Document/Exhibit Description Pages Size
1: 8-K Current Report 3 15K
2: EX-1 Underwriting Agreement 14 55K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 52 190K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 50 187K
5: EX-4 Instrument Defining the Rights of Security Holders 50 191K
6: EX-5 Opinion re: Legality 47 175K
7: EX-6 Opinion re: Discount on Capital Shares 52 167K
EXHIBIT 6
AGREEMENT OF LEASE, dated as of the 31st day of December,
1997, by and between SCC I LLC, a Delaware limited liability company, having
offices at c/o Millennium Partners I, Inc., 1995 Broadway, 3rd Floor, New York,
New York 10023 ("LANDLORD"), and THE SPORTS CLUB COMPANY, INC., a Delaware
corporation, having offices at 1100 Santa Monica Boulevard, Suite 300, Los
Angeles, California 90025 ("TENANT").
W I T N E S S E T H:
WHEREAS, Landlord possesses a fee estate in and to certain
land (the "SANTA ANA LAND") more particularly described in Exhibit A-1 annexed
hereto and Landlord possesses a leasehold estate in and to certain land (the
"FULLERTON LAND"; the Santa Ana Land and Fullerton Land, collectively, the
"LAND") more particularly described in Exhibit A-2 annexed hereto;
WHEREAS, present on the Land are certain improvements as
described in Exhibit B annexed hereto (the "IMPROVEMENTS");
WHEREAS, Landlord desires to demise and let to Tenant and
Tenant desires to lease from Landlord, the Improvements and Land (collectively,
the "PREMISES"), upon and subject to the terms and provisions of this Lease;
WHEREAS, ALL CAPITALIZED TERMS NOT OTHERWISE DEFINED IN THE
OTHER ARTICLES OF THIS LEASE SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN ARTICLE
37 OF THIS LEASE.
NOW, THEREFORE, for good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged, the parties
hereto, for themselves, their heirs, distributees, executors, administrators,
legal representatives, trustees, successors and assigns, hereby covenant and
agree as follows:
ARTICLE 1
PREMISES, TERM
1.1. Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, the Premises for the rents hereinafter reserved and upon and
subject to the terms of this Lease, reserving however to Landlord the rights,
interests and estates reserved to Landlord by the provisions of this Lease or by
operation of law. The term of this Lease (the "TERM") shall commence (the
"COMMENCEMENT DATE") on the date hereof. The Term shall terminate on December
31st next following the twentieth (20th) anniversary of the Commencement Date
(the "EXPIRATION DATE"), or until such sooner date this Lease shall terminate as
hereinafter provided, subject to Tenant's right to extend the Term in accordance
with Article 35 of this Lease.
ARTICLE 2
RENT
2.1. Tenant shall pay to Landlord at the times and in the
manner set forth in this Lease Base Rent as set forth in Article 3 hereof, Base
Rent and Additional Rent as set forth in Section 3.2 hereof. Base Rent and
Additional Rent are hereinafter sometimes collectively referred to as the "RENT"
or "RENTS".
2.2. If Tenant shall fail to pay when due any installment of
Rent for a period of (i) three (3) days, with respect to Base Rent or (ii) ten
(10) days after Landlord's delivery of notice thereof to Tenant, with respect to
Additional Rent, after such installment or payment, as the case may be, shall
have become due, Tenant shall pay interest thereon at the Default Interest Rate,
from the date when such installment or payment, as the case may be, shall have
become due to the date of the payment thereof, and such interest thereon shall
be deemed Additional Rent. The imposition and/or payment of such interest shall
be in addition to all other rights and remedies available to Landlord in case of
nonpayment of Rent.
2.3. If any of the Rent payable under the terms and provisions
of this Lease shall be or become uncollectible, reduced or required to be
refunded because of any Legal Requirement, Tenant shall enter into such
agreement(s) and take such other steps as Landlord may request and as may be
legally permissible to permit Landlord to collect the maximum Rents which from
time to time during the continuance of such legal rent restriction may be
legally permissible (but not in excess of the amounts reserved therefor under
this Lease). Upon the termination of such legal rent restrictions, the Rents
shall become and thereafter be payable in accordance with the amounts reserved
herein for the periods following such termination and Tenant shall pay to
Landlord immediately following the termination of such legal rent restrictions,
to the maximum extent legally permissible, an amount equal to the Rents which
would have been paid pursuant to this Lease but for such legal rent restriction
less the Rents paid by Tenant during the period that such legal rent restriction
was in effect.
2.4. The parties hereby agree (i) that Section 467 of the
Internal Revenue Code is not operative to this Lease and (ii) to report rental
income and rental deductions without any recharacterization pursuant to such
Section.
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ARTICLE 3
BASE RENT AND ADDITIONAL RENT
3.1. Tenant shall pay to Landlord Base Rent ("BASE RENT") in
the amount of (a) $1,000,000 per annum for the period commencing on the
Commencement Date and ending on December 31, 2007, and (b) $1,200,000 per annum
for the period commencing on January 1, 2008 and ending on the Expiration Date.
3.2. Tenant agrees to pay to Landlord, Base Rent and
Additional Rent in immediately available lawful money of the United States of
America, in equal monthly installments in advance of the first day of each
calendar month during the term as required hereunder at the offices of Landlord
or such other place in the United States of America as Landlord may designate,
without any setoff or deduction whatsoever. Should the obligation to pay Base
Rent commence on any day other than on the first day of a month, then the Base
Rent for such month shall be prorated on a per diem basis. All sums other than
Base Rent payable by Tenant hereunder to, or for the account of, or for the
benefit of, Landlord shall be deemed "ADDITIONAL RENT" (any default in the
payment of which Landlord shall have the same remedies as for a default in the
case of the failure to pay Base Rent), and shall be payable on demand, unless
other payment dates are herein provided.
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ARTICLE 4
ADDITIONAL RENT
4.1. From and after the Commencement Date, Tenant shall pay,
as Additional Rent, all amounts payable by Landlord or Tenant on account of real
estate taxes, assessments and any other charges ("TAXES") in respect of the Land
and/or the Premises. Tenant shall pay all such Taxes as and when due, and shall
exhibit, and deliver to Landlord, photostatic copies of the receipted bills or
other evidence satisfactory to Landlord showing such payment promptly after such
receipts shall have been received by Tenant, but in any event prior to the
Delinquency Date (as hereinafter defined). If the bills, statements, invoices or
other demands for payment (collectively, "STATEMENTS") for Taxes due and payable
by Tenant hereunder are delivered to Landlord rather than Tenant, Landlord shall
deliver any such Statement to Tenant promptly upon receipt by Landlord, but in
any event not less than ten (10) days, or such shorter period of time if such
Statement is not received by Landlord within ten (10) days prior to the date on
which Taxes relating to such Statement become delinquent (the "DELINQUENCY
DATE"). Notwithstanding anything in this Article 4 otherwise provided, if such
Statements are delivered by the taxing authority to Landlord (and not also to
Tenant) and not forwarded by Landlord to Tenant as provided in the immediately
preceding sentence, then Tenant's obligation to pay Taxes hereunder shall not
arise until such Statements are delivered to Tenant. Landlord and Tenant shall
cooperate to cause the taxing authority imposing Taxes to deliver such
Statements directly to Tenant during the Term of this Lease. Tenant's obligation
to pay Taxes shall include the payment of any fines, fees, penalties or other
amounts imposed by the taxing authority for the late or non payment of Taxes to
the extent that same were not imposed solely upon Tenant's failure to timely pay
Taxes resulting solely from, Landlord's failure to timely deliver to Tenant any
Statements as hereinabove provided.
ARTICLE 5
ACCEPTANCE OCCUPANCY OF THE PREMISES
5.1. Tenant acknowledges that Tenant is accepting the Land and
the Premises in its "AS IS, WHERE IS, WITH ALL FAULTS" condition on the date
hereof and Landlord will not be required to perform any work in or to the
Premises as a condition to Tenant's occupancy. Furthermore, Tenant acknowledges
and agrees that Tenant, Tenant's legal counsel, agents and representatives have
each inspected the Land and the Premises and have commissioned, reviewed and
conducted detailed reports (including, without limitation, recent title
commitments, environmental reports and engineering reports, leases, covenants,
tenancies, mechanic lien laws and the Fullerton Ground Lease) and analysis of
the condition of both the Land and Premises, and Tenant hereby accepts all
conditions currently existing or which may in the future exist regarding zoning,
the physical condition of the Improvements, uses, title and environmental
matters.
ARTICLE 6
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NET LEASE
6.1. Tenant acknowledges and agrees that it is intended that
this Lease is a net lease that is completely carefree to Landlord,
UTILITIES AND SERVICES
6.2. Landlord shall have no responsibility to make available
to the Premises electricity, water, gas, sewer service or any utility or service
whatsoever required by Tenant during the Term connection with the use, operation
or occupancy of the Premises. Tenant shall make all arrangements for and pay for
the consumption of all utilities and services furnished to or used in connection
with the Premises, including, without limitation, heating, ventilating and
air-conditioning, electricity, water, sewer, gas, telephone, security,
janitorial services and waste removal. Tenant hereby expressly waives any and
all claims against Landlord for compensation, damages, payments or offset based
upon or with respect to any and all loss or damage now or hereafter sustained by
Tenant by reason of any failure by Landlord or any other party to furnish,
supply or provide any service or utility furnished or supplied to or used by
Tenant or any other party in connection with the use, occupancy, maintenance, or
operation of the Premises or any part thereof.
ARTICLE 7
USE
7.1. Subject to the Senior Interest, Tenant shall use the
Premises only for such uses, and in such manner of use, as is expressly
permitted by Legal Requirements (the "PERMITTED USE").
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ARTICLE 8
NON-LIABILITY, INDEMNITY
8.1. From and after the date hereof, Tenant shall protect,
indemnify, defend and hold harmless Landlord, its directors, shareholders,
members, managers, officers, partners, agents, contractors, servants, licensees,
employees or invitees (collectively, "LANDLORD INDEMNIFIED PARTIES") from and
against any and all claims, losses, liabilities, damages, costs and expenses
including, without limitation, reasonable attorneys' fees and disbursements
(collectively, "CLAIMS") arising from (i) the use, conduct or maintenance of the
Premises or any business therein or any work or thing whatsoever done, or any
condition created in or about the Premises during the Term, (ii) any negligent
or otherwise wrongful act or omission of Tenant or any of its agents,
contractors, servants, licensees, employees or invitees, (iii) any failure of
Tenant to perform or comply with any or all of the provisions of this Lease;
provided, however, Tenant's foregoing indemnification shall not extend to any
claims to the extent caused by the fraud, gross negligence or willful misconduct
of Landlord, its agents, contractors, servants, licensees, employees or
invitees, unless such acts are covered under insurance required to be maintained
by Tenant hereunder, it being agreed that from and after the date hereof,
Landlord shall protect, indemnify, defend and hold harmless Tenant, its
directors, shareholders, members, managers, officers, partners, agents,
contractors, servants, licensees, employers or invitees for claims with respect
to the Premises arising as a result of Landlord's fraud, gross negligence or
willful misconduct, or the fraud, negligence or wilful misconduct by Landlord's
agents who enter upon the Premises at Landlord's direction. In case any action
or proceeding is brought against Landlord or any other Landlord Indemnified
Parties by reason of any Claims, Tenant, upon notice from Landlord, shall defend
such action or proceeding by counsel chosen by Tenant, who shall be reasonably
satisfactory to Landlord. Tenant or its counsel shall keep Landlord fully
apprised at all times of the status of such defense and shall not settle same
without the written consent of Landlord, unless such settlement has no impact
publicly, privately or economically on Landlord Indemnified Parties as part of
any such settlement.
8.2. From and after the date hereof, Tenant shall protect,
indemnify, defend and hold harmless Landlord Indemnified Parties, which arise
out of or relate in any way to any use, handling, production, transportation,
disposal or storage of any Hazardous Materials in or on the Land and/or the
Improvements at any time during the Term and the surrender of the Premises by
Tenant, whether by Tenant or any other person directly or indirectly arising out
of the use, generation, storage or disposal of Hazardous Materials by Tenant or
any person on or about the Land and/or the Improvements including, without
limitation, Hazardous Materials in, on, under or about the Land as of the date
hereof and the costs of any required or necessary repair, cleanup, or
detoxification of the Land and/or the Premises and the preparation of any
closure or other required plans; provided, however, Tenant shall not indemnify
Landlord for Landlord's intentional acts which create additional liability for
Tenant hereunder. All such Claims shall constitute Additional Rent owing from
Tenant to Landlord hereunder and shall be due and payable from time to time
immediately upon Landlord's request, as incurred. Tenant
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understands and agrees that its liability to the Landlord Indemnified Parties
shall arise upon the discovery of any such Hazardous Materials on, under or
about the Land and/or the Premises, and not upon the realization or claim of
loss or damage. The indemnity provided in this Section 9.2 shall survive the
Expiration Date or sooner termination of this Lease.
ARTICLE 9
ALTERATIONS AND INSTALLATIONS
9.1. (a) Tenant shall not make any repairs, alterations,
installations, additions or improvements in or to the Premises (collectively or
individually, "TENANT'S CHANGES") without first obtaining the written consent of
one or more Senior Interest Holders, if, and to the extent, required under the
documents evidencing the Senior Interests (all other such Tenant Changes,
"CONSENT REQUIRED CHANGES"), provided, however, Tenant shall have received
copies of all such Senior Interests .
(b) Tenant shall simultaneously deliver any such documents to
Senior Interest Holder and Landlord with respect to any Tenant's Changes for
which the consent of, or notice to any Senior Interest Holder is required.
Tenant shall pay all costs and expenses relating to any Tenant's Changes and
shall cause same to be performed and completed in accordance with the terms,
covenants, conditions, provisions and agreements of this Lease.
(c) Consent Required Changes shall be effected in a good and
workerlike manner in accordance with plans and specifications first approved in
writing by such Senior Interest Holder. Tenant shall reimburse Landlord promptly
upon demand for any costs and expenses actually and reasonably incurred by
Landlord in connection with Landlord's and any Senior Interest Holder's review
of such Tenant's plans and specifications.
(d) Upon receipt of any Senior Interest Holder's objections to
any Consent Required Changes, Tenant shall promptly submit revised plans and
specifications addressing such Senior Interest Holder's objections. This process
of revision and review shall continue until a full and complete set of plans and
specifications for any subsequent Consent Required Changes are approved by any
such Senior Interest Holders.
9.2. Prior to commencement of Tenant's Changes, Tenant shall
obtain and deliver to Landlord the following:
(a) all required permits and authorizations of governmental
agencies having jurisdiction;
(b) worker's compensation insurance covering all persons
employed for such work;
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(c) reasonable comprehensive general liability and property
damage insurance naming Landlord, its designees and Tenant as insureds, with
coverage of at least $5,000,000 single limit; and
(d) any other insurance which Landlord may reasonably request.
9.3. All Tenant's Changes shall be performed in accordance
with the following provisions:
(a) All work shall be done in a good and workerlike manner;
(b) All Tenant's Changes shall be effected and maintained in
compliance with Legal Requirements;
(c) Tenant shall keep the Premises and the Land free and clear
of all liens for any work or material furnished claimed to have been furnished
to Tenant or to the Premises on Tenant's behalf;
(d) Tenant's Changes shall be subject to inspection by
representatives of Landlord, and such representatives shall be permitted access
and the opportunity to inspect same (during the progress thereof and following
completion) at all reasonable times, but this provision shall not in any way
whatsoever (i) create any obligation on Landlord to conduct such an inspection
or (ii) any warranty on Landlord's part that any Tenant's Changes have in fact
been completed within the requirements of this Section 10.3;
(e) In connection with Tenant's Changes, Landlord shall not be
liable for any labor or materials furnished or to be furnished to Tenant upon
credit, and no mechanic's or other lien for any such labor or materials shall
attach to or affect the reversion or other estate or interest of Landlord in and
to the Premises. Landlord may elect to record and post notices of
non-responsibility in connection with Tenant's Changes; and
(f) Promptly following completion of any Tenant's Changes,
Tenant, at Tenant's expense, shall obtain (to the extent required by Legal
Requirements) certificates of final approval of such Tenant's Changes and lien
waivers with respect thereto and shall furnish Landlord with copies thereof,
together with the "as-built" plans and specifications for such Tenant's Changes.
9.4. Any mechanic's lien filed against the Premises or the
Land for work claimed to have been done for or materials claimed to have been
furnished to Tenant shall be discharged by Tenant at its expense within thirty
(30) days after Tenant receives notice of such filing, by payment, filing of the
bond required by law or otherwise, and Tenant shall provide satisfactory proof
of such discharge to Landlord. In default thereof, Landlord may discharge any
such mechanic's lien, by bond or payment, or otherwise, and the cost thereof
shall be paid by Tenant to Landlord upon demand as Additional Rent. Notice is
hereby given that Landlord
8
shall not be liable for any labor or materials furnished or to be furnished to
Tenant upon credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the reversion or other estate or interest of
Landlord in Improvements and to the Land or the Premises.
9.5. In the event any notice of violation of any Legal
Requirement is placed against the Premises arising out of or relating to any
Tenant's Changes, it shall be cured by Tenant as soon as reasonably possible
using diligent efforts to effect such cure, but in no event later than the first
day that Landlord, Tenant, or the Premises would be subject to lien, fine,
penalty or forfeiture/foreclosure as a result of such violation after Tenant has
actual knowledge of such violation. In default thereof, Landlord reserves the
right to cure the same by whatever action may be necessary including, without
limitation, the removal of all or any part of the Tenant's Change involved, and
the cost thereof shall be paid by Tenant to Landlord upon demand.
9.6. All alterations, installations, additions and
improvements made and installed by Landlord, if any, shall be the property of
Landlord and shall remain upon and be surrendered with the Premises as a part
thereof at the end of the term of this Lease.
9.7. Subject to the provisions of Section 10.8 hereof, all
Tenant's Changes upon or in the Premises which are of a permanent nature and
which cannot be removed without material damage to the Premises shall become and
be the property of Landlord, and shall remain upon and be surrendered with the
Premises as a part thereof at the end of the term of this Lease.
9.8. Notwithstanding anything to the contrary contained above,
where furnished solely by or at the expense of Tenant, all furniture,
furnishings and trade fixtures, and any other movable property ("TENANT'S
PERSONAL PROPERTY") shall remain the property of Tenant and, provided no Event
of Default exists hereunder, Tenant may at its option remove all or any part
thereof at any time prior to the expiration of the term of this Lease and Tenant
shall repair and restore in a good and workerlike manner to good condition any
damage to the Premises caused by any such removal. In case Tenant shall decide
not to remove any part of Tenant's Personal Property, Tenant shall notify
Landlord in writing not less than three (3) months, nor more than six (6)
months, prior to the expiration of the term of this Lease, specifying the items
of property which it has decided not to remove. If, within sixty (60) days after
the service of such notice, Landlord shall request Tenant to remove any of
Tenant's Personal Property, then Tenant shall, at its expense, remove the same
in accordance with such request. As to such Tenant's Personal Property which
Landlord does not request Tenant to remove, the same shall be, if left by
Tenant, deemed abandoned by Tenant and thereupon the same shall become the
property of Landlord.
9.9. If any removal of Tenant's Personal Property is requested
by Landlord as provided above and such Tenant's Property is not removed on or
prior to the Expiration Date, Landlord shall have the right, subject to any
Legal Requirements, to remove Tenant's
9
Personal Property and to dispose of the same without accountability to Tenant
and at the sole cost and expense of Tenant. In case of any damage to the
Premises resulting from the removal of Tenant's Personal Property, except to the
extent any such damage results solely from Landlord's failure to exercise
reasonable care in connection with any such removal, Tenant shall reimburse
Landlord for Landlord's cost in repairing such material damage. Tenant's
obligation to make such payment shall survive the Expiration Date.
9.10. No approval by Landlord of any Tenant's Changes shall be
deemed (x) an agreement by Landlord that such Tenant's Changes comply with Legal
Requirements, insurance requirements or the certificate of occupancy for the
Premises or (y) a waiver by Landlord of compliance by Tenant with any of the
terms and conditions set forth in this Lease.
ARTICLE 10
MAINTENANCE AND REPAIR
10.1. (a) Tenant agrees that, at its sole cost and expense, it
will keep and maintain the Premises in first class condition and in good repair
and appearance during the continuance of this Lease, and will with reasonable
promptness make all foreseen and unforeseen, and ordinary and extraordinary
changes, repairs and replacements including, without limitation, capital
improvements, of every kind and nature which may be required to be made upon or
in connection with the Premises or any part thereof in order to keep and
maintain the same in such condition, repair and appearance. All replacements and
repairs made by Tenant shall be paid for in full by Tenant and be free and clear
of liens and encumbrances.
(b) Landlord shall not be required to maintain, repair
or rebuild, or to make any alterations, replacements or restorations of any
nature or description to the Premises or any part thereof, whether ordinary or
extraordinary, structural or nonstructural, foreseen or unforeseen, or to
maintain the Premises or any part thereof in any way, and Tenant hereby
expressly waives any right to make repairs at the expense of Landlord which may
be provided for in California Civil Code Sections 1941 and 1942 or any similar
statute or law which may hereafter be enacted.
ARTICLE 11
REQUIREMENTS OF LAW
11.1. Tenant, at its own cost and expense, shall comply with
all Legal Requirements with respect to the Premises and the use and occupation
thereof. Tenant shall give prompt notice to Landlord of any notice it receives
of any violation of Legal Requirements. Tenant acknowledges and agrees that
Tenant shall be responsible for compliance with all Legal Requirements relating
to handicapped person's access to the Premises and within the Premises
including, without limitation, compliance with ADA.
10
11.2. Tenant, at its own cost and expense, in its name and/or
(whenever necessary and, in such event, with Landlord's prior written approval)
Landlord's name, may contest, in any manner permitted by any Legal Requirement
(including appeals to a court, or governmental department or authority having
jurisdiction in the matter), the validity or the enforcement of any Legal
Requirement with which Tenant is required to comply pursuant to this Lease, and
may defer compliance therewith provided that:
(a) such noncompliance shall not subject Landlord or any
Senior Interest Holder to criminal prosecution or subject the Land and/or
Improvements to lien or sale or adversely affect the financeability or
insurability of the Improvements;
(b) such noncompliance shall not be in violation of any Senior
Interest; and
(c) Tenant shall promptly and diligently prosecute such
contest and keep Landlord advised at all times as to the status of such contest.
Landlord, without liability to it and at Tenant's expense
(including, without limitation, the payment of reasonable attorneys' fees and
disbursements incurred by Landlord), shall cooperate with Tenant and execute any
documents or pleadings required for such purpose, provided that Landlord shall
reasonably be satisfied that the facts set forth in any such documents or
pleadings are accurate. Tenant shall indemnify and hold harmless Landlord from
any loss, cost, damage, expense, fine, penalty or other fee (including, without
limitation, reasonable attorneys' fees and disbursements) incurred or suffered
by Landlord as a result of Tenant's contest as permitted under this Section
12.2.
11.3. Notwithstanding anything to the contrary contained
herein, it is agreed and acknowledged that if any change in Legal Requirements
occurs and such change materially and adversely affects Tenant's use of the
Premises and (i) no Event of Default shall have occurred and be continuing
hereunder, (ii) the estimated restoration cost to same shall be in excess of 25%
of the then fair market value of the Premises (excluding the value of the Land)
(a "MAJOR LEGAL REQUIREMENT") (iii) such Major Legal Requirement occurs during
the last year of the Term hereof (taking into account any exercised Extension
Terms), then Tenant shall thereupon have the option of canceling and terminating
this Lease by written notice ("TERMINATION NOTICE") delivered to Landlord within
thirty (30) days after Tenant receives notice (actual or constructive of such
change in Legal Requirements). If Tenant elects to cancel and terminate this
Lease in accordance with the foregoing option, then Tenant shall not be
obligated to restore, rebuild or repair the Improvements, Rent shall be
apportioned as of the date of the Termination Notice and (the "LEGAL REQUIREMENT
TERMINATION DATE"), subject to the terms and provisions of this Lease, the (a)
insurance proceeds payable to Tenant as a result of such damage or destruction
of the Improvements (excluding business interruption insurance) shall be paid to
Landlord and any Senior Interest Holders, as their respective interests may
appear and (b) on the date Tenant delivers the Termination Notice to Landlord
pursuant to this Section, Tenant shall pay to Landlord a sum equal to the
Prepayment Premium plus a sum
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("FUTURE RENT") which at the time of such termination of this Lease represents
the then value (using a discount rate equal to the sum of (x) the then current
rate of interest paid on United States Treasury Obligations selected by Landlord
with a maturity comparable to the Expiration Date plus (y) 150 basis points
(1.5%)) of the aggregate of the Rent (excluding the cost of any such Major Legal
Requirement) payable hereunder which would have been payable by Tenant for the
period commencing on the Legal Requirement Termination Date and ending on the
Expiration Date (taking into account only exercised Extension Terms).
ARTICLE 12
ASSIGNMENT AND SUBSUBLETTING
12.1. Tenant shall not (a) assign or otherwise transfer this
Lease or the term and estate hereby granted, (b) sublet (or subsublet as the
case may be) the Premises or any part thereof or allow the same to be sublet,
except that, Tenant may sublet (or subsublet as the case may be) less than 20%
of the space within the Improvements to be used or occupied by others without
Landlord's prior consent for any Permitted Use or (c) mortgage, pledge or
encumber this Lease or the Premises or any part thereof in any manner by reason
of any act or omission on the part of Tenant, except as otherwise expressly
provided in this Article 13 or with the prior written consent of Landlord, which
consent may be withheld in its sole and absolute discretion.
12.2. (a) Subject to the exceptions set forth in subsection
13.2(b) below, for purposes of this Article 13, (i) the transfer of a majority
of the issued and outstanding capital stock of any corporate tenant, or of a
corporate subtenant, or the transfer of a majority of the total interest in any
partnership tenant or subtenant, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions, or the creation
of new stock by which an aggregate of fifty (50%) percent or more of Tenant's
stock shall be vested in a party or parties who are nonstockholders as of the
date hereof, shall be deemed an assignment of this Lease, or of such Lease, as
the case may be, except that the transfer of the outstanding capital stock of
any corporate tenant, or subtenant, shall be deemed not to include the sale of
such stock by persons or parties through the "over-the-counter market" or
through any recognized stock exchange, other than those deemed "INSIDERS" within
the meaning of the Securities Exchange Act of 1934, as amended, (ii) a takeover
agreement shall be deemed a transfer of this Lease, (iii) any person or legal
representative of Tenant to whom Tenant's interest under this Lease passes by
operation of law, or otherwise, shall be bound by the provisions of this Article
13, and (iv) a material modification, material amendment or extension of the
term of a Lease shall be deemed a subsublease subject to the provisions of this
Article 13.
(b) Notwithstanding anything to the contrary set forth above,
Tenant may, subject to the terms and conditions hereinafter set forth, without
the consent of, but upon not less than thirty (30) days prior notice to,
Landlord, assign its interest in this Lease or subsublet all or a portion of the
Premises (i) to any partnership, corporation or other entity which is a
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successor to Tenant by either merger or consolidation, (ii) to a purchaser of
all or substantially all of Tenant's assets, or (iii) to any partnership,
corporation or other entity which shall (A) control, (B) be under the control
of, or (C) be under common control with, Tenant (the term "CONTROL" as used
herein shall be deemed to mean ownership of more than fifty (50%) percent of the
outstanding voting stock of a corporation, or other majority equity and
controlling interest if Tenant is not a corporation) provided in each of the
aforementioned events each such entity has a liquid net worth equal to the
product obtained by multiplying five (5) times an amount equal to the sum of the
annual Base Rent plus all Additional Rent due or to become due in respect of the
Calendar Year in which such assignment occurs ("MINIMUM NET WORTH") (any such
entity referred to in clause (iii) above being a "RELATED ENTITY"). Each of the
entities referred to in clauses (i) through (iii) above shall be a "PERMITTED
ASSIGNEE".
(c) Any assignment or subletting (or subsubletting as the case
may be) described in subsection 13.2(b) may only be made upon the condition that
(i) the principal purpose of such assignment or sublease (or subsublease as the
case may be) is not the acquisition of Tenant's interest in this Lease (except
if such assignment or sublease (or subsublease as the case may be) is made to a
Related Entity and is made for a valid intracorporate business purpose and is
not made to circumvent the provisions of this Article 13) and (ii) any such
assignee or tenant (or subsubtenant as the case may be) shall continue to use
the Premises for the conduct of a business in full compliance with the terms,
covenants and conditions of this Lease. Tenant shall within two (2) days after
an assignment or sublease (or subsublease as the case may be) is executed, as
the case may be, deliver to Landlord a copy of such assignment or sublease (or
subsublease as the case may be). No subsubletting or assignment made pursuant to
subsection 13.2(b) shall release Tenant from its obligations under this Lease.
12.3. Tenant covenants that, notwithstanding any assignment or
transfer, whether or not in violation of the provisions of this Lease, and
notwithstanding the acceptance of Rent by Landlord from an assignee or
transferee or any other party, Tenant shall remain fully and primarily liable
for the payment of the Rent due and to become due under this Lease and for the
performance of all of the covenants, agreements, terms, provisions and
conditions of this Lease on the part of Tenant to be performed or observed.
12.4. The liability of Tenant for the due performance by
Tenant of the obligations on its part to be performed under this Lease shall not
be discharged, released or impaired in any respect by an agreement or
stipulation made by Landlord or any grantee or assignee of Landlord, by way of
mortgage or otherwise, extending the time of or modifying any of the obligations
contained in this Lease, or by any waiver or failure of Landlord to enforce any
of the obligations on Tenant's part to be performed under this Lease, and Tenant
shall continue to be liable hereunder. If any such agreement or modification
operates to increase the obligations of a tenant under this Lease, the liability
under this Section 13.4 of the Tenant named in this Lease or any of its
successors in interest (unless such party shall have expressly consented in
writing to such agreement or modification), shall continue as if such
13
agreement or modification had not been made. To charge Tenant named in this
Lease and its successors in interest, no demand or notice of any default shall
be required in connection with any default under this Lease; Tenant and each of
its successors in interest hereby expressly waives any such demand or notice.
12.5. Notwithstanding any sublease (or subsublease as the case
may be) or assignment, the named Tenant herein shall remain fully and primarily
liable for the payment of Base Rent and Additional Rent, and for all other
obligations of this Lease on the part of Tenant to be performed or observed. In
the event that Tenant defaults in the payment of any Rent, Landlord is
authorized to collect any rents due or accruing from any subsubtenant or other
occupant of the Premises and to apply the net amounts collected to the Rent
reserved herein, and the receipt of any such amounts by Landlord from subtenant
(or subsubtenant as the case may be), or other occupant of any part of the
Premises, shall not be deemed or construed as releasing Tenant from Tenant's
obligations hereunder or the acceptance of that party as a direct tenant.
12.6. In each subletting (or subsubletting as the case may be)
permitted by this Article 13, Tenant shall include, or cause to be included, in
the sublease (or subsublease as the case may be) a provision prohibiting the
assignment of the sublease (or subsublease as the case may be) or subletting (or
subsubletting as the case may be) thereunder. If such sublease (or subsublease
as the case may be) is assigned or further subsublet except in case of a further
sublease (or subsublease as the case may be) or assignment of sublease (or
subsublease as the case may be) under subsection 13.2(b) where Landlord's prior
consent is not required, Tenant shall immediately terminate such sublease (or
subsublease as the case may be), or arrange for the termination thereof, and
proceed expeditiously to have the occupant thereunder dispossessed.
12.7. Any person or legal representative of Tenant to whom
Tenant's interest under this Lease passes by operation of law, or otherwise,
shall be bound by the provisions of this Article 13.
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ARTICLE 13
MORTGAGES OF TENANT'S INTEREST
13.1. (a) Subject to the limitations of this Section, Tenant
shall have the right to mortgage and pledge its interest in and to this Lease
after the Commencement Date provided and on condition that (i) Tenant has
obtained the consent of Landlord and Senior Interest Holders if, and to the
extent, required pursuant to the documents evidencing the Senior Interests, as
the case may be and (ii) any such mortgage or pledge shall be given to an
Authorized Institution ("AUTHORIZED HOLDER"). Any such mortgage or pledge shall
be subject and subordinate to the rights of Landlord hereunder and to the lien
and priority of the Senior Interest Holders and Tenant and the holder of any
mortgage or pledge of Tenant's Interest in this Lease shall execute and deliver
such documentation as Landlord and the Senior Interests Holders shall reasonably
require evidencing such subordination and the provisions of this Article 14.
Landlord shall not be obligated to recognize a holder of any such mortgage or
pledge, nor shall any such holder be entitled to any of the rights granted to an
Authorized Holder in this Section 14, unless such holder shall be an Authorized
Institution.
(b) No Authorized Holder of a mortgage on this Lease shall
have the rights or benefits mentioned in this Article 14, nor shall the
provisions of said Article be binding upon Landlord, unless and until an
executed counterpart of such leasehold mortgage or a copy certified by the
holder of the mortgage or by the recording officer to be true, shall have been
delivered to Landlord, together with a certified copy of all other ancillary or
security documents evidencing, securing or otherwise related to such leasehold
financing ("LEASEHOLD FINANCING DOCUMENTS").
(c) Tenant and/or the Authorized Holder of such mortgage shall
send to Landlord an executed counterpart of any amendment, modification or
extension of such leasehold mortgage or any other Leasehold Financing Documents
promptly after the same is executed, it being expressly understood and agreed
that Tenant shall have obtained the consent of the Senior Interest Holders with
respect to any such amendment, modification or extension, if, and to the extent,
required pursuant to the documents evidencing the Senior Interests, as the case
may be.
(d) If, in connection with the financing of the Land, the
Improvements or the interest of the Tenant under this Lease, or if in connection
with the entering into of a ground or underlying lease, any lending institution
or Tenant shall request reasonable modifications of this Lease that do not
increase Landlord's monetary terms under this Lease, or diminish the rights, or
increase the other obligations of Landlord under this Lease by more than a de
minimis amount, Landlord shall consent to such modifications.
15
13.2. If Tenant shall mortgage this Lease in compliance with
the provisions of this Article 14, then so long as any such mortgage shall
remain unsatisfied of record, the following provisions shall apply:
(a) Landlord, upon serving upon Tenant any notice of default
pursuant to the provisions of Article 18 hereof shall also serve a copy of such
notice upon the Authorized Holder of such mortgage, at the address provided for
in subsection (e) of this Section, and as to such Authorized Holder only, no
notice by Landlord to Tenant hereunder shall be deemed to have been duly given
unless and until a copy thereof has been so served.
(b) Any Authorized Holder of such mortgage, in case Tenant
shall be in default hereunder, shall, within the period set forth herein to cure
such default and otherwise as herein provided, have the right to remedy such
default, or cause the same to be remedied, and Landlord shall accept such
performance by or at the instance of such Authorized Holder as if the same had
been made by Tenant.
(c) Anything herein contained to the contrary notwithstanding,
upon the occurrence of an Event of Default, other than an Event of Default which
can be cured by payment of money and/or without taking possession of the
Premises, Landlord shall take no action to effect a termination of this Lease
without first giving to the Authorized Holder of such mortgage written notice
thereof and a reasonable time thereafter within which either to obtain
possession of the mortgaged property (including possession by a receiver) or to
institute, prosecute and complete foreclosure proceedings or otherwise acquire
Tenant's interest under this Lease with diligence; provided, however, that such
Authorized Holder shall promptly deliver to Landlord a valid, legal and binding
written undertaking by such Authorized Holder to cure such default and to
indemnify, defend and hold harmless Landlord Indemnified Parties susceptible of
being cured from and against all Claims actually or allegedly arising from or in
connection with such Event of Default and Landlord's forbearing from terminating
this Lease as aforesaid; provided, further, however, that:
(i) such forbearance shall not subject Landlord to criminal
prosecution or subject all or any portion of the Improvements to lien
or sale (without limiting the application of the above Landlord shall
be deemed subject to prosecution for a crime if Landlord, or its
managing agent, if any, or any officer, director, partner, shareholder,
member, manager or employee of Landlord or its managing agent as an
individual, is charged with a crime of any kind or degree whatsoever,
whether by summons or otherwise);
(ii) such forbearance shall not be in violation or result in
a violation of, or default under, any Senior Interest or Legal
Requirement
(iii) such Authorized Holder shall promptly, diligently and
continuously prosecute the cure of such Event of Default; and
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(iv) such Authorized Holder upon obtaining possession or
acquiring Tenant's interest under this Lease shall be required promptly
to cure all defaults then susceptible of being cured; provided,
however, that: (A) such Authorized Holder shall not be obligated to
continue such possession or to continue such foreclosure proceedings
after such defaults shall have been cured; (B) nothing herein contained
shall preclude Landlord, subject to the provisions of this Article 14,
from exercising any rights or remedies under this Lease with respect to
the occurrence of any other Event of Default during the pendency of
such foreclosure; proceedings; (C) such Authorized Holder shall agree
with Landlord in writing to comply during the period of such
forbearance with such of the terms, conditions and covenants of this
Lease as are susceptible of being complied with by such Authorized
Holder. Any default by Tenant not susceptible of being cured by such
Authorized Holder shall be deemed to have been waived by Landlord upon
completion of such foreclosure proceedings or upon such acquisition of
Tenant's interest in this Lease by such Authorized Holder, except that
any of such Events of Default which are reasonably susceptible of being
cured after such completion and/or acquisition shall then be cured with
reasonable diligence. It is understood and agreed that such Authorized
Holder, or its designee, or any purchaser in foreclosure proceedings
(including, without limitation, a corporation formed by such Authorized
Holder) may become the legal owner and Authorized Holder of this Lease
through such foreclosure proceedings or by assignment of this Lease in
lieu of foreclosure; provided, however, that such legal owner and
Authorized Holder shall within a reasonable period of time after
acquiring possession, not to exceed thirty (30) days in the aggregate,
assign the leasehold interest created by this Lease to an entity which
is a Permitted Assignee under Article 13 hereof.
(d) In the event of the termination of this Lease prior to the
expiration of the Term, whether by summary proceedings to dispossess, service of
notice to terminate, or otherwise, due to an Event of Default as referred to in
Article 18 hereof, Landlord shall serve upon an Authorized Holder of such
mortgage written notice that this Lease has been terminated together with a
statement of any and all sums which would at that time be due under this Lease
but for such termination, and of all other Events of Default, if any, under this
Lease then known to Landlord. Such holder shall thereupon have the option to
obtain a new lease in accordance with and upon the following terms and
conditions:
Upon the written request of the holder of such mortgage, within thirty
(30) days after service of such notice that this Lease has been
terminated, Landlord shall enter into a new lease of the Premises with
such holder, or its designee, as follows:
Such new lease shall be entered into at the cost (including,
without limitation, reasonable attorneys' fees, disbursements
and expenses and any real estate transfer or transfer gains
taxes
17
imposed, primarily or secondarily, on Landlord, or any Senior
Interest Holder by reason of such termination and/or the
granting of such new lease) of the tenant thereunder, shall be
effective as of the date of termination of this Lease, and
shall be for the remainder of the Term and at the Rent and
upon all the agreements, terms, covenants and conditions
contained in this Lease, including any applicable rights of
renewal. Such new lease shall require the tenant to perform
any unfulfilled obligation of Tenant under this Lease which is
susceptible of being performed by such tenant including,
without limitation, curing any default which can be cured by
the payment of a liquidated sum of money. Such new lease shall
provide that there shall be no liability on the part of
Landlord for any holdover by Tenant. Upon the execution of
such new lease, the tenant named therein shall pay any and all
sums which would at the time of the execution thereof be due
under this Lease but for such termination and shall pay all
expenses including, without limitation, (i) reasonable
attorneys' fees, court costs and disbursements and expenses
and any real estate transfer or transfer gains taxes imposed,
primarily or secondarily, on Landlord, or any Senior Interest
Holder by reason of such termination and/or the granting of
such new lease and (ii) any
18
costs and expenses incurred by Landlord in connection with
such defaults and termination, the recovery of possession of
the Premises, and the preparation, execution and delivery of
such new lease.
(e) Any notice or other communication which Landlord shall
desire or be required to give to or serve upon any Authorized Holder of a
mortgage on this Lease shall be in writing and shall be served by certified
mail, return receipt requested, addressed to such Authorized Holder at its
address as set forth in such mortgage, or in the last assignment thereof
delivered to Landlord pursuant to Section 22.1 hereof or at such other address
as shall be designated by such Authorized Holder by notice in writing given to
Landlord by certified mail.
(f) Any notice or other communication which any Authorized
Holder of a mortgage on this Lease shall desire or is required to give to or
serve upon Landlord shall be deemed to have been duly given or served on the
date of first attempted delivery if sent by certified mail addressed to Landlord
at Landlord's addresses as shall be designated by Landlord by notice in writing
given to such Authorized Holder by certified mail, return receipt requested, and
shall be deemed given the date of first attempted delivery.
(g) To the extent not otherwise provided for in this Section
14.2, each such notice and communication provided for under this Section 14.2
shall be governed by Section 22.1 hereof.
13.3. (a) If any Authorized Holder of a leasehold mortgage of
this Lease or its designee shall acquire title to Tenant's interest in this
Lease, by foreclosure of a mortgage thereon or by assignment in lieu of
foreclosure or by an assignment from a nominee or wholly-owned subsidiary
corporation of such mortgagee or its designee, or under a new lease pursuant to
this Article 14, such mortgagee may assign such lease, and notwithstanding
anything contained in Article 13 hereof, shall thereupon be released from all
liability for the performance or observance of the covenants and conditions in
such lease contained on Tenant's part to be performed and observed from and
after the date of such assignment, provided and on condition that (i) the
assignee from such mortgagee shall have assumed such lease in accordance with
subsection 13.5(a)(iv)(C) hereof and shall have complied with subsection 13.5(a)
hereof and (ii) such assignee has a net worth computed in accordance with
generally accepted accounting principles consistently applied at least equal to
the Minimum Net Worth, and has delivered evidence reasonably satisfactory to
Landlord that such net worth criteria has been satisfied.
(b) If any leasehold mortgagee is released from liability by
virtue of the provisions of clauses (i) and (ii) of subsection 14.3(a) hereof,
no exercise of any extension
19
right by the then holder of the leasehold estate under this Lease or any new
lease shall be effective unless at the time of such exercise such holder has a
net worth at least equal to the Minimum Net Worth, and has delivered evidence
reasonably satisfactory to Landlord that such net worth criteria has been
satisfied.
ARTICLE 14
INSURANCE
14.1. Insurance. (1) Tenant will at all times maintain
insurance on the Premises of the following character:
(a insurance against loss or damage by fire, lightning,
windstorm, hail, explosion, aircraft, smoke, vandalism, malicious
mischief, vehicle damage and other risks from time to time included
under "extended coverage" policies and such other risks as are or shall
customarily be insured against with respect to property that is similar
to the Premises, in amounts sufficient to prevent Landlord or Tenant
from becoming a co-insurer of any loss under the applicable policies,
but in any event in amounts not less than the full insurable value of
the Premises (the term "full insurable value", as used herein, means
"actual replacement value", less foundations, footings and excavations,
but which may include provisions for deductibles or uninsured loss not
to exceed $10,000 per occurrence);
(b general public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Premises (and if applicable law, regulation or ordinance creates
liability for a property owner for injuries occurring on adjoining
streets, sidewalks and passageways, such insurance shall cover the
adjoining streets, sidewalks and passageways), such insurance to afford
protection to Landlord of not less than a combined single limit
coverage of $10,000,000 per occurrence;
(c workmen's compensation insurance covering all persons
employed in connection with any work done on or about the Premises in
connection with which claims for death or bodily injury could be
asserted against Landlord, Tenant or the Premises; and
(d such other insurance on the Premises as Landlord and the
Senior Interest Holder may from time to time reasonably require to
protect Landlord, Tenant and/or the Premises in such amounts and
against such other insurable hazards which at the time are commonly
obtained in the case of property similar to the Premises, and similarly
located.
Such insurance shall be written by companies of recognized financial standing
having a Best rating of A VII or better reasonably acceptable to Landlord, which
are authorized to do an insurance business in the State of California and such
insurance shall be in a form reasonably
20
acceptable to Landlord and shall name as the insured parties thereunder
Landlord, the Senior Interest Holder, and Tenant, as their interests may appear.
Tenant may, at its option, provide for the foregoing insurance coverage by the
use of a "blanket" policy covering Tenant's interest in other properties in
addition to the Premises, provided that the Premises are separately described
and scheduled in said "blanket" policy and certificates of coverage thereunder
with respect to, and listing, the Leased Premises are delivered as provided in
subparagraph (c), below. Landlord shall not be required to prosecute any claim
against any insurer or to contest any settlement proposed by any insurer;
provided, however, that Tenant may, at its sole cost and expense, prosecute any
such claim or contest any such settlement, and in such event Tenant may bring
any such prosecution or contest in the name of Landlord, Tenant or both and
Landlord will join therein at Tenant's written request upon the receipt by
Landlord of an indemnity from Tenant against any and all costs, liabilities and
expenses in connection with such prosecution or contest.
14.2. Every such insurance policy referred to herein shall,
provided that Landlord has notified Tenant as to the identity of the mortgagee,
bear a first mortgagee endorsement in favor of the mortgagee and any replacement
mortgagee and any proceeds with respect to loss or damage to the Premises under
any such policy shall be made payable to the mortgagee and any replacement
mortgagee in the manner provided in paragraph 12. Every such policy shall
contain, to the extent obtainable, an agreement by the insurer that it will not
cancel such policy except after thirty (30) days' prior written notice to
Landlord and to the mortgagee, that such policy shall not be invalidated if any
insured thereunder shall waive in writing, prior to any loss, any or all rights
of recovery against any other party for losses covered by such policy and that
any loss otherwise payable thereunder shall be payable notwithstanding any act
or negligence of Landlord or Tenant which might, absent such agreement, result
in a forfeiture of all or a part of such insurance payment and notwithstanding
any foreclosure or other action or proceeding taken pursuant to any provision of
the mortgage by a mortgagee upon the happening of an event of default, as
defined therein.
14.3. Tenant shall deliver to Landlord promptly after the
execution and delivery of this Lease the original or duplicate policies or
certificates of the insurers evidencing all the insurance which is then required
to be maintained by Tenant hereunder, and Tenant shall, prior to the expiration
of any such insurance, but not more than thirty (30) days prior thereto, deliver
other original or duplicate policies or certificates of insurers evidencing the
renewal of such insurance. Should Tenant fail to effect, maintain or renew any
insurance provided for in this paragraph 15, or to pay the premium therefor, or
to deliver to Landlord any of such policies or certificates, then and in any of
said events Landlord, at its option, but without obligation so to do, may with
reasonable notice to Tenant procure such insurance, and any sums expended by it
to procure any such insurance shall be Additional Rent hereunder and shall be
repaid by Tenant within five (5) days after receipt of bills therefor from
Landlord.
14.4. Tenant shall not obtain or carry separate insurance
concurrent in form or contributing in the event of loss with that required in
this paragraph 15 to be furnished by Tenant unless Landlord is included therein
as a named insured, with loss payable as provided
21
in this Lease. Tenant shall immediately notify Landlord whenever any such
separate insurance is obtained and shall deliver the policy or policies or
certificates evidencing the same. So long as Tenant maintains the insurance
required in this paragraph 15, Landlord shall not obtain or carry separate
insurance on the Leased Premises concurrent in form or contributing in the event
of loss with that required in this paragraph 15.
14.5. Any proceeds received by Landlord under the insurance
policies referred to in clauses (i) and (iv) of paragraph 15.1(a) shall be held
in trust by Landlord or held by any such Senior Interest Holder until disposed
of in accordance with paragraph 15.
ARTICLE 15
DAMAGE OR DESTRUCTION
15.1. In case of any damage to or destruction of the
Improvements or any part thereof, Tenant will promptly, but not more than ten
(10) days after the occurrence of any such damage or destruction, give written
notice thereof to Landlord describing with as much specificity as is reasonable
the nature and extent of such damage or destruction.
15.2. If the Improvements are partially or totally damaged or
destroyed, (a) Tenant shall have no right to terminate this Lease and this Lease
shall not be terminated by reason of such casualty and (b) Tenant's obligation
to pay Rent hereunder shall not abate.
15.3. In the event of any damage to or destruction of all or
any portion of the Improvements, Tenant covenants that, within a reasonable
period of time, Tenant shall commence and diligently and continuously pursue and
complete the restoration of the Improvements ("RESTORATION") to the condition it
was in prior to such damage or destruction, to the extent possible in accordance
with then applicable laws, subject to Force Majeure. All Restoration performed
by Tenant shall be in accordance with the procedures set forth herein relating
to Tenant's Changes.
15.4. Notwithstanding anything to the contrary contained
herein including, without limitation, Article 14 and this Article 16 hereof, it
is agreed and acknowledged that if any casualty occurs to the Premises and (i)
the estimated restoration cost to same shall be in excess of 25% of the then
fair market value of the Premises (excluding the value of the Land) (a "Major
Casualty") and (ii) such Major Casualty occurs during the last year of the Term
hereof, then Tenant shall thereupon have the option of canceling and terminating
this Lease by a Termination Notice given to Landlord within thirty (30) days
after such damage or destruction. If Tenant elects to cancel and terminate this
Lease in accordance with the foregoing option, Tenant shall be under not duty to
restore, rebuild or repair the Improvements, the Rent shall be apportioned as of
the date of the destruction and, subject to the terms and provisions of this
Lease, the (a) insurance proceeds payable to Tenant as a result of such damage
or destruction of the Improvements (excluding business interruption insurance)
shall be paid to Landlord and the Senior Interest Holder, as their interests may
appear and (b
22
on the date Tenant delivers the Termination Notice to Landlord pursuant to this
Section, Tenant shall pay to Landlord an amount equal to Future Rent which at
the time of such termination of this Lease represents the then value (using a
discount rate equal to the sum of (x) the then current rate of interest paid on
United States Treasury Obligations selected by Landlord with a maturity
comparable to the Expiration Date and (y) 150 basis points (1.5%)) of the
aggregate of the Rent payable hereunder which would have been payable by Tenant
for the period commencing with such earlier termination of this Lease and ending
with the Expiration Date, had this Lease not so terminated by Tenant pursuant to
this Section 16.4.
ARTICLE 16
CONDEMNATION
16.1. Subject to the provisions of this Section 17, Tenant
hereby irrevocably assigns to Landlord any award or payment to which it may be
or become entitled by reason of any taking of the Premises or any part thereof,
in or by condemnation or other eminent domain proceedings pursuant to any laws,
general or special, or by reason of the temporary requisition of the use or
occupancy of the Premises or any part thereof, by any governmental authority,
civil or military, whether the same shall be paid or payable in respect of
Tenant's leasehold interest hereunder or otherwise. Landlord shall be entitled
to participate fully in any such proceedings and Landlord's expenses shall be
paid to it out of the award. The award, net of such expenses, is hereinafter
called the "NET AWARD".
16.2. If during any term of this Lease the Premises shall be
permanently taken in their entirety in or by condemnation or other eminent
domain proceedings pursuant to any law, general or special, then this Lease
shall terminate upon the date Tenant shall be deprived of possession of the
Premises on account of such taking, without further obligation, except with
respect to obligations and liabilities of Tenant under this Lease, actual or
contingent, which have arisen with respect to the Premises prior to such date.
16.3. If during any term of this Lease any substantial portion
of the Premises shall be taken in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, which is sufficient to
render the remaining portion of the Premises unsuitable for Tenant's continued
use or occupancy even after restoration, then Tenant may, within sixty (60) days
after such taking, give notice to Landlord of its intention to terminate this
Lease not less than one hundred twenty (120) days after delivery of such notice.
No such termination shall release Tenant from any obligations and liabilities of
Tenant under this Lease, actual or contingent, which have arisen with respect to
the Premises prior to the date of such termination.
If Landlord shall dispute Tenant's determination that the
remaining portion of the Premises is unsuitable for Tenant's continued use or
occupancy even after restoration, Landlord shall so notify Tenant within thirty
(30) days after receipt of Tenant's notice to such
23
effect, and the dispute between the parties shall be resolved by arbitration
pursuant to Article 36, below.
If this Lease shall terminate pursuant to Section 17.2 above,
or this Section 17.3, then the entire award shall be retained by Landlord as its
sole property.
16.4. If (a) a portion of the Premises shall be taken during
any term of this Lease in or by condemnation or other eminent domain proceedings
pursuant to any law, general or special, which taking is not sufficient to
authorize Tenant to give notice of its intention to terminate this Lease as
provided in Section 17.3 above, or (b) the use or occupancy of the Premises or
any part thereof shall be temporarily requisitioned by any governmental
authority, civil or military, then this Lease shall continue in full force and
effect without abatement of any Base Rent, Additional Rent or other sums payable
by Tenant hereunder notwithstanding such taking or requisition, and Tenant
shall, promptly after any such taking or requisition and at its sole cost and
expense, repair any damage caused by any such taking or requisition in
conformity with the requirements of Section 16 so that after the completion of
such repairs the Premises shall be, as nearly as possible, in a condition as
good as and having a value as great as the condition and value thereof
immediately prior to such taking or requisition.
In the event of any such taking from time to time after the
commencement of any such repairing but not more often than once in any period of
thirty (30) calendar days, Tenant may by notice request that Landlord pay to
Tenant out of the Net Award an amount sufficient to reimburse Tenant for the
unreimbursed cost and expense of such repairing and, upon receipt by Landlord of
a certificate, dated currently and signed by an officer of Tenant setting forth
in reasonable detail the aggregate amount of such costs and expenses actually
incurred for the account of Tenant, and Tenant shall state therein that no event
of default has happened and is continuing hereunder, then Landlord shall pay to
Tenant out of the Net Award the amount so certified, less the amount of all
previous reimbursements made on account of such repairs. If the cost of any
repairs required to be made by Tenant pursuant to this Section 17.4 shall exceed
the Net Award, the deficiency shall be paid by Tenant. If there is a balance of
the Net Award remaining after final payment for such work of repair and in
excess of related administrative and legal fees, and the fair market value of
any land taken which constituted a portion of the Premises (which amount shall
be paid to Landlord), then such balance shall be retained by or paid to
Landlord. In the event of any temporary requisition, Tenant shall be entitled to
receive the entire Net Award payable by reason of such temporary requisition,
less any portion of the Net Award which may be determined to be payable to
Landlord on account of that period of such temporary requisition which extends
past the time Tenant is entitled to occupy the Premises.
ARTICLE 17
CREDITOR'S RIGHTS/EVENTS OF DEFAULT
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17.1. This Lease and the term and estate hereby granted by
this Lease are subject to the limitation that if (a) Tenant makes an assignment
of the property of Tenant for the benefit of creditors, or (b) Tenant files a
voluntary petition under any bankruptcy or insolvency law (either, a "CREDITOR'S
LAW"), or (c) an involuntary petition alleging an act of bankruptcy or
insolvency is filed against Tenant under a Creditor's Law, or (d) a petition is
filed by or against Tenant under the reorganization provisions of any Creditor's
Law, or (e) a petition is filed by Tenant under the arrangement provisions of
any Creditor's Law, or (f) a permanent receiver of Tenant of or for the property
of Tenant is appointed, then, in any of the aforementioned events Landlord may,
(i) if the event occurs with the consent or acquiescence of Tenant, at any time
after Landlord becomes aware or receives notice of the occurrence of any such
event, or (ii) if such event occurs without Tenant's consent or acquiescence, at
any time after the event continues for ninety (90) days, give Tenant a notice of
intention to end the term of this Lease at the expiration of five (5) days from
the date of service of Landlord's notice of intention, and upon expiration of
said five (5) day period, this Lease and the term and estate hereby granted,
whether or not the term shall theretofore have commenced, shall terminate with
the same effect as if that day were the Expiration Date, but Tenant shall remain
liable for damages as provided in Article 20 hereof.
17.2. If any of the following events (an "EVENT OF DEFAULT")
occurs, then Landlord may give to Tenant a notice of intention to end the term
of this Lease on the fifth (5th) day after the date of the service of such
notice of intention, and upon the expiration of said five (5) day period this
Lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
was the Expiration Date of this Lease, but Tenant shall remain liable for
damages as provided in Article 20 hereof:
(a if Tenant shall default in the payment of (i) any Base Rent
with such default continuing for three (3) days or (ii) Additional Rent, with
such default continuing for ten (10) days after notice of such non-payment or
incomplete payment, or
(b if Tenant shall, whether by action or inaction, be in
default of any of its obligations under this Lease, and such default shall
continue and not be remedied as soon as practicable and in any event within
thirty (30) days after Landlord shall have given to Tenant a notice specifying
the same, or, in the case of a default which cannot with due diligence be cured
within a period of thirty (30) days and the continuance of which for the period
required for cure will not (i) subject Landlord or any Senior Interest Holder to
prosecution for a crime or any other fine or charge, (ii) subject the Premises
or any part thereof or Land, or any part thereof, to being condemned or vacated,
(iii) subject the Improvements or Land, or any part thereof, to any lien or
encumbrance, or (iv) result in the termination of any Senior Interest. The
foregoing extended cure periods are subject to the following further conditions:
Tenant shall (A) within the aforementioned thirty (30) day period advise
Landlord of Tenant's intention to take all steps necessary to remedy such
default, (B) duly commence within said thirty (30) day period, and thereafter
diligently prosecute to completion all steps necessary to remedy the default and
(C) complete such remedy within a reasonable time after the date of
25
said notice to Landlord, provided that in no event shall such thirty (30) day
period be extended beyond the point which would (1) subject Landlord or any
Senior Interest Holder to prosecution for a crime or any other fine or charge,
(2) subject the Premises or any part thereof or Land, or any part thereof, to
being condemned or vacated, or (3) subject the Premises or Land, or any part
hereof, to any lien or encumbrance, or
(c if any event shall occur or any contingency shall arise
whereby this Lease or the estate hereby granted or the unexpired balance of the
term of this Lease would, by operation of law or otherwise, devolve upon or pass
to any person, firm or corporation other than Tenant, except as expressly
permitted by Article 13 hereof, or
(d if Tenant shall, whether by action or inaction, cause a
default under any Senior Interest (including, without limitation, the Fullerton
Lease), and such default shall continue for five (5) days after notice of such
default, or
(e Tenant shall not acquire the Landlord's Interest in and to
the Premises and Land in accordance with the terms as set forth in Article 40
hereof within sixty (60) days after Landlord shall deliver a Put Option Notice.
17.3. (a) If Tenant shall have assigned its interest in this
Lease, and this Lease shall thereafter be disaffirmed or rejected in any
proceeding under the United States Bankruptcy Code ("BANKRUPTCY CODE") or under
the provisions of any Federal, state or foreign law of like import, or in the
event of termination of this Lease by reason of any such proceeding, the
assignee or any of its predecessors in interest under this Lease, upon request
of Landlord given within ninety (90) days after such disaffirmance or rejection
shall (i) pay to Landlord all Rent then due and payable to Landlord under this
Lease to and including the date of such disaffirmance or rejection and (ii)
enter into a new lease as Tenant with Landlord of the Premises for a term
commencing on the effective date of such disaffirmance or rejection and ending
on the Expiration Date, unless sooner terminated as in such lease provided, at
the same Rent and upon the then executory terms, covenants and conditions as are
contained in this Lease, except that (A) the rights of the Tenant under the new
lease, shall be subject to any possessory rights of the assignee in question
under this Lease and any rights of persons claiming through or under such
assignee, (B) such new lease shall require all defaults existing under this
Lease to be cured by the Tenant with reasonable diligence, and (C) such new
lease shall require the Tenant to pay all Additional Rent which, had this Lease
not been disaffirmed or rejected, would have become due after the effective date
of such disaffirmance or rejection with respect to any prior period. If the
Tenant shall fail or refuse to enter into the new lease within ten (10) days
after Landlord's request to do so, then in addition to all other rights and
remedies by reason of such default, under this Lease, at law or in equity,
Landlord shall have the same rights and remedies against the Tenant as if the
Tenant had entered into such new lease and such new lease had thereafter been
terminated at the beginning of its term by reason of the default of the Tenant
thereunder.
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(b If, pursuant to the Bankruptcy Code, Tenant is permitted to
assign this Lease in disregard of the restrictions contained in Article 13
hereof (or if this Lease shall be assumed by a trustee), then the trustee or
assignee shall cure any default under this Lease and shall provide adequate
assurance of future performance by the trustee or assignee including (i) the
source of payment of rent and performance of other obligations under this Lease,
for which adequate assurance shall mean the deposit of cash security with
Landlord in an amount equal to the sum of one (1) year's Base Rent then reserved
hereunder plus an amount equal to all Additional Rent, payable during the
calendar year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord, without interest, for the
balance of the term as security for the full and faithful performance of all of
the obligations under this Lease on the part of Tenant yet to be performed, and
that any such assignee of this Lease shall have a net worth exclusive of good
will, computed in accordance with generally accepted accounting principles,
equal to at least the Combined Net Worth and (ii) that the use of the Premises
shall in no way diminish the reputation of the Premises or the Improvements as a
first-class retail Improvements or impose any additional burden upon the
Premises or increase the services to be provided by, or payments to be made by,
Landlord. If all defaults are not cured and such adequate assurance is not
provided within sixty (60) days after there has been an order for relief under
the Bankruptcy Code, then this Lease shall be deemed rejected, Tenant or any
other person in possession shall vacate the Premises, and Landlord shall be
entitled to retain any rent or security deposit previously received from Tenant
and shall have no further liability to Tenant or any person claiming through
Tenant or any trustee. If Tenant receives or is to receive any valuable
consideration for such an assignment of this Lease, such consideration, after
deducting therefrom (i) the brokerage commission, if any, and other expenses
reasonably incurred by Tenant for such assignment and (ii) any portion of such
consideration reasonably designated by the assignee as paid for the purchase of
Tenant's property in the Premises, shall be and become the sole exclusive
property of Landlord and shall be paid over to Landlord directly by such
assignee.
(c If Tenant's trustee, Tenant or Tenant as
debtor-in-possession assumes this Lease and proposes to assign the same
(pursuant to Title 11 U.S.C. ss. 365, as the same may be amended) to any person,
including, without limitation, any individual, partnership or corporate entity,
who shall have made a bona fide offer to accept an assignment of this Lease on
terms acceptable to the trustee, Tenant or Tenant as debtor-in-possession, then
notice of such proposed assignment shall be given to Landlord by the trustee,
Tenant or Tenant as debtor-in-possession, setting forth (i) the name and address
of such person, (ii) all of the terms and conditions of such offer, and (iii)
the adequate assurance to be provided Landlord to assure such person's future
performance under this Lease, including, without limitation, the assurances
referred to in Title 11 U.S.C. ss. 365(b)(3) (as the same may be amended).
Following delivery of the aforementioned notice to Landlord, the trustee, Tenant
or Tenant as debtor-in-possession shall make application to a court of competent
jurisdiction for authority and approval to enter into any such assignment and
assumption, and Landlord shall thereupon have the prior right and option, to be
exercised by notice to the trustee, Tenant or Tenant as debtor-in-possession,
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this Lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage
27
commissions which may be payable out of the consideration to be paid by such
person for the assignment of this Lease.
ARTICLE 18
RE-ENTRY BY LANDLORD, INJUNCTION
18.1. If this Lease shall be terminated by Landlord as
provided in Article 18 hereof, Landlord or Landlord's agents and employees may
immediately or at any time thereafter re-enter the Premises, or any part
thereof, either by summary dispossess proceedings or by any suitable action or
proceeding at law, without being liable to indictment, prosecution or damages
therefrom, to the end that Landlord may have, hold and enjoy the Premises again
as and of its first estate and interest therein. The terms "RE-ENTER" and
"RE-ENTRY", as herein used, are not restricted to its technical legal meaning.
In the event of any termination of this Lease under the provisions of Article 18
hereof or if Landlord shall re-enter the Premises under the provisions of this
Article or in the event of the termination of this Lease, or of re-entry, by or
under any summary dispossess or other proceedings or action or any provision of
law by reason of default hereunder on the part of Tenant, Tenant shall thereupon
pay to Landlord the Base Rent and Additional Rent payable by Tenant to Landlord
up to the time of such termination of this Lease, or of such recovery of
possession of the Premises by Landlord, as the case may be, and shall also pay
the Landlord damages as provided in Article 20 hereof.
18.2. In the event of a breach or threatened breach by Tenant
of any of its obligations under this Lease, Landlord shall also have the right
of injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not intended to be exclusive of any other remedies or means
of redress to which Landlord may lawfully be entitled at any time and Landlord
may invoke any remedy allowed at law or in equity as if specific remedies were
not provided for herein.
18.3. If this Lease shall terminate under the provisions of
Article 18 hereof, or if Landlord shall re-enter the Premises under the
provisions of this Article 19, or in the event of the termination of this Lease,
or of re-entry, by or under any summary dispossess or other proceeding or action
or any provision of law by reason of default hereunder on the part of Tenant,
Landlord shall be entitled to retain all moneys, if any, paid by Tenant to
Landlord, whether as advance rent, security or otherwise, but such moneys shall
be credited by Landlord against any Rent due from Tenant at the time of such
termination or re-entry or, at Landlord's option against any damages payable by
Tenant under Article 20 hereof or pursuant to law.
18.4. Tenant hereby expressly waives, for itself and on behalf
of any person claiming through or under it, including creditors of all kinds,
any and all rights of redemption granted by or under any present or future laws
in the event of Tenant being evicted or dispossessed for any cause, or in the
event of Landlord obtaining possession of the Premises, by reason of the
violation by Tenant of any of the covenants and conditions of this Lease or
otherwise. Tenant also waives the provisions of any law relating to notice or
delay in levy of
28
execution in case of an eviction or dispossess of Tenant for non-payment of rent
or of any other law of like import now or hereafter in effect.
ARTICLE 19
DAMAGES
29
19.1. Should Landlord elect to re-enter, as herein provided,
or should it take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may either terminate this Lease or it may from
time to time, without terminating this Lease, make such alterations and repairs
as may be necessary in order to relet the Premises, and relet the Premises (or
any one of them) or any part thereof for such term or terms (which may be for a
term extending beyond the term of this Lease) and at such rental or rentals and
upon such other terms and conditions as Landlord in its sole discretion may deem
advisable. Upon each such reletting all rentals and other sums received by
Landlord from such reletting shall be applied, first, to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; second, to
the payment of any costs and expenses of such reletting, including reasonable
brokerage fees and attorneys' fees and of costs of such alterations and repairs;
third, to the payment of Rent and other charges due and unpaid hereunder; and
the residue, if any, shall be held by Landlord and applied in payment of future
Rent as the same may become due and payable hereunder. If such Rent and other
sums received from such reletting during any month are less than that to be paid
during that month by Tenant hereunder, Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall in
no event be entitled to any rent collected or payable upon any reletting,
whether or not such rent shall exceed the Rent due in this Lease. No such
re-enter or taking possession of the Premises by Landlord shall constitute an
election on its part to terminate this Lease unless a written notice of such
intention is given to Tenant or unless the termination thereof is decreed by a
Court of competent jurisdiction. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous breach. Should Landlord at any time terminate this Lease for
any breach, in addition to any other remedies it may have, it may recover from
Tenant all damages incurred by Landlord by reason of Tenant's default, including
(i) the worth at the time of the award of the unpaid Rent and other charges
which Landlord had earned at the time of the termination; (ii) the worth at the
time of the award of the amount by which the unpaid Rent and other charges which
Landlord would have earned after termination until the time of the award exceeds
the amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Rent and other charges which Tenant would have paid for the balance of
the Term of this Lease after the time of award exceeds the amount of such rental
loss that Tenant proves Landlord could have reasonably avoided; (iv) any other
amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant's failure to perform its obligations under this Lease or which would
be likely to result therefrom, including, but not limited to, any costs or
expenses Landlord incurs in maintaining or preserving the Premises after such
Event of Default, the cost of recovering possession of the Premises, expenses of
reletting, including, without limitation, necessary renovation or alteration of
the Premises, Landlord's reasonable attorneys' fees incurred in connection
therewith, and any real estate commission paid or payable in connection with the
reletting of the Premises by Landlord; and (v) any Prepayment Premium incurred
in connection with such Event of Default or as a result thereof. As used herein,
the "worth at the time of the award" is computed by allowing interest on unpaid
amounts at the Default Interest Rate per annum, or such lesser amount as may
then be the maximum lawful rate. If Tenant has abandoned the Premises, Landlord
shall have the option of (i) retaking possession of the
30
Premises, terminating this Lease and recovering from Tenant the amount specified
in this Section 20.1 or (ii) Landlord may elect not to terminate this Lease and
to proceed under the foregoing provisions of this Section 20.1. In determining
the rent which would be payable by Tenant hereunder subsequent to an Event of
Default, the annual Rent for each year of the expired Term of this Lease shall
be equal to the annual Rent payable hereunder during the balance of the Term,
including, without limitation, Base Rent and Additional Rent.
20.2. In addition to the foregoing, if the Fullerton Lease is
terminated as result of an Event of Default by Tenant, then in such event,
Tenant shall pay to Landlord all actual damages incurred by Landlord in
connection with any such termination.
20.3. Suit or suits for the recovery of such damages, or any
installments thereof, may be brought by Landlord from time to time at its
election, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the term of this Lease would have expired if
it had not been so terminated under the provisions of Article 18 hereof, or
under any provision of law, or had Landlord not re-entered the Premises. Nothing
herein contained shall be construed to limit or preclude recovery by Landlord
against Tenant of any sums or damages to which, in addition to the damages
particularly provided above, Landlord may lawfully be entitled by reason of any
default hereunder on the part of Tenant. Nothing herein contained shall be
construed to limit or prejudice the right of Landlord to prove for and obtain as
liquidated damages by reason of the termination of this Lease or re-entry of the
Premises for the default of Tenant under this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, such damages are to be proved, whether or
not such amount is greater, equal to, or less than any of the sums referred to
in Section 20.1 hereof.
ARTICLE 20
INTENTIONALLY OMITTED
ARTICLE 21
NOTICES
21.1. Any notice to be given under this Lease shall be in
writing and shall be sent by certified mail, return receipt requested, or by
nationally-recognized overnight courier, with acknowledgment receipt, addressed
to (a) Landlord at its address herein stated on page 1, Attention: Christopher
M. Jeffries and (b) Tenant (i) at its address herein stated on page 1,
Attention: John Gibbons, President. No notice shall be effective unless given to
all of the parties listed hereinabove. Each party shall have the right to
designate, by notice in writing, any other address to which such party's notice
is to be sent. Any notice to be given by either
31
party may be given by the attorneys for such party. Any notice shall be deemed
given upon the date of first attempted delivery.
21.2. (a All performance (including cure) dates expire at 5:00
o'clock p.m. (Los Angeles time) on the applicable performance or cure date.
(b A performance date which falls on a Saturday,
Sunday or holiday on which courts in the County of Orange shall be closed is
automatically extended to the next business day with interest, if applicable, at
the Interest Rate, or Default Interest Rate, as the case may be.
ARTICLE 22
QUIET ENJOYMENT
22.1. Landlord covenants that Tenant, on paying the Rents and
performing all the terms, covenants, conditions, provisions and agreements
aforesaid, shall and may peacefully and quietly have, hold and enjoy the
Premises for the term aforesaid, free from any interference or hindrance by
Landlord.
ARTICLE 23
BROKER(S)
23.1. Each of Landlord and Tenant represents to the other that
such party has had no dealings, either direct or indirect, with any other real
estate agent or broker in connection with this transaction. Landlord and Tenant
each agrees to indemnify, defend and hold the other party harmless from any
loss, liability and expense incurred by such indemnified party as a result of
any claim made against such indemnified party which is based upon a breach of
said representation by the indemnifying party. The indemnification obligations
hereunder shall survive the Expiration Date or sooner termination of this Lease.
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ARTICLE 24
SUBORDINATION; NON-DISTURBANCE
24.1. This Lease and all rights of Tenant under it are
subordinate to and shall be subject to (a) any present and future ground or
underlying leases which may now or hereafter affect all or any portion of the
Premises and (b) any mortgages which may now or hereafter affect such leases or
all or any portion of the Premises, and to all renewals, modifications,
replacements, consolidations and extensions thereof (all of the foregoing,
collectively, the "SENIOR INTERESTS," and holders of Senior Interests shall be
referred to as "SENIOR INTEREST HOLDERS"), provided that, with respect to each
existing Senior Interest, Landlord shall obtain from the Senior Interest Holder
to which this Lease is now subordinated, a non-disturbance agreement
substantially in the form of the subordination, non-disturbance and attornment
agreement then used by such Senior Interest Holder for commercial loans. The
provisions of this Section 25.1 shall be self operative and no further
instrument of subordination shall be required.
24.2. Any Senior Interest Holder who succeeds to the rights of
Landlord under this Lease, whether through exercise of remedies or by operation
of law, is hereinafter called a "SUCCESSOR LANDLORD." Upon the Successor
Landlord's succession to the rights of Landlord under this Lease, Tenant shall
attorn to and recognize the Successor Landlord as Tenant's Landlord under this
Lease and shall promptly execute and deliver any instrument that such Successor
Landlord may reasonably request to evidence the attornment. Upon attornment,
this Lease shall continue in full force and effect and as a direct Lease between
the Successor Landlord and Tenant on the same terms and conditions and with the
same options, if any, then remaining. The foregoing provisions of this Section
25.2 shall inure to the benefit of such Successor Landlord, shall be
self-operative and no further instrument shall be required to give effect to
said provisions. Tenant, however, upon demand of any such Successor Landlord
agrees to execute, from time to time, instruments in confirmation of the
foregoing provisions of this Section 25.2, satisfactory to any such Successor
Landlord acknowledging such attornment and setting forth the terms and
conditions of its tenancy.
24.3. Anything herein contained to the contrary
notwithstanding, under no circumstances shall a Successor Landlord whether or
not it shall have succeeded to the interests of Landlord, under this Lease, be
(a) liable for any act, omission or default of any prior
landlord; or
(b) subject to any offsets, claims or defenses which Tenant
might have against any prior landlord; or
(c) bound by any Base Rent or Additional Rent which Tenant
might have paid to any prior landlord for more than one (1) month in advance; or
33
(d) bound by any modification, amendment or abridgment of this
Lease, or any cancellation or surrender of the same, made without its prior
written approval; provided, however, Successor Landlord shall be subject to the
terms of Article 39 hereof.
24.4. Tenant shall pay no rent under this Lease more than
thirty (30) days in advance of its due date, if so restricted by any existing or
future ground or underlying lease or mortgage to which this Lease is
subordinated or by an assignment of this Lease to a Senior Interest Holder, and
Tenant shall not seek to terminate this Lease by reason of any act or omission
of Landlord until Tenant has given written notice of such act or omission to
each Senior Interest Holder whose name and address has been furnished to Tenant,
and until thirty (30) days after Tenant shall have given such Senior Interest
Holder such notice, or in the case of a default which cannot with due diligence
be cured within a period of thirty (30) days, such reasonable period of time
necessary to remedy such default so long as the Senior Interest Holder duly
commences and thereafter diligently prosecutes to completion all steps necessary
to remedy the default and complete such remedy within a reasonable period of
time following the giving of such notices, during which time any Senior Interest
Holder shall have the right, but shall not be obligated, to remedy such act or
omission.
24.5. If, in connection with the financing of the Land, the
Improvements or the interest of the Tenant under any ground or underlying lease,
or if in connection with the entering into of a ground or underlying lease, any
lending institution or Landlord shall request reasonable modifications of this
Lease that do not increase Tenant's monetary obligations under this Lease, or
diminish the rights, or increase the other obligations of Tenant under this
Lease by more than a de minimis amount, Tenant shall consent to such
modifications.
ARTICLE 25
NO WAIVERS
25.1. Failure by either party in any instance to insist upon
the strict performance of any one or more of the obligations of the other party
under this Lease, or to exercise any election herein contained or acceptance of
payment of any kind with knowledge of a default by the other party, shall in no
manner be or be deemed to be a waiver by such party of any defaults or breaches
hereunder or of any of its rights and remedies by reason of such defaults or
breaches, or a waiver or relinquishment for the future of the requirement of
strict performance of any and all of the defaulting party's obligations
hereunder. Further, no payment by Tenant or receipt by Landlord of a lesser
amount than the correct amount of Base Rent and/or Additional Rent due hereunder
shall be deemed to be other than a payment on account, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment be
deemed to effect or evidence an accord and satisfaction, and Landlord may accept
any checks or payments as made without prejudice to Landlord's right to recover
the balance or pursue any other remedy in this Lease or otherwise provided at
law or in equity.
ARTICLE 26
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LIMITATIONS ON TENANT'S REMEDIES
26.1. With respect to any provision of this Lease which
specifically requires that Landlord shall not unreasonably withhold or
unreasonably delay its consent or approval, Tenant in no event shall be entitled
to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim,
for any sum of money whatsoever as damages, costs, expenses, attorneys' fees or
disbursements, whether affirmatively or by way of setoff, counterclaim or
defense, based upon any claim or assertion by Tenant that Landlord has
unreasonably withheld or unreasonably delayed such consent or approval. Tenant's
sole remedy for claimed unreasonable withholding or unreasonable delaying by
Landlord of its consent or approval shall be an action or proceeding brought and
prosecuted solely at Tenant's own cost and expense to enforce such provision,
for specific performance, injunction or declaratory judgment. Notwithstanding
the foregoing, Tenant shall be entitled to money damages only with respect to a
claim that Landlord has unreasonably withheld or delayed its consent if it is
expressly determined in an action or proceeding (as opposed to an arbitration,
which the parties agree cannot result in an award for damages) that Landlord has
wilfully or arbitrarily withheld its consent in bad faith and without any good
faith business justification.
ARTICLE 27
INTENTIONALLY OMITTED
ARTICLE 28
CERTIFICATE OF TENANT AND LANDLORD
28.1. Each party will, at any time and from time to time, as
requested by the other party, upon not less than ten (10) days' prior written
notice, execute and deliver to the other a statement certifying that this Lease
is unmodified and in full force and effect (or if there have been modifications,
that this Lease is in full force and effect as modified and stating the
modifications), certifying the dates to which the Base Rent and the Additional
Rent have been paid, and stating whether, to the best knowledge of the signer,
the other party is in default in performance of any of its obligations under
this Lease, and, if so, specifying each such default, it being intended that any
such statement delivered pursuant hereto may be relied upon by others with whom
the party requesting such certificate may be dealing. It is agreed to that a
party shall certify to such other information as the requesting party may
reasonably require.
35
ARTICLE 29
LEGAL PROCEEDINGS; WAIVER OF JURY TRIAL
29.1. Landlord and Tenant do hereby waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, and/or any other claims (except claims for
personal injury or property damage), and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Landlord
commences any summary proceeding for nonpayment of rent, Tenant will not
interpose and does hereby waive the right to interpose any counterclaim of
whatever nature or description in any such proceeding, except as permitted by
law.
ARTICLE 30
SURRENDER OF PREMISES
30.1. Upon the expiration or other termination of the term of
this Lease, Tenant shall quit and surrender to Landlord the Premises and Tenant
shall, in all events, remove all of Tenant's Personal Property as herein
provided. Tenant's obligation to observe or perform this covenant shall survive
the expiration or other termination of the term of this Lease.
30.2. If Tenant fails to surrender possession of the Premises
upon the expiration or other termination of the term of this Lease, Landlord may
elect by notice to Tenant, to treat Tenant as a holdover and, in all events,
Tenant shall be obligated to pay in addition to all Additional Rent payable
hereunder, minimum rent at a rate per diem equal to the greater of (a) one
hundred twenty-five (125%) percent of the Base Rent payable immediately
preceding the Expiration Date or sooner termination of the term of this Lease,
or (b) one hundred twenty-five percent (125%) of the fair market rental value
for the Premises during the holdover period. Notwithstanding such election by
Landlord, if the Premises are not surrendered upon the expiration or other
termination of the term of this Lease, then Tenant shall indemnify and hold
harmless Landlord against and from any loss, costs, liability or expenses
(including attorneys' fees) resulting therefrom, including any claims made by
any succeeding Tenant founded upon such delay; provided, however, (i) Landlord
shall have the right to seek to recover from Tenant any consequential or
punitive damages occasioned by such holding over by Tenant and (ii) Landlord
shall have no duty to mitigate any such damages incurred in connection with
Tenant's failure to surrender possession of the Premises pursuant to this Lease.
30.3. If Tenant shall vacate the Premises at any time during
the last month of the term of this Lease, then Landlord may after five (5) days
prior written notice to Tenant enter and alter, renovate and redecorate the
Premises, without elimination, diminution or abatement of rent, or incurring
liability to Tenant for any compensation, and such acts by
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Landlord shall have no effect upon this Lease, except Tenant shall have no
further obligation to maintain and repair the Premises after the date Landlord
enters the Premises pursuant to this Section.
ARTICLE 31
INABILITY TO PERFORM
31.1. If, by reason of Force Majeure, a party is unable to
perform or is delayed in performing any of its obligations under this Lease
including, without limitation, any Rent due and owing from Tenant hereunder, or
is unable to supply or is delayed in supplying any service which it is obligated
to supply, then such party shall have no liability in connection with that
inability and this Lease and the other party's obligation to perform all of such
other party's obligations under this Lease shall in no way be affected, impaired
or excused. Notwithstanding the foregoing, "Force Majeure" shall not apply to
any failure to timely pay monies due under this Lease including, without
limitation, Rent due and owing from Tenant hereunder, nor shall the failure to
receive or obtain financing be an excuse for failing to perform obligations
hereunder.
ARTICLE 32
NAME OF IMPROVEMENTS
32.1. Tenant named herein shall have the right to name the
Improvements during the Term, and to erect any signs permitted by Legal
Requirements.
ARTICLE 33
MEMORANDUM
33.1. Concurrently with the execution and delivery of this
Lease, Landlord and Tenant shall execute and deliver a statutory form of
memorandum of this Lease for the purpose of recording, but said memorandum of
this Lease shall not in any circumstances be deemed to modify or to change any
of the provisions of this Lease. Neither Landlord nor Tenant shall record this
Lease. Any recording costs associated with the memorandum of this Lease shall be
borne by Tenant. Within fifteen (15) days after written notice by Landlord upon
the expiration of the term of this Lease or sooner termination of this Lease,
Tenant covenants and agrees to execute, in recordable form, such documents as
may be required to cancel/terminate the memorandum of this Lease.
ARTICLE 34
EXTENSIONS OF TERM
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34.1. Tenant shall have the option (each, an "EXTENSION
OPTION") to renew the Term of this Lease for the entire Premises for two (2)
additional, successive periods of ten (10) years each (collectively, the
"EXTENSION TERMS," and each individually, an "EXTENSION TERM") on all the same
terms and conditions as provided in this Lease, provided that:
(a) an Extension Option shall be exercised as set forth in
Section 35.2 below;
(b) Base Rent for each Extension Term shall be the amounts set
forth in Section 35.3 below;
(c) Tenant shall not be in default under this Lease as of the
time of (i) the giving of the applicable Extension Notice (as defined in Section
35.2 below) and (ii) the commencement date of the applicable Extension Term;
(d) with respect to the second Extension Term, Tenant shall
have exercised the first Extension Option;
(e) Tenant shall have no further right to extend the Term
beyond the last day of the second Extension Term; and
(f) the second Extension Term with respect to the Fullerton
Land shall expire on April 11, 2035, unless the term of the Fullerton Lease is
extended beyond such date.
34.2. Tenant may exercise an Extension Option by giving notice
of its election to extend the Term of this Lease (an "EXTENSION NOTICE") at
least twelve (12) months prior to the expiration of the initial Term of this
Lease with respect to the first Extension Term, or, with respect to the second
Extension Term, at least twelve (12) months prior to the expiration of the first
Extension Term. Landlord shall endeavor to deliver notice of Tenant's Extension
Option prior to the expiration of each Extension Option, but failure to do so by
Landlord shall not relieve Tenant from meeting the time requirements and
otherwise fulfilling Tenant's obligations set forth herein. If Tenant does not
deliver an Extension Notice with respect to such immediately succeeding
Extension Term on or before the date which is twelve (12) months prior to the
Expiration Date or the last day of the first Extension Term, as the case may be,
TIME BEING OF THE ESSENCE WITH RESPECT TO TENANT'S OBLIGATION TO DELIVER SUCH
EXTENSION NOTICE PRIOR TO SUCH DATE, THEN THIS ARTICLE 35 SHALL HAVE NO FURTHER
FORCE OR EFFECT AND SHALL BE DEEMED DELETED FROM THIS LEASE WITH RESPECT TO ANY
UNEXERCISED EXTENSION TERMS. Notwithstanding the foregoing, in the event that
Tenant fails to pay the rent due under the Fullerton Lease during the initial
Term such that the City of Fullerton (as lessor under the Fullerton Lease) shall
require an extension of the guaranty of the Fullerton Lease rental payments by
Tenant or an affiliate thereof (or its successors or assigns) beyond the initial
Term, then in such event, Tenant shall be deemed to have elected the Extension
Option for the first Extension Term and if the City of Fullerton requires at the
time of the
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second Extension Option a further guaranty of the rental payments under the
Fullerton Lease, Tenant shall be deemed to have made an election for the second
Extension Term for the duration of the City of Fullerton Lease.
34.3. The Base Rent for the Premises during any Extension Term
shall be equal to the then fair market rent for comparable space in Orange
County as of the commencement of the Extension Term, as Landlord and Tenant
shall agree. The fair market rent shall be the rent charge for space of
comparable size and condition under the same terms, conditions and obligations
contained in this Lease, for a ten (10) year term, subject to Tenant's remaining
right to extend the Term (if any), to a tenant having a net worth substantially
similar to Tenant's, assuming that Landlord has had a reasonable time to locate
a substitute tenant and neither Landlord nor such tenant is under any compulsion
to rent, and taking into consideration any relevant facts and considerations in
the market place at the time of the extension of the Term. Notwithstanding the
foregoing, the Base Rent payable by Tenant for the first Extension Term shall be
a minimum of $1,400,000 per annum and shall be a maximum of $1,800,000 per
annum. The Base Rent payable by Tenant for the second Extension Term, shall be
minimum of $1,600,000 per annum and a maximum of $2,200,000 per annum.
34.4. If Landlord and Tenant cannot agree as to such fair
market rent within six (6) months prior to the end of the Initial Term of this
Lease or six (6) months prior to the end of the first Extension Term, as the
case may be, then the fair market rent shall be determined as follows:
(a) Landlord and Tenant shall each, within ten (10) days of
the beginning of such six (6) month period, select an appraiser to determine
such fair market rent for the Premises. Each Appraiser shall:
(i) be a professional designated member of the
American Society of Real Estate Counselors or the American Institute of
Real Estate Appraisers (holding designations of CRE or MAI
respectively) or be a professionally designated member of the then
preeminent successor organization and holding the senior professional
designation awarded by the organization;
(ii) have a minimum of ten (10) years of commercial
experience in (A) the leasing of retail space in Orange County,
California or (B) the appraisal of retail Improvements in Orange
County, California (the "APPRAISERS"); and
(iii) have generally recognized current competence in
the valuation of such property, who would qualify as an expert witness
over objection to give opinion testimony addressed to the issue which
is the subject of the appraisal.
(b) All appraisals under this Article 35 shall be made in
accordance with sound, customary and usual appraisal practices utilized at the
time of any such appraisals, consistently applied; provided, however, in
determining fair market rent for the Premises, the Appraisers shall not assign
any value to any improvements to the Premises made at Tenant's
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expense which will not remain in the Premises or to the good will created by
Tenant or Tenant's name.
(c) The Appraisers shall have the right to consult experts and
competent authorities with respect to factual information or evidence pertaining
to the determination of fair market rent, but any such consultation shall be
made in the presence of the parties, with full right on their part to
cross-examine. In addition, each party shall have the right to submit relevant
information and documentation to the Appraiser, so long as not less than five
(5) days prior to doing so, such party notifies the other party and supplies
copies of such information and documentation intended to be delivered to the
Appraisers in order to allow such other party to prepare and concurrently submit
any relevant counter information or documentation to the Appraiser.
(d) If either party fails to appoint an Appraiser within ten
(10) days after written notice of its failure to appoint any such Appraiser
pursuant to this Section 35.4, then, in such event, the party which has
appointed an Appraiser pursuant to this Section 35.4 may, on notice to the
other, request appointment of the other party's Appraiser by the Los Angeles,
California office of the AAA in accordance with its rules then prevailing or if
the AAA shall fail to appoint said Appraiser within fifteen (15) days after such
request is made, then such party may apply, on notice to the other, to the Chief
Judge of the Superior Court in the County of Orange (or any other court have
jurisdiction and exercising functions similar to those now exercised by said
Court) for the appointment of such Appraiser.
(e) If the Appraisers are unable to agree as to the fair
market rent within thirty (30) days after the date of the appointment of the
last of such Appraisers, then the Appraisers shall, within five (5) days of the
end of the thirty (30) day period, mutually select a third appraiser (the
"ARBITRATOR") who has the same qualifications as the Appraisers. Each Appraiser
shall submit to the Arbitrator and the other party its determination of the fair
market rent of the Premises including reasonable documentation supporting such
determination, and the Arbitrator shall within thirty (30) days of its
appointment decide which Appraiser has most accurately determined the fair
market rent, which decision shall be final and binding on both Landlord and
Tenant. The Arbitrator shall be permitted to question each of the Appraisers
regarding their respective appraisal, but only in the presence of the Appraiser
appointed by the other party.
(f) Notwithstanding anything to the contrary contained in this
Article 35, if the parties come to an agreement with respect to the fair market
rent prior to the rendition by the Appraisers or the Arbitrator of any decision
to be made by them hereunder, such agreement between the parties shall be
binding and conclusive and terminate the appraisal procedure hereunder.
(g) Landlord and Tenant shall each pay their own Appraiser's
fees and costs, and shall each pay one-half (1/2) of the Arbitrator's fees and
costs.
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34.5. If this Lease is renewed for any Extension Term, then
Landlord or Tenant can request the other party hereto to execute an instrument
in form for recording setting forth the exercise of Tenant's right to extend the
Term and the last day of the applicable Extension Term.
34.6. If Tenant exercises its right to extend the Term for an
Extension Term pursuant to this Article 35, the definition of the word "TERM"
with respect to any period thereafter for all applicable purposes under this
Lease shall include the Extension Term.
ARTICLE 35
FULLERTON LEASE
35.1. Subject to Section 36.2 below, Landlord covenants and
agrees that it will not do or cause to be done or suffer or permit any act or
thing to be done which may or could cause the Fullerton Lease or the rights of
Landlord thereunder to be canceled, terminated or forfeited.
35.2. Subject to the provisions of Article 36.3 hereof, this
Lease shall be expressly subject and subordinate to all of the terms, covenants,
conditions, provisions and agreements contained in the Fullerton Lease, except
such terms, covenants, conditions, provisions and agreements as are specifically
inconsistent with the provisions hereof or are set forth in Section 36.3 hereof
(the "EXCLUDED PROVISIONS"). All express provisions of this Lease shall govern
in all circumstances unless use of the Premises or any action or inaction taken
in accordance with said provisions may be the basis of a default under the
Fullerton Lease, in which case the inconsistency shall be resolved in favor of
the provisions of the Fullerton Lease. A true copy of the Fullerton Lease has
been delivered to, and reviewed by, Tenant.
35.3. The following provisions of the Fullerton Lease are
hereby excluded from this Lease: Article VI, Section 9.01, Article X and Section
12.01.
35.4. Except for any Excluded Provisions, Tenant covenants and
agrees to observe and perform all of the terms, covenants, conditions,
provisions and agreements to be performed by Landlord, as lessee pursuant to the
Fullerton Lease, and further covenants and agrees not to do or suffer or permit
anything to be done which would result in a default under or cause the Fullerton
Lease to be terminated. All of the terms, covenants, conditions, provisions and
agreements of the Fullerton Lease, excepting any Excluded Provisions, are hereby
incorporated herein with the same force and effect as if herein set forth in
full and wherever the term "LESSEE" occurs in the Fullerton Lease, the same
shall be deemed to refer to Tenant and wherever the term "LESSOR" occurs in the
Fullerton Lease, the same shall be deemed to refer to Landlord, it being
understood and agreed that the foregoing shall not be deemed to confer upon
Tenant any rights afforded to Landlord under the Fullerton Lease to cancel,
terminate, surrender, modify or amend the Fullerton Lease, or to waive, settle,
compromise or otherwise adversely affect Landlord's rights thereunder; provided,
however, Tenant shall be entitled, during the Term of this Lease, to have all
the rights and benefits
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afforded to Landlord under the Fullerton Lease, except those contained in the
Excluded Provisions. Notwithstanding the foregoing, all grace periods specified
in the Fullerton Lease for performance by Landlord of its obligations to the
City of Fullerton under the Fullerton Lease shall, for purposes of determining
compliance by Tenant with the provisions hereof, be each reduced by five (5)
days.
ARTICLE 36
DEFINITIONS
36.1. For the purposes of this Lease each of the following
terms shall have the meaning given such term in this Article or in the Section
or subsection of this Lease indicated:
1. "ADA" shall mean Title III of the Americans with
Disabilities Act of 1990, together with any amendments thereof or supplementary
laws thereto.
2. "ADDITIONAL RENT" shall have the meaning provided in
Section 3.2.
3. "APPRAISERS" shall have the meaning provided in subsection
35.4(a)(ii).
4. "ARBITRATOR" shall have the meaning provided in subsection
35.4(e).
5. "AUTHORIZED HOLDER" shall have the meaning provided in
subsection 14.1(a).
6. "AUTHORIZED INSTITUTION" shall mean a (i) bank, savings and
loan institution, trust or insurance company, real estate investment trust, a
pension, welfare or retirement fund, an eleemosynary institution or any
combination of the foregoing, acting for its own account or as a trustee, with a
net worth of at least $100,000,000 or (ii) governmental or quasi-governmental
instrumentality.
7. "BANKRUPTCY CODE" shall have the meaning provided in
subsection 18.3(a).
8. "BASE RENT" shall have the meaning provided in subsection
3.1(a).
9. "BROKERS" shall have the meaning provided in Section 24.1.
10. "CLAIMS" shall have the meaning provided in Section 9.1.
11. "COMMENCEMENT DATE" shall have the meaning provided in
Section 1.1.
12. "CONSENT REQUIRED CHANGES" shall have the meaning provided
in subsection 10.1(a).
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13. "CONTROL" shall have the meaning provided in subsection
13.2(b).
14. "CREDITOR'S LAW" shall have the meaning provided in
Section 23.1.
15. "DEFAULT INTEREST RATE" shall mean a rate per annum equal
to the lesser of (a) two (2%) percent above the Prime Rate, and (b) the maximum
applicable legal rate, if any.
16. "DELINQUENCY DATE" shall have the meaning provided in
Section 4.1.
17. "EVENT OF DEFAULT" shall have the meaning provided in
Section 18.2.
18. "EXPIRATION DATE" shall have the meaning provided in
Section 1.1.
19. "EXTENSION NOTICE" shall have the meaning provided in
Section 35.2.
20. "EXTENSION OPTION" shall have the meaning provided in
Section 35.1.
21. "EXTENSION TERM" shall have the meaning provided in
Section 35.1.
22. "FORCE MAJEURE" shall mean events which result in delays
in a party's performance of its obligations hereunder due to causes beyond such
party's control, including, but not restricted to, acts of God, the public enemy
acts of the government, acts of the other party, fires, floods, strikes, freight
embargoes and unusually severe weather.
23. "FULLERTON LEASE" shall mean that certain Ground Lease
dated April 11, 1980, as amended, with the City of Fullerton as lessor and
Landlord (by an assignment dated the date hereof) as lessee.
24. "FUTURE RENT" shall have the meaning provided in Section
12.3.
25. "IMPROVEMENTS" shall have the meaning provided in the
Recitals of this Lease.
26. "INSIDERS" shall have the meaning provided in subsection
13.2(a).
27. "INTEREST RATE" shall mean a rate per annum equal to the
lesser of (a) two (2%) percent above the Prime Rate, and (b) the maximum
applicable legal rate, if any.
28. "LAND" shall have the meaning provided in the Recitals of
this Lease.
29. "LANDLORD" shall have the meaning provided in the Recitals
of this Lease.
30. "LANDLORD INDEMNIFIED PARTIES" shall have the meaning
provided in Section 14.1.
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31. "LEASEHOLD FINANCING DOCUMENTS" shall have the meaning
provided in subsection 19(b).
32. "LEGAL REQUIREMENTS" shall mean laws, statutes and
ordinances (including Improvements codes and zoning regulations, and ordinances)
and the orders, rules, and regulations, directives and requirements of all
federal, state, county and city departments, bureaus, boards, agencies, offices,
commissions and other subdivisions thereof, or of any official thereof, or of
any other governmental public or quasi-public authority, whether now or
hereafter in force, which may be applicable to the Land or Improvements or the
Premises or any part thereof, or the sidewalks, curbs or area adjacent thereto
and all requirements, obligations and conditions of all instruments of record on
the date of this Lease.
33. "MINIMUM NET WORTH" shall have the meaning provided in
subsection 13.2(b).
34. "PERMITTED ASSIGNEE" shall have the meaning provided in
subsection 13.2(b).
35. "PERSON" shall mean any individual, general partnership,
limited partnership, corporation, joint venture, trust, business trust, limited
liability company, cooperative or association or any other recognized business
entity, and the heirs, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.
36. "PREMISES" shall have the meaning provided in the Recitals
of this Lease.
37. "PREPAYMENT PREMIUM" shall mean an amount equal to the
amount due to all Senior Interest Holders as a result of a prepayment of all
Senior Interests providing financing secured, in whole or in part, by Landlord's
interest in the Premises and/or this Lease, together with all fees, costs,
charges and expenses incurred by Landlord in connection with satisfaction of
such Senior Interests.
38. "PRIME RATE" shall mean a rate per annum equal to the
commercial lending rate announced from time to time by The Chase Manhattan Bank
(New York, New York), or its successor, as its prime rate for ninety (90) day
unsecured loans.
39. "RELATED ENTITY" shall have the meaning provided in
subsection 13.2(b).
40. "RENT" or "RENTS" shall have the meaning provided in
Section 2.1.
41. "RULES OF CONSTRUCTION" are as follows:
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(a) The words "INCLUDE" and "INCLUDING" and similar
terms shall be construed as if followed by the phrase "WITHOUT
BEING LIMITED TO."
(b) All references to numbered Articles or Sections
are references to the Articles and Sections of this Lease
unless otherwise expressly designated in context.
(c) Unless other payment dates are provided in this
Lease, all payments of any kind to be made by Tenant to
Landlord under this Lease other than Base Rent (which shall be
payable without notice or invoice), including reimbursements
by Tenant to Landlord of costs incurred by Landlord, shall be
payable by Tenant to Landlord upon receipt by Tenant of
Landlord's bill therefor.
(d) The terms "PROVISIONS," "TERMS," "CONDITIONS,"
"COVENANTS," "REQUIREMENTS," "OBLIGATIONS" and other words of
similar import shall be deemed to include all of those terms,
where the context so permits.
(e) The term "THIS LEASE" shall be deemed to include
all of the provisions of this Lease.
(f) In any instance in which consent or approval by
Landlord is required under this Lease, it shall be deemed to
be preceded by the word "PRIOR."
(g) The terms "FAILURE," "VIOLATION," "DEFAULT,"
"BREACH" and words of similar import shall be deemed to
include all of those terms where the context so permits.
(h) The terms "COSTS," "EXPENSES," "OBLIGATIONS,"
"LIABILITIES" and words of similar import shall be deemed to
include all of those terms where the context so permits.
(i) The use of the singular or the plural shall be
deemed to include the plural and the singular, as the case may
be, where the context so permits.
(j) The use of the conjunctive shall be deemed to
include any, both or all of the terms which are joined, where
the context so permits.
42. "SEC" shall have the meaning provided in Section 38.19.
43. "SENIOR INTEREST HOLDERS" shall have the meaning provided
in Section 25.1.
44. "SENIOR INTERESTS" shall have the meaning provided in
Section 25.1.
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45. "SUCCESSOR LANDLORD" shall have the meaning provided in
Section 25.2.
46. "TAXES" shall have the meaning provided in Section 4.1.
47. "TENANT" shall have the meaning provided in the Recitals
of this Lease.
48. "TENANT'S CHANGES" shall have the meaning provided in
subsection 10.1(a).
49. "TENANT'S PERSONAL PROPERTY" shall have the meaning
provided in Section 10.8.
50. "TERM" shall have the meaning provided in Section 1.1.
51. "TERMINATION NOTICE" shall have the meaning provided in
Section 16.4.
52. "UNTENANTABLE" shall mean that the Premises, or a portion
thereof, cannot be occupied by Tenant in a commercially reasonable manner for
the conduct of its business.
ARTICLE 37
MISCELLANEOUS
37.1. Irrespective of the place of execution or performance,
this Lease shall be governed by and construed in accordance with the laws of the
State of California without regard to principles of conflicts of laws.
37.2. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted.
37.3. Except as otherwise expressly provided in this Lease,
each covenant, agreement, obligation or other provision of this Lease on
Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease.
37.4. All terms and words used in this Lease, regardless of
the number or gender (including the neuter form) in which they are used, shall
be deemed to include any other number and any other gender (including the neuter
form) as the context may require.
37.5. Except as expressly provided herein, time shall be of
the essence with respect to the exercise of any option granted under this Lease.
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37.6. Except as otherwise provided herein, whenever payment of
interest is required by the terms hereof it shall be at the Interest Rate.
37.7. In the event that Tenant is in arrears in payment of
Rent hereunder, Tenant waives Tenant's right, if any, to designate the items
against which any payments made by Tenant are to be credited, and Tenant agrees
that Landlord may apply any payments made by Tenant to any items it sees fit,
irrespective of and notwithstanding any designation or request by Tenant as to
the items against which any such payments shall be credited.
37.8. The covenants, agreements, conditions and provisions of
this Lease shall be binding upon and inure to the benefit of Landlord, Tenant
and their respective heirs, distributees, executors, administrators, successors
and assigns, except that no assignment or subsubletting in violation of the
provisions of Article 18 hereof shall operate to vest any rights in any
successor assignee or subtenant (or subsubtenant as the case may be).
37.9. Landlord and Tenant agree that it is their intention to
create only the relationship of landlord and tenant (and optioner and optionee,
as and only to the extent provided in Articles 39 and 40 hereof), and no
provision of this Lease, or act of either party under this Lease, shall ever be
construed as creating the relationship of principal and agent, or a partnership,
or a joint venture or other form of enterprise between the parties.
37.10. All prior negotiations and agreements relating to this
Lease and the Premises are merged into this Lease. This Lease may not be
amended, modified or terminated, in whole or in part, nor may any of the
provisions be waived, except by a written instrument executed by the party
against whom enforcement of such amendment, modification, termination or waiver
is sought.
37.11. Each person executing this Lease hereby represents and
warrants that he or she is a duly authorized representative of Landlord or
Tenant, as the case may be, and has full authority to execute and deliver this
Lease.
37.12. This Lease shall have no binding force and effect and
shall not confer any rights or impose any obligations upon either party unless
and until both parties have executed it and Landlord shall have and delivered to
Tenant an executed copy of such consent. Under no circumstances shall the
submission of this Lease in draft form by or to either party be deemed to
constitute an offer for the subleasing of the Premises.
37.13. This Lease may be executed in several counterparts each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
37.14. This Lease and all the obligations of Tenant to pay
Base Rent and Additional Rent and perform all of its other covenants and
agreements hereunder shall in no way be affected, impaired, delayed or excused
because Landlord is unable to fulfill any of its
47
obligations hereunder, either explicit or implicit, if Landlord is prevented or
delayed from so doing by reason of Force Majeure.
37.15. Each and every right and remedy of Landlord under this
Lease shall be cumulative and in addition to every other right and remedy herein
contained or now or hereafter existing at law or in equity, by statute or
otherwise.
37.16. The captions are inserted only as a matter of
convenience and for reference, and in no way define, limit or describe the scope
of this Lease nor the intent of any provision hereof.
37.17. If no standard for approval is provided herein, if
either party hereto reserves the right to consent or approve the actions of the
other party, such consent or approval shall not be unreasonably withheld or
delayed, it being understood and agreed that if any action of the Tenant
requires the approval of any other Senior Interest Holder, then, in such event,
Landlord's approval shall be deemed withheld if the approval of any such other
Senior Interest Holder is withheld.
37.18. Tenant shall deliver, or cause to be delivered, to
Landlord (a) fiscal year-end audited financial statements and/or the Securities
and Exchange Commission ("SEC") 10K annual report for Tenant promptly after the
same is filed with the SEC (and in no event later than one hundred fifty (150)
days after the end of such fiscal year) and (b) the SEC 10Q quarterly report for
Tenant (and its parent companies, if applicable) promptly after the same is
filed with the SEC (and in no event later than sixty (60) days after the end of
such quarter), provided, however, that if a Tenant ceases to be a publicly
traded corporation, Tenant shall deliver, or cause to be delivered, to Landlord
financial statements prepared and reviewed by a so-called "Big 6" accounting
firm approved by Landlord, which approval shall not be unreasonably withheld,
containing substantially the same information as required in such 10K and 10Q
reports within said one hundred fifty (150) and sixty (60) days periods, as
applicable.
37.19. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
it, and this Lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or segregation of any
person or group of persons on account of age, ancestry or national origin,
color, creed, disability, gender, marital status, race, religion or sexual
orientation in the leasing, subleasing, transferring, use, occupancy, tenure or
enjoyment of the Premises nor shall Tenant, or any person claiming under or
through Tenant establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number,
use or occupancy, of tenants, Tenants, subtenants (or subsubtenants as the case
may be), subtenants or vendees in the Premises.
ARTICLE 38
PURCHASE OPTION
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38.1. At any time during the three (3) year period commencing
on the Commencement Date and ending on the third (3rd) anniversary thereof (the
"PURCHASE OPTION PERIOD"), Tenant shall have the right (the "PURCHASE OPTION")
to elect to purchase Landlord's fee and leasehold interests in the Premises for
a purchase price equal to an amount that would enable Landlord to receive a
return of its initial $10,000,000 investment, plus all other sums advanced
hereunder or any transaction costs in connection with Landlord's investment in
the Land and Improvements (including all acquisition costs) less the net amount
of insurance proceeds and condemnation awards, plus a twelve percent (12%)
cumulatively compounded (compounded annually) return on all such investments and
costs advanced by Landlord (all such investments and costs, together with such
compounded returns, the "PURCHASE PRICE"). If Tenant wishes to exercise such
right, Tenant shall deliver to Landlord written notice (a "PURCHASE NOTICE")
prior to the last day of the Purchase Option Period electing to exercise such
Purchase Option in accordance with this Article 39; provided, however, Tenant
shall not have the right to deliver a Purchase Notice if an Event and a Default
shall be continuing hereunder. Notwithstanding the foregoing, following the
expiration of the Purchase Option Period, Tenant shall be permitted to exercise
the Purchase Option, provided, however, that in addition to the Purchase Price,
Tenant shall pay to Landlord in addition to the Purchase Price, the Prepayment
Premium.
38.2. Any notice by which Tenant shall elect to purchase
Landlord's interest in the Premises shall specify a closing date, which shall be
a business day not less than sixty (60) days nor more than ninety (90) days
after the date of such notice and as to which time shall be of the essence as to
Tenant's obligation to close the transaction contemplated hereunder. Any such
conveyance shall be (i) with respect to the Fullerton Premises, by assignment
and assumption of Lease in form required by Landlord , the City of Fullerton and
any other Senior Interests and (ii) with respect to the Santa Ana Premises by
grant deed, without covenant, and shall be subject to all exceptions to title
then affecting the Premises except for monetary financing liens placed upon
Landlord's interest in the Premises. The conveyance shall be completely "AS IS,
WHERE IS, WITH ALL FAULTS," and Landlord shall make no representation or
warranty in connection with such conveyance (including, for purposes of this
clause, that it is the understanding of the parties that Tenant, and not
Landlord, shall deliver any Title Affidavit required by Tenant's title insurance
company. If Landlord shall timely tender to Tenant such a deed, and if Tenant
shall thereupon fail to accept such deed and pay the Purchase Price to Landlord
(together with any accrued Rent payable with respect to any period prior to the
date of closing), then (a) the Base Rent otherwise payable hereunder shall be
increased to be one-hundred fifty percent (150%) of the then current Base Rent.
38.3. Tenant shall be responsible for any transfer taxes (as
well as for any title charges or other miscellaneous closing expenses) payable
in connection with any conveyance by Lessor to Lessee pursuant to this Article
39.
38.4. Upon conveyance by Landlord to Tenant pursuant to this
Article 39, Tenant shall accept the Premises in its then "as is" condition, and
Landlord shall not be
49
deemed to have made any representation or warranty, or to have assumed any
ongoing responsibility of any kind whatsoever, in connection with any such
conveyance.
38.5. Upon any conveyance by Landlord to Tenant pursuant to
this Article 39, this Lease shall not terminate, but (a) Tenant shall succeed to
all rights and obligations of Landlord arising under this Lease from and after
the date of such conveyance and (b) as between Landlord and Tenant, the Rent
shall be apportioned as of the date of such conveyance.
39.6 Subject to the last sentence of Section 39.1, if Tenant
shall not have delivered to Landlord a Purchase Notice on or prior to the last
day of the Purchaser Option Period, then this Article 39 shall no longer be of
any further force or effect and shall be deemed deleted from this Lease and
Tenant shall not have any right to exercise the Purchase Option.
ARTICLE 39
PUT OPTION
39.1. Landlord shall have the unqualified right to sell,
transfer and/or assign to Tenant all of its rights, title and interest under
this Lease and in the Land and the Premises demised hereby (the "PUT OPTION")
during the period (the "PUT OPTION PERIOD") beginning on the date Landlord first
receives actual notice of any of the following events and ending on the date
which is sixty (60) days thereafter: (a) Tenant or any affiliate of Tenant
receives private debt financing in excess of $95,000,000 (a "PRIVATE DEBT
FINANCING"); (b) Tenant or any affiliate of Tenant enters into a private or
public equity financing in excess of $20,000,000; (c) an Event of Default occurs
hereunder; (d) a Major Casualty occurs with respect to either the Santa Ana Land
and the Improvements thereon or the Fullerton Land and the Improvements thereon,
or (e) Tenant elects to terminate this Lease pursuant to Section 17.3 hereof.
39.2. Notwithstanding the foregoing, in the event that (i)
Tenant elects to deliver notice (a "PRIVATE FINANCING NOTICE") to Landlord that
Tenant intends to proceed with a Private Debt Financing and (ii) such Private
Financing Notice is delivered not later than twenty-one (21) days prior to
closing on such Private Debt Financing, then, in such event (x) the "Put Option
Period" for purposes of such Private Debt Financing shall be the twenty-one (21)
day period following delivery of such Private Financing Notice, (y) Landlord
shall have the right to deliver a Put Option Notice during such period and (z)
if Landlord does not so deliver a Put Option Notice during such period then
Landlord shall not have the right to deliver a Put Option Notice following the
closing of such Private Debt Financing; provided, however, if Tenant has not
closed on such Private Debt Financing which was the subject of such Private
Financing Notice within ninety (90) days after delivery of such Private
Financing Notice, then (A) if Tenant intends to continue with such Private Debt
Financing, then Tenant shall deliver to Landlord another Private Financing
Notice regardless of whether Landlord delivered a Put Option Notice, (B) if
Tenant does not so deliver another Private Financing
50
Notice then the provisions of 40.1 (a) and 40.3 shall be applicable to such
Private Debt Financing and (C) the provisions of Section 40.1 and 40.3 shall be
applicable to any other Private Debt Financing, subject to the provisions of
this Section 40.2 if Tenant complies with the terms hereof.
39.3. If at any time Landlord shall elect to exercise the Put
Option during any Put Option Period, then Landlord shall deliver written notice
to Tenant (a "PUT OPTION NOTICE") declaring that Landlord has exercised the Put
Option, in which event Tenant shall be obligated to acquire Landlord's interest
("LANDLORD'S INTEREST") in the Land and Premises for an amount equal to the
Purchase Price plus the Prepayment Premium, with the same force and effect as if
Tenant delivered a Purchase Notice under Article 39 hereof, except that (i)
Section 39.6 shall not be applicable and (ii) failure to pay the Purchase Price
to Landlord as required hereunder, within sixty (60) days after Landlord
delivers a Put Option Notice shall be an Event of Default hereunder; provided,
however, Tenant shall not be obligated to pay the Prepayment Premium if (x) the
event giving rise to the Put Option is set forth in Sections 40.1(a) or 40.1(b)
and (y) such event occurs during the Purchase Option Period.
51
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement of Lease as of the day and year first above written.
LANDLORD:
SCC I LLC, a Delaware limited
liability company
By: /s/ Brian Collins
-------------------------------
Name: Brian Collins
Title: Authorized Officer
TENANT:
THE SPORTS CLUB COMPANY, INC.
a Delaware corporation
By: /s/ John Gibbons
--------------------------------- -------------------------------
Federal Identification Number Name: John Gibbons
Title:President
52
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘8-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 4/11/35 | | 38 |
| | 1/1/08 | | 3 |
| | 12/31/07 | | 3 |
| Changed as of / Corrected on: | | 1/20/98 |
| Filed on: | | 1/15/98 |
| For Period End: | | 12/31/97 | | | | | | | 10-K405, 4 |
| List all Filings |
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