HomeMy WebLinkAbout12-13-2013 B5 DietrickMEMORANDUM
From the Office of the City Attorney
December 12, 2011
TO: Mayor and Council
i ,
FROM: J. Christine Dietrick, City Attorne
VIA: Katie Lichtig, City Manager
SUBJECT: Red File, Business Item 135: APPROVAL OF AGREEMENTS FOR THE
PURCHASE AND SALE OF PROPERTY BETWEEN THE CITY OF
SAN LUIS OBISPO AND SLO CHINATOWN, LLC REGARDING THE
CHINATOWN PROJECT
The lease for the 955 Morro Road property is being forwarded for your review and authorization
to execute, subject to the approval by the City Attorney.
TIED FILE
MCTTI,NG AGENDA
STANDARD INDUSTRIAL /COMMERCIAL SINGLE - TENANT LEASE - NET
Basic Provisions ( "Basic Provisions ").
1.1 Parties: This Lease ( "Lease "), dated for reference purposes only December 13, 2011 is made by and between
the CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ( "Landlord ") and SLO CHINATOWN, LLC, a California
limited liability company ( "Tenant "), (collectively the "Parties ", or individually a "Party ").
1.2 Premises: That certain real property, including all improvements therein or to be provided by Landlord under
the terms of this Lease, and commonly known as 955 Morro Street, San Luis Obispo, located in the County of San Luis Obispo,
State of California and generally described as (describe briefly the nature of the property and, if applicable, the "Project ", if the
property is located within a Project): In addition to the building which is located at 955 Morro Street, the Project also includes a
parking lot adjacent thereto (the "Parking Lot ") The Parking Lot is not included in the Premises and Tenant shall have no right to
park in the Parking Lot.
1.3 Term: month to month beginning on f 2012][the Closing Date, as that term is defined in that certain
Agreement of Purchase and Sale -- Monterey Parcels Agreement, dated as of even date herewith ( "Commencement Date ") and
ending on the effective date of the Termination Notice ( "Expiration Date ")] ( "Original Term "). This Lease may be terminated on
not less than ninety (90) days prior written notice (the "Termination Notice ") as set forth in Paragraph 3.1 below (See also
Paragraph 3)
1.4 Early Possession: Such time as the parties may agree ( "Early Possession Date ") (See also Paragraphs 3.2
and 3.3)
1.5 Base Rent: Five hundred dollars ($500) per month ( "Base Rent ") plus Additional Transfer Rent, if any, payable
on the first of each month commencing on the Commencement Date or Early Possession Date, whichever is earlier. (See also
Paragraphs 4 and 12.1(b))
If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.
1.6 Base Rent and Other Monies Paid Upon Execution:
a) Base Rent: $1000, for the first and last months' Base Rent,
b) Security Deposit: $ -0- ( "Security Deposit "). (See also Paragraph 5)
c) Association Fees: $ -0 -, for the period
d) Other: $ -0 -, for_
e) Total Due Upon Execution of this Lease: $1000.
1.7 Agreed use: any lawful use (See also Paragraph 6)
1.8 Insuring Party. Tenant is the "Insuring Party" unless otherwise stated herein. (See also Paragraph 8)
1.9 Real Estate Brokers: (See also Paragraph 15) NONE.
1.10 Guarantor. NONE
1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:
an Addendum consisting of Paragraphs _ through
X a plot plan depicting the Premises;
a current set of the Rules and Regulations;
a Work Letter;
other (specify):
2. Premises.
2.1 Letting. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, for the
term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein,
any statement of size set forth in this Lease, or that may have been used in calculating Rent, is an approximation which the Parties
agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less.
Note: Tenant is advised to verify the actual size prior to executing this Lease.
2.2 Condition. Landlord shall deliver the Premises to Tenant broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs ( "Start Date ") in its AS -IS, WHERE -IS condition, with no
representations or warranties as to the Condition of the Premises whatsoever.
2.3 Compliance. Tenant acknowledges that it has performed such due diligence as it elects or has elected to
perform as to the condition and all other aspects of the Premises, the title to the Premises and the suitability of the site of the
Premises for the proposed uses. Tenant further acknowledges that it has or shall have inspected, investigated and tested all
aspects of the Premises, and that Tenant is relying and shall rely solely on its own due diligence to evaluate all aspects of the
Premises and its suitability for Tenant's purposes without any representations and warranties of any kind or nature concerning the
Premises or any aspect thereof, either express or implied, from or on behalf of City or any of its employees, agents or independent
contractors. In entering into this Lease, Tenant agrees and accepts the Premises in its "AS -IS, WHERE -IS" condition with all faults
and defects, whether patent or latent, known or unknown. Tenant is responsible for determining whether or not the Applicable
Requirements, and especially the zoning, are appropriate for Tenant's intended Use and acknowledge that past uses of the
Premises may no longer be allowed. Tenant shall be responsible for correction of any and all conditions of the Premises that are
not in compliance with any applicable laws governing the Premises or any part thereof, at any time during the Original Term, and
any extension term, of this Lease, at Tenant's sole expense, whether or not such expenses are capital in nature.
2.4 Acknowledgements. Tenant acknowledges that: (a) it has been advised by Landlord to satisfy itself with
respect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability
for Tenant's intended use, (b) Tenant has made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Landlord nor Landlord's
agents have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease.
In addition, Landlord acknowledges that it is Landlord's sole responsibility to investigate the financial capability and /or suitability of
Tenant.
3. Term.
3.1 Term; Termination. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3. The Parties acknowledge that Landlord and Tenant have entered into that certain Agreement of
Purchase and Sale -- Palm Development Site, dated as of even date herewith (the "Purchase Agreement "), pursuant to which
Tenant has the right to purchase certain real property including the Premises under certain conditions specified therein. Landlord
shall have the right to terminate this Lease on not less than ninety (90) days prior written notice to Tenant, which notice may not be
given by Landlord until the Purchase Agreement has been terminated as provided therein. Nothing in this Paragraph, however,
shall prevent either party from exercising its rights to early termination of this Lease as provided herein.
3.2 Early Possession. If Tenant totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall begin on the early Possession Date. All other terms of this Lease (including but not limited to the
obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period.
Any such early possession shall not affect the Expiration Date.
3.3 Delay In Possession. Landlord agrees to use its best commercially reasonable efforts to deliver possession of
the premises to Tenant by the Commencement Date. If, despite said efforts, Landlord is unable to deliver possession by such date,
Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease. Tenant shall not, however,
be obligated to pay Rent or perform its other obligations until Landlord delivers possession of the Premises and any period of Rent
abatement that Tenant would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period
equal to what Tenant would otherwise enjoy under terms hereof, but minus any days of delays caused by the acts or omissions of
Tenant. If possession is not delivered within 60 days after the Commencement Date, Tenant may, at its option, by notice in writing
within 10 days after the end of such 60 day period, cancel this Lease, in which event the parties shall be discharged from all
obligations hereunder. If such written notice is not received by Landlord within said 10 day period, Tenant's right to cancel shall
terminate. If possession of the Premises is not delivered with 120 days after the Commencement Date, this Lease shall terminate
unless other agreements are reached between Landlord and Tenant, in writing.
3.4 Tenant Compliance. Landlord shall not be required to deliver possession of the Premises to Tenant until
Tenant complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Tenant
shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent,
notwithstanding Landlord's election to withhold possession pending receipt of such evidence of insurance. Further, if Tenant is
required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Landlord may elect
to withhold possession until such conditions are satisfied.
4. Rent.
4.1. Rent Defined. All monetary obligations of Tenant to Landlord under the terms of this Lease (except for the
Security Deposit), including without limitation any sublease rents due to Landlord, are deemed to be rent, as are all obligations of
Tenant to pay Taxes and Insurance payments to third parties as provided elsewhere herein (collectively, "Rent ").
4.2 Payment. Tenant shall cause payment of Rent due to Landlord to be received by Landlord (and Taxes, and
Insurance payments to be received by the relevant third parties) in lawful money of the United States, without offset or deduction
except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to
the nearest whole dollar. In the event that any invoice prepared by Landlord is inaccurate such inaccuracy shall not constitute a
waiver and Tenant shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is
for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall
be made to Landlord at its address stated herein or to such other persons or place as Landlord may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Landlord's rights to the balance of
such Rent, regardless of Landlord's endorsement of any check so stating. In the event that any check, draft, or other instrument of
payment given by Tenant to Landlord is dishonored for any reason, Tenant agrees to pay to Landlord the sum of $25 in addition to
any Late Charge and Landlord, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to
accrued late charges and attorney's fees, second to accrued interest, then to Base Rent, and any remaining amount to any other
outstanding charges or costs.
5. [intentionally omitted]
6. Use.
6.1 Use. Tenant shall use and occupy the Premises only for the Agreed Use, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Tenant shall not use or permit the use of the Premises in a manner that is
unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or
properties. Other than guide, signal and seeing eye dogs, Tenant shall not keep or allow in the Premises any pets, animals, birds,
fish, or reptiles. Landlord shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed
Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical
PAGE 2 OF 15
INITIALS INITIALS
2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5105E
systems therein, and /or is not significantly more burdensome to the Premises. If Landlord elects to withhold consent, Landlord shall
within 7 days after such request give written notification of same, which notice shall include an explanation of Landlord's objections
to the change in the Agreed Use.
6.2 Hazardous Substances.
a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any
product, substance or waste whose presence, use or manufacture, disposal, transportation or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential
liability of Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to hydrocarbons, petroleum, gasoline and /or crude oil or any products, by products or
fractions thereof. Tenant shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substance, without the express written consent of Landlord and timely compliance (at Tenant's expense) with all Applicable
Requirements. "Reportable Use" shall mean (i) the installation or, use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with
respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and /or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may use
any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with
Applicable requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk
of contamination or damage or expose Landlord to any liability therefor. If addition, Landlord may condition the consent to any
Reportable Use upon receiving such additional assurances as Landlord reasonably deems necessary to protect itself, the public the
Premises and /or the environment against damage, contamination injury and or liability, including but not limited to, the installation
and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and /or
requiring Tenant to provide a security deposit.
b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause to believe, that a Hazardous Substance
has come to be located in, on, under or about the Premises, other than as previously consented to by Landlord, Tenant shall
immediately give written notice of such fact to Landlord, and provide Landlord with a copy of any report, notice, claim or other
documentation which it has concerning the presence of such Hazardous Substance.
c) Tenant Remediation. Tenant shall not cause or knowingly permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at
Tenant's expense, comply with all Applicable Requirements and take all investigatory and /or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance,
security and /or monitoring of the Premises or neighboring properties, that was caused, permitted or materially contributed to by
Tenant or its invitees or permittees or pertaining to or involving any Hazardous Substance in or on the Premises during the term of
this Lease, by or for Tenant or its invitees or permittees.
d) Tenant Indemnification. Tenant shall indemnify, defend and hold Landlord, its agents, employees, lenders and
ground Landlord, if any, harmless from and against any and all loss of rents and /or damages, liabilities, judgment, claims, expenses,
penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or
for Tenant, its invitees or permittees (provided however, that Tenant shall have no liability under the Lease with respect to
underground migration of any Hazardous Substances under the Premises from adjacent properties not caused or contributed by
Tenant)... Tenant's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or
the environment created or knowingly permitted by Tenant, and the cost of investigation, removal, remediation, restoration and /or
abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement
entered into by Landlord and Tenant shall release Tenant from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Landlord in writing at the time of such agreement.
e) [intentionally omitted]
f) [intentionally omitted]
g) Landlord Termination Option. If a Hazardous Substance Condition (see paragraph 9.1(e)) occurs during the
term of this Lease, unless Tenant is legally responsible therefore (in which case Tenant shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to
Landlord's rights and Paragraph 6.2(d) and Paragraph 13), Landlord may, at Landlord's option, either (i) investigate and remediate
such Hazardous Substance Condition, if required, as soon as reasonably possible at Landlord's expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to remediate such conditions exceeds 12 times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to Tenant, within 30 days after receipt by Landlord of knowledge of
the occurrence of such Hazardous Substance Condition, of Landlord's desire to terminate this Lease as of the date 60 days
following the date of such notice. This Lease shall thereafter terminate as of the date specified in Landlord's notice of termination.
6.3 Tenant's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Tenant
shall, at Tenant's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements provided,
however that Tenant may instead terminate this Lease unless Landlord notifies Tenant in writing, within 10 days after receipt of
Tenants termination notice that Landlord has elected to pay the actual cost thereof. If Tenant elects termination, Tenant shell
immediately cease the use of the Premises which require such capital expenditure and deliver to Landlord written notice specifying
a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that
Tenant could legally utilize the Premises without commencing such capital expenditure. Tenant shall, within 10 days after receipt of
Landlord's written request, provide Landlord with copies of all permits and other documents, and other information evidencing
Tenant's compliance with any Applicable Requirements specified by Landlord, and shall immediately upon receipt, notify Landlord in
writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Tenant or the Premises to comply with any Applicable Requirements.
PAGE 3 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
6.4 Inspection; Compliance. Landlord and Landlord's "Lender" (as defined in Paragraph 30) and consultants shall
have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable
notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Tenant with this Lease. The cost
of any such inspections shall be paid by Landlord. In addition, Tenant shall provide copies of all relevant material safety data sheets
MSDS) to Landlord within 10 days of the receipt of a written request therefor.
Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.
7.1 Tenant's Obligations.
a) In General. Subject to the provisions of Paragraph 2.2(Condition), 2.3 (Compliance), 6.3 (Tenant's Compliance
with Applicable Requirements), 7.2 (Landlord's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Tenant shall, at
Tenant's sole expense, keep the Premises, all Utility Installations (intended for Tenant's exclusive use, no matter where located),
and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result
of Tenant's use, any prior use, the elements or the age of such portion of the Premises) and to maintain service contracts relating
thereto, as appropriate, including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical and
telecommunication wiring, gas and water pipes, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls
interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, , signs and
sidewalks located in, on, or adjacent to the Premises. Tenant, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Tenant's obligations shall include restorations, replacements or renewals when necessary to
keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Tenant shall, during
the term of this Lease, keep the exterior appearance of the Building in a first -class condition (including, e.g. graffiti removal)
consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building.
b) [intentionally omitted]
c) Failure to Perform. If Tenant fails to perform Tenant's obligations under this Paragraph 7.1, Landlord may
enter upon the Premises after 10 days' prior written notice to Tenant (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Tenant's behalf, and put the Premises in good order, condition and repair, and
Tenant shall promptly pay to Landlord a sum equal to 115% of the cost thereof.
d) Replacement. Subject to Tenant's indemnification of Landlord as set forth in Paragraph 8.7 below, and without
relieving Tenant of liability resulting from Tenant's failure to exercise and perform good maintenance practices, if an item described
in Paragraph 7.1(b) cannot be repaired to a commercially reasonable standard, then either (i) such item should be replaced by
Lessee, and the cost thereof shall be including in the Lessee Operating Expenses or (ii) Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay
the actual cost thereof. If Lessee elects termination, Lessee shell immediately cease the use of the Premises which require such
replacement and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date
shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such
replacement, if any.
7.2 Landlord's Obligations. Subject to the provisions of Paragraphs 2.2(Condition), 2.3 (Compliance), 9 (Damage
or Destruction), and 14 (Condemnation), it is intended by the Parties hereto that Landlord have no obligation, in any manner
whatsoever, to repair and maintain the Premises or any part thereof, or the equipment therein including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical and telecommunication wiring, gas and water pipes, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof
drainage systems, floors, windows, doors, plate glass, skylights, signs and sidewalks located in, on, or adjacent to the Premises., all
of which obligations are intended to be that of the Tenant. It is the intention of the Parties that the terms of this Lease govern the
respective obligations of the Parties as to maintenance, replacement and repair of the Premises, and they expressly waive the
benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air and /or vacuum lines,
power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment,
plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Tenant's machinery and equipment that can be
removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements,
other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Tenant Owned Alterations and /or Utility
Installations" are defined as Alterations and /or Utility Installations made by Tenant that are not yet owned by Landlord pursuant to
Paragraph 7.4(a).
b) Consent. Tenant shall not make any Alterations or Utility Installations to the Premises without Landlord's prior
written consent, which shall not be unreasonably withheld, conditioned or delayed. Tenant may, however, make non - structural
Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to
Landlord, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing
walls, will not affect the electrical, plumbing, HVAC, and /or life safety systems, and the cumulative cost thereof during this Lease as
extended does not exceed a sum equal to $50,000 in the aggregate or a sum equal to $50,000 in any one year. Notwithstanding the
foregoing, Tenant shall not make or permit any roof penetrations and /or install anything on the roof without the prior written approval
of Landlord. Landlord may, as a precondition to granting such approval, require Tenant to utilize a contractor chosen and /or
approved by Landlord. Any Alterations or Utility Installations that Tenant shall desire to make and which require the consent of the
Landlord shall be presented to Landlord in written form with detailed plans. Consent shall be deemed conditioned upon Tenant's: (i)
acquiring all applicable governmental permits, (ii) furnishing Landlord with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike
PAGE 4 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
manner with good and sufficient materials. Tenant shall promptly upon completion furnish Landlord with as -built plans and
specifications. For work which costs an amount in excess of $50,000 in any one year, Landlord may condition its consent upon
Tenant providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility
Installation and /or upon Tenant's posting an additional Security Deposit with Landlord.
c) Liens; Bonds. Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been
furnished to or for Tenant at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's
lien against the Premises or any interest therein. Tenant shall give Landlord not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Landlord shall have the right to post notices of non - responsibility. If
Tenant shall contest the validity of any such lien, claim or demand, then Tenant shall, at its sole expense defend and protect itself,
Landlord and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Landlord shall require, Tenant shall furnish a surety bond in an amount equal to 150% of the
amount of such contested lien, claim or demand, indemnifying Landlord against liability for the same. If Landlord elects to participate
in any such action, Tenant shall pay Landlord's attorneys' fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
a) Ownership. Subject to Landlord's right to require removal or elect ownership as hereinafter provided, all
Alterations and Utility Installations made by Tenant shall be the property of Tenant, but considered a part of the Premises. Landlord
may, at any time, elect in writing to be the owner of all or any specified part of the Tenant Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Tenant Owned Alterations and Utility Installations shall, at the expiration
or termination of this Lease, become the property of Landlord and be surrendered by Tenant with the Premises.
b) Removal. By delivery to Tenant of written notice from Landlord not earlier than 90 and not later than 30 days
prior to the end of the term of this Lease, Landlord may require that any or all Tenant Owned Alterations or Utility Installations be
removed by the expiration or termination of this Lease. Landlord may require the removal at any time of all or any part of any Tenant
Owned Alterations or Utility Installations made without the required consent.
c) Surrender; Restoration. Tenant shall surrender the Premises by the Expiration Date or any earlier termination
date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition
and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that
would have been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12 months or less,
then Tenant shall surrender the Premises in the same condition as delivered to Tenant on the Start Date with NO allowance for
ordinary wear and tear. Tenant shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures,
Tenant owned Alterations and /or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed
by or for Tenant. Tenant shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises
by or for Tenant to the amounts required by applicable law (except for Hazardous Substances which were deposited via
underground migration from areas outside of the Premises, or if applicable, the Premises). Trade Fixtures shall remain the property
of Tenant and shall be removed by Tenant. Any personal property of Tenant not removed on or before the Expiration Date or any
earlier termination date shall be deemed to have been abandoned by Tenant and may be disposed of or retained by Landlord as
Landlord may desire. The failure by Tenant to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Landlord shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Tenant shall pay for all insurance required under Paragraph 8 except to the extent of
the cost attributable to liability insurance carried by Landlord under Paragraph 8.2(b) in excess of $2,000,000 per occurrence..
Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Tenant to its insurance company, with a copy of the invoice and payment instrument sent to
Landlord, within 10 days following receipt of an invoice.
8.2 Liability Insurance.
a) Carried by Tenant. Tenant shall obtain and keep in force a Commercial General Liability policy of insurance
protecting Tenant and Landlord as an additional insured against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000.00 per occurrence
with an annual aggregate of not less than $5,000,000.00. Tenant shall add Landlord as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization's "Additional Insured - Managers or Landlords of Premises"
Endorsement. The policy shall not contain any intra- insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured contract" for the performance of Tenant's indemnity
obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Tenant nor relieve Tenant of any
obligation hereunder. Tenant shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be
primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess
insurance only.
b) Carried by Landlord. Landlord shall maintain liability insurance as described in Paragraph 8.2(a), in addition
to, and not in lieu of, the insurance required to be maintained by Tenant. Tenant shall not be named as an additional insured therein.
Landlord may elect to self- insure.
8.3 Property Insurance - Building, Improvements and Rental Value.
a) Building and Improvements. Tenant shall obtain and keep in force a policy or policies in the name of
Landlord, with loss payable to Landlord, any ground - Landlord, and to any Lender insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value
thereof. If Landlord is the Insuring Party, however, Tenant Owned Alterations and Utility Installations, Trade Fixtures, and Tenant's
personal property shall be insured by Tenant under Paragraph 8.4 rather than by Landlord. If the coverage is available and
PAGE 5 OF 15
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of
earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All Consumers for the city nearest where the Premises
are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Tenant shall be liable for such deductible amount in the event of an Insured Loss.
b) [intentionally omitted]
c) [intentionally omitted]
8.4 Tenant's Property; Business Interruption Insurance.
a) Property Damage. Tenant shall obtain and maintain insurance coverage on all of Tenant's personal property,
Trade Fixtures, and Tenant Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with
a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Tenant for the
replacement of personal property, Trade Fixtures and Tenant Owned Alterations and Utility Installations. Tenant shall provide
Landlord with written evidence that such insurance is in force.
b) [intentionally omitted]
c) No Representation of Adequate Coverage. Landlord makes no representation that the limits or forms of
coverage of insurance specified herein are adequate to cover Tenant's property, business operations or obligations under this
Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact
business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at
least A -, VII VI, as set forth in the most current issue of "Best's Insurance Guide ", or such other rating as may be required by a
Lender. Tenant shall not do or permit to be done anything which invalidates the required insurance policies. Tenant shall, prior to the
Start Date, deliver to Landlord certified copies of policies of such insurance or certificates evidencing the existence and amounts of
the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to
Landlord. Tenant shall, at least 10 days prior to the expiration of such policies, furnish Landlord with evidence of renewals or
insurance binders" evidencing renewal thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which
amount shall be payable by Tenant to Landlord upon demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Tenant and Landlord each hereby
release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property
arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by
the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such companies may have against Landlord or Tenant, as
the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Landlord's negligence or willful misconduct, Tenant shall indemnify, protect, defend and
hold harmless the Premises, Landlord and its agents, Landlord's master or ground Landlord, partners and Lenders, from and
against any and all claims, loss of rents and /or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses
and /or liabilities arising out of, involving, or in connection with, the use and /or occupancy of the Premises by Tenant. If any action or
proceeding is brought against Landlord by reason of any of the foregoing matters, Tenant shall upon notice defend the same at
Tenant's expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense.
Landlord need not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Landlord and its Agents from Liability. Notwithstanding the negligence or breach of this
Lease by Landlord or its agents, neither Landlord nor its agents shall be liable under any circumstances for: (i) injury or damage to
the person or goods, wares, merchandise or other property of Tenant, Tenant's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water
or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources
or places, (ii) any damages arising from any act or neglect of any other tenant of Landlord or from the failure of Landlord or its
agents to enforce the provisions of any other lease in the Project, or (iii) injury to Tenant's business or for any loss of income or profit
therefrom. Instead, it is intended that Tenant's sole recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Tenant is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Tenant acknowledges that any failure on its part to obtain or maintain the
insurance required herein will expose Landlord to risks and potentially cause Landlord to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Tenant does not
maintain the required insurance and /or does not provide Landlord with the required binders or certificates evidencing the existence
of the required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Tenant, by an
amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base
Rent represents fair and reasonable compensation for the additional risk/costs that Landlord will incur by reason of Tenant's failure
to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Tenant's Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted
hereunder, nor relieve Tenant of its obligation to maintain the insurance specified in this Lease.
9. Damage or Destruction.
PAGE 6 OF 15
INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
INITIALS
FORM MTN- 5 -5/05E
9.1 Definitions.
a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other
than Tenant Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the
damage or destruction. Tenant shall notify Landlord in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Tenant Owned
Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the
damage or destruction. Tenant shall notify Landlord in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Tenant Owned
Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Landlord at the time
of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required
by the operation of Applicable Requirements, and without deduction for depreciation.
e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the
presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2, in, on, or under the Premises which
requires repair, remediation, or restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Tenant
shall, at Tenant's expense, repair such as soon as reasonably possible .
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless
caused by a negligent or willful act of Tenant (in which event Tenant shall make the repairs at Tenant's expense), Landlord may
either: (i) repair such damage as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full
force and effect, or (ii) terminate this Lease by giving written notice to Tenant within 30 days after receipt by Landlord of knowledge
of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event
Landlord elects to terminate this Lease, Tenant shall have the right within 10 days after receipt of the termination notice to give
written notice to Landlord of Tenant's commitment to pay for the repair of such damage without reimbursement from Landlord.
Tenant shall provide Landlord with said funds or satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Landlord shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Tenant does not make the required commitment, this Lease shall terminate as of
the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this
Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the negligence or willful
misconduct of Tenant, Landlord shall have the right to recover Landlord's damages from Tenant, except as provided in Paragraph
8.6.
9.5 Damage. If at any time there is damage for which the cost to repair exceeds one month's Base Rent, whether
or not an Insured Loss, Tenant may terminate this Lease effective 60 days following the date of occurrence of such damage by
giving a written termination notice to Landlord within 30 days after the date of occurrence of such damage.
9.6 Abatement of Rent; Tenant's Remedies.
a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance
Condition for which Tenant is not responsible under this Lease, the Base Rent payable by Tenant for the period required for the
repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Tenant's use of the Premises
is impaired. All other obligations of Tenant hereunder shall be performed by Tenant, and Landlord shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.
b) Remedies. If Landlord is obligated to repair or restore the Premises and does not commence, in a substantial
and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Tenant may, at any time prior to the
commencement of such repair or restoration, give written notice to Landlord and to any Lenders of which Tenant has actual notice,
of Tenant's election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Tenant gives such
notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect.
Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph
9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Tenant to
Landlord. Landlord shall, in addition, return to Tenant so much of Tenant's Security Deposit, if any, as has not been, or is not then
required to be, used by Landlord.
10. Real Property Taxes.
10.1 Definition. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes);
improvement bond; and /or license fee imposed upon or levied against any legal or equitable interest of Landlord in the Premises or
the Project, Landlord's right to other income therefrom, and /or Landlord's business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located.
Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of
PAGE 7 OF 15
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied
or assessed on machinery or equipment provided by Landlord to Tenant pursuant to this Lease.
10.2 Payment of Taxes. In addition to Base Rent, Tenant shall pay the Real Property Tax installment due prior to
the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiration or termination of
this Lease, Tenant's share of such installment shall be prorated.
10.3 [intentionally omitted]
10.4 Personal Property Taxes. Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon
Tenant Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Tenant. When
possible, Tenant shall cause its Tenant Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real property of Landlord. If any of Tenant's said property
shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant's property within 10 days
after receipt of a written statement setting forth the taxes applicable to Tenant's property.
11. Utilities and Services. Tenant shall pay for all water, gas, heat, light, power, telephone, trash disposal and
other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately
metered or billed to Tenant, Tenant shall pay a reasonable proportion, to be determined by Landlord, of all charges jointly metered
or billed. There shall be no abatement of rent and Landlord shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other
cause beyond Landlord's reasonable control or in cooperation with governmental request or directions.
12. Assignment and Subletting.
12.1 Landlord's Consent Not Required.
a) Subject to Section 12.2(a), Tenant may assign, transfer, mortgage or encumber (collectively, "assign or
assignment ") or sublet all or any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent,
provided that Tenant provides notice to Landlord of, and consults with Landlord concerning, such subtenants, assignees or
transferees.
b) Tenant shall pay Landlord each month Additional Transfer Rent (as defined below) following any assignment or
subletting of the Premises. Additional Transfer Rent shall mean an amount equal to 50% of Tenant's Net Additional Revenue.
Tenant's Net Additional Revenue" shall mean the rent payable by any assignee or subtenant to Tenant, including any amounts paid
in reimbursement for any expenses paid by Tenant (the "Sublease Rent ") minus Tenant Operating Expenses. Tenant Operating
Expenses shall mean (i) Base Rent payable to Landlord; (ii) amounts payable by Tenant for Maintenance, Repairs, Utility
Installations, Trade Fixtures and Alterations made under this Lease;, (iii) amount payable by Tenant for Insurance required under
this Lease; (iv) amounts payable by Tenant for Real Property Taxes; (v) amounts payable by Tenant for utilities and services as
provided in Section 11; and (vi) reasonable amounts actually incurred by Tenant as costs of subleasing or assigning, including such
brokers fees, attorney fees, costs of improvements, allowances, fees paid to the Tenant and its attorneys, and other related out of
pocket costs as are reasonably necessary to sublease and maintain the Premises (collectively, "Sublease Expenses "). Sublease
Expenses shall be subtracted from the Sublease Rent in the month in which incurred and carried forward until deducted in full.
Tenant may calculate Tenant Operating Expenses on an estimated basis and pay Landlord's share of Tenant's Net Additional
Revenue of such basis. Not later than 90 days after the end of each calendar year, Tenant shall reconcile the Sublease Rent and
Tenant Operating Expenses for the prior calendar year by delivering a written itemization thereof to Landlord. When the actual
amount of the Tenant's Net Additional Revenue is determined, an appropriate lump sum adjustment shall be made between
Landlord and Tenant with respect to Landlord's share thereof, with any excess payments made by Landlord credited to Tenant's
next payment of Rent, or at Lease expiration or earlier termination, by payment to Tenant within 30 days of such determination, and
any deficiency to be paid by Tenant within thirty (30) days after notice to Landlord of such determination.
c) [intentionally omitted]
d) [intentionally omitted]
e) [intentionally omitted]
f) [intentionally omitted]
g) [intentionally omitted]
12.2 Terms and Conditions Applicable to Assignment and Subletting.
a) Regardless of Landlord's consent, no assignment or subletting shall: (i) be effective without the express written
assumption by such assignee or subtenant of the obligations of Tenant under this Lease, (ii) release Tenant of any obligations
hereunder, (iii) alter the primary liability of Tenant for the payment of Rent or for the performance of any other obligations to be
performed by Tenant, or (iv) fail to comply with applicable zoning and other laws and regulations.
b) Landlord may accept Rent or performance of Tenant's obligations from any person other than Tenant pending
approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of
Rent or performance shall constitute a waiver or estoppel of Landlord's right to exercise its remedies for Tenant's Default or Breach.
c) Landlord's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment
or subletting.
d) In the event of any Default or Breach by Tenant, Landlord may proceed directly against Tenant, any Guarantors
or anyone else responsible for the performance of Tenant's obligations under this Lease, including any assignee or subtenant,
without first exhausting Landlord's remedies against any other person or entity responsible therefor to Landlord, or any security held
by Landlord.
PAGE 8 OF 15
INITIALS INITIALS
2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
e) [intentionally omitted]
f) Any assignee of, or subtenant under, this Lease shall, by reason of accepting such assignment, entering into
such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to
conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Tenant
during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Landlord has specifically consented to in writing.
g) [intentionally omitted]
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply
to any subletting by Tenant of all or any part of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:
a) Tenant hereby assigns and transfers to Landlord all of Tenant's interest in all Rent payable on any sublease,
and Landlord may collect such Rent and apply same toward Tenant's obligations under this Lease; provided, however, that until a
Breach shall occur in the performance of Tenant's obligations, Tenant may collect said Rent. In the event that the amount collected
by Landlord exceeds Tenant's then outstanding obligations any such excess shall be refunded to Tenant. Landlord shall not, by
reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the
subtenant for any failure of Tenant to perform and comply with any of Tenant's obligations to such subtenant. Tenant hereby
irrevocably authorizes and directs any such subtenant, upon receipt of a written notice from Landlord stating that a Breach exists in
the performance of Tenant's obligations under this Lease, to pay to Landlord all Rent due and to become due under the sublease.
Subtenant shall rely upon any such notice from Landlord and shall pay all Rents to Landlord without any obligation or right to inquire
as to whether such Breach exists, notwithstanding any claim from Tenant to the contrary.
b) In the event of a Breach by Tenant, Landlord may, at its option, require subtenant to attorn to Landlord, in which
event Landlord shall undertake the obligations of the sublandlord under such sublease from the time of the exercise of said option to
the expiration of such sublease; provided, however, Landlord shall not be liable for any prepaid rents or security deposit paid by
such subtenant to such sublandlord or for any prior Defaults or Breaches of such sublandlord.
c) Any matter requiring the consent of the sublandlord under a sublease shall also require the consent of Landlord.
d) No subtenant shall further assign or sublet all or any part of the Premises without Landlord's prior written
consent.
e) Landlord shall deliver a copy of any notice of Default or Breach by Tenant to the subtenant, who shall have the
right to cure the Default of Tenant within the grace period, if any, specified in such notice. The subtenant shall have a right of
reimbursement and offset from and against Tenant for any such Defaults cured by the subtenant.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Tenant to comply with or perform any of the terms,
covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Tenant to cure such Default within any applicable grace period:
a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially
reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential vandalism.
b) The failure of Tenant to make any payment of Rent or any Security Deposit required to be made by Tenant
hereunder, whether to Landlord or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill
any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3
business days following written notice to Tenant.
c) The commission of waste, act or acts constituting public or private nuisance, and /or an illegal activity on the
Premises by Tenant, where such actions continue for a period of 3 business days following written notice to Tenant.
d) The failure by Tenant to provide (i) reasonable written evidence of compliance with Applicable Requirements,
ii) the service contracts, (iii) an Estoppel Certificate, (iv) a requested subordination, (v) evidence concerning any guaranty and /or
Guarantor, (vi) any document requested under Paragraph 42, (vii) material safety data sheets (MSDS), or (viii) any other
documentation or information which Landlord may reasonably require of Tenant under the terms of this Lease, where any such
failure continues for a period of 30 days following written notice to Tenant.
e) A Default by Tenant as to the terms, covenants, conditions or provisions of this Lease, other than those
described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice;
provided, however, that if the nature of Tenant's Default is such that more than 30 days are reasonably required for its cure, then it
shall not be deemed to be a Breach if Tenant commences such cure within said 30 day period and thereafter diligently prosecutes
such cure to completion.
f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the
benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a
petition filed against Tenant, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored
to Tenant within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the
event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
g) The discovery that any financial statement of Tenant or of any Guarantor given to Landlord was materially false.
PAGE 9 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
h) [intentionally omitted]
13.2 Remedies. If Tenant fails to perform any of its affirmative duties or obligations, within 10 days after written
notice (or in case of an emergency, without notice), Landlord may, at its option, perform such duty or obligation on Tenant's behalf,
including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. Tenant shall pay to Landlord an amount equal to 120% of the costs and expenses incurred by Landlord in such
performance upon receipt of an invoice therefor. In the event of a Breach, Landlord may, with or without further notice or demand,
and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such Breach:
a) Terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession to Landlord. In such event Landlord shall be entitled to recover from
Tenant: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental
loss that the Tenant proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Tenant proves could
be reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by
the Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Landlord
in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred
to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by
Landlord to mitigate damages caused by Tenant's Breach of this Lease shall not waive Landlord's right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Landlord shall have the
right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Landlord may reserve the right to
recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously
given, a notice to pay rent or quit, or to perform or quit given to Tenant under the unlawful detainer statute shall also constitute the
notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Tenant to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Landlord to the remedies provided for in this Lease and /or
by said statute.
b) Continue the Lease and Tenant's right to possession and recover the Rent as it becomes due, in which event
Tenant may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and /or the appointment of
a receiver to protect the Landlord's interests, shall not constitute a termination of the Tenant's right to possession.
c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the
Premises are located. The expiration or termination of this Lease and /or the termination of Tenant's right to possession shall not
relieve Tenant from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof
or by reason of Tenant's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by
Landlord to or for Tenant of any cash or other bonus, inducement or consideration for Tenant's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Tenant's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Tenant, any such Inducement
Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Landlord under such an inducement Provision shall be
immediately due and payable by Tenant to Landlord, notwithstanding any subsequent cure of said Breach by Tenant. The
acceptance by Landlord of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a
waiver by Landlord of the provisions of this paragraph unless specifically so stated in writing by Landlord at the time of such
acceptance.
13.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant of Rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges which may be imposed upon Landlord by any Lender.
Accordingly, if any Rent shall not be received by Landlord within 5 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall immediately pay to Landlord a one -time late charge equal to 10% of each such
overdue amount or $100, whichever is greater. The Parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of such late payment. Acceptance of such late charge by Landlord shall in no
event constitute a waiver of Tenant's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the
other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3
consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Landlord's option, become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Landlord hereunder, other than late charges, not received by Landlord,
when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non-
scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to
non - scheduled payments. The interest ( "Interest ") charged shall be computed at the rate of 10% per annum but shall not exceed
the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Landlord.
a) Notice of Breach. Landlord shall not be deemed in breach of this Lease unless Landlord fails within a
reasonable time to perform an obligation required to be performed by Landlord. For purposes of this Paragraph, a reasonable time
shall in no event be less than 30 days after receipt by Landlord, and any Lender whose name and address shall have been
furnished Tenant in writing for such purpose, of written notice specifying wherein such obligation of Landlord has not been
performed; provided, however, that if the nature of Landlord's obligation is such that more than 30 days are reasonably required for
PAGE 10 OF 15
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
its performance, then Landlord shall not be in breach if performance is commenced within such 30 day period and thereafter
diligently pursued to completion.
b) Performance by Tenant on Behalf of Landlord. In the event that neither Landlord nor Lender cures said
breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion,
then Tenant may elect to cure said breach at Tenant's expense and offset from Rent the actual and reasonable cost to perform such
cure, or Tenant may elect to cure such breach at Tenant's expenses and pursue an action at law or in equity against Landlord
including without limitation an action seeking specific performance of this Lease t. Tenant shall document the cost of said cure and
supply said documentation to Landlord.
14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold
under the threat of the exercise of said power (collectively "Condemnation "), this Lease shall terminate as to the part taken as of
the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building is taken by
Condemnation, Tenant may, at Tenant's option, to be exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and /or payments shall be the property of Landlord, whether such award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Tenant shall be
entitled to any compensation paid by the condemnor for Tenant's relocation expenses, loss of business goodwill and /or Trade
Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the Premises by Tenant, for purposes of Condemnation only, shall be considered the property of the
Tenant and Tenant shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Landlord shall repair any damage to the Premises caused by such Condemnation.
15. Brokerage Fees.
15.1 Representations and Indemnities of Broker Relationships. Tenant and Landlord each represent and
warrant to the other that it has had no dealings with any person, firm, broker or finder in connection with this Lease, and that no one
is entitled to any commission or finder's fee in connection herewith. Tenant and Landlord do each hereby agree to indemnify,
protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any
such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
a) Each Party (as "Responding Party ") shall within 10 days after written notice from the other Party (the
Requesting Party ") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then
most current "Estoppel Certificate" form published by the AIR Commercial Real Estate Association, plus such additional
information, confirmation and /or statements as may be reasonably requested by the Requesting Party.
b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the
Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except
as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if
Landlord is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.
c) If Landlord desires to finance, refinance, or sell the Premises, or any part thereof, Tenant and all Guarantors
shall deliver to any potential lender or purchaser designated by Landlord such financial statements as may be reasonably required
by such lender or purchaser, including but not limited to Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Definition of Landlord. The term "Landlord" as used herein shall mean the owner or owners at the time in
question of the fee title to the Premises, or, if this is a sublease, of the Tenant's interest in the prior lease. In the event of a transfer
of Landlord's title or interest in the Premises or this Lease, Landlord shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Landlord. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Landlord shall be relieved of all liability with respect to the obligations and /or covenants under this Lease thereafter to be
performed by the Landlord. Subject to the foregoing, the obligations and /or covenants in this Lease to be performed by the Landlord
shall be binding only upon the Landlord as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean
and refer to calendar days.
20. Limitation on Liability. The obligations of Landlord under this Lease shall not constitute personal obligations of
Landlord or its city council members, administrators, managers, employees, contractors, counsel, or agents, and Tenant shall look
to the Premises, and to no other assets of Landlord, for the satisfaction of any liability of Landlord with respect to this Lease, and
shall not seek recourse against Landlord's partners, members, directors, officers or shareholders, or any of their personal assets for
such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or
observed by the Parties under this Lease.
PAGE 11 OF 15
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
22. No Prior or Other Agreements. This Lease contains all agreements between the Parties with respect to any
matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and
may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon
Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for notice. A copy of all notices to
Landlord shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter
designate in writing.
212 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given
on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given 24 hours after
delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.
24. Waivers.
a) No waiver by Landlord of the Default or Breach of any term, covenant or condition hereof by Tenant, shall be
deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Tenant of the same or
of any other term, covenant or condition hereof. Landlord's consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Landlord's consent to, or approval of, any subsequent or similar act by Tenant, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
b) The acceptance of Rent by Landlord shall not be a waiver of any Default or Breach by Tenant. Any payment by
Tenant may be accepted by Landlord on account of moneys or damages due Landlord, notwithstanding any qualifying statements or
conditions made by Tenant in connection therewith, which such statements and /or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Landlord at or before the time of deposit of such payment.
c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL
MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE
EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. [intentionally omitted].
26. No Right To Holdover. Tenant has no right to retain possession of the Premises or any part thereof beyond
the expiration or termination of this Lease. In the event that Tenant holds over, then the Base Rent shall be increased to 150% of
the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as
consent by Landlord to any holding over by Tenant.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or
performed by Tenant are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of
the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning
as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives,
successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non - Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground
lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device "), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions
thereof. Tenant agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender ") shall have no
liability or obligation to perform any of the obligations of Landlord under this Lease. Any Lender may elect to have this Lease and /or
any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Tenant, whereupon this
Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. In the event that Landlord transfers title to the Premises, or the Premises are acquired by another
upon the foreclosure or termination of a Security Devise to which this Lease is subordinated (i) Tenant shall, have the right to
terminate this Lease or, at its election, subject to the non - disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the
remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between
Tenant and such new owner, and (ii) Landlord shall thereafter be relieved of any further obligations hereunder (but not of its
obligations under that certain Agreement of Purchase and Sale — Palm Development Site, to be executed and delivered between
the City and SLO Chinatown, LLC, a California limited liability company) and such new owner shall assume all of Landlord's
PAGE 12 OF 15
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior Landlord or with respect to events
occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Tenant might have against any prior
Landlord, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to
any prior Landlord which was not paid or credited to such new owner.
30.3 Non - Disturbance. With respect to Security Devices entered into by Landlord after the execution of this Lease,
Tenant's subordination of this Lease shall be subject to receiving a commercially reasonable non - disturbance agreement (a "Non -
Disturbance Agreement" ) from the Lender which Non - Disturbance Agreement provides that Tenant's possession of the Premises,
and this Lease, including any options to extend the term hereof, will not be disturbed so long as Tenant is not in Breach hereof and
attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Landlord shall, if requested by
Tenant, use its commercially reasonable efforts to obtain a Non - Disturbance Agreement from the holder of any pre- existing Security
Device which is secured by the Premises. In the event that Landlord is unable to provide the Non - Disturbance Agreement within
said 60 days, then Tenant may, at Tenant's option, directly contact Lender and attempt to negotiate for the execution and delivery of
a Non - Disturbance Agreement.
30.4 Self- Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any
further documents; provided, however, that, upon written request from Landlord or a Lender in connection with a sale, financing or
refinancing of the Premises, Tenant and Landlord shall execute such further writings as may be reasonably required to separately
document any subordination, attornment and /or Non - Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded
in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action,
or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall
include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by
compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees
award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. In addition, Landlord shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and
consultation).
32. Landlord's Access; Showing Premises; Repairs. Landlord and Landlord's agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the
purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or
additions to the Premises as Landlord may deem necessary or desirable and the erecting, using and maintaining of utilities,
services, pipes and conduits through the Premises and /or other premises as long as there is no material adverse effect to Tenant's
use of the Premises. All such activities shall be without abatement of rent or liability to Tenant.
33. Auctions. Tenant shall not conduct, nor permit to be conducted, any auction upon the Premises without
Landlord's prior written consent. Landlord shall not be obligated to exercise any standard of reasonableness in determining whether
to permit an auction.
34. Signs. Landlord may not place on the Premises any signs at any time other than following the giving of a notice
of termination of this Lease without Tenant's prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Landlord, the voluntary or other
surrender of this Lease by Tenant, the mutual termination or cancellation hereof, or a termination hereof by Landlord for Breach by
Tenant, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Landlord may elect to
continue any one or all existing subtenancies. Landlord's failure within 10 days following any such event to elect to the contrary by
written notice to the holder of any such lesser interest, shall constitute Landlord's election to have such event constitute the
termination of such interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Landlord's actual reasonable costs and
expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of,
or response to, a request by Tenant for any Landlord consent, including but not limited to consents to an assignment, a subletting or
the presence or use of a Hazardous Substance, shall be paid by Tenant upon receipt of an invoice and supporting documentation
therefor. Landlord's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach
by Tenant of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Landlord at the time of such consent. The failure to specify herein any particular condition
to Landlord's consent shall not preclude the imposition by Landlord at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
37. [intentionally omitted]
38. Quiet Possession. Subject to payment by Tenant of the Rent and performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under this Lease, Tenant shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. [intentionally omitted]
40. [intentionally omitted]
41. Security Measures. Tenant hereby acknowledges that the Rent payable to Landlord hereunder does not
include the cost of guard service or other security measures, and that Landlord shall have no obligation whatsoever to provide
PAGE 13 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5 /05E
same. Tenant assumes all responsibility for the protection of the Premises, Tenant, its agents and invitees and their property from
the acts of third parties.
42. Reservations. Landlord reserves to itself the right, from time to time, to grant, without the consent or joinder of
Tenant, such easements, rights and dedications that Landlord deems necessary, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the
Premises by Tenant. Tenant agrees to sign any documents reasonably requested by Landlord to effectuate any such easement
rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid
by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation
on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as
it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid "under protest" with 6 months shall
be deemed to have waived its right to protest such payment.
44. Authority; Multiple Parties; Execution.
a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of
such authority.
b) If this Lease is executed by more than one person or entity as "Tenant ", each such person or entity shall be
jointly and severally liable hereunder. It is agreed that any one of the named Tenants shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of the named Tenants, and Landlord may rely on the
same as if all of the named Tenants had executed such document.
c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.
45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions
shall be controlled by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall
not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all
Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the
modification. As long as they do not materially change Tenant's obligations hereunder, Tenant agrees to make such reasonable
non - monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.
48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and /or the Arbitration of all
disputes between the Parties and /or Brokers arising out of this Lease - is 0 is not attached to this Lease.
50. Americans with Disabilities Act. Since compliance with the Americans with Disabilities Act (ADA) is
dependent upon Tenant's specific use of the Premises, Landlord makes no warranty or representation as to whether or not the
Premises comply with ADA or any similar legislation. In the event that Tenant's use of the Premises requires modifications or
additions to the Premises in order to be in ADA compliance, Tenant agrees to make any such necessary modifications and /or
additions at Tenant's expense.
LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY
CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT
WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF
THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF
HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE
ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR TENANT'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF
THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS
LOCATED.
The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
Executed at: San Luis Obispo, California Executed at: San Luis Obispo, California
PAGE 14 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
On:
By TENANT:
SLO CHINATOWN, LLC,
a California limited liability company
By:
Name Printed: Thomas M. Copeland
Title: Manager
Address: P.O. Box 12260
San Luis Obispo, CA 93406
Telephone:(805) 593 -0200
Facsimile:(805) 593 -0109
Federal ID No.
On:
By LANDLORD:
CITY OF SAN LUIS OBISPO,
a municipal corporation and charter city
By:
Name Printed:
Title:
By:
Name Printed:
Title:
Address:
Telephone:(_)
Facsimile:)
Federal ID No.
NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write
or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 800 W 6th Street,
Suite 800, Los Angeles, CA 90017. Telephone No. (213) 687 -8777. Fax No.: (213) 687 -8616.
Copyright 2001 - By AIR Commercial Real Estate Association. All rights reserved.
No part of these works may be reproduced in any form without permission in writing.
PAGE 15 OF 15
INITIALS INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E