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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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
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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
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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