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HomeMy WebLinkAboutReso 42-1985 RESOLUTION NO. 42-85 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION AUTHORIZING EXECUTION OF A GROUND LEASE BE IT RESOLVED by the City Council of the City of South San Francisco that: 1. Approval of Agreement. The Agreement entitled "Ground Lease" between the City of South San Francisco and the Price Company, a copy of which is attached hereto as Exhibit "1", is hereby approved. Also, the "Memorandum of Lease", a copy of which is attached hereto as Exhibit "2", is hereby approved. 2. Execution of Agreement. The Mayor is hereby authorized to execute the "Ground Lease" and Exhibit "B" thereto and the "Memorandum of Lease" on behalf of the City and the City Clerk attest his signature thereto. 3. Recordation. The "Memorandum of Lease" attached hereto as Exhibit "2" is hereby authorized to be recorded in the Office of the Recorder of the County of San Mateo, and upon signature by both parties thereto, the City Clerk is hereby directed to insure that such recordation occurs. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at an adjourned regular meeting held on the 20th day of February , 19 85 , by the following vote: AYES: Councilmembers Mark ii. Addiego, Emanuele N. Damonte, Richard A. Haffey; and Gus Nicolopulos None NOES: ABSENT: Councilmember Roberta Cerri Teglia GROUND LEASE TO EXHIBIT 1 Resolution No. 42-85 1 of ?~ pao~ This 26th 'day of February , 1985, .the CITY OF SOUTH SAN FRANCISCO (referred to h'erein as "La.ndlord"), hereby leases to THE PRICE COHPANY, a California corporation (referred. to herein as "Tenant"), the land located on South Airport Boulevard. in the City of South.San Francisco, consisting of approximately 12 acres, together with any and all appurtenances, rights, privileges and easements benefiting, belonging to, pertaining thereto, and described on Exhibit "A" attached hereto (referred to herein as the "Premises") for the term and upon the terms and conditions hereinafter set forth: ~ ARTICLE TERN OF LEA~E 1.01 - Initial Term The initial term ("Initial Term") of this Lease shall be a period of twenty (20) years, commencing as provided in the "Site Preparation Agreement" attached hereto as Exhibit 'B" and made a part of this Lease ("Commencement Date"). 1.02 - Extended Term Subject to all of the provisions of this Lease, Tenant may, at Tenant's Option, extend the Initial Term for two (2) additional seven (7) year periods (the "Extended Term"), which Extended Term shall commence a.t the expiration of the Initial Term (or the first Extended Term) and termina.te at the hour of 12:01 a.m. on the seventh anniversary of the, date of commencement of each Extended Term, unless earlier terminated as herein provided. After the exercise of either option to extend, all references in this Lease to the "term'! shall be considered to mean the term as extendedt and all references to termination or ~o the end of the term shall be considered to mean the termination or end o*f the term as extended. Failure to exercise the option for the first Extended Term shall nullify the option for the subsequent Extended Term, Tenant's right to exercise the options to extend are subject to: 1. The followin~ conditions precedent: (a) This Lease shall be in effect at the time notice of exercise is given and on the last day of the term. · ' (b) Tenant shall not be in default under any provision of this Lease at the time notice of exercise is given or on the last day of the term preceding ~he Extended Term. 2. Compliance with the following procedure for exercising the option: .. (a) At least six (6) months before the last day of the Initial Term, or first Extended Term, as the case may be, Tenant shall give Landlord written notice irrevocably exercising, the option. (b) Each party shall, at the request of the other, execute a memorandum in recordable form, acknowledging the fact that the option has been exercised and otherwise complying with the requirements of law for an effective memorandum or abstract of Lease. ' ARTICLE II USE OF PREMISES 2.01 - Use The PremiSes may, during the term of.this Lease, be used for any lawful purpose. 2.02 - Only Lawful Uses Permitted 'Tenant shall not use or permit the Premises or any por'tion thereof to be improved, developed, used or occupied in any manner or for any purpose that is in any way in violation of any valid law, ordinance or regulation of any federal, state, county or local governmental agency, body or entity. Furthermore~ Tenant shall not maintain, commit or permit the maintenance or commission 'of any nuisance as now or hereafter defined by any statutory or decisional law applicable to said'Premises on said Premises or any part thereof. ARTICLE III RENT 3.01 - Minimum Rent Tenant'shall pay to Lessor a minimum annual rent of Four Hundred Thousand Dollars ($400,000.00) per annum, payable in advance in twelve (12) equal monthly installments of Thirty-Three Thousand, Three Hundred Thirty-Three and 33/100 Dollars ($33,333.33) each, on the first day of each month, beginning on the first day of the month following the Commencement Date. On that day Tenant shall also pay One Thousand One Hundred Eleven and 11/I00 Dollars ($I,111.11) for each day from the Commencement Date to that first day. 3.02 - Percentage Rent A) Tenant shall pay to Landlord, as percentage rent, rent for each lease year during the term hereof, a sum equal to the amount by which one-half of one percent (.5%) of Tenant's gross sales (as gross sales are hereinafter defined) made during each - 2 - lease year exce'eds the total of the minimum rent as specified in Se~'tion 3.01 hereof for such year. Said sum is hereinafter referred.to as "Percentage Rent." B) Withi'n sixty (60) days a~ter ~he close of each lease year, Tenant shall submit to Landlord a statement indicating the -amount of its gross sales for the previous lease year. Tenant shall accompany such statement with a payment of the percentage rental due, if any, as provided in section 3.02.(A) herein, C) . "Cross Sales" is defined as the selling price of all merchandise or services sold in or from the Premises which is the subject of this Lease by Tenant,' its subtenants, licensees and concessionaires, whether for cash or for credit, excluding, however, the following: 1. The sales price of all .mercha.ndtse returned and. accepted for full credit or the amount of the cash refund or allowance made thereon; Any exchange or merchandise between stores of Tenant; Uncollectible credit account; 4. The sums and credits received in settlement of claims for loss or damage to merchandise or other property; 5. Sales taxes, so called luxury taxes, excise taxes, gross receipt taxes, and other taxes, now or hereafter imposed upon the sale or value of'merchandise or services, whether added separately to the selling price of the merchandise or services and collected from customers or included in the retail selling price; 6. Receipts from public telephones, vending machines for the use of employees, sale. s of money orders, and the collection of public utility bills; 7. Interest, carrying charges, or 'other finance charges in respect of sales made on credit; 8, Sales of fixtures, trade fixtures, or personal property that are not merchandise held for sale in the normal course of business; Sales to employees. Tenant shall maintain adequate records for a period of two (2) years after the close of each lease year for the purpose of allowing Landlord to verify the reported gross sales for such year. At any time within said two (2) years, Landlord o~ its agents may inspect such records during normal business hours and, in the event an inaccuracy is disclosed, an adjustment shall thereupon be made. In the. event the required adjustment arises - 3 - f~bm an understatement of gross sales in excess of three percent (3%), Tenant shall reimburse Landlord for Landlord's reasonable expense incurred in establishing the tn@ccuracy. D) Should the lease period~commence and/or terminate on other than September I and August 31, then the Percentage Rent, if any, shall be computed based on the following time periods which shall be called "lease year" or "lease years": 1. The first lease year shall extend from the Commencement Date of the Lease~ to the first August 31 following commencement. The computation shall be.made as follows: (a) The total gross sales for the period from the Commencement Date of the Lease to twelve (i~) months therefrom shall be totaled, and a monthly average derived therefrom. (b) This average monthly sales figure shall be multiplied by the number of months prior to the first September I of the least term. (c) The product of the above calculation shall be the gross sales for the first lease year° 2. The second lease year shall commence on the first September ! to occur following the Commencement Date of this Lease, and terminate the following August 31. 3. Thereafter, the lease years shall coincide'with the lease year as defined in No. 2 above. 4. The final lease year period shall terminate on the termination date of the Lease, if other than August 31. For purposes of computing Percentage Rent, the average monthly sales for the twelve (12) month period prior to the termination date shall be calculated. This monthly figure shall then be multiplied by the number of months that have elapsed since the last August 31 of the lease term. This figure shall represent gross sales for the final lease year. 3.03 - Minimum Revenue Guaranty A). Beginning twenty-four (24) months after the Tenant opens for business, and for the balance of the lease term ("Guaranty Period"), the Tenant shall pay additional rent for each lease year computed as follows: If the total revenues due Landlord from (i) the minimum rent and percentage rent under this Lease; and (ii) the City of South San Francisco's share of sales taxes generated from the Premises ("Total Revenues"), with respect to the particular lease year, is less than One Million ($1,000,000.00) Dollars, then Tenant shall pay Landlord, for such lease year, additional rent in an amount equal to the difference between such Total Revenues and One Million ($1,000,000.00) Dollars. Such additional rent shall be paid to Landlord within sixty (60) days - 4 - after Tenant receives a bill from Landlord, showing such amount dBe.' Notwithstanding the aforementioned, Tenant may elect not to pay such additto,nal rent and, in lieu thereof, terminate the Lease . by giving written notice of such electio~ to Landlord. In such case, this .Lease shall terminate one hundred twenty (120) days after such written election is made. Should the Guaranty Period commence and/or terminate on other than September ! and August 31, then the One Hillion ($1,000,000.00) Dollar figure, as aforementioned, shall be reduced for a short.lease year in an amount equal to the product of One Million ($1,000,000,00) Dollars multiplied by a fraction, the numerator of which is the number of days in such short lease year, and the denominator of which is 365. B) This Section 3.03 shall apply only so long as the City of South San Francisco is the Landlord' under., this Lease. 3.04 - Prorations During the first month and last month of the lease term, rent shall be prorated based upon a thirty (30)day month if this Lease starts on a day other than the first day of the -month or ends on a day other than the last day of the month. 3.05 - Place for Payment of Rent Ail rent that becomes due and payable under this Lease shall be paid to Landlord at the office of Landlord at 400 Grand Avenue, South San Francisco, California, or such other pla-ce or places as Landlord may from time to time designate by written notice given to Tenant. ARTICLE IV TAXES AND UTILITIES 4.01 - Payment by Tenant During the Term, Tenant shall pay~ in addition to rent, at least ten (I0) days before delinquency and before any fine, interest, penalty or 'other charge shall become due, directly to the charging authority: Ail real property and possessory interest, taxes, personal property taxes, general and special assessments, levies, fees, rents and other charges of every description, ordinary or extraordinary, foreseen or unforeseen, which at any time arise with respect to, or are levied on or assessed against the Premises, improvements located on the Premises, the leasehold estate, or any subleasehold estate, or any part thereof, including personal property located on the Premises or within the improvements to the full extent of installments falling due during the lease term, whether belonging to or chargeable against Landlord or Tenant. - 5 - 4.~2 - Exclusion of Net Income Taxes and Related Taxes Nothing herein contained shall impose upon Tenant the obligations to pay any franchise, torpor'ate, estate, inheritance, succession, capital levy, transferor other tax imposed upon · Landlord which is measured by Landlord's net income or revenue, or a formula derived therefrom. 4.03 - Proration of Taxes · ; In the event the Landlord is a non-governmental entity and is subject to taxes, the following shall apply: Ail or part of the Premises may comprise a tax lot or lots with other premises owned by Landlord or other parties .("Other Premises") and may be assessed for. real estate tax purposes, together with said Other Premises. Immediately upon execution'and de'livery of this Lease~ Landlord and Tenant shall attempt to cause the appropriate taxing authorities to assess the Premises for real .estate tax purposes separately from all Other Premises. During any period in which 'the Premises are assessed for real estate tax purposes, together with any Other Premises, Landlord will pay, at least five (5) days before .the last day on which payment may be made without penalty or interest, all real estate taxes and assessments which shall be levied against the Premises and said Other Premises (collectively, the "Combined Premises"). Beginning as of the Commencement Date, and thereafter during the term hereof, Tenant shall reimburse Landlord for that portion of each installment of such combined real estate'taxes and assessments which are attributable to the Premises. Each such reimbursement shall be payable within thirty (30) days after a notice from Landlord to Tenant containing a true copy of the real estate tax bill upon which it is based, together with a calculation showing the portion of such bill which is attributable to the Premises (but in no event shall Tenant be required to pay any such reimbursement to Landlord more than ten (10) days prior to the last day on which the installment' on which it is based may be paid without penalty or interest). For the purposes of. the foregoing calculations, the percentage of the total assessment of the Combined Premises for land (as unimproved) attributable to the Premises shall be equal to the percentage which the square footage of the land bears to the total square footage of the Combined Premises; any assessment attributable to the buildings or any other improvements constructed upon the Premises shall be attributed to the Premises, and any assessment .attributable to improvements constructed upon the Other Premises shall be attributed to such Other Premises; provided, however, that if there are buildings and improvements constructed upon the Other Premises, then for purposes of the foregoing calculations, the percentage of the total assessment of the Combined Premises for buildings and improvements attributable to the Premises shall be equal to the percentage which the square footage of the floor area of the buildings and improvements constructed upon the Premises bears to the gross square footage of the floor area of all buildings and improvements constructed within the Combined Premises. If Landlord shall fail to pay any installment of real - 6 - es'cate taxes and assessments on the Combined Premises in accordance with this paragraph, then Tenant, at Tenant's option, may pay such in&,aliment, together with any penalties and interest, and d~duct the amount of such ~ayment from the next installments of rent becoming due under this Lease. Landlord represents, warrants, covenants, and agrees that, subject to the provisions hereof, tenant shall only be responsible for the payment of those real property taxes, assessments, possessory interest taxes and other taxes and impositions assessed or levied solely against the Premises as herein desdribed and improvements thereon (and exclusive of all other Premises). In addition, all tax'es, assessments, levies, fe~s and other charges levied on, or assessed against, the Premises shall be prorated and apportioned between Landlord and Tenant for the tax year in which the term commences and for the tax year in which the term expires-or terminates. Landlord is not responsible fox'any taxes from which it is.exempt. 4.04 -' Installment Payment of Assessments Tenant may take the benefit of any law allowing assessments to be paid in installments and, in such event, =enant shall only be liable for such installments of assessments due during the term. 4.05 -- Contest of Tax Levied Tenant shall have the right to contest the validity or amount of any tax, assessment, levy, fee or other charge payable in whole or in part by Tenant hereunder, or to seek a reduction in the assessed value'of the Premises, or any part thereof, by appropriate proceeding diligently conducted in good faith and, in any such event, Landlord agrees, at the request of Tenant, to Join with Tenant, at Tenant's expense, in said proceedings, and Landlord agrees to sign and deliver such papers and instruments as may be necessary to prosecute such proceedings.. Tenant shall have the right to withhold payment of any such tax'or assessment which Tenant elects to contest, for so long as tenant is actively and diligently contesting the same, if the statute under which Tenant is prosecuting such contest so permits. If Tenant contests any such tax assessment or charge, Tenant shall protect Landlord and Premises from any lien by adequate surety' bond or other security reasonably acceptable to Landlord. 4.06 - Tax Returns and Statements Tenant shall, as between Landlord and Tenant, have the duty of attending to, preparing, making and filing any statement, return report or other instruments required or permitted by law in connection with the determination, equalization, reduction, or payment of any taxes, assessments or other charges that are or may be levied on or assessed against said Premises, any portion of said Premises, any interest in said Premises or any improvements or other property on said Premises. Tenant shall furnish to .- 7 - Landlord, a.t its request, within forty (40) days after the date when any tax, assessment or charge would become delinquent, a receipt or other evidence establishing their payment. Tenant may comply with thi~ requirement by retaintn~ a tax service to notify Landlord whether the taxes have been paid. 4.07 - Tax Hold-Harmless Tenant shall indemnify and hold Landlord and the property of Landlord, including said Premises and any improvements now or hereafter on said Premises, fr~e and harmless from any liability, loss or damage resulting from any taxes, assessments, or other charges required by this Article to be paid by Tenant and from all interest, penalties, and other sums imposed therein and from any sales or other proceedings to~ enforce collection of any such taxes, assessments or other charges. · ~ 4.08 - Utilities Tenant shall pay or cause to be paid, and hold Landlord and the property of. Landlord, including said Premises, free and harmles.s from all' charges for the furnishing of gas, water, electricity, telephone service, and other public utilities to said Premises during the term of this Lease, and for the removal of garbage and rubbish from said Premises during-the term of this Lease. Ail utilities shall be prorated for the initial lease year and the year the Lease terminates. ~-- 4.09 - Payment by Landlord Subject 'to Tenant's right to contest taxes and withhold payment of same as provided in Section 4.05 herein, should Tenant fail to pay within the time specified in this Article, any taxes, assessments or other charges required by this Article to be paid by Tenant, Landlord may, without notice to or demand on Tenant, pay, discharge, or adjust such tax~ assessment, or other charge for the benefit of Tenant. In.such event, Tenant shall promptly, on written demand of Landlord, reimburse Landlord for the full amount paid by Landlord in paying, discharging, or adjusting such tax, assessement, or other charge, together with interest thereon at the rate of ten percent (10%) per annum from the date of payment by Landlord until the date of repayment by Tenant. Where no time within which any charge required by" this Article to be paid by Tenant is specified in this Article, such charge must be paid by Tenant before it becomes delinquent. The obligation of Tenant to pay taxes, utilities and other charges under this Article shall begin on the first day of the term. ARTICLE V INDEMNITY AND INSURANCE 5,01 - Indemnity Agreement Tenant shall indemnify and hold Landlord and the property of Landlord, including Premises and any buildings or improvements - 8 - now or hereafter on said Premises, free and harmless from any and all liability, demands, claims, loss, damages and expenses, including reasonable attorneys' fees, resulting from Tenant's 'occupation and use of the Premises. 5.02 - Liability Insurance Tenant shall, at Tenant's own cost and expense, secure promptly upon execution of this Lease, and maintain during the entire term' of this Lease, a broad form cdmprehensive coverage policy of public liability insurance issued by an insurance company reasonably acceptable to Landlord a'nd authorized to issue liability insurance in California insuring Tenant and Landlord against loss or liability caused by or connected with Tenant's occupation and use of said Premises under this Lease in amounts not less than: A) Five Million ($5,000,000.00) Dollars for injury to or death of one person and, subject to such limitation for the injury or death of one person, of not less than Five Million ($5,000,000.00) Dollars for injury to or death of two (2) or more persons as a result of any one accident <or incidentl and B) ' One Million Dollars ($1,000,000.00) for damage to or destruction of any property of others. 5.03 - Fire and Casualty Insurance Tenant shall, at Tenant's own cost and expense, at all .times during the term of this Lease, keep all buildings, improvements and other structures on said Premises, as well as any and all additions thereto, insured for'their full insurable value by insurance companies authorized to issue such insurance in California against loss or destruction by fire and the perils commonly covered under the standard extended coverage-endorsement to fire insurance policies in the county where said Premises are located. Any loss payable under such insurance shall be payable to Tenant. 5.04 - Specific Perils -to be Insured Notwithstanding anything to the contrary in Section 5.03 of this Lease, the insurance required by SectiOn 5.03 of this Lease shall, whether or not included in the standard extended coverage endorsement mentioned in Section 5.03, insure all buildings, improvements and other structures on said Premises, as well as any and all additions thereto, against loss or destruction by windstorm, cyclone, tornado, hail, explosion, riot, riot attending a strike, civil commotion, malicious mischief, vandalism, aircraft, fire, smoke damage and sprinkler leakage. 5.05 - Notice of Cancellation of Insurance - Coverage The liability insurance required herein shall be extended to include, as additional insureds, the City of South San - 9 - Fr,ancisco, its elective and appointive boards, officers, agents and employees. Evidence of the insurance described above shall be provided to the 'City upon execution of this Lease and shall be subject to approval by the City Attorney as to form. The policy of insurance shall also contain a provision indicating that such insurance shall not be reduced or cancelled except upon thirty (30) days written notice to the City. In addition, the following endorsement shall be made on said policy of insurance: "Notwithstanding any other provisions in this policy, the insurance a~forded hereunder to the City of South San Francisco shall be primary as' to any other insurance or reinsurance covering or available to the City of South San Francisco, and such other insurance or reinsurance shall not be required to contribute to any liabil~ty or loss until and unless the approximate limit of liability afforded hereunder is exhausted." 5.06 - Blanket Coverage and Self Insurance · 'Notwithstanding anything to the contrary contained within this Article V, Tenant's obligation to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy and/or so-called umbrella policies of insurance carried and maintained by Tenant; provided, however, that Landlord shall be named as an additional insured thereunder as its interests may appear, and that the coverage afforded Landlord will not be reduced or diminished by reason of the use of such blanket or excess coverage policy of insurance; and provided further 'that the requirements set forth in this Article V are -otherwise satisfied. Furthermore, Tenant shall have the right, at Tenant's option, to self insure up to the first One Hundred Thousand ($100,000.00) Dollars of any risk required by this Article V to be insured by Tenant so long as Tenant maintains a net worth of at least One Hundred Million ($100,000,000.00) Dollars. ARTICLE VI REPAIRS AND RESTORATION 6.01 - Maintenance by Tenant At all times during the term of this Lease, Tenant shall, at Tenant's own cost and expense, keep and maintain the Premises and all improvements, now or hereafter and from time to time on said premises, in good condition and repair. Furthermore, Tenant shall, at tenant's own cost and expense, maintain, at all times during the term of this Lease, the whole of said Premises, as well as any improvements, landscaping or facilities thereon, in a clean, sanitary an orderly cDndition. - 10 - 6.0,2 - Casualty - Turnover Insurance Proceeds If, during the last three (3) years of the Lease, a portion' or all of the Pr~mises are damaged by fire or other casualty, Tenant may elect to terminate this Lease by serving upon Landlord, at any time within one hundred twenty (120) days after the date of the casualty, written notice ("Casualty Termination Notice") of Tenant's. election to so terminate, effective at the end of the calendar month next following the month in-which such notice has been so given (the "Casualty Termination Date"), and thereupon this Lease shall terminate and/be null and void as if such date were the date originally set fOrth herein for the expiration of the Term, and except for accrued liabilities, neither Landlord nor Tenant shall have any further obligations to each other pursuant to this Lease. If Tenant elects to terminate the Lease as aforementioned, Tenant must turn over all in'surance proceeds attributable to the damage ko the building ahd other' improvements on the Premises, but not those insurance proceeds attributable to Tenant's personal property and other property which Tenant would be permitted to remove upon termination of the Lease. 6.03 - Tenant's Alterations; New Construction At any time and-from time to time during the Term, Tenant may, at its option and at its sole expense, make any alterations or changes, whether structural or nonstructural, to any portion or all of any improvements which may exist from time to time on any portion of the Premises, and may, at its option, make new improvements on the Premises, provided that all such alterations or changes in improvements and new improvements must comply with all governmental laws, zoning regulations and ordinances, and any conditions on permits issued pursuant thereto. 6,04 - Requirements of Governmental Agencies At all times during the term of this Lease, Tenant, at Tenant's own cost and expense, shall: A) .Make all alterations, additions or repairs to said Premises or the improvements or facilities on said Premises required by any valid law, ordinance, statute, order or regulation now or hereafter made or issued by an federal, state~ county, local or other governmental agency or entity. B) Observe and comply with all valid laws, ordinances, statutes, orders and regulations now or hereafter made or issued respecting said Premises or the improvements or facilities on said Premises by any federal, state, county, local or other governmental agency or entity. C) Contest if Tenant, in Tenant's sole discretion, desires by appropriate legal proceedings brought in good faith and diligently, prosecuted, in th~ name of Tenant, or in the names of Tenant and Landlord where appropriate or required, the va.lidity or applicability to said Premises of any law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity; provided, however, that any such'contest or proceedings, though maintained in the names of Tenant and Landlord, shall be without cost to Landlord, and Tenant shall protect said Premises and'Landlord from Tenant's failure to observe or comply during the contest with the contested law, ordinance, statute, order or regulation. D) Indemnify and hold Landlord and the property of Landlord, including said Premises, free and harmless fr.om any and all liability, loss, damages, fines, penalties, claims and actions resulting from Lessee's failure to comply with and perform the requirements of this Section. ARTICLE VII DEVELOPMENT OF PREMISE'S 7.01 - See Site Preparation Agreement attached hereto as Exhibit "B" for. terms and conditions of developing the Premises. ARTICLE VIII ENCUMBRANCE OF LEASEHOLD ESTATE 8.01 - Tenant's Right to Encumber Tenant may, at any time and from time to time during the term of this Lease, encumber to any one or more person or entity, herein called "Lender," by deed of trust or mortgage or other security instrument, a. portion or all of Tenant's interest under this Lease and the leasehold estate hereby created in Tenant for any purpose or purposes without the consent of Landlord; provided, however, that no encumbrance incurred by Tenant pursuant to this Section shall, and Tenant shall not have power to incur any encumbrance that will, constitute' in any way a lien or encumbrance on the fee of said Premises or any interest of Landlord in said Premises. The mortgage or trust deed, and all rights acquired under it, shall be subject to each and all of the covenants, conditions and restrictions stated in this Lease and to all rights and interests of the Landlord~ except as otherwise specifically provided in this Lease. 8.02 - Requirement for Notice of Loan Default Immediately after the recording of any deed of trust or mortgage executed by Tenant pursuant to Section 8.01 of this Lease and containing a power of sale as defined by California law, Tenant shall, at Tenant's own cost and expense, record in the Office of the County Recorder of the county in which the Premises are located a written reques, t executed and acknowledged by Tenant for a copy of any notice of default and a copy of any notice of - 12- sa~!e under such deed of trust, or mortgage to be mailed to Landlord. 8.03 - Lender as Including Subsequent Security ltolders The term "Lender," as used im this Lease, shall mean not only the person, persons or entity that loaned money to Tenant.'and is named as beneficiary, mortgagee, secured party or security holder in the instrument creating any encumbrance incurred by Tenant pursuant to Section 8.01 of this Lease, but also all subsequent assignees and holders of the security ~nterest created by such instrument. , 8.04 - Rights of Lender Any lender on the security of the lea'sehold shall have the right at any time during the.term of this Le'ase: ' A) To do any act or th'lng required o'f Tenant hereunder, and all such acts or things done and performed shall be as effective to prevent a forfeiture of Tenant's rights hereunder as if done by the Tenant. B) Foreclose on security afforded by the leasehold estate by exercising foreclosure proceedings or power of sale or other remedy afforded in law or in equity or by the security documents (hereinafter sometimes collectively referred to as "Foreclosure Sale"), and to transfer, convey or assign the title of Tenant to the leasehold estate created hereby to any purchaser at any such foreclosure sale, and to acquire and succeed to the interest of Tenant hereunder by virtue of any such foreclosure sale, all without Landlord's consent. C) Notwithstanding anything to the contrary provided for in this Article, or elsewhere in this Lease, the rights of Landlord, in the event of a default, may not be exercised until written notice of such default is given to any lender, or to the person or firm designated by any such lender to accept such 'notices. It is agreed that such lender shall have the right to cure any such default within ten (10) days after receipt of written notice of default with respect to any default that can be cured by the payment of money, or within thirty (30) days after receipt of written notice of default with respect to any other covenant or condition or term of this Lease; and, if such a default is of such nature that it cannot be remedied within said time (other than payments of money) then such lender shall have such additional time as is reasonably necessary to cure such default, provided that it. commences the curing of such default within said thirty (30) day period and thereafter diligently continues the curing of the same. 8.05 - Lender as Assignee No such lender shall 'be liable to the Landlord, as an assignee of this Lease, unless and until such time as such l~nder - 13- shall acqui.re the rights of Tenant hereunder through foreclosure om other appropriate proceedings in the nature thereof, or as a result of any other action or remedy provided for by such mortgage or deed of trust', or which may otherwise, be provided by law. If the lender subsequently sells, assigns or otherwise transfers its interest in the leasehold estate, thereafter lender shall have no further obligations under this Lease. 8.06 - Notice of Mortgage to'Lessor AnY and all rights of the lender, as provided herein or otherwise, is conditioned upn Che lender delivering to the Land'lord a copy of the leasehold mortgage or trust deed and a copy of Tenant's promissory note, if any, and address for sending notices to lender as may be required by this article, within sixty (60) days after such documents are executed. ARTICLE IX ASSIGNMENT AND SUBLETTING 9.01 - Subletting Tenant shall have the right to sublet a portion or all of the Premises. Tenant shall notify Landlord, thirty (30) days prior to the effective date, of any sublease, the name and nature of business.of the sublessee. Any Sublease of the Premises shall be subject to all of the terms and conditions of this Lease. Tenant shall continue to remain liable for all past and future rent and all other obligations and covenants of Tenant under the terms of this Lease. 9.02 .'- Assignment Tenant shall have the right to assign a portion or all of this Lease or otherwise transfer Tenant's interest in this Lease with Landlord's prior consent, which shall not'be unreasonably withheld; provided, however, that Tenant shall continue to remain liable for all past and future rent and all other obligations and covenants of the Tenant under the terms of this Lease. If Tenant requests consent for assignment and Landlord does not give Tenant a written objection to such request, specifying all reasons for such objection, within forty-five (45) days after such request, then such consent shall be deemed to have been given. No assignment by Tenant of its interest under this Lease shall be valid unless in writing and unless and until a copy of such written assignment, executed by Tenant, together with a copy of a written assumption agreement, executed by the assignee whereby such a~signee agrees to assume and be bound by all of the obligations of this Lease, beginning from the date of such assignment, to be performed by Tenant hereunder from and after the effective date of such assignment, is delivered to Landlord. Notwithstanding the aforemenkioned, Tenant shall have the right to assign this Lease or its interest in the Premises (1) to 'an entity - 14 - whi'ch is a parent, subsidiary or affiliate of Tenant; or (2) to a corporation which is a successor to Tenant, by way of merger, consolidation or corporate reorganization, or to any entity which 'has succeeded to'the interest of Tenant by the purchase of substantially all of the assets or shares of stock of Tenant without obtaining Landlord's prior written consent thereto. ARTICLE X CONDEMNATION ! 10.01 - Definitions The following definitions apply in construing provisions of this Lease relating to a taking of or damage to all or any part of the Premises or.improvements or any interest.~in them by eminent domain.or inverse condemnation: A) "Taking" means that taking or damaging, including severance damage, by eminent domain or by inverse, condemnation or for any public or quasi-public use under any statute. The transfer of title may be either a transfer resulting from the recording of a final order in condemnation or a voluntary transfer or conveyance to the condemning agency or entity under threat of condemnation, in avoidance of an exercise of eminent domain, or while condemnation proceedings are pending. The taking shall be considered to take place as of the latter of (i) the date on which the right to. compensation and damages accrues under the law applicable'to, the Premises; or (ii) the date ackual physical possession is taken by the condemnor. B) "Total Taking" means the Caking of the fee title to all the Premises and the improvements on the Premises, which shall be considered to include any offsite improvements effected by Tenant to serve.the. Premises or the improvements on the Premises. C) "Partial Taking'' means any taking O'f the Premises or any improvements thereon which is not a total taking. D) "Notice of Intended Taking" means any notice or notification on which a reasonably prudent man would rely and which he would interpret as expressing an existing intention of taking as distinguished from a mere preliminary inquiry or proposal. It incudes, but is not limited to, the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a notice of intent, to take, in writings containing a description or map of the taking reasonably defining the extent of the taking. E) "Award" means compensation paid for the taking, whether pursuant to Judgment or by agreement or otherwise. - 15- Id;02 - Notice of Other Par'ty The party receiving any notice of the kinds specified below shall promptly' give the other party not~ce of the receipt, contents, and date of the notice received: Notice of intended taking; B) Service of any legal process relating to condemnation~ of the Premises or improvements; /' C) Notice in connection with any proceedings or negotiations with respect to such a condemnation; or D) Notice of intent Or willingness to make or negotiate a private purchase, sale or transfer in'lieu df condemnation. 10.03 - Total Taking - Effect on Rent and Term On a total taking, Tenant's obligation to pay rent shall terminate on, and Tenant's interest in the leasehold shall continue until, the date of taking, at which time this Lease shall terminate. 10.04 - Distribution of Award for Taking On a Taking, all sums, including, but not limited to, damages and' interest awarded for the value of the real estate taken, shall be paid in the following order of priority: A) To Tenant, an amount equal to the fair market value of Tenant's improvements; B) To Tenant, an amount equal to the "bonus' value" value of t'he leasehold estate without improvements. C) To Landlord, the balance. 10.05 - Partial Taking - Rent Adjustments On a partial taking, the lease shall remain in full force and effect covering the remaining Premises, except that the total rent as otherwise provided herein shall be'reduced in the same ratio as the percentage of the area of the Premises taken, as bears to the total area of the Premises. 10.06 - Partial Taking - Option to Terminate Notwithstanding anything herein to the contrary, in the event of a partial taking, Tenant may terminate this Lease by giving written notice to Landlord within 18 months from the date of such partial taking. - 16- 10~O7 - Separate Tenant's Award In the event of a Taking, Tenant may make a separate claim with respect to 'lost business, lost profits, moving expenses and other related damages. ARTICLE XI DEFAULT ll.01 - Tenant's Default I: The occurrence of any of the following shall constitute a default by Tenant: A) Failure to pay rent, taxes .(subject, however, to Tenant.'s rights to contest'taxes as provided' in Section herein) or any other monetary obligation provided herein, when due, if the failure continues for ten (.10) days after written notice has been given to Tenant. ~) Failure to perform' any other' provision of this Lease if the failure to perform is not cured within thirty (30) days after written nbtice; provided, however, Tenant shall not be in default of this Lease if Tenant commences to cure the default within the thirty (30) day period and diligently, and in good faith continues to cure the default. C) An assignment by Tenant for the benefit of creditors or the filing of a voluntary or involuntary petition by or against the Tenant under any law for the purpose of adjudicating Tenant as bankrupt; or for extending time for payment, adjustment or satisfaction of Tenant's liabilities; or for reorganization, dissolution or arrangement on account of or to prevent bamkruptcy or insolvency unless the assignment or proceeding and all consequent Orders, adjudications, custodies and supervisions are dismissed, vacated or otherwise permanently s~ayed or terminated within ninety (90) days after the assignment, filing or other initial event. 11.02 - Landlord's Remedies Cumulative Landlord shall have the following remedies set forth in subsections (A) through (F) below if Tenant commits a default. These remedies, are not exclusive and may be exercised concurrently or successively; they are cumulative in addition to any remedies now or later allowed by law. A) Bring Suit for Performance. Landlord may.bring suit for the collection of the rent or other amounts for which Tenant is then in default, or for the performance of any other covenant or agreement devolving upon Tenant, all without having to enter into possession or terminate-this Lease. B) Re-Entry without ~Terminatton. Landlord may re-enter the Premises, by summary proceedings or otherwise, and take possession thereof, without thereby terminating this Lease, and thereupon Landlord may expel all persons'and remove all property therefrom, either peacably or by force, without becoming liable to prosecution therefor, and relet the Premises and receive the rent therefrom, applying the same, first to the payment of'the reasonable expenses of such re-entry and the reasonable cost of such' reletting, and then to the payment of the rent and other amounts for which Tenant is then in default; the balance, if any, to b~ paid.to Tenant, who, whether or not the Premises are relet, shall remain liable for any deficiency. Landlord shall.use Landlord's best efforts to relet the Premises. It is agreed that the commencement and prosecution of any action by Landlord in'. forceable entry and detainer,'eJectment or otherwise, or the appointment of a receiver, or any exec.ution of any decree obtained in any.action to recover possession of the Premises, or any re-entry, shall not be construed as an election to terminate this Lease unless Landlord shall, in writing~ expressly exercise its election to declare the term hereunder ended and to terminate.this Lease, and unless this Lease be expressly terminated, such re-entry or entry by Landlord, whether had or taken under summary proceedings-or otherwise, shall not be deemed to have absolved or discharged Tenant from any of its obligations and liabilities for. the remainder of the term of this Lease. Notwithstanding anything to the contrary or other provisions'of this Lease, if the Landlord elects the remedy provided in this Section i1.02(B), Tenant shall have the right to sublet the Premises, assign his interest in the Lease, or both, with the written consent of the Landlord, which consent shall not be unreasonably withheld. .. C) Termination of Lease and Tenant's Right to Possession. Landlord may terminate this Lease and Tenant's right to possession by giving Tenant five (5) days written notice of such termination. No act by Landlord, other than giving Tenant written notice of termination of this Lease, shall in fact terminate the Lease. Upon termination of the Lease, neither the Landlord nor the Tenant shall have any future rights or obligations under the Lease except that Landlord shall have the right to recover from the Tenant the following: 1. The worth, at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease; 2. The worth, at the time of the award of the amount by which the unpaid rent that would have been earned after the date of termination of this Lease until the time of award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided; 3. The worth, at the time of the award of the amount by which the unpaid rent for'the balance of the term after the time of award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided; and - 18- ~. Any other amount~ and court costs, necessary to compensate.Landlord for all detriment proximately caused by Tenant's failure, to perform his obligatigns under the Lease or which, in the ordinary course of things, would be likely to result therefrom. ,! "The worth, at 'the time of the award, as used 'in subsection 11.02(C)(1) and (2) above,· is to be computed by allowing interest at the maximum lawful r~te. "The worth, at 'the time of the award, as referred to in subsection I1.02(C)(3) above, is to be computed by discounting the amount at the discount · ! rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%). Promptly after notice Of termination, Tenant shall surrender and vacate the Premises and 'all improvements in broom=clean condition, and .Landlord may re-enter and take possession of the Premises and all remaining improvements, and eject all parties in possession or eject some and not others or eject none. Termination under this paragraph shall not relieve Tenant from the payment of any sum then due to Landlord or from any claim for damages previously accrued Or then accruing against Tenant. As used herein, the term "time of award" shall mean either the date upon which Tenant pays to Landlord the amount recoverable by Landlord as hereinabove .set forth or the date of entry of any determination, order or Judgment. of any court or other legally constituted body determining the amount recoverablem whichever first occurs. D. 'Waiver of Landlord's Lien. Landlord shall not have, and hereby expressly waives, any lien granted to Landlord, whether statutory or otherwise, in Tenant's personal property, trade, fixtures, inventory, or stock in trade on the Premises for nonpayment of rent, default by Tenant, or any..other reason whatsoever. E. Assignment of Subrents. Tenant assigns to Landlord all subrents and other sums falling due from subtenants, licensees and concessionaires (herein called subtenants) during any period in which Landlord has the right under this Lease, whether exercised or not, to re-enter the Premises for Tenan['s default, and Tenant shall not have any right to such sums during that period. During any such period as aforesaid, Landlord may, at Landlord's election, re-enter the Premises and improvements with or without process of law, without terminating this Lease, and either or both collect these sums or bring action for the recovery of the sums directly from such obligors. Landlord shall receive and collect all subrents and avails from reletting applying them: First, to the payment of reasonable expenses (including attorneys' fees or brokers' commissions or both) paid or incurred by or on behalf of Landlord in recovering possession, placing the Premises and improvements in good condition, and preparing or altering the Premises or improvements for reletting; second, to the reasonable expense of securing new tenants; third, to the fulfillment of Tenant's covenan'ts to the end of the term; and fourth, to Landlord's uses and purposes.. Tenant shall nevertheless pay to Landlord on the due dates specified in this Lease the.equivalent of all sums required of t~nant under this Lease, plus .Landlord's expenses, less the avails of the sums assigned and actually collected under this provision. Landlord may proceed to collect either the assigned sums or Tenant's balance or both, or any installment or installments of them, either before or after expiration of the term, but the period of limitations shall not. begin to run on Tenant's payments until the due date of' the final installment to which Landlord is entitled, nor shall it begin' to run on the payments of the assigned sums until the due date of the final installment due from the respect.lye obligors. ~ F. Landlord's Right to Cure Tenant's Default. Landlord, at any time after Tenant commits a default, ..can cure the default at Tenant's cost. If Landlord, at any time, by reason of Tenant's default, pays any sum or does any act that requires the payment of any sum, the sum paid by Landlord shall be immediately reimbursed from Te'nant to Landlord, and if paid at a later date, shall bear interest at the rate of ten percent (10%) per annum from the date the sum is paid by Landlord until Landlord is reimbursed by Tenant. 11.03 - Surrender of Premises On expiration or sooner termination of this Lease, Tenant shall surrender said Premises and all improvements in or on said Premises, including buildings and other structures as may then exist, and all facilities in any way appertaining to said Premises, to Landlord. Tenant may, upon expiration or earlier termination of this Lease, remove any.furniture, fixtures (excluding att conditioning, heating and plumbing), equipment and other personal property of Tenant. -. ARTICLE XlI MISCELLANEOUS 12.01 - Notices All notices, demands and requests required or permitted under this Lease shall be in writing and shall be either personally delivered or sent by United States registered or certified mall, postage prepaid, addressed as follows: To Tenant: The Price Company Attn: Legal Department 2657 Ariane drive San Diego, CA 92117 and ' 20 - The Price Company Attn: Legal Department 2550 Fifth Ave., Ste. 629 San Diego,, CA 92103 To Landlord: City of South San Francisco 400 Grand Avenue South San Francisco, California To Lender: At the most'recent address ~urntshed to Landlord.tn Writing by the lender Notices, demands and requests given to Landlord, Tenant or any lender in the manner aforesaid shall be deemed to have been received for all purposes hereunder u~on personal delivery or forty-eight (48) hours after deposit in any post office or branch post office regularly maintaind by the United States Government. Landlord, Tenant and any lender shall have the right to change the address for receipt of notice by a notice given as aforesaid. 12.02 - Severabtlity of Provisions If any term or provision of this Lease, or the application thereof to any person or circumstance, shall be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to Persons or circumstances, other than those as to which it is invalid or unenforceable, shall not be affected thereby. 12.03 - AttOrneys' Fees Should any action or proceeding be commenced between the parties to the Lease concerning said Premises, this Lease, or the rights and duties of either in relation thereto, the party, Landlord or Tenant prevailing in.such litigation shall be entitled, in addition to such other relief, a~d may be granted in the action or proceeding, to a reasonable sum as and for his' attorneys' fees in such litigation which shall be determined by the court in such litigation or in a separate action brought for that purpose. 12.04 - Headings The headings of the Articles and Sections of this Lease are for convenfence or reference only and are not a part of this Lease. 12.05 ~ Number and Gender Whenever the context requires, the singular number shall include the plural, the plural the singular, and the use of any gender shall include all genders. - 21 - 12;06 - Waiver No term, .covenant or condition of this Lease can be waived by Landlord or Tenant, except in writing'signed by Landlord and Tenant. No waiver of any default hereunder shall be implied from any omission by Landlord to take any action on account of such default, if such default persists, or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver, and then only for the time and to the extent therein stated. The acceptance by Landlord of rent or partial rent with knowledge of/the breach of any of the covenants of this Lease by Tenant shall not be deemed a waiver of any such. breach. One or more waivers of any breach of any covenant, term or condition of this Lease shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by Landlord to or o~'any act by Tenant requir, ing Landlord's consent or approval shall not be deemsd to waive, or render unnecessary Landlord's consent or approval to or of any subsequent similar act by Tenant. 12.07 - Inspection 'At all reasonable times Landlord shall have the right to enter upon the Premises for 'the purpose of inspection and to post and keep posted thereon notices provided for by Section '1183.1 of the .Code of Civil Procedure of California or by any other law of that state, or to do any other act required or provided to be done by any such statute to the effect that Landlord will not be responsible for the improvement of the Premises or for the construction, alteration or repair of any building or other structure thereon. Landlord shall exercise all rights given it by' this paragraph, during ordinary business hours, and in such manner as not to interfere unreasonably with the business of Tenant. 12.08 - Sale or Transfer of Premises Landlord shall promptly notify Tenant in writing of any. sale or-transfer of the Premises or any assignment of the Landlord's interest in this Lease, giving the name and address of' the assignee or new owner, as the case may be, and instructions regarding the payment of rent, In the event of any transfer or assignment of the Landlord's interest in this Lease or any change in, or transfer of, title in and to the Premises or any part thereof, whether voluntary or involuntary, or by act of Landlord or by operation of law, Tenant shall be under no obligation to pay rent or other charges payable by Tenant to Landlord hereunder, thereafter accruing, until Tenant shall have been notified in writing of such transfer, assignment or change in title and given satisfactory proof thereof, and the withholding of rent or other charges payable by Tenant to Landlord hereunder, in the meantime shall not be deemed a default upon the part of the Tenant. If . Landlord sells or transfers all or any portion of its fee estate in the Premises, on consummation of the sale or transfer, Landlord shall be released, from any liability thereafter occurring or' - 22 - a~cruing under this Lease. Any successor in interest to Landlord shall take Landlord's fee estate in the Premises subject to each and every one oC' the conditions and obli~ations to be observed 'and performed by Landlord under this Lease. 12.09 - Estoppel Certificate Tenant shall, within ten (10) days notice from Landlord, .execute and deliver to Landlord, in record~ble form, a certificate stating that this Lease is unmodified and-in full force and effct, or in full force and effect as tmodified, and stating the modifications. The certificate also shall state the amount of current monthly rent, the dates to which the rent has been paid in advance, the amount of any security deposit or prepaid rent, and any other information with respect to this Lease requested by Landlord. Failure to deliver the certificate within the ten days shall be conclusive upon the party falling to deliver the certificate, and. any successor to the party requesting the certificate, that this Lease is in full force and effect and has not been modified except as may be represented by the party requesting the certificate and that rent and other charges have not been paid for any period after date of 'Notice of Request. 12.10 - Governing Law This Lease and all matters relating to this Lease shall be governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision or holding concerning this Lease arises. 12.11 - Binding on Heirs and Successors . . Subject to the provisions of this Lease, on assignment, each and all of the terms, covenants' and conditions of this Lease shall be binding on and inure to the'benefit of the heirs, ' successors, 'executors, administrators, assigns and personal representatives of the respective parties. 12.12 - Entire Agreement This Lease and the exhibits and riders, if any attached, set forth the entire agreement between the parties. Except as specifically set forth herein, there are no~ agreements, representations or warranties whatsoever as to any matter. Any prior conversations or writings are merged herein, superseded hereby and extinguished. No subsequent amendment of this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by Landlord and Tenant. 12.13 - Net Lease This Lease shall be deemed and construed to be a triple "net lease," Landlord shall not be required to furnish any services or facilities or to make any repairs or alterations of any kind in or on the Premises. - 23 - 12.14 - Memorandum of Lease for Recording Neither'p'arty, Landlord or Tenant; shall record this Lease without the written consent of the other. However, Landlord and Tenant shall, at the request of either at any time during the term of this Lease, execute a memorandum "short form" of this Lease for purposes of and in a form suitable for being recorded. The memorandum "short form" of this Lease shall describe the parties, Landlord and Tenant, set forth a descriptign.of the leased Premises, specify the term of this Lease ~nd shall incorporate this Lease by reference. 12.15 - Exhibits The following exhibits are atta. ched hereto and incorporated herein, by this reference: ..~- Exhibit A - Description of Premises Exhibit B- .Site Preparation Agreement 12.16 ~-Force Majeure In the event that Tenant shall be delayed or hindered in or prevented from the performance of any act other than Tenant's obligation to make payments of. rent, and other charges required hereunder~ by reason of strikes, lockouts, unavailability of materials, failure of power, restrictive governmental laws or regulations, riots, insurrections, the act, failure to act, or default of Landlord, war or other reason beyond its control, then performance of such act shall be excused for the period of the delay, and the -period for the performance of such act shall be extended for a period equivalent to the period of such delay. Notwithstanding the foregoing, lack of funds shall not be deemed to be a cause beyond control of Tenant. 12.17 - Brokers Landlord and Tenant represent and warrant to the other that it has not had'any contact with a third person which could result in any claim against the other for a broker's, finder's or similar fee or commission in connection with this Lease; and each of Landlord and Tenant shall indemnify and defend the other against, and hold it harmless from, any claim for a broker's, finder's or similar fee or commission arising out of its contacts with any third person in connection with this Lease. 12.18 - Arbitration Either party may require the arbitration of any matter arising under or in connection with this Lease. Arbitration is initiated and required by giving notice specifying the matter to be arbitrated. If action is already pending on any matter concerning which the notice is given, the notice is ineffective unless given before the expiration of twenty (20) days after - 24 - service of process on the person giving the notice. ExcePt as provided to the contrary in these provisions on arbitration, the arbitration shall be in conformity with and subject to applicable rules and procedures of the American. Arbitration Association. If the American Arbitration Association is not then in existence or for any reason fails or refuses to act, the arbitration, shall be in conformity with and subject to provisions of the California Code of Civil Procedure relating to arbitration as they stand amended at the time of the notice. The arbitrators shall be bound by this' Lease. Pleadings in any action pending on the same matter shall, if the arbitration is required or consented to, be deemed amended to limit the issues to those contemplated by the rules prescribed above. Each party shall pay half the cost of arbitration, including arbitrators' fees. Attorneys' fees shall be awarded as separately provided in this Lease. 'Executed as of the date first above written. TENANT THE PRICE COMPANY Robert E. Pric~ President BY~Mic~ael 'H. Dessent Executive Vice President Assistant Corporate Secretary LANDLORD ATTEST: By: CITY OF SOUTH SAN FRANCISCO City Clerk - 25 - STATE OF CALIFORNIA) ) SS, COUNTY OF SAN DIEGO) On '~~ ~ , 1985, before me, the undersigned, a Notary Public in i~hd for said State, personally appeared ROBERT E, PRICE, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as designated agent, on behalf of THE PRICE COMPANY, a California corporation, the corporation therein named, and acknowledged, to me that such corporation executed the within instrument pursuant to its by-laws or a resolution of its board of directors. Witness my hand and official seal. , ~ ..~ C^NDICE M. LA MAR ~ ~ *~ t~3 NOTARY PUBLlC- CALIFORNIA N o t a r y P u b 1 i c ~ ~/y SAN DIEGO COUNTY ~ My Comm. Expires Au~. 8, 1988 STATE OF CALIFORNIA) ) SS, On ?~~~ , 1985, before me, the undersigned, a Notary Public in ~d for said State, personally appeared MICHAEL H. DESSENT, personally known to me {or proved to me on the basis of satisfactory evidence) to be the person who executed the within .instrument as designated agent, on behalf of THE PRICE COMPANY, a California corporation, the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its by-laws or a resolution of its board of directors. Witness my hand and official seal. CANDICE M. IA MAR ~ ---~ NOTARY PUBLIC- CALIFORNIA ~ k~/_" J SAN DIEGO COUNTY EXhiBIT "A" LEGAL, ~ESCRIPTION TO ~ Resolution No. 42-85 PRICE-CLUB LEASE AREA BOUNDARY l' of 2 pages )IORTH OF BELLE'AIR ROAD, SOUTH SAN FRANCISCO REAL PROPERTY SITUATED IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN NATEO, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 1 Al,iD PARCEL 2 AS SAID PARCELS ARE SNOWN UPON THAT' CERTAIN PARCEL M/kP RECORDED FEBRUARY 6, 1979 IN VOLUME 45 OF PARCEL MAPS AT PAGE OFFICIAL RECORDS OF'SAN MATEO COUNTY~ HORE PARTICULARLY DESCRIBED 'AS .FOLLOWS: ' BEGINNING at a point' 'on the E~sterly right of way line' of South Airport Boulevard and the Northwesterly CUr. per of Parcel 1 as shown on said map, Thence leaving sa.id'right of way line'[-'.-al'ong the Northerly line of parcel 1, North: 56~ 12m East 530.18. feet; 'North 85~ 12'. East 179.99 feet; South 55~ 48' East 166.45 feet to the Northeasterly corner of .Parcel I; thence leaving said Parcel 1, along the Northerly and Easterly lines of Parcel' 2 of said map South 55~ 48' East 453.51 feet; South 24~ 32' 34" West 139,85 feet to a corner of Parcel. 2; thence leaving said corner, South 24~-32' 34" West I4.83 feet; South 82~' 09: West 230.90 feet to a'point; thence al'ong a curve to the left having radiu~ of 62.00 feet, the radial center of which bears South 7°` 5~' East said' point, through a central angle of 90~ an arc distance of 97.39 feet; thence' South· 7° 51' East 92.00 feet to .a point; thence along a curve to the right having a radius of 30.00 feet the radial center of which bears South 82 09 West from said point, through a central angle of "90~[ an arc distance of 47.12 feet; .thence South 82~ 09' West 539.02 feet along the Northerly right, of way line of Belle Air Road as shown on said map to a point; thence along said righ~ of way line' along a curve to the right having a radius of 30.00 feet the radial center of which bears No~th 7~ 51' West from said point, through central angle of 61~ 17' 21"j an arc distance of 32.09 feet to a point on the curve with a radial bearing of South 53~ 26' 21" )Jest;-thence leaving said polnt~ North 62~ 10~' 54" East 2.69 feet; North 27~ 49' 06" )~est 32.06 feet; South 62° 10' 54" West, 1.40 feet to a point on the Easterly right of way llne of South Airport Boulevard; thence along said right-of way line, being also the Westerly. line of Parcel 1, North 24~ 16' 36" l~est 308,59 feet; thence leaving. said right of way linej Easterly[ Northerly[ a. nd Westerly along said Parcel 1, 14orth $6~ 12' East 379.64 feet; North 33~ 48' West, 119.99 feet; South 56° 12' West 359,51 feet to the Easterly right of way line of South Airport Boulevard; thence along said right of way line North 24° 16' 36" lJest 50.63 feet to the Point of Beginning. CONTAINING 11.783 ACRES MORE OR LESS. ROB.. · .PETAIL. ~1o 6cal~ ?rice Club L'e ~ ~ ~ Areo t~oundary Feb. Iq&5 EXH I i~ll' _ EXHIBIT "B" TO Resolution no. 42-85 1 of 5 pages SITE PREPARATION AGREEMENT between' CITY OF SOUTH SAN FRANCISCO - LANDLORD and . · THE PRICE COMPANY - TENANT 1. Conditions of Lease This Lease shall not take effect'and this Agreement shall terminate unless each of the following conditions are fully satisfied; provided, however, that such conditions may be waived in writing by Tenant. A.. Tenant, at its sole expense, shall be entitled to enter the Property to perform soils and engineering tests and obtain a soils report of the Property, prepared by a soils engineer licensed by the State of California, not later than sixty (60) days from the date of Tenant's approval of the title exceptions in the preliminary title report as provided in paragraph I(B)'herein, and Tenant shall fully indemnify Landlord from any damage caused by such testing. This Agreement is conditioned upon Tenant's approval of the soils report by written notice to Landlord within ten (10) days after Tenant .receives said soils report. If Tenant does not give such written notice of approval within said time limit, this condition shall be deemed not satisfied. B. Landlord shall, at its expense, provide Tenant with a CLTA preliminary title report covering th'e Property (including a metes and bounds survey, copies of all documents referred to therein and plot map delineating all easements of record on the' Property) within thirty (30) days after the date of this Agreement. This Agreement is conditioned upon Tenant's approval of such preliminary title report and the title exceptions by written notice to Landlord within twenty (20) days after Tenant receives such documents. If Tenant does not give such written notice of approval within that time limit,-this condition shall be deemed not satisfied. C, Landlord covenants that it shall, no later than ten (10) days after the conditions in paragraph i(B) herein have been satisfied or waived, at its expense, provide Tenant with a CLTA leasehold extended coverage title insurance policy in the amount of $2,500,000.00, showing the leasehold estate of Tenant, subject only to those exceptions approved by Tenant as provided in paragraph 'I(B) above herein and fee title vested in the City of South San Francisco. D. .This Agreement is conditioned upon Tenant receiving, no later than one hundred twenty (120) days after the date of the Lease, all necessary and required final governmental land use and other approvals and building and other p'ermits (the "Approvals") needed for the construction and operation on the Property of a typical Price Club operation to be located in a building of approximately 100,000 square feet (the "Planned Use"), including all governmental approvals necessary to perform the Development Work referred to in paragraph 2, below her-ein. If the conditions in either paragraph A or B above are not sa~isfied, then (i) Tenant shall pay to Landlord one-ha'if of the. cost of the title report and survey (referred to in paragraph B above) within thirty (30) days after receipt of a bill from Landlord, and (ii) Landlord.shall pay to Tenant one-half of the cost of the soils and engineering tests and .~eport (referred to in paragraph A above) within thirty (30) days after receipt of a bill from Tenant. 2. Development Work .A, Tenant agrees to install and complete certain items of development work as hereinafter described (the "Development Work"). The Development Work shall begin within a reasonable period of time (weather permitting) after all conditions set forth in paragraph 1 herein have been satisfied or waived by Tenant. B. The Development Work to be performed by Tenant shall consist of all work required to render the Property in a buildable condition for the construction and operation of the Planned Use thereon (excluding all on-site engineering, design and construction work). The Development Work shall include, but not be limited to: (1) The extension to the property line of the Property of public water and sewer lines, gas, telephone and electric lines, as well as storm drains in locations determined by Landlord and Tenant; (2) The import and removal of soil to or from the Property and'its compaction and treatment and installation of pilings, as needed, to permit Tenant to enter the Property and construct its Price Club building without additional work to the soil; (3) Installation of traffic light at the intersection of So. Airport Blvd. and Belle Air Road, with left turn arrows; (4) The construction off the Property of any storm drain facilities required for the use and operation of the Planned Use; (5) The relocation of any existing above ground utility poles within the Property; - 2 - · (6)' The construction of required off-site curbs and gutters or' any public streets; and (7)- The construction of all other required public improvements. C. Ail Development Work to be installed or furnished by Tenant under this Agreement will be done and completed in good and workmanlike manner, and in accordance with the rules, regulations, laws and ordinances of the applicable goMernmental authorities. D. Landlord, at its own expense, shall obtain and have recorded proper instruments establishing necessary easements and rights-of-way for off-site drainage and other utilities. 3. Reimbursement for Development Work A. Landlord shall be responsible for all costs and expenses incurred by Tenant in connection with the Development Work referred to in paragraph 2 herein, including, but not limited to, contractor's fees, labor, materials, permit fees and all other construction costs ("Development Costs"). B. Landlord shall reimburse Tenant for Development Costs, plus interest thereon(as provided below herein). Such reimbursement shall be effected by Tenant deducting such Development Costs, plus interest thereon, from Percentage Rent (as provided in Section 3.02 of the Lease) and additional rent (as provided in Section 3.03 of the Lease) otherwise due the Landlord during the lease term, until the Development Costs and interest have been recovered in their entirety. C. The interest' on Development Costs shall be computed from the date or dates such costs are incurred until the date Tenant is reimbursed (as provided -in paragraph 3(A) above herein) at the simple interest rate equal to the prime rate charged by Wells Fargo Bank on the date all conditions i-n paragraph 1 herein are satisfied or waived; but in no event higher than twelve (12%) percent per annum. Reimbursement as provided in paragraph 3(A) shall be credited first'to accrued but unpaid interest and the balance to unpaid Development Costs. D. For purposes of this paragraph ~D), the term "major construction contract" shall mean. a contract in excess of Five Thousand ($5,000.00) Dollars. Tenant shall submit all major construction contracts in connection with the Development Work to Landlord for approval of the contract price, which approval shall not be unreasonably withheld. A contract shall be deemed approved unless Landlord gives Tenant written notice of disapproval (specifying the reasons for disapproval) within fifteen (15) business days after receipt by Landlord of the contract, plans and specifications relating thereto. - 3 - Approval Applications Tenant a~rees to diligently pursu'e the acquisition of the "Approvals" referred to in paragraph I(D) herein immediately after all the conditions set forth in paragraph I(A), (B) and (C) are sat~sfied or waived. 5.. Lease Commencemen~ The lease term shall commence two (2) months after all conditions in paragraph I have been satisfied or waived by Tenant; (the "Commencement Date"). Within fifteen (15) days after the Commencement Date, Landlord and Tenant shall execute an addendum to the Lease, setting forth the date of the Commencement Date. 6. Landlord's Representations and Warrantf~ Landlord represents and warrants that': Ao There are no actual, pending or proposed ordinances, rules,.regulations or other actions on the part of any governmental body department or agency having Jurisdiction which would affect the ability and right of the Tenant to construct and operate the Planned Use on the Property. B. There are not threatened or pending any proceedings or litigation affecting any part of the Property. C. Sewer, water, drainage, telephone, gas and electric utility lines are within a public street'adjacent to the Property, and are immediately available for use and connection with size and capacity adequate'to properly serve Tenant's development and 'operation of the Planned Use on the Property, without governmental restrictions or prohibition, and subject only to payment of usual charges and'fees, .and without the requirements of obtaining easements consents from others for the extension and connection of any and all of such utilities. Ownership of Improvements All buildings and other improvements which may be constructed on the Premises .by Tenant at any time and from time to time during the lease term shall be owned by Tenant. Tenant shall be entitled to tax depreciation on such improvements. 8. Incorporation This Site Preparation Agreement is a part of that certain written Ground Lease Agreement between the City of South San Francisco as Landlord, and The Price Company as Tenant (the "Lease"), and all of the provisions of this Site Preparation' - 4 - Agreement are incorporated into the Lease. TENANT; THE PRICE COMPANY BY:Robert E. Prick'e, Prg'sident ~Executive Vice President/ · Assistant Corporate Secretary LANDLORD: ATTEST: 'City Clerk By: CITY OF 30UTH SA~ FRANCISCO - 5 - RECORDING REqUeSTED BY: Joseph Ro Satz, Esqo WHEN RECORDED, HAIL TO: EXHIBll "2" TO Resolution No. 42-85 I of 2 pages The Price Company Attn: Joseph R. Satz 2550 Fi£th Ave., S:eo 629 San Diego., California 92103 t' Space Above This Line For Recorder~s Use Only MEMORANDUM OF LEASE ' ~h~s is a' Memorandum of the Lease dated , 1985 between THE CITY OF SOUTH SAN FRANCISCO ("Landlord") and THE PRICE COHPANY~ a california corporation ~"Tenant") concerning the " prem~s'es described in Exhibit A (the "Premises") attached hereto (the "Lease"). 1. For good and adequate consideration, Landlord leases the Premises to Tenant and Tenant hires them from Landlord for the term and on the provisions contained ~n the Lease which is incorporated in th~s Memorandum by reference. 2° The term'is twenty (20) years, beginning 1985~ subject to Tenant's right to extend ~he term for two additional consecutive periods of seven (7) years each. 3. Th~s ~emorandum is not a complete summary of the Lease. Provisions of th~s Memorandum shall not be used in fnterpreting the Lease provisions. In'the event of conflict between th~s Memorandum and the Lease) the Lease shall control. Executed th~s day of , 1985 in the City of ~outh San Francisco, California. THE'PRICE COMPANY By: By: THE CITY OF SOUTH SAN FRANCISCO By: ATTEST: City Clerk -- 2 --. LEGAL DES.CRIPTIO){ TO Resolution No. 42-86 PRICE CLUB LEASE AREA BOU~IDARY 1 of 2 pages -" UORTH OF BELLE'AIR ROAD,' SOUTH SA~I FRA}ICISCO REAL PROPERTY SITUATED Ill THE CITy OF SOOTH SAIl FRANCISCO, COUXTY OF SAi~ t. IATEO, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL iL AND PARCEL 2 A.S SAID PARCELS. ARE SHOWN UPON THAT' CERTAI~I PARCEL MAP RECORDED'FEBRUARY 6, 1979 IN ¥OLUME 46 OF PARCEL 14APS AT PAGE 41, OFFICIAL RECORDS OF SAN MATEO C. OU)4T¥, HORE PARTICULARLY DESCRIBED ' AS FOLLO~IS: ' BEGINtIII~G at a point' 'on the E~sterly right of way line. of South Airport Boulevard and the Northwesterly. calmer of Parcel 1 as shown on safd map. ~ence leaving sa.id;right of way 'l ine?--, along th~' Northerly line of Parcel North" 56* 12' East 530.18. feet; 'North 85~ 12'. East 17g.99 feet$ South 55a 48' East 166.45 feet to the Northeasterly corner of Parcel 1; thence leaving sat6 Parcel 1, along the Northerly and Easterly'lines of Parcel' 2 of said map South 55° 48' East 453.51 feet; South 24° 32' 34" West 139.85 feet to a corner of Parcel. ~; thence leaving said corner, South 24° -32' 34" l~est 14.83 feet; South 82~ 09' West 230,90 feet to a'point; thence'al'ong a curve to the left having a radius of 6~.00 feet, the radial center of which bears South 7~ 5i' East said' point, .through a central angle of 90~; an arc distance of 97.39 feet; thence South 7~ 51' East 92.00 feet to.a point; thence along a curve to the right ha~ing a radius of 30.00 feet the radial center of which bears South 82 09' West from said point, through a central angle of 90~; an arc distance of 47.12 feet;'.thence South 82° 09' West 539,02 feet along the Northerly right.-of way line of Belle Air Road as shown on said map to a point; thence along sai~ righ~ of way line, along a curve t.o the right having a radius of 30.00 feet the radial center of which bears North 7~ 51' West from said point, through a central angle of 61" 17' 21"; an arc distance of 32.09 feet to a point on the curve with a radial bearing of South 53~ 26' 21" ~4est;-~hence leaving said ~oint~ North 62° 10" 54" East 2.69 feet; North 27° 49' 06" Wes~ 32.06 feet; South 62° 10' 54" West, 1.40 feet to a point on the-Easterly ri. ght of way llne of South Airport Boulevard; thence along said right of way line, being also the Westerly. line of Parcel 'l, North 24° 16' 36" West 308.59 feet; thence leaving said right of ~ay line; Easterly; Northerly;_a. nd lJesterly along said Parc.el North 56° 12' East 379,64 feet; North 33° 48' West, 119.99 feet; South 56~ 12' West 359,51 feet to the Easterly right of way line of South Airport Boulevard; thence along said right of way line North 24° 16' 36" lJest 50,63 feet ~o the Poi nt of Begi nning. CONTAII{ING 11.783 ACRES MORE OR LESS. ,/i,e£A , II. ~8 Xc,,'¢e ~- ' Price Club Z e~ Jre~ l~und~ry