreement, or obligation, nor shall any forbearance by
either
party to exercise a remedy for any violation or
nonperformance by
the other party be deemed a waiver by that party of
rights or
remedies with respect to that violation or
nonperformance.
(i) Landlord may require Tenant or any
trustee for
Tenant under the United States Bankruptcy Code (as
amended, the
"Bankruptcy Code") to cure Tenant's Default and to
provide
adequate assurances of future performance of this Lease
as
provided in Section 365(b)(3) of the Bankruptcy Code,
including,
without limitation, adequate assurance that; (i) Rent
will be
paid when due; (ii) there shall be no substantive
breach in the
provisions of this Lease relating to the Shopping
Center
including, without limitation, the Permitted Use; and
(iii) that
there shall be no disruption in any Tenant mix or
Tenant balance
in the Shopping Center. If Tenant or the trustee does
not cure
existing Defaults and provide such assurances of future
performance within sixty (60) days after there has been
an order
for relief pursuant to the Bankruptcy Code, this Lease
shall be
deemed rejected, and Landlord shall have no further
liability
hereunder to Tenant or any person claiming through or
under
Tenant and, if Tenant or any such person is in
possession.
Tenant or any such person shall forthwith quit and
surrender the
premises to Landlord.
Section X.3 Attorneys' Fees. In the event
that
either party hereto commences an action related to this
Lease,
the prevailing party shall be entitled to recover from
the other
party all of its costs and expenses incurred therein,
including,
without limitation, reasonable attorneys' fees and
disbursements.
If either party hereto is, without fault on its own
part, made a
party to any action instituted by or against the other
party to
this Lease due to such other party's fault, such other
party
shall indemnify the party innocently involved and
defend and hold
it harmless against and from all such costs and
expenses incurred
therein including, without limitation, reasonable
attorneys' fees
and disbursements.
Section X.4 Agreement to Arbitrate. Any
controversy, dispute or claim under, arising out of, in
connection with or in relation to this Lease, including
but not
limited to the negotiation, execution, interpretation,
construction, coverage, scope, performance,
non-performance,
breach, termination, validity or enforceability of this
Lease or
any provision hereof shall be determined by arbitration
conducted
in accordance with the Commercial Arbitration Rules or
then
existing rules for commercial arbitration of the
American
Arbitration Association. The arbitration shall
additionally be
governed by the California Arbitration Act. The
arbitration
shall be conducted in a location in San Bernardino
County and
shall be before a single arbitrator who shall be
selected by
mutual agreement of the parties from among a list of
seven
potential arbitrators provided by the American
Arbitration
Association. If the parties cannot agree on an
arbitrator from
this first list, the parties hereto shall select an
arbitrator
for such arbitration from a second list of seven
potential
arbitrators provided by the American Arbitration
Association with
each party alternately striking names, with the last
name
remaining to be the arbitrator so selected. In the
event that
either party seeks a temporary restraining order,
preliminary
injunction or other provisional relief, the provisions
of Section
1281.8 of the California Code of Civil Procedure shall
apply.
The arbitration of such issues, including the
determination of
any amount of damages suffered by any party hereto by
reason of
the acts or omissions of any party, shall be final and
binding
upon the parties to the maximum extent permitted by
law.
Judgment upon any award rendered by the arbitrator(s)
may be
entered by any court having jurisdiction thereof. The
parties
intend that this Article shall be valid, binding,
enforceable and
irrevocable and shall survive the termination of this
Agreement.
Section X.5 No Set-off/Counterclaims.
Tenant shall
pay all Rent due hereunder, free of any charges,
assessments,
impositions or deductions and without abatement,
deferral,
reduction, set-off, counterclaim, defense or deduction
except as
permitted under the express terms of this Lease or the
Asset
Purchase Agreement. Tenant shall not interpose any
counterclaim(s) in any action brought by Landlord
based, in whole
or in part, on Tenant's failure to pay Rent; provided,
however,
that, the foregoing to the contrary notwithstanding:
(i) Tenant
may interpose any counterclaim deemed "compulsory"
under
applicable court rules of civil procedure; (ii) Tenant
shall be
permitted to bring a separate action against Landlord
based on
any claim which Tenant is prohibited by this Lease from
asserting
as a set-off or counterclaim; and (iii) Tenant may
bring actions
and assert defenses, setoffs and counterclaims
permitted to be
brought or asserted against Landlord in accordance with
the terms
of the Asset Purchase Agreement.
Section X.6 Right of Redemption. Tenant
hereby
waives, for itself and all persons claiming by, through
or under
Tenant, any right of redemption or for the restoration
of the
operation of this Lease under any present or future law
in the
event Landlord shall obtain possession of the Premises.
Section X.7 No Waiver. No receipt of
monies by
Landlord from Tenant after the termination or
cancellation of
this Lease in any lawful manner shall reinstate the
Term of this
Lease, or operate as a waiver of the right of Landlord
to enforce
the payment of Rent then due, or operate as a waiver of
the right
of Landlord to recover possession of the Premises by
proper suit,
action, proceeding or remedy; it being agreed that,
after the
termination or cancellation of this Lease, or after a
final order
or judgment for the possession of the Premises,
Landlord may
demand, receive and collect any monies due, without in
any manner
affecting such notice, proceeding, suit, action, order
or
judgment; and any and all such monies collected shall
be deemed
to be payment on account of the use and occupation or
Tenant's
liability hereunder.
Section X.8 Unperformed Covenants of
Landlord May Be
Performed By Tenant. If Landlord shall fail to perform
any of
the terms, provisions, covenants or conditions to be
performed or
complied with by Landlord pursuant to this Lease, or if
Landlord
should fail to make any payment which Landlord agrees
to make,
and any such failure shall, if it relates to a matter
which is
not of any emergency nature, remain uncured for a
period of
thirty (30) days after Tenant shall have served upon
Landlord
notice of such failure, or for a period of twenty-four
(24) hours
after service of such notice, if in Tenant's judgment
reasonably
exercised such failure related to a matter which is of
an
emergency nature, then Tenant may at Tenant's option,
at any time
prior to commencement of Landlord's acting to cure such
failure
and thereafter if Landlord fails to diligently perform
the curing
of such failure, perform any such term, provision,
covenant or
condition or to make any such payment, as Landlord's
agent, and
in Tenant's sole discretion as to the necessity
therefor, and
Tenant shall not be liable or responsible for any loss
or damage
resulting to Landlord or anyone holding under Landlord
on account
thereof. The full amount of the cost and expense
entailed, or
payment so made, shall immediately be owing and payable
by
Landlord to Tenant. The option given in this Section
is for the
sole protection of Tenant, and its existence shall not
release
Landlord from the obligation to perform the terms,
provisions,
covenants and conditions herein provided to be
performed by
Landlord or deprive Tenant of any legal rights which it
may have
by reason of any such default by Landlord.
ARTICLE XI
[INTENTIONALLY OMITTED]
ARTICLE XII
STORE CLOSING
Landlord acknowledges Tenant's intent to
close the
department store to be operated on the Premises during
the month
of January, 1999. The "Permitted Use" includes the
right to
operate the Premises as a discount or outlet store, and
to
conduct "close-out" and "going out of business" sales
on the
Premises (so long as such use complies with applicable
law).
Landlord hereby agrees to indemnify, defend (using
counsel
mutually approved by Tenant and Landlord or Landlord's
insurer)
and hold Tenant harmless from and against any loss,
liability,
suit, claim or demand whatsoever arising out of any
party's
contention that closing of the store violates any
agreement or
obligation binding on Landlord or Tenant, including,
without
limitation, any such claim brought under the REA or any
covenants, conditions or restrictions applicable to the
Premises.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section XIII.1 Notices.
(a) Any notice, demand, request,
approval,
consent or other instrument (collectively, a "Notice")
which may
be, or is required to be, given under this Lease shall
be in
writing and given by hand or sent by United States
certified or
registered mail, return receipt requested, postage
prepaid, or by
an overnight nationally recognized courier service,
addressed to
Landlord at the address herein first given with a copy
to:
XxXxxxxx McAlearny Shimoff & Xxxx, 0 Xxxx Xxxxxxxx
Xxxxxxxxx,
X.X. Xxx 0000, Xxxxxxxx, XX 00000-0000 Attn: Xxxxxx
X.
XxXxxxxx, Esq., or to such other address as Landlord
may from
time to time designate to Tenant by notice in
accordance with
this Section, and to Tenant at the Premises and to
Tenant's
address herein first given Attention: Law Department,
or to such
other address as Tenant may from time to time designate
to
Landlord by notice in accordance with this Section.
All Notices
shall be deemed given or served three (3) business days
after the
date of registration or certification by the postal
authorities,
if mailed, or upon receipt, if sent by overnight
courier or
delivered in person.
(b) Any notice which may or shall be
given under
this Lease by Landlord may be given by Landlord, by any
employee
of Landlord, by any attorney representing Landlord, by
any
management company operating the Shopping Center on
behalf of
Landlord or any employee of, or attorney retained by,
said
management company, and all notices from any of the
foregoing
shall be as effective as if given by Landlord itself.
(c) Any Notice with respect to any
assignment,
alleged default, termination or other material issue
given to
Landlord shall also be given to each mortgagee of
Landlord's
interest in the Shopping Center, the name and address
of which
mortgagee Landlord has previously given Tenant written
notice.
Section XIII.2 Brokers. Landlord and Tenant
each
warrants and represents to the other party hereto that
it has not
dealt with any broker in negotiating or consummating
this Lease,
and Landlord and Tenant each hereby agrees to
indemnify, defend
and hold harmless the other party hereto against and
from any and
all claims losses or liabilities as a result of any
inaccuracy in
the foregoing representation. This Section shall
survive the
Term of this Lease.
Section XIII.3 Subordination of Lease.
(a) This Lease is subordinate to the
lien of all
mortgages, deeds of trust and security instruments
(collectively,
"Mortgages"), and to all ground leases, easement
agreements and
operating agreements now covering or affecting all or
any part of
the Shopping Center, including, without limitation, the
REA, and
to all modifications, consolidations, renewals,
replacements and
extensions of any of the foregoing. Landlord hereby
represents
and warrants that there are no Mortgages in effect with
respect
to the Shopping Center or the Premises except as
specifically set
forth in Exhibit G attached hereto and made a part
hereof, nor
are there any REAs affecting the Shopping Center or
Tenant's
rights under this Lease except as set forth in Exhibit
D attached
hereto and made a part hereof. Landlord shall exercise
best
efforts to obtain from each mortgagee under a Mortgage
listed on
Exhibit G a nondisturbance agreement in the form of the
"SNDA"
attached to the Asset Purchase Agreement.
(b) Subject to the terms of any
nondisturbance
agreement entered into by Tenant, should any mortgagee
under a
Mortgage succeed to Landlord's interest in this Lease,
Tenant
shall, upon demand, attorn to and recognize such
mortgagee as
Landlord under this Lease. In the event of a sale or
assignment
of Landlord's interest in this Lease or the Premises,
Tenant
shall attorn to and recognize such purchaser or
assignee as
Landlord under this Lease without further act by
Landlord or such
purchaser or assignee.
Section XIII.4 Unavoidable Delays. In the
event that
either party shall be delayed or hindered in, or
prevented from,
the performance of any work, service or other act
required under
this Lease to be performed by such party and such delay
or
hindrance is due to: (i) strikes, lockouts, or other
labor
disputes; (ii) inability to obtain labor or materials
or
reasonable substitutes therefor; or, (iii) acts of God,
governmental restrictions, enemy act, civil commotion,
unavoidable fire or other casualty, or other causes of
a like
nature beyond the control of the party so delayed or
hindered
(collectively, "Unavoidable Delays"), then performance
of such
work, service or other act shall be excused for the
period of
such delay and the period for the performance of such
work,
service or other act shall be extended by a period
equivalent to
the period of such delay. In no event shall any such
delay
constitute a termination or extension of this Lease.
The
provisions of this Section shall not operate to excuse
Tenant
from the timely payment of Rent.
Section XIII.5 Estoppel Certificates. Upon
ten (10)
business days prior written request therefor by
Landlord or
Tenant from time to time, each party agrees to execute
and to
deliver to the requesting party, or to such other
addressee or
addressees as the requesting party may designate, a
written
statement certifying that: (i) this Lease is in full
force and
effect and unmodified, or describing any modification;
(ii) that
there are no defenses or offsets against the
enforcement of this
Lease, or stating with particularity defenses or
offsets claimed;
stating the date to which Rent has been paid; and (iv)
stating
the Term Commencement Date and the date this Lease
expires.
Section XIII.6 Relationship of Parties.
Nothing
contained in this Lease shall be deemed or construed as
creating
the relationship of principal and agent or of
partnership or of
joint venture between the parties hereto, it being
understood and
agreed that neither the method of computing Rent nor
any other
provision contained herein nor any acts of the parties
hereto
shall be deemed to create any relationship between the
parties
other than that of Landlord and Tenant.
Section XIII.7 Governing Law; Jurisdiction.
(a) Governing Law. This Lease, the
legal
relations between the parties and any Action (defined
below),
whether contractual or non-contractual, instituted by
any party
with respect to matters arising under or growing out of
or in
connection with or in respect of this Lease, including
but not
limited to the negotiation, execution, interpretation,
coverage,
scope, performance, breach, termination, validity, or
enforceability of this Lease, shall be governed by and
construed
in accordance with the laws of the State of California
applicable
to contracts made and performed in such State and
without regard
to conflicts of law doctrines, except to the extent
that certain
matters are preempted by federal law or are governed as
a matter
of controlling law by the law of the jurisdiction of
incorpora-
tion of the Tenant.
(b) Jurisdiction. Each party hereby
irrevocably
submits to and accepts for itself and its properties,
generally
and unconditionally, the exclusive jurisdiction of and
service of
process pursuant to the laws of the State of California
and the
rules of its courts, waives any defense of forum non
conveniens
and agrees to be bound by any judgment rendered thereby
arising
under or out of in respect of or in connection with
this Lease or
any related document or obligation. Each party further
irrevocably desig-nates and ap-points the individual
identified
in or pursuant to Section 13.1 hereof to receive
notices on its
behalf, as its agent to receive on its behalf service
of all
process in any such Action before any body, such
service being
hereby acknowledged to be effect-ive and binding
service in every
respect. A copy of any such process so served shall be
mailed by
registered mail to each party at its address provided
in Section
13.1; provided that, unless otherwise provided by
applicable law,
any failure to mail such copy shall not affect the
validity of
the service of such process. If any agent so appointed
refuses
to accept service, the designating party hereby agrees
that
service of process sufficient for personal jurisdiction
in any
action against it in the applicable jurisdiction may be
made by
registered or certified mail, return receipt requested,
to its
address provided in Section 13.1. Each party hereby
acknowledges
that such service shall be effective and binding in
every
respect. Nothing herein shall affect the right to
serve process
in any other manner per-mitted by applicable law.
(c) As used in this Section 13.7,
"Action" shall
mean any action, complaint, petition, investigation
suit or other
proceeding before any arbitrator or any other governing
body or
entity having appropriate jurisdiction.
Section XIII.8 Interpretation. The neuter,
feminine or
masculine pronoun when used herein shall each include
each of the
other genders and the use of the singular shall include
the
plural. In the event of any conflict between the terms
of this
Lease, and the terms of the Asset Purchase Agreement
(including
any related agreements entered into by Landlord and
Tenant), the
terms of the Asset Purchase Agreement shall prevail
over any
contrary term of this Lease.
Section XIII.9 Captions. The captions of
Articles and
Sections contained in this Lease are for convenient
reference
only and shall not be deemed or construed as in any
manner
limiting or amplifying the terms and provisions hereof.
Section XIII.10 Partial Invalidity. If
any term or
provision of this Lease, or the application thereof to
any person
or circumstance, shall to any extent be determined to
be invalid
or unenforceable by a court of competent jurisdiction,
then the
remainder of this Lease, or the application of such
term or
provision to persons or circumstances other than those
as to
which it is held invalid or unenforceable, shall not be
affected
thereby.
Section XIII.11 Waivers. The waiver by
Landlord of
any breach of any term, covenant or condition contained
in this
Lease shall not be deemed to be a waiver of such term,
covenant
or condition or of any subsequent breach of the same or
any other
term, covenant or condition contained in this Lease.
The
subsequent acceptance of Rent hereunder by Landlord
shall not be
deemed to be a waiver of any preceding breach by Tenant
of any
term, covenant or condition of this Lease or of any
right of
Landlord to a forfeiture of the Lease by reason of such
breach,
regardless of Landlord's knowledge of such preceding
breach at
the time of acceptance of such Rent. No term, covenant
or
condition of this Lease shall be deemed to have been
waived by
Landlord unless such waiver be in writing and signed by
Landlord.
Section XIII.12 Accord and Satisfaction.
No
payment by Tenant, or receipt by Landlord, of a lesser
amount
than the Rent payment due under this Lease shall be
deemed or
construed to be other than a payment or receipt on
account of the
earliest Rent due. Neither the endorsement or
statement on any
check nor the receipt or negotiation of any such check
by
Landlord, shall be deemed or construed to be an accord
and
satisfaction.
Section XIII.13 Counterparts. This Lease
may be
executed in several counterparts, each of which shall
be deemed
an original and all of which shall together constitute
one and
the same instrument.
Section XIII.14 Entire Agreement. This Lease
and the
Asset Purchase Agreement incorporate all undertakings
between the
parties hereto with respect to Tenant's lease of the
Premises.
Tenant hereby acknowledges that neither Landlord nor
Landlord's
employees, agents or contractors have made any
representations or
promises to Tenant with regard to the Premises or the
Shopping
Center or this Lease that have not been expressly
stated in this
Lease and, therefore, Tenant hereby waives any and all
claims
against, or liability of, Landlord and Landlord's
employees,
agents, and contractors based thereon. Landlord hereby
acknowledges that Tenant and its employees and officers
have made
no representations or promises with regard to Tenant's
operations, sales figures or methods of doing business
or any
other matter except as expressly contained in this
Lease, and
Landlord, therefore, hereby waives any claim with
respect thereto
or based thereon.
Section XIII.15 Successors and Assigns. This
Lease and
each of the terms and conditions hereof shall inure to
the
benefit of, and be binding upon, Landlord, and
Landlord's heirs,
executors, administrators, successors and assigns.
This Lease
and each of the terms and conditions hereof shall also
be binding
upon Tenant, and Tenant's heirs, executors,
administrators,
successors and assigns and shall inure to the benefit
of Tenant
and only such assigns of Tenant to whom the assignment
by Tenant
has been made and consented to in accordance with the
provisions
of Article IX of this Lease.
Section XIII.16 Survival of Obligations. All
obligations of each party which by their nature involve
performance after the end of the Term, or which cannot
be
ascertained or have been fully performed until after
the end of
the Term, shall survive the expiration or earlier
termination of
this Lease.
Section XIII.17 Submission of Lease.
Submission of this
Lease by one party to the other for examination or
execution does
not constitute an offer made, or an option granted, to
enter into
this Lease.
Section XIII.18 Memorandum of Lease. Landlord
and
Tenant agree to execute a memorandum of this Lease,
which
memorandum shall be substantially in the form attached
hereto as
Exhibit F and shall be recorded in the applicable real
property
records as soon as possible after the date of this
Lease.
Section XIII.19 Attachments. Attached hereto
and made a
part of this Lease are the following: Exhibits A-G,
inclusive.
IN WITNESS WHEREOF, Landlord and Tenant have
caused
their duly authorized representatives to execute this
Lease as of
the date first above written.
LANDLORD:
EL CORTE INGLES, S.A.
By: _______________________
Its:____________________
By: _______________________
Its:____________________
TENANT:
GOTTSCHALKS INC.
By _______________________
Its:____________________
By: _______________________
Its:____________________
EXHIBIT A
LEGAL DESCRIPTION OF SHOPPING CENTER
EXHIBIT B
SITE PLAN OF SHOPPING CENTER
EXHIBIT C
SITE PLAN OF PREMISES
EXHIBIT D
SCHEDULE OF REA AND RELATED AGREEMENTS
EXHIBIT E
DEPARTMENT LEASES
EXHIBIT F
FORM OF MEMORANDUM OF LEASE
Recording Requested By And
When Recorded Return To:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
_________________________________________________________________
_____________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (this "Memorandum"),
dated as
of _________, 1998, is entered into by and between El
Corte
Ingles, S.A., a Spanish corporation ("Landlord"), and
Gottschalks
Inc., a Delaware corporation ("Tenant"). Landlord and
Tenant
have entered into that certain Store Lease Agreement
dated as of
_____________, 1998 (the "Store Lease"), pursuant to
which
Landlord demised and leased to Tenant and Tenant hired
from
Landlord the Premises as more particularly described in
the Lease
(the "Premises"), which Premises are located on the
real property
described in Exhibit A attached hereto and made a part
hereof.
LANDLORD AND TENANT AGREE AS FOLLOWS:
1. For and in consideration of the rental
reserved
and of the mutual covenants, agreements and conditions
set forth
in that certain Store Lease, Landlord does hereby lease
to Tenant
and Tenant does hereby lease from Landlord, upon all
terms and
conditions set forth in the Store Lease, the Premises.
The term
of the Lease commences on __________, 1998 and expires
on January
30, 1999.
2. This Memorandum has been prepared to
provide
notice that the Premises are subject to the terms and
conditions
of the Store Lease, which terms are hereby incorporated
into this
Memorandum by this reference. In no event shall the
terms of
this Memorandum be deemed to modify, amend, limit or
otherwise
affect the terms and conditions of the Store Lease. In
the event
of any inconsistency between the terms of this
Memorandum and the
terms of the Store Lease, the terms of the Store Lease
shall
control.
IN WITNESS WHEREOF, Landlord and Tenant have
caused
their duly authorized representatives to execute this
Memo-randum
as of the date first written above.
LANDLORD:
EL CORTE INGLES, S.A.
By:
Its:
TENANT:
GOTTSCHALKS INC.
By:
Its:
EXHIBIT A
Description of Real Property
EXHIBIT G
SCHEDULE OF EXISTING MORTGAGES
A. Current preliminary title report:
Title Company:
Date of report:
Order No.:
B. Existing Mortgages:
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND BASIC PROVISIONS 1
Section 1.1 Definitions 1
Section 1.2 Effect of Basic Terms 5
ARTICLE II
GRANT AND TERM 5
Section 2.1 Grant and Term of Lease 5
Section 2.2 Acceptance of Premises;
Quiet Enjoyment. 5
Section 2.3 Surrender of Premises. 5
Section 2.4 Holding Over. 6
ARTICLE III
MATTERS RELATED TO RECIPROCAL EASEMENT
AGREEMENT 6
Section 3.1 Lease Controls Over REA. 6
Section 3.2 Covenants Regarding REA. 7
ARTICLE IV
RENT AND OTHER CHARGES 7
Section 4.2 Percentage Rent 7
Section 4.3 Utilities Charge 9
Section 4.4 Common Area Maintenance
Costs 10
Section 4.5 Taxes 10
Section 4.6 Late Payment Charges 11
Section 4.7 Rent Payments 11
ARTICLE V
OPERATION OF PREMISES AND COMMON AREAS 11
Section 5.1 Permitted Use 11
Section 5.2 Signs 11
Section 5.3 Alterations of Premises 12
Section 5.4 Use of Common Areas 13
Section 5.5 Compliance with REA 14
Section 5.6 Compliance with
Requirements 14
Section 5.7 Liens 15
ARTICLE VI
REPAIRS AND MAINTENANCE 15
Section 6.1 Tenant's Obligations 15
Section 6.2 Landlord's Obligations 16
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION 16
Section 7.1 Damage or Destruction 16
Section 7.2 Condemnation 17
ARTICLE VIII
INSURANCE 18
Section 8.1 Tenant's Insurance 18
Section 8.2 Landlord's Insurance 20
Section 8.3 Waiver of Subrogation 20
Section 8.4 Governmental and Insurance
Requirements 20
Section 8.5 Indemnification 21
Section 8.6 Landlord Exculpation 22
ARTICLE IX
ASSIGNMENT AND SUBLETTING 22
Section 9.1 Notice to Landlord 22
ARTICLE X
DEFAULT 22
Section 10.1 Events of Default 22
Section 10.2 Remedies 23
Section 10.3 Attorneys' Fees 26
Section 10.4 Agreement to Arbitrate 26
Section 10.5 No Set-off/Counterclaims 26
Section 10.6 Right of Redemption 27
Section 10.7 No Waiver 27
Section 10.8 Unperformed Covenants of
Landlord May Be
Performed By Tenant 27
ARTICLE XI
[INTENTIONALLY OMITTED] 28
ARTICLE XII 28
ARTICLE XIII
MISCELLANEOUS PROVISIONS 28
Section 13.1 Notices 28
Section 13.2 Brokers 29
Section 13.3 Subordination of Lease 29
Section 13.4 Unavoidable Delays 29
Section 13.5 Estoppel Certificates 30
Section 13.6 Relationship of Parties 30
Section 13.7 Governing Law;
Jurisdiction 30
Section 13.8 Interpretation 31
Section 13.9 Captions 31
Section 13.10 Partial Invalidity 31
Section 13.11 Waivers 31
Section 13.12 Accord and Satisfaction 31
Section 13.13 Counterparts 31
Section 13.14 Entire Agreement 32
Section 13.15 Successors and Assigns 32
Section 13.16 Survival of Obligations 32
Section 13.17 Submission of Lease 32
Section 13.18 Memorandum of Lease 32
Section 13.19 Attachments 32
EXHIBITS
EXHIBIT A LEGAL DESCRIPTION OF SHOPPING
CENTER A-1
EXHIBIT B SITE PLAN OF SHOPPING CENTER B-1
EXHIBIT C SITE PLAN OF PREMISES C-1
EXHIBIT D SCHEDULE OF REA AND RELATED
AGREEMENTS D-1
EXHIBIT E [INTENTIONALLY OMITTED] E-1
EXHIBIT F FORM OF MEMORANDUM OF LEASE G-1
EXHIBIT G SCHEDULE OF EXISTING MORTGAGES H-1
